Purpose: this paper investigates the compliance behavior of firms simultaneously regulated under multiple environmental programs. Spillover effects arise when stricter regulation under one program increase or decrease a firm’s compliance with another program. Three possible relationships among regulatory programs are considered: complementarity, substitution and independence.

Method/data: I first develop a theoretical model of firm decision making that shows the potential for the three types of interrelationships among regulations. Then I propose an indirect test of the theoretical results and implement the empirical model using data on compliance with Resource Conservation and Recovery Act (RCRA) for large quantity generator facilities regulated under both RCRA and Clean Air Act (CAA). A bivriate probit model with censoring is estimated.

Data will be collected from various sources: the EPA’s Enforcement and Compliance History Online (ECHO) track compliance histories of those facilities regulated by EPA. Inspections, enforcement actions and penalties are also recorded in this dataset. The data used in the analysis covers from the third quarter of 2006 to the first quarter of 2008. Other relevant datasets include Facility Registration System (FRS), the Aerometric Information Retrieval System (AIRS) Facility Subsystem, the RCRAInfo database, and county characteristics.

Preliminary results: the preliminary results show evidence of positive cross program effects such that an increase in measures of CAA enforcement intensity lead to increased firm compliance with RCRA; the empirical results are consistent with a complementary relationship between the two programs. Thus coordination is required for optimal monitoring and enforcement strategies.