Notwithstanding Congressional gridlock on climate change legislation, cap-and-trade remains the tried and true efficient method for reducing air emissions.  Although the acid rain provisions of the Clean Air Act are the most well-known example, the CAA also provides for cap-and-trade programs to implement its regional haze regulations.  On Monday, the 10^th Circuit Court of Appeals affirmed the cap-and-trade program adopted by New Mexico, Utah, and Wyoming.

Given that conservatives have abandoned their support for market-based regulation in opposing climate change legislation, it is perhaps comforting to return to the historical lineup in which it is environmental groups who challenge the cap-and-trade program as inferior to the traditional command and control approach.  At least it’s a world I recognize, even if it’s wrong-headed.  Fortunately, the 10^th Circuit was not having any of it.

The ruling is too complicated to summarize here, but two points are worth noting

• The Court gave significant deference to EPA’s interpretation of its own regulations – a notable point given that some members of the Supreme Court seem interested in revisiting the scope of Auer deference.

• The Court affirmed EPA’s use of a “weight of the evidence” approach in determining that the cap-and-trade program would yield better results than simply imposing Best Available Retrofit Technology on all subject sources.  Specifically, it allowed EPA to rely on qualitative evidence as well quantitative evidence.

At bottom, this should not have been a difficult case.  EPA’s regulatory interpretations get deference.  Once that deference was provided, it is hard to see how a court could have concluded that EPA’s application of those interpretations was arbitrary and capricious.

Long live cap-and-trade!