CPR Briefing Paper: Chesapeake Bay States Need to Strengthen Penalty Policies to Make Sure there is No Profit in Pollution

Industries that discharge water pollution are required to abide by clean water laws and regulations that limit how much they can pollute the nation's rivers, lakes, streams, and other bodies of water. If they exceed their limits or fail to implement appropriate methods for controlling their pollution, they violate the law. Such violations should trigger appropriate sanctions to deter all regulated entities from committing future violations. Unfortunately, polluters may weigh decisions about whether and how much to pollute from a dollars-and-cents perspective only, comparing the costs of compliance with the penalties to which they may be subject for exceeding applicable discharge limits. Such a comparison can make decisions about how much to pollute turn on a comparison of the bottom line on the corporate balance sheet with and without a violation, without any apparent recognition of the impact that pollution may have on the health of others or the social responsibility to abide by legal mandates. That's precisely why strict regulation of polluting industries is necessary. More specifically, it's why there should be no question that the cost of violating the law will exceed the avoided costs of compliance that result from a decision not to abide by applicable discharge limits. The penalties for violating environmental laws such as the Clean Water Act should provide ample economic disincentive to violate the law - the penalties must be high enough that regulated businesses that make decision about whether to pollute based purely on the bottom line will find no profit from polluting. Today, CPR releases No Profit in Pollution: A Comparison of Key Chesapeake Bay State Water Pollution Penalty Policies (CPR Briefing Paper 1305), which examines the component of clean water enforcement penalty policy that is aimed at ensuring that polluters do not profit from their bad behavior. The paper focuses on what is known formally as the "economic benefit of noncompliance (EBN)." We look at the penalty policies of three key Chesapeake Bay states, Maryland, Pennsylvania, and Virginia, to examine the rigor of their penalty policies and practices concerning the EBN penalty component. Using the EPA's policies and frameworks as the comparative standard, we review the clean water statutory and regulatory frameworks in these three states to determine the answers to the following questions: