Document ID: ./input/supremecourt_opinions/opinions/boundvolumes/524bv.pdf
Page Number: 112

524US1

Unit: $U74

[09-06-00 17:54:15] PAGES PGT: OPIN

Cite as: 524 U. S. 51 (1998)

67

Opinion of the Court

to do with the leakage or disposal of hazardous waste, or
decisions about compliance with environmental regulations.

B

With this understanding, we are satisﬁed that the Court
of Appeals correctly rejected the District Court’s analysis of
direct liability. But we also think that the appeals court
erred in limiting direct liability under the statute to a par-
ent’s sole or joint venture operation, so as to eliminate any
possible ﬁnding that CPC is liable as an operator on the facts
of this case.

1

By emphasizing that “CPC is directly liable under section
107(a)(2) as an operator because CPC actively participated
in and exerted signiﬁcant control over Ott II’s business and
decision-making,” 777 F. Supp., at 574, the District Court
applied the “actual control” test of whether the parent “actu-
ally operated the business of its subsidiary,” id., at 573, as
several Circuits have employed it, see, e. g., United States v.
Kayser-Roth Corp., supra, at 27 (operator liability “requires
active involvement in the affairs of the subsidiary”); Jackson-
ville Elec. Auth. v. Bernuth Corp., 996 F. 2d 1107, 1110
(CA11 1993) (parent is liable if it “actually exercised control
over, or was otherwise intimately involved in the operations
of, the [subsidiary] corporation immediately responsible for
the operation of the facility” (internal quotation marks
omitted)).

The well-taken objection to the actual control test, how-
ever, is its fusion of direct and indirect liability; the test is
administered by asking a question about the relationship be-
tween the two corporations (an issue going to indirect liabil-
ity) instead of a question about the parent’s interaction with
the subsidiary’s facility (the source of any direct liability).
If, however, direct liability for the parent’s operation of the
facility is to be kept distinct from derivative liability for the
subsidiary’s own operation, the focus of the enquiry must