Pollution-induced regulation substitution

Abstract

This paper estimates the previously unexamined effect of Clean Air Act (CAA) monitoring and enforcement (M&E) on Clean Water Act (CWA) M&E. According to the literature, air polluters located close to violating air monitors face more CAA scrutiny, as regulators reallocate resources to these areas. Given limited regulatory resources within states, we examine how this reallocation affects CWA M&E. We find that plants located close to violating particulate matter (PM) monitors are less likely to receive state-level CWA inspections and enforcement actions. These results provide evidence that state regulators substitute resources across federal environmental regulations, which may explain previously observed substitution of pollution across media from air to water as a response to heightened CAA scrutiny.