By Alexander Liguori, Managing Editor at N.Y.U. Environmental Law Journal. This post is part of the Environmental Law Review Syndicate. Introduction Any good survey of our nation’s bedrock environmental laws will likely cover the Clean Air Act and Clean Water Act, but hardly any would…
By Hannah Yang, Articles Editor at N.Y.U. Environmental Law Journal. This post is part of the Environmental Law Review Syndicate. Introduction Ocean plastic pollution is a large-scale problem that stems from multiple points of the plastics life cycle, ranging from design, production, use, disposal, and…
By Grace Weatherall, Managing Editor at the Harvard Environmental Law Review.
Bostock v. Clayton County was marked for a place among landmark Supreme Court jurisprudence as soon as it arrived.1. The decision protected LGBTQ+ employees from discrimination based on their sexual orientation or gender identity,2 and LGBT activists and allies rightly celebrated it as an affirmation of basic human rights and dignity. But amidst this celebration, excitement arose from a different, surprising, quarter: climate change activists.
Before the ink had dried on Bostock—or, more accurately, before many readers had managed to battle through the download delay that Justice Alito’s unwieldy dissent caused the Court’s servers3—various climate scholars were already arguing that the language and reasoning that Justice Gorsuch employed in his majority decision could have major implications for climate regulation under the federal Clean Air Act (CAA).4 Specifically, scholars posited that Gorsuch’s use of progressive textualism, and his specific acknowledgment that old statutes may be used to address new problems,5 bodes well for the durability of future climate change policymaking under CAA authority.6 Following the Bostock framework, climate litigants could, in theory, argue that the text of the CAA must allow for broad regulation of greenhouse gas as a pollutant, despite Congress’s failure to address greenhouse gases or climate change directly.
Climate advocates and policymakers are certainly justified in searching for a silver bullet of legal theory to convince the Supreme Court to uphold a major CAA climate rulemaking. Climate scientists across the globe are warning policymakers that time is running out to save the world from climate disaster,7 and lacking climate-specific legislation, it seems more important than ever that the Environmental Protection Agency (EPA) undertake significant action under its existing authority. I have suggested elsewhere that EPA should institute National Ambient Air Quality Standards (NAAQS) for greenhouse gases (GHGs) under CAA sections 108–10, in order to activate broad federal power over state implementation plans (SIPs) for emissions reduction.8 Similarly, several scholars have argued stridently for the implementation of a GHG SIPs program under section 115.9 Either way, regulating GHGs through SIPs represents the broadest possible approach to GHG regulation under the existing CAA,10 but represents a difficult legal argument to make to the Supreme Court. Moreover, the Court has already demonstrated wariness of EPA attempts to address climate change under the CAA,11 and climate litigants can expect this wariness to increase as the conservative wing of the Court grows.12 Since a successful EPA climate rule must survive judicial review, in this article I examine whether Justice Gorsuch’s Bostock framework could indeed aid EPA in future climate rulemaking and advocacy before the Court.
Ultimately, I conclude that Bostock is not the legal silver bullet that climate activists seek.13 As attractive as the Bostock framework is, it cannot save climate change policymaking under the CAA from a textualist standpoint because interpretation of the word “pollutant” in the CAA, unlike “sex” in the Civil Rights Act, involves deference to an agency head. Thus, the battle for CAA GHG regulation must be fought on the fields of reasonability analysis, not textualism. And this raises a second problem for EPA. In a future climate case, the Court may reject Chevron deference entirely and instead utilize either the deregulatory “major questions” doctrine, or the Schechter-era nondelegation doctrine—and in either case, Bostock offers no useful tool to climate litigants. I do not argue that EPA has no chance of enacting climate policy under the CAA, nor that the agency should not attempt to do so. On the contrary, I feel strongly that EPA is morally obligated to make every effort possible to enact significant GHG regulation. I conclude, however, that future climate jurisprudence will be governed not by precise textualism, but by broad judicial and political philosophy—and that realistically, climate advocates’ best bet is to pursue the appointment of as many liberal justices to the Supreme Court as possible.
I. Overview of Bostock v. Clayton County and Its Potential Relevance to Climate Litigation
A. Bostock v. Clayton County
Bostock v. Clayton County began in its life in Clayton County, Georgia, when Gerald Bostock, a county employee with an excellent work performance record,14 joined a gay softball league and was promptly fired for “conduct unbecoming a county employee.”15 Bostock sued, alleging that the county had violated Title VII of the Civil Rights Act of 1964.16 The district court ruled against Bostock,17 and the Eleventh Circuit agreed, holding that Title VII’s prohibition of discrimination “on the basis of sex” did not apply to sexual orientation.18 The Supreme Court reversed.19
Justice Gorsuch, writing for a six-three majority, announced in the first paragraph of his seventeen-page opinion that the phrase “discrimination . . . on the basis of . . . sex” included discrimination on the basis of sexual orientation because sexual orientation itself depends on sex.20 “An employer who fires an individual for being homosexual or transgender,” Justice Gorsuch explained, “fires that person for traits or actions it would not have questioned in members of a different sex,”21 and thus “[s]ex plays a necessary and undisguisable role in the decision, exactly what Title VII forbids.”22 In the following pages, Justice Gorsuch also rejected protests that Title VII cannot be used to protect LGBT employees because such a result is at odds with the “expected applications” of the law.23 Such an application of purposivism, Gorsuch insisted, has no place in Supreme Court jurisprudence today.24 Instead, he reasoned, the ordinary public meaning of the word “sex,” and its use in the statute,25 requires the Court to recognize protections for gay and transgender individuals—and it has always done so.26 Ultimately, Gorsuch declared, the fact that the framers of the statute may not have realized that such protections existed was no reason to deny these protections now, because “the limits of the drafters’ imagination supply no reason to ignore the law’s demands.”27
Moreover, Justice Gorsuch specifically forestalled potential objections on “elephants in mouseholes” grounds.28 While Gorsuch acknowledged the late Justice Scalia’s adage that Congress “does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions,”29 Gorsuch insisted that this canon “ha[d] no relevance” in the Bostock case, because while the policy implications of Gorsuch’s interpretation are sweeping—an indisputable “elephant”—Title VII’s prohibition against sex discrimination is hardly a “mousehole.”30 Instead, Gorsuch wrote, the prohibition is “written in starkly broad terms,” which necessarily, according to the ordinary public meaning of the word “sex,” include sexual orientation discrimination.31
B. Parallels to Climate Rulemaking and Litigation
The implications of Bostock to future climate litigation and jurisprudence are complex, but a series of parallels can be identified as follows. First, it can be argued that a prohibition against “discrimination on the basis of sex” is to LGBT employee protections under the Civil Rights Act—a statute that never mentions sexual orientation—as “air pollutant” is to GHGs under the Clean Air Act—a statute that never mentions climate change, but which empowers EPA to broadly regulate “air pollutants”32 for the protection of the “public health and welfare.”33 In other words, both phrases explicitly identify a general issue that their statute is designed to address, and thus both should implicitly include specific aspects of that broader issue in the same way: sexual orientation discrimination is a type of sex-based discrimination (and civil rights violation), as climate change-causing GHG is a type of air pollutant (and a threat to public health and welfare). Second, climate change and sexual orientation discrimination are both issues that have been neglected by most national politicians until relatively recently,34 despite decades of advocates’ efforts, and both seem ripe for regulation under an old statute that was designed to address a general issue but that did not directly acknowledge this specific problem. Third, Gorsuch’s choice in Bostock to brush aside “elephants in mouseholes” concerns, despite the broad policy implications of his holding, is encouraging to climate activists because the Supreme Court has made clear in past climate cases that it considers broad GHG regulation programs to constitute an elephantine effect on national industry.35
C. Overview of Relevant Climate Jurisprudence
For those hoping for a friendly judicial reception to climate change regulation, Justice Gorsuch’s Bostock arguments are tantalizing. I am convinced, however, that the series of parallels outlined above will not, alone, be enough to ensure the protection of an ambitious Clean Air Act GHG regulation scheme. In order to understand why not, we must first understand the history of the three Supreme Court cases that have addressed GHG regulation under the CAA thus far: Massachusetts v. EPA (Mass. v. EPA),36 American Electric Power Co. v. Connecticut (AEP v. Connecticut),37 and Utility Air Regulatory Group v. EPA (UARG v. EPA).38
1. Massachusetts v. EPA and the Origins of Greenhouse Gas Regulation Under the Clean Air Act
The Supreme Court first addressed GHG regulation under the CAA in 2007, in Mass. v. EPA. Today, this case represents the basis for EPA regulation of GHGs as pollutants. Mass. v. EPA began in 2003 when EPA made an official determination declaring that it lacked authority under the CAA to regulate GHGs as pollutants in the context of climate change.39 A coalition of states, cities, and environmental organizations brought suit, arguing that section 202 of the CAA—requiring EPA to set emissions standards for “any air pollutant” produced by vehicles—included GHGs.40 The Supreme Court agreed, finding that GHGs “fit well within the Clean Air Act’s capacious definition of ‘air pollutant.’”41 Accordingly, in 2009, EPA under the newly-elected President Obama made an “endangerment finding” officially establishing that the six primary “well-mixed” greenhouse gases together constituted a singular “air pollutant” under section 202.42
2. AEP v. Connecticut, Stationary Source Regulation, and the Potential for Future Rulemaking
AEP v. Connecticut, decided in 2011, subsequently expanded EPA’s ability to regulate GHGs as an air pollutant beyond section 202 (vehicle regulation) to include subsections 111(b) and (d) (stationary source regulation). AEP v. Connecticut began when an alliance of states and environmental interests sued a group of energy companies, attempting to use federal common law authority to force the companies to reduce GHG emissions from their power plants.43 The Supreme Court dismissed the case.44 Writing for a 6-0 majority,45 Justice Ginsburg held that the CAA had foreclosed common law litigation on matters of interstate air pollution, because the Act “speaks directly” on this issue46—and after Mass. v. EPA, it was “plain that emissions of carbon dioxide qualify as air pollution subject to regulation under the Act.”47 Significantly, in addition to confirming EPA GHG regulatory authority under sections 202 and 111, Justice Ginsburg also left the door open for GHG rulemaking under other sections of the CAA, including the NAAQS program.48 “The Act,” she wrote, “provides multiple avenues for enforcement, [and i]f EPA does not set emissions limits for a particular pollutant or source of pollution, States and private parties may petition for a rulemaking on the matter.”49
3. UARG v. EPA and the GHG Regulation – Textualism Mismatch
Mass. v. EPA and AEP together constitute an essential foundation to federal GHG regulation, but UARG v. EPA, decided in 2014, provides the most relevant precedent for future attempts at ambitious GHG regulatory policy. UARG began in 2010, when EPA, reacting to Mass. v. EPA, determined that it must regulate GHG emissions under the “prevention of significant deterioration”50 (PSD) and Title V programs, which require emissions permits for “major sources.”51 Per the statute, a “major source” is any source emitting 250 tons of “any air pollutant” each year52––but many sources emit GHGs in such vast amounts that millions of nontraditional sources, including residences, would count as “major sources” if GHGs were considered “air pollutants” under these programs.53 Seeking to avoid unmanageable permitting responsibilities, EPA designed the “Tailoring Rule,” which specified that sources would be considered “major” due to their GHG emissions alone only if they emitted at least 100,000 tons of GHGs each year.54
Energy interests challenged the Tailoring Rule in the D.C. Circuit, and the Supreme Court struck it down.55 Writing for a deeply divided plurality which only Chief Justice Roberts and Justice Kennedy joined in full,56 Justice Scalia held that EPA had been wrong to “tailor” a statutory provision this way.57 In writing a rule that purported to recognize GHG sources as “major” for purposes of regulation only if they emitted at least 100,000 tons per year, Scalia wrote, EPA had illegally “revise[d] statutory terms.”58 The only solution to the legal and practical problem at hand, Scalia held, was to read an implicit exemption into the phrase “any air pollutant” in the context of the PSD and Title V programs.59 Thus, according to Justice Scalia, GHGs are officially not “air pollutants” under sections 165, 169, or 171–73 of the CAA.60
Justice Breyer, meanwhile, argued in a partial concurrence that the Court had misplaced its implicit exemption. While Scalia had decided that the term “any air pollutant” must be read to exclude “non-traditional” pollutants like GHGs, Breyer argued that it would instead be possible to read the term “any major source” to exclude those sources, like private residences, which are unsuited to Title V permitting.61
Finally, Justice Alito argued in a separate partial concurrence that EPA should not be allowed to regulate GHGs under the CAA at all.62 Alito argued that GHGs are fundamentally unsuited to regulation under the CAA and that while EPA had attempted to gloss over the problems of GHG regulation under the CAA by arguing that the Act grants the agency “a great deal of discretion,” ultimately “[t]hat is not what the Clean Air Act contemplates.”63
This, then, is the state of Supreme Court climate jurisprudence after ten years of EPA GHG regulation and climate cases before the Court. After UARG, the Court’s conservative wing has made its suspicion of ambitious GHG regulation clear––but the door is not closed to climate rulemaking entirely. Would-be climate policymakers and litigants, anticipating a possible Biden presidency, will keep all this in mind as they seek a successful legal framework for ambitious policy.
II. Textualism, Deference, and the Nondelegation Doctrine: What Bostock Does and Does Not Mean for the Future of Climate Jurisprudence
Based on the precedent outlined above, it appears that the Bostock textualist approach cannot be used as a template for climate litigation. This is true both because the Court has already held that “any air pollutant” does not actually mean “any,” and because interpretation of the term “pollutant” in the context of the CAA fundamentally involves relative deference to the EPA administrator. In theory, litigants could argue that the plain text of the CAA mandates full deference to the EPA Administrator in identifying those pollutants that endanger public health or welfare and are thus subject to CAA regulation. Realistically, however, the battle for climate regulation will depend not on textualism, but on the broader questions of reasonability and deference. And unfortunately for EPA, this Court is likely to forego Chevron altogether and dismiss a climate rule either on major questions grounds, or, in a worst-case-scenario situation, through the revival of the nondelegation doctrine. This unfortunate possibility is now more likely than ever in light of Justice Ginsburg’s death and likely replacement with conservative judge Amy Coney Barrett.64
A. The Textualist Mismatch Between Title VII’s “on the Basis of Sex” and the Clean Air Act’s “Any Air Pollutant”
Despite Bostock’s progressive textualist appeal, it is unlikely that the Bostock framework will aid a future EPA in establishing GHGs as “any air pollutant” throughout the Clean Air Act. As noted above, Justice Gorsuch in Bostock put forth a compelling argument for the inclusion of an implicit, specific issue within an explicit, general statutory term and mandate. The Civil Rights Act’s prohibition against “discrimination on the basis of sex”, Gorsuch insisted, must include a prohibition against sexual orientation discrimination.65 It is tempting to conclude by the same logic that the CAA’s reference to “any air pollutant” must include GHGs––but this does not necessarily follow from likely Supreme Court reasoning, for two reasons.
First, it is important to note that Bostock itself overturned no Supreme Court precedent—instead, it announced the existence of a previously unrecognized inherent meaning in the phrase “discrimination…on the basis of sex.”66 By contrast, the Supreme Court has already addressed the question of whether the term “air pollutant” could include GHGs, and purports to have settled the matter under more than one section of the CAA. According to Mass. v. EPA and AEP v. Connecticut, GHGs are air pollutants under sections 202 and 111.67 But according to UARG, GHGs are not air pollutants under section 169.68 It is already clear, then, that the Court does not believe that the phrase “any air pollutant” must always include GHGs.
Second, both sides of the ideological spectrum have already exhibited an aversion to a plain text approach in the context of climate change. In UARG, Justice Scalia and Justice Breyer’s majority and dissenting opinions are opposite in function but identical in form: both engage in a textualist approach of a sort, yet explicitly reject the bounds of plain meaning. Each Justice notes that the term “any” need not mean “any in the universe,”69 and each acknowledges the need to read an implicit exemption into the text—accordingly, Scalia proposes to read the relevant line as “any air pollutant except greenhouse gases,”70 and Breyer proposes “any major source except non-traditional sources.”71 In advancing a plain text approach to support GHG regulation throughout the CAA, litigants would need to convince the Supreme Court to both overturn decided precedent and abandon longstanding methods of interpretation. Neither proposition is likely to succeed.
B. A Textualist Obligation to Afford Deference?
Certainly, the status of greenhouse gases as air pollutants remains unsettled under several thus-far unlitigated sections of the Clean Air Act—including, notably, the NAAQS program. The NAAQS program empowers the EPA Administrator to identify a list of ambient air pollutants which she feels may “endanger public health or welfare”72 and develop national standards for these pollutants, and it provides an excellent example of why the Supreme Court has good reason to eschew a plain text approach in interpreting “any air pollutant” under the CAA. Despite Justice Alito’s protestations, the CAA does indeed grant EPA “a great deal of discretion”73—in particular, regarding which substances to regulate as pollutants. The Administrator’s choice of pollutant under the NAAQS program is of course reviewable in theory, but thus far the Court has essentially granted EPA free reign in identifying criteria pollutants74—cabined by the traditional “reasonableness” metric for evaluating agency discretion.75
Arguably, this means that despite the clear failure of a plain text approach to defining the term “any air pollutant,” there may still be hope for a plain text argument in support of deference to the EPA Administrator. The NAAQS program demands that the Administrator be allowed to exercise her “judgment” in identifying and listing criteria pollutants.76 Thus climate advocates could adopt a sort of Bostock framework and argue that the CAA has always given EPA the ability to regulate any substance which can reasonably be said to endanger health or welfare, regardless of cost or regulatory reach.77 I have argued elsewhere that under the NAAQS program at least, EPA is clearly authorized to regulate GHGs as an air pollutant, in part because of the broad discretion granted to the Administrator in the stark language of the CAA.78 Under this theory, the Court would be required to accept EPA’s identification of GHGs as a pollutant, and subsequently engage in the traditional reasonability and arbitrary and capriciousness analysis of whatever the resulting rule may be.
C. Major Questions, New Tricks, and the Court’s Evolution Away from Deference
As noted above, while an intellectually honest textualist approach may in theory require the Court to grant EPA the discretion to regulate GHGs as a pollutant throughout the CAA, in practice it is unlikely that defending a massive GHG regulatory program will be as simple as a text-based argument for EPA discretion. Furthermore, this Court is likely to forego a Chevron reasonability analysis altogether, and instead either invoke its “major questions” doctrine to bar EPA’s regulatory authority over GHGs for lack of a “clear statement,”79 or use a major climate rule as a vehicle to revisit the Schechter-era nondelegation doctrine.80
First, the Supreme Court could invoke its “major questions” jurisprudence, used to great effect in UARG,81 and declare that EPA cannot, for example, regulate GHGs as a pollutant under the NAAQS program without a “clear statement” from Congress authorizing it to do so—because GHGs are not “conventional” pollutants,82 and because any major climate rule would surely have a transformative effect on industry. Justice Scalia, of course, is no longer on the Court, but other justices seem eager to pick up his mantle on this point.83 Justice Kavanaugh, for instance, has already demonstrated his fondness for the major questions principle on environmental and administrative law issues in particular.84 In oral argument for West Virginia v. EPA, the 2016 D.C. Circuit case regarding the legality of the Obama EPA’s ambitious Clean Power Plan, then-Judge Kavanaugh pressed government counsel on major questions grounds.85 It is not difficult to imagine that Kavanaugh and like-minded justices would be swift to invoke the “major questions” rule in a major climate case to bar EPA from regulating GHGs as a pollutant under major sections of the CAA.
More troubling still, the Court’s conservative wing has recently been sending signals that it is eager to move away from the Chevron tradition altogether in favor of the nondelegation doctrine of the Schechter era, which could require Congress to outline a highly specific “intelligible principle” before agencies may develop regulatory schemes.86 This shift was most recently demonstrated in Gundy v. United States,87 a case addressing whether the Sex Offender Registration and Notification Act, in stating that the Attorney General has “the authority to specify the applicability of the requirements of [the Act] to sex offenders convicted before [its] enactment,” fails to establish an intelligible principle cabining the Attorney General’s authority and thus violates the nondelegation doctrine.88 Although Justice Kagan’s plurality opinion did not alter Supreme Court precedent on the matter, the conservatives in dissent made their displeasure with this result clear.89 Indeed, those heralding the Bostock decision as a harbinger of friendly climate jurisprudence may find reason to be concerned with the fact that Justice Gorsuch himself wrote a dissenting Gundy opinion, joined by the Chief Justice, Justice Kavanaugh, and Justice Thomas. Specifically, Gorsuch argued that Gundy would have been an opportunity to revisit the nondelegation doctrine because the statute in question inappropriately “hand[ed] off to the nation’s chief prosecutor the power to write his own criminal code.”90 It is not difficult to imagine that Justice Gorsuch might feel the same way about the argument that the CAA grants EPA the power to identify and regulate any pollutants that endanger health or welfare in any way. And Justice Gorsuch would likely find particular reason to be concerned if EPA applied this reasoning to the regulation of GHGs because GHGs are well-mixed, globally dispersed, dangerous only on an international scale, and impossible to effectively control without a significant shift in the American energy industry.91
In response to this concern, climate advocates may cite the second significant Bostock finding: the idea that old statutes can perform new tricks, regardless of their framers’ intent.92 Certainly, this holding may help to defeat an “elephants in mouseholes” challenge, following Justice Gorsuch’s Bostock reasoning, because while deference to EPA in regulating GHGs as pollutants is certainly an elephant, the text of the Clean Air Act grants EPA the authority to identify and regulate pollutants that endanger public health and welfare—and thus no “mousehole” exists.93 Ultimately, however, I fear that in light of the Court’s shift toward the major questions and nondelegation doctrines,94 this is but a hollow victory.
Having considered the future of climate jurisprudence in light of Bostock, relevant climate cases, and the Court’s current trend toward nondelegation, I conclude that the problem with climate advocates’ search for a silver bullet may not be that no such bullet exists, but rather that the Court is unlikely to acknowledge one. It may be true, in theory, that the text of the Clean Air Act demands deference to the EPA Administrator in identifying pollutants for regulation, but the Court may refuse to acknowledge this, either by citing major questions or by announcing a revival of the intelligible principle requirement. Ultimately, I do not suggest that climate advocates and a theoretical Biden EPA should cease regulatory attempts under the Clean Air Act. For one thing, I believe that the Act provides a clear mandate for EPA action in identifying pollutants that endanger public health or welfare and regulating emissions of those pollutants. And despite the challenges, I do not think it is impossible that Justice Roberts or Gorsuch could be persuaded to support a new significant climate rulemaking. In the end, however, it is clear that climate advocates’ best bet is not to craft a brilliantly reasoned rulemaking to impress this Court, but instead to elect a President who will appoint one or two climate-friendly justices—and perhaps, given recent events on the Court, even to initiate a Court-packing plan. Time, after all, is running out.
By John Niedzwiecki, Senior Editor, Georgetown Environmental Law Review This post is part of the Environmental Law Review Syndicate. Read the original here and leave a comment. I. An algae bloom in the Gulf of Mexico is wreaking havoc on Florida’s economy and environment. An…
Conduit for Peace in the Middle East: An Analysis of the Red Sea – Dead Sea Water Conveyance Project
By Sarah L. Fine Sarah Fine is a J.D. candidate at Lewis & Clark Law School and an Online Journal Editor of Environmental Law. This post is part of the Environmental Law Review Syndicate. As the old saying goes, whiskey is for drinking—water is for…
Mitigating Greenhouse Gas Emissions in the Northeast and Mid-Atlantic Transportation Sector: A Cap-and-Invest Approach
By James D. Flynn
James Flynn is an LL.M. candidate at New York University School of Law and the graduate editor of the NYU Environmental Law Journal.
This post is part of the Environmental Law Review Syndicate.
In recent years, states in New England and the mid-Atlantic region have made significant progress in reducing climate change-inducing greenhouse gas (GHG) emissions from the electricity generation sector. Several factors–including the effects of the economic recession, shifts in energy markets from coal to natural gas and renewable energy sources, and carbon pollution mitigation and clean energy programs like renewable portfolio standards–have been identified as principal drivers of these reductions. Another is the Regional Greenhouse Gas Initiative (RGGI), a cooperative effort among nine northeastern and mid-Atlantic states to reduce carbon dioxide (CO2) emissions from the power sector. RGGI employs a cap-and-invest approach in which the participating states set a regionally uniform, decreasing cap on CO2 emissions from covered power plants, periodically auction off emission allowances, and invest auction proceeds in other programs including end-use energy efficiency, renewable energy, greenhouse gas abatement, and direct customer electric bill assistance. One study estimates that CO2 emissions in the RGGI region would have been approximately 24 percent higher in 2015 but for the program, which took effect in 2009. At the same time, it is estimated that through 2015, RGGI generated approximately $2.9 million in net economic benefits, and that the investment of RGGI allowance auction proceeds in 2015 alone will return $2.31 billion in lifetime energy bill savings for consumers.
Over approximately the same period of time, however, CO2 emissions from the transportation sector in RGGI states have remained relatively level or have increased. Transportation accounts for 44 percent total CO2 emissions in the region, more than any other sector. Each RGGI member state has adopted a long-term GHG reduction goal, set by statute or executive order, or in climate- or energy-related plans, “generally consistent with achieving an 80 percent reduction of GHG emissions by 2050 from 1990 levels.” Most states’ goals do not include sector-specific emission targets, but because transportation is the largest source of emissions in the region, shifting to a cleaner transportation system is a “critical component of the action needed to meet economy-wide goals and to avoid further catastrophic harms of climate change.” RGGI states already employ a variety of policy mechanisms aimed at decarbonizing transportation, but have been considering whether to employ a cap-and-invest approach similar to RGGI or California’s multi-sector cap-and-invest program, which includes the state’s transportation sector.
This paper first discusses the mechanics of RGGI and California’s cap-and-invest program generally, including how auction proceeds are invested. It then discusses the potential to use a cap-and-invest approach to mitigate GHG emissions from transportation in the Northeast and mid-Atlantic and addresses two key policy considerations: the type of fuels to be covered and the point of regulation. It concludes that, if properly designed, a cap-and-invest approach could achieve significant GHG reductions from transportation in the region and generate substantial funds for other GHG mitigation and climate change adaptation initiatives.
II. The Cap-and-Invest Model
Cap-and-trade programs generally operate as follows. The government sets an overall emissions target–the cap–and determines which facilities will be covered. Emission allowances, each generally equal to one ton of emissions, are periodically auctioned or distributed without cost—or both—to covered facilities. The total number of allowances is equivalent to the cap number, which decreases over time. A market is created in which covered facilities may purchase or sell allowances from other covered facilities. Covered facilities are required to hold enough allowances to cover their emissions at the end of a compliance period, which may range from one to three years. If a facility lacks sufficient allowances, it will be assessed a monetary penalty in addition to having to purchase enough allowances to cover the shortfall.
This market-based approach provides covered facilities three options: (1) they may reduce their emissions to meet the number of allowances they purchase or receive; (2) they may purchase additional allowances on the market and emit more; or (3) they may reduce their emissions below the allowances they hold and sell the remainder on the market. The advantage of cap-and-trade programs is that facilities that can reduce their emissions more cost-effectively will do so, while those that face higher emissions reduction costs will purchase additional allowances at auction or on the market. Accordingly, cap-and-trade schemes provide firms with flexibility to design cost-effective, tailored emissions plans, and the regulator achieves its policy objective by means of the overall emissions cap. “Cap-and-invest” refers to cap-and-trade programs that invest their proceeds into other policy initiatives intended to address the pollutant or its effects.
RGGI is the first market-based regulatory program in the United States designed to reduce GHG emissions. It is a cooperative effort among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont to cap and reduce CO2 emissions from the electricity generation sector. RGGI is composed of individual CO2 budget trading programs implemented in each participating state. Through independent regulations, each state’s CO2 budget trading program limits emissions of CO2 from electric power plants with the capacity to generate 25 megawatts or more (some 164 facilities), issues CO2 allowances, and establishes participation in regional CO2 allowance auctions.
RGGI began with discussions among the governors of seven New England and mid-Atlantic states, which led to a 2005 Memorandum of Understanding that outlined the program. In 2008, the RGGI states issued a Model Rule that participating states could use as guidance to establish and implement their individual programs. RGGI’s designers expected the initial program might be expanded in the future by covering other emission sources, sectors, GHGs, or states. CO2 emissions from covered facilities in RGGI states account for approximately 20 percent of GHG emissions in the region.
At the end of each three-year compliance period, covered facilities must surrender one allowance for each ton of CO2 emissions generated during the period. Covered facilities are permitted to bank an unlimited number of emission allowances for future use. Over 90 percent of allowances are distributed through periodic auctions, and a reserve price sets a price floor for allowances. RGGI employs a “cost containment reserve” that allows for additional allowances to be auctioned if certain price thresholds are met. In limited circumstances, covered facilities may also submit offsets, which are measurable reductions, avoidances, or sequestrations of emissions from non-covered sources, in lieu of emission allowances. The RGGI states agreed that each would use at least 25 percent of its individual auction proceeds “for a consumer benefit or strategic energy purpose.”
Member states invest the proceeds from allowance auctions in a variety of consumer benefit programs at scale. In October 2017, RGGI, Inc. (the corporate entity that administers RGGI) released a report that tracks the investment of RGGI auction proceeds in 2015 and the benefits of these investments throughout the region. The report estimates that “[t]he lifetime effects of these investments are projected to save 28 million MMBtu of fossil fuel energy and 9 million MWh of electricity, avoiding the release of 5.3 million short tons [4.8 million metric tons] of carbon pollution.” The report also notes that “RGGI investments in 2015 are estimated to return $2.31 billion in lifetime energy bill savings to more than 161,000 households and 6,000 businesses which participated in programs funded by RGGI investments, and to 1.5 million households and over 37,000 businesses which received direct bill assistance.” RGGI states have discretion as to how they invest RGGI proceeds.
The report breaks down these investments into four categories. Energy efficiency makes up 64 percent of investments. Funded programs are expected to return $1.3 billion in lifetime energy bill savings to over 141,000 participating households and 5,700 regional businesses. Clean and renewable energy makes up 16 percent of investments, and investments in these technologies are expected to return $785.8 million in lifetime energy bill savings to 19,600 participating households and 122 regional businesses. Greenhouse gas abatement makes up 4 percent of investments and are expected to avoid the release of 636,000 short tons of CO2. Finally, direct bill assistance makes up 10 percent of investments accounting for $40.4 million in bill credits and assistance to consumers. One independent report notes that while RGGI states each have their own unique auction revenue investment programs, “[o]verall, greater than 60 percent of proceeds are invested to improve end-use energy efficiency and to accelerate the deployment of renewable energy technologies,” which far exceeds the 25 percent investment “for a consumer benefit or strategic energy purpose” required by the Model Rule.
Whether or not RGGI has been successful is the subject of debate. As designed, it applies only to CO2 and only to emissions from some 164 power plants with the capacity to generate twenty-five megawatts or more. Since CO2 accounts for only 20 percent of total GHG emissions in the RGGI states, and electricity generation accounts a fraction of total CO2 emissions, RGGI’s potential is limited. The Congressional Research Service has thus described the initiative’s contribution to global GHG reductions to be “arguably negligible.” In addition, RGGI significantly overestimated emissions from member states for its first compliance period and set an initial emissions cap that was actually above realized emissions levels. This limited participation in the program and allowed participating facilities to bank substantial amounts of unused allowances. After the 2012 program review, RGGI lowered the cap by 45 percent between 2014 and 2020. And after the most recent review in 2016, RGGI lowered the cap by an additional 30 percent between 2020 and 2030. The extent to which these adjustments will hasten emissions reductions to be seen. On the other hand, several studies have shown that the combination of the price signal created by RGGI and the investment of allowance auction proceeds in other environmental programs has been the dominant driver of the recent emissions decline in the region.
b. California’s Cap-and-Invest Program
In 2006, California enacted its landmark climate change law, the Global Warming Solutions Act, also known as AB (“assembly bill”) 32. The statute established an aggressive goal of reducing GHG emissions to 1990 levels by 2020, and an 80 percent reduction from 1990 levels by 2050, across multiple sectors of the state’s economy. AB 32 directed the California Air Resources Board (CARB), the state’s air pollution regulator, to implement a cap-and-trade program, which went into effect in 2013.
According to CARB, the program, which covers approximately 450 entities, “sets a statewide limit on sources responsible for 85 percent of California’s greenhouse gas emissions, and establishes a price signal needed to drive long-term investment in cleaner fuels and more efficient use of energy.” It is “designed to provide covered entities the flexibility to seek out and implement the lowest-cost options to reduce emissions.” The 2013 cap was set at about 2 percent below the emissions level forecast for 2012, declines an additional 2 percent in 2014, and declines 3 percent annually from 2015 to 2020.
Unlike RGGI, California’s program distributes free allocations of emission allowances earlier in the program, but those allocations decrease over time as the program transitions to an auction process. The allocation for most industrial sectors is set at approximately 90 percent of average emissions and is updated annually based on each facility’s production. Electrical distribution and natural gas facilities receive free allowances on the condition that the value of allowances must be used to benefit ratepayers and achieve GHG emission reductions. The allocation for electrical distribution utilities is set at about 90 percent of average emissions, and for natural gas utilities, is based on natural gas supplied in 2011 to non-covered entities. The program includes cost containment measures and allows for the banking of allowances, has a three-year compliance period with an annual obligation to surrender 30 percent of their previous year’s emissions, and allows for offsets of up to 8 percent of a facility’s compliance obligation. AB 32 also employs a substantial penalty mechanism for facilities that fail to meet their compliance obligations: “If the compliance deadline is missed or there is a shortfall, four allowances must be provided for every ton of emissions that was not covered in time.”
California’s cap-and-trade program became linked with Québec’s cap-and-trade system on January 1, 2014 and became linked with Ontario’s cap-and-trade program on January 1, 2018. All allowances issued by the California, Québec, and Ontario programs before and after the linkage can be used for compliance interchangeably across jurisdictions. The three jurisdictions also hold joint allowance auctions.
On January 1, 2015, suppliers of transportation fuels, including gasoline and diesel fuel, became covered under the program. A fuel supplier is defined as “a supplier of petroleum products, a supplier of biomass-derived transportation fuels, a supplier of natural gas including operators of interstate and intrastate pipelines, a supplier of liquefied natural gas, or a supplier of liquefied petroleum gas.” All fuel suppliers that deliver or import 10,000 metric tons or more of annual CO2 equivalent emissions are subject to a reporting requirement, but only suppliers that reach a 25,000 metric ton threshold are covered by the cap-and-trade program.
Proceeds from the allowance auctions are deposited in the state’s Greenhouse Gas Reduction Fund and are appropriated by the state legislature for “investing in projects that reduce carbon pollution in California, including investments to benefit disadvantaged communities, recycling, and sustainable transit.” As of 2017, some $3.4 billion had been appropriated to state agencies implementing GHG emission reduction programs and projects, collectively referred to as the California Climate Investments. Of that amount, $1.2 billion has been expended on projects “expected to reduce GHG emissions by over 15 million metric tons of carbon dioxide equivalent.”
III. Applying a Cap-and-Invest Approach to Northeast and Mid-Atlantic Transportation Sector
Under business-as-usual trends, carbon emissions in RGGI states will be 23 percent below the 1990 baseline in 2030. These states must achieve much deeper emissions reductions across multiple economic sectors in order to achieve their “greenhouse gas emission reduction targets for 2030 that range from 35 to 45 percent, centered around a 40 percent reduction from 1990 levels.” Since transportation represents the largest share of GHG emissions in the RGGI states, that sector should be a primary focus of policymakers’ attention.
One study finds that the levels of emissions reductions necessary to meet the GHG reduction goals of the states in the region could be accomplished “through a suite of clean transportation policies” including financial incentives for the purchase of clean vehicles, such as electric and hybrid light-duty vehicles and natural gas powered heavy-duty vehicles; investments in public transit expansion including bus rapid transit, light rail, and heavy rail; promotion of compact land use; investment in bicycle infrastructure; support for travel demand management strategies; investment in system operations efficiency technologies; and investment in infrastructure to support rail and short-sea freight shipping.
One potential mechanism for achieving the levels of reductions necessary for the RGGI states to meet their targets “would be to implement a transportation pricing policy, which could both achieve GHG reductions and generate proceeds that could be used to fund clean and resilient transportation solutions.” For example, “carbon-content-based fees, mileage-based user fees, and motor-fuel taxes” could “generate an average of $1.5 billion to $6 billion annually in the region.” A mid-range pricing policy that generated approximately $3 billion annually “would create a price signal that would promote alternatives to single-occupancy vehicle travel and result in modest additional emission reductions. It would also raise a cumulative $41 billion to $46 billion for the region during 2015-2030.” Proceeds from such a pricing policy would offset projected declines from existing state and federal gasoline taxes and could be used to fund other clean transportation initiatives.
A hypothetical regional cap-and-invest program for vehicle emissions might be structured as follows. Member states would establish a mandatory regional cap on GHG emissions from the combustion of fossil transportation fuels calculated using volumetric fuel data and fuel emission factors available from the Environmental Protection Agency. The cap would decline over time. States would auction allowances equal to the cap and establish an entity like RGGI, Inc. to administer the program, auction platform, and allowance market. Regulated entities would achieve compliance by purchasing allowances at auction or from other market participants, and possibly with offsets earned from reductions in other aspects of their operations. As with RGGI, individual member states would commit to invest a percentage of their auction proceeds into other initiatives aimed at reducing GHG emissions, including from transportation, and could retain the discretion to decide individually how to allocate those funds.
Because power plants are stationary and relatively few in number, their GHG emissions can be regulated directly, i.e., at the stack. Vehicles, however, are mobile and far more numerous. To regulate the emissions from every fossil fuel powered vehicle at the tailpipe would entail a substantial and possibly prohibitive administrative burden, and would likely be politically unpalatable. An alternative is to use transportation fuel as the point of regulation. Determining which types of fuels and which entities in the fuel supply chain to cover under the cap-and-invest program will be critical.
Transportation fuels that could be covered include gasoline, on-road and off-road diesels, aviation fuels, natural gas, propane/butane, and marine fuels. Considering both the volume of each type of fuel consumed and the comparative emissions resulting from its consumption, the program should cover, at a minimum, gasoline and on-road diesel, which account for approximately 85 percent of carbon emissions from transportation in the region. Other fuels may make up too small a portion of total emissions to justify the additional technical and regulatory burden of covering them. In addition, because all states in the region currently require reporting on gasoline and on-road diesel, the most straightforward approach would be to regulate those fuels. Covering other fuels would require at least some states that do not already require reporting of these fuels to establish new reporting requirements.
Another key design choice is the point of regulation: which entities within the transportation fuel supply chain should be subject to the regulatory obligation to hold sufficient allowances. Because all states in the region have existing reporting and enforcement mechanisms for gasoline and on-road diesel (and many also tax off-road diesel and aviation fuel), one option would be to regulate existing state points of taxation for these fuels. However, state points of taxation are not uniform throughout the region. They can include many different types of entities in the supply chain and in some states the point of taxation is different for different fuels. State regulations also differ with respect to what actions by covered entities trigger the reporting requirement. Many states have points of regulation low in the supply chain, such as entities that purchase fuel from the terminal rack and distribute it to retailers. Thus, while using existing state points of taxation to regulate transportation fuels would make use of existing state regulatory mechanisms, it would also require regulating over one thousand entities across the region, many of which are smaller distributors.
Another possible point of regulation would be one that is as far upstream as possible, i.e., entities that refine fuel in the region for use in the region, and those that import fuel into the region for use in the region. This would include refineries, and for fuels refined outside the region, the first importers into the region. Eight refineries in the region and an unknown number of first importers, including foreign suppliers and suppliers from U.S. states outside the region, would be subject to regulation. This option would require reporting of the destination of all fuel produced in or that enters the region to ensure that a fuel to be used outside the region is not inadvertently covered. While the Energy Information Administration (EIA) and the Environmental Protection Agency generally require destination data from refiners and importers into the U.S. and from interstate suppliers, the agencies do not publicly disclose this data. Thus, regulating refiners and importers would likely cover many fewer entities as compared to existing state points of taxation, most of which would be large petroleum companies. However, because only three states in the region have refineries within their borders, and because importers are not systematically tracked throughout the region, accounting for fuels that are transported through states to prevent double-counting would likely require the establishment of new regional reporting requirements that would include points of origin and destination.
A third possible point of regulation would be entities known as prime suppliers, defined by the EIA as “suppliers who produce, import, or transport product across state boundaries and local marketing areas and sell to local distributors, local retailers, or end-users.” For the region, this includes approximately 30 refiners, other producers of finished fuel, interstate resellers and retailers, and importers. EIA requires these entities to report the amount of fuel, including gasoline, diesel, and aviation fuel, sold or transferred for end use by state on a monthly basis. Although EIA does not publicly provide disaggregated prime supplier data because of statutory privacy restrictions, organizations may enter into data-sharing arrangements with EIA to obtain individual prime supplier data. Thus, while the prime supplier group would include a larger number of regulated entities than importers and refiners, it would provide a consistent definition of a point of regulation already understood by the regulated entities. Regulating prime suppliers, most of which are higher in the supply chain than existing state points of taxation, would also relieve most smaller entities of compliance obligations.
States in states in New England and the mid-Atlantic region must make much deeper emissions reductions in the transportation sector in order to meet their overall GHG emission reduction targets. Recognizing this reality, representatives from Connecticut, Delaware, Maryland, Massachusetts, New York, Rhode Island, Vermont, and Washington, D.C., at the 2017 Conference of the Parties to the United Nations Framework Convention on Climate Change, signed a joint statement affirming their commitment to reducing GHG emissions from the transportation sector. In that statement, they identified “market-based carbon mitigation strategies” as potential pathways to achieving needed emissions reductions.
Despite its early struggles, the cap-and-invest approach to mitigating emissions in the northeast and mid-Atlantic electricity generation sector has achieved, at a minimum, some emissions reductions, substantial investment in other GHG mitigation efforts, and overall net benefits within the region. California has achieved substantial GHG emissions reductions across multiple sectors, including transportation, and has invested substantial sums in a suite of other green programs. These examples demonstrate the potential of using a cap-and-invest approach to accomplish environmentally and economically sound policy objectives, both within the RGGI region and in the context of transportation. If properly structured, such an approach could achieve significant emissions reductions in the region and raise substantial funds for other GHG mitigation and climate change adaptation initiatives.
How would a cap-and-invest approach to transportation emissions be structured? The fundamental aspects of RGGI and California’s cap-and-invest program are similar in most respects. California occupies a unique position in federal regulation of automobile emissions and had the benefit of constructing a program applicable only to itself, although its program is now linked with programs in other jurisdictions. RGGI already covers much of the Northeast and mid-Atlantic region, could be expanded to include other sectors of those states’ economies, including transportation, and could be linked with the California-Québec-Ontario cap-and-invest system to create a larger and more efficient allowance market.
Owing to the practical differences between directly regulating emissions from power plants and indirectly regulating transportation emissions by fuel type and supply chain point, the mechanics of using a cap-and-invest approach to mitigate transportation emissions, especially across jurisdictions, poses some potentially challenging design issues. The program should cover, at a minimum, gasoline and on-road diesel. Identifying the appropriate point of regulation will require policymakers to consider a host of technical, administrative, and policy issues. Existing state points of taxation are numerous and vary by jurisdiction and by fuel type within jurisdictions. Upstream refiners and importers are far fewer in number but regulating these entities would likely require the development of new regional reporting mechanisms that might make this option administratively undesirable. While the prime suppliers group is larger in number than refiners and importers, regulating prime suppliers would provide a consistent state-based definition of a point of regulation already understood by the regulated entities, and would not subject most smaller entities to compliance obligations.
 See Energy Information Administration, State Carbon Dioxide Emissions Data (last visited Feb. 10, 2018), https://www.eia.gov/environment/emissions/state/.
 See Gabe Pacyniak, et al., Reducing Greenhouse Gas Emissions from Transportation: Opportunities in the Northeast and Mid-Atlantic, Georgetown Climate Center 8 (2015), http://www.georgetownclimate.org/files/report/GCC-Reducing_GHG_Emissions_from_Transportation-11.24.15.pdf.
 Regional Greenhouse Gas Initiative, RGGI Benefits (last visited Feb. 10, 2018), https://www.rggi.org/investments/proceeds-investments.
 Brian C. Murray and Peter T. Maniloff, Why have greenhouse emissions in RGGI states declined? An econometric attribution to economic, energy market, and policy factors, Energy Economics 51, 588 (2015).
 See Paul J. Hibbard, et al., The Economic Impacts of the Regional Greenhouse Gas Initiative on Nine Northeast and Mid-Atlantic States, Analysis Group 5 (July 14, 2015), http://www.analysisgroup.com/uploadedfiles/content/insights/publishing/analysis_group_rggi_report_july_2015.pdf; Ceres, The Regional Greenhouse Gas Initiative: A Fact Sheet (2015), https://www.ceres.org/sites/default/files/Fact%20Sheets%20or%20misc%20files/RGGI%20Fact%20Sheet.pdf.
 Regional Greenhouse Gas Initiative, The Investment of RGGI Proceeds in 2015 3 (Oct. 2017), https://www.rggi.org/sites/default/files/Uploads/Proceeds/RGGI_Proceeds_Report_2015.pdf.
 See Energy Information Administration, supra note 1; Gerald B. Silverman and Adrianne Appel, Northeast States Hit the Brakes on Carbon Emissions From Cars, BNA (Oct. 16, 2017), https://www.bna.com/northeast-states-hit-n73014470981/.
 Pacyniak, supra note 2.
 See Gabe Pacyniak, et al., Reducing Greenhouse Gas Emissions from Transportation: Opportunities in the Northeast and Mid-Atlantic, Appendix 3: State GHG Reduction Goals in the TCI Region, Georgetown Climate Center 4-13 (2015), http://www.georgetownclimate.org/files/report/Apndx3_TCIStateEnergyClimateGoals-Nov2015-v2_1.pdf.
 See, e.g., Center for Climate and Energy Solutions, California Cap and Trade (last visited Feb. 10, 2018), https://www.c2es.org/content/california-cap-and-trade/.
 See Joel B. Eisen, et al., Energy, Economics and the Environment 326 (4th ed. 2015).
 See id.
 See id.
 See id.
 See Regional Greenhouse Gas Initiative, supra note 3.
 See id.
 Regional Greenhouse Gas Initiative, Program Design (last visited Feb. 10, 2018), https://www.rggi.org/program-overview-and-design/elements.
 Regional Greenhouse Gas Initiative, A Brief History of RGGI (last visited Feb. 10, 2018), https://www.rggi.org/program-overview-and-design/design-archive.
 Jonathan L. Ramseur, The Regional Greenhouse Gas Initiative: Lessons Learned and Issues for Congress,
Congressional Research Service 3 (May 16, 2017), https://fas.org/sgp/crs/misc/R41836.pdf.
 Id. at 4.
 Id. at 3.
 See Brian M. Jones, Christopher Van Atten, and Kaley Bangston, A Pioneering Approach to Carbon Markets: How the Northeast States Redefined Cap and Trade for the Benefit of Consumers, M.J. Bradley & Associates 4 (Feb. 2017), http://www.mjbradley.com/sites/default/files/rggimarkets02-15-2017.pdf.
 Regional Greenhouse Gas Initiative, The Investment of RGGI Proceeds in 2015 (Oct. 2017), https://www.rggi.org/sites/default/files/Uploads/Proceeds/RGGI_Proceeds_Report_2015.pdf.
 Id. at 3.
 Jones, supra note 33.
 See id. at 3.
 Id. at 17.
 Id. at 4.
 Regional Greenhouse Gas Initiative, Elements of RGGI (last visited Feb. 10, 2018), https://www.rggi.org/program-overview-and-design/elements.
 Regional Greenhouse Gas Initiative, Summary of RGGI Model Rule Updates 1 (Dec. 19, 2017), https://www.rggi.org/program-overview-and-design/elements.
 See Murray, supra note 5 at 25-26; Man-Keun Kim and Taehoo Kim, Estimating impact of regional greenhouse gas initiative on coal to gas switching using synthetic control methods, Energy Economics 59, 334 (2016).
 California Air Resources Board, Overview of ARB Emissions Trading Program 1 (last visited Feb. 10, 2018), https://www.arb.ca.gov/cc/capandtrade/guidance/cap_trade_overview.pdf.
 Id. at 2.
 California Air Resources Board, Facts About The Linked Cap-and-Trade Programs 1 (updated Dec. 1, 2017), https://www.arb.ca.gov/cc/capandtrade/linkage/linkage_fact_sheet.pdf.
 California Air Resources Board, Information for Entities That Take Delivery of Fuel for Fuels Phased into the Cap- and-Trade Program Beginning on January 1, 2015 1 (last visited Feb. 10, 2018), https://www.arb.ca.gov/cc/capandtrade/guidance/faq_fuel_purchasers.pdf.
 Id. at 2.
 California Air Resources Board, 2017 Report to the Legislature on California Climate Investments Using Cap-And-Trade Auction Proceeds i (2017), https://www.arb.ca.gov/cc/capandtrade/auctionproceeds/cci_annual_report_2017.pdf.
 Id. at v.
 Elizabeth A. Stanton, et al., The RGGI Opportunity, Synapse Energy Economics, Inc. 3 (revised Feb. 5, 2016), http://www.synapse-energy.com/sites/default/files/The-RGGI-Opportunity.pdf. Notably, this study took into account the anticipated effect of the Clean Power Plan, which President Donald Trump and Environmental Protection Agency Administrator Scott Pruitt propose to repeal. See id. at 4.
 Id. at 2.
 Pacyniak, supra note 2 at 22. The Georgetown Climate Center serves as the facilitator for the Transportation Climate Initiative, which is “a collaboration of the agency heads of the transportation, energy, and environment agencies of 11 states and the District of Columbia, who in 2010 committed to work together to improve efficiency and reduce greenhouse gas emissions from the transportation sector throughout the northeast and mid-Atlantic region.” Id. at i.
 Id. at 25.
 Id. at 26-27.
 Drew Veysey, Gabe Pacyniak, and James Bradbury, Reducing Transportation Emissions in the Northeast and Mid-Atlantic: Fuel System Considerations, Georgetown Climate Center 7 (Nov. 13, 2017), http://www.georgetownclimate.org/files/report/GCC_TransportationFuelSystemConsiderations_Nov2017.pdf.
 See id.
 Id. at 9.
 See id. at 11-13.
 See id. at 33.
 Id. at 20.
 Id. at 16.
 Id. at 17.
 Id. at 33.
 Id. at 21.
 Id. at 22.
 Id. at 33.
 Id. at 24.
 Id. at 25.
 Id. at 33
 See Transportation and Climate Initiative, Northeast and Mid-Atlantic States Seek Public Input As They Move Toward a Cleaner Transportation Future (Nov. 13, 2017), https://www.transportationandclimate.org/northeast-and-mid-atlantic-states-seek-public-input-they-move-toward-cleaner-transportation-future; Sierra Club, Northeast and Mid-Atlantic Governors Lauded for Announcement on Transportation and Climate, Press Release (Nov. 13, 2017), https://www.sierraclub.org/press-releases/2017/11/northeast-and-mid-atlantic-governors-lauded-for-announcement-transportation.
Sara Dewey, Liz Hanson, & Claire Horan This post is part of the Environmental Law Review Syndicate. Read the original here and leave a comment. Introduction The Farm Bill affects nearly every aspect of agriculture and forestry in the United States. Therefore, its next reauthorization…
Danika Desai. Managing Editor, UCLA Journal of Environmental Law & Policy. This post is part of the Environmental Law Review Syndicate. I. Introduction to California’s Soils California is called the golden state, named for the gold trapped in the Sierra Nevada mountains that drew desperate men like…
The California Cap-and-Trade program has been a beacon of success for market-based environmentalism. The program masterfully incorporated the lessons learned from previous cap-and-trade initiatives by more precisely allocating emission allowances and by setting higher price floors for auctions. The ambitious emissions reduction target and extensive range of gases covered by cap-and-trade have resulted in a substantial decrease in greenhouse gas emissions across the State. But the program has recently been involved in contentious litigation, with the chief concern being whether the emission regulations exceed the authority of the California Air Resource Board. The recent Morning Star Packing Company v. California Air Resources Board decision ultimately upheld the program, providing California Cap-and-Trade with a new lease on life. However, with recent federal policy demonstrating a marked shift away from ecological conservationism, the survival of the nation’s best hope for free-market environmentalism still hangs in the balance.
The California Cap-and-Trade Program (“CAT”) is derived from the California Global Warming Solutions Act of 2006 (“Global Warming Act”), which requires the State to reduce its greenhouse gas (“GHG”) emissions to 1990 levels by 2020. The California Air Resource Board (“CARB”) is the State regulatory agency responsible for the project. In 2011, the CARB adopted cap-and-trade regulations and created the CAT to set limits on GHG emissions. The first auctions for the CAT were held in 2012, and the program went into full effect on January 1, 2013.
The CAT operates in two phases each year. First, a number of emission allowances are freely distributed to entities that fall under the purview of the program. Second, the remaining allowances are auctioned off on a quarterly basis. The free distributions are reduced annually, and eventually all the allowances will be distributed via auctions. The program also permits carbon offsets to satisfy up to eight percent of an entity’s compliance obligations. The ultimate objective is to create incentives for businesses to craft environmentally friendly industrial practices as the number of yearly allowances decreases over time.
The CAT also has an enormous scope, and it is the world’s second largest market-based mechanism designed to reduce GHG emissions. This size makes the successful implementation of the program especially impressive. The success is due largely to a design structure that draws upon the shortcomings of previous cap-and-trade initiatives, such as the Regional Greenhouse Gas Initiative (“RGGI”) in the northeastern United States and the Emissions Trading System (“ETS”) in the European Union.
II. Lessons Learned from the Regional Greenhouse Gas Initiative
The CAT was not the first emissions marketplace in the United States. In 2009, the RGGI went into effect as a cap-and-trade marketplace for CO2 emissions in the following nine states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont. However, the RGGI has been plagued with numerous shortcomings that have frustrated the performance of the initiative and which impart several lessons on how to more effectively design a cap-and-trade system.
A. Lesson 1: Cap-and-Trade Programs Need a Broad Scope
A key drawback of the RGGI is its limited scope. The program applies exclusively to CO2 emissions and only covers electrical power plants with the capacity to generate twenty-five or more megawatts. Predictably, the results of the RGGI have been underwhelming, as only 163 facilities fall under the regulatory reach of the program. Furthermore, CO2 emissions merely account for twenty percent of the GHG emissions in the nine participant states—a number that shrinks even further since the RGGI only regulates the electrical sector. This narrowed scope has undermined the efficacy of the RGGI so drastically that Congress considers the program’s contribution to global GHG reductions to be “arguably negligible.”
B. Lesson 2: Emission Forecasts Must Be Accurate
The second significant failing of the RGGI was that it overestimated the amount of CO2 emissions among the member states. In fact, the RGGI set an initial emissions cap that was above actual emissions levels. This was a gross oversight that stemmed from two key defects in the RGGI’s design.
First, the RGGI emission limits for the first cap period, which ran from 2009–2013, were based on emission estimations made in 2005. Between 2005 and 2009, the amount of electricity generation in the member states decreased by thirty-six percent due to energy efficiency improvements and structural changes in energy generation portfolios. Second, the RGGI distorted its emission forecasts by including all electrical power plants that had the capacity to generate twenty-five or more megawatts in its estimates. Limiting the emission calculations to power plants that actually generated twenty-five or more megawatts would have produced more accurate projections.
These errors have been catastrophic for the initiative. The initial regulations had no effect on most businesses, which were already emitting below the inflated emissions cap. Participation in the RGGI was therefore minimal, since many of the targeted businesses had no need to reduce emissions, purchase allowances, or generate offset credits. Furthermore, because the RGGI does not limit the amount of allowances that can be “banked” and used in subsequent years, many companies have stored substantial amounts of these initial surplus allowances for future use.
The administrators of the RGGI have taken extreme measures to try and remedy these miscalculations. Most notably, they implemented a “revised emissions cap,” running from 2014–2020, that slashes the emission limits by forty-five percent in an effort to match actual emission levels. Such radical action would not have been necessary if the initial emissions cap had been more precise.
C. Lesson 3: Auctions Need Robust Price Floors
A final pitfall of the RGGI is its undervalued price floor for auctions. The reserve price has hovered around two dollars per allowance, despite being scheduled to increase according to the Consumer Price Index (“CPI”). But the fact that auctioned allowances have been sold at prices exceeding five dollars indicates that businesses are willing to pay more. The program therefore severely underappreciated the corporate demand for allowances and forfeited substantial potential earnings. Moreover, by greatly undervaluing the price floor, the RGGI administrators neglected to protect against suboptimal years when allowance prices have plummeted. A higher reserve price would have preserved the revenue generation capacity of the program, even during these off years.
III. Lessons Learned from the European Union’s Emission Trading System
There are also numerous lessons to be learned from the deficiencies of the European Union’s ETS, which is the world’s largest market-based mechanism for reducing GHG emissions.
A. Lesson 1: Cap-and-Trade Programs Need Ambitious Initial Targets
At the conclusion of Phase I of the ETS, the “Learning Phase” that ran from 2005–2007, it was apparent that the initial targets for emission reductions were far too lenient. Indeed, the lax regulations during Phase I only produced GHG reductions of three percent. The EU was forced to compensate by crafting extreme targets for Phases II and III of the program, setting emissions goals of six percent below 2005 levels for Phase II and twenty-one percent below 2005 levels for Phase III. If the EU had formulated a more ambitious target for Phase I rather than over-prioritizing the transition of members into the program, it would have avoided the need for these drastic adjustments.
B. Lesson 2: Allowances Must Be Apportioned Judiciously
Similar to the RGGI, the ETS grossly over-allocated emission allowances. In fact, ETS allowances initially exceeded the amount of actual emissions by four percent. This miscalculation was devastating for Phase I of the ETS, as it enabled European businesses to emit 130 million tons more in GHGs than they had emitted prior to the implementation of the program. This surplus destroyed the demand for allowances in the ETS marketplace, and auction prices fell precipitously. The EU was forced to heavily reconfigure ETS allowance allocations to try and mitigate the damage caused by these initial overestimations, and it is still attempting to normalize the ETS marketplace.
C. Lesson 3: Cap-and-Trade Programs Need Balanced Market Designs
The ETS has also been hamstrung by its inferior market design. Phase I of the program did not permit any allowances to be banked for future use. Coupled with the initial over-allocation of allowances, this meant that most regulated entities possessed surplus allowances they had to expend by the year-end. This resulted in extreme downward price volatility at the conclusion of trading periods, as many companies attempted to dump the remainder of their emission allowances into the auctions. The EU was once again forced to implement significant revisions to correct this oversight. And while the ETS now permits allowances to be banked, the initial trading instability across Europe nearly destroyed the program.
The EU also does not set a reserve price for ETS auctions, meaning there is no price protection for emission allowances. This remains a gross oversight by the EU, as the lack of a price floor fails to account for the inevitable fluctuation of allowance prices due to changes in weather or energy price cuts. As a consequence, the ETS has lost significant revenue during periods of low auction demand where allowances have sold for pennies on the dollar, and the program will continue to be financially vulnerable until this design flaw is remedied.
D. Lesson 4: Cap-and-Trade Programs Need Administrative Uniformity
Administrative inefficiencies have also plagued the ETS. The most glaring hole was the initial lack of a single registry for ETS participants. Prior to 2012, each nation participating in the ETS had its own registry, which resulted in inconsistent regulation across the system. The Danish registry, for example, failed to vet its registrants for two years. The registry ultimately became so saturated with fraudulent companies that over ninety percent of account holders had to be deleted in 2010. Even after the EU moved all participants into a single registry, the credibility lost among consumers during these initial years continues to plague the reputation of the program.
E. Lesson 5: Cap-and-Trade Programs Need Strong Cyber-Security
The final shortcoming of the ETS is that its cyber-security has been extremely assailable. “Phishing” has been one particularly vexing problem. The scam involves the creation and promotion of fake registries that solicit users to reveal their ETS identification codes. The “phishers” then use this information to carry out carbon trading transactions in legitimate registries. These deceptions have had severe economic ramifications, and as much as three million euros have been stolen in a single month.
Hacking has been another key cyber-security issue for the ETS. Hackers have been able to infiltrate users’ computer systems and sell off all their allowances for immediate cash payments on the “spot market.” Numerous companies have been crippled by this scam, and hackers have defrauded certain businesses of more than seven million euros worth of emission allowances.
IV. The Success of the California Cap-and-Trade Program
When considering the numerous oversights of the RGGI and ETS programs, the success of the CAT is doubly impressive. This success is due to the balanced design of the CAT, which incorporates the strengths of the RGGI and ETS while mitigating their weaknesses.
A. Success 1: The CAT Has Precise Methods for Accurately Allocating Allowances
Both the RGGI and ETS erred by overestimating actual emission levels and allocating excessive allowances. The CARB avoided this mistake by crafting a precise allocation methodology that prevented surplus allowances from derailing the auction marketplace. Foremost, the CARB calculated California emission levels for the years immediately preceding the creation of the CAT to more accurately forecast future emissions. The CARB also narrowed the variability of its emissions estimates by only including emitters who had actually emitted 25,000 or more metric tons of CO2 or equivalents. Emitters who merely had the capacity to emit beyond the 25,000 metric ton threshold were not included in the calculations. The greater accuracy of the CAT estimates was evidenced during the program’s first quarterly auction in 2012, where all twenty-three million allowances offered at the auction were purchased above the reserve price.
B. Success 2: The CAT Began Ambitiously While Also Facilitating Transition
Another common error of the RGGI and ETS was that their design strategies over-prioritized transitioning members into their systems. The programs initially neglected to implement substantive emission reduction targets for fear of overwhelming participants, and they have subsequently instituted dramatic reforms to compensate. By contrast, the CARB recognized the need to balance the transition of members into the program against regulatory efficacy, lest one derail the other.
The CARB facilitated the transition of participants into the CAT by narrowing the scope of the first compliance period to only cover electrical and industrial sectors. It waited until the second compliance period to expand into the transportation and heating fuel sectors to provide companies time to adjust their business practices. Yet the CARB also implemented considerable GHG reduction targets. The CARB initially set a 2020 reduction goal of seventeen percent below 2013 levels, which still eclipses the target of the RGGI. Due to these ambitious benchmarks, the CAT has already produced “non-negligible” emission reductions and economic gains, with 2013 alone seeing GHG reductions of over a million and a half metric tons and statewide economic growth of two percent. The CAT has benefitted greatly from such a stable infrastructure, and it remains on track to reach its ultimate emission reduction target by 2020.
C. Success 3: The CAT Has a Broad Scope
The CARB also built off the mistakes of the RGGI by broadening the regulatory scope of the CAT. Because it only regulates CO2 emissions, the RGGI covers less than twenty percent of the GHG emissions generated across its nine participating states. By contrast, the CAT emulates the ETS by also covering CO2 equivalents such as CH4, N2O and other fluorinated GHGs, resulting in more effective emission restrictions. The CARB also recognized that the RGGI erred in solely regulating electrical power plants. Accordingly, the CARB extended CAT regulations into other sectors heavy in GHG emissions, such as industrial, transportation, and heating fuel sectors. Because of this broader scope, the CAT already covers over 600 facilities in California, whereas the RGGI only reaches 163 facilities across nine states. The CAT also covers more than eighty-five percent of California’s GHG emissions, which is almost four times the amount of GHG coverage under the RGGI.
D. Success 4: The CAT Has a Balanced Market Design
The CAT also avoided the severe design blunders of the RGGI and ETS. Rather than undervaluing or ignoring auction price floors, the CARB instituted a strong reserve price of ten dollars in 2012, which has been set to increase each year thereafter by five percent (in addition to increases for inflation). Allowances have consistently sold above these amounts, but the price floor has provided steady protection against downward price volatility during poor trading periods. Moreover, the built-in mechanism for annual increases to the reserve price has ensured that the price floor continues to increase irrespective of CPI circumstances.
The CAT further protects against precarious price drops by permitting allowances to be banked. This avoids the price instability problems of the ETS by discouraging businesses from dumping surplus allowances into auctions at the end of trading periods. Nevertheless, the CAT imposes limits on the maximum amount of allowances that can be held by a business. This circumvents the design flaw of the RGGI that allows businesses to bank an inordinate amount of allowances and eliminate any need to subsequently reduce emissions.
The revenues generated by the CAT best demonstrate the success of its market design. The first auction raised more than $289 million, and the first compliance period generated $969 million in revenue for California. Projections estimate that the CAT will generate two billion dollars or more per year as the program’s regulatory scope continues to scale upwards.
E. Success 5: The CAT Has Strong Administrative and Security Practices
The CAT has also benefitted immensely from its efficient administration and strong security practices. Foremost, the CAT keeps a single registry for all its regulated entities, ensuring vigilant and orderly monitoring of all participants. The cyber-security protocols of the CAT have been extremely successful as well. To prevent hackers and phishers from infiltrating the program, CAT auctions take place over a four-hour window that is constantly supervised by state employees. The bidders and supervisors remain undisclosed to the public, and all parties must surrender their electronic devices during the auction. This “sealed bid” approach to the auctions has protected the CAT from the fraud and counterfeiting issues that tormented the RGGI and ETS.
V. A Recent Legal Challenge: Are Cap-and-Trade Auctions Tax Programs?
Despite the success of the CAT, the program has faced serious legal obstacles. The principal challenge took place in the recent Morning Star Packing Company v. California Air Resources Board case, where the plaintiffs alleged that the auctions were unconstitutional and violated California law. The chief contention was that the CAT constituted a tax on companies for emitting GHGs. The plaintiffs argued that the statutory authorization of the CAT, the Global Warming Act, therefore fell under the purview of California’s Proposition 13, which requires legislators to pass by two-thirds vote “any act to increase state taxes for the purpose of increasing revenue.” Because the Global Warming Act was not passed by a two-thirds vote, the plaintiffs asserted that the CARB exceeded its regulatory authority when it created the CAT.
The dispositive issue in the case was whether the auctions were unconstitutional taxes or whether they were permissible regulatory fees placed on tradable commodities. The Sacramento superior court ultimately upheld the CAT, concluding that emission allowances were tradable commodities in a marketplace. The court considered several distinctions between taxes and regulatory fees, but the chief difference seemed to be that whereas the government sets tax prices, the market determined the auction price of the emission allowances. Thus, the fact that the allowances had no value independent of the California regulatory scheme did not transform the auctions into a tax program, and the allowances remained tradable commodities.
Yet the superior court ruling did not mark the end of the contentious litigation. The Morning Star decision was appealed to the Sacramento appeals court, which affirmed the lower court judgment by a two-to-one majority decision. In turn, the appellate court ruling was appealed to the California Supreme Court, which ultimately declined to hear the case in June of 2017. What should have been a resounding victory, however, was diminished by the fact that the State Supreme Court did not issue a written opinion on the program itself. Nevertheless, the affirmation of the CAT provided market-based environmentalism with a new lease on life and has galvanized California policymakers and legislators.
VI. The Aftermath of Morning Star
The ramifications of the Morning Star have already been substantial in California. State legislators quickly capitalized on the State Supreme Court’s dismissal of the case by voting to extend the CAT an additional ten years through 2030. The extension produced newfound confidence in environmentalism and revitalized the market economy surrounding the CAT – whereas previous quarterly auction sales had dropped sharply, the California government sold every emission permit offered in the August 2017 auction.
Yet these successes have not been replicated on a national scale. This is somewhat perplexing, as the CAT provides a workable model upon which to base the creation of a federal cap-and-trade program. In particular, Congress could convincingly argue that the Morning Star case supports the notion that cap-and-trade programs deal with tradable commodities and do not constitute tax programs. Congress could therefore avoid having to rely on the Taxing and Spending Clause of the Constitution to justify the creation of an auction program and, instead, could derive its authority from the broader powers of the Commerce Clause.
The affirmation of Morning Star also provides strong persuasive reasoning for Congress to resolve the longstanding debate on whether emission allowances are “physical” (or “nonfinancial”) commodities, which are physically deliverable and consumable, or “financial” commodities that are satisfied through cash settlements. Relying upon the Morning Star court’s description of allowances as being consumable and involving the physical transfer of title, Congress now has a strong basis for asserting, on the federal level, that allowances are physical commodities. This would shield a federal cap-and-trade program from the administrative burdens of complying with the Commodity Exchange Act and other commercial regulations. 
Despite the reasoning provided by Morning Star, recent federal policy has demonstrated a marked shift away from the environmentalist approach espoused by the Obama Administration. The recent withdrawal of the Clean Power Plan, the Obama-era rule regulating greenhouse gas emissions, best evinces this change in protocol. Indeed, with the Environmental Protection Agency consistently the choice target of President Trump’s proposed budget cuts, environmentalism on a national level has been placed in a precarious position.
It remains to be seen whether this federal paradigm shift will take a toll on the CAT. It is certain, however, that the demise of the CAT would be the death knell for market-based environmentalism in the United States. Fortunately, the CAT has several contingency protocols to counteract market volatility. In particular, the CARB can hold unsold allowances off the market for at least nine months to compress the supply and force participants back to the auctions. This foresight proved to be invaluable in the wake caused by the initial Morning Star appeal in 2016, during which time the May 2016 and August 2016 auctions only sold eleven percent and thirty-five percent, respectively, of the allowances offered. The remedial mechanisms built into the CAT allowed administrators to re-stabilize the market, and the November 2016 auction resulted in the successful sale of eighty-nine percent of the offered allowances. Nevertheless, these contingencies are merely stopgap solutions, and hesitation among market participants will likely resurface as Californian and national policy progress along their collision course. Until a clear and unified path towards environmentalism is forged across the nation, an ominous shadow will remain cast over the CAT.
The CAT has been a landmark initiative for environmentalism in the United States. Incorporating lessons from the RGGI and ETS, the program has struck a masterful balance in its market design and has produced significant environmental and financial gains for California. The affirming decision of the California judiciary and recent expansion of the program by the California legislature have been beacons of hope for cap-and-trade. Despite these successes, the future of the CAT remains in doubt, plagued by an uncertain socio-political climate where federal support for environmentalism has recently waned. And while the CAT has withstood previous legal and economic challenges, it is undeniable that the decisive battle for market-based environmentalism across the United States has begun.
* J.D. 2017, University of Virginia School of Law. I would like to thank Alisha Mehta for her advice and comments and Pamela Lim for her tireless support, without which this article would not be possible.
 Morning Star Packing Co., et al. v. California Air Resources Board, et al., Sacramento Appellate Court, Case No. 34-2012-80001313 [hereinafter Morning Star Appellate Decision], http://documents.latimes.com/appeals-court-upholds-californias-cap-and-trade-program/.
 California Environmental Protection Agency, Assembly Bill 32 Overview, http://www.arb.ca.gov/cc/ab32/ab32.htm.
 California Cap-and-Trade Program Summary, Center for Climate and Energy Solutions (Jan. 2014), https://www.c2es.org/docUploads/calif-cap-trade-01-14.pdf.
 Id. From 2013–2015, the program covered electrical and industrial power plants that emitted 25,000 or more metric tons of CO2 or equivalent gases per year. Since 2015, fuel distributors have also been covered.
 Id. Carbon offsets are greenhouse gas emission reductions that are credited to a company that funds or participates in an activity that reduces carbon footprints in the environment.
 Lucas Bifera, Regional Greenhouse Gas Initiative, Center for Climate and Energy Solutions 1 (Dec. 2013), https://www.c2es.org/docUploads/rggi-brief-12-18-13-updated.pdf.
 Jonathan Ramseur, The Regional Greenhouse Gas Initiative: Lessons Learned and Issues for Congress, Congressional Research Service 2 (Apr. 27, 2016), https://www.fas.org/sgp/crs/misc/R41836.pdf.
 Id. at 3.
 Id. at 19.
 Id. at 3–7.
 Id. at 4.
 Id. at 4–5.
 Id. at 5.
 See id.
 Id. at 4–5.
 Id. at 3–7.
 Overview of RGGI CO2 Budget Trading Program, Regional Greenhouse Gas Initiative 6 (Dec. 2007), http://www.rggi.org/docs/program_summary_10_07.pdf.
 Ramseur, supra note 12 at 7–8.
 Id. at 8–12.
 Emissions Trading in the European Union: Its Brief History, Pew Center on Global Climate Change 1–2 (Mar. 2009), https://www.c2es.org/docUploads/emissions-trading-in-the-EU.pdf.
 Tamra Gilbertson, Fraud and Scams in Europe’s Emissions Trading Systems, Climate & Capitalism, May 5, 2011, http://climateandcapitalism.com/2011/05/05/fraud-and-scams-in-europes-emissions-trading-system/.
 See id.
 Emissions Trading in the European Union, supra note 28 at 1–2.
 Flawed Application of the Auction Reserve Price in the EU ETS, Emissions-EUETS.com (Feb. 23, 2013), http://www.emissions-euets.com/auctionsco2allowances/153-flawed-application-of-the-auction-reserve-price-in-the-eu-ets.
 Gilbertson, supra note 31.
 Id.; Union Registry, European Commission, https://ec.europa.eu/clima/policies/ets/registry_en (last visited Feb. 17, 2017).
 Gilbertson, supra note 31.
 California Cap-and-Trade Program Summary, supra note 4.
 Dana Hull, 13 Things to Know About California’s Cap-and-Trade Program, San Jose Mercury News (Feb. 22, 2013), http://www.mercurynews.com/ci_22092533/13-things-know-about-california-cap-trade-program.
 California Cap-and-Trade Program Summary, supra note 4.
 Dave Clegern, California greenhouse gas inventory shows state is on track to achieve 2020 AB 32 target, California Environmental Protection Agency (June 30, 2015), http://www.arb.ca.gov/newsrel/newsrelease.php?id=740.
 Id.; Michael Hiltzik, California’s cap-and-trade program has cut pollution. So why do critics keep calling it a failure?, L.A. Times (July 29, 2016), http://www.latimes.com/business/hiltzik/la-fi-hiltzik-captrade-20160728-snap-story.html.
 Ramseur, supra note 12 at 2.
 California Cap-and-Trade Program Summary, supra note 4.
 Id.; Emily Reyna, Four Reasons California Cap and Trade Had an Extraordinary First Year, Forbes (Jan. 14, 2014), http://www.forbes.com/sites/edfenergyexchange/2014/01/08/four-reasons-california-cap-and-trade-had-an-extraordinary-first-year/#58ffab0e4dfc.
 California Cap-and-Trade Program Summary, supra note 4.
 Archived Auction Information and Results, California Environmental Protection Agency, http://www.arb.ca.gov/cc/capandtrade/auction/auction_archive.htm.
 California Cap-and-Trade Program Summary, supra note 4.
 Archived Auction Information and Results, supra note 60.
 California Cap-and-Trade Program Summary, supra note 4.
 Hull, supra note 47; Michael Hiltzik, Emissions cap-and-trade program is working well in California, L.A. Times (June 12, 2015), http://www.latimes.com/business/hiltzik/la-fi-hiltzik-20150613-column.html.
 Hiltzik, supra note 65.
 California Cap-and-Trade Program Summary, supra note 4.
 Laurel Rosenhall, Why hasn’t California’s cap and trade pollution program been the model for the U.S.?, L.A. Daily News (July 31, 2015), http://www.dailynews.com/environment-and-nature/20150731/why-hasnt-californias-cap-and-trade-pollution-program-been-a-model-for-us.
 Id.; Gilbertson, supra note 31.
 Morning Star Packing Co., et al. v. California Air Resources Board, et al., Sacramento Superior Court, Case No. 34-2013-80001464 [hereinafter Morning Star Superior Court Ruling]. The case was consolidated and decided jointly with California Chamber of Commerce, et al. v. California Air Resources Board, et al., Sacramento Superior Court, Case No. 34- 2012-80001313. The joint decision is available at: http://www.edf.org/sites/default/files/content/decisionchambermorningstar.pdf.
 Id. at 5.
 Id. at 11–14.
 Id. at 16–18.
 Id.; Allie Goldstein, Cap-and-Trade Is Not A Tax, California Court Says, Ecosystem Marketplace (Nov. 18, 2013), http://www.ecosystemmarketplace.com/articles/cap-and-trade-is-not-a-tax-california-court-says/.
 Goldstein, supra note 78.
 See generally Morning Star Appellate Decision.
 Dan Whitcomb, California Supreme Court Upholds Cap-and-Trade Law, CNBC (June 28, 2017), https://www.cnbc.com/2017/06/28/reuters-america-california-supreme-court-upholds-cap-and-trade-law.html.
 Id.; Chris Megerian, California Supreme Court Leaves in Place Decision Upholding Cap-and-Trade System, L.A. Times (June 28, 2017), http://www.latimes.com/politics/essential/la-pol-ca-essential-politics-updates-cap-and-trade-supreme-1498684764-htmlstory.html.
 Melanie Mason & Chris Megerian, California Legislature Extends State’s Cap-and-Trade Program in Rare Bipartisan Effort to Address Climate Change, L.A. Times (July 17, 2017), http://www.latimes.com/politics/la-pol-ca-california-climate-change-vote-republicans-20170717-story.html.
 California Cap-and-Trade Program: Summary of Joint Auction Settlement Prices and Results, California Air Resources Board (Aug. 2017), https://www.arb.ca.gov/cc/capandtrade/auction/results_summary.pdf.; Chris Megerian, California Cap-and-Trade Program Gets Shot in the Arm with Strong Permit Auction, L.A. Times (Aug. 23, 2017), http://www.latimes.com/politics/la-pol-sac-cap-trade-auction-results-20170823-story.html.
 CFTC Glossary, United Statutes Commodity Futures Trading Commission, http://www.cftc.gov/ConsumerProtection/EducationCenter/CFTCGlossary/glossary_p.
 See generally Morning Star Superior Court Ruling.
 See, e.g., 7 U.S.C. § 1a(47)(B)(ii) (2012) (excluding from the definition of “swap” “any sale of a nonfinancial commodity or security for deferred shipment or delivery, so long as the transaction is intended to be physically settled”).
 Daniella Diaz et al., EPA Administrator Scott Pruitt Announces Withdrawal of Clean Power Plan, CNN (Oct. 10, 2017), http://www.cnn.com/2017/10/09/politics/environmental-protection-agency-scott-pruitt-clean-power-plan/index.html.
 Brady Dennis & Juliet Eilperin, EPA Remains Top Target with Trump Administration Proposing a 31 Percent Budget Cut, Washington Post (May 23, 2017), https://www.washingtonpost.com/news/energy-environment/wp/2017/05/22/epa-remains-top-target-with-trump-administration-proposing-31-percent-budget-cut/?utm_term=.c5889f6eca1d.
 Hiltzik, supra note 53.
 Summary of Joint Auction Settlement Prices and Results, supra note 84.
Reinstating CERCLA as the “Polluter Pays” Statute With the Circuit Court’s Mutually Exclusive Approach
Brianna E. Tibett, Vermont Law School. This post is part of the Environmental Law Review Syndicate. INTRODUCTION The purpose of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) is to facilitate the “timely cleanup of hazardous waste sites and to ensure that the [cleanup costs…