DOJ Drops Probe of Carmakers that Aligned with California on Pollution

February 11, 2020

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by Zack Coleman and Alex Guillén (Politico) DOJ was investigating whether Ford, Volkswagen, Honda and BMW illegally coordinated last year. -- The Justice Department has ended its antitrust investigation of automakers who formed a voluntary deal with California to reduce air pollution — a probe that was one of a series of punitive Trump administration actions against blue states and their liberal policies.

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DOJ was investigating whether Ford, Volkswagen, Honda and BMW illegally coordinated last year when they agreed to follow California's stringent vehicle fuel-economy targets, largely out of concern for climate change.

California Gov. Gavin Newsom had attacked the DOJ inquiry as politically motivated and part of a pattern in President Donald Trump's feud with the state over environmental rules and other issues.

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The end of the antitrust probe came as the Trump administration is preparing to finish rolling back planned increases in federal fuel-economy standards and as it defends in court its decision to strip California's long-standing ability to set its own requirements.

The latter action threatens to fracture the auto market, as 13 states plus the District of Columbia follow California's standard, representing 40 percent of vehicle sales. California has asserted a right to set stronger marks due to its unique topography and persistent local air pollution problems. READ MORE

Justice Dept. ends antitrust probe of 4 automakers who sided with California: Ford, BMW, Honda, VW did nothing wrong, investigation concludes (Auto Blog)

Administration ends antitrust probe of 4 automakers, Calif. (Santa Maria Times/Associated Press)

DOJ dropping antitrust probe of four major automakers (The Hill)

Justice Department Drops Antitrust Probe Against Automakers That Sided With California on Emissions (New York Times)

DEM PUSHES DOJ ON CALIFORNIA INVESTIGATION: (Politico's Morning Energy)

CAR EMISSIONS IN THE SPOTLIGHT: (Politico's Morning Energy)

House panel digs into DOJ auto emissions probe (Politico's Morning Energy)

Testimony of John W. Elias (U.S. House Committee on the Judiciary)

DEMS WANT SENATE TO LOOK AT DOJ POLITICIZATION: (Politico's Morning Energy)

Excerpt from Poltico's Morning Energy: DEM PUSHES DOJ ON CALIFORNIA INVESTIGATION: (Senator Sheldon) Whitehouse (D-R.I.) is pressing DOJ antitrust chief Makan Delrahim to answer questions about the origin of his now-closed investigation of the voluntary emissions deal struck last year between California and four automakers. After lots of buzz, DOJ's antitrust investigation was dropped a few months ago. Delrahim has long rejected complaints that his probe was politically motivated.

In a Tuesday letter, Whitehouse asked Delrahim to fully answer questions about who at DOJ first proposed the investigation and whether any steps had been taken prior to August 2019 tweets from Trump attacking the automakers. Delrahim has previously sidestepped sharing any real information about the investigation with lawmakers, Whitehouse complained. READ MORE

Excerpt from Politico's Morning Energy: CAR EMISSIONS IN THE SPOTLIGHT: The Justice Department had concerns that BMW, Ford, Honda and Volkswagen illegally agreed among themselves to adopt California's stronger emissions standards, the agency said last week in its first substantive explanation of the since-closed investigation. In a letter to Whitehouse, Assistant Attorney General for Legislative Affairs Stephen E. Boyd said the probe was "entirely reasonable" since an agreement between the carmakers would violate antitrust law. "To be clear, the Division did not seek to investigate bilateral agreements between individual automakers and the State of California," Boyd said in the Friday letter. "Rather, it undertook an investigation of whether competing automakers had entered an agreement with each other—a key distinction for antitrust purposes, even if the State of California were a participant."

— The antitrust division opened the probe in September, around the same time the Trump administration moved to revoke California's ability to set its own emissions standards. The investigation was blasted by Democrats and California politicians, who alleged the antitrust probe was politically motivated. Assistant Attorney General for Antitrust Makan Delrahim defended the decision to open a probe in an op-ed in USA Today but later declined to answer questions about the investigation citing department policy against commenting on ongoing matters. DOJ officially closed the probe in February.

On the schedule: On Wednesday, Delrahim's former chief of staff, John Elias, is expected to testify before the House Judiciary Committee about the car emissions probe. READ MORE

Excerpt from Politico's Morning Energy: DOJ WHISTLEBLOWER TO ANSWER AUTO QUESTIONS: The antitrust probe the DOJ launched last year into the voluntary vehicle emissions agreement between California and Ford, Volkswagen, Honda and BMW was rushed, unusual and launched over the objections from career staff, according to testimony from John W. Elias, who will testify before the House Judiciary Committee today.

The written testimony released Tuesday describes what the career prosecutor viewed as the irregular nature of the investigation into the automakers, as well as other aspects of the Trump administration's fight with California on the environment, Pro's Alex Guillén and Leah Nylen report. President Donald Trump tweeted critically about the deal on Aug. 21, and the next day, DOJ's antitrust leaders ordered an investigation, Elias said in his testimony.

DOJ spokesperson Brianna Herlihy said that the investigation, which was ultimately closed in February, "was entirely consistent with established policies and not the result of any influence from outside the Department." She said the antitrust division opened the probe to review whether the deal constituted a horizontal agreement among competitors, which if so, could potentially be an antitrust violation. Elias' testimony "rests entirely upon his opinion and provides no evidence to the contrary," Herlihy added.

Elias' testimony on the auto emissions probe is part of a broader pattern critics have identified of politicization at the Trump DOJ. Today's hearing will also cover a string of allegedly shaky investigations into cannabis mergers that Elias says were undertaken because Attorney General William Barr dislikes marijuana.

Also sure to get a lot of attention will be testimony from career prosecutor Aaron Zelinsky about political pressure in the Roger Stone case. While every administration gets accused of politicizing DOJ, having career prosecutors come forward publicly like this is striking.

Bass fishing: The House Judiciary Committee is home to a number of California Democrats who may focus on the auto emissions probe, including 13-termer Zoe Lofgren and climate hawk Ted Lieu. But with hearing performances becoming a part of veepstakes try-outs for lawmakers under consideration, ME will be keeping a special eye on Karen Bass, who is now reportedly in the mix to be Joe Biden's running mate. Fellow contender Val Demings of Florida is also on the committee. READ MORE

Excerpt from Politico's Morning Energy: DEMS WANT SENATE TO LOOK AT DOJ POLITICIZATION: Senate Democrats want Republican leaders to look into allegations made this week that the Justice Department's decisions on antitrust investigations were influenced by partisan politics, Pro's Leah Nylen and Alex Guillén report. Klobuchar (D-Minn.), the top Democrat on the Senate Judiciary Antitrust and Competition Subcommittee, said at a markup of a bill related to inspectors general that the Senate should look into the claims fro m career antitrust prosecutor John W. Elias that the Trump administration didn't like the emissions deal California struck with four automakers last year and used DOJ's antitrust division to attack it.

Klobuchar and six Democratic colleagues on the Judiciary panel sent a letter Wednesday to committee chair Lindsey Graham (R-S.C.) and Mike Lee (R-Utah), who heads the antitrust subcommittee, calling for a hearing. Conn Carroll, a spokesperson for Lee, said the senator received Democrats' letter and is reviewing the transcript of Wednesday's House hearing. "No decision on a possible Senate hearing has been made yet," Carroll said. READ MORE