Effluent Limits and Monitoring: Do Regulators Inspect Polluters Facing Tighter Limits Less Frequently in Response to Noncompliance

Presenter
Dietrich Earnhart, Director of the Center for Environmental Policy,
Instiute for Policy & Social Research, Professor of Economics, The University of Kansas 

Abstract
This paper examines the effect of effluent limits on regulatory agencies' monitoring decisions (e.g., inspections). Frequently limits are based on a uniform emission standard, which applies to all polluting facilities within in a single industry. However, implementation of the U.S. Clean Water Act (CWA) issues limits that reflect the minimum of the level identified by the industry-specific Effluent Limitation Guideline (ELG) and the level identified by an assessment of the ambient surface water quality of the receiving waterbody. Since determination of the water quality-based level considers only the benefits of cleaner water, effluent limits tighter than the ELG generate a greater gap between environmental benefits and abatement costs (i.e., greater inefficiency). Given this difference, if regulators seek to maximize the difference between the benefits and costs of CWA implementation, regulators should respond less strongly to increased non-compliance from polluters facing tighter limits because the regulators are less concerned about compliance with excessively stringent limits. Nevertheless, regulators should inspect polluters facing tighter limits more frequently in general because tighter limits are imposed where marginal benefits of environmental protection are greater and greater regulatory pressure is needed to induce compliance with tighter limits. This paper empirically tests these hypotheses by examining inspections against a sample of municipal wastewater treatment facilities during the period 1990 to 1998.

Date
Thursday, April 26, 2012
12:00 - 1:30 p.m. Lunch will be provided. Location
7th Floor Conference Room
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