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Wisconsin Style: New Approaches to Regulatory Innovation

 

Wisconsin's Green Tier draws on Bavaria's experience

In the year before the Environmental Law in a Connected World conference, Wisconsin set the stage for enabling regulators and business to work together on more flexible, efficient and innovative environmental policy.

Gov. Jim Doyle signed into law Wisconsin’s Green Tier program in April 2004. The results-based environmental policy rewards superior environmental performance that improves the quality of air, water, land or natural resources beyond the minimum standard required by law. Green Tier allows the state to differentiate among good environmental actors and those performing at or near the regulatory minimum.

“Wisconsin has really carried Green Tier through in a way that I can’t find in other states that have,” said David Laws, director of the Environmental Technology and Public Policy Program at the Massachusetts Institute of Technology and an expert in the comparative study of regulatory and planning institutions in the United States and Europe. He spoke at the Environmental Law in a Connected World conference the La Follette School of Public Affairs sponsored in January 2005.

“Having it go through legislative debate is really prompting a level of reflection on and constituting an experiment in revising the role of actors in governance,” Laws added.

Based on the principles of the Coalition for Environmentally Responsible Economics, Green Tier has its roots in a 1996 pilot project that established the Environmental Cooperation Pilot Program, which allowed participating businesses some latitude and assistance in pursuing development of innovative approaches to waste reduction and pollution prevention.

Two years later Wisconsin and the German state of Bavaria signed a regulatory reform working agreement and began exchanging delegations to gather ideas for reform and improvement on environmental policies. Bavaria is a world leader in identifying and implementing innovative public-private agreements. That pact between the two states became the basis for Wisconsin’s Green Tier law.

A Wisconsin delegation representing business, regulators and environmental activists traveled to Bavaria in October 2004 to examine collaborations by businesses and regulators to further economic and environmental objectives and to find ideas to implement in Wisconsin under its Green Tier law.

The trip to Bavaria was a valuable opportunity to see how public-private partnerships achieve the best results, said Graham Wilson, professor of public affairs and chair of the political science department at the University of Wisconsin-Madison, who joined the delegation as part of his research into public-private agreements regarding environmental regulation.

“In Bavaria we saw examples of how a governance system can work,” Wilson said. “Bavaria is achieving real environmental results through the cooperation of government, business and environmental groups — a practice I hope we can import.”

A partnership based on performance and transparent collaboration between government, business and environmental groups works because people in business around the world are concerned about environmental issues, said Mark McDermid, director of the Wisconsin Department of Natural Resources’ Cooperative Environmental Assistance bureau, which oversees Green Tier and the Environmental Cooperation Pilot Program.

Green Tier creates a governance framework that measures performance and reduces the emphasis on minimal compliance. Companies, communities and governments voluntarily negotiate contracts and charters that are flexible, innovative, efficient and enforceable. One of the more appealing features is the flexibility compared to previous systems of environmental protection. Programs and plans for individual companies can be specialized, and the businesses themselves have an important role in determining how they work and how they are monitored.

Participants commit to achieving measurable environmental improvements. They conduct annual assessments of their performance and regulatory compliance status and present results to the Wisconsin Department of Natural Resources.

“These assessments reduce the potential for noncompliance, help facilities move above the compliance threshold and improve overall environmental performance,” McDermid said.

In exchange for improved environmental performance, Green Tier offers the potential to reduce the turn-around time on permits and other Department of Natural Resources decisions. This can reduce internal environmental staff effort as well as legal counsel and consultant costs. This new method for environmental management would allow further and broader exemptions from other permit requirements. The program can ease monitoring of a business’s performance by hastening permission to test and install new technologies, especially those that conserve energy or reduce emissions.

Green Tier agreements are usually linked to an organization’s environmental management system to assure predictable performance and continual improvement. Self-auditing, public involvement and reporting make the processes transparent and verify the results.

“Through Green Tier, businesses implement environmental management systems and incorporate them into their formal decision-making,” McDermid adds. “Because these systems require proactive planning, companies that use them are likely to identify and minimize potential environmental risks that traditional compliance-based programs don’t address.

“Using Green Tier, Wisconsin’s business community can promote and apply new initiatives to improve environmental performance.”