“Much has been written in the two continents over the last few years about regulatory reform in the environmental realm”, notes Daniel Esty in the preface to this important collection.
It is undoubtedly true.
One of the reasons is the peculiarity of environmental contracts: an impalpable entity that many seek to reach, and very few can claim to have really grasped. In fact, many in Europe say that the United States is the homeland of environmental contracting.
Accordingly, a litany of European industrial and business unions is that the excessive use of command and control regulation produces a lack of competition, unlike the flexible situation in the US.
Yet, in the United States environmental contracting is considered an original European approach to environmental regulation.
The experiments launched in the Clinton administration in this area – Project XL, the Common Sense Initiative, – are viewed mainly as bold attempts to follow the European example.
These contrasting opinions have two things in common.
First, they are both wrong, the effect of a double legal mirage: the persuasion that the neighbour’s garden is more contractual-minded and flexible in environmental matters than his own.
In fact, in the US environmental contracts have been neither popular nor successful.
It is sufficient to consider the data offered by Maxwell and Lyon in their chapter (An Institutional Analysis if Environmental Voluntary Agreements in the United States): since 1996 only one agreement has been entered (in 1997), a dramatic drop from the 1993-1995 period, when 21 agreements were realised.
On the other hand, in Europe, after the creative experimenting in France in the 1970s, terminated after a few years by the Conseil d’Etat, successes have been limited to contracts realised in a single country, Holland (and, but more controversially, the Flemish part of Belgium).
Second, these opinions reflect a malaise common on both sides of the Atlantic: command and control rules are deemed inefficient and too rigid to encourage the potential of market forces.
One of the values of this volume is to try to explain the reasons for and different aspects of this conflicting assessment of environmental contracts, through comparison of the experiences and the approaches to environmental contracting realised or planned in Europe and in the US.
The first part addresses environmental contracts in the US.
The contributions offer a general perspective (Cannon’s “Bargaining, Politics and Law in Environmental Regulation” and Hazard and Orts’ “Environmental Contracts in the United States”) and an overview of practical implementation (starting from the Negotiated Rulemaking of the 1990 examined by Hazard and Orts).
Many articles compare the U.S. and European experiences (e.g. Dennis Hirsch, “Understanding Project XL: A Comparative Legal and Policy Analysis”).
The second part is devoted to Europe.
The European Union’s policy is analysed by Van Calster and Deketelaere (“The Use of Voluntary Agreements in the European Community’s Policy”) and by Vedder (“Competition Law and the Use of Environmental Agreements: The Experience in Europe, an Example for the United States?”).
Faure analyses the only effective experience available, in Holland and in Flemish Belgium (“Environmental Contracts: A Flemish Law and Economics Perspective”) and Seerden reviews the legal aspects of environmental agreements in the Netherlands.
The volume then addresses the economics of environmental contracts and regulation and offers a comparative case study of electricity and energy.
After reading the volume, one is left with the question: why is environmental law still firmly grounded in command and control regulation if so many think that environmental contracting is much more effective?
The answer probably is that on both sides of the Atlantic supporters of command and control are still the majority.
Legal experts on environmental matters, although often convinced that the traditional system needs reform and innovation, maintain much more critical views of the feasibility of substituting for the dominant system environmental contracts.
Command and control may be inefficient and flawed in several ways (e.g. it discourages competition; it impedes innovation).
Yet, as Van Calster and Deketelaere remark, comparing voluntary agreements with command and control must be done with caution.
There is a tendency to oversimplify and idealize both.
If it is true that the advantages of the existing regulatory system are rarely as good as those of its model, the same is certainly true of voluntary environmental agreements.
As Coglianese remarks in his contribution (“Is Consensus an Appropriate Basis for Regulatory Policy?”): “a reliance on consensus introduces new sources of conflicts and creates additional problems in the policy process: it leads to unrealistic expectations, increased time and resources, lowest common denominators, imprecision, and a focus on tractability over importance”.
In Europe, notwithstanding the Communication on Environmental Agreements of the Commission released in 1996 [not implemented], sceptical views still predominate at the Community level as well as at the level of the States.
Many stress a set of theoretical questions not yet satisfactorily solved.
We may call it the democratic question underlying the substitution of command and control with environmental contracting.
Hazard and Orts ask when may the government avoid its own contractual promises by virtue of its sovereign authority, founded on a democratic mandate, to establish the rules, and change them?
The answer requires a difficult choice between government as sovereign regulator and government as contracting party, following the definition offered by Hazard and Orts, or, more precisely in my view, between government as honest contractor and government as democratic legislator, following the recent contribution of Gillian Hadfield.
In conclusion, doubts linger about entrusting to environmental contracting – that is, to powerful private interests selected by the Public Administration – solutions to problems which necessarily involve a plurality of private and public positions.
These can be adequately represented only in the institutions established in the democratic process.
This is the reason why the Final Report of the Committee of Experts appointed by The European Union on “New Instruments for Sustainability – The New Contribution of Voluntary Agreements to Environmental Policy”, published in 1998, concludes that environmental agreements may lead to a higher level of environmental protection than other regulatory instruments, but also that the participation of all social actors is essential for the long term success of the agreements.