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Private monitoring and public enforcement: Evidence from complaints and regulation of oil and gas wells

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  • Maniloff, Peter
  • Kaffine, Daniel T.

Abstract

The traditional theory of firm regulatory compliance examines the interplay of firms and regulator, with the general public as passive consumers of goods or providers of votes. However, members of the public can play an important role in monitoring for compliance, which we analyze with a novel dataset of Colorado regulatory activities. We find regulators frequently conduct follow-up inspections of people’s complaints, and these complaint-driven inspections are at least as likely to be followed by regulatory action as “normal” scheduled inspections. However, regulators do not increase inspection activity of other assets owned by a firm that was complained about, consistent with regulators treating these complaints as “one-offs”. An inspector conducting a complaint inspection crowds out two regular inspections at the daily level, but we find no evidence of crowd-out at time scales of one month or greater. Finally, heterogeneity across complaint types suggests people are more adept at identifying nuisance-related violations (e.g. noise, smell), but are less adept at identifying more technical violations.

Suggested Citation

  • Maniloff, Peter & Kaffine, Daniel T., 2021. "Private monitoring and public enforcement: Evidence from complaints and regulation of oil and gas wells," Journal of Environmental Economics and Management, Elsevier, vol. 108(C).
    • Handle: RePEc:eee:jeeman:v:108:y:2021:i:c:s009506962100053x
    DOI: 10.1016/j.jeem.2021.102473
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    References listed on IDEAS

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    1. Peter Maniloff, 2019. "Can Learning Explain Deterrence? Evidence from Oil and Gas Production," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(5), pages 853-881.
    2. Ashenmiller Bevin & Norman Catherine Shelley, 2011. "Measuring the Impact of Anti-SLAPP Legislation on Monitoring and Enforcement," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-19, November.
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    7. Matthew Kahn, 2007. "Environmental disasters as risk regulation catalysts? The role of Bhopal, Chernobyl, Exxon Valdez, Love Canal, and Three Mile Island in shaping U.S. environmental law," Journal of Risk and Uncertainty, Springer, vol. 35(1), pages 17-43, August.
    8. Langpap, Christian & Shimshack, Jay P., 2010. "Private citizen suits and public enforcement: Substitutes or complements?," Journal of Environmental Economics and Management, Elsevier, vol. 59(3), pages 235-249, May.
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    Cited by:

    1. Jonathan Colmer & Mary F. Evans & Jay Shimshack, 2023. "Environmental citizen complaints," CEP Discussion Papers dp1903, Centre for Economic Performance, LSE.
    2. Zach Raff, 2023. "Identifying the regulator’s objective: Does political support matter?," Public Choice, Springer, vol. 194(3), pages 277-295, March.

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