United States v. Bestfoods (1998)
The U.S. Supreme Court ruled on when a parent corporation can be held liable for the environmental contamination of a subsidiary's facility. CPC International's subsidiary, Ott Chemical, had contaminated a Michigan chemical plant. The Court held that a parent company can be directly liable as an "operator" if it actually managed, directed, or conducted the subsidiary's pollution-related operations—not just if it controlled the subsidiary generally.
The ruling drew a clear line: a parent corporation's general oversight of a subsidiary was not enough for operator liability, but active involvement in environmental decisions was.
Bestfoods became the foundational test for parent-company environmental liability across federal statutes. The DTE ruling applies this framework to the Clean Air Act, using evidence of shared-services agreements and environmental decision-making control to meet the Bestfoods standard.
Judge Drain's ruling explicitly builds on Bestfoods, using management-services agreements and shared officers as evidence that DTE met the threshold of actual operational control—extending this precedent from Superfund cleanup cases into Clean Air Act enforcement.