This paper aims to use federal theory to explain environmental policy making in the EU, with a focus on the deficit between the standards set in the EU’s environmental policy and the implementation of that policy by member states. Although federalism as a theoretical approach is not new, there has been a rather strong interest in federalism in the 2000s to explain the European Union as a multi- level polity. Having the advantage that it is not dependent on a state-centric ontology, federalism deploys a more integral way of understanding multi-level political relationships that are neither purely domestic nor purely international in comparison with the majority of theories used to describe multi-level polities like the EU. Environmental policy is an excellent case for studying multi-level governance relationships in the EU as environmental problems often spill over national boundaries thus requiring a more coordinated multi-state response. First, the paper draws on concepts from fiscal, cooperative and regulatory federalism, to outline a framework for conceptualizing the relationship between the EU and its member states in relation to environmental policy implementation and any deficits that may arise. Second it applies this framework to new empirical data collected through documentary analysis and elite interviews to examine multi-level policy making through the lens of federalism in a live policy area. Finally the paper proposes that, given the rapidly evolving policy context of the EU, the theory of federalism offers a great starting point for the conceptualization of future challenges.