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Big Field, Small Potatoes: An Empirical Assessment of EPA's Self- Audit Policy

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Author Info
Chris William Sanchirico (University of Pennsylvania Law School & Wharton School)
Alexander S. P. Pfaff (School of International & Public Affairs & Department of Economics)

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Abstract

Environmental self-auditing is said to deserve and require encouragement. Although firms can audit themselves more cheaply and effectively than regulators, they are deterred for fear that information they uncover will be used against them. To reduce this disincentive, EPA’s “Audit Policy” lowers punitive fines when firms promptly disclose and correct self-discovered violations. While some contend that the Audit Policy is inadequate, EPA touts its success based on the policy’s track record. Our examination of that track record leads us to question EPA’s claim. Comparing the violations in these cases with those detected by standard EPA enforcement suggests that the typical self-audited violation is relatively minor. Cases arising under the Policy are more likely to concern reporting violations and less likely to concern emissions. The relative insignificance of self-audited violations raises a number of policy questions, including whether the Audit Policy should be revised to play a larger role in enforcement.

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Publisher Info
Paper provided by EconWPA in its series Public Economics with number 0403007.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 100 pages
Date of creation: 30 Mar 2004
Date of revision:
Handle: RePEc:wpa:wuwppe:0403007

Note: Type of Document - pdf; pages: 100. Companion paper: 'Environmental Self-Auditing: Setting the Proper Incentives for Discovery and Correction of Environmental Harm,' The Journal of Law, Economics, & Organization, 16(1), 189 - 208 (2000)
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Related research
Keywords: Environmental Self-Auditing; Self-evaluative Privilege; Self- evaluative Immunity; Disclosure; Inverse Negligence; Modes of Detection; EPA Audit Policy;

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Find related papers by JEL classification:
D6 - Microeconomics - - Welfare Economics
D7 - Microeconomics - - Analysis of Collective Decision-Making
H - Public Economics

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Arlen, Jennifer, 1994. "The Potentially Perverse Effects of Corporate Criminal Liability," Journal of Legal Studies, University of Chicago Press, vol. 23(2), pages 832-67, June.
  2. Kaplow, Louis & Shavell, Steven, 1994. "Optimal Law Enforcement with Self-Reporting of Behavior," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 583-606, June. [Downloadable!] (restricted)
    Other versions:
  3. Innes, Robert, 2000. "Self-Reporting in Optimal Law Enforcement When Violators Have Heterogeneous Probabilities of Apprehension," Journal of Legal Studies, University of Chicago Press, vol. 29(1), pages 287-300, January.
  4. Hartman, Raymond S. & Huq, Mainul & Wheeler, David, 1997. "Why paper mills clean up : determinants of pollution abatement in four Asian countries," Policy Research Working Paper Series 1710, The World Bank. [Downloadable!]
  5. Robert Innes, 1999. "Self-Policing and Optimal Law Enforcement When Violator Remediation is Valuable," Journal of Political Economy, University of Chicago Press, vol. 107(6), pages 1305-1325, December. [Downloadable!] (restricted)
  6. Arora Seema & Cason Timothy N., 1995. "An Experiment in Voluntary Environmental Regulation: Participation in EPA's 33/50 Program," Journal of Environmental Economics and Management, Elsevier, vol. 28(3), pages 271-286, May. [Downloadable!] (restricted)
  7. Dasgupta, Susmita & Wheeler, David, 1997. "Citizen complaints as environmental indicators : evidence from China," Policy Research Working Paper Series 1704, The World Bank. [Downloadable!]
  8. Linda T. M. Bui & Christopher J. Mayer, 2003. "Regulation and Capitalization of Environmental Amenities: Evidence from the Toxic Release Inventory in Massachusetts," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 693-708, December. [Downloadable!] (restricted)
    Other versions:
  9. Pargal, Sheoli & Wheeler, David, 1995. "Informal regulation of industrial pollution in developing countries : evidence from Indonesia," Policy Research Working Paper Series 1416, The World Bank. [Downloadable!]
  10. Shavell, Steven, 1992. "Liability and the Incentive to Obtain Information about Risk," Journal of Legal Studies, University of Chicago Press, vol. 21(2), pages 259-70, June.
  11. Pfaff, Alexander S P & Sanchirico, Chris William, 2000. "Environmental Self-Auditing: Setting the Proper Incentives for Discovery and Correction of Environmental Harm," Journal of Law, Economics and Organization, Oxford University Press, vol. 16(1), pages 189-208, April.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Guerrero, Santiago & Innes, Robert, 2008. "Statutory Rewards to Environmental Self-Auditing: Do They Reduce Pollution and Save Regulatory Costs? Evidence from a Cross-State Panel," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6204, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  2. James J. Murphy & John K. Stranlund, 2005. "An Investigation of Voluntary Discovery and Disclosure of Environmental Violations Using Laboratory Experiments," Working Papers 2005-7, University of Massachusetts Amherst, Department of Resource Economics. [Downloadable!]
  3. Alfredo Burlando & Alberto Motta, 2007. "Self Reporting reduces corruption in law enforcement," "Marco Fanno" Working Papers 0063, Dipartimento di Scienze Economiche "Marco Fanno". [Downloadable!]
    Other versions:
  4. Sarah L. Stafford, 2006. "Should You Turn Yourself In? The Consequences of Environmental Self-Policing," Working Papers 27, Department of Economics, College of William and Mary, revised 13 Jun 2006. [Downloadable!]
  5. Sarah L. Stafford, 2006. "Self-Policing in a Targeted Enforcement Regime," Working Papers 26, Department of Economics, College of William and Mary. [Downloadable!]
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