Car Makers Ignore Trumps Advice To Lower Fuel-Efficiency Standards (#GotBitcoin?)
Impasse between White House, California has auto makers scrambling for an alternative. Car Makers Ignore Trumps Advice To Lower Fuel-Efficiency Standards (#GotBitcoin?)
Major car makers are caught in the crossfire between the Trump administration and California over U.S. tailpipe-emissions rules, leading them down different paths in how to respond to the standoff.
The White House last year proposed easing the Obama-era fuel economy standards, freezing them at 2020 levels, or around 37 miles a gallon, through 2026. The move came after car companies had pressed for years for more flexibility on the existing rules, which were agreed to in 2012 and call for increases in fuel economy annually through mid-decade to an average of about 50 miles a gallon.
Car industry executives have argued the current fuel-economy requirements are too strict and don’t take into account the shift in consumer preference to larger, less-fuel efficient trucks and sport-utility vehicles. When President Trump came into office, they raised the issue in a White House meeting the week after his inauguration.
But the rollback being pushed by the administration is so extensive that car companies are worried it will set off a protracted legal battle with California—the nation’s most populous state and the biggest auto market—and ultimately conclude with manufacturers having to meet two different sets of requirements for selling cars in the U.S. Auto makers have warned the continuing tussle could hamper planning.
In a tweet Wednesday, Mr. Trump defended his plan, saying it would lower the average price of a car by $3,000 and have little impact on the environment.
Earlier this summer, four car makers— Ford Motor Co. , Volkswagen AG , Honda Motor Co. and BMW AG —splintered from the rest of the industry, striking a side deal with California to meet new standards that are tougher than the Trump administration’s proposal but less stringent than the Obama-era ones. For decades, California has had the legal authority to set its own requirements. Thirteen states now follow California’s rules, a number that has grown over time.
The car companies reasoned that even if the White House prevails in freezing the targets they could still be stuck with paying the added cost of building cars to meet California’s stricter standards, say people familiar with their thinking. California has sued the Trump administration trying to block its efforts and a legal battle could take years to resolve, prolonging uncertainty about the rules.
But other auto makers have been reluctant to join the California pact, preferring instead to wait for a final rule, which is expected to be made public later this year. Some foreign-based car manufacturers are also worried a public stance against the rollback would only embolden Mr. Trump to carry out his threat to impose tariffs on imported cars, according to one person close to the fuel-economy discussions.
General Motors Co. , meanwhile, doesn’t think the California proposal gives enough credit for sales of fully electric vehicles, an area where it is investing heavily, people familiar with GM’s thinking say. The Detroit auto maker is pushing for rules to require car companies to sell battery-powered cars across all 50 states.
Such a divergence is unusual for the auto industry, which has been mostly aligned on fuel economy in the past, say industry executives, former regulators and analysts.
“We tend to think of the industry as monolithic,” said Brett Smith, a director at the Ann Arbor, Mich.-based Center for Automotive Research. “But it is increasingly very different companies with very different goals.”
The administration views the regulatory rollback as a way to help car makers lower costs and adjust to the shifting demand for bigger vehicles. It also wants to revoke California’s federal waiver to set its own emissions standards.
California has already filed a lawsuit to prevent the White House from moving forward with its efforts and threatened more legal action if the existing rules are changed.
A U.S. Transportation Department spokesman said any car company that wants to exceed the proposed standards is free to do so if they can find enough buyers. “But California does not have the legal authority to, and should not, push the U.S. auto market to electric cars to serve its own political agenda,” he said.
A spokesman for California Gov. Gavin Newsom said in an email that California’s agenda is to clean up the air, fight climate change and protect the health of children.
The rift has left auto makers in the middle but with differing agendas. Some car companies have already made large investments in electric vehicles, putting them in a better position to comply with the existing standards, while others are more dependent on trucks and SUVs for the bulk of their sales, making those targets harder to reach.
“No two car companies are totally aligned,” said Mandy Gunasekara, a former Environmental Protection Agency official who had worked on the proposed rollback and left the administration this year.
Ford, Honda, BMW and VW had hoped for a truce between the administration and California. This spring, the companies and 13 other auto makers signed a letter urging Mr. Trump to personally find a compromise with California.
That letter was “summarily dismissed” by the administration, said an executive for one auto maker. The four car companies—representing about 30% of all U.S. vehicle sales—then forged their own agreement with California, working behind the scenes for more than a month and willing to risk political backlash from the White House, say people involved with the effort.
The voluntary pact with California was signed in July.
“In this case, deregulation doesn’t produce lower costs. It produces higher costs,” this executive said.
Since then, no other car company has publicly revealed plans to join the California deal.
Auto makers, such as Fiat Chrysler Automobiles NV and Kia Motors Corp. , say they want one set of federal standards on fuel economy but declined to comment further.
GM has proposed its own plan to revise the Obama-era regulations, backing a proposal to increase fuel economy by about 1% annually through mid-decade, short of the 3.7% under the California agreement. The largest U.S. auto maker by sales is also pushing for federal rules requiring car companies to sell a minimum number of electric vehicles across all 50 states.
Mark Reuss, GM’s president, said last fall a federal program for requiring electric cars would foster a market for these vehicles and help manufacturers better plan for the future.
“We’re making bets now on a lot of uncertainty, which is highly destructive to capital,” he said.
Trump Administration Takes Step Toward Loosening Vehicle Emissions Standard
Move marks another step in easing requirements set under the Obama administration.
The Trump administration took a step toward loosening emissions rules for vehicles sold in the U.S. by moving to strip California’s ability to set its own tougher requirements, which officials said will give drivers access to cheaper, safer cars.
Officials from the Environmental Protection Agency and the Transportation Department said Thursday they issued a final action on a rule that will unify the country’s fuel-economy and greenhouse-gas-emissions standards. The announcement, which had been previewed by President Trump and other officials earlier in the week, marks another step in easing requirements set under the Obama administration in 2012.
The actions ensure that “no state has the authority to opt out of the nation’s rules, and no state has the right to impose its policies on the rest of the country,” said Secretary of Transportation Elaine Chao.
Critics say the administration’s moves will hurt air quality and the fight against climate change.
“You created chaos here because the auto makers are not going to know what to do,” said Rep. Zoe Lofgren (D., Calif.) at a hearing on Capitol Hill following the announcement. “This is going to be tied up in court for the foreseeable future.”
EPA Administrator Andrew Wheeler said that the action will provide certainty for auto makers as they prepare to comply with stronger standards designed to cut air pollution.
“Most auto makers can’t comply with the trajectory of the current standards,” Mr. Wheeler said at a press conference Thursday morning.
In the press conference, Ms. Chao called the standards set by the Obama administration “unattainable” and said they made the price of new cars unaffordable for some families. “The rule will not force auto makers to spend billions of dollars developing cars that consumers do not want to buy or drive,” she said.
California has long had the authority to set its own rules on limiting air pollutants from cars, but the Trump administration believes such requirements should be set by the federal government. California has already taken legal action to block the White House’s efforts to take away its waiver to set its own standards, and top state officials threatened more lawsuits on Wednesday.
Federal officials said they are still working on additional rules that will give auto makers the full scope of requirements and expect to release those details later this year.
Rescinding the California waiver would fulfill a longstanding goal of the administration to curb California’s influence over the car industry with its ability to set more stringent emissions rules than federal mandates. In July, four car companies— Ford Motor Co. , Honda Motor Co. , Volkswagen AG and BMW AG —signed an agreement with California to meet tougher emission requirements than those proposed by the Trump administration.
In previewing the planned action, Mr. Trump tweeted Wednesday: “Auto makers should seize this opportunity because without this alternative to California, you will be out of business.”
Led by California, States Sue EPA Over Tailpipe-Emissions Dispute
Move comes a day after the Trump administration announced new regulations to strip away California’s authority.
California, joined by 22 other states and the District of Columbia, sued the Trump administration Friday in a bid to preserve the state’s power to set tougher vehicle-emissions standards for the country’s auto industry.
California Attorney General Xavier Becerra filed the lawsuit in a Washington, D.C., federal court the day after officials from the Transportation Department and the Environmental Protection Agency announced new regulations to strip away California’s authority.
“California has been regulating vehicle emissions since 1959. Its authority to do so has been repeatedly recognized, reaffirmed, and even expanded by Congress,” the states said in the lawsuit. The new Trump administration effort “flies in the face of this history,” the states said.
California’s authority to set its own greenhouse gas emissions standard exists in the form of a waiver to the Clean Air Act. Thirteen other states follow California’s rules—representing roughly one-third of overall U.S. auto sales last year—giving California’s air regulators wide power over national standards.
Federal regulators are working on their own tailpipe-emission rules that could ease requirements set under the Obama administration in 2012. Their efforts, they said, would give drivers access to cheaper, safer cars while providing certainty to auto manufacturers as they engineer future models of cars that comply with anti-air-pollution rules.
The administration’s moves against California, critics say, will hurt air quality and the fight against climate change.
California’s rules got some industry support earlier this year. In July, four car companies— Ford Motor Co. , Honda Motor Co. , Volkswagen AG and BMW AG —voluntarily signed an agreement with California to meet tougher emission requirements than those proposed by the Trump administration. The companies said the agreement is intended to show support for a single, nationwide vehicle-emissions standard.
Specifically, the auto makers agreed to improve average fuel efficiency by 3.7% annually from model years 2022 to 2026. They would get some credit toward that goal for selling electric vehicles.
White House Backing Off Proposed Fuel-Efficiency Freeze
Trump administration plans for annual efficiency increases of 1.5%; rule likely to come by year’s end.
The Trump administration is backing away from a plan to freeze tailpipe-emissions targets for new vehicles through 2025, say people familiar with the process.
The administration is now considering requiring a 1.5% annual increase in fleetwide fuel efficiency, using an industry measure that takes both gas mileage and emissions reductions into account, the people said. The target moves the number closer to the Obama-era rules calling for 5% gains but still provides auto makers with significant relief and would allow cars to emit more pollution.
The new final number for annual increases could change, as the rules remain under review, one of these people said. In addition, the administration’s number is expected to be challenged in court by California and other states, which favor tougher regulations.
President Trump has been trying for years to soften a set of stringent targets to reduce greenhouse gas emissions first agreed to in 2012 by the Obama administration, California and much of the automobile industry. The move to 1.5%—expected to be announced by year’s end—comes after intense industry lobbying, which opposed the Trump administration’s original plan to freeze targets at 2019 levels, around 37 miles a gallon.
The process has cleaved an auto industry traditionally united on emissions policy, with some companies siding with California and some with the White House over who should set the standards and what they should be.
California’s Air Resources Board said that a 1.5% annual increase wouldn’t be enough for the state to meet federal air quality standards.
A coalition of companies including General Motors Co. , Toyota Motor Corp. and Fiat Chrysler Automobiles NV filed Monday to intervene in a lawsuit over the standards, lending support to the Trump administration’s argument that the federal government set emissions targets. In July, Ford Motor Co. , Honda Motor Co. , Volkswagen AG and BMW AG agreed to recognize California’s authority to set its own targets, which would be more stringent than those proposed by the federal government and are followed by 13 other states.
“The Trump Administration is focusing on finalizing [its] rule which will deliver one national standard to the American auto market,” Environmental Protection Agency spokesman Michael Abboud said in response to questions.
The agency’s administrator, Andrew Wheeler, hinted last week in Detroit that the final rule would be more restrictive than the proposed freeze, in part because of industry feedback, but declined to provide details. He said the agency expects to publish the new requirements by year’s end and hoped they will appease both auto makers and California.
“I’m, again, the eternal optimist: Once everybody sees our final CAFE regulation, everybody will see that it makes sense and maybe we won’t have litigation on that part of it,” Mr. Wheeler said, referencing the acronym used for federal fuel efficiency standards.
A regulation satisfying all parties seems unlikely considering the long and contentious rule-making process so far. The administration first proposed freezing the Obama standards at their current levels in August 2018, triggering fears in the industry of disrupted product planning and prolonged uncertainty pending rulings by the courts.
Those anxieties pushed Ford, Honda, BMW and Volkswagen to strike their deals with California, people familiar with those companies’ thinking said. The move angered the White House, and the Justice Department has opened an investigation into whether the four companies violated antitrust statutes in negotiating with California.
In September, the administration moved to revoke California’s ability to set its own standard under a federal waiver granted through the Clean Air Act.
But the emissions targets themselves have been delayed, as the data analysis supporting the rule change has been redone, according to people briefed on the process.
The administration initially justified freezing the standards by arguing that improvements in technology have made new cars safer and that any emissions improvements would raise the prices of new cars. According to the analysis, people would consequently keep their older cars on the road longer, leading to increased deaths and injuries from crashes.
The initial analysis showed that the most social and cost benefit would come from eliminating the emissions-target increases entirely, a former EPA official involved in that effort said.
Opponents of the proposal have focused much of their criticism on the assumptions and data underpinning the administration’s analysis.
Since then, changes have been made in the modeling of the data that show room for an increase in the efficiency targets, people briefed on the matter said.
“It’s not as cut and dry anymore,” the former EPA official said.
Push to Roll Back Auto-Emissions Rules Hits a Roadblock
Friction between the federal agencies drafting the regulations threatens further delays, frustrating auto makers.
Two federal agencies are struggling to finish new rules to roll back auto-emissions regulations, according to auto industry lobbyists and government officials with knowledge of the process.
The Environmental Protection Agency and Transportation Department are clashing over the underlying rationale for the new regulations, which are aimed at reducing requirements set under the Obama administration, these people say.
The new rule will set requirements for tailpipe emissions and fuel economy for vehicles built through mid-decade. Administration officials hope to complete the rule by April 1, but are likely to miss that target, the people say. The delays could further prolong uncertainty for the auto industry, which is trying to lock in plans now for new models due out in the coming years.
The rule requires the agencies to produce hundreds of pages of technical analysis, explaining its predicted impact on everything from the environment to highway safety and the U.S. labor market.
Some EPA staff have challenged the DOT’s analysis and don’t feel the agency has had adequate say in how the new regulations are being crafted, some of the people say.
The National Highway Traffic Safety Administration, the DOT’s primary agency on auto regulations, has been charged with taking the lead on the rule, according to a senior White House official involved in the process. He defended the agency’s analysis.
This tension has left critical parts of the draft rule unfinished as the deadline nears and a lack of input from the EPA could make the rule vulnerable to legal challenges down the line, Sen. Thomas Carper, (D., Del.), warned in a letter sent Wednesday to the EPA’s inspector general.
Mr. Carper, a ranking Democrat on the Senate’s environmental policy committee and an opponent of the rollback effort, called on the agency’s inspector general to open an investigation into whether the rule-making process is being conducted properly and transparently, according to the letter viewed by The Wall Street Journal but not yet made public.
NHTSA said in a statement that it is working closely with EPA and expects the rule to be published soon but declined to elaborate further. The EPA, in a statement, said it is focused on working with NHTSA to ensure the rule is completed.
The White House deferred comment to EPA, NHTSA and the Office of Management and Budget, which is overseeing the rule’s final review. A spokesman from the budget and management office declined to comment, citing its policy of not commenting on rules under review.
Car executives say the uncertainty has left them in limbo, not knowing if they should engineer cars for the stricter Obama-era rules, the easier standards favored by the Trump administration, or somewhere in between. They fear the prospect of having to develop separate versions of the same model for different parts of the country. California has a waiver under the Clean Air Act to set its own auto-emissions requirements separate from the federal mandates, and those rules are followed by 12 other states.
“You can’t do business that way. It’s just ludicrous,” said Steve Center, head of U.S. sales at Honda Motor Co. in a recent interview.
Absent clarity, many auto makers are trying to put in contingency plans for different scenarios, said Brett Smith, director of technology at the Center for Automotive Research in Ann Arbor, Mich. “If you aren’t ready, you’re going to be in a lot of trouble,” he said.
The interagency strife is the latest obstacle in the now yearslong push by the Trump administration to weaken environmental regulations for the U.S. auto industry set under the Obama administration and agreed to by most auto makers and California in 2012.
That effort began shortly after car companies asked President Trump to revisit the rules agreed to under President Obama, which called for a 5% annual greenhouse-gas reduction.
Within days of him taking office, auto executives met with Mr. Trump, arguing they needed relief because the current requirements were out of sync with what many customers were buying, namely bigger, less fuel-efficient trucks and SUVs. But the effort has now stretched on for nearly three years and divided the auto industry over how to respond with some car companies advocating for stricter mandates than proposed by the administration.
In August 2018, the Trump administration proposed freezing the current regulations altogether at 2019 levels. His administration has since settled on a less-drastic cut, mandating car companies reduce greenhouse-gas emissions by 1.5% each year, people close to the process have told the Journal.
White House officials have argued the rollback would save lives by reducing prices for new cars with more safety features. But the auto industry worried it was too drastic and would be struck down in court.
Last summer, Ford Motor Co., Honda Motor Co., Volkswagen AG and BMW AG agreed with California, to meet 3.5% annual targets in reducing emissions in hopes of striking an industry-driven compromise. The move angered the White House. The Justice Department opened an antitrust investigation into the four auto makers, which has since been dropped, and Trump administration officials accelerated efforts to revoke California’s ability to set the standards.
In October, General Motors Co., Toyota Motor Corp., Fiat Chrysler Automobiles NV and other auto makers sided with the Trump administration in a lawsuit over California’s mandates arguing the federal government alone should set emissions regulations.
Those auto makers and others that haven’t sided with California met with officials from EPA, NHTSA and the OMB to discuss it last week. Industry executives at the meeting stressed their desire for a robust rule that will provide certainty for their new-model planning moving forward, according to two people briefed on the meeting.
States Sue Trump Administration Over Easing of Auto Standards
Lawsuit argues March action by administration violated law and was based on faulty analysis.
A coalition of 23 states filed suit Wednesday against the Trump administration’s March easing of tailpipe-emissions standards, arguing that it violated the law and was based on faulty analyses.
The Environmental Protection Agency and National Highway Transportation Safety Administration in March significantly cut back on clean air rules for cars, including increased mileage standards, that were put in place by the Obama administration in 2012 with the aim of reducing greenhouse-gas emissions and improving fuel efficiency.
The Trump administration argued that its new rule would boost car sales and save consumers money by cutting the sale price of new cars by about $1,000. The move was criticized at the time by environmentalists.
The White House and the Justice Department didn’t immediately respond to a request for comment about the lawsuit. Most of the states backing it are led by Democratic governors, including California, Michigan, New York and Colorado. The suit was also backed by the District of Columbia, the cities of New York, Los Angeles, Denver and San Francisco, and the counties of Denver and San Francisco.
California Attorney General Xavier Becerra called the rule a “job-killer and public health hazard.”
“It will increase costs to consumers and allow the emission of dangerous pollutants that directly threaten the health of our families,” said Mr. Becerra, a Democrat who is battling the Trump administration in court over a variety of issues, including environmental regulation, immigration and health care.
The states argue in their suit that the Trump administration relied on an error-prone analysis that included omissions to justify the rule change, particularly in asserting that the changes would save consumers money over time, according to some of the attorneys general involved. The suit also argues that the rule violates federal requirements to reduce air pollution and increase vehicle efficiency, they said.
The Alliance for Automotive Innovation, the trade group representing the industry in Washington, hasn’t yet seen the lawsuit but will review it, a spokesman said.
The emissions issue has divided the auto industry during Mr. Trump’s tenure. Car executives long believed that the Obama-era rules were too stringent and not achievable during a protracted period of low gas prices, and lobbied the administration early on to roll back the standards.
But an earlier Trump administration plan to essentially freeze fuel-efficiency standards at 2020 levels, without requiring annual improvements, went further than many in the auto industry had expected. Some executives worried that watered-down U.S. standards would be out of step with more-stringent rules in China and Europe, complicating their vehicle-planning efforts.
General Motors Co., Toyota Motor Corp. and most other major car companies warmed to the final rule, which calls for 1.5% annual fuel-economy gains.
But another group, including Ford Motor Co. and Honda Motor Co., settled on a middle ground, voluntarily agreeing with California to meet standards that are stricter than the Trump administration’s proposal, but looser than the Obama-era ones. BMW AG , Volkswagen AG and Volvo Cars also are part of that group.
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