Source: https://www.khlaw.com/1126
Timestamp: 2019-05-27 11:14:05
Document Index: 148686030

Matched Legal Cases: ['§ 171', '§ 302', '§ 1910', 'art 82', 'art 266', 'art 280', '§ 116', 'art 112', '§ 1910', 'art 112', 'art 403', '§ 152', '§ 9601', '§ 9622', '§107', '§ 7586']

Keller Heckman | Food Retailers and Environmental Compliance
Food Retailers and Environmental Compliance
Date: Jun 02, 2002
The impact of food retailers on the environment is significant in terms of size and influence. 2001 data identified 156,371 grocery stores and 32,265 supermarkets ($2 million or more in annual sales) spread throughout the United States. 2 Although food retail is responsible for only a small portion of U.S. energy consumption (less than one percent), it is the third most intensive energy user in the commercial sector. 3 The usage is partly traced to dependence on refrigeration and cooling. Food retailers are the largest commercial users of refrigeration (39% of total). In addition, the Environmental Protection Agency (EPA) has estimated that food waste is the third largest category of solid waste, comprising approximately ten percent of the solid waste stream. In 1993, grocery packaging contributed approximately one-third of the containers in the municipal solid waste stream. 4 There are no data available on air or water emissions for the food retail sector. Food retailers are not generally a significant source of air pollution and their discharges typically are treated by municipal sanitary sewer systems.
In terms of this sector's influence, food marketers have a significant effect on downstream and upstream behavior. Consumer purchase decisions are influenced by store appearance, point of purchase materials, and products offered on the shelf. Due to industry consolidation and vertical integration, many food retailers also have manufacturing, warehousing, and distribution operations. 5
In the environmental area, food retailers are recognizing sizable benefits from switching to energy efficient technology. Using "green" fluorescent lighting or other low- or mercury-free illumination can reduce disposal costs and regulatory obligations associated with spent lighting. EPA expects to launch a similar program for warehouses and convenience stores in the future.
Food retailers also are using their sizable influence to be proactive in recycling and reducing solid waste. Packaging recovery from food retail establishments experienced a significant jump from 860 thousand tons in 1970 to 8.4 million tons in 1993. 7 Today, this trend continues to grow. A few examples easily illustrate their contribution. Safeway and Vons diverted 81,600 tons of green waste from landfills in CA in 2001. Albertson's is recycling 50% of its waste stream. In 2001, this amounted to 318,134 tons of cardboard and 4,788 tons of plastic bags.
The focus of federal and state environmental regulation remains on industrial, goods-producing activities. Nevertheless, the shift to a service-based economy is bringing fresh attention to the activities of the commercial sector. Additional environmental challenges and responsibilities lay ahead, and this paper is intended to provide a broad overview of environmental rules that directly affect the daily operations of a food retail establishment. As explained below, food retailers should be knowledgeable about rules for spill reporting, and EPA's rules for refrigeration systems that use an ozone-depleting products (ODP's) such as R-22-based systems. Special rules for disposing of used batteries, spent lighting, expired pesticides and the like, controlling releases to stormwater and sewer drains inside and outside the stores, proper management of above-ground and below ground storage tanks, and rules for applying pesticides are also relevant to food retail operations.
An emergency release is ordinarily of a size or nature that it cannot be cleaned up by employees working in the area or department, or by maintenance employees. In the case of certain hazardous chemicals, however, a release may be reportable simply if certain quantities are involved, regardless of the facility's ability to handle the clean up.
There are verbal (by telephone) and written reporting requirements are associated with accidental releases of regulates substances. Responding timely to accidental releases minimizes risks to employees and contractors, company assets and the surrounding community. In addition, the failure or delay in complying with release reporting exposes a company to significant penalties independent of the adverse consequences of a release.
In many instances, the reporting requirement must be dealt with in the midst of an emergency or potential emergency. Most initial reports must be made within 1 hour of discovering the release. Sometimes, three to five different agencies must be contacted. Certain information should be kept on hand to facilitate reporting. A list of EPA's hazardous and extremely hazardous substances (EHSs) and their reportable quantities, a list of the substances present on site or commonly transported, a list of the location(s) and tank capacity of underground storage tanks, and a list of any discharge limits relative to water discharges, are examples of information that may be needed quickly.
Generally speaking, immediate reporting is needed (within 1 hour) of discovering a release to the environment (water, air, and land beyond the property boundaries, and groundwater anywhere) during a 24-hour period of a hazardous substance or an extremely hazardous substance at or above its reportable quantity (RQ). 8 At the Federal level, the National Response Center (NRC) must be called at 800-424-8802. If the NRC cannot be reached, the nearest EPA regional office should be contacted. In some states, the U.S. Coast Guard is another alternative contact. At the state level, both the designated Local Emergency Planning Center (LEPC) and the State Emergency Response Center (SERC) must be contacted. If the release is to a publicly owned treatment works (POTWs) then the POTW must be called as well. Written follow up must be typically be provided within 24 hours to the LEPC and the SERC. Updated written notices must be submitted as new information becomes available concerning the release.
Immediately (within 1 hour) upon discovering a non-transport related release of a hazardous substance of any amount that results in the death, hospitalization, or evacuation of any person who is not an employee or contractor during the hours of employment, the SERC should be contacted. If the release is to the POTW, contact the POTW. Notification to the Occupational Safety and Health Administration (OSHA) is required if the person involved is an employee or contractor.
Pouring or spilling petroleum or oil down storm drains, onto the ground, or into the trash, can contaminate groundwater, surface water, and soils. Just one gallon of oil can contaminate a million gallons of water, and there are at least 25 different listed hazardous wastes that may be found in significant concentrations in used oil. 9 As a result, a release of oil or petroleum to navigable waters in any quantity must be reported to the NRC and the SERC immediately (within 1 hour) if the release causes a sheen on the water surface or there is a buildup below the surface or on the shoreline. The state environmental agency should also be contacted. Written follow up it typically required, as well as updates when new information becomes available with regard to the release.
If a release of petroleum or oil to a navigable waterway occurs twice within any 12-month period, or is in excess of 1,000 gallons in a single event, a written report must be submitted to EPA within 60 days.
For releases of petroleum or oil to the environment other than to navigable waters, different reporting rules apply. Immediate reporting should be made to the state agencies only. No reports are necessary to the NRC, EPA, or the Coast Guard.
For a release or suspected release of petroleum or oil to the environment from an UST (including a spill during filling), a report must be made within 24 hours of discovery (including a spill during filling) if it exceeds 25 gallons or produces a sheen on nearby surface water. The need to report applies to UST releases on and off company property. The SERC must be contacted, and written follow up is typically required to the state environmental agency. No federal notification is required.
For water discharges, e.g., powdered or fluid milk, flour, etc., to a navigable water, a report must be made immediately upon discovery to the SERC providing the nature and volume of the discharge. Written follow up is typically required within fifteen days. No federal notification is required unless the facility has a National Pollution Discharge Elimination System (NPDES) permit that includes a notification requirement. Any local water discharge agreements or permits should be reviewed for additional reporting requirements related to an un-permitted release or exceedance.
If the discharge is to a POTW, the POTW should be notified within 24 hours of the discharge or a loading that could cause the POTW to violate its own discharge permit or interfere with its treatment process. Written follow up should be provided to the POTW within five days. The state environmental agency should also be notified typically. No federal reporting is required unless called for in the facility's NPDES permit.
During the loading and unloading of railcars and tractor trailers, the following guidance is offered:
Rule 1: If a release to the environment (including surface waters) occurs during loading and/or unloading of hazardous substances, EHSs, hazardous materials, petroleum or oil, provide all applicable notifications and follow up written reports to the agencies identified above.
Rule 2: To the extent that the release occurs on site, the carrier/transporter is responsible for the U.S. Department of Transportation (DOT) notification and follow up reporting requirements.
Rule 3: If the company employees or contractors, other than the carrier/transporter, are loading or unloading the vehicle, and become responsible for conducting the loading or unloading, (e.g., the trailer is dropped off), then, in addition to the reports under Rule 1, the company must submit Form F 5800.1 to the DOT within 15 days of the release.
Any transport related release needs to be reported if it results in one of the following: (1) a person is killed or receives injuries resulting in hospitalization; (2) estimated property damage exceeds $50,000; (3) an evacuation of the general public that lasts for one or more hours; (4) one or more major transportation arteries or facilities are closed for one or more hours; (5) aircraft flight patterns or routines are altered; (6) fire, spillage, or suspected release of radioactive or etiologic agents occurs; (7) a marine pollutant is released in quantities exceeding 119 gallons for liquids or 882 pounds for solids; or (8) a continued danger to life exists at the scene. In these cases, the NRC, DOT, SERC, state environmental agency, and emergency operator should be notified immediately. In the case of etiological (e.g., biological) agents, the Center for Disease Control must be contacted. A separate incident notice must be submitted to DOT within 30 days for most materials on Form F5800.1. If the release involves a hazardous waste, a copy of the hazardous waste manifest must accompany the report, as well as information on the quantity of the release and the method of removal and disposal. ( 49 C.F.R. §§ 171.15, 171.16). In all cases, in house counsel and outside counsel should be notified.
Emergency response plans are required by a number of different agencies, including OSHA, 10 DOT, and EPA. While the requirements will vary, employers who have hazardous chemicals in their workplaces must address items such as employee training, evacuation, notification, assisting emergency responders, emergency escape procedures, route assignments, procedures for operating critical operations during the emergency, procedures to account for all employees, and identifying management personnel who can be contacted during the emergency. Alarm systems distinct from other purposes are typically required.
Close to half of retail food sales are perishable or semiperishable foods that need to be refrigerated, 11 and commercial refrigeration is an essential part of preserving the large quantities of perishable food that exist in stores today. Traditionally, these systems were designed to connect a central refrigeration system to open and closed-door food display cases and freezers, as well as walk-in freezers and refrigerators. Newer system designs place smaller refrigeration compressors nearer the display cases, and use indirect systems by which a primary refrigeration loop cools a secondary fluid that circulates through a secondary loop to the display cases. The type of refrigerant that is used will depend in large part on design requirements.
Food retailers, through their use of commercial refrigeration appliances, use large quantities of refrigerant chemicals, including chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs) that are subject to EPA phase out regulations based on the contribution of these substances to the depletion of the ozone layer. In accordance with the Montreal Protocol, the accelerated phase out of the production of CFCs (called "class I" compounds in EPA's regulations) was completed as of December 1995, and their use is being phased out as well. Phase out of all HCFCs ("class II" substances), including the popular refrigerant R-22, is expected by January 2030. EPA has made exceptions to its phase out rules for certain essential uses, and has regulations for transferable allowances, safe use, recycling, and disposal of these compounds.
As a result, food retailers are having to comply with strict rules for their existing systems. 12 For example, when a food retailer has a refrigeration appliance that contains a refrigerant charge of more than 50 pounds, and discovers that refrigerant is leaking at a rate of thirty five percent or more for a twelve month period, a series of responses come to bear. For commercial refrigeration, the applicable trigger rate is thirty-five percent. Leaks calculated to be at or in excess of this rate must be either repaired within thirty days, or a retrofit/retirement plan must be developed and submitted within thirty days. If the latter option is selected, retrofitting or retirement operations must typically be completed within one year. Extensions to the need to complete repairs within 30 days may be granted under special circumstances, such as when repair parts are unavailable. Verification testing to ensure the leak rate has been brought below thirty five percent is required.
For retrofitting or replacement activities, a time extension generally must be requested within six months of the initial thirty-day period. Extensions can be granted if other governmental requirements are creating a delay, or if a suitable replacement system is not yet available. EPA will allow an additional year if a critical component of a custom system has a quoted delivery time of more than thirty weeks, and an additional year's extension may be permitted if made in the ninth month of the second year.
Changing refrigerant oil is an activity also regulated by the EPA to recover the dissolved refrigeration in the used oil. Under EPA's regulations, there are only two acceptable procedures for recovering the refrigerant. The procedures have been designed to minimize the loss of refrigerant from the oil and the appliance interior and prohibit oil changes at higher than 5 psig.
The failure to comply with EPA's rules for leak detection and repair can expose companies to enforcement liability. Corporate compliance managers are advised to produce an organization-specific refrigerant compliance program that is consistent with the recommendations of The Food Marketing Institute (FMI)'s refrigerant management program, which was developed in consultation with the EPA in 1995. FMI has estimated that at least 77 percent of its membership has adopted these recommendations.
In addition to these requirements, EPA's rules: (1) require practices that maximize the recycling of ODP's during servicing and disposal; (2) establish certification requirements for recycling and recovery equipment, technicians, and reclaimers; (3) restrict the sale of refrigerant to certified technicians; (4) require technicians to certify that they are properly recycling and recovering these materials; and (5) establish safe disposal requirements. Thus, in the case of food refrigeration equipment that is typically dismantled on-site before disposal, refrigerant must be recovered using a certified technician in accordance with EPA's rules for servicing. This is due to a complete prohibition on knowingly venting ODP's during servicing and repair, with very limited exceptions for releases, for example, that are de minimis in size or that are emitted during normal operation of the equipment at levels below those which trigger the Agency's leak repair rules.
Non-CFC or HCFC alternatives under development include the use of a glycol cooling solution in the secondary loop, that greatly reduces the quantity of the ODP required in the primary system loop. 13 Hydrofluorcarbon (HFC) systems and the HP-80 system are potential alternatives receiving discussion in the literature. 14 Ammonia-based systems are another alternative, but are not free from potential regulation. Ammonia is a regulated EHS chemical. 15 Facilities must notify the local fire department, the LEPC, and the SERC within 60 days of bringing 500 pounds of ammonia on site. Ammonia levels must be reported every March 1 to these same authorities. Moreover, systems using 10,000 pounds of ammonia must have a Risk Management Plan (RMP) prior to reaching that threshold pursuant to the Clean Air Act. Under the "general duty clause" of the CAA, RMPs may be needed for systems with less than 10,000 pounds of ammonia on site. In addition, having 10,000 pounds or more of a hazardous chemical on site triggers OSHA Process Safety Management rules (PSM) for emergency planning and response.
Waste Disposal Practices A wise manager will take inventory of the types of waste generated by a retail establishment, and manage each waste stream accordingly. Typically, for example, the hazardous waste stream of a food retail establishment is expected to be small enough to be considered a conditionally exempt small quantity generator (CESQG) (100 kilograms of hazardous waste or less per month). CESQGs must still meet certain requirements, including: (1) the need to make hazardous waste determinations; (2) ensuring that hazardous waste is sent to a licensed disposal facility; (3) the need to obtain a generator identification number; (4) container labeling and management; (5) manifesting; and (6) training and emergency planning. There is no time limit on how long a CESQG may accumulate hazardous waste on site. Those facilities that accumulate more than 100 kilograms of hazardous waste must meet additional requirements related to storage time limits, pollution prevention, land disposal restrictions, and biennial reporting.
In addition, review state requirements for special rules that govern the disposal of many solid waste streams. Separate collection and recycling programs are now in place in many states for lead-acid batteries, yard waste, unprocessed tires, used oil, large appliances, pesticides, spent mercury-containing fluorescent lighting and electronic waste. 16 Particular types of construction waste, such as asbestos, lead pipes, transformers containing fluids contaminated with polychlorinated biphenyls (PCBs), and toxics in paints and treated lumber may need to be handled separately.
While state rules should be reviewed, generally speaking, the federal regulations permit waste oil destined for disposal and not exhibiting a hazardous characteristic to be incinerated without a RCRA permit. Nevertheless, states have the right to impose additional controls, and some have designated used oil as a hazardous waste. Over half the states have used oil recycling programs. Thus, it is important to consult state and local rules to determine the regulatory status of waste oil and labeling rules, even in the case of drainage pans that are used when changing the oil in a motor vehicle.
The storage of fuels and petroleum underground "out of sight, out of mind" was once a smart decision. Today we know differently. EPA's regulations in this area impact virtually all retailers that maintain and refuel their own vehicle fleet and that store regular or emergency supplies of liquid fuels in buried tanks. 17 The rules distinguish between tanks that are old and new. As of December 1998, all USTs installed prior to December 1988 that do not meet current requirements for protecting against corrosion, spills, and overfills had to be upgraded, replaced, or properly closed, and, where appropriate, cleanup of the underlying soil was required. New tanks must meet stringent design requirements that ensure that problems are detected before an environmentally-adverse effect can result with an emphasis on corrosion protection and avoidance of spills.
Currently, managers must: (1) maintain an existing inventory of USTs; (2) know what is or was stored in the tank, even if it is no longer in use; (3) plan and implement removal operations for older tanks that do not meet current requirements; (4) notify state authorities thirty days before closing an UST permanently, and describe any corrective actions planned or taken to abate leaks; (5) ensure that new tanks and pipes meet corrosion resistant criteria and have leak detection capability; (6) notify the state agency of new installations; (7) oversee inventory control through automatic tank gauging or similar measurement system; (8) perform leak detection performance and maintenance, and report leaks promptly to state regulatory authorities; (9) perform corrosion protection testing and inspections; (10) keep records as to compliance with these requirements; and (11) meet government requirements related to financial responsibility insurance.
Experienced contractors should be used for all tank removals and installations, as penalties for improper practices or contamination incidents are severe. The UST program is implemented by the states, whose particular rules should be consulted. Leaking USTs have caused fires and explosions and released gasoline fumes into schools, homes, and other buildings. Owners and operators of substandard USTs are subject to monetary penalties of up to $11,000 per day. If you have one of these tanks on your property that is in use, it is best to seek legal counsel. Generally speaking, in such case if the substandard UST is still in use, it needs to be immediately closed.
Above ground tanks also require careful attention. Above ground tanks are regulated indirectly by EPA and the states through the Clean Water Act and the Oil Pollution Act. 18 As mentioned above, EPA must be notified of spills into navigable waters of certain listed hazardous substances if the spill exceeds the RQ for the substance. Discharges of any amount of oil must be reported if the spill causes a sheen on the water surface or causes a sludge to be deposited beneath the surface or on the shoreline.
Facilities that handle substantial quantities of oil must comply with the Oil Pollution Act if the above ground storage capacity is more than 1,320 gallons or if any single tank has a capacity of over 660 gallons. In such case, a Spill Prevention Control and Countermeasure (SPCC) plan is required if a discharge of oil in harmful quantities could affect navigable waters. The plan has to be certified by a professional engineer, provide for site security, predict potential spill quantities, flow rate and direction, and provide appropriate containment or diversion. SPCC plans need to be updated every three years. They also are required for USTs with a capacity of over 42,000 gallons.
Note that, in addition, OSHA has requirements for storing flammable or combustible chemicals above-ground in tanks. 19 State health department and local fire department rules should also be consulted.
Almost any discharge can be a point source of water pollution - everything from a spout, pipe, ditch, or machinery. As such, food retail establishments are point sources of water pollution. Generally, their discharges do not rise to a quantity or type that require a water discharge permit. Usually, these establishments discharge to a municipal sanitary sewer system and may have a written understanding of the types and quantities of permitted discharges with the local treatment works. POTWs are designed to recognize and treat common residential and commercial waste stream pollutants. As an "indirect discharger", a person intending to discharge pollutants must ensure that their pollutant discharges do not pass through or interfere with the operation of the POTW that is downstream from them. This may involve compliance with local pretreatment requirements. In addition, national pretreatment standards also prohibit certain discharges, including pollutants that pose flammable or explosive hazards, have a pH of less than 5.0 or 104 degrees Fahrenheit, or consist of petroleum or mineral oils. 20 In order to know what pretreatment standards apply, it is necessary to keep up to date with changes in local POTW standards. Moreover, while EPA's permitting requirements for stormwater discharges does not specifically regulate food retail establishments, state and local rules for managing and avoiding such discharges should be consulted.
Food retailers use pesticides in general maintenance activities, such as indoor crack and crevice sprays, as well as weed killers for outside use. If a food retailer handles a "restricted use" pesticide, it has to have its personnel certified. Best practices in this area include keeping abreast of registrations that have been cancelled by EPA and the rules surrounding the use of existing stocks of cancelled pesticides, checking for expired pesticides, and disposing of pesticides according to the instructions on the label. When using a pest control contractor is used, confirm that the contractor's license and applicator certificates are current. The usual procurement procedures of obtaining and checking references should also be followed.
Given the multitude of products with "antimicrobial" claims now appearing on retail shelves, a section on pesticides would be remiss without mentioning the regulatory rules related to this phenomenon in passing. EPA's so-called "treated article" exemption21 exempts a product from registration if it is treated with, or contains, a pesticide that is present solely to protect the article or product itself, and is registered by EPA for the specific use of protecting the article. It is important to distinguish between treated articles or manufactured goods that are exempt from FIFRA, and treated articles or manufactured goods that must be registered as pesticides themselves. To be exempt from FIFRA, a treated article may only claim to control pests to protect the article itself. In contrast, if a producer claims an article will control pests that are not on or in the article itself, then the article must be registered as a pesticide with EPA.
The treated article exemption does not cover public health claims, as human pathogens such as E. coli and salmonella generally don't cause deterioration or spoilage of plastic or fiber containers. Instead, EPA has argued that consumers mistakenly believe that these products will provide human protection against pathogens, when in fact an exempted treated article only provides protection to the article against these pests. To fall under the exemption, all claims must be limited to protecting bacteria or microorganisms that affect the product itself ((but not other items) from spoilage or deterioration. EPA has issued several guidance documents and brought numerous enforcement actions recently against manufacturers whose claims extend into the "public health" realm. Retailers may be affected to the extent that the manufacturer is forced by EPA to apply additional labeling or even recall product from shelves.
Other Requirements that May Arise
Issues relating to a handful of additional environmental regulatory programs may arise, and bear a brief mention. For example, food retailers may find themselves be held liable for the costs of a Superfund action at a site they do not own or control, for waste that was properly disposed at the time. 22 Compliance with hazardous waste disposal rules does not preclude liability. EPA can seek reimbursement for the entire cost of a clean up against any party, although there also is provision in the law for de minimis settlements for parties responsible for a minor portion of the response costs. 23
With respect to certain products on retail shelves that contain volatile organic compounds (VOCs), EPA is in the process of issuing a series of rules to limit the VOC content of both consumer and commercial products. Thus far, only architectural coatings are regulated; however, many everyday products will, in the near future, face limits on the amount of VOCs they may contain via Section 183 of the Clean Air Act.
In addition, emissions from vehicle fleet operations are coming under increased scrutiny. As food retailers in the State of California know, states are establishing and enforcing diesel emission limits surrounding distribution centers. Finally, establishments that are located in areas of the country facing noncompliance with ground level ozone levels may find that they are required to maintain a certain number of fleet vehicles that use "clean" fuels. Fleets of 10 or more vehicles in these regulated districts are covered. Even if you are not located in a currently covered urban area, EPA expects to one day extend these rules across the country. Thus, it may be wise to explore these requirements and opportunities as part of long range environmental planning efforts. 24
1 Presented at the Food Marketing Institute 2002 Legal Conference, Toronto, Canada, June 2-4, 2002.
2 www.fmi.org/facts_figs/superfact.htm.
3 Davies, T. and Konisky, D., Environmental Implications of the Foodservice and Food Retail Industries, Discussion Paper 00-11, Resources for the Future (March 2000) at p. vii (hereinafter "RFF Paper").
5 Id. at p. 15.
7 RFF Paper at p. 29.
8 See, e.g., 40 C.F.R. § 302.
9 EPA/530-SW-90-057, 6.
10 See OSHA's Hazardous Waste Operations and Emergency Response Rule, which prescribes training, safety precautions, and procedures that must be followed in responding to emergencies involving hazardous substances. 29 C.F.R. § 1910.120.
11 ASHRAE Refrigeration Handbook, Ch. 47, Retail Food Store Refrigeration and Equipment, p. 47-1 (1998).
12 See Section 608 of the Clean Air Act Amendments of 1990 and 40 C.F.R. Part 82, circa 1992.
13 67 Fed. Reg. 5586, 5587 (Feb. 6, 2002).
14 RFF Paper at p. 38.
15 See sections 302 and 311 of the Emergency Planning and Community Right to Know Act (EPCRA) and their implementing regulations.
16 See 40 C.F.R. Part 266.
17 See 40 C.F.R. Part 280.
18 See 40 C.F. R. §§ 116-117 and 40 C.F.R. Part 112, respectively.
19 See 29 C.F.R. § 1910.106 and 40 C.F.R. Part 112.
20 See 40 C.F.R. Part 403.
21 See 40 C.F.R. § 152.25(a).
22 See 42 USC § 9601.
23 See 42 USC § 9622(g). A seminal U.S. Supreme Court case, U.S. v. Bestfoods, No. 97-454 (June 8, 1998), speaks to the requirements for finding parent corporations liable for hazardous waste clean-up costs incurred by their subsidiaries. Parent corporations, the Court ruled, can be held liable only if (1) the corporate veil may be pierced under the applicable state law, or (2) the parent actively participated in and exercised direct control over the operations of the subsidiary's facility. The ruling has broad implications for many Superfund cost-recovery cases. Justice Souter, writing for a unanimous Court, set out the proper test for parent corporation liability under CERCLA. A parent may be held derivatively liable only when the corporate veil can be pierced under the applicable state law. CERCLA, therefore, does not change the common law rule that owners may be held liable for the corporation's debts when the corporate form is being misused for wrongful or fraudulent purposes. Alternatively, a parent may be held directly liable in its own right under CERCLA §107(a)(2) if it actively participated in and exercised control over the operations at the subsidiary's facility. The Court stated that norms of corporate behavior should serve as reference points in distinguishing normal oversight functions from active control over operations.
24 See 42 U.S.C. § 7586.