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DOJ's cap-and-trade lawsuit can't put the genie back in the bottle.

Published: November 12, 2019 by Editorial Team

While the Department of Justice’s lawsuit targeting California and the Western Climate Initiative (WCI) may make it more expensive for greenhouse gas polluters to cut emissions, it does not represent an existential threat to the cap-and-trade program and will not stem the tide of climate change action.

First, the lawsuit comes amid the political storm of the impeachment inquiry, which suggests that there is at least some element of political theatre to the move and that the Administration’s focus will be elsewhere.  The lawsuit, even if it took center stage, will take a significant amount of time to move through the courts. By that time, the White House may have a new occupant, resulting in the suit being dropped.

The lawsuit does not appear to have much merit, either. Professor Ann Carlson of UCLA points out that a central principle of foreign affairs doctrine is that state actions may be preempted only if they conflict with federal action. There is nothing to indicate that such a conflict exists. Furthermore, while a state cannot enter into treaties, alliances, or confederation with a foreign nation, it is difficult to clearly categorize the looseness of the California-Quebec agreement as such, or Quebec as a foreign nation. Several other legal scholars have echoed these same sentiments in a recent article in CalMatters.

Even if the lawsuit were successful, it would terminate the linkage, not the cap-and-trade program.  California and Quebec would continue their greenhouse gas reduction strategies, albeit with a bifurcated market. Analysis by ICIS, a leading carbon market analysis firm, predicts that de-linkage would not significantly affect the fundamental supply and demand of the California program because Quebec emissions are less than one-fifth of California’s.

It is also important to put all of this into context. As my colleague Kyler Sherry pointed out last week, many states and cities throughout the United States are actively working on greenhouse gas reduction strategies, including cap-and-trade programs that could bolster the WCI market. At the end of the day, Trump’s lawsuit cannot stop the rising tide of climate change action.