Cap-and-trade programs for greenhouse gases (GHGs) present central political questions with significant economic and environmental ramifications. This paper addresses a critical structural issue: To what extent should states retain the capacity to develop stricter parameters within a federal cap-and-trade program? This Article argues that, within the confines of a federal trading program, states should retain substantial autonomy to establish their own direct regulatory requirements, impose their own offset policies, and adopt differing trading parameters to maximize a GHG trading program’s co-pollutant and other benefits. State autonomy is justified by benefits to the nation as a whole, since states can provide a safety net for federal failure and provide on-going laboratories of invention for future federal and state policies. State autonomy is also justified by the importance of state democratic prerogatives over the multiple political, economic, and environmental implications of cap-and-trade design.