Economists are not real big fans of command and control pollution regulations--you know the kind where the regulatory agency says here is how much pollution is allowed and here is how you are going to do it. The reason? Because there are usually cheaper ways to meet the same goals. Requiring everyone to do the same thing means that no one has the flexibilty to figure out the cheapest way to meet the goal on their own. The only way a command and control regulation is efficient (least cost) is if the required method of reduction is the least cost method for all polluters. But since it is unlikely that the regulatory agency can possibly know the least cost reduction technology for all polluters, it's unlikely that command and control regulation are the cheapest.
That's why the EPA has built in some flexibility for states to meet Clean Air Act ground level ozone--smog--standards.
The Clean Air Act smog standards do have a command and control component to them. If the ozone attainment levels laid out in the CAA are not met by the CAA deadline, states are subject to mandatory actions to reduce ozone. But--and here's the flexibility part--states were allowed to enter into agreements with the EPA (called Early Action Compacts) in which states can defer the CAA mandated requirements as long as they meet the smog goals before the CAA deadline. Why would states want to voluntarily meet pollution goals before they are required to? Because they might be able to do it cheaper than the mandated CAA requirements. In other words, the CAA requirements are a big stick and the Early Action Compacts are a big carrot. How yummy is the carrot?
Fourteen communities across the United States remain ahead of schedule in the effort to reduce ground-level ozone -- or smog -- as part of a program that encourages steps to protect air quality. The progress these areas have made under EPA's Early Actions Compacts program puts them on track to meet clean air requirements one to two years sooner than required.
Early Action Compacts provide a strong incentive for state and local governments, civic leaders and business interests to develop innovative, cost-effective strategies for improving ozone air quality in ways that are tailored to individual communities. Fifteen additional Early Action Compact areas already meet the 8-hour ozone standard, but chose to join the compact to ensure that they stay in attainment while continuing voluntary steps to protect the health and quality of life in their communities.
Gotta love carrots.