Enforcing Regulation When Violations Are Heterogeneous: Empirical Evidence from US Stationary Emissions Policy

Almira Salimgarieva and Wesley Blundell

Journal of the Association of Environmental and Resource Economists, 2025, vol. 12, issue 3, 663 - 699

Abstract: Enforcement of environmental regulation in the United States is often delegated from the federal level to local authorities. This devolution of responsibility poses a significant challenge when local regulators differ in their knowledge and priorities regarding the harm posed by environmental violations. Using plant-level data from the Environmental Protection Agency, we exploit variation in the application of a 2014 revision to the criteria for classifying severe violations under the Clean Air Act. We find that following the revision, plants located in states most impacted by the policy exhibited a greater decrease in emissions. As a result, the overall emissions-related damages from stationary sources of air pollution decreased by 2.5%, equivalent to $2.4 billion annually. These results provide quasi-experimental evidence on the effectiveness of limiting regulatory discretion and the importance of marginal deterrence in enforcement.

Date: 2025
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