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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.

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