Whither Environmental Reform?: Some Thoughts on a Recent AALS Debate

Joel A. Mintz

The author is a Professor of Law at Nova Southeastern University Shepard Broad Law Center in Fort Lauderdale, Florida. He writes frequently on selected aspects of environmental law and state and local government law. His most recent books include ENVIRONMENTAL LAW (4th ed., LEXIS Publishing 2000) (with Frank P. Grad) and STATE AND LOCAL TAXATION AND FINANCE IN A NUTSHELL (2d ed., West Group 2000) (with M. David Gelfand and Peter W. Salsich Jr.).

[31 ELR 10719]

From Wednesday, January 3d, through Sunday, January 7th, the Association of American Law Schools (AALS) held its 101st annual meeting in San Francisco. Among the numerous panel discussions, workshops, luncheons, receptions, and field trips that took place at that event was a lively and well-attended session (held on Friday, January 5th) entitled "Dinosaur or Phoenix?: Choosing Between Old-Fashioned Regulation and Second-Generation Strategies in the New Millennium."

This discussion, co-sponsored by the AALS' sections on Environmental Law and Administrative Law, was moderated by Prof. Thomas O. "Tom" McGarity, a widely respected environmental law professor at the University of Texas at Austin, who has participated in and written about the formulation of environmental policies for many years. Other participants included Jan Mazurek, an economist and visiting fellow with the Public Policy Institute of California who, for a number of years, was associated with Resources for the Future (RFF) in Washington, D.C.; David B. Spence, an assistant professor at the University of Texas at Austin McCombs School of Business, who specializes in the analysis of environmental regulatory issues; and John Walke, an attorney with the Natural Resources Defense Council (NRDC) in Washington, D.C. A number of the environmental law professors in attendance at this session also volunteered perceptive comments and questions.

This Dialogue is intended to summarize and to comment upon the remarks of the participants in this discussion. In particular, I will recount and assay the observations of the AALS session panelists on three distinct topics that their discussion considered: the strengths and weaknesses of the current environmental regulatory regime in the United States (with special attention to the U.S. Environmental Protection Agency's (EPA's) recent "Project XL" reinvention project), the role of (and prospects) for mutual trust among those involved in the regulatory process, and strategies for addressing "second-generation environmental problems" (such as nonpoint source water pollution and diffuse area sources of air pollution).

Some Strengths and Weaknesses of Environmental Regulation: Project XL Reconsidered

After introducing each of the panelists, Professor McGarity opened the panel discussion with an anecdote. In 1981, soon after he had begun teaching environmental law at the University of Texas, he delivered a lecture to his students regarding Clean Air Act (CAA) permit writing at the state level, and the establishment of state implementation plans. After class, an older student, who had been a staff officer with the Texas Air Control Board for 15 years before going to law school, came up to the podium and said "that was a really interesting lecture, Professor McGarity. Now would you like to know how it all really works?" When McGarity indicated that he would, the student stated that, in writing state permits at the field level, "the way it really works is you push them, and you push them until they call Vinson and Elkins, and then you stop!"

For Professor McGarity, this anecdote illustrated a simple fact with regard to regulatory implementation: the notion of devolution and regulatory flexibility has, built within it, the structure of discretion. "To the extent that regulation is more flexible," McGarity stated, "we are saying that some governmental entity, somewhere, has more discretion." That, in turn, raises a normative question: "By being more flexible are we really doing anything positive?"

With that introduction, McGarity asked that each of the panelists respond to the following question: what is the strongest aspect of the environmental regulatory regime currently in place in the United States and what is its weakest aspect?

Jan Mazurek responded by saying: "The CAA and the CAA." She noted that, of all of the federal pollution control statutes, the CAA is the only legislation that allows for meaningful evaluation of successes in terms of emissions reductions and ambient improvements. Moreover, the fact that implementation of the statute gave rise to a 95% reduction in ambient lead emissions is "a strong testament to the success of the current system."

On the other hand, however, Ms. Mazurek indicated the Act is fraught with inflexibility for regulated firms. Thus, for example, Intel, a company that needs to make frequent modifications of its product lines, has a need to obtain a revised CAA permit at one of its semi-conductor fabrication facilities every 18 to 22 months. The delays created by this frequent re-permitting have enormous economic implications for Intel, which stands to lose many millions of dollars in revenues as a result.

David Spence took the view that the current system of environmental regulation is "based upon a misconception of how firms behave, and how we can get good behavior out of firms." He stated that this flawed model posits that business firms are "amoral profit seekers who will violate environmental laws when the expected value of doing so is positive." Moreover, the model suggests, "we have to be constantly vigilant against the omnipresent risk that [businesses] [31 ELR 10720] are going to capture the system and subvert the enforcement process."

Professor Spence opined that the part of that model that concerns how firms make compliance decisions "is wrong and has been wrong for a long time," since it fails to accurately describe "the vast majority of firms and how they relate to the system." Moreover, in his view, even though the risk of industry capture of governmental regulatory agencies is "not a zero risk," it is also "an overstated risk, especially when we factor in the amount of effort we've put forth to try to guard against it."

Spence also indicated that he believes in "the complexity critique" of the environmental regulatory system. In his estimation, that system is "too complicated, too rule-bound, too focused on punishment and deterrence as the way to maximize compliance, and too suspicious of the motives of regulated firms and, for that matter, of regulations."

Finally, in a statement which opened an extensive and impassioned discussion among other panelists and some audience members, Professor Spence advocated an expansion of experimental "regulatory reinvention" programs such as Project XL and Performance Track, which he described as encouraging firms to propose changes in the way they are regulated that would offer "additional environmental benefits," over and above what those firms are required to provide by law, in exchange for "increased flexibility and less costly ways of doing things." In his view, such programs represent "a good step forward" since they "invite firms to be part of the solution, rather than treating them as only part of the problem."

John Walke responded with vigorous criticism of Project XL. He noted that when he had worked on the program with EPA, as an attorney in the Office of General Counsel, there had been a saying among some of the staff of the Agency that "if it ain't illegal it ain't XL!" In fact, Walke stated, "the legal problem with the XL Program is that it is unlawful."

First adopted by the Clinton Administration in 1994-1995, "out of defensive political needs" in the immediate aftermath of the Republican take over of Congress, Project XL was "quickly coopted at the Agency by the deregulatory forces." Over time, Walke stated, industry's site-by-site priorities "took precedence over any more rational, systemic change that may have been promised by such a program."

In the early days of the program, in Walke's view, notwithstanding the fact that industry had long been promising "cleaner, smarter, and cheaper solutions" to environmental pollution problems, "the first wave of XL proposals that came in [to EPA] were so abominable that the Agency was forced to reject most of them because they didn't even begin to meet the standards that had been set." Following that, there was a longer period during which, even though the quality of industry's XL submittals improved somewhat, "the program became more one of deregulation, as driven by industry needs, and not one driven by superior environmental performance." Finally, as John Walke saw it, during the last 18 months of the Clinton Administration, "the XL program again became abominable because it was necessary to reach the Vice President's goal of 50 reinvention projects by the end of the Administration," regardless of whether those projects lived up to existing environmental standards.¹ "Whatever the promise of Project XL may have been on the drawing board," Walke stated, "it generated cynicism outside of the Agency as well as within the Agency, because it was just a way of generating 50 deregulatory 'beans' so the program could be called a success and then done with."

David Spence responded to Walke's emphatic critique of Project XL by declaring: "I would strongly disagree that [the XL Project] is some sort of 'Trojan horse' that is really rolling back [environmental] regulation under the guise of reform!" Noting that the XL program had provoked a split within the EPA, as well as among environmental organizations, Spence indicated that in his view there are genuine environmental gains to be made from Project XL.² He also stated:

The fact that the XL program has not met its expectations really stems from the fact that XL's opponents within EPA were stronger than I would have liked to have seen them be, and they imposed all sorts of restrictions on what constituted a good enough environmental benefit, so that only a relatively small percentage of [XL] applicants were able to satisfy that criterion.³

Jan Mazurek was also critical of Project XL. She stressed that although the program was "a potentially innovative step," which might have been a good way to "reprogram scarce EPA resources away from low priority to higher priority problems," it was "poorly designed, poorly executed, we didn't learn a lot of lessons, and nobody even tried." From the outset, Mazurek indicated, Project XL was "hotly politicized." It was a program that Administrator Carole Browner and others at the EPA "never really wanted," and to which the Agency did not dedicate adequate resources. Project XL was developed in an EPA policy office, which would have achieved more success in its design and implementation if it had worked closely with the Agency's air office and other EPA program offices.⁴ Moreover, Mazurek noted, it was unfortunate for the XL program that nearly all of the first crop of applicants sought relief from CAA Title V permit requirements, a circumstance which placed their submittals in a bad light.

Thomas McGarity then suggested that the panelists contrast Project XL with another innovative approach, Title IV of the CAA (the acid rain emission trading program) which, [31 ELR 10721] in his view, "seems to have been a great success." McGarity stated that "Title IV showed you can achieve cleaner, cheaper—and it was a whole lot cheaper than people thought it was going to be. Why did that not happen with Project XL?"⁵

Jan Mazurek responded that the Title IV program succeeded because, unlike Project XL, it was "not just an add-on to the current system of regulations." Instead, Title IV "started with a clean slate." EPA was authorized, from the start, to "start up a whole new program from scratch" which included performance-based standards as opposed to technology-based ones. In contrast, in Project XL "the participants were trying to be in an experimental system at the same time as they were in a status quo system," an untenable and ultimately unworkable situation.⁶

John Walke commented that, in the Title IV program, the aggregate sulfur dioxide (SO₂) emissions cap was "set too high from the get go," an arrangement that led to artificially low prices for tradable emissions credits. He noted that the acid rain trading program was essentially a "closed system," involving a single pollutant and participated in by a discrete number of electric utilities whose activities are relatively easy to track and follow. In addition, Walke stated, EPA has wisely chosen to require continuous SO₂ emissions monitoring to allow for verification of program results. Unfortunately, however, the Agency failed to follow the Title IV example in establishing other CAA emissions trading programs. Thus, he noted, the nitrogen oxide (NO_x)/SO₂ trading program has been expanded to permit toxic air pollutant emissions to be traded for less toxic emissions of volatile organic compounds (VOCs), and to encourage trades of emissions that involve "mobile and area sources [of air pollution] which cannot be adequately measured and monitored."

Professor Rob Fischman of Indiana University then noted that Project XL has sometimes been viewed as an example of "adaptive management" or "iterative regulation," i.e., an approach that learns from "feedback" as to what has occurred previously. He requested that the panelists comment on that aspect of the program.

Professor Spence replied that while Project XL may not be the best example of adaptive management, its overall approach is "a worthy goal for the Agency." He observed that EPA has been divided as to what a "valuable lesson" is, with respect to the XL program, and that interpretations of the program tend to be "in the eye of the beholder." On the other hand, he stated, EPA's new Performance Track program—which creates incentives for firms to use environmental management systems—is a better example of adaptive management at the Agency, inasmuch as it is partially based on EPA's past experiences with the Environmental Leadership Program, environmental auditing, Star Track, and certain other programs.

John Walke noted that, to date, EPA has published no materials showing demonstrable, measurable success from Project XL. Despite this, he said, the Agency has repeatedly made the claim that the program is a "stunning success."

Jan Mazurek reported that EPA had actually discouraged RFF from conducting an independent evaluation of Project XL. She observed that "XL was never designed to be either successful or evaluated," and stated that "few bureaucracies that are dependent upon appropriations have strong motivations to evaluate the effectiveness of their programs."

Tom McGarity recalled an interview he had a number of years ago with an EPA official in the Agency's Office of Policy, Planning, and Evaluation, who candidly told him: "We don't do [program] evaluations here at EPA. How does it advance my career to find out that a prediction I made 10 years ago was wrong?" Nonetheless, McGarity declared, "somebody really does need to do evaluations," and assessing the effectiveness of some of EPA's new approaches and initiatives is an entirely appropriate task for academics. In McGarity's words:

Even the debates we are having now are vacant because there is no empirical data underlying them. We go into it from a political perspective, we go out of it from a political perspective, and there is no principled or reasoned way to make a determination—particularly if the Agency is not going to help us out with information that would help in the evaluative process.⁷

How sound are the panelists' divergent assessments of EPA's Project XL? The two most significant academic analyses of the XL program to date suggest that Walke and Mazurek's conclusions regarding that controversial project are closer to the mark.

Writing in 1996 in the Environmental Law Institute's monthly journal, the Environmental Law Reporter (ELR), Prof. Rena I. Steinzor concluded that "in its haste to respond to Republican proposals for regulatory reform, EPA began constructing a major alternative to existing regulation without a blueprint for resolving the most fundamental and predictable problems that inevitably arose."⁸ Professor Steinzor characterized Project XL as "a regulatory free-for-all, with companies requesting lengthy lists of unrelated exemptions in exchange for environmental 'improvements.'"⁹ She recommended a series of XL reforms, including a clear, threshold definition of environmental improvements, ground rules for facilitating and mediating public participation, and the mandatory disclosure of comprehensive information regarding projects and proposals.

Prof. Bradford Mank was critical of Project XL in a somewhat different way. He viewed the program as "severely hampered by a lack of legal authority"¹⁰ and noted that "the shift from national, uniform regulation to more individualized, site-specific agreements between firms and permitting agencies contains some risks of weakening public control, producing inconsistencies and allowing sweetheart deals."¹¹ Professor Mank cautiously advocated enactment of a statute authorizing regulatory flexibility agreements [31 ELR 10722] that would require "an inclusive stakeholder negotiation process, provisions to protect minority voting interests, a technical assistance grant program [for public interest participants] … public hearings … and annual reporting provisions."¹²

Tom McGarity and Jan Mazurek are clearly right to suggest that new government initiatives, like Project XL, should be subject to rigorous, independent outside evaluation, based upon comprehensive and sound data, openly provided by government agencies. It also seems likely that academics have, potentially, a constructive role to play in that process.

In compelling and exceptional circumstances—and with clear assurances that well-defined and carefully monitored overall environmental benefits will result—case-specific regulatory flexibility may well be a worthwhile goal. However, the experience of Project XL to date seems to suggest that, in implementing that program, EPA went about trying to attain this goal in precisely the wrong way. Hastily planned, legally suspect, and poorly coordinated within the Agency, the project was far too timid in establishing guidelines by which project proposals could be evaluated. Instead of making a determined and genuine attempt to inform and involve potential critics—both outside of EPA and within it—Project XL's managers failed to establish and insist upon a transparent public participation process that would foster dialogue, trust, and consensus among all interested parties. Moreover, by proceeding without a sound legal foundation, EPA was unable to afford potential industrial participants in the project any needed assurances that particular XL proposals which the Agency approved would not later be the subject of successful lawsuits by nongovernmental parties.

Whatever other notable improvements the recent Clinton-Gore Administration may have made in the areas of pollution control and governmental reform, on the record to date Project XL hardly appears to redound to that past administration's credit. Undoubtedly, along with other EPA projects and programs, this project will be reassessed by appointees of the new Bush Administration. In view of its numerous shortcomings, it seems reasonable to predict that few will lament if XL is quietly abandoned by the Agency's new managers.

Openness, Trust, and the Regulatory Process

From Project XL, the panelists turned to questions of trust among interested environmental stakeholders, and between regulators and regulated entities. Professor McGarity noted that many of the earliest reinvention efforts hinged on the notion that innovative approaches would work if environmental groups participated in the process and came to trust in its outcome. He indicated that, in 1993 and 1994, "some positive things were happening in stakeholders meetings." However, he stated, "then we had an election in 1994 [in which the Republican Party won control of the Congress] and suddenly it seemed that all of the industries who had been at the table with the environmentalists were out there trying to repeal the Clean Water Act, or at least make it a much different statute than it used to be." That left environmental organizations with "a sense of betrayal." McGarity noted that we've recently had another election and that we now have a new presidential administration in which new, innovative approaches to environmental protection are probably going to be taken. He asked "is there now a sufficient repository of trust that any of this can possibly work?"

Jan Mazurek replied by invoking the now well-known Russian maxim, "trust but verify!" She stated that for there to be trust, and for voluntary programs to succeed, you need monitoring and verification that is robust—a better system of transparency and accountability than we have today. She also observed that an effective system of third-party environmental verification, financed jointly by government and industrial parties, is now in effect in Europe as an aspect of the Voluntary Sectoral Climate Change Agreements. Such an approach might well be a model for improvement of environmental monitoring and information-gathering in this country.

David Spence responded that "there is room for optimism when you look on a firm-by-firm, facility-by-facility basis. But when it comes to fighting legislative fights I'm not optimistic." He expressed the view that there is "lots of evidence" that trust can be built up as to questions about how agreed-upon goals are to be achieved. In contrast, there is little reason to believe that trust will be increased "in the legislative stage, or in arguments over what the goals [of environmental regulation] ought to be."

John Walke stated that "I tend to be optimistic by nature, but the recent past has discouraged me in this arena." He opined that verification of industrial emissions is "critical" and that it should be an "unassailable" goal. Nonetheless, he observed, industrial interests have spent millions of dollars successfully opposing measures to implement more rigorous emissions monitoring under the CAA. Moreover, he stated "the fact that Republicans and industry aligned to resuscitate Lochner-era jurisprudence, and to rip out the heart of the CAA before the U.S. Supreme Court, doesn't exactly instill trust either." Walke also criticized Congress' recent tendency to legislate environmental policy by passing riders to appropriations bills rather than after "meaningful dialogue and [substantive] legislation." He concluded that these events and trends "don't speak to a great measure of earning trust, but one can remain hopeful."

Prof. Howard Latin, of Rutgers University, then presented a brief, largely negative assessment of the environmental credentials of newly appointed EPA Administrator Christine Todd Whitman, and of the likelihood that her tenure at the Agency will create the trust that Tom McGarity had asked about. Professor Latin observed that, as New Jersey's governor, Ms. Whitman compiled an "usually good record" on issues of conserving open space and reducing urban sprawl. "But," he stated, "in my estimation she was very, very willing to work with industry groups to subvert efforts at aggressive pollution control." In his view, as EPA Administrator, Whitman is likely to provide "a friendly ear" toward industrial concerns. He stated that "you are likely to see a battle … I do not think trust is likely to be a feature of the new administration."

Prof. William Ginsburg, of Hofstra University, expressed similar concerns with respect to the new Bush Administration's choice of former Sen. John Ashcroft (R-Mo.) to be U.S. Attorney General. He asked: "Isn't an agency's regulatory effectiveness largely based upon its ability to sue when necessary? Is the new Attorney General going to think [31 ELR 10723] the attitude of Christine [Todd] Whitman, or of anyone else, is irrelevant?"

David Spence briefly responded to these concerns by declaring that:

One of the lessons of the Reagan/Bush years is that it is really difficult to subvert what the EPA does. You expend a lot of political capital. There may be a lot of sound and fury about changing things in radical ways. However, I'd be very surprised if we saw any radical administrative changes.¹³

To what extent, if any, is trust among environmental stakeholders and regulators likely to increase in the months and years ahead? At this point, as the panelists and commentators at the AALS session aptly noted, in many key areas government regulators, environmental advocates, and industrial representatives appear to have adopted the version of "trust" implicit in "Mr. Dooley's" fictional observation at the turn of the last century: "Trust everybody, but cut the cards."¹⁴

To the extent that Professor Latin's pessimistic prediction as to Christine Todd Whitman's forthcoming management approach at the EPA proves to be more accurate than Professor Spence's cautionary prognostication, the short-term prospects for greater trust and cooperation among competing environmental interests, and between governmental and nongovernmental entities, may indeed be slim. Any widely held perception among representatives of environmental organizations, or their governmental allies, that the new Bush Administration is unilaterally "tilting" toward industry's viewpoint on pollution control issues—to the detriment of long-standing environmental positions and concerns—seems highly likely to exacerbate suspicions, frictions, and rivalries that have long persisted in the environmental field.¹⁵

Whatever the immediate future may hold, however, over the longer term the likelihood of improved working relationships among environmental stakeholders, and between regulators and regulated parties, may well depend upon the presence or absence of several factors. First, for more cooperative inter-stakeholder relationships to begin, the EPA itself must make an active, determined effort to foster such relationships. A balanced approach by the Agency's managers, one that seeks frequent input from those with divergent perspectives and then skillfully attempts to harmonize competing viewpoints, appears most likely to create a situation in which genuine inter-stakeholder trust will take root. Second, environmental stakeholders, including both industrial interests and environmental groups, must perceive that sound working relationships between them coincide with their own self-interests, and that such relationships can be established without compromising their most basic positions. Finally, currently competing stakeholders must be willing to adjust their positions in concrete ways that will signal a sincere willingness to move beyond past rhetoric and work constructively and reliably with their adversaries. As the ancient Greek historian Herodotus observed, "men trust their ears less than their eyes."¹⁶

On the industrial side, it would undoubtedly be very helpful for regulated firms to end their determined resistance to improved verification of pollutant discharges and emissions. As John Walke put it, "industry would garner much more respect and trust from the environmental community if they spend half as much energy being forthcoming and revealing what their precise emissions are, rather than doing everything in their power to oppose it."

Additionally, industrial groups will do much to dispel environmentalist skepticism if they refrain from lobbying for wholesale, radical changes in environmental legislation, and from pursuing litigation that delays the effectiveness of environmental standards. They will also improve their credibility in environmentalist circles if they actively support the allocation of budgetary resources sufficient to allow environmental agencies at federal and state levels to function independently and effectively. Moreover, industry and its allies could help foster an atmosphere of mutual trust among all environmental stakeholders by abjuring harsh and sardonic rhetoric in public references to environmental organizations.¹⁷

On the environmentalist side, the likelihood of trust can be improved if environmental advocates are careful to maintain a positive, constructive approach in all policy discussions. Environmentalists may also wish to keep alert for any genuine opportunities for meaningful cooperation that may arise, and to refrain from their own public criticism of industrial interests when such criticism may diminish the fruitfulness of ongoing inter-stakeholder negotiations and relationships.

Whether trusting, long-term working relationships will be established among industrialists, environmental organizations and government regulators is, at this writing, an open question. Given the bitterness and persistence of past controversies and disagreements, it is clear that the accomplishment of that goal will not come easily. It will require persistent, widespread effort, combined with a measure of good fortune. Nonetheless, as one of my former colleagues at EPA once observed, "as unpredictable as life can be, who knows what pleasant surprises may develop?"¹⁸

"Second-Generation" Environmental Problems

After discussing inter-stakeholder trust and cooperation, the AALS session panelists turned very briefly to questions of variances in environmental regulation,¹⁹ and the applicability [31 ELR 10724] of voluntary programs to small and medium sized firms.²⁰ They then considered a question posed by Prof. David Driesen of Syracuse University: what mechanisms should be used to address "second-generation" environmental problems, such as air pollution from small, diffuse "area sources" and largely unregulated "nonpoint sources" of water pollution?

Jan Mazurek responded that, in these sorts of situations, we need to work with information-based programs and voluntary programs. She stated that "there are clearly limits on command-and-control regulations [in these circumstances] and I don't think we can escape that voluntary programs are here to stay." Nonetheless, Mazurek conceded, currently such programs are a "clunky, imperfect, and very novel tool." She thus encouraged the audience to think of ways to improve and refine them.

David Spence took the view that second-generation environmental problems are best addressed at the local level. "Inevitably," he opined, "this may involve some type of devolution."

It is unfortunate that this inherently important question was the subject of relatively little discussion by the panelists and audience members at the AALS gathering. As Prof. James Salzman has pointed out in a thoughtful, significant law review article, reprinted in part and updated in ELR, even though the vast majority of environmental regulations focus on traditional "smokestack" manufacturing industries, the service sector now supplies more than three-quarters of the U.S. gross domestic product (GDP) and four-fifths of our employment.²¹ Although it is often not benign in its direct and indirect environmental impacts, this sector has largely escaped environmental regulation at any level to date.

Unfortunately, service sector pollution has also received relatively little systematic attention from environmental legal scholars. The most comprehensive treatment of this topic may be found in Professor Salzman's own provocative essay, which divided services into three broad (and occasionally overlapping) analytical categories: "smokestack services," such as airlines, hospitals, trucking companies, and electric utilities, that have large physical plants which emit significant quantities of wastes; "cumulative services," including dry cleaners, dentist offices, and hotels and fast food chains, that have large collective environmental impacts even where they may not cause significant environmental harm at the level of individual operations; and "leverage services," as exemplified by retail chains, financial services, and utilities which act as "funnels" through which products must flow from manufacturers to consumers.

Salzman advocates a panoply of approaches to addressing the environmental problems of service industries. For smokestack services, he believes that regulatory programs must be specifically tailored to the unique impacts and circumstances of particular industries. On the other hand, with regard to cumulative service industries, Salzman favors a combination of local command-and-control regulation, a carefully crafted scheme of environmental fees and taxes, and governmentally assisted "information exchanges" that promote the sharing of best practices between and among service sectors. Finally, Salzman notes that leverage services "raise intriguing possibilities for environmental protection because, while not necessarily causing significant environmental impact in their immediate activities, they act as a uniquely effective fulcrum to leverage environmental improvements upstream and downstream in the life cycle."²² To make use of this fulcrum, he suggests a range of programs from direct consumer pressure on leverage service providers, through legal mandates that provide economic incentives for downstream environmental improvements, imposition of legal responsibility on retail sellers for upstream or downstream environmental impacts, and requirements that larger retail firms provide annual, publicly available reports on the toxic content, energy requirements, solid waste generation, and other characteristics of products they sell.²³

Although much narrower in scope, Prof. J.B. Ruhl's recent analysis of the sometimes substantial environmental harms caused by agricultural operations is similar to Salzman's essay in its advocacy of a blend of policy approaches to enhance farming's environmental performance.²⁴ After persuasively documenting a range of environmental impacts from agriculture—from habitat loss and soil erosion through animal wastes and water pollution—Ruhl suggests a "proposed framework for a positive law of farms and the environment." This framework contains an integrated mix of information-based programs, incentive programs, environmental taxes, pollutant trading regimes, and (in more limited situations) traditional regulatory approaches.²⁵

Clearly, our collective examination of "second-generation" environmental problems, and the best ways to solve them, is still at a preliminary stage. Jan Mazurek may well be correct that, in and of themselves, traditional regulatory techniques are not the most effective means of abating the environmental disruptions to which service sector industries, and certain presently unregulated extractive industries, [31 ELR 10725] contribute directly and indirectly. These issues deserve further, careful thought, both within government and outside of it. Nonetheless, in their carefully documented research, and by their creative efforts to fashion workable situations, Professors Salzman and Ruhl have crafted thoughtful proposals that provide a valuable starting point for additional discussion of environmental problems ignored or minimized for far too long.

1. As an illustration, Mr. Walke referred to a Project XL proposal by WEPCO, a midwestern electric utility company. The proposal would have allowed the utility to avoid CAA new source review requirements that the company had previously received a Notice of Violation from EPA for violating. Walke noted that EPA ultimately rejected the proposal. It was, however, "relatively typical of the [proposed] XL projects, to the program's detriment."

2. Professor Spence pointed to the example of an oil refinery owned by Amoco Oil Company that, under Project XL, was encouraged to reduce benzene emissions by many times more than what the CAA required, at a greatly reduced cost to the company. For a detailed discussion of the project, see Bradford C. Mank, The Environmental Protection Agency's Project XL and Other Regulatory Reform Initiatives: The Need for Legislative Authorization, 25 ECOLOGY L.Q. 1, 11-12 (1998).

3. David B. Spence, Remarks at the Meeting of the Association of American Law Schools (AALS), San Francisco, Cal. (Jan. 5, 2001) [hereinafter Remarks at the Meeting of the AALS].

4. In response to this point, Mr. Walke observed that one reason that this inter-office cooperation never occurred within the Agency was that it was initially thought that the managerial authority for reinvention efforts should be placed outside of EPA's program offices, who were viewed as "too set in their ways." However, in Walke's view, "what [this] ended up doing was putting it in the hands of a bunch of uninformed people who didn't know a thing about the programs and who ended up being coopted entirely by the industry stakeholders."

5. Professor McGarity's favorable assessment of the CAA Title IV trading program has support among environmental legal commentators. See, e.g., Christopher H. Schroeder, Third Way Environmentalism, 48 U. KAN. L. REV. 801, 814-17 (2000).

6. Ms. Mazurek endorsed the enactment of federal "second-generation" regulatory legislation that would "provide a legal basis for starting a new program from scratch, while providing for some limited forms of experimentation."

7. Thomas O. McGarity, Remarks at the Meeting of the AALS, supra note 3. The paucity of reliable data regarding environmental quality has been noted elsewhere. See, e.g., U.S. GENERAL ACCOUNTING OFFICE (GAO), WATER QUALITY: KEY EPA AND STATE DECISIONS LIMITED BY INCONSISTENT AND INCOMPLETE DATA (2000) (GAO/RCED-00-54).

8. Rena I. Steinzor, Regulatory Reinvention and Project XL: Does the Emperor Have Any Clothes?, 26 ELR 10527, 10536-37 (Oct. 1996).

9. Id. at 10529.

10. Mank, supra note 2, at 5.

11. Id. at 88.

12. Id.

13. David B. Spence, Remarks at the Meeting of the AALS, supra note 3.

14. FINLEY PETER DUNNE, MR. DOOLEY'S OPINIONS (1900).

15. I lack firsthand knowledge of Ms. Whitman's environmental policies as governor of New Jersey and the forthcoming decisionmaking structure of the Bush Administration. I thus offer no prediction here as to what direction Ms. Whitman will choose to take as EPA's Administrator or, perhaps equally important, the extent to which she will be granted sufficient managerial autonomy to have "the final say" on questions of pollution control policy.

16. HERODOTUS, THE HISTORIES OF HERODOTUS, ch. 8.

17. In the past, such inflammatory rhetoric, associated with attempts to demonize or discredit environmental organizations, has referred to environmental activists as "environmental extremists," "new socialists" or persons who wish to "weaken America." For a discussion of this language, in the context of a journalistic analysis of contemporary environmental politics, see Nina J. Easton, The GOP's Sleeping Grizzly, WASH. POST (Nat'l Wkly. Ed.), Jan. 22-28, 2001, at 22.

18. James O. McDonald, Management 39 (n.d.) (unpublished manuscript) (on file with author).

19. This discussion arose when Prof. Dennis Hirsch asked whether the panelists felt it important to allow for the creation of exceptions to environmental regulations in "special cases" (or "bad fit cases") where broad general rules don't really apply. Professor Spence replied that EPA should have an "automatic authority" to waive its own regulations in such cases, and that the only reason that doesn't happen more frequently is that "we have this dreadful fear of [industry] capture of the process." Mr. Walke countered that broadening the availability of environmental variances "would be a terrible mistake." In his estimation, the question of variances is debated so often in environmental law "precisely because there is so much potential for, and evidence of, capture."

20. In this aspect of the discussion, Prof. William Funk, of Lewis and Clark Law School, noted that in Oregon, which has a flexible "green permit program" somewhat similar to EPA's Project XL, participant qualification standards are quite strict and only a handful of green permits are actually issued each year by state authorities. He asked for the panelists' reaction to that situation. Jan Mazurek responded that it is often a problem that only large firms with substantial resources participate in voluntary programs (such as International Organization for Standardization (ISO) 14001), whereas small and medium sized companies often do not. To avoid this, she stated, there should be some "public policy intervention for the smaller and middle sized companies" that would provide them with technical assistance sufficient to offset the transaction costs of participation.

21. James Salzman, Beyond the Smokestack: Environmental Protection in the Service Economy, 47 UCLA L. REV. 411, 413 (1999) [hereinafter Salzman I]; James Salzman, Beyond the Smokestack: Environmental Protection in the Service Economy, 30 ELR 10856 (Oct. 2000) [hereinafter Salzman II].

22. Salzman I, supra note 21, at 461; Salzman II, supra note 21, at 10858.

23. Salzman I, supra note 21, at 466-88; Salzman II, supra note 21, at 10878-87.

24. J.B. Ruhl, Farms, Their Environmental Harms, and Environmental Law, 27 ECOLOGY L.Q. 263 (2000) [hereinafter Ruhl I], reprinted in part and updated, The Environmental Law of Farms; 30 Years of Making a Mole Hill Out of a Mountain, 31 ELR 10203 (Feb. 2001).

25. Ruhl I, supra note 24, at 333-48.