Toxics are generally detected only after contamination has occurred. Toxic substances may be carcinogenic (cause cancers), mutagenic (cause genetic damage), teratogenic (cause birth defects) or cause other human health problems. Since many of these effects (e.g., cancers) have long latency periods, linking them to specific contamination sources is very difficult. Animal tests can indicate acute toxicities (from short-term, high-dosage exposures) for humans; chronic toxicities (from long-term, low-dosage exposures) are much harder to demonstrate. Some toxics have synergistic effects that are not easily discerned from conventional controlled experiments.

Toxic substances may generate occupational hazards. Under complete information about risks, firms and workers will negotiate premium wages for riskier jobs. Risk-averse workers will opt for lower-risk lower-paying jobs than more risk-neutral workers. Each employer will control risks to the point where the marginal costs of risk control equal the marginal benefits (foregone wage premiums), and risk costs will be reflected in product prices. This theory implies that neither zero-risk occupational safety policies nor uniform-risk policies are economically efficient.

In reality, risk information is incomplete, although wages in risky occupations do exhibit risk premiums. Since risk information is a public good, it is generally undersupplied by markets. Governments may support risk-analysis research or pass "right-to-know" laws to insure workers are well-informed about job risks and trained to minimize them.

Toxics may also influence product safety. Well-informed consumers should be able to buy whatever level of product safety they want. Product labeling laws provide consumers with much of the information they need to make informed product choices. In reality, consumers demand extremely high levels of product safety, but neither zero-risk standards nor uniform product safety requirements are economically efficient.

Toxics will generally be managed appropriately when they are internalized into market processes. They are most problematic when they affect third parties via externalities. Since economic controls through market processes are inadequate, toxics are also controlled via tort law, criminal law and statute. These legal controls all have clear inefficiencies.

Civil or tort law lets individual plaintiffs seek compensation for damages from defendants. Courts base decisions on current statutes and legal precedents. In conventional negligence cases, the plaintiff must prove "by a preponderance of the evidence" that his or her harm resulted from the defendent's failure to exercise due care. The Learned Hand formula defines "due care" in benefit-cost terms: if the defendant's lack of care was likely to cause damage costing more than damage prevention would have cost, he or she is negligent. Some states impose strict liability on inherently hazardous activities, so that plaintiffs in such cases don't have to prove negligence. The costs of litigation frustrate many legitimate claims, but do deter some nuisance suits.

Criminal law is used by governments to punish law-breakers. The prosecutor must prove guilt "beyond a reasonable doubt." Guilt generally requires criminal action with criminal intent. Criminal sanctions (fines and/or imprisonment) are not well-linked to the economic costs of criminal malfeasance, and do not compensate victims.

Various statutes have been passed by Congress to control toxics. The FDA regulates food additives. The Delaney Amendment bars additives that can be shown to cause tumors in lab animals at any dosage: this zero-risk policy is clearly inefficient. OSHA regulates occupational safety, and dictates both safety standards and specific safety procedures. Pesticides are regulated by the EPA under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA). The EPA reviews pesticide registrations and oversees certification of pesticide applicators.

Toxic wastes are regulated by the EPA under the Resource Conservation and Recovery Act (amended 1984); the Toxic Substances Control Act (1976); and the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or "Superfund;" reauthorized 1986). RCRA mandates a "cradle-to-grave" manifest system for keeping track of industrial toxics, and regulates underground storage tanks. It doesn't provide adequate incentives for reducing or recycling toxics. Tietenberg argues that waste-end taxes would be far more efficient.

Under TSCA, the EPA assesses risks of toxics and can restrict or even ban the production of "unreasonably" risky toxics. Defining "reasonable" risks is obviously difficult. In striking down OSHA's benzene standards, the Supreme court ruled that "safe is not the equivalent of risk-free."

CERCLA established a revolving Superfund from chemical industry taxes to finance immediate clean-up of toxic waste sites; the EPA reimburses the fund with settlements and triple-damage fines collected from "responsible parties." Under CERCLA's "joint and several" liability doctrine, any potentially responsible party (PRP) may be liable for all damages until it settles its case, and can recover its damage payments by suing other responsible parties. This has led to various abuses: the EPA can prosecute PRP's selectively; some guilty parties settle and then initiate nuisance suits to recover settlement costs from other PRP's associated with the site in any conceivable way; other guilty parties declare bankruptcy to escape liability.