Cost-Benefit Analysis of Superfund Liability Standards
by Mika Pringle Tolson
UC TSR&TP Trainee Kerry Knight
ls California's Superfund program, a combination of liability standards and cleanup of contaminated sites, effective in reducing the amount of hazardous waste produced by manufacturing? This is the question that Kerry Knight, a doctoral student in economics at UCLA, is exploring this year with his graduate student fellowship from the TSR&TP. Reliance on recovering costs (liability funding) from site owners and the generators, transporters, and disposers of hazardous waste has been identified as a potential reason for the limited success of the national Superfund program. Knight will use the data from the Toxics Release Inventory, a nationwide database managed by the US EPA that contains information on the land releases and off-site transfers of toxic chemicals, and state liability standards and regulations. He will compare the different combinations of liability standards and funding sources for toxics cleanup in all US states to determine which are most effective. He is interested in whether the legal concept of strict liability has beneficial incentive effects. Knight explains, "People assume that there's some sort of incentive effect in the liability standards, although it is very costly to enforce them and it slows down the process of getting sites cleaned up. That's the down side. But on the up side are the incentive effects they could have in deterring future pollution. This study will give us an idea of whether [liability standards] are effective or not." California's current policy of nonjoint and several liability necessitates pursuing each responsible party to recover the full cost of cleanup, unlike most other states who have the option of going after the biggest contributors and holding them liable for the entire amount. Recovering costs from multiple parties can result in long delays and greater expenses on the part of the states, which diverts resources from site remediation. A 1992 study conducted by the RAND Corporation estimated that more than three times as much was spent on litigation than on cleanup costs by the insurers of responsible parties. The results of Knight's research will help us determine whether California should adopt joint and several liability or continue with the status quo to reduce toxic waste generation. If his findings are negative, then California might consider switching to a standard of limited liability, or in general, less reliance on liability funding altogether. The ultimate goal is to create a policy that will be the most cost effective. Knight's current research is determining relationships in the data, but he hopes that once models are developed, he can investigate the reasons behind the relationships. In his future research, Knight would like to continue doing cost-benefit analyses of policies on "Superfund related issues and branch out from there to other environmental problems".
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