Pace Environmental Law Review

Volume 24

Issue 1 Winter 2007 Article 7

January 2007

Shining the Spotlight on European Union

Environmental Compliance

Clifford Rechtschaffen

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Recommended Citation

Clifford Rechtschaffen, Shining the Spotlight on European Union Environmental Compliance, 24 Pace

Envtl. L. Rev. 161 (2007)

Available at: http://digitalcommons.pace.edu/pelr/vol24/iss1/7
Shining the Spotlight on European Union

Environmental Compliance

CLIFFORD RECHTSCHAFFEN*

The practical application of environmental provisions is the

most serious problem that national, Community and international environmental law faces. Even a piece of national legislation that copies a directive word for word will remain a mere

piece of paper unless it is applied.'

European Union ("EU") environmental law has grown rapidly

in size and complexity in recent years so that it now consists of at

least 300 environmental directives and regulations. Indeed, in an

increasing number of areas of environmental law, including

greenhouse gases controls, toxic chemicals regulation, and extended producer responsibility regulations (known as "take-back"

laws), EU law now is the world trendsetter, outpacing even U.S.

environmental laws. 2

At the same time that EU environmental laws are multiplying, however, implementation and enforcement of these laws is

lagging. According to a 2004 survey of the European Commission,

just under one one-third of all complaints and cases alleging noncompliance with EU law that were investigated by the Commis-

* Professor and Director of the Environmental Law Program, Golden Gate University School of Law. Professor Rechtschaffen can be reached at crechtschaffen@ggu.edu. Thanks to Elizabeth Kirk, Karen Kramer, and Eckhard Rehbinder for

their comments on earlier drafts of this article, and to Golden Gate Law School students Jennifer Maier, Ashling McAnaney, and David Zizmor for their helpful research

assistance.

1. LUDWIG KRAMER, EC ENVIRONMENTAL LAW, § 12-12 (5th ed. 2003).

2. Theofanis Christoforou, The Precautionary Principle, Risk Assessment, and

the Comparative Role of Science in the European Community and the US Legal Systems, in GREEN GIANTS? ENVIRONMENTAL POLICIES OF THE UNITED STATES AND THE

EUROPEAN UNION 17 (Norman J. Vig & Michael G. Faire eds., 2004) [hereinafter

GREEN GIANTS?]. For a somewhat different view, see Jonathan Wiener, Convergence,

Divergence, and Complexity in US and European Risk Regulation, in GREEN GIANTS?,

supra, at 73, 90-93 (arguing that the United States and EU each are more precautionary in some areas, but less in other areas).

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sion concerned noncompliance with environmental laws. 3 Indeed,

there is a greater lack of implementation and enforcement of EU

environmental requirements than of any other area of EU

regulation.

The challenges to ensuring that regulated entities comply

with EU law are considerable, given the diversity of EU states and

the highly limited enforcement tools possessed by institutions at

the community-wide, EU level. EU laws, while adopted at the

community level, are implemented and enforced by individual

member states. EU institutions themselves lack any direct enforcement authority, and face considerable obstacles when even

attempting to monitor compliance with EU requirements in any

individual country. The challenge of achieving compliance will

grow in the future as the number of environmental requirements

increases, the EU embraces smaller and more varied regulated

entities (such as small businesses, small municipalities, and agriculture), and EU membership grows.

For these reasons, new approaches to promoting compliance

with EU environmental law are needed. This article argues that

one promising regulatory tool that the EU could utilize is greater

reliance on information disclosure requirements, particularly "spotlighting" the compliance records of regulated entities. The

article first explains the difficulties that the EU is currently facing

in enforcing its environmental laws. It then discusses how spotlighting has proven to be an effective environmental policy tool

and how the EU has already embraced a spotlighting strategy in

certain areas. Finally, it argues that the EU should use spotlighting as an enforcement strategy because it would provide a potent

method of improving compliance with EU environmental laws.

I. THE CHALLENGE OF ENVIRONMENTAL

ENFORCEMENT IN THE EU

There are a number of reasons-some institutional, some political, and some reflective of European legal culture-why achieving widespread compliance with EU environmental requirements

has been so challenging.

3. See, e.g., Commission Staff Working Paper, Sixth Annual Survey on the Implementation and Enforcement of Community Environmental Law 2004, at 4 (Aug. 17,

2005), available at http://ec.europa.eu/environment/law/pdf/6th-en.pdf [hereinafter

Sixth Annual Survey]. The Commission noted, however, that there were fewer environmental infringement cases in 2004 than in prior years. Id.

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One is the federalist political structure of the EU. EU environmental laws are enacted at the community-wide level. Most

EU environmental legislation is adopted in the form of directives,

which bind member states to a certain result but leave the method

of achieving the result to their individual discretion. 4 Thus, even

after enactment by the EU, directives must be formally transposed into national law before they can be actually enforced. 5 (EU

regulations, by contrast, are directly binding on member states

without the need for implementing legislation.)6 The percentage

of EU environmental directives transposed into national laws varies considerably. 7 Further, after the directives are incorporated

into national law, it is the member states and not the EU that

largely bear the responsibility for ensuring that regulated entities

comply with EU requirements. But the EU encompasses states

with widely varying levels of enforcement resources, administrative and technical capacities, experience, and philosophical commitment to enforcement principles.8 Additionally, some countries,

particularly those in southern Europe, believe that economic considerations should have priority over environmental protection. 9

For these reasons, the degree to which EU environmental requirements are enforced in member states varies considerably. As one

observer recently opined, "in some countries, the national commitment to compliance is questionable, so compliance by their industries, let alone individual facilities, has to be doubted."10

At the same time, the European Commission, which serves as

an administrative, quasi-executive branch of the EU governing

4. Christopher Demmke, Implementation of Environmental Policy and Law in

the United States and the European Union, in GREEN GIANTs?, supra note 2, at 135.

5. Id.

6. Id.

7. See id. at 138.

8. See KRAmER, supra note 1, §1-21 ("[Tlhere is a wide gulf between the individual [miember [s]tates' national environmental policies and regulations.").

9. See id.

10. Ernie Rosenberg, EU's Aspiration Trumped by U.S. Implementation, 23 ENVT.

F. 51, 51 (Mar.-Apr. 2006) (also noting large differences among EU countries, particularly when comparing southern and northern European countries, as to the degree to

which environmental requirements are enforced); see also Luke Goodrich, Implementing Environmental Law in the European Union: Lessons from the Bathing Water Directive, 16 GEO. INT'L ENVTL. L. REV. 301, 301 (2004) (noting the failure of member

states to effectively implement EU law); Richard C. Visek, Implementation and Enforcement of EC Environmental Law, 7 GEO. INT'L ENVTL. L. REV. 377, 393, 400-02

(1995) (noting that member states lack resources, that member states are concerned

about the economic impacts of regulation, and that EU laws will usurp traditional

state powers).

2007] 163

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structure, lacks any direct enforcement tools. 1 The Commission

has no inspectorate and cannot inspect or monitor facilities. It

cannot directly sue facilities within a member state, penalize individual facilities, issue compliance or other orders directed at regulated entities, or exercise criminal enforcement authority. 12

Efforts to enhance the Commission's enforcement authorities have

been resisted as interfering with sovereignty and violative of the

EU's principle of subsidiarity (providing, in general terms that the

EU should only take action at the community level if the objectives of a proposed action cannot be sufficiently achieved by member states).' 3 Also as a result of federalist concerns, the European

Environment Agency, which (in theory) was created to improve

the EU's capacity for monitoring and enforcement of environmental requirements, has limited powers, and essentially only coordinates the information-gathering activities of member states.1 4

Thus, as Professor Christopher Demmke points out, implementation of EU law depends largely on cooperative, partnership-oriented approaches.1 5

The only sanction available to the Commission to remedy noncompliance with environmental laws is to institute "infringement"

procedures against member states that have failed to implement

or enforce EU laws. If that administrative process proves ineffective, the Commission may sue the states in the European Court of

Justice ("ECJ").16 In recent years, the Commission has instituted

more infringements against member states in the environmental

sector than any other area of EU law.17 Nonetheless, the infringement process has substantial limits. The small staff of the Commission's Directorate General Environment legal unit is often

"overwhelmed" by the number of complaints alleging environmental infringements18 (the Directorate General Environment only

has a total staff of about 450 while in comparison the U.S. Envi11. See Demmke, supra note 4, at 139.

12. See id. at 140.

13. See KRAMER, supra note 1, § 12-19

14. There is also an informal implementation network called the European Union

Network for Implementation and Enforcement of Environmental Law ("IMPEL"),

which consists of representatives of enforcement and monitoring bodies of member

states as well as Commission representatives. IMPEL provides for the exchange of

practical ideas and experiences among members. KRAMER, supra note 1, § 12-21.

15. Demmke, supra note 4, at 140.

16. Id.

17. Demmke, supra note 4, at 141.

18. R. Daniel Kelemen, Environmental Federalism in the United States and the

European Union, in GREEN GIANTs?, supra note 2, at 113, 123.

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ronmental Protection Agency ("EPA") has approximately 18,000

employees). 19 On average, the Commission's administrative process takes about three years,20 and only about 10% of environmental cases are referred to the ECJ.21 The average time between the

Commission's decision to initiate an infringement procedure on an

environmental matter and judgment by the ECJ is nearly five

years.

22

Another important consideration-and point where EU law

diverges considerably from U.S. environmental law-is that citizen enforcement of EU directives is possible only in highly circumscribed situations. EU citizens do not have a right to bring citizen

enforcement actions against regulated entities who violate EU environmental requirements. Although private parties can file complaints with the European Commission, 23 they cannot challenge a

Commission decision not to refer a particular matter to the ECJ

(and in any case, the Commission can bring suit only against

member states not private regulated entities).

The "direct effect" doctrine provides that in certain circumstances individuals may rely directly on provisions of EU law and

sue member states in national courts for not implementing (or not

correctly implementing) an EU directive, (even though, as noted

above, directives normally first must be transposed into national

law to be applicable).24 The doctrine, however, can only be employed against a government body; it does not allow individuals to

sue regulated entities directly. Moreover, restrictive standing

rules in some member states may prevent environmental groups

from bringing suits in national courts. 25 Individuals also can sue

19. Demmke, supra note 4, at 139. The economies of the EU and the United

States are roughly comparable in size. The population of the EU, however, is about

1.5 times greater than the United States' population, while the United States is about

2.5 times larger in physical size. Id.

20. KRAMER, supra note 1, § 12-42.

21. Id. § 12-33.

22. Kelemen, supra note 18, at 123.

23. Demmke, supra note 4, at 143; European Comm'n, European General Guides:

Enforcing Your Rights in the Single European Market, Who Can Lodge a Complaint to

the European Commission? What is the Procedure? 9 (2005), available at http://

ec.europa.eu/youreurope/nav/en/citizens/services/eu-guide/enforcing-rights/enforcingrights-en.pdf.

24. KRAMER, supra note 1, § 12-27; see also Goodrich, supra note 10, at 312-13

(noting that these actions play an increasingly important role in the implementation

of EU directives).

25. Demmke, supra note 4, at 126; see also Sevine Ercmann, Enforcement of Environmental Law in United States and European Law: Realities and Expectations, 26

ENVTL. L. 1213, 1222 (1996) (noting divergent provisions of certain EU member states

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member states for damages suffered as a direct result of a member

state's "serious" breach of EU law, but these actions too are limited to lawsuits against a member state. 26 Finally, even if legal

doctrines were more favorable towards citizen enforcement, as a

practical matter, environmental organizations apparently lack the

muscle of those in the United States. As Kramer maintains,

"[e]nvironmental organisations in Western Europe are structurally and financially too weak to defend environmental interests

effectively over a long period of time."27

A final factor that may contribute to noncompliance with EU

requirements is that the legal culture in most European countries

is less adversarial than the legal culture in the United States. 28

Thus, tort liability is less developed and wide-ranging. 29 Moreover, many European countries traditionally have relied heavily on

cooperative-oriented enforcement strategies rather than on the

traditional deterrence-based enforcement model widely used in

the United States. Although it is beyond the scope of this paper to

examine the enforcement practices of individual European countries, at least some evidence suggests that enforcement in EU

member states is not particularly effective. 30

The bottom line is that for a variety of reasons, noncompliance with its environmental laws has been and continues to be a

major problem for the EU. As two recent scholars concluded,

"It]he biggest obstacle to environmental policy success in the EU

concerning the right of interested individuals and associations to bring actions before

the national courts for noncompliance with EU environmental legislation).

26. Although there are few, if any, cases in which this has been done, scholars

argue that some environmental directives provide rights that could be the basis of

future liability actions. See R. Daniel Kelemen, Regulatory Federalism: EU Environmental Regulation in Comparative Perspective, 20 J. PUBL. POL. 133, 158 (2000) (arguing that when considering criteria for state liability, it is entirely possible that

individuals will bring claims for damages relating to environmental directives in the

future).

27. KRAMER, supra note 1, § 12-13.

28. Wiener, supra note 2, at 76.

29. James A. Lofton, Environmental Enforcement: The Impact of Cultural Values

and Attitudes on Social Regulation, 31 Envtl. L. Rep. (Envtl. Law Inst.) 10,906,

10,910 (2001); Steven Kelman, Enforcement of Occupational Safety and Health Regulations-A Comparison of Swedish and American Practices, in ENFORCING REGULATION 98, 104-15 (Keith Hawkins & John M. Thomas eds., 1984); see also KEITH

HAWKINS, ENVIRONMENT AND ENFORCEMENT: REGULATION AND THE SOCIAL DEFINITION

OF POLLUTION 110-54 (1984) (describing a less adversarial enforcement approach by

water pollution inspectors in Great Britain).

30. Demmke, supra note 4, at 143.

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appears to be ensuring that environmental policy directives are

carried out appropriately in the member states."31

II. SPOTLIGHTING IS AN EFFECTIVE

ENVIRONMENTAL POLICY TOOL

The concept of using information disclosure, or spotlighting,

to achieve environmental objectives has become increasingly popular in the past two decades. This policy tool enjoys support

across the political spectrum-economists like it because it relies

on the efficiency of market forces, while environmental advocates

favor it because it can promote citizen empowerment and create

incentives for firms to reduce harmful activities. 32 Moreover, governments like it because it does not require a lot of governmental

resources, infrastructure, or personnel.

Spotlighting has also proven to be quite effective. 33 This is

because it takes advantage of the basic fact that all companies desire to avoid negative publicity, including publicity regarding their

environmental record. As the architects of the popular "Scorecard" website explain, "[b]y spotlighting the companies with the

worst environmental records, we sought to create strong incentives for pollution reduction - no one enjoys holding the rank of top

polluter in their community."34 Indeed, in one compliance study,

managers at a pulp and paper mill told researchers that the sanctions the facility feared the most were the informal sanctions imposed by the public and the media and that "they were motivated

less by avoiding regulatory violations per se than by avoiding 'anything that could give you a bad name."' 35

31. JANET R. HUNTER & ZACHARY A. SMITH, PROTECTING OUR ENVIRONMENT: LESSONS FROM THE EUROPEAN UNION 91 (2005).

32. See Michael Vandenbergh, From Smokestack to SUV: The Individual as Regulated Entity in the New Era of Environmental Law, 57 VAND. L. REV. 515, 530 (2004)

(noting that "information disclosure may be less expensive for regulators and regulated entities than command and control requirements, may be more flexible and efficient than command and control or market mechanisms, and may enhance

deliberative democracy").

33. David Case, Corporate Environmental Reporting as Information Regulation: A

Law and Economics Perspective, 76 U. COLO. L. REV. 379, 386 (2005) ("Empirical studies, though limited, demonstrate that information disclosure can be a powerful lever

in motivating improved environmental performance by regulated firms.").

34. About Scorecard: The History of Scorecard, http://www.scorecard.org/aboutl

txt/history.html (last visited Feb. 11, 2007).

35. Neil Gunningham et al., Social License and Environmental Protection: Why

Businesses Go Beyond Compliance, 29 LAw & SOC. INQUIRY 307, 321 (2004). Another

study found some, albeit mixed, evidence that past noncompliance by a commercial

hazardous waste management facility led to a reduction in the quantity of waste sent

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There is substantial evidence that a spotlighting approach to

combating environmental problems achieves concrete results.

The most well developed spotlighting programs are pollutant registries, such as the United States' Toxics Release Inventory

("TRI") program, which require firms to publicly disclose their releases and transfers of certain pollutants. 36 TRI covers 666 toxic

chemicals used by industrial facilities in the United States in

amounts above certain thresholds. 37 From 1988 to 2004, releases

of chemicals subject to TRI reporting dropped by a remarkable

57%, or 1.71 billion pounds 38 (this figure covers those chemicals

that have been on the list for this entire period).39 EPA officials, as

well as environmentalists and regulated entities, regularly tout

TRI as one of the United States' most effective environmental

laws. 40 Professor Bradley Karkkainen describes TRI as a "watershed" and argues that this program works because it establishes

an objective, comparable, and broadly accessible performance metric.4 1 He notes that TRI compels firms to self-monitor and "confront disagreeable realities" concerning their performance, and

that it subjects them to the scrutiny of a variety of external parties-including investors, community residents, and regulatorseach of whom can exert powerful pressures to improve the firm's

performance. 42 A related state program, the Massachusetts Toxics

Use Reduction Act ("TURA"), passed in 1989, requires industrial

facilities to publicly report the quantities of toxic chemicals they

use and generate as waste (as well as to prepare a toxics use reduction plan).43 From 1990 to 2004, facilities subject to TURA

to that facility by generators of hazardous waste. Sarah Stafford, Can Consumers

Enforce Environmental Regulations? The Role of the Market in Hazardous Waste

Compliance, 10-11 (Coll. of William & Mary, Dep't of Econ., Working Paper No. 19,

2005).

36. Toxics Release Inventory (TRI) Program, http://www.epa.gov/tri/ (last visited

Feb. 11, 2007).

37. EPA TRI: TRI Chemicals, http://www.epa.gov/tri/chemical/index.htm (last visited Feb. 11, 2007).

38. ENvTL. PROT. AGENCY, 2004 TRI PUBLIC DATA RELEASE E-REPORT 16 (2006),

available at http://www.epa.gov/tri/tridata/tri04/ereport/2004eReport.pdf.

39. Id.

40. See Addition of Reporting Elements; Toxic Chemical Release Reporting; Community Right-to-Know, 61 Fed. Reg. 51,322, 51,322 (Oct. 1, 1996) ("EPA considers

Right-to-Know to be among its most effective strategies for improving environmental

performance.").

41. Bradley C. Karkkainen, Information as Environmental Regulation: TRI and

Performance Benchmarking, Precursor to a New Paradigm?, 89 GEO. L.J. 257, 260,

295 (2001).

42. Id. at 295.

43. Id. at 354.

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since the law's inception have decreased their toxic chemical use

by 41%, reduced their generation of waste by 65% per unit of product, and slashed their releases of toxic chemicals by 91%. 4 4

Some observers, though, offer more mixed appraisals of the

TRI program. Mary Graham and Catherine Miller, for example,

find a core of positive trends but note that the rate of decline of

toxic releases slowed markedly after the first five years of reporting, that the amount of toxic waste generated (as opposed to released) has continued to increase, and that few facilities have

employed source reduction to cut releases. 45 Other critics argue

that TRI data is inaccurate and unreliable and that it is misleading because it fails to convey information to the public about the

risk of toxic releases. 46

Similar to the U.S. TRI program, Canada's pollutant registry,

the National Pollutant Release Inventory ("NPRI"), established in

1992, requires companies to report environmental releases and

transfers of approximately 270 chemicals. 47 The NPRI has

sparked emission reductions in Canada, although not as dramatic

as those reported in the United States under TRI. From 1995 to

2003, NPRI facilities reduced their releases and transfers by 10%.48 (During this period, the number of facilities reporting increased by 67%. For firms that reported both in 1995 and 2003,

the decrease in total releases and transfers was 20%. 49 ) One recent study found that Canadian firms with consumer market ex44. Massachusetts Toxic Use Reduction Institute, Results to Date, http:/l

www.turadata.turi.org/Success/ResultsToDate.html (last visited Feb. 11, 2007).

45. Mary Graham & Catherine Miller, Disclosure of Toxic Releases in the United

States, 43 ENV'T 8, 11-12 (Oct. 2001).

46. Kathryn E. Durham-Hammer, Left to Wonder: Reevaluating, Reforming, and

Implementing the Emergency Planning and Community Right-to-know Act of 1986, 29

COLUM. J. ENVTL. L. 323, 336-41 (2004); Alexander Volokh, The Pitfalls of the Environmental Right-to Know, 2002 UTAH L. REV. 805, 814-24 (2002); Susan E. Dudley, It

is Time to Reevaluate the Toxic Release Inventory, 12 Mo. ENVTL. L. & POL'Y REV. 1,

11-15 (2004). For an overview of the TRI program's impact, see JAMES T. HAMILTON,

REGULATION THROUGH REVELATION: THE ORIGIN, POLITICS, AND IMPACTS OF THE ToxiCs RELEASE INVENTORY PROGRAM 208-51 (2005).

47. About the NPRI, http://www.ec.gc.ca/pdb/nprinpri-aboute.cfm (last visited

Jan. 12, 2007); CEPA Environmental Registry: General Information, http:l!

www.ec.gc.ca/CEPARegistry/geneinfo/fsl.cfm (last visited Jan. 12, 2007).

48. COMM'N FOR ENVTL. COOPERATION, TAKING STOCK: 2003 NORTH AMERICAN POLLUTANT RELEASES AND TRANSFERS 160 (2006).

49. Id. at 140. In the first seven years of the program (1993 to 1999), covered

firms reduced their on-site releases by 27%. Two researchers have concluded that

most of these reductions resulted from traditional command-and-control regulation,

rather than voluntary reductions undertaken by firms in response to public pressure

stemming from disclosure of their releases. Kathryn Harrison & Werner Antweiler,

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posure reduced their emissions more than other firms subject to

NPRI, although the effect was relatively small.50 Other countries

with similar versions of pollutant registries include Australia, Japan, Mexico, and Norway, 51 and as discussed in more detail below,

members states of the EU.

Environmental groups have used pollutant registries like the

TRI and NPRI as a springboard to develop more detailed and personalized spotlighting tools. For example, the "Scorecard" website

mentioned above, created by the environmental organization Environmental Defense, allows the public in the United States to analyze and compare TRI data and other environmental information

by zip code or facility, and also provides estimates of the health

risks posed by certain releases. 52 Environmental groups in

Canada have developed a similar website entitled "Pollution

Watch." 53

Beyond pollutant registries like TRI and NPRI, other information disclosure programs have produced significant environmental benefits. For example, California's Proposition 65, which

requires businesses to warn the public prior to exposing them to

listed carcinogens or reproductive toxins, has generated substantial reductions in industrial air emissions and significant reformulations of consumer products containing toxic chemicals (including

brass faucets, ceramic ware, calcium supplements, water meters,

water filters, rain coats and other plastic clothing, wooden playground structures, and portable classrooms). 54 More generally, in

the consumer products market, there is some evidence that

awarding a positive environmental label to a product leads to a

substantial increase in the market share of the product (and, conversely, some evidence of companies whose sales dropped sharply

as a result of being labeled environmentally unfriendly). 55

Incentives for Pollution Abatement: Regulation, Regulatory Threats, and Non-Governmental Pressures, 33 J. POL'Y ANAL. & MAN. 361, 368-69 (2003).

50. Werner Antweiler & Kathryn Harrison, Toxic Release Inventories and Green

Consumerism: Empirical Evidence From Canada, 36 CAN. J. ECON. 495, 517-18

(2003).

51. HAMILTON, supra note 46, at 239.

52. See Scorecard: The Pollution Information Site, http://www.scorecard.org/ (last

visited Dec. 1, 2006).

53. See PollutionWatch, http://www.pollutionwatch.org (last visited Dec. 1, 2006).

54. Clifford Rechtschaffen, The Continued Success of Proposition 65 in Reducing

Toxic Exposures, 35 ENVTL. L. REP. (Envtl. Law Inst.) 10,850 (2005).

55. Clifford S. Russell et al., Environment, Information and Consumer Behavior:

An Introduction, in ENVIRONMENT, INFORMATION AND CONSUMER BEHAVIOR 1, 8-9

(Signe Krarup & Clifford S. Russell eds., 2005); cf. Christopher D. Clark & Clifford S.

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To date, there have been few formal programs that mandate

disclosure of a firm's compliance or environmental performance

records. In a number of instances where such information has

been mandated, however, disclosure has stimulated improved environmental performance. For example, in Indonesia, the environmental agency developed a color-coded grading system to

evaluate the environmental performance of industrial facilities. 56

Using this system, facility grades were then publicly disclosed, although there was a six-month delay in disclosing firms in the

worst two categories to allow them an opportunity to improve

their performance. 57 Rates of compliance among participating factories increased from 35% to 51%, and discharges on average declined by 43%.58

In a very similar program, China's Environmental Protection

Agency established "Greenwatch," a public disclosure program

that rates industrial environmental performance from best to

worst in five colors based on a firm's emissions, environmental

management practices, public complaints, regulatory actions and

penalties, and firm characteristics.5 9 In a pilot project conducted

in one Chinese city, the number of "superior" performing firms

doubled (from 31% to 62%) in the first year after the firm rankings

were publicly released; in a second city, the percentage of firms

rated good or better increased from 24% to 62% of total firms, and

Russell, Public Information Provision as a Tool of Environmental Policy, in ENVIRONMENT, INFORMATION AND CONSUMER BEHAVIOR, supra, at 111, 112 (reporting some evidence that environmental labels have prompted consumers to change their behavior

and chose eco-labeled products).

56. Shakeb Afsah & Jeffrey R. Vincent, Putting Pressure on Polluters: Indonesia's

PROPER Program (1999) (on file with author). The colors were chosen because they

had cultural connotations in Indonesia analogous to the environmental performance

levels they signified.

57. Shakeb Afsah et al., Regulation in the Information Age: Indonesian Public Information Program for Environmental Management 7 (1997), available at http://siteresources.worldbank.org/NIPRINT/Resources/RegulationInThelnformationAge.pdf.

58. See id. at 9; Shakeb Afsah, Proper Program for Pollution Control Environmental Evaluation and Rating: A Model for Promoting Environmental Compliance and

Strengthening Transparency and Community Participation in Developing Countries

18 (on file with author).

59. Hua Wang et al., Public Ratings of Industry's Environmental Performance:

China's Greenwatch Program, Address at Seventh International Conference on Environmental Enforcement (April 15-19, 2002), in CONFERENCE PROCEEDINGS 2, 7 (Inspectorate of Housing, Spatial Planning and the Environment, The Netherlands, et

al., San Jose, Costa Rica) (2002), available at http://www.inece.org/conf/proceedings2/

52-Public%2ORatingsChina.pdf.

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the percentage of firms rated in the worst category decreased from

11% to 5%.60

Likewise, in 1990 the regional environmental agency in British Columbia, Canada began publishing a list of firms that were

significantly out of compliance with environmental requirements.

Over the subsequent six-year period, publication of the list had

positive impacts; firms that were included on the list significantly

reduced their emissions, even more so than firms out of compliance that were subject to enforcement orders and penalties. 61 In

another (non-environmental disclosure) program, Los Angeles

County in 1997 required restaurants to post in their windows government-determined letter grades, reflecting the results of county

hygiene inspections. This local program resulted in revenue increases for restaurants with higher grades and revenue decreases

for those with lower grades, as well as measurable increases in

hygiene quality and a consequent significant drop in hospitalizations due to food-related illnesses. 62

Notably, moreover, negative publicity about a firm's poor environmental record-even though not necessarily as part of a government mandated program-also can translate into adverse

economic impacts for the firm. Thus, public announcements about

the initiation of enforcement actions against a firm, environmental spills, or high levels of emissions have been shown to result in

significant reductions in the market value of the affected firm.63

For example, a study of stock market reactions to 730 EPA judicial actions against publicly-traded firms from 1972-1991 found

60. Id. at 9-10.

61. J~r6me Foulon et al., Incentives for Pollution Control: Regulation or Information?, 44 J. ENVTL. ECON. & MGMT. 169, 170-71 (2002).

62. Archon Fung et al., The Political Economy of Transparency: What Makes Disclosure Policies Effective? 21 (Ash Inst. for Democratic Governance & Innovation,

John F. Kennedy School of Gov't, Harvard Univ., Working Paper No. OP-03-04, 2004),

available at http://www.archonfung.net/papers/FGWEffectiveness.pdf. Fung and his

colleagues argue, however, that transparency programs have a mixed record of success. See id. at 22.

63. Paul Lanoie et al., Can Capital Markets Create Incentives for Pollution Control?, 26 ECOLOGICAL ECON. 1, 35-36 (1998) (discussing various studies that reach this

conclusion). For example, Professor James Hamilton found that firms suffered statistically significant negative stock returns of between 0.2% and 0.3%, an average loss

per firm of $4.1 million in stock value, when TRI data was first disclosed in 1989.

James T. Hamilton, Pollution as News: Media and Stock Market Reactions to the Toxics Release Data, 28 J. ENVTL. ECON. & MGMT. 98, 109 (1995). A later study looking at

chemical firms reported similar results following disclosure of TRI data in the years

1990-1994. Madhu Khanna et al., Toxics Release Information: A Policy Tool for Environmental Protection, 36 J. ENVTL. ECON. & MGMT. 243, 245 (1998).

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EU ENVIRONMENTAL COMPLIANCE

that the market value of "the average affected firm drop[ped]

0.43% during the week of settlement" of the enforcement action. 64

Likewise, another study found that public announcement of U.S.

Occupational Safety and Health Administration ("OSHA") penalties led to a significant drop in stock prices of the companies subject to those penalties.65 Another investigation looked at the

impact on stock prices of firms in three industrial sectors in India

after a leading environmental group published ratings about their

environmental performance, which generally showed poor performance. 66 It found that in two of the three sectors examined,

stock prices declined significantly after the ratings were published.67 The losses were more significant for firms with lower

rankings. 68 Similar results were reported in an analysis of the

reaction of capital markets to environmental performance disclosure in the Republic of Korea, where, since the mid 1980s, the

Ministry of Environment has published a monthly list of facilities

in violation of Korean environmental laws and enforcement actions undertaken by the Ministry. 69 During the period from 1993

to 2002, publication of this information, in a majority of instances,

led to significant market reductions on the Korean Stock Exchange for the firms affected. The average percentage reduction

in market value was 9.7%.70

In sum, considerable experience to date shows that spotlighting a firm's emissions, environmental performance, or record of

violations can be a very effective means of motivating better firm

performance and compliance.

64. S.G. Bandrinath & Paul J. Bolster, The Role of Market Forces in EPA Enforcement Activity, 10 J. REG. ECON. 165, 167 (1996).

65. Wallace N. Davidson, III et al., The Effectiveness of OSHA Penalties: A StockMarket-Based Test, 33 INDUST. REL. 283 (1994).

66. Shreekant Gupta & Bishwanath Goldar, Do Stock Markets Penalise Environment-Unfriendly Behaviour? Evidence from India 12 (Ctr. for Dev. Econ., Working

Paper No. 116, 2003), available at http://www.cdedse.org/pdf/work116.pdf.

67. Id. at 12-15.

68. Id. at 16-17. The declines were as high as 43% for those identified as the worst

performers. Id. In a study of developing countries, other researchers found that stock

values fell in response to citizen complaints about firms and rose when positive environmental performance was publicized by the government. See generally Susmita

Dasgupta et al., Pollution and Capital Markets in Developing Countries, 42 J. ENVTL.

ECON. & MANAG. 310 (2001).

69. Susmita Dasgupta et al., Disclosure of Environmental Violations and Stock

Market in the Republic of Korea, 58 ECOL. ECON. 759 (2006).

70. Id.

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III. THE EU HAS EMBRACED THE CONCEPT OF

SPOTLIGHTING

The EU already has embraced the concept of spotlighting in a

number of areas of environmental policy. Most directly, since

2001 the EU has required member states to publish an inventory

of pollutant releases and transfers modeled after the TRI program-first as part of the European Pollution Emission Register

("EPER") and then, beginning in 2007, under the European Pollutant Release and Transfer Register ("E-PRTR") (established to implement a protocol on pollution registries signed by the EU).71

The original EPER program covers fifty pollutants and approximately 9,200 facilities; it requires member states to file reports on

emissions of these pollutants within their jurisdiction every three

years.72 The register is available on a website hosted by the European Environment Agency, thus allowing the public to see detailed data on individual facilities and rank them by the size of

their emissions. 73 The first fully complete reporting year for

EPER was 2004, 74 during which its website received over 240,000

visitors.7 5 The new E-PRTR expands the number of pollutants

covered (to over 90), as well as the type of releases, and sources

covered by member state reports. 76 It also requires member

states to report annually on releases and transfers. 77 Like the

71. See Commission Decision of 17 July 2000 on the Implementation of a European Pollutant Emission Register According to Article 15 of Council Directive 96/61/

EC Concerning Integrated Pollution Prevention and Control, 2000 O.J. (L 192) 36,

available at http://eur-lex.europa.eu/LexUriServ/site/en/oj/2000/l_192/1 19220000728

en00360043.pdf, see generally Parliament and Council Regulation (EC) No. 166/2006

of 18 January 2006 Concerning the Establishment of a European Pollutant Release

and Transfer Register and Amending Council Directives 91/689/EEC and 96/61/EC,

2006 O.J. (L 33) 1, available at http://eur-lex.europa.eu/LexUriServ/site/en/oj/2006/1l

033/1 03320060204en00010017.pdf [hereinafter Parliament and Council Regulation

No. 166/2006].

72. Welcome to EPER, http://www.eper.cec.eu.intleper/ (last visited Jan. 11,

2007); What is EPER, http://www.eper.cec.eu.int/eper/introduction.asp?i= (last visited

Jan. 11, 2007).

73. See Questions to EPER, http://www.eper.cec.eu.int/eper/faq.asp?i= (last visited Jan. 11, 2007).

74. Roel Brand et al., EPER Review Report 8 (June 2004), available at http:l

eper.ec.europa.eu/eper/documents/EPER%20Review%20report,%20final.pdf.

75. Press Release, European Environmental Agency, Updated Industrial Emissions Register Reveals Mixed Results, (Nov. 23, 2006), available at http://europa.eu/

rapid/pressReleasesAction.do?reference=IP/06/

1618&format=HTML&aged=O&language=EN&guiLanguage=en.

76. See Parliament and Council Regulation No. 166/2006, supra note 71, Annex I

(increasing the number of pollutants covered to over ninety); see also id. Annex II.

77. Id. art. 5(1)(a)-(c).

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EU ENVIRONMENTAL COMPLIANCE

EPER, the E-PRTR must be publicly accessible, user friendly, and

provide information to the public free of charge.78

In addition, to requiring publication of pollution registries by

member states, the EU is a party to the Arhus Convention, which

provides a broad right of public access to environmental information (as well as participation in environmental decision-making,

and access to justice to redress environmental violations).79 Member states are required to make all environmental information

that they possess accessible to the public and to prepare and publish a report on the state of the environment at least every four

years, including information "on the quality of, and pressures on,

the environment."80

The EU also has utilized spotlighting with success in its Bathing Waters Directive.8 ' This directive, originally adopted in 1975

and strengthened in 2006, establishes water quality standards for

beaches used by swimmers.8 2 Although plagued by considerable

noncompliance, this directive also resulted in significant improvements in water quality, in considerable part because of public disclosure about water quality at EU beaches.8 3 Since 1991 the

European Commission has published an annual report on beach

water quality in member states (the only directive for which the

European Commission has published such a report).8 4 Probably

even more significantly, since 1987 environmental groups have

78. Id. arts. 8(2), 10(1).

79. Convention on Access to Information, Public Participation in Decision-Making

and Access to Justice regarding Environmental Matters, June 25, 1998, 38. I.L.M.

517, available at http://www.unece.org/env/pp/documents/cep43e.pdf [hereinafter

Arhus Convention].

80. See generally Parliament and Council Directive 2003/4/EC, art. 7(3), 2003 O.J.

(L 41/26) (EC), available at http://eur-lex.europa.eu[LexUriServ/site/en/oj/2003/l041/

l_04120030214en00260032.pdf; see also John M. Ackerman & Irma E. Sandoval-Ballesteros, The Global Explosion of Freedom of Information Laws, 58 ADMIN. L. REV. 85,

86 (2006) (noting that as of 2005, sixty-six countries had passed laws guaranteeing

citizens access to information).

81. See Council Directive 76/160/EEC, 1976 O.J. (L 31) 1 (EC), available at http:

//eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31976LO160:EN:HTML

[hereinafter Bathing Waters Directive].

82. See Parliament and Council Directive 2006/7/EC, art. 5, 2006 O.J. (L 64) 37

(EU), available at http://eur-lex.europa.eu/LexUriServ/site/en/oj/2006/L_064/

1_06420060304en00370051.pdf [hereinafter Parliament and Council Directive 2006/7/

EC]; see also id. Annex II; Sixth Annual Survey, supra note 3, at 12.

83. See Sixth Annual Survey, supra note 3, at 12 ("The Bathing Water Report

2003 shows that bathing water quality in fifteen 'old' [miember [sitates (EU15) continues to improve.").

84. Accurate Testing of Bathing Water, http://ec.europa.eu/research/success/en/

med/0012e.html (last visited Jan. 12, 2007).

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developed a complementary spotlighting campaign, known as the

"Blue Flag Campaign." 5 This Campaign awards "Blue Flags" to

beaches and marinas that meet water quality criteria set forth in

the Bathing Waters Directive (or other national requirements for

non-EU countries), as well as other detailed requirements relating

to environmental management, safety and services on the beach

and the provision of environmental education and information. 6

Beaches and marinas can display their Blue Flag designations,

and information about participating areas is widely publicized.

The Blue Flag is now a well-known and widely recognized eco-label for tourists, and localities vie to obtain certification under the

program.8 7 It operates in 36 countries, and in 2006, 2,599 beaches

and 644 marinas were awarded the Blue Flag.88 There are related

award schemes in individual European countries including the

Strandtafel Award in Germany (administered by the state of

Schleswig-Holstein)8 9 and the "Seaside Awards, "9° "Good Beach

Guide,"91 and "Green Coast" Awards 92 in Great Britain administered by environmental groups. (The United States employs an

approach similar to the EU's Bathing Water Directive. The

"Beaches Bill," enacted by Congress in 2000, requires states to

monitor the water quality of beaches and report this data to the

EPA and the public. 93 The environmental group Natural Resources Defense Council publicizes local beach quality and clo85. KRAMER, supra note 1, § 7-15; Blue Flag History, http://www.blueflag.org/

BlueFlagHistory (last visited Jan. 12, 2007).

86. See Blue Flag Programme, http://www.blueflag.org/ (last visited Jan. 8, 2007).

87. RODIGER K. W. WURZEL, ENVIRONMENTAL POLICY-MAKING IN BRITAIN, GERMANY, AND THE EUROPEAN UNION: THE EUROPEANISATION OF AIR AND WATER POLLUTION CONTROL 225 (2002) (noting that Blue Flag has become one of best known ecolabels in Europe).

88. Blue Flag Beaches/Marinas, http://www.blueflag.org/blueflag (last visited

Jan. 10, 2007).

89. WURZEL, supra note 87, at 226-28.

90. See Seaside Awards, http://www.seasideawards.org.uk/sea2.asp (last visited

Jan. 8, 2007) (criteria also focused on rural beaches and more emphasis on litter

management).

91. See The Good Beach Guide, httpJ/www.goodbeachguide.co.uk/ (last visited

Jan. 10, 2007).

92. See Green Coast Awards, http://www.keepwalestidy.org/englishldefault.asp?

Category=Tourism&NewsID =17&Menu=0.26.12.61 (last visited Jan. 10, 2007) (criteria also include unspoiled, natural character of beaches).

93. See Beaches Environmental Assessment and Coastal Health Act of 2000, Pub.

L. No. 106-284, § 4, 114 Stat. 872 (2000) (codified as amended in scattered sections of

33 U.S.C.).

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sures through its own annual reports. 94 According to the EPA,

from 2002 to 2004 the percentage of days on which beaches were

closed and had health advisories declined, despite an increase in

the number of beaches monitored.95)

Amendments to the EU Bathing Waters Directive, adopted in

2006, build on the spotlighting approach to environmental regulation. 96 These amendments divide beaches into four classifications

based on beach water quality: excellent, good, sufficient, and

poor.97 They require that information about a beach's quality

classification, the results of water quality monitoring, the beach's

management plan, and other relevant information, be made readily available to the public both through displays at the beach and

through the media and the Internet.98 The amendments also require the Commission to publish an annual report on bathing

water quality, including classifications, within the EU.99

The EU's voluntary Eco-Management and Auditing Scheme

("EMAS") also relies on information disclosure to prompt better

environmental performance.' 00 To achieve EMAS registration, a

firm must follow certain requirements for adopting an environmental management system and prepare a public environmental

report. 101 The report must include a description of all firm activities resulting in significant environmental impacts, a statement of

94. See MARK DORFMAN, MSPH, TESTING THE WATERS 2006: A GUIDE TO WATER

QUALITY AT VACATION BEACHES, POLLUTION-RELATED BEACH CLOSINGS AND ADVISORIES CLIMB IN 2005 (2006), available at http://www.nrdc.org/water/oceans/nttw.asp.

95. William Yardley, Beach Closings and Advisories Rose in 2005, Council Reports, N.Y. TIMES, Aug. 14, 2006, at A12 (the EPA reported that the percentage of

beaches with advisories declined from six percent to four percent from 2002 to 2004;

the Natural Resources Defense Council, however, contends that the number of closings and advisories actually increased five percent from 2004 to 2005).

96. See Parliament and Council Directive 2006/7/EC, supra note 82.

97. Id. art. 5(1)(a)-(d).

98. Id. arts. 7, 13(4).

99. Id. art. 13.

100. Dialogue and Reporting, http://www.emas.org.uk/aboutemas/mainframe.htm

(last visited Jan. 12, 2007).

101. Parliament and Council Regulation 761/2001, Allowing Voluntary Participation by Organisations in a Community Eco-Management and Audit Scheme, 2001

O.J. (L 114) 1, available at http://eur-lex.europa.eu /LexUriServ/site/enroj/2001/_114/

1_11420010424en00010029.pdf [hereinafter Parliament and Council Regulation 761/

2001]. Specifically, firms must (1) conduct a review of all environmental aspects of

the firm's activities; (2) establish an effective management system that, among other

things, commits the firm to continuous improvement of its performance (since 2001,

this system can be the International Organization for Standardization ("ISO") 14001

EMS, although EMAS also goes beyond ISO 14001 in several respects); (3) carry out

an audit assessing the effectiveness of the firm's management system and compliance

with regulatory requirements; and (4) prepare a public statement of environmental

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the organization's performance as compared to its goals and improvement targets, and information on the organization's compliance with legal requirements.10 2 As Professor David Case argues, "public environmental information disclosure is the "prime objective" of the EMAS regulation."1 0 3

The only tangible reward (other than the internal improvements that may result from adopting a management system) for

entities that participate in EMAS is enhanced public reputationfacilities that are registered are entitled to display an "attractive"

("visible and recognizable") EMAS logo on their letterheads, environmental statements, and product advertisements. EMAS has

engendered some, albeit limited, participation; at the start of

2005, more than 4,000 facilities representing more than 3,000

firms had obtained registration under EMAS. (The relatively limited participation in EMAS is likely due in part to it being overshadowed by International Organization for Standardization

("ISO") 14001, a competing environmental management standard.

As of the end of 2005, over 111,000 firms worldwide had achieved

certification under ISO 14001.104)

The EU also has been moving toward requiring greater environmental information disclosure in annual corporate reports.

Under its 2003 "Modernization Directive" (dealing with EU companies' financial reporting), for example, the EU requires large

public corporations to include an analysis of their environmental

performance necessary to understand the "company's development, performance or position" in their annual reports. 10 5 Professors Cynthia Williams and John Conley term this requirement an

example of general "sustainability reporting."os An earlier set of

recommendations adopted by the European Commission goes further, calling on EU companies to disclose specific environmental

information such as the company's policy and programs; environmental improvements in key areas; resource, water, and energy

performance. In addition, an independent, accredited third party must verify that the

firm has met all the requirements of the EMAS regulation. Id. art. 3(2)(a)-(d).

102. Id .at Annex 111(3.2).

103. Case, supra note 33, at 404.

104. See Int'l Org. on Standardization, The ISO Survey of Certifications 2005, at 9,

available at http://www.iso.org/iso/en/iso9000-14000/pdf/survey2005.pdf.

105. Parliament and Council Directive 2003/51, 2003 O.J. (L 178) 16, available at

http://eur-lex.europa.euLexUriServ/site/en/oj/2003/l_178/1-17820030717en00160022.

pdf.

106. Cynthia A. Williams & John M. Conley, An Emerging Third Way? The Erosion

of the Anglo-American Shareholder Value Construct, 38 CORNELL INT'L L. J. 493, 530

(2005).

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use; emissions and waste disposal; material environmental liabilities; significant fines and payments resulting from noncompliance

with environmental regulations or tort liability; and government

environmental incentives received by the firm in their annual

reports*107

A number of EU countries, Denmark, Holland, Norway, Sweden, and Spain also require companies to provide expanded environmental information in their annual reports.108 Most

expansively, France requires each company that trades on the

French stock exchange to provide extremely detailed environmental and other social information in its annual report to shareholders, including resource use, emissions, environmental

management systems, and sanctions paid because of environmental damage.10 9 Similarly, in 2005 the British government promulgated regulations that would have required 1,300 British-based

companies listed on the London Stock Exchange and the two major U.S. exchanges to publish an annual report identifying material social and environmental risk and disclose information about

those risks.11° These regulations were unexpectedly withdrawn in

late 2005, but some observers expect them to be reinstated. 1

'

Large corporations also have begun to voluntarily prepare formal corporate environmental reports in response to the growing

socially responsible investment movement in Europe (and the

United States). This movement evaluates the social records of

companies, including their record of environmental compliance

and performance, when making investment decisions in the stock

market. 1 2 In Europe, the socially responsible investment market

in 2003 was estimated at approximately C 12.2 billion for individ107. Commission Recommendation of 30 May 2001 on the Recognition, Measurement and Disclosure of Environmental Issues in the Annual Accounts and Annual

Reports of Companies, 2001 O.J. (L 156) 33, available at http://eur-lex.europa.eu/LexUriServ/site/en/oj/2001/I_156/1_15620010613en00330042.pdf.

108. Williams & Conley, supra note 106, at 504.

109. Id. at 504-05.

110. John M. Conley & Cynthia A. Williams, Engage, EMBED, and Embellish:

Theory vs. Practice in the Corporate Social Responsibility Movement, 31 J. CoRP. L. 1,

3 (2005).

111. Id. at 3-4.

112. See generally CSR Europe et al., Investing in Responsible Business: The 2003

Survey of European Fund Managers, Financial Analysts and Investor Relations

Officers, available at http://www.deloitte.com/dtt/cda/doc/content/dtt-gfsiCSRweb2_

110603.pdf [hereinafter Investing in Responsible Business]; Soc. Inv. Forum, 2005 Report on Socially Responsible Investing Trends in the United States: 10 Year Review

(2006), available at http://www.socialinvest.org/areas/research/trends/sri-trends_

report_2005.pdf [hereinafter 2005 Report].

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ual investors and C336 billion for institutional investors. 113 Today, 68% of large companies in Western Europe report on their

economic, social and environmental performance. 11 4

Lastly, the EU has adopted a voluntary "eco-labeling" program to promote a reliable market for environmentally friendly

products and services. 115 Firms that wish to display the EU's "eco-label" must demonstrate to government agencies that they

meet detailed environmental criteria, which focus on reductions in

the environmental impacts of a product or service throughout its

life-cycle (from raw material through extraction, production, distribution and disposal)." 6 As of August 2006, 339 eco-label licenses had been granted, covering several hundred products. 17

The EU also has directives that set requirements for labels on organic foods, genetically modified organisms, and household appliances (requiring information about energy consumption, noise,

water use, and power)."" Moreover, there are other non-governmental voluntary labeling schemes in the EU, such as the marine

stewardship scheme for fisheries. 119

Thus, in a variety of contexts, EU policymakers and others

recognize the value of spotlighting to motivate better environmental performance. It's time to expand the spotlighting concept to

the enforcement context to promote more widespread compliance

with EU environmental law.

113. Investing in Responsible Business, supra note 112, at 9. In the United States,

approximately $2.29 trillion of professionally managed assets are invested according

to social criteria-approximately 9.4% of such assets. 2005 Report, supra note 121, at

iv.

114. Investing in Responsible Business, supra note 112, at 20.

115. See Welcome to the European Union Eco-label Homepage, http://ec.europa.eu/

environmentjecolabel/index en.htm (last visited Jan. 30, 2007).

116. Parliament and Council Regulation 1980/2000, On a Revised Community Ecolabel Award Scheme, 2000 O.J. (L 237) 1, available at http://eur-lex.europa.eu/LexUri

Serv/site/en/oj/2000/1l237/l_23720000921en00010012.pdf.

117. The Use of the European Eco-Label Criteria in Green Public Procurement Approaches, http://ec.europa.eu/environment/ecolabelpdf/marketing/management_

group/eu..ecolabel-criteria-ingpphelpdesk.pdf (last visited Jan. 30, 2007).

118. The sale of organic foods has been increasing throughout Europe. Mette Wier

et al., Information Provision, Consumer Perceptions and Values-The Case of Organic

Foods, in ENVIRONMENT, INFORMATION AND CONSUMER BEHAVIOR, supra note 55, at

161, 161.

119. See Welcome to MSC Online, http://eng.msc.org/ (last visited Jan. 30, 2007).

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IV. THE NEXT STEP FOR THE EU: SPOTLIGHTING

ENFORCEMENT AND COMPLIANCE

INFORMATION

Despite its potential, so far spotlighting has only been employed as an enforcement strategy in a very limited way. Yet as

discussed above, spotlighting is a valuable and cost-effective tool

that should be better exploited by EU regulators. 120 While the EU

has embraced spotlighting in some contexts, such as the E-PRTR

and with respect to beaches, it has not publicized the extent to

which individual companies are meeting the requirements of EU

law (with the notable exception of Great Britain, discussed below).

This article proposes that EU regulators take the next step and

publicly profile and disclose the compliance records of individual

firms in all member states.

The U.S. EPA has taken a major step in this direction with its

Enforcement and Compliance History Online ("ECHO") website. 121 Started in 2002, ECHO provides enforcement and compliance information about three major statutes-the Clean Water

Act, the Clean Air Act, and the Resource Conservation and Recovery Act-for approximately 800,000 regulated facilities. 122 This

includes information from the previous two years regarding: facility inspections and evaluations, compliance status, violations detected, pollutants associated with the violations and whether they

are significant, formal enforcement actions, and penalties imposed

as a result of enforcement actions. 123 In little more than its first

three years of operation, the website received approximately 2.5

million visits. 124

Great Britain's Environmental Agency has gone further than

ECHO and has presented a template for the rest of the EU to fol120. See Robert H. Cutting et al., Enforcement Data: A Tool for Environmental

Management, 36 ENVTL. L. REP. (Envtl. Law Inst.) 10,060-61 (2006) ("an assemblage

of existing enforcement and compliance data from all environmental regulatory agencies in a publicly accessible format would be a valuable tool that is either overlooked

by policymakers or is intentionally ignored").

121. See Envtl. Prot. Agency, Enforcement and Compliance History Online, http:l!

www.epa.gov/echo/ (last visited Jan. 28, 2007).

122. Envtl. Prot. Agency, Enforcement and Compliance History Online: About the

Site, http://www.epa.gov/echo /aboutsite.html (last visited Jan. 28, 2007).

123. Envtl. Prot. Agency, Enforcement and Compliance History Online: About the

Data, http://www.epa.gov /echo/aboutdata.html (last visited Jan. 28, 2007).

124. Press Release, Envtl. Prot. Agency, Three EPA Programs Nominated for Government 'Oscars,' (March 30, 2006), available at http://yosemite.epa.gov/opa/admpress.nsf/198a007cc57e64d3852570210055f3f6/ 09d2dfd224b8298f85257141005987 ia

!OpenDocument&Highlight=0,ECHO.

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low. For the past decade, the Agency has published a "Spotlight

on Business Environmental Performance," which details the environmental performance and compliance record of individual firms

in various business sectors. 125 Within each sector, the report

highlights good and bad performers (including some case studies),

pollution incidents, and fines assessed over a given threshold. 126

In its 2005 report, for example, the Agency listed the ten firms

with the highest cumulative fines, events leading to prosecution,

and repeat offenses. 127 The Agency also grades operator performance from "A" to "E" based on the firm's ability to comply with

permit conditions and its actual compliance history, including violations, pollution incidents, and prosecutions. 128 Within its grading scheme, the Agency divides operators into three categories of

regulated facilities: publicly-traded corporations (including the

stock market listed parent companies of the businesses highlighted) large private companies, and small and medium sized

companies. 129

In its 2002 annual report, the Environment Agency noted the

positive results achieved through its spotlighting reports program:

When the Environment Agency first turned the media spotlight on poor environmental performance five years ago, a chorus of disapproval rose through the ranks of regulated industry.

Five years on, Spotlight on business environmental performance has developed and expanded into a rounded assessment of performance, good and bad, and highlights positive

action as well as failings. In its short lifetime the report has

become a regular fixture in the environmental calendar, its findings keenly anticipated by some, anxiously awaited by others.

The latest report shows the positive trends of previous

years continuing. [These trends include] reductions in many

pollutants and significant overall improvements in environmental management. 130

125. See generally ENVIRONMENTAL AGENCY, THE ENVIRONMENT: WHAT'S IN IT FOR

YOU? SPOTLIGHT ON BUSINEss ENVIRONMENTAL PERFORMANCE IN 2005, 2006, available

at http://publications.environment-agency.gov.uk/pdf/GEHO0706BLBM-e-e.pdf [hereinafter SPOTLIGHT ON BusINEss ENVIRONMENTAL PERFORMANCE IN 2005].

126. See generally id.

127. See generally id.

128. Id. at 42.

129. Id. at 5.

130. ENVIRONMENT AGENCY, SPOTLIGHT ON BusINEss ENVIRONMENTAL PERFORMANCE, 2002, at 1, available at http://image.guardian.co.uk/sys-files/Guardian/documents/2003/07/30/spL2002full_523404.pdf.

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A more recent observer describes the positive impact of the

spotlighting reports:

There has been an impact here, specifically on major utility corporations and investors such as in the waste industry and the

water quality industry. The reality of convictions and the "naming and shaming" is that it is effective. It does modify company

behavior as it has caused problems in England and Wales and

overseas. Experience has been had, for example, of other companies contacting the [Environment Agency] to seek advice of

how to best avoid doing something illegal that their competitors

have done. Public limited companies do not like bad publicity .... 131

The EU itself, however, has only taken small steps in the direction of using spotlighting to showcase the compliance records of

regulated firms. In the Commission's last several reports on the

implementation of EU environmental law, it has published "scoreboards" documenting comparative implementation records, but

only on a member state basis. 132 These reports compare various

types of noncompliance by member states (such as missed deadlines for transposition measures, incorrect transposition of directives, and inadequate implementation of directives, in certain

regulatory areas). 133

In order to improve compliance with the large body of EU

laws, the EU should publicly evaluate and compare the compliance records of the best and worst regulated facilities. It should

rank facilities based on factors such as the number and severity of

violations, the number of civil and criminal prosecutions, the size

of penalties assessed, the degree to which discharges or emissions

exceed permitted levels, and the number and severity of spills or

accidental releases. More ambitiously, and perhaps further down

the road, the EU also should require member states to evaluate

"operator performance" (as the British Environmental Agency

does) based on the firm's ability to comply with permit conditions,

including the quality of its environmental management systems

and internal mechanisms for monitoring compliance.

A reasonable starting point for this program would be to spotlight the record of facilities governed by the EU's Integrated Pollu131. Martha Grekos, Environmental Fines - All Small Change, J. PLANNING &

ENVT'L L. 1330, 1336 (2004).

132. See, e.g., Sixth Annual Survey, supra note 3, at 5.

133. See id. at 53-58.

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tion Prevention and Control Directive, which applies to major

industrial facilities that are responsible for a large share of pollution in Europe, including the chemical, energy, mineral, paper,

and waste processing sectors.134 An estimated 50,000 facilities

are covered by this directive. 135

It is important that the reports about firm compliance within

EU states be comparative. Spotlighting is at its most powerful

and effective when it draws clear distinctions among firms. Professor Shelley Metzenbaum explains that spotlight comparison

has great power to embarrass and motivate, just as comparison

shopping by consumers spurs firms to improve their products. 36

As one recent analysis argues, publicizing enforcement and compliance data "provides both positive reinforcement for those in

compliance and negative reinforcement for those who are not....

The regulated community is wary about the release of [environmental] performance and enforcement information, which is precisely why it can be so effective."1 37

It is also important that the task of publicizing data and

drawing comparisons be done by an EU governmental agency, as

opposed to having the government make raw data available and

letting environmental groups prepare evaluative reports. When

the government is actively involved in evaluating private firm performance, the evaluations are likely to carry greater weight and

credibility with the public.' 38 In particular, the spotlighting

should be carried out by the European Environment Agency,

which already has responsibility for maintaining the E-PRTR.

Lastly, and most obviously, an effective spotlighting system

depends upon having underlying data to disclose. There are cur134. Council Directive 96/61, 1996 O.J. (L 257) 26, available at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31996L0061:EN:HTML (concerning integrated pollution prevention and control).

135. The IPPC Directive, http://ec.europa.eu/environment/ippc/index.htm (last visited Jan. 30, 2007).

136. SHELLEY METZENBAUM, BROOKINGS INST. CTR. FOR PUB. MGMT., MAKING MEASUREMENT MATTER: THE CHALLENGE AND PROMISE OF BUILDING A PERFORMANCE-FoCUSED ENVIRONMENTAL PROTECTION SYSTEM 42 (1998), available at http://

www.brook.edu/gs/cpm/metzenbaum.pdf.

137. Cutting et al., supra note 120, at 10,061-62. A study by the Oregon Department of Environmental Quality found that "65% of Oregonians would stop or reduce

buying from a company that was 'taking action that was bad for the environment.'"

Id. at 10,064.

138. C.f John Thogersen, Consumer Behavior and the Environment: Which Role

for Information, in ENVIRONMENT, INFORMATION AND CONSUMER BEHAVIOR, supra note

55, at 51-53 (consumers trust information about energy-conserving improvements

more when provided by the government than private firms).

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rently considerable gaps in information concerning the extent to

which EU laws are actually complied with. If member states are

not monitoring compliance or collecting data about the performance of firms, it will be impossible for the EU to report this information. Some member states, however, currently lack the

administrative capacity (or perhaps the political will) to effectively

monitor the behavior of regulated entities. Further, even where

they do collect this information, they may not turn it over to the

EU. One leading authority indicates that it has been "extremely

difficult" for the EU to gain access to data held by national, regional, or local authorities.139 He further contends that "no administration would be easily persuaded to release data showing

that a directive is not properly monitored or applied in practice."140 Thus, a basic prerequisite for a spotlighting program is

that the EU adopt a directive or regulation mandating that member states systematically collect and maintain data about compliance by regulated entities within their borders.

To be sure, there will be significant hurdles to the implementation of an EU spotlighting program. Countries that are resistant to meaningful implementation of EU law will not want

attention drawn to their enforcement deficits. Likewise, companies that are violating the law will not welcome the harsh glare of

additional public attention and notoriety (though firms that are

leaders in environmental performance and compliance are keen to

publicize this fact). If these hurdles are overcome, however, a

spotlighting approach could work where other traditional methods

of environmental enforcement have failed. This approach is far

less intrusive and expensive than direct EU enforcement. It

should not be seen as compromising the sovereignty of individual

countries or interfering with their primary role in achieving enforcement within their boundaries. Spotlighting also does not require levying fines or other sanctions for noncompliance, which

countries may be reluctant to impose. Rather, it relies on the simple but potent power of public scrutiny to motivate better

performance.

139. KRAMER, supra note 1, § 12-16.

140. Id.

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V. CONCLUSION

To date, efforts to ensure widespread compliance with EU environmental laws have been met with mixed success. The spotlighting approach offers a practical and effective alternative, and

should be implemented by the EU.

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