Lessons Learned in the Transfer of U.S.-Generated Environmental Compliance Tools: Compliance Schedules for Poland

Ruth Greenspan Bell and Susan E. Bromm

Ruth Greenspan Bell is Program Director for International Institutional Development and Environmental Assistance (IIDEA), Center for Risk Management, at Resources for the Future. Previously she was Senior Advisor to the Assistant Secretary of State for Oceans and International Environmental and Science Affairs and served in various capacities at the Environmental Protection Agency (EPA), most recently as Senior Attorney providing legal and policy institution-building advice to foreign governments seeking to strengthen their regimes for environmental protection. Susan E. Bromm is the Deputy Director of the EPA Office of Site Remediation Enforcement and is a member of the U.S. team of the Polish/U.S. Environmental Enforcement Project. The ideas expressed in this Dialogue are those of the authors and do not necessarily represent EPA's views. The authors wish to acknowledge the leadership and dedication of the U.S. team co-leader, Thomas J. Maslany; the Polish team leader, Zbigniew Kamienski; and their colleague in EPA Region III, Jim Baker. Piotr Wilczynski of the World Bank, increased our understanding of Poland's fee system, and Bogudar Kordasiewicz, Katarzyna Michalik, and Pawel Kunachowicz of the Warsaw office of Hogan & Hartson very patiently helped us understand the nuances of the Polish legal issues described here.

[27 ELR 10296]

Introduction

Environmental-protection techniques that have been developed in the United States may be useful to other countries. Specific tools such as compliance schedules can help countries bring actual environmental practice in line with ambitious discharge requirements. They can also help domestic phase-in of obligations under accession agreements with entities such as the European Union (EU) that often have more rigorous requirements than new members are able to achieve in the short run. However, the success of these mechanisms is often linked to the availability of other types of institutions available in the United States, including traditions of law, public participation, and transparency.

Because the same combination of elements that form the backbone of environmental protection in the United States is not always found in other countries, effective transfers of tools with a track record of success in the United States require special efforts on the part of both countries engaged in the transfer, as well as in-depth understanding of each other's traditions of law and other domestic conditions. The process of adapting U.S.-developed toolsof environmental protection for use in countries with markedly different legal and cultural traditions provides interesting lessons, not only about their transferability, but more generally about the strengths and weaknesses of environmental-assistance efforts.

This Dialogue explores some of the lessons learned in the transfer of U.S.-generated compliance tools to other countries by examining an international assistance effort in which a specific compliance tool commonly used in the United States—the negotiated compliance schedule—was adapted for use in Poland. Understanding these lessons is particularly important because the United States is and will continue to be looked to as a model for the world in the area of environmental protection.

The Polish/U.S. Environmental Enforcement Project

Background

When the end of communism seemed in sight in 1989, the United States began an effort to assist the countries formerly in the Soviet bloc to gain the skills necessary to function effectively in a market economy. Not surprisingly, the lessons learned in environmental protection in the United States and the experiences of the U.S. Environmental Protection Agency (EPA) provided a model for much of the environmental assistance.¹

The collapse of the Soviet bloc also brought prominence to the severe industrial pollution affecting parts of Eastern and Central Europe. Poland, in particular, suffered from some of the highest levels of industrial pollution in Europe.² Many factors contributed to Poland's pollution problem, among them rapid post-war industrialization dominated by coal-based, energy-intensive heavy industries such as steel, coal, and heavy chemistry;³ state-owned, output-driven industry; lack of infrastructure investment (e.g., sewers and wastewater treatment);⁴ and communist dogma that held nature to be a tool for man to use to fulfill his needs and desires and further his economic goals.⁵

Despite what appeared to be a stringent set of laws containing rigorous environmental standards, the environmental-compliance [27 ELR 10297] system existing in Poland at the end of the Cold War was in fact rather toothless.⁶ For example, the right to a clean environment was added to Poland's Constitution in 1976, but was never implemented through legislation.⁷ Similarly, a 1980 Act authorizes fees for the use of natural resources and established a system of fines for pollution.⁸ These fees and fines are applied to industrial environmental investments through environmental-protection funds administered at the Voivoda (district) and the national level.⁹ There is some irony that this system, which appears to harness market forces, originated during the period of a centrally planned economy. The ostensible objective of this scheme is to create incentives for reducing pollution and to provide significant sources of funding for environmental-protection activities. But in fact, monetary penalties were inconsistently applied. Even when they were applied, penalties were ineffective as a compliance incentive because their predictability allowed them to be easily absorbed as a cost of doing business, or they were financed through soft loans from state banks.¹⁰ Additionally, fees for using natural resources were imposed based on pollution discharges but were often too small to affect behavior.¹¹ The entire fee and fine system was riddled with exceptions.¹² Perhaps most important, environmental standards themselves were idealistic and impractical, and there was no flexibility in the system to sanction incremental progress toward compliance.

Industry in the communist system was much more responsive to output quotas than financial incentives.¹³ Criminal penalties existed for environmental violations but could be waived if production goals were met.¹⁴ The communist government's actual priorities were evidenced by its policies of subsidizing inefficient, nonprofitable industries in an output-driven industrial system.¹⁵ Nevertheless, over time, particularly in the 1980s, some individuals and local authorities used the existing legal provisions creatively, including, occasionally to phase-in requirements.

After 1989, Poland began taking more consistent steps to address its environmental degradation, including strengthening its environmental-enforcement mechanisms¹⁶ and increasing environmental cooperation with the United States and the European Union. The tangible evidence of these changes includes the new laws and institutions discussed below, increased attention to real implementation activities, and indigenous investments in the environment.¹⁷

Poland's motivation to improve its environment reflects domestic pride and an appreciation of Poland's natural resources, as well as the overall post-communism philosophy of diversifying governing responsibilities and providing citizens an opportunity to have more influence over governmental actions. It is also partly economically driven. As Poland emerges into a market economy, it has begun to place economic value on natural resources, with the consequence of reducing waste and pollution.¹⁸ Poland's privatization program also creates some motivation to address the environmental problems attendant to polluting industries, because, for example, foreign investors are reluctant to take over "dirty" operations without a full understanding of their environmental liabilities and obligations.¹⁹ Finally, Poland's will to better its environmental track record is related to its strong desire to join the EU.²⁰ Poland will be required to harmonize or approximate its laws with EU directives and will also likely be required to show some progress toward achieving the standards contained in those directives.

The Existing Polish Compliance/Enforcement Program

Poland's environmental system has been governed by a web of laws that separately address specific media and activities, including nature, forests, water, fishing, hunting, geology, mining, and building. Its basic environmental law is the 1980 Law on the Protection and Management of the Environment (the Framework Act),²¹ which outlines broad, fundamental precepts of environmental protection and creates liabilities and an enforcement system that includes criminal sanctions.

Poland's Ministry of Environmental Protection, Natural Resources, and Forestry,²² created in 1989, has responsibility for establishing national policy and setting environmental [27 ELR 10298] standards. In each of the national government's 49 Voivodas, a Department of Ecology with implementation responsibilities reports to the Ministry and the Voivoda governor.²³ It is these Departments that, for example, issue required environmental permits. Enforcement authority is vested in the State Inspectorate (PIOS). PIOS also has the authority to issue and oversee guidelines on environmental monitoring that are applicable to all agencies and laboratories involved in pollution measuring and monitoring.²⁴ PIOS has district offices (VIOS) in each Voivoda that have the authority to issue fines and enjoin activities that endanger the environment.

Appeals of permits issued by the Voivodas' Departments of Ecology are first decided by the Ministry and eventually can be appealed to the Supreme Administrative Court. Similarly, fines assessed by a VIOS may be appealed to PIOS and ultimately to the Supreme Administrative Court. The Supreme Administrative Court hears all types of cases and one of its five divisions is devoted exclusively to environmental and construction issues. Presently, very little authority is vested at the Gmina (local) level.

The Polish/U.S. Environmental Enforcement Project's Proposed New Approach

U.S.-Polish cooperation to develop and strengthen Poland's national environmental institutions has existed since the 1970s, and began to intensify when Poland began its transition from a centrally planned economy. In 1992, U.S. and Polish environment bodies negotiated an agreement that identified cooperation in establishing a compliance and enforcement system as a priority area.²⁵ And on November 10, 1992, the Polish Environment Minister signed Decision 22,²⁶ creating a special Polish team to adapt and implement in Poland world solutions for the effective enforcement of environmental laws and requirements.²⁷

The team was given latitude to consider both legislative and organizational changes. The Polish team decided to undertake a thorough review of the U.S. compliance and enforcement system, as well as the systems of several European countries. In response to the Polish team's interest in reviewing the U.S. system for useful analogues and tools, the United States²⁸ established a counterpart U.S. team. With the assistance of the U.S. team, the Polish analysis of the U.S. system focused on the differences in the two countries' respective legal frameworks; the roles of different levels of government (federal, state, and local) in compliance and enforcement; and the use of negotiations, compliance schedules, and dispute-resolution techniques as alternatives to unilateral governmental actions to compel compliance.

After analyzing the environmental programs in the United States and several European countries, the Polish team developed a framework for revamping Poland's approach to environmental compliance. The operative document is a publicly available "concept paper."²⁹ This paper itself is particularly interesting because it is in effect an options paper, designed to provide some intragovernment and public understanding of the various alternatives that the Polish team considered and to build a constituency for the choices the Polish team made. To the authors' knowledge, it represents a departure from previous ways of presenting proposed government decisions.

At the heart of the Polish team's recommended approach to environmental protection is the use of "compliance programs" or what Americans would consider compliance schedules, implemented on a case-by-case basis through facility-specific permits. A compliance schedule is an enforceable schedule of remedial measures or actions leading to compliance with an applicable emission limit or other type of pollution-control requirement. The Polish compliance programs would be negotiated, enforceable agreements between the government and the facility, and would set forth increments of progress that the facility would be required to achieve.

The government's negotiating team would be composed of representatives from the Voivoda Department of Ecology, VIOS, and the local authority, if they elected to participate. During the period of coming into compliance, penalties would be waived as long as the facility continued to meet its compliance schedule. Also, as an incentive, mandatory fees could be earmarked for upgrades and improvements needed to achieve full compliance, rather than going to the National Environmental Fund. If interim deadlines were missed, all suspended penalties would become due and additional penalties (similar to stipulated penalties) would be imposed.

The Polish team expressed a strong desire to move toward integrated or multimedia permits as part of this framework approach. The multimedia approach is driven, even in light of the recognized difficulties some other countries are having [27 ELR 10299] implementing integrated permitting,³⁰ by the EU's movement toward integrated pollution prevention and control, as specified in the EU Directive on Integrated Pollution Prevention and Control.³¹

How Polish Institutional and Cultural Constraints Were Resolved

The interactions between the Polish and U.S. teams during the planning and drafting periods revealed several institutional and structural issues that had to be resolved. The first of these involved mechanisms to compensate for the differences between U.S. and Polish legal traditions.³² The Polish team could not expect that Polish courts could incorporate negotiated compliance schedules into court orders and directly enforce the terms of those schedules, as they do in the United States. Like most of Europe, Poland follows the civil-law tradition. In common-law countries like the United States, judges can use their discretion to fashion remedies appropriate to the specific facts before them. Further, they have the power to hold parties in civil contempt and punish them for violating court orders or injunctions.³³ In contrast, the civil-law tradition restrains the power of judges, and vests lawmaking power firmly in legislatures, which generally restrict judges in the exercise of equity.³⁴ The Polish found it necessary to create a set of procedures that would assure the enforceability of compliance schedules without relying on the same techniques used in the United States.

Second, the Polish team reviewed structural options that affected plans to move to negotiated agreements. Poland, like other civil-law countries, has a separate system for establishing administrative requirements that keeps review of such decisions out of the hands of the ordinary judiciary and substantially restricts the scope of the review.³⁵ Environmental protection, including responsibility for the volume and type of pollution, comes under this system, which establishes rules for the activities of the state administration and local governments. The Courts of Civil Jurisdiction have jurisdiction over issues such as liability and the enforcement of contracts. It is these courts that can award damages, including financial liability for nuisance and other environmental damage actions.

In Poland, the state acts in these two different legal spheres in different ways. These ways can roughly be analogized to the government acting in its proprietary capacity and acting in its governing capacity. Only in the first capacity does the state engage in bilateral legal relationships and enter into agreements with natural persons or other entities such as commercial or nonprofit organizations. An agreement under civil law between the state acting in its governing capacity and any economic entity is disfavored, and is characterized by some legal authorities as unthinkable. These experts say that the state cannot, for fundamental reasons, enter into agreements where its role is based on establishing and enforcing public order, including environmental protection. When it is acting in this unilateral capacity, the state does not enter into agreements that could be reviewed on substantive grounds by courts but only issues orders (administrative decisions) that must be followed by citizens and entities.³⁶ The Polish team had to consider these constraints for the shaping of its compliance program. It concluded that the best means of achieving the result of negotiated agreements is under Polish administrative law, supplemented with economic incentives.³⁷ Additionally, [27 ELR 10300] this decision may reflect concerns expressed elsewhere that Polish civil courts are the weakest branch of the judiciary, lacking sufficient enforcement capacity.³⁸

The Polish team also spent substantial time considering whether the compliance program should consist of sector-based requirements introduced through a descriptive act covering certain categories of enterprises or through individually crafted requirements.³⁹ In addition to the concern that generalized compliance requirements would not allow attention to the specific compliance issues confronting individual enterprises, and might end up with lowest common denominator solutions, a decision to use group requirements would also place all negotiation responsibilities on the central administration. The Polish team thought it far better to push negotiation responsibilities to the district level, closer to the actual pollution problems. This was consistent with an individual, not a group, approach.

From the U.S. team's point of view, there were additional legal and institutional obstacles to overcome. Some of these reflected Poland's incomplete transition to a market economy, and are being remedied over time by legislative efforts. For example, Poland now has a public procurement law to provide regularity to the process of government contracting. But other problems still require resolution. To some extent, these problems have ramifications on issues other than the process of environmental protection, and probably cannot be addressed solely through revisions to the environmental protection laws.

Many of the teams' concerns were related to the general issue of public access to information held by the government. The U.S. team believed that clear rules governing the handling and distribution of information in the possession of the government was an essential underpinning of a negotiation process. Rules assure the fairness of the negotiation by maximizing the public's ability to obtain and examine relevant information, and protect those negotiating on behalf of the government from having to make ad hoc decisions about whether to release potentially sensitive information. Poland has yet to establish such rules, although it has made strides toward a more open government. Under the previous regime, the legal status of environmental information in Poland was murky and its availability somewhat subject to the whims of government censors.⁴⁰ For example, during the 1980s, Communist Party-affiliated groups did publish various reports on the disastrous environmental conditions that existed in Poland; however, when western media picked up on these reports, the Party adamantly denied them.⁴¹ Today, there is still no set of decision rules analogous to the Freedom of Information Act (FOIA)⁴² that specify what kinds of information must be disclosed and assure that citizens will obtain sufficient information to assess the fairness of government actions.

In the course of the U.S./Polish Environmental Enforcement Project, the Polish team was very creative in finding opportunities to share its efforts and progress with interest groups, including the public interest environmental community. It consistently acted on the perceived need to increase public participation to comply with a European Community directive on the right of free access to environmental information,⁴³ and reiterated this in the concept paper. Nevertheless, the U.S. team was concerned about the impact of the differences in public-information requirements on negotiated compliance tools.

The U.S. team identified a related issue on access to information: the need to protect proprietary business information, or trade secrets. Poland does not appear to have any rules regarding government treatment of privately held confidential business information, but only a long-standing state-secrets law reflecting Poland's history of pervasive state ownership of industry and commerce. The existing state-secrets law may not provide adequate safeguards for private parties or for government officials who might be exposed to proprietary information in the course of negotiations. This may in turn lead to a reluctance by industry to share necessary information.

Another institutional and cultural issue concerned the relationship between political corruption and grants of discretion to negotiate changes in the terms and conditions of discharge requirements. This issue was raised consistently throughout the process by the Polish team, Polish government officials at all levels of government (including Ministries other than the Ministry of Environmental Protection, Natural Resources, and Forestry), industry, and the nongovernmental environmental advocacy sector. In the United States, nearly all environmental laws provide either explicit or implicit authority to negotiate schedules in the context of administrative or judicial enforcement actions.⁴⁴ This authority is supported by a variety of long-standing, effective laws and regulations to address concerns about undue influence over, and corruption of, executive branch officials empowered to negotiate on behalf of the government.⁴⁵ The public's confidence is bolstered by FOIA, public-participation requirements, government-in-the-sunshine laws, requirements for public vetting of consent decrees, and policies like the "fishbowl" principle of government.

In Poland, citizens and officials are acutely aware of the corruption that riddled the communist system and of the dangers that unfettered discretion can present to a system of laws. But thus far, there are no general safeguards built into the Polish system. This is not unusual throughout much of Europe, where there are fewer requirements governing public access to government decisionmaking than in the [27 ELR 10301] United States.⁴⁶ It is particularly troublesome in Poland, where concern over giving public servants unfettered discretion to negotiate is real and widespread.⁴⁷ This concern seems to include industry's interests (e.g., fear that government officials may unjustly treat the industrial entity or give one factory an economic advantage over its competitors) and protection of the public trust (e.g., bribery of government officials to give industry "sweetheart deals").

The Polish team devised a number of safeguards to deal with these concerns. First, their proposal establishes criteria for the kinds of enterprises that can be admitted to participation in the negotiation program. They would require the Minister of Environmental Protection, Natural Resources, and Forestry to compile and publish a list of eligible enterprises, based on general criteria, including the type of utilized technical installations and equipment, production, and environmental impact generated. An enterprise applying for the program would be required to prepare an environmental impact assessment, and prove it has undertaken or is prepared to undertake certain activities in fulfillment of environmental requirements. It would have to be prepared to prove that funding for environmental improvements had been secured. Each of these requirements reduces the prospects for special deals and favoritism.

The Polish team is also proposing that industry be given an opportunity to appeal negotiated agreements. In the United States, this seems to be an unnecessary additional step, given that government and private industry are accepted as relatively equal parties capable of negotiating. However, the retention of this right in Poland seemed to be essential to the acceptability of the approach. A third safeguard is similar to one used in the United States to prevent corruption: the creation of multiparty negotiating teams as opposed to vesting discretion in one individual. In the Polish concept, local authorities (whose interests clearly may differ from the national government's) may participate, by right, as full voting members of negotiating teams.⁴⁸ All governmental members of negotiating teams would be excluded from other administrative decisionmaking regarding the enterprise with whom they are negotiating during the pendency of the negotiation. Poland is also exploring ways to open up its processes to the public, through the provision of more information and the involvement of nongovernmental organizations in negotiations.⁴⁹

Further safeguards are provided by the clarity of the sanctions imposed for a participating industrial entity's failure to meet the obligations contained in negotiated compliance schedules. Failures would result in immediate sanctions enforced immediately after the deadline for implementation of the task has passed and the expected result has not been achieved.⁵⁰ The additional monetary sanctions would be set at a level sufficient to make the real costs of the fine significantly higher than the financial benefits of noncompliance.⁵¹

Compliance Schedules and Economic Issues

The potential impact of a compliance-schedule scheme on the long-standing use of fees and fines in the Polish environmental-protection system illustrates the different perspectives of the various constituencies that want to improve the Polish environment. One side in the debate argues that the fee system has been uneven in achieving discharge reductions. Some say it has never really worked.⁵² In contrast, supporters of the fee and fine system argue that it generates revenue that can be used for a broad range of environmental improvements that might not otherwise find financing, including what the United States would characterize as municipal environmental projects.⁵³ Others support the system because it appears to harness economic forces and therefore is preferable to what is characterized, perhaps unfairly, as command-and-control regulation. Early in the process of developing the concept paper, supporters of the fee/fine system expressed fear that a system that possibly waived penalties and that allowed fees to be reserved for the use of particular enterprises (rather than deposited into a fund) would cause revenues to fall, and that the National Environmental Fund would be reduced as a significant environmental funding source. The U.S. team was inclined to focus more narrowly on compliance effects. The Polish fee system generated revenue, but the fees were often set too low to encourage real changes in behavior, or were not consistently collected. It seemed unlikely in Poland's current economic straits that fees would be increased to a level sufficient to address these concerns. It was difficult for the U.S. team to understand the arguments for preserving a [27 ELR 10302] system that had theoretical merit but meager compliance results, although it came to understand the funding impacts.

A different kind of economic concern is whether a resource-poor society can support the relatively costly administrative infrastructure necessary for a negotiation-based compliance mechanism. Standardized approaches, whether or not they work, don't require the assembly of specialized teams, negotiating time, and other administrative costs. The Polish team addressed this to some extent by limiting the enterprises that could qualify for negotiation and by limiting the time period for negotiation. The true test, however, will only come when the planned demonstration negotiations take place in the fall of 1997.

A concern expressed by a number of Poles with whom the U.S. team met was whether enterprises within the compliance program, whose penalties were waived and fines dedicated to their own environmental improvements, would have an unfair economic advantage over enterprises not in the program who were legally compelled to continue paying fines and fees to the government. The team's official response to this question emphasized EPA's enforcement policy, which ensures that noncomplying facilities do not obtain a competitive advantage over their complying competitors, and U.S. reluctance to allow continuing noncompliance. However, the problem is much more complicated and illustrates the differences between a mature system of environmental protection, in which noncompliance is the exception rather than the norm, and a system in which regulators are still struggling to begin the process of attaining effective compliance. In fact, the U.S. team was concerned that the compliance program might have exactly the opposite effect. The U.S. team feared that if there were widespread noncompliance, companies in the compliance program that were required to make environmental improvements and potentially be subjected to additional fines for failure to meet their goals might be disadvantaged with respect to their competitors who have made no efforts at compliance.

Clearly, Polish enforcers are frustrated by an inadequate arsenal of unevenly applied tools that are not achieving the goal of environmental compliance. But in devising change, the Polish team must deal with both the compliance realities and the perceptions created by formal requirements. Part of the problem Poland faces is dealing with the disparities between a seemingly stringent legal structure and actual practice, in which, as the concept paper carefully points out, it is "widely known that there are many [enterprises] which do not fully comply with legal requirements defining permissible level and types of their adverse impacts on the environment."⁵⁴ The compliance program can work if Polish enforcers make clear that they will no longertolerate any noncompliance, or if companies are otherwise required (for example, by their multinational owners) to be in compliance with local, or even more stringent, requirements.

Lessons Learned

Poland's struggle to improve compliance with environmental requirements is far from unique. Many countries face a situation in which laws or regulations require adherence to ambitious pollution-discharge limits but have few effective mechanisms to compel compliance. This problem is not only common throughout Central and Eastern Europe,⁵⁵ but can in fact be described as a global problem.⁵⁶ Many countries face even more difficult hurdles than Poland does.

The Polish project suggests that frustration with disparities between existing laws and actual practice is a necessary, but not sufficient, condition to effect change. Change requires access to resources, adequate infrastructure, and domestic motivation—all of which exist in Poland. Although environmental damage in Poland is severe and resources to improve conditions are constrained, Poland had several distinct advantages working in its favor. Economically, Poland is doing better than most of the former communist bloc countries, freeing some funds for environmental improvements. It still has abundant natural resources, a low cost of living and a well-educated work force providing relatively inexpensive labor.⁵⁷ These factors, and Poland's demonstrated adaptability to change, clearly help it attract much-needed foreign capital. Institutionally, Poland has the advantage of a fairly centralized ministry for environmental protection, while in many countries, jurisdiction over environmental matters is scattered across the government.⁵⁸

Most importantly, however, motivation to tackle this project came from within Poland and was fed by attitudes that supported change. The Polish team showed great skill in riding out and eventually overcoming potential political and institutional obstacles. It did a masterful job of developing support within other parts of the government, the Sejm (parliament), industry, and the environmental advocacy community. Interestingly, a constituency for change already existed within district and local governments. During our interactions with the Polish team and our travels within Poland to meet with Voivoda environmental authorities, we gradually learned that some districts had already, as a practical matter, introduced the use of compliance schedules in their individual interactions with enterprises.⁵⁹ On one of our visits, we were shown a Polish news report that a court had in effect imposed a compliance schedule on a noncomplying enterpriseto ease the financial burden of compliance and reduce the chances of forcing the enterprise out of business. Clearly, some regulators had become increasingly frustrated with the likelihood of individual enterprises achieving compliance under the old system. They welcomed the introduction of the methods described in this Dialogue to regularize and provide a clear legal basis for what they already understood to be a practical tool for achieving environmental results.

The conclusions that assistance could not alone carry the weight of change, that local constituencies for change must be developed and strengthened, and that there must be a credible legal basis for the new activities are reinforced by [27 ELR 10303] the experience of some other countries in the region that have experimented with the use of compliance schedules.

For example, in the Czech Republic, compliance agreements were negotiated for two facilities with significant environmental problems in the city of Ostrava. In both cases, the United States provided the Czechs technical assistance in using negotiated agreements to bring about environmental solutions incrementally. The approach taken in the Czech Republic differed from that being used in Poland in a fundamental way. In Poland, a significant amount of up-front work has been and still is being done to create a legal and institutional framework for implementing the compliance-program approach. In the Czech Republic, the agreements were negotiated and then went through an arduous, multiyear approval process by the local parliamentary body. Thus, rather than change the law to allow negotiation of compliance schedules, the site-specific agreements were incorporated into the law. The Czechs were able to move quickly into the negotiation phase using this approach, but the overall process required to finally adopt the negotiated schedules was very cumbersome. Ultimately, if the Czechs decide to adopt the use of negotiated compliance schedules on a broader basis, they must create a generic legal and institutional framework to avoid this lengthy and inefficient post-negotiation approval process. Not surprisingly, the Czech case-specific implementation faced many of the same issues that the Poles are dealing with in their concept development, including the inclusion of the public in the negotiation and implementation of the agreements and the need to make implementation of the schedule verifiable and enforceable.

Romania now also has some legal provisions that would allow the use of compliance schedules. An example from relatively early in Romania's transition from communism to a free market economy is Romania's Foreign Investment Law, which provides leverage to the government to require foreign investors to agree to a schedule for bringing Romanian companies in which they are investing into compliance.⁶⁰ In late 1995, Romania put general language into its framework environmental-protection law that requires compliance schedules for existing facilities that are out of compliance.⁶¹ In early 1996, Romania created an implementing regulation on permitting for compliance schedules.⁶² There has not yet been experience under these provisions. It is also not clear what remedies Romania will have if such schedules are violated.⁶³ Having strong sanctions for schedule violations is critical to the success of the program, a factor the Poles have taken very seriously in the development of their proposal. The Poles recognize that to avoid having the compliance program be an excuse for foot dragging and even more delays in compliance, the political will to require adherence to negotiated schedules is critical.

Finally, the focus of this Dialogue and of this particular transfer of expertise has been the countries in transition. But there are other examples of countries beginning to experiment with negotiated compliance agreements. Within the western hemisphere, Mexico has used the threat of plant closures to obtain negotiated schedules. Compliance agreements are also used to follow up on problems identified through Mexico's government/industry self-audit program. Many of Poland's infrastructure issues also exist in Mexico. Like other civil-law countries, Mexico will need to find ways to compensate for courts that lack strong injunctive powers. Similarly, Mexican laws do not allow the release of information necessary to facilitate fully informed public involvement. Recently enacted legislation may help address these concerns.⁶⁴ Mexico also faces the potential for corruption in the exercise of discretion by government officials and is concerned about this issue in a broader context. Central American countries in general are often still at the stage of creating basic environmental law frameworks and consolidating their environmental authorities into a single environmental ministry. What enforcement authorities these ministries will have is unknown. Ultimately, these countries are likely to face issues similar to Poland's as they attempt to impose rigorous environmental standards on companies that face serious technical and financial difficulties.

Negotiated compliance schedules may turn out to be particularly useful in societies, such as some in Asia, in which consensual, nonconfrontational processes play a strong role in interpersonal and governmental relationships. Compliance schedules in the United States are ways to settle differences in an enforcement context, but they can also be used, with appropriate safeguards, in other settings and contexts.

Conclusion

Poland is interested in developing new enforcement options that can provide realistic ways to bring facilities into compliance with environmental requirements. Given the realities in Poland, there is a strong need to flexibly address facility compliance issues without sacrificing environmental protection. Negotiated approaches can fill that need. The experiment described here carefully tailored the negotiated approach to the legal, economic, and political context in which it will be used. This tailoring should increase the likelihood that it will be successful in accomplishing its dual goals of allowing reasonable flexibility without sacrificing compliance objectives.

Developing workable laws is itself a tricky business. But having the right laws and appropriate sanctions is only part of what is needed to successfully transfer tested methods of environmental protection from the United States to other countries. Related legal infrastructure must develop on a parallel track, and often long-standing cultural differences must be recognized and addressed. Economic realities must be taken into account and resources (both human and monetary) must be made available. But possibly the single most essential element of the successful transfer of environmental solutions is the motivation or domestic will of the receiving country. Without this, assistance is likely to be a one-sided endeavor.

1. About 6 percent of the money allocated under the Support for Eastern European Democracies Act of 1989 (SEED Act) was initially directed into environmental assistance. 22 U.S.C. § 5452(b). The Agency for International Development (AID) line item for the environment in the SEED Act decreases from roughly 6 percent a year through fiscal year 1995 to about 4 percent in FY 1996 and about 2 percent in FY 1997.

2. Elzbieta M. Zechenter, The Socio-Economic Transformation of Poland: Privatization and the Future of Environmental Protection, 6 GEO. INT'L ENVTL. L. REV. 99 (1993); Susan S. Cummings, Polish Environmental Regulation: The State of Poland's Environment, Governmental Authorities and Policy, 16 SUFFOLK TRANSNAT'L L. REV. 379-404 (1993).

3. Zechenter, supra note 2, at 104-05; Piotr Syryczynski, Environmental Compliance Issues During Privatization Process in Poland, 1994 PROCEEDINGS OF THE THIRD INTERNATIONAL CONFERENCE ON ENVIRONMENTAL ENFORCEMENT, OAXACA, MEXICO 103 [hereinafter 1994 PROCEEDINGS OF THE THIRD INTERNATIONAL CONFERENCE]; Kenneth J. Serafin, Bridging the Gap in Eastern Europe: Forty Years of Communist Indifference and the Environmental Realities in Poland, 10 DICK. J. INT'L L. 177-80 (1991).

4. Zechenter, supra note 2, at 107; Cummings, supra note 2.

5. G. Nelson Smith III, The Real Challenge to the Polish Revolution: Cleaning the Polish Environment Through Privatization and Preventive Market-Based Incentives, 19 PEPP. L. REV. 554 (1992).

6. Daniel H. Cole, Environmental Law and Administration in Poland, 18 HASTINGS INT'L & COMP. L. REV. 340 (1995); Ruth Greenspan Bell, Industrial Privatization and the Environment in Poland, 22 ELR 10092 (Feb. 1992).

7. Zechenter, supra note 2, at 114-15. Constitutional provisions cannot be enforced directly and thus have no effect unless implementing legislation is enacted. Margaret Bowman & David Hunter, Environmental Reforms in Post Communist Central Europe: From High Hopes to Hard Reality, 13 MICH. J. INT'L L. 931 (1992).

8. Environmental Development Act, Dziennik Ustaw, No. 3, item 6; Zechenter, supra note 2, at 115.

9. Forty percent of these revenues go to the National Environmental Fund and 60 percent go to the Voivoda. Environmental Development Act, Dziennik Ustaw, No. 3, item 6, Art. 87.

10. Bell, supra note 6, at 10093; John Casalino, Shaping Environmental Law and Policy of Central and Eastern Europe: The European Union's Critical Role, 14 TEMP. ENVTL. L. & TECH. J. 251 (1995).

11. Zechenter, supra note 2, at 115.

12. See Cole, supra note 6, at 340-41 for a discussion of the many exceptions and exclusions to the liability provisions of the Act.

13. Bowman & Hunter, supra note 7, at 972.

14. Cole, supra note 6, at 340; Bell, supra note 6, at 10094.

15. Cole, supra note 6, at 351.

16. The Act of July 20, 1991, on state inspection of environmental protection (ustawa o Panstwowej Ochrony Srodowiska) significantly strengthened the enforcement authorities of Poland's State Inspectorate, the national enforcement body. 1991 Dziennik Ustaw [Journal of Laws] No. 77, item 335. See Cole, supra note 6, at 355-56.

17. Environmental assistance from foreign sources funds only 5 percent of Poland's environmental investment. Instead, Poland has been resourceful in finding and leveraging resources to invest in the environment. The main sources of Polish environmental improvement today include equity capital and commercial credits, followed by the National and local environmental funds and EcoFund. Email from Tomasz Zylicz, Professor of Economics at Warsaw University. See Tomasz Zylicz, Environmental Policy Reform in Poland, in ECONOMIC POLICIES FOR SUSTAINABLE DEVELOPMENT 82-112 (Thomas Sterner ed., 1994).

18. Zechenter, supra note 2, at 105.

19. Mats Sacklen, Managing Environmental Risks in Eastern Europe: The Framework for Negotiated Solutions, 27 INT'L LAW. 785 (1993); Bell, supra note 6.

20. Casalino, supra note 10, at 227-56.

21. Environmental Development Act, Dziennik Ustaw, No. 3, item 6.

22. Law of December 20, 1989, creating the Office of the Minister of Environmental Protection, Natural Resources, and Forestry. Dz. U. Nr. 73 poz. 422.

23. The governor is an arm of the central government, not a regional elected official.

24. Cole, supra note 6, at 355-56.

25. The agreement was signed in 1995. Memorandum of Agreement Concerning Cooperation inthe Field of Environmental Protection, signed in Washington, D.C., on May 15, 1995, and entered into force on the same date. For a discussion of U.S. interest in providing environmental assistance to countries such as Poland, see Ruth Greenspan Bell, EPA's International Assistance Efforts: Developing Effective Environmental Institutions and Partners, 26 ELR 10593 (Oct. 1994).

26. Minister of Ministry of Environmental Protection, Natural Resources, and Forestry, Decision 22 (Nov. 10, 1992) (on file with authors).

27. Since its original creation under Decision 22, the membership of the Polish team has varied. Over the course of the Polish/U.S. Environmental Enforcement Project, membership on the Polish team has included representatives of the Environment Ministry, the State Inspectorate, other Ministries (Justice, Privatization, and Industry and Trade) and Voivodships. Professors from the University of Lodz provided contract support to the Polish Team. The seriousness of this effort was demonstrated by including representatives from the Ministry of Industry and Voivoda (district) environmental enforcement officials, as well as enforcement officials from Warsaw. Also part of the equation was the changing role of the gminas, or municipal governments.

28. The U.S. team, established through a negotiation between EPA and the Polish Environmental Ministry, consists of EPA technical and legal experts in environmental compliance and enforcement and international matters. During the initial information-sharing phase of the project, state and local enforcement experts also participated on the team.

29. CHIEF INSPECTORATE FOR ENVIRONMENTAL PROTECTION, THE CONCEPT OF "COMPLIANCE PROGRAMS" AS A LEGAL INSTITUTION FACILITATING THE PROCESS TOWARDS COMMON COMPLIANCE OF ORGANIZATIONAL UNITS (ENTERPRISES) WITH ENVIRONMENTAL STANDARDS (1995) [hereinafter CONCEPT PAPER]. See also Zbigniew Kamienski, Compliance Program Innovations in Polish Environmental Law, 1996 PROCEEDINGS OF THE FOURTH INTERNATIONAL CONFERENCE ON ENVIRONMENTAL COMPLIANCE AND ENFORCEMENT, THAILAND 631-49.

30. A review of three countries that have adopted integrated permits is contained in Robert Hersh, A Review of Integrated Pollution Control Efforts in Selected Countries, RFF DISCUSSION PAPER 97-15 (1996).

31. EU Directive 96/61/EC 1996 Official Journal of the European Commission 10/10/96 NoL 257/28.

32. Some sense of the difficulty of understanding the Polish legal requirements is found in the following quote:

Although many important fields of Polish law are codified, within the last 45 years particular legal institutions or entire legal fields were supplemented by dozens or hundreds of legal acts of various ranks, which provided for new solutions or amended existing ones. This legislative style has been picturesquely called a "cabbage method," as the new provisions add to the old ones forming another layer, although loosely connected with one another, sometimes incoherent with the whole system or even contradictory to the existing provisions.

Andrzej Wiercinski & Monika Strus-Wolos, Introduction to BUSINESS LAW GUIDE TO POLAND para. 101 (Claudia Seibel ed., 1996).

33. JOHN HENRY MERRYMAN, THE CIVIL LAW TRADITION 54 (2d ed. 1985).

34. Id. at 50. There are ways to circumvent these rules under Polish law. One way of doing this is found in Article 5 of the Polish Civil Code, which provides that a right cannot be used in a way that would contradict the socio-economic purpose of that right or the principles of social coexistence in the Republic of Poland. Such act or omission is not considered to be in exercise of that right is not protected. Using this authority and a "hook" in the Polish code, a Polish judge can introduce equity into the written law by declaring somebody's action as misusing of the right. The process for achieving this result is more complex than it would be for a judge in the system of common law, and the judge's understanding of the equities involved cannot be the only source for imposing the legal duties.

35. The purpose for the separation was a concern that judges wrongly interfered with the administrative work of the government. This stands in contrast with common-law practice in which judges can compel an official to perform duties and can question the legality of acts performed by public officials. See generally BUSINESS LAW GUIDE TO POLAND, supra note 32. See also MERRYMAN, supra note 33, at 85-89, 133-34.

36. Under 363 § 1 of the Polish Civil Code, redress of damage can take place, either through restoration of the former condition or through payment of an appropriate sum of money, at the option of the injured party. If restoration of the former condition would be impossible, or would entail excessive difficulty or cost to the liable party, the injured party's claim is limited to a pecuniary payment. The 1980 Polish environmental law as amended contains a general clause that for environmental damages the rules of the Civil Code apply. Environmental Law Art. 82. It also contains some specific provisions concerning the restoration of the former state in the environmental area. An administrative body at the Voivoda level may use a decision to direct the manner and extent of this obligation. Another authority is found in an Ordinance of the Council of Ministers. When a body of the state administration finds that an enterprise is involved in activity that is hazardous to agricultural land or forests, it must issue a decision requiring the enterprise to restore the surface ground layer to its proper condition and specifying commencement and completion dates of these assignments. "Restoration to the proper condition" means, among other things, restoration of functional and natural values of the land that have been destroyed as a result of commercial activity, and methods of land reclamation that ensure the best possible conditions of the environment and economic utility of the land transformed. The administrative body can specify the commencement and completion dates for work aimed at the restoration of the environment to its proper condition, including an extended period. Email communications with Bogudar Kordasiewicz, Polish Academy of Sciences, Warsaw. However, a compliance agreement is intended to attain a different set of results than an order directing environmental restoration.

37. CONCEPT PAPER, supra note 29, at 7, 14; Kamienski, supra note 29, at 636.

38. JERZY JENDROSKA, ENVIRONMENTAL LAW IN POLAND 1989-1996: EXPERIENCE WITH THE REFORM AND PROSPECTS FOR THE FUTURE 29 (1996).

39. CONCEPT PAPER, supra note 29, at 5; Kamienski, supra note 29, at 635.

40. Cole, supra note 6, at 345; Smith, supra note 5, at 555.

41. Cole, supra note 6, at 345.

42. 5 U.S.C. §§ 552-552(a), available in ELR STAT. ADMIN. PROC.

43. EC Directive No. 93/33, June 7, 1990.

44. See, e.g., Safe Drinking Water Act, 42 U.S.C. §§ 300f-300j-26, § 300g-3, ELR STAT. SDWA §§ 300f-300j-26, § 300g-3; Federal Water Pollution Control Act, 33 U.S.C. §§ 1251-1387, § 1319, ELR STAT. FWPCA §§ 1251-1387, § 1319; Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901-6992k, § 6928, ELR STAT. RCRA §§ 6901-6992k, § 6928.

45. The U.S. Office of Government Ethics has promulgated comprehensive, generic anticorruption regulations, the Standards of Ethical Conduct for Employees of the Executive Branch, 5 C.F.R. Part 2635 (1996). The Ethics in Government Act of 1978, 5 U.S.C. App. 4, and its implementing regulations, 5 C.F.R. Part 2634 (1996), require disclosure of personal financial information by certain executive branch employees. The Hatch Act, 5 U.S.C. § 7325, and its implementing regulations, 5 C.F.R. Part 734 (1996), govern the participation of federal employees in political activities.

46. See, e.g., Susan Rose-Ackerman's description of the German process for public consultation:

The formal law conceives of the Bureaucracy's job as essentially administrative. Under this view, there is no need to give the public any general right of access to executive branch officials or to the information they possess [footnote omitted]. Individuals have no general legal right to obtain information held by the government unless it directly related to a suspected violation of their rights in the context of an administrative proceeding.

In practice, organized groups play a key role in developing environmental policy. But the process of consultation is under the control of the ministry and does not give outsiders any legally enforceable claim to be heard.

SUSAN ROSE-ACKERMAN, CONTROLLING ENVIRONMENTAL POLICY: THE LIMITS OF PUBLIC LAW IN GERMANY AND THE UNITED STATES 10 (1995). In fairness, Rose-Ackerman complains that German licensing proceedings that approve projects like airport runways or nuclear plants have if anything an "excess" of public participation. Thus, the "approval of individual projects takes an inordinate amount of time" in contrast to general policies that are "established by federal ministry with no legally enforceable participation and are subject to approval only by the cabinet and by the Lander politicians sitting in the Bundesrat." ROSE-ACKERMAN, supra, at 92.

47. Kamienski, supra note 29, at 643-44.

48. CONCEPT PAPER, supra note 29, at 48.

49. Poland's 1980 Framework Act took a step forward in this regard by giving nongovernmental organizations (NGOs) some limited role in administrative processes. Environmental Development Act, Dziennik Ustaw, No. 3, item 6. The law, although not fully implemented even today, does authorize environmental organizations to file suit to seek environmental restoration and to enjoin economic activities that pose environmental threats. The law also requires that environmental groups be notified, and their comments considered, before any new activity likely to have a substantial impact on the environment is given administrative approval. Cole, supra note 6, at 338. The Polish team envisions using this existing legal mechanism as the vehicle to obtain NGO participation in the development of facility-specific compliance programs.

50. CONCEPT PAPER, supra note 29, at 21.

51. Id. at 22.

52. Zechenter, supra note 2, at 115-16.

53. See, e.g., Zylicz, supra note 17, at 94.

54. CONCEPT PAPER, supra note 29, at 1.

55. See Bowman & Hunter, supra note 7, at 972; Ruth Greenspan Bell, Environmental Law Drafting in Central and Eastern Europe, 22 ELR 10597 (Sept. 1992).

56. See generally 1994 PROCEEDINGS OF THE THIRD INTERNATIONAL CONFERENCE, supra note 3, describing the experiences of countries in Africa, Europe, and South America.

57. Serafin, supra note 3, at 187.

58. See Bowman & Hunter, supra note 7, at 972, for a discussion of the impact of organizational issues on environmental enforcement in the former Czechoslovakia.

59. See supra note 36.

60. Law Concerning the Status of Foreign Investments, Arts. 9(a), (c), Mar. 29, 1991, Collectia De Legi Si Decrete Law No. 35/1991 (Rom.).

61. Law No. 137/December 29, 1995, Moniturol Oficial (Official Gazette of Romania) Part I, No. 304/December 30, 1995. Article 10 authorizes "shall establish the compliance program in agreement with the title holder…."

62. PERMITTING PROCEDURE FOR ECONOMIC AND SOCIAL ACTIVITIES WITH AN ENVIRONMENTAL IMPACT ACCORDING TO ENVIRONMENTAL PROTECTION LAW NO. 137/1995, Part 6 (Compliance Schedules).

63. Bowman & Hunter, supra note 7, at 971.

64. Ley General del Equilibrio Ecologico y la Proteccion al Ambiente, Diario Oficial de la Federacion, Jan. 28, 1988, modified by decree published in the Diario Oficial de la Federacion, Dec. 13, 1996.