This post first appeared today in the National Journal Energy & Environment Experts blog .
As with many aspects of climate policy, there is some truth to the arguments on both sides of the debate over how federal legislation should treat state action and EPA Clean Air Act (CAA) authority. The answer is less about who is right or wrong and more about appropriately balancing the strengths and weaknesses brought to the table by states and the federal government. Both have important roles to play in a strong federal climate and clean energy program.
Addressing our climate change and clean energy challenges ultimately requires a strong, comprehensive federal program that sets a nationwide carbon price and puts us on the path to a more secure energy future. A comprehensive national program  would be more economically efficient , create regulatory certainty for business that unlocks major private investment dollars, and offer a minimum level of environmental protection. But the vast scope of the problem demands that the federal government work with states to implement the most comprehensive solutions.
States  have a long history of being innovative leaders  in tackling air pollution problems. In recent years, they have also played a similar role on climate and energy policy. California has pioneered a number of policies, including the first-ever standard to reduce the carbon intensity of vehicle fuels. Ten Northeastern states have successfully implemented the first mandatory greenhouse gas (GHG) trading program in North America, limiting emissions and setting a price on carbon. And thanks to its renewable energy standards, Texas has become one of the world’s largest wind power  markets. These and dozens of other states have proven that their policies work and provide valuable lessons for the federal government. Federal policy should recognize these states’ achievements and preserve their role as policy innovators.
Federal policy should treat the states as partners: they have the relevant policy experience, know what works within their own borders, and will have a role in implementing federal policy on the ground. One reasonable middle-ground approach contained in the House-passed American Clean Energy and Security Act of 2009  largely leaves states free to pursue a wide range of policies across all economic sectors, but halts the implementation of state and regional GHG trading programs for six years in order to give a federal program time to get up and running. If at the end of that period states find the federal program inadequate, they can adopt their own market programs. Such an approach recognizes that policies like comprehensive market-based climate and energy mechanisms are most effectively addressed at the federal level. At the same time, states remain free to develop complementary policies that address local concerns in areas such as transportation , renewable energy , and energy efficiency .
A middle-path forward in any new legislation also exists regarding preemption of EPA authority to regulate under the CAA.
Several aspects of EPA’s CAA authority are useful regardless of what course Congress takes, particularly in certain sector-specific applications. For example, the recent adoption of new emissions standards for light duty vehicles  has been widely viewed as an appropriate and important step toward limiting carbon emissions while reducing our dependence on foreign oil . It is conceivable that legislation might include a provision that treats EPA authority in the same manner as state GHG trading programs, suspending some forms of regulation for a few years in order to give a federal program time to get established for those sources covered under the federal program. But it might allow EPA to continue to judiciously use existing authorities for those sources that fall outside of any newly created federal regime. As with the states, Congress needs to recognize the EPA as a partner and craft comprehensive legislation that takes advantage of EPA’s existing strengths and expertise.