The Department of Justice has opened an antitrust investigation of the four major car manufacturers that signed a deal with California this year to reduce car emissions, according to people familiar with the case, and escalates a standoff between President Trump, California and the auto industry over one of his key returns of climate regulations.
The Trump administration is in the process of drastically rolling back the Obama era rules designed to reduce car emissions that contribute to global warming, an effort large car manufacturers have publicly opposed. The administration is also considering a plan to revoke California's legal authority to enforce stricter greenhouse gas emissions regulations within its state boundaries, and put the two sides on collision course.
Now, the Department of Justice is investigating whether the four car manufacturers violated federal antitrust laws by coming to a side deal to follow California's stricter rules, these people said. The Ministry of Justice declined to comment on the investigation, which was originally reported by The Wall Street Journal.
Top Environmental Protection Agency and Transportation Department attorneys on Friday sent a letter to Mary Nichols, California's top clean air official, saying, "The purpose of this letter is to put California on notice" that the deal with the car manufacturers "looks to be in violation of federal law. "
Legal experts and people close to the Trump administration said the investigation was intended as a show of power for companies that have disliked the president.
is going to go ahead and use it, "said Myron Ebell, who heads the energy program at the Competitive Enterprise Institute, an industry-funded research organization, and who led the administration's transition at EPA." It's really the threat that matters. in cases it is a shot over the bow to get attention from companies. ”
Richard Revesz, a professor of environmental law at New York University, said he saw the case as a unique effort to use the Justice Department to intimidate or punish companies that had angered the president.
Revesz noted that a forensic investigation of the agreement was atypical because the agreement between California and the car companies is, so far, largely a principled agreement that has not yet been signed or legally formalized.
"It is extremely unusual for an prosecutor to investigate a deal that has not even been signed," Revesz said.
"These are four car companies that stands in the way of what the president wants to do, " Mr. Revesz said. "Now the huge prosecution of the federal government has been carried against them. This should make big companies very nervous."
The investigation already appears to have that effect. Another company, Mercedes-Benz, had become aware to join the California agreement, but after the German government learned of the federal investigation into the other companies that had signed, it warned Mercedes not to participate, according to a person familiar with the matter who spoke anonymously about it due to the sensitivity of the negotiations.
Under the agreement, the four automakers, which make up about 30 percent of the US car market, would be required to reach an average volatile fuel economy of 51 miles per gallon by 2026, a slightly looser standard than 54.5 miles per gallon by 2025 set by the Obama administration.
In comparison, the Trump administration's plan would bring those standards back to about 37 Miles per gallon.
Honda, Ford and BMW confirmed that they had been contacted about the case by the Department of Justice and said they were cooperating. Volkswagen declined to comment.
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