German State Leadership Conference Environmental Policy Challenges for the 21st Century
George E. Meyer, Secretary Wisconsin Dept. of Natural Resources to the U.S.
Washington, D.C. March 12, 1999

I am honored to be here today to represent the State of Wisconsin and Governor Tommy G. Thompson. As you know, Governor Thompson is the current President of the Council of State Governments. He applauds the Herbert Quandt Foundation, German Marshall Fund and the Council of State Governments for their leaderships in selecting this topic and convening this group.

It is my primary purpose here today to commit the State of Wisconsin to the task of building a new generation of trans-Atlantic leadership, by helping to create the next generation of environmental policy.

We will build this new century with our Bavarian partners through a regulatory reform partnership based on strong environmental and economic results. But we also will share our results with the people of our great nations and in so doing show the world the value to be found in forming a sustaining, trans-Atlantic friendship as the foundation of a sustainable.

Trans-Atlantic States and Leadership

Conference organizers have demonstrated great vision, wisdom and boldness in convening this event.

The vision comes by focusing on the states, the historic laboratories of innovation in our countries. By focusing on states, the organizers communicate their knowledge of trends in creative governance and public leadership.

The wisdom comes by framing topics around next generational environmental challenges, not the environmental battles of the past. In the U.S. and Germany, next generation leaders know that environmental issues will not be framed by the air, water and waste criteria and new words for the environmental policies of the future.

And the boldness comes by preferring partnerships to disconnected relationships. Partnerships are the key to success to environmental policy because the 21st century leadership requires integrating ideas and reconciling ideals unlike the 20th century's often fractionated and dogmatic approaches.

The Wisconsin-Bavaria Agreement

The principles that guide this conference also guide the Regulatory Reform Working Partnership Agreement entered into December 1, 1998 by the State of Wisconsin and the Free State of Bavaria. This transAtlantic agreement has tremendous potential to demonstrate environmental vision and leadership with profound consequence.

The agreement will produce results-oriented partnership with business, community, legal, university and government interests to advance the cause of sustainability and global competitiveness. Together, Bavaria and Wisconsin will develop joint pilot projects, define research initiatives, share technical information and develop new policies that are transferable to our states and elsewhere. We will learn by applying an environmental systems approach to commerce and a people to people approach to all we do together.

I applaud Ministerpreasident Stoiber and Staatminister Schnappauf for advocating this new model of economic and environmental progress that is based on experimentation, validation and replication of benchmarked progress and concrete results. I and members of my staff have just returned from Bavaria where I met with Staatminister Schnappauf and his excellent staff. We have developed a detailed implementation plan that stresses the exchange of information. I am confident that this partnership will guide the economic and environmental destiny of our states in ways never before attempted to successes never before imagined.

Indeed, this agreement was crafted in the spirit of the new transAtlantic Agenda announced in 1995 and hopefully will have implications far beyond our own states. This agenda reinforces a common American and European destiny and affirms our joint need for environmental regulatory cooperation and innovation. It is amazing how both Bavaria and Wisconsin have independently come to the same detailed systems of regulatory innovation and reform. Our coming together will be a powerful message for change that will hopefully inform and encourage new transAtlantic leaders in government, non-government and business sectors.

Wisconsin Cooperative Environmental Agreements

The foundation of Wisconsin's regulatory innovation is our Cooperative Environmental Agreement law. While developed independently, this law is very similar to the Environmental Pact of Bavaria. Governor Thompson proposed this law, which was enacted in the 1997-99 state budget. This law is the most comprehensive regulatory innovation law in the United States and has invited new ways of thinking in our agency and beyond.

The law authorizes 10 agreements with businesses over the next five years. Contents of the agreements will cover a full range of currently environmentally regulated and unregulated activities. These agreements will free innovative partners to achieve greater environmental and economic performance. They will implement the U.S. EPA vision of cheaper, cleaner and smarter environmental protection but reach beyond existing federal experiments such Project X-L, the Common Sense Initiative and the Environmental Leadership Program.

The foundation of our approach is in the adoption of an environmental management system that produces superior environmental performance, communicate progress and questions anything that does not add value. Pilot projects must have an ISO-14001 "Plus" EMS that is clear and firm on legal compliance (or, as our Bavarian partners would say, "functional equivalency"); produces measurable results; has two way communication with the public, and addresses both both regulated and unregulated environmental problems. The agreement essentially transforms the existing regulatory system.

In return, the law allows us to provide appropriate regulatory flexibility for an non-statutory regulation or guidance. Our Bavarian colleagues describe this by use of the term "substitution". The bottom line is if the regulation does not significantly contribute to an environmental goal, it may be modified or eliminated. If the regulation costs money that should go to a higher goal, that can happen, too. Also, because of third party certification, we will be able to reduce the government inspection and reporting burden on both the company and our limited staff resources.

Another important aspect of the law supports a detect, correct and disclose policy covering minor environmental infractions. This provision is designed to be an incentive to catch and correct environmental problems in an early and transparent manner. The present system encourages for some, a kind of "don't ask, don't tell" approach to environmental violations.

Serious violations or criminal activity are still subject to enforcement, as are violations of the cooperative In no circumstances will environmental standards be sacrifices but in every circumstance we will ask "is there a better way" to produce greater environmental performance.

Although reached independently, this new law is very similar to the Environmental Pact of Bavaria. Through our agreement, Bavaria and Wisconsin will be able to exchange results, benchmark to improve out systems and enable our business partners to achieve improved environmental performance and greater economic competitiveness.

So far, in Wisconsin, we have six major businesses that expressed their intention to participate as pilot projects and another six are in contact with our new Bureau of Cooperative Environmental Assistance.

The Wisconsin-EPA Innovation Agreement

Up to now, business interest in Wisconsin's innovation program has had an appropriate and healthy skepticism because of uncertainly about the role of U.S. Environmental Protection Agency oversight. Candidly, business feared EPA would refuse to authorize the flexibility needed to adequately test innovation. they also feared increased federal inspections and enforcement attention.

To address that fear, Wisconsin and the EPA have prepared a memorandum of agreement to provide necessary protection and certainty to businesses and the state. The agreement had been publicly announced and is now out for public comment. Formal signing is expected on March 15, 1999 in Madison, Wisconsin.

This agreement is the first reached by a state and U.S. EPA under the EPA-State Environmental Commissioner's Regulatory Innovation Agreement and I am confident that it will serve as a good model for many more.

In brief, the EPA-Wisconsin agreement does the following:

It commits EPA and the state to giving experimentation more than a fair chance of finding cleaner, cheaper, smarter ways to protect the environment. It emphasizes greater performance, accountability, stakeholder involvement and public reporting.

It gives the state ultimate authority over pilot project selection.

It promotes bold experimentation by allowing deviation from regulations, policies and guidance but assures strong accountability to maintaining statutory environmental standards.

It ensures prompt, coordinated EPA answers to state questions and provides a cooperative approach to problem solving.

It allows EPA to retain its enforcement authority but prohibits the agency from increasing its scrutiny of a firm because of its participation in the program.

We applaud EPA Administrator Carol Browner and especially Region V Acting Administrator David Ullrich for reaching this agreement and we hope it serves as a model for other sates that have earned the right to experiment through their responsible administration of environmental protection programs.

National Innovation Needed

The regulatory innovation being pursue by the states in the U.S. are signs that we are not satisfied with the status quo. We know that existing command and control laws, policies and organizational structures fall short of meeting today's need for integrated holistic and sustaining approaches that meet the needs of the environment, economy and society.

Frankly, there are numerous barriers to innovation facing all sectors of society -- business, government and non-government interests. And , in the U.S., too many of these barriers have their origins in existing federal environmental policy and its implementation. That is why we support regulatory reform laws that make it east for responsible states to be innovative and for responsible businesses to excel at environmental and economic performance.

As proud as we are of Wisconsin's EPA agreement, and as pleased as we are with EPA in its efforts to reach agreement. I think Congress has an obligation as well to foster innovation in the states and to remove the barriers in the administration, fiscal and legal maze that define and often protect the status quo.

In U.S., there are promising new efforts at creating the next generation of environmental policy. We applaud the Progressive Policy Institute and Main Street Republican Coalition for their hard work on this issue.

In Washington, D.C., and in those states able to implement it, it is time to enact a Two Tier system of environmental regulation. This new system should retain an improved version of our current command and control system for those companies that need it and those that feel comfortable with the status quo. But it also would provide a more favorable regulatory tier for those ever increasing numbers of companies that commit themselves in a profound manner to superior environmental performance.

Indeed, unless we create this "Green Tier" system that removes unproductive regulatory constraints and allows companies to achieve their full environmental and economic potential, we will never be fully able to achieve ecological sustainability in this world. This compelling need affects both the developed and developing world.

The Need for Support

We can't do it alone. As one might imagine, the path of regulatory innovation for states can be difficult and staff resources to test these ideas, implement what works and learn from what does not.

The reason is that the status quo controls the fiscal resources and the owners of the status quo control the communications infrastructure. Finding the resources needed to form innovation partnerships -- especially partnerships that cross the Atlantic -- is a daunting challenge, indeed.

That is why the support of the Quandt Foundation and the German Marshall Fund is so critical to creating the structure and process of sharing what we do, so that we can learn and develop together -- as new leaders with new ideas.

But frankly, we need to do more than meet once a year. We need to actively exchange people and practices; we need to keep records, disseminate information and market ideas. We need to create and maintain networks and find and celebrate successes.

These are the challenges that need attention if 21st century are to create a 21st century system. State like Wisconsin and Bavaria will provide the ideas, the energy and the support they can. But more help is needed for real progress to be made. That is why this forum is so important and the Quandt Foundation, the German Marshall Fund and other foundations are so fundamentally important to creating this bold new strategy of environmental and economic sustainability.