Throughout US environmental regulation history, centralized regulation by the federal EPA has been the norm. More recently, however, state/local governments have taken a more active role by imposing more stringent environmental standards than the federal requirements. Some authors in the literature claim that this may be caused by the policy regime shift from the early command-and-control to incentive-based regulations. In this paper, we adopt both simultaneous-move and sequential-move regulation models, and consider both quantity and price policy regimes to see if and when this argument is valid. It is found that the policy regime shift theory holds only in a rather restricted sequential-move setting in which local EPAs lead the game. In addition, we further incorporate policy implementation/enforcement costs in our analysis. It is found that equilibrium policies of the central and local EPAs hinge crucially on these costs.