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The Law and Economics of the Environment

Edited by Anthony Heyes

This outstanding book focuses on how economics can contribute to the design, implementation and appraisal of legal systems that create the ‘right’ incentives for environmental protection. The sixteen original and specially commissioned contributions – written by some of the leading names in their field – span many of the important areas of contemporary interest and employ case study material combined with theoretical, empirical and experimental research.
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Chapter 7: Environmental liability in practice: liability for clean-up of contaminated sites under Superfund

Hilary Sigman


Hilary Sigman In the late 1970s, residents of Love Canal (a suburb of Niagara Falls, New York) noticed discolouration of their lawns and basement walls. It turned out that their homes were built on land that had been used for disposal of chemical wastes in the 1940s and 1950s. In response to the public outcry from this incident, the US Congress hurriedly passed the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) in December 1980. Under CERCLA, the Environmental Protection Agency (EPA) identifies abandoned sites with hazardous contamination, evaluates the dangers present, and ensures that either the government or private parties clean up the contamination. Because Congress established a large trust fund to pay for site clean-up, the programme became known as ‘Superfund’. Under the Superfund programme, EPA can conduct, or order private parties to conduct, small-scale emergency clean-ups and large-scale lengthy clean-ups, with the latter restricted to sites on the National Priorities List (NPL). The NPL included 1405 sites by September 1997; sites typically qualify for the NPL based on a rudimentary risk assessment. Superfund relies heavily on legal liability rules to pay for clean-up at NPL sites. Private parties or government agencies associated with a site pay for most clean-up. Potentially Responsible Parties (PRPs) often undertake clean-up themselves under agreements with EPA. EPA estimates that it had reached agreements for clean-up cumulatively worth over $11.9 billion through September 1996. Alternatively, EPA can pay for clean-up using the Superfund Trust Fund and then sue the PRPs to recover its...

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