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A Reflexive Model of Environmental Regulation

Published online by Cambridge University Press:  23 January 2015

Eric W. Orts
Eric W. Orts*
Affiliation:
The Wharton School, University of Pennsylvania
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Abstract

Although contemporary methods of environmental regulation have registered some significant accomplishments, the current system of environmental law is not working well enough. First the good news: Since the first Earth Day in 1970, smog has decreased in the United States by thirty percent. The number of lakes and rivers safe for fishing and swimming has increased by one-third. Recycling has begun to reduce levels of municipal waste. Ocean dumping has been curtailed. Forests have begun to expand. One success story is the virtual elimination of airborne lead in the United States. Another is the rapid phase-out of ozone-layer depleting chemicals worldwide. Nevertheless, prominent commentators of diverse political persuasions agree in an assessment that conventional models of environmental law have “failed.” Many environmental problems remain unsolved: species extinction, global desertification and deforestation, possible global climate change, and continuing severe air and water pollution in urban areas and poor countries. What is more, successful environmental protection has come only at enormous economic cost. By the year 2000, the Environmental Protection Agency (EPA) estimates that the United States will spend approximately two percent of its gross national product on environmental pollution control. Academic economists have pointed out the nonsensical inefficiency of many environmental regulations, but usually to no avail.

Type
Articles
Information
Business Ethics Quarterly , Volume 5 , Issue 4 , October 1995 , pp. 779 - 794
Copyright
Copyright © Society for Business Ethics 1995

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References

1 Gregg Easterbrook, The Good Earth Looks Better (New York Times, Apr. 21, 1995), at A31. See also Gregg Easterbrook, A Moment on the Earth: The Coming Age of Environmental Optimism (1995) (providing a sanguine view of the success of environmental regulation in developed countries).

2 For airborne lead reduction, see, e.g., Sandra Blakeslee, Concentrations of Lead in Blood Drop Steeply (New York Times, July 27,1994), at A18 (reporting on government study finding 78% decline in the amount of lead in the bloodstreams of Americans over phase-out period of leaded gasoline from 1976 to 1991); Thomas O. McGarity, Radical Technology-Forcing in Environmental Regulation, vol. 27, Loyola of Los Angeles Law Review (1994), pp. 943, 947–52 (calling the “lead phase down” an “environmental success story”). See also Council on Environmental Quality, United Nations Conference on Environment and Development: United States of America National Report (1992), p. 197; Barry Commoner, Making Peace with the Planet (4th ed. 1992), p. 22.

For the reduction in the production of ozone-depleting chemicals, see, e.g., William K. Stevens, Ozone-Depleting Chemicals Building Up at Slower Pace (New York Times, Aug. 26, 1993), at Al (recounting that global slowdown of ozone-depleting chemicals in atmosphere can be “attributed to industry’s unexpectedly rapid cut in the production of the chemicals even before international agreements to phase them out took full effect”); Philip Shabecoff, Industry Acts to Save Ozone (New York Times, Mar. 21, 1988), at Al (describing industrial efforts to develop substitutes for ozone-depleting chemicals). See also Richard E. Benedick, Ozone Diplomacy (1991).

3 See, e.g., Commoner, supra note 2, at pp. 19–40 (referring to “the environmental failure”); E. Donald Elliott, Environmental TQM: Anatomy of a Pollution Control Program That Works!, vol. 92; Michigan Law Review (1994), pp. 1840, 1844 (commenting on “the disappointing record of traditional strategies used in U.S. environmental law to achieve its stated goals”); Lakshman Guruaswamy, Integrated Environmental Control: The Expanding Matrix, vol. 22, Environmental Law (1992), pp. 77, 83–87 (describing “failures of the existing system”); Cass R. Sunstein, Paradoxes of the Regulatory State, vol. 57, University of Chicago Law Review (1990), pp. 407, 411 (environmental regulation has “frequently failed”).

4 For an overview of the world’s continuing environmental problems and an emerging framework for addressing some of them, see Agenda 21, the non-binding agreement drafted at the Earth Summit in Rio de Janeiro in 1992. Agenda 21 is reprinted in Stanley P. Johnson, ed., The Earth Summit: The United Nations Conference on Environment and Development (UNCED) (1993), pp. 125–508. See also Christopher D. Stone, The Gnat is Older Than Man: Global Environment and Human Agenda (1993), pp. 5–18 (diagnosing some of the continuing basic environmental problems).

5 U.S. EPA The Cost of a Clean Environment (1990), p. v.

6 For an influential argument discussing the inefficiencies of conventional environmental regulation, see Bruce A. Ackerman & Richard B. Stewart, Reforming Environmental Law, vol. 37, Stanford Law Review (1985), pp. 1333, 1334–40. See also T.H. Tietenberg, Economic Instruments for Environmental Regulation in Dieter Helm, ed., Economic Policy Towards the Environment (1991), pp. 86, 95–97, tbl. 4.1 (summarizing empirical studies of the high cost of conventional environmental regulation as opposed to least-cost alternatives).

7 My conception of reflexive environmental law is described more fully in Eric W. Orts, Reflexive Environmental Law, vol. 89, Northwestern University Law Review (1995), p. 1227. For an early development of the theory of reflexive law, see Gunther Teubner, Substantive and Reflexive Elements in Modern Law, vol. 17, Law & Society Review (1983), p. 239. For recent applications of the idea of reflexive law in the environmental context, see the essays collected in Gunther Teubner, et al. eds., Environmental Law and Ecological Responsibility: The Concept and Practice of Ecological Self-Organization (1994). See also Michael Herz, Parallel Universes: NEPA Lessons for the New Property, vol. 93, Columbia Law Review (1993), pp. 1668,1689–93 (describing National Environmental Policy Act as an example of reflexive law); Eric Bregman & Arthur Jacobson, Environmental Performance Review: Self-Regulation in Environmental Law, vol. 16, Cardozo Law Review (1994), p. 465.

8 See Mary Douglas, How Institutions Think (1986).

9 Anthony Giddens, The Consequences of Modernity (1990), p. 38. Cf. Pierre Bourdieu & Loïc J.D. Wacquant, An Invitation to Reflexive Sociology (1992), pp. 36–46 (describing various approaches to “reflexive sociology”).

10 Kenneth A. Manaster, Ten Paradoxes of Environmental Law, vol. 27, Loyola of Los Angeles Law Review (1994), pp. 917, 931.

11 See Robert W. Hahn & Robert N. Stavins, Incentive-Based Environmental Regulation: A New Era from an Old Idea?, vol. 18, Ecology Law Quarterly (1991), pp. 1, 5–6.

12 Id. at 6 (“Uniform emissions standards, the dominant policy mechanism chosen to attack a number of environmental problems, tend to lead to inefficient outcomes in which firms use unduly expensive means of controlling pollution. The reason is simple: the costs of controlling pollutant emissions vary greatly among and even within firms. Indeed, the cost of controlling a unit of a given pollutant may vary by a factor of 100 or more among sources, depending upon the age and location of plants and the available technologies.”). See also Ackerman & Stewart, supra note 6, at 1334–40 (criticizing command-and-control “best available control technology” as wasteful, inefficient, and counterproductive). But see Howard Latin, Ideal Versus Real Regulatory Efficiency: Implementation of Uniform Standards and “Fine-Tuning” Regulatory Reforms, vol. 37, Stanford Law Review (1985), p. 1267 (defending command-and-control regulation against market-based criticism).

13 See, e.g., Michael Herz, Imposing Unified Executive Branch Statutory Interpretation, vol. 15, Cardozo Law Review (1993), pp. 219, 223–26 (providing a critical account of the Council on Competitiveness).

14 Kirkpatrick Sale, The Green Revolution: The American Environmental Movement 1962–1992, pp. 50–51 (1993).

15 The literature on administrative capture and bureaucratic rent-seeking is vast. For a brief overview of the two problems, see Cass R. Sunstein, Constitutionalism After the New Deal, vol. 101, Harvard Law Review (1987), pp. 421,448–51.

16 See Daniel A. Farber, Environmental Protection as a Learning Experience, vol. 27, Loyola of Los Angeles Law Review (1994), p. 791 (discussing the problem of “learning” in environmental regulation).

17 Council on Environmental Quality, supra note 2, app. D (a “selected list” of federal environmental statutes).

18 This total is reached just counting seven statutes: the Clean Air Act, the Clean Water Act, the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), the Safe Drinking Water Act, the Toxic Substances Control Act (TSCA), the Resource Conservation and Recovery Act (RCRA), and the Comprehensive Emergency Response, Compensation, and Liability Act (CERCLA). Dallas Burtraw & Paul R. Portney, Environmental Policy in the United States in Dieter Helm ed., Economic Policy Towards the Environment (1991), pp. 289, 291–97. Not counted are several other important statutes, including the National Environmental Policy Act (NEPA) and the Endangered Species Act.

19 Thomas Ehrlich, Legal Pollution (New York Times, Feb. 8, 1976 (Magazine), p. 17); Richard B. Stewart, Reconstitutive Law, vol. 46, Maryland Law Review (1986), pp. 86, 101.

20 Orts, supra note 7, pp. 1239–41.

21 See, e.g., Richard J. Lazarus, Assimilating Environmental Protection into Legal Rules and the Problem with Environmental Crime, vol. 27, Loyola of Los Angeles Law Review (1994), p. 867 (describing the enormous increases in administrative resources devoted to environmental prosecutions and the controversy surrounding greater reliance on environmental criminal enforcement); Judson W. Starr & Thomas J. Kelly, Jr., Environmental Crimes and the Sentencing Guidelines: The Time Has Come … and It Is Hard Time, vol. 20, Environmental Law Reporter (Environmental Law Institute, 1990) ¶ 10.096 (describing recent reclassification of many offenses under federal environmental statutes from misdemeanors to felonies). See also James M. Strock, Environmental Criminal Enforcement Priorities for the 1990s, vol. 59, George Washington Law Review (1991), p. 916.

22 Marianne Lavelle, Environmental Vise: Law, Compliance (National Law Journal, Aug. 30, 1993), at S1.

23 See, e.g., Eckard Rehbinder, Environmental Regulation Through Fiscal and Economic Incentives in a Federalist System, vol. 20, Ecology Law Quarterly (1993), pp. 57, 72–74.

24 Michael Wines, Tax’s Demise Illustrates the First Rule of Lobbying: Work, Work, Work, (New York Times, June 14, 1993), at Al (recounting the failure of Clinton’s proposal for an energy tax even after key concessions were made to various interest groups, including tax breaks for ethanol, diesel fuel, home heating oil, electricity, and even coal).

25 See, e.g., Terry L. Anderson & Donald R. Leal, Free Market Environmentalism (1991); Symposium, Free Market Environmentalism, vol. 15, Harvard Journal of Law and Public Policy (1992), p. 297. Coase’s classic article is R.H. Coase, The Problem of Social Cost, vol. 3, Journal of Law and Economics (1960), p. 1.

26 James E. Krier, The Pollution Problem and Legal Institutions: A Conceptual Overview, vol. 18, UCLA Law Review (1971), pp. 429, 440.

27 Oxygen to Go on Sale in Smog-Choked Mexico City (Reuters, Feb. 7, 1991) (available on LEXIS). For an account of the terrible air pollution problems of Mexico City, see, e.g., Marjorie Miller, A Day in the Life of Mother Earth: Mexico City’s Smog (Los Angeles Times, May 26, 1992), p. 9.

28 B-52’s, Planet Claire, B-52’s (Island Records 1979).

29 Clean Air Act Amendments of 1990, Pub. L. No. 101–549, § 401, 104 Stat. 2399 (1990). For an overview, see William H. Rodgers, Jr., vol. 1, Environmental Law: Air and Water Pollution (Supp. 1994), pp. 64–74. See also Jeanne M. Dennis, Comment, Smoke for Sale: Paradoxes and Problems of the Emissions Trading Program of the Clean Air Act Amendments of 1990, vol. 40, UCLA Law Review (1993), p. 1101.

30 For a conceptual analysis of this problem, see Dieter Helm & David Pearce, Economic Policy Towards the Environment: An Overview, in Dieter Helm, ed., Economic Policy Toward the Environment (1991), pp. 1, 15.

31 High profile cases brought by the FTC include enforcement actions resulting in consent decrees concerning advertisements of “chlorine-free” coffee filters made of “recycled” paper, In re Mr. Coffee, Inc., 1993 FTC LEXIS 62 (1993), and “biodegradable” trash bags, In re North Am. Plastics Corp., 1993 FTC LEXIS 61 (1993); In re Mobil Oil Corp., 1992 FTC LEXIS 187 (1992).

32 For further description and an illustration of these environmental labels, see Orts, supra note 7, pp. 1246–51, fig. 2.

33 See, e.g., Jamie A. Grodsky, Certified Green: The Law and Future of Environmental Labelling, vol. 10, Yale Journal on Regulations, vol. 147, (1993), pp. 218–26 (discussing some of the technical problems with life-cycle analysis); Committee on Antitrust and Trade Regulation, Association of the Bar of City of New York, Private Certification of Manufacturers Environmental Claims, vol. 48, Rec. pp. 25, 29–30 (Jan.-Feb. 1993) (discussing controversy over life cycle analysis).

34 Orts, supra note 7, pp. 1268–1313.

35 42 U.S.C. §§ 4321–70 (1988).

36 42 U.S.C. § 4332(2)(c). Michael Herz recognizes and comments on the reflexive aspect of NEPA. Michael Herz, Parallel Universes: NEPA Lessons for the New Property, vol. 93, Columbia Law Review (1993), pp. 1668, 1689–93.

37 Herz, supra note 36, p. 1700, n.151 (noting “central concern” about whether complying with NEPA’s requirements “precedes and informs the agency decision or follows and justifies it”). Compare Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 350 (1989) (expressing Supreme Court’s view that NEPA is “almost certain” to “affect the agency’s substantive decision”) with Joseph L. Sax, The (Unhappy) Truth About NEPA, vol. 26, Oklahoma Law Review (1973), p. 239, (“I think the emphasis on the redemptive quality of procedural reform [represented by NEPA] is about nine parts myth and one part coconut oil.”) See also Symposium on NEPA at Twenty, vol. 20, Environmental Law (1990), p. 447.

38 I discuss details of these enforcement policies in Orts, supra note 7, pp. 1275–81.

39 Defense lawyers roundly criticized the enforcement policies concerning environmental auditing as unenforceable and even somewhat deceptive. See, e.g., Jed S. Rakoff, et al., Corporate Sentencing Guidelines: Compliance and Mitigation (1994), § 8.02[1] (“While ostensibly encouraging audits, [EPA’s 1986] Policy Statement [on Environmental Auditing] provides no assurance that the results would not be used against the defendant, nor that the existence of the auditing would create any defense or limitation on liability, nor that the audits would be protected from disclosure at EPAs discretion for use in criminal prosecution.”); Terrell E. Hunt & Timothy A. Wilkens, Environmental Audits and Enforcement Policy, vol. 16, Harvard Environmental Law Review (1992), pp. 365, 370 (“lawyers recommend extreme discretion and caution in the use of environmental audits”). See also Robert W. Darnell, Note, Environmental Criminal Enforcement and Corporate Environmental Auditing, vol. 31, American Criminal Law Review (1993), pp. 123, 124 (“Executives are now hesitant to authorize audits that the government could, under federal environmental auditing policy, use as a roadmap for establishing knowledge in a criminal prosecution.”).

40 60 Fed. Reg. 16,875 (Apr. 3, 1995).

41 U.S. Sentencing Commission Advisory Panel, Final Draft Environmental Guidelines (Nov. 1993). See also John C. Coffee, Jr., Environmental Crime and Punishment (New York Law Journal, Feb. 3, 1994), p. 5

42 For development of this point, see Orts, supra note 7, pp. 1281–84.

43 42 U.S.C. (1994), §§ 13101–09; Pollution Prevention Strategy, vol. 56, Fed. Reg. 7849 (1991). See also Stephen M. Johnson, From Reaction to Proaction: The 1990 Pollution Prevention Act, vol. 17, Columbia Journal of Environmental Law, (1992), p. 153.

44 Participating companies in the 33/50 program voluntarily reduced emissions of seventeen toxic chemicals 33 percent by 1992 and 50 percent by 1995. See, e.g., Seema Arona & Timothy N. Carson, A Voluntary Approach to Environmental Regulation: The 33/50 Program, Resources (Summer 1994), p. 6.

45 See, e.g., Bert Black & David H. Hollander, Jr., Forced Volunteerism: The New Regulatory Push to Prevent Pollution, vol. 16, Chemical Regulation Reporter (BNA) (Jan. 22, 1993), p. 38.

46 More than 280 Companies Join Effort to Reduce, Reuse, Recycle Waste, EPA Says, vol. 25, Environmental Law Reporter (BNA) (July 22, 1994), p. 529.

47 Council Regulation 1836/93, Allowing for Voluntary Participation by Companies in the Industrial Sector in a Community Eco-management and Audit Scheme, 1993 O.J. (L 168) 1. This regulation went into effect in April 1995. I examine this regulation in detail in Orts, supra note 7, p. 1287–1313, and recommend adoption in a revised form of a version of the EMAS in the United States, id., p. 1313–27.

48 Council Regulation 1836/93, art. 1, 1993 O.J. (L 168) 1, 2

49 Id. art. I, at 4.

50 Id. arts. 6, 7, at 4–5.

51 Louis Loss, Fundamentals of Securities Regulation (1988), p. 7.

52 Joel Seligman, The Transformation of Wall Street (1982), p. 185.

53 See, e.g., J.I. Case v. Borak, 377 U.S. 426 (1962); Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083 (1991).

54 I advocate allowing citizens’ suits in proposed an American EMAS, although it must be kept in mind that adding teeth to a voluntary EMAS system requires corresponding increases in the positive incentives for businesses to participate. See Orts, supra note 7, pp. 1324–27 (discussing enhanced incentives for an American EMAS system, such as strict evidentiary protection of internal environmental audits and perhaps even immunity from criminal prosecution for participating businesses).

55 Ian Ayres & John Braithwaite, Responsive Regulation: Transcending the Deregulation Debate (1992), pp. 54–132.

56 Cf. Gunther Teubner, After Legal Instrumentalismo, in Gunther Teubner ed., Dilemmas of Law in the Welfare State (1986), p. 299.

57 See Philip Selznick, The Moral Commonwealth: Social Theory and the Promise of Community (1992); Philip Selznick, Self-Regulation and the Theory of Institutions in Gunther Teubner et al. eds., Environmental Law and Ecological Responsibility: The Concept and Practice of Ecological Self-Organization (1994), pp. 396–402. See also Phillipe Nonet & Philip Selznick, Law and Society in Transition: Toward Responsive Law (1978).

58 Selznick, The Moral Commonwealth, supra note 57, p. 236.

59 Holmes Rolston, III, Environmental Ethics: Duties to and Values in the Natural World (1988), p. 325 (emphasis in original).

60 Id. at 317 (emphasis in original).

61 Assessing competing ethical theories in the context of reflexive environment law lies outside the scope of this article. However, it appears that utilitarian approaches inform both command-and-control and market-based approaches. Contractarian approaches appear highly compatible, at least in spirit, with a reflexive model of environmental regulation. See, e.g., Thomas Donaldson & Thomas W. Dunfee, Integrative Social Contracts Theory: A Communitarian Conception of Economic Ethics, vol. 11, Economics and Philosophy (1995), p. 85; Thomas W. Dunfee & Thomas Donaldson, Contractarian Business Ethics: Current Status and Next Steps, vol. 5, Business Ethics Quarterly (1995), p. 173.