Does self-policing reduce chemical emissions?

This research has been partially supported by a grant from the U.S. Environmental Protection Agency's Science to Achieve Results (STAR) program. Although the research described in the article has been funded in part by the EPA's STAR program through grant R829686, it has not been subjected to EPA review and therefore does not necessarily reflect the views of the Agency, and no official endorsement should be inferred.

Abstract

The U.S. Environmental Protection Agency's Self-Policing Policy (more commonly referred to as the Audit Policy) waives or reduces penalties when companies voluntarily discover, disclose, and correct environmental violations. One goal of the Audit Policy is to encourage companies to conduct environmental audits in order to identify poor environmental performance. Thus, the regulatory flexibility associated with the Audit Policy should reduce subsequent chemical emissions. While several studies examine predictors of the Audit Policy, no studies examine if facilities that use the Policy decrease their chemical emissions as a result. The purpose of this research is to examine the impact of the Audit Policy on changes in Toxic Release Inventory (TRI) emissions among a sample of 178 facilities operating in the chemical and allied product industry. The results of that analysis suggest that facilities that use the policy have similar subsequent emissions trends as facilities that do not use the policy. Moreover, the results also suggest that formal enforcement actions are the best predictor of TRI reductions. These findings persist despite other regulator and company controls. In terms of environmental policy, the results suggest that self-policing may not improve or deteriorate environmental performance in the chemical and allied products industry.

Notes

This research has been partially supported by a grant from the U.S. Environmental Protection Agency's Science to Achieve Results (STAR) program. Although the research described in the article has been funded in part by the EPA's STAR program through grant R829686, it has not been subjected to EPA review and therefore does not necessarily reflect the views of the Agency, and no official endorsement should be inferred.

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1 Penalties that the EPA assesses are comprised of two elements: the economic benefit component and the gravity-based component. The economic benefit component reflects the economic gain derived from a violator's illegal competitive advantage. Gravity-based penalties are that portion of the penalty over and above the economic benefit. They reflect the egregiousness of the violator's behavior and constitute the punitive portion of the penalty (U.S. EPA, 1999).

2 IDEA was developed in response to a need for integrated data on facilities that were potentially involved in enforcement or compliance actions. It is now a major data retrieval mechanism for accessing multimedia enforcement and compliance data and the primary system that informs the EPA's Online Tracking Information System (OTIS), which nearly all regulatory personnel use to track facility compliance, make enforcement decisions, and creates annual reports.

3 The IDEA system contains facility level data on inspections, enforcement actions, penalties assessed, and toxic chemicals released. A more detailed description of IDEA is available for review on the EPA's website (http://www.epa.gov/compliance/data/systems/multimedia/idea/index.html). The original data sources imported into IDEA are also widely used by researchers as a source of environmental data and include: (1) AFS (CAA – AIRS Facility Subsystem); (2) PCS (Clean Water Act – Permit Compliance System); (3) RCRAInfo (Resource Conservation and Recovery Act Information System); (4) the Federal Enforcement Docket; (5) TRI (Toxics Release Inventory); and (6) NCDB (the National Compliance Database).

4 Reporting for Enforcement and Compliance Assurance Priorities (RECAP) inspections were used because they count as the official performance measure for the EPA's office of Enforcement and Compliance Assurance. A list of RECAP inspections can be obtained from the EPA's website (http://www.epa.gov/echo/dfr_data_dictionary.html).

5 The EPA calculates state inspection rates in OTIS which are available to regulatory enforcement personnel. The state inspection rates used in the current analysis were obtained from OTIS.

6 The American Business Disc lists 11 categories for company sales and number of employees. EPA data are notorious for being incomplete—especially with regard to company financial indicators where rates of missing data have been found to be on the order of 30% (Grant et al., 2002). Therefore, data on company size and employees were collected by manually looking up each company in the American Business Disc.