Do Companies Care about Judicial Ideology? Evidence from Air Pollution

Sarfraz Khan, Andrew J. Schwartz and John K. Wald

Journal of Law and Economics, 2024, vol. 67, issue 1, 195 - 224

Abstract: We examine the relationship between the judicial ideology of the local federal circuit court and companies’ plant-level air pollution. Environmental litigation in Republican-leaning circuits is less likely to produce outcomes favorable to the plaintiff. Consistent with firms forming expectations based on the belief that Republican-appointed judges are more likely to side with firms, plants emit more air pollutants that are not explicitly covered by the Clean Air Act if the local circuit court has more Republican judges. The results are weaker for chemicals covered by the Clean Air Act, which suggests that greater regulatory certainty reduces judicial flexibility. To provide a causal argument, we examine the deaths of judges and find that those during Republican presidencies are associated with 5.6 percent greater emissions of non–Clean Air Act chemicals.

Date: 2024
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