1998 Reports

Environmental Self-Auditing: Setting the Proper Incentives for Discovering and Correcting Environmental Harm

Talikoff, Alexander Strickland Pfaff; Sanchirico, Chris William

Since the 1970's, the amount of environmental regulation at all levels of government has
increased significantly. Major federal statutes include the Clean Air Act, Federal Water
Pollution Act, Resource Conservation and Recovery Act (RCRA), Toxic Substances Control Act
(ToSCA) and the Comprehensive Environmental Response, Compensation, and Liability Act
(CERCLA). In addition, states have their own environmental laws and regulations. The
resulting web of often highly technical requirements makes it difficult for even the regulated
enterprise itself to know whether it is in compliance with applicable law. In response, many
firms have instituted a policy of conducting their own "environmental audits."