Working Paper: NBER ID: w16209
Authors: Howard F. Chang; Hilary Sigman
Abstract: Economic theory developed in the prior literature indicates that under the joint and several liability imposed by the federal Superfund statute, the government should recover more of its costs of cleaning up contaminated sites than it would under nonjoint liability, and the amount recovered should increase with the number of defendants and with the independence among defendants in trial outcomes. We test these predictions empirically using data on outcomes in federal Superfund cases. Theory also suggests that this increase in the amount recovered may discourage the sale and redevelopment of potentially contaminated sites (or "brownfields"). We find the increase to be substantial, which suggests that this implicit tax on sales may be an important deterrent for parties contemplating brownfields redevelopment.
Keywords: Superfund; Cost Recovery; Brownfields; Joint and Several Liability
JEL Codes: K32; K41; Q53; Q58; R38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increase in the number of potentially responsible parties (PRPs) (L99) | increase in expected cost recovery (G18) |
| increase in the number of defendants (K41) | increase in expected cost recovery (G18) |
| increase in expected cost recovery (G18) | implicit tax on the sale of contaminated properties (H23) |
| implicit tax on the sale of contaminated properties (H23) | discourage redevelopment (R38) |
| increase in the number of defendants (K41) | dynamics of settlement among defendants (K41) |