If Obama co-opts automakers, it could kill legal challenges to new fuel economy standards 

Yesterday, I wrote about the prospect of the Obama administration winning over automakers on new fuel economy standards by offering a variety of credits and subsidies. As I noted, while automakers could get rewarded for accepting the new regulations, car buyers would be stuck with fewer choices and lighter, more deadly, vehicles. Yet there’s another wrinkle in this. If the Obama administration successfully co-opts automobile manufacturers, it would make it a lot more difficult, if not impossible, for other parties to challenge the new regulations in court.

There’s already precedent for this. In April, the U.S. Court of Appeals for the DC Circuit tossed out a suit challenging auto emissions regulations, and the cozy relationship between auto manufacturers and the Obama administration played a key role.

The case pitted the National Automobile Dealers Association and the Chamber of Commerce against the Environmental Protection Agency, which had approved California’s sweeping greenhouse gas emission regulations. There were a number of issues raised in the court’s decision to dismiss the suit (including the overlap between federal and state regulations). But the ability of the plaintiffs to challenge the new rules was particularly hindered by the agreement automakers struck with the Obama administration. At a time when the beleaguered auto industry was looking for handouts from Washington, the manufacturers got behind the administration’s policy, and agreed not to contest it.

As a result, auto dealers were hung out to dry. Their ability to attain “standing” in court (i.e. to show injury as a result of the regulations) was weakened for several reasons. The new rules were imposed on manufacturers, not dealers, yet the manufacturers were not suing. Further, because manufactures made so many statements about environmentally-friendly automobiles being the wave of the future, it bolstered the argument that they would have made the same changes to the auto fleet whether or not the government had adopted the new regulations. Ultimately, the court concluded that any harm to auto dealers would have occurred with or without the rules.

It’s easy to envision this scenario playing out again if Obama is once again able to produce a sweet enough honey pot for automakers. They’ll accept the subsidies, agree not to sue, and publicly tout the awesomeness of our new fuel economy standards. That could make it effectively impossible for anybody else to challenge the rules in court.

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Philip Klein

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