Compliance Bias and Environmental (In)Justice

Abstract

Scholarship on race- and class-based disparities in regulatory outcomes has failed to provide a theoretically-grounded account of this bias’ origin. We address this shortcoming by providing a micro-level explanation of how demographics influence compliance bias, or the failure to detect noncompliant firms. We argue that regulatory compliance is best understood as a dual-agent – firm and regulatory officer – production function, and that community mobilization and agency decision-making authority shape bureaucrats’ incentives to report noncompliance. We test our argument with an original dataset on community mobilization and agency structure that delineates the political costs and benefits of state regulatory officers implementing the U.S. Clean Air Act. Using detection controlled estimation, we find that while certain communities are vulnerable to compliance bias, such bias is mitigated in the presence of either politically mobilized communities or decentralized enforcement authority within the implementing agency.

Keywords: regulation, compliance, environmental justice, policy implementation