An Empirical Analysis of Cost Recovery in Superfund Cases: Implications for Brownfields and Joint and Several Liability

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: Environmental Law, Torts, Litigation and Settlement, Real Estate, Economics

JEL Classification: K32, K41, Q53, Q58, R38