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Government Says Emissions Deal Between California, 4 Automakers May Be Illegal

Ford is among the auto companies being investigated in the antitrust probe, as are BMW, Volkswagen and Honda. (Credit: Tim Boyle/Getty Images)

Ford is among the auto companies being investigated in the antitrust probe, as are BMW, Volkswagen and Honda. (Credit: Tim Boyle/Getty Images)

The Trump administration on Friday launched an all-out assault on California over mileage rules, opening an antitrust investigation and telling state officials that they appear to be violating federal law in a deal with four automakers setting tougher automotive emission standards.

The outcome of the emissions fight will make or break an effort by President Donald Trump to relax Obama-era mileage standards nationwide. California’s congressionally granted authority to set its own, tougher emissions standards under the 1970 Clean Air Act has long prodded automakers to adopt more fuel-efficient passenger vehicles.

Ford and Honda confirmed receiving a letter from the U.S. Justice Department informing them of an antitrust inquiry into a July deal with California, in which the two automakers along with Volkswagen and BMW agreed to stricter emissions standards than preferred by Trump. The Department of Transportation and the Environmental Protection Agency sent a letter to California saying the deal appears to violate the Clean Air Act and other laws.

“Congress has squarely vested the authority to set fuel economy standards for new motor vehicles, and nationwide standards for GHG (greenhouse gas) vehicle emissions, with the federal government, not with California or any other state,” the agencies wrote in a letter dated Friday to the California Air Resources Board, which oversees auto emissions in the state.

California has emerged as a leader of state-level efforts to block Trump administration moves weakening environmental protections. As part of those efforts, dozens of lawsuits have been filed challenging administration rollbacks.

Trump long has made clear he wants to end California’s clout in setting mileage standards. Gov. Gavin Newsom remained defiant in the face of Friday’s administration actions.

“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.”

Ford spokesman T.R. Reid confirmed Friday that the company received the Justice Department letter on the antitrust issue and said the company is cooperating. He would not disclose which other automakers may have gotten the letter, but Honda confirmed that it also had received it.

The July deal bypassed the Trump administration’s plan to freeze emissions and fuel economy standards adopted under the Obama administration at 2021 levels.

The four automakers agreed with the California Air Resources Board to reduce emissions by 3.7% per year starting with the 2022 model year, through 2026. That compares with 4.7% yearly reductions through 2025 under the Obama standards, according to California.

Emissions standards are closely linked with fuel economy requirements because vehicles pollute less if they burn fewer gallons of fuel.

The Justice Department gave no details of why it believed the deal could have violate federal law meant to prohibit anticompetitive behavior by companies. The EPA refused further comment.

In the letter to California, the EPA and Transportation Department warned the state’s pollution regulator to “disassociate” itself from the deal with the four automakers. “Those commitments may result in legal consequences given the limits placed in Federal law on California’s authority,” the letter said.

Former EPA attorneys who had worked on the emissions standards questioned the administration’s legal arguments Friday.

Congress in the 1970s granted California authority, through a waiver in the Clean Air Act, to pursue tougher automobile emissions standards, in a nod to the state’s battles against the especially tenacious smog in central and Southern California. Lawmakers also allowed for other states to follow California’s tougher standards.

The move over the decades has at times led to two different pollution and related mileage standards, one set by California and the states that follow it, and a federal one. The Trump administration is now challenging whether California has that legal authority under the Clean Air Act.

“It’s crystal clear that it’s very hard to deny California a waiver” from national automobile emissions standards, said John Hannon, a retired EPA lawyer with decades of experience involving emissions standards.

“Congress set it up to give incredible deference to California’s authority to protect the health and safety of its residents,” Hannon said, referring to the Clean Air Act.

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