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Trump’s Latest California Swipe Wades Into Murky Legal Territory

Oct. 29, 2019, 9:00 AM

A new legal challenge to California’s carbon-trading agreement with Quebec builds on a debate that has brewed for years over the constitutionality of state-led climate programs.

The Justice Department filed a complaint Oct. 23 in the U.S. District Court for the Eastern District of California, alleging the state stepped on the federal government’s toes by striking a climate deal with the Canadian province.

Critics pounced on the Trump administration’s move, calling it a political ploy to tie California’s hands on environmental policy.

The DOJ and the Environmental Protection Agency have taken several recent shots at the state—revoking its authority to set auto emissions standards; threatening to cut highway funds; and alleging Clean Water Act violations linked to the state’s homeless population.

But legal questions about the California-Quebec arrangement predate the Trump administration’s recent blitz.

Some scholars have raised questions about the agreement, including whether it intrudes on the constitutional prohibition against compacts with foreign governments without congressional approval. Such arguments haven’t been tested before in climate issues.

“I think people are too quick to assume that this is all about the president’s disfavor with California, and people aren’t taking seriously the actual reasons why a lot of really smart folks that work in this space are unhappy with California and want to push back, and now have the opportunity,” said Jonathan H. Adler, director of the environmental law program at Case Western Reserve University.

“I think the questions are quite serious,” he said of the new lawsuit.

‘This is Less Out of Left Field’

Academics and analysts noted potential legal vulnerabilities early on in California’s plans for the Western Climate Initiative, as it’s officially known, even before it included a Canadian component.

In a 2008 law review article, for example, scholars warned that constitutional objections to programs like the one California was designing “may be more complicated than previously appreciated.”

The American Bar Association published a piece in 2012 that likewise contended “the type of international cooperation required by a cross-border cap-and-trade system may nevertheless overstep constitutional limits on subnational players venturing into foreign affairs.”

California and Quebec negotiated their first agreement under the initiative in 2013 and a subsequent deal in 2017.

Augusta C. Wilson, then a fellow at the Guarini Center on Environmental, Energy, and Land Use Law at New York University, wrote a 2017 paper outlining numerous potential legal pitfalls and how California could avoid them.

Now an attorney at the Climate Science Legal Defense Fund, Wilson noted that DOJ’s new lawsuit touches on most of the legal questions debated at the time.

“The claims that have been raised are claims which I and other commentators had pointed out for some time as possible arguments that the federal government could raise against the Western Climate Initiative because of the fact that it’s a cross-border arrangement,” she said.

Wilson thinks California has strong arguments to defend against the lawsuit but cautioned that the case is a more substantive legal threat than the Trump administration’s other recent jabs at the state.

“This is less out of left field than some of the other recent things that have been happening,” she said.

Constitutional Claims

The Trump administration has four arguments: that California’s partnership with Quebec amounts to an unconstitutional treaty; that it’s an unconstitutional compact with a foreign government because Congress didn’t sign off on it; that it intrudes on the nation’s authority to conduct foreign affairs; and that it interferes with foreign commerce.

Some experts see real risks for California, especially from the argument about unconstitutional compacts.

“California’s agreement with Canada may well violate the foreign compacts clause,” said Eugene Kontorovich, a George Mason University international law scholar. “It appears to be a clear agreement with Canada to do what would otherwise be done by a treaty.”

The clause bars states from forming certain types of alliances with one another or with foreign governments without congressional approval. Courts have ruled that states go too far when an alignment threatens the federal government’s supremacy.

But the legal precedent is murky. A 2017 Congressional Research Service analysis of other types of state climate coalitions noted that “there is no definitive judicial decision or scholarly consensus on how to differentiate between the treaties, alliances, confederations, and compacts” addressed in the Constitution.

Temple University law professor Duncan Hollis, who studies compacts and treaties, said the Supreme Court hasn’t weighed in on foreign compacts in more than a century—making it a somewhat open question how judges will interpret the issue today.

Uncharted Territory

The U.S. Chamber of Commerce and other groups unsuccessfully sued over California’s program in its early years, but they focused on claims that it violated state law and amounted to an unconstitutional tax.

The Regional Greenhouse Gas Initiative—a group of Northeastern states that cooperate to cap carbon dioxide emissions—doesn’t have an international component, but still faced claims that the arrangement violated the compact clause.

The lawsuits targeting RGGI ultimately failed on procedural grounds or reached settlements that didn’t deal with the constitutional questions.

Michael Wara, director of the Climate and Energy Policy Program at Stanford University, said California officials designed their program carefully to “make it resistant to these kinds of attacks.”

The state has experience with federal crackdowns: The Supreme Court in 2003 struck down a California insurance law on grounds that it interfered with U.S. foreign policy—an argument featured in the third prong of the new lawsuit.

State officials are expected to defend their Quebec agreement by arguing, for example, the partnership doesn’t conflict with any federal carbon-cutting policy, that it’s designed to benefit California residents, and that it isn’t actually binding—there’s nothing to stop the state or province from calling it off.

“Many states have arrangements with other states and countries on a whole variety of topics that we work on together,” California Air Resources Board Chairwoman Mary Nichols said during a recent event at Stanford University.

That’s a strong case against the Trump administration’s claims, Wara said.

“On the other hand, the Department of Justice also has some OK arguments, and they’re basically untested,” he said. “And if there’s enough time, they will be tested in front of a very conservative Supreme Court.”

The case is United States v. California, E.D. Cal., No. 2:19-at-01013.

To contact the reporter on this story: Ellen M. Gilmer in Washington at egilmer@bloombergenvironment.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergenvironment.com; Anna Yukhananov at ayukhananov@bloombergenvironment.com; Rob Tricchinelli at rtricchinelli@bloombergenvironment.com