Automakers have long built their vehicles to meet the tougher emission standards in place under California law as it is cheaper to do that than to make different cars to sell in other states without those standards. I wrote about the phenomenon of one government effectively subjecting a larger population to its laws by virtue of the larger economic factors at play a couple years ago during the implementation of the European Union’s General Data Protection Regulation.
Last summer, the Trump administration began its efforts to roll back the federal automotive emission standards. At the same time, Ford, Honda, Volkswagen, and BMW (four of the largest automakers, which hold about 30 percent of the U.S. car market) reached their own agreement with the state of California to comply with the stricter state regulations. Last fall, the Justice Department initiated an investigation into that agreement, alleging that it violated antitrust laws and that California was overstepping its authority under the Clean Air Act.
As of this past February, the Justice Department found no evidence of wrongdoing by the automakers and officially closed its antitrust investigation. The administration’s dispute with California over its authority to set fuel economy standards, like the dozens of other pending cases between the two, remains unresolved.