I assume you mean this:
https://en.wikipedia.org/wiki/Love_Canal
To me, that sounds like a lack of regulations allowed toxic waste to be dumped.
Later, a lack of regulation allowed people to live near the still-toxic area.
In my mind, part of the reason for government is to protect people from harm to themselves or their property, or at least harm they cannot reasonably avoid or prevent on their own.
Thus, if an entity's actions would result in harm to the people or environment protected by a government body (local government, at most basic level), the duty of that government body is to prevent that entity from acting in that way.
Of course, there is a degree of balance between harm and benefit, so that isn't an inflexible rule.
In short, from what I've read in that wikipedia article, either:
The dumping of those waste products should not have been allowed without more restrictions on how the land would be treated after it's use in such a way.
And/or at the very least building residences should never have been allowed without measures to ensure a healthy environment, if that would even be possible.
Not sure what you're talking about when you say abuse of power though...