Opinion ID: 482542
Heading Depth: 1
Heading Rank: 5

Heading: scope of liability

Text: 69 The district court found NEPACCO liable as the owner or operator of a facility (the NEPACCO plant) under CERCLA Sec. 107(a)(1), 42 U.S.C. Sec. 9607(a)(1), and as a person who arranged for the transportation and disposal of hazardous substances under CERCLA Sec. 107(a)(3), 42 U.S.C. Sec. 9607(a)(3). 579 F.Supp. at 847. The district court found Lee liable as a person who arranged for the disposal of hazardous substances under CERCLA Sec. 107(a)(3), 42 U.S.C. Sec. 9607(a)(3), id. at 847-48, and as an owner or operator of the NEPACCO plant under CERCLA Sec. 107(a)(1), 42 U.S.C. Sec. 9607(a)(1), by piercing the corporate veil. Id. at 848-49. The district court also found Michaels liable as an owner or operator of the NEPACCO plant under CERCLA Sec. 107(a)(1), 42 U.S.C. Sec. 9607(a)(1). Id. at 849. 70 Appellants concede NEPACCO is liable under CERCLA Sec. 107(a)(3), 42 U.S.C. Sec. 9607(a)(3), for arranging for the transportation and disposal of hazardous substances at the Denney farm site. Brief for Appellants at 25-26. Because NEPACCO's assets have already been liquidated and distributed to its shareholders, however, it is unlikely that the government will be able to recover anything from NEPACCO. 71 Appellants argue (1) they cannot be held liable as owners or operators of a facility because facility refers to the place where hazardous substances are located and they did not own or operate the Denney farm site, (2) Lee cannot be held individually liable for arranging for the transportation and disposal of hazardous substances because he did not own or possess the hazardous substances and because he made those arrangements as a corporate officer or employee acting on behalf of NEPACCO, and (3) the district court erred in finding Lee and Michaels individually liable by piercing the corporate veil. Appellants have not claimed that any of CERCLA's limited affirmative defenses apply to them. See CERCLA Sec. 107(b)(1), (2), (3), 42 U.S.C. Sec. 9607(b)(1), (2), (3) (no liability if defendant establishes by preponderance of evidence that release was caused solely by act of God, act of war, act or omission of third party other than employee or agent or by contract only if defendant establishes due care and precautions against foreseeable consequences taken); see, e.g., United States v. Ward, 618 F.Supp. at 897-98; United States v. Conservation Chemical Co., 619 F.Supp. at 203-04; see generally Developments, 99 Harv.L.Rev. at 1543-48. 72 The government argues Lee can be held individually liable without piercing the corporate veil, under CERCLA Sec. 107(a)(3), 42 U.S.C. Sec. 9607(a)(3), and that Lee and Michaels can be held individually liable as contributors under RCRA Sec. 7003(a), 42 U.S.C.A. Sec. 6973(a) (West Supp.1986). For the reasons discussed below, we agree with the government's liability arguments. 6 73
74 First, appellants argue the district court erred in finding them liable under CERCLA Sec. 107(a)(1), 42 U.S.C. Sec. 9607(a)(1), as the owners and operators of a facility where hazardous substances are located. Appellants argue that, regardless of their relationship to the NEPACCO plant, they neither owned nor operated the Denney farm site, and that it is the Denney farm site, not the NEPACCO plant, that is a facility for purposes of owner and operator liability under CERCLA Sec. 107(a)(1), 42 U.S.C. Sec. 9607(a)(1). We agree. 75 CERCLA defines the term facility in part as any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located. CERCLA Sec. 101(9)(B), 42 U.S.C. Sec. 9601(9)(B); see New York v. Shore Realty Corp., 759 F.2d 1032, 1043 n. 15 (2d Cir.1985). The term facility should be construed very broadly to include virtually any place at which hazardous wastes have been dumped, or otherwise disposed of. United States v. Ward, 618 F.Supp. at 895 (definition of facility includes roadsides where hazardous waste was dumped); see also United States v. Conservation Chemical Co., 619 F.Supp. at 185 (stereotypical waste disposal facility); New York v. General Electric Co., 592 F.Supp. 291, 296 (N.D.N.Y.1984) (dragstrip); United States v. Metate Asbestos Corp., 584 F.Supp. 1143, 1148 (D.Ariz.1984) (real estate subdivision). In the present case, however, the place where the hazardous substances were disposed of and where the government has concentrated its cleanup efforts is the Denney farm site, not the NEPACCO plant. The Denney farm site is the facility. Because NEPACCO, Lee and Michaels did not own or operate the Denney farm site, they cannot be held liable as the owners or operators of a facility where hazardous substances are located under CERCLA Sec. 107(a)(1), 42 U.S.C. Sec. 9607(a)(1). 76
77 CERCLA Sec. 107(a)(3), 42 U.S.C. Sec. 9607(a)(3), imposes strict liability upon any person who arranged for the disposal or transportation for disposal of hazardous substances. As defined by statute, the term person includes both individuals and corporations and does not exclude corporate officers or employees. See CERCLA Sec. 101(21), 42 U.S.C. Sec. 9601(21); United States v. Ward, 618 F.Supp. at 894 (CERCLA); cf. United States v. Pollution Abatement Services of Oswego, Inc., 763 F.2d 133, 134-35 (2d Cir.) (individual liability for violation of Rivers and Harbors Appropriation Act of 1899), cert. denied, --- U.S. ----, 106 S.Ct. 605, 88 L.Ed.2d 583 (1985). Congress could have limited the statutory definition of person but chose not to do so. Compare CERCLA Sec. 101(20)(A), 42 U.S.C. Sec. 9601(20)(A) (limiting definition of owner or operator). Moreover, construction of CERCLA to impose liability upon only the corporation and not the individual corporate officers and employees who are responsible for making corporate decisions about the handling and disposal of hazardous substances would open an enormous, and clearly unintended, loophole in the statutory scheme. 78 First, Lee argues he cannot be held individually liable for having arranged for the transportation and disposal of hazardous substances under CERCLA Sec. 107(a)(3), 42 U.S.C. Sec. 9607(a)(3), because he did not personally own or possess the hazardous substances. Lee argues NEPACCO owned or possessed the hazardous substances. 79 The government argues Lee possessed the hazardous substances within the meaning of CERCLA Sec. 107(a)(3), 42 U.S.C. Sec. 9607(a)(3), because, as NEPACCO's plant supervisor, Lee had actual control over the NEPACCO plant's hazardous substances. We agree. It is the authority to control the handling and disposal of hazardous substances that is critical under the statutory scheme. The district court found that Lee, as plant supervisor, actually knew about, had immediate supervision over, and was directly responsible for arranging for the transportation and disposal of the NEPACCO plant's hazardous substances at the Denney farm site. We believe requiring proof of personal ownership or actual physical possession of hazardous substances as a precondition for liability under CERCLA Sec. 107(a)(3), 42 U.S.C. Sec. 9607(a)(3), would be inconsistent with the broad remedial purposes of CERCLA. Cf. United States v. Mottolo, 629 F.Supp. 56, 14 Envtl.L.Rep. (Envtl.L.Inst.) 20497, 20499 (D.N.H.1984) (person who arranges for disposal or transportation for disposal need not own or possess the hazardous waste). 80 Next, Lee argues that because he arranged for the transportation and disposal of the hazardous substances as a corporate officer or employee acting on behalf of NEPACCO, he cannot be held individually liable for NEPACCO's violations. Lee also argues the district court erred in disregarding the corporate entity by piercing the corporate veil because there was no evidence that NEPACCO was inadequately capitalized, the corporate formalities were not observed, individual and corporate interests were not separate, personal and corporate funds were commingled or corporate property was diverted, or the corporate form was used unjustly or fraudulently. 81 The government argues Lee can be held individually liable, without piercing the corporate veil, because Lee personally arranged for the disposal of hazardous substances in violation of CERCLA Sec. 107(a)(3), 42 U.S.C. Sec. 9607(a)(3). We agree. As discussed below, Lee can be held individually liable because he personally participated in conduct that violated CERCLA; this personal liability is distinct from the derivative liability that results from piercing the corporate veil. The effect of piercing a corporate veil is to hold the owner [of the corporation] liable. The rationale for piercing the corporate veil is that the corporation is something less than a bona fide independent entity. Donsco, Inc. v. Casper Corp., 587 F.2d 602, 606 (3d Cir.1978). Here, Lee is liable because he personally participated in the wrongful conduct and not because he is one of the owners of what may have been a less than bona fide corporation. For this reason, we need not decide whether the district court erred in piercing the corporate veil under these circumstances. 82 We now turn to Lee's basic argument. Lee argues that he cannot be held individually liable for NEPACCO's wrongful conduct because he acted solely as a corporate officer or employee on behalf of NEPACCO. The liability imposed upon Lee, however, was not derivative but personal. Liability was not premised solely upon Lee's status as a corporate officer or employee. Rather, Lee is individually liable under CERCLA Sec. 107(a)(3), 42 U.S.C. Sec. 9607(a)(3), because he personally arranged for the transportation and disposal of hazardous substances on behalf of NEPACCO and thus actually participated in NEPACCO's CERCLA violations. 83 A corporate officer is individually liable for the torts he [or she] personally commits [on behalf of the corporation] and cannot shield himself [or herself] behind a corporation when he [or she] is an actual participant in the tort. The fact that an officer is acting for a corporation also may make the corporation vicariously or secondarily liable under the doctrine of respondeat superior; it does not however relieve the individual of his [or her] responsibility. 84 Donsco, Inc. v. Casper Corp., 587 F.2d at 606 (citations omitted); see New York v. Shore Realty Corp., 759 F.2d at 1052-53 (CERCLA; New York law); United States v. Conservation Chemical Co., 619 F.Supp. at 187-90 (CERCLA); United States v. Carolawn Co., 14 Envtl.L.Rep. (Envtl.L.Inst.) 20699, 20700 (D.S.C.1984) (CERCLA); United States v. Mottolo, 629 F.Supp. 56, 14 Envtl.L.Rep. (Envtl.L.Inst.) at 20499; cf. United States v. Pollution Abatement Services of Oswego, Inc., 763 F.2d at 135 (corporate officers liable for violating Rivers and Harbors Appropriations Act of 1899); see also Escude Cruz v. Ortho Pharmaceutical Corp., 619 F.2d 902, 907 (1st Cir.1980) (general discussion of liability of corporate officers for participation in corporate torts), citing Lobato v. Pay Less Drug Stores, Inc., 261 F.2d 406, 408-09 (10th Cir.1958); see generally 3A W. Fletcher, Cyclopedia of the Law of Private Corporations Sec. 1135 (rev. perm. ed. 1986). Thus, Lee's personal involvement in NEPACCO's CERCLA violations made him individually liable. 85
86 The district court did not reach the question of individual liability under RCRA because it concluded that RCRA did not impose liability upon past non-negligent off-site generators like NEPACCO. As we discussed in Part IV, RCRA is applicable to past non-negligent off-site generators. The government argues Lee and Michaels are individually liable as contributors under RCRA Sec. 7003(a), 42 U.S.C.A. Sec. 6973(a) (West Supp.1986). We agree. 87 RCRA Sec. 7003(a), 42 U.S.C.A. Sec. 6973(a) (West Supp.1986), imposes strict liability upon any person who is contributing or who has contributed to the disposal of hazardous substances that may present an imminent and substantial endangerment to health or the environment. As defined by statute, the term person includes both individuals and corporations and does not exclude corporate officers and employees. See RCRA Sec. 1004(15), 42 U.S.C. Sec. 6903(15); cf. United States v. Johnson & Towers, Inc., 741 F.2d 662, 665-66 (3d Cir.1984) (employees could be criminally prosecuted for RCRA violations), cert. denied, 469 U.S. 1208, 105 S.Ct. 1171, 84 L.Ed.2d 321 (1985); United States v. Ward, 676 F.2d 94, 97 (4th Cir.) (chairperson of board convicted of unlawful disposal of toxic substances in violation of 15 U.S.C. Secs. 2605, 2614, and 40 C.F.R. Sec. 761.01(b)), cert. denied, 459 U.S. 835, 103 S.Ct. 79, 74 L.Ed.2d 76 (1982). As with the CERCLA definition of person, Congress could have limited the RCRA definition of person but did not do so. Compare CERCLA Sec. 101(20)(A), 42 U.S.C. Sec. 9601(20)(A) (limiting definition of owner and operator). More importantly, imposing liability upon only the corporation, but not those corporate officers and employees who actually make corporate decisions, would be inconsistent with Congress' intent to impose liability upon the persons who are involved in the handling and disposal of hazardous substances. See United States v. Price, 523 F.Supp. at 1073; see also H.R.Conf.Rep. No. 1133, 98th Cong., 2d Sess. 119, reprinted in 1984 U.S.Code Cong. & Ad.News at 5690; S.Rep. No. 172, 96th Cong., 2d Sess. 5, reprinted in 1980 U.S.Code Cong. & Ad.News 8665, 8669. 88 Our analysis of the scope of individual liability under the RCRA is similar to our analysis of the scope of individual liability under CERCLA. NEPACCO violated RCRA Sec. 7003(a), 42 U.S.C.A. Sec. 6973(a) (West Supp.1986), by contributing to the disposal of hazardous substances at the Denney farm site that presented an imminent and substantial endangerment to health and the environment. Thus, Lee and Michaels can be held individually liable if they were personally involved in or directly responsible for corporate acts in violation of RCRA. Cf. United States v. Pollution Abatement Services of Oswego, Inc., 763 F.2d at 134 (corporate officers and shareholders individually liable for company discharging refuse into creek in violation of Rivers and Harbors Appropriations Act of 1899); United States v. Johnson & Towers, Inc., 741 F.2d at 664-66 (employees criminally liable for RCRA violations). 89 We hold Lee and Michaels are individually liable as contributors under RCRA Sec. 7003(a), 42 U.S.C.A. Sec. 9673(a) (West Supp.1986). Lee actually participated in the conduct that violated RCRA; he personally arranged for the transportation and disposal of hazardous substances that presented an imminent and substantial endangerment to health and the environment. Unlike Lee, Michaels was not personally involved in the actual decision to transport and dispose of the hazardous substances. As NEPACCO's corporate president and as a major NEPACCO shareholder, however, Michaels was the individual in charge of and directly responsible for all of NEPACCO's operations, including those at the Verona plant, and he had the ultimate authority to control the disposal of NEPACCO's hazardous substances. Cf. New York v. Shore Realty Corp., 759 F.2d at 1052-53 (shareholder-manager held liable under CERCLA). 90 In summary, we hold Lee individually liable for arranging for the transportation and disposal of hazardous substances in violation of CERCLA Sec. 107(a)(3), 42 U.S.C. Sec. 9607(a)(3), and Lee and Michaels individually liable for contributing to an imminent and substantial endangerment to health and the environment in violation of RCRA Sec. 7003(a), 42 U.S.C.A. Sec. 6973(a) (West Supp.1986).