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U.S. Closes Antitrust Probe of Carmakers Over Emissions Pact

David McLaughlin and Jennifer A. Dlouhy

(Bloomberg) -- The Justice Department has abandoned its antitrust probe of four automakers that sided with California over President Donald Trump in a fight over the future of fuel economy and emissions requirements.

The inquiry had targeted Ford Motor Co., Honda Motor Co., BMW AG and Volkswagen AG over their agreement last year with California regulators to voluntarily meet the state’s targets for fuel economy and tailpipe emissions. The decision was seen as undercutting Trump’s plan to relax the national requirements and was decried by the administration at the time as a “PR stunt.”

California Governor Gavin Newsom cheered the Justice Department’s decision to back down, calling it “a big loss for the president and his weaponization of federal agencies.”

“These trumped up charges were always a sham -- a blatant attempt by the Trump administration to prevent more automakers from joining California and agreeing to stronger emissions standards,” Newsom said in an emailed statement.

The move to back down from the investigation was confirmed by two people familiar with the matter who spoke on the condition they not be identified. Ford and BMW also said that the Justice Department had closed the investigation.

The department and the California Air Resources Board declined to comment. Representatives of Honda and VW didn’t immediately comment. The New York Times previously reported the move.

The Justice Department raised concerns in August that the deal might be in violation of antitrust statutes, and the automakers were sent civil investigative demands late last year.

The Environmental Protection Agency and the Transportation Department also warned California regulators last September that the pact appeared “inconsistent with federal law” and its commitments “may result in legal consequences.“

California officials had maintained that discussions with automakers over the emissions requirements were conducted individually, rather than with the entire group.

The Trump administration has moved on multiple fronts against California since the auto pact, with federal regulators rapping the state’s work to clean up air pollution and blasting it for allowing “piles of human feces” and pollution to foul nearby waterways.

The Trump administration is preparing to finalize a rule easing Obama administration emissions and fuel-economy requirements this spring.

Separately, it already moved ahead with the most controversial aspect of its sweeping plan to reshape auto efficiency rules by stripping California of its authority to set tailpipe greenhouse gas standards that are tougher than federal requirements. Federal agencies finalized that move last fall, and litigation over the issue is underway now.

(Updates with comments from Governor Newsom from fourth paragraph)

--With assistance from David Welch, Ryan Beene and Gabrielle Coppola.

To contact the reporters on this story: David McLaughlin in Washington at dmclaughlin9@bloomberg.net;Jennifer A. Dlouhy in Washington at jdlouhy1@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, John Harney

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