CAA programs, and especially under the NAAQS or performance standards, states have the
primary implementation and enforcement role for existing sources. But the EPA has oversight
responsibility and must implement the program where states decline to assume responsibility
for implementation and enforcement.
Under the CAA, states also have had a role in determining whether incentive-based
approaches, such as tradable performance standards or cap and trade, can be used to achieve
emissions reduction goals. States could reject an EPA emissions trading proposal in favor of
a more traditional technology-based state program. If a CO2 cap-and-trade program emerged
under the CAA, the allocation decision would also be the prerogative of the states, while under
most legislative proposals, allocation was a federal matter. It is noteworthy that the authority to
assign value associated with environmental regulation has traditionally been the prerogative of
the states, exercised through various permitting procedures (Burtraw and Shobe 2009). States
also allocate emissions allowances under the NOx budget program (which was initiated under
NAAQS authority) and most other previous trading programs. The only exception to this rule is
the Title IV sulfur dioxide (SO2) program, where allocation was explicitly set by the 1990 CAA
amendments. The EPAs recently proposed Transport Rule would also reserve allocation decisions
for the agency itself—at least in the initial years of the program.
In the near term, one of the most important questions is how the EPA will accommodate
existing state cap-and-trade programs in the Northeast (the Regional Greenhouse Gas Initiative)
and in California (slated to begin trading in 2010). States in theWestern Climate Initiative
and Midwestern Accord have also begun to implement cap and trade. These states have argued
that their efforts should be treated as equivalent to actions under the CAA. If some states successfully
petition to have their trading programs accepted as substitutes for the EPAs program,
it could leave the door open for expansion of trading programs by other states (Litz et al. 2011).
Legal Challenges to CAA Regulation
The Waxman–Markey and Kerry–Boxer bills would have preempted or precluded major
elements of EPA authority to regulate GHGs. Climate policy in general and the CAA specifically
both have their share of opponents who may seek blocking legislation or pursue
litigation against the agency. Given these challenges, what are the CAAs chances of success
in regulating GHGs?
The most immediate threat to CAA authority is likely to come from direct legislative
challenge. This might be accomplished through overturning of regulations under the Congressional
Review Act, through legislative preemption, or through defunding of EPA activities
through riders to appropriation bills.
These challenges are serious, but at the time of this writing (May 2011), they seemunlikely to
be successful. The Senate considered and rejected legislation to remove EPA authority over
GHGs. Furthermore, President Obama has stated that he would veto such legislation unless
it includes other policy tools for reducing GHGs—though this does imply that compromise is
possible, perhaps as part of broader energy legislation. The CAA has withstood many challenges
over its lifetime and remains broadly popular legislation that is credited with substantially improving
the nations air quality. Moreover, if the EPAs CAA regulatory activity limiting GHGs
were defunded, private lawsuits against the agency might create a legal entanglement. Rather
Greenhouse Gas Regulation under the Clean Ai