White House Pressed Car Makers to Join Its Fight Over California Emissions Rules

Source: By Coral Davenport and Hiroko Tabuchi, New York Times • Posted: Thursday, October 31, 2019

WASHINGTON — Monday’s surprise move by General Motors, Toyota and other auto giants to back President Trump in his fight with California over pollution rules came after days of White House pressure to support one of the administration’s biggest efforts to weaken climate regulations.

Previously, many automakers had indicated to California that they would not take a stand, according to Mary D. Nichols, chairwoman of California’s clean air regulator, the Air Resources Board.

Late last week, their stance quickly changed.

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.

The auto industry was already divided. In July four other major companies — Ford, Honda, Volkswagen and BMW — publicly sidedwith California.

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.”

On Wednesday Mr. Trump wrote on Twitter, “Thank you” to General Motors, Toyota, Fiat Chrysler and the other automakers, “for standing with us for Better, Cheaper, Safer Cars for Americans. California has treated the Auto Industry very poorly for many years, harming Workers and Consumers. We are fixing this problem!”

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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It was that calculus that concerned many automakers at a gathering earlier this month in the sleek Washington office of the Alliance of Automobile Manufacturers, the industry’s powerful lobbying arm. The companies were split over whether to back Mr. Trump’s revocation of the right of California and other states to set strict state rules on climate-warming tailpipe pollution.

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.

The calls appeared to work.

Over the weekend, the companies rapidly worked out their plan.

On Monday, more than a dozen automakers filed a legal intervention siding with the White House’s effort to revoke the right of California and other states to enact tougher emissions rules than those set by the federal government. The final details were still being worked out as late as Monday morning, said three people familiar with the matter.

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.

The decision by General Motors and the others to side with the administration was criticized by officials in California. “They have consistently said that they wanted a negotiated agreement that California could agree to. But now they are parroting, almost copying, the Trump administration’s lies,” said Ms. Nichols, the California clean-air official.

During the Obama administration, California wanted to set one of the world’s most ambitious standards to curb vehicle carbon dioxide emissions. Carbon dioxide, a heat-trapping greenhouse gas, is one of the largest contributors to global warming, and tailpipes are the world’s largest source.

Automakers pushed back against California’s effort to create an ambitious state pollution standard, fearing it could split the auto market in two, with California and other states following one set of pollution rules and the federal government following another.

President Barack Obama, though, declared that the federal government would follow California’s standard, ensuring a single national auto market. The Obama-era standard requires automakers to build vehicles that achieve an average fuel economy of 54.5 miles per gallon by 2025, which would eliminate about six billion tons of carbon dioxide pollution over the lifetime of those vehicles.

As soon as Mr. Trump came into office, he made it a priority to dismantle that rule.

In September, the administration revoked the legal authority of California and other states to set their own standards. Separately, the E.P.A. and Transportation Department are working on a new rule, which they expect to publish this winter, rolling back the national fuel economy standard to about 40 miles per gallon.

That crafting of that rule — which Trump administration officials had expected to unveil in May — has been plagued with confusion and delays, as many people familiar with the process say that Mr. Trump’s appointees are struggling to prepare a plan that can withstand legal challenges.

General Motors and its peers have said that their decision to side with the administration does not mean they will support the final Trump rollback.

They point out that they can withdraw their legal support at any point — if, for example, they don’t like the final rule. But by formally participating in this way, they say, it is more likely they will keep their seats at the table and hedge their bets.

Some experts questioned the automakers’ legal reasoning for siding with the administration. “It’s hard to see how this intervention is anything other than a pretty hostile stance against California’s authority,” said Ann Carlson, co-director of the Emmett Institute on Climate Change and the Environment at the University of California Los Angeles Law School.

For years, she said, California’s efforts to set tougher clean air rules amounted to pressure on the federal government to follow suit. “If you eliminate that authority, you eliminate that pressure. That’s awfully convenient for the auto companies,” she said.