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GM, Toyota, Fiat Chrysler back Trump on California emissions challenge

Published 10/29/2019, 12:42 AM
© Reuters. FILE PHOTO: FILE PHOTO: Morning commuters travel in rush hour traffic toward Los Angeles, California

By David Shepardson

WASHINGTON (Reuters) - Major automakers are siding with the Trump administration in its bid to bar California from setting its own fuel efficiency rules or zero-emission requirements for vehicles, the companies said in a filing with a U.S. appeals court late on Monday.

The move by firms including General Motors Co (N:GM), Toyota Motor Corp (T:7203), Hyundai Motor Co (KS:005380), and Fiat Chrysler Automobiles NV (MI:FCHA), follows legal challenges by California and 22 states and environmental groups in September.

Those challenges aim to undo the Trump administration's determination, issued in September, that federal law bars California from setting stiff tailpipe emission standards and zero-emission vehicle mandates.

In their filing with the U.S. Court of Appeals for the District of Columbia, the automakers and the National Automobile Dealers Association said they backed the administration bid to bar individual emissions rules by states.

They asked to intervene, arguing the administration's rule provided "vehicle manufacturers with the certainty that states cannot interfere with federal fuel economy standards."

The decision to side with President Donald Trump could prompt a furious backlash from Democrats and environmentalists.

It also poses a risk for automakers if a Democrat wins the White House in next year's election and reverses Trump’s actions, and also reinstates California’s right to set its own rules and tougher national emissions standards adopted by President Barack Obama.

A spokeswoman for California Attorney General Xavier Becerra said the action "doesn’t change our resolve to fight as long and hard as necessary to protect our standards."

She added, "The courts have upheld our authority to set standards before and we’re hopeful they will yet again."

Other automakers, such as Ford Motor Co (N:F), Honda Motor Co (T:7267) and Volkswagen AG (DE:VOWG_p), which announced a voluntary deal with California in July on emissions rules, are not joining the bid to intervene on the administration's side.

The group backing Trump also includes Mazda (T:7261), Nissan Motor Co (T:7201), Kia Motors Corp (KS:000270) and Subaru Co (T:9778).

John Bozzella, president and chief executive of Global Automakers, a trade group representing major foreign firms, said the companies had little choice but to back the administration.

"It's been the federal policy for the better part of 40 years that the federal government has the sole responsibility for regulating fuel economy standards, but it doesn't have to get to that," Bozzella told reporters, speaking for an ad-hoc group, the Coalition for Sustainable Automotive Regulation.

"We can still reach an agreement" on fuel economy rules, Bozzella said, adding that companies still support a "middle ground" between California and the administration that would see rising attainable fuel efficiency requirements. He said the Trump administration did not ask the automakers to intervene.

Senator Tom Carper, the top Democrat on the Senate Environment and Public Works Committee, had harsh words for the automakers.

"Instead of choosing the responsible path forged by four automakers and the state of California, one that will move us toward the cleaner, alternative fuel vehicles of the future, these companies have chosen to head down a dead-end road," Carper said in a statement.

A group of major environmental groups, including the Sierra Club, the Union of Concerned Scientists and Natural Resources Defense Council, sued in September to block the determination.

On Friday, seven U.S. states, including Alabama, Ohio, Texas, Utah and West Virginia, also filed in support of the Trump regulation, arguing that without the rule their residents would have to pay "higher vehicle costs."

In Aug. 2018, the Environmental Protection Agency and National Highway Traffic Safety Administration proposed freezing fuel efficiency requirements at 2020 levels through 2026.

The Obama-era rules adopted in 2012 called for a fleetwide fuel efficiency average of 46.7 miles per gallon by 2026, with average annual increases of nearly 5%, compared with 37 mpg by 2026 under the Trump administration’s preferred option.

The final rule is expected to modestly boost fuel efficiency from the initial proposal, with some automakers anticipating annual increases of about 1.5%, but still much less stringent than the Obama rules.

The group was not taking a position on what those requirements should be, Bozzella emphasized, but reiterated they should continue to rise annually.

"The decision to intervene in the lawsuit is about how the standard should be applied, not what the standard should be," Bozzella said.

The announcement showed an industry split.

© Reuters. FILE PHOTO: FILE PHOTO: Morning commuters travel in rush hour traffic toward Los Angeles, California

After the four automakers, including BMW AG, announced the voluntary California pact, the Justice Department warned them the agreement "may violate federal antitrust laws," according to documents seen by Reuters.

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