How the EPA Should Modify Its Proposed 111(D) Regulations to Allow States to Comply by Taxing Pollution

23 Pages Posted: 31 Oct 2014 Last revised: 18 Nov 2014

See all articles by Michael W. Wara

Michael W. Wara

Stanford Law School

Adele C. Morris

The Brookings Institution

Marta R. Darby

Stanford University; Independent

Date Written: October 28, 2014


The U.S. Environmental Protection Agency (EPA) is exercising its authority under section 111(d) of the Clean Air Act to limit U.S. greenhouse gas (GHG) emissions from existing stationary sources, beginning with carbon dioxide (CO2) emissions from fossil-fuel fired electric generating units (EGUs, power plants, or covered sources). This comment examines the extent to which EPA’s proposed rule for existing power plants (the EPA proposal) and its existing regulations would allow states to comply with their obligations under 111(d) by adopting and enforcing carbon excise taxes. We find that although states can adopt carbon taxes to comply with 111(d) rules, EPA has inadvertently restricted how states can design their policies, precluding some of the most straightforward approaches. Accordingly, we recommend amendments that would give full flexibility to states to design policies as they see fit, provided those policies are enforceable and will achieve the applicable emissions guidelines.

Keywords: Climate Change, carbon tax, emission pricing, carbon markets, carbon emissions, Clean Air Act

Suggested Citation

Wara, Michael W. and Morris, Adele C. and Darby, Marta R. and Darby, Marta R., How the EPA Should Modify Its Proposed 111(D) Regulations to Allow States to Comply by Taxing Pollution (October 28, 2014). Stanford Public Law Working Paper No. 2516456, Stanford Law and Economics Olin Working Paper No. 468, Available at SSRN: or

Michael W. Wara (Contact Author)

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

Adele C. Morris

The Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
United States


Marta R. Darby

Stanford University ( email )

Stanford, CA 94305
United States

Independent ( email )

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