Court Again Turns Down Trump's Challenge of California's Cap-And-Trade Program

July 21, 2020

by APPA News
Posted July 21, 2020

A federal court on Friday ruled against the Trump administration’s attempts to block California’s greenhouse gas emissions trading program.

It was the second setback for the administration’s efforts to limit California’s cap-and trade program.

In October, the U.S. Department of Justice filed a civil complaint against California in United States District Court for the Eastern District of California, arguing that the state’s cap-and-trade agreement with the Canadian Province of Quebec is unconstitutional.

The DOJ sought a permanent injunction against the agreement.

The California legislature passed the California Global Warming Solutions Act in 2006, The California Air Resources Board (CARB) finished the regulation to implement a cap-and-trade program in October 2011. The law included a “framework for linkage” to accept the compliance instruments of other states and provinces.

In 2016, the United States entered into the Paris Agreement of 2015. 2017, President Donald Trump announced the United States would withdraw from the Paris Accord and negotiate a new deal. The United States’ withdrawal from the Paris Accord will be complete on Nov. 4, 2020.

Meanwhile, California linked its cap-and-trad program with those of Quebec and Ontario in January 2018, although the relationship with Ontario ended shortly thereafter.

In the October filing, the DOJ argued that California’s agreement with Quebec was unconstitutional because it was in violation of the Commerce and Treaty clauses and the Foreign Affairs Doctrine.

In March, the district court denied DOJ’s attempt to shut down California’s emissions program on the basis that it violated the Commerce and Treaty clauses. The court left for a subsequent hearing the claims made under the Foreign Affairs Doctrine.

The DOJ complaint cites the supremacy of the president’s authority to conduct foreign affairs as granted by the Constitution and says the agreement between California and Quebec falls “outside the area of any traditional state interest” and interferes with the United States’ foreign policy on greenhouse gas regulation, including but not limited to its intention to withdraw from the Paris Accord.

The DOJ argued two main points. First, DOJ argued that California’s cap-and-trade program creates an obstacle to the president’s ability to implement the United Nations Framework Convention on Climate Change of 1992 and the Global Climate Protection Act of 1987, which aims to increase worldwide understanding of the greenhouse gas effect and to foster cooperation and coordination among nations on scientific research regarding the greenhouse effect. Second, the DOJ argued that California’s program is inconsistent with President Trump’s withdrawal from the Paris Accord and should be preempted.

California responded that its program is consistent with both the Global Climate Protection Act and the 1992 Convention and that the program has little to no effect on the president’s ability to withdraw from the Paris Accord.

Citing case law, Judge William Shubb of the U.S. District Court for the Eastern District of California ruled that without a “clear conflict between the policies adopted” by California and federally in the Global Climate Protection Act and the 1992 Convention, conflict preemption is inappropriate.

Regarding the Paris Accord argument, the DOJ argued that California’s program conflicts with Trump’s withdrawal from the Paris Accord and undermines the federal government’s ability to develop a new international mitigation arrangement.

However, the district court noted that neither California nor Quebec are parties to the Paris Accord and are, therefore, incapable of authorizing the use of compliance instruments. Nor could California facilitate Canada’s participation in the Paris Accord because as of November, the United States would no longer be a party to the accord.

The DOJ also argued that the California program would “undermine the federal government’s ability to develop a new international mitigation arrangement.” And while the DOJ argued that the administration need not state and exact foreign policy, the district court ruled that “case law holds otherwise.” Both “the Supreme Court and the Ninth Circuit [Court of Appeals] have recognized conflict preemption only in the face of a clear and definite foreign policy.”

The DOJ “cites no authority for the proposition that an intent to negotiate for a ‘better deal’ at some point in the future is enough to preempt state law. Indeed, there is a clear distinction between the act of negotiation and the resulting policy,” Shubb wrote, concluding that the DOJ’s case falls short of meeting the requirements of conflict preemption and California’s program is not barred by conflict preemption.

That left the broader challenge of field preemption, which can occur in the absence of a treaty or federal statute if a state attempts to establish its own foreign policy.

While the district court acknowledged California’s authority to enact legislation to regulate greenhouse gas emissions and air pollution, the court found that California’s cap-and-trade program exceeds traditional state interests because of its expressed intent to have “far-reaching effects,” including “encouraging other … countries to act.” That, according to the district court, extends California’s cap-and-trade program beyond the area of traditional state responsibility.

On the issue of intrusion into federal government powers, however, case law holds that a state’s action “must have more than some incidental or indirect effect on foreign affairs,” Shubb wrote. He noted that the DOJ failed to offer evidence that “California’s cap-and-trade program interferes with the President’s powers” or that the program has interfered with either negotiations for a better deal or the nation’s imminent withdrawal from the Paris Accord.

In conclusion, Shubb ruled that the DOJ failed to show that California’s program impermissibly intrudes on the federal government’s foreign affairs power “because the court must find both that a state law has exceeded a traditional state responsibility and intrudes on the federal government’s foreign affairs power to be preempted.”

The court granted the California parties’ motions for summary judgment on DOJ’s field preemption claim and denied DOJ’s motion for a summary judgment.