Does Your Corporate Structure Protect You from Environmental Liability? (with Grant Gilezan)
One Minute Matters Video Series
3.27.26
Can a parent company be held liable for its subsidiary’s Clean Air Act violations without piercing the corporate veil? A federal district court in Michigan just said yes.
In United States v. EES Coke Battery, LLC, the court found parent company liability for environmental violations using a direct operator theory (not the traditional veil-piercing analysis). The key factor: parent-company employees were making environmental compliance decisions at the facility level. The result was joint liability exceeding $100 million in civil fines.
Key takeaways:
- Management agreements and corporate formalities did not shield the parent company
- Shared employees and overlapping decision-making created direct operator liability
- The court applied this framework even though the Clean Air Act doesn’t expressly reference parent companies
Grant Gilezan breaks down what this decision means and what companies should be reviewing now.
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