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50 Wash. & Lee L. Rev. 1093 (1993)
Disclosure of Environmental Liabilities under the Securities Laws: The Potential of Securities-Market-Based Incentives for Pollution Control

handle is hein.journals/waslee50 and id is 1103 raw text is: DISCLOSURE OF ENVIRONMENTAL LIABILITIES UNDER THE SECURITIES LAWS: THE POTENTIAL OF SECURITIES-MARKET-BASED INCENTIVES FOR POLLUTION CONTROL PERRY E. WALLACE* I. INTRODUCTION The dramatic growth of environmental regulation has been one of the important recent developments in modem law.' And of those most affected by this impressive growth, the business community ranks at or near the top of the list. In fact, this expanding environmental regulatory sphere is now a constant and imposing presence in the economic, managerial and political lives of many businesses.2 The discussion in this article derives from a provocative new phenom- enon affecting those businesses, and lying at the juncture of environmental protection, economics, and corporate finance: the dynamic created by the legal duty of publicly held companies to disclose environmental liabilities and obligations to the federal Securities and Exchange Commission (SEC or Commission), to their securityholders, and to the securities markets. Environmental regulation has become increasingly more substantial and more stringent. Significantly, these estimable new laws are spilling over into other regulatory schemes with the same force that has accompanied their * Professor of Law, Washington College of Law, American University; B. Engr., Vanderbilt University, 1970; J.D., Columbia University School of Law, 1975. The preparation of this Article was supported by a generous grant from the Washington College of Law, for which I express my appreciation. I wish to thank Steve Masur for his research assistance and Professor Andrew Pike for his valuable observations and commentary on the article. 1. See ROBERT V. PERCIVAL ET AL., ENVIRONMENTAL REGuLATIoN; LAW, SCIENCE, AND PoLcY 1 (1992). The following statement well summarizes the growth of environmental regulation: The spectacular growth of public concern for the environment has transformed American law during the past quarter-century. In the space of a single generation, environmental law has grown from a sparse set of common law precedents and local ordinances to encompass a vast body of national legislation. Numerous federal and state agencies now implement these laws through breathtakingly complex regulations that affect virtually every aspect of our lives. In addition, as environmental concerns increasingly transcend national boundaries, environmental law is now serving as a catalyst for the development of new regimes of international law. 2. See Richard Y. Roberts, Overview of Environmental Disclosure, Remarks at Prentice Hall Law & Business Thirteenth Annual Institute on Proxy Statements, Annual Meetings & Disclosure Documents I (Dec. 16, 1991) (transcript on file with author); see also Lawrence B. Cafiifl, Issues in Environmental Auditing, PEmoatrOUM INDEPENDENT, Nov. 1992, at A2: As environmental rules become more complex and enforcement penalties increase, companies are simultaneously having to do more with less due to economic pressures. Is there relief in sight? Probably not. 1093

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