Association for Public Policy Analysis & Management

This paper builds off of recent analyses of environmental monitoring and enforcement policy to evaluate hazardous waste treatment and disposal regulation through the Resources Conservation and Recovery Act. Using two decades of plant-level inspection and enforcement data, we have reaffirmed the basic conclusion that monitoring and enforcement activities tend to produce positive externalities in the regulatory environment. These externalities are measured in the form of increased compliance rates among plants that were not the target of agency actions. This study finds that Compliance Evaluation Inspections conducted by the Environmental Protection Agency (EPA) increase state-wide compliance by as much as ten percentage points in the agency’s most heavily targeted states. Inspections conducted by states increase compliance rates across the state by as much as twenty percentage points in similarly targeted locations. In addition to this, we make use of finer grained data to identify more detailed spatial relationships between monitoring and enforcement activities and neighboring plant compliance than have been done before. By using this data, we find not only that inspections generate the positive spillover effects mentioned earlier, but that the spillover effects of EPA inspections cross state lines while the compliance spillovers of state inspections are significantly reduced across these borders. These findings provide further evidence that monitoring and enforcement activities generate significant positive externalities, while providing some insight into the spatial and jurisdictional dynamics that drive these changes.