Environmental Protection: New Approaches

Order Code RL30760

CRS Report for Congress

Received through the CRS Web

Environmental Protection: New Approaches

December 11, 2000

John E. Blodgett

Deputy Assistant Director

Resources, Science, and Industry Division

Congressional Research Service ˜ The Library of Congress

Environmental Protection: New Approaches

Summary

In recent years, the interest in alternatives to the nation’s “command-andcontrol” approach to environmental protection has heightened. Driving this interest

are concerns that the current approach is inefficient and excessively costly, and that

it is ineffective in addressing certain problems such as nonpoint source pollution and

global climate change. Several blue-ribbon panels have issued reports on

environmental protection needs for the next century, including one headed by former

two-time Administrator of the Environmental Protection Agency, William D.

Ruckelshaus – The Environmental Protection System in Transition: Toward a More

Desirable Future (1998) – and one by the National Academy of Public Administration

– environment.com: Transforming Environmental Protection for the 21st Century

(2000).

Alternative environmental protection approaches range from proposals that

would replace the current system to ones that would supplement it. Elements of the

proposals include enhanced information processes, greater reliance on market

mechanisms, devolution of federal responsibilities to state and local decisionmakers,

and substitution of private markets for public actions. The proposals for the most part

represent a mix of techniques, and few are really new. Most of the ideas have been

developed and promoted for some time; many have been incorporated to some degree

in existing programs.

This report summarizes briefly a number of “new approaches,” grouped under

the following categories:

Information: Approaches to improve the quantity and quality of

information to enhance the knowledge base underlying environmental decisions (e.g., risk assessment, cost-benefit analysis).

! Public Sector Processes: Approaches to restructure governmental

processes for making environmental decisions (e.g., devolution).

! Incentives: Approaches that emphasize incentives as opposed to

regulatory or financial penalties for achieving environmental ends.

! Market Mechanisms: Approaches that rely on markets and

common law for environmental decisions to the extent possible.

! Management Principles. Approaches to inculcate environmental

values in public or private managerial decisions (e.g., sustainability).

!

Each approach seems to have some useful applications. Each has some

disciplinary, ideological, or institutional proponent; but none commands the multistakeholder commitment necessary for truly transforming environmental programs.

There may be consensus that environmental protection programs could and should be

improved, but beyond modest iterative steps, there is as yet no consensus on what that

would entail nor on how to achieve those steps. Critical to this lack of consensus is

an apparent split in proponents’ goals – those most focused on improving the

efficiency of the current process, versus those most focused on finding new ways to

address so-far intractable environmental problems such as global climate change.

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Environmental Management: A Portfolio of “New” Tools . . . . . . . . . . . . . 2

Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Public Sector Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Market Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Management Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Selecting and Implementing New Approaches . . . . . . . . . . . . . . . . . . . . . . 5

Selected New Approaches to Environmental Protection . . . . . . . . . . . . . . . . . . . 9

Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

#“Sound Science” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

#Risk Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

#Cost-Benefit Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

#Informing Public Choices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Public Sector Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

#Environmental Federalism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

#Beyond Compliance: Incentives for Environmental Performance . . 23

Market Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

#Pollution Trading and Pollution Taxes . . . . . . . . . . . . . . . . . . . . . . 26

#Private Markets and Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . 28

Management Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

#Sustainability – Sustainable Development . . . . . . . . . . . . . . . . . . . 32

#Precautionary Principle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

#Ecosystem Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

#Good Management Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

#Pollution Prevention / Materials Management . . . . . . . . . . . . . . . . 42

#Environmental Management Systems and Audits . . . . . . . . . . . . . . 44

Appendix A: Selected Readings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Environmental Protection: New Approaches

Introduction1

Since the early 1970s, as U.S. environmental policy burgeoned, a key debate has

centered on the proper approach for federal environmental protection programs. The

dominant approach of choice has been a regulatory one – often labeled “command and

control” 2 – in which government decisionmakers set standards or specify particular

actions required of potential or actual polluters. However, concerns about economic

inefficiency, the difficulty of addressing certain problems such as nonpoint source

pollution, and other perceived shortcomings of the regulatory approach have from the

beginning stimulated interest in alternative environmental protection approaches that

would complement, supplement, or even replace the regulatory regime.

In recent years, the interest in alternatives has taken on a new intensity. Several

reasons explain this interest, including: First, while the regulatory approach has been

quite successful in reducing pollution originating from large point sources – such as

manufacturing facilities and sewage outfalls – as well as pollution arising from

products with relatively few manufacturers – such as automobiles and pesticides – it

has not been so successful in addressing “nonpoint” sources of pollution, such as

agricultural and urban runoff, nor small “dispersed” sources, from domestic fireplaces

to small businesses. Second, economic and other analyses have suggested that,

compared to regulation, various alternative approaches may be more economically

efficient and may encourage technological developments to reduce pollution, among

other advantages. Third, the federal “command and control” approach troubles those

concerned about the overall size and power of the federal government. Fourth, some

argue that the regulatory approach has become captured by one or another set of

stakeholders. Some environmentalists believe that those being regulated strongly

influence the process, to the detriment of the environment, while others perceive

regulators as overly responsive to environmentalists. Additionally, the advent of a new

millennium has seemed, at least to some, a propitious symbolic opportunity for

exploring alternatives. (For selected initiatives and publications relating to the future

of environmental protection, see Appendix A.)

1

Prepared by John E. Blodgett, Deputy Assistant Director, Resources, Science, and Industry

Division, Congressional Research Service.

2

For an introduction to the early development of environmental protection programs, see

Frank P. Grad, et al., Environmental Control: Priorities, Policies, and the Law (New York:

Columbia University Press, 1971), especially pp. 47-183. For an assessment of why market

mechanisms were not more readily adopted during that early development, see Steven Kelman,

What Price Incentives? Economists and the Environment (Boston: Auburn House Publishing

Company, 1981).

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Numerous alternative environmental protection approaches have been proposed.

They range from proposals that would radically reshape the environmental protection

approach in the nation, to proposals that would fine-tune existing programs.

Metaphorically, some proposals represent new tool boxes for addressing

environmental problems, others represent individual new tools. Generally, they are

not exclusive; that is, any environmental protection program would likely draw on a

mix of the tools.

Moreover, their “newness” lies more in application than

conception: most of these ideas have been developed and promoted for some time;

many have been incorporated to some degree in existing programs.

Environmental Management: A Portfolio of “New” Tools

This report summarizes briefly a number of “new approaches,” grouped under

the following categories:

Information: Approaches to improve the quantity and quality of

information and to organize it effectively so as to enhance the

knowledge base underlying decisions affecting the environment

! Public Sector Processes: Approaches to revise or create new

governmental structures or processes for making environmental

decisions

! Incentives: Approaches that emphasize incentives as opposed to

regulatory or financial penalties for achieving environmental ends

! Market Mechanisms: Approaches that rely on markets and

common law for environmental decisions to the extent possible

! Management Principles: Approaches to inculcate environmental

values in public and private managerial decisions

!

These categories are not necessarily mutually exclusive. Not only may the

approaches overlap, but also the various “tools” may serve more than one approach.

As will become apparent, the idea of a “new approach” to environmental management

in reality consists of a mix of ideas and proposals.

Information. This group of approaches centers on enhancing the information

available to decisionmakers, including administrators, legislators, environmental

managers, polluters, and the public. Legislatively establishing information generating

processes is not novel, of course. It is the essence of the National Environmental

Policy Act of 1969 (NEPA, P.L. 91-190), specifically the “environmental impact

statements” (EIS) provision of section 102, which requires a study of environmental

effects of alternative approaches to federal actions. Initially, there was a question of

whether the EIS requirement of NEPA applied to environmental regulatory decisions;

in the end, only selected environmental regulatory decisions were made subject to the

EIS requirement. Proposals for cost-benefit analyses, risk assessments, and the use

of “sound science” represent continuing pressure for generating and/or arranging

information to improve decisionmaking. Within this group of information tools are

a number that proponents believe will benefit decisionmaking in various ways.

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In general – “Sound Science”3

Information focused on improving regulatory decisions, in particular

risk analysis and cost-benefit analysis

! Information focused on improving planner/program manager

decisions, in particular “green accounting” and materials

accounting/materials management

! Information focused on improving consumer/voter decisions, in

particular the Toxic Release Inventory and energy efficiency ratings

!

!

Often these proposals to enhance information for environmental decisions are

proffered with the stated goal of improving regulatory decisions; certainly this has

been the primary impetus for developing cost-benefit analysis and risk assessment, and

for much of the concern about “sound science.” Some alternatives to regulation may

reduce the need for certain kinds of information. For example, a pollution tax may

generate a price signal that leads to pollution controls without the government

needing information on the specific controls used, as might be required by regulation.

On the other hand, the alternative may require its own enhanced information base;

thus, implementing a pollution tax could depend on developing particular information

in order to set such a tax at an appropriate level. (It should be noted that reliable

information may be costly to collect, maintain, and interpret and may raise issues of

confidentiality.)

Public Sector Processes. This second set of approaches proposes to

improve environmental decisions by restructuring the processes by which those

decisions are made in the public sector. Proposals include:

Environmental Federalism – state delegation –defederalism/

devolution – “Civic Environmentalism”

! Creation of an independent cost-benefit/risk assessment review body

! Establishment of a “Regulatory Budget”

!

These proposals are designed primarily to reform and improve the regulatory process,

not to replace it.

Incentives. A third set of approaches seeks to shift the emphasis from a

government regulatory role with its enforcement and compliance emphasis to a

supportive role based on incentives to encourage environmentally beneficial actions.

These include:

!

!

!

!

Grants, loans, tax breaks

Procurement policies

Technical assistance

Regulatory waivers, “Beyond compliance”

If the role of government in a regulatory approach is that of the “stick,” then for these

alternatives the role of government is to offer “carrots.” Inducements can include the

provision of information; technical and financial support; or regulatory relief for

3

Items in bold are discussed at length in the body of the report.

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voluntary compliance, especially if it goes beyond what might be required. Typically,

incentive approaches leave the potential or actual polluter to respond as he or she

chooses – that is, to decide whether to seek out and use assistance, or to decide

whether the amount of reimbursement for costs of pollution-reducing actions is worth

it. The conduct of research and development, to develop information and techniques,

might be seen as an indispensable antecedent to governmental incentive programs.

Market Mechanisms. This set of approaches shifts as much as possible of the

decisionmaking on environmental protection away from the government to the private

sector:

!

Market mechanisms by which environmental standards can be met,

including trading, banking, and offsetting of pollution rights; and

the “clean development mechanism,” to allow international trading

!

Market signals, such as through pollution taxes and liability risks

under tort law (plus information such as from the Toxic Release

Inventory)

!

Private markets/private property, including common law remedies,

trespass protections, and “free market environmentalism”

What distinguishes all of these alternatives is the reliance on marketplace-type

processes to affect decisions with respect to their environmental implications. A

potential or actual polluter can decide what action is best, given his or her

circumstances, based on emission allowances (e.g., in a banking/trading program);

cost signals (e.g., from a pollution tax); liability from imposed risks (e.g., from harm

resulting from waste disposal practices); or liability from violating private property

rights (e.g., when pollution crosses property lines). For these alternatives, the role of

government lies primarily in setting the rules and boundaries on the market, and/or

establishing the courts and rules of evidence for determining legal redress. In contrast

to the regulatory approach, the government does relatively less specifying of

environmental requirements that designated sources would have to meet, although a

standards-setting role may be maintained.

Management Principles. A fifth group of approaches relies on defining

management processes or values that proponents believe would result in good

environmental outcomes:

!

!

!

!

!

!

!

“Sustainability”

Precautionary principle

Ecosystem management

Environmental Management Systems

Pollution prevention

Certification

“Good Management Practices”

Where the privatizing approach would affect decisions concerning the environment

by modifying market signals, the management process approach proposes to affect

decisions by promoting and reinforcing environmentally oriented values. Generally,

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“good management” approaches have entailed moral suasion, sometimes backed with

incentives; they are often seen as a “voluntary” alternative to regulatory mandates.

A key issue is who can and should define such standards; typical options include

governmental bodies (international, federal, state, local), professional societies, and

private sector consortia. Experience suggests that translating general values of

environmental protection into practical decisionmaking is not always easy, however.

In a regulatory setting, incentives may be contingent on complying with the standards;

in other contexts, compliance may be largely or entirely voluntary.

Selecting and Implementing New Approaches

What is striking about these proposals for complementing, supplementing, or

replacing environmental regulation is how few of them are really new, and how even

fewer represent radically new approaches. In part, this may simply reflect the truth

that there is nothing new under the sun; but even more, it may reflect the fact the

environmental protection system that has grown up over the past 40 years in the U.S.,

while dominated by a federal regulatory approach, consists of complex, multifaceted,

and interlocking institutions, laws, regulations, and programs involving all levels of

government. Some aspects of virtually every approach proposed have found at least

some niche for trial, and some are, in fact, widely accepted as practical for particular

applications. (For example, the market approach of the acid rain program under the

Clean Air Act is widely viewed as greatly successful and as a potential model for

additional programs; but it is not widely viewed as a model for comprehensively

replacing the existing environmental regulatory regimen. Likewise, the Toxic Release

Inventory is widely viewed as a greatly successful informational mechanism, but

whether it should be expanded is highly contentious.)

For those proposing different environmental protection approaches, the quest for

alternatives is often driven by a conviction that the existing system is piecemeal,

unduly complex, inefficient, and too costly. Implicitly, this view suggests that a new

approach would be simpler, neater, more efficient, and hence less costly – and surely

more (cost-)effective. This search for more efficient, less costly approaches has

focused on market alternatives because traditional economic analysis suggests that

market-based alternatives are usually more efficient. However, empirically, the

relative efficiencies may not always be clear-cut.4 Moreover, while the ideas for “new

alternatives” to regulation have attracted much attention and considerable theoretical

analysis, assessments of the actual costs to develop and implement them are often

lacking. Even where alternatives may in the long run save money – for example in

private sector compliance costs – they may require substantial up-front investments,

often by government at some level. 5

4

See Robert W. Hahn, “The Impact of Economics on Environmental Policy,” Journal of

Environmental Economics and Management, 39 (May 2000), 375-399.

5

See, for example, the conclusion of Rena I. Steinzor, “The Corruption of Civic

Environmentalism,” Environmental Law Reporter, V. XXX, no. 10 (Oct. 2000), 10921: “...

there can be little doubt that civic environmentalism will be a more expensive alternative [than

the regulatory system], if it is carried out in accordance with the civic environmentalists’

stated goals. Gathering and organizing the information necessary to impose effective

(continued...)

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One recent effort to examine program and policy alternatives was the Enterprise

for the Environment (E4E) project, headed by former EPA Administrator William

Ruckelshaus. Basically, the E4E project concluded that there was no single new

environmental protection approach; rather, the participants concluded that the

“existing system must be improved” through an iterative, “deliberate, step-by-step

process” that involves better information, flexibility, best-available scientific and

economic information, and a “broad set of policy tools.”6 As Ruckelshaus said in his

preface –

None of us were so certain that we knew how to construct the new system that we

were willing to recommend its immediate adoption; we recognized that a lot of care

and adaptive management will be needed along the way. Thus we were led to

recommend a “stepping-stone” approach, one that allows us to move carefully and

systematically from where we are today to where we want to go.7

Further impetus for the quest for a new approach arises from the recognition that

the present system seems ill-equipped to deal with some important environmental

problems – some of long standing concern, like nonpoint source pollution, others

more newly recognized, such as global climate change. These problems have proved

extremely difficult, especially where they involve individual behaviors on the one

hand, and where they involve global actions on the other. The E4E project concluded

that tackling these issues was beyond its capabilities.8

A second major effort to examine program and policy alternatives was a series

of studies by the National Academy of Public Administration (NAPA), culminating

in a report environment.gov: Transforming Envirionmental Protection for the 21st

Century.9 In many respects, the NAPA report comes to similar conclusions as the

E4E project (not so surprisingly, as Ruckelshaus was on the Panel that prepared it).

The report begins by defining three high-priority environmental protection problems

for which the existing regulatory system is proving inadequate and for which the

report recommends innovative, alternative approaches. These three problems are:

5

(...continued)

performance-based standards will be very expensive, as will the financial support that should

be provided to ‘level the playing field’ for local groups.

“This then brings us to what is, in many ways, the ultimate dilemma. As long as we are

in the throes of denying that reinvention will cost money, we will not end up with reinvention

as advocated....”

6

The Environmental Protection System in Transition: Toward a More Desirable Future

(Washington, D.C.: Center for Strategic and International Studies. 1998), pp. 3, 5, 4.

7

Ibid., p. viii.

8

Ibid. In the end, virtually all the environmental stakeholders originally participating in the

E4E process dropped out. One of the main reasons was that they felt the process was failing

to address continuing and emerging environmental problems.

9

Published by the National Academy of Public Administration, 2000. Two earlier reports by

the Academy were Setting Priorities, Getting Results: A New Direction for EPA, and

Resolving the Paradow of Environmental Protection: An Agenda for Congress, EPA and the

States. These reports were funded by Congress through appropriations to EPA.

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!

!

!

nutrient pollution of waters, mainly from nonpoint sources;

dispersed sources of ground-level ozone and smog; and

global climate change.

The NAPA report directly discusses the need for statutory changes, particularly to

allow innovation, to increase flexibility among media-focused programs, and to

develop better information on environmental quality.

The report analyzes the successes and failures of efforts to make environmental

protection programs more efficient and effective.10 It assessed the respective roles

of all levels of government, business and industry, the public, and the Congress. The

report concludes that the nation will continue to need a strong national environmental

regulatory agency; that the agency needs both to adopt innovations to achieve more

efficient environmental protection and to take a leadership role in developing

alternatives (especially market mechanisms) and in mobilizing public and

congressional support for them; and that the federal government needs to be a leader

in providing credible, authoritative environmental information.

While E4E and the NAPA Report focus on environmental protection, the

development of the concept “sustainability,” originating in global concerns, subsumes

environmental protection issues within a broader framework of long-term resource

management. The term “sustainable development” emerged in its current form in

1987 in the final report of the United Nations World Commission on Environment and

Development (WCED).11 The definition most widely quoted in the WCED report is:

“Development that meets the needs of the present without compromising the ability

of future generations to meet their own needs.” The importance of the concept is that

traditional economic analysis often treats growth in economic activity without taking

into account possible deterioration of the resource base; sustainability analysis focuses

on the ability of resources to sustain economic activity over the long-run. In this

context, pollution becomes viewed as a degrader of the resource base.

Finally, concerns about the federal role itself can drive the search for a new

environmental protection approach. For some, the federal government is simply too

big and too powerful. They would cut down the federal environmental role, typically

relying on state programs, the marketplace, and/or tort and common law to resolve

environmental problems. For some others, the federal regulatory process has been

captured by one or another set of stakeholders – for some, the polluters, for others,

environmentalists. Their response often involves radical restructuring not just of

environmental protection programs, but of all governing institutions.

The existing system is embedded in law, institutions, and expectations. Its inertia

must be overcome to accomplish change, modification, or even improvement. Overall,

while each “approach” could contribute to protecting the environment, none seems

to command an essential breadth of political and technical respect to be seen as a

10

NAPA commissioned 17 research papers relating to environmental protection innovation:

see Appendix A of environment.com.

11

World Commission on Environment and Development, Our Common Future (Oxford:

Oxford University Press, 1987).

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single viable “new direction” for the 21st Century. Each “approach” seems to have

some useful application. Each has some disciplinary, ideological, or institutional

proponent; indeed, many of the approaches have become virtually inseparable from

the institutions and/or group of individuals promoting them.

While many have contributed to the conceptual development of alternative

approaches, the largest share has come from the work of academics and think tanks.

Institutions involved in international development issues have also contributed, such

as the Organization for Economic Co-operation and Development (OECD). Business

and industry interests have more commonly reacted to regulatory issues than taken

the lead in conceptualizing new approaches.12 Environmental and health public

interest groups have more commonly focused on the need to address environmental

problems than on the development of new approaches. The White House’s Council

on Environmental Quality – a dynamic force in environmental policy development in

the early 1970s – has been allowed to atrophy. And the Environmental Protection

Agency – whose Administrator the NAPA report suggests might spearhead the

transformation of environmental policy in the 21st Century – has tended to focus on

finetuning the existing system. Indeed, it was Congress through the appropriations

process that directed the Agency to contract with NAPA to prepare the analyses that

led to environment.com: Transforming Environmental Protection for the 21st

Century.

What it would take to prompt additional innovation is the question: it could be

a crisis – perhaps a critical environmental threat for which regulation seems powerless

or some fundamental environmental regulatory mistake that threatens economic

disaster. Alternatively, it might be, as the NAPA report urges, a sustained initiative

by the future head of EPA, the new President, and/or the Congress. Absent a crisis

or this kind of initiative, it is hard to see how the regulatory “approach” will be

supplanted generally until a more comprehensive, interdisciplinary, multi-stakeholder

commitment to some alternative emerges. That, indeed, would seem to be the final

lesson of the E4E and the NAPA projects: there may be consensus that environmental

protection programs could and should be improved, but beyond modest iterative

steps, there is as yet no consensus on what that would entail nor on how to achieve

those steps.

Building toward that consensus would appear to be the next necessary step if

environmental policy is to be transformed. Inhibiting the formation of consensus is

a split in the way proponents tend to see new approaches: for some they are primarily

ways to solve the inefficiencies of the existing regulatory problem; for others they are

primarily ways to address unresolved or new environmental problems. Those focused

on inefficiency fear that expanding environmental protections to new problems would

make the burdens of compliance worse; while those focused on environmental insults

fear that efforts to reduce inefficiencies would be accomplished by retreating from

environmental protections and ignoring new problems. These divergent motives

12

See, however, the works of Stephan Schmidheiny, e.g., Financing Change: The Financial

Community, Eco-efficiency, and Sustainable Development (Cambridge, Mass.: MIT Press,

1996).

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inhibit joint recognition of opportunities for new approaches to contribute both to

efficiency and to effectiveness.

Selected New Approaches to Environmental Protection

The remainder of this report consists of brief introductions to selected new

approaches to environmental protection. Each identifies a tool, or set of related tools,

describes its basic characteristics, notes “pros” and “cons” associated with the tool,

provides some background, summarizes current developments, and concludes with

a list of readings for further research. These introductions are necessarily brief and

incomplete; their purpose is to expose the reader to these alternatives and to provide

sources through which the reader can pursue ideas that he or she finds promising.

Information

Making environmental decisions requires an understanding of the problem at

hand and the ability to predict outcomes from alternative actions. Common criticisms

of the existing regulatory approach to environmental management are that

decisionmakers may lack sufficient, reliable information to make a sound decision;

that they may rely on invalid data or findings or selectively choose only data

supporting preferred outcomes (i.e., “junk science”); or that they may rely overmuch

on nontechnical determinants at the expense of sound scientific information. A

presumption that sufficient, robust information will be brought to bear objectively on

environmental decisions underlies all conceptions of an improved or alternative

approach. What this presumption means in general is often subsumed in calls for

“sound science”; particular applications include risk analysis and cost-benefit analysis,

among other methods of generating and organizing information.

#“Sound Science”.13 The idea of “sound science” encompasses at least two

parts of the policy decisionmaking process. The first part is establishing the technical

knowledge underlying the issue and assessing possible solutions. This involves many

activities, including development, validation, and application of research methods;

environmental monitoring; epidemiological studies; data collection, storage, and

evaluation; laboratory experiments; integration of disciplinary knowledge; and

assessment of the robustness of the data, experimental results, and interpretive

findings.

The second part of science-in-policy is applying the scientific understanding to

the policy issue. At this intersection of science and policy, of scientists and

decisionmakers, the question about the science moves from “What do we know?” to

“What do these findings mean (in terms of the policy options faced by the

decisionmaker)?” To illustrate, science can address the question, “At a 95%

confidence level, what is the no-effect level of arsenic in drinking water?”; the policy

question might be, “What level of exposure to arsenic in drinking water will we

consider safe?” Or, scientifically, “What do we know about the effects of emissions

13

Prepared by Michael Simpson, Specialist in Life Sciences, and John E. Blodgett, Deputy

Assistant Director, Resources, Science, and Industry Division.

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of mercury from fossil fuel combustion?”, where the policy question might be,

“Should emissions of mercury be regulated?” While sound science may necessarily

underlie a good policy decision, it is not sufficient: statutory and administrative

requirements and social and cultural values are also determinative.

Validating and Applying Science. Because policy issues by definition involve

conflicting viewpoints, both the validity of the science base as well as its interpretation

may be challenged. Scientists have developed processes for ensuring robust results

– that is, scientific information that is widely perceived as reliable. Crucial

components of these processes include publication of both data and results so

experiments can be independently repeated to verify results, and peer review through

which colleagues assess and, at times, challenge findings and interpretations. Science

is not static: new observations and understandings may raise questions about the

findings of earlier studies, and peer review and the self-correcting nature of science

help ensure that scientific knowledge is updated to reflect the most current and

widely-accepted thinking in the scientific community. Thus scientific knowledge is

always subject to some degree of uncertainty, especially in frontier areas such as

ecology and the environment. Even widely agreed-upon scientific findings may be

accompanied by “loose ends”: incomplete data as well as some data that do not fit,

uncertainties, probabilistic findings, ranges in results, incomplete studies, and not

infrequently, some contradictory findings and even an occasional reputable scientist

who contends in favor of an alternative conclusion.

The policymaker – usually not a scientist – must meld the technical information

with the other factors involved in his or her decision. Even if the science indicates a

problem, it may not indicate a solution. The EPA Administrator’s 1998 decision to

set a very fine particulate matter (PM2.5) National Ambient Air Quality Standard is

illustrative: while 19 out of 21 members of the Clean Air Scientific Advisory

Committee recommended that EPA regulate PM2.5, the body fragmented on what

level would be appropriate for the standard. Thus, in setting a standard, the

Administrator must not only make decisions about the “loose ends” of the scientific

findings, but also must incorporate appropriate policy determinants – from the

statutory guidelines to social ethos. Claims of “junk science” can stem both from

disagreements concerning a decisionmaker’s handling of uncertainties and any

persisting scientific “loose ends” and from disagreements about the need for and

effectiveness of alternative solutions.

Uncertainty. Perhaps the single biggest challenge to the decisionmaker is

deciding when the robustness of the science outweighs remaining uncertainties. The

question of when enough reliable information is available to act is, in the end, a policy

call. As an emerging arena of scientific attention, environmental issues have regularly

been bedeviled by that question: notable examples include DDT and its effects on

birds, PCBs and their persistence in the environment, emissions causing acid rain, and

the hypothesis that chlorofluorocarbons deteriorate stratospheric ozone; and it

continues at the center of the climate change debate.

For scientists, uncertainty can be an opportunity for further research; for

policymakers, uncertainty is a void that makes assessing options more difficult. But

more research takes time – and during that time further damages may occur. This

raises the policy question, In the face of potential but uncertain hazards, should one

CRS-11

defer action until better information is at hand, or should one act quickly to forestall

possible future damages? In part, the answer depends on the risks and costs involved,

but there are other considerations, as well. A key concern is who will generate the

better information – Should that be a government responsibility, or should it be the

responsibility of the producer of the hazard, if identifiable? One management principle

for dealing with uncertainty is the “Precautionary Principle,” discussed below.

Federal Procedures. Congress and the Administration have developed a number

of procedures and processes to ensure that the scientific underpinnings of

environmental, health, and safety decisions are robust, and that policy decisions are

sound. These include:

creation of scientific bodies to advise policymakers: governmentwide ones include the federally-chartered National Academy of

Sciences – National Research Council and the Office of Science and

Technology Policy in the Executive Office of the President;

individual agencies have their own science advisory bodies, for

example the Science Advisory Board appointed by the Administrator

of EPA, as well as specialized ones, such as the Clean Air Scientific

Advisory Committee in EPA mandated by the Clean Air Act

! employment of scientific research expertise within agencies

(including the Department of Agriculture, Food and Drug

Administration, and Environmental Protection Agency), or in parallel

to the administrative body (Occupational Safety and Health

Administration – National Institute for Occupational Safety and

Health)

! statutory and/or administrative requirements for incorporating

science in policymaking decisions, for example the criteria document

review process spelled out in the Clean Air Act, plus a statutory

requirement that scientific data generated through federal research

dollars be publicly available14; as well as requirements in the

Administrative Procedure Act (5 U.S.C. 551 et seq.) for public

review of administrative decisions (for air quality regulations, these

are replaced by special administrative review procedures in the Clean

Air Act [42 U.S.C. 7607(d)]); Executive Order 12866, Regulatory

Planning and Review, requires that “Each agency shall base its

[regulatory] decisions on the best reasonably obtainable scientific,

technical, economic, and other information concerning the need for,

and consequences of, the intended regulation” (Sec. 1(b)(7)).

!

Both improvements to environmental regulatory programs and the development

of alternative environmental management techniques presume continued enhancement

of the science underpinning decisions. How to ensure sound science has attracted

congressional attention, notably in the context of various controversial EPA

regulatory actions, and most particularly with respect to oversight of EPA’s 1998

14

Generated by a controversy over the availability for review of data used in assessing health

risks from air pollution.

CRS-12

ozone and fine particulates National Ambient Air Quality Standards.15 Most

proposals to reform and improve EPA’s regulations would mandate cost-benefit

analysis and/or risk assessment procedures – which themselves depend on good

scientific information – to enhance the information base for decisions. Some

regulatory reform bills also specifically provide for new mechanisms to enhance the

science underlying regulatory decisionmaking – e.g., in the 106th Congress, H.R. 574,

introduced by Rep. Pombo, would require peer review of scientific data used in

support of federal regulations through establishment of a list of impartial peer

reviewers from which agency heads would select reviewers for comment on proposed

regulations; H.R.5195, introduced by Rep. Ehlers, would provide for the

establishment of a position of Deputy Administrator for Science and Technology of

the Environmental Protection Agency.

For additional reading, see:

John D. Graham, ed., Harnessing Science for Environmental Regulation (New

York: Praeger, 1991)

Mark R. Powell, Science at EPA: Information in the Regulatory Process,

(Washington, D.C.: Resources for the Future, 1999)

National Research Council, Committee on Research and Peer Review in EPA,

Strengthening Science at the U.S. Environmental Protection Agency (Washington,

D.C.: National Academy Press, 2000)

National Research Council, Linking Science and Technology to Society’s

Environmental Goals (Washington, D.C.: National Academy Press, 1996).

#Risk Analysis.16 Risk analysis is a tool for setting priorities among programs

and evaluating management options. In the context of environmental issues, “risk”

is defined as the probability of occurrence of a particular adverse effect on human

health or the environment as a result of exposure to a “hazard,” which may be a

chemical, some other technology, or a natural hazard, such as flooding. “Risk

assessment” refers to a formal or informal procedure producing a quantitative

estimate of environmental risk. For example, risk assessment is often used to estimate

the expected rate of illness or death in a population exposed to a hazardous chemical.

“Risk analysis” is used more broadly to include quantitative and qualitative evaluation

of all relevant attributes of environmental hazards, risks, adverse effects, events and

conditions that lead to or modify adverse effects, and populations or environments

that influence or experience adverse effects. Comparative (or relative) risk analysis

and cost-benefit analysis are aids to risk management, the process of deciding what

should be done about hazards, for example, to reduce risk.

15

E.g., U.S. Congress, House, Committee on Science, Subcommittee on Energy and

Environment, The Science behind the Environmental Protection Agency’s (EPA’s) Proposed

Revisions to the National Ambient Air Quality Standards for Ozone and Particulate Matter,

Parts I-III, Hearings [No. 21] (105th Cong., 1st sess.) (Washington, D.C.: U.S. Govt. Print.

Off., 1997), 659 pp.

16

Prepared by (name redacted), Specialist in Environmental Policy, Resources, Science,

and Industry Division, Congressional Research Service.

CRS-13

Thus, risk analysis is a tool for risk management, and Environmental Protection

Agency risk managers increasingly have relied on it, to the extent permitted by law.

In setting priorities across or within program offices, EPA sometimes has compared

risks or risk reduction potential of different regulatory targets. In developing

regulations, EPA has used the results of risk analysis to set standards, to compare the

effectiveness of various control measures, and to evaluate risks relative to costs.

Risks avoided (i.e., the difference between risks before and risks after a regulation

is implemented) are the usual measure of benefits for environmental or health and

safety regulations. Reports by the Commission on Risk Assessment and Risk

Management17 and the National Academy of Public Administration18 recommend an

expanded role for risk analysis in risk management.

Benefits and costs of risk analysis. Environmental risk analysis assists

decisionmakers by summarizing available data about hazards and potential effects of

exposure. At its best, when reliable data are available, scientific understanding is

relatively advanced, methods are reliable (i.e., when the underlying science is sound),

and interested stakeholders are involved in the process, risk analysis can facilitate

decisions. Quantified, robust information about alternative regulatory strategies and

their potential consequences – implementation and compliance costs, risks avoided,

and other benefits – help policymakers and the general public set priorities, allocate

resources, assess options, and evaluate existing federal laws and programs. Also, it

is a critical component of cost-benefit analysis.

Risk assessment is not always at its best, however: the scientific understanding

of a risk may be undeveloped, data incomplete, and experiments unfruitful;

practitioners and stakeholders may disagree on methods and interpretations. Ensuring

that the underlying science for risk assessment is sound requires resources – time,

effort, and money – to collect data, conduct experiments, run computer models,

analyze findings, and write reports. Agency resources expended on analysis may not

be available for enforcement, program evaluation, or research. Some costs, for

example, collection of data, may be shifted to those regulated; for example, the Clean

Air Act requires large emitters of certain air pollutants to monitor emissions. Another

concern has been that the time required to conduct risk analysis may make difficult

the meeting of deadlines for implementation of provisions of major environmental

statutes. Finally, quantitative risk assessment, by focusing on the data that do exist

and on risks that are best understood, may thereby ignore or insufficiently account for

other risk parameters. For example, many environmentalists, among others, have long

been concerned that risk assessment often over-weighs cancer endpoints compared

to other health risks; and it often over-weighs health endpoints generally compared

to ecological risks.

Executive and legislative interest in risk analysis. The potential value of risk

assessment has both stimulated research in its development and made its use a focus

17

The Presidential/Congressional Commission on Risk Assessment and Risk Management,

Framework for Environmental Health Risk Management (Vol. 1) and Risk Assessment and

Risk Management in Regulatory Decision-Making (Vol. 2) (Washington, D.C.: 1997).

18

Setting Priorities, Getting Results: A New Direction for the Environmental Protection

Agency (Washington, D.C.: National Academy of Public Administration, 1995).

CRS-14

of policy debates. Presidents have attempted to encourage more consistent use of risk

and economic analysis by federal agencies through executive orders. Most recently,

President Clinton’s Executive Order 12866 requires EPA to analyze risks, costs, and

benefits for “significant” rules, including all proposed and final rules expected to cost

at least $100 million in a year.

Congress also has issued general mandates to federal agencies to encourage

greater use of risk and cost-benefit analysis. The Unfunded Mandates Reform Act

(P.L. 104-4), Title II, requires all federal agencies to quantitatively assess benefits,

including the effect of a federal mandate on health, safety, and the natural

environment, and to compare benefits to costs for all rules with an expected cost of

$100 million or more in a year. However, of 110 economically significant rules

promulgated in the first 2 years since enactment, 78 did not require assessments due

to specific exemptions allowed by the Act, according to the U. S. General Accounting

Office.

The 104th Congress added mandates for considering risks to two environmental

statutes authorizing EPA’s regulatory activities, the Federal Insecticide, Fungicide,

and Rodenticide Act and the Safe Drinking Water Act. The 105th and 106th

Congresses have continued working on legislation that would foster and in some cases

require more rigorous use of risk assessment by regulatory agencies. For example,

S. 746 (Levin-Thompson), the Regulatory Improvement Act of 1999 [106th Congress]

would codify the requirements for cost-benefit analysis and risk assessment for major

rules, and executive oversight of the rulemaking process. Among its major provisions,

the bill would have required regulatory agencies to prepare a risk assessment if rule

involves a risk to health, safety, or the environment; provide for independent peer

review of risk assessments and cost-benefit analyses for rules costing $500 million;

and include cost-benefit analysis, cost-benefit determinants, and risk assessment in the

rulemaking record. The Office of Information and Regulatory Affairs, in consultation

with the Office of Science and Technology Policy, would issue guidelines for risk

assessments.

For further reading, see:

CRS Report 98-619, Risk Analysis: Background on Environmental Protection

Agency Mandates

CRS Report 98-618, Environmental Risk Analysis: A Review of Public Policy

Issues

CRS Issue Brief 94036, The Role of Risk Analysis and Risk Management in

Environmental Protection (updated regularly)

Robert W. Hahn (ed.), Risks, Costs, and Lives Saved: Getting Better Results

from Regulation (New York: Oxford University Press, 1996)

National Research Council, Committee on Risk Characterization, Understanding

Risk: Informing Decisions in a Democratic Society (Washington, D.C.: National

Academy of Sciences, 1996)

National Research Council, Committee on Risk Assessment of Hazardous Air

Pollutants, Science and Judgment in Risk Assessment (Washington, D.C.: National

Academy of Sciences, 1994).

CRS-15

#Cost-Benefit Analysis.19 Cost-benefit analysis is one way to organize,

evaluate, and present information about the actions that governments take to improve

public well-being. With respect to environmental and health issues, risk assessment,

which presents information in such terms as morbidity and mortality for humans or

animals, is a prerequisite for cost-benefit analysis, which places monetary values on

attributes of human well-being.20 And like risk assessment, its use can be

complicated, expensive, and controversial.

As a set of procedures to measure the merit of some public sector actions in

dollar terms, cost-benefit analysis is a counterpart to private-sector profitability

accounting. The difference is that most public actions to improve public well-being

do not have established private markets which generate price information on which

to judge their value or benefits. To compare the public benefit of such actions to their

costs, benefits (and sometimes costs) are indirectly estimated in dollar terms. The

objective is to determine the alternative for public action that produces the largest net

gain to the society. In this case, gain is not in terms of private sector profit, but rather

as an estimated surplus of monetized benefits over estimated costs. Based on this

criterion, cost-benefit analysis attempts to identify the most economically efficient way

of meeting a public objective. Other goals of public management are not focused on

in this process, but in some cases they may be subsumed in the analysis.

The debate over cost-benefit analysis focuses on its possible value in reducing

the perceived economic burden and complexity of traditional regulatory approaches.

Greater use of cost-benefit analysis is part of the broader regulatory reform effort

calling for increased flexibility in regulatory approaches and increased accountability

and scrutiny of regulatory decisions.

Complexities. Formal cost-benefit analysis often demands costly and sometimes

disputed expertise and data. Done carefully, it provides an array of information that

can inform the decision process. Done poorly or taken out of context, the results can

create a false sense of clarity and precision. Methods, data, expense, and prospects

for court challenges on use and abuse are concerns driving debate on how greater use

of this tool may figure in regulatory reform.

The tensions in regulatory reform and the role of cost-benefit analysis touch on

many complex issues. These include: scientific capabilities in measuring and

characterizing long-term and often uncertain health, safety, and environmental

phenomena; agency capacity for collecting and using data; methods to characterize

positive and negative effects of regulations; equity in protecting the public against

health, safety, and environmental risks; burdens on lower levels of government and

the private sector in achieving public goals; and fundamental questions of regulatory

design such as flexibility and location of implementing and decisionmaking authority.

19

20

Prepared by (namer edacted),Assistant Director, Resources, Science and Industry Division.

Risk assessors tend to be drawn from various health and environmental disciplines,

including epidemiology, toxicology, statistics, public health, and others; cost-benefit analysis

is primarily the domain of economics.

CRS-16

The role and application of cost-benefit analysis by agencies are important

focuses of the evolving process of regulatory reform. Disagreements typically revolve

around the practicality and usefulness of strict application of the tool. The conflicts

involve more questions of “how much” and “to what end” than “whether,” since these

techniques are already used by federal agencies to differing degrees in assessing many

of their regulatory activities.

Application of cost-benefit analysis: support and criticism. Cost-benefit can

be applied to public actions using varying degrees of formality (how far analysts go

in trying to compare monetized benefits with costs). At one level, some believe that

the only regulations that should be maintained or adopted are those that clearly pass

the cost-benefit test – namely, benefits must demonstrably exceed the costs.

Proponents of this position argue that promulgating only those regulations where

benefits outweigh or justify costs (presumably in monetary terms) can help rationalize

the regulatory process and improve priority setting. In this view, such reform would

increase the likelihood that regulations will not place burdens on businesses and

consumers that are out of proportion to gains in health, safety, or environmental

protection. Such a change, it is maintained, could lead to more systematic

consideration of more efficient ways to achieve desirable health, safety, and

environmental protection goals. Excessive regulations would be minimized,

eliminating rules and enforcement where goals are ill defined and measurement of

costs or benefits is uncertain.

Others argue that cost-benefit analysis can be an important and useful exercise

in assessing the impacts of regulatory actions, but the resources demanded for full and

rigorous cost-benefit analysis can be excessively costly and time consuming with the

result that cost-benefit analysis can impede legitimate protection. Proponents of this

position fear that efforts to use cost-benefit comparisons for establishing regulatory

priorities will end up emphasizing only those aspects of health, safety, and

environmental protection which can be easily translated to dollar terms. Such an

outcome would weigh heavily against intangible or nonmonetary aspects of health,

safety, and environmental protection, which is often what these types of regulations

are intended to protect or enhance in the first place. In this view, the effort to make

such comparisons could impede the legitimate government role of protecting and

enhancing public well-being. As a practical matter, expanding the use of cost-benefit

analysis would imply committing additional agency resources in research, monitoring,

and analysis.

Finally, many argue that cost-benefit analysis is an incomplete tool for regulatory

impact analysis, particularly with respect to non-quantitative values, and that related

methods of analysis such as risk assessment and cost-effectiveness are more

appropriate. Proponents of this view argue that no one opposes the use of costbenefit in a quantitative or qualitative sense in assessing regulatory impacts in

instances where it is feasible. However, there is a wide range of opinion regarding

how rigorously the method should be used, given that costs and benefits in many

instances are so difficult or perhaps impossible to measure, even in an approximate

way. Cost-benefit analysis, despite its widespread application, is still a developing art.

Much of the policy dispute is really about the rigorous use of cost-benefit analysis

versus the use of other related methods of regulatory impact assessment, such as the

CRS-17

less rigorous use of cost-benefit (based on a combination of qualitative and

quantitative assessment); risk analysis or risk assessment; and cost-effectiveness.

Executive and legislative interest in cost-benefit analysis. From the beginning

of federal environmental programs, costs imposed on industry and business, state and

local governments, and consumers and taxpayers have generated concern. As a tool

for identifying those costs and comparing them to environmental and health

improvements, cost-benefit analysis has been a subject of research and a focus of

policy debates. In many respects, the development and application of cost-benefit

analysis and of risk assessment have gone hand-in-hand.

President Clinton’s Executive Order 12866, the most recent of several E.O.’s on

analyzing regulatory costs and benefits, sets forth criteria for the application of both

risk assessment and of cost-benefit analysis in preparing major regulations. In meeting

its obligations under this directive, EPA has created an “EPA economy and

environment program” which carries out “research and analyses of the interactions

and relationships between the economy and environmental pollution control as well

as other aspects of environmental economics.” A key task of the office is “developing

and applying improved methods to produce economic benefit information used in

benefit-cost analyses of environmental programs, policies and regulations.”21

Likewise, in the Unfunded Mandates Reform Act (P.L. 104-4), Title II, Congress

requires federal agencies to quantitatively assess benefits, including the effect of a

federal mandate on health, safety, and the natural environment, and to compare

benefits to costs for all rules with an expected cost of $100 million or more in a year.

As noted in the risk assessment section above, recent Congresses have worked on

legislation that would foster and in some cases require more rigorous application of

cost-benefit analysis by regulatory agencies. For example, S. 746 (Levin-Thompson),

the Regulatory Improvement Act of 1999 [106th Congress] would codify the

requirements for cost-benefit analysis and risk assessment for major rules.

For further reading, see the citations under risk assessment, above, especially

Robert W. Hahn, ed., Risks, Costs, and Lives Saved: Getting Better Results from

Regulation (Washington, D.C.: The AEI Press, 1966), plus:

Robert W. Hahn, “The Impact of Economics on Environmental Policy,” Journal

of Environmental Economics and Management, 39 (May 2000), 375-399.

John E. Blodgett, Environmental, Health, and Safety Tradeoffs: A Discussion

of Policymaking Opportunities and Constraints, CRS Report RL30043 (1999)

Tammy Croote, Cost-benefit Analysis of EPA Regulations: An Overview, CRS

Report RL30326 (Sept. 16, 1999). 31 p.

Lisa Hinzerling, “The Perils of Precision,” The Environmental Forum

(September/October 1998), 38-43

(namer edacted),Cost-Benefit Analysis: Regulatory Issues, CRS Report 95-760

ENR (Jan. 10, 1997)

21

See EPA’s webpage for the program [http://199.223.18.220/ee/epa/eed.nsf/pages/aboutee]

and especially the hotlink to Regulatory Economic Analysis at the EPA by Robert Anderson

and Paul Kobrin: [http://199.223.18.220/ee/epalib/riaepa.nsf]

CRS-18

#Informing Public Choices.22

One widely used tool today is making

environmentally-relevant data available to consumers, voters, corporations, and policy

and program administrations so they can make environmentally-informed choices

among competing products or programs. (Conceptually, there is a parallel with

energy or pollution taxes, which convey price signals to consumers, corporate

officials, and others.) Various public laws mandate public dissemination of

information such as the environmental impacts of alternative federal programs,

relative energy efficiency of products, and emissions of pollutants:

The National Environmental Policy Act (P.L. 91-190) requires

U.S. government agencies to include in every recommendation

or report on proposals for legislation and other major federal

actions significantly affecting the quality of the human

environment, a detailed environmental impact statement.

! The Energy Policy and Conservation Act (P.L. 94-163, in

Section 322), as amended by the Energy Policy Act (P.L. 102486, Secs. 121-126), requires that household appliances and

some commercial equipment be labeled by the Federal Trade

Commission with an energy efficiency rating developed by the

Department of Energy to allow buyers to assess the energy

consumption and potential cost savings of alternative products.

! The Energy Policy and Conservation Act (P.L. 94-163) also

requires the EPA Administrator to report annually in a Fuel

Economy Guide estimates for miles per gallon (mpg) rankings

for passenger vehicles to help consumers make informed

choices about fuel economy when selecting new or used

vehicles.

! The Emergency Planning and Community Right-to-Know Act

(P.L. 99-499, Title III) mandates annual reports to the EPA by

industries with pollutant emissions to the environment; after

EPA compiles these reports in the Toxics Release Inventory

(TRI), they are issued publically.

! The Residential Lead-Based Paint Hazard Reduction Act of

1992 (P.L. 102-550, Title X) requires the certification of

contractors and laboratories engaged in detection and control

of lead hazards, the publication of an “information pamphlet”

on lead hazards that includes lists of certified contractors, and

the disclosure of lead hazards to purchasers or lessees of

targeted housing.

!

Criticism and support for information provision. Industries targeted by

information provision strategies usually are required to generate and report to

government the requisite data which the governmental agency then makes available

to the general public. As reporting requirements escalate, some industries have

objected to the cost, not only for data gathering and reporting, but also for producing

and presenting to the public other information to “provide context” for the data which

22

Prepared by (name redacted), Specialist in

and Industry Division.

Environmental Policy, Resources, Science,

CRS-19

otherwise may be misleading. Some businesses have been concerned about the public

release of data that might reveal confidential business information and compromise

economic competitiveness. In a few cases, chemical companies and other facilities

that handle dangerous chemicals have argued that there are risks of terrorism that

could be exacerbated if certain information were easily accessible, for example

information about the potential consequences of accidents at various facilities.

Environmental and consumer advocacy groups have championed these tools.

They argue that citizens have a “right to know” about potential environmental risks

to which they may be exposed, and that information approaches such as the TRI have

been successful in the past in promoting more environmentally responsible corporate

behavior. TRI is credited by right-to-know advocates with reducing releases of many

toxic chemicals from manufacturers by more than 50%. On occasion, manufacturers

also have promoted use of these tools, especially as an alternative to federal regulation

of emissions or manufacturing practices.

Proponents argue that providing information works with a free economic market

rather than against it, facilitates pollution prevention and creative pollution reduction

strategies, and encourages stakeholder involvement in decisionmaking and

enforcement. It facilitates voluntary efforts to protect the environment, and may be

one of the few options for reducing pollution that is the cumulative effect of numerous

daily individual decisions. On the other hand, the tool is only as good as the

information; information that is inaccurate, confusing, misleading, out-of-date,

irrelevant, or incomplete could distort rather than improve decisions. Similarly, there

may be little benefit, or greater environmental harm could result, if the selection of

reporting parameters (for example, under TRI) encourages industry to use alternative

substances or processes which may pose even greater risk than the reported or

regulated substance or process.

Under the Clinton Administration, EPA worked vigorously to expand public

access to information, especially electronically. EPA has promised to “make 100

percent of EPA’s non-confidential environmental data available and accessible to the

public in a user-friendly manner” by 2003.23

For additional information about tools that manage the environment by providing

information, see:

CRS Report 97-970, Toxics Release Inventory: Do Communities Have a Right to

Know More? Oct. 26, 1997.

Public Sector Processes

Reforming the federal role in environmental protection has attracted much

attention. One group of such proposals would mandate risk assessment and/or costbenefit analysis (which have been discussed previously), with varying institutional

overseers. Another related set of proposals would constrain the federal regulatory

23

U.S. EPA, Office of the Chief Financial officer, EPA Strategic Plan [EPA/190-R-97-002/]

(Washington, D.C., Sept. 1997), p. 17.

CRS-20

scope, for example by establishing a regulatory budget, which would be based on

costs imposed. But by far the most attention to the federal role has focused on its

relation to state (and local) roles.

#Environmental Federalism.24 Giving states more responsibility or a larger

role in environmental management is one of the oldest new ideas in environmental

policymaking and implementation. Variously termed environmental federalism,

devolution, decentralization, defederalization, or civic environmentalism – all of these

terms have been used in recent years – the concept involves returning some

decisionmaking authority from the federal to state and local governments.

Environmental federalism, or devolution (or accountable devolution, as it has most

recently been termed), is based in part on returning to intergovernmental relationships

that predominated before enactment of today’s federal environmental laws. In the

intervening 30 years, however, both federal and state environmental programs have

evolved considerably. Notably, states have enacted laws and developed management

capacity to a much greater extent than was the case before 1970.

Development of the federal role in environmental policy. Regulation and

management of pollution was almost entirely the province of state and local

governments before the 1970s. States had virtually unlimited discretion to protect

local environmental quality, yet most failed to act. During the late 1960s and early

1970s, many environmental concerns previously seen as local issues became federal

issues, and the proper role of each level of government in implementing policies has

been debated continuously since then. The primary impetus for the major federal

environmental statutes was the perceived need for a national response to states’

inaction, by providing a minimum level of environmental quality throughout the

country. Historically, environmental policymakers justified a strong federal role on

the basis of several considerations: (1) the implications of interstate or transboundary

pollution which individual states could not effectively control; (2) fear that states

competing for economic development will engage in a “race to the bottom,” if left to

their own devices; (3) concern that a hodgepodge of separate state regulation will

impose financial costs on out-of-state producers operating in national markets; and

(4) belief that administrative efficiency and economies of scale can be achieved by

developing complex technical standards at the national level.

The organizing principle of federal environmental laws is that policy is developed

at the national level, and programs are implemented at the state level. For 30 years,

federal environmental policy was characterized by command-and-control strategies

with states acting primarily through a system of delegated authority administered by

EPA. Issues of day-to-day program management often strain the state-EPA

relationships. There have been a number of thorny issues, which are now driving the

agenda for change in intergovernmental relationships in environmental policy. The

most contentious are costs (program costs and unfunded federal mandates) and

federal micromanagement of states.

24

Prepared by (name redacted), Specialist in Resources and Environmental Policy,

Resources, Science, and Industry Division.

CRS-21

Current support for increased state responsibility. The numerous advocates

of increased state responsibility in environmental management reflect a spectrum of

views on the issue. Some see the debate in terms of needing to strengthen the existing

EPA-state partnership, while others argue for more complete shifting of

responsibilities. On one end are those in state agencies, governors’ offices, and top

levels of EPA itself who believe that states should have more discretionary authority

(flexibility) to implement federal laws, so that states can address their highest

environmental priorities and establish resource allocations based on those priorities.

Concurrently, these advocates believe that EPA should lighten the burden of oversight

where states are willing to take on added responsibility. They cite several reasons for

changing the EPA-state relationship and increasing state responsibility. First, the

issue of state capacity to manage programs has changed. Unlike 30 years ago, states

today have working environmental programs, and the federal government is not

forcing states to create programs. Second, relying on traditional command-andcontrol methods derived from nationally uniform requirements is less effective in

meeting today’s changed environmental protection needs. The current generation of

environmental problems (ranging from sprawl to nonpoint source pollution to

watershed management and pollution impacts from people rather than companies)

points to the need for state and local governments to wield the policy lever, they say,

and points to the need to move beyond “one-size-fits-all” regulatory approaches

established centrally.

On the other end of the spectrum of environmental federalism proponents are

views represented by some academics and economists, who may bring a more

ideological approach to the debate. Some argue, for example, that the command-andcontrol regulatory strategy that dominates environmental policy has proved

inadequate, because it has not set intelligent priorities, has squandered resources, has

discouraged environmentally superior technologies, and has imposed unnecessary

penalties on innovation and investment.

They maintain that centralized

decisionmaking ignores local preferences for varying levels of environmental quality,

reduces the ability of citizens to monitor government, and stifles experiments with

policy options that are alternatives to one-size-fits-all. The goal of devolution, they

say, is to reverse the rising power of the national government, which they see as

bloated and ineffective, and to return authority to states and individuals. Some

economists view these issues in terms of the implications that alternative divisions of

decisionmaking responsibility have on efficiency. They are interested in questions

such as which level of government might best determine the extent of environmental

protection and which is most likely to select the least costly methods of control. In

many cases, they believe, the answers will dictate moving the locus of decisionmaking

to states and localities.

Between those who are advocating primarily an enhanced federal-state

partnership and those seeking a more complete shifting of roles are other groups who

support many of these arguments, including some federal legislators who advance

policy and budgetary initiatives to restrict or curtail the federal role and those in

industry who want less stringent federal regulation. A federal role would continue,

all agree, but would be restricted to setting national standards, monitoring and

enforcing compliance, providing technical assistance, and addressing transboundary

pollution problems.

CRS-22

Policy literature on this topic has continued to grow, with reports and

recommendations from a number of non-partisan or stakeholder groups (such as the

National Academy of Public Administration and the National Environmental Policy

Institute), as well as advocacy groups (e.g., the American Enterprise Institute, Cato

Institute, and the Progressive Policy Institute). These studies have advocated and

endorsed devolving existing environmental management responsibilities to capable

state and local governments to tailor regulatory solutions to local problems and

concerns, while leaving the federal government to address cross-boundary and

international issues.

Opposition to increased state responsibility. While there is considerable

support for environmental federalism, there is significant opposition, as well.

Environmentalists, in particular, who have traditionally supported a strong federal role

that provides a core level of environmental protection for all citizens and a level

playing field across the country, believe that a federal programmatic baseline is an

important counterbalance to potential state backsliding that could result from

devolution. For these groups, concern persists that state capacity to shoulder the

responsibility of devolution is less robust than state regulators say, although it is hard

to either prove or disprove this assertion. Given flexibility, they say, states fail to

meet high-priority program requirements, such as monitoring, permitting, and

enforcement. States may set lax standards in order to lure industry or succumb to

pressure by industry to adopt weak standards. Some environmentalists are concerned

that states will shift away from enforcement towards compliance assistance and also

reduce public involvement and participation.

Environmental federalism today. Devolution, or environmental federalism, is

occurring today, and the basic issue is one of timing and extent. Debate continues

over the degree of oversight that EPA exercises and degrees of responsibility,

authority, and accountability that it gives to states. In May 1995, EPA and states

took a major step towards devolution when they entered into a commitment to an

improved partnership called the National Environmental Performance Partnership

System (NEPPS). In it, EPA and states agreed that states should establish their own

comprehensive environmental plans and identify environmental priorities. National

minimum standards will remain, but EPA will allow more flexible approaches to

achieve national goals. EPA oversight will focus on ensuring that states achieve

environmental results, not on process. As of May 2000, 34 states have developed

Performance Partnership Agreements with EPA under NEPPS.

In return for the autonomy and flexibility that states seek, all of the advocates of

environmental federalism acknowledge that accountability for environmental

performance is key – thus, the source of the phrase often used today to describe these

developments, “accountable devolution.” Accountability is necessary to address

concerns of critics such as environmentalists who fear that devolution will lead to

disintegration of national programs. The largest challenge for EPA and states is to

build a foundation of meaningful indicators for a transformed performance-based

system. The success of such a system depends on the ability to measure

environmental progress in lieu of measuring traditional programmatic outputs (such

as number of enforcement actions).

CRS-23

For further reading, see:

Henry R. Butler and Jonathan R. Macey, Using Federalism to Improve

Environmental Policy (Washington, D.C.: AEI Press. 1996)

Environmental Protection Agency, Joint Commitment to Reform Oversight and

Create a National Environmental Performance Partnership System. (“May 17th

Agreement”) May 17, 1995, available at:

[http://www.epa.gov/ocirpage/pps/policy.htm]

National Academy of Public Administration, Setting Priorities, Getting Results:

A New Direction for the Environmental Protection Agency. Report to Congress.

(April 1995)

Vickie L. Patton, “A Balanced Partnership,” The Environmental Forum

(May/June 1996), 16-22

Rena I. Steinzor, “Reinventing Environmental Regulation Through the

Government Performance and Results Act: Are the States Ready for the Devolution?”

Environmental Law Reporter News & Analysis (Vol. 29, February 1999), 1007410084.

Incentives

Incentives, including both financial and technical support, predated the

regulatory command and control environmental protection programs. They remained

a critical complement to those programs – most notably sewage treatment grants as

a complement to the water quality regulatory program. And new forms of incentives

are components of various alternatives – for example, of the best management

practices approach to controlling agricultural pollution (see under Management

Principles below). Of various new incentives being proposed, rewarding entities that

undertake environmental protection initiatives that go beyond regulatory requirements

has gotten particular attention.

#Beyond Compliance: Incentives for Environmental Performance.25

The concept of businesses and other regulated entities achieving improved

environmental performance beyond what is strictly required to meet regulatory

obligations is often called “beyond compliance.” Some say that, besides being overly

prescriptive, the current environmental management system fails to reward excellent

performers. Truly voluntary initiatives by some businesses that are intended to

encourage improved environmental performance (such as environmental audits and

Environmental Management Systems) attract some businesses and industries, but

participation is limited. While businesses enter into such voluntary commitments for

various reasons, including a perception by some that good environmental practice is

good for business, the numbers that will do so without some type of incentive is likely

to be small.

Recent literature and activity advocating beyond compliance. A number of

recent reports and contributions to the policy literature have examined how the United

States could adopt environmental management systems using alternatives to

25

Prepared by (name redacted), Specialist in Resources and Environmental Policy,

Resources, Science, and Industry Division.

CRS-24

command-and-control regulation. Some of this literature explicitly recommends that

whatever new systems evolve and develop should include incentives to encourage and

reward those whose environmental protection performance exceeds basic

requirements. For example, the 1995 report of the National Academy of Public

Administration, Setting Priorities, Getting Results, recommended that EPA support

legislation to provide flexibility and accountability to businesses and local

governments in exchange for better-than-required performance A similar theme was

expressed in the 1996 report of The Aspen Institute, Alternative Path, which

recommended that in the future the United States should utilize two parallel

environmental regulatory tracks. One would be the existing system. An alternative

would allow volunteers to propose pilot demonstrations of better ways to achieve

environmental progress. Only projects yielding a greater net benefit than expected

from existing or anticipated regulations could become pilots, but participants would

receive regulatory flexibility in order to encourage their environmental protection

innovations.

The concept of providing incentives to encourage beyond compliance

environmental performance underlies a number of EPA’s recent regulatory reinvention

projects and programs. These include the ongoing Project XL, which was largely

based on principles in the Alternative Path report and seeks to encourage up to 50

site-specific experiments to achieve better environmental outcomes along with

operational flexibility and other benefits. The Common Sense Initiative (CSI), which

lasted from 1994 to 1998, is related to Project XL. It sought to remove barriers to

innovation by implementing multi-media projects in six specific industrial sectors.

EPA’s newest regulatory reinvention program, called the National Environmental

Performance Track, was announced in June 2000. EPA says it is intended to reward

companies which exceed minimum regulatory requirements and take extra steps to

reduce and prevent pollution, including having an operational Environmental

Management System. Benefits for participants will include national recognition,

regulatory and administrative flexibility, a more cooperative relationship with EPA,

a reduction in record keeping and reporting requirements, and flexibility in meeting

certain regulatory requirements.26 Several states (including New Jersey,

Massachusetts, and Minnesota) also have adopted regulatory reinvention programs

which provide qualifying facilities with flexibility under state and/or federal rules in

exchange for improved environmental performance.

The types of incentives appropriate or necessary to encourage beyond

compliance environmental performance are varied. They range from direct financial

incentives (e.g., tax subsidies for installing pollution control equipment), to indirect

financial incentives (such as more rapid permitting, less stringent standards or

monitoring, more flexibility to meet standards, or less frequent renewal of permits),

to public recognition in the form of a Presidential merit award or EPA certificate, to

better relations with regulators, corporate customers, or non-corporate customers.

26

In September, EPA announced that Epson Portland Inc. of Hillsboro, Oregon, is the first

company accepted for the National Environmental Performance Track. (For additional

information, see [http://www.epa.gov/performancetrack].)

CRS-25

The most powerful incentives are likely to be those that contribute directly or

indirectly to the corporate bottom line.27

Support and criticism. Proponents of providing incentives for beyond

compliance performance include business and industry participants, who favor the

prospect of regulatory flexibility and other benefits, and top federal and state

environmental officials, who view such policies as integral to more efficient,

performance-based management systems in the future. Opponents include some

environmentalists who criticize policies that potentially would allow companies to

sidestep regulations or obtain regulatory relief with no guarantee of environmental

outcome. As with a number of other recent environmental management tools, there

is a fundamental conflict between business’s desire for flexibility and simplicity and

environmentalists’ desire for certainty and enforceability.

As a tool of environmental policy, incentives for beyond compliance are related

to a number of other ideas intended to move beyond rigid regulatory strategies and

towards performance-based approaches, especially use of market incentives,

management practices, and devolution or defederalization. Unlike most of these other

new or newer approaches, however, beyond compliance incentives lack statutory

authority, a fact that some proponents believe is an obstacle. These supporters argue

that many companies (especially small ones) will remain reluctant to innovate because

they view the transaction costs as being too high in terms of uncertain rules,

consensus requirements, and unclear benefits at the end of the process. At the same

time, there has been little discussion and there is no consensus on how to change

statutes to address these kinds of uncertainties.

For further reading, see:

Terry Davies and Jan Mazurek. Industry Incentives for Environmental

Improvement: Evaluation of U.S. Federal Initiatives

Global Environmental Management Initiative (Washington, D.C., 1996);

National Academy of Public Administration, Setting Priorities, Getting Results: A

New Direction for the Environmental Protection Agency. Report to Congress (April

1995)

The Aspen Institute, The Alternative Path, A Cleaner, Cheaper Way to Protect

and Enhance the Environment (Washington, D.C., 1996).

Market Mechanisms

Employing market mechanisms in environmental protection has been an evolving

policy approach for certain types of problems since the mid-seventies. Such

mechanisms have the potential to reduce the compliance costs of some environmental

protection actions. These cost saving potentials are an important reason that the EPA

introduced greater flexibility in implementing some Clean Air Act regulations and that

Congress authorized a market-based approach to acid rain control. Such mechanisms

27

Davies, Terry, and Jan Mazurek. Industry Incentives for Environmental Improvement:

Evaluation of U.S. Federal Initiatives. Global Environmental Management Initiative.

Washington, 1996: 7.

CRS-26

have also been authorized in the international treaty dealing with possible future

actions to slow global climate change.

This gradual development of supplements to the “command and control”

regulatory approach in practice has also has been preceded and accompanied by a

growing body of academic and policy community attention. Proponents of marketbased approaches include think tanks, academics, and some leading environmental

advocacy groups. They argue that properly structured incentive mechanisms can

produce significant reduction in pollution control costs while achieving agreed upon

environmental standards.

#Pollution Trading and Pollution Taxes.28 Market-based mechanisms

fall into two distinct groups with many variations in each category. The first are

trading mechanisms which allow businesses to meet a facility, regional, industry-wide,

or a national cap on a pollutant by shifting their individual compliance obligations

within their business operations or to other businesses subject to the same compliance

requirements. For the case of trading between companies, this mechanism operates

when companies with low compliance costs control their pollution beyond what is

required by regulation and then sell the excess compliance to companies with high

control costs. The latter companies are thus relieved of some of their pollution

control obligations, avoiding costly abatement expenditures. The net effect is to

concentrate compliance at the points of lowest cost, thus reducing overall compliance

costs. Environmental protection is achieved in a more economically efficient manner.

A second market mechanism is the explicit taxation of a polluting activity in

order to include in the cost of a good or service the social costs (environmental or

human health damage) that the polluting activity may cause. By raising the cost of

polluting inputs or outputs for businesses or raising the cost for consumers using

polluting substances (e.g.; gasoline combustion), businesses or consumers have an

incentive to economize on the polluting activity. Businesses or consumers can

respond as they choose, with some paying the higher costs and others making changes

that avoid the effects of the tax. The combined responses to the cost incentive in

theory will result in a reduction in the polluting activity to a point where further

reductions by businesses or consumers would cost more than paying the tax or be

inconvenient or impractical. The potential reduction in pollution depends on the level

of the tax. This is set, in theory, based on what is needed to meet a targeted reduction

in pollution. Alternately, the tax can be set to achieve a given level of reduction in the

incremental monetized damages caused by the pollutant. This assumes that complex

environmental and human health values and attributes can be translated to monetary

surrogates. Although widely advocated by economists, this incentive mechanism has

never been employed in U.S. environmental laws or regulations except as fees or

charges intended to raise revenue or cover regulatory administrative costs. Such

charges typically are low enough not to create incentive effects for reducing pollution

levels.

Both trading mechanisms and pollution taxes have defined circumstances in

which they have been or could be effective in environmental management.

28

Prepared by (namer edacted),Assistant Director, Resources, Science and Industry Division.

CRS-27

For trading mechanisms, like sulfur allowance trading for acid rain control or the

EPA’s netting, banking, and offset programs for some criteria air pollutants, several

business and institutional circumstances are necessary for effective implementation.

These programs are likely to be effective when: 1) the pollutant is one where

transactions and information costs are low, typically when industries have long

experience with monitoring and controlling a pollutant, there are a large but fairly set

number of possible market participants, and there are intermediary institutions to

facilitate trading; 2) security of long term investments in pollution control by

companies is highly certain, so that unanticipated future changes do not impede long

term planning and financial commitments; 3 ) there are several technically and

financially feasible options for reducing pollution among different industry segments

(fuel switching, process changes, etc.); and 4) reductions are sought across a broad

geographical area for a pollutant that does not involve local public health or

environmental effects or alternately within one jurisdiction or facility, so that third

party impacts are minimized. Thus, the advantages of trading mechanisms are their

potential for lower-cost implementation of environmental controls in situations where

a set number of large sources can potentially optimize expenditures on abatement

through mutually beneficial exchange of the location of control. On the other hand,

for pollution from diffuse and numerous sources, trading mechanisms do not appear

very practical given the high transaction and information costs needed for

implementation.

Taxation as a tool for reducing environmental damage is particularly applicable

to problems where pollution is the result of small, diffuse, and numerous sources. In

these cases, meeting environmental objectives requires an overall reduction in the total

consumption or use of a polluting material or activity, but the large number of

contributors makes traditional regulation or targeted reductions difficult. With

population, GDP, material consumption, and waste flows all growing, mitigating

environmental deterioration may be extremely difficult or impossible to manage

without the use of incentives. Some forms of air and water pollution, CO2 generation,

and traffic congestion are examples where taxation or other price signals could be a

relevant management tool. Taxes on polluting substances and activities send a signal

to consumers and businesses to make short and long term alterations, without

prescribing how or what to modify. The advantages of using this tool are its

administrative simplicity; the flexibility it gives those affected to respond; and its long

term effects on innovation and technical and behavioral changes.

While the theory and logic for using taxes to reduce certain types of

environmental deterioration are straightforward, this approach meets public as well

as policy objections on several fronts. First, those who would pay such taxes may

oppose this approach as being unfair if other types of pollution sources are not being

taxed, and as diverting monies that could be used for pollution abatement investments.

Second, if large sums of money are involved, how such revenue is used is a critical

question (some argue for use in environmental programs or recycling through income

tax relief, but questions of tax base stability arise). Third, agreeing on the appropriate

level of a pollution tax is problematic due to uncertainty about the exact reductions

in pollution that may result. Finally, questions of pollution taxes become involved in

broader tax policy issues which complicate practical implementation.

For further reading, see:

CRS-28

Gary C. Bryner, New Tools for Improving Government Regulation: An

Assessment of Emissions Trading and Other Market-Based Regulatory Tools (The

PricewaterhouseCoopers Endowment for The Business of Government: 1999)

Stephen Kelman, What Price Incentives: Economists and the Environment

(Boston: Auburn House Publishing Co., 1981)

Robert Repetto, et al., Green Fees: How a Tax Shift Can Work for the

Environment and the Economy (World Resources Institute, 1992)

Project 88 – Round II: Incentives for Action: Designing Market-Based

Environmental Strategies, A Public Policy Study Sponsored by Senator Timothy E.

Wirth and Senator John Heinz (Washington, D.C.: May, 1991)

EPA’s National Center for Environmental Economics website at

[http://www.epa.gov/economics/], for articles such as Robert Anderson, “Economic

Savings from Using Economic Incentives for Environmental Pollution Control” and

Robert C. Anderson and Andrew Q. Lohof, The United States Experience with

Economic Incentives in Environmental Pollution Control Policy.

#Private Markets and Legal Actions.29 Under some circumstances,

environmental protection can be achieved between private parties without direct

statutory and regulatory involvement. Some argue that these tools if used more

extensively could avoid the inefficiencies of bureaucratic regulation, although critics

contend that the circumstances are more narrowly delimited than proponents

acknowledge. In one case, if pollution rights are clearly defined between two parties

where one is generating pollution, bargaining can lead to an economically efficient

reduction in the pollution level. In a second case, tort actions based on injuries

suffered due to pollution can result in court rulings that restrict defendants or

compensate plaintiffs; and polluters will consider the benefits of reducing the threat

of liability in accounting for costs of pollution reduction. Finally, in a third situation,

private property rights can be used to protect resources vulnerable to the “tragedy of

the commons” (in which common ownership leads to overexploitation as each

participant seeks to maximize gain).

Markets in pollution rights. In the case of bargaining between private parties,

the potential for finding an economically efficient reduction exists when a clearly

traceable pollution source operated by one party is causing verifiable damages or loss

to another party. Under specific and site-dependent circumstances, such private

transactions can produce economically efficient environmental protection.

If the right to discharge pollution is clearly defined or alternately, the right to be

free of pollution is clearly defined, negotiations between the parties can lead to an

efficient balance between reducing pollution damages and expenditures to reduce

pollution. This occurs because either party has an incentive to bargain with the other.

In the case where the polluter has the rights to discharge wastes, the negatively

affected party can offer to pay the polluter to reduce discharges to the point that the

monetary value of remaining damages is below the cost of additional abatement

expenditures to the polluting party. On the other hand, if the party that potentially

would be damaged has the right to be free of pollution, the party that needs to pollute

in order to operate can negotiate a level of compensation in order to find a balance

29

Prepared by (namer edacted),Assistant Director, Resources, Science and Industry Division.

CRS-29

between abatement expenditures and purchasing from the other party the right to

discharge some pollution. Depending on equality in bargaining positions, an

“optimal” reduction in pollution would result. Which party draws the greater benefit

from the exchange depends on who holds the initial pollution rights. This type of

situation is an example of what is called the Coase theorem (after a classic article by

Professor Ronald Coase) in which a clear assignment of property rights in theory will

lead to an economically efficient reduction in pollution through private party

bargaining. This outcome, however, rests on the assumption of no barriers to

transactions such as imperfect knowledge, limited rationality, or communications

costs. It assumes equality of bargaining positions, clear and provable linkages

between polluter and the injured party, minimal transaction costs (meaning, generally

a limited number of parties), and the absence of potential free riders on the

agreements reached between the bargaining parties.

Private legal remedies. In the second case, where pollution rights are illdefined, or custom has implicitly assumed that pollution is accepted as part of

economic activity, legal remedies sometimes can lead to a balance between pollution

reduction costs on the one hand and avoided injuries to other parties on the other. A

variety of legal theories may be available to plaintiffs such as nuisance, negligence,

trespass, infliction of mental distress, and strict liability. For example, under the

common law doctrine of nuisance, as well as under other legal theories, courts can

award compensation of injuries or injunctions to parties injured by pollution. In

situations where there is one polluter and the nature of hardships favors the plaintiffs,

nuisance remedies can be an effective management tool. This assumes that plaintiff

has the money, time, and patience to see the action through. Class actions also help.

As a hypothetical example, if air emissions from a factory were causing damage to

crops on downwind farms, the farmers could seek an injunction and compensatory

damages for any losses in the value of their crops. A court could find any number of

ways to address the situation depending on the severity of damages to the crops and

the economic consequences of enjoining further pollution from the factory. For

example, if the plant was the mainstay of the local economy and had already

undertaken extensive pollution abatement expenditures and the aggregate damages

to crops were small, a court could find against enjoining the factory from further

pollution. In this type of situation, some state courts have chosen to “balance the

equities” and deny injunctions since the resulting hardships to the defendant outweigh

the harm to the plaintiffs. However, where injunctions are denied, sometimes courts

have awarded past or ongoing compensatory damages to plaintiffs.

In general, nuisance law has had only limited effectiveness in controlling widespread pollution. In addition to the tendency to balance the equities and deny

injunctions, other factors have limited nuisance law as an effective tool in controlling

widespread pollution. One important limitation is the lack of eligibility to sue. The

common law distinguishes between private and public nuisances, where the latter may

involve small damages to large numbers of people. In cases of public nuisances, in

general, only a state attorney general or a local prosecutor has been allowed to bring

a law suit against polluters. Reluctance by governments to bring suits that would

harm local industries has mostly limited the role of injunctive relief, though some

states now allow individuals to bring suits to mitigate public nuisances.

CRS-30

Another complication that has limited the usefulness of nuisance remedies is the

burden of proof on the plaintiffs. Widespread pollution typically comes from many

sources, none of which alone could be shown to produce the resulting injury. It is

further difficult to achieve a group of defendants among whom potential damages can

be allocated. In general, then, common law remedies under nuisance law do not

provide a sufficiently systematic means for managing widespread pollution discharges

to environmental media. In other types of legal actions, similar issues of causation and

accountability limit such methods for dealing with widespread pollution which is

typical of must contemporary environmental problems.

Environmental markets. In a third situation, creating markets for transactions

of environmental “goods,” may lead to efficient outcomes. (In pollution control,

trading programs, as discussed above, constitute a type of environmental market). In

some cases, private parties may act through existing markets to achieve environmental

protection ends, as for example when the Nature Conservancy buys private land in

order to protect it and its resources, or when a private landowner sells hunting or

fishing rights (and thereby has a vested interest in maintaining healthy populations of

the sport game or fish). In other cases, governmental intervention may be needed to

create the market for an environmental good or service, as for example when

governmental bodies allow the selling of development rights as a way of channeling

development from environmental sensitive areas to less sensitive areas, or when state

and federal governments provide for market transactions of water rights.

Market approaches are being actively debated for allocating water resources30

and certain fisheries.31 Proponents of what is sometimes called “envirocapitalism”

have cataloged numerous other examples that demonstrate the potential power of

environmental markets. Examples include the Fossil Rim Wildlife Center in Texas,

the marketing of paddlefish roe in Montana, the retirement of salmon quotas by the

North Atlantic Salmon Fund, and wildlife management in Zimbabwe.32

How to generalize from the anecdotal successes of environmental markets (and

from failures of common ownership of resources) is not easy, however. A key issue

is the original endowment of rights: first-in-time, first-in-right effectively legitimizes

historical patterns of income and property; while changing those rights raises

questions of due process. For example, should fishing rights be vested to those now

fishing, or should those rights be auctioned to give every one an opportunity of entry?

(In the case of sulfur oxides emission allowances,33 existing facilities received

allowances based on historical emissions, and new sources have to buy into the limited

number of allowances available.) A second key issue arises from the complex

interactions that can be affected by transactions in environmental markets. Promoting

30

Terry L. Anderson and Peter J. Hill, eds., Water Marketing–The Next Generation

(Lanham, MD: Rowman and Littlefield Publishers, Inc., 1997; and Richard W. Wahl,

Markets for Federal Water: Subsidies, Property Rights, and the Bureau of Reclamation

(Washington, D.C.: Resources for the Future, 1989).

31

(name redacted), Individual Quotas in Fishery Management, CRS Report 95-849 ENR.

32

See Terry L. Anderson and Donald R. Leal, Enviro-Capitalists: Doing Good While Doing

Well (Lanham, Md. : Rowman & Littlefield Publishers, 1997).

33

The Clean Air Act specifies that the allowances do not constitute “property rights”

(§403(f)); hence they could be revoked without penalty.

CRS-31

markets for resources such as game animals and fish may have divergent impacts on

broader ecosystems and other community and public values – for example, on

nongame species, helping some and harming others, or on other resources, such as

water use.

As with so many of the other alternatives to command and control regulation,

the creation of environmental markets is an evolving tool. It includes not just markets

in goods and services, but also in qualities, over time, as with the sale and transference

of development rights. While these initiatives can bring the power of the market to

bear on environmental goods, they may require governmental structuring of the

markets and defining of the transactions.

For further reading, see:

Michael Common, Sustainability and Policy (Cambridge: Cambridge University

Press, 1995), pp. 145-152

Roger W. Findley and Daniel A. Farber, Environmental Law (St. Paul, MN:

West Publishing Co., 1998)

Roger E. Meiners and Andrew P. Morriss, eds., The Common Law and the

Environment: Rethinking the Statutory Basis for Modern Environmental Law

(Lanham: Rowman & Littlefield Publishers, 2000).

Management Principles

Addressing environmental protection as a problem of changing decisionmakers’

values underlies a set of approaches that may be called “management principles.”

These approaches focus on the way managers make decisions with environmental

consequences. The managers involved can include not only corporate managers, but

also managers of public lands and resources, individual property owners, and, in some

cases, regulatory officials as well.

The “command-and-control” regulatory system specifies what is to be done or

accomplished; enhancing information and “market-based” systems presume

environmentally protective decisions will follow from neutral competence and/or selfinterested responses to the information or the price and cost signals. In contrast, the

management principles approaches seek to achieve environmental protection goals by

redirecting managers’ criteria for making decisions affecting the environment. New

information, changed cost/price signals, incentives, even regulatory standards may be

involved; but the key elements of management principles approaches involve, first,

inculcating a heightened awareness of environmental protection needs in managers,

and second, providing some criterion or yardstick for decisionmakers to assess the

environmental implications of choices. If a manager can accurately anticipate the

consequences of decisions and has accepted environmental values, environmentally

preferable choices should follow voluntarily – a crucial difference from regulation.

Management principles approaches themselves range from the relatively abstract,

such as “sustainability,” to the pragmatic, such as “best management practices” for

agricultural tillage and environmental “audits.”

CRS-32

#Sustainability – Sustainable Development.34 The term sustainable

development emerged in its current form in 1987 in the final report of the United

Nations World Commission on Environment and Development (WCED), known as

the Brundtland Commission after its chairman, then Norwegian Prime Minister Gro

Harlem Brundtland. The definition most widely quoted in the WCED report is:

“Development that meets the needs of the present without compromising the ability

of future generations to meet their own needs.”

In the more detailed treatment of the term, the report identified requirements for

sustainability to include citizen participation in the political system, a self-reliant and

sustained economic system, a social system that allows for solutions for tensions from

“disharmonious development,” a production system that respects the ecological base,

a technological system that continuously searches for new solutions, an administrative

system that is flexible and has the capacity for self-correction, and an international

system that fosters sustainable patterns of trade and finance.

Summing up these components, the WCED report stated, “In its broadest sense,

the strategy for sustainable development aims to promote harmony among human

beings and between humanity and nature.” Popular usage has made sustainable

development nearly synonymous in many circles with “environmentally compatible

development.” In 1992, following up on the Brundtland Commission report, the

United Nations Conference on Environment and Development (UNCED, popularly

known as the Earth Summit) was held in Rio de Janeiro. The Conference produced

the Rio Declaration on Environment and Development, plus a 40-chapter action plan

called “Agenda 21" (referring to the 21st Century). Agenda 21 posits sustainable

development as key to most areas of development, and discusses both what individual

nations should undertake to achieve it and what the international community should

do. The Rio Declaration endorses actions such as environmental impact assessment,

public participation, effective environmental legislation, cooperation to promote an

open international economic system, and the precautionary approach (this last is

discussed in a following section). One of the most general principles, number 25,

states, “Peace, development and environmental protection are interdependent and

indivisible.”

At a practical level, sustainable development is a planning and decision

framework. For example, optimal management of a fishery or of lumbering of a forest

can be based on the criterion of sustainability, in which, as a first principle, harvesting

only the annual growth from a fish or timber stock assures a perpetual yield from the

resource base. In other words, society consumes only the interest from its asset, not

the principal itself. At a broader level, sustainable development involves both an

understanding and a commitment (by individuals, businesses, communities, and

various levels of government) to set and meet goals or constraints on key

determinants of the ecological or environmental health of an environmental system.

The goals or constraints represent indicators or variables which must be maintained

at certain levels if the system in the long term is to yield desired human uses and

benefits without degrading or seriously damaging the system. The goals or

34

Prepared by (name redacted), Senior Analyst in International Environmental Policy,

Resources, Science and Industry Division.

CRS-33

constraints set the context for decision makers to use various economic and

regulatory tools, such as tradable permits, taxation of pollution, best management

practices, cost-effectiveness, risk assessment, or cost-benefit analysis.

The local, interstate, and federal efforts to improve the ecology of the

Chesapeake Bay can be viewed in the sustainability framework. Science and research

have determined that, in order to enhance the fishery and recreational values of the

Bay and ensure their sustainability into the future, dissolved oxygen levels and water

clarity must improve from current levels and harvest levels on commercial and

recreational species must be established and enforced. To achieve those goals,

nutrient and sediment loadings must be reduced. To do that, a host of watershedwide land use management practices (buffering tributaries with forest-cover,

protecting and expanding wetlands, improving urban storm water management,

limiting agricultural runoff, etc.) and a similar host of direct pollution control

improvements (upgraded sewage and industrial waste water treatment, reduced

nitrogen oxide emissions from transportation and industry sources, improved septic

system performance, etc.) must be undertaken. Achieving such improvements, then,

is a process of applying a range of tools (informational, economic, and regulatory)

within numerous government and citizen planning and decision making processes.

The ultimate measure of success would be the long-term viability of the Bay’s

resources.

In practice, the application of the sustainability concept to environmental

program management is proceeding along several lines, notably: (1) within the

economic discipline, evaluating what it means with respect to economic concepts of

growth, development, and social welfare; (2) within executive and ministerial bodies,

assessing what it means for environmental planning and management; and (3) within

specific programs, focusing on what it means for accomplishing “on the ground”

practices.

The Economics of Sustainability. At present, “sustainability” remains on the

periphery of economic practice; however, a number of economic theoreticians have

been exploring how to incorporate the insight behind the concept into economic

theory and understanding.35 So-called “green accounting” is the idea of modifying

national accounts, such as Gross Domestic Product, so that resource depreciation is

incorporated. However, efforts to develop “national indicators of progress toward

sustainable progress” have been controversial and in the United States they have yet

to be widely endorsed or to be formally adopted.36

35

E.g., “Processes for Environmental Valuation: Procedures and Institutions for Social

Valuations of Natural Capitals in Environmental Conservation and Sustainability Policy.”

See: [http://alba.jrc.it/valse/noappletvalse.htm]

36

See Organisation for Economic Co-operation and Development, Towards Sustainable

Development: Indicators to Measure Progress (OECD, 2000), especially pp. 194-197, on

the experience of the United States. See also, [http://www.sdi.gov]

CRS-34

Planning.37 In the eight years since UNCED, the U.N. Commission on

Sustainable Development (CSD) has met annually at the United Nations to review

what countries are doing to implement the elements of Agenda 21. National reports

submitted to the CSD detail what countries are doing in various focus areas such as

pollution control, forestry, water resources, agriculture, etc. In many, if not most,

cases it is difficult to sort out which, if any, actions proceed with conscious reference

to Agenda 21 or to sustainable development as an organizing principle. In some

developing countries, such as China, action plans around principles of Agenda 21

have been identified.

However, the concept of sustainability has been adopted and integrated into the

terminology of development in a number of European government efforts,38 and in the

United States there has been extensive activity – particularly at the state and local

level – around this term. In 1993, the President established the President’s Council

on Sustainable Development (PCSD), bringing together high-level participants from

government (Cabinet secretaries), business and industry (at the CEO level), and nongovernmental and academic entities, usually the heads of these organizations. The

Council formed Task Forces, held extensive hearings and public meetings, and

prepared numerous reports on topics such as eco-efficiency, population and

consumption, energy and transportation, sustainable agriculture, etc. The Council

submitted a report Sustainable America: A New Consensus in 1996, having adopted

the Brundtland Commission definition. It outlined a vision statement that “articulates

the Council’s broad concept of the benefits of sustainability to the Nation.” The

Council outlined 10 broad goals, such as ensuring a healthy and clean environment,

economic prosperity, equity, conservation of nature, civic engagement, population

stabilization, education, and sustainable communities. It published a second report

Towards a Sustainable America in 1999. It included chapters on Climate Change,

Environmental Management, Metropolitan and Rural Strategies, and International

Leadership, with each chapter including recommendations for concrete actions. Since

the appearance of this report, it is unclear whether a federal entity charged with a

comprehensive sustainability mandate will be continued, although some federal

agencies have incorporated this concept into their policy framework.

Practical applications. At the local level, a Joint Clearinghouse on Sustainable

Communities was established by the National Association of Counties and the

National Conference of Mayors in 1996 at the request of President Clinton (for

information, see http://www.usmayors.org/USCM/sustainable/background.htm), in

which the quite extensive array of activities undertaken by communities, towns, cities

and states in the United States are tracked. In most cases, these efforts begin with a

decision by a town, county or state government to commit to sustainable

development, followed by the convening of multi-stakeholder councils, commissions,

37

The World Wide Web Virtual Library “SUSTAINABLE DEVELOPMENT” gives access

to a broad range of activities, at [http://www.ulb.ac.be/ceese/meta/sustvl.html]; see also the

“sustainable development gateway” on the web: [http://sdgateway.net/default.htm]

38

The concept was added to the European Union constitution in 1997 and by July 2001 the

European Commission is expected to introduce a “sustainability strategy” to direct policies

of governmental sectors. See

[http://europa.eu.int/comm/environment/forum/governance_en.pdf.]

CRS-35

or committees to decide on the process to be used. The dialog that follows usually

attempts to identify key goals of the community, then arrive at recommended actions

to achieve sustainability as those goals are conceived. The key concept underlying

these attempts is that sustainability can be achieved only if the trade-offs between

potentially conflicting goals are identified early in the process, and mechanisms

devised to assure that one stakeholder’s goals are not undermined as other

stakeholders’ goals are achieved. Participants in this dialog often feel that they have

had a beneficial learning experience when unrecognized trade-offs are brought to their

attention. But arriving at a means of achieving all stakeholders’ goals usually requires

some compromises. As these compromises are identified and debated, the sustainable

development effort often becomes a very painful process, and it often breaks down

without arriving at action points.

Overall, the effort to define and achieve sustainability has involved a significant

amount of consciousness raising about the trade-offs involved in community decisionmaking, especially those such as environmental ones, which economic development

activities often tend to ignore. At its best, it is a process for ensuring that otherwise

overlooked perspectives and constituencies are not excluded from decisions. But it

remains an ill-defined process in which operational results remain elusive.

For further reading, see:

World Commission on Environment and Development, Our Common Future,

(Oxford, England: Oxford University Press, 1987)

United Nations, Agenda 21, Rio Declaration, Statement of Forest Principles:

The final text of agreements negotiated by Governments at the United Nations

Conference on Environment and Development (UNCED), 3-14 June 1992, Rio de

Janeiro, Brazil (New York: United Nations Department of Public Information, 1992)

President’s Council on Sustainable Development, Sustainable America, A New

Consensus (Washington, D.C.: U.S. Govt. Print. Off., 1996) and Towards a

Sustainable America (Washington, D.C.: U.S. Govt. Print. Off., 1999)

Board on Sustainable Development, National Research Council, Our Common

Journey: A Transition toward Sustainability (Washington, D.C.: National Academy

Press, 1999)

Michael Common, Sustainability and Policy: Limits to Economics (Cambridge

University Press, 1995)

Michael Toman, “Sustainable Decisionmaking: The State of the Art from an

Economics Perspective,” Discussion Paper 98-39 (Washington, D.C.: Resources for

the Future, 1998).

#Precautionary Principle.39 How managers should assess potential hazards

has been debated for many years. It was a key issue in the debates over the Toxic

Substances Control Act, enacted in 1976. Its resolution of the issue was that

chemical producers should be responsible for research to assess hazards, but that there

had to be some trigger of concern before EPA could require such research. In recent

years, the European Community has taken the lead in applying what is called the

39

Prepared by Michael Simpson, Specialist in Life Sciences, and John E. Blodgett, Deputy

Assistant Director, Resources, Science, and Industry Division.

CRS-36

“precautionary principle.” It provides a framework for making decisions in the face

of uncertainty – described by one observer as a shift in environmental policy from

“react-and-cure to anticipate-and-prevent.”40 It has also become prominent in

international agreements. The 1992 Rio Declaration on Environment and

Development, Principle 15, stated:

In order to protect the environment, the precautionary approach shall be

widely applied by States according to their capabilities. Where there are

threats of serious or irreversible damage, lack of full scientific certainty

shall not be used as a reason for postponing cost-effective measures to

prevent environmental degradation.41

In January 1998, an international group of scientists, government officials, attorneys,

and labor and environmental activists developed the Wingspread Statement on the

Precautionary Principle which says, in part, “when an activity raises threats of harm

to human health or the environment, precautionary measures should be taken even if

some cause and effect relationships are not fully established scientifically. In this

context the proponent of an activity, rather than the public, should bear the burden of

proof.”42 The precautionary principle or approach has become a basis for European

environmental law and, increasingly, European environmental health policies, as well;

but in the U.S., the principle is at most implicit in environmental statutes.

The precautionary principle is not without its critics. Key objections include its

variability in interpretation, its potential role in trade protectionism, and its potential

to hinder the development and application of new technologies. The title of a June

1999 Harvard Center for Risk Analysis workshop on “The Precautionary Principle:

Refine It or Replace It”43 conveys the concern over how to interpret the principle.

Controversies over bioengineered foods have been cited as exemplifying both trade

distortions and hindrances to beneficial research and development.44

For further reading, see:

Kenneth Foster, et al., “Science and the Precautionary Principle,” Science, Vol.

288 (May 12, 2000), 979

40

A. Stewart, “Scientific Uncertainty, Ecologically Sustainable Development and the

Precautionary Principle,” Griffith Law Review, Vol. 8, no. 2 (1999), 364.

41

The United Nations Conference on Environmental Development, Rio de Janeiro 1992, Earth

Summit ’92 (London: The Regency Press Corp.,1992), p. 13.

42

P. Montague “The Precautionary Principle,” Rachel’s Environment and Health Weekly,

586 (February 19, 1998), 2. http://www.monitor.net/rachel/r586.html

43

For a brief summary, see Harvard Center for Risk Analysis, “Making Sense of the

Precautionary Principle,” Risk in Perspective, Vol. 7, issue 6 (Sept. 1999).

44

See Jonathan Adler, “More Sorry Than Safe: Assessing the Precautionary Principle and

the Proposed International Biosafety Protocol,” Texas International Law Journal, Vol. 35,

no. 173 (1999-2000), 196; and Kenneth Foster, et al., “Science and the Precautionary

Principle,” Science, Vol. 288 (May 12, 2000), 979-981.

CRS-37

Harvard Center for Risk Analysis, “Making Sense of the Precautionary Principle,” Risk

in Perspective, Vol. 7, issue 6 (Sept. 1999).

#Ecosystem Management.45 Ecosystem management is an approach to

land and resource management that has been conceptualized in various ways.46 The

scientific community has viewed ecosystem management largely as identifying

environmental conditions before European settlement of North America, and

examining how subsequent activities and management have altered ecosystems from

these conditions. The environmental community has seen ecosystem management as

using the scientific information on pre-settlement conditions to set management goals

for restoring or preserving ecological processes and biological diversity. The federal

land and resource management agencies have adopted ecosystem management to

improve their planning processes, both expanding the geographic and ecological scope

under consideration and broadening the participation of stakeholders.47 The USDA

Forest Service has recently revised its planning regulations to include “ecological

sustainability” as a way to implement ecosystem management.48

Ecosystem management is one of several approaches that attempt to expand the

historic, geographic, ecological, and participatory aspects of land and resource

management. Other efforts, some of which have existed far longer than ecosystem

management, include watershed management, landscape management, and multipleuse management. These approaches are all generally similar in attempting to consider

interactions among uses on lands and resources, typically on broader geographic

scales and over longer time periods than traditional management. They differ

primarily in their geographic basis (ecosystems, watersheds, landscapes, or politicallydefined management units) and their emphasis (ecological conditions; water supply

and quality concerns; ecological interactions; and land and resource uses).

Background. Policies to manage resources based on an understanding of the

broad environmental and social consequences of decisions have existed for decades.

Multiple-use management for the national forests, for example, has been required by

law since 1960, and arguably was the intent in the original 1897 forest management

authority. Watershed management can be traced easily to the Water Resources

Council and river basin commissions authorized in 1965. Ecosystem management

appears to have been first used in Professor Eugene Odum’s Fundamentals of

Ecology in 1971, and arguably is the vision presented by Aldo Leopold in A Sand

County Almanac in 1949.

45

Prepared by Ross Gorte, Specialist in Natural Resources Policy, Resources, Science, and

Industry Division.

46

For a more detailed discussion of this issue, see U.S. Senate, Committee on Environment

and Public Works, Ecosystem Management: Status and Potential. Summary of a Workshop

Convened by the Congressional Research Service, March 24 and 25, 1994, S.Prt. 103-98

(Washington, DC: U.S. Govt. Print. Off., 1994), 331 p.

47

For a list of federal agencies with some land and/or resource management responsibilities

that are implementing ecosystem management, see CRS Report 94-339 ENR, Ecosystem

Management: Federal Agency Activities.

48

65 Federal Register 67514-67581 (Nov. 9, 2000).

CRS-38

Ecosystem management, as adopted by the federal agencies, can be traced to the

United Nations Conference on Environment and Development (UNCED) held in June

1992 in Rio de Janeiro, Brazil. The 1989 U.N. General Assembly resolution initiating

UNCED cited concerns about freshwater quality and supplies, deforestation and

desertification, biological diversity, and many other issues. UNCED included

discussions of the Rio Declaration (principles on environmentally sustainable

development), adopted Agenda 21 (an action program to implement the principles),

and opened for signature two treaties — a convention on climate change and a

convention on biological diversity. Ecosystem management for U.S. federal land and

resource management agencies was an approach announced by the Bush

Administration to precede the President’s attendance at the Earth Summit.

Pro/Con Analysis. The various views of ecosystem management have both

support and opposition. The scientific community view of ecosystem management,

involving expanded historic, geographic, and ecological information, is seen as leading

to better informed decisions by providing a baseline for assessing the results,

especially cumulative impacts, of management efforts. However, some argue that the

sciences have not progressed sufficiently to develop such information and that the

cost of such data collection exceeds any improvement in decisions. There is also

some concern that additional information on the conditions and uses of private lands

could be used to regulate those lands, constraining the private landowners.

The environmental community views of ecosystem management largely as a goal

of preserving or restoring biological diversity and ecological processes. Proponents

often assert that, because it is generated by scientific research, the information is a

“science-based” goal for land and resource management. They also sometimes argue

that the improved information and a goal of “naturalness” for federal lands can clarify

the role of the federal government, as a provider of public goods and social values,

and private landowners as producers of private goods. Opponents argue that a goal

of “naturalness” is unlikely to be limited to federal lands, and is likely to be used to

restrict private land uses. They also argue that, while recreating historically natural

conditions might be desirable for providing certain environmental values and

processes, but is only one of many possible options for land and resource

management.

The federal adoption of ecosystem management has been as an expansion of the

planning process. Part of this expanded planning is developing broader historic and

geographic information. The Forest Service and the Bureau of Land Management

have conducted “ecoregional” assessments at relatively broad geographic scales that

include private land conditions and uses. These agencies contend that greater

information at expanded scales could lead to a better sense of the possible cumulative

impacts of federal decisions, while private land information might provide a clearer

understanding of the appropriate role of federal lands within a specific region. Some

oppose such data development, however, as a costly exercise with few real benefits.

Also, private landowners are concerned about possible regulation of their lands based

on information allegedly collected to improve federal land management planning.

Environmental interests criticize the federal agencies view of ecosystem management

only as a planning process rather than as a goal of restoring natural conditions. This

criticism might be alleviated somewhat by the November 2000 Forest Service final

revised planning regulations that establish ecological sustainability as a management

CRS-39

goal for the national forests. However, this new management goal engendered

criticism of the draft regulations from groups whose uses or interests may conflict

with this goal.49 Further, some have suggested that this goal differs fundamentally

from the direction in the laws currently governing national forest management, and

question whether the current laws permit ecosystem management for the federal

lands.50

Federal ecosystem management planning is, according to the agencies, also

intended to promote greater cooperation in federal decisionmaking through expanded

public participation. Collaboration might reduce local antipathy towards federal land

ownership and produce a broader, more balanced local and regional economic base.

However, the expanded planning process likely will increase the time and cost of

planning, both directly by the federal government and indirectly by the public

participants, especially if another planning level (ecoregional assessments) is added.

The process also could exacerbate current feelings of frustration with federal land

ownership if the participants do not feel that the process has been truly collaborative

and led to consensus.

For additional information, see:

U.S. Senate, Committee on Environment and Public Works, Ecosystem

Management: Status and Potential. Summary of a Workshop Convened by the

Congressional Research Service, March 24 and 25, 1994. Prt. 103-98.

(Washington, DC: U.S. Govt. Print. Off., 1994).

U.S. General Accounting Office, Ecosystem Management: Additional Actions

Needed to Adequately Test a Promising Approach. GAO/RCED-94-111.

(Washington, DC: Aug. 1994).

(name re dacted),

(name er dacted), and (name redacted), Ecosystem

Management: Federal Agency Activities. CRS Report for Congress 94-339 ENR.

(Washington, DC: April 19, 1994).

The Keystone Center. The Keystone National Policy Dialogue on Ecosystem

Management: Final Report. (Keystone, CO: Oct. 1996).

Interagency Ecosystem Management Task Force. The Ecosystem Approach:

Healthy Ecosystems and Sustainable Economies. (Washington, DC: June 1995). 3

volumes.

Oliver A. Houck, "On the Law of Biodiversity and Ecosystem Management,"

Minnesota Law Review, v. 81, no. 4 (April 1997): 869-979.

#Good Management Practices.51 Good management practices at the

individual level are the least intrusive and least consistent end of the environmental

policy spectrum because they rely on the good intentions of individuals. These

49

65 Federal Register 67514-67581 (Nov. 9, 2000).

50

Roger A. Sedjo, “A View of the Report of the Committee of Scientists,” Sustaining the

People’s Lands: Recommendations for Stewardship of the National Forests and Grasslands

into the Next Century, by the Committee of Scientists, K. Norman Johnson, Chair

(Washington, DC: March 15, 1999), p. 183.

51

Prepared by Jeffrey Zinn, Specialist in Natural Resources Policy, Resources, Science, and

Industry Division.

CRS-40

practices encompass stewardship by landowners and leaseholders as they manage

private working lands that provide diverse benefits, ranging from producing

commodities such as trees and row crops to providing habitat and amenities. The

most familiar applications of good management practices occur in the context of

resource management activities. However, the essential concept of these practices is

that good stewardship of the land – keeping soil on the land, rather than permitting

it to erode into nearby streams – will benefit both the land resource and environmental

quality. Good management practices are a collage of many possible actions that

involve physical modifications to the landscape and sound resource management

activities that provide environmental benefits. While the practices usually have a

single environmental focus, such as improved water quality, they typically provide

multiple benefits. These practices often are voluntarily applied, although that is not

a prerequisite.

The typical role of the federal government is to provide incentives that encourage

participation: (1) public cost sharing funds to help pay for planning, installation, and

maintenance; (2) education to explain both their benefits and how to properly use and

maintain them; and (3) technical assistance to help design and implement stewardship

activities. A cornerstone is planning to assemble the most appropriate mix of

practices that will help the land user reach his goals while recognizing the physical

characteristics and limitations of each site and its resources. The focus of application

has been on the most modified lands, which are usually lands cultivated to produce

crops, but also include forest lands, range, and pasture, and at the scale of an

individual ownership.

Underlying concepts. Good management practices are designed to maintain,

restore, or enhance the health and integrity of the resource base – soils, water and air,

and the plants and animals that depend on them – by using tools that range from

active to passive and from construction to resource management. Individual practices

have design and other standards, but they vary widely in what they actually

accomplish because of the dynamic nature of land uses and conditions, and users’

goals. The unstated assumption is that resources benefit from these practices, not that

they should benefit at least to some prescribed level, or standard.

Pros and cons. Supporters cite many aspects of good management practices as

the basis for continued and expanded use. Participation is incentive-driven, involves

willing participants, and attracts those who want to improve their resources.

Participation is driven by personal goals about resource protection and improvement

rather than externally-generated requirements. Good management can be practiced

at many different scales and levels of intensity. Practices have design standards that

must be met. Each benefits the resources to different degrees, but all are

improvements over the status quo for resource conditions. Land users can change

their mix of good management practices; this flexibility recognizes the dynamic ways

in which land users may modify their goals from year to year.

Reliance on good management practices has also been criticized. Resource

problems are not evenly distributed across the landscape, so the relative interest in

applying them does not match the distribution pattern of environmental problems.

The result is a hodge-podge of practices that inefficiently address resource problems.

In addressing the resource problems of a given area, such as a watershed, there is

CRS-41

greater benefit when all landowners participate and when all utilize consistent

practices. Also, since participation is voluntary, there are few mechanisms to insure

that the practices are properly maintained after they are installed, even when federal

funds help pay for the installation. Few of these programs have penalties, such as

requiring the repayment of public funds if the practices are not maintained; the

installation of practices is often publicized, but the ephemeral characteristics are not

discussed. Further, there are few incentives for public agencies to monitor the

condition or performance of these practices after they are in place, and in many cases,

there are no penalties for land operators who decide not to maintain these practices.

Historical beginnings. Good management practices can be traced back to

defining events or periods. For agricultural land uses, the defining event for soil was

the Dust Bowl of the 1930s, when dust storms from the Midwest blanketed that

region and the West. The response was development of conservation practices that

would allow crop production while reducing soil erosion. For forests, there was a

defining period late in the 19th century rather than an event, with the recognition that

much of the forests were disappearing, especially in the East and upper Midwest. The

response was the establishment of the National Forest System and the beginnings of

efforts to develop sound forest management practices.

One part of the institutional structure that supports these practices, the land grant

college system, is far older, having been created in the 1860s. Because this system

was already well-established when these defining events occurred, the public policy

responses have drawn from this structure. The land grant college system has provided

a major research component to develop new practices and improve existing ones, and

also a major educational component through the USDA Extension Service.

Since the broad needs to protect and improve natural resources on private lands

were first recognized, both the number of concerns and the tools to address them have

expanded. Newer concerns are often more precise modifications of more general

ones raised earlier. Newer tools include tillage practices, forest management

techniques, and grass and rangeland management techniques. Emerging technologies,

such as biotech and Geographic Information Systems, are creating new opportunities

for good management practices. Recently, interest has grown in considering resource

needs from a systems perspective that combines many of these factors on a scale that

is larger than single land holdings, and emphasizes interrelationships among resources

that resource management experts view as critical to maintaining healthy resources

in the broader landscape.

Concluding thoughts. The voluntary approach to managing these resources has

generated considerable debate about their effectiveness. The voluntary approach is

viewed by some as getting the strongest commitment to installing and maintaining

practices because all the participants are willingly involved and have a strong desire

for success. Others see limitations in this approach in that the greatest needs or worst

problems are not necessarily controlled by willing land owners. They view this

approach as being less efficient, both in terms of committing public resources and in

terms of results. They also may view it as less enduring, as there are few features

built into these programs to insure that environmental benefits are maintained. One

aspect of this debate has been the questions of whether resources to conduct these

programs should be distributed more-or-less equally over the landscape and be

CRS-42

available in small amounts to many participants, as had been the case until recently,

or should they be concentrated to address the worst problems or greatest needs, based

on some measure of physical conditions, and the role that new technologies might

play in making this approach more effective.

For further reading, see:

National Research Council, Board on Agriculture, Soil and Water Quality

(Washington, D.C.: National Academy Press, 1993)

U.S. Department of Agriculture, Economic Research Service. Agricultural

Resources and Environmental Indicators.

#Pollution Prevention / Materials Management.52 Since passage of the

Pollution Prevention Act (Title VI of the Omnibus Budget Reconciliation Act of

1990, P.L. 101-508), the Environmental Protection Agency has been required to

develop and coordinate a pollution prevention strategy, and owners and operators of

many industrial facilities have been required to report annually on source reduction

and recycling activities as part of their submissions under the Toxics Release

Inventory.

Enactment of the Pollution Prevention Act marked a turning point in the

direction of U.S. environmental protection policy. From an earlier focus on the need

to reduce or repair environmental damage by controlling pollutants at the point where

they are released to the environment – i.e., at the “end of the pipe” or smokestack, or

after disposal – Congress turned to pollution prevention through reduced generation

of pollutants at their point of origin. Broad support for this policy change was based

on the notion that traditional approaches to pollution control had achieved progress

but should in the future be supplemented with new approaches that might better

address cross-media pollution transfers, the need for cost-effective alternatives, and

methods of controlling pollution from dispersed or nonpoint sources of pollution.

The Act states that –

it is the policy of the United States that pollution should be prevented or reduced

at the source whenever feasible; pollution that cannot be prevented should be

recycled in an environmentally safe manner, whenever feasible; pollution that

cannot be prevented or recycled should be treated in an environmentally safe

manner whenever feasible; and disposal or other release into the environment

should be employed only as a last resort and should be conducted in an

environmentally safe manner [§6602(b)].

These principles were adopted 15-20 years after the development of a complex

regulatory structure that governs emissions to the air, water, and land separately,

however, and their adoption has had little effect on the day-to-day functioning of

environmental regulatory authorities. Further, EPA and its state counterparts are

essentially reactive agencies, with little authority to require the use of cleaner

production methods or to require the adoption of “environmentally preferable”

52

Prepared by (name redacted),

and Industry Division.

Specialist in Environmental Policy, Resources, Science,

CRS-43

products. Given the fundamental respect for private property that permeates

American society and an economic system that values free enterprise above most

competing values, EPA and state environmental agencies are unlikely ever to have

authority to regulate production methods or production decisions, except in extreme

cases where a production method or product can be demonstrated to pose an

unreasonable risk to human health or the environment.53

Pollution prevention tools in the United States and internationally. Given

these constraints, the government’s role in pollution prevention has been limited

largely to research, information gathering, and information dissemination. Tools such

as the Toxics Release Inventory and voluntary programs in which industry commits

to reduce pollution beyond the requirements of law (“beyond compliance”) in return

for public recognition and use of an EPA-developed symbol are perhaps the Agency’s

most widely recognized tools.

In recent years, another pollution prevention tool has been the Supplemental

Environmental Project (SEP). SEPs are environmentally beneficial projects that may

be proposed by a violator during the settlement of an enforcement action. In FY1998,

EPA settlements produced 221 SEPs valued at $90.8 million. Over the 1996-1998

fiscal years, 20% of all judicial and administrative penalty orders included SEPs.

SEPs are often used as a pollution prevention tool: in reporting on its FY1998

enforcement accomplishments, EPA estimated that “60% of SEPs offered human

health or worker protection benefits, while 52% offered ecosystem protection.”54

Extended Producer Responsibility. There are other possible approaches that

combine regulation and pollution prevention. The most frequently discussed is an

approach referred to as “Extended Producer Responsibility” (EPR). EPR is a term

applied to efforts in Europe, Japan, and elsewhere that hold producers of certain

products responsible for managing them at the end of their useful life. This

management may be accomplished individually, by requiring manufacturers to take

products back after use, or collectively, by allowing take back or recycling to be

managed by an industry-wide organization.

Perhaps the best known example of EPR is the Green Dot system for packaging

recovery and recycling established in Germany by Duales System Deutschland (DSD).

Under the German Ordinance on the Avoidance of Packaging Waste, adopted in 1991

and fully implemented in 1993, packaging must be recovered and reused or recycled

by retailers and manufacturers. Since retailers did not wish to collect used packages,

manufacturers established a consortium to operate a separate collection system for

53

There are, in fact, some cases in which EPA has been given and has exercised pollution

prevention authority, for example in banning the manufacture and sale of asbestos products

or of DDT, or prohibiting the use of lead in gasoline. Several statutes, including the Clean

Air Act and the Federal Insecticide, Fungicide, and Rodenticide Act, provide some such

authority. The broadest authority is probably that provided in the Toxic Substances Control

Act (P.L. 94-469), which gives EPA the power to control “unreasonable risks” to human

health and the environment by prohibiting or limiting production or distribution of harmful

substances or products containing them. Use of this authority has been rare.

54

U.S. EPA. Office of Enforcement and Compliance Assurance.

Accomplishments Report, June 1999, p. 4.

FY98 OECA

CRS-44

used packaging throughout Germany. (The Green Dot, or recycling symbol, identifies

those packages included in the system.)

This Dual System collects material for recycling curbside or at drop-off locations

in much the same way local governments or private organizations do in the United

States, but the system operates nationwide, and is paid for by fees that the

manufacturer or packager gives to DSD. These fees are based on the cost of

recovering and recycling specific materials (glass, plastic, paper, etc.). Thus,

manufacturers have an incentive to minimize packaging waste, since they must pay for

its recovery; and packages that are not recyclable are forced out of the system.

Many European countries and Japan have adopted systems similar to Germany’s

Green Dot for managing their packaging waste, and the concept is now being applied

in Germany and elsewhere to automobiles, electronic equipment, and other products.

By returning products for reuse or recycling, these EPR systems provide incentives

for the design of products that are easily reused or recycled and minimize the disposal

of solid and hazardous waste.

There are many sources of information on pollution prevention and extended

producer responsibility. Two comprehensive sources are the EPA Office of Pollution

Prevention Website [http://www.epa.gov/p2/] and the National Pollution Prevention

Roundtable [http://www.p2.org]. For information on extended producer

responsibility, the Organisation for Economic Cooperation and Development’s

Website [http://www.oecd.org/env/] is searchable using the term “Extended Producer

Responsibility.” Among OECD publications is a 1996 report on EPR policies in the

OECD member countries.

#Environmental Management Systems and Audits.55 Over the last 10

years, corporations and governments have given a great deal of attention to the use

of environmental management systems (EMS) as a tool to lessen environmental

impacts and improve compliance with environmental laws. The most prominent

efforts to facilitate the use of EMSs have been those of the International Organization

for Standardization (ISO), which has developed a series of standards for

environmental management systems referred to as the ISO 14000 standards.

Voluntary industry standards. ISO is a nongovernmental, international,

industry-based organization. Its U.S. counterpart, the American National Standards

Institute (ANSI), has a long history – as does ISO – of setting voluntary industry and

product standards to facilitate both domestic and international commerce.

In the 1990s, ISO (with ANSI participation) developed a set of standards

covering environmental management, environmental auditing, life cycle assessment,

environmental labeling, and environmental performance. To be certified or registered

under these standards, an organization must demonstrate that it has an Environmental

Management System in conformity with ISO 14001. Conformity with ISO 14001

indicates that a company or organization has a system in place for setting

55

Prepared by (name redacted),

and Industry Division.

Specialist in Environmental Policy, Resources, Science,

CRS-45

environmental goals, auditing performance, and taking corrective action. But the

company or organization is free to set its own goals; thus, compliance with ISO

14001 does not necessarily certify environmental excellence. Furthermore, the

absence of any meaningful public reporting requirement in the standard means that

outsiders have no way of judging a company’s environmental performance under the

standard.

Thus, compliance with ISO 14001, often discussed as a new method of

stimulating improved environmental performance, is probably not, in its current form,

a substitute for environmental regulation. But many feel it has the potential to

improve corporate performance and benefit the environment.

Environmental audits. The same may be said for a related tool, the

environmental audit. Environmental audits presume that there are environmental

regulations against which to measure a company’s performance. In the absence of

regulations, an audit would be relatively meaningless.

Audits have been used extensively in the corporate world as a means of

improving environmental performance. A 1995 survey by Price Waterhouse found

that 75% of 369 companies who responded conducted such audits and another 8%

planned to do so.

Some argue that audits would be even more widely used were it not for fear that

they may provide evidence that could be used against the company in court or in other

enforcement proceedings. As a result, there has been a lively debate throughout the

1990s as to whether state and federal governments should consider information

collected in audits to be “privileged,” or inadmissible in enforcement proceedings.

About 20 states have provided some such privilege for environmental audit

information, and some states offer immunity from civil and criminal penalties to

persons and entities reporting violations detected in such audits, provided that

violations detected are promptly reported and corrected.

U.S. EPA and the Department of Justice have adopted policies restricting the

role of audit information in enforcement proceedings and reducing penalties for

voluntary disclosure of violations; but they oppose legislation that they believe would

limit their discretion in such matters. Such legislation was the subject of

congressional hearings in the mid-1990s, but now appears to have less support.

For further reading, see:

CRS Report 96-332, Environmental Audit Privilege: State Laws and Federal

Policy, (name redacted), Apr. 11, 1996.

Pacific Institute for Studies in Development, Environment, and Security.

Managing a Better Environment: Opportunities and Obstacles for ISO 14001 in

Public Policy and Commerce. March 2000

CRS-46

Appendix A: Selected Readings

Jonathon H. Adler, ed., Ecology, Liberty & Property: A Free Market Environmental

Reader (Washington, D.C.: Competitive Enterprise Institute, 2000)

Terry Anderson, ed., Breaking the Environmental Policy Gridlock (Stanford, CA:

Hoover Institution Press,1997)

The Aspen Institute, The Alternative

http://www.aspeninst.org/dir/eee/altpath.html]

Path

(1996)

[at

Ronald Bailey, ed., Earth Report 2000: Revisiting the True State of the Planet (New

York: McGraw-Hill, 2000)

The Business Roundtable, Toward Smarter Regulation (Washington, D.C.: The

Business Roundtable, updated 1995)

Carnegie Commission on Science, Technology, and Government, Risk and the

Environment: Improving Regulatory Decision Making (New York: Carnegie

Corporation, 1993)

Marian R. Chertow and Daniel C. Esty, Thinking Ecologically: the Next Generation

of Environmental Policy (New Haven: Yale University Press, 1997)

Robert W. Crandall, et. al., An Agenda for Federal Regulatory Reform (Washington,

D.C.: American Enterprise Institute for Public Policy Research and The Brookings

Institution, 1997)

Environmental Protection Agency, National Center for Environmental Economics,

[http://www.epa.gov/economics/]. See, for example, Robert Anderson, “Economic

Savings from Using Economic Incentives for Environmental Pollution Control” and

Robert C. Anderson and Andrew Q. Lohof, The United States Experience with

Economic Incentives in Environmental Pollution Control Policy.

The Environmental Protection System in Transition: Toward a More Desirable

Future (Washington, D.C.: Center for Strategic and International Studies. 1998)

Peter Humber, Hard Green: Saving the Environment from the Environmentalists: A

Conservative Manifesto (New York: Basic Books, 1999)

National Academy of Public Administration, environment.gov: Transforming

Environmental Protection for the 21st Century (Washington, D.C.: National Academy

of Public Administration, 2000)

Wallace E. Oates, ed., The RFF Reader in Environmental and Resource

Management (Washington, D.C.: Resources for the Future, 1999)

The Presidential/Congressional Commission on Risk Assessment and Risk

Management, Framework for Environmental Health Risk Management (1997) at

[http://www.riskworld.com/]

CRS-47

Research and Policy Committee of the Committee for Economic Development,

Modernizing Government Regulation: The Need for Action (New York: Committee

for Economic Development, 1998)

Philip Shabecoff, Earth Rising: American environmentalism in the 21st century

(Washington, D.C. : Island Press, 2000).

Irwin M. Stelzer and Paul R. Portney, Making Environmental Policy: Two Views

(Washington, D.C.: The AEI Press, 1998).

“25th Anniversary Special Issue,” Journal of Environmental Economics and

Management, 39 (May 2000).

World Wide Web Virtual Library “SUSTAINABLE DEVELOPMENT,” at

[http://www.ulb.ac.be/ceese/meta/sustvl.html

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