Developing countries, which pollute less, would get pollution rights above their current needs and thus build up a surplus.

Then it has been argued, a free cap and trade market could develop in pollution rights.

It was an unlikely scenario: Law school students bidding against corporate giants for pollution rights.

Under a cap-and-trade system, these plants are likely to purchase pollution rights rather than cut emissions.

The costs to some of these utilities could be cut, moreover, by allowing them to sell so-called "pollution rights."

Northeast said yesterday that regulations on interstate trading of pollution rights had not yet been written.

That will create, in effect, a market in pollution rights.

The Administration's plan will lead to a securities-like trading system in which "pollution rights" would be freely bought and sold.

A dirty plant can buy pollution rights from a clean plant, for example.

But companies are already gauging the effects on their operations and laying plans to cut emissions or buy pollution rights.