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Federal Court rules against automakers on mileage


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Source: Bloomberg

In a decision certain to be appealed, a federal district court (the lowest level) yesterday ruled that states could impose carbon dioxide emissions standards on automakers that differ from and are more strict than standards imposed by the federal government. The decision was issued by Judge William Sessions sitting in the district of Vermont. Sessions was appointed by President Clinton and has a reputation of being an extremely liberal activist judge. Vermont is one of the most politically liberal states in the nation, the state that elected Howard Dean its governor and has sent to Congress a representative who belongs to the Socialist party.
 
The lawsuit saw a rare alliance of automakers, foreign and domestic, acting through an industry trade group, including Chrysler and General Motors, the Alliance of Automobile Manufacturers. It was the first court test of legislation regulating so-called “global warming” pollutants enacted in states including California, Vermont, New York, and Massachusetts, and seven other states – in all, about 40% of the auto market.
 
The regulations enacted by these states require drastic fuel economy increases – from 27.6 mpg in 2009 to 43.8 mpg in 2016. That is drastically higher economy standards than are proposed in even the most strict version of the pending federal energy bill and a much more rapid timetable for achieving them. Automakers have said that the 2007 standards are impossible to meet and that, overall, compliance with the Vermont standards would cost $15 billion dollars and create no improvement in air quality. The automakers have a similar lawsuit pending against the State of California. 
 
The issue arises because the federal Clean Air Act, which gives the federal government the authority to set emissions regulations for cars, also allows California to set its own standards and other states to adopt the California standards, provided the EPA gives California a waiver of the federal standards. To this point, the EPA has not done so. Without the waiver, the California legislation cannot go into effect, nor can the similar legislation in other states. Arnold Schwarzenegger – who drove a Hummer Hummer H1 with a hopped up big block Chevy engine when he took office – has pushed this legislation, and has threatened to sue the EPA if it does not grant California a waiver.
 
On a related issue, earlier this week Congressman John Dingell, the Democratic congressman who is the Chair of the House Energy Subcommittee and also represents the Detroit area in Congress, expressed confidence that the severe fuel economy standards proposed in the Senate version of the pending energy bill – which raises fuel economy standards to 35 mpg for 2020 and sets the same standards for cars and light trucks - will not be adopted in the final version. Those standards were deleted in the House of Representatives. The bill is now before a “conference committee” which is supposed to reconcile the differences between the two versions. Dingell told a meeting of automobile dealers that an earlier House proposal calling for a smaller increase over a longer period of time would likely be the basis for discussions in the conference committee.
 
All of this comes against the backdrop of a domestic auto industry which is struggling to revive itself and a drastically diminished body of union autoworkers who fear that the government is going to bankrupt the automakers and destroy their jobs. The automaker’s union, the UAW, has opposed the measures designed to drastically increase fuel economy, but their political clout is much less than it was once and it can no longer count on the unified support of other unions. The largest voice in the union movement today is government employees, over 30% of whom are unionized and are a much larger group of workers. 

Though scientific evidence linking man-made activities to “global warming” is scant and, increasingly, scientists researching the question are discrediting the claims of global warming activists, acceptance of the theory that man is causing global warming has become a political philosophy being pursued for political purposes. The automakers, in general, have done little to challenge the global warming theory and have, in some instances, appeared to accept it. 
 
The decision, if upheld, may have a drastic impact on what you are able to drive. The regulations which Vermont, California, and the other states are attempting to force on the automakers are so high that they would, in effect, legislate out of existence performance cars, be they Corvettes or Porsches.
 
The automakers may, however, fare better in other courts and on appeal. Sessions decision is not precedent anywhere by Vermont, which means that it isn’t the law anywhere else and other courts are free to decide differently. 
 
In truth, the Vermont law and the California law on which it was patterned are fuel economy regulations, albeit in disguise. Because federal law prohibits the states from adopting their own fuel economy standards, the states deliberately chose to make an end-run around that prohibition by framing the law as a pollution regulation. But satisfying the regulation can only be accomplished by drastically raising fuel economy. In reality, the measure is a fuel economy regulation. It merely uses a different standard than miles per gallon to define the required economy.
 
Allowing states to set their own fuel economy standards, of course, runs the risk of having fifty different standards, something that would make the costs of manufacturing cars hugely expensive and raise the price for all consumers. It was to prohibit state laws that would produce effects of that type that lead to the inclusion in the United States Constitution of the “interstate commerce clause,” the provision which gives the federal government the exclusive power to regulate “commerce among the states.”
 
But, while the California, Vermont, et al. efforts to set their own mileage standards are wending their way through the courts, the automakers will be faced with trying to determine what they will be building six years from now. Six years is the typical lead time for design of a new model car. Uncertainty over the nature of regulations which may be adopted by Congress has already led automakers to put development programs on hold. The pending litigation with these states will certainly exacerbate that problem.
 
If one were to set out to destroy the competitive capability of the domestic automobile industry, the approach of Vermont and Judge Sessions would be as good a way of doing so as any. It isn’t likely to do much for the German auto industry, either. 

Moreover, much more is at stake than the merits of the states’ economy standards. Even if the automakers manage to create an S Class that can pull down 50 mpg, there is no guarantee that these states won’t then turn around and make the standard 100 mpg. 

The mentality behind these states’ regulations is really one of control over the consumer, more than it is over the car maker. The objective is to dictate what will be available to the consumer on the market.

And you can bet they don’t like what you drive.



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