Trump deepens legal war against California, automakers
The Trump administration is opening new fronts in its legal war with California and much of the auto industry over clean air rules, taking steps toward punishing two of the major opponents of the president’s efforts to roll back Obama-era regulations.
The administration’s tactics include an expected effort to strip away California’s authority to set its own air pollution standards for cars and trucks, as well as a new Justice Department antitrust probe into four automakers that are voluntarily cooperating with the state’s clean air goals. The administration also warned California on Friday that its attempt to circumvent the administration's rollback of federal rules is illegal.
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All three actions represent a striking escalation of pressure from the administration, and come weeks afterPresident Donald Trump publicly rebuked the “politically correct Automobile Companies” that are resisting his efforts to let them produce more gas-guzzling vehicles. Ford Motor Co., Honda, BMW and Volkswagen announced a voluntary agreement with California this summer to meet the state's air pollution goals despite the Trump administration's proposal to freeze fuel efficiency standards at their current level.
Word of the DOJ antitrust probe provoked a furious reaction Friday from supporters of California's efforts to combat air pollution and climate change.
"This smacks of Stalinism and bureaucratic thuggery at its worst," former California Gov. Jerry Brown wrote on Twitter. "Congress, stop this perversion of America’s legal system."
Delaware Sen. Tom Carper, the top Democrat on the Environment and Public Works Committee, slammed the moves as a politically motivated effort to intimidate other car companies from joining the “valid” California agreement.
“For automakers that have not already agreed to join the California deal, I’ll say this: if it was ever unclear that this administration does not have your company and workers’ best interest at heart, let that be known today,” he said in a statement.
Rep. Frank Pallone (D-N.J.), the chairman of the House Energy and Commerce Committee, pointed the finger directly at Trump.
"Weaponizing federal agencies and the Department of Justice is a gross abuse of power, and likely ordered by a President who is acting like a dictator seeking to punish his enemies," Pallone said in a statement.
California is already fighting the Trump administration in federal court with a lawsuit challenging EPA's decision in 2018 that the Obama-era rules were too stringent, a precursor to the ongoing work to write a new rule. At a hearing in that case Friday at the U.S. Court of Appeals for the D.C. Circuit, a panel of judges expressed skepticism of the administration's motives, even as they acknowledged it may be premature to render a verdict until the Trump administration's new standards are complete.
The Trump administration was “somewhat candid about the not-thorough character of the revised determination,” Judge Nina Pillard, an Obama appointee, said.
"You may have a strong argument that what was laid out in [the Clean Air Act] wasn’t complied with," said Judge Sri Srinivasan, an Obama appointee.
POLITICO reported Wednesday that the Trump administration is considering moving ahead on revoking the waiver that allows California to set its own air pollution standards for vehicles — even if the Environmental Protection Agency and U.S. Transportation Department aren't yet ready to relax the federal pollution limits. The Obama-era standards were a major piece of the previous administration's efforts to reduce climate change and would have required cars and light trucks to reach an average of 54.5 miles per gallon by 2025. The rules faced fierce resistance from oil companies and auto dealers. Car makers asked EPA and DOT to revisit the rule soon after Trump was elected, but many have since warned that the administration's proposal goes too far in the wrong direction.
Sources close to the administration have said the administration views California's waiver, which gives it an outsize influence on the entire U.S. auto market, as a separate legal matter from the pollution rules.
“We have a pretty strong sense that it is going to be a denial of the waiver, they have never veered off that, they have been very strong on that," said Tom Pyle, president of American Energy Alliance and former head of Trump's Energy Department transition team.
Gov. Gavin Newsom said California would go to court to protect its authority to enforce tougher pollution rules within its borders. Newsom added that the administration's proposed rollbacks would make drivers pay more for gasoline and worsen air quality.
“The Trump Administration has been attempting and failing to bully car companies for months now," Newsom said in a statement. "We remain undeterred. California stands up to bullies and will keep fighting for stronger clean car protections that protect the health and safety of our children and families.”
Trump's allies said the president has been frustrated with the pace of rolling back the federal vehicle rules. EPA and DOT proposed freezing the federal emission limits and revoking California's authority in August 2018, but encapsulating that in a new regulation has proved difficult.
"The president is really angry that it’s taken so long to get this rule out and the public relations battle to win public support for what they're doing is weakening because of the delay and the ability of California to sign up automakers onto their team," said Myron Ebell, energy program director with the Competitive Enterprise Institute and former head of Trump's EPA transition team. "To me it looks like it’s all a push coming from the president.”
Ford, Honda, BMW and Volkswagen said in their agreement with California that they would reduce their fleetwide emissions by 3.7 percent per year for model years 2022 to 2026. While that is less of a reduction than required by the Obama-era rules Trump is rolling back, California officials and environmentalists hailed the pact as an important step to fight climate change and help consumers save money on fuel.
Auto companies will likely be able to claim immunity from antitrust laws, said Hill Wellford, an antitrust lawyer and partner at Vinson & Elkins. They could argue the companies' First Amendment right to petition state or federal governments supersedes such laws through what’s known as the Noerr-Pennington doctrine.
"If they do it correctly and they’re well-counseled — which I have no doubt they are — there’s a way to do this that is utterly, completely sheltered from the antitrust laws,” he said.
The July agreement came as a surprising rebuke to Trump's regulators, who have argued that freezing the standards would save consumers money by reducing the costs of new cars and trucks. Now, the administration's legal threats are likely to keep any more companies from signing on with California.
Upping the ante even further, the top lawyers at EPA and DOT sent a letter Friday to Mary Nichols, chairperson of the California Air Resources Board, threatening "legal consequences" if the state does not move immediately to "disassociate" itself from the agreement with the automakers.
Nichols later issued a statement lashing back at EPA Administrator Andrew Wheeler.
“The US Department of Justice brings its weight to bear against auto companies in an attempt to frighten them out of voluntarily making cleaner, more efficient cars and trucks than EPA wants," she said. "Consumers might ask, who is Andy Wheeler protecting?"
The Justice Department has also sent letters to the automakers as part of its antitrust probe.
"We have received a letter from the Department of Justice and will cooperate with respect to any inquiry," Ford said in a statement.
Honda said it "will work cooperatively with the Department of Justice with regard to the recent emissions agreement reached between the State of California and various automotive manufacturers." BMW confirmed receiving a letter and said it would "respond appropriately."
Volkswagen did not confirm or deny its involvement. "We are in regular contact with U.S. authorities on a number of matters, but do not comment on specific private communications we may or may not receive," a company spokesman said.
Automakers signed on with California in part out of concern that Trump's efforts would splinter the U.S. market, as it's not clear whether a move to scrap California's waiver would survive a court challenge.
Mandy Gunasekara, a former Trump EPA official who worked on the fuel efficiency rule, said it is California's agreement that risks splitting the market place.
“What they’re doing with their framework agreement is they’re effectively putting in motion a two-standard world that this administration isn’t going to let happen,” Gunasekara, who co-founded advocacy group Energy45 to tout Trump’s energy agenda, said of California.
The Wall Street Journal first reported the antitrust case. DOJ declined to comment.
Dan Sperling, a member of the California Air Resources Board, called the idea of the antitrust probe “fascinating, amusing,” but said he had not previously been made aware of the inquiry.
Environmentalists marveled at the administration's escalation of the fight.
“I think this has now become a personal thing between Trump and California," said Andrew Linhardt, deputy director of the Sierra Club's clean transportation campaign. “I think there’s going to be a multi-pronged attack on the deal."
Debra Kahn, Anthony Adragna and Alex Guillén contributed to this report.