Automakers caught in tup-of-war between Trump and California

Source: By Josh Siegel, Washington Examiner • Posted: Thursday, September 19, 2019

There’s no way around it: Automakers are caught in the middle.

Back in 2017, when the Trump administration first came into office, car companies lobbied the Environmental Protection Agency and the Transportation Department to take another look at federal fuel economy standards. The Obama EPA in its final few months had rushed through a determination to keep the stringent standards, and car companies wanted some relief, they told the administration.

But now, car companies are the ones being lobbied by two warring factions — the Trump administration and its allies on one side, and California, Democratic lawmakers, and environmentalists on the other.

Each side wants the industry to back them up in the ever-escalating battle over the future of fuel economy and greenhouse gas limits for passenger cars.

And at this point, even if automakers don’t pick a side, they might end up getting burned — by years-long litigation prolonging uncertainty in the market and potential enforcement actions from either side against each other or the automakers themselves.

“You talk to the engineers at the car companies, and they say, ‘Just tell me what the rules are,’” Maureen Gorsen, partner in Alston & Bird’s environment, land use, and natural resources group based in California, told Abby. The politics are “all fun and games, but they just need to know.”

But nothing is set in stone at this point, she said, adding the landscape could dramatically change depending on what action the courts take and who wins the presidency in 2020.

In July, four automakers finally chose sides. Ford, Honda, Volkswagen, and BMW struck a deal with California to follow standards weaker than the Obama-era rules but much more stringent than what the Trump administration proposed.

Tensions between Trump and California keep getting higher, and the automakers’ deal is caught up in it: During an announcement at EPA headquarters Thursday that the Trump administration would eliminate California’s authority to set its own greenhouse gas limits for cars, agency officials also hinted they could take legal action against the California deal.

That would be separate from an antitrust investigation the Justice Department has already launched against the four companies to explore whether they violated federal competition laws by teaming up with California.

California needs to apply for a new waiver from the EPA to be allowed to change its state-level vehicle rules to accommodate the deal made with the automakers, EPA general counsel Matt Leopold told reporters Thursday.

“California knows this full well,” Leopold said, in response to questions from Abby. “We haven’t been contacted by California to seek any waiver, so we question the legality of that.”

Leopold didn’t say directly whether the EPA could bring an enforcement action against California, but he didn’t rule it out either.

“I will say that the law is clear that absent a waiver from the EPA, they can’t adopt or attempt to enforce — that’s the language of the statute — standards,” he added.

Meanwhile, automakers’ phones are ringing off the hook: Senator Tom Carper of Delaware, the top Democrat on the Senate environment committee, told reporters Wednesday he and his staff called nearly a dozen automakers to urge them to join the California deal.

Environmental groups are putting increasing pressure on the companies, too.

“Investors understand that California’s stronger standards spur innovation and keep the U.S. auto industry competitive, and they know undermining those standards would throw the industry into disarray,” Sue Reid, vice president of climate and energy for the sustainable investment group Ceres, said in a statement.

Reid urged other automakers to join the compromise with California.

No other car companies have spoken up to join the deal so far. But some in the auto industry are still holding onto hope and urging the Trump administration and California to come back to the negotiating table.