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Any environmentalist who believes that this set-up is a super idea should pay heed to our experience with legislatively limited liability in another industry where the risks of injury are high: nuclear power. Back in the 1950s, when "the peaceful atom" was but a fervent dream on the part of the Atomic Energy Commission, Congress stepped in as the promulgator of devil-may-care. Faced with a drawing-board industry unable to obtain insurance (for reasons that themselves have much to do with government–see "Who Caused Three Mile Island?" REASON, Aug. 1980), Congress passed the Price-Anderson Indemnity Act in 1957, dictating that, in the event of a major nuclear accident, the first $500 million in claims would be footed by US taxpayers, the next $60 million by the firm (through its insurance), and anything over and above that–practically everything in a serious accident–would simply go uncompensated.
The nuclear-power industry was born as a direct result of this legislation. While it may well have come into existence anyway–eventually, and when reactor designers and so on had satisfied insurers’ safety experts that nuclear-power generation was insurable–the indisputable effect of this legislation has been to reduce the incentives for individual firms or the industry as a whole to make sure that they are employing and coming up with the best, safest procedures possible.
How could we even think of imposing a similar system upon the public as a way of "controlling" the chemical industry? Said Sen. Jennings Randolph in urging the Senate’s passage of its superfund bill: "We cannot afford another Love Canal." But the senator entirely misses the point. Any society that socializes risks while it privatizes rewards is earning every Love Canal it gets.
Eric Zuesse is a freelance writer and the director of the Consumers’ Alliance, a New York-based consumer advocacy group.
In the waning days of its lame-duck session, Congress passed a compromise bill creating a federal fund to pay for cleaning up abandoned chemical dumps and toxic chemical spills, to be financed by a tax on the chemical and crude oil-producing industries, with taxpayers’ dollars sweetening the pot. The legislation also creates a separate fund, from a tax on wastes deposited in chemical dumps licensed by the EPA, that will assume liability for dumps operated by RCRA standards.
If the superfund is used to clean up a hazardous site, the EPA can sue the responsible company for the cost. No victims’ medical expenses, loss of income, or property damage will be paid for by the fund. When it comes to government owned property, however, companies may be held liable for damage from toxic spills and wastes, although even here the liability would be limited to $50 million per incident.
Moreover, how thoroughly the government cleans up a site, and thus how much the responsible company will be liable for reimbursing the fund, will be at the EPA’s discretion and hence subject to competing demands on the fund’s kitty, to political pressure, and to corporate wheeling and dealing. All these features, plus the fact that the fund can be used for purposes other than direct clean-up (such as promoting efforts to prevent toxic spills), means that the link between a company’s doing harm and having to pay up for it–in full and by Itself, without contributions from taxpayers and from more responsible members of the industry–is substantially weakened.