Automakers Split in Fight Over Trump’s Fuel Economy Rules

Source: By Ryan Beene and Malathi Nayak, Bloomberg • Posted: Monday, June 29, 2020

Ford Motor Co., Honda Motor Co., Volkswagen AG and BMW AG will file a joint motion on Monday with a Washington, D.C., appeals court to get involved in litigation challenging the Trump administration’s March rule that weakened future U.S. fuel efficiency and emissions standards for vehicles, according to Ford.

The action separates the companies from the auto industry’s primary trade association, the Alliance for Automotive Innovation. That group in late May threw its support behind the Trump administration by intervening in support of the U.S. in a legal challenge brought by a libertarian organization that said the weaker federal rules were still too strict. The trade group represents nearly every major automaker, including General Motors Co., Fiat Chrysler Automobiles NV and Toyota Motor Corp.

Bob Holycross, Ford’s vice president of sustainability, environment and safety engineering, said the legal filing doesn’t take a position on the rules themselves or the challenges they face, but instead aims to preserve the companies’ ability to have a say in potential replacement standards should courts find the current policy needs to change.

Regardless of how the litigation plays out, “our goal and our interest is coalescing around the framework that we’ve outlined with California,” Holycross said.

The move highlights the widening chasm between carmakers over Trump’s rule mandating fuel efficiency gains of roughly 1.5% annually starting in 2021, a major reduction from the 5% annual gains demanded by rules set during the Obama administration.

Ford, Honda, Volkswagen and BMW in July agreed to voluntarily meet tailpipe standards set by California clean air regulators that were more stringent than the Trump administration’s nationwide standards being finalized at the time. President Donald Trump lashed out against the pacts on Twitter, and the Justice Department opened an antitrust probe into deals that was dropped in February.

Holycross said the legal action reflects Ford’s desire to continue toward its voluntary emissions pact with California, which he said provides the company with greater regulatory certainty and is more supportive of electric vehicles than the federal rules.

The automakers will file to intervene in a lawsuit by power companies, including Calpine Corp. and Consolidated Edison Inc., in May seeking a review of the federal fuel efficiency rule, one of several similar actions filed against the federal standards after they were finalized in late March.

California and nearly two dozen other states and environmental advocacy groups have filed separate suits to stop the Trump administration from easing the requirements. Ford’s filing with the other carmakers doesn’t endorse the state’s argument.

As those cases are underway, the automakers are looking to protect their interests, as a final decision calling for a rule review would affect the fate of the auto industry. The industry is already under stress from the U.S. economic shutdown, the fuel costs borne by Americans and pollution levels in the country.

(Updates with latest filing plan in second paragraph)