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Volumn 59, Issue 2, 2007, Pages 269-313

Beyond playing "banker": the role of the regulatory agency in emissions trading

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EID: 34848820305     PISSN: 00018368     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review
Times cited : (10)

References (348)
  • 1
    • 34848887696 scopus 로고    scopus 로고
    • See infra Part I.C (discussing the difference of the agency role between traditional and cap and trade programs).
    • See infra Part I.C (discussing the difference of the agency role between traditional and cap and trade programs).
  • 2
    • 34848905323 scopus 로고    scopus 로고
    • See infra Part I.B (noting that the new role of regulated entities as strategic planners leads to a more flexible program).
    • See infra Part I.B (noting that the new role of regulated entities as strategic planners leads to a more flexible program).
  • 3
    • 34848823424 scopus 로고    scopus 로고
    • The terms command and control and traditional are used interchangeably herein. The term command and control is most common in the literature, but should be avoided because it fails to capture many aspects of environmental regulation as it has been implemented over the past several decades. See Daniel H. Cole & Peter Z. Grossman, When Is Command-and-Control Efficient? Institutions, Technology, and the Comparative Efficiency of Alternative Regulatory Regimes for Environmental Protection, 1999 WIS. L. REV. 887, 892 (stating that use of the term command and control is misleading);
    • The terms "command and control" and "traditional" are used interchangeably herein. The term "command and control" is most common in the literature, but should be avoided because it fails to capture many aspects of environmental regulation as it has been implemented over the past several decades. See Daniel H. Cole & Peter Z. Grossman, When Is Command-and-Control Efficient? Institutions, Technology, and the Comparative Efficiency of Alternative Regulatory Regimes for Environmental Protection, 1999 WIS. L. REV. 887, 892 (stating that use of the term "command and control" is misleading);
  • 4
    • 34848916364 scopus 로고    scopus 로고
    • David M. Driesen, Is Emissions Trading an Economic Incentive Program?: Replacing the Command and Control/Economic Incentive Dichotomy, 55 WASH. & LEE L. REV. 289, 296-99 (1998) (arguing command and control programs are not as rigid as often criticized).
    • David M. Driesen, Is Emissions Trading an Economic Incentive Program?: Replacing the Command and Control/Economic Incentive Dichotomy, 55 WASH. & LEE L. REV. 289, 296-99 (1998) (arguing command and control programs are not as rigid as often criticized).
  • 5
    • 34848890620 scopus 로고    scopus 로고
    • See Joseph Kruger, Companies and Regulators in Emissions Trading Programs, RES. FOR THE FUTURE, Discussion Paper 5-03, at 2 (2005) ([T]he focus of both parties on a routine and predictable administrative program has been mutually beneficial and has led to a reasonably harmonious relationship between industry and program administrators. . . .). For information on the literature describing adversarial and cooperative regulatory styles,
    • See Joseph Kruger, Companies and Regulators in Emissions Trading Programs, RES. FOR THE FUTURE, Discussion Paper 5-03, at 2 (2005) ("[T]he focus of both parties on a routine and predictable administrative program has been mutually beneficial and has led to a reasonably harmonious relationship between industry and program administrators. . . ."). For information on the literature describing adversarial and cooperative regulatory styles,
  • 6
    • 34848925127 scopus 로고    scopus 로고
    • see note 64
    • see infra note 64.
    • infra
  • 7
    • 0038133268 scopus 로고    scopus 로고
    • While relatively little has been written in legal literature about compliance in cap and trade programs, several economists have focused on it. See Carlos A. Chavez & John K. Stranlund, Enforcing Transferable Permit Systems in the Presence of Market Power, ENVTL. & RESOURCE ECON. 25, 65-78 (2003, deriving an enforcement strategy to achieve compliance in a cost-effective manner);
    • While relatively little has been written in legal literature about compliance in cap and trade programs, several economists have focused on it. See Carlos A. Chavez & John K. Stranlund, Enforcing Transferable Permit Systems in the Presence of Market Power, ENVTL. & RESOURCE ECON. 25, 65-78 (2003) (deriving an enforcement strategy to achieve compliance in a cost-effective manner);
  • 8
    • 0037967163 scopus 로고    scopus 로고
    • John K. Stranlund et al., Enforcing Emissions Trading Programs: Theory, Practice, and Performance, 30 POL. STUD. J. 343 (2002) (explaining the compliance systems in a number of cap and trade programs).
    • John K. Stranlund et al., Enforcing Emissions Trading Programs: Theory, Practice, and Performance, 30 POL. STUD. J. 343 (2002) (explaining the compliance systems in a number of cap and trade programs).
  • 9
    • 34848916992 scopus 로고    scopus 로고
    • See, e.g., Dallas Burtraw & Byron Swift, A New Standard of Performance: An Analysis ofthe Clean Air Act's Acid Rain Program, 26 ENVTL. L. REP. 10411, 10411 (1996) (demonstrating the success of the Acid Rain Program and advocating for adoption of more cap and trade programs);
    • See, e.g., Dallas Burtraw & Byron Swift, A New Standard of Performance: An Analysis ofthe Clean Air Act's Acid Rain Program, 26 ENVTL. L. REP. 10411, 10411 (1996) (demonstrating the success of the Acid Rain Program and advocating for adoption of more cap and trade programs);
  • 10
    • 34848817678 scopus 로고    scopus 로고
    • Byron Swift, How Environmental Laws Work: An Analysis of the Utility Sector's Response to Regulation of Nitrogen Oxides and Sulfur Dioxide Under the Clean Air Act, 14 TUL. ENVTL. L.J. 309, 323 (2001) [hereinafter Swift, Environmental Laws].
    • Byron Swift, How Environmental Laws Work: An Analysis of the Utility Sector's Response to Regulation of Nitrogen Oxides and Sulfur Dioxide Under the Clean Air Act, 14 TUL. ENVTL. L.J. 309, 323 (2001) [hereinafter Swift, Environmental Laws].
  • 11
    • 34848888934 scopus 로고    scopus 로고
    • EPA, Cap & Trade Multi-state NOx Programs, available at http://www.epa.gov/ airmarkets/cap-trade/docs/nox.pdf (last visited Feb. 23, 2007).
    • EPA, Cap & Trade Multi-state NOx Programs, available at http://www.epa.gov/ airmarkets/cap-trade/docs/nox.pdf (last visited Feb. 23, 2007).
  • 12
    • 34848918487 scopus 로고    scopus 로고
    • See EPA, Clean Air Rules of 2004, available at http://www.epa.gov/cleanair2004/ (stating that the Clean Air Interstate Rule and the Clean Air Mercury Rule employ a cap and trade approach).
    • See EPA, Clean Air Rules of 2004, available at http://www.epa.gov/cleanair2004/ (stating that the Clean Air Interstate Rule and the Clean Air Mercury Rule employ a cap and trade approach).
  • 14
    • 34848926513 scopus 로고    scopus 로고
    • See, e.g., Northeastern and Mid-Atlantic States' Regional Greenhouse Gas Initiative (RGGI), available at http://www.rggi.org (last visited Feb. 23, 2007) (describing a regional strategy for RGGI participating states that includes the implementation of a multi-state capand-trade program);
    • See, e.g., Northeastern and Mid-Atlantic States' Regional Greenhouse Gas Initiative (RGGI), available at http://www.rggi.org (last visited Feb. 23, 2007) (describing a regional strategy for RGGI participating states that includes "the implementation of a multi-state capand-trade program");
  • 15
    • 34848836337 scopus 로고    scopus 로고
    • California's Climate Change Initiatives, available at http://www.climatechange.ca.gov/biennial_reports/2006report/index.html (addressing California's response to climate change).
    • California's Climate Change Initiatives, available at http://www.climatechange.ca.gov/biennial_reports/2006report/index.html (addressing California's response to climate change).
  • 16
    • 34848818466 scopus 로고    scopus 로고
    • See, e.g., Press Release, Senator Dianne Feinstein's Office, Senator Feinstein Outlines New Legislation to Curb Global Warming, Keep Economy Strong (Mar. 20, 2006), available at http://www.feinstein.senate.gov/ 06releases/r-global-warm320.htm (advocating for the Strong Economy and Climate Protection Act, which would establish a mandatory cap and trade system).
    • See, e.g., Press Release, Senator Dianne Feinstein's Office, Senator Feinstein Outlines New Legislation to Curb Global Warming, Keep Economy Strong (Mar. 20, 2006), available at http://www.feinstein.senate.gov/ 06releases/r-global-warm320.htm (advocating for the Strong Economy and Climate Protection Act, which would establish a mandatory cap and trade system).
  • 17
    • 34848837013 scopus 로고    scopus 로고
    • International initiatives include the Kyoto Protocol and the European Union Emissions Trading System (EU ETS, See, e.g, Kyoto Protocol to the U.N. Framework Convention on Climate Change, Dec. 10, 1997, art. 3, U.N. Doc. FCCC/CP/1997/L.7/Add.1, 37 I.L.M. 22 (1997, available at, detailing the responsibilities of the parties to the protocol);
    • International initiatives include the Kyoto Protocol and the European Union Emissions Trading System (EU ETS). See, e.g., Kyoto Protocol to the U.N. Framework Convention on Climate Change, Dec. 10, 1997, art. 3, U.N. Doc. FCCC/CP/1997/L.7/Add.1, 37 I.L.M. 22 (1997), available at http://unfccc.int/ resource/docs/convkp/kpeng.pdf (detailing the responsibilities of the parties to the protocol);
  • 18
    • 34848891804 scopus 로고    scopus 로고
    • European Union Emissions Trading Program, http://ec.europa.eu/ environment/ climat/emission.htm (establishing emissions trading in greenhouse gases);
    • European Union Emissions Trading Program, http://ec.europa.eu/ environment/ climat/emission.htm (establishing emissions trading in greenhouse gases);
  • 19
    • 34848857935 scopus 로고    scopus 로고
    • Vivian E. Thomson, Early Observations on the European Union's Greenhouse Gas Emission Trading Scheme: Insights for United States Policymakers, PEW CENTER ON GLOBAL CLIMATE CHANGE, Apr. 19, 2006, available at http://www.pewclimate.org/docUploads/ Early%5FObservations%5Fon%5FEUETS%5FThomson%2Epdf (evaluating the European Climate Change Program and Emissions Trading Scheme).
    • Vivian E. Thomson, Early Observations on the European Union's Greenhouse Gas Emission Trading Scheme: Insights for United States Policymakers, PEW CENTER ON GLOBAL CLIMATE CHANGE, Apr. 19, 2006, available at http://www.pewclimate.org/docUploads/ Early%5FObservations%5Fon%5FEUETS%5FThomson%2Epdf (evaluating the European Climate Change Program and Emissions Trading Scheme).
  • 20
    • 34848873401 scopus 로고    scopus 로고
    • Regional Clean Air Incentives Market (RECLAIM) was implemented in 1994, a year before the Acid Rain Program. South Coast Air Quality Management District, Regulation XX-Regional Clean Air Incentives Market, Rules 2000-20, available at http://www.aqmd.gov/rules/reg/reg20_tofc.html.
    • Regional Clean Air Incentives Market (RECLAIM) was implemented in 1994, a year before the Acid Rain Program. South Coast Air Quality Management District, Regulation XX-Regional Clean Air Incentives Market, Rules 2000-20, available at http://www.aqmd.gov/rules/reg/reg20_tofc.html.
  • 21
    • 34848923619 scopus 로고    scopus 로고
    • Id
    • Id.
  • 22
    • 34848823411 scopus 로고    scopus 로고
    • For more information on the heterogeneity of RECLAIM sources, see notes 161-63 and accompanying text
    • For more information on the heterogeneity of RECLAIM sources, see infra notes 161-63 and accompanying text.
    • infra
  • 23
    • 34848819698 scopus 로고    scopus 로고
    • Another cap and trade program that has received little scholarly attention and has experienced problems in some similar ways to those of RECLAIM is the Emissions Reduction Market System (ERMS) implemented in 2000 to control emissions of volatile organic materials (VOMs) in the Chicago, Illinois airshed. For more information on ERMS, see David A. Evans & Joseph A. Kruger, Taking up the Slack: Lessons from a Cap-and Trade Program in Chicago, RES. FOR THE FUTURE, Discussion Paper 06-36, at 8-9 July 2006, available at, highlighting sources of delay and inefficiency in implementing ERMS
    • Another cap and trade program that has received little scholarly attention and has experienced problems in some similar ways to those of RECLAIM is the Emissions Reduction Market System (ERMS) implemented in 2000 to control emissions of volatile organic materials (VOMs) in the Chicago, Illinois airshed. For more information on ERMS, see David A. Evans & Joseph A. Kruger, Taking up the Slack: Lessons from a Cap-and Trade Program in Chicago, RES. FOR THE FUTURE, Discussion Paper 06-36, at 8-9 (July 2006), available at http://www.rff.org/rff/Publications/ Discussion_Papers.cfrn (highlighting sources of delay and inefficiency in implementing ERMS).
  • 24
    • 84888467546 scopus 로고    scopus 로고
    • notes 108-10 and accompanying text
    • See infra notes 108-10 and accompanying text.
    • See infra
  • 25
    • 84894689913 scopus 로고    scopus 로고
    • §§7401-7700 1994
    • 42 U.S.C. §§7401-7700 (1994).
    • 42 U.S.C
  • 26
    • 34848841798 scopus 로고    scopus 로고
    • R.H. Coase, The Problem of Social Cost, 3 J.L. & ECON. 1, 41-44 (1960). The Coase Theorem states that in the absence of transaction costs, all government allocations of property are equally efficient because interested parties will bargain privately to correct any externalities. Cap and trade regulation is based on this central idea of assigning property rights in pollution and allowing bargaining.
    • R.H. Coase, The Problem of Social Cost, 3 J.L. & ECON. 1, 41-44 (1960). The Coase Theorem states that in the absence of transaction costs, all government allocations of property are equally efficient because interested parties will bargain privately to correct any externalities. Cap and trade regulation is based on this central idea of assigning property rights in pollution and allowing bargaining.
  • 27
    • 34848841183 scopus 로고    scopus 로고
    • See Thomas D. Crocker, The Structuring of Atmospheric Pollution Control Systems, in ECON. OF AIR POLLUTION 61, 61-86 (Harold Wolozin ed., 1966) (relating the pollution problem to a market failure);
    • See Thomas D. Crocker, The Structuring of Atmospheric Pollution Control Systems, in ECON. OF AIR POLLUTION 61, 61-86 (Harold Wolozin ed., 1966) (relating the pollution problem to a market failure);
  • 28
    • 34848860457 scopus 로고    scopus 로고
    • JOHN H. DALES, POLLUTION, PROPERTY, AND PRICES 77-100 (1968) (proposing pollution rights as a social experiment);
    • JOHN H. DALES, POLLUTION, PROPERTY, AND PRICES 77-100 (1968) (proposing pollution rights as a social experiment);
  • 29
    • 49649139346 scopus 로고    scopus 로고
    • see also W. David Montgomery, Markets in Licenses and Efficient Pollution Control Programs, 5 J. ECON. THEORY 395 (1972) (discussing the application of pollution and emissions licensing to achieve higher levels of environmental quality).
    • see also W. David Montgomery, Markets in Licenses and Efficient Pollution Control Programs, 5 J. ECON. THEORY 395 (1972) (discussing the application of pollution and emissions licensing to achieve higher levels of environmental quality).
  • 30
    • 34848896870 scopus 로고    scopus 로고
    • EPA, TOOLS OF THE TRADE: A GUIDE TO DESIGNING AND OPERATING A CAP AND TRADE PROGRAM FOR POLLUTION CONTROL, EPA430-B-03-002, at 1-2 (June 2003) [hereinafter TOOLS OF THE TRADE].
    • EPA, TOOLS OF THE TRADE: A GUIDE TO DESIGNING AND OPERATING A CAP AND TRADE PROGRAM FOR POLLUTION CONTROL, EPA430-B-03-002, at 1-2 (June 2003) [hereinafter TOOLS OF THE TRADE].
  • 32
    • 34848878876 scopus 로고    scopus 로고
    • See EPA, ACID RAIN PROGRAM 2004 PROGRESS REPORT, EPA 430-R-05-012, at 3 (2005), available at http://www.epa.gov/airmarkets/progress/docs/2004report.pdf [hereinafter ACID RAIN PROGRAM REPORT 2004].
    • See EPA, ACID RAIN PROGRAM 2004 PROGRESS REPORT, EPA 430-R-05-012, at 3 (2005), available at http://www.epa.gov/airmarkets/progress/docs/2004report.pdf [hereinafter ACID RAIN PROGRAM REPORT 2004].
  • 33
    • 34848839516 scopus 로고    scopus 로고
    • x, RES. FOR THE FUTURE, Discussion Paper 05-5, at 4 (Mar. 2005) (The key feature of emissions trading is that allowing regulated facilities to transfer emission allowances should lead to a distribution of emission reductions that equates the marginal cost of emission reductions among facilities and therefore minimizes the total costs of emission reductions.).
    • x, RES. FOR THE FUTURE, Discussion Paper 05-5, at 4 (Mar. 2005) ("The key feature of emissions trading is that allowing regulated facilities to transfer emission allowances should lead to a distribution of emission reductions that equates the marginal cost of emission reductions among facilities and therefore minimizes the total costs of emission reductions.").
  • 34
    • 34848819077 scopus 로고    scopus 로고
    • TOOLS OF THE TRADE, supra note 21, at 1-2.
    • TOOLS OF THE TRADE, supra note 21, at 1-2.
  • 35
    • 84918884349 scopus 로고    scopus 로고
    • Jason Scott Johnston, Tradable Pollution Permits and the Regulatory Game, in THIRTY YEARS OF MARKET-BASED INSTRUMENTS FOR ENVIRONMENTAL POLLUTION: A RETROSPECTIVE 10 n.36 (Charles Kolstad & Jody Freeman eds., Oxford Univ. Press 2006). For an explanation of technology-based standards,
    • Jason Scott Johnston, Tradable Pollution Permits and the Regulatory Game, in THIRTY YEARS OF MARKET-BASED INSTRUMENTS FOR ENVIRONMENTAL POLLUTION: A RETROSPECTIVE 10 n.36 (Charles Kolstad & Jody Freeman eds., Oxford Univ. Press 2006). For an explanation of technology-based standards,
  • 36
    • 34848832033 scopus 로고    scopus 로고
    • see notes 59-69 and accompanying text
    • see infra notes 59-69 and accompanying text.
    • infra
  • 37
    • 34848856663 scopus 로고    scopus 로고
    • See Byron Swift, U.S. Emissions Trading: Myths, Realities, and Opportunities, NAT. RES. & ENV'T, at 3 (Summer 2005) (lauding the success of the Acid Rain Program). This Article will focus on the aspects of the Acid Rain Program that regulate sulfur dioxide (SO2). While NOx is regulated under the Acid Rain Program as well, it is not regulated through a cap and trade program.
    • See Byron Swift, U.S. Emissions Trading: Myths, Realities, and Opportunities, NAT. RES. & ENV'T, at 3 (Summer 2005) (lauding the success of the Acid Rain Program). This Article will focus on the aspects of the Acid Rain Program that regulate sulfur dioxide (SO2). While NOx is regulated under the Acid Rain Program as well, it is not regulated through a cap and trade program.
  • 38
    • 34848926514 scopus 로고    scopus 로고
    • For a detailed analysis and comparison of each, see Swift, Environmental Laws, supra note 6
    • For a detailed analysis and comparison of each, see Swift, Environmental Laws, supra note 6.
  • 39
    • 0034485978 scopus 로고    scopus 로고
    • See Reimund Schwarze & Peter Zapfel, Sulfur Allowance Trading and the Regional Clean Air Incentives Market: A Comparative Design Analysis of Two Major Cap-and-Trade Permit Programs?, 17 ENVTL. & RES. ECON. 279, 280 (2000) (noting the aim of RECLAIM is to avoid and reduce natural damages from emissions).
    • See Reimund Schwarze & Peter Zapfel, Sulfur Allowance Trading and the Regional Clean Air Incentives Market: A Comparative Design Analysis of Two Major Cap-and-Trade Permit Programs?, 17 ENVTL. & RES. ECON. 279, 280 (2000) (noting the aim of RECLAIM is to avoid and reduce natural damages from emissions).
  • 40
    • 34848921134 scopus 로고    scopus 로고
    • The EPA defines a unit as a fossil fuel-fired combustor that serves a generator that provides electricity for sale. ACID RAIN PROGRAM REPORT 2004, supra note 23, at 5. The 263 units included in Phase I of the program were located in 110 generating plants.
    • The EPA defines a "unit" as a fossil fuel-fired combustor that serves a generator that provides electricity for sale. ACID RAIN PROGRAM REPORT 2004, supra note 23, at 5. The 263 units included in Phase I of the program were located in 110 generating plants.
  • 41
    • 34848892398 scopus 로고    scopus 로고
    • A. DENNY ELLERMAN ET AL., MARKETS FOR CLEAN AIR: THE U.S. ACID RAIN PROGRAM 6 (2000) (noting that the phases were a means to reach an emissions cap).
    • A. DENNY ELLERMAN ET AL., MARKETS FOR CLEAN AIR: THE U.S. ACID RAIN PROGRAM 6 (2000) (noting that the phases were a means to reach an emissions cap).
  • 42
    • 34848833807 scopus 로고    scopus 로고
    • note 29, at, 3,391 generating units were subject to the Acid Rain Program
    • ELLERMAN, supra note 29, at 8. In 2004, 3,391 generating units were subject to the Acid Rain Program.
    • (2004) supra , pp. 8
    • ELLERMAN1
  • 43
    • 34848816472 scopus 로고    scopus 로고
    • ACID RAIN PROGRAM REPORT 2004, supra note 23, at 4
    • ACID RAIN PROGRAM REPORT 2004, supra note 23, at 4.
  • 44
    • 34848820281 scopus 로고    scopus 로고
    • ENVTL. DEF., FROM OBSTACLE TO OPPORTUNITY: HOW ACID RAIN EMISSIONS TRADING IS DELIVERING CLEANER AIR 5 (2000) (noting that the units allowed declined from 445 in 1995 to 398 in 1999).
    • ENVTL. DEF., FROM OBSTACLE TO OPPORTUNITY: HOW ACID RAIN EMISSIONS TRADING IS DELIVERING CLEANER AIR 5 (2000) (noting that the units allowed declined from 445 in 1995 to 398 in 1999).
  • 45
    • 34848835106 scopus 로고    scopus 로고
    • EPA, ACID RAIN PROGRAM 2000 PROGRESS REPORT, EPA 430-R-01-008, at 7, available at http://www.epa.gov/airmarkets/progress/docs/2000report.pdf. In 2004, the EPA allocated a total of 9.5 million allowances.
    • EPA, ACID RAIN PROGRAM 2000 PROGRESS REPORT, EPA 430-R-01-008, at 7, available at http://www.epa.gov/airmarkets/progress/docs/2000report.pdf. In 2004, the EPA allocated a total of 9.5 million allowances.
  • 46
    • 34848863648 scopus 로고    scopus 로고
    • ACID RAIN PROGRAM REPORT 2004, supra note 23, at 4-5
    • ACID RAIN PROGRAM REPORT 2004, supra note 23, at 4-5.
  • 47
    • 34848857920 scopus 로고    scopus 로고
    • ACID RAIN PROGRAM REPORT 2004, supra note 23, at 4 (stating that the cap of 8.95 million is permanent).
    • ACID RAIN PROGRAM REPORT 2004, supra note 23, at 4 (stating that the cap of 8.95 million is permanent).
  • 48
    • 34848843048 scopus 로고    scopus 로고
    • See Schwarze & Zapfel, supra note 28, at 287 reviewing operation of the Acid Rain Program
    • See Schwarze & Zapfel, supra note 28, at 287 (reviewing operation of the Acid Rain Program).
  • 49
    • 34848885747 scopus 로고    scopus 로고
    • Interview with Bob Miller, Market Operations Branch, Clean Air Markets Division, EPA (Jan. 6, 2006);
    • Interview with Bob Miller, Market Operations Branch, Clean Air Markets Division, EPA (Jan. 6, 2006);
  • 50
    • 34848832595 scopus 로고    scopus 로고
    • see also ACID RAIN PROGRAM REPORT 2004, supra note 23, at 8
    • see also ACID RAIN PROGRAM REPORT 2004, supra note 23, at 8.
  • 51
    • 34848812270 scopus 로고    scopus 로고
    • Approximately 38.1 million allowances were issued in Phase I, but net emissions were only 26.5 million tons. Swift, Environmental Laws, supra note 6, at 326. While it has not been emphasized in the literature, it would not be incorrect to say that the Acid Rain Program was overallocated in its initial years. Between 1985 and 1993, the emissions of Phase I units fell from 9.3 million tons to 7.6 million tons.
    • Approximately 38.1 million allowances were issued in Phase I, but net emissions were only 26.5 million tons. Swift, Environmental Laws, supra note 6, at 326. While it has not been emphasized in the literature, it would not be incorrect to say that the Acid Rain Program was overallocated in its initial years. Between 1985 and 1993, the emissions of Phase I units fell from 9.3 million tons to 7.6 million tons.
  • 52
    • 34848900114 scopus 로고    scopus 로고
    • ELLERMAN, supra note 29, at 79. Yet the cap for 1995 was set at 8.7 million tons.
    • ELLERMAN, supra note 29, at 79. Yet the cap for 1995 was set at 8.7 million tons.
  • 53
    • 34848871571 scopus 로고    scopus 로고
    • 2 emissions, Ellerman finds that the pre-1994 emission reductions largely were attributable to declines in the price of Western low-sulfur coal and concluded that it would not be correct to attribute much[,] if any[,] of the pre-1994 emission reductions to early compliance with the provisions of Title IV, since these reductions are largely explained by economic factors independent of Title IV.
    • 2 emissions, Ellerman finds that the pre-1994 emission reductions largely were attributable to declines in the price of Western low-sulfur coal and concluded that "it would not be correct to attribute much[,] if any[,] of the pre-1994 emission reductions to early compliance with the provisions of Title IV, since these reductions are largely explained by economic factors independent of Title IV."
  • 54
    • 34848915093 scopus 로고    scopus 로고
    • ELLERMAN, supra note 29, at 104-05.
    • ELLERMAN, supra note 29, at 104-05.
  • 55
    • 34848896275 scopus 로고    scopus 로고
    • ACID RAIN PROGRAM REPORT 2004, supra note 23, at 4. It is worth noting, however, that emissions in the years 2000 to 2004 consistently have been above the annual number of allocations, a result of the use of banked allowances from Phase I of the program.
    • ACID RAIN PROGRAM REPORT 2004, supra note 23, at 4. It is worth noting, however, that emissions in the years 2000 to 2004 consistently have been above the annual number of allocations, a result of the use of banked allowances from Phase I of the program.
  • 56
    • 34848839515 scopus 로고    scopus 로고
    • Id. at 5
    • Id. at 5.
  • 57
    • 34848891207 scopus 로고    scopus 로고
    • See Kruger, supra note 4, at 2 creating a new role for regulated entities
    • See Kruger, supra note 4, at 2 (creating a new role for regulated entities).
  • 58
    • 34848899512 scopus 로고    scopus 로고
    • TOOLS OF THE TRADE, supra note 21, at 1-3.
    • TOOLS OF THE TRADE, supra note 21, at 1-3.
  • 59
    • 34848889584 scopus 로고    scopus 로고
    • See, e.g., Bruce A. Ackerman & Richard B. Stewart, Reforming Environmental Law: The Democratic Case for Market Incentives, 13 COLUM. J. ENVTL. L. 171, 172-73 (1988) (noting the uniformity and stringent controls of best available technology strategies).
    • See, e.g., Bruce A. Ackerman & Richard B. Stewart, Reforming Environmental Law: The Democratic Case for Market Incentives, 13 COLUM. J. ENVTL. L. 171, 172-73 (1988) (noting the uniformity and stringent controls of "best available technology" strategies).
  • 60
    • 34848873402 scopus 로고    scopus 로고
    • See, note 6, at, noting that the program was geared toward currently available technology, which was a disincentive to innovation
    • See Burtraw & Swift, supra note 6, at 10414 (noting that the program was geared toward currently available technology, which was a disincentive to innovation).
    • supra , pp. 10414
    • Burtraw1    Swift2
  • 61
    • 34848828204 scopus 로고    scopus 로고
    • But see Driesen, supra note 3, at 302-04 (citing lack of empirical evidence for this notion and stating that polluters have substantial economic incentives to use the flexibility that performance standards offer to employ innovative means of meeting emission limitations that are less costly).
    • But see Driesen, supra note 3, at 302-04 (citing lack of empirical evidence for this notion and stating that polluters "have substantial economic incentives to use the flexibility that performance standards offer to employ innovative means of meeting emission limitations that are less costly").
  • 62
    • 34848891790 scopus 로고    scopus 로고
    • See Kruger, supra note 4, at 2 (A company is not forced to meet a technology mandate that may not make sense for its plant configuration or business plan.).
    • See Kruger, supra note 4, at 2 ("A company is not forced to meet a technology mandate that may not make sense for its plant configuration or business plan.").
  • 63
    • 34848907677 scopus 로고    scopus 로고
    • See Ackerman & Stewart, supra note 40, at 180 discussing the transfer of technology assessment from bureaucrats to business managers
    • See Ackerman & Stewart, supra note 40, at 180 (discussing the transfer of technology assessment from bureaucrats to business managers).
  • 64
    • 34848905923 scopus 로고    scopus 로고
    • Id
    • Id.
  • 65
    • 34848861085 scopus 로고    scopus 로고
    • Id. at 183
    • Id. at 183.
  • 66
    • 0004717767 scopus 로고
    • Emissions Trading: Why Is this Thoroughbred Hobbled?, 13
    • See, e.g
    • See, e.g., Daniel J. Dudek & John Palmisano, Emissions Trading: Why Is this Thoroughbred Hobbled?, 13 COLUM. J. ENVTL. L. 217, 218 (1988);
    • (1988) COLUM. J. ENVTL. L , vol.217 , pp. 218
    • Dudek, D.J.1    Palmisano, J.2
  • 67
    • 0029197857 scopus 로고    scopus 로고
    • Adam B. Jaffe & Robert N. Stavins, Dynamic Incentives of Environmental Regulations: The Effects of Alternative Policy Instruments on Technology Diffusion, 29 J. ENVTL. ECON. & MGMT. S-43, S-45 (1995);
    • Adam B. Jaffe & Robert N. Stavins, Dynamic Incentives of Environmental Regulations: The Effects of Alternative Policy Instruments on Technology Diffusion, 29 J. ENVTL. ECON. & MGMT. S-43, S-45 (1995);
  • 68
    • 34848815339 scopus 로고    scopus 로고
    • Environmental Laws, supra note 6, at 392 (containing a section of the article entitled "Cap-and-Trade Program, Promotes Broader Technology Use and Innovation")
    • thesis that existing emission trading programs have spurred significant innovation
    • Swift, Environmental Laws, supra note 6, at 392 (containing a section of the article entitled "Cap-and-Trade Program, Promotes Broader Technology Use and Innovation"). There is, however, a lack of empirical evidence supporting this thesis that existing emission trading programs have spurred significant innovation.
    • There is, however, a lack of empirical evidence supporting this
    • Swift1
  • 69
    • 34848829490 scopus 로고    scopus 로고
    • See, e.g, Driesen, supra note 3, at 332-36 (emphasizing that emissions trading reduces the incentive for high-cost sources to apply new technology thus leading to a net weakening of incentives to innovate);
    • See, e.g., Driesen, supra note 3, at 332-36 (emphasizing that emissions trading reduces the incentive for high-cost sources to apply new technology thus leading to a net weakening of incentives to innovate);
  • 70
    • 0032816346 scopus 로고    scopus 로고
    • Richard Toshiyuki Drury et al., Pollution Trading and Environmental Injustice: Los Angeles ' Failed Experiment in Air Quality Policy, 9 DUKE ENVTL. L. & POL'Y F. 231, 275-78 (arguing that companies in trading regimes are not motivated to innovate, but rather to purchase emission reduction credits);
    • Richard Toshiyuki Drury et al., Pollution Trading and Environmental Injustice: Los Angeles ' Failed Experiment in Air Quality Policy, 9 DUKE ENVTL. L. & POL'Y F. 231, 275-78 (arguing that companies in trading regimes are not motivated to innovate, but rather to purchase emission reduction credits);
  • 71
    • 34848876622 scopus 로고    scopus 로고
    • Evans & Kruger, supra note 16, at 25 (Industry and government officers said that they believed that the flexibility of the program led to the identification of numerous low-cost abatement options, but there is little evidence that this is the case.).
    • Evans & Kruger, supra note 16, at 25 ("Industry and government officers said that they believed that the flexibility of the program led to the identification of numerous low-cost abatement options, but there is little evidence that this is the case.").
  • 72
    • 34848828214 scopus 로고    scopus 로고
    • See Kruger, supra note 4, at 5-7 stressing the importance of inter-dependent coordination with compliance planning
    • See Kruger, supra note 4, at 5-7 (stressing the importance of inter-dependent coordination with compliance planning).
  • 73
    • 34848882498 scopus 로고    scopus 로고
    • Id. at 4
    • Id. at 4.
  • 74
    • 34848887695 scopus 로고    scopus 로고
    • noting participation of senior officials including chief financial officers
    • See id. (noting participation of senior officials including chief financial officers).
    • See id
  • 75
    • 34848913140 scopus 로고    scopus 로고
    • See Swift, supra note 27, at 7
    • See Swift, supra note 27, at 7.
  • 76
    • 34848872230 scopus 로고    scopus 로고
    • But see Timothy F. Malloy, Regulating by Incentives: Myths, Models, and Micromarkets, 80 TEX. L. REV. 531, 589-90 (2002) (setting forth a resource allocation model that suggests that the division between the environmental and operating departments of a firm may often be ossified and deeply embedded in the firm).
    • But see Timothy F. Malloy, Regulating by Incentives: Myths, Models, and Micromarkets, 80 TEX. L. REV. 531, 589-90 (2002) (setting forth a "resource allocation model" that suggests that the division between the environmental and operating departments of a firm may often be "ossified" and "deeply embedded in the firm").
  • 77
    • 34848927162 scopus 로고    scopus 로고
    • Swift, supra note 27, at 7 offering an example of how cap and trade programs allow the integration of economic and environmental variables
    • Swift, supra note 27, at 7 (offering an example of how cap and trade programs allow the integration of economic and environmental variables).
  • 78
    • 34848827125 scopus 로고    scopus 로고
    • See Kruger, supra note 4, at 6-7 (analyzing computer forecasting models of PEPCO and American Electric Power and each company's satisfaction with the results).
    • See Kruger, supra note 4, at 6-7 (analyzing computer forecasting models of PEPCO and American Electric Power and each company's satisfaction with the results).
  • 80
    • 34848858516 scopus 로고    scopus 로고
    • See Swift, supra note 27, at 7 (The effect of trading in establishing a market price for a ton of reductions helps integrate environmental decision-making within a firm.).
    • See Swift, supra note 27, at 7 ("The effect of trading in establishing a market price for a ton of reductions helps integrate environmental decision-making within a firm.").
  • 81
    • 34848824039 scopus 로고    scopus 로고
    • See Kruger, supra note 4, at 2 stating that the larger role sources take on with trading schemes allows a more tailored emissions reduction plan
    • See Kruger, supra note 4, at 2 (stating that the larger role sources take on with trading schemes allows a more tailored emissions reduction plan).
  • 82
    • 34848821585 scopus 로고    scopus 로고
    • Id. at 10
    • Id. at 10.
  • 83
    • 0032737843 scopus 로고    scopus 로고
    • Id. (citing A. Denny Ellerman, The Next Restructuring: Environmental Regulation, 20 ENERGY J. 1, 141-48 (1999)).
    • Id. (citing A. Denny Ellerman, The Next Restructuring: Environmental Regulation, 20 ENERGY J. 1, 141-48 (1999)).
  • 84
    • 34848828822 scopus 로고    scopus 로고
    • See, e.g., Schwarze & Zapfel, supra note 28, at 288 (The administration of emissions inventories and permit accounts is 'the' classic function reserved for the regulatory agency in cap-and-trade programs.) (emphasis omitted).
    • See, e.g., Schwarze & Zapfel, supra note 28, at 288 ("The administration of emissions inventories and permit accounts is 'the' classic function reserved for the regulatory agency in cap-and-trade programs.") (emphasis omitted).
  • 85
    • 34848816484 scopus 로고    scopus 로고
    • Ackerman & Stewart, supra note 40, at 183
    • Ackerman & Stewart, supra note 40, at 183.
  • 86
    • 34848863025 scopus 로고    scopus 로고
    • See id. (recognizing the lack of incentive to purchase polluter rights if no enforcement is present).
    • See id. (recognizing the lack of incentive to purchase polluter rights if no enforcement is present).
  • 87
    • 84894689913 scopus 로고    scopus 로고
    • §7411(a)(1, 2000, Examples of source categories subject to New Source Performance Standards (NSPS) include medical waste incinerators, sulfuric acid plants, glass manufacturing plants, and the beverage can surface coating industry
    • 42 U.S.C. §7411(a)(1) (2000). Examples of source categories subject to New Source Performance Standards (NSPS) include medical waste incinerators, sulfuric acid plants, glass manufacturing plants, and the beverage can surface coating industry.
    • 42 U.S.C
  • 89
    • 34848859241 scopus 로고    scopus 로고
    • See Johnston, supra note 26, at 11 (highlighting the intense bargaining process between regulators and industry with technology-based standards);
    • See Johnston, supra note 26, at 11 (highlighting the "intense bargaining process" between regulators and industry with technology-based standards);
  • 90
    • 34848883064 scopus 로고    scopus 로고
    • see also David M. Driesen, Distributing the Costs of Environmental, Health, and Safety Protection: The Feasibility Principle, Cost-Benefit Analysis, and Regulatory Reform, 32 B.C. ENVTL. AFF. L. REV. 1, 2-3 (2005) (comparing feasibility principle and cost benefit analysis theories on environmental statutes).
    • see also David M. Driesen, Distributing the Costs of Environmental, Health, and Safety Protection: The Feasibility Principle, Cost-Benefit Analysis, and Regulatory Reform, 32 B.C. ENVTL. AFF. L. REV. 1, 2-3 (2005) (comparing feasibility principle and cost benefit analysis theories on environmental statutes).
  • 91
    • 34848817046 scopus 로고    scopus 로고
    • Johnston, supra note 26, at 11
    • Johnston, supra note 26, at 11.
  • 92
    • 34848898109 scopus 로고    scopus 로고
    • See, while the courts have held that uniform technologybased standards are designed to be applied uniformly across firms in the relevant source category, the EPA and state regulators often take the economic circumstances of particular firms into account when permits are written
    • See id. Johnston notes that while the courts have held that uniform technologybased standards are designed to be applied uniformly across firms in the relevant source category, the EPA and state regulators often take the economic circumstances of particular firms into account when permits are written.
    • Johnston notes that
  • 93
    • 34848823423 scopus 로고    scopus 로고
    • Id. at 12
    • Id. at 12.
  • 94
    • 34848862429 scopus 로고    scopus 로고
    • See Kruger, supra note 4, at 1 (Most companies explore numerous compliance scenarios before selecting a strategy based on their [internal] analysis ....).
    • See Kruger, supra note 4, at 1 ("Most companies explore numerous compliance scenarios before selecting a strategy based on their [internal] analysis ....").
  • 95
    • 34848827124 scopus 로고    scopus 로고
    • A large body of literature emerged about enforcement styles that describes how regulatory officials assess compliance with the law and respond to situations of noncompliance using strategies of persuasion and coercion. See generally IAN AYRES & JOHN BRAITHWAITE, RESPONSIVE REGULATION: TRANSCENDING THE DEREGULATION DEBATE 19-20 ( 1992) (arguing regulatory agencies are more likely to secure compliance by speak[ing] softly while carrying big sticks);
    • A large body of literature emerged about "enforcement styles" that describes how regulatory officials assess compliance with the law and respond to situations of noncompliance using strategies of persuasion and coercion. See generally IAN AYRES & JOHN BRAITHWAITE, RESPONSIVE REGULATION: TRANSCENDING THE DEREGULATION DEBATE 19-20 ( 1992) (arguing regulatory agencies are more likely to secure compliance by "speak[ing] softly" while carrying "big sticks");
  • 96
    • 34848836338 scopus 로고    scopus 로고
    • KEITH HAWKINS & J. M. THOMAS, ENFORCING REGULATION 4 (1984) (analyzing regulatory enforcement from a political and organizational perspective);
    • KEITH HAWKINS & J. M. THOMAS, ENFORCING REGULATION 4 (1984) (analyzing regulatory enforcement from a political and organizational perspective);
  • 97
    • 34848907130 scopus 로고    scopus 로고
    • Robert A. Kagan, Regulatory Enforcement, in HANDBOOK OF REGULATION & ADMIN. LAW 383, 387 (D. H. Rosenbloom & R. D. Schwartz eds., 1994) (discussing the impact of decisionmaking style in regulatory enforcement);
    • Robert A. Kagan, Regulatory Enforcement, in HANDBOOK OF REGULATION & ADMIN. LAW 383, 387 (D. H. Rosenbloom & R. D. Schwartz eds., 1994) (discussing the impact of decisionmaking style in regulatory enforcement);
  • 98
    • 0345912580 scopus 로고    scopus 로고
    • Clifford Rechtschaffen, Deterrence vs. Cooperation and the Evolving Theory of Environmental Enforcement, 71 S. CAL. L. REV. 1181, 1186 (1998) (defending traditional enforcement techniques).
    • Clifford Rechtschaffen, Deterrence vs. Cooperation and the Evolving Theory of Environmental Enforcement, 71 S. CAL. L. REV. 1181, 1186 (1998) (defending traditional enforcement techniques).
  • 100
    • 34848925126 scopus 로고    scopus 로고
    • Keith Hawkins, Compliance Strategy, in A READER IN ENVIRONMENTAL LAW 161, 183 (Bridget M. Hutter ed., 1999).
    • Keith Hawkins, Compliance Strategy, in A READER IN ENVIRONMENTAL LAW 161, 183 (Bridget M. Hutter ed., 1999).
  • 101
    • 34848880075 scopus 로고    scopus 로고
    • Id. at 165
    • Id. at 165.
  • 102
    • 2142712533 scopus 로고    scopus 로고
    • See Stephanie Benkovic & Joseph Kruger, To Trade or Not to Trade? Criteria for Applying Cap and Trade, 1 SCI. WORLD J., 953, 955 (2001) (noting that many environmental regulations measure compliance based on adherence to technology or processes).
    • See Stephanie Benkovic & Joseph Kruger, To Trade or Not to Trade? Criteria for Applying Cap and Trade, 1 SCI. WORLD J., 953, 955 (2001) (noting that many environmental regulations measure "compliance" based on adherence to technology or processes).
  • 103
    • 34848834476 scopus 로고    scopus 로고
    • Ackerman & Stewart, supra note 40, at 181-82
    • Ackerman & Stewart, supra note 40, at 181-82.
  • 104
    • 34848917835 scopus 로고    scopus 로고
    • Benkovic & Kruger, supra note 70, at 953
    • Benkovic & Kruger, supra note 70, at 953.
  • 105
    • 34848870223 scopus 로고    scopus 로고
    • But see Stranlund et al., supra note 5, at 345 (pointing out a second type of noncompliance: a reporting violation, where a source's actual emissions exceed its reported emissions). Both the Acid Rain Program and the RECLAIM Program, however, use compliance rates to communicate the prevalence of cap violations rather than reporting violations. Also, reporting violations may ultimately lead to a cap violation.
    • But see Stranlund et al., supra note 5, at 345 (pointing out a second type of noncompliance: a reporting violation, where a source's actual emissions exceed its reported emissions). Both the Acid Rain Program and the RECLAIM Program, however, use compliance rates to communicate the prevalence of cap violations rather than reporting violations. Also, reporting violations may ultimately lead to a cap violation.
  • 106
    • 34848818467 scopus 로고    scopus 로고
    • Benkovic & Kruger, supra note 70, at 958
    • Benkovic & Kruger, supra note 70, at 958.
  • 107
    • 34848838280 scopus 로고    scopus 로고
    • TOOLS OF THE TRADE, supra note 21, at 2-4.
    • TOOLS OF THE TRADE, supra note 21, at 2-4.
  • 108
    • 34848867192 scopus 로고    scopus 로고
    • Id
    • Id.
  • 110
    • 34848825312 scopus 로고    scopus 로고
    • see also Richard F. Kosobud, Emissions Trading Emerges from the Shadows, in EMISSIONS TRADING 3, 30 (Richard F. Kosobud ed., 2000) (emphasizing that public confidence in the market depends on the perception of effective monitoring and enforcement).
    • see also Richard F. Kosobud, Emissions Trading Emerges from the Shadows, in EMISSIONS TRADING 3, 30 (Richard F. Kosobud ed., 2000) (emphasizing that public confidence in the market depends on the perception of effective monitoring and enforcement).
  • 111
    • 34848829476 scopus 로고    scopus 로고
    • Pérez Henríquez, supra note 76, at 11
    • Pérez Henríquez, supra note 76, at 11.
  • 112
    • 34848903573 scopus 로고    scopus 로고
    • Stranlund et al, supra note 5, at 349 (explaining that the technology required depends on the type of emission source);
    • Stranlund et al., supra note 5, at 349 (explaining that the technology required depends on the type of emission source);
  • 113
    • 34848819699 scopus 로고    scopus 로고
    • see also Continuous Emission Monitoring, 40 C.F.R. pt. 75 (2006) (providing a list of specific monitoring and reporting requirements).
    • see also Continuous Emission Monitoring, 40 C.F.R. pt. 75 (2006) (providing a list of specific monitoring and reporting requirements).
  • 114
    • 84894689913 scopus 로고    scopus 로고
    • § 765l(k, 2000, Continuous emission monitoring systems (CEMS) are expensive, with an average annual cost of about $124,000 per unit, amounting to 7% of compliance costs in 1995
    • 42 U.S.C. § 765l(k) (2000). Continuous emission monitoring systems (CEMS) are expensive, with an average annual cost of about $124,000 per unit, amounting to 7% of compliance costs in 1995.
    • 42 U.S.C
  • 115
    • 34848900760 scopus 로고    scopus 로고
    • Pérez Henriquez, supra note 76, at 11
    • Pérez Henriquez, supra note 76, at 11.
  • 116
    • 34848887687 scopus 로고    scopus 로고
    • Pérez Henríquez, supra note 76, at 11 describing CEMS
    • Pérez Henríquez, supra note 76, at 11 (describing CEMS).
  • 117
    • 34848852969 scopus 로고    scopus 로고
    • See Stranlund et al, supra note 5, at 349 stating that every emissions report sent to EPA is subject to a series of reviews to verify accuracy and determine compliance
    • See Stranlund et al., supra note 5, at 349 (stating that every emissions report sent to EPA is subject to a series of reviews to verify accuracy and determine compliance).
  • 118
    • 24644515373 scopus 로고    scopus 로고
    • Enforcing Emissions Trading When Emissions Permits Are Bankable, 28
    • John K. Stranlund et al., Enforcing Emissions Trading When Emissions Permits Are Bankable, 28 J. REG. ECON. 181, 182 (2005).
    • (2005) J. REG. ECON , vol.181 , pp. 182
    • Stranlund, J.K.1
  • 119
    • 34848874028 scopus 로고    scopus 로고
    • Joe Kruger & Christian Egenhofer, Confidence Through Compliance in Emissions Trading Markets, 99 CTR. FOR EUR. POL'Y STUD. 1, 3 (2006).
    • Joe Kruger & Christian Egenhofer, Confidence Through Compliance in Emissions Trading Markets, 99 CTR. FOR EUR. POL'Y STUD. 1, 3 (2006).
  • 120
    • 34848898110 scopus 로고    scopus 로고
    • See EPA, last visited Mar. 23
    • See EPA, Continuous Emissions Monitoring Fact Sheet, http://www.epa.gov/ airmarkets/emissions/continuous-factsheet.htrnl (last visited Mar. 23, 2007).
    • (2007) Continuous Emissions Monitoring Fact Sheet
  • 121
    • 34848905312 scopus 로고    scopus 로고
    • See Benkovic & Kruger, supra note 70, at 958 (noting that missing data rules generally require a very conservative substitute value, which might be used for any hours of missing emissions data).
    • See Benkovic & Kruger, supra note 70, at 958 (noting that missing data rules generally require a very conservative substitute value, which might be used for any hours of missing emissions data).
  • 122
    • 34848898110 scopus 로고    scopus 로고
    • See EPA, last visited Mar. 23
    • See EPA, Continuous Emissions Monitoring Fact Sheet, http://www.epa.gov/ airmarkets/emissions/continuous-factsheet.html (last visited Mar. 23, 2007).
    • (2007) Continuous Emissions Monitoring Fact Sheet
  • 123
    • 34848905313 scopus 로고    scopus 로고
    • Pérez Henríquez, supra note 76, at 1
    • Pérez Henríquez, supra note 76, at 1.
  • 124
    • 34848830822 scopus 로고    scopus 로고
    • See Stranlund et al., supra note 5, at 348-49 (emphasizing that CEMS, or an equivalent device, are fully automated, thus minimizing the risks of tampering with emissions data).
    • See Stranlund et al., supra note 5, at 348-49 (emphasizing that CEMS, or an equivalent device, are fully automated, thus minimizing the risks of tampering with emissions data).
  • 125
    • 34848896286 scopus 로고    scopus 로고
    • See, note 76, at, reporting that approximately 80% of transfers are entered online by the sources themselves
    • See Pérez Henríquez, supra note 76, at 11 (reporting that approximately 80% of transfers are entered online by the sources themselves).
    • supra , pp. 11
    • Henríquez, P.1
  • 126
    • 34848855388 scopus 로고    scopus 로고
    • Id.;
    • Id.;
  • 127
    • 34848913131 scopus 로고    scopus 로고
    • see also Evans & Kruger, supra note 16, at 5-6 discussing the efforts of the EU ETS in developing market-based policies for reducing emissions
    • see also Evans & Kruger, supra note 16, at 5-6 (discussing the efforts of the EU ETS in developing market-based policies for reducing emissions).
  • 128
    • 34848893592 scopus 로고    scopus 로고
    • Pérez Henríquez, supra note 76, at 10-11;
    • Pérez Henríquez, supra note 76, at 10-11;
  • 129
    • 84894751966 scopus 로고    scopus 로고
    • see also, note 16, at, describing Allotment Trading Units ATU, which are transferable emission rights
    • see also Evans & Kruger, supra note 16, at 10 (describing Allotment Trading Units (ATU), which are transferable emission rights).
    • supra , pp. 10
    • Evans1    Kruger2
  • 130
    • 33947613111 scopus 로고    scopus 로고
    • § 7651(j, 1994, Additional discretionary penalties in the form of fines or surrender of additional allowances are also provided for, but have been used rarely. Interview with Bob Miller, Market Operations Branch, Clean Air Markets Division, EPA Jan. 6, 2006
    • 42 U.S.C. § 7651(j) (1994). Additional discretionary penalties in the form of fines or surrender of additional allowances are also provided for, but have been used rarely. Interview with Bob Miller, Market Operations Branch, Clean Air Markets Division, EPA (Jan. 6, 2006).
    • 42 U.S.C
  • 131
    • 34848824689 scopus 로고    scopus 로고
    • ACID RAIN PROGRAM REPORT 2004, supra note 23, at 8
    • ACID RAIN PROGRAM REPORT 2004, supra note 23, at 8.
  • 133
    • 34848888933 scopus 로고    scopus 로고
    • see also Stranlund et al, supra note 5, at 350 noting that a noncompliant utility must offset the excess emissions from its allowance in the following year
    • see also Stranlund et al., supra note 5, at 350 (noting that a noncompliant utility must offset the excess emissions from its allowance in the following year).
  • 134
    • 34848832045 scopus 로고    scopus 로고
    • See Kruger, supra note 4, at 13 (stating that because participants know that the cost of a ton of excess emissions exceeds the cost of buying on the market, they have every incentive to comply);
    • See Kruger, supra note 4, at 13 (stating that because participants know that the cost of a ton of excess emissions exceeds the cost of buying on the market, they have every incentive to comply);
  • 135
    • 34848846258 scopus 로고    scopus 로고
    • see also Stranlund et al, supra note 5, at 346 (showing that complete compliance will be guaranteed as long as the market price of a unit allowance remains less than both (1) the per unit fine for a cap violation (making a cap violation economically irrational), and (2) the probability that a reporting misrepresentation will get detected multiplied by the per unit fine for a reporting violation and a cap violation (making a reporting misrepresentation economically irrational)).
    • see also Stranlund et al, supra note 5, at 346 (showing that complete compliance will be guaranteed as long as the market price of a unit allowance remains less than both (1) the per unit fine for a cap violation (making a cap violation economically irrational), and (2) the probability that a reporting misrepresentation will get detected multiplied by the per unit fine for a reporting violation and a cap violation (making a reporting misrepresentation economically irrational)).
  • 136
    • 34848874781 scopus 로고    scopus 로고
    • Interview with Bob Miller, Market Operations Branch, Clean Air Markets Division, EPA (Jan. 6, 2006, accompanied by documents entitled Compliance Summary for the Acid Rain Program (as of July 5, 2005) and Acid Rain Program Units Assessed Penalties for Excess Emissions as of July 5, 2005, hereinafter 2005 Compliance Documents, In comparison with the documentation dated July 5, 2005, the EPA's Annual Progress Reports for the years 2000 and 2001 underreport the number of units out of compliance and amount of excess tons. Id
    • Interview with Bob Miller, Market Operations Branch, Clean Air Markets Division, EPA (Jan. 6, 2006) (accompanied by documents entitled "Compliance Summary for the Acid Rain Program (as of July 5, 2005)" and "Acid Rain Program Units Assessed Penalties for Excess Emissions (as of July 5, 2005)" [hereinafter 2005 Compliance Documents]). In comparison with the documentation dated July 5, 2005, the EPA's Annual Progress Reports for the years 2000 and 2001 underreport the number of units out of compliance and amount of excess tons. Id.
  • 137
    • 34848822805 scopus 로고    scopus 로고
    • For 2000, the Annual Progress Report states that there were six units out of compliance, with total excess emissions of fifty-four tons. EPA, ACID RAIN PROGRAM: ANNUAL PROGRESS REPORT (2000). However, the 2005 Compliance Documents show eight units out of compliance with total excess emissions of seventy tons.
    • For 2000, the Annual Progress Report states that there were six units out of compliance, with total excess emissions of fifty-four tons. EPA, ACID RAIN PROGRAM: ANNUAL PROGRESS REPORT (2000). However, the 2005 Compliance Documents show eight units out of compliance with total excess emissions of seventy tons.
  • 138
    • 34848883077 scopus 로고    scopus 로고
    • For 2001, the Annual Progress Report states that there were two units out of compliance with total excess emissions of eleven tons. EPA, ACID RAIN PROGRAM: ANNUAL PROGRESS REPORT (2001). The 2005 Compliance Documents show nine units out of compliance with total excess emissions of 603 tons.
    • For 2001, the Annual Progress Report states that there were two units out of compliance with total excess emissions of eleven tons. EPA, ACID RAIN PROGRAM: ANNUAL PROGRESS REPORT (2001). The 2005 Compliance Documents show nine units out of compliance with total excess emissions of 603 tons.
  • 139
    • 34848898118 scopus 로고    scopus 로고
    • Interview with Bob Miller, Market Operations Branch, Clean Air Markets Division, EPA Jan. 6, 2006
    • Interview with Bob Miller, Market Operations Branch, Clean Air Markets Division, EPA (Jan. 6, 2006).
  • 140
    • 34848851908 scopus 로고    scopus 로고
    • Id
    • Id.
  • 141
    • 34848886536 scopus 로고    scopus 로고
    • See JOSEPH DIMENTO, ENVIRONMENTAL LAW AND AMERICAN BUSINESS: DILEMMAS OF COMPLIANCE 20 (1986) (citing studies in the 1980s showing high noncompliance with the Clean Water Act, the Toxic Substances Control Act, and the Clean Air Act).
    • See JOSEPH DIMENTO, ENVIRONMENTAL LAW AND AMERICAN BUSINESS: DILEMMAS OF COMPLIANCE 20 (1986) (citing studies in the 1980s showing high noncompliance with the Clean Water Act, the Toxic Substances Control Act, and the Clean Air Act).
  • 142
    • 34848870232 scopus 로고    scopus 로고
    • Joel Mintz, The Uncertain Future Path of Environmental Enforcement and Compliance, 33 ENVTL. L.J. 1093, 1094 (2003).
    • Joel Mintz, The Uncertain Future Path of Environmental Enforcement and Compliance, 33 ENVTL. L.J. 1093, 1094 (2003).
  • 143
    • 34848831456 scopus 로고    scopus 로고
    • Id
    • Id.
  • 144
    • 34848860470 scopus 로고    scopus 로고
    • See, e.g., TOOLS OF THE TRADE, supra note 21, at 4-6;
    • See, e.g., TOOLS OF THE TRADE, supra note 21, at 4-6;
  • 145
    • 34848900113 scopus 로고    scopus 로고
    • see also Swift, supra note 27, at 7 emphasizing that transaction and administrative costs are far lower in cap and trade programs than with traditional rate-based standards
    • see also Swift, supra note 27, at 7 (emphasizing that transaction and administrative costs are far lower in cap and trade programs than with traditional rate-based standards).
  • 146
    • 34848851320 scopus 로고    scopus 로고
    • Schwarze & Zapfel, supra note 28, at 291;
    • Schwarze & Zapfel, supra note 28, at 291;
  • 147
    • 34848928123 scopus 로고    scopus 로고
    • see also Swift, supra note 27, at 7 (positing that [governmental administration costs are lower for cap-and-trade because the role of the government regulator is transformed from that of evaluating and approving technologies to one of monitoring emissions and enforcing compliance. Eliminating the former vastly simplifies permitting policies and also reduces government costs.).
    • see also Swift, supra note 27, at 7 (positing that "[governmental administration costs are lower for cap-and-trade because the role of the government regulator is transformed from that of evaluating and approving technologies to one of monitoring emissions and enforcing compliance. Eliminating the former vastly simplifies permitting policies and also reduces government costs.").
  • 148
    • 34848894827 scopus 로고    scopus 로고
    • But see Driesen, supra note 3, at 333 (explaining that enforcers in trading programs need information about emissions at two sources to verify compliance of a single source and concluding that agencies relying upon trading need more resources to verify compliance than agencies relying on traditional regulation).
    • But see Driesen, supra note 3, at 333 (explaining that enforcers in trading programs need information about emissions at two sources to verify compliance of a single source and concluding that "agencies relying upon trading need more resources to verify compliance than agencies relying on traditional regulation").
  • 149
    • 34848896276 scopus 로고    scopus 로고
    • TOOLS OF THE TRADE, supra note 21, at 4-6.
    • TOOLS OF THE TRADE, supra note 21, at 4-6.
  • 150
    • 34848879466 scopus 로고    scopus 로고
    • Id
    • Id.
  • 151
    • 34848859833 scopus 로고    scopus 로고
    • Id
    • Id.
  • 152
    • 34848917834 scopus 로고    scopus 로고
    • Stranlund et al, supra note 5, at 349
    • Stranlund et al., supra note 5, at 349.
  • 153
    • 34848838881 scopus 로고    scopus 로고
    • See TOOLS OF THE TRADE, supra note 21, at 4-5 (describing the electronic auditing procedure for emissions data);
    • See TOOLS OF THE TRADE, supra note 21, at 4-5 (describing the electronic auditing procedure for emissions data);
  • 155
    • 34848903558 scopus 로고    scopus 로고
    • TOOLS OF THE TRADE, supra note 21, at 4-4.
    • TOOLS OF THE TRADE, supra note 21, at 4-4.
  • 156
    • 34848924567 scopus 로고    scopus 로고
    • Kruger, supra note 4, at 13
    • Kruger, supra note 4, at 13.
  • 157
    • 34848884500 scopus 로고    scopus 로고
    • Id
    • Id.
  • 159
    • 34848867812 scopus 로고    scopus 로고
    • providing a detailed comparison of the design parameters of the two programs
    • See id. (providing a detailed comparison of the design parameters of the two programs).
    • See id
  • 160
    • 34848912518 scopus 로고    scopus 로고
    • 2 program. This Article focuses to a greater extent on the NOx program because of the particular difficulties it experienced.
    • 2 program. This Article focuses to a greater extent on the NOx program because of the particular difficulties it experienced.
  • 161
    • 34848832034 scopus 로고    scopus 로고
    • Id
    • Id.
  • 163
    • 34848822806 scopus 로고    scopus 로고
    • see also James M. Lents, The RECLAIM Program (Los Angeles ' Market-Based Emissions Reduction Program) at Three Years, in EMISSIONS TRADING 223 (Richard F. Kosobud ed., 2000) (excluding sewage treatment plants and landfills from the program).
    • see also James M. Lents, The RECLAIM Program (Los Angeles ' Market-Based Emissions Reduction Program) at Three Years, in EMISSIONS TRADING 223 (Richard F. Kosobud ed., 2000) (excluding sewage treatment plants and landfills from the program).
  • 164
    • 34848871572 scopus 로고    scopus 로고
    • For a complete list of the types of facilities organized by SIC code, see SCAQMD, RECLAIM PROGRAM THREE-YEAR AUDIT AND PROGRESS REPORT 1998, apps. D-E [hereinafter THREE-YEAR AUDIT].
    • For a complete list of the types of facilities organized by SIC code, see SCAQMD, RECLAIM PROGRAM THREE-YEAR AUDIT AND PROGRESS REPORT 1998, apps. D-E [hereinafter THREE-YEAR AUDIT].
  • 165
    • 34848847474 scopus 로고    scopus 로고
    • At the end of the 1996 compliance year, the universe consisted of 329 facilities, including 329 NOx emitters and 37 SO2 emitters. SCAQMD, ANNUAL RECLAIM AUDIT REPORT FOR THE 1996 COMPLIANCE YEAR 1-2 1998, hereinafter RECLAIM AUDIT 1996
    • 2 emitters. SCAQMD, ANNUAL RECLAIM AUDIT REPORT FOR THE 1996 COMPLIANCE YEAR 1-2 (1998) [hereinafter RECLAIM AUDIT 1996].
  • 166
    • 34848861814 scopus 로고    scopus 로고
    • SCAQMD, ANNUAL RECLAIM AUDIT REPORT FOR THE 2004 COMPLIANCE YEAR 1 2 (2006) [hereinafter RECLAIM AUDIT 2004].
    • SCAQMD, ANNUAL RECLAIM AUDIT REPORT FOR THE 2004 COMPLIANCE YEAR 1 2 (2006) [hereinafter RECLAIM AUDIT 2004].
  • 167
    • 0030435418 scopus 로고    scopus 로고
    • Economic Assessment of the Regional Clean Air Market: A New Emissions Trading Program for Los Angeles, 72
    • Scott Lee Johnson & David M. Pekelney, Economic Assessment of the Regional Clean Air Market: A New Emissions Trading Program for Los Angeles, 72 LAND ECON. 277, 281 (1996).
    • (1996) LAND ECON , vol.277 , pp. 281
    • Lee Johnson, S.1    Pekelney, D.M.2
  • 168
    • 34848861648 scopus 로고    scopus 로고
    • Compare SCAQMD, SECOND ANNUAL RECLAIM PROGRAM AUDIT REPORT ( 1997) [hereinafter RECLAIM AUDIT 1995],
    • Compare SCAQMD, SECOND ANNUAL RECLAIM PROGRAM AUDIT REPORT ( 1997) [hereinafter RECLAIM AUDIT 1995],
  • 169
    • 34848909834 scopus 로고    scopus 로고
    • with SCAQMD, ANNUAL RECLAIM AUDIT REPORT FOR THE 2003 COMPLIANCE YEAR (2005) [hereinafter RECLAIM AUDIT 2003].
    • with SCAQMD, ANNUAL RECLAIM AUDIT REPORT FOR THE 2003 COMPLIANCE YEAR (2005) [hereinafter RECLAIM AUDIT 2003].
  • 170
    • 34848837603 scopus 로고    scopus 로고
    • Schwarze & Zapfel, supra note 28, at 287. The question of whether cap and trade programs in general, and RECLAIM in particular, should incorporate banking is beyond the scope of this Article.
    • Schwarze & Zapfel, supra note 28, at 287. The question of whether cap and trade programs in general, and RECLAIM in particular, should incorporate banking is beyond the scope of this Article.
  • 171
    • 34848873402 scopus 로고    scopus 로고
    • For a perspective on the role of banking in the RECLAIM Program, see, note 24, at, positing that had allowance banking been permitted, the RECLAIM Program would have out-performed other regulatory programs
    • For a perspective on the role of banking in the RECLAIM Program, see Burtraw et al., supra note 24, at 281 (positing that had allowance banking been permitted, the RECLAIM Program would have out-performed other regulatory programs).
    • supra , pp. 281
    • Burtraw1
  • 172
    • 34848836339 scopus 로고    scopus 로고
    • See supra notes 111-18.
    • See supra notes 111-18.
  • 173
    • 34848877737 scopus 로고    scopus 로고
    • See EPA, AN EVALUATION OF THE SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT'S REGIONAL CLEAN AIR INCENTIVES MARKET-LESSONS IN ENVIRONMENTAL MARKETS AND INNOVATION 12 (Nov. 2002) [hereinafter EPA EVALUATION OF RECLAIM], available at http://www.epa.gov/ region09/air/reclaim/report.pdf (basing its conclusions on data collected from Nov. 2001 through Jan. 2002).
    • See EPA, AN EVALUATION OF THE SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT'S REGIONAL CLEAN AIR INCENTIVES MARKET-LESSONS IN ENVIRONMENTAL MARKETS AND INNOVATION 12 (Nov. 2002) [hereinafter EPA EVALUATION OF RECLAIM], available at http://www.epa.gov/ region09/air/reclaim/report.pdf (basing its conclusions on data collected from Nov. 2001 through Jan. 2002).
  • 174
    • 34848837014 scopus 로고    scopus 로고
    • See, e.g, RECLAIM AUDIT 1995, supra note 119;
    • See, e.g., RECLAIM AUDIT 1995, supra note 119;
  • 175
    • 34848843033 scopus 로고    scopus 로고
    • SCAQMD, ANNUAL RECLAIM AUDIT REPORT FOR 2002 COMPLIANCE YEAR 5-3 (2004) [hereinafter RECLAIM AUDIT 2002].
    • SCAQMD, ANNUAL RECLAIM AUDIT REPORT FOR 2002 COMPLIANCE YEAR 5-3 (2004) [hereinafter RECLAIM AUDIT 2002].
  • 176
    • 34848815918 scopus 로고    scopus 로고
    • For further insight into the relatively high noncompliance rates in RECLAIM, see Stranlund et al, supra note 5, at 353 suggesting that a number of RECLAIM facilities have decided that the incentives they face do not warrant their full compliance
    • For further insight into the relatively high noncompliance rates in RECLAIM, see Stranlund et al., supra note 5, at 353 (suggesting that "a number of RECLAIM facilities have decided that the incentives they face do not warrant their full compliance").
  • 177
    • 34848885136 scopus 로고    scopus 로고
    • For information on the California energy crisis, see Alan Ramo, California's Energy Crisis-The Perils of Crisis Management and a Challenge to Environmental Justice, 7 ALB. L. ENVTL. OUTLOOK J. 1, 8 (2002);
    • For information on the California energy crisis, see Alan Ramo, California's Energy Crisis-The Perils of Crisis Management and a Challenge to Environmental Justice, 7 ALB. L. ENVTL. OUTLOOK J. 1, 8 (2002);
  • 178
    • 34848918476 scopus 로고    scopus 로고
    • see also David B. Spence, The Politics of Electricity Restructuring: Theory vs. Practice, 40 WAKE FOREST L. REV. 417, 417-18 (2006) (arguing that the economic rationale for restructuring is inconsistent with the political rationale for the same).
    • see also David B. Spence, The Politics of Electricity Restructuring: Theory vs. Practice, 40 WAKE FOREST L. REV. 417, 417-18 (2006) (arguing that the economic rationale for restructuring is inconsistent with the political rationale for the same).
  • 179
    • 34848850720 scopus 로고    scopus 로고
    • Compare SCAQMD, ANNUAL RECLAIM AUDIT REPORT FOR 2000 COMPLIANCE YEAR ES-1 (2002), [hereinafter RECLAIM Audit 2000] (asserting that the average allowance price in 2000 was $45,609 per ton),
    • Compare SCAQMD, ANNUAL RECLAIM AUDIT REPORT FOR 2000 COMPLIANCE YEAR ES-1 (2002), [hereinafter RECLAIM Audit 2000] (asserting that the average allowance price in 2000 was $45,609 per ton),
  • 180
    • 34848814737 scopus 로고    scopus 로고
    • with SCAQMD, ANNUAL RECLAIM AUDIT REPORT FOR 1999 COMPLIANCE YEAR ES-2 (2001) [hereinafter RECLAIM Audit 1999] (comparing emissions for compliance for years 1994 through 2002).
    • with SCAQMD, ANNUAL RECLAIM AUDIT REPORT FOR 1999 COMPLIANCE YEAR ES-2 (2001) [hereinafter RECLAIM Audit 1999] (comparing emissions for compliance for years 1994 through 2002).
  • 181
    • 34848883065 scopus 로고    scopus 로고
    • SCAQMD, ANNUAL RECLAIM AUDIT REPORT FOR 2001 COMPLIANCE YEAR F-23 (2003) [hereinafter RECLAIM AUDIT 2001].
    • SCAQMD, ANNUAL RECLAIM AUDIT REPORT FOR 2001 COMPLIANCE YEAR F-23 (2003) [hereinafter RECLAIM AUDIT 2001].
  • 182
    • 34848838880 scopus 로고    scopus 로고
    • See RECLAIM AUDIT, note 123, tbl.3-2, at
    • See RECLAIM AUDIT 2002, supra note 123, tbl.3-2, at 3-4.
    • (2002) supra , pp. 3-4
  • 183
    • 34848904781 scopus 로고    scopus 로고
    • Id
    • Id.
  • 184
    • 34848856664 scopus 로고    scopus 로고
    • Id.at tbl.3-1, at 3-3.
    • Id.at tbl.3-1, at 3-3.
  • 186
    • 34848905314 scopus 로고    scopus 로고
    • SCAQMD, WHITE PAPER ON STABILIZATION OF NOX RTC PRICES (2001), [hereinafter WHITE PAPER];
    • SCAQMD, WHITE PAPER ON STABILIZATION OF NOX RTC PRICES (2001), [hereinafter WHITE PAPER];
  • 187
    • 34848921770 scopus 로고    scopus 로고
    • SCAQMD, PROPOSAL TO ADOPT PROPOSED CHANGES TO RECLAIM (May 11, 2001) [hereinafter PROPOSAL TO ADOPT CHANGES], available at http://www.aqmd.gov/hb/2001/010535a. html.
    • SCAQMD, PROPOSAL TO ADOPT PROPOSED CHANGES TO RECLAIM (May 11, 2001) [hereinafter PROPOSAL TO ADOPT CHANGES], available at http://www.aqmd.gov/hb/2001/010535a. html.
  • 188
    • 34848917828 scopus 로고    scopus 로고
    • Compliance Plan for Power Producing Facilities, AQMD Rule 2009 (May 11, 2001) (as amended Jan. 7, 2005);
    • Compliance Plan for Power Producing Facilities, AQMD Rule 2009 (May 11, 2001) (as amended Jan. 7, 2005);
  • 189
    • 34848839517 scopus 로고    scopus 로고
    • see also infra text accompanying note 238. For a discussion on the Mitigation Fee Program, which was established so that power plants could pay for any excess emissions at the rate of $7.50 per pound or $15,000 per ton,
    • see also infra text accompanying note 238. For a discussion on the Mitigation Fee Program, which was established so that power plants could pay for any excess emissions at the rate of $7.50 per pound or $15,000 per ton,
  • 190
    • 34848881292 scopus 로고    scopus 로고
    • see PROPOSAL TO ADOPT CHANGES, supra note 131, at 4. The District was instructed to use the program to invest in NOx emission reduction projects from mobile, stationary, or area sources to mitigate the air pollution effects of excess emissions.
    • see PROPOSAL TO ADOPT CHANGES, supra note 131, at 4. The District was instructed to use the program to invest in NOx emission reduction projects from mobile, stationary, or area sources to mitigate the air pollution effects of excess emissions.
  • 192
    • 34848813490 scopus 로고    scopus 로고
    • RECLAIM AUDIT 2001, supra note 126, at F-2627;
    • RECLAIM AUDIT 2001, supra note 126, at F-2627;
  • 193
    • 34848843736 scopus 로고    scopus 로고
    • RECLAIM AUDIT 2000, supra note 125, at G-20
    • RECLAIM AUDIT 2000, supra note 125, at G-20.
  • 195
    • 34848904792 scopus 로고    scopus 로고
    • EPA EVALUATION OF RECLAIM, supra note 122, at 56
    • EPA EVALUATION OF RECLAIM, supra note 122, at 56.
  • 196
    • 34848841184 scopus 로고    scopus 로고
    • See THREE-YEAR AUDIT, supra note 115, tbl.3-1, at 3-3 (showing that actual emissions in the years 1993; 1994; 1995; and 1996 were 24, 982; 25, 314; 25, 764; and 24, 200 tons, respectively). SCAQMD notes, however, that emissions for 1995 and 1996 may have been overestimated because of the impact of the Missing Data Provisions.
    • See THREE-YEAR AUDIT, supra note 115, tbl.3-1, at 3-3 (showing that actual emissions in the years 1993; 1994; 1995; and 1996 were 24, 982; 25, 314; 25, 764; and 24, 200 tons, respectively). SCAQMD notes, however, that emissions for 1995 and 1996 may have been overestimated because of the impact of the Missing Data Provisions.
  • 197
    • 34848863649 scopus 로고    scopus 로고
    • Id. at 3-6
    • Id. at 3-6.
  • 198
    • 34848905322 scopus 로고    scopus 로고
    • See SCAQMD, RECLAIM III SOCIOECONOMIC AND ENVIRONMENTAL ASSESSMENT tbl.9-8, at 9-73 (Oct. 1993) (noting that emissions of NOx under Alternative G, the RECLAIM Program, are predicted to be thirty-seven tons per day, which is equivalent to 13,505 tons per year).
    • See SCAQMD, RECLAIM VOLUME III SOCIOECONOMIC AND
  • 199
    • 34848878890 scopus 로고    scopus 로고
    • See, note 115, fig.3-3, at, showing that approximately 40,000 tons of NOx were emitted in
    • See THREE-YEAR AUDIT, supra note 115, fig.3-3, at 3-5 (showing that approximately 40,000 tons of NOx were emitted in 1989).
    • (1989) supra , pp. 3-5
    • THREE-YEAR, A.1
  • 200
    • 34848904188 scopus 로고    scopus 로고
    • But see id. at 8-8 to 8-9 (asserting that although significant emissions reductions had been achieved at a reasonable cost historically, during the early 1990s it became apparent that limited opportunities for additional emissions reductions remained available to this approach ... and [t]here is no assurance that the downward trends experienced during the 1980s and the first years of the 1990s would have continued under the command-and-control regime).
    • But see id. at 8-8 to 8-9 (asserting that although significant emissions reductions had been achieved at a reasonable cost historically, "during the early 1990s it became apparent that limited opportunities for additional emissions reductions remained available to this approach ..." and "[t]here is no assurance that the downward trends experienced during the 1980s and the first years of the 1990s would have continued under the command-and-control regime").
  • 201
    • 34848919772 scopus 로고    scopus 로고
    • RECLAIM AUDIT 2002, supra note 123, tbl.3-3, at 3-4.
    • RECLAIM AUDIT 2002, supra note 123, tbl.3-3, at 3-4.
  • 202
    • 34848844913 scopus 로고    scopus 로고
    • Id. at 3-3
    • Id. at 3-3.
  • 203
    • 34848833808 scopus 로고    scopus 로고
    • RECLAIM AUDIT 2004, supra note 117, tbls.3-2, 3-3 at 3-4.
    • RECLAIM AUDIT 2004, supra note 117, tbls.3-2, 3-3 at 3-4.
  • 204
    • 34848928122 scopus 로고    scopus 로고
    • See RECLAIM AUDIT 2002, supra note 123, tbls.3-2, 3-3 at 3-4 (showing emissions of 13, 703 and 9, 896 tons for compliance years 2000 and 2002, respectively);
    • See RECLAIM AUDIT 2002, supra note 123, tbls.3-2, 3-3 at 3-4 (showing emissions of 13, 703 and 9, 896 tons for compliance years 2000 and 2002, respectively);
  • 205
    • 34848819078 scopus 로고    scopus 로고
    • see also RECLAIM AUDIT 2004, supra note 117, tbl.3-3, at 3-4 (showing emissions of 9, 412 tons for compliance year 2004).
    • see also RECLAIM AUDIT 2004, supra note 117, tbl.3-3, at 3-4 (showing emissions of 9, 412 tons for compliance year 2004).
  • 206
    • 34848815927 scopus 로고    scopus 로고
    • Gary Polakovic, Innovative Smog Plan Makes Little Progress, L. A. TIMES, Apr. 17, 2001.
    • Gary Polakovic, Innovative Smog Plan Makes Little Progress, L. A. TIMES, Apr. 17, 2001.
  • 207
    • 34848854161 scopus 로고    scopus 로고
    • EPA EVALUATION OF RECLAIM, supra note 122, at 58-59
    • EPA EVALUATION OF RECLAIM, supra note 122, at 58-59.
  • 208
    • 34848865957 scopus 로고    scopus 로고
    • SCAQMD, REPORT: PUBLIC HEARING TO RATIFY FINDINGS REQUIRED BY HEALTH AND SAFETY CODE SECTION 39616(e) PERTAINING TO THE RECLAIM PROGRAM (2000), at 232 [hereinafter PUBLIC HEARING REPORT] ([c]ontrol technologies have not been implemented to the extent anticipated prior to adoption of RECLAIM because many facilities found it more economically attractive to delay capital investments in control equipment by purchasing low-cost RTCs [RECLAIM Trading Credits].).
    • SCAQMD, REPORT: PUBLIC HEARING TO RATIFY FINDINGS REQUIRED BY HEALTH AND SAFETY CODE SECTION 39616(e) PERTAINING TO THE RECLAIM PROGRAM (2000), at 232 [hereinafter PUBLIC HEARING REPORT] ("[c]ontrol technologies have not been implemented to the extent anticipated prior to adoption of RECLAIM because many facilities found it more economically attractive to delay capital investments in control equipment by purchasing low-cost RTCs [RECLAIM Trading Credits].").
  • 209
    • 34848842439 scopus 로고    scopus 로고
    • To complete an evaluation of RECLAIM, a research team assembled by EPA Region IX interviewed over twenty stakeholders from regulated facilities, environmental organizations, regulatory agencies, and brokerage firms. The questions the team asked each set of respondents are included as Appendix B in PUBLIC HEARINGS REPORT, supra note 145, at 72-81. The data collected through these interviews was made available to the author by EPA Region IX in the form of a Microsoft Access database [hereinafter EPA Evaluation Database]. Each reference to the database includes the code used by the EPA for the respondent (e.g., IN-12, referring to Industry Stakeholder 12) and The code used by the EPA for the question (e.g., Market Effectiveness).
    • To complete an evaluation of RECLAIM, a research team assembled by EPA Region IX interviewed over twenty stakeholders from regulated facilities, environmental organizations, regulatory agencies, and brokerage firms. The questions the team asked each set of respondents are included as Appendix B in PUBLIC HEARINGS REPORT, supra note 145, at 72-81. The data collected through these interviews was made available to the author by EPA Region IX in the form of a Microsoft Access database [hereinafter EPA Evaluation Database]. Each reference to the database includes the code used by the EPA for the respondent (e.g., "IN-12," referring to "Industry Stakeholder 12") and The code used by the EPA for the question (e.g., "Market Effectiveness").
  • 210
    • 34848909249 scopus 로고    scopus 로고
    • The questions and their codes can be found in EPA EVALUATION OF RECLAIM, supra note 120, app. B, at 73-81.
    • The questions and their codes can be found in EPA EVALUATION OF RECLAIM, supra note 120, app. B, at 73-81.
  • 211
    • 34848821573 scopus 로고    scopus 로고
    • See SCAQMD, PROPOSED AMENDMENTS TO REGULATION XX-REGIONAL CLEAN AIR INCENTIVES MARKET (RECLAIM) (Jan. 7, 2005), at 2 (stating that the program was initially over allocated, which led to an under-utilization of available, cost-effective technologies).
    • See SCAQMD, PROPOSED AMENDMENTS TO REGULATION XX-REGIONAL CLEAN AIR INCENTIVES MARKET (RECLAIM) (Jan. 7, 2005), at 2 (stating that "the program was initially over allocated, which led to an under-utilization of available, cost-effective technologies").
  • 212
    • 34848814128 scopus 로고    scopus 로고
    • For the actual prices of allowances, see RECLAIM AUDIT 1995, supra note 119;
    • For the actual prices of allowances, see RECLAIM AUDIT 1995, supra note 119;
  • 213
    • 34848914363 scopus 로고    scopus 로고
    • RECLAIM AUDIT 1996, supra note 116;
    • RECLAIM AUDIT 1996, supra note 116;
  • 214
    • 34848857933 scopus 로고    scopus 로고
    • SCAQMD, ANNUAL RECLAIM AUDIT REPORT FORTHE 1997 COMPLIANCE YEAR 2 (1999) [hereinafter RECLAIM AUDIT 1997];
    • SCAQMD, ANNUAL RECLAIM AUDIT REPORT FORTHE 1997 COMPLIANCE YEAR 2 (1999) [hereinafter RECLAIM AUDIT 1997];
  • 215
    • 34848916991 scopus 로고    scopus 로고
    • SCAQMD, ANNUAL RECLAIM AUDIT REPORT FOR THE 1998 COMPLIANCE YEAR 2 (2000) [hereinafter, RECLAIM AUDIT 1998],
    • SCAQMD, ANNUAL RECLAIM AUDIT REPORT FOR THE 1998 COMPLIANCE YEAR 2 (2000) [hereinafter, RECLAIM AUDIT 1998],
  • 216
    • 34848875411 scopus 로고    scopus 로고
    • On the projected prices of allowances, see SCAQMD, RECLAIM I: DEVELOPMENT REPORT AND RULES 6-10 (1993) [hereinafter RECLAIM I].
    • On the projected prices of allowances, see SCAQMD, RECLAIM VOLUME I: DEVELOPMENT REPORT AND RULES 6-10 (1993) [hereinafter RECLAIM VOLUME I].
  • 217
    • 34848888328 scopus 로고    scopus 로고
    • See SCAQMD, supra note 137, tbl.6-2, at p. 6-10 (table entitled Average RTC Price for SOx and NOx).
    • See SCAQMD, supra note 137, tbl.6-2, at p. 6-10 (table entitled "Average RTC Price for SOx and NOx").
  • 218
    • 34848877756 scopus 로고    scopus 로고
    • RECLAIM AUDIT 1999, supra note 123, at F-18
    • RECLAIM AUDIT 1999, supra note 123, at F-18.
  • 219
    • 34848830105 scopus 로고    scopus 로고
    • Before the first announcement of RTC prices in 1994, nine selective catalytic recovery (SCR) units that would have significantly reduced NOx emissions had been scheduled for installation in RECLAIM facilities. Within a year, all were cancelled. CLEAN AIR ACTION CORP., U.S. EXPERIENCE WITH EMISSIONS TRADING 49 (Jan. 22, 2002).
    • Before the first announcement of RTC prices in 1994, nine selective catalytic recovery (SCR) units that would have significantly reduced NOx emissions had been scheduled for installation in RECLAIM facilities. Within a year, all were cancelled. CLEAN AIR ACTION CORP., U.S. EXPERIENCE WITH EMISSIONS TRADING 49 (Jan. 22, 2002).
  • 220
    • 34848816482 scopus 로고    scopus 로고
    • RECLAIM AUDIT 2000, supra note 123, at F-16 to F-18.
    • RECLAIM AUDIT 2000, supra note 123, at F-16 to F-18.
  • 221
    • 34848880735 scopus 로고    scopus 로고
    • WHITE PAPER, supra note 131, at 26
    • WHITE PAPER, supra note 131, at 26.
  • 222
    • 34848896277 scopus 로고    scopus 로고
    • Numbers were calculated by comparing year 2000 reported emissions of 20,491 tons with the RECLAIM caps for years 2001 (15,693 tons) and 2002 (14,044 tons). See RECLAIM AUDIT 2004, supra note 117, tbl.3-1, at 3-3 for data.
    • Numbers were calculated by comparing year 2000 reported emissions of 20,491 tons with the RECLAIM caps for years 2001 (15,693 tons) and 2002 (14,044 tons). See RECLAIM AUDIT 2004, supra note 117, tbl.3-1, at 3-3 for data.
  • 223
    • 34848843034 scopus 로고    scopus 로고
    • RECLAIM AUDIT 1999, supra note 125, at F-18
    • RECLAIM AUDIT 1999, supra note 125, at F-18.
  • 224
    • 34848856665 scopus 로고    scopus 로고
    • Such figures also are included in each Annual Audit Report: RECLAIM AUDIT 1996, supra note 116;
    • Such figures also are included in each Annual Audit Report: RECLAIM AUDIT 1996, supra note 116;
  • 225
    • 34848913132 scopus 로고    scopus 로고
    • RECLAIM AUDIT 1997, supra note 148;
    • RECLAIM AUDIT 1997, supra note 148;
  • 226
    • 34848848705 scopus 로고    scopus 로고
    • RECLAIM AUDIT 1998, supra note 148;
    • RECLAIM AUDIT 1998, supra note 148;
  • 227
    • 34848876631 scopus 로고    scopus 로고
    • RECLAIM AUDIT 1999, supra note 125;
    • RECLAIM AUDIT 1999, supra note 125;
  • 228
    • 34848878890 scopus 로고    scopus 로고
    • note 113, tbl.3-1, at
    • THREE-YEAR AUDIT, supra note 113, tbl.3-1, at 3-3;
    • supra , pp. 3-3
    • THREE-YEAR, A.1
  • 230
    • 34848822214 scopus 로고    scopus 로고
    • and WHITE PAPER, supra note 131
    • and WHITE PAPER, supra note 131.
  • 231
    • 84963456897 scopus 로고    scopus 로고
    • note 133 and accompanying text;
    • See supra note 133 and accompanying text;
    • See supra
  • 232
    • 34848846240 scopus 로고    scopus 로고
    • see also EPA CLEAN AIR MARKETS DIVISION, AN OVERVIEW OF THE REGIONAL CLEAN AIR INCENTIVES MARKET (RECLAIM) (Aug. 14, 2006) [hereinafter EPA OVERVIEW OF RECLAIM], http://www.epa.gov/ airmarkets/resource/docs/reclaimoverview.pdf (It is generally accepted that the primary cause of the NOx RTC price spike was the state's energy supply situation, but the lack of new pollution control investments under RECLAIM up to this point... also likely had a role.).
    • see also EPA CLEAN AIR MARKETS DIVISION, AN OVERVIEW OF THE REGIONAL CLEAN AIR INCENTIVES MARKET (RECLAIM) (Aug. 14, 2006) [hereinafter EPA OVERVIEW OF RECLAIM], http://www.epa.gov/ airmarkets/resource/docs/reclaimoverview.pdf ("It is generally accepted that the primary cause of the NOx RTC price spike was the state's energy supply situation, but the lack of new pollution control investments under RECLAIM up to this point... also likely had a role.").
  • 233
    • 34848812282 scopus 로고    scopus 로고
    • EPA Evaluation Database, supra note 146, at respondent BR-17, code Market Effectiveness.
    • EPA Evaluation Database, supra note 146, at respondent BR-17, code Market Effectiveness.
  • 238
    • 34848928694 scopus 로고    scopus 로고
    • Id
    • Id.
  • 240
    • 34848817047 scopus 로고    scopus 로고
    • 2).
    • 2).
  • 241
    • 34848910437 scopus 로고    scopus 로고
    • Schwarze & Zapfel, supra note 28, at 285
    • Schwarze & Zapfel, supra note 28, at 285.
  • 242
    • 34848888313 scopus 로고    scopus 로고
    • The average emissions of Acid Rain Program facilities at the beginning of Phase II in 2000 was calculated by dividing the 2000 emissions of 11.2 million tons by a count of approximately 920 separate facilities included in the program. See EPA, ACID RAIN PROGRAM ANNUAL PROGRESS REPORT 6 & app. A (2000), http://www.epa.gov/airmarkets/ progress/docs/2000report.pdf (stating total emissions and listing all participating facilities).
    • The average emissions of Acid Rain Program facilities at the beginning of Phase II in 2000 was calculated by dividing the 2000 emissions of 11.2 million tons by a count of approximately 920 separate facilities included in the program. See EPA, ACID RAIN PROGRAM ANNUAL PROGRESS REPORT 6 & app. A (2000), http://www.epa.gov/airmarkets/ progress/docs/2000report.pdf (stating total emissions and listing all participating facilities).
  • 243
    • 84888467546 scopus 로고    scopus 로고
    • note 171 and accompanying text
    • See infra note 171 and accompanying text.
    • See infra
  • 244
    • 34848896285 scopus 로고    scopus 로고
    • EPA Evaluation Database, supra note 146, at respondent IN-3, code Decision- Making Process.
    • EPA Evaluation Database, supra note 146, at respondent IN-3, code Decision- Making Process.
  • 245
    • 34848843747 scopus 로고    scopus 로고
    • See generally note 50 explaining reasons why firms, despite market incentives, remain inefficient
    • See generally Malloy, supra note 50 (explaining reasons why firms, despite market incentives, remain inefficient).
    • supra
    • Malloy1
  • 246
    • 34848921136 scopus 로고    scopus 로고
    • EPA Evaluation Database, supra note 146, at respondent IN-3, code DecisionMaking Process.
    • EPA Evaluation Database, supra note 146, at respondent IN-3, code DecisionMaking Process.
  • 249
    • 34848890607 scopus 로고    scopus 로고
    • Interview with Danny Luong, Air Quality Analysis and Compliance Supervisor, SCAQMD June 27, 2006
    • Interview with Danny Luong, Air Quality Analysis and Compliance Supervisor, SCAQMD (June 27, 2006).
  • 250
    • 34848819712 scopus 로고    scopus 로고
    • See Stranlund et al, supra note 5, at 349-50 (explaining specific reporting requirements that differ among types of sources);
    • See Stranlund et al., supra note 5, at 349-50 (explaining specific reporting requirements that differ among types of sources);
  • 251
    • 34848877755 scopus 로고    scopus 로고
    • see also Continuous Emission Monitoring, 40 C.F.R. §75 (2006) (detailing the emissions monitoring requirements).
    • see also Continuous Emission Monitoring, 40 C.F.R. §75 (2006) (detailing the emissions monitoring requirements).
  • 252
    • 34848878890 scopus 로고    scopus 로고
    • note 115, tbl.5-1, at
    • THREE-YEAR AUDIT, supra note 115, tbl.5-1, at 5-9.
    • supra , pp. 5-9
    • THREE-YEAR, A.1
  • 253
    • 34848912527 scopus 로고    scopus 로고
    • A major source includes any source that emits ten or more tons of NOx per year. For the full definition of a major source, see SCAQMD, RULE 2012 PROTOCOL FOR MONITORING, REPORTING, AND RECORDKEEPING FOR OXIDES OF NITROGEN (NOX) EMISSIONS, app. A, tbl.l-A, http://www. aqmd.gov/rules/reg/reg20/ r2012_chap_l.pdf (listing ten criteria for determining major source category). Note that a single facility may have more than one source. In 1996, for example, there were 329 RECLAIM facilities and over 3,995 sources.
    • A major source includes any source that emits ten or more tons of NOx per year. For the full definition of a major source, see SCAQMD, RULE 2012 PROTOCOL FOR MONITORING, REPORTING, AND RECORDKEEPING FOR OXIDES OF NITROGEN (NOX) EMISSIONS, app. A, tbl.l-A, http://www. aqmd.gov/rules/reg/reg20/ r2012_chap_l.pdf (listing ten criteria for determining major source category). Note that a single facility may have more than one "source." In 1996, for example, there were 329 RECLAIM facilities and over 3,995 sources.
  • 254
    • 34848878890 scopus 로고    scopus 로고
    • note 115, tbl.1-1, at
    • THREE-YEAR AUDIT, supra note 115, tbl.1-1, at 1-3.
    • supra , pp. 1-3
    • THREE-YEAR, A.1
  • 255
    • 34848856673 scopus 로고    scopus 로고
    • Stranlund et al, supra note 5, at 349
    • Stranlund et al., supra note 5, at 349.
  • 256
    • 34848856067 scopus 로고    scopus 로고
    • See SCAQMD, RULE 2011 PROTOCOL FOR MAJOR SOURCES-CONTINUOUS EMISSION MONITORING SYSTEM, 2011A-2-29 through 2011A-2-36 (Jan. 7, 2005), available at http://www.aqmd.gov/rules/reg/reg20/r2011_chap_2.pdf. (detailing the procedures that must be used to identify alternative data when emissions data has not been recorded).
    • See SCAQMD, RULE 2011 PROTOCOL FOR MAJOR SOURCES-CONTINUOUS EMISSION MONITORING SYSTEM, 2011A-2-29 through 2011A-2-36 (Jan. 7, 2005), available at http://www.aqmd.gov/rules/reg/reg20/r2011_chap_2.pdf. (detailing the procedures that must be used to identify alternative data when emissions data has not been recorded).
  • 258
    • 34848867813 scopus 로고    scopus 로고
    • THREE-YEAR AUDIT, supra note 115, at 5-3;
    • THREE-YEAR AUDIT, supra note 115, at 5-3;
  • 259
    • 34848819700 scopus 로고    scopus 로고
    • see also Stranlund et al., supra note 5, at 349 (stating that comprehensive audits involving the evaluation of emissions reporting data for accuracy and noncompliance and the inspection of equipment, records, and monitoring devices are conducted at the end of the compliance year).
    • see also Stranlund et al., supra note 5, at 349 (stating that comprehensive audits involving the evaluation of emissions reporting data for accuracy and noncompliance and the inspection of equipment, records, and monitoring devices are conducted at the end of the compliance year).
  • 260
    • 34848905912 scopus 로고    scopus 로고
    • THREE-YEAR AUDIT, supra note 115, at 5-3
    • THREE-YEAR AUDIT, supra note 115, at 5-3.
  • 261
    • 34848837616 scopus 로고    scopus 로고
    • For information on audits in the Acid Rain Program, see supra notes 104-07.
    • For information on audits in the Acid Rain Program, see supra notes 104-07.
  • 262
    • 34848822796 scopus 로고    scopus 로고
    • CALIFORNIA AIR RESOURCES BOARD (CARB), AN EVALUATION OF THE SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT'S AIR POLLUTION CONTROL PROGRAM V-8 (2000) [hereinafter CARB EVALUATION OF RECLAIM].
    • CALIFORNIA AIR RESOURCES BOARD (CARB), AN EVALUATION OF THE SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT'S AIR POLLUTION CONTROL PROGRAM V-8 (2000) [hereinafter CARB EVALUATION OF RECLAIM].
  • 263
    • 34848927152 scopus 로고    scopus 로고
    • Id
    • Id.
  • 264
    • 34848916972 scopus 로고    scopus 로고
    • Id. app. A, at 6.
    • Id. app. A, at 6.
  • 265
    • 34848836340 scopus 로고    scopus 로고
    • But see EPA EVALUATION OF RECLAIM, supra note 122, at 31-32 stating that it can take several years for SCAQMD to audit facilities and that SCAQMD fell several years behind in their auditing in the early stages of RECLAIM
    • But see EPA EVALUATION OF RECLAIM, supra note 122, at 31-32 (stating that "it can take several years for SCAQMD to audit facilities" and that "SCAQMD fell several years behind in their auditing in the early stages of RECLAIM").
  • 267
    • 34848846257 scopus 로고    scopus 로고
    • EPA EVALUATION OF RECLAIM, supra note 122, at 31
    • EPA EVALUATION OF RECLAIM, supra note 122, at 31.
  • 268
    • 34848818468 scopus 로고    scopus 로고
    • Id. at 32;
    • Id. at 32;
  • 269
    • 34848813491 scopus 로고    scopus 로고
    • EPA Evaluation Database, supra note 146, at respondent IN-13, code Trade Costs.
    • EPA Evaluation Database, supra note 146, at respondent IN-13, code Trade Costs.
  • 270
    • 34848812872 scopus 로고    scopus 로고
    • EPA Evaluation Database, supra note 146, at respondent BR-19, code Market Effectiveness.
    • EPA Evaluation Database, supra note 146, at respondent BR-19, code Market Effectiveness.
  • 272
    • 34848847475 scopus 로고    scopus 로고
    • see also EPA EVALUATION OF RECLAIM, supra note 122, app. F, attachment A, at 8 (highlighting the significant improvements made to the automation system to make trading information more transparent and facilitate data transmission status checks).
    • see also EPA EVALUATION OF RECLAIM, supra note 122, app. F, attachment A, at 8 (highlighting the significant improvements made to the automation system to make trading information more transparent and facilitate data transmission status checks).
  • 273
    • 34848874766 scopus 로고    scopus 로고
    • TOOLS OF THE TRADE, supra note 21, at 5-2.
    • TOOLS OF THE TRADE, supra note 21, at 5-2.
  • 274
    • 34848863026 scopus 로고    scopus 로고
    • Notably, companies are only required to report allowance transfers if they will be used for compliance. Pérez Henriquez, supra note 76, at 10-11. There are also various companies in the private sector that track and disseminate Acid Rain Program allowance price information.
    • Notably, companies are only required to report allowance transfers if they will be used for compliance. Pérez Henriquez, supra note 76, at 10-11. There are also various companies in the private sector that track and disseminate Acid Rain Program allowance price information.
  • 275
    • 34848923989 scopus 로고    scopus 로고
    • Id
    • Id.
  • 276
    • 34848843047 scopus 로고    scopus 로고
    • Id
    • Id.
  • 277
    • 20644443285 scopus 로고    scopus 로고
    • Anne Egelston & Maurie J. Cohen, California RECLAIM'S Market Failure: Lessons for the Kyoto Protocol, 4 CLIMATE POL. 427, 433 (2005).
    • Anne Egelston & Maurie J. Cohen, California RECLAIM'S Market Failure: Lessons for the Kyoto Protocol, 4 CLIMATE POL. 427, 433 (2005).
  • 278
    • 34848875400 scopus 로고    scopus 로고
    • Id. (noting that this program design feature allowed facilities to withhold potentially valuable information regarding their emissions from others).
    • Id. (noting that this program design feature allowed facilities to withhold potentially valuable information regarding their emissions from others).
  • 279
    • 34848907678 scopus 로고    scopus 로고
    • Id
    • Id.
  • 280
    • 34848860458 scopus 로고    scopus 로고
    • EPA Evaluation Database, supra note 146, at respondent IN-I, code Changes to Trading.
    • EPA Evaluation Database, supra note 146, at respondent IN-I, code Changes to Trading.
  • 283
    • 34848833891 scopus 로고    scopus 로고
    • Currently, the District posts a spreadsheet covering the prior three months with trading information updated to the previous business day. See, e.g., RECLAIM Trading Credits (RTCs) Trade Information, http://www.aqmd.gov/ reclaim/rtc_main.html (last visited Mar. 26, 2007).
    • Currently, the District posts a spreadsheet covering the prior three months with trading information updated to the previous business day. See, e.g., RECLAIM Trading Credits (RTCs) Trade Information, http://www.aqmd.gov/ reclaim/rtc_main.html (last visited Mar. 26, 2007).
  • 284
    • 34848820296 scopus 로고    scopus 로고
    • Interview with Danny Luong, Air Quality Analysis and Compliance Supervisor, SCAQMD June 27, 2006
    • Interview with Danny Luong, Air Quality Analysis and Compliance Supervisor, SCAQMD (June 27, 2006).
  • 285
    • 34848839527 scopus 로고    scopus 로고
    • Id.;
    • Id.;
  • 286
    • 34848838279 scopus 로고    scopus 로고
    • see also RECLAIM AUDIT 2001-B, supra note 178, at F-19 (describing Board rules requiring participants to voluntarily report current and future trades within five days of agreement).
    • see also RECLAIM AUDIT 2001-B, supra note 178, at F-19 (describing Board rules requiring participants to voluntarily report current and future trades within five days of agreement).
  • 287
    • 84963456897 scopus 로고    scopus 로고
    • notes 92-93 and accompanying text
    • See supra notes 92-93 and accompanying text.
    • See supra
  • 288
    • 34848898117 scopus 로고    scopus 로고
    • Cf. Stranlund et al., supra note 82, at 182 (stating that policy analysts attribute two elements of the Acid Rain Program to have led to almost 100% compliance-namely, automatic penalties that are higher than market price, and CEMS that produce quarterly reports).
    • Cf. Stranlund et al., supra note 82, at 182 (stating that policy analysts attribute two elements of the Acid Rain Program to have led to almost 100% compliance-namely, automatic penalties that are higher than market price, and CEMS that produce quarterly reports).
  • 289
    • 34848872777 scopus 로고    scopus 로고
    • See, e.g., Robert A. Kagan, On Regulatory Inspectorates and Police, in ENFORCING REGULATION at 39-40 (Keith Hawkins & John M. Thomas eds., 1984) (noting that regulatory inspectors can only visit potentially dangerous places like mines, factories, and chemical dumps a few times a year, even though dangers may be present twenty-four hours a day on most days of the year).
    • See, e.g., Robert A. Kagan, On Regulatory Inspectorates and Police, in ENFORCING REGULATION at 39-40 (Keith Hawkins & John M. Thomas eds., 1984) (noting that regulatory inspectors can only visit potentially dangerous places like mines, factories, and chemical dumps a few times a year, even though dangers may be present twenty-four hours a day on most days of the year).
  • 290
    • 34848883076 scopus 로고    scopus 로고
    • See id. at 41-42 (providing the example that a more detached higher agency official may be more lenient than a field-level enforcer).
    • See id. at 41-42 (providing the example that a more detached higher agency official may be more lenient than a field-level enforcer).
  • 291
    • 84963456897 scopus 로고    scopus 로고
    • note 180 and accompanying text
    • See supra note 180 and accompanying text.
    • See supra
  • 292
    • 34848912519 scopus 로고    scopus 로고
    • See CARB EVALUATION OF RECLAIM, supra note 182, at V-3 explaining that the procedures intentionally overstate actual emissions so as not to create an incentive to disable the recordkeeping systems
    • See CARB EVALUATION OF RECLAIM, supra note 182, at V-3 (explaining that the procedures intentionally overstate actual emissions so as not to create an incentive to disable the recordkeeping systems).
  • 294
    • 34848905922 scopus 로고    scopus 로고
    • RECLAIM Rule 2004(d)(1).
    • RECLAIM Rule 2004(d)(1).
  • 296
    • 34848815926 scopus 로고    scopus 로고
    • See California Health and Safety Code §§42402.3, 42403 (1954).
    • See California Health and Safety Code §§42402.3, 42403 (1954).
  • 297
    • 34848878889 scopus 로고    scopus 로고
    • See Stranlund et al, supra note 5, at 350-51 reasoning that the facilities will base their expectations on the penalty the agency would be likely to apply rather than he maximum penalty available
    • See Stranlund et al., supra note 5, at 350-51 (reasoning that the facilities will base their expectations on the penalty the agency would be likely to apply rather than he maximum penalty available).
  • 298
    • 34848876019 scopus 로고    scopus 로고
    • EPA EVALUATION OF RECLAIM, supra note 122, at 33;
    • EPA EVALUATION OF RECLAIM, supra note 122, at 33;
  • 299
    • 34848880074 scopus 로고    scopus 로고
    • see also Stranlund et al., supra note 5, at 350 (finding that the agency imposes RECLAIM penalties on a case-bycase basis and that [b]ecause of the resulting uncertainty that facilities must have about the consequences they will face if they are noncompliant, it is difficult to judge the deterrence value of the RECLAIM sanctions).
    • see also Stranlund et al., supra note 5, at 350 (finding that the agency imposes RECLAIM penalties on a case-bycase basis and that "[b]ecause of the resulting uncertainty that facilities must have about the consequences they will face if they are noncompliant, it is difficult to judge the deterrence value of the RECLAIM sanctions").
  • 300
    • 34848923988 scopus 로고    scopus 로고
    • CARB EVALUATION OF RECLAIM, supra note 182, at V-3 recommending an average settlement time of ninety days instead of the current average of twelve months
    • CARB EVALUATION OF RECLAIM, supra note 182, at V-3 (recommending an average settlement time of ninety days instead of the current average of twelve months).
  • 302
    • 34848865956 scopus 로고    scopus 로고
    • The author is pursuing data on the actual costs of running RECLAIM
    • The author is pursuing data on the actual costs of running RECLAIM.
  • 303
    • 34848905921 scopus 로고    scopus 로고
    • EPA Evaluation Database, supra note 146, at respondent REG-21, code Effectiveness.
    • EPA Evaluation Database, supra note 146, at respondent REG-21, code Effectiveness.
  • 306
    • 34848888932 scopus 로고    scopus 로고
    • EPA EVALUATION OF RECLAIM, supra note 122, at 31
    • EPA EVALUATION OF RECLAIM, supra note 122, at 31.
  • 308
    • 34848817048 scopus 로고    scopus 로고
    • See CARB EVALUATION OF RECLAIM, supra note 182, at vi
    • See CARB EVALUATION OF RECLAIM, supra note 182, at vi.
  • 309
    • 34848868428 scopus 로고    scopus 로고
    • See id
    • See id.
  • 310
    • 34848843746 scopus 로고    scopus 로고
    • Ackerman & Stewart, supra note 40, at 180-81
    • Ackerman & Stewart, supra note 40, at 180-81.
  • 311
    • 34848856666 scopus 로고    scopus 로고
    • See, e.g., Stranlund et al., supra note 5, at 345, 353 (noting that RECLAIM provides for emissions fees assessed on a per-unit of emissions basis to help fund program administration, but criticizing these fees as an incentive for noncompliance).
    • See, e.g., Stranlund et al., supra note 5, at 345, 353 (noting that RECLAIM provides for "emissions fees" assessed on a per-unit of emissions basis to help fund program administration, but criticizing these fees as an incentive for noncompliance).
  • 312
    • 34848851906 scopus 로고    scopus 로고
    • EPA Evaluation Database, supra note 146, at respondent IN-3, code Decision Making Process.
    • EPA Evaluation Database, supra note 146, at respondent IN-3, code Decision Making Process.
  • 314
    • 34848869052 scopus 로고    scopus 로고
    • EPA EVALUATION OF RECLAIM, supra note 122, at 22
    • EPA EVALUATION OF RECLAIM, supra note 122, at 22.
  • 315
    • 34848880734 scopus 로고    scopus 로고
    • See EPA Evaluation Database, supra note 146, at respondent IN-3, code DecisionMaking Process.
    • See EPA Evaluation Database, supra note 146, at respondent IN-3, code DecisionMaking Process.
  • 317
    • 34848870231 scopus 로고    scopus 로고
    • EPA Evaluation Database, supra note 146, at respondent IN-I, code Changes to Trading.
    • EPA Evaluation Database, supra note 146, at respondent IN-I, code Changes to Trading.
  • 318
    • 34848849450 scopus 로고    scopus 로고
    • KAREN R. POLENSKE & ALI SHIRVANI-MAHDAVI, REVIEW OF AN EMISSIONS PERMIT EXCHANGE AND THE CHARACTERISTICS OF THE RECLAIM NOx MARKET IN LOS ANGELES 6 (2001) (prepared for SCAQMD).
    • KAREN R. POLENSKE & ALI SHIRVANI-MAHDAVI, REVIEW OF AN EMISSIONS PERMIT EXCHANGE AND THE CHARACTERISTICS OF THE RECLAIM NOx MARKET IN LOS ANGELES 6 (2001) (prepared for SCAQMD).
  • 319
    • 34848835116 scopus 로고    scopus 로고
    • Id
    • Id.
  • 320
    • 34848919171 scopus 로고    scopus 로고
    • EPA Overview of RECLAIM, supra note 156, at 10.
    • EPA Overview of RECLAIM, supra note 156, at 10.
  • 321
    • 34848839526 scopus 로고    scopus 로고
    • See SCAQMD, REPORT: MERITS OF A CENTRALIZED MARKET FOR RECLAIM (May 3, 2002) [hereinafter MERITS OF A CENTRALIZED MARKET] (considering both options).
    • See SCAQMD, REPORT: MERITS OF A CENTRALIZED MARKET FOR RECLAIM (May 3, 2002) [hereinafter MERITS OF A CENTRALIZED MARKET] (considering both options).
  • 322
    • 34848877754 scopus 로고    scopus 로고
    • Id
    • Id.
  • 323
    • 34848844335 scopus 로고    scopus 로고
    • Id. at ES-3
    • Id. at ES-3.
  • 324
    • 34848879467 scopus 로고    scopus 로고
    • Id.; see, e.g., Press Release, U.S. Department of Justice, Broker of Air Pollution Credits Pleads Guilty To Wire Fraud Scheme in Federal Court (Apr. 26, 2005), available at http://www.usdoj.gov/usao/cac/pr2005/063. html (reporting allegations of illegal activity by several RECLAIM brokers). In March 2002, the District cited Anne Sholtz, one of the architects of RECLAIM who later founded a brokerage firm, for alleged violations of the agency's emissions credit trading regulations. In 2005, Sholtz pled guilty to wire fraud in a related federal investigation.
    • Id.; see, e.g., Press Release, U.S. Department of Justice, Broker of Air Pollution Credits Pleads Guilty To Wire Fraud Scheme in Federal Court (Apr. 26, 2005), available at http://www.usdoj.gov/usao/cac/pr2005/063. html (reporting allegations of illegal activity by several RECLAIM brokers). In March 2002, the District cited Anne Sholtz, one of the architects of RECLAIM who later founded a brokerage firm, for alleged violations of the agency's emissions credit trading regulations. In 2005, Sholtz pled guilty to wire fraud in a related federal investigation.
  • 325
    • 34848825322 scopus 로고    scopus 로고
    • See SCAQMD, MERITS OF A CENTRALIZED MARKET, supra note 235, at 9 citing significant costs and increased oversight as some of the difficulties
    • See SCAQMD, MERITS OF A CENTRALIZED MARKET, supra note 235, at 9 (citing significant costs and increased oversight as some of the difficulties).
  • 326
    • 34848857932 scopus 로고    scopus 로고
    • Cf. Kruger, supra note 4, at 10 (stating that both government and industry officials have noted the importance of a hands off approach to the market by government officials).
    • Cf. Kruger, supra note 4, at 10 (stating that both government and industry officials have noted the importance of a "hands off" approach to the market by government officials).
  • 327
    • 34848876630 scopus 로고    scopus 로고
    • SCAQMD, REVIEW OF RECLAIM FINDINGS, supra note 155, at 2-30 to 2-39
    • SCAQMD, REVIEW OF RECLAIM FINDINGS, supra note 155, at 2-30 to 2-39.
  • 328
    • 34848863655 scopus 로고    scopus 로고
    • Id. at 2-39
    • Id. at 2-39.
  • 329
    • 34848828831 scopus 로고    scopus 로고
    • PROPOSAL TO ADOPT CHANGES, supra note 131
    • PROPOSAL TO ADOPT CHANGES, supra note 131.
  • 330
    • 34848849459 scopus 로고    scopus 로고
    • WHITE PAPER, supra note 131, at 44
    • WHITE PAPER, supra note 131, at 44.
  • 331
    • 34848886535 scopus 로고    scopus 로고
    • Id
    • Id.
  • 332
    • 34848904791 scopus 로고    scopus 로고
    • Rule 2009, supra note 132;
    • Rule 2009, supra note 132;
  • 333
    • 34848898116 scopus 로고    scopus 로고
    • RECLAIM AUDIT 2001, supra note 126, at F-26
    • RECLAIM AUDIT 2001, supra note 126, at F-26.
  • 334
    • 34848865955 scopus 로고    scopus 로고
    • Rule 2009.1, supra note 132;
    • Rule 2009.1, supra note 132;
  • 335
    • 34848881303 scopus 로고    scopus 로고
    • RECLAIM AUDIT 2000, supra note 125, at G-20
    • RECLAIM AUDIT 2000, supra note 125, at G-20.
  • 336
    • 34848893591 scopus 로고    scopus 로고
    • Rule 2009.1(e), supra note 134.
    • Rule 2009.1(e), supra note 134.
  • 337
    • 34848876018 scopus 로고    scopus 로고
    • EPA EVALUATION OF RECLAIM, supra note 122, District Response at 5.
    • EPA EVALUATION OF RECLAIM, supra note 122, District Response at 5.
  • 338
    • 34548089753 scopus 로고    scopus 로고
    • at, I]t may not be feasible to rely on a 'pure' market-based program without requiring enforceable compliance plans from affected facilities
    • Id.; see also id. at 7 ("[I]t may not be feasible to rely on a 'pure' market-based program without requiring enforceable compliance plans from affected facilities ...").
    • Id.; see also id , pp. 7
  • 340
    • 34848818282 scopus 로고    scopus 로고
    • Cf. Ackerman & Stewart, supra note 40, at 178 discussing how pollution regulation is based on the best technology available
    • Cf. Ackerman & Stewart, supra note 40, at 178 (discussing how pollution regulation is based on the best technology available).
  • 341
    • 34848909261 scopus 로고    scopus 로고
    • Cf. Neil Gunningham & Darren Sinclair, Designing Smart Regulation, in A READER IN ENVIRONMENTAL LAW 183, 308 (Bridget M. Hutter ed., 1999) (Command and control has virtues of high dependability and predictability . . . but inflexible and inefficient . . . economic instruments tend to be efficient, but, in most cases, not dependable.).
    • Cf. Neil Gunningham & Darren Sinclair, Designing Smart Regulation, in A READER IN ENVIRONMENTAL LAW 183, 308 (Bridget M. Hutter ed., 1999) ("Command and control has virtues of high dependability and predictability . . . but inflexible and inefficient . . . economic instruments tend to be efficient, but, in most cases, not dependable.").
  • 342
    • 77950653867 scopus 로고    scopus 로고
    • See generally, note 131
    • See generally WHITE PAPER, supra note 131 ;
    • supra
    • WHITE, P.1
  • 343
    • 34848817677 scopus 로고    scopus 로고
    • PROPOSAL TO ADOPT CHANGES, supra note 131 explaining the reform options that the District considered and the reasons for the chosen reforms
    • PROPOSAL TO ADOPT CHANGES, supra note 131 (explaining the reform options that the District considered and the reasons for the chosen reforms).
  • 344
    • 84886338965 scopus 로고    scopus 로고
    • notes 130-34 and accompanying text discussing the changes made
    • See supra notes 130-34 and accompanying text (discussing the changes made).
    • See supra
  • 345
    • 34848847487 scopus 로고    scopus 로고
    • Cf. Evans & Kruger, supra note 16, at 28 commenting upon the problem of low allowance prices in the Chicago ERMS program and suggesting the possibility of mechanisms to address lower than anticipated prices
    • Cf. Evans & Kruger, supra note 16, at 28 (commenting upon the problem of low allowance prices in the Chicago ERMS program and suggesting the possibility of mechanisms to address lower than anticipated prices).
  • 346
    • 34848829489 scopus 로고    scopus 로고
    • EPA Evaluation Database, supra note 146, at respondent REG-21, code Involvement (quoting a regulatory stakeholder stating that an environmental group predicted in 1993 that there would be seven years of fluff paper credits but EPA believed that there would only be about two or three years).
    • EPA Evaluation Database, supra note 146, at respondent REG-21, code Involvement (quoting a regulatory stakeholder stating that an environmental group predicted in 1993 "that there would be seven years of fluff paper credits but EPA believed that there would only be about two or three years").
  • 347
    • 34848851907 scopus 로고    scopus 로고
    • See Kruger, supra note 4, at 10-11 emphasizing the importance of certainty in program administration
    • See Kruger, supra note 4, at 10-11 (emphasizing the importance of certainty in program administration).
  • 348
    • 34848911932 scopus 로고    scopus 로고
    • That cap and trade programs may impose additional burdens on administrators does not mean they should not be implemented. See Ackerman & Stewart, supra note 40, at 198 (noting in a similar context that [t]he additional administrative costs may be outweighed by greater benefits by society as a whole). However, to the extent that novel forms of regulation create new and expensive bureaucratic responsibilities, the question of how they will be funded should be considered.
    • That cap and trade programs may impose additional burdens on administrators does not mean they should not be implemented. See Ackerman & Stewart, supra note 40, at 198 (noting in a similar context that "[t]he additional administrative costs may be outweighed by greater benefits by society as a whole"). However, to the extent that novel forms of regulation create new and expensive bureaucratic responsibilities, the question of how they will be funded should be considered.


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