Does Self-Policing Help the Environment? EPA\u27s Audit Policy and Hazardous Waste Compliance

In 1995, the Environmental Protection Agency (EPA) issued a final policy, Incentives for Self-Policing: Discovery, Disclosure, Correction, and Prevention of Violations. \u27 This policy, more commonly referred to as the Audit Policy, is designed to encourage greater compliance with environmental regulations by providing incentives for facilities to voluntarily disclose and correct violations of environmental regulations.2 More specifically, the Audit Policy eliminates or reduces civil penalties for violations that facilities disclose as the result of a documented self-audit procedure and correct within 60 days.3 Additionally, regulators may choose not to recommend criminal prosecution for these facilities.4 Repeated violations, violations that present a serious or imminent harm to human health and the environment, or violations that involve criminal activity are not covered by the policy.5 Supporters of the Audit Policy argue that it is an efficient and economical means of ensuring and improving compliance with environmental laws and regulations. ,6 Opponents argue that this policy ultimately protects polluters from punishment, and thus will have a detrimental effect on the environment because facilities have less incentive to comply.7 Many who do not directly oppose the policy are nonetheless skeptical about its ability to measurably affect compliance because of the uncertain legal status of environmental audits, particularly whether the results of the audit can be used against them in court.8 The goal of this paper is to determine whether the Audit Policy has affected compliance with hazardous waste regulations. The results of this analysis will provide important feedback on the effectiveness of the Audit Policy. The remainder of this paper is organized as follows: Section 2 provides an overview of the related literature on self-policing and compliance; Section 3 presents a theoretical framework for this analysis; Section 4 discusses the empirical approach and the results of the analysis; and Section 5 concludes

Self-policing in a Targeted Enforcement Regime

This paper adds to the debate over whether self-policing can increase environmental protection by considering an issue that has been ignored in previous models—that self-policing may influence future enforcement. The model combines self-policing with targeted enforcement and allows for both deliberate and inadvertent violations. As expected, rewarding self-policers with more lenient future enforcement increases auditing, remediation, and disclosure of inadvertent violations. Self-policing can also serve as a complement to deliberate compliance and can thus further increase environmental performance. However, under reasonable conditions, self-policing can be a substitute for deliberate compliance and could therefore be detrimental to environmental protection

Pipeline Performance and Safety in a Federal System A Study of Natural Gas Pipeline Enforcement by States in the USA

This article analyses the role that US states play in enforcing federal natural gas pipeline regulations. The paper finds that states are more likely to have responsibility for enforcing these regulations if they have larger networks of gathering and transmission lines and if their citizens are more liberal and more pro-environment. Conversely, states with a larger natural gas industry are less likely to assume oversight. However, whether a state has assumed oversight has no significant effect on either state enforcement efforts or pipeline performance. The most effective state enforcement tool is monetary penalties, which significantly decrease incidents and property damage

Identifying Socially Vulnerable Communities in Coastal Virginia

Social Vulnerability Panelists, moderated by Lynda Butler, will share their perspectives and analyses on the intersections among race, law, science and environmental justice in community vulnerability assessments

Were the 1982 Merger Guidelines Old News?

This paper examines the impact of the 1982 Department of Justice Merger Guidelines on the stock market prices of publicly traded firms in the United States. We argue that those Guidelines were perceived by the market as a real change in enforcement policy that would result in substantial deregulation of mergers throughout the economy. We conduct an event study of S&P 500 firms to test this hypothesis and find evidence of a significant positive effect on the stock prices of firms in moderately concentrated industries subject to antitrust regulation, the firms for which the 1982 Guidelines articulate a substantially less intrusive enforcement policy. However, the announcement does not have any significant effect on firms in less concentrated industries or those that are highly concentrated. These results are robust to a number of different sensitivity analyses and thus we conclude that market actors believed the 1982 Guidelines contained new information

Developing a Framework to Identify Local Business and Government Vulnerability to Sea-Level Rise: A Case Study of Coastal Virginia

In this paper we develop methods for identifying local business and government vulnerabilities to sea-level rise and the natural hazards associated with it. Unlike the fairly large literature on measuring social vulnerability to natural hazards, there are very few papers that discuss methods for measuring local business or local government vulnerability even though businesses and governments are also differentially affected natural hazards. Our goal is to create measures that are easily replicable using readily available data and that are easy to explain to local planners, policy makers, and citizens. We implement our measures of local business and government vulnerability for our study area, Coastal Virginia. We then combine those measures with a physical vulnerability measure to identify the areas in Coastal Virginia where planners and policy makers need to more closely examine the potential impacts of sea-level rise on their local businesses and government. While our methods are tailored to Coastal Virginia, they could be easily applied in other areas threatened by sea-level rise

Standardization and the Impacts of Voluntary Program Participation: Evidence from Environmental Auditing

We explore how limits to our insight about the underlying decision-making structure of firms may affect the conclusions we draw about the likely impacts of participation in voluntary environmental programs. We develop a theoretical model to examine the conditions under which a multi-facility firm chooses to employ a standardized adoption policy for a voluntary program. We test this model empirically using a firm-level dataset on the adoption of a voluntary environmental auditing program and find that, consistent with the theoretical model, a standardized auditing outcome is less likely among firms with more heterogeneous portfolios of facilities. We also examine the effect of environmental auditing on facility compliance using both firm-level and facility-level controls. We find that the estimated effect depends on whether or not measures that proxy for firm incentives for standardization are included in the analysis. These findings suggest caution in drawing conclusions on the effectiveness of voluntary programs in improving compliance based on analyses that assume standardization on the part of the firm