Mr. Revesz said he does not believe the administration’s argument would stand up in court and likened California’s agreement to trade missions that states and cities routinely take to open new markets for state products.
Michael Wara, director of the Climate and Energy Policy Program at the Woods Institute for the Environment at Stanford University, said the legal question could come down to whether California’s agreement is viewed as a treaty or merely a memorandum of understanding that does not rise to the level of a contract in possible violation of the president’s exclusive authority to set agreements with foreign nations.
He noted that the state crafted its deal with Quebec mindful of its Supreme Court loss in a 2003 case where the state tried to require insurance companies to provide information about their Holocaust-era policies. In that case, the court decided California’s Holocaust Victim Insurance Relief Act, which would have revoked the license of any company that did not comply with its law, unconstitutionally interfered with the president’s conduct of the nation’s foreign policy.
“I think there are definitely ways that California will defend itself, but there’s an intuitive idea that the federal government speaks with the voice of America to other countries,” Mr. Wara said. “And to some degree what California is doing is counter to that.”
That argument, he said “might turn out to be effective before the current Supreme Court.”
The Western Climate Initiative — whose board includes representatives from California, Quebec and Nova Scotia, another Canadian province — is also a defendant in the lawsuit. A similar cap-and-trade system, the Regional Greenhouse Gas Initiative, covers power-plant emissions in Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont, but does not stray beyond the borders of the United States.
Robert N. Stavins, a professor of economics at Harvard University, said linking California’s cap-and-trade system to Canada’s enables cost savings for electricity generators in both places.
“If the lawsuit were successful, both policies would remain in place, but the costs to compliance entities and to the broader economies (including consumers) would increase,” he said in an emailed comment. “That outcome would be in no one’s interest!”