Trump to sit down with major automakers on Friday on fuel rules

[May 11, 2018]  By David Shepardson

WASHINGTON (Reuters) - U.S. President Donald Trump will meet 10 major automakers at the White House on Friday to discuss the fate of landmark fuel efficiency standards and a looming confrontation with California and other major states.

A draft proposal circulated by the U.S. Transportation Department would freeze requirements at 2020 levels through 2026, but the administration is not expected to formally unveil the proposal until later this month or in June.

Major automakers reiterated this week they do not support freezing requirements but say they want new flexibilities and rule changes to address lower gasoline prices and the shift in U.S. consumer preferences to bigger, less fuel-efficient vehicles.

Automakers also want the White House and California to reach agreement on maintaining national standards, fearing a prolonged legal battle could leave them facing two different sets of rules and extended uncertainty.

Trump plans to tell automakers he is willing to support a freeze and challenge California but wants the industry to back the effort, a senior administration official said. He also wants to know if they want him to fight on their behalf, the official said.

The chief executives of General Motors Co, Ford Motor Co, Fiat Chrysler Automobiles, along with senior U.S. executives from Toyota Motor Corp, Volkswagen AG <VOWG_p.DE>, Hyundai Motor Co, Nissan Motor Co, Honda Motor Co, BMW AG and Daimler AG will meet Trump, along with the chief executives of two auto trade groups.

Trump went to Michigan, a state that helped him win the presidency, in March 2017 and suggested he would soften the fuel rules. "The assault on the American auto industry is over," he told autoworkers there.

California and 16 other states covering about 40 percent of the U.S. population filed suit last week to block the Trump administration's efforts to weaken the requirements.

A White House official said Trump would hear from the automakers about the impact of the administration's forthcoming revisions to Corporate Average Fuel Economy rules and automakers' efforts to negotiate a national program with California.

'MARKETPLACE REALITIES'

U.S. Trade Representative Robert Lighthizer, Transportation Secretary Elaine Chao, White House economic adviser Larry Kudlow, Environmental Protection Agency chief Scott Pruitt and White House aide Chris Liddell are among the administration officials scheduled to attend the session, which is expected to last an hour.

Mitch Bainwol, who heads the Alliance of Automobile Manufacturers, told a U.S. House committee on Tuesday the industry supports "standards that increase year over year that also are consistent with marketplace realities."

President Donald Trump holds a rally with supporters at North Side middle school in Elkhart, Indiana, U.S., May 10, 2018. REUTERS/Leah Millis

Bainwol said the industry remains hopeful that there will be a "negotiation" between the White House, California and the auto industry.

Automakers may also use the Trump meeting to raise proposed controversial changes to the North American Free Trade Agreement, officials said.

Trump is likely to also raise an idea - first reported in early April - about requiring imported automobiles to meet stricter environmental standards, the administration official said.

Automakers plan to argue that Trump should view California as a flawed trade deal and he should help them get a better deal, two auto officials said.

The industry also notes it faces rising fuel efficiency standards around the globe and is spending billions of dollars to introduce new battery electric vehicles in the coming years.

The Transportation Department proposal also asserts that a 1975 federal law preempts states from imposing emissions rules, even though California has received numerous waivers under the Clean Air Act to set emissions rules.

Democrats and environmental advocates plan to aggressively challenge the Trump administration's plans to weaken the vehicle rules touted by the previous Obama administration as one of its biggest climate actions.

The Trump administration plans to argue the weaker rules will lead to cheaper vehicles, boost sales and employment and improve safety by prodding faster turnover of older vehicles.

The Obama rules adopted in 2012 sought to double average fleet-wide vehicle fuel efficiency to about 50 miles (80 km) per gallon by 2025, but included an evaluation due by April 2018 to determine if the rules were appropriate.

Unlike many other Trump meetings with business leaders, Friday's meeting will be closed to the media.

(Reporting by David Shepardson; Editing by Paul Tait)

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