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EPA's Narrow Definition of Economic Benefit Vastly Increases Its Economic Benefit Estimate

March 1993

Citation: ELR 10121

Author: Jasbinder Singh

The policy that a violator should not gain financially from noncompliance with environmental regulations appeals to regulators, the regulated community, and the public. From the government's point of view, the concept provides a basis for treating all companies equally. From the regulated community's point of view, no competitor can gain an economic advantage over another, provided the government applies the concept fairly. From the public's point of view, the application of the concept promotes compliance because no one has a financial incentive to delay compliance.

Recognizing its widespread appeal, the U.S. Environmental Protection Agency (EPA) began to encourage the use of the concept in the early 1980s. It named the financial gain the "economic benefit" of noncompliance, and developed a computer model, called BEN, to calculate the economic benefit in noncompliance cases. EPA also established programs to train its employees to use the model. EPA also promoted the BEN model by holding training workshops for employees of state governments. Now all EPA regions and several states regularly use the model to assess penalties in civil and administrative cases. To encourage even greater use of the concept at the state level, EPA suggests that it will not overfile in those instances in which the states recover economic benefit.

Mr. Singh is President of Policy Planning & Evaluation, Inc., an environmental compliance management firm located in Herndon, Virginia. He frequently estimates economic benefit. Mr. Singh thanks Thomas L. Adams Jr., of the Washington, D.C., office of Dechert, Price & Rhoads and Charles Nestrud of Chisenhall, Nestrud & Julian in Little Rock, Arkansas, for early draft comments and legal references, respectively.

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