Environment, Nov 2002 v44 i9 p11(14)

Policy options for improving environmental management in the private sector.

Cary Coglianese; Jennifer Nash.

Full Text: COPYRIGHT 2002 Heldref Publications

SOME OF THE MOST critical environmental problems resulting from human activity have improved considerably in the past three decades--a period during which environmental regulation in most developed countries has made substantial headway. However, challenges remain in providing more sensible and effective environmental protection. The current system of environmental regulation in the United States often has been criticized for its high cost and inflexibility, and at times it has proved ineffectual. Some problems that have been targeted by existing regulations--such as urban smog--persist at levels that exceed current environmental standards. Moreover, existing regulations do not fully address all pervasive environmental concerns, including such varied issues as hazardous air pollutant emissions from dry-cleaning businesses, fertilizer runoff from farms, and the use and disposal of certain consumer products. To address both new and long-standing environmental concerns, policy makers are looking for cost-effecti ve policy tools that can achieve further improvements.

One tool on the policy agenda is the environmental management system (EMS). An EMS is a set of rules developed by the managers of an organization to help it meet internally established environmental goals. Although the specific features of these systems vary, they generally require managers to establish an environmental policy or plan; implement it by assigning responsibility, providing resources, and training workers; check progress through systematic auditing; and act to correct problems. In some cases, an organization's EMS draws in outsiders such as independent auditors to help monitor environmental performance or members of the community to help set goals and develop plans. (1)

The demonstrated improvement that some firms have made with EMSs raises the question of whether--and how--the U.S. government should seek to expand EMS use in the private sector. How should government respond to developments in private-sector environmental management, and what are the benefits of implementing EMSs?

Unlike regulatory standards established by government agencies, an EMS places responsibility for decisionmaking about how to improve environmental performance upon the people with the most information about industrial processes and potential control methods: private-sector managers. The strategies that managers adopt through the process of developing EMSs have the potential to be less costly and more effective than those they would adopt in response to government-imposed technology standards. (2) Moreover, by placing responsibility at the company level, there may be a greater "buy-in" from the entire management team as well as a greater commitment by employees to carry out environmental responsibilities. (3)

By giving companies the flexibility to create their own approaches to environmental protection, EMSs can promote innovation and social learning. Many of these systems require firms to improve continually--in anticipation that they will identify innovative solutions that actually go beyond compliance with existing environmental regulations. EMSs provide opportunities for diverse and experimental approaches to achieving regulatory goals, which may lead to solutions that government standard-setters would never consider. (4)

In addition to giving private-sector managers responsibility and flexibility, EMSs also may be able to help government agencies overcome some of the limitations created by scarce enforcement resources. Given current budgetary levels, environmental agencies simply cannot oversee every firm's regulatory compliance on a regular basis. EMSs may be able to help by enlisting managers and third-party auditors to monitor compliance more regularly. The internal and external review processes embedded within EMSs may therefore enable government to target its enforcement resources more effectively. (5)

Because of their potential, EMSs recently have emerged on the environmental policy agenda in the United States, and the U.S. Environmental Protection Agency (EPA) has explicitly endorsed their use in the private sector. (6) EPA and many states are exploring ways in which public policy might encourage the broader, more effective use of EMSs by the private sector. Under some circumstances, it may be appropriate for government to mandate the use of management systems, but in others it may be best for government to step back and leave the development of these systems to the private sector. Perhaps the most attractive strategy to date has been for government to take action between these two extremes, by providing limited incentives that encourage--but do not require--firms to develop and implement EMSs. Options to increase the use of EMSs, like any policy options, should be carefully assessed to determine how well they can achieve policy makers' goals under the prevailing social and economic conditions. Analysis of each option reveals its potential as well as its limitations in achieving better and less costly environmental outcomes.

A Tool to Improve Environmental Performance

An EMS consists of a regulatory structure that arises from within an organization, and it represents a collection of internal efforts at policymaking, planning, and implementation that yields benefits for the organization as well as potentially significant benefits for society. (7) Through the effective use of an EMS, a firm's managers can gather information about the environmental impacts of its facilities, raise workers' awareness of their facility's environmental policy, formalize job responsibilities related to environmental protection, and focus attention on compliance obligations. (8)

EMS Standards

Many firms design their systems to comply with EMS standards developed by trade associations or standard-setting organizations. Several major trade associations have developed standards for their members, including the American Chemistry Council's Responsible Care program and the American Forest and Paper Association's Sustainable Forestry Initiative. (9) In addition, beginning in the early 1990s, national standards organizations in various countries began developing their own guidelines for how EMSs should be implemented. Around the same time, the European Commission developed a standard for EMS implementation known as the Eco-Management and Audit Scheme. The plethora of EMS standards developed around the world led the International Organization for Standardization (ISO) to adopt a series of environmental management standards in 1996. ISO 14001 has become the most widely recognized standard for EMS design throughout the world. (10) (See the box on this page for more information on ISO standards.)

All of these standards direct firms to engage in systematic management through what is commonly called a "plan-do-check-act" approach. However, EMS standards developed by trade associations and standard-setting organizations can differ significantly in what they require of participating firms. For example, the standards for designing an EMS can differ regarding the following four factors:

Environmental objectives. To comply with ISO 14001, a firm needs to commit itself only to making improvements in environmental management--not striving to meet ambitious goals or even necessarily achieving compliance with existing government regulations. In contrast, to meet the requirements of the National Association of Chemical Distributors, firms must make environmental concerns "a priority in ... planning for all existing and new operations, products, processes, and facilities" and must "comply with relevant environmental, health and safety regulations." (11)

The role of third-party auditing. Firms can self-certify that they have followed the ISO 14001 standard, but if a firm would like to be registered with its nation's standard-setting body as having met these requirements, it must secure an accredited third-party auditor to verify that its EMS meets ISO requirements. In contrast, the American Textile Manufacturers Institute's EMS standards are entirely self-enforcing.

The role of community involvement. Community consultation is an integral part of an EMS that meets the American Chemistry Council's Responsible Care standards, but such consultation is not required by ISO 14001.

Consequences for failure to comply. If a firm fails to comply with the EMS standards created by the American Forest and Paper Association, it risks expulsion from the association. In contrast, a firm failing to meet the standards of the American Petroleum Institute trade association faces the less formal sanction of other members' disapproval. A firm failing to meet the requirements of ISO 14001 only risks having its ISO certification (if any) withdrawn.

Effective Implementation

Many firms have used management systems to improve their environmental performance, but the overall environmental record for companies that implement EMSs reflects the variability in EMS standards. (12) Some managers fail to implement their systems aggressively, making only token improvements or even using the EMS simply as a public-relations effort. (13) Research on the performance of EMSs has only recently begun to emerge, but one extensive study that compared data across European companies found no statistically significant relationship between adoption of a formal EMS and improved environmental performance. (14) However, it is difficult to conclude from such a study that EMSs have no effect. Especially when EMS use is voluntary, statistical analysis is complicated because large firms that pollute the most from the outset may also be the ones most likely to adopt EMSs. Moreover, many observers believe that EMSs are beneficial in that they enable firms to make environmental improvements. (15)

The results of these systems vary not only because of differences in EMS standards but also because managers encounter different incentives and constraints in using them. For companies with managers who believe that strong environmental performance will enhance their financial performance, an EMS can be a powerful tool for making significant strides. (16) For companies in which environmental performance is perceived as peripheral to business success, an EMS may be used simply to formalize the status quo. Managers' commitment to achieving environmental improvement is likely to matter far more than the mere presence of an EMS, because it is managerial commitment that determines how diligently the firm implements its EMS. Similarly, firms that adopt EMSs because they must do so to comply with customer requirements or a government mandate may well achieve more modest results than those that decide on their own to adopt EMSs to advance their organizational objectives. In evaluating public policy options, it is imp ortant to distinguish between the mere presence of an EMS and its effective and committed use to achieve significant improvements.

Policy Options

Government efforts to increase the use of EMSs are still in their early stages. To encourage firms to implement EMSs, policy makers have three main options. The first is to leave the development of management systems to the private sector without government guidance or intervention. The second option is for government to mandate the adoption of EMSs, at least in certain sectors or to address particular problems. The third option is for government to pursue a "middle way" between the two extremes, encouraging but not requiring the adoption of certain types of EMSs.

One factor that constrains analysis of and decisionmaking on these policy options is a general paucity of experience and research on how the systems work under a variety of situations. Much of the research that has been conducted to date examines EMSs in a small number of firms that adopted them voluntarily. (17) In these firms, the motivation to improve compliance presumably already existed and gave rise to the firm's choice to adopt an EMS. Because EMS adoption by companies has not occurred randomly, studies of a select group of early adopters generally do not support reliable inferences about how a wider set of companies would perform if they adopted EMSs. The current variability of performance suggests that EMSs operate differently in various firms and that they may work differently when adopted to meet customer requirements or government mandates than when voluntarily adopted. Additional empirical research on how the systems work in a variety of circumstances will be needed to understand fully how they c an contribute to environmental protection.

Private Efforts

EMS adoption is proceeding rapidly in many sectors through the efforts of private organizations and without government taking any direct role. As noted earlier, several trade associations require that their members adopt EMSs. In addition, some automotive companies now require all of their parts suppliers to implement ISO-certified EMSs. Suppliers to General Motors must become compliant by the end of 2002. (18) Ford suppliers needed to have at least one facility certified by the end of 2001, and all 5,000 or so supply plants that ship parts to Ford must be fully compliant by mid-2003. (19) Other manufacturing companies are imposing or contemplating similar requirements, giving rise to the prospect that EMS use will spread throughout entire supply chains in some sectors. Facing the risk of losing their purchase agreements or membership in trade associations, companies are likely to respond by adopting certifiable management systems.

Policy makers could let this trend continue without any government intervention beyond continued efforts to enforce existing environmental regulations. Any government program to encourage EMSs would be associated with some cost--for program development, staffing, and implementation--at a time when federal and state budgets for discretionary environmental programs are limited and some are declining. Funds used to support EMS initiatives might be better spent on improving conventional regulations or enforcing existing regulations.

Moreover, EMS standards developed by a few trade associations have become significantly more stringent in recent years. In June 2002, for example, the American Chemistry Council's board of directors voted to require that all member companies establish performance goals and have their Responsible Care management systems externally verified. (20) Similarly, in 1998 the directors of the National Association of Chemical Distributors established the requirement that all members have their EMS programs externally verified, and in 2001 the association began to require a more rigorous external review of environmental performance. This trend toward more stringent standards suggests that private approaches can be responsive to public demands for greater accountability-but at the same time can offer more flexibility than government requirements.

Leaving EMS development entirely to the private sector may be appealing, but policy makers need to be cognizant of the fact that outside of a few trade associations, the major private-sector trend is toward developing systems that meet ISO standards. To date, an estimated 35,800 organizations worldwide have certified and registered their EMSs as meeting the ISO 14001 requirements; 1,650 of these organizations are located in the United States. (21) Although this trend may be promising, questions have arisen about whether EMSs developed under ISO 14001 will result in significantly improved environmental performance. (See Table 1 on this page for a summary of ISO 14001.) As discussed earlier, nothing in ISO 14001 actually requires organizations to establish ambitious environmental objectives. (22) The goals that firms set for themselves under ISO 14001 can be simply to achieve marginal reductions in environmental impacts--or just to improve the efficiency with which the firms process regulatory paperwork. An org anization may be certified to the standard as long as work practices are in alignment with its goals and all other aspects of its EMS comply with the standard.

A recent study of automotive facilities conducted prior to the decisions by Ford and General Motors to require their suppliers to adopt EMSs found that minimal reductions were the norm following ISO 14001 adoption. (23) The study compared automotive facilities that had adopted EMSs under ISO 14001 with those that had not and found that environmental performance, in terms of toxic releases and regulatory compliance, was about the same in the two groups. (24) However, a recent study of electronics firms that had adopted ISO 14001 showed that these firms generally were able to catch up to the best practices in their industry, especially if they initially produced large quantities of toxic emissions. (25)

Considering both of these initial studies together, it can be inferred that--at best--ISO 14001 can help ensure that all facilities of a company or in a supply chain attain a minimal level of environmental performance. If this is the case, a policy option that leaves EMS adoption entirely to the private sector might not spur substantial improvements. By placing responsibility for setting environmental goals and objectives upon managers within a firm, EMSs can certainly make managers more capable of understanding and controlling their environmental impacts, yet they will not necessarily be more willing to take action when changes require substantial investment. (26) It is reasonable to expect substantial variation in companies' performance, even with relatively far-reaching private-sector requirements such as those adopted by General Motors and Ford. Although private-sector demand for EMSs can motivate many facilities to become ISO 14001 certified, improved environmental performance does not necessarily follo w.

A further limitation of relying exclusively on private-sector EMS efforts is that companies in many sectors probably will find little incentive to adopt an EMS. So far, ISO 14001 adoption in the United States has been concentrated in the chemical, electronics, and automotive sectors. Some facilities from other industries also have obtained certification, but relatively few of the polluting facilities in the service sector have chosen to become certified. Service industries such as dry cleaning and printing have substantial environmental impacts that are difficult for government to control using conventional regulatory approaches. As a result, many highly polluting firms might continue operating without systematic attention to their environmental impacts. If EMS adoption is left entirely to the private sector, managers of many of these companies probably will continue to run their businesses without the benefit of a formal EMS. (See the box on page 16 for information about the use of EMSs by small businesses such as these.)

Government Mandates

Although EMSs currently are conceived as alternatives to conventional regulation, in principle they could be incorporated into government mandates. In other fields of regulation such as securities, banking, and food safety, government agencies require operational procedures comparable to management and auditing systems. (27) Even in the environmental arena, government requirements to engage in planning and other management activities can be found in several contexts, including settlements of enforcement actions, regulations requiring chemical companies to engage in risk-management planning, and state pollution-prevention laws. (28)

The advantage of a government mandate is that it can be imposed on all firms. If the goal is simply to increase the number of firms using EMSs, a mandate probably is the best option. However, just as firms may respond to customer mandates begrudgingly, their responses to government mandates may turn out to be only token or ritualistic. The specter of EMS regulations and possible sanctions for noncompliance may breed resistance from companies, especially if their managers do not see the need for such systems. Firms may perceive EMS requirements simply as one more unreasonable regulatory burden imposed by government and may react by complying only minimally with the rules. (29) Mandating EMSs might dramatically increase the number of firms using them without necessarily increasing the number of firms using them effectively. (30)

On the other hand, if EMSs tend to take on a life of their own once implemented--such that even firms that begrudgingly undertake them later realize how beneficial they can be--regulation might be a sensible way to get firms to overcome their initial resistance. Requiring firms to engage in systematic planning and management effectively compels them to invest more resources in a search for cost-effective opportunities for environmental improvement. When required to engage in planning, firms might identify ways to reduce risks that otherwise would have gone overlooked. (31)

Government also could mandate the use of EMSs for particular sectors or industries that typically have the worst environmental records. For example, under the Clean Air Act, EPA requires certain large industrial facilities to develop specific risk-management plans to prevent chemical accidents. (32) This is an archetypal case for management-based regulation because preventing chemical accidents calls for systematic, facility-specific practices that cannot be addressed readily through traditional regulation.

To help predict the impact of government EMS mandates, it is instructive to examine the management-based requirements that regulators have imposed on companies for reducing their use of toxic materials. In the late 1980s, more than a dozen states passed laws requiring facilities to develop plans to reduce their use or generation of toxic materials. (33) Massachusetts adopted one of the most notable of these laws in 1989. The Massachusetts Toxics Use Reduction Act (TURA) aimed to reduce the use of toxic chemicals in the state by 50 per-cent from 1987 to 1997--but without requiring facilities to implement toxic use-reduction projects or meet specific reduction goals. (34) Instead, the act required managers at approximately 600 facilities in the state to report publicly on their use of toxic materials and undertake a planning process to identify opportunities for reduction.

While Massachusetts does not characterize its mandated toxic use-reduction plans as environmental management systems, TURA essentially incorporates the main elements of an EMS. Managers of TURA-regulated facilities must submit a policy statement every two years that includes goals for the reduction of toxic use and waste. Plans must describe the industrial processes in which listed chemicals are used, the costs of the toxic chemicals, and options for reducing their use. Managers are encouraged to establish planning teams that enlist workers in analyzing. production processes and identifying opportunities for improvement. Plans must be signed by an officer of the firm as well as by a toxic use-reduction planner who has been certified by the state.

An evaluation commissioned by Massachusetts's Toxics Use Reduction Institute in 1996 concluded that managers of facilities covered by the act significantly increased planning to reduce the use of toxics from 1990 to 1996. For example, before 1990, 48 percent of the 434 facilities surveyed tracked quantities of chemicals used, but 90 percent did so in 1996. (35) Even though the act does not require facilities to implement their plans (only to create them), 81 percent of the facilities reported having implemented at least a few toxic use-reduction projects that they had identified during the planning process. (36) In addition, participating managers perceived the benefits of the program-in terms of reducing facility operating expenses-to exceed the costs of planning, certification, and implementation. (37)

Massachusetts's experience with TURA suggests that a mandatory approach, with appropriate sanctions for noncompliance, can provide substantial incentives for firms to use EMSs. Nearly all managers complied with the mandate to develop plans, and most implemented at least part of them. Data compiled by the state's Toxics Use Reduction Institute indicate that facilities covered under the law reduced their use of toxic chemicals by 41 percent from 1990 to 1999 and generated 57 percent less waste per unit of production. (38)

However, because comparable data have not been compiled for similar facilities not governed by the mandate, the degree to which these improvements should be credited to the act is far from clear. Many New England states saw marked declines in toxic emissions during the same period, even in the absence of toxic use-planning requirements. (39) Moreover, although initial declines were significant, in recent years environmental improvements as a result of TURA planning may have begun to taper off, and firms now may be treating compliance with TURA as a matter of routine paperwork. (40) In addition, government proposals to expand TURA-type requirements to other environmental concerns generally have gone nowhere due in part to industry resistance.

Experience with TURA suggests that mandates indeed would increase firms implementation of EMSs and might help some firms improve their environmental performance. The overall environmental impact of such requirements is much harder to assess, but the outcome of TURA seems to indicate that when such planning requirements are imposed, at least some companies will respond to achieve meaningful change, even though others are more likely just to go through the motions.

A Middle Way

A third policy option is to chart a "middle way" in which government does not mandate adoption but offers incentives for firms to use EMSs. These incentives include reducing firms' implementation costs (by providing technical assistance, for example) or increasing the benefits of adoption (by offering public recognition or regulatory flexibility, for example). (41) This allows government to encourage the private sector without creating the resistance that can accompany a mandate for adoption. The attractiveness of this middle-way option has led to numerous state and federal programs that offer firms incentives to develop effective management systems. (42)

At the federal level, EPA's Office of Enforcement and Compliance Assistance initiated a task force in 1996 to determine the relationship between EMS adoption and regulatory compliance. One project that grew out of this initiative was the Environmental Leadership Program (ELP), which offered recognition and enforcement forbearance to facilities that exhibited qualities of leadership such as compliance management and environmental management systems, independent audits, public participation, and pollution prevention. (43) Around the same time, EPA's Region I office launched StarTrack, a pilot program designed to test the use of EMSs, third-party certification, and public disclosure of environmental performance. (44)

Building on the ELP and StarTrack experience, in 2000 EPA launched National Environmental Performance Track to recognize and reward facilities with EMSs and good environmental track records. About a dozen states have developed similar performance tiers for above-average facilities. (45) To be admitted to these programs, a facility must have a history of sustained compliance as well as an EMS that calls for continual improvements in environmental performance. EPA requires Performance Track facilities to submit applications providing information about their current operations, confirming that their EMS meets Performance Track requirements, describing their public outreach and reporting practices, and committing to specific environmental improvements beyond those required by law. Facilities must commit to making improvements in at least four environmental areas- such as energy, water or materials use, waste generation, and air or water emissions. Within each area, EPA has identified aspects of performance that facilities must target. For instance, in the category of waste generation, facility managers must pledge to reduce solid waste, hazardous waste, or toxic releases to land. In Performance Track and several other programs, public reporting of progress toward meeting EMS targets is required. (46) Table 2 above provides the admissions requirements for Performance Track, which contrast with the requirements of ISO 14001 (see Table 1).

Both federal and state environmental agencies charged with developing middle-way programs can offer facilities the benefit of regulatory flexibility. For example, on 13 August 2002 EPA issued a notice of proposed rulemaking to provide incentives to Performance Track members. These incentives would allow large generators of hazardous waste that are Performance Track members to accumulate waste for up to 180 days without a Resource Conservation and Recovery Act permit. In addition, the proposed rule would reduce the frequency of reports required under the Clean Air Act's maximum achievable control technology provisions, and it would simplify reporting for publicly owned treatment works that participate in Performance Track. (49)

In return for meeting these requirements, facilities are offered a range of benefits, including public recognition, reduced agency monitoring, and regulatory flexibility. Facilities that meet the Performance Track criteria are also listed on EPA's web site. (47) In addition, facilities are told that they will be given a "low inspection priority status," because their EMSs should prevent compliance problems. (48) EPA retains the right to conduct an inspection if it has information that a serious problem exists, such as criminal activity or noncompliance in an area of high concern to E PA. Should a violation be found, participation in an EMS program may be construed as a good-faith effort to comply, and penalties may be reduced. The promise of regulatory flexibility could serve as a powerful incentive if federal and state agencies were authorized to make significant regulatory concessions, but putting this idea into practice has turned out to be difficult in all but the most modest regulatory changes. Agencies generally lack the authority to waive many environmental requirements, and even when they do have the authority to do so, the process of granting a regulatory waiver can be quite involved.

The difficulties associated with securing a regulatory waiver are evident in Oregon's Green Permits program, a four-tiered system of permits that offers increasing regulatory flexibility to firms that adopt EMSs and achieve other objectives. The Oregon program was based on the simple principle of rewarding firms that perform well, but the process became complicated and ultimately resulted in more than a dozen pages of regulations, including definitions of 23 terms. When accepting applications (the forms for which span two dozen pages), the state agency must proceed through notice-and-comment procedures and hold a public hearing if requested, and the state also may need to seek approval from EPA. Finally, the applicant to the program must reimburse the state about $5,000 for the costs of processing its application. Not surprisingly, to date the Oregon Green Permits program has attracted only a handful of participants. (50)

In the absence of significant and readily achievable regulatory waivers, the incentives that agencies are able to offer in middle-way programs may not be sufficient to motivate many firms to make substantial voluntary commitments. For most firms, public recognition by the government does not return enough dividends to justify making large investments in environmental improvements. Of course, incentives cannot address all concerns that firms might have. For example, federal agencies' assurances of enforcement forbearance do not protect a firm from state enforcement, and vice versa. Also, such government assurances do not protect firms against citizen suits brought by environmental organizations.

Participation in state and federal incentive programs has so far been limited. About 280 facilities participate in EPA's Performance Track. (51) State programs vary in size, from about 135 facilities in the Texas program to fewer than 10 each in the New Jersey, Oregon, and Idaho programs. (52) Together, state and federal programs engage approximately 660 facilities. (53) All of these facilities are, by definition, environmental leaders and, given the newness of the programs, most facilities probably were leaders well before the programs were established. As long as there are significant administrative hurdles to join these programs and the incentives offered are relatively weak, middle-way programs will be limited in their ability to attract large numbers of new facilities and ensure that they engage in rigorous environmental management. However, these state and federal programs are still at most a few years old. With time, it will become clearer whether and how well they can increase the effective use of EM Ss.

EMSs and the New Policy Agenda

In making space for EMSs on an everchanging policy agenda, decision makers should acknowledge the value and limitations of the available policy options. The fact that large manufacturing firms such as Ford and General Motors now require ISO 14001 certification as a condition for business and the fact that the number of ISO 14001 certifications in general is growing show that many private-sector managers see value in these systems. In firms committed to environmental quality, EMSs offer a foundation for strong performance and can help ensure consistency across different facilities within a firm.

If government leaves the growth and development of EMSs entirely up to the private sector or mandates the wider use of EMSs by regulation for particular sectors or industries, the use of EMSs will increase. However, the key issue is whether they will actually result in significant changes in firms' environmental impacts. On their own, the procedures that make up an EMS cannot ensure excellent performance. EMSs are tools that firms can use to identify and implement ways of making improvements, but they do not themselves provide incentives to invest substantial resources in pollution prevention or control.

To motivate industries to continue internalizing the costs of environmental controls, government will need to maintain the incentives provided by sensible regulatory oversight. The available research indicates that managers find the conventional methods of enforcing regulations to be a significant motivating factor in their adoption of EMSs. (54) While the middle way is promising, the specific incentives that middle-way programs have offered so far have tended to be rather limited for most firms, especially when weighed against burdensome eligibility requirements and other necessary procedures.

Policy makers interested in expanding the use of EMSs should find it reassuring that the trends already are headed in the right direction, with more firms adopting systems every year. Government's role should therefore be to support these trends in the private sector using complementary policies. Allowing the private sector to proceed on its own with the diffusion of EMSs seems at minimum an appropriate default position. Government could at least take some limited actions to remove potential disincentives for EMS development. For example, several states have sought to clear the way for facilities to internally monitor their environmental problems more systematically by adopting audit privilege laws. These laws give firms assurance that, in the absence of outright fraud or other serious improprieties, government agencies will not use the firms' own EMS record-keeping against them. (55)

The additional incentives offered through middle-way programs may make a difference at the margin for some firms, and the rise of these programs could signal regulators' tacit willingness to treat firms that have EMSs at least somewhat more favorably. Perceiving middle-way programs in this way could help bolster the prevailing trends in private-sector adoption of EMSs.

While relying on the private sector and deploying selective incentives make for a reasonable policy posture, regulators need to be realistic about what can be accomplished. Private-sector mandates are likely to yield highly varied environmental outcomes, with some firms treating their EMSs as mere formalities. Where EMS adoption remains voluntary, the firms that adopt effective systems are likely to be firms that already are more committed to environmental improvement than others in their sector. Firms that are dimly aware of their regulatory obligations or unconcerned about their impacts on the environment and the community are less likely to adopt an EMS voluntarily and may even be less likely to use one effectively when mandated by a customer or trade association. An ongoing challenge for policy makers will be to devise strategies to encourage EMS adoption and quality improvements in firms that are less committed to environmental protection.

In some circumstances, government mandates are warranted. One promising strategy already pursued by the U.S. government is to incorporate EMS mandates into the settlement agreements it reaches in regulatory enforcement actions. For example, in 2001, EPA's Region I office reached a settlement with the Massachusetts Institute of Technology over allegations of regulatory violations in its research laboratories. In addition to paying penalties, the university agreed to develop an EMS approach to addressing the hazards within its more than 2,000 laboratories. (56) The imposition of regulatory sanctions--or the threat of their imposition--as part of these agreements can motivate managers to pay greater attention to environmental regulations, and EMS requirements within them can give managers a tool with which to structure their efforts to improve environmental practices. Moreover, because the firms targeted by enforcement actions tend to be regulatory laggards, they would have much to offer society from the diligen t implementation of an EMS. Even if few firms with mandated EMSs become environmental leaders, they probably will be more likely to take into account their regulatory obligations in the future and might even outperform comparable firms that have not been compelled to develop an EMS.

Government EMS mandates also could be useful in addressing specific environmental problems that are not amenable to more traditional forms of regulatory control. A management-based regulatory approach deserves consideration for problems that have no uniform technological fix and for which it is difficult for government to measure or monitor firms' performance. (57) One example is EPA's requirement that some large industrial facilities develop risk-management plans to prevent chemical accidents. (58) Other persistent environmental problems that have proved difficult to regulate using traditional tools--such as nonpoint sources of water pollution--also may be appropriate candidates for the application of government mandates. For example, EPA currently is considering an EMS option as part of a proposed rule addressing runoff and water contamination from large animal feedlots. (59) To keep firms from dismissing such mandates as merely another meaningless paperwork burden, regulators will need to adopt clear guide lines about what constitutes effective implementation of a management system.

EMSs are promising tools that have captured the attention of both business and government. In deciding how to respond to the trend toward private-sector adoption of EMSs, public officials have several options, each of which has its own strengths and limitations. Moreover, in some cases, elements of the three main policy options can be combined to form the most effective strategy for a particular situation. The most important challenge for policy makers is to select from these options not only so that EMS adoption increases but also so that EMSs actually are implemented in ways that further public policy goals. The role of public policy remains one of providing appropriate incentives for the private sector to achieve socially desirable, efficient, and equitable environmental outcomes. In choosing among the different policy options for expanding the use of EMSs, decision makers will need to continue to focus on the goal of improved environmental outcomes and seek to expand the meaningful and effective use of EM Ss by firms throughout the private sector.

Table 1
 
Summary of the International Organization for Standardization's ISO
14001
 
Policy Objectives Requirements
 
Improve environmental Managers must establish a procedure to
performance identify the environmental impacts of
  "activities, products, and services" over
 which they have control. They must establish
 specific and measurable goals to reduce
 impacts they deem "significant" and
  programs to accomplish these goals.
 Workers must be aware of their personal
 contribution to these impacts.
 
Comply with regulations Managers must establish an environmental
  policy that includes a commitment to
 regulatory compliance, establish procedures
 that will inform them of their legal
 obligations, and set targets and objectives
  with compliance in mind. However, actual
 regulatory compliance is not required.
 
Prevent pollution ISO 14001 requires "commitment" to
 "prevention of pollution," defined to include
 pollution control.
 
Audit performance Audits must be conducted routinely to
 identify and correct violations of the system
 and must include an evaluation of the
  facility's regulatory compliance program.
 
Disclose information The only information that must be disclosed
to the public is a facility's environmental policy.
 
SOURCE: International Organization for Standardization, Technical
Committee 207, Subcommittee 1, "Environmental Management
Systems--Specification with Guidance for Use" (Geneva, 1996).
Table 2
 
Summary of the U.S. Environmental Protection Agency's Performance Track
 
Policy objectives Requirements
 
Improve  Managers must identify significant
environmental environmental impacts and commit to
performance performance improvements in at least four
 areas. These improvements must exceed
 regulatory requirements.
 
Comply with Only facilities with records of sustained
regulations compliance are eligible. The environmental
 policy must include a commitment to
 compliance, and the environmental
 management system (EMS) must include
 systems to remain in compliance. Managers
 must self-certify compliance annually.
 
Prevent In setting environmental objectives and
pollution targets, managers should consider
 preventing noncompliance, preventing
 pollution at its source, minimizing
 cross-media pollutant transfers, and
 improving environmental performance.
 
Audit Audits must be conducted routinely to
performance identify and correct violations of the EMS.
 
Disclose Managers must commit to public outreach
information to and disclose performance information
the public following a standardized format.
 
SOURCE: U.S. Environmental Protection Agency, "Performance Track
Instructions and Checklist," accessed via
http://www.epa.gov/performancetrack/apps/NEPTinstructionsfinal.pdf on 11
September 2002.
 

NOTES

(1.) For a discussion of environmental management systems (EMSs) and their implications for regulatory policy, see C. Coglianese and J. Nash, eds.. Regulating from the Inside: Can Environmental Management Systems Achieve Policy Goals? (Washington, D.C.: Resources for the Future Press, 2001).

(2.) I. Ayres and J. Braithwaite, Responsive Regulation: Transcending the Deregulation Debate (New York: Oxford University Press, 1992).

(3.) C. Coglianese and J. Nash, "Environmental Management Systems and the New Policy Agenda," in Coglianese and Nash, note 1 above.

(4.) C. Coglianese and D. Laser, "Management-Based Regulatory Strategies," in J. Donahue and J. Nye, eds., Market-Based Governance (washington, D.C.: Brookings Institution Press, 2002).

(5.) H. Kunreuther, P. McNulty, and Y. Kang, "Improving Environmental Safety through Third-Party Inspection," Risk Analysis 22 (2002): 309-18.

(6.) U.S. Environmental Protection Agency (EPA) Administrator Christine Todd whitman has declared that "it is becoming clear that EMSs, when implemented diligently, can help improve environmental performance and foster other important benefits to organizations" and that "EPA will encourage wide spread use of EMSs across a range of organizations and settings" (EPA, "Environmental Management Systems--EMS Position Statement" (15 May 2002), accessed via http://www.epa.gov/ems/policy/position.htm on 15 July 2002).

(7.) E. Orts, "Reflexive Environmental Law," Northwestern University Law Review 89 (1995): 1,227-90; and D. Fiorino, "Toward a New System of Environmental Regulation: The Case for an Industry Sector Approach," Environmental Law 26(1999): 457-88.

(8.) J. Nash, J. Ehrenfeld, J. MacDonagh-Dumler, and P. Thorens, "ISO 14001 and EPA's Region I StarTrack Program: Assessing Their Potential as Tools in Environmental Protection," in National Academy of Public Administration, Envtronment.gov: Transforming Environmental Protection far the 21st Century (washington, D.C., 2000); D. Rondinelli and G. Vastag, "Panacea, Common Sense, or Just a Label? The value of ISO 14001 Environmental Management Systems' European Management Journal 18 (2000): 499-510; R. Florida and D. Davison, "why Do Firms Adopt Advanced Environmental Practices (And Do They Make a Difference)?" in Coglianese and Nash, note 1 above; and B. Tener, ISO 14001: Lessons from Early Adopters (Arlington, Mass.: Business and the Environment, 1999).

(9.) J. Nash and J. Ehrenfeld, "Code Green: Business Adopts Voluntary Environmental Standards," Environment, January/February 1996, 16-20, 36-45.

(10.) Even some of the earlier EMS standards have been adapted to align their requirements with ISO 14001. For example, the American Chemistry Council's Responsible Care program recently was redesigned so that chemical firms can meet both Responsible Care and ISO 14001 standards with the same EMS.

(11.) National Association of Chemical Distributors, "The Responsible Distribution Process" (Arlington, Va., 1997).

(12.) J. Howard et al., "Standard or Smokescreen? Implementation of a Voluntary Environmental Code," California Management Review 42 (2000): 63-82; A. King and M. Lenox, "Industry Self-Regulation without Sanction: The Chemical Industry's Responsible Care Program," The Academy of Management Journal 43 (2000): 698-716; J. Nash and 1. Ehrenfeld, "Factors that Shape EMS Outcomes in Firms," in Coglianese and Nash, note 1 above; and R. Kagan, N. Gunningham, and D. Thornton, "Regulatory Regimes and Variations in Corporate Environmental Performance: Evidence from the Pulp and Paper Industry" (paper presented at the annual meeting of the Law and Society Association, Budapest, 2001).

(13.) King and Lenox, ibid.

(14.) Science Policy Research Unit, Science and Technology Policy Research, "Measuring the Environmental Performance of Industry," European Commission Environment and Climate Change Programme Contract No. ENV4-CT97-0655 (Sussex, U.K.: University of Sussex, 2001).

(15.) T. O'Brien, Ford and ISO 14001 (New York: McGraw-Hill, 2001); A. Schoffman and A. Tordini, ISO 14001: A Practical Approach (Oxford, U.K.: Oxford University Press, 2000); and D. Rondinelli. "A New Generation of Environmental Policy: Government-Business Collaboration in Environmental Management," Environmental Law Reporter 31(2001): 10,891.

(16.) For a cogent discussion of how firms can deliver shareholder value through improved environmental performance, see F. Reinhardt, Down to Earth: Applying Business Principles to Environmental Management (Boston: Harvard Business School Press, 2000).

(17.) R . Andrews et al., "Environmental Management Systems: History, Theory, and Implementation Research," in Coglianese and Nash, note 1 above.

(18.) F. Seelig, "Suppliers' ISO 14001: 'Opportunity,' Not Regulation," Grand Rapids Business Journal 17 (1999): 39.

(19.) R. C. Wilson, "Ford Spreads the Word about Its EMS Success," Pollution Engineering 33 (2001): 6.

(20.) L. Kusek, "ACC Members Adopt New Performance Requirements," American Chemistry Council press release (Arlington, Va., 2 June 2002).

(21.) "Certifications to ISO 14001 Continued to Sparkle in 2001," Business and the Environment 13 (2000): 3. The United States has lagged significantly behind Europe and the Asia/Pacific region when it comes to the adoption of ISO systems, but it still is experiencing a steady rate of increase in their use. See also M. Delmas, "Barriers and Incentives to the Adoption of ISO 14001 by Firms in the United States," Duke Environmental Law & Policy Forum 11(2000): 1-38.

(22.) J. Switzer et al., "ISO 14001 and Environmental Goal Setting: Promises Kept," Environmental Quality Management (Winter 1999): 1-24; R. Krut and H. Gleckman, ISO 14001: A Missed Opportunity for Sustainable Global Development (London: Earthscan, 1998); and J. Nash, "Industry Codes of Practice: Emergence and Evolution," in T. Diets and P. Stern, eds., New Tools for Environmental Protection: Education. Information, and Voluntary Measures (Washington, D.C.: National Academy Press, forthcoming).

(23.) D. H. Matthews, "Assessment and Design of Industrial Environmental Management Systems" (Ph.D. diss., Carnegie Mellon University, Department of Civil and Environmental Engineering, Pittsburgh, 2001), 47-48.

(24.) Ibid. Of course, as noted earlier, it seems likely that the types of firms that voluntarily adopted EMSs in this study would have been those with greater pollution at the outset, which may serve to bias these statistical results. It also is possible that some firms that have not adopted EMSs meeting the ISO standard have adopted other, equally effective EMSs.

(25.) M. V. Russo, "Institutional Change and Theories of Organizational Strategy: ISO 14001 and Toxic Emissions in the Electronics Industry" (paper presented at the 60th annual meeting of the Academy of Management, Toronto, 2000).

(26.) Ayres and Braithwaite, note 2 above.

(27.) Coglianese and Lazer, note 4 above.

(28.) C. Coglianese and D. Lazer, "Management-Based Regulation:) Using Private Sector Management to Achieve Public Goals" (faculty working paper, John F. Kennedy School of Government, Harvard University, Cambridge, Mass., 2001).

(29.) E. Bardach and R. Kagan, Going by the Book: The Problem of Regulatory Unreasonableness (Philadelphia: Temple University Press, 1982).

(30.) Moreover, a sharp increase in the number of firms seeking to implement EMSs could potentially overwhelm the current capacity for qualified third-party verification, thereby reducing the effectiveness of one critical method of ensuring the credibility and effectiveness of EMSs.

(31.) The authors make no claims here about how widespread the potential win-win opportunities available might be--a point that has garnered some debate in the relevant literature. See M. Porter and C. van der Linde, "Green and Competitive: Ending the Stalemate' Harvard Business Review 73 (1995): 120-34; and K. Palmer, W. Oates, and R Portney, "Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm?" Journal of Economic Perspectives 9, no. 4 (1995): 119-32. The point here is simply that there likely will be some opportunities that would otherwise be overlooked because of the cost of acquiring the necessary information but that once an investment in risk identification and planning is compelled by regulation, some of these costs effectively will become sunk costs to the firm.

(32.) K. Chinander, P. Kleindorfer, and H. Kunreuther, "Compliance Strategies and Regulatory Effectiveness of Performance-Based Regulation of Chemical Accident Risks," Risk Analysis 18 (1998): 135-43.

(33.) T. Greiner, "Tiered Approach to EMS" (presentation at the annual meeting of the Multi-State Working Group on Environmental Management Systems, Orlando, Fla., 2002).

(34.) Toxics Use Reduction Institute (TURI), "Overview of TURA," accessed via http://80-www.turi.org.myaccess.library.utoronto.ca/turadata/WhatIsTURA/OverviewOfTURAA.html on 10 September 2002.

(35.) M. Becker and K. Gieser, "Evaluating Progress: A Report on the Findings of the Massachusetts Toxics Use Reduction Program Evaluation" (Lowell, Mass.: TURI, 1997).

(36.) Ibid.

(37.) R. Currier and C. Van Atten, Benefit-Cost Analysis of the Massachusetts Toxics Use Reduction Act (Lowell, Mass.: TURI, 1997).

(38.) TURI, "TURA Data--Results to Date," accessed via http://80-www.turi.org.myaccess.library.utoronto.ca/turadata/Suceess/ResultsToDate.html on 19 July 2002.

(39.) B. Karkkainen, "Information as Environmental Regulation: TRI and Performance Benchmarking, Precursor to a New Paradigm?" Georgetown Law Journal 89 (2001): 257-370.

(40.) Greiner, note 33 above.

(41.) C. Coglianese, "Policies to Promote Systematic Environmental Management," in Coglianese and Nash, note I above.

(42.) M. Crow, "Beyond Experiments," The Environmental Forum, May/June 2000, 19-29.

(43.) Nash, Ehrenfeld, MacDonagh-Dumler, and Thorens, note 8 above.

(44.) J. Nash, "Tiered Environmental Regulation: Lessons from the StarTrack Experience" (paper presented at the conference "Voluntary, Collaborative and Information-Based Policies: Lessons and Next Steps for Environmental and Energy Policy in the United States and Europe," Cambridge, Mass., 2001). StarTrack ceased operating in 2000.

(45.) EPA, "National Environmental Performance Track: State Programs," accessed via http://www.epa.gov/performancetrack/partners/linkage.htm on 15 July 2002. See also J. Speir, "EMSs and Tiered Regulation: Getting the Deal Right," in Coglianese and Nash, note I above.

(46.) EPA, "Performance Track Instructions and Checklist," accessed via http://www.epa.gov/performancetrack/apps/NEPTinstructionsfinal.pdf on 11 September 2002.

(47.) EPA, "National Environmental Performance Track: Members," accessed via http://www.epa.gov/performancetrack/particip/index.htm on 19 July 2002.

(48.) S. K. Lowrance and T. J. Gibson," National Environmental Performance Track Program," EPA memorandum, 23 April 2002, accessed via http://www.epa.gov/performancetrack/Performancetrackmemo4_23_02.pdf on 10 September 2002.

(49.) EPA, "Proposed Rule for the National Environmental Performance Track Program," Federal Register 67, no. 156 (13 August 2002): 52, 674.

(50.) Oregon Department of Environmental Quality, "Oregon Green Permits Program:' accessed at http://www.deq.state.or.us/programs/greenpermits/gpupdate.htm on 15 July 2002.

(51.) EPA, note 47 above.

(52.) EPA, note 45 above.

(53.) Ibid.

(54.) Andrews et al., note 17 above; and Florida and Davison, note 8 above.

(55.) Coglianese, note 41 above.

(56.) B. Daley, "MIT to Pay $550,000 in EPA Complaint," The Boston Globe, 19 April 2001, B3. For an excellent account of the integration of regulatory standards in university laboratory environments, see P. Ewick and S. Silbey, "The Architecture of Authority: The Place of Law in the Space of Science," in A. Sarat and T. Kearns, eds., The Place of Law (Ann Arbor: University of Michigan Press, forthcoming).

(57.) C. Coglianese and D. Laser, note 4 above.

(58.) Chinander, Kicindorfer, and Kunreuther, note 32 above.

(59.) EPA, "Proposed NPDES Permit Regulation and Effluent Limitation Guidelines for Concentrated Animal Feeding Operations," Federal Register 66, no. 9 (12 January 2001): 2,960. In addition, EPA has announced that it is exploring EMSs as a regulatory alternative in new water-quality rulemaking, affecting the meat and poultry processing industry (EPA, "Proposed Effluent Limitation Guidelines for Wastewater Discharges from Meat and Poultry Processing Facilities," Federal Register 67, no. 37 (25 February 2002): 8,582.

RELATED ARTICLE:

ISO Standards for Environmental Management Systems

The International Organization for Standardization (ISO) was established in 1947 in Geneva, Switzerland, to promote the development of voluntary standards that would facilitate international trade. ISO is a nongovernmental organization made up of national standards bodies from more than 100 countries. Since its formation, ISO has developed more than 10,000 standards that govern products--such as the size of paper. the format of credit cards, and the symbols on automobile dashboards. ISO standards ensure that products share uniform characteristics no matter where they are produced.

In the late 1970s, the focus of ISO's standard setting began to shift. While product standards helped to ensure that specific products performed as expected, they did not address the operations of the facilities that manufactured them. ISO committees set to work on a series of quality-management standards known as ISO 9000. The ISO 9000 standards were drafted to help ensure that facilities had in place competent management processes that were capable of manufacturing high-quality products, regardless of how business conditions might change. Thousands of organizations in Europe, Asia, and the United States quickly adopted these standards.

In the early 1990s, ISO began work on a series of environmental management standards. However, leaders in business and government were concerned that the national environmental management standards under development in England, Ireland, France, and Spain, as well as European Union standards, could result in unintended barriers to international trade as each country developed its own potentially inconsistent requirements for manufacturers. As part of the preparations for the United Nations Conference on Environment and Development in Brazil in 1992, business leaders called on ISO to provide guidance for sustainable business development. This task, combined with the success of ISO 9000, led ISO in 1992 to establish subcommittees to work on aspects of environmental management, including environmental management systems (EMSs), auditing, labeling, performance evaluation, and life-cycle assessment. The work of these committees resulted in a series of standards known as the 14000 series, published beginning in 199 6. The first of these standards, ISO 14001, established criteria for EMSs. It is the only standard in the 14000 series to which a facility may be certified as having an EMS in compliance with ISO criteria.

The American National Standards Institute (ANSI) represents the United States in ISO. Work on ISO 14000 takes place under the auspices of the U.S. Technical Advisory Group, which includes business, government, environmental advocacy, and academic organizations. The advisory group currently is working on proposed changes to ISO 14001--the first such revision since its publication. Many of the proposed changes are designed to make ISO 14001 more compatible with ISO's recently revised quality-management standards. Additional areas under debate include ISO 14001's requirements for regulatory compliance and public disclosure of information.

Environmental Management Systems in Small Businesses

Small businesses make up the vast majority of firms in the United States. In 1999, more than 99 percent of businesses employed fewer than 500 people, and 89 percent employed fewer than 20 people. (1) Although small businesses are a critical part of the economy, their environmental impact is largely unknown. It is often assumed that small firms cause small impacts. But photo processors, dry cleaners, printers, and other businesses that utilize hazardous materials and generate significant quantities of waste often operate out of small establishments. Their large collective numbers may mean that their environmental impacts are substantial, particularly at local levels. (2)

Developing responses to the environmental impacts of small businesses becomes problematic because their managers often lack the human and financial resources needed to address environmental concerns. Moreover, responsibility for environmental performance may not be directly assigned to any individual. Managers who are focused on matters directly related to their business's survival may not be aware of their environmental impacts or regulatory requirements. Furthermore, many small businesses are not required to apply for environmental permits, and government rarely has sufficient resources to enforce the regulations that are in place for small companies, due to the sheer number of them.

Given the potentially significant cumulative environmental effects of small businesses and the challenges associated with addressing them through conventional regulatory means, there is considerable interest in the possible role of environmental management systems (EMSs) in small firms. Most of the early adopters of the ISO 14001 standard for EMSs in the United States have been large facilities, but small facilities are beginning to adopt it as well. (3) Some small businesses that have implemented formal systems such as ISO 14001 have achieved organizational, financial, and human-resources benefits that are similar to those cited by managers of large and medium-sized firms that have implemented EMSs. (4) EMS implementation has helped small firms improve overall quality management and internal communication, and managers claim that implementation has helped them attract new customers and satisfy customer requirements. EMSs have improved these firms' environmental performance, including regulatory compliance. (5)

Despite the potential advantages that EMSs promise small firms, efforts at implementation can face significant barriers. Managers often are skeptical of the benefits of improving their environmental performance. (6) Surveys suggest that environmental performance often is of little concern to customers of small firms. (7) Lack of motivation or human resources can result in the interruption of EMS implementation as resources are diverted to more pressing business issues.

Several state governments have begun to offer incentives to small firms to implement EMS frameworks. In Massachusetts, for example, the Department of Environmental Protection implemented the Environmental Results Program (ERP) in 1997 for small firms in the dry cleaning and photo processing sectors. Officials at the Department of Environmental Protection describe the program as offering an EMS-type approach for small firms. Through ERP, the state government provides step-by-step guidance for achieving compliance and preventing pollution and requires managers to self-certify that their firms have met all regulatory requirements. In the past, government largely overlooked the environmental activities of small businesses in these sectors. By using an EMS framework, the Massachusetts Department of Environmental Protection has improved compliance without inspecting every facility, which would not be feasible given the large number of firms. (8) In coming years, the strategy developed in Massachusetts might be ado pted by other states. Rhode Island, Florida, Maryland, Tennessee, and the District of Columbia are developing ERP-type programs for a variety of small-business sectors.

(1.) U.S. Census Bureau. "Statistics about Business Size (including Small Business) from the U.S. Census Bureau," accessed via http://www.census.gov/epcd/www/smal1bus.htm1 on 5 September 2002.

(2.) R. Hillary, introduction to Small and Medium-Sized Enterprises and the Environment, by R. Hillary, ed. (Sheffield. U.K.: Greenleaf Publishing Limited. 2000).

(3.) J. Nash, J. Ehrenfeld, 3. MacDonagh-Dumler, and P. Thorens. "ISO 1400t and EPA's Region I StarTrack Program: Assessing Their Potential as Tools in Environmental Protection," in National Academy of Public Administration. Environment. gov: Transforming Environmental Protection for the 21st Century (Washington, D.C., 2000).

(4.) R. Hillary, "EMAS, ISO 14001 and the Smaller Firm," in Hillary, ed., note 2 above.

(5.) Ibid.

(6.) W. Tunnessen, "The Mentoring of Small and Medium-Sized Enterprises," in Hillary, ed., note 2 above.

(7.) Hillary, note 4 above.

(8.) S. April and T. Greiner. "Evaluation of the Massachusetts Environmental Results Program," in National Academy of Public Administration, note 3 above. Under the Environmental Results Program, a random set of inspections is completed both before and after the required compliance certification. They give the Department of Environmental Protection a snapshot of performance for all firms in the sector. The department also uses self-certification data to target particular firms for inspection. Firms that fail to certify are inspected as well.

Cary Coglianese is associate professor of public policy at Harvard University's John F. Kennedy School of Government and chair of the Regulatory Policy Program at the school's Center for Business and Government in Cambridge, Massachusetts. His interdisciplinary research focuses on issues of regulation and administrative law, with a particular emphasis on the empirical evaluation of alternative regulatory strategies and the role of disputing and negotiation in regulatory policymaking. An affiliated scholar at the Harvard Law School and the director of the Kennedy School's Politics Research Group, Coglianese teaches public law, environmental policy, and regulatory strategy. He is a recipient of she American Political Science Association's Edward S. Corwin Award for his research on environmental litigation. Jennifer Nash is director of the Regulatory Policy Program at Harvard, where she manages research projects on new directions in regulation. She also has served as associate director of the Technology, Busines s, and Environment Program at the Massachusetts Institute of Technology and as executive director of the Delaware valley Citizens' Council for Clean Air. She has written articles on the role of industry self-regulation in environmental performance improvement and government's response to private-sector environmental initiatives. The authors' book Regulating from the Inside: Can Environmental Management Systems Achieve Policy Goals? (see note 1 below) was the first to examine the public policy implications of emerging trends in private-sector environmental management. The authors may be reached by email at cary_coglianese@harvard.edu or jennifer_nash@harvard.edu.

CARY COGLIANESE, coauthor of "Policy Options for Improving Environmental Management in the Private Sector' which begins on page 10, is associate professor of public policy at Harvard University's John F. Kennedy School of Government and chair of the Regulatory Policy Program at the school's Center for Business and Government. His interdisciplinary research focuses on issues of regulation and administrative law, with a particular emphasis on the empirical evaluation of alternative regulatory strategies and the role of disputing and negotiation in regulatory policymaking. An affiliated scholar at the Harvard Law School and the director of the Kennedy School's Politics Research Group, Coglianese teaches public law, environmental policy, and regulatory strategy. He received the American Political Science Association's Edward S. Corwin Award for his research on environmental litigation. JENNIFER NASH is director of the Regulatory Policy Program at Harvard, where she manages research projects on new directions in r egulation. She also has served as associate director of the Technology, Business, and Environment Program at the Massachusetts Institute of Technology and as executive director of the Delaware Valley Citizens' Council for Clean Air. She has written articles on the role of industry self-regulation in environmental performance improvement and government's response to private-sector environmental initiatives.