Why Do Regulatory Agencies Punish? The Impact of Political Principals, Agency Culture, and Transaction Costs in Predicting Environmental Criminal Prosecution Outcomes in the United States

Abstract

Studies of administrative behavior are keen to examine the internal dynamics of agency decision making, as well the impact of external political actors on agency actions. Yet few studies apply these findings to the question of why agencies use their most punitive enforcement powers. Contrasting principal-agent, transaction costs, and organizational culture models of agency behavior, this study examines why regulatory agencies punish. Through content analysis of nearly one thousand of the U.S. Environmental Protection Agency's criminal investigations and subsequent prosecutions, 2001-11, findings suggest that punishment severity in environmental criminal cases is based less on transaction costs and political pressure and more on professional norms that value strong enforcement. These findings have important implications for explaining regulatory outcomes and administrative behavior.

Red state, blue state, green state: analysing the geography of federal environmental crime prosecutions within and across the U.S. states

“…O'Hear's (2004) study looked at data on environmental prosecutions and found defendants in environmental crime prosecutions are often treated more leniently than defendants in other federal crime cases. Ozymy and Jarrell's (2016) study examined the predictors of federal environmental crime prosecution outcomes.…”

“…The number of criminal indictments pursued by the agency was only about 340 in 2007 (Jarrell and Ozymy, 2014). Large corporations and other environmental offenders understand the transaction costs associated with strong enforcement, which is why the deterrent value of environmental enforcement is often very low (Ozymy and Jarrell, 2016) and offenders may see enforcement as just another variable in the calculation of the economic cost of doing business.…”

“…Region II, for example, has a strong reputation for enforcement activities, which has been cataloged in past research (Ozymy and Jarrell, 2015), whereas other regions have a less than stellar reputation. The EPA's actions may be affected by the current political environment (Ringquist, 1995;Ozymy and Jarrell, 2016) and that may influence the outcome in the states and political structure in general (Ozymy and Rey, 2013). Outcomes may result from the sheer nuance of the crimes that happened to be investigated at the time, the size of the state, presences of environmental groups, size of industry and so on.…”

“…Lynch et al (2004a) used self-disclosed data on environmental violations and compared it with the penalties assessed across different geographic areas. Other scholars use data on environmental crime sentencing and prosecutions to examine both the kinds of crimes that exist, as well as how those crimes are prosecuted and why (Brickey, 2001;O'Hear, 2004;Ozymy and Jarrell, 2016).…”

Executive Actors and Environmental Enforcement: Examining the “Rick Scott Effect” in the U.S. State of Florida

“…Even with all of these constraints, executive actors do manage to navigate the principal–agent game at the state and federal level to much success. Environmental policy is often studied as a classic case of difficult principal–agent dynamics related to a salient, but complex, policy area that gives agencies autonomy over policy creation and implementation within the political context of many actors competing to influence agency outcomes, including the agencies themselves (Ozymy & Jarrell, ). In this context we find Presidents Reagan, Clinton, and G.W.…”