Toxic substances include substances that are 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 or exposures is very difficult. Animal tests give us some information about acute toxicities (from short-term, high-dosage exposures) for humans; chronic toxicities (from long-term, low-dosage exposures) are much harder to analyze. 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.  Several federal laws mandate provision of risk information: the Occupational Safety and Health Act (OSHA), and the Freedom of Information Act (FOIA).  OSHA created the Occupational Safety and Health Adminstration and its research arm, the National Institute for Occupational Safety and Health (NIOSH) to define and enforce workplace safety standards, and enforce "right-to-know" laws that insure workers have easy access to information about the job risks they face.

On the consumer side, the US government regulates product safety through various agencies such as the Consumer Product Safety Commission, the Food and Drug Administration, etc.  Product labeling laws are intended to provide consumers with enough information to make well-informed product choices. In fact, US consumers demand extremely high levels of product safety, and are quick to reject products associated with any risk receiving media publicity, even if that risk is statistically trivial (the Alar apple scare, the Chilean grape scare...).  The popular media do a notoriously bad job of conveying accurate risk information, which is part of the reason US consumers are so risk-intolerant.

At least in theory, toxics should be managed efficiently if 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 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, she is negligent. Some states impose strict liability on inherently hazardous activities, so that plaintiffs in such cases don't have to prove negligence.

Violators of criminal law are prosecuted by the government.  Here the standard of proof is higher: 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 typically compensate victims, although the victims themselves may sue the defendant for damages in civil court.

Various statutes have been passed by Congress to control toxics:

The FDA regulates drugs and food additives. The Delaney Amendment bars additives that can be shown to cause any increased incidence of 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).
Under FIFRA, EPA studies the consequences of pesticide usage, requires applicators to earn certification by exam and register when purchasing pesticides, and registers (licenses) specific pesticides. Pesticide registration defines proper labeling and usage that "will not cause unreasonable harm to the environment."  The Food Quality Protection Act (FQPA) of 1996 amended FIFRA, imposing a new safety standard, "reasonable certainty of no harm," that must be applied to all pesticides used on foods.

Toxic wastes are regulated by the EPA under various laws:

The Resource Conservation and Recovery Act (RCRA, pronounced "rick-rah", amended 1984 and 1986) mandates a "cradle-to-grave" manifest system for keeping track of industrial toxics, and regulates underground storage tanks. RCRA addresses active sites only; CERCLA (see below) addresses abandoned sites.  The 1984 Federal Hazardous and Solid Waste Amendments (HSWA, pronounced "hiss-wah") defined standards to phase out land disposal of hazardous waste.  The 1986 amendments established a comprehensive program for managing petroleum from leaking underground storage tanks (LUST)

Unfortunately, RCRA doesn't provide much incentive for reducing or recycling toxics.  Waste-end taxes would be far more efficient.

The Toxic Substances Control Act (TSCA, 1976) gives EPA authority to track about 75,000 industrial chemicals produced or imported into the US.  EPA screens chemicals, requires testing of those that may pose an environmental or human-health risk, and bans those with "unreasonable" risk.  EPA has tended to set a very strict standard for "reasonable" risk.   In striking down OSHA's benzene standards, the Supreme court ruled that "safe is not the equivalent of risk-free."

Superfund et al.

The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or "Superfund") established a revolving Superfund of $1.6 billion, collected from chemical industry taxes over five years, to finance immediate clean-up of toxic waste sites. The EPA reimburses the fund with settlements and triple-damage fines collected from "responsible parties."

EPA used a Hazard Ranking System to identify well over 1,000 sites for the National Priorities List (NPL).  Delaware had 20 NPL sites, of which 3 have been sufficiently remediated to be removed from the list. Delaware actualy has about 40 toxic waste sites listed by EPA, including NPL sites.

Since many NPL sites are long-abandoned, finding the responsible parties is often difficult if not impossible.  But under CERCLA's joint and several liability provisions, any potentially responsible party (PRP) may be liable for all the site remediation costs 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 PRP's try to excape liability by declaring bankruptcy.

CERCLA was reauthorized in 1986 by the Superfund Amendments and Reauthorization Act (SARA). SARA increased the focus on human health problems posed by hazardous waste sites, improves citizen participation in site remediation decisions, and increased the Superfund to $8.5 billion.in 1986),

EPA's Toxic Release Inventory (TRI) program is mandated by the Emergency Planning and Community Right-To-Kow Act (EPCRA is Title III, Section 313 of SARA, 1986) and the Pollution Prevention Act (PPA, section 6607).  EPA maintains the TRI database documenting releases of any of 600+ listed chemicals as self-reported by about 23,000 firms.  EPA audit data suggest this self-reporting system works reasonably well: about 80 percent of firms are reporting their releases within a 2% margin of error.  TRI data and background information on the TRI program are available at http://www.epa.gov/tri/.

Modeled on Superfund, the Oil Pollution Act (OPA) of 1990 authorizes EPA's prevention and management of catastrophic oil spills.  A trust fund, financed by a tax on oil, finances cleanup of spills when the responsible party is incapable or unwilling to do so.  The OPA requires oil storage facilities and vessels to submit plans for responding to oil spills.  Under OPA, EPA also regulates aboveground oil storage facilities.  The Coast Guard regulates oil tankers.