The Effectiveness of Litigation as a Policy Instrument: The Case of the New Source Review Settlements

54 Pages Posted: 14 Jun 2019 Last revised: 4 May 2020

See all articles by Sam Krumholz

Sam Krumholz

University of California, San Diego (UCSD) - Department of Economics

Date Written: June 3, 2019

Abstract

Enforcing regulations through litigation against noncompliant firms is an important policy tool for environmental regulators. In this paper, I provide new empirical evidence on the effectiveness of this mechanism by examining the effects of a major environmental enforcement initiative, which led one-third of the US coal-fired power plant fleet to come under a consent decree. I show that legal settlements arising out of this initiative caused large decreases in pollution emissions, which further led to meaningful improvements in local air quality and decreases in local cardiovascular and respiratory mortality rates. I then show suggestive evidence that in regulated electricity markets average electricity retail price and utility revenues increased following a settlement, implying that a substantial proportion of overall costs were borne by ratepayers.

Keywords: power plants; new source review; environmental regulation; law and economics

JEL Classification: Q30; Q52; K32

Suggested Citation

Krumholz, Sam, The Effectiveness of Litigation as a Policy Instrument: The Case of the New Source Review Settlements (June 3, 2019). Available at SSRN: https://ssrn.com/abstract=3398035 or http://dx.doi.org/10.2139/ssrn.3398035

Sam Krumholz (Contact Author)

University of California, San Diego (UCSD) - Department of Economics ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States

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