President Trump divides just about everything political he or his administration touches. The latest industry Trump has caused to turn against itself is automaking.
Since Day 1 of the Trump presidency, the auto industry has been hoping to re-negotiate the deal it struck with the Obama administration on auto and light truck fuel efficiency standards (CAFE) for the period 2021 through 2025. The industry thought its wishes were answered when in April 2018 the then-EPA Administrator Pruitt announced the Trump administration would be rolling back the auto efficiency rule that the Obama administration had negotiated with the automakers in 2010.
Not long after the announcement, however, wisher’s remorse began to settle on the sector. It was clear from the beginning that the dialogue between the California Air Resources Board (CARB) and the administration would not go well. The only thing the two sides seemed to share was antipathy for each other.
Without much warning, the administration cut off any further discussions with CARB in February 2019 and announced it would be going ahead with its Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule that freezes the standards through 2025 at the 2020 level—a number much below what the industry is both capable and willing to meet.
Automakers had hoped to gain some flexibility in meeting the 54.5 mpg target, e.g., additional time, more than it wanted the standard rolled back. The industry recognized that greater fuel efficiency was important to consumers and the climate. Increased efficiencies were needed by US manufacturers to stay competitive in foreign markets, and the industry had already invested heavily both in design and technology to meet the Obama era standard.
Once California and the Trump administration pulled back, automakers found themselves behind an eight-ball of uncertainty–not knowing what standard to build to. To achieve the needed certainty, four major automakers—Ford, VW, Honda, and BMW of North America entered into their own agreement with California.
Central provisions of the deal are:
- The four companies have agreed to produce fleets averaging nearly 50 miles per gallon (mpg) by the model year 2026–one year later than the target set under the Obama administration. The four companies account for around 30 percent of the US auto market.
- California, for its part of the agreement, pledged to certify vehicles from the four automakers and provide the companies additional flexibility in meeting each year’s emissions goal, which is to improve their fleet’s average efficiency by 3.7 percent a year, as opposed to 4.7 percent dictated under the Obama-era rules.
- Automakers will also be entitled to receive significant credits for adopting climate-friendly technologies, such as cooling cars more effectively through less polluting refrigerants and selling more electric vehicles
The “deal” both embarrassed and infuriated Trump. In early September, the US Department of Justice (DOJ) announced that it had opened an anti-trust inquiry over the actions of California and the four automakers at the president’s request. The administration understood that the California agreement threatened to undercut its authority to set a federal fuel efficiency standard.
If states and automakers could just go off and cut their own deals, who would need the federal government? Moreover, the side deal was thought inconsistent with Trump’s promise to deregulate the environment.
It seemed clear, at the time, that the DOJ announcement was not just a shot across the bows of the four automakers; it was a none too subtle message to other states and the remaining manufacturers not to follow suit. The message was received.
Kia, General Motors, and 14 other foreign and American car companies[i] have now asked the US District Court for the District of Columbia for permission to intervene on the side of the Trump administration in the case of California et al. v. Chao et al. (California). Also looking to support the administration are Alabama, Ohio, Texas, Utah, and West Virginia. The case challenges the right of the administration to suspend California’s waiver granted under the Clean Air Act (CAA).
The waiver permits the state to set a more strident fuel efficiency standard than the federal government. California is the only state eligible for the waiver. However, other states have the option of following its more strident standard in place of the federal rule. Currently, 13 states and the District of Columbia have chosen to follow California’s regulation.
In addition to California, the plaintiffs in the case include 23 states and the cities of Los Angeles, New York, and the District of Columbia. The four automakers that negotiated the compromise agreement with California have not chosen to intervene in the proceedings—although their arrangement will undoubtedly be of interest to the Court.[ii]
The freeze is being called the Trump administration’s most environmentally significant regulatory rollback yet according to a penetrating analysis of the rule’s impact on the environment. Given that the transportation sector has surpassed electricity as the primary contributor of greenhouse gases (GHGs) to the atmosphere the call is hardly surprising.
According to the court pleadings and press reports, California and the Trump administration are approaching the waiver issue from very different perspectives. The administration is arguing that the purpose of the proposed federal rule and the reason California should lose its waiver is to ensure a single national fuel efficiency standard.
John Bozzella, a spokesperson for the coalition of automakers asking the court’s leave to join the case on the side of the Trump administration, explains that the industry has “historically taken the position that fuel economy is the sole purview of the federal government….”
California doesn’t disagree with the assertions of either the administration or Bozzella. What the Golden State and its 23 state and city allies argue is that the federal rule should not prevent states from setting their own greenhouse gas emission (GHG) standards from four primary sources within the automobile—of which burning fuel is just one. The other sources include emissions from operating the air conditioning system, refrigerant emissions from the air conditioning system due to leakage, recharging, or scrappage; and upstream emissions from production of the fuel used in the vehicle.
California’s Advanced Clean Cars program includes tailpipe emissions standards for GHGs and a zero-emission vehicles (ZEV) mandate. The program, in general, is fundamental to its (the state’s) efforts to protect the health and welfare of its citizens. Moreover, the ZEV standards are a necessary part of California’s efforts to meet National Ambient Air Quality Standards, especially in the extreme ozone nonattainment areas.
California, with EPA approval, relies on the ZEV standards to demonstrate conformity with the Clean Air Act for purposes of federal transportation funding. Under the Clean Air Act’s transportation conformity requirements, states cannot obtain federal transportation funding for projects unless they can demonstrate that those projects are consistent with the relevant State Implementation Plans.
There are no California regulations mandating miles per gallon.
As Julia Stein writes:
…California and the 23 other states opposing the Trump administration waiver preemption rule aren’t saying that fuel economy is not the sole purview of the federal government. They are simply saying that the federal government’s purview over fuel economy standards does not entitle it to interfere with California’s longstanding right to set its own emissions control standards for cars.
The administration’s narrative incorrectly implies that California and other states have crossed the line by trying to regulate fuel economy—but they haven’t done that at all. Instead, it’s the administration that is crossing the line, trying to use its authority to regulate fuel economy as a sword against GHG emissions standards.
The automakers asking to stand with the Trump administration claim they are only trying to help California and the federal government find some middle ground. Bozzella explains his group’s position this way:
Since 2010, America has had a unified fuel economy in greenhouse gas emission and programs on improved fuel efficiency. Recent federal and California rulemakings have threatened to end this balanced approach, creating uncertainty for consumers. Facing this problem, we had an obligation to intervene.
The unified standard Bozzella speaks of was a function of the agreement between California, the Obama administration, and the major automobile manufacturers that effectively covered model years 2012-2025[iii]. EPA promulgated its rule largely based on California’s standard.
Now that the Trump administration has announced its intention to rescind the Obama era fuel efficiency schedule for the five year period 2021 through 2025 and replace it with a lower standard, there is no equivalency between the federal fuel-efficiency standard and California’s GHG and ZEV mandates as there has been in the past. It is critical, therefore, for California and the states that follow California to be allowed to set stricter standards than the Trump administration anticipates it will establish.
Bozzella’s claim that a coalition of automakers on the side of the Trump will somehow lead to a kumbaya compromise between California and the administration is either disingenuous or naïve. It is hard to ignore the not so veiled threat of possible anti-trust actions against California and the four automakers that have already struck a bargain.
By choosing to intervene on the administration’s side, the coalition of companies has only driven the parties further apart. The manufacturers’ alliance has now lost the neutrality needed to broker equitable compromises—especially between two parties who have such opposing views on climate change and are long on enmity and short on trust. Ford, Honda, VW, and BMW of America have appropriately remained interested spectators rather than litigants in the case.
Hiroko Tabuchi is spot on when she writes:
The legal fight between the Trump administration and California over auto pollution rules has swelled into a battle over states’ rights and climate change that is likely only to be resolved once it reaches the Supreme Court.
I would add to this that the conflict has been made much worse because all politics for Trump are personal. Admittedly, there are those in California who have willingly accepted the challenge on equally personal grounds.
It is hardly the first time that California has been targeted by Trump for its stance on issues, particularly immigration and climate. In just the past two months, the administration has sued California over its cap-and-trade deal with Quebec, threatened to withhold highway funds for Clean Air Act violations, and slapped San Francisco with a seemingly specious violation over its sewers—alleging that the city dumps raw and partially-treated sewage into the ocean.
As happenstance would have it, former California Governor Jerry Brown testified before a House Oversight subcommittee the day after General Motors and the other companies asked to intervene in the California case. Brown accused GM of trying in the past to “torpedo” California’s air pollution regulations—calling the intervention a “shameless effort” to protect its bottom line.
If the partisanship preventing concerted action to combat climate change were not already in evidence both in Washington and Sacramento, Brown’s statements came after the subcommittee’s Republican members unsuccessfully attempted to adjourn the subcommittee citing impeachment hearings.
Harley Rouda (D-CA), chair of the subcommittee, stalled the vote on the motion, setting off verbal thrusts and parries between partisan members. In one exchange Representative Ocasio-Cortez (D-NY) could be heard to say:
We’re here to talk about the very pressing issue of cutting our carbon emissions and saving our planet, and we have an entire political party that’s trying to get out of their job. I just want to know what the reason is for such a disrespect of the process.
The near-term certainty that the four auto companies had hoped to achieve with their “side-agreement” with California has been lost, only to be replaced by years of litigation or the hope of a Democratic administration being sworn in in 2021. Although the CAFE standards fight is unfortunate for the automakers, consumers, the environment, and the public in general, I would suggest that there’s a much larger problem in need of resolution—of which auto fuel efficiencies are only a portion.
As I’ve written before, the nation’s need for an integrated energy and environment framework capable of combating climate change cannot be answered by the courts. Neither can it be met as long as cross-aisle collaboration is considered by Trump as treasonous, and every act is measured in terms of loyalty to him.
The brawl over federal fuel efficiency standards never needed to occur. Had Trump actually listened to what the automakers were saying about flexibility in meeting the Obama standard, a new rule would already be in place. A rule I would venture that closely resembles the agreement Ford, Honda, VW, and BMW of American and California were able to work out.
Instead of compromise and certainty, there’s the chaos and courtroom drama that have become hallmarks of the Trump administration.
[i] The full list of automakers is Aston Martin Lagonda of North America, Inc., Ferrari North America, Inc., Hyundai Motor America, Isuzu Motors America, LLC, Kia Motors America, Inc., Maserati North America, Inc., McLaren Automotive, Ltd., Nissan North America, Inc., Subaru of America, Inc., Suzuki Motor of America, Inc., Toyota Motor North America, Inc., Fiat Chrysler, General Motors, Mazda, Mitsubishi, and Toyota.
[ii] The reason that the administration isn’t being challenged yet for its freezing of the mileage per gallon standard is because the rule has not yet come into force. The final rule has been published in the Federal Register but is not scheduled to become effective until November 26, 2019. The rule will be immediately challenged and is likely be stayed because of legal challenges.
[iii] The Environmental Policy and Conservation Act (EPCA) prohibits the National Highway Transportation Safety Administration from setting standards for more than five years at a time.