A growing number of business, government, and environmental interest groups have concluded that environmental policy in the United States is inadequate to deal with the complexities of environmental protection in the 21st century. In 1995, the National Science and Technology Council, a cabinet-level committee chaired by the President of the United States, outlined a national environmental technology strategy calling for "a new generation of incentive-based policies and programs that stress performance, flexibility and accountability."¹ In a report funded by Congress in 2000, the National Academy of Public Administration (NAPA) argued that "the nation's current environmental protection system cannot deliver the healthy and sustaining world that Americans want."² Unless the system is changed, NAPA warned, greenhouse gases will accumulate, nonpoint source pollution will increase, and natural resources will be degraded. "The regulatory programs in place in this country simply cannot address those problems at a price Americans can afford," the report emphasized. The Aspen Institute, in the proceedings of a conference of business, government, and environmental organizations, called for the modernization, reform, and improvement of environmental policy.³ Its report contends that although the regulatory approach may have worked well in the past, it is "unable to respond to today's challenges and opportunities as well as it should—it does not deliver and often inhibits continuously improving environmental performance."⁴ The Business Roundtable, coming to similar conclusions, insisted that 30 years after the U.S. Environmental Protection Agency's (EPA's) creation, "the time has come not only to mark our many accomplishments in improving environmental quality but to look ahead to new challenges in a rapidly changing world."⁵ The business group points out that traditional regulatory tools are no longer adequate and need to be updated so that our regulatory system can respond effectively.

All of these organizations, and others, note that the federal government's current command-and-control system of regulation requires the private sector to use the "best available" technology to control harmful air, water, and solid waste emissions from industrial and business facilities, but provides few incentives for industry to move beyond regulatory compliance to find new and innovative ways of preventing pollution at the source and of conserving resources through eco-efficiency practices. Few observers inside or outside of government deny that environmental regulations have greatly reduced air, water, and soil pollution in the United States since the early 1970s. Critics contend that the existing regulatory system is focused on media-specific points of environmental pollution, however, and is not effective in controlling nonpoint pollution. They also argue that separate laws for each type of pollution do not address complex environmental problems that involve more than one source, and that regulations often are not cost effective or based on sound scientific analysis or scientific peer review.⁶ Both business leaders and state and local government officials often point out that national regulations result in a "one-size-fits-all" approach that is relatively inflexible and unresponsive to local conditions and needs or industry differences.