Abstract
Monitoring and enforcement are an important part of any regulatory regime, and the costs of such regulatory actions should be justified by improvements in environmental performance. Among air pollutants, particulate matter has the greatest health impacts: the EPA estimates that reductions in ambient particulate matter will have prevented 195,500 cases of premature mortality by 2020. This article is the first to study the impact of monitoring and enforcement actions on emissions of criteria pollutants, which are commonly found air pollutants such as ozone and particulate matter. Previous research on criteria pollutants has been limited as data are not easily available. This article studies both specific and general deterrence. It shows that penalties produce a small but statistically significant specific deterrence impact and inspections produce a general deterrence impact: increasing the average number of inspections at other facilities in the same county by one decreases emissions by 2.7 %.
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Notes
Local air districts are responsible for almost 99 % of the regulatory actions in my data, so my discussion focuses on air district policy and practice, not EPA policy and practice. I base this description of air district policy on discussions with staff at the four largest air districts, which constitute 80 % of my sample.
Administrative orders may include other requirements. For instance, an administrative order could include a shutdown order, which requires the facility to stop operating the particular piece of equipment, or it could include a variance, which relaxes the facility’s permit restrictions. Obviously, the shutdown order is far more costly than the variance, and this aspect of the enforcement process is important. However, I do not have any of these details about the administrative orders.
High-priority violations are violations that the EPA believes should receive the “highest scrutiny and oversight” (EPA 1998, p. 3). These include more serious permit, emissions, and testing violations, and chronic violations. All districts report high-priority violations; the San Joaquin Valley Air Pollution Control District reports some of its violations that are not considered high-priority violations, and the South Coast Air Quality Management District reports all of its violations regardless of whether they are considered high-priority violations.
Regulatory authorities also have other types of enforcement actions at their disposal, such as notices to comply. However, as these are not reported to the EPA database, I do not discuss them.
The EPA adopted a new Compliance Monitoring Strategy in October of 2001 (EPA 2001). This introduced new types of regulatory actions and changed the recommended inspection frequency.
I determine the facility’s start date using the earliest entry of compliance data or any regulatory action at the facility.
Note that the data only show whether the facility received an enforcement action; they do not specify which pollutant the enforcement action concerns. Thus, I cannot tell if the facility violated a \(\hbox {NO}_{\mathrm{x}}\) emissions limit or some other permit condition. Additionally, while some of the water pollution literature used information on individual effluent pipes within the facility, my data treat the facility as the unit of observation, and I do not have information on individual smokestacks within a facility. Lastly, while one firm may own many facilities, the data are at the facility level, so I study the facility as the unit of observation, not the firm.
A Hausman test rejects the random effects model in favor of the fixed effects model \((p < 0.01)\).
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Acknowledgments
I am grateful to Christian Anderson, Mohan Balagopalan, John Borton, Nancy Feldman, Tony Gambardella, Magen Holloway, Morgan Lambert, Betty Laudig, Ken Mangelsdorf, Ed Pupka, and Craig Strommen for helping me understand regulatory policy. I also thank Mark A. Cohen, Paige M. Skiba, Michael P. Vandenbergh, and W. Kip Viscusi, as well as two anonymous referees for helpful comments.
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Lim, J. The impact of monitoring and enforcement on air pollutant emissions. J Regul Econ 49, 203–222 (2016). https://doi.org/10.1007/s11149-016-9293-7
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DOI: https://doi.org/10.1007/s11149-016-9293-7