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1 '2 Government-Sponsored Voluntary Programs for Firms: An Initial Survey Janice Mazurek U.S. regulatory agencies and industry view voluntary agreements (VAs) as an increasingly popular alternative to conventional air, water, waste, and toxic control laws. Some observers view VAs as potentially more effective, efficient, and less adversarial than traditional command-and-control approaches. Since 1988, 42 voluntary initiatives have been developed at the federal level by the U.S. Environmental Protection Agency (EPA) and industrial trade organizations such as the American Chemistry Council. As of 1998, more than 7,000 corporations, small businesses, local governments, and nongov- ernmental organizations participated in public voluntary and negotiated programs administered by the EPA, according to the agency's most recent estimates (U.S. Environmental Protection Agency, 1998~. The EPA had projected the number would increase to approximately 13,000 in 2000 (See Figure 13-1~. In contrast, more than 350 such agreements are in place in Organization for Economic Co-operation and Development (OECD) member countries (Dowd and Boyd, 1998~. European examples include the Dutch covenant system and the Danish CO2 Agreements. The OECD (1999) compared VAs in Europe, Japan, and the United States. Although it is difficult to generalize across political economies and cultures, the report concludes that VAs in the United States ap- pear to represent a special case because they must operate within the context of a stringent, complicated, and often adversarial legal context. Despite their growing popularity, a 1997 study commissioned by the U.S. Congress found EPA voluntary initiatives to be "marginal" to the agency's regu- latory activities (National Academy of Public Administration [NAPA], 1997~. Similarly, a 1996 study commissioned by 21 U.S. companies found the EPA's major voluntary programs "peripheral, both to business and to society" (Davies 219
220 Number of firms 14,000 12,000 - 1 0,000 8,000 6,000 4,000 2,000 - GOVERNMENT-SPONSORED VOLUNTARY PROGRAMS FOR FIRMS 13,055 3,275 1,944 400 4,489 6,695 6,882 1991 1992 1993 1994 1995 1996 2000* FIGURE 13-1 Participation in EPA voluntary programs, 1991-2000. Sources: EPA (1997a, 1998, 2002~. NOTE: ~ Projected. Year 2000 participation number extrapolated from trends between 1991 and 1996. Note that actual data for years 1997 through 2000 were not developed by EPA. EPA estimates the total number of partners in 2002 to be about 11,000. et al., 1996~. Observers agree that the existing legislative framework limits the EPA' s ability to use voluntary efforts to improve environmental regulation (NAPA, 1995, 1997; U.S. General Accounting Office [GAO], 1997a). In a study of the EPA's most prominent voluntary agreements, Davies et al. (1996) conclude: "There is no way around the difficult task of trying to legislate a better system." To illustrate how laws limit VA effectiveness and efficiency, this chapter is organized into three sections. The first section uses Leveque's (1996) typology to illustrate how and under what circumstances the EPA and industry apply VAs. In the United States, most VAs are between the EPA and individual firms. In general, the EPA and industry use voluntary agreements to (1) address risks that U.S. laws and regulations fail to adequately target, and (2) integrate individual air, water, waste, and tonics laws (NAPA, 1995, 1997; Davies and Mazurek, 1998~. The subsequent section shows how federal pollution control laws and regulations impede effective VA implementation. Another section pairs assess- ment data developed by implementing regulatory agencies with independent stud- ies to describe the performance of three prominent voluntary initiatives: Green Lights, the 33/50 program, and Project XL.
JANICE MAZUREK 221 In most cases, poorly designed program evaluation methods make it diffi- cult to attribute environmental changes exclusively to voluntary programs (NAPA, 1997; GAO, 1997b). Because little data exist to demonstrate environ- mental effectiveness, it is virtually impossible to assess whether or to what de- gree voluntary programs affect abatement cost. To supplement what is known about VA effectiveness, this chapter draws from a small but growing literature to examine three of the most prominent U.S. public voluntary programs. They include Green Lights; the 33/50 program, and Project XL (GAO, 1994, 1997a, 1997b; INFORM, 1995; Arora and Cason, 1995; NAPA, 1995, 1997; Davies et al., 1996; Storey et al., 1996; Kappas, 1997; Dowd and Boyd, 1998; Boyd et al., 1998~. Appendix 13-A provides an overview of each program. The literature underscores the degree to which the lack of data and evalua- tion methods complicates assessment. Some data exist with which to assess the administrative cost of voluntary programs. This chapter concludes that to pro- mote transparency and acceptance of voluntary programs, public agencies must develop better evaluation methods. PUBLIC VOLUNTARY PROGRAMS PREVAIL VAs in the United States consist primarily of what Leveque (1996) defines as "public voluntary" programs, the focus of this chapter.3 The EPA indepen- dently or in tandem with other federal agencies administers 33 of the 42 volun- tary federal initiatives (see Table 13-1~. Of these, 31 are purely public voluntary programs. Two, Project XL and the Common Sense Initiative (CSI), are hy- brids. Project XL involves negotiation between the EPA and individual industri- al facilities. The EPA uses CSI to develop voluntary agreements with industry sectors. Voluntary programs, including 33/50 and Green Lights, were first popular- ized under the former Bush Administration to promote more market-oriented incentives for environmental performance. Today, most of the EPA's voluntary programs are designed to reduce greenhouse gas emissions or to adopt voluntary goals established under the Pollution Prevention Act of 1990. Voluntary climate change programs are designed to provide participants with technical information in order to promote energy conservation. For example, the EPA designed the Green Lights program in 1991 to encourage the installation of energy-efficient lighting technologies in commercial and industrial buildings. Voluntary pollution prevention programs are designed to reduce a subset of toxic chemicals released and transferred by manufacturers. For example, the 33/ 50 program, initiated under the Bush Administration in 1991 and concluded in 1995, encouraged manufacturers to voluntarily reduce emissions of 17 target chemicals by 50 percent. A primary goal of negotiated strategies is to improve efficiency by reducing regulatory burden. In practice, Project XL aims to reduce administrative costs associated with reporting, monitoring, and permitting.
222 GOVERNMENT-SPONSORED VOLUNTARY PROGRAMS FOR FIRMS TABLE 13-1 Voluntary Agreement Categories PUBLIC VOLUNTARY Climate Change Pollution Prevention Negotiated Agreements 1. AgStar Program (1993) 1. 33/50 (1991) 1. Project XL (1995 2. Climate Wise (1993) 2. Design for the Environment 2. Common Sense (1991) Initiative (1994) 3. Chlorofluorocarbon 3. Environmental Accounting Substitutes (post- 1993) Project (1992) 4. Coalbed Methane Outreach 4. Environmental Leadership Program (1994) 5. Commuter Choice (post- 1993) 5. Green Chemistry (1992) 6. Energy Star Buildings (1994) 6. Indoor Environments Program (1995) 7. Energy Star Homes (1995) 8. Energy Star Office Equipment (1993) 9. Energy Star Transformer Program (1995) 10. Environmental Stewardship Initiative (1997) 11. Green Lights (1991) 12. HFC-23 Reductions (post- 1993) 13. Landfill Methane Outreach Program (1994) Natural Gas Star (1993, 1995) 15. Ruminant Livestock Methane Efficiency Program (1993) 16. Seasonal Gas Use for the Control of Nitrous Oxide (post- 1993) 17. State and Local Climate Change Outreach Program (1993) 18. Transportation Partners (1995) 19. The U.S. Initiative on Joint Implementation (1993) 20. Voluntary Aluminum Industrial Partnership (1995) 21. WasteWise (1992) 7. Pesticide Environmental Stewardship Program (1993) 8. Waste Minimization National Plan (1994) 9. Water Alliances for Voluntary Efficiency (WAVE) (1992) 10. Voluntary Standards Network (1993) Sources: EPA (1996a, 1997b); Dowd and Boyd (1998). Note: Programs listed in boldface are discussed in this chapter.
JANICE MAZUREK 223 Public voluntary programs in the United States use information subsidies, technical assistance, and/or public recognition to encourage participants to vol- untarily reduce pollution. Public recognition may be provided through awards, press announcements, and the use of product logos. Among U.S. VAs, only Project XL contains legally binding provisions. This is because only Project XL promises to provide firms with relief from existing laws and regulations. In exchange, participants must be able to demonstrate environmental performance superior to status quo standards. Typically, the le- gally binding portions of an XL agreement are contained as a separate document, such as a permit to ensure the agreement's enforceability. Nonbinding provi- sions appear in what is known as a "Final Project Agreement (FPA)." Enforce- able provisions carry sanctions such as compliance actions and fines. Failure to meet nonbinding commitments results in FPA termination. Most EPA voluntary initiatives such as Green Lights require participants to sign nonbinding letters of agreement such as a Memorandum of Understanding (MOU), which imposes no sanction for program withdrawal. Failure to meet the MOU terms means that the company can no longer claim the benefits of partici- pation, which usually includes public recognition. The threshold for participa- tion in 33/50 was even lower. The program simply asked potential participants to send the EPA a letter indicating their willingness to reduce the 17 targeted chemicals. In the case of 33/50, firms were free to reduce as much or as little as they saw fit. POLLUTION CONTROL LAWS IMPEDE IMPLEMENTATION In theory, the primary disadvantage of VAs arises from the collective nature of their benefits participants have a strong incentive to act as free-riders. Vol- untary agreements also may act to exclude competitors and restrain trade. Such practices may privately benefit participants, but not society in general, by reduc- ing supply and increasing cost. Another potential problem is that industry may use VAs to influence and capture the details of environmental policy. In prac- tice, such problems have not yet been observed because laws impede VA imple- mentation. In particular, negotiated strategies such as Project XL, which are designed to provide participants with regulatory relief, are problematic. For public voluntary programs in particular, environmental laws impede implementation because Congress and the courts require the EPA to focus attention and resources on meeting legal requirements and judicially imposed deadlines (NAPA, 1995~. The persistence of pollution control laws also makes it difficult for groups that traditionally act as adversaries to effectively harness cooperative strategies (Davies et al., 1996~. Although cooperative strategies tend to be more inclusive than status quo approaches, they are also less trans- parent.
224 GOVERNMENT-SPONSORED VOLUNTARY PROGRAMS FOR FIRMS Negotiated Agreements Implementation of Project XL is hampered because Congress has not given the EPA the authority to provide firms with relief from existing laws and regula- tions and because potential participants run the risk of civil lawsuits (NAPA, 1995, 1997; Davies et al., 1996~. The results are twofold: First, the lack of regulatory flexibility has led to suboptimal outcomes, with projects that are large- ly possible under existing regulations. For example, the EPA cannot authorize companies to reduce abatement costs via plant-level pollutant trades. The sec- ond problem is procedural. When government or trade associations fail to pos- sess legal authority, they can act only by achieving some degree of consensus. This situation gives each participant a potential veto power and leads to large, sometimes intractable transaction costs. Reliance on consensus-based methods also fails to maximize outcomes. Instead, they tend to result in goals that repre- sent the lowest common denominator on which all parties agree. In the extreme- ly adversarial context of U.S. environmental regulations, consensus is typically difficult to achieve (Davies et al., 1996~. Project XL's limitations stem more directly from uncertainties regarding its legality. As long as the EPA lacks the authority to grant firms relief from laws, firms face the risk of civil lawsuits. However, the time and resources required to negotiate the first three XL agreements were higher than forecast due to proce- dural problems. Under Project XL, the EPA agreed to give up "letter of the law" compliance with all applicable regulations in return for environmental perfor- mance exceeding what traditional regulation could bring. Because the experi- ment involves negotiation, it was understood that initial transaction costs to in- dustry, to regulators, and to public participants would be high for all parties. It was hoped that the benefits in cost reductions accorded by increased compliance flexibility would more than make up for delays and costs of negotiations. Concerns regarding the legality of Project XL resulted in participation rates lower than EPA originally envisioned. Although the EPA originally had hoped to admit 50 firms to Project XL, since 1995 the agency has approved 46 all of which are underway (EPA, 2000~. Fourteen additional projects are in various stages of development or negotiation, and 30 proposals have been withdrawn or rejected. As mentioned, questions regarding the legality of XL projects also have resulted in proposals that fall largely within the scope of existing laws. As a result, environmental benefits are likely to be lower than originally envisioned. Although XL projects largely are possible under current laws, environmen- tal groups nonetheless worry that XL projects could set precedents that would weaken existing laws and regulations. For example, at Intel's XL effort in Arizona, local participants agreed to provide Intel with relief from air permitting requirements in exchange for a set of binding and voluntary environmental com- mitments. The local community supported the plan. However, 130 nonlocal environmental organizations and individuals signed a petition in protest of the
JANICE MAZUREK 225 agreement. It has been suggested that national environmental groups protested the Intel XL plan because they were not invited to participate in the formal 6- month project negotiation (NAPA, 1997~. The EPA reasoned that only parties directly affected by the project outcome should participate in the bargaining process (EPA, 1996c). To summarize, the EPA and U.S. industry employ VAs to address the short- comings of pollution control laws. However, the persistence of pollution control laws impedes VA implementation, particularly of industry-led efforts and public projects that employ negotiation (Boyd et al., 1998~. As a result, voluntary approaches remain largely "marginal" to federally mandated air, water, waste, and toxic control programs. Implementation of voluntary agreements may be improved by taking into account more fully the legal uncertainties associated with attempts to circumvent laws. However, it is likely that the effectiveness of VAs in the United States will require legislative remedy. Implementation problems have led to lower-than-expected environmental results for all VA categories. Among the different types of VAs employed in the United States, programs designed to reduce greenhouse gas emissions and a subset of toxic chemicals have contributed to emissions declines. However, poor evaluation methods likely caused the EPA to overstate the environmental effectiveness of both climate change and prevention programs. VA PERFORMANCE This section draws from a small but growing literature that examines the three most prominent U.S. voluntary programs: Green Lights, the 33/50 pro- gram, and Project XL. Although the EPA reports that each of these programs was a success, independent studies report otherwise (GAO, 1994, 1997b; IN- FORM, 1995; Arora and Cason, 1995; NAPA, 1995, 1997; Davies et al., 1996; Storey et al., 1996; Dowd and Boyd, 1998; Boyd et al., 1998~. This section briefly reviews the results of independent studies to illustrate that poor program evaluation methodology makes it difficult to assess the success of voluntary programs. Green Lights The experience of the Green Lights program illustrates best uncertainties surrounding VA program measurement and performance. The EPA reports that 2,300 Green Lights participants have experienced rates of return of up to 50 percent (see Table 13-2~. The agency also reports that total energy savings translate into $100 million dollars per year (EPA, 1996a). However, the U.S. General Accounting Office (GAO) finds that poor assessment methods caused the EPA to initially overestimate the effectiveness of Green Lights (GAO, 1997b).
226 GOVERNMENT-SPONSORED VOLUNTARY PROGRAMS FOR FIRMS TABLE 13-2 Participants, Funding, and Other Details About Green Lights Targeted Gas(es) Carbon Dioxide Type of participants Number of participants FY 1996 funding (million $) Greenhouse Gas (GHG) reductions through FY 1995 Million Metric Tons of Carbon Equivalent (MMTCE) GHG reductions in 2000 MMTCE Business and government 2,308 $20. 1 0.6 3.9 Source: U.S. General Accounting Office (1997b). GAO questioned the basis of the EPA's emission reduction estimates for Green Lights. GAO also questioned the extent to which Green Lights was re- sponsible for adoption decisions among a quarter of the program's participants. GAO found that 593 of the 2,308 Green Lights participants represented compa- nies that were likely to install energy-efficient lighting even in the absence of Green Lights. The subset consisted of companies that manufacture, sell, and install lighting products. Combined, the 593 companies contributed to about 6 percent of total emissions reductions attributed by the EPA to Green Lights. Finally, GAO found evidence to suggest that a substantial amount of floor space was upgraded before the Green Lights program was well established. GAO based its findings on a national survey of commercial buildings conducted by the Department of Energy's Energy Information Administration (EIA). The EIA survey found that 43 percent of commercial floor space had lighting conserva- tion features in the years prior to EPA implementation of Green Lights. The 33/50 Program GAO faulted the EPA's 33/50 assessment methods for many of the same reasons it faulted the EPA's climate change assessments: Poor assessment meth- ods caused the EPA to initially overestimate program effectiveness (GAO, 1997b). The EPA points to the 33/50 program as one of the agency's most successful voluntary initiatives. The initiative did reduce toxic emissions. How- ever, GAO (1994) and two nonprofit organizations (Citizen Fund, 1994; IN- FORM, 1995) found that the EPA overstated the success of the 33/50 program. Moreover, there is no evidence to suggest that participants used prevention rath- er than control methods to achieve 33/50 program goals. According to the EPA, the 33/50 program's interim and final emissions reduction goals were both met a year ahead of schedule (EPA, 1996c). The EPA calculated 33/50 program reductions for the 17 chemicals by aggregating reduc-
JANICE MAZUREK TABLE 13-3 Emissions and Transfer Declines, Participants and Nonparticipants 227 Years 33/50 Program Participants Nonparticipants 1991-1994 -49% -30% Source: EPA (1996c). lions from all reporting firms. By this method, the EPA found that participants reduced the targeted chemicals by 590 million pounds in 1991 and by 757 million pounds in 1994. In 1995, releases and transfers for the 17 target chemicals totaled 664 million pounds, a 55.6-percent reduction from the program's 1988 baseline. The EPA reports that between 1991 and 1994, reductions in releases and transfers among program participants outpaced nonparticipant reductions by 19 percent (see Table 13-3), but the actual figure may be even lower (EPA, 1996c).45 GAO, however, found that the EPA incorrectly attributed emissions reduc- tions to the 33/50 program. GAO researchers found evidence to suggest that companies had made substantial reductions prior to 33/50's implementation. GAO also faulted the EPA's decision to use 1988 emissions as a baseline against which to compare performance under 33/50. GAO's findings were reinforced by another study which found that prior to 33/50's implementation, about 83 per- cent of all facilities had started to make reductions in 33/50 program chemicals (Citizen Fund, 1994~. Researchers from INFORM, a nonprofit environmental research organiza- tion, similarly found that 31 percent of 33/50 program participants already had initiated reduction activities prior to 1991. Based on these findings, GAO rec- ommended that EPA only consider reductions achieved between 1991 and 1994. Table 13-4 shows how the 33/50 program's results change when the baseline is modified from 1988 to 1991. From this perspective, 33/50 program chemical emissions fell by only 204 million tons (as opposed to 757) by 1994 a 27- percent, rather than a 51-percent, decline (Davies et al., 1996~. GAO estimated that about 38 percent of 33/50 program reductions were made by nonparticipating companies (GAO, 1994~. EPA's (1996c) estimates TABLE 13-4 Baseline Selection and 33/50 Program Results Reduction Goal/Year 1994 Result (1988 baseline) 1994 Result (1991 baseline) 33% by 1992 40% 12% 50% by 1995 51% 28% Source: Adapted from Davies et al. (1996).
228 GOVERNMENT-SPONSORED VOLUNTARY PROGRAMS FOR FIRMS TABLE 13-5 Production Related Waste Declines, 33/50 and Nonprogram Chemicals Years 33/50 Program Chemicals Nonprogram Chemicals 1991-94 -1% 9% Source: EPA (1996c). are slightly lower. The EPA found that about 26 percent (196 million pounds) of reductions attributed to 33/50 were made by nonparticipants. The EPA nonethe- less concludes that 33/50 influenced nonparticipants to make such reductions. Moreover, between 1991 and 1994, the waste declines achieved were of chemi- cals not covered by the program (see Table 13-5~. The 33/50 program's ancillary goal was to promote pollution prevention. However, GAO found no evidence to suggest that 33/50 promoted prevention measures, as opposed to less favorable strategies such as abatement (GAO, 1994~. INFORM (1995) similarly found 33/50's impact on prevention to be question- able. INFORM found 33/50's prevention goals ineffectual because the EPA failed to require participants to link reported reductions to the use of prevention methods. Project XL As in the case of 33/50, the calculation of environmental benefits under Project XL is complicated by poor baseline measures. The best example is Intel Corporation's XL project in Arizona. The world's largest microprocessor manu- facturer negotiated with the EPA for a specialized air permit to facilitate frequent production changes. To achieve refinements and optimize its production process, Intel must modify process chemistries up to 35 times a year and equipment 5 times a year. However, the manufacturer's ability to make refinements in a timely manner is threatened by air permitting provisions. The facility must obtain air permit approval each time it makes a manufacturing change. To address these issues, Intel under Project XL sought a 5-year air permit that approved chemical and equipment changes in advance. The binding, en- forceable air permit is part of a larger package of Project XL commitments to reduce water use and waste generation at the company's newest manufacturing facility in Phoenix. The air permit covers emissions of conventional and hazard- ous air pollutants at Intel' s new facility, and gives the manufacturer the ability to construct an additional manufacturing facility without having to secure a new permit. In exchange, Intel pledged to accept air pollution caps for the Phoenix facility set lower than the requirements of the Clean Air Act Amendments of 1990 (see Table 13-6~.
JANICE MAZUREK 229 TABLE 13-6 Intel's Project XL Emissions and Two Baselines Pollutant (Tons/Per Year) Federal Requirements for Minor Sources 1994 Plant Air Permit Project XL Site Permita Carbon monoxide <100 59 49 Nitrogen oxide <100 53 49 Sulfur dioxide <250 10 5 Particulate matter-10 <70 7.8 5 Total volatile organic <100 25 40 compounds Hazardous air <25 aggregate; 5.5 10 total organic-10 pollutants (HAPs)b for any individual 10 total inorganicC HAP Source: U.S. EPA (1996b). a The emissions levels under the XL permit column are for two plants, or the entire site. b HAPs are those listed in Section 112(b) of the federal Clean Air Act, as amended; the 10-ton-per- year limits for total organic HAPs and total inorganic HAPs assume that more than one HAP will be emitted from the site. c If a single HAP is emitted from the site, the emissions limit is 9.9 tons per year; based on Intel's modeling exercise and Arizona Ambient Air Quality Guidelines, the permit establishes a separate limit for phosphene, at 4 tons per year, and sulfuric acid at 9 tons per year, to be included in the aggregated combined inorganic HAP emissions plant site emissions limit. Boyd et al. (1998) considered various types of costs and benefits registered as part of Intel's XL air permit. Cost and benefit categories include environmen- tal benefits, abatement costs, and transaction costs. They also examined poten- tial benefits associated with reducing permit-based delays in production. Over- all, they found that the air permit could raise abatement costs for Intel and increase environmental benefits over a standard air permit baseline, although there is ample room for debate over both of these conclusions. At the time, the Intel XL air permit applied to a new plant and to a second manufacturing facility that only existed on paper. Because one facility was new, and the other remained in blueprint form, the site lacked an emissions history with which to craft a baseline, or base case to determine what emissions would have been in the absence of Project XL. EPA and Intel XL project stakeholders decided that absent historic data, the theoretical maximum under the Clean Air Act Amendments of 1990 constituted an appropriate baseline. Nonlocal environmental groups objected to the use of this baseline measure, claiming that it failed to constitute environmental perfor- mance "superior" to the status quo. National environmental groups encouraged the EPA to develop an industry air emissions benchmark against which to com- pare how well the Intel facility actually performed. The EPA attempted such a
230 GOVERNMENT-SPONSORED VOLUNTARY PROGRAMS FOR FIRMS calculation, but concluded that the exercise was complicated because of the lack of industrywide air emissions data (EPA, 1996c). In response to criticism from environmental groups, Intel and the EPA adopted as binding a set of voluntary ambient air pollution guidelines issued by the state of Arizona. Boyd and colleagues (1998) conclude that precise measurement of the XL air permit' s incremental effects is likely to be difficult, if not impossible. This is because of the site-specific nature of the XL air permit. It is also because of the complex effects that any form of regulation including command and control- can have on the private sector. Although it is difficult to isolate the effects of the XL air permit with precision, analyses of such effects can provide suggestive evidence on the social welfare effects of the XL agreement. CONCLUSIONS VA assessment is hampered by program novelty, lack of data, and weak metering and evaluation methods. As Harrison shows in Chapter 16 of this volume, evaluating voluntary programs is challenging. In most cases, it is diffi- cult to attribute environmental changes exclusively to voluntary programs. Par- tially because of the lack of environmental data, virtually no studies have been developed to demonstrate whether voluntary approaches are efficient. Some data illustrate administration and compliance costs. The Intel case suggests that Project XL may confer significant competitive advantages to Intel, but that the magnitude of the effect is impossible to measure. Assessment data that have been developed suggest that the primary benefit of VAs may be intangible and, in any event, difficult to measure. Participants in 33/50 and Project XL all cite public opinion and/or regulatory goodwill as sig- nificant benefits. Improved goodwill may indirectly lower costs associated with permitting and reporting. Goodwill may allow influential firms to reduce regu- latory adoption of more stringent regulation by agencies. Soft factors also may indirectly reduce administrative and abatement costs. At a minimum, VAs such as Project XL have the potential to promote inter- action among groups that act under status quo laws as adversaries. In the ab- sence of explicit legal authority, industry, the EPA, and interested stakeholders must achieve consensus regarding project goals to minimize the potential for citizen lawsuits. In this regard, negotiated VAs in theory provide more opportu- nities for stakeholder participation than the status quo. In practice, though, im- plementation is hampered by the lack of clearly defined administrative, monitor- ing, and participatory procedures. Poor monitoring data have caused unilateral and negotiated approaches in particular to lack credibility among environmental groups and some industries. To promote greater trust and greater public partici- pation, agencies must develop and use more robust monitoring and reporting measures to provide confidence that VA participants do deliver environmental results that are superior to those of conventional regulation.
JANICE MAZUREK 231 NOTES 1 The U.S. Department of Energy administers about 20 voluntary climate change programs that have been examined elsewhere (Storey et al., 1996; Dowd and Boyd, 1998). 2 For an analysis of several prominent state voluntary programs, see Beardsley (1996). 3 Leveque (1996) identifies three VA types: public voluntary, unilateral, and negotiated agree- ments. Public voluntary schemes refer to nonmandatory rules developed by a government body such as the EPA. Unilateral commitments refer to programs established by industry to encourage firms to achieve environmental improvements. Negotiated agreements refer to contracts between public authorities and industry. In contrast to public voluntary efforts, negotiated agreements contain spe- cific targets and are legally binding. 4 The 19-percent figure is relative to releases and transfers only from participating firms, not total 1991 releases and transfers. The 19-percent difference in reductions by participating firms constitutes an 11-percent reduction relative to the total releases and transfers of 33/50 chemicals in the 1990 reference year. The total releases and transfers figure is a more appropriate baseline because it was the goal of the 33/50 program to reduce all discharges of 33/50 chemicals, not just those by a subset of firms. 5 I am indebted to Kathryn Harrison at the University of British Columbia for making this distinction. REFERENCES Arora, S., and T.N. Cason 1995 Why Do Firms Overcomply with Environmental Regulations? Understanding Partici- pation in EPA's 33/50 Program. Discussion paper 95-38. Washington, DC: Resources for the Future. Boyd, J., A. Krupnick, and J. Mazurek 1998 Intel 's XL Permit: A Framework for Evaluation. Discussion paper 98-11. Washington, DC: Resources for the Future. Citizen Fund 1994 Pollution Prevention or Public Relations? Washington, DC: Citizen Fund. Davies, J.C., and J. Mazurek 1998 Pollution Control in the United States: Evaluating the System. Washington, DC: Re- sources for the Future/Johns Hopkins University Press. Davies, J.C., J. Mazurek, N. Darnall, and K. McCarthy 1996 Industry Incentives for Environmental Improvement: Evaluation of U.S. Federal Initia- tives. Washington, DC: Global Environmental Management Initiative. Dowd, J., and G. Boyd 1998 A Typology of Voluntary Agreements Used in Energy and Environmental Policy. Of floe of Policy and International Affairs. Washington, DC: U.S. Department of Energy. INFORM 1995 Toxics Watch 1995. New York: INFORM. Kappas, P.D. 1997 The Politics, Practice and Performance of Chemical Industry Self-Regulation. Doctoral dissertation in political science. University of California, Los Angeles. Leveque, F. 1996 Environmental Policy in Europe - Industry, Competition and the Policy Process. Chel- tenham, Eng.: Edward Elgar. National Academy of Public Administration (NAPA) 1995 Setting Priorities, Getting Results: A New Direction for EPA. Washington, DC: NAPA.
232 GOVERNMENT-SPONSORED VOLUNTARY PROGRAMS FOR FIRMS 1997 Resolving the Paradox of Environmental Protection. Washington, DC: NAPA. Organization for Economic Co-operation and Development (OECD) 1999 Voluntary Approaches for Environmental Policy: An Assessment. Paris: OECD. Storey, M., J. Dowd, G. Boyd, and T. van Dril 1996 Demand Side Efficiency: Voluntary Agreements with Industry. Working Paper 8, pre- pared for Annex I Expert Group on the United Nations Framework Convention on Climate Change, December. U.S. Environmental Protection Agency (EPA) 1996a Partnerships in Preventing Pollution: A Catalogue of the Agency's Partnership Pro- grams. Washington, DC: EPA, Office of the Administrator. 1996b Project XL: Final Project Agreement for the Intel Corporation Ocotillo Site Project XL. Office of Policy, Economics, and Innovation. [Online]. Available: http://www.epa.gov/ ProjectXL/implement.htm. [Accessed 12/01/01]. 1996c 1994 Toxics Release Inventory. Public Data Release. Office of Pollution Prevention and Toxics. Washington, DC: EPA. 1997a Pollution Prevention 1997: A National Progress Report. Office of Pollution Prevention and Toxics. Washington, DC: EPA. 1997b Risk Reduction through Voluntary Programs. Audit Report No. ElKAF6-05-0080- 100130, 3119197. Office of the Inspector General. Washington, DC: EPA. 1998 Partners for the Environment: Collective Statement of Success. Office of Reinvention. Washington, DC: EPA. 2000 Project XL. Implementation and Evaluation. Office of Policy, Economics and Innova- tion. [Online]. Available: http://www.epa.gov/ProjectXL/implement.htm. [Accessed 12/ 01/011. 2002 Partners for the Environment. Office of Policy, Economics, and Innovation. [Online]. Available: http//:www.epa.gov/partners. [Accessed 2/1/02]. U.S. General Accounting Office (GAO) 1994 Toxic Substances: EPA Needs More Reliable Source Reduction Data and Progress Measures. GAO/RCED-94-93. Washington, DC: U.S. Government Printing Office. 1997a Environmental Protection: Challenges Facing EPA's Efforts to Reinvent Environmen- tal Regulation. GAO/RCED-97-155. Washington, DC: U.S. Government Printing Of- fice. 1997b Global Warming: Information on the Results of Four of EPA's Voluntary Climate Change Programs. June 30. GAO/RCED-97-163. Washington, DC: U.S. Government Printing Office.
JANICE MAZUREK APPENDIX 13-A DESCRIPTION OF MAJOR VOLUNTARY AGREEMENTS 233 1. Green Lights Program The EPA launched Green Lights in 1991. The program's goal is to prevent pollution by encouraging U.S. institutions to use energy-efficient lighting tech- nologies. The program currently has more than 2,338 participants. Participants are required to survey their domestic facilities and upgrade lighting where it is profitable and improves or maintains lighting quality. According to the EPA, a profitable project is one that on a facility aggregate basis maximizes energy savings while providing an annualized internal rate of return (IRR) that is greater than 20 percent. This target is a "floor" rather than a ceiling; most lighting upgrades yield 20 to 40 percent IRR, according to the EPA. Participants must complete their lighting upgrades within 5 years of joining. 2. 33/50 Program Established by the EPA in 1991, 33/50 is the first major public voluntary pollu- tion reduction initiative in the United States. Concluded in 1995, the 33/50 Program encouraged companies to voluntarily reduce emissions of 17 target chemicals by 33 percent by 1992 and by 50 percent by 1995. Firms achieved the final 50 percent reduction goal in 1994 a year ahead of schedule. According to the EPA, the initiative helped to eliminate 700 million pounds of toxic waste. Approximately 1,300 companies participated in the initiative. 3. Project XL President Clinton directed the EPA to create Project XL in 1995. The program is designed to give individual regulated sources (e.g., industrial facilities) relief from some regulatory requirements in exchange for environmental performance superior to that required by command-and-control regulation. The case-by-case projects are achieved through negotiation between firms and regulators, subject to stakeholder approval. Project XL is the only voluntary initiative in the United States that contains legally binding provisions. As of April 1998, seven XL projects were underway. Another nine were under negotiation. Four were in the proposal phase. Since 1995, 30 proposed projects have been rejected by the EPA or withdrawn.