For years, President Trump has decried the Mueller investigation as a “witch hunt.” Putting aside whether that characterization was fair, the Trump justice department has now initiated a witch hunt of its own—an investigation into whether four car companies violated antitrust laws by agreeing with the State of California to build cars that are more efficient and emit less carbon pollution.
It is painfully clear that this investigation was launched to retaliate against these four companies and California and deter other car companies from joining it. I say this because: 1) the president was enraged by this agreement; 2) the antitrust claim is utterly baseless; and 3) the current attorney general has demonstrated a remarkable lack of independence from the president. (Mis)using antitrust laws to punish those who disagree with a policy is beyond scary.
The background
In 2012, all of the major automakers, the state of California, and two federal agencies (EPA and the National Highway Traffic Safety Administration, or NHTSA) agreed to standards to roughly double miles per gallon for cars and light duty trucks and dramatically cut carbon pollution from these sources. As UCS has demonstrated, these standards will save a typical consumer approximately $6000 over the lifetime of a vehicle, even after accounting for a higher purchase cost, and cut carbon pollution in the aggregate by hundreds of millions tons per year. These rules are the most significant greenhouse gas cutting measure that the United States has implemented, and they are working.
Notwithstanding this success, the Trump administration is determined to roll them back, proposing that there be no increase in fuel economy after the year 2021. In addition, the Trump administration seeks to take away the right of California and thirteen other states (and the District of Columbia) to maintain the stricter standards agreed upon in 2012. (This latter gambit is also legally problematic, to say the least—California’s authority to regulate greenhouse gas emissions is expressly allowed under Clean Air Act, EPA approved the CA standards, and two courts have already ruled that California can regulate greenhouse gas emissions under the CAA).
In what may be a first in regulatory history, the regulated entity—carmakers—do not support Trump’s rollback or the assault on CA’s authority, and they have urged the Trump administration to work with California on a compromise that will increase fuel economy over time. The administration has not heeded this call and so California and four automakers (Ford, Volkswagen, Honda and BMW) made a reasonable decision to work together.
The four automakers agreed that notwithstanding any federal rollback, they will continue to build more fuel efficient cars nationwide, and California agreed to make several changes to its standards to allow more time for compliance and more credits for prior actions. This voluntary agreement gives these automakers the certainty they need to plan their fleets, and achieves roughly 75% of the economic and environmental benefits of the original standard. And while it is far from perfect (compromises rarely are), it keeps the trend line moving in the right direction, and it is vastly superior to the standards that the Trump administration is expected to issue this fall.
Apparently, the president was furious with this agreement. Shortly after it was announced, he publicly rebuked the four executives who signed it, and then hauled other carmaker CEO’s into the White House to demand that they not join the agreement. He also called upon his agencies to expedite taking away California’s independent authority.
Not content with this, the Justice Department, headed by William Barr, has now sent letters to California and the four carmakers apparently alleging that this agreement violates anti-trust laws. (Perhaps it is also no coincidence that the new Deputy AG, Jeffrey Rosen was the Deputy Secretary of Transportation from May 2017 to February 2019 and a key architect of the proposed rollback of the federal rules and the plans to undermine state regulatory authority.)
A baseless claim
Any notion that these four companies and California have violated anti-trust laws is absurd. Anti-trust laws are designed to foster competition, and so they forbid actions such as price-fixing, bid rigging, dividing up sales territories or product lines, using market power to destroy competitors, and the like. This voluntary agreement bears no similarity whatsoever to any of these practices. Under the agreement, these carmakers will continue to compete against one another, selling the cars they individually choose to manufacture at prices that they think the market can bear, benefiting all consumers by saving them money at the pump.
Indeed, even if a voluntary agreement of this kind were anti-competitive (which this one is not), the courts have long held that companies can join together to exercise their First Amendment rights and petition government for a change in policy. (If this were not the case, trade associations that lobby on behalf of an entire industry would violate antitrust laws). Such conduct is on its face exempt from anti-trust scrutiny, as many legal experts have noted.
This is part of a pattern
In this case, the Trump administration is directing the fearsome threat of federal prosecution against companies and a state because they favor more fuel efficient cars than does the White House. This is strikingly contrary to our constitutional values. This is also part of a widespread pattern. In recent weeks, acting Chief of Staff Mulvaney and Secretary of Commerce Wilbur Ross have apparently threatened to fire officials who rebuffed the President’s assertion that Alabama was in the path of Hurricane Dorian. And this is on top of years of sacking government scientists or transferring them to meaningless roles, disbanding advisory panels, and ordering reports to exclude information on topics such as climate change, all with an eye towards rooting out those who disagree with the president.
Increasingly, our president acts as a mad king, ruling in fits of pique. The cabinet officials who might have once said no to him are largely gone, replaced by underlings who carry out his orders blindly. This is the time for leaders of all branches of government, and civil society, to fight back. For the carmakers who have joined the agreement, stand strong. For the carmakers who have not yet joined this agreement, do it now, as this president does not have your interests in mind. And Congress—now is the time for searching oversight of this and many other abuses of power.