Trump Drops Antitrust Probe of Four Automakers Which Adopted Tougher Cal Tailpipe Emissions Standards

By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.

The Department of Justice (DoJ) last Friday dropped its antitrust probe into four automakers who opted  to comply with California’s tougher  tailpipes emissions standards.

Emissions one of many environmental areas in which the Trump administration is charting its own (more) blatantly pro-fossil fuels course ; Trump seems to take especial delight in reversing the policies of his immediate predecessor.

Now, occasionally Trump policies stray into the ridiculous – as they did in September when the DoJ commenced an antitrust probe into the four automakers which had ‘voluntarily” decided to comply with California’s tougher state emissions rules, going so far going as to pursue a “‘vindictive’ antitrust investigation, s described in EcoWatch in Justice Department Drops Investigation Against Four Automakers That Sided With California’s Emissions Standards.)

The four automakers are BMW, Ford, and Honda and Volkswagen (see also Carmakers and California Agree on Emissions Rules:

As I’ve written previously, the Trump Administration was on a collision course with California over Trump’s August 2018 plans to rollback standards previously due to come into force in 2021 (see Trump Regulators and California on Collision Course on Rolling Back Fuel Efficiency Standards):

As the Wall Street Journal reports in Auto Makers Agree to Stricter California Tailpipe-Emissions Standards:

The Trump administration last year proposed easing Obama-era fuel-economy standards by freezing them at the 2020 levels, or around 37 miles a gallon, through 2026. The current rules, implemented in 2012, call for increases in fuel economy of around 5% annually through mid-decade, to a level of 46.7 miles a gallon.

The Feds and California had been engaged in negotiations to agree a compromise, but those talks collapsed in February, according to an Ars Technica report, Car makers, California agree to emissions rules Trump admin is trying to kill.

…

The California standards with which the four carmakers have now agreed to comply are looser than the rules that were supposed to come into effect in 2021, but tighter than the proposed Trump rollback.  According to a statement released last week by the California Air Resources Board (CARB), California and major automakers reach groundbreaking framework agreement on clean emission standards

As Autoblog Reports in Justice Dept. ends antitrust probe of 4 automakers who sided with California:

Under the deal, the automakers planned to comply with pollution and related mileage requirements established by California that are tougher than the federal standards sought by President Donald Trump.

The Justice Department didn’t find conduct violating the law and has closed the investigation, a person familiar with the matter told The Associated Press on Friday. The person spoke on condition of anonymity because they weren’t authorized to speak publicly.

In September, the administration revoked California’s authority to set auto mileage standards, asserting that only the federal government has the power to regulate greenhouse gas emissions and fuel economy. Top California officials and environmental groups took legal action to stop the rollback.

Democrats accused the administration of using antitrust powers to target political opponents with the investigation. A top Justice Department official defended the probe before Congress and denied any political motivation or influence from the White House.

California Gov. Gavin Newsom, a Democrat, said Friday that the Justice Department’s “trumped-up charges were always a sham — a blatant attempt by the Trump administration to prevent more automakers from joining California and agreeing to stronger emissions standards.”

Newsom called the closing of the probe “a big loss for the president and his weaponization of federal agencies.”

California was granted a waiver from the Clean Air Act in 1970, allowing the state to set an emissions standard that was more stringent than the national standard. As Ecowatch notes:

However, other states were allowed to follow California’s lead, which some of the most populated states did. In all, 13 states followed California’s lead. Those states, plus California, make up 40 percent of the U.S. population, as CNN reported.

The July move by the automakers was initially dismissed by the Trump administration as “a PR stunt that does nothing to further the one national standard that will provide certainty and relief for American consumers,” as Car and Driver reported.

After California bypassed the Trump administration’s rollbacks, the White House aggressively undermined California’s authority and funding. Not only did the administration revoke the state’s authority to set its own emissions standard, it then forced California to drop Quebec from its carbon-credit market. Also, in September, the U.S. Environmental Protection Agency threatened to withhold federal highway funding from California, as The New York Times reported.

Administration Climbdown

The decision to drop the federal antitrust investigation represents a significant administration climbdown.Even in a context in which Trump et al often privilege rhetoric over reality, this antirust investigation looked from its inception to be a stunt. Administration officials, nonetheless, apparently believed that like the Little Engine That Could, repetition of a simple antirust mantra was enough to trump the latest tougher California emissions tailpipe standards and thwart California’s more than forty years of precedent in setting de facto national standards.

The Trump administration argues that cars that meet the California standard cost more, but as CNN reiterates in Justice Department notifies four automakers it has dropped antitrust investigation,this additional cost is offset by the reality that automakers do not have to create two product lines that comply with two sets of standards

Although the California rules would require automakers to build more costly cars, they gave the companies an advantage: The automakers would have to meet only one national standard, rather than one weaker standard for most of the country and one tougher standard for California and 13 other states that follow its rules. Those 14 states account for about 40% of the US population.