Effectiveness of Government Interventions at Inducing Better Environmental Performance: Does Effectiveness Depend on Facility or Firm Features?

Abstract

Environmental agencies have several options for dealing with alleged noncompliance with environmental regulations. These options include pursuit of administrative or judicial civil penalties and injunctions to prevent future violations. Scholars have begun exploring whether these options induce better performance by regulated entities. This Article addresses a largely neglected question: whether a regulated facility’s characteristics affect the efficacy of the different enforcement options. The Article stems from a study of compliance by the chemical industry with federal Clean Water Act permits. It assesses whether facility characteristics, including effluent limit level and type, permit modifications, facility size, capacity utilization, discharge volatility, and ownership structure, theoretically should make a difference and actually appeared to do so at the facilities covered by the study. The findings should be of interest to both facilities regulated under the Clean Water Act and federal and state regulators seeking to maximize the impact of their enforcement actions.