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California is also battling the Trump administration over auto emissions.

Justin Sullivan/Getty Images

Topline: In the latest sign of increasing hostilities between California and the Trump White House, the Justice Department sued the state Wednesday, alleging that it circumvented the federal government by entering into an agreement to reduce air pollution with the Canadian province of Quebec.

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  • The lawsuit claims that California's cap-and-trade program is unlawful because it includes a foreign entity: Quebec.
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  • Cap-and-trade refers to the practice of creating annual limits (caps) on carbon dioxide emissions while allowing corporations to buy and sell (trade) permits to produce emissions within that limit.
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  • Under California's program, manufacturers can trade those permits in an auction with companies in Quebec, which has its own cap-and-trade program.
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  • The program is considered by environmentalists a novel market solution to reduce dangerous carbon emissions that contribute to climate change.
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  • In the lawsuit, the DOJ likens the program to an "independent foreign policy in the area of greenhouse gas regulation" because it includes Quebec.

Crucial quote: "The state of California has veered outside of its proper constitutional lane to enter into an international emissions agreement. The power to enter into such agreements is reserved to the federal government, which must be able to speak with one voice in the area of U.S. foreign policy," said assistant attorney general Jeffrey Bossert Clark.

Chief critic: California governor Gavin Newsom said in a statement that the lawsuit is an example of the White House's "political vendetta" against California. "Carbon pollution knows no borders, and the Trump administration's abysmal record of denying climate change and propping up big polluters makes cross-border collaboration all the more necessary," Newsom said. (Clark told the Wall Street Journal in an interview that the case isn't political and that department didn't consult with the White House before filing the suit.)

Key background: California, where Trump lost handily in the 2016 election, has been involved in several conflicts with the Trump administration. The state and 23 others are battling Trump over the administration's decision to roll back auto emissions standards. Lawmakers passed a bill that may force Trump to release his tax returns to appear on the 2020 primary ballot. And in San Francisco, state and local officials pushed back against an EPA citation that claimed the city was letting sewage pollute the ocean.

Further reading: Read the full complaint here.

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I'm a San Francisco-based reporter covering breaking news at Forbes. Previously, I've reported for USA Today, Business Insider, The San Francisco Business Times and San

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