Will Trump intervene in war over car rules?

Source: Camille von Kaenel, E&E News reporter • Posted: Monday, May 7, 2018

Rising tensions between the auto industry and the Trump administration over the extent of the rollback of fuel efficiency rules could culminate in a high-stakes White House meeting as early as next week.

President Trump and senior executives of a dozen automakers including Ford Motor Co., General Motors Co. and Toyota Motor Corp. were planning a meeting at the White House this week to discuss the regulatory changes, Reuters first reported.

The White House was behind the request for the meeting. Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, said she would defer to the “inviter” to release more details. The White House did not comment.

On the agenda for the meeting would be the new, lower targets EPA and the National Highway Traffic Safety Administration are drafting for car tailpipes. Negotiations over the North American Free Trade Agreement (NAFTA), which may overshadow the debate over fuel efficiency for the industry, could also come up. But the meeting could offer a key opportunity for manufacturers to avoid a worst-case scenario in which they would have to sell cars to meet two different sets of mileage and emission requirements.

Meeting with the White House could represent the “last chance for Car CEOs to be adults and tell Trump that gutting #GHG standards is lose-lose-lose for industry, consumer and the planet,” Margo Oge, the former head of EPA’s transportation office, wrote on Twitter.

A Trump administration draft plan would flatline fuel economy at 2020 levels through 2026 (E&E News PM, April 27). It would argue against California’s authority to set its own standards. It does not explicitly revoke California’s waiver, however. The draft proposal would hurtle the country toward a split market and an extended legal battle (see related story).

“These car companies have to tell the president that when they asked him, right after the election, to reopen the 2025 standards, that they didn’t have in mind what we’re seeing in NHTSA’s leaked proposal, which is freezing fuel economy,” Oge added in an interview.

‘Reasonable deal to be had’

Industry trade groups have pushed the Trump administration for the review of the rules since day one. Some companies, like Fiat Chrysler Automobiles NV, stand to gain from a major loosening of the rules, but others, like General Motors, that have invested millions in more fuel-efficient technology could lose out. Some automakers have come out against a freeze or major rollback of the rules. They have ramped up their efforts to get on the same page regarding the rules in past weeks, according to auto industry and government sources. The departure of Mike Catanzaro, a former White House energy aide who sought to smooth over talks with California, was seen as a loss.

Mary Barra, CEO of General Motors, has stressed her company’s desire for “one set of requirements” while wanting some reforms to incorporate new developments in shared and autonomous vehicle technology. Ford Chairman Bill Ford and CEO Jim Hackett wrote in March they’re looking for “flexibility” in the rules, not a rollback. American Honda Motor Co. Inc. came out with a detailed proposal this month to keep the Obama-era stringency, which would bring average fuel economy to a projected 50.8 mpg in 2025, or about 36 mpg in the real world, but add incentives for electric vehicles and other special credits.

“I think there’s a reasonable deal to be had,” said Robert Bienenfeld, assistant vice president of environment and energy strategy at American Honda. “All we can do is advocate for the best policy options out there.”

This week, 17 states and the District of Columbia filed a lawsuit aimed at preventing EPA from drafting lower emissions standards based on EPA Administrator Scott Pruitt’s April determination that the Obama targets were too ambitious. The lawsuit ups the stakes but was framed by California Air Resources Board head Mary Nichols as a “preventative measure.”

“The best way to read the tea leaves right now is there is still room to land in a place to preserve the framework that the Obama team established, which is the one national standard,” said Jody Freeman, an architect of the Obama deal with automakers and now a law professor at Harvard University. “There’s no inevitability to blowing that up. It depends on what the White House ultimately does and what the automakers say they want.

“That would require the administration to provide for a less drastic rollback than it looks like they are considering,” she added.

She also suggested automakers may want to meet at the White House to go above Pruitt’s head and ensure continuity.