A New Generation of Environmental Policy: Government-Business Collaboration in Environmental Management

Dennis A. Rondinelli

Dennis A. Rondinelli is the Glaxo Distinguished International Professor of Management at the Kenan-Flagler Business School, University of North Carolina at Chapel Hill. He does research on corporate environmental management, international business, and the public role of the private sector. He is the author of a recent report published by the PricewaterhouseCoopers Endowment for the Business of Government, RETHINKING U.S. ENVIRONMENTAL PROTECTION POLICY: MANAGEMENT CHALLENGES FOR A NEW ADMINISTRATION (2000).

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

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

Since the 1970s, environmental regulation in the United States has focused primarily on emissions control and cleanup; but in 1990, Congress authorized EPA to focus on pollution prevention.⁷ Federal and state environmental agencies have never been given the flexibility and resources, however, to pursue source reduction as an alternative to emissions control. EPA's industry assistance programs are limited in scope, and often focus more on compliance than innovation.

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Since the early 1990s, a growing number of corporations have been adopting voluntary environmental management systems (EMS), auditing and monitoring their environmental performance, and using environmental cost accounting, despite a regulatory system that neither strongly encourages nor adequately rewards experiments with new ways of preventing pollution.⁸ Some companies are applying life-cycle analysis, adopting principles of product stewardship, and using "design for environment" concepts to make their production systems and products more environmentally friendly.⁹ Others are reducing or eliminating waste, recycling and reusing materials, substituting cleaner materials for environmentally hazardous ones, conserving water and energy, and extending good environmental practices throughout their supply chains.

Many corporations apply pollution prevention and eco-efficiency practices that go beyond regulatory compliance for sound business reasons.¹⁰ Eliminating waste in the production process saves disposal costs and can increase the efficiency of production. Managers are under increasing pressures from shareholders and stakeholders to reduce environmental risks and liabilities, protect the corporation's image, and develop a reputation for social responsibility and good corporate citizenship. In a recent World Resources Institute report, Robert Repetto and Duncan Austin point out from their study of the pulp and paper industry that, other things being equal, financial analysts prefer to recommend to stock buyers a company "facing lower financial risks and better expected outcomes from its environmental exposures."¹¹ Some firms have also found that applications of life-cycle and supply-chain analyses lead to the discovery of new business opportunities and new products, more efficient and effective production processes, and new sources of revenue.¹² By adopting international standards of environmental management such as International Organization for Standardization (ISO) 14000, American corporations can more easily remain or become competitive in world markets.¹³ Through beyond-compliance environmental management practices, corporations are also finding ways of developing new products or improvements in existing products that make them more environmentally friendly, and of marketing their "green" characteristics.¹⁴

Although large corporations have been adopting EMS and pollution prevention practices for more than a decade, the spread of those practices to small and medium sized enterprises has been slow and sporadic.¹⁵ Many small and medium sized enterprises still see environmental protection as a cost and struggle to keep up with constantly changing regulations. Pollution prevention and eco-efficiency practices have not spread faster because many enterprises do not yet see clearly the benefits of moving beyond regulatory compliance under command-and-control policies. Government continues to rely on regulatory mechanisms that do not leverage market forces or reward businesses that reduce their negative environmental impacts.

The growing calls for reform of current environmental policies seek to make pollution prevention and eco-efficiency the driving forces for improving industrial performance. Maintaining a clean environment remains a high policy priority in the United States because environmental protection is essential to improving public health, conserving natural resources, and enhancing overall quality of life. As problems of environmental pollution become more complicated, however, and as attempts are made to tighten regulations, command-and-control approaches to environmental management are likely to be less effective, more frequently challenged, and more costly to implement. The current complex, media-specific, constantly changing, and costly regulatory system can weaken or undermine attempts by industry to adopt beyond-compliance environmental management practices. To convince the private sector to adopt pollution prevention practices, environmental protection agencies must sell them primarily on their cost-saving, quality-enhancing, efficiency-promoting business advantages rather than only on their environmental benefits. Industry leaders must see adoption of eco-efficiency practices first as good business decisions.

Why Command-and-Control Regulation Cannot Achieve Continuing Environmental Improvements

Federal and state governments' ability to achieve continuous improvement in environmental quality will be severely limited in the 21st century if they continue to rely primarily on command-and-control regulations.¹⁶ The current regulatory system cannot achieve continuing environmental improvements for a variety of reasons. Although regulations are usually effective in reducing emissions from large and obvious point sources, they do not allow EPA and state regulators the flexibility to reduce pollution among numerous small sources that account for most environmental degradation. The Wisconsin Department of Natural Resources points out that the current regulatory system in the United States applies to only about 20% of the sources of environmental problems, and that addressing the remaining 80% will require means that go beyond regulatory controls.¹⁷ At the same time, national environmental regulations are numerous, [31 ELR 10893] complex, fragmented, and ever-changing, making it difficult for both the regulators and the regulated to keep pace with new requirements and to achieve and maintain compliance. The number of federal, state, and local environmental rules and regulations in the United States exploded from about 2,000 in the 1970s to more than 100,000 at the end of the 1990s.¹⁸ Environmental regulations are now listed in over 789 parts of the Code of Federal Regulations.

Many of the problems of managing environmental policy arise from the intrinsic nature of regulation and from political and bureaucratic constraints within government.¹⁹ Both public and private organizations point out the limitations of a regulatory approach. One EPA official argues that relying on command-and-control approaches to environmental management is analogous to using emergency rooms as the primary instrument of health care.²⁰ Both involve prescribed treatment by experts, depend on invasive intervention, provide only focused treatment, emphasize remediation and not recovery, and limit treatment to extreme but necessary measures. Relying primarily on command-and-control environmental regulations or on emergency room treatment neither encourages preventive measures nor provides incentives for maintaining good health. He concludes that "as long as the objective for environmental quality remains damage mitigation or simple protection rather than enhancement, the chance for a robust, sustaining environmental policy is low."²¹

The U.S. General Accounting Office (GAO) concludes that although the current system of environmental regulation in the United States is the most advanced in the world, its volume and complexity "often results in conflict and gridlock."²² Between 1970 and the mid-1990s EPA promulgated more than 11,000 pages of regulations increasing industry's compliance costs.²³ The GAO points out that this regulatory structure impairs EPA's "ability to experiment with innovative and more cost-effective ways of reducing pollution (such as preventing pollution by eliminating or minimizing it at its source, instead of containing it at the end of the pipe) or using market-based incentives (such as pollution or trading emission rights)." In turn, federal regulatory restrictions make it more difficult for states and localities to solve creatively environmental problems in their jurisdictions.

Many problems arise from the fact that regulations focus separately on individual media of pollution (air, land, and water) and categories of pollutants (toxic substances, hazardous wastes, pesticides), rather than on overall environmental quality.²⁴ New laws have been enacted and amendments have been made to environmental regulations for more than 30 years, usually independently of each other and sometimes in conflict with already existing standards. Rarely are requirements for one medium coordinated with requirements for others either in legislation or in administrative rulemaking.²⁵ Often the regulation of one medium, e.g., air, increases pollution in other media, e.g., water or soil.²⁶

The slowness of regulatory and bureaucratic processes makes it difficult for government to stay ahead of environmental threats and to make pollution prevention rather than emission control the focus of environmental policy. Media-specific environmental regulations are ineffective and inadequate to deal with the increasingly significant "nonpoint" sources of environmental degradation. Restrictions on one category of pollutants sometimes lead to increases in other types of emissions or degradation. EPA's requirement that methyl tertiary butyl ether (MTBE) be added to gasoline in some regions of the United States in order to lower carbon monoxide emissions, for example, resulted in widespread contamination of public water systems from gasoline leakage into soil and underground water sources. MTBE produces odors in water and prolonged ingestion can cause acute and chronic toxicity in humans.²⁷ Before EPA revoked the requirement in 2000, the city of Santa Monica, California, four years earlier, had to close down its water system because of MTBE contamination. MTBE was detected in groundwater and surface water throughout the United States. A sample study found MTBE contamination of more than 9,000 water supply wells in communities in 31 states.²⁸

The regulatory system is also limited by fragmented congressional law making, supervision, and micro-management of implementation. Congressional attempts to micro-manage environmental protection hobbles EPA with what one professional group calls "overly prescriptive statutes [31 ELR 10894] that pull the agency in too many directions and permit managers too little discretion to make wise decisions."²⁹ Because Congress passes environmental legislation piecemeal, consolidates diverse environmental regulations under EPA's control, and adds new environmental rules and regulations without reviewing the scope and impacts of previous laws, the Agency lacks a coherent mission and a clear direction. More than 40 committees and subcommittees of Congress have some type of oversight responsibilities for or jurisdiction over EPA. More than a dozen statutes govern EPA's mandate to control pollution and require the Agency to organize into numerous offices with different environmental management philosophies, control strategies, and "legal cultures."

Because of detailed congressional mandates, EPA must spend its resources on developing and implementing complex bureaucratic procedures rather than focusing on improving environmental quality. EPA routinely passes its bureaucratic requirements and burdens on to states and private businesses, exercising detailed oversight that often inhibits state and local environmental agencies from innovating or becoming more creative in improving performance.

Frequent changes in federal and state environmental regulations make it difficult for companies, especially smaller ones, to keep abreast of requirements and to comply, and making regulations continuously more stringent sometimes undermines the ability of even large corporations to respond effectively. The National Research Council (NRC), for example, found that EPA's more stringent vehicle exhaust emissions standards, issued in 2000 for phase-in beginning in 2004, would set back efforts of automobile manufacturers to develop more fuel-efficient vehicles.³⁰ The NRC points to an innovative pilot project in which Ford, General Motors, and Daimler-Chrysler are developing a new generation of fuel-efficient cars that combine electric and diesel engines to obtain 70 to 80 miles per gallon. These extremely efficient vehicles can meet the previous emission standards, but not the new ones. The concept cars would be three times more efficient than current automobiles. But after six years of development, even if the automakers can further refine the technology, they are unlikely to meet EPA's new requirements or be able to produce the cars at a commercially viable price.

Scientific, research, and industry groups contend that EPA often fails to make use of accepted scientific findings as the basis for its regulations, explain its decisions realistically in terms of risk, or take into account the compliance costs to states, localities, or the private sector. In a comprehensive evaluation of the use of science at EPA published by Resources for the Future, Mark Powell points out that "to cover a growing set of issues under resource constraints, the agency has typically traded off depth of analysis, using few data and simple scientific models for decisionmaking. Consequently, EPA sometimes uses screening—level analyses to support regulatory decisions with important ramifications."³¹ The study found that EPA incentives, staffing patterns, and norms all subordinate science to political and bureaucratic criteria in regulatory decisionmaking, and that EPA's highest level administrators often lack an understanding of what science can contribute. Because many regulatory changes are made under tight time and budget constraints, EPA often does not conduct a thorough review of the science before acting. And even when scientific information is considered at lower levels of management within the Agency, it often fails to filter up to the Assistant Administrators' level, and does not, therefore, get considered in regulatory decisions.³²

EPA's controversial attempts to tighten national ambient air quality standards for ozone and small particles in 1997, for example, continue to be criticized because of the lack of solid scientific evidence of their health benefits and because of the difficulties and high costs of compliance. EPA ignored the scientific community's skepticism of the evidence that was offered to support its position. Ten of the 22 members of EPA's own Clean Air Act (CAA) Scientific Advisory Committee either found insufficient evidence to support the new standards or refused to select a range for the standards based on existing scientific evidence. Seven other members called for setting the standard at the less stringent end of EPA's recommended range.³³ Some scientists argued that the evidence EPA offered of correlations between fine particles and premature deaths could not explain a causal relationship. Other scientists claim that the correlations were spurious because premature deaths could have been caused by many other factors including indoor pollution rather than outdoor air quality.

Other critics contend that few of EPA's regulations reflect realistic cost-benefit analyses, despite the fact that Congress requires regulatory agencies to take costs into consideration. The total cost of compliance with environmental laws since 1970 now exceeds $ 1.5 trillion. Studies indicate that by 1990, the cost of pollution abatement had "emerged as a major claimant on the resources of the U.S. economy," reaching more than 10% of the total cost of government purchases of goods and services.³⁴ By the early 1990s, individuals, businesses, and governments spent more than $ 120 billion annually on pollution abatement and control.³⁵ Clearly, the reduction of environmental pollution has significant social and economic benefits, but alternatives to command-and-control regulation may be more effective and less costly.

Even EPA supporters note that the challenged fine particle standards would require compliance costs that far outweigh the benefits.³⁶ By EPA's own calculations, the implementation of the new small particle regulation would cost from $ 58 billion to $ 110 billion and would generate benefits of only about $ 6 billion. Ironically, EPA conceded that it would be extremely difficult for most cities and counties to meet the standard. It noted that the costs of even partially complying with more stringent ozone standards exceeded $ 1.2 billion and would generate benefits valued at less than $ 0.8 billion.

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Many corporations complain that environmental policy in the United States simply does not take account of market forces or other pressures on businesses that determine how they react to environmental issues. The Enterprise for the Environment Committee, led by former EPA Administrator William Ruckelshaus, emphasized that "the environmental protection system of the next century must become as efficient and low cost as possible without compromising environmental progress."³⁷ But command-and-control policies lead inevitably to an adversarial relationship between government and the private sector and limit incentives for creativity and innovation. In fiscal year 1999, EPA brought almost 4,000 civil judicial and administrative actions against noncompliant regulated entities resulting in $ 166.7 million in civil penalties and 241 cases referred for criminal prosecution.³⁸ Yet, the complex, costly, and inflexible command-and-control regulatory system that dominates environmental policy in the United States neither encourages nor rewards corporate EMS that exceed compliance requirements.

Because EPA has no overarching environmental objective other than enforcing media-specific controls, it is difficult to convey to the private sector the long-term business benefits of adopting proactive EMS. Even EPA's voluntary industrial partnership programs focus on compliance rather than on the business benefits of sound environmental practices. The mutual lack of trust between the private sector and regulatory agencies makes it difficult for EPA to work with businesses in the most effective ways.

In brief, the growing complexity of environmental degradation, the inherent limitations of regulations, and the growing tendency to mobilize political opposition to new regulatory controls and to challenge them in the courts will make command-and-control approaches far less useful in the future. Moreover, since the early 1990s, many enterprises have taken new initiatives in managing their environmental impacts. They seek new ways to reduce their costs, increase their efficiency, lower their liabilities, and enhance their competitiveness while reducing pollution, conserving resources, and eliminating waste. National and state policies have not kept pace with changes in environmental management in the private sector and are no longer the driving force for environmental improvements in some industries.

The Need for a New Generation of Environmental Policies

Assessments of the performance of EPA and state environmental agencies conclude that, in an advanced post-industrial nation in which legal controls are already quite stringent, continued reliance on a command-and-control approach to environmental management produces diminishing marginal returns.³⁹ Economic, social, legal, and political limitations on making regulations and their enforcement more stringent can generate backlash, resulting in opportunity costs for achieving better environmental conditions. Many of those calling for reform note that greater returns on public and private investment can be obtained from environmental policies that, while maintaining a sound regulatory system, place much more emphasis on promoting pollution prevention and eco-efficiency. Environmental conditions can best be improved by encouraging business and industry to eliminate the sources of environmental degradation rather than continuing to try to clean up pollution at the "end of the pipeline."⁴⁰

Many corporations are already pursuing pollution prevention, clean manufacturing, and responsible use of resources through management systems that lead to what the World Business Council for Sustainable Development calls "eco-efficiency."⁴¹ By building stronger collaboration between government and business to promote and disseminate pollution prevention and eco-efficiency practices, federal and state environmental protection agencies can move to a new level of activity for encouraging continuous environmental improvement. Eco-efficiency encourages businesses to become more competitive, innovative, and environmentally responsible by pursuing both environmental protection and productive commercial activities. Firms attain eco-efficiency by reducing the energy and material intensity of goods and services, reducing toxic dispersion, recycling materials, maximizing sustainable use of renewable resources, extending product durability, and increasing the usable life of products.

Corporations in some industries have been practicing pollution prevention for more than 30 years.⁴² But environmental protection policy based on pollution prevention and eco-efficiency has never been seriously tried in the United States because it requires flexibility and a multimedia approach that command-and-control regulations do not easily accommodate.⁴³

The arguments for reorienting environmental policy from command-and-control regulation to a collaborative approach that gives stronger emphasis to promoting eco-efficiency are compelling, for both government and the private sector. Eliminating pollution from production systems and from goods and services could reduce substantially the volume of pollutants that would have to be controlled at the end of the pipeline.⁴⁴ In government, billions of dollars could be saved that now go to administration and enforcement of regulations at federal, state, and local levels, and to monitoring compliance, prosecuting violators, and defending legal challenges to new rules and to civil and criminal penalties. [31 ELR 10896] Pollution prevention and eco-efficiency could reduce workers' exposure to toxic materials and health-threatening emissions, degradation of the environment in communities where companies' facilities are located, and pressures on local landfills and on water, air, and land resources.

To the extent that harmful emissions and wastes can be removed from products and manufacturing processes, companies would save money, increase their efficiency, improve the quality of the products they make, and enhance customer satisfaction. Cleaner production would result in cost savings through energy and water conservation, materials substitution, and recycling and reuse of "waste materials."⁴⁵ By eliminating or significantly reducing pollution at the source, companies could more easily comply with environmental laws, saving them money in fines, penalties, and compliance costs. By lowering their risks, firms could save on legal and insurance costs.⁴⁶ Lower legal liabilities would help satisfy stakeholder concerns about corporations' environmental impacts and improve their images as socially responsible organizations. Eco-efficiency practices would help companies improve the quality of their products and give them competitive advantages in global markets.

EPA and Pollution Prevention

In 1990, Congress in enacting the Pollution Prevention Act mandated EPA to focus its efforts on pollution prevention.⁴⁷ The statute points out that "the United States of America annually produces millions of tons of pollution and spends tens of billions of dollars per year controlling this pollution,"⁴⁸ and that there are "significant opportunities for industry to reduce or prevent pollution at the source through cost-effective changes in production, operation, and raw materials use. Such changes offer industry substantial savings in reduced raw material, pollution control, and liability costs as well as help protect the environment and reduce risks to worker health and safety."⁴⁹ Congress recognized, however, that the opportunities for source reduction are

often not realized because existing regulations, and the industrial resources they require for compliance, focus upon treatment and disposal, rather than source reduction; existing regulations do not emphasize multi-media management of pollution; and businesses need information and technical assistance to overcome institutional barriers to the adoption of source reduction practices.⁵⁰

Yet, Congress never really followed up with significant reform of environmental laws to allow EPA the flexibility, or gave it the budgetary resources, to make pollution prevention the focus of its activities. Nor has EPA been aggressive in promoting pollution prevention or in seeking greater allocations of budgetary resources for nonregulatory collaborations or partnerships with the private sector to develop and disseminate eco-efficiency practices, despite public pronouncements to the contrary. EPA officials themselves recognize the limitations of the conventional regulatory approaches to management, and emphasized in the Agency's Strategic Plan 2000 that end-of-pipe pollution control must be supplemented in the future with new and different alternatives.⁵¹ "EPA increasingly finds diminishing returns in its traditional approaches to regulating large and obvious sources of pollution,"⁵² its strategic plan points out. EPA claims that its "strategy of first choice is to prevent pollution before it occurs. Pollution prevention precludes environmental damage and necessity for costly cleanups."⁵³

EPA officials have publicly committed the Agency to promoting "the use of pollution prevention (P2) for meeting environmental goals by … increasing adoption of environmentally protective business practices such as environmental accounting practices and P2 opportunity assessments [and] increasing integration of P2 into EPA's regulatory, enforcement, and compliance programs…."⁵⁴ EPA attempts to promote innovations in pollution prevention by testing market-based solutions, providing compliance assistance, developing partnerships with industry to address environmental problems, encouraging breakthroughs in science and technology, and promoting "pollution prevention and reduction by developing more environmentally compatible technologies and facilitating their introduction into the marketplace."⁵⁵

EPA's Ham-Handed Implementation: All Thumbs, No Fingers

EPA initiated several programs during the 1990s to work with the private sector on voluntary pollution prevention; however, the Agency is not organized or staffed effectively to work flexibly with the private sector, nor is it, some analysts contend, supported adequately with legislative authority.⁵⁶ EPA has not committed adequate financial resources to shift dramatically from a command-and-control regulatory approach to one that supplements regulation with a strong focus on collaboration with the private sector. Many of the initiatives were undermined by ham-handed implementation—the unwillingness of EPA's regulatory staff to grant flexibility in regulatory enforcement or by their perception that they have weak legislative authority to do so.

Through the Common Sense Initiative (CSI), EPA elicited the participation of stakeholders from industry, environmental justice organizations, labor organizations, environmental organizations, and federal, state, and local governments to address environmental issues facing companies in the automobile manufacturing, computer and electronics, iron and steel, metal finishing, petroleum refining, and printing industries. EPA's Climate Wise and Energy Star programs encouraged industry to practice energy efficiency and conservation. Its Design for Environment (DfE) program helps businesses take environmental considerations into their design of products, processes, and management [31 ELR 10897] systems. Project XL is a pilot program that encourages corporations to test innovative ways of achieving more cost-effective environmental performance. In addition, EPA has programs promoting environmental accounting and sustainable development practices in specific industries.

EPA programs for pollution prevention and industrial partnership have been limited, however, in scope and impact. Only a small percentage of EPA's budget goes to promoting pollution prevention in the private sector. In fiscal years (FYs) 1998, 1999, and 2000, EPA's total expenditures for pollution prevention programs were less than 4% of its budget each year, and only a small part of those expenditures targeted industry. In FY 2000, programs for preventing pollution accounted for less than $ 278 million (3.6%) of a $ 7.5 billion budget.⁵⁷

Moreover, the GAO and industry leaders often question the efficacy of many of the industry partnership programs that EPA did try. The impacts of EPA's best-known attempt to reinvent environmental policy to be "cleaner, cheaper, and smarter" through the CSI were, according to a GAO analysis, quite modest.⁵⁸ Although the CSI achieved some success in establishing a process for multiple stakeholders to discuss environmental solutions in selected industries, after several years of operation it only "produced three formal recommendations to EPA, none of which has suggested the types of changes in the existing approach to environmental management that EPA expected."⁵⁹

GAO's evaluations found that the CSI's limited results were due, among other things, to the lengthy process of collecting and analyzing data; difficulties in meeting EPA's requirements that stakeholders reach consensus on the approaches needed to address large, complex issues or policies; and stakeholders' varying commitments of time and understanding of technical environmental issues. EPA measured success in terms of inputs—numbers of meetings and participants, for example—rather than results. Although EPA spent more than $ 10 million on the process, failure to measure the actual reductions in pollution in the partnership industries rendered judgments about the cost-effectiveness of the CSI impossible.

Project XL, which EPA initiated in 1994, encouraged industries to develop alternative pollution reduction strategies, but uses regulatory compliance rather than the inherent benefits to businesses of better environmental performance as the benchmark of progress. The experiment sought participation by 50 companies. However, by 1999, only 7 projects had been implemented, and those selected tended to be limited in scope, focusing on rather conventional objectives such as setting "emission caps" at Merck, easing time limits on cleanup at Exxon, multimedia permitting and some compliance flexibility at Weyerhaeuser, and relief from obsolete requirements and paperwork requirements at Intel—hardly the innovative breakthroughs envisioned in EPA's program design.⁶⁰

Industry partnership programs suffered from the relatively high level of mistrust that exists between companies and EPA, and between corporations and external stakeholders who are required to provide inputs. Many firms feared that involving stakeholders might lead to legal actions or public criticism. Paperwork involved in many of the programs is voluminous and tedious, requiring companies to commit substantial resources to participate. Negotiations between companies and EPA were long and drawn out. In many cases, EPA and state regulatory agencies were unswerving in their attempts to enforce regulatory compliance, despite the fact that the program was designed to allow flexibility and creativity for companies. Union Carbide, for example, applied to participate in Project XL in 1996; two years later EPA and the company still had not reached an agreement.⁶¹ Other firms like 3M and Anheuser Busch withdrew their applications after months of negotiations with federal and state environmental agencies. The state of Minnesota and the federal EPA refused, for example, to back down from performance guarantees that gave 3M little real flexibility for error in meeting compliance requirements. Fear that participation in voluntary programs sponsored by government agencies might lead to compliance actions also limited private sector responses. Only under continued political pressure did EPA, in 2000, modify the procedures to increase the number of projects underway.

The relationship between EPA and the states is often tense and characterized, as the GAO points out, "by fundamental disagreements over such issues as EPA's and state environmental agencies respective roles, appropriate priorities among state environmental programs, and the appropriate degree of federal oversight."⁶² EPA often exercises strong oversight of state regulatory agencies, but as the GAO found, that oversight is inconsistent across regions. EPA sometimes tries to micro-manage state programs, does not provide sufficient technical support, and sometimes fails to consult the states before making critical decisions that affect them. Indeed, many state regulatory agency officials do not agree with EPA's heavy reliance on deterrence-based enforcement and continually attempt to gain increasing flexibility, thereby adding to the tensions.⁶³

Other voluntary programs initiated by EPA have fared little better. The weaknesses in EPA's industry partnership programs arise primarily fromthe Agency's inability to refocus them from regulatory compliance to the business benefits for participating firms.⁶⁴ EPA's voluntary programs cannot provide relief from costly regulation or help firms to avoid highly prescriptive, inflexible and, sometimes, conflicting environmental statutes. Some critics of regulatory reform see the weaknesses in EPA's collaborative programs with industry as evidence of the dangers of regulatory flexibility.⁶⁵ Others contend that it was EPA's inflexibility that undermined the success of the collaborative arrangements.⁶⁶ [31 ELR 10898] The Tellus Institute's assessment of programs in EPA points out that by the late 1990s pollution prevention had "by and large stalled in its evolution toward becoming the dominant regulatory ethic and framework," largely because the concept had not permeated EPA operations.⁶⁷

Directions for Change—Building on What Businesses Can Do

The wide range of studies reviewed above call for a new generation of environmental policy in the United States that combines sound and proven regulatory controls with be-yond-compliance environmental management practices focused on pollution prevention and eco-efficiency. The new approach would be collaborative and build on what businesses can do—and indeed are now doing—in environmental management, including adopting EMS that meet international guidelines, using ecologically efficient processes of pollution prevention and source reduction, and conserving environmental resources. The challenge for federal and state government regulators is to understand better what companies are doing, why they are doing it, how to reinforce those that are moving toward pollution prevention and eco-efficiency, and how to encourage other companies to do the same.

EMS

Some large corporations in the United States are adopting voluntary EMS and pollution prevention practices that go well beyond legal requirements, and many are implementing international standards of environmental management that transcend and exceed national environmental regulations.⁶⁸ For more than a decade, industry groups have been adopting voluntary principles, such as Responsible Care(R) in the chemical industry.⁶⁹ Many corporations also comply with the Coalition for Environmentally Responsible Economies (CERES) principles, the Global Environmental Management Initiative's (GEMI) practices, the International Chamber of Commerce Guidelines, and ISO 14000 series standards.⁷⁰ Many North American and European corporations are adopting EMS that integrate eco-efficiency practices into their overall business operations and certifying them by ISO 14001 standards. The ISO 14000 series is an international standard for certifying an EMS that was developed by the International Organization of Standardization in Geneva andimplemented in the United States by the American National Standards Institute (ANSI).⁷¹ By 2000, more than 800 organizations in the United States had officially joined more than 14,000 organizations worldwide in certifying their EMS under ISO 14001.⁷² Many companies are using ISO 14001 guidelines to design or improve their EMS without seeking official certification.⁷³

ISO 14001 provides a framework for environmental management that focuses on five major components.⁷⁴ First, the facility or firm seeking certification must develop and adopt an environmental policy to which senior management is committed. Second, it must establish a planning process that identifies all of the environmental aspects of a facility's operations, legal and other requirements, clearly defined objectives and targets for environmental improvement, and a set of environmental management programs. Third, it must create a clear structure of responsibility for environmental management; identify programs for training, awareness and competence among all employees of the facility, and for internal and external communication of the EMS; describe a system of environmental management documentation and of document control; and detail procedures for operational controls of environmental impacts and emergency preparedness and response. Fourth, the facility or organization must monitor and measure environmental impacts, report nonconformance, and take corrective and preventive action; keep environmental management records; and carry out environmental audits. Fifth, it must establish a review process through which senior management reassesses the suitability, effectiveness, and adequacy of the EMS at appropriate intervals in order to assure continuous improvement.

Some companies have been implementing EMS that go beyond regulatory requirements for more than two decades. The 3M Corporation long ago committed itself to solving its own environmental problems, preventing pollution at the source wherever possible, developing products that have minimum effect on the environment, conserving natural resources, meeting and sustaining government regulations and, where possible, assisting government agencies in environmental activities.⁷⁵ Other corporations such as Texaco, Eastman Kodak, GlaxoSmithKlein, Goodyear, Bristol-Myers Squibb, and Alcoa developed EMS, based on their own corporate environmental, health, and safety standards, that exceed U.S. standards and international guidelines. These corporate standards are often more stringent than the requirements adopted by governments.⁷⁶ Texaco's EMS addresses product stewardship, air emissions, spill prevention and control, and waste management, as well as health and industrial hygiene and personnel and contractor safety. Texaco applies its environment, health, and safety policies not only in its facilities in the United States but in all of its global business operations.⁷⁷

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Some companies have their EMS certified for the entire corporation, others for strategic facilities, products, or processes. IBM certified an EMS for the entire corporation to the ISO 14001 standard, with all of its manufacturing and hardware development sites having completed the audit process by 1999.⁷⁸ Lucent Technologies implemented its EMS for 98% of its products, services, operations and facilities in 1999, and certified 63% of its facilities.⁷⁹ Motorola plants in the United States and around the world use a common environmental, health, and safety management system framework that satisfies ISO 14001 requirements; the corporation seeks to have all of its manufacturing plants certified by 2001.⁸⁰ General Motors, Ford, Toyota North America, and other automobile manufacturers not only require all of their plants to certify their EMS but also to encourage or require their suppliers to certify as well. Indeed, General Motors' EMS includes all of the ISO 14001 requirements plus several others that require plants to provide higher levels of support for environmental performance, cost reduction, and system auditing.

Although there have been few in-depth evaluations of the impacts of ISO 14001-certified EMS, those studies that have been done indicate that they can bring positive changes. A detailed analysis of the impacts of ISO 14001 certification of the EMS at Alcoa's aluminum plant in Mt. Holly, South Carolina, for example, showed that the primary benefits were reinforcing and strengthening good environmental management practices, reviewing and improving management procedures, increasing operational efficiency and effectiveness, and enhancing employee awareness of the environmental impacts of their activities.⁸¹

An essential element of an EMS is monitoring, auditing, and measuring environmental performance.⁸² An increasing number of corporations are now voluntarily monitoring and auditing their environmental impacts regularly in order to prevent problems or correct them quickly. General Motors, Eastman Kodak, GlaxoSmithKlein, and Bristol-Meyers Squibb assess their facilities' environmental performance against legislation and corporate standards on a regular basis.⁸³ Baxter International and Alcoa headquarters hold operating unit managers responsible for closing audit action items quickly.⁸⁴

As part of their EMS, some corporations are attempting to identify the costs of their environmental impacts, expenditures, and the savings from reducing the use of materials, energy, and water, as well as the costs of regulatory compliance and penalties. Environmental accounting is a management tool that firms use to identify, quantify, and allocate the direct and indirect costs of operations and to determine the real costs of producing a product.⁸⁵ Environmental cost accounting identifies and quantifies not only the direct costs of environmental management (labor, capital, and raw materials), but also the hidden costs (monitoring and reporting), contingent liability costs such as fines and remedial action, and intangible costs such as public relations and good will.⁸⁶

Baxter International was a pioneer in the development of a corporate environmental financial statement that accounts for the costs of basic environmental programs, remediation, waste generation, and other environmental responses, and for income, savings, and cost-avoidance related to environmental activities.⁸⁷ General Motors, Amoco, 3M, DuPont, Allied Signal, Monsanto, and others have discovered ways of offsetting environmental costs with revenues by selling waste byproducts, adopting clean technologies, or selling unused pollution allowances. Improving environmental performance in any area of business operations contributes to the overall effectiveness of a firm's EMS.

Adoption of Extended Product Responsibility and Life-Cycle Analysis

Corporations have also shown a strong ability to develop eco-efficiency practices when they see them as an important part of their business strategy. Some have adopted extended product responsibility and life-cycle analysis, and are also encouraging their suppliers and customers to do the same. Others are using "design for environment" principles, materials substitution, and waste recycling to reduce negative environmental impacts.

An increasing number of firms are adopting principles of "extended product responsibility" that commit them to assessing the environmental, health, and safety impacts associated with their products and services throughout their life cycles.⁸⁸ Life-cycle analysis is a systematic means of measuring resource use and environmental releases to air, water, and soil from products, processes, and services.⁸⁹ It helps companies to improve their understanding of how much resources their products consume in raw materials extraction, manufacturing, transportation, distribution, and final disposal, and the environmental impacts of production at each stage in the life cycle. Using life-cycle analysis, corporations such as Dow Chemical, Intel, Hewlett-Packard, General Motors, International Paper, Xerox, and Nortel determine the environmental implications of producing, distributing, [31 ELR 10900] using, and disposing of a product and ways of improving the eco-efficiency of their operations, products, technologies, and practices. Life-cycle analysis helps these firms reduce material intensity and create a smaller environmental "footprint" from their operations.

Other companies, such as IBM, Motorola, and Toyota are extending their environmental management practices and life-cycle analyses throughout their supply chains and attempting to encourage suppliers, distributors, and customers to manage their environmental impacts more effectively.⁹⁰ IBM requires all of its suppliers to comply with all applicable environmental laws and regulations in performing work for any of its units, and does environmental evaluations of those with environmental risks that are inherent in the work they do for IBM. Ford, General Motors, and Daimler-Chrysler are adopting pollution-prevention measures in production and distribution, and requiring their suppliers around the world to certify their EMS by ISO 14001 standards and to promote eco-efficiency throughout their supply chains.⁹¹

Companies such as IMB, Dell Computer, Compaq, Motorola, Xerox, and Lucent Technologies that are concerned about total quality management are designing or redesigning their products to decrease or eliminate adverse affects on the environment. Many large firms are adopting DfE programs that allow them to redesign old products or to create new ones in ways that minimize their environmental impact by using less raw materials or substituting inputs that are more environmentally benign.⁹² DfE guides designers to produce, package, and distribute products so that they conserve energy, water, and other resources. Companies use DfE to make components and finished products that can be recycled when customers no longer use them. Many companies are using the DfE process to review and evaluate criteria for each of their products in order to minimize environmental impacts throughout their life.

Numerous examples can be found of how corporations are reducing inputs and recycling materials.⁹³ The automobile industry has been especially attentive to reducing waste. General Motors' application of life-cycle analysis helped it to find ways of recycling fender scrap from its Saturn car line into wheel cap assemblies and to use recycled tires for making radiator side air baffles. General Motors uses recycled textile fabric for floor insulation. Hewlett-Packard reuses or recycles more than 3.5 million pounds a month of materials from its product recovery centers in France, Germany, and the United States.⁹⁴

The carpet industry is also making significant progress in reducing waste. Shaw Industries, for example, reduced the amount of waste generated in manufacturing by adopting high-precision technology that cuts by 25% the amount of selvedge or residual edge trimming that had to be sent to local landfills.⁹⁵ It reuses selvedge and carpet seams for making 100% recycled carpet pads that pass its industry trade association's "green label" requirements. Shaw engineers also recycled carpet fiber waste that would have had to be sent to landfills into reinforced concrete to make a product that is tougher, stronger, and more resistant to drying. Milliken & Company is aggressively cutting waste from its carpet manufacturing plants. By 1999, 43 of its 55 locations in the United States achieved the company's "zero-waste-to-landfills" target. Milliken has reduced its waste output to landfills by 98% since 1988 and recycled 100% of its office paper since 1992.⁹⁶ Interface, Inc. has a product take-back program for carpet that reclaims any brand, whether or not its owner is purchasing Interface products. The company recycles carpet tile and broad-loam and reuses the material for carpet or other products so that waste will not end up in landfills.⁹⁷

Reductions of Energy Intensity, Resource Use, and Toxic Dispersion

Corporations are also finding new ways of reducing their harmful air emissions, conserving energy and water, and limiting their use of nonrenewable natural resources. Xerox, DuPont, the Olin Corporation, 3M, and Eastman Kodak are a few of the many corporations that have made significant cuts in their toxic release inventory (TRI)-reportable air emissions.⁹⁸ Other corporations report significant cuts in greenhouse gas emissions. Baxter International reduced theozone-depletion potential of its operations by 99% and its chlorofluorocarbon (CFC) air emissions by 98% since 1988.⁹⁹ Between 1991 and 1998, DuPont reduced its total TRI waste and emissions by 35%, its deep-well disposal of hazardous waste by 75%, and its releases to air, water, and land by 46%.¹⁰⁰ Despite a 35% increase in production from 1990 to 1998, it lowered its greenhouse gas emissions by 39%, kept its energy consumption stable, and anticipated reducing its Kyoto Protocol-basis emissions by 45% by 2000.

Many other corporations are decreasing their energy and water use in order to achieve significant cost savings and improve the efficiency of their operations, by using water-and energy-saving devices, cleaning and recycling water in manufacturing operations, replacing high-water consumption facilities, and installing more energy-efficient manufacturing equipment. United Parcel Service uses a variety of alternative fuels and engines, including compressed and liquid natural gas and propane- and electric-powered engines in its delivery trucks to lower their use of fossil fuels and vehicle fuel emissions.¹⁰¹ It has purchased thousands of electronic fuel injected engines to reduce gasoline consumption. PepsiCo, IBM, ARCO, and Hughes Electronics have initiated energy conservation programs that have [31 ELR 10901] saved billions of kilowatts of electricity and reduced carbon dioxide emissions.¹⁰²

Creating More Effective Government-Business Collaboration for Environmental Protection

Because regulations alone cannot achieve continuing improvements in industrial environmental performance during the 21st century, they must be supplemented with government-business collaborations and partnerships that promote pollution prevention and eco-efficiency based on current and emerging experiments with beyond-compliance environmental management practices. As noted above, organizations ranging from the President's National Science and Technology Council and the GAO to NAPA and the Business Roundtable are calling for changes in the ways in which governments attempt to protect the environment and in the ways in which business owners and executives perceive pollution prevention and eco-efficiency practices. Both business and public policy groups recognize that although federal and state governments alone cannot bring about a revolution in business practices, they can—working together—help to create conditions that encourage and promote beyond-compliance environmental management in the private sector. New federal and state environmental policies can combine cost-efficient scientifically sound regulations with stronger programs to promote, reward, and disseminate new technologies and practices of eco-efficiency in the private sector to ensure continued improvement of environmental conditions in the United States during the 21st century.¹⁰³

Many observers argue that the regulatory system in the United States must be rethought and redesigned to leverage the resources of the private sector in achieving higher levels of environmental performance.¹⁰⁴ For all of the reasons outlined above, the promotion of pollution prevention and eco-efficiency practices can become an essential tool for continuous environmental improvement in the United States during the 21st century. The examples offered earlier show that large corporations can apply pollution prevention and eco-efficiency practices, even when the regulatory system provides few incentives for them to do so. More rapid dissemination of pollution prevention and eco-efficiency practices—especially to small and medium sized enterprises—however, requires both regulatory reform and new administrative actions that allow more businesses to develop flexible and innovative responses to reducing or eliminating harmful pollutants at the source. The NAPA 2000 report shows that government can play a critical role in encouraging pollution prevention, recognizing innovative and effective practices, rewarding companies that adopt them, testing and verifying pollution prevention and eco-efficiency technologies and processes, supporting clearinghouses of information about best practices, and helping to commercialize those technologies that are proven effective.¹⁰⁵

In a study for the PricewaterhouseCoopers Endowment for the Business of Government, I argue that progress on promoting pollution prevention and eco-efficiency in industry requires stronger collaborations between the public and the private sectors, and that neither government alone through regulation, nor business alone through voluntary environmental management efforts, are likely to make significant progress.¹⁰⁶ The report recommends three sets of changes in environmental policy in order to forge stronger government-business collaborations in promoting the adoption of EMS that focus on pollution prevention and eco-efficiency:

1. Legislative revisions in regulations that focus on:

a. requiring a performance-based approach to environmental management that encourages EPA and state regulatory agencies to measure and reward environmental performance improvements in industry;

b. emphasizing a multimedia approach to environmental management that integrates pollution control and prevention measures to address ecological system issues more comprehensively; and

c. using more flexible place-based and facility-level regulatory controls to allow enterprises to find the most efficient and effective ways of meeting environmental requirements.

2. Administrative revisions that place more reliance on:

a. testing and using market-based mechanisms for environmental management;

b. delegating more responsibility, authority, and resources to state and local environmental agencies to develop and use negotiated agreements with industry to improve environmental performance;

c. improving EPA's and the states' environmental information and data collection systems;

d. strengthening the scientific foundation of rulemaking and review; and

e. extending the use of cost-and risk-analyses in rulemaking and enforcement.

3. Program revisions that promote pollution prevention [31 ELR 10902] and eco-efficiency practices through voluntary EMS in industry by:

a. expanding activities to identify efficient and effective industry pollution prevention and eco-efficiency practices;

b. expanding activities to test, verify, and commercialize pollution prevention and eco-efficiency technologies and processes;

c. strengthening public-private partnership programs for the development and adoption of EMS in industry; and

d. increasing government's roles in assisting the private sector to adopt pollution prevention and eco-efficiency technology and practices.

Legislative changes will be needed to create a policy environment conducive to government-business collaboration for continuously improving environmental performance. Although the foundation for multimedia regulation seems to exist in the National Environmental Policy Act of 1969 (NEPA), in the face of court challenges to rulemaking and enforcement and the tradition of single medium application of environmental laws, EPA has been reluctant to move more aggressively toward multimedia programs without more explicit legislative authorization.¹⁰⁷

A new generation of environmental policy promoting EMS, pollution prevention, and eco-efficiency practices must be based on integrative and reflexive laws rather than on the current system of command-and-control regulation.¹⁰⁸ A new generation of environmental policies must be reflexive, because a beyond-compliance system of environmental management will require extensive experimentation and a tolerance for failure. Not all experiments now underway are succeeding, nor will all new future experiments be successful. Much of the technology and practices associated with pollution prevention and eco-efficiency will emerge through trial and error. Some experiments that succeed in some industries or states will not be appropriate or successful in others. Beyond-compliance environmental management will be a continuous learning process.

Economic incentives and rewards for innovation and creativity are needed to entice more businesses to experiment with beyond-compliance EMS and to adopt new technologies that improve environmental performance. Command-and-control policies do not adequately recognize that organizations adopting practices that lead to real, long-term solutions to environmental problems—such as the shift away from carbon-based economies—can create business opportunities and make use of market forces to achieve improvements in environmental performance. Tax breaks, investment credits, performance credits, pollution banking, and emissions trading are examples of market-based strategies that both create wealth and promote long-term environmental improvement. States are experimenting with a wide range of market mechanisms, often with financial support from EPA, but often with only reluctant administrative support for regulatory flexibility. Cap-and-trade systems are being tried in California for sulfur oxides (SO[x]) and nitrogen oxides (NO_x), allowance trading experiments have been under way in North Carolina and California to reduce effluents in surface waters, and open market and offset systems for volatile organic compounds (VOCs) are being utilized in Louisiana, Michigan, New Jersey, New York, and Texas.¹⁰⁹ These experiments must be monitored, tested under varying conditions, and modified if they do not work as intended, or replaced with other experiments if they fail.

If efficient and effective collaborations between government and business for improving environmental performance in industry are to flourish in a new generation of environmental policy, Congress and EPA must delegate more responsibility and discretion to state and local governments. The need for delegation arises from the growing complexity of environmental pollution and the need for more flexible responses to local conditions and needs. State and local governments are often better able than EPA to develop programs that appeal directly to corporate motivations for adopting pollution prevention practices. They may also be better able to restructure environmental policies to provide support for new combinations of regulatory and voluntary management systems that are more effective and less costly than current command-and-control approaches.

Almost all of the recent reports on environmental policy reform call for a system that is focused on performance criteria that allow businesses and industries to develop the most appropriate means of achieving desired objectives. The Business Roundtable, for example, notes that a new generation of environmental policy that seeks to expand technological solutions must foster a culture of performance-based management. "This culture would focus on defining, measuring and rewarding environmental results and reorienting core regulatory functions so they are driven primarily by performance goals and not activity measures."¹¹⁰ New Jersey's experiments with flexible, facility-level permitting have saved time and money for the state and for businesses. North Carolina's pollution prevention programs provide technical assistance to small and medium sized businesses in adopting eco-efficiency practices that save them money and improve environmental performance. Wisconsin's award recognition program for innovative technologies and practices in source reduction provides models for other companies to follow in preventing pollution.¹¹¹

Although national regulations are needed to ensure a basic standard of environmental protection throughout the country and to address "spillover effects" and regional impacts of pollution, many environmental problems can be solved more effectively at local and state levels, through dialogue and interaction, than by federal mandates.¹¹² Local stakeholders generally understand local possibilities and constraints better than federal or state regulators. Business [31 ELR 10903] owners and managers often know the operational and economic realities of dealing with environmental problems better than government officials. Federal regulations should be revised to allow EPA to set performance targets and allow businesses and state and local governments to determine the most effective ways of reaching them.

In those areas where regulation is still considered the best approach to environmental protection, Congress should require EPA and the states to take the costs of implementing new and more stringent rules into consideration. Current policies do not require environmental agencies to use cost as a major criterion in promulgating and implementing regulations. EPA's rules to tighten enforcement of the CAA, as noted earlier, often set standards that are economically unrealistic and impose enormous costs on both businesses and state and local governments. Paul Portney, president of Resources for the Future, observes that the costs of complying with ever more stringent regulations are increasing substantially. He notes that it can cost as much as $ 50,000 to prevent the discharge of one ton of VOCs in Los Angeles today, compared to about 50 cents decades ago.¹¹³ In order to motivate the private sector to comply with regulations and adopt pollution prevention practices, environmental regulations must reflect those criteria that businesses themselves use in decisionmaking: value, quality, cost, and payback.

Public confidence in pollution prevention and eco-efficiency practices depend heavily on demonstrations that new technologies and processes aimed at source reduction or elimination work effectively. In order to promote eco-efficiency, EPA and the states must develop better programs to encourage research and development and to test and verify the results of pollution prevention technologies and processes.¹¹⁴ The Business Roundtable urges Congress to design "a better process for business and government collaboration, informed by national environmental goals and performance measures, both to minimize long-term [research and development (R&D)] investment and to leverage existing R&D results."¹¹⁵ Although EPA now has an environmental technology verification (ETV) program, it is slow, burdensome, and costly. The National Pollution Prevention Roundtable and other organizations recommend that EPA create a simpler, lower cost program for evaluating pollution prevention technologies.¹¹⁶ They argue that a less complicated and faster protocol review process of existing data from multiple sites may be sufficient for many pollution prevention technologies and more cost efficient than the pilot programs EPA now uses. They point out that Massachusetts, for example, has a standard reporting and evaluation format for all technology development and verification activities that streamlines the process and helps disseminate results more quickly. Firms competing on quick manufacturing turn-around or short design and production cycles cannot afford to wait for time-consuming technology verification. EPA's program should also focus more strongly on identifying and disseminating information about the benefits of technology verification to developers and users.

If pollution prevention and eco-efficiency practices are to be disseminated more widely, companies must have easy access to affordable and effective technologies. Although many large corporations, research organizations, and engineering and consulting firms do develop technologies for pollution prevention, it is often difficult to commercialize them for general use. The U.S. Department of Commerce's Office of Technology Policy points out that there is often sufficient capital available for organizations to develop environmental technologies, but not for the stages between introduction and regulatory approval of use, when many technologies face a financial "valley of death" from which they never again emerge.¹¹⁷

A new generation of environmental policies would recognize that environmental protection agencies can play important roles in accelerating the adoption of voluntary EMS in industry. Agencies can provide technical assistance and stimulate technology transfer, develop metrics that measure performance in terms of both environmental protection and economic impacts, and test new technologies and processes that achieve environmental goals in cost-effective ways. Programs for promoting pollution prevention and eco-efficiency should be based initially on reinforcing and disseminating practices that corporations are already testing.

Federal and state environmental agencies can collaborate with industry more effectively by developing programs that identify, recognize, and assist in adapting and disseminating eco-efficient technologies and processes. Support for think tank, trade association, or university-based clearinghouses of information on pollution prevention and eco-efficiency practices would provide greater access for small and medium sized companies to practices that work. More programs such as North Carolina's pollution prevention program, which provides technical assistance to companies in adapting eco-efficiency practices, are needed.¹¹⁸ In order for businesses to adopt pollution prevention and eco-efficiency practices, they need assistance in developing accounting systems that allow for accurate identification and measurement of the value of natural resources and allocate responsibility for costs. Helping firms to adopt environmental accounting can have positive impacts on environmental performance because reducing or eliminating pollution will ultimately depend on changing the behavior of corporate executives and shareholders.

The success of collaborative government-business programs for pollution prevention and eco-efficiency depend in part on the capacity of environmental agencies to provide regulatory flexibility to those companies that develop or adopt new technologies and processes. Flexibility does not necessarily mean granting businesses exemptions from, or weakening the enforcement of, regulatory requirements. But it does imply granting firms greater discretion in how they achieve required or negotiated goals to meet performance standards. NAPA recommended in its 1995 report to Congress that EPA and state regulatory agencies encourage and reward companies that "draft multi-media, facility-wide plans to reduce their emissions to a point that might [31 ELR 10904] be significantly lower than national standards. EPA or a state environmental agency would formalize the plans by granting an integrated permit, which would stipulate the plant's total allowable emissions."¹¹⁹ Under such a plan, the incentive for the firm is to find the least costly and most effective approach to improving environmental performance, through appropriate combinations of emissions control and pollution prevention, that meet business needs and operational capabilities.

The Negotiated Rulemaking Act of 1990 appears to provide EPA with a legislative foundation for expanding agreements with industry on proactive environmental management.¹²⁰ Congress created a formal framework for rulemaking through a bargaining and consensus process involving stakeholders such as industry, citizens groups, and regulatory agency staff. Daniel Farber points out that a good deal of bargaining and negotiation already takes place between EPA and state governments, between EPA and industry, and between state environmental agencies and the private sector, and that EPA does have a legislative base from which to extend agreements between the states and the private sector.¹²¹ Illinois, Louisiana, Michigan, Minnesota, New Jersey, Oregon, and Wisconsin are experimenting with performance tracks for companies seeking to manage the environmental impacts beyond regulatory requirements. Some observers see the possibility of a shift from command-and-control to "command-and-covenant," in which more flexible agreements with industry will lead to more efficient and effective and less costly environmental quality improvements. Donald Elliott argues that negotiated agreements with industry should include not only parity with the existing regulatory system but a margin of advancement that "would not only enhance the acceptability of flexible compliance but would also compensate for the risks of slippage and misstatement that inevitably accompany a new system."¹²²

Federal and state regulatory agencies are now examining the possibility of integrating voluntary EMS into their environmental policies. EPA and several states are pursuing pilot projects with both private and public organizations to test the EMS as an instrument for improving environmental performance.¹²³ In 2000, EPA developed a performance track program that, if effectively implemented, can provide some flexibility for companies adopting EMS.¹²⁴ Paulette Stenzel notes that widespread adoption of ISO 14001-type EMS can ease government's regulatory enforcement burdens, shift reliance on reactive regulations toward pollution prevention practices, help create a new corporate culture by providing a proactive environmental management paradigm, and assist citizens in making better informed decisions about their behavior and impact on the environment.¹²⁵

But attempting to make a voluntary management system part of the regulatory process can undermine the creative potential of businesses to protect the environment while reducing waste and gaining competitive advantage. A far more effective approach to promoting pollution prevention and eco-efficiency is for public agencies to provide incentives and rewards for companies that adopt beyond-compliance management systems. Those incentives can include facilitywide permitting, one-stop multimedia permitting, consistent industrywide standards, permit streamlining, and concurrent compliance assistance. Regulation should be used to change behavior, not to make it difficult for enterprises to comply or to punishexecutives that are trying new approaches to achieving beyond-compliance performance. More programs are needed such as those in Arizona, Michigan, and Oklahoma that refund or reduce hazardous waste fees for pollution prevention activities. The state of Illinois gives preferred treatment in permitting and compliance problems to companies that develop toxic pollution prevention programs. Florida's Metro-Dade County lowers fees or allows more lenient time schedules in enforcement settlement agreements for organizations that implement pollution prevention projects.¹²⁶

Conclusion

In brief, a growing consensus among government, business, and environmental interest groups concludes that the current regulatory system in the United States will be inadequate to improve environmental conditions during the 21st century. The inadequacy of the system lies not only in the inherent limitations of command-and-control management in achieving continuing environmental improvements, but in the changing nature of the environmental problems in a post-industrial society. The NRC, for example, points out that "the environmental problems of today are often difficult to diagnose and treat; they cross state and national boundaries, entail difficult tradeoffs, and sporadically present unpleasant surprises."¹²⁷ Relying simply on regulatory solutions, especially when they do not have strong scientific foundations, will not address the complexities of environmental protection in the 21st century. "Past illusions about simple and easy solutions to environmental problems," the NRC report emphasizes, "have been replaced by the realization [31 ELR 10905] that environmental protection is often complicated and challenging."

In the future, significant gains in environmental quality are more likely to come from widespread adoption of pollution prevention and eco-efficiency practices through voluntary EMS than from more stringent control of "end-of-pipe" emissions. When Congress passed NEPA in 1970, it declared it the continuing policy of the federal government "to use all practicable means and measures, including financial and technical assistance, in a manner calculated to foster and promote the general welfare, to create and maintain conditions under which man and nature can exist in productive harmony, and fulfill the social, economic and other requirements of present and future generation of Americans."¹²⁸ But Congress, the courts, and EPA have relied most heavily on command-and-control regulation as the primary tool for environmental protection. The inflexibility of national and state environmental regulations and their enormous costs for both governments and businesses will make them less effective in achieving higher levels of environmental quality in the future.

Eliminating rather than controlling pollutants through prevention and eco-efficiency will be essential in supplementing regulations in the future. Implementing a collaborative policy of environmental management focused on pollution prevention and eco-efficiency will require a better understanding by EPA and state environmental protection agencies of trends in the private sector to adopt beyond-compliance EMS and of their motivations for doing so. Not only will government have to make environmental regulations more flexible in the future, but environmental agencies at all levels will have to learn how to forge effective partnerships among federal, state and local governments, and between public and private organizations.

Clearly, if pollution prevention and eco-efficiency are to play a stronger role in U.S. environmental management, beyond-compliance practices will have to be disseminated more widely in the private sector. Although many large corporations are innovating with new technologies and processes for achieving eco-efficiency, commitment to beyond-compliance management varies from industry to industry, and among companies within industries. Often these innovative processes and technologies do not filter down from large companies to medium and small sized enterprises. Some companies, both large and small, still see environmental management as a cost and regulations as burdens to be avoided or complied with minimally. Supplementing "end-of-pipe" emissions control regulations with a system of voluntary environmental management based on pollution prevention and eco-efficiency will require both public agencies and private businesses to experiment with and develop innovative processes and technologies for improving environmental quality and find new ways of disseminating them more widely.¹²⁹

1. NATIONAL SCI. & TECH. COUNCIL, BRIDGE TO A SUSTAINABLE FUTURE: NATIONAL ENVIRONMENTAL TECHNOLOGY STRATEGY i (1995).

2. NAPA, TRANSFORMING ENVIRONMENTAL PROTECTION FOR THE 21ST CENTURY 11 (2000) [hereinafter TRANSFORMING].

3. ASPEN INST., A CALL TO ACTION TO BUILD A PERFORMANCE-BASED ENVIRONMENTAL MANAGEMENT SYSTEM (2000) [hereinafter CALL TO ACTION].

4. Id. at 1.

5. THE BUSINESS ROUNDTABLE, BLUEPRINT 2001: DRAFTING ENVIRONMENTAL POLICY FOR THE FUTURE (2001) [hereinafter BUSINESS ROUNDTABLE].

6. See MARK POWELL, SCIENCE AT EPA: INFORMATION IN THE REGULATORY PROCESS 1 (1999) (arguing that "there are a host of interconnected factors emanating from inside and outside EPA that appear to impede the agency's use of scientific information in regulatory decisionmaking…. By contrast, relatively few factors appear to facilitate EPA's use of science.").

7. 42 U.S.C. § 133 (1990).

8. John Voorhees, The Changing Environmental Management Scene: Federal Policy Impacts the Private and Public Sectors, 31 ELR 10079 (Jan. 2001).

9. Dennis A. Rondinelli & Michael A. Berry, Industry's Role in Air Quality Improvement: Environmental Management Opportunities for the 21st Century, 7 ENVTL. QUALITY MGMT. 31 (1997).

10. Dennis A. Rondinelli & Michael A. Berry, Environmental Citizenship in Multinational Corporations: Social Responsibility and Sustainable Development, 18 EUR. MGMT. J. 70 (2000).

11. ROBERT REPETTO & DUNCAN AUSTIN, PURE PROFIT. THE FINANCIAL IMPLICATIONS OF ENVIRONMENTAL PERFORMANCE 47 (2000).

12. GLOBAL ENVTL. MGMT. INITIATIVE, ENVIRONMENT. VALUE TO BUSINESS (1998).

13. Julio Videras & Anna Alberini, The Appeal of Voluntary Environmental Programs: Which Firms Participate and Why?, 18 CONTEMP. ECON. POL'Y 449 (2000).

14. See, e.g., William Atkinson, Demand for Green Office Products Blossoms, 129 PURCHASING 211 (2000); Thomas J. Maronick & J. Craig Andrews, The Role of Qualifying Language on Consumer Perceptions of Environmental Claims, 33 J. CONSUMER AFF. 297 (1999) (both indicating that customers are influenced to purchase some types of products that are made more environmentally friendly).

15. Kristin E. Reed, The EPA's Environmental Audit Policy: Are Small Businesses Disadvantaged?, 8 DICK. J. ENVTL. L. & POL'Y 299 (1999).

16. A more detailed argument can be found in DENNIS A. RONDINELLI, RETHINKING U.S. ENVIRONMENTAL PROTECTION POLICY: MANAGEMENT CHALLENGES FOR A NEW ADMINISTRATION (2000).

17. See GEORGE E. MEYER, WIS. DEP'T OF NAT. RESOURCES, A GREEN TIER FOR GREATER ENVIRONMENTAL PROTECTION (1999).

18. ENVIRONMENTAL LAW DESKBOOK (Envtl. L. Inst. 6th ed. 1999).

19. DAVID OSBORNE & TED GAEBLER, REINVENTING GOVERNMENT: HOW THE ENTREPRENEURIAL SPIRIT IS TRANSFORMING THE PUBLIC SECTOR 300-01 (1993).

20. Gerald Andrews Emison, The Potential for Unconventional Progress: Complex Adaptive Systems and Environmental Quality Policy, 7 DUKE ENVTL. L & POL'Y F. 167 (1996).

21. Id. at 171.

22. U.S. GAO, REGULATORY REINVENTION: EPA'S COMMON SENSE INITIATIVE NEEDS AN IMPROVED OPERATING FRAMEWORK AND PROGRESS MEASURES, 12 (1997) (GAO/RCED-97-164) [hereinafter REGULATORY REINVENTION].

23. Kathi Futornick, Total Quality Environmental Management: Managing Corporate Change, in POLLUTION PREVENTION HANDBOOK 57 (Thomas E. Higgins ed., 1995).

24. NAPA, SETTING PRIORITIES, GETTING RESULTS: A NEW DIRECTION FOR THE ENVIRONMENTAL PROTECTION AGENCY (1995) [hereinafter SETTING PRIORITIES].

25. Elizabeth Glass Geltman & Andrew B. Skroback, Reinventing the EPA to Conform With the New American Environmentality, 23 COLUM. J. ENVTL. L. 1 (1998). The authors point out that:

Although outsiders may view the EPA as a single agency with the unitary purpose of protecting public health and the environment, the organizational structure and individualistic culture have produced separate program offices, each with its own parochial agenda. The Office of Water implements regulations to safeguard the public health and the aquatic environment from the dangers of water pollution. Similarly, the Office of Air and Radiation is concerned primarily with the threat of air pollution. From the standpoint of the EPA's regulated community, interaction with the Agency is on a program-specific basis since industrial facilities are often regulated by a number of separate, and to a large extent, independent EPA programs.

Id. at 11.

26. TERRY DAVIES & JAN MAZUREK, REGULATING POLLUTION: DOES THE SYSTEM WORK? (1998).

27. R.P. Ghirelli et al., MTBE Water Contamination: Key Considerations for Remediation, Risk Assessment, and Risk Management (1997) (paper presented at Pacific Conference on Chemistry and Spectroscopy, American Chemical Society, Oct. 1997).

28. R. Johnson et al., MTBE: To What Extent Will Past Releases Contaminate Community Water Supply Wells?, ENVTL. SCI. & TECH., May 1, 2000, at 2A.

29. See generally TRANSFORMING, supra note 2.

30. NRC, REVIEW OF RESEARCH PROGRESS OF THE PARTNERSHIP FOR A NEW GENERATION OF VEHICLES—SIXTH REPORT (2000).

31. POWELL, supra note 6, at 112.

32. See E. Donald Elliott et al., Science, Agencies, and the Courts: Is Three a Crowd?, 31 ELR 10125 (Jan. 2001).

33. Robert W. Crandall, The Costly Pursuit of the Impossible, BROOKINGS REV., Summer 1997, at 40.

34. Dale W. Jorgenson & Peter J. Wilcoxen, Environmental Regulation and U.S. Economic Growth, 21 RAND J. ECON. 314 (1990).

35. Robert Repetto, Environmental Taxes and U.S. Competitiveness, 21 COLUM. J. WORLD BUS. 128 (1992).

36. Lester B. Lave, Clean Air Sense, BROOKINGS REV., Summer 1997, at 40.

37. ENTERPRISE FOR THE ENVIRONMENT, THE ENVIRONMENTAL PROTECTION SYSTEM IN TRANSITION, TOWARD A MORE DESIRABLE FUTURE 3 (1997) [hereinafter E4E].

38. OFFICE OF ENFORCEMENT AND COMPLIANCE ASSURANCE, U.S. EPA, HIGHLIGHTS OF FY 1999 EPA ENFORCEMENT AND COMPLIANCE ASSURANCE ACTIVITIES (2000); WILLIAM L. THOMAS ET AL., CRAFTING SUPERIOR ENVIRONMENTAL ENFORCEMENT SOLUTIONS (Envtl. L. Inst. Monograph 2000).

39. E4E, supra note 37, at 3.

40. See RONDINELLI, supra note 16, at 8-14.

41. WORLD BUS. COUNCIL FOR SUSTAINABLE DEV., ECO-EFFICIENT LEADERSHIP FOR IMPROVED ECONOMIC AND ENVIRONMENTAL PERFORMANCE (1996).

42. Johan Schot & Kurt Fischer, Introduction: The Greening of the Industrial Firm, in ENVIRONMENTAL STRATEGIES FOR INDUSTRY 3 (Kurt Fischer & Johan Schot eds., 1993) [hereinafter ENVIRONMENTAL STRATEGIES].

43. The Aspen Institute called for reforming environmental policy to "build a system that emphasizes pollution prevention, product stewardship, resource efficiency and sustainable enterprise; and build on the work of [EMS]." CALL TO ACTION, supra note 3, at 2.

44. EPA claims, for example, that its voluntary partnerships with industry resulted in projected savings of 2 billion gallons of water and 755 trillion British thermal units of energy, reductions in carbon dioxide emission of 210 metric tons, and prevented the generation of 8.3 million tons of waste in 2000. See U.S. EPA, What Is Partners for the Environment? (2001), available at http://www.cpa.gov/partnerships.

45. William H. Miller, Making Pollution Prevention Pay, INDUS. WK., May 20, 1996, at 136.

46. D. Lencus, Taking Initiative to Prevent Pollution Can Reduce Premiums, BUS. INS., Nov. 11, 1996, at 30.

47. Pollution Prevention Act (PPA), 42 U.S.C. §§ 13101-13109, ELR STAT. PPA §§ 13101-13109.

48. Id. § 13101(a)(1), ELR STAT. PPA § 13101(a)(1).

49. Id. § 13101(a)(2), ELR STAT. PPA § 13101(a)(2).

50. Id. § 13101(a)(3), ELR STAT. PPA § 13101(a)(3).

51. U.S. EPA, DRAFT STRATEGIC PLAN 2000 (2000).

52. Id. at 26.

53. Id.

54. Id.

55. Id. at 48.

56. 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 (1998).

57. U.S. EPA, SUMMARY OF 2001 BUDGET (2000).

58. REGULATORY REINVENTION, supra note 22.

59. Id. at 5.

60. Nancy S. Bryson & Richard J. Mannix, Reinventing Project XL, 7 ENVTL. QUALITY MGMT. 111 (1998).

61. Andrea Foster, Browner Promises Completion on Project XL, CHEM. WK., Apr. 8, 1998, at 16.

62. U.S. GAO, MAJOR MANAGEMENT CHALLENGES AND PROGRAM RISKS: ENVIRONMENTAL PROTECTION AGENCY 28 (1999) (GAO/OCG-99-17).

63. David L. Markell, The Role of Deterrence-Based Enforcement in a "Reinvented" State-Federal Relationship: The Divide Between Theory and Reality, 24 HARV. ENVTL. L. REV. 1 (2000).

64. Dennis A. Rondinelli & Michael A. Berry, Corporate Environmental Management and Public Policy: Bridging the Gap, 44 AM. BEHAV. SCI. 168 (2000).

65. Rena L. Steinzor, Regulatory Reinvention and Project XL: Does the Emperor Have Any Clothes? 26 ELR 10527 (Oct. 1996).

66. For a more detailed discussion, see Rondinelli & Berry, supra note 64.

67. See JEANNE HERB ET AL., TELLUS INST., PATHWAYS TO STATE POLLUTION PREVENTION REGULATORY INTEGRATION: THE SPRINT COMPENDIUM 3 (1999).

68. BRUCE W. PIASECKI, CORPORATE ENVIRONMENTAL STRATEGY: THE AVALANCHE OF CHANGE SINCE BHOPAL (1995).

69. Peter Simmons & Brian Wynn, Responsible Care: Trust, Credibility, and Environmental Management, in ENVIRONMENTAL STRATEGIES, supra note 42, at 201.

70. Paula C. Murray, Inching Toward Regulatory Reform—ISO 14000: Much Ado About Nothing or a Reinvention Tool?, 37 AM. BUS. L.J. 35 (1999).

71. SUZAN L. JACKSON, THE ISO 14001 IMPLEMENTATION GUIDE: CREATING AN INTEGRATED MANAGEMENT SYSTEM (1997).

72. ISO, THE ISO SURVEY OF ISO 9000 AND ISO 14000 CERTIFICATES, NINTH CYCLE (2000).

73. ISO 14000 CASE STUDIES: MODELS FOR IMPLEMENTATION (Mark E. Baker ed., 1996).

74. Dennis A. Rondinelli & Gyula Vastag, International Environmental Standards and Corporate Policies: An Integrative Framework, 39 CAL. MGMT. REV. 106 (1996).

75. 3M CORP., 3M ENVIRONMENTAL, HEALTH, AND SAFETY PROGRESS REPORT: 1998-1999 (1999).

76. Dennis A. Rondinelli & Gyula Vastag, Multinational Corporations' Environmental Performance in Developing Countries: The Aluminum Company of America, in GROWING PAINS: ENVIRONMENTAL MANAGEMENT IN DEVELOPING COUNTRIES 68 (Walter Wehrmeyer & Yacoob Mulugetta eds., 1999).

77. TEXACO, INC., ENVIRONMENT, HEALTH, AND SAFETY REVIEW 1996 (1997).

78. IBM, ENVIRONMENT AND WELL-BEING (1999).

79. LUCENT TECH., 1999 ANNUAL REPORT—ENVIRONMENT, HEALTH, AND SAFETY (2000).

80. MOTOROLA INC., THE JOURNEY TO A SUSTAINABLE WORLD: PROGRESS FOR 1999 (2000).

81. Dennis A. Rondinelli & Gyula Vastag, Panacea, Common Sense, or Just a Label? The Value of ISO 14001 Environmental Management Systems, 18 EUR. MGMT. J. 499 (2000). The study found that external registration encourages managers of certified facilities to develop or upgrade EMS, create or strengthen environmental management programs to international standards, establish procedures for monitoring and correcting negative environmental impacts, and train employees in good environmental management practices.

82. FRANK FRIEDMAN, PRACTICAL GUIDE TO ENVIRONMENTAL MANAGEMENT (Envtl. L. Inst. 8th ed. 2000); LAWRENCE B. CAHILL, ENVIRONMENTAL AUDITS (7th ed. 1996).

83. Michael A. Berry & Dennis A. Rondinelli, Environmental Management in the Pharmaceutical Industry: Integrating Corporate Responsibility and Business Strategy, 9 ENVTL. QUALITY MGMT. 21 (2000).

84. Dennis A. Rondinelli & Gyula Vastag, Globalizing Corporate Environmental Management Practices at Alcoa, 7 CORP. ENVTL. STRATEGY 288 (2000).

85. Elisabeth Kirschner, Full Cost Accounting for the Environment, CHEM. WK., Mar. 9, 1994, at 25.

86. Mare J. Epstein, Improving Environmental Management With Full Environmental Cost Accounting, 5 ENVTL. QUALITY MGMT. 11 (1996).

87. BAXTER INT'L, SUSTAINABILITY REPORT (2000).

88. P.S. Dillon & M.S. Baram, Forces Shaping the Development and Use of Product Stewardship in the Private Sector, in ENVIRONMENTAL STRATEGIES, supra note 42, at 329.

89. C.C. Henn & J.A. Fava, Life-Cycle Analysis and Resource Management, in ENVIRONMENTAL STRATEGIES HANDBOOK 541 (Rao V. Kolluru ed., 1994).

90. Dennis A. Rondinelli & Michael A. Berry, Multimodal Transportation, Logistics, and the Environment: Managing Interactions in a Global Economy, 18 EUR. MGMT. J. 398 (2000).

91. GENERAL MOTORS, 1997 GM ENVIRONMENTAL, HEALTH, AND SAFETY REPORT (1998).

92. R.B. Shelton & J. Shopley, Improved Products Through Design for Environment Tools. PRISM, 1st Quarter 1996, at 41.

93. Ellen Bogardus, Recycling Programs for Solid Waste, in POLLUTION PREVENTION HANDBOOK, supra note 23, at 89.

94. HEWLETT-PACKARD, HEWLETT-PACKARD'S COMMITMENT TO THE ENVIRONMENT (1998).

95. Dennis A. Rondinelli & Michael A. Berry, Integrating Strategic and Environmental Management in the Value Chain at Shaw Industries, 17 NAT'L PRODUCTIVITY REV. 17 (1998).

96. MILLIKEN & CO., WITH RESPECT TO OUR EARTH (2000).

97. RAY C. ANDERSON, MID-COURSE CORRECTION—TOWARD A SUSTAINABLE ENTERPRISE: THE INTERFACE MODEL (1998).

98. See Rondinelli & Berry, supra note 64, for more examples.

99. BAXTER INT'L, supra note 87, at 39.

100. DUPONT, SUSTAINABLE GROWTH: 1999 PROGRESS REPORT (2000).

101. UNITED PARCEL SERV., ENVIRONMENTAL INITIATIVES (2000).

102. See PEPSICO, ENVIRONMENTAL COMMITMENT (1997); ARCO, ARCO ENVIRONMENT, HEALTH, AND SAFETY REPORT (1996); HUGHES ELECS., ENVIRONMENTAL, HEALTH, AND SAFETY ANNUAL REPORT (1998).

103. Robert W. Hahn, Achieving Real Regulatory Reform, 1997 U. CHI. LEGAL F. 143. Hahn argues that:

The most important steps that can be taken in the near term are: making the process more transparent to the public by annually publishing more detailed information on the benefits and costs of proposed and final regulations; improving the quality of economic analysis of proposed and final regulations; passing laws that encourage civil servants and administrators to be more sensitive to the benefits and costs they impose on the public; developing "smarter" regulations that harness the power of the marketplace to achieve social objectives at lower cost; and rethinking the appropriate scope of federal regulation when the substantive statutes are rewritten.

Id. at 158.

104. See Rondinelli & Berry, supra note 64, at 168.

105. See TRANSFORMING, supra note 2.

106. RONDINELLI, supra note 16, at 24-33.

107. Matthew J. Lindstrom, Procedures Without Purpose: The Withering Away of the National Environmental Policy Act's Substantive Law, 20 J. LAND RESOURCES & ENVTL. L. 245 (2000).

108. See Neil Gunningham & Darren Sinclair, IntegrativeRegulation: A Principle-Based Approach to Environmental Policy, 24 LAW & SOC. INQUIRY 853 (1999); Daniel J. Fiorino, Rethinking Environmental Regulation: Perspectives on Law and Governance, 23 HARV. ENVTL. L. REV. 441 (1999).

109. TRANSFORMING, supra note 2, at 65-91.

110. BUSINESS ROUNDTABLE, supra note 5, at 2.

111. NAPA, LEARNING FROM INNOVATION IN ENVIRONMENTAL PROTECTION (2000).

112. See E4E, supra note 37.

113. Paul R. Portney, Counting the Cost: The Growing Role of Economics in Environmental Decisionmaking, 40 ENVIRONMENT 14 (1998).

114. Kurt A. Strasser, Cleaner Technology, Pollution Prevention, and Environmental Regulation, 9 FORDHAM ENVTL. L.J. 1 (1997).

115. BUSINESS ROUNDTABLE, supra note 5, at 8.

116. NATIONAL POLLUTION PREVENTION ROUNDTABLE, WHITE PAPER ON GOVERNMENT'S ROLE IN POLLUTION PREVENTION TECHNOLOGY VERIFICATION (2000) [hereinafter WHITE PAPER].

117. See D.R. BERG ET AL., U.S. DEP'T OF COMMERCE, THE U.S. ENVIRONMENTAL INDUSTRY (1998).

118. NORTH CAROLINA DEP'T OF ENV'T & NAT. RESOURCES, POLLUTION PREVENTION PAYS (2001), available at http://www.p2pays.org.

119. SETTING PRIORITIES, supra note 24, at 31.

120. 5 U.S.C. §§ 561-570.

121. Daniel A. Farber, Triangulating the Future of Reinvention: Three Emerging Models of Environmental Protection, 2000 U. ILL. L. REV. 61.

122. E. Donald Elliott, Toward Ecological Law and Policy, in THINKING ECOLOGICALLY: THE NEXT GENERATION OF ENVIRONMENTAL POLICY 170, 184 (Marian R. Chertow & Daniel C. Esty eds., 1997).

123. UNIVERSITY OF N.C. AT CHAPEL HILL & ENVTL. L. INST., NATIONAL DATABASE ON ENVIRONMENTAL MANAGEMENT SYSTEMS (2000), available at http://www.eli.org.

124. U.S. EPA, NATIONAL ENVIRONMENT ACHIEVEMENT TRACK: PROGRAM DESCRIPTION 4, 9-10 (2000). EPA offers companies that (1) adopt and implement an EMS, (2) are able to demonstrate specific environmental achievements and are committed to continuing improvements, (3) commit to public outreach and performance reporting, and (4) have maintained compliance with environmental requirements, the opportunity to qualify for the Achievement Track. For those facilities that quality, EPA promises low priority for inspection targeting purposes, use of an Achievement Track logo at the facility, consideration of good-faith efforts to comply as a discretionary factor in assessment of penalties, and participation in EPA information exchanges, peer dialogues, and recognition programs. EPA is also exploring the possibility of further administrative and rulemaking flexibility in the future, including reduced monitoring and reporting requirements. By mid-2001, EPA plans to offer a second track—the National Environmental Stewardship Track—that would recognize higher and broader levels of voluntary environmental performance.

125. Paulette L. Stenzel, Can the ISO 14000 Series Environmental Management Standards Provide a Viable Alternative to Government Regulation?, 37 AM. BUS. L.J. 237 (2000).

126. WHITE PAPER, supra note 116.

127. NRC, STRENGTHENING SCIENCE AT EPA: RESEARCH MANAGEMENT AND PEER REVIEW PRACTICES 1 (2000).

128. 3 CONGRESSIONAL QUARTERLY, CONGRESS AND THE NATION: 1969-1972, at 748 (1973).

129. Rondinelli & Berry, supra note 64, at 168-87.