Does self-policing reduce chemical emissions?

The U.S. Environmental Protection Agency's Self-Policing Policy (more commonly referred to as the Audit Policy) waives or reduces penalties when companies voluntarily discover, disclose, and correct environmental violations. One goal of the Audit Policy is to encourage companies to conduct environmental audits in order to identify poor environmental performance. Thus, the regulatory flexibility associated with the Audit Policy should reduce subsequent chemical emissions. While several studies examine predictors of the Audit Policy, no studies examine if facilities that use the Policy decrease their chemical emissions as a result. The purpose of this research is to examine the impact of the Audit Policy on changes in Toxic Release Inventory (TRI) emissions among a sample of 178 facilities operating in the chemical and allied product industry. The results of that analysis suggest that facilities that use the policy have similar subsequent emissions trends as facilities that do not use the policy. Moreover, the results also suggest that formal enforcement actions are the best predictor of TRI reductions. These findings persist despite other regulator and company controls. In terms of environmental policy, the results suggest that self-policing may not improve or deteriorate environmental performance in the chemical and allied products industry.