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If you see (or smell) something, say something: Citizen complaints and regulation of oil and gas wells

Peter Maniloff and Daniel Kaffine

No 2020-01, Working Papers from Colorado School of Mines, Division of Economics and Business

Abstract: The traditional theory of firm regulation and enforcement examines the interplay of firms and regulator, with citizens as passive consumers of goods or providers of votes. However, in industries such as oil and gas, citizens can play an important role in inspections and enforcement, which we analyze with a novel dataset of Colorado regulatory activities. We find regulators frequently conduct follow-up inspections of citizen complaints, and these citizen-driven inspections are just as likely to lead to regulatory action as ``normal'' scheduled inspections. However, the evidence is consistent with regulators treating these complaints as ``one-offs'' --- regulators do not increase inspection activity of other wells owned by a firm that was complained about. An inspector conducting a complaint inspection crowds out two regular inspections at the daily level, but we find no evidence of crowd-out at time scales of one month or greater. Finally, heterogeneity across complaint types suggests citizens are particularly adept at identifying nuisance-related violations (e.g. noise, smell), but are less adept at identifying more technical violations.

Keywords: enforcement; oil and gas; citizen participation (search for similar items in EconPapers)
JEL-codes: K42 Q48 Q58 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2020-01
New Economics Papers: this item is included in nep-bec, nep-ene, nep-law and nep-reg
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