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The city of León, Guanajuato, is Mexico’s leather goods capital and a notorious environmentalhotspot. Over the past two decades, four high-profile voluntary agreements aimed at controlling pollutionfrom León’s tanneries have yielded few concrete results. To understand why, this paper reconstructs thehistory of these initiatives, along with that of local environmental regulatory capacity. Juxtaposing thesetwo timelines suggests that the voluntary pollution control agreements were both motivated by—andundermined by—gaps in the legal, institutional, physical, and civic infrastructures needed to makeregulation effective. Our analysis offers a concrete definition of environmental regulatory capacity,provides insights into how it evolves, and demonstrates its importance. Moreover, it sheds light on thequestion of whether voluntary environmental agreements—an increasingly popular regulatory tool—arelikely to be effective in developing countries.