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http://ssrn.com/abstract=307241
 
 

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Big Field, Small Potatoes: An Empirical Assessment of EPA's Self-Audit Policy


Alexander Pfaff


Duke University - Policy, Economics, Environment; Duke University - Department of Psychology and Neuroscience

Chris William Sanchirico


University of Pennsylvania Law School; University of Pennsylvania Wharton School - Business Economics and Public Policy Department

John Lee


Columbia University, Graduate School of Arts and Sciences, Department of Economics

Daniel Prager


Columbia University, Graduate School of Arts and Sciences, Department of Economics

March 2004

UVA Law and Economics Research Paper No. 02-02

Abstract:     
Environmental self-auditing by private firms is generally thought to both deserve and require encouragement. Firms can audit themselves more cheaply and effectively than can regulators, but too often are deterred for fear that the information they uncover will be used against them. To reduce this disincentive, the EPA's Audit Policy lowers punitive fines when firms promptly disclose and correct violations that they themselves discover. While some contend that the Audit Policy is inadequate, EPA touts its success, presenting as evidence the policy's track record to date. Yet our examination of that track record leads us to question EPA's conclusions. While the policy appears to have encouraged firms to self-audit in a number of instances, a comparison of the violations uncovered in these cases with those detected by standard enforcement practices suggests that the typical self-audited violation is relatively minor. For instance, cases arising under the Audit Policy are more likely to concern reporting violations, rather than emissions. The relative insignificance of self-audited violations raises a number of broader policy questions, including whether the Audit Policy could and should be revised to play a larger role in regulatory enforcement.

Number of Pages in PDF File: 30

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Date posted: November 23, 2004  

Suggested Citation

Pfaff, Alexander and Sanchirico, Chris William and Lee, John and Prager, Daniel, Big Field, Small Potatoes: An Empirical Assessment of EPA's Self-Audit Policy (March 2004). UVA Law and Economics Research Paper No. 02-02. Available at SSRN: http://ssrn.com/abstract=307241 or http://dx.doi.org/10.2139/ssrn.307241

Contact Information

Alexander Pfaff
Duke University - Policy, Economics, Environment ( email )
Box 90312
Durham, NC 27708
United States
Duke University - Department of Psychology and Neuroscience ( email )
Durham, NC 27708
United States
Chris William Sanchirico (Contact Author)
University of Pennsylvania Law School ( email )
3501 Sansom Street
Philadelphia, PA 19104
United States
215-898-4220 (Phone)
HOME PAGE: http://www.law.upenn.edu/faculty/csanchir/
University of Pennsylvania Wharton School - Business Economics and Public Policy Department
3641 Locust Walk
Philadelphia, PA 19104-6372
United States
John Lee
Columbia University, Graduate School of Arts and Sciences, Department of Economics ( email )
420 W. 118th Street
New York, NY 10027
United States
Daniel Prager
Columbia University, Graduate School of Arts and Sciences, Department of Economics ( email )
420 W. 118th Street
New York, NY 10027
United States
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