Working Paper: NBER ID: w13512
Authors: Nathaniel Keohane; Erin T. Mansur; Andrey Voynov
Abstract: This paper explores firms' response to regulatory enforcement. New Source Review, a provision of the Clean Air Act, imposes stringent emissions limitations on significantly modified older power plants. In 1999, the EPA sued owners of 46 plants for NSR violations. We study how electricity companies respond to both the perceived threat of future action, and the action itself. A discrete choice model estimates plants likelihood of being named in lawsuits increases with large historic emissions and investments. On the eve of the lawsuits, emissions at plants with a one standard deviation greater probability of being sued fell approximately ten percent.
Keywords: regulatory enforcement; New Source Review; Clean Air Act; emissions reductions; electric power industry
JEL Codes: L51; L94; Q52; Q58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| large historic emissions (N50) | likelihood of being named in lawsuits (K13) |
| capital investments (G31) | likelihood of being named in lawsuits (K13) |
| lawsuits announced (K41) | emissions reductions (Q52) |
| current emissions levels (Q56) | likelihood of being named in lawsuits (K13) |
| perceived enforcement threats (K42) | emissions reductions (Q52) |