White House Warns Carmakers on Emissions in Tense Call

(Bloomberg) -- The White House has issued an us-versus-them challenge to carmakers: back an administration plan to roll back fuel-economy standards or risk President Donald Trump's wrath by siding with California's stringent emissions requirements.

That message was delivered during a tense conference call between Trump administration officials and auto executives in late February, according to five people familiar with the call who spoke on the condition they not be identified discussing the private conversation.

The administration has terminated months of talks between federal regulators and California officials to maintain a common standard. Automakers have urged the two sides to reach an agreement to avert a legal battle with the state, which covets its unique ability to establish its own emissions rules.

Joining the call for the White House were senior officials with the Environmental Protection Agency and the National Highway Traffic Safety Administration, one of the people said.

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The industry officials on the call were told that auto companies should either proclaim their support for the Trump administration's direction on the efficiency mandates, or back California's tougher and more costly regulations, the people said.

White House representatives and the Alliance of Automobile Manufacturers declined to comment.

The request has added to industry anxiety about getting caught in a conflict between Trump and the nation's biggest auto market, the people said. The president is also reviewing the findings of a Commerce Department inquiry into whether imported cars and parts threaten national security, which automakers worry could provide the basis for new tariffs.

The Trump administration in August recommend capping tailpipe carbon emissions standards and fuel economy requirements at 37 miles per gallon after 2020, instead of rising to roughly 47 mpg under rules adopted by the Obama administration.

The joint proposal by the EPA and the traffic safety administration also called for revoking California's authority to set its own greenhouse standards for vehicles, a move that could lead to yet another legal battle between Washington and Sacramento.

Nearly all automakers have urged both sides to strike a deal to avert a messy legal battle that could roil business plans heavily reliant on predictability.

The White House call to automakers came after the administration declared that months of talks with the California Air Resources Board in search of a compromise were over, citing insufficient progress.

Earlier: California Counters Trump's Car Emissions Rollback With New Plan

“Despite the administration's best efforts to reach a common-sense solution, it is time to acknowledge that CARB has failed to put forward a productive alternative,” the White House said in its Feb. 21 statement.

CARB spokesman Stanley Young at the time said the administration had broken off communications before Christmas, “and never responded to our suggested areas of compromise -- or offered any compromise proposal at all.”

Most automakers have called for revisions to ease the so-called national program of fuel economy and tailpipe greenhouse gas emissions standards in light of cheap gasoline and surging SUV sales that weren't expected when the rules were agreed upon in 2011. Yet the companies have stopped short of endorsing the administration's recommendation to freeze requirements after 2020 and revoke California's authority to set its own rules.

Ford Motor Co. declined to comment on the White House's outreach, but Rachel McCleery, a spokeswoman for the company, said it still wanted the Trump administration to work with California and maintain national mileage and emissions standards.

“A coordinated program with every stakeholder is in the best interest of Ford's customers, and is the best path forward to achieve reductions in carbon dioxide emissions and support critical investments in new technologies,” McCleery said.

--With assistance from Jennifer Jacobs.

To contact the reporter on this story: Ryan Beene in Washington at rbeene@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, John Harney

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