Automakers File Suit to Bar State’s Lower-Emissions Law

A long-expected auto industry lawsuit to block California’s pioneering effort to cut tailpipe emissions linked to global warming was filed Tuesday in federal court in Fresno.

The suit was immediately criticized by environmental groups and large investors, who have urged the auto industry to stop spending its money on fighting California’s environmental regulations and instead use the funds to improve auto emissions.

California State Controller Steve Westly and New York State Comptroller Alan Hevasi, who help manage retirement funds that hold more than $2 billion in automakers’ stocks, called the suit a mistake and an example of myopic thinking.

The lawsuit by the Washington-based Alliance of Automobile Manufacturers and a group of San Joaquin Valley auto dealers sets the stage for high-stakes confrontations in the courtroom and in boardrooms.

Westly and Hevasi said that although they would rather resolve differences through discussion, the state retirement systems’ huge investments in the auto industry would give them considerable clout in a proxy battle with the car companies if one became necessary.

Automakers fear that if California, the country’s biggest car market, can force them to build more efficient cars to meet the new rules, other states will join in. A number of Northeastern states, including New York and Massachusetts, have said that they may adopt similar rules. Officials in Canada are examining the California regulations as well.

Westly said that he has asked the boards of the California teachers’ and public employees’ retirement funds to ask automakers to explain why they “are choosing to pay more for lawyers to challenge the law rather than investing in more engineers to build the cleaner cars the public wants.”

He said Tuesday that he expects the boards to hold sessions on the automakers’ lawsuit early next year.

Several environmental groups also have challenged the auto industry to reduce emissions rather than continue to battle California’s regulations.

The coalition of nine automakers behind the suit has argued that California’s law, which mandates a nearly 30% reduction of heat-trapping gases emitted by passenger cars, is actually an effort to regulate fuel economy, which only the federal government can do.

The California rules require the auto industry to phase in the so-called greenhouse gas emissions standards between 2009 and 2016.

The easiest known way to reduce emissions of carbon dioxide and other greenhouse gases is to reduce the amount of fossil fuel -- gasoline and diesel -- that cars and trucks burn each mile.

The California Air Resources Board, which drew up the regulations earlier this year, has said that increased fuel efficiency is only a side-effect of the regulations’ primary goal.

Automakers also are concerned that the rules would require them to spend more money per car, which either would cut into profits or increase the price for buyers.

“Automakers are very sensitive to anything that puts them crosswise with their consumers, as higher prices would,” said David Cole, chairman of the nonprofit Center for Automotive Research in Ann Arbor, Mich.

State regulators contend that carmakers can meet the standards with existing technologies for an additional cost of $1,000 per car.

Automakers say the increase would be closer to $3,000 per car and that implementing the rules would severely reduce the number of models available to California consumers.

The automakers’ alliance represents General Motors Corp., DaimlerChrysler, Bayerische Motoren Werke, Ford Motor Co., Mazda Motor Corp., Mitsubishi Motors Corp., Porsche, Volkswagen and Toyota Motor Corp.

Jim Press, executive vice president of Toyota Motor Sales USA, said Toyota supports the suit because global warming “is a much larger issue than one state can address” and because the regulations “would limit consumer choice and increase vehicle prices.”

Though American Honda Motor Co. is not an alliance member, a spokesman said Tuesday that the company, also based in Torrance, agrees that the issue is one of fuel economy and “is a matter for the federal government,” not state-by-state regulation. Honda, he said, is “still evaluating” whether to join the suit.