A Home for Cap and Trade

Our initial findings suggest that the EPA would be the right home for the regulatory side of such a program, as it already administers similar programs for phasing out ozone-depleting substances under the Montreal Protocol and SO2 and NOx under the Clean Air Act. The last major GAO examination of the SO2 program was in 2002; the only major examination of the full acid rain regulation program was provided by the EPA itself in 2006. Assessing the accomplishments and lessons learned of these programs would be extremely helpful in designing a viable cap and trade system. A new GAO assessment, as soon as possible, would be very helpful. The EPA, however, is likely not the best place to handle the permit auctioning side of a cap and trade program. The new Treasury Office of Environment and Energy may be a logical home for the program’s revenue administration, although the office size would have to increase and it would need to continue to strengthen its existing relations with the EPA and DOE. It is worth considering also engaging the Department of Commerce in the business development side of the pro- gram. It would be helpful to establish and fully resource a standing Cap and Trade Interagency Team immediately in order to identify the ingredients of success for such a program (e.g., federal domain over transmission line and pipeline sites or safety and liability regulations for carbon capture and sequestration), to help negotiate with Congress to draft legislation accordingly, and to execute the program once Congress passes the legislation.