Study: Agencies Flout Environmental Rules More than Private Firms

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Government-owned power plants, hospitals and water utilities fall short in complying with federal environmental laws more often than similar private-sector entities, an academic study found.

Publicly owned facilities are less likely to face fines or other sanctions for violations than are those owned and run by private firms, according to an examination of records of plants regulated under the Clean Air Act and Safe Drinking Water Act from 2001-2011.

Published last month in the American Journal of Political Science, the study titled "When Governments Regulate Governments" also found that regulatory authorities are less vigorous in enforcing the rules when they are regulating other governments.

“The findings are significant but not surprising,” said co-author David Konisky of the School of Public and Environmental Affairs at Indiana University. He and co–author Manny Teodoro, associate professor of political science at Texas A&M University, viewed records from more than 3,000 power plants, 1,000 hospitals and 4,200 water utilities.

Their findings:

  • Public power plants and hospitals were on average 9 percent more likely to be out of compliance with Clean Air Act regulations and 20 percent more likely to have committed high-priority violations;
  • Public water utilities had on average 14 percent more Safe Drinking Water Act health violations and were 29 percent more likely to commit monitoring violations;
  • Public power plants and hospitals that violated the Clean Air Act were 1 percent less likely than private-sector violators to receive a punitive sanction and 20 percent less likely to be fined;
  • Public water utilities that violated Safe Drinking Water Act standards were 3 percent less likely than investor-owned utilities to receive formal enforcement actions.

One reason for the disparity, the professors said, is that government entities have “higher costs of complying with regulations because they often must go through political processes to raise the money needed to improve their facilities. And they may face pushback from customers or taxpayers who object to higher rates and have the political power to block them.”

Public entities also are able to delay or avoid paying fines when penalties are assessed. “And officials with regulatory agencies may be sympathetic to violations by public entities, because they understand the difficulty of securing resources in the public sector,” the academics concluded.

While some observers may take the findings as an argument for privatizing regulated services, Konisky cautioned that privatization comes with its own issues, “such as a loss of accountability and over-spending for infrastructure,” he said. Privatization “could be a solution, but it has to be put in context,” he added. Other approaches could include providing stronger incentives and assistance to help public agencies comply with regulations.

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