Car News

Trump administration launches legal attack on carmakers’ fuel-economy deal with California

"We have received a letter from the Department of Justice and will cooperate with respect to any inquiry."

Los Angeles traffic on the 105 freeway near the 405 interchange in Southern Calif. Al Seib/Los Angeles Times/TNS

WASHINGTON — The Trump administration warned California on Friday that its deal with four automakers to increase mile-per-gallon standards for cars violates federal law.

In a letter to the California Air Resources Board, officials for the U.S. Environmental Protection Agency and Department of Transportation said the deal struck with Ford, Volkswagen, BMW and Honda “appears to be inconsistent with federal law” that gives the administration “and not California or any other state” authority to set fuel standards.

It warned CARB Chair Mary Nichols that the agreements “may result in legal consequences” if they move forward, though the letter wasn’t specific about what those consequences might be.

At the same time, The Wall Street Journal reported that the U.S. Department of Justice is examining potential antitrust violations in the carmakers’ agreement with California.


The federal law enforcement agency is probing whether the four companies violated federal competition laws by agreeing with each other to follow tailpipe-emissions standards that exceed what’s sought by President Donald Trump, sources close to the probe told the Journal.

“We have received a letter from the Department of Justice and will cooperate with respect to any inquiry,” Ford spokeswoman Rachel McCleery said in a statement provided to the Detroit Free Press. The company declined to comment further. Honda also said it would cooperate with the investigation.

In July, the automakers reached an agreement with the CARB to increase average fuel standards for new vehicles to nearly 50 mpg by model year 2026. They also notably recognized what they considered California’s authority to set standards for it and a handful of other states that have adopted them.

The deal, however, was been sharply criticized by Trump and his administration, which has proposed freezing existing fuel economy standards put in place in 2011 and potentially overturning a longstanding waiver allowing California to set its own standards.

On Thursday, Trump met with General Motors CEO Mary Barra at the White House, and while it’s not known what they spoke about, it was widely presumed that the fuel standards issue would come up. GM hasn’t joined the California deal.


Last month, Trump slammed Ford for joining the deal, saying it would force up prices on autos and that “Henry Ford would be very disappointed if he saw his modern-day descendants wanting to build a much more expensive car, that is far less safe and doesn’t work as well.”

There has been little or no evidence, however, to back up Trump’s claims about the safety and even by the administration’s own past statements, the average price of new, more fuel efficient vehicles could go up by $2,100, not $3,000.

“The Trump administration has been attempting and failing to bully car companies for months now,” California Gov. Gavin Newsom said in a statement to the Free Press. “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.”

Nichols, the CARB chair, added: “The U.S. Department of Justice brings its weight to bear against auto companies in an attempt to frighten them out of voluntarily making cleaner, more efficient cars and trucks than EPA wants. Consumers might ask, who is (EPA Administrator) Andy Wheeler protecting?”

California has authority under the Clean Air Act, which was signed into law by President Richard Nixon, to set its own emissions standards, which are tougher than national standards. Twelve other states have adopted those standards and account for a third of the U.S. auto market.


The Trump administration action holds out the prospect of a legal battle to erase California’s waiver as automakers, represented by the Alliance of Automobile Manufacturers, advocate for “one national standard” — which could be read as wanting to eliminate California’s rules.

The alliance declined to comment Friday.

The Justice Department investigation, preliminary in nature, is the latest salvo from a Trump administration that is intent on curbing California’s influence on the auto industry, the Journal reported.

The Justice Department’s antitrust division is acting on its own accord and without direction from or coordination with the White House, the Journal reported. The review began after news reports of the deal between the four companies and California, sources said.

“The four companies put their names on a one-page agreement in the announcement, and said the California regulators had agreed to the terms,” the Journal wrote. “That structure raised concerns by the Justice Department that the deal was not something a regulator had compelled, but something that the companies had negotiated with one another, in the fashion of a cartel.”

Justice Department letters delivered to the companies are exploratory at this time.