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

Chris William Sanchirico () and Alexander S. P. Pfaff
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Alexander S. P. Pfaff: School of International & Public Affairs & Department of Economics

Public Economics from EconWPA

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.

Keywords: Environmental Self-Auditing; Self-evaluative Privilege; Self- evaluative Immunity; Disclosure; Inverse Negligence; Modes of Detection; EPA Audit Policy (search for similar items in EconPapers)
JEL-codes: D6 D7 H (search for similar items in EconPapers)
Date: 2004-03-30
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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Working Paper: Big field, small potatoes: An empirical assessment of EPA's self-audit policy (2002)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwppe:0403007

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