CPR Perspective: Environmental Enforcement

What Works?

By Joel Mintz, September 2009

Background

Effective enforcement is key to ensuring that the ambitious goals of the nation’s environmental statutes are realized. Currently, rates of noncompliance with environmental laws remain disturbingly high; experts believe that as many as 20 to 40 percent of firms regulated by federal environmental statutes regularly violate the law. Tens of millions of citizens live in areas out of compliance with the health-based standards of the Clean Air Act, and close to half of the water bodies in the country fail to meet water quality standards of the Clean Water Act. In communities burdened by multiple sources of pollution, noncompliance has particularly serious health consequences for affected residents.

As in virtually every other area of government regulation, environmental enforcement traditionally has been based on the theory of deterrence. The theory assumes that persons and businesses act rationally to maximize profits, and will comply with the law where the costs of noncompliance outweigh the benefits of noncompliance. The job of enforcement agencies is to make both penalties and the probability of detection high enough that it becomes unprofitable - and therefore irrational - for regulated firms to violate the law.

Notwithstanding lapses during the Reagan and G.W. Bush administrations, EPA's enforcement policies traditionally have reflected these principles. EPA has emphasized the importance of regular inspections and monitoring activity to detect noncompliance, and has responded to violations with swift and appropriate sanctions. EPA’s policies also mandate that the agency recover the economic benefit that firms realize through noncompliance, since if a firm is able to profit from illegal activity, it has little incentive to comply in the first place.

While EPA’s enforcement policies are beneficial, they are not always carried out consistently at the state level. In fact, state environmental agencies carry out the majority of enforcement activity in the United States because most states have received authority from EPA to administer federal environmental laws under EPA oversight (see CPR Perspective on Devolution). States also administer and enforce their own state laws. As in other areas of environmental regulation, the quality of state enforcement programs varies considerably. Some states carefully follow EPA mandates and vigorously enforce environmental requirements. In other states, enforcement is relatively lax, and agencies rarely respond to violations with penalties.

Citizen enforcement also is a feature of most federal environmental statutes. The statutes explicitly create causes of action -- avenues for citizens to sue companies for violations when the government fails to do so and when various, often strict, procedural conditions are met. Traditionally, Congress has viewed citizen enforcement as an important supplement to agency enforcement and an important prod to agency regulators.

What People are Fighting About

In recent years, a sharp debate has arisen over the future direction of environmental enforcement. Many states and regulated entities advocate a more business-friendly, conciliatory enforcement strategy, one that does not emphasize enforcement actions and penalties as the keys to securing compliance. In their stated view, businesses are likely to comply without resort to sanctions because of adherence to social and political norms, market forces and other factors.

Thus, many states have reduced funding for inspection, enforcement cases and similar activities, and shifted resources toward compliance assistance programs. Some have created "customer service centers" for regulated entities. Many states (and even some EPA regional offices) do not follow EPA guidance for responding to violations with "timely and appropriate" enforcement actions. Many impose only limited penalties on violators, penalties that typically are far lower than those assessed by EPA in similar circumstances.

At the same time, since the early 1990s, EPA has deemphasized traditional enforcement and has used its limited resources to provide more compliance assistance to small businesses and other regulated sectors. It has also searched for positive incentives for companies that carry out self-policing efforts. Through the 1990s, however, EPA continued to demand that the states impose sanctions, conduct inspections, and bring enforcement actions as the main tools for deterring firms from violating the law. EPA also resisted the most far-reaching efforts of states to weaken enforcement of environmental laws.

From 2001 to 2008, however, a number of top EPA political appointees gave less than unambiguous support to vigorous enforcement initiatives – sometimes considerably less. In some instances officials actually subverted enforcement efforts by making environmentally insensitive regulatory changes on such questions as whether modified sources of pollution must meet strict “new source review” emissions standards. Moreover, they presided over a decline in budgetary resources for vital aspects of EPA enforcement programs, and over a series of resignations or retirements of experienced, dedicated staff members, some of whom left government service to protest EPA's enforcement shortcomings.

In reaction to these changes, environmental organizations contend that government enforcement is too lax, that too often fines for violating environmental requirements are no more than a routine cost of doing business for regulated entities, and that the government lacks the resources to pursue most violations. They would like to see more vigorous enforcement by responsible government agencies, but failing that, they see the critical importance of citizen suits to achieve effective enforcement of environmental laws. During the past decade or so, however, the Supreme Court has erected a series of hurdles to citizen enforcement of environmental laws. The Court has imposed restrictions on who has standing to bring suit, what type of illegal conduct may be challenged, when a decision is "ripe" for suit, when government agencies may be sued, and when attorneys’ fees may be awarded to successful plaintiffs' attorneys. These court-imposed obstacles have significantly undermined the role envisioned by Congress for citizen enforcers.

A Progressive Perspective

Both experience and a host of empirical research demonstrate that deterrence-based approaches promote compliance and reduce pollution. Inspections, the threat of inspections, and timely and appropriate enforcement responses, tend to increase the rate of industry compliance. Conversely, the absence of deterrence-based enforcement, that is, the absence of a threat of meaningful sanctions, often translates into noncompliance.

The effectiveness of the business-friendly enforcement strategies favored by a number of states has yet to be proven. Few states have been able to demonstrate improvements in compliance or improved environmental conditions from their conciliatory strategies, nor have they even been willing to devote the resources necessary to document such results. In light of the clear economic incentives for non-compliance, conciliatory enforcement by states thus could lead to higher rates of noncompliance by firms and increased public exposure to harmful pollutants. It also could undermine the national uniformity Congress intended in enacting the federal environmental laws. A number of elements are critical to effective environmental enforcement:

• Maintain credible threat of enforcement. As agencies expand compliance assistance and incentive programs, they must maintain a strong, credible threat of enforcement. Strong enforcement motivates many regulated parties to strengthen their internal regulatory systems and promotes voluntary compliance by ensuring firms that voluntarily comply that other firms cannot gain a competitive advantage by not complying with applicable laws and regulations.

• Create a unified enforcement front. Visible support for strong deterrent enforcement, from the top political levels of environmental agencies, is crucial to the success of environmental enforcement. So too are a skilled, experienced, professional enforcement staff (at all levels), clear and unambiguous environmental rules and standards, and adequate funding for all aspects of enforcement work. Top EPA officials must leave no doubt in anyone's mind that enforcement is one of their highest priorities. They should also direct that the Agency review all existing and proposed regulations, and revise them, as needed, to assure that they are clear and legally enforceable. Moreover, Congress should commit many more resources, on a sustained basis, to support EPA enforcement programs.

• Invite sunlight and scrutiny. Information disclosure has proven to be a potent force in motivating firms to improve environmental performance (see CPR Perspective on Right to Know). EPA and state agencies should publicly spotlight the compliance and performance status of regulated entities to generate important public pressure for compliance and improved performance. They should also actively publicize specific enforcement actions as those actions occur--a practice that EPA abandoned during the G.W. Bush administration.

• Reward states that enforce the law. EPA should implement a "differential oversight" scheme that rewards states that have effective and successful enforcement programs with reduced oversight and greater flexibility, and publicly report its evaluation of State enforcement programs in order to motivate states' environmental performance with the power of an external spotlight. (See CPR Perspective on Devolution.)

• Ensure viability of citizen enforcement. Citizen enforcement plays a valuable role in promoting environmental compliance, spurring agency enforcement efforts and providing an important deterrent to noncompliance when government agencies fail to act whether because of lack of resources or lack of political will. Federal environmental and civil rights statutes should be amended to ensure citizens access to the courts to enforce environmental violations.

For more information, see:

• Joel A. Mintz, Enforcement at the EPA: High Stakes and Hard Choices (Univ. of Texas, 1995);

• Clifford Rechtschaffen and David Markell, Reinventing Environmental Enforcement (Environmental Law Institute, 2004); and Environmental Enforcement: Cases and Materials by Joel Mintz, Clifford Rechtschaffen, and Robert Kuehn, (Carolina Academic Press, 2007).