Environmental policy in the United States is undergoing a momentous transition. The partially successful but outdated pollution control strategies of the late 20th century are gradually yielding to approaches that may offer greater environmental improvements at lower cost. Central to the emerging policy landscape are voluntary agreements between governments and businesses to share responsibility for safeguarding environmental quality and public health. These multi-stakeholder collaborations have the potential to foster co-operative, cost-effective environmental solutions. But a recent experiment in environmental regulatory reform, Project XL, illustrates practical barriers and constraints that impede government-business partnerships for environmental improvement. This chapter examines lessons learned for overcoming these obstacles, especially the need for each sector to acquire the requisite co-operative environmental competence for effective participation in multi-stakeholder collaborations.