Discretion given to local authorities is an essential feature when national governments delegate enforcement of environmental regulations/laws to the local authorities. Enforcement discretion, however, raises the concern about weak environmental enforcement at the local level, especially in developing countries where institutions are built on weak foundations in general and enforcement usually falls short of what is needed to address environmental challenges. Given that existing literature does not have a clear understanding of whether discretion helps or hinders enforcement, This paper uses a unique nation-wide dataset collected from more than 2,200 counties in China from 2015 to 2017 to empirically identify key factors considered by local environmental authorities when they exercise discretion in the enforcement of the new Environmental Protection Law. Main results from the econometric analyses show that the level of enforcement measured by the total number of penalties is significantly higher in counties with higher GPD per capita and larger government budget deficit. In contrast, the choice of penalty types is unlikely to be correlated with these two variables. The patterns above are quantitatively similar across geographical regions that have different natural, economic and environmental conditions. Similar to the case for which the central government issues a series of normative documents to limit local environmental authorities’ room to select the type of penalties to be imposed, it is also necessary for the central government to regulate local authorities’ discretion to decide whether to impose penalties.