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Vacating the decision of the Sixth Circuit, a unanimous Supreme Court specified when a parent corporation may be held liable, under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), as an operator of a polluting facility that is owned and operated by its subsidiary. The mere fact that the parent corporation actively participated in and exercised control over the operations of the subsidiary will not, in itself, make the parent corporation derivatively liable unless, under applicable law (which the Court declined to identify), the subsidiary has been controlled to such an extent that it should not be regarded as a separate entity (a doctrine known as "piercing the corporate veil"). However, if the parent corporation actively participated in and exercised control over the operations of the facility itself, then it may be held directly liable as an operator of the facility.

The NAM filed an amicus brief 2/20/98 arguing that state corporate law clearly limits the liability of shareholders of corporations (including shareholders that are themselves corporations), even when they actively participate in running the corporation. The brief argued that the courts should not create a new body of federal common law in place of the well-established body of state common law in this area.