Carmakers Face Probe Over Calif. Emissions Pact

The U.S. Dept. of Justice is determining whether four carmakers broke antitrust laws in July by pledging to adopt modified California emission standards.

The companies—BMW, Ford, Honda and Volkswagen—received letters advising them of the preliminary investigation, sources tell Reuters. The carmakers also received copies of a letter sent by federal regulators to the state of California that suggests the voluntary pact is “unlawful and invalid.”

The notices coincide with President Donald Trump’s rising frustration with the California Air Resources Board.

Trump is adamant about freezing emission and fuel economy standards at 2020 levels and canceling the tougher Obama-era regulations currently set to take effect in 2021-2025. California is equally determined to impose the stronger standards anyway.

Carmakers have repeatedly urged the two sides to find a compromise that would avoid dual standards and a lengthy legal battle. The White House cut off talks with California in February. Now it is finalizing a plan to revoke California’s authority to set its own regulations.

Under terms of the non-binding deal between California and the four carmakers, the companies have pledged to meet a milder form of the tougher federal standards. They would have more time to meet the regulations. They also would be able to claim more credit for electric-car sales and for implementing such fuel-saving features as aerodynamics and automatic stop-start engine controls.