2 ENVIRONMENTAL FEDERALISM IN THE UNITED STATES AND CHINA

In the US, the proper division of responsibility between national and state governments has been a subject of fierce controversy since the founding of the Republic.Footnote ¹⁰ Throughout the 19^th and most of the 20^th centuries, environmental protection was viewed primarily as the responsibility of state and local governments. Although federal law imposed few regulations on private industry that were animated by environmental concerns, after the Second World War the federal government became involved in encouraging states to adopt pollution control measures of their own. The Federal Water Pollution Control Act of 1948Footnote ¹¹ provided federal financial assistance to states for water pollution control programmes. In 1956, Congress made the federal government responsible for paying for the construction of municipal sewage treatment plants. This overcame the reluctance of municipalities to invest in treatment works that primarily benefited downstream, rather than their own, municipalities.

The perception that state and local authorities lacked the resources and political capability to control problems that were becoming national in scope ultimately led Congress to make environmental protection a primary responsibility of the federal government. The EPA, which was created in 1970, was directed by Congress to establish national regulatory programmes to ensure clean air (Clean Air Act of 1970 (CAA)Footnote ¹² ), clean water (Federal Water Pollution Control Act of 1972, or Clean Water Act (CWA)Footnote ¹³ ), safe drinking water (Safe Drinking Water Act of 1974Footnote ¹⁴ ), and the proper management of hazardous waste (Resource Conservation and Recovery Act of 1976Footnote ¹⁵ ).Footnote ¹⁶ Today, the only significant area of environmental law not directly regulated by the federal government is land-use management. Legislation to create a national programme to regulate land use was narrowly defeated in Congress in the early 1970s, despite the support of the Nixon administration.Footnote ¹⁷

US environmental laws generally require the EPA to set minimum national standards that must be met in each state either through programmes operated by the EPA or through state programmes operating under EPA supervision. States can acquire authority to administer and enforce these programmes if they convince the EPA that they have devoted the legal and financial resources required to meet the minimum federal standards. Nearly all states have sought and obtained programme delegation from the EPA. Under this model of environmental governance – known as ‘cooperative federalism’ – the EPA can veto permits issued by states and it can take enforcement action against violators if it is not satisfied with state enforcement action.Footnote ¹⁸

To assist in supervising delegated state programmes the EPA has established regional offices, and currently has ten such offices located throughout the US. Each regional office is responsible for supervising environmental programmes operated by between four and ten states and territories.Footnote ¹⁹ The EPA headquarters in Washington, DC, is organized into twelve different divisions.

Federal environmental laws do not pre-empt state law except in narrowly defined circumstances. Thus, while states must meet minimum federal environmental standards, they are generally free to adopt more stringent standards if they so choose. The only exceptions are for chemicals regulated under the Toxic Substances Control Act (TSCA),Footnote ²⁰ and pesticide labelling under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA).Footnote ²¹ Partial pre-emption (barring states from some, but not all, regulation of a particular subject) has also been applied to the regulation of nuclear materials under the Atomic Energy ActFootnote ²² and by the CAA to state standards governing motor vehicle emissions. However, states are allowed to adopt California’s more stringent motor vehicle standards, which were grandfathered into the Act.Footnote ²³ California has pioneered the adoption of environmental standards that go beyond minimum federal requirements. The state has its own aggressive programmes to reduce greenhouse gas (GHG) emissions,Footnote ²⁴ to limit human exposure to carcinogens,Footnote ²⁵ and to promote the use of safer chemicals.Footnote ²⁶

Although environmental protection was incorporated into the Chinese Constitution in 1978, the Ministry of Urban Construction and Environmental Protection (MUCEP) was not established until 1984. In the same year, the State Council established the Environmental Protection Commission (EPC) and transformed the MUCEP into the National Environmental Protection Agency (NEPA). In 1998, the State Council abolished the EPC and transformed the NEPA into the State Environmental Protection Agency (SEPA). When the SEPA was transformed into the MEP in 2008, it was anticipated that its elevation to ministry status would give the agency more clout within the Chinese bureaucracy. This does not appear to have happened so far: ‘China’s Ministry of Environmental Protection (MEP) manages pollutant discharge, but it is a weak player within the government system’.Footnote ²⁷

Compared with the US, China’s system of environmental governance is far more decentralized, with power delegated to local EPBs. While municipal EPBs in theory report to provincial EPBs, which in turn report to the MEP, in practice local officials can control the EPBs. They can fire EPB officials, control their hiring, and even deprive them of funds.Footnote ²⁸ Because EPBs are controlled by local governments, they are subject to considerable local political pressure. In some cases, local officials have protected polluting enterprises by engaging in ‘local protectionism’, designating notorious sources of pollution as ‘key protected enterprises’, and barring inspections.Footnote ²⁹ Under China’s national environmental laws, the MEP is responsible for unified supervision and management of the environmental protection work throughout the country.Footnote ³⁰ The ‘three-set programme’, which determines the functions of every agency, affirms that the central agencies are intended to serve as ‘professional guides’ to local environmental officials. In practice, this means that the MEP primarily develops laws, policies and standards, but all implementation happens at local governmental level.

The lack of effective accountability at the local level has made the implementation of China’s environmental laws far more difficult. Local governments lack the enthusiasm and capacity for enforcement. Hence, the laws and regulations have not achieved uniform application. In 2015, for example, Zhejiang Province had 479 environmental administrative detention cases, but there were only 27 cases in Jiangsu Province. Given that Jiangsu Province is the location of China’s largest chemical plants, this discrepancy suggests a lack of enforcement effort where industries have the most economic power.Footnote ³¹

Since 1970, citizen suit provisions in US environmental laws have provided a mechanism for countering lack of enforcement by government officials. Since the 1980s, US non-governmental organizations (NGOs) have worked with local environmentalists to use citizen suits to promote more stringent enforcement, particularly of the Clean Water Act. By comparison, in China the establishment of environmental public interest litigation (PIL) could theoretically improve the implementation of environmental law at the local level. The threshold for bringing PIL cases has, to date, been so high that cases are still relatively sporadic. Although some PIL pilot cases have been brought by the Chinese Procurator, they have been unable to produce sufficient deterrence to ensure more stringent local compliance with environmental regulations. By contrast, US citizen suits have played a meaningful role in ensuring the implementation of environmental laws at the local and national levels.Footnote ³²

3 RECENT DEVELOPMENTS IN ENVIRONMENTAL GOVERNANCE IN CHINA

With the Chinese government’s recent impetus to improve environmental protection, it has undertaken initiatives to address pollution problems on a regional basis and to increase central government’s influence over local officials. The 2013 Air Pollution Action PlanFootnote ³³ recognizes the need for coordinated regional action to combat transboundary pollution. The Regional Coordinated Mechanism seeks to coordinate responses to environmental problems on a regional basis. Inspired by persistent air pollution, especially from particulate matter, this mechanism was initiated in the Beijing-Tianjin-Hebei region (otherwise known as Jing-Jin-Ji). It is now spreading to many other regions of China, such as the Pearl River Delta and Yangtze River Delta area. In Jing-Jin-Ji, the Regional Coordinated Mechanism seeks to orchestrate responses to pollution through joint regional law enforcement, the establishment of a regional information sharing platform, regional air quality forecasting, and the development of an early warning and emergency response mechanism, among other measures.Footnote ³⁴ Regional cooperation is essential because at times more than 50% of Beijing’s pollution is of a long-range nature. Many observers believe that greater regional cooperation is desirable because it will promote more stringent enforcement of environmental standards by countering lax enforcement at the local level.

Far-reaching amendments to the Environmental Protection Law of the People’s Republic of China became effective in January 2015. These amendments require greater transparency by enterprises and local governments, increase liability for polluters and local government officials, authorize PIL by certain NGOs, and increase penalties for environmental violations.Footnote ³⁵ Following a report at the Fourth Plenary Session of the 18^th Communist Party of China (CPC) in 2014, a pilot programme for administrative PIL, conducted by public prosecutors, was launched. Other initiatives also seek to increase central government’s influence on local governments. Centralized environmental governance was enhanced by the decision on ‘Vertical Management of Environmental Monitoring and Internal Inspection Functions below Provincial Levels’ at the 18^th session of the Fifth Plenary Session in 2015.Footnote ³⁶ These include the use of ‘interviews’ or the ‘chats’ system to interrogate poorly performing local governments, and warn local officials about their area’s environmental problems in an effort to hold them accountable for poor environmental conditions.Footnote ³⁷ The national government also created a new Programme of Environmental Protection Inspection (for Trial Implementation), which extends the Central Environmental Protection Inspectorate mechanism to local government.Footnote ³⁸

At the beginning of 2016, the central Communist Party and officials of the MEP of China inspected Hebei Province to ascertain its environmental performance and local environmental governance. A 36-day investigation was conducted in January and February 2016. Central Environmental Protection inspectors identified 2,856 environmental problems related to 13,784 projects that violated regulations. The inspectors criticized 28 companies by name in a lengthy report. This was the highest level of cadre team to inspect a province in China’s history. Building on this effort, the MEP announced that it would inspect 15 provinces in 2016.Footnote ³⁹ The State Council confirmed the ability of the MEP to deploy inspection teams and to engage in discussions with provincial leaders. It also decreed that the results of inspections should be reported to central government authorities, including the Organization Department of the CPC Central Committee, which plays an important role in the assessment of cadres. Statistics show that to date, in the first batch of eight provinces, Central Environmental Protection Inspectorate groups have talked to 193 provincial cadres, received 13,316 calls reporting environmental violations, ordered the rectification of 9,617 cases, imposed fines totalling 198 million renminbi, interviewed 2,176 people, detained 310 people, and criticized 3,287 people, many of whom have since been disciplined by the party or the government.Footnote ⁴⁰

Alex Wang has comprehensively researched the cadre system of environmental evaluation used by the bureaucracy in China. He concludes that ‘bureaucratic cadre mandates, not laws and regulations, are at the core of Chinese governance. However, [redressing] environmental problems is an effort deeply and inextricably linked to the party-state’s ultimate self-interest: doing what it takes to remain in power’.Footnote ⁴¹ This suggests that the new central government and MEP are raising an ‘environmental storm’ to conquer the gridlock of local protectionism and thereby stabilize their power and appeal to the common people. In the past, generally such ‘storms’ have lasted only temporarily.

Other measures to increase the accountability of local leaders include the Measure for the Accountability of Party and Government Leaders for Damage to the Ecological Environment (for Trial Implementation), and the Pilot Programme to Off-Office Auditing of Cadres for Natural Resources Assets, both adopted in 2015.Footnote ⁴² Both decisions directly target local cadres and their environmental governance performance. On 13 May 2016, the State Council issued a notice that the central government would play a greater role in directing local and provincial expenditure on conservation efforts. The government will direct conservation funding to specific areas within local governments. In an explanatory notice issued on 16 May 2016, the MEP stated that local governments would be directed to establish tracing systems to document how funding is spent on environmental protection.Footnote ⁴³

As a result of these new measures, especially the establishment of the new Central Environmental Protection Inspectorate team system, local government officials perceive that they are now more likely to be held accountable for poor environmental performance. However, all these new measures and policies need sustained enforcement to be effective in the long term. At the same time, central government faces even more serious challenges than before from the slowing of the national economy, so it remains unclear for how long it will continue to pursue aggressive policies to make local officials crack down on pollution. For now at least, the trend towards greater efforts by central government to influence local environmental performance seems to be clear.

4 REASONS FOR CENTRALIZING ENVIRONMENTAL GOVERNANCE

The centralization of environmental governance in the US occurred at a time of enormous public concern for the environment. Millions of Americans took to the streets to show their concern when they celebrated the first Earth Day on 22 April 1970. Presidential historian Theodore White wrote that, by 1970, ‘the environment[al] cause had swollen into the favorite sacred issue of all politicians, all TV networks, all goodwilled people of any party’.Footnote ⁴⁴ Two years later, the United Nations Conference on the Human Environment (UNCED), held in Stockholm (Sweden), focused global attention on environmental concerns.Footnote ⁴⁵ This helped to inspire Chinese officials to adopt their first environmental protection measures.

Scholars have offered several reasons for the US centralizing environmental governance. These include the need to prevent a race to the bottom between lower levels of government competing to attract industry; the transboundary nature of pollution problems; and the scope for regulatory economies of scale.Footnote ⁴⁶ The race-to-the-bottom theory has spawned the most scholarly debate. Questioning this theory, some scholars argue that there could just as easily be a race to the top among states competing to attract businesses and people concerned about environmental protection.Footnote ⁴⁷

The need to control transboundary pollution is the most widely accepted rationale for national regulatory programmes. As Daniel Esty explains, ‘in so far as the central reason for environmental regulation is to mitigate the impact of market failures that emerge from uninternalized externalities, drawing more lines on the map only multiplies the potential for transboundary spillovers’.Footnote ⁴⁸ Additionally, some have argued that it is easier to focus public attention on environmental problems and enact legislation at the national level so that citizen preferences can overcome the concentrated interests of regulated industry.Footnote ⁴⁹

For decades, state officials in the US have lobbied for greater devolution of authority to the states. While the EPA has sought to be more responsive to state concerns, the ‘EPA’s paradox is that it must maintain national programs and seek national consistency while simultaneously attempting to make its programs and standards fit an incredibly diverse and dynamic nation’.Footnote ⁵⁰ Opponents of state devolution maintain that there are economies of scale in having national regulatory programmes. As Esty argues, ‘[do] we really want every state or hamlet to determine for itself whether polychlorinated biphenyls create additional cancer risks greater than 10^-6, and if so, at what cost these risks are worth worrying about?’.Footnote ⁵¹

The race-to-the-bottom theory is an outgrowth of century-old concerns from the field of corporate law about the ‘tendency of state legislation’ to move ‘towards the lowest level of lax regulation’.Footnote ⁵² In his dissenting opinion in the 1933 case Liggett v. Lee,Footnote ⁵³ US Supreme Court Justice Louis Brandeis embraced the idea, which was used by the US government in its defences against Commerce Clause challenges to New Deal legislation. The Supreme Court itself cited race-to-the-bottom fears as justification for upholding federal minimum wage and maximum hour regulations.Footnote ⁵⁴ Modern use of the term ‘race to the bottom’ is often traced to an article published in 1974 by William Cary, former chairman of the Securities and Exchange Commission, who expanded the view of Justice Brandeis by expressing concern that competition among states to attract corporations forced them to offer rules that benefited managers at the expense of shareholders.Footnote ⁵⁵

Richard Revesz argues that there is no theoretical basis for believing that regulatory competition would induce states to set sub-optimally low standards. Moreover, Revesz maintains that, even if a race to the bottom were occurring, federal regulation would not be an effective response because states could relax regulatory controls in other areas to compensate.Footnote ⁵⁶ Noting the scarce empirical support for the notion that environmental standards have a substantial effect on industry location decisions, Revesz argues that state regulatory standards ideally should be set at a level where the benefits of increased employment would at least offset the costs of increased environmental degradation.Footnote ⁵⁷ Responding to this argument, Kirsten Engel argues that, even if regulatory standards have little actual effect on industry location decisions, a race to the bottom would occur because state officials believe that they do. She supports her argument with the results of a survey of state regulators, indicating that they believe the stringency of regulatory standards does affect industry location decisions.Footnote ⁵⁸

Proponents of the race-to-the-bottom hypothesis also invoke game theory’s ‘prisoner’s dilemma’. While states do better by cooperating with each other in enacting optimally stringent environmental standards, fear and uncertainty concerning how competing states will act to attract industry creates a kind of prisoner’s dilemma that induces them to relax their standards in an ultimately unsuccessful attempt to attract industry.Footnote ⁵⁹ When it is too difficult politically for states to make highly visible changes to relax regulations (de jure policy changes), states may be able to accomplish the same end by interpreting laws in ways that favour businesses, by enforcing laws less vigorously, and by constraining regulatory budgets (including budgets allocated to rule writers and enforcement officials).Footnote ⁶⁰

In the US today, the race-to-the-bottom controversy has been largely eclipsed by widespread realization that centralized regulation has been enormously successful in reducing environmental damage. As Richard Stewart writes, ‘[t]he criticisms of the “first generation” system of centralized federal command-and-control regulation are by now familiar ... The defense of the current command regulatory system is also well known. It “works”’.Footnote ⁶¹ Emphasizing the many other factors that constrain state competition,Footnote ⁶² some argue that there is neither a race to the bottom nor to the top. In an influential 2005 article, Daryl J. Levinson contends that ‘recent work has cast theoretical and empirical doubt on the existence of any meaningful competition at all’.Footnote ⁶³ Importantly, Levinson discusses the effect of special interest groups, and their relative power in the state legislature, as a determinant in state decision making. He also challenges the assumption that individual lawmakers would be motivated to compete for businesses, concluding that ‘instead of racing to the top or bottom, they will just stand still’.Footnote ⁶⁴

5 ENVIRONMENTAL FEDERALISM AND THE RACE TO THE BOTTOM

While the consequences of regulatory competition remain a subject of lively debate, in practice a centralized approach to environmental governance has prevailed in the US. In comparison, relations between the central and local levels in China are affected by different economic and political factors, such as local cadre selection and the promotion system in public administration.Footnote ⁶⁵ Arguably, these dynamics foster a process of decentralization and a race to the bottom in environmental protection.

In the US, most significant polluting activities are subject to national standards. One notable exception that may be relevant to the race-to-the-bottom debate is pollution caused by hydraulic fracturing (‘fracking’). Although the Safe Drinking Water Act establishes a national permitting programme for underground injection, an amendment added in 2005 exempts hydraulic fracturing from this requirement as long as diesel fuel is not used.Footnote ⁶⁶ As a result, regulation of the impact of fracking on underground sources of drinking water is left entirely to the discretion of individual states. However, there does not appear to be a consistent pattern of states competing with their neighbours to attract fracking operations.

States have employed a diverse array of approaches to regulate fracking. Fracking projects are now under way in 34 states, only a few of which have regulated it stringently. Fracking is used extensively in Pennsylvania. Operators are required to obtain a permit from the state Department of Environmental Protection. Pennsylvania law pre-empted local zoning and land-use control laws from blocking fracking operations,Footnote ⁶⁷ but this law was struck down for violating the environmental protection provisions of the Pennsylvania Constitution.Footnote ⁶⁸ Alaska and Florida have no laws governing fracking. Vermont has banned all fracking activities within the state. After imposing temporary moratoria on fracking to study its environmental risks,Footnote ⁶⁹ New York and Maryland have decided not to allow it.Footnote ⁷⁰

Although leaving fracking regulation to the states does not appear to have spawned a race to the bottom,Footnote ⁷¹ this does not undercut the rationale for strong federal environmental regulations. The most concerning environmental impacts of fracking are local: underground injection does not generate the kind of transboundary pollution caused by other water and air emissions, except pollution from the disposal of wastewater from fracking operations, which remains subject to federal regulation under the Clean Water Act. The other rationales for federal regulation, including economies of scale in standard setting and the need to regulate transboundary pollution, continue to provide powerful support for centralized regulation, as illustrated by the experiences of both China and the US.

Much of the debate over the race-to-the-bottom theory and state decision-making dynamics has shifted since the turn of the 21^st century, as scholars seek to explain new forms of government and constituent behaviour related to climate change. In 2005, nine north-eastern states and two Canadian provinces banded together to form the Regional Greenhouse Gas Initiative (RGGI), a regional cap-and-trade programme limiting carbon emissions. California has been a pioneer in promoting stricter regulation of GHG emissions on a statewide basis, enacting the California Global Warming Solution ActFootnote ⁷² in 2006. As amended in 2016, this legislation commits the state to reduce such emissions by 40% below 1990 levels by 2030. At first blush, states voluntarily imposing regulatory costs on themselves, combined with knowledge that these actions will not result in capturing economic benefits within the region, appears to be strong evidence to refute a race to the bottom. In articles published in 2005 and 2008, however, Engel explained that one of the reasons for states to cooperate was that they anticipate inevitable market changes, recognize the economic value of stimulating job growth in a young sector, and are attempting to ease the transition to potential future emissions credit markets.Footnote ⁷³

Similar explanations are offered for state renewable portfolio standards (RPSs), which are laws requiring retail electricity suppliers to include a minimum amount of electricity derived from renewable energy in the mix of electricity they sell. State RPSs exploded in popularity among states in the early 2000s: in the late 1990s only a couple of states had RPSs; by 2005, 25 states and the District of Columbia had enacted them.Footnote ⁷⁴ Scholars have concluded that states are not racing to the top by voluntarily passing RPSs, but are instead attempting to cultivate the economic benefits of a new sector in anticipation of inevitable change.Footnote ⁷⁵

China has a substantial body of national environmental legislation, but its legal and administrative systems for protecting the environment are far more decentralized than those in the US. China’s MEP plays a small, though growing, role in supervising enforcement of environmental standards; most significant enforcement decisions are made by local EPBs. China’s system of cadre oversight fosters competition between local governments. Instead of leading to a race to the top, in practice this tends to result in lower levels of environmental protection.

The first important point is to understand the basic political framework between central and local governments. Zheng Yongnian maintains that the relationship between provincial and national governments in China reflects mutual conditionality, including top-down rules and bottom-up reactions. Although China’s reform has been market-oriented, until now it has not yet established complete private property rights, commercial law, or an independent judicial system – all of which are crucial factors in creating a market economy. Some scholars attribute China’s high-speed development to ‘de facto federalism’, meaning that central government has delegated powers to local governments to stimulate the economy.Footnote ⁷⁶

Commentators have observed that, as many political and economic powers have been delegated to local governments, the latter can countermand the policies of central government. However, the ruling party in China firmly controls the cadre personnel through appointment, assessment, transfer and decommissioning decisions made by the Party committee and its departments that are in charge of all cadres at higher levels. The cadre personnel are the central government’s ultimate trump card, and represent the most fundamental restriction on local officials. Some scholars even argue that local governments are reduced to the role of agents of central government and that, through the principle of ‘party managing cadres’, a new supervision mechanism has developed that is more effective than that of the planned economy era.Footnote ⁷⁷ Others believe that China’s central and local relationship can best be described as ‘regionally decentralized authoritarianism’ (RDA). Although central government has ultimate political control over local governments and their officials, it has decentralized executive and economic power in local governments. This combination is a unique feature of China’s environmental governance system. Arguably it plays a major role in determining China’s reform and development tracks, but it also creates some serious structural problems.Footnote ⁷⁸

Certainly the ability of central government to evaluate the performance of local cadres remains an important source of power. In the current assessment and promotion system for officials, central government has set economic development as a ‘hard indicator’, while social development is a less important ‘soft indicator’. It is also worth noting that the system of assessment of local officials creates a kind of competition for promotion based on economic growth, and has launched a special ‘political championship’ or ‘promotion tournament’ between local officials.Footnote ⁷⁹ Using economic growth as measured by growth in gross domestic product (GDP) has several advantages over other indices of governance. Firstly, officials at all levels of government need GDP growth to prove their trustworthy performance to the Communist Party and its government officials. Secondly, GDP growth increases local tax revenues, which generally reduces the financial burden on local governments, even if more tax is withheld by central government. Thirdly, GDP is easily measured, which facilitates comparisons among all official competitors.Footnote ⁸⁰

Another important aspect to understand is the relationship between GDP and environmental protection from the perspective of local governments. Because GDP growth is an important factor in cadre evaluation, local officials prefer to promote economic projects that generate immediate benefits during their tenure in office over environmental projects with longer-term effects.Footnote ⁸¹ Environmental protection efforts by local officials mostly produce benefits that are attributed to their successors as a result of their delayed effect. In China the period for promotion is typically three to five years, and the period for achieving environmental protection or recovery is obviously much longer. This makes the environment a lower priority for many officials. Also, in competing to raise GDP, officials are not satisfied with simply operating existing enterprises and projects; they also must try to entice new projects to their areas, attracting foreign businesses and investment. Wang explains:

During recent years, attracting foreign businesses and investment has become the top priority among local governments that seek to promote economic growth. There is evidence that this has indeed resulted in a race to the bottom, particularly through the relaxation of environmental regulations. Other avenues include lowering the price of industrial land, relaxing labour protection, and reducing social security payments. Undeniably, the regional race-to-the-bottom development model of attracting industrial investment from 2002 to 2008 brought the Chinese economy ultra-high-speed growth of around 10% annually, and made China the global centre for low to middle-end manufacturing.Footnote ⁸³ As observed by the first author, to discuss the race to the bottom in the Chinese context, in addition to the low cost of labour, local governments can attract global Foreign Direct Investment (FDI) to China by holding fire sales of their natural resources, with serious consequences for China’s environment, market, and even government revenue. As China won the title of ‘world factory’, environmental destruction and energy consumption have reached intolerable levels.Footnote ⁸⁴

Examples of the race to the bottom between local governments are not difficult to find in China. In the interests of attracting foreign businesses and investment, some EPBs have supported the location of polluting enterprises within their jurisdictions. In 2005, the head of the local EPB in the Huangzhong county of China’s Qinghai Province welcomed a heavily polluting chromium salt factory that created severe environmental hazards.Footnote ⁸⁵ In Anhui Province, the local EPB approved the construction of a battery factory near a community of 3,000 residents. Not surprisingly, it was later discovered that more than 100 children in the vicinity of the plant had levels of lead in their blood that exceeded health standards. Many of them required hospital treatment.Footnote ⁸⁶

These developments are driven by a thirst for foreign investment. In recent years, many local governments have forced their executive departments, including the local environmental protection department, to participate directly in promoting investment. In order to achieve this objective some departments were forced to neglect their main duties. Officially, the local EPB should be responsible for environmental supervision, law enforcement inspection, and the examination and approval of environmental impact assessments (EIAs). Because of its involvement in efforts to attract foreign investment, however, it actually plays the role of referee as well as player. In the long run, this is bound to affect the ability of local EPBs to perform their normal responsibilities.Footnote ⁸⁷ Many EPBs are praised by local governments for their ‘outstanding performance’ in attracting investment, which reveals that this troubling phenomenon persists. Meanwhile, the few courageous EPB officials who insist that their primary function should remain environmental protection receive criticism from local leaders. For example, one local head of an EPB who suggested that a project should be relocated to another site was quickly transferred from his position.Footnote ⁸⁸

China’s present political system operates in a fluid fashion, with great local variation, considerable opportunity for local initiative, and tremendous pressure on local officials to give priority to rapid economic development. As a consequence, local governments must find some methods to cope with inspection and examination from central government. In China, sub-national officials may be forced to make trade-offs among multiple targets to balance their own political survival against the mandates of central government. This appears to be the case particularly when limited resources and mutually incompatible goals connect with outcomes that are not entirely under their control.Footnote ⁸⁹ In addition, the alienation of grass-roots governments from the execution of environmental policy appears widespread.Footnote ⁹⁰ It seems that, without the discipline of public pressure, just coping with upper levels of government on environmental issues can be difficult.

Further support for this observation is provided by scholars from Tsinghua University and the National University of Singapore. Their empirical results indicate that ‘spending on environmental amenities negatively affects city-level cadres’ odds of promotion. This is plausible because funds spent on the environment do not translate as surely into added local GDP growth’.Footnote ⁹¹ This contrasts starkly with infrastructure investment in urban transportation, including roads and bridges, and public transportation. Transportation infrastructure as a share of total urban infrastructure investment rose from 60.2% in 2000 to 72.7% in 2010.Footnote ⁹² Studies of the effectiveness of assessments of local officials based on achievement of China’s environmental targets offer yet another perspective. These studies focused on the implementation of China’s Five-Year Plan, and its targets for reduced emissions of pollutants. The best results were achieved in relation to reducing air pollutants, the most publicly visible among the pollutants targeted in the Plan. Water pollution, which is less visible but also a mandated target, was unaffected. Emissions of soot, an untargeted pollutant, also were unaffected. The findings imply that a high-stakes reward for measured performance is not a universal guarantee of success. Another study shows that environmental targets do not always achieve their intended goals. Strategic and cyclical behaviour by local government officials in leadership positions often leads to short-term maximization of economic performance instead of long-term actions aimed at innovative environmental management.Footnote ⁹³

In sum, a comparison of China and the US provides some support for the race-to-the-bottom hypothesis because local authorities in China often pursue lax enforcement policies in an effort to attract industry. Evidently, there are many other factors that contribute to explaining why the American, more federalized governance regime delivers more robust environmental protection, including a stronger tradition of respect for the rule of law and greater public involvement in the development and enforcement of environmental regulations. Nevertheless, the preliminary results are sufficiently compelling to invite further reflection on and further comparative study of the relation between decentralized governance and environmental ambition in China.

6 CONCLUSION: ENVIRONMENTAL FEDERALISM IN AN ERA OF GLOBALIZATION

In the US concerns over a race to the bottom have been raised as a justification for centralizing legal authority to protect the environment in the national government. In contrast, China has a far more decentralized legal system with greater responsibility for environmental protection given to local authorities. Local concerns over economic development and employment, as well as GDP assessment from upper leaders, are strong motivations that may trump environmental protection, particularly when protecting the environment is perceived to interfere with local development.Footnote ⁹⁴ Chinese local governments have stronger impulses to race to the bottom compared with the US. China’s persistent pollution problems, and its highly decentralized system of environmental governance, provide significant evidence supporting the race-to-the-bottom hypothesis.

Globalization has had a profound effect on the development of environmental law throughout the world. Even countries with pronounced differences in their legal and political systems borrow laws and regulatory innovations from one another to respond to environmental concerns.Footnote ⁹⁵ To combat the enormous environmental problems associated with its race to the bottom, China in recent years has been aggressive in borrowing regulatory innovations to strengthen its environmental laws and reform its system of environmental governance. These reforms include measures to provide emissions data to the public and to authorize public interest litigation, as well as initiatives to increase the influence of central government over local officials.

There are other potential reforms that may help to combat China’s race to the bottom. The first and most important method may be to facilitate greater public participation in the supervision of local environmental governance. This is likely to be harder to achieve in China than it is in the US, which has a long tradition of encouraging public participation in the development and enforcement of environmental regulations. Secondly, borrowing from the US, the Chinese national MEP and its branches should be given more direct powers for administrative enforcement, even expanding vertical management power between the MEP and local EPBs to combat local protectionism. The system of central environmental inspectors is a meaningful but still preliminary step in this direction. Thirdly, the MEP’s capacity and resources should be enhanced. A final strategy, which is currently popular in China, would be to require central authorities to supervise local authorities more stringently and to insist on greater cadre accountability.

While China’s enormous pollution problems and its highly devolved system of environmental governance are consistent with the race-to-the-bottom theory, it does not provide conclusive evidence of its accuracy because there are many other factors at work. Recent developments in the US suggest that some states may be reacting to the election of President Donald Trump by strengthening their environmental standards. The Trump administration has launched a determined effort to relax national environmental regulations. In a series of executive orders, President Trump has directed the EPA to repeal clean air and clean water regulations.Footnote ⁹⁶ Yet, California has reaffirmed its commitment to reduce its emissions of GHGs and several other states have indicated that they will oppose efforts to relax national environmental regulations.Footnote ⁹⁷ It is also noteworthy that, notwithstanding the appointment of fierce EPA critic Scott Pruitt to head the Agency, the Trump administration has backed off from earlier plans to abolish the EPA. President Trump’s proposal to cut the EPA budget by 31% and to eliminate one-quarter of its 15,000 positionsFootnote ⁹⁸ generated fierce resistance and Congress ultimately funded the EPA to the end of September 2017 at 99% of its previous budget without reducing the size of its workforce.Footnote ⁹⁹ This suggests there is little popular support for relaxing environmental regulations. Hence, even if the Trump administration forges ahead with environmental deregulation at the federal level, it is by no means certain that US states would take this as an invitation to compete and race to the bottom.

Thus, as China struggles to control severe pollution problems and seeks to combat a race to the bottom, the new US President seeks to relax national standards and potentially foster a new race to the bottom at US state level. Neither may find their goals easily achievable. In any event, the next few years promise to be a time of turbulence for environmental governance in both China and the US. This may further test theories of environmental federalism, the race to the bottom, and the quest for improved environmental protection in both countries.