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Monday, June 17, 2024

Is the Clean Water Act Enforced Less Stringently in Battleground States?

There are many reasons why administrative regulation may be preferable to nuisance law for dealing with environmental pollution. Among other things, regulations may provide clearer standards of what sorts of conduct is or is not permitted and may provide clearer incentives for firms to reduce polluting behavior. One potential downside, however, is that administrative regulation may be more subject to political influence.

If regulatory agencies are responsible to elected officials, we might expect this to affect their enforcement efforts. In particular, if we assume that polluting firms are a politically important constituency, we might expect enforcement efforts to be less stringent in closely contested (i.e. “battleground”) jurisdictions. A new paper, “The Selective Enforcement of Government Regulations: Battleground States, State Regulators, and the Environmental Protection Agency” by Huseyin Gulen and Brett W. Myers, recently published in the Journal of Law & Economics, suggests just such an effect.

Here is the abstract:

The Electoral College creates incentives for politicians and regulators to direct policy favors toward battleground or swing states. We examine whether this affects regulatory enforcement and find that facilities in battleground states are less likely to be found in violation of the Clean Water Act, partially because the permit limits for facilities in these states are less restrictive. Identification is obtained by analyzing violation rates of similar facilities located along the border between battleground and nonbattleground states.

And here is from the paper’s conclusion:

The literature on the impact of government regulation has largely focused on whether it benefits or harms social welfare. We examine an equally important and related question: is regulation uniformly enforced? In our study, we find that government actors selectively enforce economically important government regulations, and this selective enforcement is widespread, is economically meaningful, and benefits politically important states. Our findings suggest that electoral politics provides incentives to both politicians and regulators to selectively enforce government regulations. To be specific, and consistent with differing levels of enforcement standards, we find that facilities located in battleground states experience lower violation rates of the CWA than facilities in nonbattleground states. This is at least partially explained by facilities in battleground states being issued more lenient NPDES permits. We achieve identification and control for unobserved heterogeneity by focusing the analysis on similar facilities located along the border of battleground and nonbattleground states. We argue that the battleground status of a facility’s state is likely to represent an exogenous source of political importance to facility operators. Our evidence is consistent with the idea that government regulators—in our case, the EPA and state-level regulators—do not uniformly enforce economically important regulations.

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