30 ELR 10523 | Environmental Law Reporter | copyright © 2000 | All rights reserved

Does Environmental Deterrence Work? Evidence and Experience Say Yes, But We Need to Understand How and Why

Mr. Silberman is a Senior Attorney in the U.S. Environmental Protection Agency's (EPA's) Office of Planning and Policy Analysis (OPPA) within the Office of Enforcement and Compliance Assurance (OECA). He has served as an EPA attorney since 1983. Mr. Silberman attended the State University of New York at Binghamton, where he obtained a B.A. in Environmental Planning and Policy Analysis in 1979, and The National Law Center at The George Washington University, where he obtained a J.D. in 1982. The author wishes to thank John Fogarty, Acting Director, EPA-OECA-OPPA, Justin Smith of the U.S. Department of Justice's (DOJ's) Environment and Natural Resources Division (ENRD), Ken Gigliello, Deputy Director, EPA-OECA-Office of Compliance (OC)-Manufacturing, Energy, and Transportation Division (METD), Matt Clark of EPA's Office of Research and Development (ORD), and Alicia Jaeger, a third-year student at the Washington University School of Law (J.D. expected May 2000), for their assistance in preparing this Article. The views expressed in this Article are solely those of the author and do not necessarily reflect those of EPA, DOJ, the National Institute of Justice, or the above persons.

[30 ELR 10523]

The principle of deterrence underlies the U.S. Environmental Protection Agency's (EPA's or the Agency's) compliance monitoring and enforcement program.¹ It is referenced expressly in virtually every EPA enforcement response and penalty policy,² and endorsed in EPA Environmental Appeals Board (EAB) penalty decisions.³ The U.S. Supreme Court itself has cited deterrence as a key underlying purpose of penalties assessed to redress environmental violations.⁴ In a banner year, EPA undertakes fewer than 22,000 inspections and 4,000 civil judicial and administrative actions under multiple and complex environmental statutes,⁵ in addition to the approximately 146,000 state inspections and 9,000 enforcement actions tracked in EPA's compliance databases,⁶ for nearly eight million regulated entities.⁷ These numbers emphasize the practical and pressing importance of establishing a credible deterrent to noncompliance.

EPA has consistently described its compliance and enforcement programs as providing both specific and general deterrence. That is, inspections and other forms of compliance monitoring and enforcement are undertaken not only to identify specific violators and return them to compliance, but also to deter the violators and all other similarly situated regulated entities from future noncompliance.⁸ Underlying this paradigm is the assumption that most regulated entities will comply with the law when the costs of noncompliance exceed the benefits. For this to occur, penalty amounts must recoup any economic benefits of noncompliance (EBN) the violators may have realized. This serves to "level the playing [30 ELR 10524] field" and ensure no company obtains a competitive edge from its noncompliance. Secondly, as EPA's penalty policies consistently provide, the penalties must impose a deterrent component beyond the amount of any economic benefit of noncompliance to the violators. The current governmental emphasis on environmental performance and results,⁹ reflected in the proliferation of EPA programs to promote pollution prevention,¹⁰ innovation,¹¹ self-policing,¹² and other so-called beyond compliance efforts, highlights a third, increasingly important deterrence goal—encouraging regulated entities to adopt these values and participate in these programs in order to consistently maintain compliance as well as achieve environmental excellence.¹³ Such efforts can mean moving beyond merely preventing or correcting obvious violations, to committing the time, personnel, and funding necessary to affirmatively investigate overall compliance and identify pollution prevention opportunities.

An increasing body of anecdotal and research evidence suggests that compliance monitoring and enforcement is effective in promoting improved compliance and performance through deterrence, but there are many unanswered questions. This Article provides an introduction to deterrence theory, and describes existing and planned research to measure deterrent impacts. These include (1) the Office of Enforcement and Compliance Assurance's (OECA) implementation of its National Performance Measures Strategy (NPMS), (2) an ongoing deterrence measurement project sponsored by EPA's Chief Financial Officer (CFO), and (3) a recently issued research solicitation, sponsored by EPA's Office of Research and Development (ORD), National Center for Environmental Research (NCER) in co-operation with the U.S. Department of Justice (DOJ) and the National Institute of Justice (NIJ),¹⁴ with input from the OECA and DOJ's Environment and Natural Resources Division (ENRD).

The EPA research solicitation, entitled Corporate Environmental Performance and the Effectiveness of Government Interventions (the Request for Proposals, or RFP), opened on April 10, 2000.¹⁵ The closing date for submitting grant proposals is July 24, 2000. Through the RFP, EPA anticipates making up to $ 1 million available to address priority gaps in its understanding of the relationship between government interventions and the behavior of the regulated community, of which the deterrence-related issues discussed in this Article are a subset. The projected range for awards is $ 50,000 to $ 200,000 per research grant per year for durations of one to three years. Proposed research can be prospective or retrospective, with prospective field experiments, survey research, and multi-investigator projects more likely to justify higher funding levels. The results will be made publicly available to assist federal, state, tribal and local governments, industry associations, environmental groups, corporations, and private citizens to allocate their resources in order to achieve the greatest degree of environmental and health protection and improvement as efficiently as possible.

Introduction to Deterrence Theory

What is "deterrence"? The dictionary definition of the verb to deter is "to prevent or discourage from acting, as by means of fear or doubt."¹⁶ It is a Latin root word, consisting of "de" (away) + "terrere" (to frighten). To frighten people away effectively, one must be strong, or in Latin, "fortis," from whence is derived today's "enforcement," defined as "to compel observance or obedience to something." The end result is that the people "act in accordance with another's command, request, rule, or wish." This is the definition of "compliance," derived from another Latin root, "complere," to complete.

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While the use of deterrence as a law enforcement tool is as old as the Bible,¹⁷ apart from the military context, it is rarely defined. The EPA, DOJ-ENRD, and NIJ staff who drafted the RFP developed their own definition using concepts from environmental, political science, and economics literature.¹⁸ For purposes of this Article, consistent with the etymology of "deter," "enforce," and "comply," deterrence will be defined as the act of motivating people subject to laws or regulations to respond to pressure from an external source by conforming to legal or social norms¹⁹ due to a fear of actual or perceived consequences. Several distinct theoretical concepts implicit in this formulation warrant close consideration due to their importance and practical implications for environmental enforcement policy and research.

Deterrence, by definition, requires externally applied pressure—a credible threat by one person sufficient to influence other persons. In the context of environmental deterrence, the "person" seeking to deter is normally a federal or state government, but many statutes grant private citizens the ability also to act as enforcers by filing citizen suits.²⁰ Private citizens may also seek to deter noncompliance through information gathering and publicity, whether initiated pursuant to the federal Administrative Procedure Act,²¹ state analogues, right-to-know laws, or private-party efforts.

Broadly speaking, the intended subjects of deterrence are the individuals and corporations that constitute the regulated, or potentially regulated, community. For environmental compliance purposes, however, these groups may be too broad for effective policymaking, especially where the intent is to influence or alter corporate behavior. Government compliance and enforcement policies that treat the corporation as essentially a "black box" for deterrence purposes risk ignoring an increasing body of research which suggests that internal corporate structure and penalty/reward systems play a significant role in how corporations address compliance internally or react to external enforcement stimuli.²² For example, in meetings in 1998 and 1999 with federal and state field personnel from across the country in connection with OECA's Compliance Information Project (CIP), the author found that inspectors tend to associate compliance with dedicated environmental staff who have sufficient rank and authority to influence corporate decisionmaking, particularly where the corporation's environmental programs are well integrated with its operations and maintenance activities.²³ Firm size is important, too. Small businesses, for example, possess unique characteristics likely to impact the effectiveness of deterrence strategies. These include a limited ability to pay penalties and a higher potential to attract sympathetic press coverage. Findings and experiences like these suggests that additional research into the practical implications of corporate size, staffing, and structure for compliance and deterrence could prove helpful to governments and corporations alike.

What can government or private citizens do to establish a credible threat sufficient to correct and deter noncompliance? A traditional answer has been to file an enforcement action for monetary penalties, but in fact the set of potentially available interventions encompasses a broad array of actions. As noted in the RFP, steps the government can take to influence polluter behavior, encourage compliance, improve performance, and/or deter violations include inspections and monitoring, civil and criminal enforcement, warnings, penalties and injunctive relief, technical and compliance assistance, public notification of violations, releases, or emissions levels, and the provision of an array of incentives.²⁴ Such governmental interventions can serve to increase the direct costs associated with noncompliance (fines, penalties, and sanctions), decrease direct compliance costs (assistance and incentives), or increase the probability that facilities will experience further direct or indirect costs or additional governmental interventions, e.g., further inspections or other forms of compliance monitoring.

While deterrence, by definition, operates pursuant to a fear of negative consequences, as a practical matter, it is not always effective or possible to segregate the results of combinations of interventions, or even to characterize the impacts on behavior as purely positive or negative reinforcement. Increasingly, EPA is seeking to develop strategies to employ the tools in its enforcement and compliance assurance "toolbox" in an integrated and holistic manner in order to maximize their influence on behavior and deterrence.

One recent example is the Agency's Compliance Incentive Program for the Industrial Organic Chemical sector promoting a voluntary audit program. Letters were sent to members identified as potential participants in August 1998, by OECA's Office of Regulatory Enforcement (ORE) supplying compliance assistance materials and inviting participation in the program. Participants were told they would have until January 31, 1999, to perform voluntary facility audits, disclose any discovered violations, and receive significant penalty mitigation under EPA's Audit Policy²⁵ before EPA and authorized states increased their [30 ELR 10526] compliance inspections of this sector. As a result, 19 companies identified and disclosed violations at 51 facilities (32 of which reported multimedia violations) in 8 Regions.²⁶ EPA's use of such strategies will continue and expand as enforcement efforts become increasingly focused on achieving and documenting concrete beneficial health and environmental results.²⁷

The deterrence concept of "achieving or maintaining compliance" itself warrants close consideration. What is "compliance"? In one sense, as anyone who has been the subject of an enforcement response or has entered compliance data into a data system can verify, compliance can be viewed as a simple either/or proposition, i.e., either you are in compliance or you are not. While laws and regulations generally state specific requirements to be complied with or levels to be achieved, however, even so-called command-and-control approaches leave quite a bit of leeway for the regulated entity to determine how best to achieve compliance, in terms of budgets, strategies, equipment, and personnel/organization. As EPA continues to explore ways to replace "command-and-control" requirements with performance-based approaches, the leeway afforded the regulated community to design compliance solutions will only increase.

How important to policymaking is the consideration that each regulated entity's compliance decisionmaking process includes not only deciding whether to comply or violate, i.e., in the simple "either/or" sense described above, but also selecting an appropriate level of operation or pollution control sufficient in the operator's mind to provide a safety factor to cover probability factors associated with achieving and maintaining long-term compliance? In the author's view, this is a critically important question from a deterrence and environmental quality perspective. Whether the actual concentrations of heavy metals in a facility's effluent are 99% or 20% of its permit limits, it is still operating in compliance with its permit as long as it remains consistently below those limits. Complying with hazardous waste regulations by setting up a compliant long-term storage unit, or eliminating the generation of hazardous waste in the first place, both count as compliance. Yet, obviously, reducing effluent concentrations, and eliminating the generation of hazardous waste, are preferable environmental outcomes to maximizing legal releases or managing wastes after-the-fact. The challenge is to harness the power of deterrence appropriately to encourage facilities to reduce or eliminate pollution rather than manage it.

EPA policy, generally, increasingly promotes programs and values designed to take facilities "beyond compliance" to "superior environmental performance," often by encouraging pollution prevention compliance solutions.²⁸ Assuming, as some EPA and DOJ officials maintain, that "deterrence and enforcement are the engines which pull the compliance train," government efforts to expand the development and use of holistic compliance strategies are worthy of support because they factor deterrence-based efforts into an overall approach to attracting customers and converts to the growing array of "beyond compliance" programs and philosophies.

In the case of the Industrial Organic Sector Compliance Incentive Program discussed above, EPA used the threat of increased future inspections to help motivate proactive facility self-audits. EPA's ongoing efforts to promote environmental improvements in hog farming²⁹ provides an example of the Agency working collaboratively with industry to enhance compliance and performance, while participating in appropriate citizen suit actions which EPA hopes will help attract attention and resources to the compliance problems posed by hog farming and efforts to address them.³⁰

EPA Region 1's ongoing compliance work with its colleges and universities provides another useful example of how EPA is integrating its compliance assistance and enforcement programs for maximum environmental impact. In 1999, faced with negative compliance trends at these schools, Region 1 reassessed its standard inspections and enforcement strategy for these institutions and replaced it with a two-pronged, "carrot and stick" approach blending enforcement with enhanced, targeted compliance assistance. The Regional compliance assistance staff's initial step was to schedule a compliance assistance workshop for colleges and universities on March 24, 1999. When the Region first advertised the workshop, out of over 350 colleges and universities in New England, fewer than 40 individuals responded, many from the same college. Then, on March 10, 1999, the Region issued an administrative penalty action against the University of New Hampshire, at the same time contacting the president of each school by letter to highlight the action and encourage attendance at the seminar. The response to the post-enforcement action letter was overwhelming; over 330 requests were received to attend the compliance assistance workshop, which attracted a capacity audience. A second workshop in August 1999 was also filled to capacity. This anecdote demonstrates a strong motivational link between one sector's willingness to avail itself [30 ELR 10527] of government-offered compliance assistance, and a single, well-publicized enforcement action.³¹

Returning to the definition of deterrence, recall that the desired outcome of deterrent efforts is a fear, on the part of the regulated community, of actual or perceived consequences if applicable standards are not met. Perhaps the most tangible consequences of government actions to achieve deterrence, apart from jail sentences,³² are civil and criminal penalties. In fact, total and average federal environmental penalties have risen markedly over the past decade.³³

Experience suggests, however, that for many firms the deterrent impacts which penalties generate may pale in comparison with the potential individual or cumulative impacts of market forces such as consumer demand, shareholder loyalty, declining stock prices in response to pollution liability fears, poor eco-efficiency that shareholders relate to reduced profitability, liabilities such as tort judgments, citizen suits, or cleanups, adverse publicity, or community pressure.³⁴ This is because market forces are capable of generating financial pressures orders of magnitude greater than those posed by most penalties. Similar reasoning is applied in the exceptional circumstance where EPA determines, in the context of an enforcement action, that calculating the EBN component as a delayed or avoided cost pursuant to EPA's BEN model³⁵ would produce an overall penalty amount insufficient to "level the playing field" and deter future noncompliance. In such a case, EPA may seek instead to recoup any illegal profits the violator has realized on the grounds that the dollar value of the illegal profits greatly exceeds the value of the delayed or avoided compliance costs.³⁶

One highly attractive feature of leveraging market forces to deter noncompliance is that it is sometimes possible to influence the market simply by disclosing information, without the need for formal or expensive enforcement responses, court decisions, or settlements.³⁷ At the same time, such approaches can be effective not only in encouraging baseline present compliance, but also in promoting forward-looking environmental strategies and solutions such as pollution prevention that may minimize or eliminate the risk of future violations. These possibilities suggests that further research into how public disclosure of violations or emissions interacts with enforcement and compliance interventions could prove useful.

Deterrent impacts may also occur as a result of governments tying individual or sector eligibility for government benefits to current or continuous compliance. EPA, for example, limits companies' eligibility to participate in government contracts, subcontracts, loans, grants and other assistance programs through its suspension and debarment program, which includes considering applicants' compliance records.³⁸ A recent Montana Attorney General opinion [30 ELR 10528] construing the state's cleanup reimbursement statute³⁹ disqualified underground storage tank (UST) owners who violate the state's UST requirements from qualifying for cleanup reimbursement from the state, even where the non-compliance is brief and the owners eventually come back into compliance.⁴⁰ The author is aware of little hard information in the environmental context on the efficacy of such strategies from a deterrence standpoint, suggesting that future research could prove fruitful.

The fact that deterrence depends on corporations' and individuals' responses to perceived or actual consequences highlights how important it is for the government to be prepared, and empowered, to effect consequences sufficiently grave and credible to actually induce the intended reactions on the part of its audience. This point, because it is an essential prerequisite to deterrence theory working in all practical applications, cannot be overstated.

In the context of deterrence research, it is important that researchers and policymakers not confuse the viability of a deterrence strategy, per se, with its effectiveness at given intervention levels or penalty increments. Consider, for example, the relationship between penalty amounts and deterrence. While there is a dearth of data in this regard,⁴¹ the established wisdom is that the effectiveness of a legal threat depends on three related factors, (1) the certainty that a lawbreaker will be caught ("certainty"), (2) the nature and severity of the punishment ("severity"), and (3) the speed of apprehension and punishment ("celerity"), and that increases in each dimension correlate with increased deterrence and compliance.⁴² Arguably, a fourth, coequal factor is the lawbreaker's perception of the first three.

Where increased penalties fail to produce measurable increases in deterrence or compliance, however, it may be a result not of deterrence not working, but because even the higher penalties amounts remain too low to matter to polluters. In other words, an enforcement strategy to increase penalties in a sector from $ 100 to $ 1,000 per violator cannot be expected to impact compliance rates when the violators view all expenses below $ 2,000 essentially as petty cash. A person analyzing such a strategy without carefully addressing this issue might misconstrue the results as suggesting that increased penalties are an ineffective deterrence strategy for the sector, when the correct lesson may be that the new penalty levels are still too low and need to be further boosted if compliance rates are to be improved. In the alternative, careful analysis may reveal that, for a particular sector, the key lesson to be learned is the fact that whether a facility receives any formal enforcement response and penalty is more important, in terms of generating specific and/or general deterrence and compliance, than the size of the penalty.

An interesting 1991 study of Occupational Safety and Health Administration (OSHA) enforcement by Gray and Scholz related firm size, inspection intensity, and penalty amounts to injury rates. The authors found, among other things, that within the relatively narrow range of penalties typically assessed by OSHA, the larger penalties did not appear to generate increased specific and general deterrence relative to the smaller ones. The authors viewed this outcome as implying that, in most cases, the enforcing agency would be better off deploying its limited resources to increase the probability of detection and overall number of penalties assessed, as opposed to maximizing individual or aggregate penalty amounts.⁴³ Gray and Scholz explained the results by hypothesizing that, for the firms studied and given the relatively small range of penalties typically assessed, being detected and forced to pay any penalty usually resulted in the associated compliance issues being bucked up the management chain, leading to specific deterrence.⁴⁴

Direct, upper management involvement may be required to allocate resources to fix problems, discipline staff, or adequately address public stigma or potential negative market impacts associated with being subject to formal health or environmental enforcement actions. The apparent increases in general deterrence as a result of penalizing more firms could flow from the nature of the communicative process through which firms become aware of other businesses' experiences, e.g., gossip at trade associations. As a practical matter, when there are more individuals with negative enforcement experiences, the subject matter is more likely to be raised for discussion and others are more likely to chime in with corroborating experiences. This could promote an overall perception on the part of the target sector of a higher probability of detection.⁴⁵

It is important, however, to understand the limitations of such an analysis and properly qualify the findings. Gray and Scholz recognized that they could not extrapolate the lack of added effectiveness their study found for penalties over $ 5,000 to the hundreds of thousands or million dollar penalties imposed only occasionally by OSHA. In their own words,

These more dramatic penalties may indeed have large effects. Large fines of this size get media attention that more normal fines do not, and send strong signals about enforcement priorities. Such symbolic fines may be particularly important for initial enforcement of a new safety standard that has met with considerable resistance. . . . Completely eliminating all high and medium penalties would likely result in a decrease in deterrence, particularly if all penalties were trivialized to the point where they could be safely ignored.⁴⁶

Thus, while "pinprick" penalties like those typically imposed by OSHA can have some positive impacts, their consistent effectiveness may well hinge on the regulated community's [30 ELR 10529] knowledge that the enforcing agency is able and willing to impose penalties large enough to carry a serious economic sting.

Additional important considerations flow from the fact that deterrence is a result of responses to consequences. First and foremost, government interventions can deter only if the intended audiences are aware of them. As touched upon above, this makes the effective communication of the threat and its consequences a sine qua non of deterrence. A second sine qua non of deterrence is visibility. Subjects must know, or at least believe, that their activities are discoverable by the government or private citizens, for if the risk is zero, so is the probability of consequences. This suggests two additional powerful tools for amplifying potential deterrent impacts: communication and visibility. If the theory is correct, efforts by the government to either improve how it communicates its compliance monitoring and enforcement programs to the regulated universe, or increase the potential visibility of regulated entities' actions, should, in and of themselves, improve the programs' deterrent impacts. In fact, there is some empirical evidence to support both the communication⁴⁷ and visibility⁴⁸ hypotheses.

Ensuring that all stakeholders understand that violators risk being held liable for costly penalties and injunctive relief will undoubtedly remain a core component of EPA's communications policy for its enforcement program.⁴⁹ The same processes used to publicize the enforcement actions themselves can also be used to educate the public on the consequences of the violations. EPA's strategy is therefore to emphasize, in all of its enforcement alerts,⁵⁰ press releases,⁵¹ and enforcement accomplishment reports,⁵² the environmental risks and consequences of violations and interventions. This approach bolsters the deterrent impacts these communication tools can have by increasing the amount and quality of relevant information for financial institutions, consumers, and others to consider in assessing firms' values, performance, and potential future liabilities. Reputation is important.⁵³ No corporation or sector would actively pursue a reputation for causing asthma sufferers and children to cough, and the elderly to die of respiratory failure. The fact is, however, that these are real-life impacts of certain types of illegal air emissions.⁵⁴ Consistent with principles of fairness and sound science, it is appropriate for regulators to remind stakeholders of this, in their public statements, both for educational and deterrence purposes.

Another relevant consideration is the government's ability to demonstrate violations via evidence admissible before a court or administrative law judge (ALJ) to prove noncompliance. [30 ELR 10530] The controversy that surrounded EPA's promulgation of its Clean Air Act (CAA) "any credible evidence" (ACE) rule⁵⁵ illustrates how expanding the scope of the evidence that "counts" toward proving violations may generate deterrent impacts even where the performance and recordkeeping/reporting standards the regulated community must follow are unchanged. The ACE rule, in essence, revised Parts 51, 52, 60 and 61 of the CAA rules to allow the use of ACE, whether reference test methods or any other data, to demonstrate CAA violations. In an article analyzing the rule's potential impacts, two commentators wrote that the ACE rule

is expected ultimately to have an enormous impact on the regulated community. Most significantly, it will be easier to prove violations of the CAA. A source that may be able to comply with an emission limitation or standard under the rigorously controlled conditions of a reference test method may find that it cannot comply continuously with the same emission limitation or standard under the credible evidence standard. To make matters worse for the regulated community, when the CAM [Compliance Assurance Monitoring] rule is finalized, sources will be required to generate the credible evidence that can be used against them in enforcement or citizen suit actions. Coupled with the enhanced enforcement provisions in Title VII of the 1990 Amendments, such as field citations and the beefed-up citizen suit provision, the credible evidence rule will challenge the regulated community to comply with the numerous and complex requirements of the Act.⁵⁶

Because the regulated community is made up of people who, individually or collectively, must ultimately choose how to react to their perceptions of the consequences of non-compliance, behavior modification and motivational concepts are highly relevant in the context of deterrence policy and research. The terms "behavior modification" and "motivation" implicate behavioral psychology and other social science disciplines, in addition to economics. It is almost a truism that different people are motivated in different ways at different times in their lives. In our daily lives, we often refer to "different strokes for different folks." The suggestion that tailored compliance and enforcement approaches may be a necessary prerequisite for effective deterrence is a powerful reason for eschewing simplistic, "one-size-fits all" compliance approaches in favor of the integrated strategies and "performance ladder"-type approaches which the federal government and many states are developing and employing with increasing frequency today.⁵⁷

These factors have implications for the types of deterrence research that the government funds, as well as the mix of professionals, e.g., economists, sociologists, and behavioral psychologists; who are selected to perform it. A large portion of the existing body of research to date on environmental deterrence has been performed by economists using economic assumptions and tools. This reflects the critical role economic principles, such as the precept that when the cost of an activity increases people tend to do less of it, play in the context of environmental deterrence.

As is true for all professional disciplines, however, economists bring to the table their own lexicon, assumptions, and predilections. For example, economists assume "rational behavior" on the part of individuals while searching for an "optimal level" of deterrence. The majority of individuals can be expected to act rationally most of the time. There is, however, an element of human nature that is chaotic and unpredictable, particularly at the margins of society.⁵⁸ Furthermore, the economic definition of "optimal" can, and often does, conflict with social and political norms.⁵⁹ This suggests that it is important to study and understand deterrence both in economic and socio-behavioral terms.

Indeed, it is critical never to lose sight of the impact of politics and values on our efforts to study and measure deterrence, determine its effectiveness as a strategy, or employ it in setting policy. While it is rare today, for example, to encounter arguments that robust penalties have no place or deterrent impact as a positive force in law enforcement when it comes to street crime or the war on drugs, it is not at all uncommon to hear that deterrence does not exist or work in the context of environmental compliance. Underlying this paradox is the unstated assumption that environmental noncompliance is somehow "different" from noncompliance with other laws.⁶⁰ At the Deterrence Forum sponsored earlier this [30 ELR 10531] year by EPA, DOJ, and NIJ,⁶¹ top EPA and DOJ enforcement officials, while rejecting this point of view on the merits, acknowledged encountering it regularly.

Existing Deterrence Research

Twenty-five years ago, one could fit a list of all of the published literature on environmental deterrence research onto one page. Today, though the state of the science in this area remains preliminary and disjointed, one can find numerous studies documenting and analyzing the deterrent, motivational, and performance-related effects of compliance monitoring, enforcement, technical assistance, incentives, and other government interventions, market forces, community pressure, and "inside the black box" factors such as corporate policy, organization, and compensation.

A review of even a portion of this growing set of literature is beyond the scope of this Article. Persons seeking more information are referred to two especially useful sources. The first, the April 1999 CIP Literature Summaries report developed by OECA's Office of Planning and Policy Analysis (OPPA), contains brief reviews of seventeen especially interesting pieces of compliance literature plus appendices referencing over two hundred additional studies on a broad array of deterrence and motivational topics.⁶² The second, a comprehensive overview of the full body of compliance and enforcement literature by Professor Mark A. Cohen of the Owen Graduate School of Management at Vanderbilt University,⁶³ is highly recommended as a starting point for delving into deterrence and motivational issues in the environmental context. It is helpful, however, before proceeding to discuss ongoing andplanned steps by EPA to promote further deterrence research, to summarize a few recently concluded surveys, analyses, and strategies as examples of some of the protocols people have employed to study deterrence issues. The focus will be placed on studies neither reviewed nor cited in the CIP Literature Summaries report.

In the area of survey research, recent studies by EPA, the states, and nongovernmental organizations (NGOs) lend support to the viewpoint that inspections and enforcement deter noncompliance while promoting pollution prevention and other forms of superior performance. Both a 1995 survey by Price Waterhouse,⁶⁴ and a 1998 survey by the National Conference of State Legislatures,⁶⁵ for example, found that more than 90% of respondents reported that they conducted environmental audits specifically to identify and correct environmental problems before discovery by an inspector. A 1997 EPA Office of Solid Waste and Emergency Response (OSWER) survey found that 65% of the larger manufacturers and 57% of the printers surveyed cited environmental enforcement actions as very important in getting them to first consider environmental issues in their jobs. The only more important factor reported was company environmental policy and management directives.⁶⁶ Other surveys have linked self-auditing and screening to improved financial performance and access to financial services.⁶⁷

A preliminary, though thought-provoking, 1998 program review of the Bay Area Air Quality Management District's (District) air pollution control program by the California Air Resources Board (CARB) found noncompliance at non-retail gasoline dispensing facilities in the District to be three times higher than at commercial dispensing facilities.⁶⁸ The difference incompliance rates was attributed to the infrequent CARB field presence at non-retail facilities which are only inspected once every 2 to 3 years, as opposed to the retail facilities which are inspected at a minimum annually. These findings, and similar ones for other sectors, led CARB staff to conclude that annual inspections of all gasoline dispensing facilities, and increases in baseline penalty amounts, were needed to deter violations and give sources a greater incentive to apply for permits and remain in continuous compliance.⁶⁹

An informal analysis conducted by OECA's Resource Conservation and Recovery Act (RCRA) Enforcement Division (RED) several years ago of the average RCRA violations detected per inspection conducted in the years 1990-1996 also found a relationship between greater lag times between inspections and increased noncompliance. The research, while preliminary and unpublished, implied that facilities which went three or more years without receiving any inspections tended to suffer from increases in the average number of violations. Interestingly, while the total number of violations per facility rose, Significant Non-compliance (SNC) rates did not. While these research results are insufficiently rigorous to generate firm conclusions,⁷⁰ [30 ELR 10532] they suggest, among other things, that a government field presence may be important even for companies that are otherwise generally well run. In any event, the protocol utilized by RED, along with the initial results, are thought provoking. Further research into the relationship between inspection lag times and noncompliance under RCRA and other statutes could prove fruitful.

Experience to date with New Jersey's mandatory minimum penalty law also suggests that certain and swift penalties can be effective in deterring noncompliance. Effective in July 1991, the New Jersey Clean Water Enforcement Act (CWEA)⁷¹ specifies minimum penalties, including the recovery of economic benefit, for serious violations and SNC. The CWEA also requires the New Jersey Department of Environmental Protection (NJDEP) to inspect all permitted facilities annually, conduct sampling inspections at each permitted facility every 3 years, and inspect all SNC-identified facilities within 60 days. In 1991, before the effective date of CWEA, 85% of New Jersey's major facilities were SNCs, the worst rate in the nation. In 1996, after the CWEA had been in effect for several years, New Jersey's SNC rate dropped to 12.5%, moving the state up to the 16th best out of 50.⁷² This dramatic decline in SNC suggests that New Jersey's approach of enhanced inspections and minimum penalties was successful in deterring noncompliance.

Further research, in the form of "before and after" studies, of the relationships between changes in inspection and enforcement frequencies, and compliance rates and duration of noncompliance, could contribute significantly to improving our understanding of how deterrence works. This could be accomplished by retrospectively comparing distinct geographical areas which received relatively lenient or intense compliance monitoring and enforcement to highlight resultant general and specific deterrent impacts. In the alternative, prospective randomized field experiments could be undertaken. Such experiments could test for deterrent impacts by deliberately limiting inspections or enforcement in selected Regions or states, making predictions as to what the deterrent impacts will be, and then measuring and analyzing the results. Randomized field experiments are normally considered the "gold standard" for statistical research, but for many reasons may not be practical in the context of measuring deterrence. Whether such studies are prospective or retrospective, however, EPA's Regions, together with the 50 states, may potentially serve as "natural laboratories" for studying the results of diverse approaches to compliance and deterrence if sufficient care is taken to control for extraneous, nonenforcement variables.

With respect to influencing behavior through information, a December 1999 evaluation of EPA's Sector Facility Indexing Project (SFIP)⁷³ provides interesting initial feedback on the potential for this data-oriented project to motivate environmental performance improvements and deter noncompliance. The SFIP, a pilot program developed by EPA, provides public access to integrated environmental profiles on approximately 650 facilities in the automobile assembly, pulp manufacturing, petroleum refining, iron and steel production, and primary smelting and refining of non-ferrous metals industrial sectors. For each facility, the SFIP provides information on its location, production or production capacity, surrounding population, permits held under major environmental programs, the number of inspections received, record of compliance with federal regulations (including the types and durations of violations), and any chemical releases, transfers, and spills.⁷⁴

EPA's intentions, in implementing the SFIP, include attempting to create an additional incentive for facilities to improve compliance and performance by assisting the public and the companies themselves to identify high-performing facilities with exemplary environmental records, as well as stragglers.⁷⁵ While the SFIP does not rank covered facilities in any way (the term "indexing" refers to the process used to identify facilities and data via EPA's Integrated Data for Enforcement Analysis [IDEA] system), its capabilities include allowing users to structure and aggregate the data to easily view, compare, and analyze information from different facilities. By considering the type and duration of any noncompliance event in conjunction with other data, SFIP users draw their own conclusions about the severity of the problem.

The December 1999 SFIP evaluation shows that environmental organizations and companies are, in fact, employing SFIP data for these purposes. The not-for-profit Council on Economic Priorities (CEP), for example, recently used SFIP in developing a report entitled The Worst and Best Auto & Tire Companies in which the CEP downloaded information about pollutants for each facility in the universe of auto assemblers and aggregated the assemblers by company to develop a ranking of the most-polluting and least-polluting [30 ELR 10533] companies.⁷⁶ And while industry representatives have told EPA in discussion groups that their primary use of the site is to review their own facilities' data,⁷⁷ one company, ASARCO, studied SFIP data for its copper processing facilities, published several analyses to provide the public with additional information "to enhance understanding of SFIP data,"⁷⁸ and relied on the data in representing that its employees "are doing an excellent job of protecting and improving the environment."⁷⁹

While it is encouraging to see environmental groups and companies using the SFIP data to develop public reports or review their operations, the pertinent questions from a deterrence standpoint are whether businesses or investors are changing their behaviors in response to the information and, if so, how, and to what health and environmental ends? Is the SFIP—directly as a result of improving management's understanding of compliance problems and solutions, or indirectly through market forces and public pressure—leading to improved compliance and performance? Further research is needed if these questions are to be answered definitively.

Ongoing and Planned Deterrence Research

Analysis of Impacts of Enforcement Activity on Water Discharge Quality for Two Sectors

EPA's CFO and the OECA are jointly sponsoring a project with the Eastern Research Group, Inc. (ERG) to develop a model for determining the impact of inspection and enforcement activity on firm behavior and environmental performance. The study is being led by Louis Nadeau of ERG, the author of an oft-cited 1997 study, summarized in OPPA's CIP Literature Summaries report, evaluating the impact of EPA enforcement and monitoring activities in reducing the amount of time noncompliant pulp and paper facilities spend in continued noncompliance.⁸⁰ In that study, Nadeau, using data from 175 pulp and paper plants covering 41 reporting quarters from 1979 through 1989, found that noncompliant plants that experienced a larger number of tests and inspections and/or enforcement actions during their periods of noncompliance tended to spend less time in violation. Nadeau determined, among other things, that a 10% increase in monitoring activity led to 4% or greater reductions in the average length of time facilities remained in noncompliance. The strength or weakness of state programs were also found to have impacted the speed of return to compliance, with each 10% increase in overall state monitoring activity at violative plants other than those subject to EPA enforcement and monitoring correlating with a 2.5% decrease in the length of the period of noncompliance.⁸¹

The ongoing ERG study focuses on the behavior of firms in two industrial sectors, petroleum refining and integrated iron and steel. The behavior under review consists of facility-level pollutant loadings regulated under the Clean Water Act (CWA).⁸² For the petroleum refining sector, the pollutants of concern are biological oxygen demand (BOD), total suspended solids (TSS), and ammonia nitrogen. The pollutants of concern for the integrated iron and steel sector are TSS, total zinc, and total lead.

In its simplest form, Nadeau's model tests whether enforcement has a discernable effect on environmental quality by impacting the behavior of the regulated community.⁸³ The goal of the model is to determine if there is a statistical relationship between compliance monitoring and enforcement activities, and measurable environmental outcomes. In other words, is there an association between changes in inspection or enforcement activity and improvement in the environmental quality measures? In the first stage of the project, inspections and enforcement will be related to firm behavior as measured by reported facility contaminant discharges. In the second stage, engineering models will be developed to link the discharges to ambient water quality.

Considerably more work is needed before the final results of this project will be available. Some preliminary results, sing quarterly loadings as the dependent variable, and various measures of enforcement and inspection activity and facility characteristics as independent variables, were available at the time this Article went to press.⁸⁴ The [30 ELR 10534] initial analysis suggested, among other things, that federal enforcement actions were successful in reducing both BOD and TSS loadings in all of the models estimated. For TSS, state enforcement actions also served to reduce pollutant loadings.⁸⁵

The preliminary results presented above represent only one-third of the sector-pollutant combinations to be investigated, i.e., BOD and TSS in the petroleum refining sector. They are presented in this Article solely to describe this ongoing EPA research project and illustrate why further research along such lines appears promising. Additional analysis is required before any conclusions can be confirmed or relied upon for policymaking, resource allocation, or targeting.

OECA's National Performance Measures Strategy

Another ongoing EPA project with implications for deterrence research because of its focus on defining reliable performance measures and calculating valid compliance rates is OECA's National Performance Measures Strategy (NPMS). The NPMS is a multiyear, high-priority effort to identify, design, and implement an enhanced set of performance measures for EPA and the public to use to assess changes in the behavior and compliance status of regulated entities from a full range of enforcement and compliance activities.⁸⁶ Following is an overview of several deterrence-related elements of the project.

OECA is in the process of implementing 12 sets of NPMS measures referred to collectively as "the Performance Profile." The Performance Profile consists of eight measures of environmental results caused by enforcement and compliance assurance activities ("outcomes"), plus four measures of program activity ("outputs"). Of the 12 sets in the Performance Profile, 3 (sets 1, 6, and 7) may prove especially interesting to deterrence researchers.

Set 1 requires EPA to determine statistically valid non-compliance rates for five regulated populations⁸⁷ in fiscal year (FY) 2000 using water, air, and hazardous waste data in EPA's compliance databases.⁸⁸ The noncompliance rates will be calculated based on results obtained from combinations of targeted and random inspections.⁸⁹ The OECA and others will then be positioned to analyze impacts on those rates from government interventions and incentive policies. Sets 6 and 7 require EPA to determine the average duration of time significant violators⁹⁰ take to return to compliance, and the percentage of significant violators with recurrent significant noncompliance within a two-year period,⁹¹ respectively. The sets will rely on the information in the databases⁹² to track trends in the duration of SNC and recidivism by media program.

EPA Region 2 is piloting an additional voluntary outcome measure aimed at determining the environmental impact and deterrent effect of inspections in terms of their "compliance inspection outcomes." These are defined as physical or behavioral changes that occur during, or as the result of, an inspection. The changes can either be actual observed physical changes, e.g., closing off an illegal water discharge, labeling a hazardous waste drum, or cleaning up oil stained soil, or perceived behavioral changes, e.g., a facility representative [30 ELR 10535] agrees to improve materials handling, institute best management or waste minimization practices, or correct potential violations. The results will supplement existing research on the effects of compliance inspections in deterring violations, while documenting "beyond compliance" impacts.

NPMS Cooperative Agreement Grants

In connection with the NPMS, the OECA is awarding $ 1.8 million in cooperative agreement grants to fund a series of Compliance Measurement Cooperative Agreements with states to develop and implement potentially transferable outcome-based performance measures for their own enforcement and compliance assurance programs. Of particular interest to deterrence researchers, among the 12 projects selected for funding, is the Oregon Department of Environmental Quality's (DEQ's) effort to document and measure the deterrent impacts of their enforcement activities.

The general deterrence component of this project is potentially groundbreaking. Oregon DEQ intends to assess specific deterrence in its state by comparing data elements such as penalty amounts and recidivism, while qualitatively evaluating general deterrent effects via surveys and interviews with the regulated community. As noted by Oregon in its Cooperative Agreement application, general deterrence is extremely difficult to measure—there is, as of yet, no NPMS measure devoted specifically to it—yet it remains a critically important enforcement outcome. The surveys and interviews undertaken by Oregon will explore, among other things, the effectiveness of government efforts to communicate information on enforcement activities and penalties to the regulated community and the public. While survey/interview protocols always present design and interpretive challenges,⁹³ EPA hopes the results of the Oregon project will enhance its understanding of the relationship between how threats are communicated and received, the actual (objective) probability/severity of punishment, and subjects' perceptions of how visible or discoverable their noncompliance may be.⁹⁴

EPA Research Solicitation

The EPA RFP described at the beginning of this Article will support research to identify determinants or motivators of regulated entities' environmental behavior and performance, and assess the influence of governmental interventions. The RFP's broad scope encompasses both traditional compliance monitoring and enforcement activities, as well as government-business partnerships, voluntary agreements, compliance assistance programs, and other new initiatives. Such partnerships, agreements, and programs are increasingly volunteered as alternatives to traditional enforcement, but their impacts remain uncertain. As discussed above, the closing date for submitting proposals under the RFP is July 24, 2000.⁹⁵

With respect to determinants and motivators of compliance and performance, EPA is interested in addressing two basic research questions: (1) What determines environmental behavior or performance and compliance with environmental laws and regulations?; and (2) What are the relationships between environmental behavior and performance, and other business characteristics such as management structure, size, profitability, corporate policies, etc.? To assist researchers to prepare and submit responsive grant applications, the RFP supplies an illustrative list of research topics that the Agency believes would address one or both of these questions.⁹⁶

With respect to the influence of government interventions on compliance and performance, EPA is interested in assessing the effectiveness of a broad array of compliance and enforcement activities. Of specific interest are inspections and monitoring; informal warnings; formal civil and criminal enforcement; penalties; injunctive relief; technical and compliance assistance; public notification of violations, releases, or emissions levels; and compliance incentives. Four basic research questions are posed: (1) What are the effects of interventions such as penalties, inspections, and enforcement on compliance and performance?; (2) What effect does disclosing environmental performance information have on corporate behavior, and through what pathways?; (3) What are the effects of technical assistance and education on compliance and performance?; and (4) What is the comparative effectiveness of various intervention strategies, for different types of corporations and situations, on compliance and performance? Again, the RFP provides examples of potentially responsive research topics for applicants to consider in developing their proposals.⁹⁷

[30 ELR 10536]

Conclusions

This is an exciting time for persons involved or interested in environmental deterrence research, whether employed in government or the private sector. The current budgetary and political pressures on government to harness strategic planning and performance measurement to best allocate limited compliance and enforcement resources for maximum effect can only be expected to increase. These pressures will press the federal and state governments alike to work creatively to help maximize compliance rates, business and agency performance, and health and environmental results. Projects such as the CFO's deterrence research project, the NPMS, and EPA's RFP reflect an ongoing commitment to conduct and sponsor further research in the key areas of deterrence, corporate and individual behavior, motivators, and incentives. The results will assist governments at all levels to tailor their compliance and enforcement interventions as effectively and efficiently as possible for maximum health and environmental results.

The environmental statutes and rules are complex, the regulatory universe is diverse, the health and environmental issues are serious, and the stakeholders are demanding. With these conditions, the issue for government is not, "compliance assistance, compliance monitoring, incentives, or enforcement," but rather how to employ all of the tools in the compliance and enforcement toolbox selectively, effectively, and holistically. If it is indeed the case that "enforcement is the engine that pulls the compliance train," it is more critical than ever for government to do all it can both to fine tune the engine for power and efficiency and upgrade the coaches for maximum occupancy. Look for the next generation of deterrence research results to play an increasingly important role in this ongoing debate.

1. EPA's 1997 Strategic Plan, developed and submitted to Congress pursuant to the Government Performance and Results Act (GPRA), infra note 9, establishes "A Credible Deterrent to Pollution and Greater Compliance With the Law" as one of the Agency's 10 overriding, mission-critical goals. See OFFICE OF THE ADMINISTRATOR, U.S. EPA, STRATEGIC PLAN, at 19 (Sept. 1997) (available at http://www.epa.gov/ocfopage/plan/epastrat.pdf).

2. See, e.g., U.S. EPA, POLICY ON CIVIL PENALTIES (GM-21), at 3 (Feb. 16, 1984), ADMIN. MAT. 35083 (also available from the ELR Document Service, ELR Order No. AD-3226) ("The first goal of penalty assessment is to deter people from violating the law.") [hereinafter GM-21]; U.S. EPA, RCRA (Resource Conservation and Recovery Act) CIVIL PENALTY POLICY, at 6 (Oct. 1990), ADMIN. MAT. 35273 (also available from the ELR Document Service, ELR Order No. AD-2966); U.S. EPA, ENFORCEMENT RESPONSE POLICY FOR § 313 OF EPCRA (Emergency Planning and Community Right-To-Know Act), at 1 (1990), ADMIN. MAT. 35199 (also available from the ELR Document Service, ELR Order No. AD-3241).

3. See, e.g., In re Sav-Mart, Inc., Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), Appeal No. 94-3, 29 ELR 40908, 40910 (Mar. 8, 1995) ("Clearly, a primary purpose of civil penalties is deterrence.") (citations omitted).

4. In Friends of the Earth v. Laidlaw Envtl. Servs. (TOC), Inc., 120 S. Ct. 693, 30 ELR 20246 (2000), the Court noted:

It can scarcely be doubted that, for a plaintiff who is injured or faces the threat of future injury due to illegal conduct ongoing at the time of suit, a sanction that effectively abates that conduct and prevents its recurrence provides a form of redress. Civil penalties can fit that description.To the extent that they encourage defendants to discontinue current violations and deter them from committing future ones, they afford redress to citizen plaintiffs who are injured or threatened with injury as a consequence of ongoing unlawful conduct.

It is reasonable for Congress to conclude that an actual award of civil penalties does in fact bring with it a significant quantum of deterrence over and above what is achieved by the mere prospect of such penalties. A would-be polluter may or may not be dissuaded by the existence of a remedy on the books, but a defendant once hit in its pocketbook will surely think twice before polluting again.

Id. at 706-07, 30 ELR at 20249 (citations omitted) reversing the Fourth Circuit Court of Appeals' dismissal of a citizen suit claim for civil penalties as moot when the defendant came into compliance with its Clean Water Act (CWA) national pollutant discharge elimination system (NPDES) permit after the litigation was commenced).

5. See U.S. EPA, FISCAL YEAR (FY) 1999 ANNUAL PERFORMANCE REPORT, EPA 190-R-00-001, at 9.1 (Mar. 2000) [hereinafter FY 1999 ANNUAL PERFORMANCE REPORT]. The report is posted at http://www.epa.gov/ocfopage/integrity/1999apr.htm.

6. See OECA, U.S. EPA, FY 1999 RECAP MEASURES OF SUCCESS MANAGEMENT REPORT, at 24, 61a-61c. RECAP refers to "Reporting for Enforcement and Compliance Assurance Priorities." This document will be made publicly available on OECA's website.

7. See FY 1999 ANNUAL PERFORMANCE REPORT, supra note 5.

8. GM-21, supra note 2. See also Kelly v. EPA, 203 F.3d 519, 30 ELR 20379 (7th Cir. 2000). In Kelly, the court of appeals affirmed CWA administrative penalty assessments against two persons determined to have illegally filled wetlands. EPA argued that the penalty in this case was appropriate both to generate specific deterrence, i.e., because the named plaintiffs knew of the applicable CWA requirements, as well as general deterrence, i.e., "because 100 of [plaintiff Kelly's] neighbors had signed a petition saying they supported what he had done." 203 F.3d at 523, 30 ELR at 20381. The court agreed with EPA, citing Tull v. United States, 481 U.S. 412, 17 ELR 20667 (1987), in holding that civil penalties "are intended to punish culpable individuals and deter future violations, not just to extract compensation or restore the status quo." 203 F.3d at 523, 30 ELR at 20381.

9. See GPRA of 1993, Pub. L. No. 103-62, 107 Stat. 285 (1993) (codified in scattered sections of 5 and 31 U.S.C.).

10. Persons interested in learning more about EPA's pollution prevention activities can access the Agency's P2 website http://www.epa.gov/opptintr/p2home/.

11. E.g., Project XL. EPA has established a website with detailed information on Project XL, including links to all of the key explanatory Federal Register notices and project-specific documents which can be found at http://www.epa.gov/ProjectXL. Descriptions of EPA's many other reinvention and partnership programs are posted at http://www.epa.gov/epahome/programs.htm.

12. U.S. EPA, INCENTIVES FOR SELF-POLICING; DISCOVERY, DISCLOSURE, CORRECTION AND PREVENTION OF VIOLATIONS, 65 Fed. Reg. 19618 (Apr. 11, 2000), ADMIN. MAT. 35763 (available at http://www.epa.gov/oeca/auditpol.html and from the ELR Document Service, ELR Order No. AD-4485) [hereinafter AUDIT POLICY]. The April 2000 Audit Policy replaces the 1995 Audit Policy, 60 Fed. Reg. 66705 (Dec. 22, 1995), ADMIN. MAT. 35639 (available at http://www.epa.gov/oeca/auditpol.html and from the ELR Document Service, ELR Order No. AD-3125). The Audit Policy is OECA's flagship compliance incentive program. In 1999, 260 companies disclosed potential violations at over 989 facilities, and EPA settled actions with 106 companies at 624 facilities, a significant increase over previous years. The recent audit settlement with AMR Corporation (American Airlines) alone is expected to eliminate nearly 700 tons of air pollutants annually, while settlements with 10 telecommunication industry companies collectively corrected 1,300 environmental violations. The April 2000 revisions are intended, among other things, to further promote corporatewide disclosures by clarifying that the requirement in the Audit Policy for qualifying facilities to discover their violations before EPA or other government agencies are likely to identify them does not automatically preclude penalty mitigation for multi-facility entities. The OECA has also created an incentives policy specifically for small businesses. See U.S. EPA, Policy on Compliance Incentives for Small Businesses, 65 Fed. Reg. 19630 (Apr. 11, 2000) (available on EPA's website at http://www.epa.gov/oeca/smbusi.html; superceding Policy of June 3, 1996). Seventy-six small businesses disclosed and corrected violations under the small business self-disclosure policy in 1999, a sevenfold increase from the previous year. Another compliance incentive program with the National Pork Producers Council (NPPC), infra note 29, negotiated in 1999 in conjunction with President Clinton's Clean Water Action Plan to eliminate water pollution caused by contaminated runoff, may result in audits at thousands of facilities during the next several years. See http://es.epa.gov/oeca/ore/porkcap.

13. See, e.g., FY 1999 ANNUAL PERFORMANCE REPORT, supra note 5, at 9.1 ("A strong enforcement effort provides the foundation for the national compliance program, motivates regulated entities to seek assistance and use incentive policies, and provides fairness in the marketplace by ensuring that noncomplying facilities do not gain an unfair competitive advantage."). (Emphasis added.)

14. The NIJ, a component of the Office of Justice Programs, is the independent research agency of DOJ. Created by the Omnibus Crime Control and Safe Streets Act of 1968, as amended, the NIJ is authorized to support research, evaluation, and demonstration programs, development of technology, and both national and international information dissemination. The NIJ actively solicits the views of criminal justice professionals and researchers in a continuing search for answers that inform public policymaking in crime and justice. For more information on the NIJ, visit the NIJ website at http://www.ojp.usdoj.gov/nij/.

15. The RFP is published at the ORD-NCER website at http://es.epa.gov/ncerqa/rfa/corpp00.html.

16. The definitions and Latin roots origins cited in this paragraph are derived from THE AMERICAN HERITAGE DICTIONARY (2d College ed. 1982).

17. "Should a man act presumptuously and disregard the . . . magistrate, that man shall die. . . . All the people will hear and be afraid and will not act presumptuously again." Deuteronomy 17:12-13.

18. The RFP defines environmental deterrence as "the motivation of regulated entities to comply with environmental laws and regulations through consideration of the government-induced consequences of violating these laws or regulations." RFP, supra note 15, at 2.

19. This phrase encompasses both achieving or maintaining compliance, and improving performance beyond the minimum required by law.

20. E.g., 42 U.S.C. § 1365, ELR STAT. FWPCA § 505 (CWA) and 42 U.S.C. § 6972, ELR STAT. RCRA § 7002 (Resource Conservation and Recovery Act).

21. 5 U.S.C. §§ 551-559, available in ELR STAT. ADMIN. PROC.

22. See, e.g., Mark A. Cohen, Monitoring and Enforcement of Environmental Policy (Aug. 1998), at 30-31, reprinted at http://www.worldbank.org/nipr/work.paper/cohen/:

Most of the literature on environmental enforcement has considered the firm as a monolith, with decisions made by management being implemented as directed. Thus the government enforcement agency can simply impose an optimal penalty on the company that is generating the emissions and not worry about the individuals involved. In reality, however, corporate managers have their own enforcement problems when trying to convince employees on act on the company's behalf.

(Citations omitted.) Cohen then discusses literature focusing on the principal-agency relationship within the firm and its effect on environmental compliance. See also Mark A. Cohen, Empirical Research on the Deterrent Effect of Environmental Monitoring and Enforcement, 30 ELR 10245 (Apr. 2000).

23. Information on the CIP is posted on the OECA-OPPA website at http://es.epa.gov/oeca/oppa.

24. RFP, supra note 15, at 4.

25. See supra note 12.

26. A fuller description of this recent OECA-ORE effort can be found at http://es.epa.gov/oeca/ore/rcra/iocs.html.

27. See U.S. EPA, INNOVATIVE APPROACHES TO ENFORCEMENT AND COMPLIANCE ASSISTANCE: ACTION PLAN FOR INNOVATION, 300-K-99-003 (Sept. 1999), at 19 ("EPA will expand its use of integrated strategies [that combine compliance assistance, incentives, monitoring, and enforcement] to address the priorities of the enforcement and compliance assistance program.").

28. Pollution prevention means source reduction—preventing or reducing waste where it originates, at the source—including practices that conserve natural resources by reducing or eliminating pollutants through increased efficiency in the use of raw materials, energy, water, and land. The Pollution Prevention Act of 1990, 42 U.S.C. §§ 13101-13109, ELR STAT. PPA §§ 13101-13109, made pollution prevention the national environmental policy of the United States.

29. See supra note 12. The NPPC plans to have independent auditors conduct more than 10,000 audits nationwide to improve environmental management practices and CWA compliance atqualifying pork production facilities. Participating facilities may take part in EPA's voluntary CWA Audit Program (CAP) for this sector, which provides for greatly reduced penalties for producers that report and correct violations within specified timetables. In addition, the NPPC will award special seals to pork producers who have voluntary environmental assessments performed, and promptly report and correct any discovered CWA violations.

30. See Citizens Legal Envtl. Action Network, Inc. v. Premium Standard Farms, Inc., No. 97-6073-CV-SJ-6 (W.D. Mo. July 2, 1997) (citizen suit against operator of 15 large-scale hog feeding facilities alleging CWA violations caused by defendant's storage and land application of animal waste and unauthorized discharges into neighboring waterways); American Canoe Ass'n v. Murphy Farms, Inc., No. 7:98-CV-4-F(1), 1998 U.S. Dist. LEXIS 21402, (E.D. N.C. Dec. 22, 1998) (citizens suit against swine facility for alleged CWA violations from defendant's unauthorized discharges of animal waste into neighboring waterways).

31. The use of an integrated compliance assistance and enforcement strategy has provided additional benefits to the Region and the sector. For example, Region 1 has been able to assemble a group of colleges and universities to identify and resolve the underlying root causes of environmental problems at these institutions. A byproduct of the root cause effort was the establishment of the College Consortium for Environmental Excellence (CCEE), a coalition whose mission is to identify specific environmental issues facing schools and communicate with EPA about them. For further information on Region 1's programs for colleges and universities, contact Peggy Bagnoli, EPA Region 1, at (617) 918-1828.

32. EPA's and DOJ's robust criminal enforcement program reflects the goal of punishing severely and personally those who put the public at serious risk by callously disregarding our nation's environmental laws. Sentencing criminals to serve jail time is an extremely important deterrent to noncompliance because prison sentences are the only costs of doing business that directly impact personal liberty and cannot be passed onto the consumer.

33. For example, in 1999, EPA assessed a record $ 166.7 million in civil penalties, including the largest Clean Air Act (CAA) and RCRA penalties ever, with the penalties assessed for noncompliance with CAA diesel engine requirements representing the highest civil penalty award in EPA history. Also in 1999, the criminal program obtained a record 208 years of incarceration for environmental offenses, including the largest sentence in program history—13 years—for dumping four million gallons of contaminated wastewater into the Tampa, Florida, sewer system and illegally sending 170,000 pounds of hazardous sludge to the city's incinerator. A new record was also set for administrative penalty order complaints issued, 1,654. The combined total of civil judicial and administrative actions (3,945) for the year was the highest over the past three years. This is in addition to a record total of $ 3.6 billion in injunctive relief required to correct violations ($ 3.4 billion), conduct superfund cleanups by potentially responsible parties, and provide additional environmental and health benefits through Supplemental Environmental Projects (SEPs). U.S. EPA, EPA Sets Enforcement Records in 1999 (Jan. 19, 2000) (press release).

34. See, e.g., WORLD BUSINESS COUNCIL FOR SUSTAINABLE DEVELOPMENT, ENVIRONMENTAL PERFORMANCE AND SHAREHOLDER VALUE (Georges Blum et al. eds., 1998) (the quality of a company's environmental management is an indicator of the quality of its overall business operations, with share-value output correlating positively with better environmental management and performance). The article is published at http://www.wbcsd.ch/publications.

35. EPA developed the BEN computer model to calculate the economic benefit a violator derives from delaying or avoiding compliance with environmental statutes. The Agency uses the BEN computer model primarily to develop penalty figures, though it can be used to determine the savings from delaying or avoiding any expenditures. The Windows version of the BEN Model, along with the BEN Users Manual, may be downloaded from http://es.epa.gov/oeca/models/ben.html. Visit http://www.ntis.gov/fcpc/cpn6215.htm for information on other enforcement program cost models.

36. See United States v. Municipal Auth. of Union Township, 150 F.3d 259, 28 ELR 21415 (3d Cir. 1998) (affirming a district court decision imposing a $ 4.031 million CWA civil penalty by assessing the economic benefit gained during the period of the violations on the basis of the violator's "wrongful profits," in lieu of delayed or avoided costs which in this case were zero) ("[The violator's] delay in constructing a pretreatment plant was not beneficial to its 'bottom line' . . . . Our general assumption of the reasonable capitalist went awry with this company."). Id. at 266, 28 ELR at 21418.

37. See, e.g., James T. Hamilton, Pollution as News: Media and Stock Market Reactions to the Toxics Release Inventory Data, 29 J. ENVTL. ECON. & MGMT. 98 (1995) (first public disclosure of toxic release inventory (TRI) information on emissions had a significant effect on the market values of traded firms). Cf., Shameek Konar & Mark A. Cohen, Information as Regulation: The Effect of Community Right-To-Know Laws on Toxic Emission, 32 J. ENVTL. ECON. & MGMT. 109 (1997) (firms suffering the worst financial consequences upon the initial TRI announcement subsequently achieved the greatest emissions reductions among their industry peers).

38. See 48 C.F.R. subpt. 9.4 & 40 C.F.R. pt. 32. Suspensions are immediately effective, temporary actions. They last up to one year and may be based on, among other things, indictments, information or evidence of environmental crimes, or false statements. Debarments apply for set periods of time which are decided on a case-by-case basis. Debarments may be based on, among other things, civil judgments, convictions, and false statements. The CWA and CAA, in §§ 508 and 306, respectively, provide for statutory debarment by operation of law following criminal conviction. The effect of a suspension or debarment by a federal agency is governmentwide, and can be extended to include subsidiaries, parent companies, and other individuals. Individuals and entities excluded from receiving government grants and contracts are listed on the General Services Administration (GSA) "List of Parties Excluded From Federal Procurement and Nonprocurement Programs." For further information on EPA's suspension and debarment authority, including the applicable federal regulations, visit http://www.epa.gov/ogd/sdd.htm, or call (202) 564-5295.

39. MONT. CODE ANN. § 75-11-308 (1999). This statute, among other things, limits an UST owner's eligibility for reimbursement from the UST fund to facilities where, "with the exception of the release, the operation and management of the tank complied with applicable state and federal laws and rules [on] prevention and mitigation of petroleum releases when the release was discovered and remained in compliance following discovery of the release."

40. In re Petroleum Tank Release Compensation Board, Mont. A.G. Opinion No. 9 (Feb. 17, 2000) (available at http://www.doj.state.mt.us/ago/opinions/00/48-009.htm).

41. For this reason, one of the questions posedin the RFP is whether larger penalties have a greater deterrent effect (specific or general) than smaller penalties. RFP, supra note 15, at 5.

42. Richard Lempert, Deterring Environmental Violations: Framing the Research Questions (paper presented at the NIJ, DOJ, and EPA Forum on Deterrence of Environmental Violations and Crimes) (July 12-13, 1999).

43. Wayne Gray & John Scholz, Analyzing the Equity and Efficiency of OSHA Enforcement, 13 LAW & POL'Y 185, 199 (1991).

44. Id. at 201-02.

45. Id. at 199.

46. Id. at 203.

47. E.g., U.S. EPA Region 5's 1996 Minimills Self-Disclosure Initiative. See http://www.epa.gov/Region5/minimill/. In 1996, Region 5 used an integrated sector-based approach to improve compliance at minimills in six states, focusing on Electric Arc Furnaces (EAFs). The approach combined aggressive compliance assistance outreach and marketing of EPA's Audit Policy incentives with potential future inspections and/or enforcement for facilities declining to participate in the Initiative. First, the Region identified relevant minimills, contacted industry groups, and sent out notification letters concerning the Initiative. Each mill had the opportunity to carry out a self-audit within a six-month period after being contacted, with any identified violations to be handled using the Audit Policy. During the six-month period, the Region conducted compliance assistance activities including: a kick-off meeting, a web page on the Internet dedicated to the initiative, telephone and e-mail access to EPA staff, EPA presentations at two conferences, coordination with state agencies to assure consistency and correspondence and meetings with individual companies. Out of 22 minimills, 10 mills self-disclosed findings based on self-audits. One facility self-disclosed without submitting an audit. Most reported violations were minor, and no penalties were assessed for mills that voluntarily disclosed and corrected violations through a self-audit. At the end of the six-month period, Region 5 began investigating the remaining minimills and brought enforcement actions against several mills, found in violation, which had not self-audited. While EPA did not develop baseline data to demonstrate a statistical improvement in compliance rates as the result of this particular Initiative, the self-audits were successful in uncovering violations which likely would not otherwise have been discovered or corrected.

48. See INTERNAL REVENUE SERVICE, FEDERAL TAX COMPLIANCE RESEARCH—INDIVIDUAL INCOME TAX GAP ESTIMATES FOR 1985, 1988, AND 1992, Pub. No. 1415 (Rev. 4-96) (Apr. 1996). This study found an association between the visibility of income and the frequency at which taxpayers fail to report it. Income types not subject to any third-party information reporting exhibited the highest rate of income reporting noncompliance on the order of 30%. Income types subject to information reporting were misreported much less frequently, on the order of 2-10%, while income types subject to both information reporting and withholding were rarely misrepresented at all, i.e., less than 1% of the time. Id. at 8, tbl. 3. For further information on income tax compliance issues, see INTERNAL REVENUE SERVICE, THE DETERMINANTS OF INDIVIDUAL INCOME TAX COMPLIANCE—ESTIMATING THE IMPACTS OF TAX POLICY, ENFORCEMENT, AND IRS RESPONSIVENESS, Pub. No. 1916 (Rev. 11-96) (Nov. 1996).

49. EPA's press release announcing the Agency's enforcement accomplishments for FY 1999, for example, leads with the statement: "The U.S. Environmental Protection Agency today announced record enforcement actions and penalties for Fiscal Year 1999, including $ 6.3 billion for environmental cleanup, pollution control equipment, and improved monitoring . . .; $ 166.7 million in civil penalties . . . ; and 3,935 civil judicial actions . . ." See supra note 33.

50. See EPA ENFORCEMENT ALERT, EPA STEPS UP ENFORCEMENT OF DIESEL, GASOLINE NONROAD ENGINE IMPORTS, EPA-300-N-00-003, at 2-3 (Feb. 2000) ("NO_x, ozone and PM [from nonroad diesel engines] have been linked to a range of serious respiratory health problems and a variety of adverse environmental effects.").

51. See U.S. EPA, U.S. Expands Clean Air Act Lawsuits Against Electric Utilities, at 2-3 (Mar. 1, 2000) (press release):

The lawsuits seek to force the facilities to install appropriate air pollution-control technology to significantly reduce tens of millions of tons of sulfur dioxide, nitrogen oxides, and particulate matter illegally emitted into the air each year. . . . In addition to detrimental effects on asthma sufferers, the elderly and children, power plant emissions have been linked to forest degradation, waterway damage, reservoir contamination, and deterioration of stone and copper in buildings.

52. See U.S. EPA, ENFORCEMENT AND COMPLIANCE ASSURANCE ACCOMPLISHMENTS REPORT—FY 1997, EPA-300-R-98-003, at 2-6 (July 1998) ("For the second year, the Agency collected data [using Case Conclusion Data Sheets] on the impact of its enforcement actions in directly addressing risks to public health and the environment."). Figure 2-9 at page 2-10 illustrates the results of EPA enforcement actions concluded in FY 1997 in terms of factors such as use reduction, industrial process changes, and emissions/discharge change. Figure 2-10 on the following page lists, by name of pollutant and reduction in thousands of pounds, the 20 largest reported pollutant reductions.

53. See U.S. EPA, PARTNERS FOR THE ENVIRONMENT, BOOSTING YOUR BOTTOM LINE, EPA 100-R-00-001, at 8 (2000):

According to the Conference Board, an international business membership and research organization, almost 80% of senior environmental, health, and safety (EH&S) executives predict that their companies' global EH&S reputation among stakeholders will become more crucial to their bottom line in the next 5 years. Another survey, by marketing analysis firm Walker Research, found that more than three out of four customers avoid businesses that have an irresponsible corporate environmental attitude.

54. See supra note 51.

55. 62 Fed. Reg. 8314 (Feb. 24, 1997) (codified at 40 C.F.R. pts. 51, 52, 60, 61).

56. Murray A. Greene & Christopher B. Amandes, The Credible Evidence Rule Raises the Compliance Stakes for Air Emissions Sources, HOUS. LAW., Mar./Apr. 1999, at 30, 34.

57. EPA is committed to developing a "performance track" system to provide "top performers" with greater flexibility to meet regulatory requirements if they do more to protect the environment and assure accountability. See U.S. EPA, INNOVATIVE APPROACHES TO ENFORCEMENT AND COMPLIANCE ASSURANCE, EPA-300-K-99-003 (1999) (available at http://es.epa.gov/oeca/innovative/final7.pdf). Two promising, ongoing state "performance ladder"-type programs are Oregon's Green Environmental Management Systems (GEMS) Permits Program and New Jersey's Gold Track Program for Environmental Excellence. These programs have been accepted by EPA under its ECOS Innovation and Project XL programs, respectively. The Oregon GEMS Program establishes a three-tier system in which greater demonstrated environmental performance is acknowledged with increasing regulatory flexibility and other incentives to participating facilities. More information on the program may be obtained from the EPA Region 10 Project Lead; Clark Gaulding, at (206) 553-1849. The Gold Track Program is an enhancement of New Jersey's Silver Track in which New Jersey will provide varying degrees of regulatory flexibility in response to different levels of environmental commitment made by participating facilities. For more information on the New Jersey Gold Track Program, see http://www.epa.gov/ooaujeag/projectxl/njgold/index.htm.

58. See, e.g., Paul Ormerod, Butterfly Economics: A New General Theory of Social and Economic Behavior (1999) (unpublished manuscript) (economist Paul Ormerod employs chaos theory in arguing that the large amount of literature on criminology that often contradicts itself is an inevitable consequence of the essentially unpredictable nature of human behavior).

59. For example, even if the latest research were to demonstrate that the most effective approach available to EPA to deter environmental noncompliance would be to immediately transfer one-half of the civil enforcement program's resources into criminal enforcement, this option would require highly unlikely congressional action to implement. Cf. Kathleen Segerson & Tom Tietenberg, The Structure of Penalties in Environmental Enforcement: An Economic Analysis, 23 J. ENVIL. ECON. & MGMT. 179, 184 (1992) ("Our model does not explicitly distinguish between criminal and civil penalties per se. . . . To the extent that the distinction between the two rests primarily on moral bases . . . little can be done in a formal economic model to capture this distinction.").

60. In the author's experience, persons typically cite one or more of the following rationales in support of this assumption: (1) unlike other lawbreakers who are "bad" at heart, environmental violators are essentially "good people"; (2) environmental laws deserve to be broken because they illegitimately encroach on personal freedom and property rights; (3) while the environmental violations themselves are wrong, the activities which lead to environmental violations have social utility and should not be chilled; or (4) environmental laws are prone to being violated accidentally due to their complexity. Economists, in particular, employ a variant of the third rationale in arguing for "optimal" levels of enforcement and deterrence. See, e.g., Segerson & Tietenberg, id., at Introduction, subsection entitled, "Characterizing an Efficient Outcome Under a System of Fines." See also A.M. Polinsky & S. Shavell, The Optimal Use of Fines and Imprisonment, 24 J. PUB. ECON. 89 (1984).

61. The NIJ, together with DOJ's ENRD and EPA's OECA, held the Forum on Deterrence of Environmental Violations and Crime, July 12-13, 1999, prior to developing the RFP. The group of academic experts and senior federal, state, and local policymakers and practitioners invited to the forum participated in a roundtable discussion of the existing deterrence literature, and worked to generate research ideas and identify potential partners for conducting or sponsoring such research.

62. For the CIP Literature Summaries report, see http://es.epa.gov/oeca/oppa/cip.html. Persons seeking other information regarding the CIP should contact the author of this Article, who served as CIP Project Co-Manager, at (202) 564-2429 or silberman.jon@epa.gov.

63. See supra note 22. The earlier Cohen report is summarized in the CIP Literature Summaries report, supra note 62.

64. PRICE WATERHOUSE LLP, THE VOLUNTARY AUDIT SURVEY OF U.S. BUSINESS (Mar. 1995).

65. NATIONAL CONFERENCE OF STATE LEGISLATURES, STATE ENVIRONMENTAL AUDIT LAWS AND POLICIES: AN EVALUATION (Oct. 1998).

66. OFFICE OF POLLUTION PREVENTION, PESTICIDES, AND TOXIC SUBSTANCES, U.S. EPA, STUDY OF INDUSTRY MOTIVATION FOR POLLUTION PREVENTION (DRAFT) (1997).

67. One-half of the respondents to a recent National Wildlife Federation Global Survey of the financial services sector described how financial markets have begun placing a greater emphasis on environmental screens in their commercial credit decisions. See David Austin, The Green and the Gold: How a Firm's Clean Quotient Affects Its Value (Resources for the Future, Issue No. 132, Summer 1998). A 1996 ICF Kaiser Consulting Group study of 327 Standard and Poors' 500 firms found that companies could push up their stock prices by as much as 5% by improving both their environmental management systems and their performance. Stanley J. Feldman et al., Does Improving a Firm's Environmental Management System and Environmental Performance Result in Higher Stock Prices?, 6 J. INVESTING 87 (1997).

68. CALIFORNIA AIR RESOURCES BOARD, AN EVALUATION OF THE BAY AREA AIR QUALITY MANAGEMENT DISTRICT'S AIR POLLUTION CONTROL PROGRAM, at vi (Mar. 1998).

69. Id. at vi-vii.

70. A probable explanation for these results, according to the people who conducted the analysis, is that the facilities that were not regularly inspected paid less, or less careful, attention to their environmental operations. As a result, the operations became sloppier over time, resulting in more violations per facility. The static SNC rates may be an artifact of consistent, equally effective approaches to targeting SNCs.

71. Pub. L. No. 90-28; N.J. STAT. ANN. § 58:10a-14.1 (West 1995).

72. Sen. Robert Torricelli (D-N.J.), Remarks Before the American Bar Association (Sept. 1998) (copy on file with author). See also Hearings Before the U.S. Senate Env't and Public Works Comm., 105th Cong. 16-17 (1997) (statement of Todd E. Robbins, Environmental Attorney, U.S. Public Interest Research Group). In noting, among other things, that the improvement in New Jersey CWA SNC rates was accompanied by a decline in the number of enforcement actions against dischargers. Mr. Robbins concluded: "Under this approach, everybody wins. . . ." Id. at 17. The fact that enforcement actions declined by 67% since 1992, and penalties by 92% by 1994, has been cited as suggesting that "the law's strong deterrent effect has prompted much of the increased compliance." (Citations omitted.) Clifford Rechtschaffen, Deterrence Vs. Cooperation and the Evolving Theory of Environmental Enforcement, 71 S. CAL. L. REV. 1181 n.105 (1998).

73. OFFICE OF ENFORCEMENT AND COMPLIANCE ASSURANCE, U.S. EPA, SECTOR FACILITY INDEXING PROJECT EVALUATION, EPA 305-R-99-003 (Dec. 1999) [hereinafter SECTOR FACILITY INDEXING PROJECT EVALUATION]. Additional information on the SFIP, along with access to its data, may be obtained at the SFIP website at http://www.epa.gov/oeca/sfi. SFIP information is also available in hard copy format by calling the SFIP Hotline at (617) 520-3015.

74. The SFIP includes compliance and enforcement information submitted to state and federal regulators, as well as chemical release information submitted under the federal toxics release inventory (TRI). It links data submitted to state and federal agencies by facilities regulated under the CAA, CWA, RCRA, and EPCRA. Statistics on populations situated nearby facilities and production information are provided from census reports and external sources, respectively.

75. The SFIP may also encourage collaborative efforts between EPA and industry to design compliance assistance programs, assist states and facilities to adopt holistic, multimedia business perspectives and identify pollution prevention opportunities, and lead to better strategies for targeting compliance assistance, inspections, and enforcement.

76. Other examples of how environmental organizations have employed SFIP data include: (1) the Environmental Defense Fund (EDF) used the SFIP website to analyze the incidence of significant CAA violations and pollutant spills for each of the five industry sectors and publish a May 1998 news release ranking the sectors by number of violations and spills; (2) the Environmental Working Group (EWG) used the facility universes defined by the SFIP to analyze enforcement efforts and the CAA and to publish "Above the Law" in May 1999, and "Above the Law: How California's Major Air Polluters GetAway With It" in July 1999; (3) Friends of the Earth (FOE), in the Clean Steel Coalition project, used SFIP data to analyze the records of iron and steel facilities and shared the results with community activists seeking to better understand technical issues and monitor industry activities in their communities. FOE also accessed SFIP iron and steel facilities data to rank each facility's production efficiency (e.g., how much zinc released/ton of steel). See SECTOR FACILITY INDEXING PROJECT EVALUATION, supra note 73, at 27-28.

77. Id. at 29.

78. ASARCO Inc., ASARCO's Glover Smelter Shows Full Compliance for 1997 in EPA Study (May 1, 1998) (press release) http://www.asarco.com/PressReleases/sfipglov.pdf.

79. ASARCO Inc., ASARCO Amarillo Copper Refinery Fares Well in EPA Study (May 1, 1999) (press release) http://www.asarco.com/PressReleases/sfipamar.pdf; ASARCO Inc., ASARCO East Helena Smelter Fares Well in EPA Study (May 1, 1998) (press release) http://www.asarco.com/PressReleases/sfipehel.pdf; ASARCO Inc., ASARCO El Paso Smelter Fares Well in EPA Study (May 1, 1998) (press release) http://www.asarco.com/PressReleases/sfipelps.html; ASARCO Inc., ASARCO Hayden Smelter's Environmental Improvements Apparent in EPA Study (May 1, 1998) (press release) http://www.asarco.com/PressReleases/sfiphay.pdf.

80. Louis W. Nadeau, EPA Effectiveness at Reducing the Duration of Plant-Level Noncompliance, 34 J. ENVTL. ECON. & MGMT. 54 (1997). The Nadeau paper is summarized in the CIP Literature Summaries report, supra note 62.

81. Persons seeking more information on these results should obtain and read the full Nadeau study in order to understand the model's strengths, limitations, and statistical assumptions.

82. The behavior of regulated entities can be measured by either compliance with environmental regulation, or the level of facility emissions/discharges. Nadeau is choosing to measure behavior using emissions/discharge data, for two apparent reasons. First, data on emissions/discharges are more readily available and consistent, though reliance on self-reported data can result in statistical bias. Second, changes in emissions/discharges are easier to translate into changes in actual environmental quality.

83. The relationship can be depicted as: Enforcement —> Behavior —> Environmental Quality.

84. To generate the results, quarterly monitoring data were reviewed for the time period 1994 to 1998. The data included a measure of the total pollutant loadings at each facility for each quarter. This resulted in 20 observations for each facility in the data set (i.e., [5 years]x[4 quarters per year]). The number of facilities varied by type of pollutant monitored because not all facilities monitor for both BOD and TSS. The BOD data contained 118 facilities while the TSS data contained 124 facilities. Also, there are missing data elements (e.g., loadings) for some facilities in some quarters, thus some facilities have incomplete sets of data. This data was compared to a list of all enforcement and inspection activity at the regulated facilities over the relevant period (first quarter of 1994 to fourth quarter of 1998). For further information on the ongoing CFO-OECA deterrence study or to ask questions concerning the information presented in notes 84 & 85 of this Article, contact: for general information, Amy Porter, OECA-Office of Compliance (OC) at (202) 564-2431; for technical information, John Veresh, OECA-OC-Enforcement Planning, Targeting, and Data Division at (202) 564-2509.

85. See supra note 84 for how to contact EPA concerning these preliminary results.

86. The National Performance Measures Strategy (Strategy) was initiated by OECA in January 1997. It is a broad outreach effort designed to develop and implement an enhanced set of performance measures for EPA's enforcement and compliance assurance program. The purpose of the Strategy is to develop and implement new or revised performance measures to supplement the "output" or "bean count" measures traditionally used by EPA's enforcement and compliance program. While "output" measures remain an important measure of program performance and accountability, they do not reveal the state of compliance among regulated entities, the environmental results and impact from enforcement and compliance assurance activities, nor the extent to which important environmental objectives are being addressed. A key component of the Strategy was to develop, with the help of interested stakeholders and other parties, an enhanced set of measures to include "outcome" and "environmental indicator" measures. Outcome measures are qualitative or quantitative measures of changes in the behavior of the public or regulated entities caused, at least in part, by government actions. Indicators are qualitative or quantitative measures over time of progress toward achieving a set of enhanced environmental or human health measures called the "Performance Profile," as described in OECA's finalreport on the Strategy, released Dec. 22, 1997. The Performance Profile contains a mix of the three different types of measures—environmental indicators, outcome, and output measures. Each of the measures contained in the Performance Profile contributes a different and essential piece of essential information which ultimately will provide a more complete picture of OECA's enforcement and compliance assurance program activities. Core documents explaining the NPMS, including key reports, public meeting transcripts and notes, and stakeholder submitted comments are contained on a website the OECA established for the Strategy. Information is also available on the relationship of the NPMS to EPA's overall Strategic Plan required by GPRA, supra notes 1 and 9, and OECA's own strategic plan known as the National Enforcement and Compliance Assurance Plan (NECAP) (available at http://es.epa.gov/oeca/perfmeas).

87. The five populations will be chosen from the following priority sectors: 1. Organic Chemicals; 2. Coal-Fired Power Plants; 3. Integrated Iron and Steel; 4. Metal Services; and 5. NPDES Self-Reporting for Municipal and Non-Municipal Sources.

88. The databases are the Permit Compliance System (PCS), AIRS Facility System (AFS), and RCRA Information System (RCRIS).

89. If all or mostly all inspections are targeted, the total number required to yield statistically significant results will be considerably higher than if most of the inspections are random.

90. The behavior of regulated facilities/entities in SNC is especially important to the national enforcement program because these persons have committed what EPA considers to be the most serious violations from the standpoint of human health and environmental protection.

91. For purposes of Set 7, the OECA has defined "recidivism" as the percentage of facilities per program in SNC that return to compliance but later revert to SNC within 24 months. EPA is restricting the pool of potentially recidivist facilities under Set 7 to facilities where the requisite information is available to EPA to make the required determinations. For purposes of its FY 2001 annual performance measures reporting, EPA has committed to reduce by 2 percentage points the level of SNC recidivism in CAA, CWA, and RCRA programs from FY 1998 levels. The full process demonstrates how performance measurement, goal setting, and strategic planning are inextricably linked. Detailed information on OECA's NPMS, including access to all relevant documents, is available on OECA's website at http://es.epa.gov/oeca/perfmeas/.

92. As always, complete and accurate data is critical to establishing accountability and an accurate baseline for future reporting. A discussion of problems EPA and the states have experienced with the timeliness and reliability of their enforcement data is beyond the scope of this Article.

93. In commenting on an early version of the protocol for the Oregonprojects, the author of this Article asked questions such as who will be surveyed/interviewed and why (e.g., environmental management professionals; company presidents; staff), and whether followup inspections were planned to determine what the companies are actually doing, as opposed to what their spokesmen say they are doing.

94. For more information on the Oregon deterrence measurement project, contact Les Carlough. Manager, Statewide Enforcement, Oregon DEQ, at 2020 SW 4th Ave., Ste. 400, Portland OR 97201-4987.

95. EPA is also sponsoring a separate solicitation entitled. Market Mechanisms and Incentives for Environmental Management (MM&I) (available at http://es.epa.gov/ncerqa/rfa/market2000.html). That RFP, dated November 2, 1999 with a closing date of February 2, 2000, focuses on alternatives or complements to traditional environmental regulation that rely specifically on market forces, financial mechanisms, or other instruments to encourage regulated entities to reduce emissions or improve environmental performance. Examples include pollution fees or taxes, pollution allowance trading; subsidies, and differing liability approaches.

96. The topics are: (1) What motivates companies to monitor, dissuade, and punish poor environmental performance by their own facilities or noncompliant behavior by their employees?; (2) What motivates firms to attain environmental performance beyond that required by regulation?; (3) What organizational characteristics (e.g., centralized or decentralized environmental compliance responsibility) foster improved environmental performance and compliance?; (4) What (nongovernmental) financial incentives exist to encourage compliance? Does pollution prevention really pay? How and in what circumstances does environmental compliance and performance contribute to the bottom line?; and (5) How does public involvement in corporate activities affect environmental performance (i.e., are corporate decisionmaking frameworks that involve the public conducive of improved environmental performance or better compliance)? RFP, supra note 15, at 4.

97. The topics are: (1) What characteristics determine how people and organizations respond to the threat of sanctions? Do penalties have any deterrent effect? Do larger penalties have a greater deterrent effect (specific or general) than smaller penalties?; (2) How does disclosure of violations or emissions to the public improve environmental performance or compliance, either through market mechanisms (e.g., declining stock prices in response to pollution liability fears, or perceptions that eco-efficiency is related to profitability), or increased liabilities (e.g., torts; citizen suits; cleanups), adverse publicity, community pressure (community right-to-know)? How does public disclosure of violations or emissions interact with enforcement and compliance assistance? Does increased visibility of environmental noncompliance decrease detection costs or increase deterrence?; (3) What enforcement strategies would maximize general deterrent effects (i.e., compliance among entities who are not immediate enforcement targets)? Is the general deterrent effect of an enforcement action greater within the same local area or industry?; (4) What is the deterrent effect of criminal enforcement? Does the availability of criminal penalties affect compliance with the environmental laws? How does it differ in effect from civil enforcement?; (5) What evidence exists to link compliance to environmental performance? Under what conditions is compliance a suitable proxy for environmental performance? What are other proxies or measures of environmental performance?; and (6) What is the optimal mix of enforcement and compliance assistance to maximize compliance or environmental performance? What is more effective, enforcement followed by compliance assistance, or compliance assistance followed by enforcement? RFP, supra note 15, at 5-6.

30 ELR 10523 | Environmental Law Reporter | copyright © 2000 | All rights reserved