# Pace En

vironmental La

w Review

V olume 24 Issue 1 W int er 2007 Article 7

January 2007 

# Shining the Spotlight on European Union En vironmental Compliance

Clifford Rechtschaffen

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### Recommended Citation Clifford Rechtschaffen, Shinin g t he S pot li g ht on Euro pean U nion Environment

al Com pliance, 24 Pace En vtl

.L. R ev. 161 (2007) Availa ble at: http://digitalcommons.pace
.edu/pelr/vol24/iss1/7

## Shining the Spotlight on European Union Environmental Compliance

CLIFFORD RECHTSCHAFFEN*

The practical application ofenvironmental provisions is the most serious problem that national, Community and international environmental law faces. Even a piece ofnational legislation that copies a directive word for word will remain a mere piece ofpaper unless it is applied.'
European Union ("EU")environmental law has grown rapidly in size and complexity in recent years so that it now consists ofat 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 ofthe 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 ofthe 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 ofScience in the EuropeanCommunity 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 andEuropeanRiskRegulation,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 ofimplementation and enforcement ofEU 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 ofEU 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 ofenvironmental 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 ofimproving compliance with EU environmental laws.

I. THE CHALLENGE OF ENVIRONMENTAL ENFORCEMENT IN THE EU

There are a number ofreasons-some institutional, some political, and some reflective ofEuropean legal culture-why achieving widespread compliance with EU environmental requirements has been so challenging.

3. See, e.g., CommissionStaffWorkingPaper,SixthAnnualSurvey on theImplementationandEnforcement ofCommunity EnvironmentalLaw 2004, at 4 (Aug. 17, 2005), available at http://ec.europa.eu/environment/law/pdf/6th-en.pdf [hereinafter SixthAnnual Survey]. The Commission noted, however, that there were fewer environmental infringement cases in 2004 than in prior years. Id. [Vol. 24

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One is the federalist political structure ofthe EU. EU environmental laws are enacted at the community-wide level. Most EU environmental legislation is adopted in the form ofdirectives, which bind member states to a certain result but leave the method ofachieving 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 ofEU 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 ofenforcement 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." 1 0 At the same time, the European Commission, which serves as
an administrative, quasi-executive branch of the EU governing

4. Christopher Demmke, Implementation ofEnvironmentalPolicy and Law in the United Statesand the European Union, in GREEN GIANTs?, supranote 2, at 135. 5. Id. 6. Id. 7. See id. at 138. 8. See KRAmER, supranote 1, §1-21 ("[Tlhere is a wide gulfbetween the individual [miember [s]tates' national environmental policies and regulations."). 9. See id. 10. Ernie Rosenberg, EU's Aspiration Trumpedby 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 alsoLuke Goodrich, ImplementingEnvironmentalLaw in the European Union:Lessonsfrom the Bathing WaterDirective, 16 GEO. INT'L ENVTL. L. REV. 301, 301 (2004) (noting the failure ofmember
states to effectively implement EU law); Richard C. Visek, Implementationand Enforcement ofEC EnvironmentalLaw, 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 ofregulation, 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 ofthe EU's principle of subsidiarity (providing, in general terms that the EU should only take action at the community level if the objectives ofa proposed action cannot be sufficiently achieved by member states).'3 Also as a result offederalist concerns, the European Environment Agency, which (in theory) was created to improve the EU's capacity for monitoring and enforcement ofenvironmental 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 ofEU law. 17 Nonetheless, the infringement process has substantial limits. The small staffofthe Commission's Directorate General Environment legal unit is often "overwhelmed" by the number ofcomplaints alleging environmental infringements18 (the Directorate General Environment only has a total staff ofabout 450 while in comparison the U.S. Envi11. See Demmke, supranote 4, at 139. 12. See id. at 140. 13. See KRAMER, supranote 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 ofmember states as well as Commission representatives. IMPEL provides for the exchange of practical ideas and experiences among members. KRAMER, supranote 1, § 12-21. 15. Demmke, supra note 4, at 140. 16. Id. 17. Demmke, supranote 4, at 141. 18. R. Daniel Kelemen, EnvironmentalFederalismin the UnitedStates andthe European Union,in GREEN GIANTs?, supranote 2, at 113, 123. [Vol. 24

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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,2 0 and only about 10% ofenvironmental 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 ofEU 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 ofEU 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 theUnited States' population, while the United States is about 2.5 times larger in physical size. Id. 20. KRAMER, supranote 1, § 12-42. 21. Id. § 12-33. 22. Kelemen, supranote 18, at 123. 23. Demmke, supranote 4, at 143; European Comm'n, EuropeanGeneral Guides: EnforcingYourRights in theSingleEuropeanMarket,Who CanLodgea Complaintto the European Commission? What is the Procedure?9 (2005), availableat 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 ofEU directives). 25. Demmke, supranote 4, at 126; seealso Sevine Ercmann, EnforcementofEnvironmentalLaw in United States andEuropeanLaw:RealitiesandExpectations, 26 ENVTL. L. 1213, 1222 (1996) (noting divergent provisions ofcertain EU member states 2007]

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### member states for damages suffered as adirect result ofa member state's "serious" breach ofEU 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 oftime."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. 2 8 

### 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 ofthis 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. 3 0


### 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]hebiggest obstacle to environmental policy success in the EU

concerning the right ofinterested 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, RegulatoryFederalism: EUEnvironmentalRegulationin ComparativePerspective,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, supranote 1, § 12-13.
28. Wiener, supranote 2, at 76. 29. James A. Lofton, EnvironmentalEnforcement:The ImpactofCulturalValues andAttitudes on Social Regulation, 31 Envtl. L. Rep. (Envtl. Law Inst.) 10,906, 10,910 (2001); Steven Kelman, EnforcementofOccupational Safety andHealthRegulations-A ComparisonofSwedish andAmericanPractices,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, supranote 4, at 143. 166 [Vol. 24

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appears to be ensuring that environmental policy directives are carried out appropriately in the member states."3 1

II. SPOTLIGHTING IS AN EFFECTIVE ENVIRONMENTAL POLICY TOOL
The concept ofusing 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 ofmarket 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 ofgovernmental resources, infrastructure, or personnel. Spotlighting has also proven to be quite effective. 33 This is because it takes advantage ofthe 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 oftop 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, FromSmokestack to SUV: TheIndividualasRegulatedEntity in theNew EraofEnvironmentalLaw, 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 ReportingasInformationRegulation: A Law andEconomicsPerspective,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 (lastvisited Feb. 11, 2007). 35. Neil Gunningham et al., Social License andEnvironmentalProtection:Why Businesses GoBeyond 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 ofwaste sent 2007] 167

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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 ofcertain 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 3 8 (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. 4 0 Professor Bradley Karkkainen describes TRI as a "watershed" and argues that this program works because it establishes

an objective, comparable, andbroadly 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 ofexternal parties-including investors, community residents, and regulatorseach ofwhom can exert powerful pressures to improve the firm's performance. 42A 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 EnvironmentalRegulations? The Role of the Market in Hazardous Waste Compliance, 10-11 (Coll. ofWilliam & 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 (lastvisited Feb. 11, 2007). 38. ENvTL. PROT. AGENCY, 2004 TRI PUBLIC DATA RELEASE E-REPORT 16 (2006), availableat http://www.epa.gov/tri/tridata/tri04/ereport/2004eReport.pdf. 39. Id. 40. See Addition ofReporting 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, Informationas EnvironmentalRegulation: TRI and PerformanceBenchmarking,Precursor to a New Paradigm?, 89 GEO. L.J. 257, 260, 295 (2001). 42. Id. at 295. 43. Id. at 354. [Vol. 24 168

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since the law's inception have decreased their toxic chemical use by 41%, reduced their generation ofwaste by 65% per unit ofproduct, and slashed their releases oftoxic 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 ofpositive trends but note that the rate of decline of toxic releases slowed markedly after the first five years ofreporting, that the amount oftoxic 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 oftoxic 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 offacilities 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 (lastvisited Feb. 11, 2007). 45. Mary Graham & Catherine Miller, DisclosureofToxic Releasesin the United States, 43 ENV'T 8, 11-12 (Oct. 2001). 46. Kathryn E. Durham-Hammer, Left to Wonder:Reevaluating,Reforming, and Implementingthe EmergencyPlanningandCommunityRight-to-knowAct of1986,29 COLUM. J. ENVTL. L. 323, 336-41 (2004); Alexander Volokh, The Pitfallsofthe EnvironmentalRight-toKnow, 2002 UTAH L. REV. 805, 814-24 (2002); Susan E. Dudley, It is Time toReevaluate the Toxic ReleaseInventory, 12 Mo. ENVTL. L. & POL'Y REV. 1, 11-15 (2004). For an overview ofthe 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 oftheir releases. Kathryn Harrison & Werner Antweiler, 2007] 169

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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 ofpollutant registries include Australia, Japan, Mexico, and Norway, 5 1 and as discussed in more detail below, members states ofthe 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 ofconsumer 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 ofthe product (and, conversely, some evidence ofcompanies whose sales dropped sharply

as a result ofbeing labeled environmentally unfriendly). 55

IncentivesforPollution Abatement:Regulation,Regulatory Threats,andNon-GovernmentalPressures,33 J. POL'Y ANAL. & MAN. 361, 368-69 (2003). 50. Werner Antweiler & Kathryn Harrison, Toxic Release Inventoriesand Green Consumerism: Empirical Evidence From Canada, 36 CAN. J. ECON. 495, 517-18 (2003). 51. HAMILTON, supranote 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 (lastvisited Dec. 1, 2006). 54. Clifford Rechtschaffen, The ContinuedSuccess ofProposition65 inReducing Toxic Exposures, 35 ENVTL. L. REP. (Envtl. Law Inst.) 10,850 (2005). 55. Clifford S. Russell et al., Environment,Informationand ConsumerBehavior: An Introduction, in ENVIRONMENT, INFORMATION AND CONSUMER BEHAVIOR 1, 8-9 (Signe Krarup & Clifford S. Russell eds., 2005); cf. Christopher D. Clark &Clifford S. [Vol. 24 170

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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 ofindustrial facilities. 5 6 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. 5 7 Rates ofcompliance 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% oftotal firms, and

Russell, PublicInformationProvisionas a Tool ofEnvironmentalPolicy,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 PressureonPolluters:Indonesia's PROPERProgram(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., Regulationinthe Information Age: IndonesianPublicInformationProgram forEnvironmentalManagement7 (1997), availableathttp://siteresources.worldbank.org/NIPRINT/Resources/RegulationInThelnformationAge.pdf. 58. See id. at 9; Shakeb Afsah,Proper Program forPollutionControlEnvironmental EvaluationandRating:A Modelfor PromotingEnvironmental Complianceand StrengtheningTransparencyand 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 ofHousing, Spatial Planning and the Environment, The Netherlands, et al., San Jose, Costa Rica) (2002), availableathttp://www.inece.org/conf/proceedings2/ 52-Public%2ORatingsChina.pdf. 2007]

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thepercentage offirms 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 offirms that were significantly out ofcompliance 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 ofcounty 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 ofa government mandated program-also can translate into adverse economic impacts for the firm. Thus, public announcements about the initiation ofenforcement actions against a firm, environmental spills, or high levels ofemissions 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 EPAjudicial actions against publicly-traded firms from 1972-1991 found

60. Id. at 9-10. 61. J~r6me Foulon et al., IncentivesforPollutionControl:RegulationorInformation?, 44 J. ENVTL. ECON. & MGMT. 169, 170-71 (2002). 62. Archon Fung et al., The PoliticalEconomy ofTransparency:WhatMakesDisclosure Policies Effective? 21 (Ash Inst. for Democratic Governance & Innovation, John F. Kennedy School ofGov't, Harvard Univ., Working Paper No. OP-03-04, 2004), availableathttp://www.archonfung.net/papers/FGWEffectiveness.pdf. Fung and his colleagues argue, however, that transparency programs have a mixed record ofsuccess. See id. at 22. 63. Paul Lanoie et al., Can CapitalMarketsCreateIncentivesforPollution 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 ofbetween 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, PollutionasNews:MediaandStock MarketReactionsto the ToxicsReleaseData,28 J. ENVTL. ECON. &MGMT. 98, 109 (1995). A later study looking at chemical firms reported similar results following disclosure ofTRI data in the years 1990-1994. Madhu Khanna et al., Toxics ReleaseInformation: A Policy ToolforEnvironmentalProtection,36 J. ENVTL. ECON. & MGMT. 243, 245 (1998). [Vol. 24

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that the market value of "the average affected firm drop[ped] 0.43% during the week of settlement" ofthe 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 ofthe companies subject to those penalties.65 Another investigation looked at the impact on stock prices offirms 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 ofEnvironment has published a monthly list offacilities in violation of Korean environmental laws and enforcement actions undertaken by the Ministry. 69 During the period from 1993 to 2002, publication ofthis information, in a majority ofinstances, 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 ofmotivating better firm performance and compliance.

64. S.G. Bandrinath & PaulJ. Bolster, The Role of MarketForcesinEPAEnforcementActivity, 10 J. REG. ECON. 165, 167 (1996). 65. Wallace N. Davidson, III et al., The Effectiveness ofOSHA Penalties: A StockMarket-Based Test, 33 INDUST. REL. 283 (1994). 66. Shreekant Gupta &Bishwanath Goldar, Do Stock MarketsPenaliseEnvironment-Unfriendly Behaviour? Evidencefrom India 12 (Ctr. for Dev. Econ., Working Paper No. 116, 2003), availableathttp://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 ofdeveloping 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., Pollutionand CapitalMarkets inDeveloping Countries,42 J. ENVTL. ECON. & MANAG. 310 (2001). 69. Susmita Dasgupta et al., DisclosureofEnvironmental Violations andStock Market in theRepublic ofKorea,58 ECOL. ECON. 759 (2006). 70. Id. 2007]

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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 ofthe 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).7 1
The original EPER program covers fifty pollutants and approximately 9,200 facilities; it requires member states to file reports on emissions ofthese pollutants within theirjurisdiction 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 ofCouncil 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, seegenerally 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, availableat 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= (lastvisited 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), availableathttp://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, supranote 71, Annex I (increasing the number ofpollutants covered to over ninety); see also id. Annex II. 77. Id. art. 5(1)(a)-(c).

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EPER, the E-PRTR must be publicly accessible, user friendly, and provide information to the public free ofcharge. 78

In addition, to requiring publication ofpollution registries by member states, the EU is a party to the Arhus Convention, which provides a broad right ofpublic access to environmental information (as well as participation in environmental decision-making, and access tojustice 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 ofpublic 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 toInformation, 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. SeegenerallyParliament and Council Directive 2003/4/EC, art. 7(3), 2003 O.J. (L 41/26) (EC), availableat http://eur-lex.europa.eu[LexUriServ/site/en/oj/2003/l041/ l_04120030214en00260032.pdf; see also John M. Ackerman & Irma E. Sandoval-Ballesteros, The GlobalExplosionof FreedomofInformationLaws, 58 ADMIN. L. REV. 85, 86 (2006) (noting that as of2005, 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), availableat 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 SixthAnnual 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). 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 ofbeaches 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/ (lastvisited 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 ofbest 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 (lastvisited Jan. 10, 2007) (criteria also include unspoiled, natural character ofbeaches). 93. See Beaches Environmental Assessment and Coastal Health Act of2000, Pub. L. No. 106-284, § 4, 114 Stat. 872 (2000) (codified as amended in scattered sections of 33 U.S.C.). [Vol. 24 176

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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 ofbeaches 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 ofwater 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.9 8 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 ofall 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), availableat http://www.nrdc.org/water/oceans/nttw.asp. 95. William Yardley, Beach Closings andAdvisories 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 ofclosings 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, availableat 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 ofits 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 ofthe 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.1 0 2 As Professor David Case argues, "public environmental information disclosure is the "prime objective" ofthe 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 ofthe end of2005, 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 oftheir environmental performance necessary to understand the "company's development, performance or position" in their annual reports. 1 0 5 Professors Cynthia Williams and John Conley term this requirement an example ofgeneral "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 ofthe EMAS regulation. Id. art. 3(2)(a)-(d).

102. Id .at Annex 111(3.2). 103. Case, supranote 33, at 404. 104. See Int'l Org. on Standardization, The ISO Survey ofCertifications 2005, at 9, availableathttp://www.iso.org/iso/en/iso9000-14000/pdf/survey2005.pdf.

105. Parliament and Council Directive 2003/51, 2003 O.J. (L 178) 16, availableat http://eur-lex.europa.euLexUriServ/site/en/oj/2003/l_178/1-17820030717en00160022. pdf.

106. Cynthia A. Williams & John M. Conley,An EmergingThirdWay? The Erosion oftheAnglo-American ShareholderValue Construct,38 CORNELL INT'L L. J. 493, 530 (2005). 178 [Vol. 24

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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 ofEU 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 ofenvironmental 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 alsohave 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 ofCompanies, 2001 O.J. (L 156) 33, availableathttp://eur-lex.europa.eu/LexUriServ/site/en/oj/2001/I_156/1_15620010613en00330042.pdf.

108. Williams & Conley, supranote 106, at 504. 109. Id. at 504-05. 110. John M. Conley & Cynthia A. Williams, Engage, EMBED, andEmbellish: Theory vs. Practicein the Corporate SocialResponsibilityMovement, 31 J. CoRP. L. 1, 3 (2005).

111. Id. at 3-4. 112. See generallyCSR Europe et al., Investing in ResponsibleBusiness:The 2003 Survey of European Fund Managers, FinancialAnalysts and Investor Relations Officers, available athttp://www.deloitte.com/dtt/cda/doc/content/dtt-gfsiCSRweb2_ 110603.pdf [hereinafter Investingin ResponsibleBusiness];Soc. Inv. Forum, 2005Report on Socially ResponsibleInvesting Trends in the United States: 10 YearReview (2006), available at http://www.socialinvest.org/areas/research/trends/sri-trends_ report_2005.pdf [hereinafter 2005 Report]. 2007] 179

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ual investors and C336 billion for institutional investors. 1 13 Today, 68% of large companies in Western Europe report on their economic, social and environmental performance. 1 1 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 ofa 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. 1 19 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 inResponsibleBusiness,supranote 112, at 9. In the United States, approximately $2.29 trillion ofprofessionally managed assets are invested according to social criteria-approximately 9.4% ofsuch assets. 2005 Report,supranote 121, at iv.114. Investing inResponsible Business,supranote 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 aRevised Community Ecolabel Award Scheme, 2000 O.J. (L 237) 1, availableathttp://eur-lex.europa.eu/LexUri Serv/site/en/oj/2000/1l237/l_23720000921en00010012.pdf.

117. The Use ofthe 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 oforganic foods has been increasing throughout Europe. Mette Wier et al., InformationProvision,ConsumerPerceptionsand Values-The CaseofOrganic Foods, in ENVIRONMENT, INFORMATION AND CONSUMER BEHAVIOR, supra note 55, at 161, 161.

119. See Welcome to MSC Online, http://eng.msc.org/ (lastvisited Jan. 30, 2007). 180 [Vol. 24

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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 ofEU law (with the notable exception ofGreat Britain, discussed below). This article proposes that EU regulators take the next step and publicly profile and disclose the compliance records ofindividual 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 AirAct, 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 ofenforcement 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 ofthe EU to fol120. See Robert H. Cutting et al., Enforcement Data:A Toolfor Environmental Management,36 ENVTL. L. REP. (Envtl. Law Inst.) 10,060-61 (2006) ("an assemblage ofexistingenforcement 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. 2007]

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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 ofindividual 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. 1 29
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 ofdisapproval rose through the ranks ofregulated 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 athttp://publications.environment-agency.gov.uk/pdf/GEHO0706BLBM-e-e.pdf [hereinafter SPOTLIGHT ON BusINEss ENVIRONMENTAL PERFORMANCE IN 2005].

126. See generallyid. 127. See generallyid. 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. 182 [Vol. 24

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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 ofconvictions 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, ofother companies contacting the [Environment Agency] to seek advice of how tobest 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 ofusing spotlighting to showcase the compliance records of regulated firms. In the Commission's last several reports on the implementation ofEU 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 ofdirectives, 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 ofcivil and criminal prosecutions, the size ofpenalties 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 offacilities governed by the EU's Integrated Pollu131. Martha Grekos, EnvironmentalFines

- All Small Change, J. PLANNING & ENVT'L L. 1330, 1336 (2004).

132. See, e.g., Sixth Annual Survey, supranote 3, at 5. 133. See id. at 53-58. 20071 183

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tion Prevention and Control Directive, which applies to major industrial facilities that are responsible for a large share ofpollution 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.' 3 8 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., supranote 120, at 10,061-62. A study by the Oregon Department ofEnvironmental Quality found that "65% ofOregonians 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, ConsumerBehaviorand the Environment: Which Role forInformation,in ENVIRONMENT, INFORMATION AND CONSUMER BEHAVIOR, supranote 55, at 51-53 (consumers trust information about energy-conserving improvements

more when provided by the government than private firms). 184 [Vol. 24

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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 offirms, 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 ofregulated 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." 14 0 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 ofindividual 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, supranote 1, § 12-16. 140. Id. 2007] 185

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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.

26 http://digitalcommons.pace.edu/pelr/vol24/iss1/7