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What's Next For The EPA?

Michael A. Livermore is the executive director of the Institute for Policy Integrity at New York University School of Law. He is the author, along with Richard L. Revesz, of Retaking Rationality: How Cost-Benefit Analysis Can Better Protect the Environment and Our Health.

Many U.S. businesses will likely see yesterday's endangerment finding from the EPA as a call to the congressional negotiating table on a climate bill. That's because the option for business-as-usual is now dead—given that greenhouse gases are now subject to the Clean Air Act, companies will have to reduce emissions one way or another.

These may be fine in small doses, but on a wider scale, this approach would be far from ideal for businesses—a patchwork of expensive and burdensome rules. But then again, environmentalists shouldn't like this second approach, either—it would be significantly less effective at curbing greenhouse gases and would probably entail some backlash as energy prices go up more than necessary.

But there's also another option if Congress can't pass a bill. EPA technically has the authority to create its own cap-and-trade mechanism for greenhouse gases under the Clean Air Act. This route wouldn't be ideal—it would be open to legal challenge like any regulation and it could be subject to gutting by future presidents—but the option is available. And, since the EPA is obligated to regulate carbon, doing so with a market-based approach rather than command-and-control regulations would have several upsides. It would avoid overly prescriptive rules that mandate that businesses follow specific paths for cutting emissions. And the EPA's program would mesh more easily with whatever cap-and-trade legislation Congress may enact down the line. In addition, this approach would be easier to integrate into an international system.

There are already conservative groups lining up to sue over the endangerment finding. But before businesses let out a sigh of relief, they would do well to remember that it was a court—in fact, the Supreme Court—that put the EPA on the road to the endangerment finding in Massachusetts v. EPA, so legal challenges to the EPA’s action are on weak footing. At this point, the best way to avoid further regulations from the executive branch is to look to Congress.

(Flickr photo credit: sfryers)