US judge tosses much of US suit against California-Quebec cap-and-trade deal

A federal judge in Sacramento threw out much of the U.S. government's lawsuit seeking to block California's cap-and-trade deal with the government of Quebec on Thursday, saying the deal shouldn't be considered a treaty in the constitutional sense and thus does not undermine foreign policy as the government claimed.

In its suite filed last October, the U.S. Justice Department said California violated the Constitution's treaty and compact clauses -- prohibiting states from making treaties or compacts with foreign powers -- when the state government entered into a cap-and-trade program with the Canadian province of Quebec in 2013.

Of the cross motions for summary judgment, Senior U.S. District Judge William B. Shubb granted California's and denied the federal government's. Shubb said the U.S. Supreme Court has ruled in other cases that in an Article I context, the word "treaty" is a term of art.

"Not all international agreements may be 'treaties' in the constitutional sense," Shubb wrote in his 33-page order. "By any metric, the Agreement between California and Quebec falls short of these consequential agreements."

However, there are two remaining causes in the DOJ's motion dealing with the foreign affairs doctrine and the foreign commerce clause. Shubb said he expresses no view on these remaining causes at this time.

California's stated goal in its cap-and-trade program is to reduce the effects of climate change by requiring businesses to obtain permits for carbon emissions, allowing them to purchase additional permits if they go over a limit set by state regulators. The revenue generated from the carbon permits is meant to be spent on clean air programs and infrastructure projects.

In 2013, California and Quebec linked their respective cap-and-trade programs in hopes of making them more attractive to businesses. The governments then signed an agreement memorializing their commitment "to work jointly and collaboratively toward the harmonization and integration of [their] cap-and-trade programs for reducing greenhouse gas emissions," Thursday's order reads.

The complaint filed by Assistant U.S. Attorney General Jeffrey Bossert Clark argued the state's deal with the Canadian province violated the federal government's right to "be able to speak with one voice on behalf of the United States in matters of foreign affairs."

"California's unlawful cap-and-trade agreement with Quebec undermines the president's ability to negotiate competitive agreements with other nations as the president sees fit," Clark said in a statement shortly after the complaint was filed.

The complaint named Gov. Gavin Newsom, California Air Resources Board Chair Mary Nichols and other state officials. It also named Western Climate Initiative Inc., the nonprofit corporation that manages the cap and trade program at issue. United States v. State of California, 19-CV02142 (E.D. CAl., Oct. 23.2019).

Responding to the lawsuit, California argued the agreement does not rise to the level of an Article I treaty because it "does not address a matter of substantial consequence to our federal structure, much less one implicating national unity."

California claimed the agreement is not binding and "merely expresses California's and Quebec's good-faith intentions to continue communicating and collaborating, ... so that the link between the two cap-and-trade programs may continue to function properly."