Monday, February 27, 2006

EPA Agreements Limit Fines

"In a first step toward setting firm guidelines on the monitoring of emissions from factory-style farms, the U.S. Environmental Protection Agency has reached agreement with 20 farms to collect air samples. In return, noncompliant operations will pay EPA a one-time fine ranging from $200 to $100,000. Ultimately, 2,681 Animal Feeding Operations (AFOs)- representing some 6,700 farms in 42 states will sign similar deals."
-Engineering News-Record (Feb. 13th, 2006)

The article is a look into a first step into controlling air pollution in a previously unmonitored industry. The policy is looking at air pollution as a negative externality. The EPA is charging a “one-time” fee for violators. This could pose a long-term environmental problem due to the fact that violators only would have to pay the fee one time, yet be allowed to continue to pollute at their previous quantity. A Coase Theorem policy might have better long-term results considering the negative externality. As it stands, all firms are operating at zero liability for their actions. The Coase Theorem would push firms into having more liability. It will be interesting to see how this problem will evolve.

2 comments:

MeShell McLeod-Mahoney said...

According to the EPA website, there are considerable other measures that those that have signed the agreement must agree to implement. The Animal Feeding Operations Air Quality Compliance Agreement Fact Sheet can be found at http://www.epa.gov/compliance/resources/agreements/caa/cafo-fcsht-0501.html.

In addition, signing the Compliance Agreement is basically a maneuver to get these producers to clean up their act in exchange for forgivance of past violations, and does not exempt them from being prosecuted if they violate the terms of the agreement. Furthermore, the agreement states that the EPA reserves the right to NOT enter into any covenants with AFOs that have already been notified that they are in violation of previous standards, so producers that are already committing egregious offenses cannot just buy their way out.

An aspect that I think is interesting is that though this is more of a command-and-control approach, the EPA aims to assist states in enforcing particulate limits that each has set: "The covenant not to sue will be nullified if AFOs fail to comply with state nuisance final orders relating to air emissions," and "The Agreement will complement ongoing state and local efforts to promote research into AFO air emissions and to improve air quality."

Larry Eubanks said...

Do you see any economic reasons that EPA should be involved in pollution from such production processes?

Tyler suggests that the Coase proposition would be something relevant to the policy issues presented by AFOs. That suggests he may be seeing the problem as having relatively small numbers involved. If so, then why would we think, from an economic point of view, that the national government should be involved?

Also when considering this question, perhaps we should ask what the geographic attributes of this pollution issue are? Does the pollution affect people across 100s of miles? From one community which is the source of pollution to another community which might represent the receptor? If the geographic range of the problem is within a given city or town, or perhaps even within one region of a town, why should the national government be involved?