State’s treaty with Quebec doesn’t preempt US power, judge rules

A federal judge in Sacramento blocked the U.S. government's attempt to halt California's cap-and-trade deal with Quebec.

In Friday's ruling, Senior U.S. District Judge William B. Shubb of the Eastern District disagreed with the U.S. Justice Department's stance that the treaty California entered into with Quebec intruded on the federal government's powers.

The DOJ argued the U.S. Constitution bars states from making treaties with foreign powers without congressional approval.

Even if the government negotiates for better deals after the U.S. withdraws from the Paris Accord this fall, Shubb said those efforts shouldn't impact the cap-and-trade agreement.

"California argues its cap-and-trade program regulates emissions and in-state businesses in a fashion that is consistent with its traditional police power. As this court has previously recognized, it is well within California's power to enact legislation to regulate greenhouse gas emissions and air pollution," Shubb wrote.

Furthermore, the state's program is similar to thousands of other deals individual states entered into with foreign jurisdictions including those addressing climate change, Shubb wrote.

California and Quebec said they entered into the agreement in the hope of making their territories more attractive to companies. United States v. State of California, Gavin Newsom; California Air Resources Board, et al., 2:19-CV-02142 (E.D. Cal., filed Oct. 23, 2019).

Representatives for neither the U.S. and California Justice Departments could not be reached for comment Monday.

The DOJ sued California and several officials, including the California Air Resources Board and the Western Climate Initiative Inc., last fall. California attempted to pursue an independent foreign policy for greenhouse gas regulation, the DOJ argued.

In March, Shubb tossed much of the DOJ's claims, finding that the deal didn't undermine foreign policy. The remaining claim left for Shubb to address involved preemption under the Foreign Affairs Doctrine. Shubb ruled there is no preemption in this case, as the U.S. is ascribing power to the agreement that Congress itself did not.

All the California-Quebec program did was articulate abstract goals the U.S. should seek to accomplish and work toward multilateral agreements to mitigate climate change, Shubb reasoned.

In essence, the U.S. failed to identify a clear and express foreign policy that directly conflicts with the state's cap-and-trade program, Shubb said.

Nicholas W. van Aelstyn, a partner at Sheppard Mullin who represented intervening defendant International Emissions Trading Association with associate Zachary M. Norris, said he hopes the ruling encourages similar treaties to combat climate change and reduce greenhouse gas emissions. His client joined in January as intervening defendants along with the Environmental Defense Fund and the Natural Resources Defense Council.

"We're very happy with the ruling and hopefully we encourage the federal government to forgo appeal. This decision is a very solid one and can encourage the use of market mechanisms to address climate change," he said.