Liabilities of Corporate Individuals for Environmental Claims Under CERCLA: The Current State of the Law and Strategies for Coping

Geoffrey M. Dugan

Editors' Summary: The Superfund law already acts like a dragnet to sweep corporations into the net of liability. Now more and more individual officers, directors, employees, and shareholders find themselves caught up in the liability net as well, and such corporate individuals across the country wonder about the contours of Superfund liability and how to stay out of it.

In this Article, the author traces the erosion of the traditional "corporate veil" doctrines that shield individuals from the corporation's liability. He explores the court opinions and their rationales, first for civil liability and then for criminal liability. Finally, he outlines steps that can reduce the risk of CERCLA liability, including preventive measures, insurance, and indemnification from the corporation.

Mr. Dugan is a partner in the law firm of Landels, Ripley & Diamond in San Francisco, where he specializes in corporate and commercial law. He frequently counsels corporate, real estate, and industrial clients on corporate and commercial law issues affecting environmental liabilities. Mr. Dugan is a graduate of Harvard University (A.B. 1973) and Georgetown University Law Center (J.D. 1976). Landels, Ripley & Diamond is nationally recognized for its expertise in environmental counseling and litigation matters.

[23 ELR 10074]

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)¹ unleashed a torrent of litigation, as zealous government regulators and private litigants sought parties able to pay for cleaning up hazardous waste. Companies, and the individuals involved in these companies, faced a dramatic increase in business risks. Courts have become willing to extend a corporation's environmental responsibility to individual shareholders, directors, officers, and employees, as well as to parent corporations and successor entities. In the process, traditional corporate law concepts of limited liability have frequently been ignored or disregarded.

This Article focuses on expanding theories of civil liability through which individual corporate officers, directors, employees, and shareholders (sometimes referred to as "corporate individuals") have been held personally responsible for CERCLA cleanups. Recent trends in criminal prosecutions of corporate individuals for environmental crimes are also addressed. Finally, strategies for reducing corporate individuals' exposure are discussed. Despite aggressive enforcement and the broad, sweeping language invoked by some courts, careful planning and practice may still help reduce the exposure of corporate individuals for a corporation's environmental problems. However, in the CERCLA context the "shield" that the corporate form was once thought to provide to individual officers, directors, and shareholders is probably little more than an illusion.

Overview of Statutory Liability Under CERCLA

CERCLA § 107(a) establishes four classes of potentially responsible parties liable for environmental investigation and cleanup costs.² These are (1) the current owner or operator of a facility;³ (2) any person who formerly owned or operated a facility at the time of disposal of any hazardous substances; (3) any person who arranged for disposal or treatment of hazardous substances owned by such person; and (4) any person who accepted hazardous substances for transport to disposal or treatment facilities. Liability under CERCLA is strict and retroactive, as well as, joint and several.

[23 ELR 10075]

CERCLA's provisions are vague and the legislative history is sparse, providing little guidance in answering the legal question that frequently arises in the corporate context: are individual corporate officers, directors, employees, or shareholders subject to personal liability under CERCLA for environmental problems at a facility which is or was legally owned and operated by the corporate entity? In order to further CERCLA's broad remedial goals, courts have consistently construed the statute's liability provisions expansively.⁴ This expansive construction has, in effect, led to a rewriting of the common-law rules of corporate liability.

Erosion of Traditional Concepts of Corporate Liability

Piercing the Corporate Veil

A corporation is a distinct legal "person" with an existence separate from its owner's shareholders, management, and employees.⁵ As a legal person, the corporation has the power to own its property, make contracts, incur obligations, and otherwise conduct its business distinct from the individuals who own or act on behalf of the corporation. The corollary principle of limited liability recognizes that a shareholder is not personally responsible for the corporation's debts. A shareholder's liability for claims asserted against the corporation is limited to the amount of capital the shareholder has actually invested. Once the corporation's assets have been exhausted, there is no recourse against the shareholder's other, separate assets for any deficiency.

The "corporate veil" has also traditionally been applied to shield individual directors, officers, and employees from liability for corporate acts. Under extraordinary circumstances, a court will ignore the corporate form and pierce the corporate veil to impose corporate liabilities on corporate individuals. These extraordinary circumstances have typically involved the complete domination of the corporation by a shareholder in the conduct of the corporation's affairs, so that the corporation is viewed as having no separate existence of its own but is merely the "alter ego" of the shareholder.⁶

Traditional Liability of Corporate Agents

Under generally accepted common-law principles, directors, officers, and employees act as agents of the corporation and bind the corporate entity, but not themselves personally, when acting properly in furtherance of their official capacities. Corporate agents are personally responsible for wrongful acts committed in the course of their official duties, as is the corporation itself under the doctrine of respondeat superior. But generally, corporate officers, directors, and other affiliated persons will not be held personally liable for torts of the corporation merely by reason of their official positions, unless these persons have participated somehow in the wrongful conduct.⁷

Expanding Theories of Liability Under CERCLA

CERCLA § 101(21)⁸ includes individuals, firms, and corporations in the list of "persons" subject to liability, but neither the statute nor the legislative history explicitly discusses whether a corporation's CERCLA liability also attaches to various persons associated with a liable corporation, including parent corporations, corporate successors, or corporate individuals. Government regulators have aggressively advanced various theories for imposing liability on corporate officers, directors, shareholders, or other affiliated persons.⁹ A number of courts have been willing to adopt expansive theories of liability. Unfortunately, many of the cases do not even discuss, much less explore, whether traditional corporate law concepts should be applied in this context. More recent cases have at least acknowledged these traditional principles in deciding whether to ignore or look beyond the corporate entity in imposing CERCLA liability. The result has been an absence of consistent reasoning. However, one theme has often been repeated: "CERCLA places no importance on the corporate form."¹⁰

Liability of Corporate Individuals Under CERCLA

The most profound departures from traditional corporate liability doctrines have been found in personal liability of individual shareholders, directors, officers, and employees. The theories of liability espoused by the court decisions in this area cover a broad spectrum, ranging from the traditional common-law rules described above to liability based on one's general control or authority over corporate activities.¹¹ The decided cases involve facts and analyses covering the entire range of this spectrum.

The case that has most closely followed the traditional common-law principles is Joslyn Co. v. T. L. James & Co.¹² The Fifth Circuit Court of Appeals' ruling in this case deals with the liability of parent corporations for the violations of subsidiaries. However, the lower court also considered issues relating to corporate individuals. An unreported district court opinion in the case held that corporate officers and directors are not directly liable as individuals under CERCLA and that under the common law of corporations [23 ELR 10076] an officer or director is not personally liable "merely because" of his status as such.¹³

The unreported opinion made clear its position that the common-law rule, which should be applied in CERCLA cases, is that:

An officer of a corporation who takes no part in the commission of the tort committed by the corporation is not personally liable to third persons for such tort, nor for the acts of other agents, officers or employees of the corporation in committing it unless he … specifically directed the particular act to be done, or participated, or cooperated therein.¹⁴

The traditional position adopted by the Fifth Circuit in the Joslyn case on the parent-subsidiary issue is consistent with the traditional view expressed by the district court regarding liability of corporate individuals and confirms the lower court's approach.¹⁵

Most of the CERCLA decisions relating to corporate individuals have imposed personal liability where a corporate officer, director, employee, or shareholder takes part in, directs, or authorizes the disposal of hazardous waste. This is not inconsistent with the traditional common-law rule described above. Most of these reported CERCLA decisions have involved closely held companies where the corporate individuals have had a high degree of involvement in the companies' hazardous waste activities. Thus, even under traditional common-law principles it would be appropriate for the courts to assign personal responsibility for CERCLA violations. However, many courts have articulated analyses that go farther than the traditional rules would allow.

The decision in United States v. Northeastern Pharmaceutical & Chemical Co.¹⁶ (NEPACCO) was one of the first CERCLA cases to impose direct liability on corporate officers and used far-reaching language on which subsequent courts have relied. In NEPACCO, a corporate vice president was found liable because he had direct authority to control the disposal of hazardous waste, actually supervised the disposal of waste-filled barrels and, therefore, was held to be an "arranger" of disposal under CERCLA. More troublesome, the president/shareholder was also held personally liable, even though he worked at the corporate headquarters in Connecticut and the facility was located in Missouri and even though it had not been shown that he had specific knowledge of the disposal arrangements. Nevertheless, the court imposed personal liability because the president/shareholder had (1) the capacity and general responsibility to control waste disposal, (2) the power to direct negotiations regarding waste disposal, and (3) the capacity to prevent damage caused by hazardous waste.

In resting its analysis on general corporate authority of the individual, rather than actual participation by corporate individuals in wrongful conduct, the NEPACCO decision and its progeny¹⁷ moved beyond the common-law principles to a broader standard of liability. Recent cases which have adopted this view include United States v. Mexico Feed & Seed Co., in which the corporate president and majority shareholder was held liable because he was "in charge of and directly responsible for all of [the company's] operations and, hence, possessed ultimate authority to control the disposal of hazardous waste substances";¹⁸ and Quadion Corp. v. Mache, which stated that "the authority to control, and not the actual control exercised, is the pivotal factor in determining individual liability under CERCLA."¹⁹

An even more extreme departure from traditional common-law principles regarding corporate individuals' liability is exemplified by Kelley v. Arco Industries Corp.²⁰ There, the court acknowledged that "traditional corporate principles … prevent individual liability absent a conclusion that … an individual has had close, active involvement or direct supervision in the events leading to the alleged tortious harm."²¹ The court, however, fashioned a different, more stringent standard for assessing liability: "… whether the individual in the close corporation could have prevented or significantly abated the release of hazardous substances…."²²

This "prevention" test is, in the court's words:

… a better standard than one which measures only the most direct knowledge or involvement in waste disposal activity, because it encourages responsible conduct instead of causing high level corporate individuals "not to see" and "to avoid getting involved with waste disposal at their facilities."²³

The ruling in the Arco Industries case reflects a careful analysis by the court of CERCLA's statutory goals and, in the court's view, will encourage responsible conduct by corporate individuals in dealing with hazardous substances. Nevertheless, it represents an expansion of corporate individuals' liability, which has not yet become the prevailing or consensus view.

The Fifth Circuit's recent decision in Riverside Market Development Corp. v. International Building Products, Inc.²⁴ reflects a more moderate approach to direct personal [23 ELR 10077] liability of corporate officers and directors, in accordance with the traditional common-law standard of personal participation in the corporation's wrongful conduct. The court in Riverside upheld the dismissal of the action against the chairman of the board who, as the corporation's 85 percent shareholder, was the corporation's principal financing source. The evidence indicated that the chairman visited the facility one to three times per year and reviewed financial statements. Such activity, in the Fifth Circuit's view, was not sufficient to warrant a finding that the chairman was an "operator" of the facility under CERCLA.

The district court in the Riverside case had refused to dismiss the claims against another corporate officer who spent 40 percent of his time at the plant and was "occasionally" involved in day-to-day operations. The district court had held that there was a question of fact as to that officer's liability: if he personally participated in the disposal of hazardous wastes, then he could be personally liable for the corporation's wrongful acts. The Fifth Circuit's decision did not affect this holding.

A recent decision by a Minnesota state court adopts yet another theory for finding a corporate officer personally liable for corporate violations of environmental statutes. In In re Amended Administrative Penalty Order Issued to Paul S. Dougherty,²⁵ the court found that, although there was insufficient evidence to establish that the officer personally participated in the hazardous waste violations, the officer could be held liable under the "responsible corporate officer" doctrine. This doctrine has been applied in other contexts (in particular, in criminal prosecutions of corporate individuals for environmental crimes, discussed below), but not previously in civil actions under environmental laws. The court held that personal liability of a corporate officer need not be premised solely on his personal participation in the environmental violation. Liability may be imposed if (1) the individual is in a position of responsibility, which allows the person to influence corporate policies or activities; (2) the individual's position is such that he or she could have influenced the actions constituting the violations; and (3) the individual's actions or inaction facilitated the violations.²⁶ While this case did not arise under CERCLA, it involved a state-law counterpart and suggests another expansive theory of liability, which could apply under CERCLA. Like the CERCLA decisions that base liability on corporate authority or power to prevent the violation, the "responsible corporate officer" doctrine is a significant departure from traditional rules governing the liability of corporate individuals.

Difficult policy issues arise as the basis for personal liability of corporate individuals shifts from direct participation in the hazardous waste disposal activity to power to prevent the disposal. In most of the reported cases, the corporate individuals' high degree of involvement in the companies' hazardous waste activities makes it appropriate for the courts to assign personal responsibility for CERCLA violations, even under application of traditional common-law standards. However, the sweeping language employed by the courts makes it difficult to use these decisions as guideposts for corporate managers and advisers to determine the level of involvement that triggers personal liability. As the individual officer, director, or shareholder becomes more remotely involved, where will the line be drawn? If the "power to prevent" standard is applied literally to officers and directors of large, publicly held corporations, it is easy to imagine wholesale defections of qualified corporate managers from positions of responsibility as liability risks become unacceptably high.²⁷

Criminal Liability of Corporate Individuals

Most environmental statutes provide for criminal as well as civil penalties. In recent years, there has been a dramatic increase in the pursuit of criminal enforcement of environmental violations under federal laws and under similar programs developed at the state level. These enforcement efforts have been directed not only against the corporate entities involved but also, as in civil actions, against corporate individuals involved in the alleged violations. Despite this increased activity, however, a consistent approach has not yet emerged that provides definitive guidance concerning the types of violations that will be handled criminally or the appropriate standard of conduct to be applied.

The principal federal environmental statutes, including CERCLA, provide that felony violations must be committed "knowingly." However, the traditional requirement of proving specific criminal intent does not apply. Rather, most courts have applied a more relaxed standard for proof of criminal intent, or scienter, that requires only a general intent to perform the act that constitutes the violation and knowledge of the general hazardous character of the materials being handled. Moreover, the requisite knowledge may be inferred from circumstantial evidence, so that as a practical matter criminal violations can be based on virtually any environmental violation, even if it is unintentional.

The few cases that have reached the appellate level have arisen under the Resource Conservation and Recovery Act (RCRA).²⁸ The analyses of these decisions, however, may be applied to other environmental statutes, including CERCLA.

Four recent appellate decisions evidence the relaxed standards being applied to scienter requirements under RCRA. A fifth recent case adopts a stricter, more traditional standard.²⁹

In United States v. Hoflin,³⁰ United States v. Dee,³¹ United States v. Hayes International Corp.,³² and United States v. Sellers,³³ each court of appeals affirmed criminal convictions of individuals who had knowledge that a discharge [23 ELR 10078] or disposal of hazardous materials had occurred and who knew that the materials being handled were potentially harmful to persons or the environment. It was not required that the individual defendants have knowledge that the material fell within the statutory definition of "hazardous waste," nor that RCRA required a permit for disposal of the material.

A contrary result was reached by the Third Circuit in United States v. Johnson & Towers, Inc.³⁴ In that case, which involved the criminal prosecution of a corporation and two of its employees, the court of appeals required findings that the defendant knew that the disposal was occurring, knew that the material involved was hazardous, knew that a permit was required for disposal, and knew that a permit had not been obtained. This case, however, clearly represents a minority view.

In each of these cases, the corporate individuals had actual, direct involvement in the disposal activities that constituted the violations. The clear majority of the courts have not been reluctant to infer from a knowledge of the facts a knowledge of the law sufficient to impose criminal liability on individuals. However, despite prosecutorial urging, courts have not been willing to expand criminal liability to corporate individuals who have had no actual involvement in or knowledge of the hazardous waste activity that constitutes the violation.

Prosecutors have attempted to apply the "responsible corporate officer" doctrine, derived from public health and welfare statutes containing a strict liability standard, to environmental crimes. Under this theory, corporate officers could be subject to criminal liability if they bear a "responsible relationship" to the environmental violation, even if they have no actual knowledge of the events giving rise to the violation.

The "responsible corporate officer" doctrine derives from cases dealing with the Federal Food, Drug, and Cosmetic Act,³⁵ which imposes strict liability for shipments of adulterated foods. Individuals can be found guilty despite no involvement in causing the adulteration and no awareness that the adulteration existed. Under the leading cases of United States v. Dotterweich³⁶ and United States v. Park,³⁷ a person is guilty if he had, "by reason of his position in the corporation, responsibility and authority either to prevent in the first instance, or promptly to correct, the violation complained of, and … he failed to do so."³⁸

Although, as noted above, one state court has applied the "responsible corporate officer" doctrine to find civil liability on the part of a corporate individual,³⁹ recent decisions have rejected attempts to expand criminal liability under environmental laws through application of this doctrine. In United States v. MacDonald & Watson Waste Oil Co.,⁴⁰ the court overturned the criminal conviction of a corporate officer under RCRA because there was no proof of the officer'sactual knowledge of the activities that resulted in the violation. The court held that official corporate responsibility alone was insufficient as evidence of actual knowledge of such acts.

Similarly, in United States v. White,⁴¹ the court held that a corporate officer may not be held criminally liable under RCRA solely for the illegal acts of subordinate employees. The fact that the defendant, by reason of his corporate position, should have known of the illegal acts was insufficient; actual knowledge of the acts was required in order to prove the requisite criminal intent.

The criminal provisions of the environmental laws, such as RCRA and CERCLA, require "knowledge" as a requisite element. In this respect, they differ from the strict liability statutes that spawned the "responsible corporate officer" doctrine. It is arguably appropriate for the knowledge of corporate individuals to be imputed to the corporate entity in order to impose criminal environmental liability on the corporation under these provisions, since a corporation cannot have knowledge but through individuals. Courts have not been willing to impute the knowledge of one corporate individual to another, however, simply because of the latter's responsible relationship to the environmental violation, in the absence of actual knowledge of the acts.

Risk Reduction Strategies

As environmental problems continue, increasingly aggressive enforcement of the environmental protection laws heightens the prospect for further judicial inroads on traditional common-law principles. Accordingly, traditional corporate structures and strategies for insulating against environmental risks are not likely to provide complete, or even significant, comfort. Clearly, the best method for corporate individuals to reduce potential exposure to environmental liability is to enact preventive corporate policies and practices that minimize the likelihood that environmental problems will arise and that promptly address problems that do occur.

Preventive Measures

Such preventive approaches might include the following measures:

development of environmental compliance policies that are endorsed by the highest levels of corporate management and communicated throughout the organization;

regular environmental compliance audits and, if appropriate, corrective actions to address problems identified by the audits;

employee incentives to prevent environmental accidents; and

development of production technologies and processes that ensure that hazardous waste materials are minimized, safely recycled, or properly treated and disposed of.⁴²

[23 ELR 10079]

Establishing a record of a company's good-faith efforts to manage environmental risks effectively will help minimize the possibility that the government will pursue criminal enforcement, if environmental violations arise, and will enhance opportunities for a more favorable disposition of an enforcement action.

Prompt reporting of violations identified as a result of in-house environmental compliance audits is also important. Not only are such reports required under most environmental statutes, but according to the U.S. Department of Justice, violations will not be subject to criminal penalties if they are reported and corrected promptly and in good faith.⁴³

Insurance

Until recently, commercial insurance markets could not be viewed as an effective means of reducing risks of environmental problems. Comprehensive general liability policies usually include pollution exclusions, which have been the subject of numerous and varied judicial interpretations. Specific coverage for environmental claims either was not generally available, was subject to major exclusions, or was so expensive and so limited in amounts of coverage as to be virtually worthless. Recently, however, insurance companies have introduced various new products that, although largely untested, may offer some relief to businesses.⁴⁴

Several large insurance companies have begun offering ostensibly long-term coverage to protect new owners of real property or mortgage lenders for payment of cleanup costs for "unknown prior conditions."⁴⁵ These policies offer some relief to real estate purchasers or lenders who are at risk from subsequent discovery of environmental damage. Manufacturing or other industrial sites that are most in need of protection are likely to be denied coverage, however, due to stringent underwriting qualification procedures.

Ongoing coverage for property owners is available through some insurers offering environmental impairment liability coverage. These policies typically insure not just the named insured property owner, but also any officer, director, partner, or employee of the owner while acting within the scope of his or her duties. Because this type of policy is relatively new, the scope of coverage has not yet been interpreted by the courts. Certain provisions suggest potential problems. For example, to be covered, the cleanup costs must relate to a release or discharge that first begins after the effective date of the policy and occurs entirely during the policy period. This poses difficult problems of proof, as it is often hard to determine when a release of pollution first occurs. Also, the release must not have been expected or intended by the insured. This type of factual issue has caused much dispute and litigation over similar language in the standard comprehensive general liability policy.

Special environmental impairment liability for directors and officers is now being provided by some insurance companies. This coverage also is untested and its protections are not yet clear. The standard policy language covers claims by third parties and adjoining property owners for damages caused by the company's operations, rather than contamination to the company's own facilities, and may be too restrictive to provide significant protection to corporate individuals.

During the current wave of enthusiasm for pollution coverage by the insurance industry and particularly during the current competitive insurance market, one may expect coverage enhancement, new carriers entering the market, and improved pricing for these new products, at least in the short term.

Indemnification

Corporate individuals may seek indemnification from their corporations as a means of reducing their personal exposure to environmental liabilities. Virtually all states' corporation statutes contain provisions permitting indemnification in the articles of incorporation or bylaws, by contract, or otherwise. However, not all statutes are the same. The statutory schemes may vary as to exclusivity (i.e., whether indemnification arrangements beyond the scope of the statute are permitted), the relevant standard of conduct that must be satisfied by the individual seeking indemnification, and the methods for approving indemnification payments. The local law applicable to a company must be carefully reviewed to determine the permissible scope of indemnification.

Indemnification arrangements are necessarily limited by the amount of a company's assets — in the event of insolvency, a claim for indemnification is just one more unsecured creditor's claim against the company. Special funding arrangements can be used to secure a company's indemnification obligations. For example, trust funds, reserve accounts, letters of credit or other self-insurance arrangements can be established for these purposes. Such funding techniques are relatively novel and the tax, bankruptcy, accounting, and other legal and financial ramifications should be carefully considered in each instance. Nevertheless, indemnification arrangements can provide corporate individuals with a measure of protection and reassurance as they perform their corporate functions.

Conclusion

The law regarding CERCLA liabilities of corporate individuals remains unsettled. The overriding public policy concerns for cleaning up the nation's environmental problems have led courts to increase dramatically the potential liability of corporate individuals. To date, the law has not progressed to the point where civil or criminal liability for environmental problems will automatically be imposed on corporate individuals by reason of their status and authority.

Several courts have indicated a willingness to proceed down that road, however. Accordingly, corporations and their management should consider committing significant resources to reduce environmental risks, through internal training and compliance programs, and to encourage qualified and responsible managers to continue to act as such, by enhancing insurance and indemnification programs.

1. 42 U.S.C. §§ 9601-9675, ELR STAT. CERCLA 001-075.

2. 42 U.S.C. § 9607(a), ELR STAT. CERCLA 024.

3. Although § 107(a)(1) imposes liability on a current "owner and operator," courts have consistently interpreted this phrase disjunctively to include owners or operators. See United States v. Maryland Bank & Trust, 632 F. Supp. 573, 578 16 ELR 20557, 20559 (D. Md. 1986); United States v. Fleet Factors Corp., 901 F.2d 1550, 1554 n.3, 20 ELR 20832, 20834 n.3 (11th Cir. 1990), cert. denied, 111 S. Ct. 752 (1991).

4. See, e.g., New York v. Shore Realty Corp., 759 F.2d 1032, 1045, 15 ELR 20358, 20363 (2d Cir. 1985); United States v. Conservation Chem. Co., 619 F. Supp. 162, 192, 16 ELR 20193, 20204 (W.D. Mo. 1985); United States v. Mottolo, 695 F. Supp 615, 19 ELR 20442 (D.N.H. 1988).

5. "The property of the corporation is its property, and not that of the stockholders, as owners." 1 CHARLES R. P. KEATING & GAIL A. O'GRADNEY, FLETCHER CYCLOPEDIA OF THE LAW OF PRIVATE CORPORATIONS § 31, at 555 (1990), quoted in Riverside Mkt. Dev. Bldg. Prods., Inc., 931 F.2d 327, 330, 21 ELR 21025, 21026 (5th Cir. 1991).

6. See, e.g., HAROLD MARSH JR. & R. ROY FINKLE, MARSH'S CALIFORNIA CORPORATION LAW § 16.16 (3d ed. 1991).

7. Id. § 9.30.

8. 42 U.S.C. § 9601(21), ELR STAT. CERCLA 008.

9. See, e.g., U.S. Environmental Protection Agency Memorandum, LIABILITY OF CORPORATE SHAREHOLDERS AND SUCCESSOR CORPORATIONS FOR ABANDONED SITES UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT (CERCLA), June 13, 1984.

10. United States v. Mottolo, 695 F. Supp. at 624, 19 ELR at 20446.

11. For a discussion of the case law in this area through 1990, see Barnett M. Lawrence, Liability of Corporate Officers Under CERCLA: An Ounce of Prevention May Be the Cure, 20 ELR 10377 (Sept. 1990).

12. 696 F. Supp. 222, 19 ELR 20518 (W.D. La. 1988), aff'd, 893 F.2d 80, 20 ELR 20382 (5th Cir. 1990).

13. Joslyn Co. v. T. L. James & Co., No. 87-2054, slip. op. at 3 (W.D. La. Nov. 16, 1988), cited in Donald B. Mitchell Jr., Joslyn Co. v. T. L. James & Co., Inc.: Integrating CERCLA With the American Common-Law Tradition, 17 COLUM. J. ENVTL. L. 53 (1992).

14. Joslyn Co. v. T. L. James & Co., No. 872054, slip. op. at 3 (W.D. La. 1988) (quoting KEATING & O'GRADNEY, supra note 5, at § 1137).

15. A discussion of the parent-subsidiary liability issue is beyond the scope of this Article. Essentially, the Fifth Circuit held that the federal courts lacked authority to impose CERCLA liability on a corporate parent in the absence of facts that warranted "piercing the corporate veil." For a recent discussion of the Joslyn case and its affirmation of traditional corporate common-law principles, see Mitchell, supra note 13.

16. 579 F. Supp. 823, 14 ELR 20212 (W.D. Mo. 1984), aff'd in part and rev'd in part, 810 F.2d 726, 17 ELR 20603 (8th Cir. 1986), cert. denied, 484 U.S. 848 (1987).

17. See, e.g., New York v. Shore Realty Corp., supra note 4; United States v. Mottolo, supra note 4; Vermont v. Staco, Inc., 684 F. Supp. 822, 18 ELR 20589 (D. Vt. 1988); United States v. Ward, 618 F. Supp. 884, 16 ELR 20127 (E.D.N.C. 1985); United States v. Carolawn Co., 14 ELR 20699 (D.S.C. June 15, 1984); United States v. Carolina Transformer Co., 739 F. Supp. 1030, 20 ELR 20935 (E.D.N.C. 1989).

18. United States v. Mexico Feed & Seed Co., 764 F. Supp. 565, 571, 21 ELR 21486, 21489 (E.D. Mo. 1991).

19. 1991 Haz. Waste Lit. Rep. 21,265, 21,269 (N.D. Ill. June 11, 1991).

20. 723 F. Supp. 1214, 20 ELR 20264 (W.D. Mich. 1989).

21. Id. at 1218, 20 ELR at 20265.

22. Id. at 1220, 20 ELR at 20266; See also Kelley v. Thomas Solvent Co., 727 F. Supp. 1532, 20 ELR 20684 (W.D. Mich. 1989).

23. 723 F. Supp. at 1220, 20 ELR at 20266.

24. 931 F.2d 327, 21 ELR 21025 (5th Cir. 1991), cert. denied, 112 S. Ct. 636 (1991).

25. 482 N.W.2d 485 (Minn. App. 1992).

26. Id. at 490.

27. In the mid-1980s, public corporations suffered such defections by independent directors as multimillion-dollar verdicts in shareholder litigation caused their liability insurance to dry up and directors were exposed to personal liability risks they considered excessive. This "insurance crisis" led to a wave of state legislation designed to encourage independent directors to serve, by broadening indemnification rights, limiting personal liability, etc. See, e.g., DENNIS J. BLOCK & ALBERT DRIVER, THE CRISIS IN DIRECTORS' AND OFFICERS' LIABILITY INSURANCE (1986).

28. 42 U.S.C. §§ 6901-6987, ELR STAT. RCRA 001-041.

29. A discussion of these cases is set forth in R. Christopher Locke, Environmental Crimes: The Absence of "Intent" and the Complexities of Compliance, 16 COLUM. J. ENVTL. L. 311 (1991).

30. 880 F.2d 1033, 19 ELR 21140 (9th Cir. 1989), cert. denied, 110 S. Ct. 1143 (1990).

31. 912 F.2d 741, 21 ELR 20051 (4th Cir. 1990), cert. denied, 111 S. Ct. 1307 (1991).

32. 786 F.2d 1499, 16 ELR 20717 (11th Cir. 1986).

33. 926 F.2d 410, 21 ELR 20787 (5th Cir. 1991).

34. 741 F.2d 662, 14 ELR 20634 (3d Cir. 1984), cert. denied, 469 U.S. 1208 (1985).

35. 52 Stat. 1040 (codified as amended in scattered sections in 21 U.S.C.).

36. 320 U.S. 277 (1943).

37. 421 U.S. 658 (1975).

38. Id. at 673-74. See generally Keith A. Onsdorff & James M. Mesnard, The Responsible Corporate Officer Doctrine in RCRA Criminal Enforcement: What You Don't Know Can Hurt You, 22 ELR 10099 (Feb. 1992).

39. See supra text accompanying note 25.

40. 933 F.2d 35, 21 ELR 21449 (1st Cir. 1991).

41. 766 F. Supp. 873, 22 ELR 20050 (E.D.Wash. 1991).

42. See generally FRANK FRIEDMAN, PRACTICAL GUIDE TO ENVIRONMENTAL MANAGEMENT (1992); Joel Hirshhorn, Cutting Production of Hazardous Waste, TECH. REV. 52-61 (Apr. 1988).

43. Cf. U.S. DOJ, FACTORS IN DECISIONS ON CRIMINAL PROSECUTIONS FOR ENVIRONMENTAL VIOLATIONS IN THE CONTEXT OF SIGNIFICANT VOLUNTARY COMPLIANCE OR DISCLOSURE EFFORTS BY THE VIOLATOR (July 1, 1991), ELR ADMIN. MAT. 35399.

44. See Greg Steinmetz, Insurers Discover Pollution Can Bolster Bottom Line, WALL ST. J., Aug. 19, 1992, at B3.

45. At least one major lender, Fleet Financial Group, Inc., requires its borrowers to purchase such coverage. Id.