On April 6, 2006, Maryland Governor Robert Ehrlich signed into law the Maryland Healthy Air Act, which had been passed with large majorities in Maryland’s General Assembly. The purpose of the law is to improve air quality in Maryland by requiring power plants in the state to reduce a variety of emissions, including sulfur dioxide, nitrogen oxides, and mercury. In addition, the law requires the six largest power plants in the state to reduce emissions of carbon dioxide, a significant greenhouse gas. Production of electric power is vital to the State of Maryland but greenhouse gases, such as carbon dioxide that are a byproduct of this production represent a significant negative externality. It is important to carefully balance the gains from inexpensive and reliable electricity with programs to mitigate the negative environmental effects of these gases. To this end, the Maryland Healthy Air Act (Senate Bill 154) was recently passed. This bill requires the State to become a full participant in the Regional Greenhouse Gas Initiative (RGGI) no later than June 30, 2007. RGGI currently comprises seven Northeastern and Mid-Atlantic states that in December 2005 entered into a memorandum of understanding to develop and implement a carbon dioxide emissions trading program for electric generators located within their states. The trading program would begin in January 2009.