Editors' Summary: Modern environmental law has relied almost exclusively on either mandating or forbidding certain conduct in order to reduce pollution. In addressing pollution that causes acid rain, the 1990 Amendments to the Clean Air Act adopted a new approach: Encouraging pollution reduction through market-based incentives. The South Coast Air Quality Management District (SCAQMD or the District), which is responsible for regulating air pollution in the Los Angeles metropolitan area, adopted this approach in its Regional Clean Air Incentives Program (RECLAIM). The program creates a system of marketable permits for emitting nitrogen oxide and sulfur oxide.

This Article begins with a review of the theory behind marketable permit programs. It then examines the history of pollution control in the District. Next, the Article analyzes the development, structure, and operation of RECLAIM. The author notes that any conclusions about RECLAIM are preliminary at this point, because the emission reductions that RECLAIM calls for extend until at least 2003. Nevertheless, the Article suggests aspects of the program that observers should watch, especially the interaction between economic incentives and "command-and-control" regulations, the use of District resources, and the regulated community's confidence in the program.