Strategies  for  Improving

                          Industrial Environmental Compliance
                              A Draft Report Prepared by

                            Todd Edwards and Tapio Kuusinen

                            for Regulatory  Innovations Staff
                      Office  of  Policy,  Planning,  and Evaluation
                     United States Environmental Protection Agency

                                     December 1989

                                         Rev.  3
           This paper is  not an official report  of  the U. S. Environmental
           Protection Agency.   Any  opinions expressed herein are solely the
           views of the authors.

                                   WASHINGTON, D.C. 20460

    .0.0 ,


     Historically at  the United States Environmental  Protection
Agency  (U.S.-EPA),  corporate compliance  with environmental  law
has  been conceptualized  in terms  of economic  deterrence.    In
adopting  the deterrence model  of compliance,  an assumption  is
made  that  corporations behave as  economic  'rational  actors'
(Becker,  1968).   That is,  the  decisions  which  corporations  make
regarding  environmental laws  are  calculated so  that the  most
economically beneficial actions are taken.

     Specifically, this means that the corporation multiplies the
probability  of being detected  out  of compliance by the  penalty
for being out of compliance and then compares this product to the
cost of compliance.  If this "expected value" of the cost of non-
compliance  is  less than the cost  of compliance, it  is  assumed
that  naturally  an  entity  which  depends  upon  economics  for
survival will  choose  to not comply  with the environmental law in
question.   In accord with  the  'rational actor1  assumption,  the
purpose  of  enforcement efforts  at EPA  has primarily been  to
insure that  the  economic costs  associated with noncompliance are
greater than the economic costs of compliance.  In this scenario,
enforcement  officials act solely  as police officers who identify
violations and apply appropriately prohibitive sanctions.

     However,  a  major  problem  exists   in adopting  deterrence
theory  as  a  comprehensive model   for   corporate  environmental
behavior.     The  problem  is  simply that  the  'rational  actor'
assumption  does  not  seem  very plausible.    Corporations  are
composed  of  various   individuals,  many  of  which  influence
decision-making.    In  fact,  employees,   competitors,   and broad
societal  norms,  all exert pressure  upon decision-making   (The
Skylonda  Group,  1985).   The result  is usually a consensus among
competing  views, rather  than  a  precisely  calculated solution.
Indeed,  it  has  been  estimated  that  top  executives of major
companies spend  as  much as  half their time dealing with external
relations,  particularly those  with  the  government  (Greanias  &
Windsor,  1982).   Whether any given  decision  which is reached is
the  most economically beneficial or  rational is usually open to

     However,   even  with   this   consideration  aside  and  the
'rational  actor'  assumption taken  as  valid,  there  are still
serious problems  in adopting the deterrence model  (as  embodied in
the  so-called  "command-and-control" strategy) as a sole means of
achieving  compliance.   This is  because  that  even  if corporate
environmental  decision-making  were conducted  so that  the most
economically beneficial actions  were  taken,  two of  the three
variables  to  be considered   in  the  deterrence  equation  are
uncertain.   Even though the cost of achieving and remaining in
compliance  may  be  fairly  certain   (and  even this  is  open to
debate),  the  risk of  detection  and the  cost  associated with
detection are  quite uncertain.    Because  of this uncertainty, it
is very difficult for  companies to behave in any consistent and

predictable manner, even given the assumption of rationality.   In
addition,  there  is  considerable  variance  across  corporations
regarding  the degree  of risk  which  is  tolerated in  decision-
making.    As  a  result,  the  deterrence  (command-and-control)
strategy  taken  alone is  necessarily  inefficient in  promoting

     At this  point one may  ask:  "If companies cannot be expected
to behave  as  ' rational actors', then  how might they be expected
to act?'1   Kagan and Scholz  (1984)  have constructed a conceptual
framework  of  different ways in which corporate behavior is often
perceived.  One conception of corporate behavior  is  that of the
corporation  as  a  political  citizen.     In  this  case,   the
corporation is  viewed in terms of its social context, and rather
than  being   ruled  purely  by  an  economic  equation,  is  also
influenced by ideological beliefs and  societal norms.   In other
words, decisions are made based upon  beliefs of right and wrong
and what their societal  and political effects might be; that is,
how they may  come to be judged by  others.   Rather than focusing
on deterrence of undesirable behavior, emphasis on good practice
and reinforcement  through peer pressure and recognition would be
the compliance  strategy  of  choice here.  Through negotiation and
social networking,  corporate and regulatory officials could reach
consensus  on environmental  management  approaches  which  were
satisfactory  to  each.  Therefore, rather than acting primarily as
police  agents,   regulators   would  serve  as  negotiators  and

     In  another model the  corporation may  be viewed  as being
organizationally incompetent:    that  is,  the right  hand of the
corporation  does  not know what  the  left  is  doing.    In this
scenario,  environmental  regulations are not adhered to because of
folly,  rather   than   principled  disobedience   (as  a  political
citizen)  or  an  economic equation  (as an  economically  rational
actor).    Even  though top  corporation management may  wish to
comply  with  environmental  laws,  the  fragmented,  disorganized
nature of  the corporation may prevent it.   There may be  norms of
operation  or distinct factions of corporate members within the
organization  which prevent  compliance.     It may  also be   a
communication problem which  works against  compliance.   In any
case,  regulators   would serve  as  consultants,   educators  and
providers  of guidance.   To  minimize  organizational  mishaps,   a
focus  on  personal liability for environmental damages —  as well
as emphasis on  environmental audits which force senior management
to  acquire knowledge  of potential violations  — are especially
important  in this scenario.    Such  roles  for  regulator and
regulatee  would greatly improve the  likelihood of compliance by
helping  the  corporation  overcome  the organizational   problems
which prevent compliance.

     Rather than any one of  these conceptions being the  correct
one,  it is  more  likely that  all  exist within corporations at

certain times,  and that  different corporations embody  each to
different extents.   Therefore, it is necessary to  keep all of
these  views  in  mind  when  trying -to  understand and/or control
corporate behavior.   In  the  words of Kagan and Scholz  (1984):
"One implication of the diverse sources of noncompliance is  that
indiscriminate reliance on  any single  theory of  noncompliance is
likely  to be  wrong,   and when  translated  into an  enforcement
strategy,  it is likely to be counterproductive" (p.  85).

     As a result of the.deterrence-based Major Source Enforcement
Effort  of  1977-1981,  a majority  of major pollution  sources are
currently  in  compliance  or  are  following  plans  to   achieve
compliance (Wasserman,  1985).   However,  this is only the  first
stage   in  an  overall  effort   to  promote  compliance   with
environmental requirements throughout the  economy.   Besides  these
large and easily visible sources,  there are many medium to small-
sized  companies  which because of  their great numbers can  never
all be monitored.  These sources have become especially important
as the need  to control toxics has grown  (U.S.-EPA,  1984).  The
risk  for  any one of  these  companies  being  detected  out of
compliance  is  so   extremely   low  that   deterrence  is an
exceptionally  poor strategy.    In keeping  with the deterrence
framework, it would not be possible to levy fines large enough to
balance out  the  low probability  of detection.  Indeed, many of
these  potential  violators are not even known by the regulatory
community to exist.

     Bringing these sources into compliance is the most difficult
task  at  hand.    Together,  they  represent  a  very  real  and
significant threat to human health and the  natural environment.
Since  these  companies  cannot be reached   effectively  through
command-and-control  (deterrence),  additional means must  be used
to influence them.  The strategy described below will not only be
effective  in  bringing  medium   to  small-sized  sources   into
compliance, but  is also  the  most effective  way of dealing with
larger  sources as  well.
An Integrated Compliance Strategy

     An  integrated  compliance strategy is one which incorporates
knowledge and principles  from various fields (such as economics,
sociology,  criminology,  psychology,   and law)  to  increase the
extent to which  individuals and groups of individuals comply with
environmental laws.  It is not bound by any particular viewpoint,
but takes advantage of the strengths of all existing viewpoints.
Wasserman  (1985)  expressed this sentiment  in  the following way:
"... the key to a  successful and efficient compliance promotion
and enforcement program is matching enforcement approaches to the
full  range  of  motivating  factors  that  may  be  at work for
individuals and  all  levels within regulated entities"  (p. IV-4).
      In adopting  an  integrated compliance strategy,  it becomes

evident that  at least four  "micro-strategies"  must be taken  in
order to  promote compliance beyond  the current level which has
been  achieved:     1.)   increase  the  perceived  legitimacy   of
environmental laws;  2.)  foster mutual respect between regulators
and  regulatees;   3.)  demonstrate  that environmental  pollution
prevention  is good for  business;   and   4.)  revise  deterrence
(command-and-control)  strategy  as part of an overall  compliance
 1.  Increasing The Perceived Legitimacy of Environmental Laws

     Deterrence  (command-and-control)  strategy is  a  necessary
part of any enforcement program.  Deterrence measures demonstrate
the  resolve of  the agency.   However, they  cannot  be  the  sole
means by  which compliance is sought.  Just as  traffic laws  will
only  be   followed to  the  extent  that  they  are  viewed  as
legitimate, so  is  the  same with environmental laws.   Although it
is  true  that  motorists  will  obey  all traffic  laws in  the
presence  of a police  officer,  police officers cannot  even  come
close to  monitoring all  motorists.   The threat of  sanction is
necessary  to  keep  those few  individuals  in  compliance who would
otherwise  break the  law.   However,  for the  vast majority of
individuals in  society,  laws are followed because they are  seen
as  legitimate and  necessary.   Therefore,  one of  the  goals of
regulatory agencies must  be to increase the perceived legitimacy
of  environmental laws so  that they are  followed in  "spirit" as
well as by the  "letter".   As Miller (1985)  put it:  "Bureaucratic
and rule-minded  enforcement can lead to a minimalist attitude on
the  part  of  both  law  enforcement  officials and  regulatees,
leaving them  unresponsive  to more serious,  but  not technically
illegal  situations"  (p.  24).   A  survey of 100 top  corporate
officers  of major  corporations demonstrated the need to increase
the perceived legitimacy  of environmental laws (Glauthier &  Fox,
1983).    It was found  here  that the  issue  about which  more
executives  were   'very  concerned1  was  the  reasonableness  or
scientific basis of regulations.

     Justifying  environmental laws was often quite  difficult in
the past due to the abstract nature of the consequences which the
laws  were  intended to  avoid.   However,  today these  abstract
consequences have  become very concrete.  As  consensus has grown
in  the scientific community regarding  the reality of  global
warming and  its potentially grave  consequences, as  holes in the
Earth's ozone layer have become  more severe, and  as  land and
water  have  become  contaminated,  it  has  become  increasingly
apparent  that  human activity is having  serious negative effects
upon the  global  environment.   Whereas in the not so distant past
concern for the environment  was viewed  by  most people to  be a
luxury, today it is considered by many to be necessary for long-
term, sustainable economic development.

     Despite widely-increasing consensus for increased investment
in environmental protection,  individual decisions and trade-offs
will  continue  to  be  controversial.   The rationality  of the
decision-making  process  and   the  degree  and   quality  of
participation  and  involvement by concerned  interest groups in
that process will effect  the  degree  to  which they challenge such
decisions.     Increased  use  of   regulatory  negotiation and
alternative  dispute  resolution  processes  will  help  in  this
regard.  More  broadly,  efforts eliminate  current inconsistencies
and to minimize future arbitrary or conflicting requirements will
increase  industry's  willingness  to  "buy  into11   environmental
programs as a whole.
 2.  Fostering Mutual Respect Between Regulator and Recrulatee

     A  more  constructive  relationship  between  regulator  and
regulatee  must  be   developed   as   the  norm  for  interaction,
reserving  confrontational  tactics  for  serious  non-compliance
issues.   An  essential  element in  doing this are  enforcement
approaches  similar to  Scholz's (1984)  "Tit-for-Tat"  framework.
In  using  Tit-for-Tat,  good  environmental behavior by  companies
would   be  rewarded  with  cooperative  enforcement   and  bad
environmental  behavior  would  be  sanctioned  with  antagonistic
enforcement.    Cooperative  enforcement  is  characterized  by  a
relatively  low   level  of  regulatory   scrutiny  and  greater
regulatory discretion and use  of negotiation.   In  other words,
companies  with good environmental  records  and even  companies
which  have shown  evidence  of  "good faith"  efforts to  comply,
would be  given regulator  trust and  respect.    Accordingly,  even
where  violations  are  detected,  regulator  trustworthiness  and
reasonableness would be demonstrated by a full consideration of
the purpose of the  law  in relation  to  the violation as  well as
any extenuating  circumstances  (impediments)  which may  have made
compliance exceptionally  difficult.   Environmental laws would be
enforced  in "spirit"  rather than just by the "letter".   Hall
(1988) noted one  of the Agency's current efforts to achieve this
level of enforcement:

     In 1986,  the Environmental Protection Agency issued a policy
     statement on  the issue  of environmental auditing.   In this
     policy it was implied but not  specifically stated that the
     Agency would  provide a  more reasonable enforcement attitude
     toward industrial  operations which had  installed a vigorous
     system of environmental auditing.   Although  this  in no way
     condones   or  encourages  the  breaking   of   any   laws  or
     regulations,  the policy is merely establishing  an attitude
     of cooperation rather than one of police activity,  (p. l)

EPA's Uniform  Civil  Penalty  Policy also  leans  in this  direction
in that it allows the regulator discretion in deciding what level
of sanction to impose.   Factors such as economic benefit derived

from noncompliance and degree  of past cooperation are considered
when penalty amounts are assessed.  By showing the regulatee that
cooperation  is  sincerely  desired  and that  the  regulator  is
reasonable, trust between regulator and regulatee can begin to be
developed.  In  the case  of bad environmental behavior, companies
would receive harsh  sanctioning and greater regulatory scrutiny.
However, in order to begin the development of regulator/regulatee
cooperation and trust, "good faith" efforts to comply on the part
of even previously  recalcitrant  firms  must be rewarded  so that
further  efforts  at  achieving  compliance   are  encouraged.
otherwise,  firms  which  have been  labeled  as "bad  actors" have
little  incentive to come into compliance.

     In order  to further  develop cooperation and  trust between
regulator  and  regulatee,   it  would  be helpful  to  as much  as
possible make the criteria of violation "few,  clear, and simple"
(Environmental  Law  Institute,  1989).   If  this were  the case,
little  dispute  would occur over whether a violation had occurred
or not.  If violations  were blatantly obvious,  regulatees would
have  no  basis  for  feeling  "cheated"  by  regulatory agencies.
Therefore  such  clear  cut  criteria would  help  to  preserve the
perception  of  regulator legitimacy.   In addition  to this, such
criteria would give regulators the  "clout" necessary to negotiate
from a  position of strength  (such  as with regard to probation—
see Stone, 1977).  In an EPA report entitled "Study Of Literature
Concerning  The Roles Of  Penalties  In Regulatory Enforcement"
(1985),  the usefulness of  regulatory negotiation was discussed.
It was  stated thus:

     The  use  of rehabilitative measures in enforcement opens up
     many  new  possibilities for  agencies  to promote  compliance.
     However, it must be noted that such enforcement  actions must
     be highly  individualized  and  tailored  to  the  individual
     violator,  and as  such, they  could be resource  intensive.
     In addition, these  tailored sanction actions may go  against
     the  idea  of 'fair  and  equitable treatment of the  regulated
     community'.  (p. 17)

With  regard to the  former criticism,  although  such an  approach
may be  resource intensive,  the  gains  to be  realized in compliance
as a  result of  increased cooperation and trust far outweigh such
expenditures.   In  addition, as  will be  discussed shortly,  the
confrontational  relationship  which  currently  exists   between
regulator and  regulatee  is  also  very  resource  intensive  in
addition  to  being mutually detrimental.   With regard  to  the
latter  criticism,  although  any  time  that  discretion exists,  the
possibility of  injustice and corruption also exists,  the current
approach  of penalizing violators without much regard for specific
circumstances is  also unjust.  To be sure,  stringent control  and
documentation of  negotiation will be necessary, but  this  will be
to  the benefit  of  both regulator and regulatee.   Such  control
will both protect regulators from forces which promote favoritism


laws  must  be  shifted  off  of  the  regulator  and  on  to the
regulatee.   Indeed,  in EPA's "Strategy Framework For  Compliance
Programs"  (1984)  it  is  stated  that  voluntary  compliance is
essential to enforcement  (p. 11).  In order to achieve this, the
justification for compliance must become the aversion of negative
environmental consequences rather than the aversion of regulatory
sanctions.   This  justification would  be  created  if  companies
were  convinced  that negative environmental  impacts are bad for
business.  This would eliminate the current passive environmental
stance   of  large   sources  as  well  as  the   diffusion  of
responsibility  which  characterizes  medium  and  small  sources.
This approach is currently being looked at within EPA through the
use of  demonstration projects in which it will be  attempted to
show that environmental pollution preventions can be economically
efficient as well as protective of the environment.

     One  key to this  approach  is  to integrate  environmental
management directly  into core  business operations.   Another key
is in a comprehensive definition of operational efficiency.   Such
a  definition  incorporates  costs  of  noncompliance  which are
usually  not  considered  but  nevertheless   are  significant
components  of  operational  efficiency.    Actually,  the economic
gains to be  realized from environmental management are short-run
as well as long-run in nature (Wasserman, 1985; ICF, 1989).   Some
short-run gains  are reduced  insurance  premiums and  reduced raw
material costs;  potential  long-run gains are avoidance of future
liability and  the  fostering  of a  positive public image.   The
costs usually associated with noncompliance are thought to stem
from enforcement actions themselves.    However/ as  any convicted
drunken driver knows, the  fine  is just  a small proportion of the
costs to be paid:  increased insurance rates and  social  stigma
exact  very  real  costs  as well.    Through  such an  expanded
definition of operational  efficiency,  it may be possible to show
a direct positive relationship between environmental management
measures  and economic  efficiency.    If  this  is  accomplished,
companies will pursue environmental management as a core business
interest.   Indeed,  books  and  articles have already  begun  to  be
written on the economic virtues of pollution prevention  (Campbell
& Glenn,  1982;  Huisingh, Martin,  Hilger, & Seldman, 1985; Plaut,
1984; ICF,  1989).   At  this point, however,  this  proposition  is
too  novel  for   many companies  to take.    This  is  why  it  is
important that   EPA  take the lead  in  developing  projects  which
would  demonstrate  the  economic  advantages  of   effective
environmental management.

     As  a related  matter,  consider  what Stone  (1975)  reported
regarding price-fixing  conspiracies  in  the  electrical equipment
industry.    He  found that  a  sentiment  existed  among employees
that  price-fixing had been  an invention  of the sales force  in
order to  avoid  having to work  harder for sales.   He also found
that design  engineers resented the fact that the products which
they took pride  in  designing were not  given  a  fair shake on the


free market.    An outside  advisory panel  which was  set  up to
investigate price-fixing aimed to demonstrate  "that  competition,
properly pursued,  can produce far  more consistent profits  than
... conspiracy"  (p.  12).   In-house  programs, management  courses,
workshops,  and  conferences  were  all established to  advocate the
positive approach of competitive initiative. As Stone reported:

     [The presentation] was not  that the  company had to  'submit1
     to  a  stronger,  outside force—that  is,  the  government.
     Rather, the price-fixing was  depicted as itself a foreign
     element, inimical to the more fundamental  corporate  ideal of
     increasing  one's  share   of  the  market through  better
     salesmanship,  superior design, and  the  like—the  norm of
     competition,  (p. 12)

Once  it is  demonstrated  that good environmental  management is
also  good  business  management, regulation will  cease  to be
viewed  as  a   "foreign  element".     Rather,   environmental
irresponsibility  and  degradation  will become as  price-fixing,
"inimical   to  the   more  fundamental   corporate  ideal of

     Chances  are  that if  a company  has  a poor  environmental
record,  its operation is  not  running very efficiently  in the
first  place.   Just  as a  car which is not tuned well will emit
more pollutants and  burn  more   fuel per  mile  than  a  well tuned
one, corporations which are the heaviest polluters are not making
the best use of their raw materials.  In addition,  a company with,
effective process  controls  normally will  increase  the productive
throughput  of  its operating  equipment .relative to  competitors.
Such costs  of  "environmental inefficiency" must be  figured into
the final efficiency equation.   Apparently intangible costs such
as  adverse  publicity must  also be  quantified and considered.
Although a  company  may incur initial  costs when converting to
more  environmentally efficient  practices,  such costs should be
recovered over  a relatively short course  of time.   An analogy is
that although one may purchase an older car at a lower price than
a  newer one would cost, over time  the  higher  fuel  efficiency of
the newer car will make it the better buy.

     A potential problem  with these economic  gains  is that they
may not be  fully realized within the  18-24 month  average tenure
of company  vice-presidents.   Since these executives depend upon
short-term  gains in  order  to demonstrate  their proficiency and
thus move  into better positions, measures may  not  be taken which
will  not show  very  immediate results.   Because of  this,  it is
crucial  to  get top decisionmakers  (i.e.,  CEOs) on  board early so
that they will become committed to environmental  management and
ensure program  survival  to  a point where   environmental  and
economic benefits can  be realized.

     As  it stands   now,   most  companies  which  are  adopting


          environmental management practices are doing so in order to avoid
          penalization  by  regulatory  agencies.    Companies  are  hiring
          environmental  consultants   to  help  them  meet  regulatory
          requirements.    In  turn,   these  consultants  are  providing
          technology which is quite safe, and  also  quite  old,  in order to
          eliminate any chance  of  their clients  (companies) being  out of
          compliance if they are inspected.  Such measures are designed for
          the sole  purpose  of achieving compliance and in  many  cases may
          not be contributing to operating efficiency.

               When corporations have become .convinced that environmental
          pollution prevention  is  "good  business", pollution  prevention
          will^-become  adopted  as  standard  operating  procedure  and  will
          cease "to be held  as  suspect.   Commitment to  environmental
          management  programs  will  become  commonplace  in the  business
          community.  Through this process, more than just compliance rates
          will be   altered.    The  'culture1  of  corporations  and  entire
          industries will be  changed.   As it  is  realized (through market
          trends   and  social  networks)   that  environmental  management
          practices can actually increase operating  efficiency, and as more
          companies adopt  such  practices,  environmental management  will
          become necessary in order to compete in the marketplace.  Rather
          than   being  forced  to  comply  with   environmental   laws,
          environmental stewardship will  have  become  a part of  corporate
          missions.  This is  the ultimate goal of all regulatory efforts.
          Changing   the  culture of  large  industries will also  bring much
          social pressure to  bear  upon smaller ones.   This is especially
(         important  at that  level because   the  economic  incentive  of
    '      environmental management may not  be  quite as great  for smaller
 ^      operations.   Through trade associations, regulatory networks, and
          general  societal  expectations,   these  smaller  sources will be
          encouraged  to  achieve and  remain  in  compliance.     Also,  as
          mentioned .above,  increased compliance  support  and  cooperation
          from  regulatory   agencies   will  make   it  easier   and  more
          advantageous  for  these  sources  to  observe  environmental

               The  aforementioned cultural transformation will first occur
          within select "forward-looking" corporations,  and then eventually
          in other  less progressive  firms.  Indeed,  today  certain  companies
          are becoming aggressively  involved  in environmental management in
          order to  get  in early on an idea whose time they see has come.
          To  these corporations, such  involvement  is considered  a good
          business  investment.  With increasing environmental problems and
          resulting governmental  regulation down the  road, corporations
          which are attempting to become  "environmentally  efficient11 now
          are avoiding larger costs later when fewer choices for  achieving
          compliance are available.   These corporations will  also  be one
          step ahead of their competitors  in gaining the benefits of more
          efficient operations.

 *•   Revising  Deterrence
          Overall Compliance Strategy

     As  discussed  at  the  beginning of  this  paper,   although
deterrence-based  strategies  should not  form the  sole  basis  of
enforcement, they are  an essential  part  of an overall compliance
strategy.  Deterrence measures demonstrate the will of regulatory
agencies.  To the extent that such approaches are employed,  there
are ways to insure that they are used as effectively as  possible.
A  recent  report  prepared  for  EPA  by the  Environmental  Law
Institute  (ELI,  1989)  entitled:  "Cost-Effective Enforcement:  A
Framework  For  The Evaluation  Of The Enforcement Authorities  Of
The EPA"  addresses  this very issue.  The  authors of this report
concluded  that  for the  programs  which  they examined (Water and
Hazardous  Waste),  "...the  Congress  generally  has  provided EPA
with  less than  ideal  enforcement  powers...   Moreover,  EPA has
often adopted regulations that appear to  diminish  the  deterrent
power of tools and that make tools harder to implement"  (p.  141).
The authors of  the ELI  report  outlined  nine measures which they
believed  would  make the  enforcement  authorities  (permits,  civil
penalties,  contractor  listing,   etc.)   at   EPA  more  cost-
effective.  Most  notably,  in cases  of dispute it was recommended
that EPA pursue an enforcement strategy which places the  'burden-
-of-proof upon  the alleged violator (IRS-style).   As  it stands
now, when  a firm is cited for  a  violation it may pursue endless
civil litigation  which greatly delays the length  of time  until
the environmental harm is stopped  and often tends  to weaken the
blow  of  the  ultimate  penalty.    If the  burden-of-proof  were
placed upon the violator, it would be necessary for the company
to circumscribe  suspect operations until the matter was cleared
up.   This would  serve the dual  purpose of immediately  stopping
the environmental harm as well as providing a great disincentive
to  litigation.    If a  company must  cease operation during the
litigation process,  it will assume a great economic burden each
day that  litigation drags on.   Although shifting the burden-of-
proof  upon alleged violators  may be  overly  heavy-handed with
first or  second-time violations,  it may  be a measure to  consider
for dealing with repeated violators.


     Because of  its severely limited view of corporate behavior,
EPA's command-and-control  (deterrence) strategy for  compliance  is
similarly  limited in effect.   Command-and-control  fails to take
into  account  all   of   the  factors  which  influence  corporate
environmental behavior.   An integrated compliance strategy has
been described  here which would  take all motivating forces into
account.    This strategy  would complement, rather than  displace
the current strategy.  An  integrated  compliance strategy  would  be
especially beneficial  in dealing with medium to small sources  of
pollution, which  cannot be reached directly through command-and-
control .

                            APPENDIX 1

Tools for Improving Industrial Environmental Compliance

1.  alternative dispute  resolution and other  negotiation
2. good management practices and pollution prevention
3. self-auditing
4. performance-based incentives (let the market work out the
5. education/training/skill development
6. technology transfer
7. violator 'burden-of-proof

and corruption as  well as protect regulatees from being double-
crossed in agreements.

     Negotiation  techniques  and  other  alternatives  to   civil
litigation are central  to  Tit-for-Tat  and other such enforcement
frameworks.   Litigation is  very resource-intensive and usually
not cost-effective for either  side of  a dispute  (Gray,  1985).
Gray cited the National Coal Policy  Project  (NCPP)  as an example
of a non-adversarial solution to a very difficult problem.   After
realizing   that  they  were  both  losing   in  the  courts,
industrialists  and environmentalists  developed  the  NCPP as  a
year-long  forum  in which  a  consensus was  reached on coal  policy
for  the  United  States.     Examples  of  other  non-adversarial
alternatives to civil litigation can be found in Blundell  (1982),
Peterson  (1983),  and  Quadrangle  Notes  (1982).    Langbein  and
Kerwin  (1982)  have   characterized  negotiation  as  "...  the
centerpiece  of implementation,  for  it  provides  the  vehicle  by
which  the  [regulatory] agency  can  simultaneously satisfy  the
preferences  of  relevant  Congressional  subcommittees,  clientele
groups, and regulated firms"  (p. 30).

     Besides a Tit-for-Tat style enforcement framework, a second
essential  element  necessary  to  promote  regulator/regulatee
cooperation is ample compliance support from regulatory agencies.
Regulators must be willing to provide companies with information,
training,  and education  which  will  enable them  to  come into
compliance.    This  includes  providing  technical  information
("technology transfer") as well as justification of laws so that ;
regulatory  reasonableness is  demonstrated.   Agencies must also v
provide  companies  with options for  achieving compliance  so that
the  most  economically efficient  means  may be  chosen  (this  is
discussed  more  fully  below).    Besides  allowing   for economic
efficiency,  providing such options will foster commitment to and
"ownership" of environmental management.   In short, environmental
regulatory  agencies must  become more service-oriented and less
authoritarian.   Both the  U.S.  Internal Revenue  Service  and the
U.S.  Postal Service  have made  this realization with increased
efficiency  and effectiveness as the result.   This is especially
important for smaller companies which lack in-house environmental
management  skills  and are  generally not very  proficient with
environmental  regulations.    With  such  support provided,  the
regulates can have no legitimate excuse for not at least making a
reasonable  attempt  at achieving  compliance.    Underlying this
compliance  support  must   be  well-established  communication
networks through which regulator and regulatee can establish and
maintain mutually  supportive relationships.
 3.    Demonstrating  That  Environmental  Pollution  Prevention Is
          Good For Business

     Ultimately, responsibility for compliance with environmental

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