Who Pays for the Stigma of Environmental Contamination?
By Carol C. Honigberg, JD, and Steven M. Nolan, JD A national effort to identify and clean up environmental contamination has raised several issues relating to cleanup costs. Recently, a debate has emerged over who is responsible for covering costs when a property loses market value because of its proximity to a contaminated site. The costs, known as stigma damages, sometimes can be passed on to the owners of the contaminated sites. Environmental stigma cases generally fall into two categories. The first, incomplete cleanup stigma, occurs when contamination spreads from one parcel to a neighboring property. After the neighboring property has been cleaned up to the satisfaction of all regulatory agencies, it still cannot recover its former value because of lingering public fears that contamination remains. The second, called marketplace stigma, occurs when a property has not been contaminated but is close enough to contaminated property to lose value if the public fears the contaminatio
A national effort to identify and clean up environmental contamination has raised several issues relating to cleanup costs. Recently, a debate has emerged over who is responsible for covering costs when a property loses market value because of its proximity to a contaminated site. The costs, known as stigma damages, sometimes can be passed on to the owners of the contaminated sites. Environmental stigma cases generally fall into two categories. The first, incomplete cleanup stigma, occurs when contamination spreads from one parcel to a neighboring property. After the neighboring property has been cleaned up to the satisfaction of all regulatory agencies, it still cannot recover its former value because of lingering public fears that contamination remains. The second, called marketplace stigma, occurs when a property has not been contaminated but is close enough to contaminated property to lose value if the public fears the contamination will spread. Recovering Stigma Damages The abilit
