%0 Journal Article %A Dietrich Earnhart %A Sarah Jacobson %A Yusuke Kuwayama %A Richard T. Woodward %T Discretionary Exemptions from Environmental Regulation: Flexibility for Good or for Ill %D 2022 %R 10.3368/le.052520-0071R1 %J Land Economics %P 052520-0071R1 %X Many environmental regulations impose limits on harmful activities yet include discretionary “safety valve” provisions allowing the regulator to grant exemptions that provide relief to regulated parties. We construct a theoretical model and explore cases in which this discretion serves good or ill. We show that when a regulation is otherwise inflexible, exemptions can improve social welfare, and perhaps reduce pollution, by distributing abatement more cost-effectively across polluters. However, these beneficial predictions rely on an unconstrained, fully informed, and benevolent regulator. In other cases, exemptions may not offer such gains; further, the discretionary nature of exemptions allows them to be abused. %U https://le.uwpress.org/content/wple/early/2022/08/16/le.052520-0071R1.full.pdf