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The political implications of the enforcement provisions of the NAFTA environmental side agreement: the CEC as a model for future accords.


One of the most novel aspects of the North American Free Trade Agreement (NAFTA)(1) is the major role played in the negotiations by environmental interest groups and by ecological issues in general.(2) The environmental community in the United States, and to a lesser degree in Canada and Mexico, seized upon the NAFTA negotiating process to test their political power in a new arena, where the implications for the environment were growing increasingly clear. One result of this political action is the environmental side agreement to NAFTA, the North American Agreement on Environmental Cooperation,(3) which was drafted specifically to address fears that the passage of NAFTA would increase environmental degradation. Among other effects, this agreement creates formal mechanisms by which private parties may initiate investigatory actions against member states believed to be persistently failing to enforce their own environmental laws.(4) Such investigations would be carried out by the trilateral Commission for Environmental Cooperation (CEC).(5) If such actions are pursued further by the member governments themselves, the agreement allows for the creation of an independent arbitral panel of experts with the authority to determine whether environmental legislation is being enforced appropriately. The end result of this process can be trade sanctions and/or fines(6) assessed to a nation found in violation. However, the likelihood of such sanctions occurring as the CEC now stands is remote.

This paper examines the enforcement provisions of the environmental side agreement to NAFTA as well as the principles of law, enforcement, and compliance implicit in the accord. It asks, what would be the consequences if the CEC were truly effective? What are the probable static and dynamic effects of powerful multinational bodies with sanctioning authority? How would environmental legislation and regulation be effected? Is the mode of enforcement embodied in the CEC approach a sound one, and therefore a good model for future accords? These questions are not merely of theoretical interest; with the possibility of NAFTA being extended to Chile or other Latin American states, the CEC's creation represents a powerful precedent.

The side agreement sets up procedures which, if used successfully and effectively, have the potential to influence and alter current regulatory practice in the United States.(7) In particular, a stronger trilateral body (which many U.S. environmentalists had sought) would enhance this potential and yield predictable effects on the shape and scope of future American environmental law. Environmental legislation in the United States is frequently both ambitious and ambiguous, and fundamentally incapable of being faithfully implemented as written. Executive agencies must often attempt to discern legislative intent from confusing and contradictory language. As a result, an essential role of the American judiciary is that of statutory interpreter, and environmental regulation is in fact a process of interaction between Congress, the implementing executive agencies, the courts, and various private interests, rather than a product purely of the legislature codified in formal law. Through this interaction, a rough equilibrium is reached that is politically satisfactory to multiple interests.(8) For most executive agencies, "[s]tatutes do not and cannot fully guide their behavior."(9) Enforcement and lawmaking are not wholly separate.

The NAFTA side agreement, by empowering a panel of international experts to make determinations about patterns of enforcement, mistakenly separates lawmaking from enforcement. Democratic accountability, which is preserved to some extent through the interactive process described above, is diminished. In addition, legislation can be expected to change in response to such enforcement measures. Specifically, the level of enforcement the CEC proposes would result in less expansive environmental legislation, decreased use of technology- and agency-forcing statutes, and broader delegation to agencies of standard- and deadline-setting powers.

This first section has introduced the main themes of this paper. Section Two discusses the North American Agreement on Environmental Cooperation and summarizes the history of the side agreement negotiations. Section Three provides an overview of the agreement's terms, focusing on enforcement provisions. Section Four discusses the process of environmental regulation in the United States, demonstrating that regulation is in fact an interactive process involving many actors, not merely a product of the legislature codified in the original statutes. Section Five applies these concepts to the enforcement approach embodied in the CEC, generating hypotheses about the likely results of rulings and sanctions.


The NAFTA environmental side agreement is a direct result of the pressure of U.S. environmental groups.(10) For the first time, environmental organizations recognized the ecological threat posed by liberalized trade and sought to ensure that the extension of free trade did not roll back the regulatory gains of the last twenty-five years. In the late 1960s and '70s there was a vast increase in environmental regulation in the United States, highlighted by the passage of the National Environmental Protection Act (NEPA)(11) and the Clean Air Act(12) in 1970. Moreover, this groundswell of federal regulation was driven by the belief that industry must be tightly controlled, lest it pollute at will. The regulatory approach chosen was one of strict demands, formal and generally inflexible standards and deadlines, and adversarial procedures.(13) This belief that an adversarial and prosecutorial style of environmental regulation works best was extended to the newfound "green" issue of trade liberalization. By engaging in extensive lobbying efforts, ecology and conservation groups were able to force the U.S. government to successfully seek a special environmental side agreement, creating a trinational body with powers of review and enforcement. Two concerns drove this process.

First, environmental groups fear that increased trade will lead to greater concentrations of pollution along the borders, especially the U.S.-Mexico border.(14) In recent years the creation of special "export processing zones" just south of the border has led to a large increase in American-owned, but Mexican-staffed, production facilities. These plants are the controversial "maquiladoras." In the maquiladora areas, enforcement of Mexican environmental laws has been exceedingly lax. In addition to creating often horrific conditions on the Mexican side, the pollution generated in the zones frequently finds its way into the United States. Some environmental groups expect NAFTA's implementation to accelerate this trend.

Second, and more importantly, environmental groups fear that NAFTA will create incentives for corporations to move environmentally-sensitive production to the least restrictive and least regulated areas available. Given an avenue of escape from tight and often costly environmental and safety regulations, corporations will move production south to Mexico, where environmental laws, though formally strong, are rarely enforced. In essence, a pollution haven will be created,(15) with access to the U.S. market guaranteed by NAFTA's provisions. More perniciously, the rise of pollution havens may create further incentives for states and nations to relax environmental standards, as they compete to retain production--and its attendant jobs--on local soil.(16) The results could disrupt U.S. environmental regulation and, at a minimum, hamper efforts to obtain more stringent environmentally-based restrictions in the future.

Both of these fears, increased border pollution and the creation of pollution havens leading to weaker regulatory standards, are clearly focused on Mexico. There is currently a wide gulf in the actual regulatory environment once the border is crossed. While Mexican environmental law is often formally as strict as American or Canadian law, it has historically been flouted with little worry by Mexican industry. Government inspectors are few, and their salaries and morale low. While the agreement's provisions provide no explicit focus on Mexico, most observers understand that concern over Mexico's poor history of enforcement is the chief impetus for the agreement. The creation of a powerful CEC, accessible to private groups and empowered to levy fines and trade sanctions, is viewed by some observers as the best way to ensure that Mexico enforces its environmental laws to the fullest extent possible and that the impact on the North American environment by the NAFTA-induced growth in free trade is minimized.

A. History of the Environmental Side Agreement

From the outset, environmental concerns plagued the NAFTA negotiations. In response to early congressional concern about the level and thoroughness of Mexican environmental regulation, the U.S. General Accounting Office conducted a survey of Mexican environmental law.(17) The survey concluded, surprisingly, that Mexican environmental regulations were formally as strong as U.S. regulations in nearly all areas.(18) This finding, however, did not assuage the worries of American environmental groups; rather, it refocused their attention on issues of enforcement and monitoring. Recognizing that formal Mexican law, though strict, was ineffective by itself, environmental groups sought to ensure compliance with those laws through a powerful and responsive supranational body to which they had access.(19) This body was to be created in a side agreement devoted solely to environmental issues.

The first official statement mentioning the possibility of such an environmental side agreement appeared in May 1991 when the Bush Administration attempted to address growing concerns.(20) This emphasized the importance the Administration placed on retaining high environmental standards, committed American negotiators to avoid weakening U.S. regulations, and indicated the Administration's intent to seek parallel agreements to NAFTA focused on labor and environmental concerns.(21)

On August 12, 1992, at 1:00 a.m., the trade ministers of the United States, Canada, and Mexico signed the NAFTA accord, just as the American presidential election campaign was gathering steam. Attacks on the agreement ensued immediately from many quarters. The major U.S. environmental groups in particular showed a keen, and generally negative, interest. One month after the signing of NAFTA, the environmental ministers of Canada and Mexico, Jean Chavest and Luis Donaldo Colosio, and the head of the U.S. Environmental Protection Agency, William Reilly, issued a joint statement endorsing the concept of a new trilateral North American Commission on the Environment (NACE). In October of the same year, then-presidential candidate Bill Clinton declared in a campaign speech in Raleigh, North Carolina, that an "Environmental Protection Commission" must be created before implementing any NAFTA.(22) Clinton continued to curry favor with environmental groups throughout the last days of the campaign, stating that if he were elected, NAFTA would be revised to allow private groups to petition the government to bring enforcement actions against objectionable practices.(23)

Most U.S. environmental groups remained skeptical and opposed to NAFTA. Joining with labor unions, they began to campaign against the accord while simultaneously seeking extensive changes that would render NAFTA more environmentally friendly. Their focus was primarily on enforcement matters. Upon taking office President Clinton began to subtly change his rhetoric on NAFTA, affirming his support--though still qualified--in stronger terms than during the campaign. In February, five months after the idea of an environmental commission was first officially proposed, the National Wildlife Federation released a detailed proposal for the NACE. The proposal emphasized the need for powerful enforcement mechanisms and open access to interested private parties in each of the three member states. On March 4, 1993 the Sierra Club, the Humane Society, Friends of the Earth, and twenty-one other environmental groups wrote to new U.S. Trade Representative (USTR) Mickey Kantor stating that a NACE must be empowered to levy sanctions to ensure compliance with national environmental laws.(24)

The enforcement issue, and specifically the use of trade sanctions as a tool of enforcement, proved to be the crucial point around which the NAFTA environmental debate turned. Staking out the opposite position from the environmental lobby, a majority of Republican Senators sent a letter to President Clinton in the spring of 1993 lending their support to NAFTA, but strongly opposing the creation of new environmental bureaucracies with enforcement powers. Kantor then rejected the notion of granting enforcement powers to any supranational panel, primarily on the grounds that it would be unnecessary: "The mere fact of making [problems] public usually persuades the government to react properly."(25) Thus, great divisions existed on the issue of environmental enforcement through trade sanctions both within the U.S. government and without, as Canada, Mexico, and the GOP firmly opposed the notion.

Preliminary negotiations were finally initiated on the environmental side agreement on March 17, 1993, concurrently with the supplemental labor negotiations. The environmental lobby in the United States continued to push hard for the NACE, in the belief that Kantor's more sanguine view of Mexican compliance was dangerously without basis. By April 1993, after much debate and discussion within their own ranks and with government officials, some of the major environmental groups formally lent their qualified support to NAFTA.(26) Negotiators for NAFTA convened in Ottawa in May 1993 to begin the first round of serious discussions on the proposed supplemental accords.(27) Meanwhile, the breakaway organizations announced that their full support would be forthcoming if the proposed trinational panel had the power to arbitrate environmental disputes.(28) Buoyed by this show of support, the Clinton Administration moved to push with greater alacrity for enforcement powers. The then-current plan proposed to create two three-member panels, one for environmental issues and one for labor. The panels would, after appropriate arbitration proceedings, have the power to impose trade sanctions by a two-to-one vote. While many Democratic legislators welcomed this idea, most Republicans criticized the plan for going too far; Senator John Danforth (R.-Mo.) called it "a disastrous principle."(29)

Canada and Mexico shared this view of the Clinton plan. Canadian officials feared that the power to sanction, though clearly directed at Mexico, could be used arbitrarily against Canada.(30) The precursor to NAFTA, the U.S.-Canadian Free Trade Agreement,(31) does not contain provisions for trade sanctions; rather, it allowed each nation to apply its own trade laws in determining whether imports from the other country hurt domestic producers. The Canadians had hoped to continue this system. The negotiations stalled over this issue, and the sanctions controversy would reemerge persistently over the course of the negotiations as the key stumbling block to agreement. Mexican officials argued that sanctions would violate Mexican sovereignty, while Canadian spokespersons called the proposed sanctioning powers too adversarial. Canadian Trade Minister Michael Wilson suggested, furthermore, that trade sanctions were fundamentally at odds with the spirit and purpose of NAFTA as a free trade accord.(32)

Within the United States, many Democrats insisted on a commission with sanctioning powers while Republicans strongly objected to what they saw as the creation of unnecessary and unwieldy multilateral bureaucracies with little accountability.(33) The fifth round of talks began in July 1993. Though many observers and insiders felt that Mexico had finally come to accept the political necessity of sanctions, discussions of sanctions were postponed until the next round. The Wall Street Journal, meanwhile, reported that the Clinton Administration was backing away from its sanctions proposal just as Mexico was allegedly coming to accept it. The Journal reported an anonymous U.S. negotiator as stating, "[w]e don't expect the Secretariat or the trilateral commission to be imposing fines, sanctions or penalties."(34) Naturally, this position was widely and virulently criticized by environmental interests. Kantor denied the Journal report of U.S. backsliding on the sanctions issue, and went on to state: "We have not changed our position at all .... We want real teeth, real enforcement."(35)

On August 13, 1993, the trade ministers of the United States, Canada, and Mexico announced that they had completed the environmental and labor side agreements. Canada succeeded in its bid to keep trade sanctioning power inert for Canada; the agreements allowed for the imposition of fines by domestic Canadian courts, rather than sanctions declared by the proposed trinational commissions. Mexico backed down and accepted the trade sanctions rather than jeopardize the trade pact any further. With Elouse Majority Whip David Bonior (D.-Mich.) leading the Democratic opposition to the trade pact, Mexico correctly perceived NAFTA's future as precarious.

B. The NAFTA Denouement

In the final months of 1993, the national debate over NAFTA became increasingly virulent, though the vast majority of the commentary revolved around issues of jobs and wages. The environmental community seemed polarized by the final side agreement, with many of the mainstream groups pleased with the outcome, or at least in quiet acquiescence, and more radical groups still fundamentally opposed to NAFTA. The internal debate in the United States over NAFTA reached a fever pitch with the nationally-televised debate between Vice President Al Gore and self-appointed NAFTA nemesis H. Ross Perot on "Larry King Live."(36)

NAFTA had transmogrified from a fairly technical trade and investment agreement, aimed at facilitating the emergence of a freer North American market, to a lightning rod for all complaints and fears of future shifts in the global economy, as well as a symbol for the decline of the American manufacturing job. The pact became a sort of modern-day Shiva, believed to be capable of massively creating and destroying jobs by turns.(37) The environmental issues were increasingly crowded out in the mainstream press, though they continued to garner some limited attention. In the closing weeks, while the job-creating or job-destroying aspects of NAFTA were debated at length within the U.S., little debate occurred over either the terms or the likely long-run effects of the environmental side agreement.

III. The Terms of the Environmental Supplemental Agreement

This section briefly describes the terms of the agreement, with a particular emphasis on the details of resolving and enforcing disputes.

A. Objectives and Obligations

The agreement's primary objective is "enhanced compliance with, and enforcement of, environmental laws and regulations."(38) In Article 3, the document establishes the right of each party to set its own levels of domestic environmental protection, but implores each party to ensure that its laws provide for "high levels of environmental protection" and a continual improvement in these levels.(39) Thus, an attempt is made to encourage harmonization in an upward direction (if at all), and to prevent regulatory rollback.

B. The CEC and the Provision of Information

Part Three of the side agreement sets out the terms by which the trinational Commission operates.(40) The Commission is comprised of a Council, a Secretariat, and a Joint Public Advisory Committee.(41) The Council consists of cabinet-level or equivalent representatives from each party,(42) while the Secretariat and the Advisory Committee members are chosen by the Council based on efficiency, competence, and integrity.(43) the Council, which is the governing body of the Commission, may establish ad hoc and standing committees and expert and working groups to seek advice from private groups or individuals.(44) This provision of Article 9 resulted directly from pressure by U.S. environmental groups seeking to ensure access and standing with the Council. The Council's purview regarding ecological issues is established to be essentially open-ended.

While enforcement matters appear throughout the document, Article 14's "Submissions on Enforcement Matters" begins the explicit focus on enforcing domestic laws and regulations, which comprises the remainder of the supplemental accord. Under Article 14, the Secretariat may consider a submission from any private group or person "asserting that a Party is ;ailing to effectively enforce its environmental law."(45) If the submission meets certain procedural and substantive criteria, the Secretariat may propose the development of a factual record, subject to Council approval.(46) The Council can make the factual record public only by a two-thirds vote,(47) provided preparation and publication of the record will not result in prejudice to the outcome of the submission.(48) Part Four encourages cooperation and information-sharing among the parties, requiring them to notify each other of proposed or existing environmental laws which might materially affect the side agreement.(49)

C. Consultation and Resolution of Disputes

Part Five of the supplemental agreement contains the dispute resolution provisions which are critical for the present-analysis. Article 22(1) stipulates that any party may request in writing consultations with any other party regarding whether there has been a persistent pattern of failure by the other party to effectively enforce its environmental laws.(50) If the parties fail to resolve the matter informally within sixty days, the dispute may initiate a special session of the Council.(51) After an additional sixty days, if the matter remains unresolved, the Council may, by two-thirds vote, convene an arbitral panel, provided that the environmental law in question relates to companies or trade regulated by the environmental side agreement.(52)

The members of the arbitral panel are to be drawn from a roster of forty-five individuals with expertise or experience in environmental law, dispute resolution, and other technical matters.(53) The panel will have five members, two from each side and a chair to be chosen by the disputing parties if they can agree, or by one party chosen by lot.(54) It becomes this panel's job to determine whether there has been a persistent pattern of failure of a party to effectively enforce its environmental standards.(55) The panel must present an initial report to this effect within 180 days containing findings of fact, the panel's determination of the pattern of enforcement, and any remedial recommendations.(56) Following consideration of any commentary and rebuttals by any disputing party, the panel then presents its final report.(57)

If, in its final report, a panel determines that there has been a "persistent pattern of failure" by the party complained against to effectively enforce its environmental law, the disputing parties may agree on a mutually satisfactory action plan.(58) The panel may be reconvened if this is not fully achieved within an additional sixty days.(59) The panel may also be reconvened if the disputing parties cannot agree on whether the party complained against is fully implementing an Article 33 action plan. In either case, the panel may impose a fine, referred to as a "monetary enforcement assessment."(60)

Annex 34, following the agreement, limits each fine to 0.7% of the total trade in goods between the parties, determined per the most recent year in which data is available.(61) Annex 34 also stresses that the actual amount of the assessment should reflect the pervasiveness of the persistent failure, the reasonable level of enforcement that could be expected, mitigating circumstances, and any other relevant factors.(62) Interestingly, all fines assessed against a country will be spent, at the direction of the Council, towards improving that nation's environmental enforcement. The fine, therefore, never really leaves the territory of the defendant nation.

If after an additional 180 days the assessed party fails to pay the monetary assessment, any complaining party may suspend the application of NAFTA benefits (63) to the complained-of party in an amount no greater than that sufficient to collect the assessed fine.(64)

D. General Provisions

Several other provisions of the side agreement serve to limit its application and potential impact. Article 37 explicitly enjoins any party from undertaking any environmental enforcement activities in the territory of another party.(65) Article 40 states that nothing in the NAFTA side agreement supersedes any existing rights or obligations under other international environmental agreements.(66) Per the Agreement's definitions section, a party has not failed to enforce its environmental laws if the action or inaction of the agencies or officials of that party are deemed to reflect a reasonable exercise of discretion, or are the result of a bona fide decision to allocate resources to enforcement in respect of higher environmental priorities.(67) This represents one of the larger escape hatches.

A "persistent pattern" is defined as a "sustained or recurring course of action or inaction beginning after the date of entry into force of this Agreement."(68) "Environmental law" is defined fairly broadly for the purposes of Article 14(1) and Part Five in general, encompassing virtually any statute or regulation relating to environmental degradation or protection.(69) Human health issues represent the definition's outer limits, and worker health and safety issues are explicitly excluded. Of greater interest is the exclusion of all statutes or regulations aimed primarily at the management of natural resources, through the regulation of commercial, subsistence, and aboriginal harvesting.(70)

E. Final Provisions and Annexes

Some final matters are worth mentioning. The agreement and all its terms became effective on January 1, 1994. It is amendable (Article 48) and open to new parties who wish to accede to its terms (Article 49) (71) Also, Annex 36A contains some special terms devised for Canada,(72) including the supersedence of the benefits suspension provisions in Article 36. Significantly, the Annex decrees that panel determinations may be filed in domestic court in Canada, and when filed become, for purposes of enforcement, a court order.(73)

IV. The Environmental Regulatory Process in the United States

The most salient aspect of the 1993 North American Agreement on Environmental Cooperation is its provisions for enforcement, particularly the ability of a trinational panel (CEC) to determine if a persistent pattern of non-enforcement has occurred, and, if so, to levy fines or trade sanctions. This enforcement power was sought solely by the United States, and it is clear from the diplomatic history that the primary, if not only, intended target of this enforcement power is Mexico. The enforcement ability of the CEC was a key demand of most mainstream environmental groups in the United States, and the inclusion of it in the side agreement blunted much of the environmental criticism of NAFTA, helping to ensure its passage in Congress. Some environmental groups sought much stronger enforcement powers, but accepted the final accord as the best available option.

The concept of enforcement embedded in the CEC provisions contains an implicit view of the regulatory process which is simplistic and misleading. By considering the key issue to be compliance and viewing environmental regulation as wholly enshrined in formal statutes, rather than emerging from an ongoing interaction between Congress, agencies, the courts, and private interests, the enforcement provisions of the side agreement may contravene the current regulatory process with predictable effects upon the scope and shape of future environmental legislation. Stronger enforcement provisions, as advocated by the U.S. environmental lobby, would accentuate these effects. As a result, the type of enforcement and the view of law developed in the NAFTA side agreement represent a problematic model for future agreements. To develop this claim, I present a brief overview of environmental regulation in the U.S., and I examine the role of statutory interpretation and the complex interaction between Congress, the Executive, litigants, and the courts.

A. Environmental Regulation in the United States

The U.S. has a unique national style of regulation. This regulatory style emphasizes rules, formal procedures, open access, adversarial interaction between interest groups and agencies, and above all extensive use of prosecution and litigation.(74) It is predicated upon a distrustful view of industry; industry must be forced to cease or diminish its environmentally destructive practices, and this is best achieved through an arms-length process of command-and-control demands and penalties. The reasons for the evolution of this style are complex and historical and need not detain us here. What is important is that this adversarial, litigious regulatory style developed primarily in the 1960s and '70s, when environmental regulation was in the vanguard of its development.

The period of the late 1960s and '70s was in many ways the golden age of environmental regulation in the United States.(75) Widely read scholars such as Theodore Lowi(76) and Grant McConnell,(77) as well as consumer activists such as Ralph Nader, openly criticized the New Deal regulatory system and sought to strengthen regulation while limiting agency discretion. NEPA, the Clean Air Act, the Clean Water Act,(78) and the Endangered Species Act(79) were all major additions to the pantheon of American environmental law. The Environmental Protection Agency (EPA) and the Council on Environmental Quality (CEQ) were also created during this time period. What was special about this wave of environmental legislation was its broad and sweeping mandate to clean up the environment at essentially any cost, its distrust of regulators and industry,(80) and its extensive shift of discretion from agencies towards Congress.

The preambles of these legislative acts expressed stirring and clearly ambitious goals.(81) Pollution was not to be minimized; pollution was to be prevented. Risks were often to be completely eliminated. Incremental progress was not sufficient; major changes were expected and, most importantly, these changes would not be subject to cost-based arguments. Many of the statutes passed at the time specifically enjoined agencies from making cost-benefit analyses,(82) essentially arguing that clean air, water, and land are fundamental rights not to be whittled away on economic considerations.(83) These broad and demanding statements of legislative purpose represent the first of three levels of provisions.

The second level of provisions in the environmental legal framework were more detailed, reflecting congressional mistrust of regulators,(84) particularly the fear that regulators would be "captured" by those they should be supervising and possibly punishing.(85) As a result, agency discretion was curtailed. EPA, for example, is not an independent commission; it reports directly to the President and has a single agency head. Generous rules of standing were incorporated, including citizen-suit provisions, so nearly any one with an interest could sue the agencies, for both action and inaction. In the place of broad agency discretion, Congress promulgated extensive and detailed guidelines to setting standards, often inserting timetables to dictate when the agency should apply the standards, ratchet them upwards, and reassess them. Often, as in the Clean Air Act Amendments, the specific standard itself was legislatively mandated. For example, the Clean Air Act mandates use of the "best available control technology" (BACT) standard.(86) Moreover, some of these standards were novel in that they were "technology-forcing"; the standards were unattainable via conventional technology, thus demanding that industry engage in extensive research to develop technology capable of meeting them.(87)

Despite the ambitious goals, detailed rules, generous standing provisions, agency- and technology-forcing elements, and injunctions against cost-benefit analysis, the environmental legislation of the 1960s and '70s contained a number of escape clauses that eased their demanding strictures. These escape clauses constitute the third level of provisions. Many legislators held concerns for the economic effects these stiff requirements might entail, and they worried about attendant losses of jobs and competitiveness. As a result, Congress indicated that it was acceptable for the enforcing agency to occasionally allow cost considerations into the process, so as not to shut down entire industries or regions, and to soften standards if they proved to be unattainable without severe financial losses.(88) In the case of automobile exhaust emissions, for example, the lack of any escape clause in the statute forced Congress to amend the statute every few years to accommodate delays.(89) In other cases the statutory language suggested that agency regulations should not impose costs that were far out of proportion to the benefits gained.(90)

In sum, the wave of environmental legislation passed in the late 1960s and '70s was part of a transformation in American administrative law.(91) It was far more demanding and specific than previous legislation, yet also contradictory. Benefits and costs were not to be weighed, yet were to receive some consideration. Zero tolerances were demanded, yet changes could be made if this proved impossible. Implementing such legislation proved formidable. Given the ambiguities and ambivalence in the legislation, interpretation came to play a significant role as implementation progressed. Moreover, the sheer number of standards and rules to be developed overwhelmed the agencies, particularly EPA; many standards have never been developed. Additionally, the generous standing and access rules made for a time-consuming, combative, and difficult process. Thus, a clear legislative purpose could not be gleaned from a textual reading of the statute.(92) The administrative process functioned as a politically guided interpretive vehicle. Indeed, as Richard Stewart noted twenty years ago, "[i]ncreasingly, the function of administrative law is not the protection of private autonomy but the provision of a surrogate political process to ensure the fair representation of a wide range of affected interests in the process of administrative decision."(93)

B. Enter the Courts

As the 1960s and '70s environmental legislation began to be implemented and enforced, U.S. industry, occasionally faced with extremely high compliance costs, fought back vigorously, with federal courts as a prime venue for their challenges to the new laws. The generous standing rules allowed industry and public interest groups alike to make numerous and varied challenges to what each considered to be the most egregious regulations. The courts became the battleground for legislative wars lost. NEPA in particular was proclaimed "a great equalizer in the hands of skilled litigants."(94) In many statutes, Congress wrote in citizen-suit provisions as a further check upon the executive branch's discretion to enforce these laws. These provisions allow private actors, frequently environmental interest groups, to challenge both private and government actions.(95) The ambiguous and often contradictory language of the legislation made such challenges particularly viable. Courts were called on to determine a legislative intent, requiring judges to decide whether the broad and sweeping purposes of the statute should take precedence, or whether economic qualifiers, such as directives that a regulation should not shut down an industry, should hold sway.(96)

A large role for judicial interpretation of statutory law thus exists.(97) The courts have attempted to discern legislative intent, but given the multiple and often competing indicators, courts are left somewhat free to shift policy in line with the preferences of individual judges. Enforcement, in essence, assumes elements of lawmaking. This process continues today. Enforcement of environmental legislation is not straightforward; rather, the process is one where the legislature sets sweeping but ambiguous standards, the executive agencies employ limited and sporadic application of the statutes, and environmental and industry groups challenge the legislation and its enforcement in the courts.(98) Moreover, Congress, mindful of this interplay, has stepped in where necessary to alter or change the legislation, the most notable example being the changes in the automobile emissions standards.(99) Congress enacted or substantially amended nineteen major environmental laws between 1970 and 1980.(100) These amendments allow Congress to engage in "mid-course" corrections of policy paths that prove in practice to be infeasible or far too politically costly. (101)

This process of setting strict deadlines that ultimately prove unattainable has several advantages for Congress. Legislators can claim credit as staunch environmentalists at the outset, and when nonattainment becomes clear, they can berate agency officials for failing to fulfill their statutory directives.(102) Congress can shift the responsibility for less popular policies to the agencies by delegating broad discretion. Additionally, while uncertainty about environmental regulation and its effects abounds, Congress can generate better information about effects through agency implementing procedures and thus allow final policy outputs to conform more closely with underlying preferences.(103) Finally, they can step in where necessary to provide relief.

C. Environmental Regulation as an Interactive Process

The key point raised by this discussion of the recent history of U.S. environmental regulation is simple: environmental regulation is a process, not a product. Enforcement cannot be separated from the lawmaking process. Environmental regulation is an interactive series of offers and actions. Congress begins by offering grand and fairly strict standards in legislation that also contains some elements which function as escape clauses.(104) The implementing agencies attempt to follow what they perceive to be the central thread of legislative intent, perhaps guided by a presidential signing statement. Private sector groups affected by the legislation pressure the agencies to heed varying portions of the text and, when necessary, they sue the agency using all available citizen-suit provisions, including any contained in the particular legislation at issue. The courts then attempt to further discern the original legislative intent. Even without lawsuits against the agencies, the courts play an important role due to the highly prosecutorial nature of U.S. environmental regulation.(105) Finally, businesses occasionally successfully challenge agency regulations on their own behalf, causing the defeated regulations to change.

Watching over this process are the members of Congress, who can step in to either reinstruct the agencies or courts, or create new and superseding legislation. Often legislative ambiguity does not represent carelessness or confusion on the part of Congress; rather, Congress may be uncertain about the real-world outcome of legislation or the political fall-out associated with it. As a result Congress tries to incorporate multiple positions to be later clarified in light of outcomes. However, the system described herein is not without major flaws: an undue reliance on command and control rather than market-based mechanisms of regulation, and an often impossible task for those who must implement environmental laws. As Cass Sunstein has described, in the context of the citizen-suit:

Congress entrusts agencies with the job of issuing a massive number of highly

centralized, rigid, and often draconian regulatory requirements. It should be no

surprise that the agencies are often unable to undertake their legally-required

tasks, especially in view of the fact that they infrequently receive the necessary

resources. The citizen suit is part of a complex system in which Congress delegates

difficult or even impossible tasks, appropriates inadequate resources, imposes

firm and sometimes unrealistic deadlines, and enlists courts and citizens

in order to produce compliance.(106)

In sum, American environmental regulation is not fully contained in the statutory text; it is the complex outcome of the interaction between agency implementation, private-party challenges, judicial interpretation, and legislative reaction. Several institutional actors take part. This process is not entirely fluid; Congress can and often does write into legislation structures and processes that inhibit policy drift by empowering certain groups and political forces, while limiting others.(107) Despite these procedural constraints, the policies are not immune to revision. At best, they can define the limits within which change can occur. Thus, environmental regulation in the United States evolves over time, as it is enforced, challenged, interpreted, changed, and enforced again.(108)


The stark contrast between the American regulatory structure, with its complex interplay, and the text-bound approach of the environmental side agreement raises significant questions about the future of environmental law. The enforcement provisions of the type contained in the environmental side agreement, which are weaker than those sought by major environmental groups, are predicated on a view of enforcement as divorced from legislation. In this view, legislation is considered a product, not a process. The legacy of the NAFTA negotiations is a CEC that is primarily focused on enforcement problems; therefore, the CEC will tend to highlight gaps between the declared standards in environmental legislation and actual practice, operating on the mistaken assumption that gaps represent regulatory failure. Compliance with formal statutes is the bottom line; as long as a country meets its own standards, the CEC is powerless to interfere. Because legislation is a process, and not a product, transferring enforcement outside the American political system reduces accountability of the legislature to the people by transferring a limited share of the lawmaking powers to a relatively unaccountable supranational body. This transfer might also result in changes in the scope and shape of environmental legislation. These changes are hypothesized below.

A. Static Effects of a Strengthened CEC

Since environmental regulation in the United States is characterized by interaction between the three branches of government and interested private parties, evolves through this process rather than being born directly by statute, and often takes years to roughly equilibrate, persistent patterns of nonenforcement abound. For example, many major American cities, the most notable example being Los Angeles, have never been in attainment of air quality standards, even after decades of notice.(109) This is clearly a persistent pattern of nonenforcement, and would thus appear vulnerable to such a ruling and the attendant trade sanctions under the CEC.

Those in favor of stricter environmental regulations in the United States might consider the effects of CEC rulings on nonenforcement to be positive. For those opposed, this specter is troubling. Trade sanctions such as fines and unreduced tariffs may be costly, increasing the incentive to achieve broad-based enforcement and attainment of environmental regulations.

Environmental groups might be among those welcoming CEC rulings against the United States. However, most environmental interest groups recognize the impossibility of achieving full compliance with U.S. environmental legislation. Though interest groups often sue agencies for failure to enforce, they forego many of the abundant opportunities to do so. Unmet deadlines are relatively easy to prove, and therefore quite vulnerable to litigation, even after the Supreme Court's ruling in Chevron U.S.A. v. Natural Resources Defense Council, which upheld agency statutory interpretations which are reasonably grounded in some aspect of the legislation.(110) Yet most major environmental groups have enough political savvy to recognize that attempting to force firms, cities, and states to meet all the regulations currently in force would create an enormous backlash against the environmental movement.(111) Few appear to want to shut down Los Angeles altogether to vehicular traffic, for example. The more moderate groups recognize the need for some discretion in implementation, even if they continue to support action- and technology-forcing regulations for symbolic purposes. They choose their court battles carefully, based upon the most pressing problems and the most egregious violations. The result is a level and focus of enforcement that, while pleasing few, satisfies many.

What this implies about expert multinational enforcement provisions, like those found in the side agreement, is the potential for a transnational body to step into this admittedly byzantine and perhaps ill-conceived regulatory process and create new political turmoil by imposing trade sanctions. A strengthened CEC would enhance this possibility. Some of this turmoil could redound negatively on the U.S. environmental movement, as citizens face the high costs brought on by strict command-and-control legislation.

There are also sovereignty and accountability arguments which favor the current system. Though somewhat chaotic, the existing process is not random. The process of arriving at acceptable solutions to American environmental problems should remain in the hands of American citizens,(112) and the enforcement provisions in the environmental side agreement infringe upon this prerogative. Moreover, granting enforcement powers to a transnational body transfers lawmaking abilities outside the United States, and invites these external expert panels to make new and unpredictable demands, with possibly high and somewhat arbitrarily distributed costs for the United States.(113) Not only could trade sanctions themselves bring costs, but the anticipation of trade sanctions could alter the actions of American industry in costly and inefficient ways. Either way, some decision-making power would shift from U.S. political actors to a somewhat unaccountable transnational body--a situation which, ironically, has incurred extensive criticism from environmental groups in the context of the GATT.

B. Dynamic Effects of CEC Enforcement

Assume that a powerful CEC or CEC-type body does engage in extensive fact-finding, enforcement, and sanctioning activities. The immediate effects would include the introduction of new turmoil into the regulatory process and possibly costly sanctions or fines which would bring new actors into the regulatory arena. Besides these immediate effects, what sort of second-order effects can be predicted? In response, we might expect to see changes in the way environmental legislation is composed in the United States. Based on the model of the American regulatory process articulated above, some preliminary hypotheses can be generated about the effects the introduction of a new institutional actor like the CEC would engender. If the CEC or a CEC-like body effectively engaged in enforcement proceedings, and used its powers of sanctioning, the analysis here suggests the following outcomes.

1. Environmental Statutes Will Lessen in Substantive Scope

Rather than attempting to regulate broad classes of substances, Congress might be expected to regulate more narrowly, in line with the capabilities of the executive branch. In the past, broad-based legislation has overwhelmed the rule-making capacity of the agencies, resulting in regulation of many substances being delayed until well past their supposed statutory deadlines, or forgotten. In an era of tight budgets, Congress is far more likely to respond with narrowed laws than with agency funding substantially increased to the level necessary to meet these new demands. Finely-grained categories of substances are easier to regulate than broad classes; thus, by regulating "less," the agencies can actually carry out the CEC's version of congressional mandates.

Standards and deadlines will likely be relaxed. Again, this moves formal legislation closer to actual outcomes, raising the aggregate level of enforcement. Compliance will be easier to achieve. Sweeping congressional claims will become less frequent, and environmental legislation increasingly narrow. In the past, basic issues such as feasibility were not salient parts of the formal legislative process. For example, in American Petroleum Institute v. Costle,(114) the D.C. Circuit upheld the EPA's standard on tropospheric ozone levels, despite challenges from all directions. Among the challengers was the City of Houston, which maintained that the natural levels of ozone in the Houston area and other physical traits of the local geography prevented the city from meeting the federal standard. The court ruled that "attainability and feasibility were not relevant considerations in setting National Ambient Air Quality Standards."(115) In contrast, under a CEC-type structure feasibility would become a relevant, if not paramount, consideration.

New classes of substances that would be ignored in early, very narrow legislation can be addressed as regulations, standards, and deadlines are developed over time; thus, regulation would become more incremental, with more steps, more information flow, and more rule-making proceedings. This sort of process would be slower, with less regulatory "throughput," requiring more time and resources spent setting ultimately fewer and possibly lower standards.

2. Congress Will Favor Weaker Standards, Such as "Regulating in the Public Interest," Over More Extensive Ones

If a transnational environmental commission like the CEC is active and successful in pursuing persistent patterns of nonenforcement, Congress may respond by delegating more discretion for standard- and deadline-setting to the relevant agencies, allowing standards to emerge from the more information-rich environment of an agency rule-making process. In the past twenty-five years Congress has frequently written standards and timetables right into the legislation it produces; for example, between 1970 and 1980 Congress included more than 300 specific deadlines in the fifteen environmental laws it enacted.(116) Many if not most of these deadlines were missed, and subsequent amendments rolled them back, often several times. This practice continues today, if not in the same volume.

If persistent failure to enforce becomes the criterion against which performance is measured and sanctions meted out, future legislation might contain fewer of these mandated actions. Formal law might only require that standards be developed along vague lines (perhaps "in order to safeguard human health" or some variant thereof). The actual development of the standard would be delegated to the relevant agency. This change will likely cause formal environmental legislation to be enforced by shifting the act of standard-setting back to the executive branch.

This should result in standards which bear a closer resemblance to what is technically feasible, and therefore would be more enforceable and attainable at an acceptable cost. However, the balance of power and modes of redress for disaffected parties will be changed. A shift away from congressional standard-setting would enhance executive agency discretion and power. This is particularly true in the post-Chevron world, where agency actions appear essentially unchallengeable so long as they adhere to a reasonable interpretation of the statutory language.(117) The ability of citizen groups to exploit citizen-suit provisions to rein in controversial agency policies would be seriously curtailed.

Additionally, such a shift would enhance the position of the regulated firms, who possess the best information on feasibility. With agencies setting more standards, agency-industry relations will play a greater role. Fear of agency capture was one of the motivating forces behind the shift away from broad agency discretion,(118) but to the degree that regulator "capture" occurs, it should happen with greater frequency under this altered scheme.

3. Technology- and Agency-Forcing Regulations Will Become Less Common

With enhanced CEC-style enforcement, use of technology- and agency-forcing measures should occur less frequently. Such regulation is risky from an enforcement point of view, since outcomes are unknown and unpredictable. "Forcing" measures create incentives (in theory) that force innovation, but learning curves and rates of future technological change are unknown and difficult to predict with accuracy. Since agency-and technology-forcing regulation is inherently uncertain, and oftentimes fails to achieve the goals set forth, enforcement envisioned under the CEC scheme would be problematic. The barriers must be set high enough to stimulate real innovation; but the corollary to this is frequent failure to meet them. For this reason, lessening the reliance upon these measures would be the most likely effect of extensive CEC enforcement.

Agency-forcing measures might also diminish in frequency. In the 1990 Clean Air Act Amendments,(119) agency-forcing provisions, including "hammers" to force timely action, abounded. In the words of Representative Waxman, one of the chief architects in 1990, the amendments contain "very detailed mandatory directives" and "statutory deadlines . . . to assure that required actions are taken in a timely fashion. More than two hundred rule-making actions are mandated in the first several years of the 1990 Amendments' implementation."(120) Yet the same concerns militating against use of technology-forcing measures--that compliance with such measures is fraught with uncertainty--is no less applicable to agency-forcing measures, and will have the same tendency to discourage their use.

A move away from agency- and technology-forcing provisions is not necessarily bad. Such a move may further stimulate the current interest in market-based regulatory instruments, such as fees and tradeable-emissions permit schemes. These instruments, by establishing property rights and markets or levying taxes, allow markets to allocate production and avoid the uncertainty problems inherent in "forcing" legislation. Depending on one's perspective, this may or may not be a positive development. Most environmental groups in the United States have tended to resist the introduction of such measures into environmental legislation, though some, most notably the Environmental Defense Fund, have actively promoted them.

In sum, an active CEC or CEC-type body as envisioned by most mainstream U.S. environmental groups would have the effect of tightening statute-writing, diminishing the use of agency- and technology-forcing regulations, increasing agency discretion, and decreasing congressional standard- and deadline-setting within the originating legislation. Compliance will be heightened, but at the expense of more ambitious and possibly effective legislation. Whether these postulated effects are favorable, from an environmental perspective, is hardly a foregone conclusion. It seems more likely that these effects would have a negative influence, in the sense of diminishing environmental quality, than a positive one. The main exception would be a move towards further reliance upon market-based mechanisms.

In general, this argument illustrates the pitfalls of an undue focus on compliance with formal rules. Compliance with the law is important, but it must be remembered that compliance is an artifact of the standards and rules contained in the law. Compliance in the abstract may be better than noncompliance (though some have argued otherwise), but the promotion of compliance on its own is insufficient to ensure the protection of the environment in any real sense, arguably the side agreement's primary purpose. Most analysts recognize this, and for this reason the NAFTA contains language aimed at restricting a downward movement in regulatory standards. But shifts in the structure and process of regulation, by empowering and disempowering various actors, can result in changes in standards and levels of protection as well, without these changes ever being formally promulgated in the legislative process. It is this pathway of change that has been insufficiently recognized. In part, this is because the CEC is still such a weak body. But it also reflects a misinterpretation of the complexity of the American regulatory process. By focusing unduly on formal law and compliance, the CEC as it now stands reflects an incomplete vision of the regulatory process, one that could be counter-productive from an environmental perspective if the CEC were to be strengthened. It falsely separates enforcement from the lawmaking process, and, by granting enforcement powers to supranational expert panels, diminishes democratic accountability.


This paper has examined the utility and probable consequences of employing the enforcement principles of the NAFTA environmental side agreement as a model for future agreements, or for extensions of NAFTA, in the guise of a thought experiment: what would happen were the CEC actually to be effective? Given the accord's negotiating history, the terms of the agreement, and the interactive and interpretative nature of the U.S. environmental regulatory process, the mandate of the CEC to examine and possibly sanction instances of persistent non-enforcement based on formal, statutory law is potentially troublesome. If the CEC is activist and effective, as many environmental groups desire, ample authority for affirmative findings of U.S. non-enforcement exists. Indeed, the American system abounds with persistent non-enforcement. Moreover, by falsely dichotomizing enforcement and law-making, democratic accountability is diminished in a CEC-type system, as supranational expert bodies gain lawmaking power via a grant of enforcement power.

Additionally, the probable legislative consequences of CEC enforcement actions, were they to occur, include three second-order effects: environmental legislation would scale back in scope; Congress would increasingly refrain from extensive standard-setting, with a resulting increase in agency discretion and power; and technology- and agency-forcing regulations, so prominent in the last two decades, would fall out of favor.

While the power and efficacy of the CEC remains to be seen, as it now stands it appears unlikely that it will engage in extensive enforcement actions. The current CEC process is long and full of escape hatches. Nevertheless, the possibility of sanctions exists, and the consequences are therefore of interest. The fact that many in the environmental community sought even greater enforcement powers than were ultimately granted to the CEC makes it especially interesting to speculate on the likely dynamic effects of a powerful CEC-type body. These effects do not appear to systematically favor the "pro" or "anti" environmental forces; indeed, and counterintuitively, their cumulative effect would appear to favor those seeking a diminishment in the scope and strength of U.S. environmental regulation. Perhaps as importantly, such a system of supra-national enforcement diminishes democratic accountability by transferring some measure of law-making power outside the U.S. political system.

For this reason, the analysis proposed here should caution those endeavoring to strengthen environmental law through international cooperation--and to use the CEC as a model--to explore more fully the dynamic implications of the institutional scheme favored and the principles of law and enforcement upon which it rests. Enforcement of environmental laws in the U.S. must be recognized to contain substantial elements of lawmaking. Compliance must be recognized as an artifact of the standard given in the law. And while the terms of the side agreement attempt to ensure against straightforward "regulatory rollback," rollback can occur through changes in the structure and process of regulation which, while less visible and obvious, are no less powerful. (1) North American Free Trade Agreement, Dec. 17, 1992, U.S.-Can.-Mex., Hein's No. KAV 3417, 32 I.L.M. 289 (1993) & 32 I.L.M. 605 (1993); see also North American Free Trade Agreement Implementation Act, Pub. L. No. 103-182, 107 Stat. 2057 (1993). (2) See generally Double-Edged Diplomacy: International Bargaining and Domestic Politics (Peter B. Evans et al. eds., 1993) (discussing the interaction between domestic politics and international negotiations). (3) North American Agreement on Environmental Cooperation, Sept. 9-14, 1993, U.S.Can.-Mex., Hein's No. KAV 3722, 32 I.L.M. 1480 (1993) [hereinafter Environmental Side Agreement]. (4) Id. pt. 5, 32 I.L.M. at 1490. (5) Id. pt. 3, at 1485. (6) The fines can range up to US$20 million. Id. annex 34, at 1496. (7) As the CEC stands now, the likelihood of its having a major impact on the United States through its enforcement provisions is slim. (8) The system is far from perfect; I do not argue that the current regulatory system works especially weD. Rather, this argument revolves around the likely changes to that system with extensive CEC-style enforcement, and the implicit model of regulation and compliance upon which enforcement is based. (9) Marc K. Landy et al., The Environmental Protection Agency 6 (expanded ed. 1994). (10) Though they are not thoroughly happy. See Mary E. Kelly, NAFTA's Environmental Side Agreement: A Review and Analysis 2-1 (Texas Center of Policy Studies working paper 1993) (comparing environmental groups, requests and demands in the final text). (11) National Environmental Policy Act of 1969, 42 [subsections] 4321-4370d (1988 & Supp. v 993). (12) Clean Air Act, 42 [subsection] 7401-7671q (1988 & Supp. V 1993). (13) See David Vogel, National Styles of Regulation: Environmental Policy in Great Britain and the United States (1986) (discussing the nature of U.S. environmental regulation, and particularly this adversarial, prosecutorial style so prevalent in the 1970s). (14) See Daniel C. Esty, Beyond Rio: Trade and the Environment, 23 Envtl. L. 387, 391 (1993) (noting two additional concerns: fears about "spillover" pollution from the border area, and concerns about the process of trade policy development, which was seen as exclusive and secretive). (15) See Gene Grossman & Alan Krueger, Environmental Impacts of a North American Free Trade Agreement, The U.S. Mexico Free Trade Agreement (Peter Garber ed., 1993); M. Kosmo, Economic Incentives and Industrial Pollution in Developing Countries (World Bank Environment Division Working Paper No. 1989-2, 1989). (16) The U.S. government maintained that this was not an issue. U.S. Trade Representative Sees No "Downward Harmonization" Under NAFTA, 15 Int'l Env't Rep. (BNA) 448 (July 1, 992). (17) See United states General Accounting Office, Pub. No. GAO/NSIAD-91-227, U.S.-Mexican Trade: Information on Environmental Regulations and Enforcement (1991). (18) Id. (19) Concerns about transparency and access were paramount throughout the negotiations North American Free Trade Agreement Greeted With Suspicion by Environmental Groups, 15 Int'l Env't Rep. (BNA) 561 (Aug. 26, 1992). (20) Office of the President, Response of the Administration to Issues Raised in Connection with the Negotiation of a North American Free Trade Agreement (1991). (21) The U.S. Trade Representative coordinated a special study of the environmental impacts of NAFTA U.S. Trade Representative, Review of U.S.-Mexico Environmental Issues 1992). (22) Governor Bill Clinton, Remarks by Governor Bill Clinton at the student center at North Carolina State University, Raleigh, North Carolina, Fed. News Serv., Oct. 4 1992, available in LEXIS, Exec Library, Fednew File. (23) Rose Gutfield, Environment: Environmental Groups Seek Free-Trade Role, Wall St. J, Oct. 16, 1992, at B1. (24) Green Groups Press Kantor for Powerful NAFTA Environmental Commission, Inside U.S. Trade, Mar. 5, 1993, at 8. Some environmental groups indicated, however, that they would support NAFTA even if a NACE lacked sanctioning power. Keith Bradsher, Trade Pact Picking Up Wide Range of Support, N.Y. Times, Apr. 30, 1993, at D2. (25) Bob Davis, U.S. Urges Curbs on Power of Panels on North American Environment, Labor, Wall ST. J., Mar. 10, 1993, at A5. (26) These were the Environmental Defense Fund, the National Wildlife Federation, the Nature Conservancy, the National Audubon Society, The Natural Resources Defense Council, and the World Wildlife Fund. Bradsher, supra note 24. (27) Anthony Boadle, NAFTA Negotiators Meet to Try to Draft Side Deals, Reuter Business Report, May 18, 1993, available in LEXIS, News Library, Reubus File. (28) This group now included the Defenders of Wildlife. Bob Davis, Environmental Groups Will Back NAFTA if Arbitration of Disputes is Permitted, WALL ST. J., May 4, 1993, at B6. (29) Danforth Cautions Kantor Against Environmental Side Agreement Proposal, 10 Int'l Trade Rep. (BNA) 788 (May 12, 1993). (30) Drew Pagan, Canada to Fight NAFTA Side Deals, REP. ON Bus., May 19, 1993. (31) United States-Canada Free Trade Agreement, Jan. 2, 1988, U.S.-Canada, 102 Stat. 1852. (32) Canada Firmly Opposes U.S. NAFTA Sanctions, Reuter Business Report, June 18, 1393, available in LEXIS, News Library, Reubus File. (33) Nancy Dunne, U.S. NAFTA Plan Draws Fire, Fin. TIMES, June 8, 1993, World Trade News Section, at 5. (34) Dianne Solis, NAFTA Negotiators Clear a Hurdle on Environmental Side Accord, WALL ST. J., July 12, 1993, at A9. (35) David Haskel, U.S. Insists NAFTA Side Deals Must Have Teeth, Reuter Business Report, July 12, 1993, available in LEXIS, News Library, Reubus File; U.S. Says Position Unchanged on NAFTA Environmental Plan, Wall ST. J., (36) Larry King Live (CNN television broadcast, Nov. 9, 1993). (37) Shiva is the Hindu god of creation and destruction. (38) Environmental Side Agreement, supra note 3, art. 1(g), 32 I.L.M. at 1483. (39) Id. art. 3. (40) Id. pt. 3, at 1485. (41) Id. art. 8. (42) Id. art. 9. (43) Id. art. 11, at 1487. (44) Id. art. 9, at 1485. (45) Id. art. 14, at 1488. (46) Id. For example, 14(b) procedurally requires that the submission "clearly identifies the person or organization making the submission"; [sections] 14(c)'s substantive requirements include that the submission "appears to be aimed at promoting enforcement rather than harassing industry." (47) This ability to keep proceedings private is particularly disappointing to many environmentalists; see Kelly, supra note 10, at 2-12. (48) Environmental Side Agreement, supra note 3, art. 15(3), 32 I.L.M. at 1488. (49) It further requires the parties to provide any information the Council or Secretariat may desire, unless by a two-thirds vote the demand is found too burdensome. Id. art. 21, at 1490. (50) Id. art. 22, at 1490. (51) Id. art. 23. (52) Id. If the matter has not been resolved within 60 days after the Council has convened pursuant to Art. 23, the Council shall, on the written request of any consulting Party and by a two-thirds vote, convene an arbitral panel to consider the matter where the alleged persistent pattern of failure by the Party complained against to effectively enforce its environmental law relates to a situation involving workplaces, firms, companies, or sectors that produce goods or provide services . . . traded within the territories of the Parties; or . . . that compete, in the territory of the Party complained against, with goods or services produced or provided by persons of another Party." Id. (53) Id. art. 25, at 1491. (54) Id. art. 27. (55) Id. art. 28, at 1492. (56) Id. art. 31. (57) Id. art. 32. (58) Id. art. 33. (59) But this must occur no later than 120 days after the date of the final report; thus, there is a sixty-day window. Id. art. 34, at 1492. (60) Id. at 1493. (61) In most cases a dispute, by the terms of the agreement, would take a minimum of one year to wend through the resolution process. Therefore, assessments will likely follow these guidelines for subsequent years. However, fines for disputes resolved within one year of the agreement's entry into force are limited to US$20 million. Id. annex 34, at 1496. (62) Id. at 1493. (63) NAFTA's benefits include primarily the reduction of tariffs applied to goods imported from other member states. (64) The panel may be further reconvened to determine if the monetary enforcement assessment has been paid or collected, Environmental Side Agreement, supra note 3, art. 36(4), or to determine whether the suspension of benefits by the complaining parties is "manifestly excessive," id. art. 36(5). (65) Environmental Side Agreement, supra note 3, art. 37, 32 I.L.M. at 1494. (66) Id. art. 40 (67) Id. art. 45, at 1494. (68) Id. at 1495. (69) Id. (70) At the insistence of Canada. (71) Environmental Side Agreement, supra note 3, arts. 48-49, 32 I.L.M. at 1495. (72) Id. annex 36A, at 1496. (73) Such panel determinations cannot be subject to domestic review or appeal. (74) See Vogel, supra note 13. For a discussion emphasizing policy implementation, see generally Daniel A. Mazmanian & Paul A. Sabatier, Effective Policy Implementation (1981) (75) It was a golden age for federal regulation in general: between 1968 and 1978 Congress passed more regulatory statutes than it had in the previous 179 years. See generally Martin Shapiro, Who Guards the Guardians? JudiciaL Control of Administration (1988). (76) Theodore Lowi, The End of Liberalism: Ideology, Politics, and the Crisis of Public Authority (1969). (77) Grant McConnell, Private Power and American Democracy (1966). (78) Federal Water Pollution Control Act, 33 U.S.C. [subsections] 1251-1387 (1988 & Supp. V 1993). (79) Endangered Species Act of 1973, 16 U.S.C. [subsections] 1531-1544 (1988 & Supp. V 1993). (80) This distrust continues today. See Representative Henry A. Waxman's (D.-CaL) justification for the mandatory deadlines in the Clean Air Act Amendments of 1990. The Honorable Henry A. Waxman, An Overview of the Clean Air Act Amendments of 1990, 21 Envtl. L. 1721, 1742-46 (1991). (81) See generally Shapiro, supra note 75, at 78-106 (1988); David Vogel, Fluctuating Fortunes: The Political Power of Business in America 93-112 (1989); Michael E. Kraft & Norman J. Vig, Environmental Policy from the 1970s to the 1990s: Continuity and Change, in Environmental Policy in the 1990s 3-30 (Norman J. Vig & Michael E. Kraft eds., 2d ed. 1994); Landy supra note 9. (82) Though this is not always heeded. See Maureen L. Cropper et al., The Determinants of Pesticide Regulation: A Statistical Analysis of EPA Decision Making, 100 J. Pol. Econ. 175, 176-78 (1992). See also Landy, supra note 9 (providing a sustained critique of the failure of Congress and the EPA to come to grips with the impossibility of regulating without regard to cost). (83) This aspect of the legislation was almost universally attacked by economists and is now in retreat, as market-based regulatory measures grow in favor. See Cass Sunstein, After the Rights Revolution: Reconceiving the Regulatory State (1990) (discussing the creation of environmental rights via statute). (84) Particularly when discussing the U.S. Congress, it should be remembered that legislatures are diverse collections, not unified entities. See Kenneth A Shepsle, Congress is a "They," not an "It": Legislative Intent as Oxymoron, 12 Int'l Rev. L. & Econ. 239, 244 92). (85) See generally Bruce A. Ackerman & William I. Hassler, Clean Coal/Dirty Air (1981); George Stigler, The Theory of Economic Regulation, 2 Bell J. Econ. & Mgmt. Sci. 3 (1971) (discussing the "capture" theory); Lowi, supra note 76, at 146-56; The Brookings Institution, Reforming Regulation: An Evaluation of the Ash Council Proposals 31 (Roger G. Nolls ed., 1971). (86) Clean Air Act Amendments of 1990, Pub. L. No. 95-95, 91 Stat. 685 (1990) (codified as amended in scattered sections of 42 U.S.C. [subsections] 7401-7671(q) (1988 & Supp. V 1993)). (87) These provisions reflected the distrust of industry that was a hallmark of this wave of environmental regulation; industry could not generally be believed about what was feasible and what was crippling. Only by setting standards that were admittedly unattainable (at the time) could progress be achieved. (88) See Shapiro, supra note 81, at 86-88. (89) Clean Air Act, 42 U.S.C. [sections] 7401, 7502 (1988 & Supp. V 1993). (90) Ackerman & Hassler, supra note 85, at 14, 16; Shapiro, supra note 81, at 86. (91) See generally Richard B. Stewart, The Reformation of American Administrative Law, 88 Harv. L. Rev. 1667 (1975) (describing and criticizing the increasing delegation of authority to administrative agencies). (92) See Daniel A. Farber & Phillip P. Frickey, Law and Public Choice: A Critical Introduction 88-115 (1991). (93) Stewart, supra note 91, at 1670. (94) Richard A. Liroff, NEPA Litigation in the 1970's: A Deluge or Dribble?, 21 NAT. RESOURCES J. 315, 316 (1981). (95) For a general treatment of citizen-suits in environmental law, see Adeeb Fadil, Citizen Suits Against Polluters: Picking Up the Pace, 9 HARV. ENVTL. L. REV. 23 (1985); Michael S. Greve, The Private Enforcement of Environmental Law, 65 TUL. L. REV. 339 (1990). The constitutionality of many of the citizen-suit provisions has come under attack recently. See Lujan v. Defenders of Wildlife, 112 S. Ct. 2130 (1992). For an attack on the position articulated by the Court in Lujan, see Cass R. Sunstein, What's Standing After Lujan? Of Citizen Suits, "Injuries," and Article III, 91 MICH. L. REV. 163 (1992), critiqued in Harold J. Krent & Ethan G. Shenkman, Of Citizen Suits and Citizen Sunstein, 91 MICH. L. REV. 1793 (1993). (96) Martin Shapiro termed these statutory directives "fudge clauses." See SHAPIRO, supra note 81, at 86. (97) The literature on statutory interpretation is immense; for a good introduction, see FARBER & FRICKEY, supra note 92. The differences between statutory language, committee reports, and the legislative history can also be immense. See ACKERMAN & HASSLER, supra note 85. (98) Presidents Bush and Reagan also used presidential signing statements to indicate to the implementing agencies what should and should not be privileged. See Daniel B. Rodriguez, Statutory Interpretation and Political Advantage, 12 INT'L REV. L. & ECON. 217, 226 (1992). (99) For a discussion of congressional shifts over time in pollution standards and deadlines, see R. Shep Melnick, Pollution Deadlines and the Coalition for Failure, in ENVIRONMENTAL POLITICS: PUBLIC COSTS, PRIVATE REWARDS 89-103 (Michael S. Greve & Fred L. Smith, Jr. eds., 1992). (100) ENVIRONMENTAL POLICY IN THE 1990S, supra note 81, at app. 1. (101) Such corrections occur subject to constraints. See John A. Ferejohn & Barry R. Weingast, A Positive Theory of Statutory Interpretation, 12 INT'L REV. L. & ECON. 263, 265 (1992). (102) Melnick, supra note 99, at 97; Daniel A. Farber, Politics and Procedure in Environmental Law, 8 J.L. ECON. & ORG. 59, 67 (1992). (103) See Matthew D. McCubbins et al., Structure and Process, Politics and Policy: Administrative Arrangements and the Political Control of Agencies, 75 VA. L. REV. 431, 442 (1989); Matthew D. McCubbins, The Legislative Design of Regulatory Structure, 29 AM. J. POL. SCI. 721 (1985). (104) Ferejohn & Weingast, supra note 101, at 262, 266. (105) Lettie M. Wenner, Environmental Policy and the Courts, in ENVIRONMENTAL POLICIES IN THE 1990S, supra note 81, at 145, 147; VOGEL, supra note 81, at 59, 61, 144-45. (106) Sunstein, supra note 95, at 221. (107) Matthew D. McCubbins et al., Administrative Procedures as Instruments of Political Control, 3 J.L. ECON. & ORG. 243, 244 (1987). (108) Shepsle suggests that statutes are similar to incomplete contracts. See Shepsle, supra note 84, at 250. (109) See generally Alexander K. Wang, Southern California's Quest for Clean Air: Is EPA's Dilemma Nearing an End?, 24 ENVTL. L 1137 (1994). (110) Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837, 865 (1984). (111) Melnick, supra note 99, at 97-98. See also LANDY ET AL., supra note 9, at 314. (112) Transboundary and global environmental problems require somewhat different approaches. (113) At present, the small size of the Mexican economy relative to that of the United States would make any sanctions levied against the United States relatively minor (though pain would be experienced by some); the key point is the general effect of multinational enforcement measures such as these. (114) American Petroleum Inst. v. Costle, 665 F.2d 1176 (D.C. Cir. 1981), cert. denied, 455 U.S. 1034 (1982); Cases brought by plaintiffs including NRDC, the American Petroleum Institute, and the City of Houston were consolidated in this case. (115) LANDY, supra note 9, at 78. (116) DAVID VOGEL, FLUCTUATING FORTUNES: THE POLITICAL POWER OF BUSINESS IN AMERICA 107 (1989). (117) Chevron U.S.A v. Natural Resources Defense Council, 467 U.S. 837 (1984). (118) See Stigler, supra note 85, at 3. (119) Clean Air Act Amendments of 1990, Pub. L. No. 101-549, [subsections] 410, 403, 104 Stat. 2399, 258992 (1991) (codified at 42 U.S.C. [sections] 7651(b) (Supp. V 1993)). (120) Waxman, supra note 80, at 1742 (emphasis added).

Kal Raustiala(*) Research Fellow in the Foreign Policy Studies Program of the Brookings Institution, Washington, D.C. I want to thank Daniel Bodansky, Steve Charnovitz, David G. Victor, and Gordon J. MacDonald for their very helpful
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Title Annotation:Commission for Environmental Cooperation
Author:Raustiala, Kal
Publication:Environmental Law
Date:Jan 1, 1995
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