The Contractual State

With the Clinton administration, the ethos of environment policy changed again. Large-scale polluters, such as smelters and refineries, had largely been controlled, but small sources, such as automobiles, trucks, lawn mowers, bakeries, cleaners, gas stations, and other modest businesses cumulatively added massively to pollution problems. Global threats, such as climate change, habitat loss, and fisheries depletion, implicated the average consumer, for example, those who drive gas-guzzling cars. Programs to reinvent regulation proposed to bring into the public sector innovations—such as information sharing, technology benchmarking, incentives, systems-thinking, and collaborative engagement— that had been introduced successfully in private enterprise.

EPA established several banking, offset, and pollution trading regimes that allowed firms to avail themselves of the cheapest ways to reduce pollution and gave them incentives to develop more efficient control technologies. Markets for trading pollution allowances, which capped total emissions at reduced levels, lowered lead and, especially, sulfur dioxide emissions, which were halved in a decade. Environmentalists could purchase and thus retire emission allowances, which sold at surprisingly low prices. EPA through Project XL engaged corporations in collaborative and negotiated rulemaking. Federal and state agencies also inspired decentralized community and individual action by providing information; for example, EPA's Green Lights program encouraged a transition from energy-intensive incandescent bulbs to far more efficient compact fluorescent ones. Similarly, toxic release inventories, eco-labeling, right-to-know regulations, and environmental certification programs illustrate other ways information can initiate local, decentralized improvements.

With the greater and easier availability of information, individuals and firms have begun to internalize environmental norms. Frustration with agency inaction, moreover, has led citizen and industry groups to try to collaborate to resolve their conflicts. Successful habitat conservation plans— the most famous concerns the desert tortoise—emerged from civil society, that is, from negotiation among concerned groups. Environmentalists and ranchers, usually at each other's throats, joined to petition the government to establish a market in tradable grazing rights that environmentalists can retire by buying them from ranchers. Officials have initiated successful stakeholder negotiations as well, for example, to protect visibility in the Grand Canyon, although agency intransigence and turf-mindedness—the Forest Service has opposed stakeholder governance of national forests, as in Quincy, California—can also undermine collaborative agreements.

In trying to decentralize decision making through collaboration, negotiation, information, incentive-formation, and so on, regulatory agencies have gotten ahead of legislation. Since 1990, Congress has enacted no major new environmental regulatory statutes nor significantly amended old ones. Since 1970, only two environmental statutes—the Right-to-Know Act of 1986 and the SO2 trading program in 1990 CAA Amendments—depart from the standard top-down, command-and-control, one-size-fits-all approach. The trend toward more reflexive, adaptive, and collaborative approaches to conflict-resolution remains tenuous and vulnerable, since it lacks a statutory basis.

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