United States v. State of California ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 THE UNITED STATES OF AMERICA, No. 2:19-cv-02142 WBS EFB 13 Plaintiff, 14 v. ORDER RE: MOTION TO DISMISS 15 THE STATE OF CALIFORNIA; GAVIN C. NEWSOM, in his official 16 capacity as Governor of the State of California; THE 17 CALIFORNIA AIR RESOURCES BOARD; MARY D. NICHOLS, in her official 18 capacity as Chair of the California Air Resources Board 19 and as Vice Chair and a board member of the Western Climate 20 Initiative, Inc.; WESTERN CLIMATE INITIATIVE, INC.; JARED 21 BLUMENFELD, in his official capacity as Secretary for 22 Environmental Protection and as a board member of the Western 23 Climate Initiative, Inc.; KIP LIPPER, in his official capacity 24 as a board member of the Western Climate Initiative, Inc., and 25 RICHARD BLOOM, in his official capacity as a board member of 26 the Western Climate Initiative, Inc., 27 Defendants. 28 1 ----oo0oo---- 2 Plaintiff United States of America (“United States”) 3 brings this action against the State of California and other 4 related individuals and entities alleging California’s cap-and- 5 trade program violates, inter alia, the Treaty Clause and the 6 Compact Clause of the United States Constitution. (See First Am. 7 Compl. (“FAC”) (Docket No. 7).) 8 Specifically, the United States seeks a declaration 9 that the Agreement between the Government of California, the 10 California Air Resources Board, and the Governments of Quebec and 11 Ontario, Canada relating to cap-and-trade programs for reducing 12 greenhouse gas emissions (“the Agreement”) is unconstitutional. 13 The United States also seeks a declaration that Agreement 11-415, 14 between the California Air Resources Board and Western Climate 15 Initiative, Inc. (“WCI, Inc.”) providing for administrative and 16 technical support to the programs, is unconstitutional, and asks 17 the court to permanently enjoin all defendants from operating or 18 implementing both agreements and the supporting California law as 19 applied. 20 Presently before the court is a motion to dismiss for 21 lack of jurisdiction and failure to state a claim, brought on 22 behalf of WCI, Inc., WCI, Inc. board members Mary Nichols, Jared 23 Blumenfeld, Kip Lipper, and Richard Bloom in their capacities as 24 board members, and Jared Blumenfeld in his capacity as Secretary 25 of California’s Environmental Protection Agency (“CalEPA”). 26 (Docket No. 25.) None of the other defendants contest 27 jurisdiction or the sufficiency of the allegations of the 28 complaint as against them. 1 The basis of moving defendants’ motion to dismiss for 2 lack of subject matter jurisdiction under Federal Rule of Civil 3 Procedure 12(b)(1) is that the United States lacks Article III 4 standing to bring this action against them because the complaint 5 does not show any causal relationship between the injury which 6 plaintiff claims it will suffer and any conduct of the moving 7 defendants. Because the same issue of causation forms the basis 8 for moving defendants’ motion to dismiss for failure to state a 9 claim under Federal Rule of Civil Procedure 12(b)(6), the court 10 will address both the Rule 12(b)(1) and Rule 12(b)(6) motions 11 together with regard to each of the moving defendants. 12 1. WCI, Inc. 13 In causes of action one through four of the FAC, the 14 United States alleges California’s cap-and-trade program violates 15 the Treaty and Compact Clauses of the United States Constitution, 16 the Foreign Affairs Doctrine, and the Foreign Commerce Clause of 17 the Constitution. (FAC ¶¶ 156-187.) While WCI, Inc. was not a 18 signatory to the Agreement, it was a signatory to Agreement 11- 19 415, which acknowledged that WCI, Inc. was established “to 20 provide coordinated administrative and technical support to 21 linked emissions trading programs implemented by the 22 [participating] jurisdictions.” (FAC ¶ 142.) 23 The FAC goes on to allege that in Agreement 11-415 the 24 California Air Resources Board and WCI, Inc. acknowledged that 25 WCI, Inc. “enables cap-and-trade programs to be administered at a 26 lower cost than would be possible with independent administration 27 28 1 by each of the WCI Partner jurisdictions.” (Id., ¶ 146.)1 2 The foregoing allegations are sufficient at the 3 pleading stage to present a plausible theory that WCI, Inc.’s 4 conduct in the administration and implementation of the Agreement 5 will have a role in causing or contributing to the injury which 6 the United States seeks to enjoin in this action and that in 7 order for complete relief to be afforded to the United States 8 WCI, Inc. must be subject to any orders for injunctive relief 9 that may be issue in this case against the other defendants. 10 Accordingly, the court will deny WCI, Inc.’s motion to dismiss. 11 2. WCI, Inc. Board Members 12 California statutorily provides for two voting members 13 to WCI, Inc.’s board of directors. See Cal. Gov. Code § 14 12894(b)(1)(C)-(D). They are “[t]he Chairperson of the State Air 15 Resources Board,” defendant Mary Nichols, and “[t]he Secretary 16 for Environmental Protection,” defendant Jared Blumenfeld.2 17 Additionally, the law requires an appointee from each chamber of 18 California’s legislature to serve on WCI, Inc.’s board as a non- 19 voting member. See Cal. Health & Safety Code § 12894(b)(1)(A)- 20 (B). Kip Lipper was appointed to WCI, Inc.’s board by the 21 22 1 The Complaint appears to confuse WCI, which is the Initiative itself, and WCI, Inc., which is the non-profit 23 corporation named as a defendant in this action. The court has reviewed the text of Agreement 11-415 and confirmed that the 24 references in the Complaint to “WCI” in Agreement 11-415 are in fact references to WCI, Inc. 25 2 Both Nichols and Blumenfeld are also sued in their official capacities as Chair of the Air Resources Board and 26 Secretary of CalEPA. (See FAC ¶¶ 13, 16.) Nichols does not move 27 to dismiss the claim against her as Chair of the Air Resources Board. Blumenfeld’s motion to dismiss the claims against him as 28 the Secretary of CalEPA is discussed below. 1 California Senate Rules Committee, and Richard Bloom was 2 appointed to the board by the Speaker of the California Assembly. 3 (FAC ¶¶ 17-18.) All are sued in their official capacities as 4 board members of WCI, Inc. (Id. ¶¶ 13, 16-18.) 5 Defendants Nichols and Blumenfeld are statutorily 6 obligated to serve on WCI, Inc.’s board as an extension of their 7 official duties as members of California’s government. Cal. Gov. 8 Code § 12894(b)(1)(C)-(D). Suits for prospective injunctive 9 relief are properly brought against individual state agents 10 operating within their official capacities. See Ex parte Young, 11 209 U.S. 123, 155-56 (1908). Accordingly, the movants’ motion to 12 dismiss will be denied as to Nichols and Blumenfeld in their 13 capacity as WCI, Inc. board members. 14 Lipper and Bloom, however, are non-voting members, and 15 as such cannot act on behalf of WCI, Inc. or its board. It is 16 not alleged that Lipper and Bloom are in “active concert or 17 participation” with the other defendants as non-voting members of 18 WCI, Inc.’s board. Indeed, at the hearing, plaintiff’s counsel 19 struggled to describe what an injunction against Lipper and Bloom 20 would actually provide, let alone achieve. (Docket No. 77.) 21 While Nichols and Blumenfeld could influence WCI, Inc. through 22 their votes, neither Lipper nor Bloom are empowered to do 23 anything other than attend meetings and voice their opinions at 24 them. Accordingly, the United States has failed to present a 25 plausible claim for injunctive relief against Lipper and Bloom, 26 and the court will grant movants’ motion to dismiss as to them. 27 3. Secretary for Environmental Protection Blumenfeld 28 Finally, Jared Blumenfeld, in his official capacity as 1 the Secretary of the CalEPA, argues the adoption and 2 implementation of California’s cap-and-trade program was 3 expressly delegated to the Air Resources Board. See Cal. Health 4 & Safety Code § 38560; see also Cal. Health & Safety Code § 5 38562(c)(2). But CalEPA is the parent agency of the Air 6 Resources Board. See Cal. Gov. Code § 12812. Blumenfeld is 7 “directly responsible to the Governor for, the operations of each 8 department, office, and unit within the agency.” Cal. Gov. Code 9 § 12850. While the Air Resources Board may retain a certain 10 degree of independence, Secretary Blumenfeld is statutorily 11 charged with “coordinat[ing] greenhouse gas emission reductions 12 and climate-change activities in state government.” Cal. Gov. 13 Code § 12812.6. Indeed, he “hold[s] the head of each department 14 [including the Air Resources Board] responsible for management 15 control over the administrative, fiscal, and program performance 16 of his or her department, office, or other unit.” Cal. Gov. Code 17 § 12800(b). 18 Again, suits for prospective injunctive relief are 19 properly brought against individual state agents. See Ex parte 20 Young, 209 U.S. at 155-56. The United States has plausibly 21 alleged its claimed injury -- the usurpation of federal authority 22 to conduct foreign affairs -- is directly attributable to 23 agreements the Air Resources Board signed on behalf of 24 California. (See FAC ¶ 57, 92-96, 128-133.) Secretary 25 Blumenfeld’s supervisory authority makes him a proper party in 26 this suit. Accordingly, the court will deny his motion to 27 dismiss in his official capacity as Secretary of CalEPA. 28 IT IS THEREFORE ORDERED that the motion to dismiss for WAS UV VEST VY RODE BP MVMVUPTIOCTI ES PIR Veliewey Taye ve 1 lack of subject matter jurisdiction and failure to state a claim 2 (Docket No. 25) be, and the same thereby is, GRANTED with respect 3 to defendants Kip Lipper and Richard Bloom, and DENIED with 4 respect to all other parties. 5 | Dated: February 26, 2020 tleom ah. A. be—~ 6 WILLIAM B. SHUBB UNITED STATES DISTRICT JUDGE 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28