Corporate Successors Under Strict Liability: A General Economic Theory and the Case of CERCLA

P undertakes an activity subject to strict liability that creates a risk of harm to others. The activity harms V. Before the harm becomes apparent, however, P sells its assets to S for cash and dissolves. Should V be entitled to compensation from S in P\u27s stead? If the talk of corporate lawyers is to be believed, concern over this seemingly technical question is having a substantial impact on the salability of billions of dollars of productive assets. With the growth of products liability litigation, state courts have given the issue of successor liability increasing attention over the last decade. With the campaign to clean up the nation\u27s tens of thousands of hazardous waste sites, successor liability has also become important for the federal courts as they have begun to deal with suits arising under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or the Superfund law). CERCLA imposes strict liability on a variety of responsible parties for the costs of these cleanups. The Environmental Protection Agency has gone so far as to claim that any corporate successor of such a responsible party is also liable under CERCLA as long as the successor continues substantially the same business operations