The Shadow of the Rational Polluter: Rethinking the Role of Rational Actor Models in Environmental Law

Abstract

The modern American environmental regulatory system is founded on the assumption that business firms are rational polluters: that the rational pursuit of their self interest guides both their compliance decisions and their participation in the political process. This traditional view of firms implies that environmental regulators must deter pollution through the imposition offines and penalties, and must deter capture and subversion of the regulatory process through the use of prescriptive and proscriptive rules. Critics of this traditional view claim that the regulatory system is unnecessarily complex, making compliance difficult, and unnecessarily punitive, since most firms try to comply and most noncompliance is unintentional. This article examines this debate between proponents of the traditional view and proponents of the complexity critique, a debate that lies at the root of ongoing controversies over civil enforcement, citizen suit standing, mens rea standards in environmental criminal prosecutions, environmental auditing policy, and EPA's experiments with collaborative regulation. While there is evidence to support both, it seems clear from a

Coerced Confessions: Self-Policing in the Shadow of the Regulator

“…The most common conceptualization of compliance behavior is grounded in deterrence theory, an economic model that assumes firms are rational actors that will comply with legal directives only to the extent that the costs of expected penalties exceed the benefits of noncompliance (Kagan and Scholz 1984;Andreoni et al 1998;Spence 2001). According to deterrence theory, firms' compliance behavior is influenced both by specific deterrence -"the fear engendered by the prior experience of being inspected, warned or penalized themselves" (Thornton et al 2005:263) -and by general deterrence, or "hearing about legal sanctions against others" (Thornton et al 2005:263;Gibbs 1986).…”

Assessing the Accuracy of Self-Reported Data: an Evaluation of the Toxics Release Inventory

“…2 For research on information provision as a regulatory instrument, see Lyon and Maxwell, 1999;Sunstein, 1999;Maxwell, Lyon, and Hackett, 2000;Roe, 2000;Cohen, 2001;Fung, Graham, and Weil, 2002;Graham, 2002;Stephan, 2002. For debate about environmental policy instrument selection, see Esty, 1996;Farber, 2000;Schroeder, 2000;Karkkainen, 2001;Spence, 2001. Assessments of environmental justice analyses include Hamilton (1993Hamilton ( , 1995b; Been (1994); Hamilton and Viscusi (1999); Viscusi and Hamilton (1999); Lazarus (2000); Cole and Foster (2001).…”

Corporate citizenship and corporate environmental performance

“…These assumptions have been extended to corporate environmental crime as well [64]. Empirically, scholars often focus on the relationship between corporate characteristics (e.g., size, profitability) and crime because the organizational context is typically viewed as an important predictor of firm outcomes [19].…”

“…Traditional theories of corporate crime assume that companies operate as "amoral calculators" and will only take costly measures to comply when it is likely that they will be caught and penalized [42,64]. Yet, amoral calculation does not explain why profit-maximizing companies would comply with laws that are weakly enforced [41].…”