Economic theories offer many explanations for why exposure to environmental risks may vary by race: pure discrimination by polluters or politicians in siting decisions; differences in willingness to pay for environmental amenities linked to income or education levels; and variations in the propensity of communities to engage in collective action to oppose the location of potential polluters. This article tests these hypotheses by focusing on the capacity decisions of commercial hazardous waste facilities. Zip code neighborhoods targeted for capacity expansion in plans for 1987-1992 by commercial hazardous waste facilities had an average non white population of 25 percent, versus 18 percent for those areas without net expansion. Differences in the probability that residents will raise a firm's expected location costs by engaging in collective action to oppose capacity siting offer the best explanation for which neighborhoods are selected for capacity expansions.