Make It a Golden Skeleton in the Closet: Corporate Environmental Crime and Deterrence

A primary goal of criminally prosecuting corporations that violate federal environmental laws is to promote specific deterrence. The idea is that once a company is successfully prosecuted it should be deterred from committing a new environmental law violation. Whether prosecutions do in fact deter companies from committing subsequent environmental law violations is another matter entirely and requires empirical verification. To date, scholarship on this issue regarding corporate environmental crime prosecutions in the United States is lacking. Our paper provides an empirical inquiry into to what extent companies that are prosecuted for environmental crimes in the United States continue engaging in these crimes. Utilizing a dataset of 242 individual companies prosecuted for an environmental crime between 2001 and 2013, we do not find evidence suggesting prosecutions are specifically deterring corporations from violating environmental laws again. In fact, prosecutorial practices may encourage future offending, and fines for environmental law violations will likely need to be increased substantially in order to be an effective deterrent. The companies committing new violations tend to have large revenues, many employees, and prior violations. Thus, while a criminal past can be seen as a skeleton in the closet for certain corporations, it just may be a golden skeleton.