This article describes a simulation-based teaching approach that helps university students learn about negotiation in the context of environmental regulatory enforcement. The approach centers on negotiation of a penalty between government agencies and a fictitious corporation that has violated provisions of the U.S. Clean Water Act. The exercise teaches negotiation and environmental problem-solving skills by providing a realistic situation similar to ones encountered by environmental professionals. In comparison with traditional teaching methods, students in three successive courses reported an increased understanding of environmental enforcement procedures and environmental negotiation processes. The simulation can be modified for application in high schools and other educational settings. (Contains 7 tables and 10 footnotes.)