Car Clash Hits Cap Hill: Motor Madness

October 29, 2019

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by Gavin Bade (Politico's Morning Energy) House lawmakers will hold a hearing today to critique the White House plan to roll back vehicle fuel economy standards, a day after GM, Fiat Chrysler and Toyota said they would side with the Trump administration on the proposal. ... Lawmakers on the House Committee on Oversight and Reform will delve into the Trump administration’s forthcoming rewrite to vehicle fuel efficiency rules, jumping into the battle between California and its backers and the White House.

EPA and the National Highway Traffic Safety Administration have yet to finalize their rollback of the Obama-era standards, but a draft proposal suggested the administration would seek to freeze efficiency upgrades after 2020, rather than keeping the Obama-era target of 54.5 miles per gallon in 2025. While that freeze is likely to soften some, the so-called ramp rate remains uncertain, and EPA has said it would revoke California’s power to set more stringent tailpipe limits to address greenhouse gas emissions.

Expect the discussion to get political. Former California Democratic Gov. Jerry Brown, who challenged Trump on climate when he ran the Golden State, is testifying along with climate hawk Sen. Sheldon Whitehouse (D-R.I.). Brown and his successor, Newsom, have dismissed Trump’s environmental actions against California as politically motivated. The Justice Department last month opened an antitrust probe into a deal California negotiated with Ford, Honda, Volkswagen and BMW to maintain the more aggressive fuel targets.

Democrats' witnesses will likely question the Trump administration’s analysis that softening the Obama-level 54.5 mpg target will reduce traffic fatalities. Antonio Bento, a University of Southern California environmental economist who contends the Trump administration misrepresented his and his peers’ work throughout the draft rule to justify their rollback, will also testify.

The hearing comes a day after GM, Fiat Chrysler and Toyota announced they will join a group of smaller foreign automakers to intervene in a federal court case in support of the administration’s plan. The coalition told reporters Monday that it supports increasing fuel efficiency standards year over year, as California envisions, but wants to ensure there is only one set of rules for the entire nation. The group hopes it can spur compromise between the sides.

“It’s been the historic position of the industry, and frankly it's been a federal policy for the better part of 40 years, that the federal government has the sole responsibility for regulating fuel economy standards,” John Bozzella, head of the Association of Global Automakers, told reporters. READ MORE

GM, Toyota, FCA back Trump on Calif. emissions challenge (Reuters/Automotive News)

UPDATE 3-GM, Toyota, Fiat Chrysler back Trump on California emissions challenge (Reuters/CNBC)

White House Pressed Car Makers to Join Its Fight Over California Emissions Rules (New York Times)

GM, Toyota and Chrysler side with White House in fight over California fuel standards, exposing auto industry split (Washington Post)

Big automakers take risks in siding with Trump administration against California (Washington Post)

The Energy 202: Trump administration makes U-turn on fuel efficiency standards (Washington Post)

GM, Chrysler and Toyota Take Trump’s Side on Federal Standards on Clean Cars (Our Daily Planet)

Daily on Energy: New fronts and new alliances in the war over fuel economy standards (Washington Examiner)

White House Backing Off Proposed Fuel-Efficiency Freeze: Trump administration plans for annual efficiency increases of 1.5%; rule likely to come by year’s end (Wall Street Journal)

Trump administration backing off plans to freeze fuel economy: WSJ (The Hill)

DOJ ISSUES AUTOMAKER SUBPOENAS: (Politico's Morning Energy)

New Consumer Reports analysis shows near-freeze of fuel economy rules would cost consumers $300 billion (Consumer Reports)

The Interaction of the Clean Air Act, California’s CAA Waiver, Corporate Average Fuel Economy Standards, Renewable Fuel Standards and California’s Low Carbon Fuel Standard (Advanced Biofuels USA)

Excerpt from New York Tmes: Andrew Olmem, a top policy aide to Mr. Trump, began calling car companies to push them to sign on to the administration’s effort in the courts to eliminate California’s right to set its own auto emissions rules on planet warming pollution, a power granted under the Clean Air Act of 1970. He was joined on the phone in some cases by Justice Department officials, according to a person familiar with the matter.

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Carmakers have long feared that Mr. Trump might retaliate, either with tariffs or trade restrictions, if they didn’t support his effort to dismantle the rules, which were designed to fight climate change. After California struck its deal with the four automakers, the administration and Justice Department pushed a series of unusual legal and policy moves against the state and those companies — including an antitrust investigation — that were widely perceived as retaliatory.

Representatives from General Motors and Fiat Chrysler declined to comment on the record, since the legal case is still unfolding. In a statement, Toyota said that it had “entered into this legal action not as a plaintiff or a defendant, and not to favor any political party. Toyota is intervening to impact how emissions standards are applied.”

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The split among the auto giants is far more consequential than simply the pursuit of divergent legal strategies among corporate competitors. “This is a huge rift. These vehicle manufacturers are splitting up in unique ways,” said Barry Rabe, a professor of public and environmental policy at the University of Michigan. “Imagine an administration unleashed in a second term to confront any industry that does not do the political bidding of the president,” he said.

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General Motors, Toyota and some other members of the alliance thought it was a safer bet to back the White House, which is fighting a lawsuit against the administration filed by California and more than 20 other states. But other alliance members, namely Ford, BMW and Volkswagen, along with Honda (not part of the manufacturers’ alliance), had already struck a deal to side with California and abide by its tougher rules, publicly opposing Mr. Trump.

Given that its members were divided, the Alliance told the White House it would not be publicly siding with the Trump administration, according to a person familiar with the matter.

The White House sprang into action. It faced a deadline — this past Monday — for any other parties to legally support its position, but as of last Friday afternoon, according to four people familiar with the matter, there were no plans for major car companies to back the White House.

Since the opening days of his administration, Mr. Trump has touted his rollback of vehicle pollution rules as helping both automakers and car buyers, who he said would benefit from lower sticker prices.

Mr. Olmem, the White House policy aide, along with some Justice Department officials, started calling car companies to push them to sign on to the administration’s side of the lawsuit. The case, which is ultimately expected to play out before the Supreme Court, could potentially have far-reaching consequences for both climate change and states’ rights.

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People with knowledge of Mr. Olmem’s calls to the auto companies said he did not make explicit threats for lack of support. But behind the scenes, automakers have expressed concerns over an administration that has shown a willingness to reward or retaliate against other industries. Foreign automakers, in particular, have worried that Mr. Trump might consider tariffs on imported cars or car parts, or even label foreign-car sales a national security issue, which could further complicate imports.

The Trump administration and the Justice Department have also pursued a host of legal measures against California and the car companies that have sided with it.

Last month, for example, days after California filed its suit fighting the administration’s revocation of its emissions authority, the Justice Department opened its antitrust inquiry into the four automakers that had joined with California. The administration also sent a letter to the state threatening to withhold federal highway funds if it did not comply with certain Environmental Protection Agency demands. And last week, the Justice Department sued California over its effort to extend its climate change initiative into Canada. READ MORE

Excerpt from Politico's Morning Energy: DOJ ISSUES AUTOMAKER SUBPOENAS: The Justice Department issued civil subpoenas to Ford, Honda, BMW and Volkswagen — the four automakers that reached a tailpipe emissions deal with California, The Wall Street Journal reports, according to people familiar with the matter. The subpoenas are the latest development in the Trump administration's antitrust probe into the California deal. READ MORE

Excerpt from Washington Post Energy 202: At first, the Trump administration wanted to freeze standards aimed at curbing climate change. But now there is a bit of a thaw.

The administration has decided to propose actually requiring auto companies to improve automobile fuel efficiency, The Post's Juliet Eilperin, Brady Dennis and Josh Dawsey report.

The decision is a notable U-turn for President Trump, whose deputies for the past year have sought to freeze those standards entirely. It means his administration may actually put in place rules for newly manufactured cars and light trucks that will curb climate-warming emissions from the nation's biggest greenhouse gas contributor: the transportation sector.

Here's what we know right now: According to senior federal officials who spoke on the condition of anonymity, the yet-to-be-published rule would involve requiring auto companies to improve fuel efficiency at a pace of 1.5 percent a year. READ MORE