You are here:
EVALUATING THE IMPACTS OF ENVIRONMENTAL ENFORCEMENT: THE CASE OF EFFLUENT DISCHARGES IN THE PETROLEUM REFINING INDUSTRY
Impact/Purpose:
This research focuses on quantifying the impact of EPA enforcement activities on reducing water pollution discharges in the petroleum refining industry. Our conclusions are unique in that we are able to estimate statistically significant pollutant reductions attributable to EPA enforcement activities over the sample period.
Description:
This paper looks at the impact of enforcement activity on facility-level behavior and derives quantitative estimates of the impact. We measure facility-level behavior as the levels of Biological Oxygen Demand (BOD) and Total Suspended Solids (TSS) pollutant discharges generated by the facility. Enforcement actions should lead to reductions in the levels of these discharges if enforcement is effective at achieving its intended outcome. We test this hypothesis using data on the petroleum refining industry from 1995 to 1998. We separate enforcement actions into two categories: formal and informal; and we stratify our enforcement measures by agency type: state and Federal. Thus, for both BOD and TSS we used four measures of enforcement: formal Federal, informal Federal, formal state, and informal state. The impact of enforcement on discharges is estimated using a two-stage least squares estimation. Based on our modeling effort, we find that enforcement actions, for the most part, have a significant impact on both BOD and TSS discharges in the petroleum refining industry. In the BOD model, formal Federal actions and informal state actions were associated with significant reductions in discharges. Formal federal enforcement actions had the largest impact on BOD discharges, reducing average discharges by 468 tons annually. In the TSS model, informal Federal actions and formal and informal state actions were associated with significant reductions in discharges. Formal state actions had the largest impact on TSS discharges, reducing average discharges by 2,351 tons annually. Based on our statistical estimates, we calculated the reduction in discharges attributable to enforcement actions over the sample period. Enforcement actions are responsible for reducing BOD discharges by 19,630 tons and TSS discharges by 305,791 tons between 1995 and 1998. Of these totals, Federal enforcement actions accounted for 55 percent of the total BOD reduction and 54 percent of the total TSS reduction.