Automakers Tell Trump His Pollution Rules Could Mean ‘Untenable’ Instability and Lower Profits

Source: By Coral Davenport, New York Times • Posted: Friday, June 7, 2019

WASHINGTON — Many of the world’s largest automakers joined together Thursday to tell President Trump that one of his most sweeping deregulatory efforts — his plan to weaken pollution standards for automobiles — threatens to hurt their profitability and produce “untenable” instability in one of the nation’s most important manufacturing sectors.

In a letter signed by 17 companies including Ford, General Motors, Toyota and Volvo, the automakers asked Mr. Trump to go back to the negotiating table on the planned rollback. It represents the most forceful statement to date by the auto industry against Mr. Trump’s effort to weaken the tailpipe pollution rules, one of President Barack Obama’s signature policies to fight climate change.

Mr. Trump’s new rule, which is expected to be unveiled in the coming weeks, would all but eliminate the Obama-era auto pollution regulations, essentially freezing mileage standards at about 37 miles per gallon for cars, down from a target of 54.5 miles per gallon by 2025. The policy makes it a near certainty that California and 13 other states will sue the administration while continuing to enforce their own, stricter rules — in effect splitting the United States auto market in two.

For automakers, a bifurcated market is their nightmare scenario. In the letter to Mr. Trump, a copy of which was reviewed by The New York Times, they warned of “an extended period of litigation and instability” should his plans be implemented.

The letter was delivered to the White House on Thursday morning, along with a similar letter to Gov. Gavin Newsom of California, according to a senior auto industry lobbyist who was not authorized to speak about the matter because the letters had not yet been made public.

“We strongly believe the best path to preserve good auto jobs and keep new vehicles affordable for more Americans is a final rule supported by all parties — including California,” the letter says. To Mr. Newsom, the companies wrote, “We are writing with a desire to resurrect discussions” on the plans.

A White House spokesman, Judd Deere, said Thursday afternoon that he was unaware of the letter and therefore unable to respond to questions about it. Stanley Young, a spokesman for the California Air Resources Board, the agency that runs the state’s tailpipe pollution program, did not respond to an email seeking comment.

The automakers’ letter is the latest unusual turn in Mr. Trump’s quest to roll back regulations on auto manufacturing, an industry he has vowed to support, only to be told by that same industry that his efforts may do more harm than good. Some industry chief executives and lobbyists have been privately telling the White House the same thing for months, but Thursday’s letter represents the most public pushback by the industry in their efforts to temper the president’s plan.

“Our thinking is, the rule is still being finalized, there is still time to develop a final rule that is good for consumers, policymakers and automakers,” said Gloria Bergquist, a vice president at the Alliance of Automobile Manufacturers.

But criticizing the president’s plan comes with risk for the automakers. The White House has courted their support for his moves, and, in particular, officials at auto companies have said they expect to be asked to stand with Mr. Trump in the Rose Garden when he announces the rollback — just as they once stood with Mr. Obama in 2009 when he first announced the creation of the pollution rules.

Privately, some officials have said that they fear auto industry criticism of Mr. Trump’s rollback could lead the president to retaliate by imposing tariffs on auto imports. That, too, could be painful for the industry, because many cars and components are now made or partly assembled across the border in Mexico or Canada.

In asking Mr. Trump to rewrite his planned rollback of the pollution rule in such a way that it could be supported by the environmentally progressive state of California, the automakers effectively withdrew their support for Mr. Trump’s current plan and asked the president to make a deal with a state that he appears to relish antagonizing. Mr. Trump has variously described California as “ridiculous,” “out of control and “the state that has wasted billions of dollars.”

Xavier Becerra, the California attorney general, has said repeatedly that the state intends to sue Mr. Trump over the weakening of the auto pollution rules. In one such remark earlier this year, he said he is “prepared to defend our national clean car standards even if the Trump administration intends to go AWOL.”

While two of the nation’s Big Three companies signed the letter, the third, Fiat Chrysler, which has been more supportive of the administration’s plan, did not. Other automakers who signed the letter include BMW, Honda, Mazda, Nissan, Subaru and Volkswagen.

The president during a March 2017 meeting in Michigan with auto industry executives.Nicholas Kamm/Agence France-Presse — Getty Images

The president during a March 2017 meeting in Michigan with auto industry executives.Nicholas Kamm/Agence France-Presse — Getty Images

The automakers conceded in their letter that they were seeking to solve a crisis of their own making. Soon after Mr. Trump took office, CEOs from Detroit’s top automakers personally asked him to loosen the some elements of the Obama-era regulations.

However, the Trump administration went further than the industry expected, using the rollback to attack California’s legal authority to set its own rules. Since the 1970 Clean Air Act, California has had special privileges to write its own pollution regulations.

The Trump administration last year unveiled a draft plan that would have rolled back the Obama rule and stripped California of the right to set tougher state standards. In subsequent months, both sides said they hoped to negotiate their way to a final plan that would lead to one national standard, avoiding potential courtroom showdowns.

But in February, the White House announced that it had ended talks with California, essentially ensuring that the final outcome would lead to litigation.

Coral Davenport covers energy and environmental policy, with a focus on climate change, from the Washington bureau. She joined The Times in 2013 and previously worked at Congressional Quarterly, Politico and National Journal. @CoralMDavenportFacebook