The Auto Rule Rollback That Nobody Wants, Except Trump
Auto companies prize certainty in how the government regulates them because of the long timelines involved in designing and manufacturing cars and trucks.
Now the Trump administration has upended that certainty by going to extraordinary lengths to roll back Obama-era greenhouse gas and fuel efficiency standards that even much of the industry supports.
It’s a senseless exercise of apparent presidential pique. Worse, it threatens to undo what would be the country’s most important climate achievement, the doubling of vehicle fuel efficiency to about 55 miles per gallon by 2025.
Those standards all told would have reduced greenhouse gas emissions by six billion metric tons, cutting auto sector emissions in half by 2025, and saved American families more than $1.7 trillion in gas, with an average fuel savings, for instance, of more than $8,000 for a 2025 model vehicle over its average lifetime.
The Trump administration is reportedly close to finalizing its proposal to freeze the standards at 2020 levels, stalling fuel efficiency at about 37 miles per gallon. It also intends to revoke California’s permission to set its own standards, which the Obama administration had approved.
California has always enjoyed the power to set stricter vehicle pollution standards than the federal ones, which other states may opt into. The Clean Air Act gives California this special power because it has faced extraordinary air quality problems and been a leader in air pollution regulation. California must, however, first obtain a waiver from the Environmental Protection Agency and meet certain conditions. For nearly 50 years, the state has received these waivers routinely from administrations of both parties. Never has one been revoked.
To block California’s vehicle greenhouse gas standards, the Trump administration has adopted a disputed legal theory — already rejected by two Federal District Courts — that only the Department of Transportation may set standards related to fuel economy. But pollution standards are about improving public health, and fuel economy standards are about increasing vehicle efficiency, distinct goals that the Supreme Court has said can be achieved compatibly.
In another striking step, the Department of Justice is investigating four auto companies — Ford, Honda, BMW and Volkswagen — that voluntarily agreed to comply with California’s rules, suggesting that it may amount to an illegal conspiracy.
This summer, those companies pledged to increase the average fuel economy of their fleets from 2021 levels by 3.7 percent per year, reaching an average of about 51 miles per gallon by 2026. This is less strict than the Obama standards but still makes meaningful progress. California offered incentives beyond those in the Obama rules, including extra credits for making electric and low- emission vehicles and other measures easing the compliance burden on the industry, changes the industry had been seeking.
By reaching an agreement with California, the auto companies want to avoid a situation in which the Trump administration requires one thing, and California (with the dozen or so states that usually follow it) requires another. The fear is that a divided market would, at a minimum, put automakers to the trouble and expense of certifying they meet two different sets of standards, and, at worst, manufacturing different vehicle models for different markets. Other auto companies also reportedly expressed interest in the California alternative. The settlement sidestepped the president’s plan, reportedly enraging him.
Antitrust prohibits companies from conspiring to restrict competition. But under well-established legal principles, they may jointly lobby government for rules they prefer, and comply with those rules once adopted. And companies may independently and unilaterally meet whatever voluntary standards they wish.
The Justice Department’s antitrust division has a long and proud history of independence from the White House. But circumstances surrounding the investigation have raised suspicion that its motivation is less than pure. It may succeed in squelching the California initiative through intimidation. For emphasis, lawyers for the Transportation Department and the E.P.A. sent a menacing letter to California officials warning that the state’s agreement with the car companies appears to violate federal law.
All this adds uncertainty and delay over the rules the auto industry must follow. Now, the question of whether the E.P.A. can revoke a waiver it has already granted will be thrown to the courts, along with the administration’s theory that, regardless, California’s greenhouse gas standards illegally conflict with the Transportation Department’s authority, questions that may take perhaps years to resolve. And if the Justice Department’s investigation progresses, it could produce a blockbuster antitrust lawsuit. All of these conflicts could wind up in the Supreme Court.
This mess is the opposite of what the auto companies want. They supported the Obama standards and joined the administration in federal court to defend them because they delivered certainty and predictability. Since they took effect, automakers have steadily produced cleaner models while enjoying some of the best sales years in history.
At the same time, the transportation sector is responsible for the largest and fastest-growing share of greenhouse gas emissions in our economy. Ambitious national standards are even more critical for this industry than in the electricity sector, where cheap natural gas and a surge in renewables are helping to reduce emissions.
The auto industry is not looking for the drastic rollback that Mr. Trump seems determined to deliver. The White House has repeatedly pressured auto company chief executives to support his plan, yet not one has publicly endorsed it, and several have defected. The industry’s trade association has said it remains committed to increasing fuel economy and strongly supports a program aligning federal and California standards. To stay competitive globally, companies know they must develop the next generation of fuel-saving technologies here in the United States.
There is a path forward. Adopting the California plan nationally would keep the industry on a sustainable trajectory to make cleaner cars, spare the states worsening air quality, cut the country’s oil consumption and save consumers money at the pump.
If only the Trump administration was smart and bold enough to embrace it.
Jody Freeman, a professor at Harvard Law School, was President Barack Obama’s counselor for energy and climate change from 2009 to 2010.
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