Los Angeles Times - 02.11.2019

C2 LATIMES.COM/BUSINESS

BUSINESS BEAT

The Trump administra-
tion is planning to require
automakers to modestly
bolster fuel economy and
pare tailpipe emissions after
2020, a reversal from its earli-
er proposal to freeze require-
ments through 2026.
Administration officials
have tentatively agreed to
the change, according to a
person familiar with the
matter who asked for ano-
nymity because the deliber-
ations are private.
The moderation of the
rollback comes amid a
widening schism in the auto
industry over Trump’s plan
to slash the fuel-efficiency
standards and strip Califor-
nia of its authority to regu-
late tailpipe greenhouse gas
emissions.
At issue is a proposal
from the U.S. Environmen-
tal Protection Agency and
the Transportation Depart-
ment to ease Obama-era
greenhouse gas emission
and fuel economy stand-
ards. Under the August 2018
proposal, those require-
ments would have been
capped at a 37-mile-per-gal-
lon fleetwide average after

2020, rather than increasing

to roughly 50 mpg by 2025, as

under current regulations

set during the Obama ad-

ministration.

Administration officials

now plan to require 1.5% an-

nual increases in fleetwide

efficiency of new autos. EPA

Administrator Andrew

Wheeler has telegraphed the

shift, which was reported by

the Wall Street Journal on

Thursday evening, saying

the final plan will not look

exactly like the proposal ad-

vanced in August 2018.

The latest plan could still

change before the final rule

is published.

In a related action, the

administration in Septem-

ber moved to strip California

of its authority to limit

greenhouse gas emissions

from vehicles. More than 20

states and several environ-

mental organizations have

challenged the administra-

tion’s action in separate law-

suits.

The Trump administra-

tion argued that its original

proposal would lower costs

and save lives by encourag-

ing motorists to replace old-

er, less-safe vehicles with

newer models. But that led

to fierce criticism from envi-

ronmentalists and Califor-

nia officials, who said it

would increase pollution.

Some automakers objected

to the proposed freeze and

urged the White House to

soften the measure, saying

they would favor rules that

supported annual fuel effi-

ciency gains and emissions

reductions.

“The Trump administra-

tion is focusing on finalizing

the SAFE rule, which will de-

liver one national standard

to the American auto mar-

ket,” said EPA spokesman

Michael Abboud. A spokes-

man for the National High-

way Traffic Safety Adminis-

tration, the Transportation

Department agency respon-

sible for its share of the rule,

declined to comment.

While the plan amounts

to a less-aggressive rollback,

environmental and con-

sumer advocates warned it

would still produce negative

outcomes. Consumer Re-

ports estimated that con-

sumers would spend $3,

more in fuel costs under the

plan than under the current

standards for a model-year

2026 vehicle, for example.

“A rollback on the scale

reported would result in mil-

lions of tons of additional

carbon pollution in the air

and higher costs for drivers

at the pump,” Luke

Tonachel, director for clean

cars and clean fuels at the

Natural Resources Defense

Council said in a statement.

“This plan is absurd and

calling it anything other

than a disaster for our cli-

mate is ridiculous.”

Stanley Young, spokes-

man for the California Air

Resources Board, said a fed-

eral rule cutting emissions

1.5% per year isn’t enough for

the state to meet its air qual-

ity and climate change goals.

“The rumored federal pro-

posal would compromise

our ability to meet federal air

quality standards and would

directly impact public

health,” he said in an email.

While auto industry

groups have repeatedly said

they support fuel efficiency

improvements, Gloria Berg-

quist, a spokeswoman for

the Alliance of Automobile

Manufacturers, said the

group wanted to see the full

details in the final rule be-

fore taking a position. “We

are pleased that the admin-

istration seems focused on

increasing standards while

still aligning them with the

marketplace and what con-

sumers are buying.”

Ford Motor Co., Volks-

wagen AG, BMW AG and

Honda Motor Co. in July re-

jected Trump’s proposal

and agreed to compromise

efficiency standards — in-

cluding 3.7% annual strin-

gency gains — offered by Cal-

ifornia regulators.

Earlier this week, a sepa-

rate coalition including Gen-

eral Motors Co., Toyota Mo-

tor Corp., Fiat Chrysler Au-

tomobiles NV and several

other carmakers moved to

back the Trump administra-

tion in one of the lawsuits to

block its rule to strip Califor-

nia of its tailpipe powers.

Beene and Dlouhy write for

Bloomberg.

EPA signals a shift on fuel economy

Contrary to earlier

proposal, government

said to back requiring

carmakers to modestly

boost standards.

By Ryan Beene and
Jennifer A. Dlouhy

THE MODERATION of the rollback comes amid a widening schism in the auto

industry over the administration’s plan to slash the fuel-efficiency standards.

Luis SincoLos Angeles Times

WASHINGTON — U.S.

employers added a solid

128,000 jobs in October, a fig-

ure that was held down by a

now-settled strike against

General Motors that caused

tens of thousands of workers

to be temporarily counted as

unemployed.

The unemployment rate

ticked up from 3.5% to 3.6%,

still near a five-decade low.

And for a second straight

month, average hourly

wages rose a decent if less-

than-robust 3% from a year

ago.

All told, the October em-

ployment report from the

government pointed to a

still-sturdy job market that

remains a key source of

strength for a U.S. economy

that’s been weakened by

trade wars and a global slow-

down.

The solid jobs data will

also make it even less likely

that the Federal Reserve,

which cut short-term inter-

est rates this week for a third

time this year, will do so

again anytime soon.

The GM strike contrib-

uted to the temporary loss

last month of 41,600 auto fac-

tory and likely other related

jobs. But the settlement

seems sure to lead to a re-

turn of those jobs in the com-

ing months. The report re-

vised upward job gains in the

prior two months by a com-

bined 95,000, suggesting a

healthier job market than

initially believed.

Another drag on hiring

last month was the U.S. Cen-

sus. The government let go

of 20,000 temporary workers

who had been helping pre-

pare for the 2020 survey.

Job growth so far this

year has averaged just

167,000 a month, down from

an average of 223,000 in 2018,

according to Labor Depart-

ment figures.

Even so, hiring remains

high enough to keep the un-

employment rate from rising

despite the tepid pace of

economic growth. On

Wednesday, the government

estimated that the economy

grew in the July–October

quarter at a modest 1.9% an-

nual rate.

The economy has been

expanding for more than a

decade, the longest period of

growth on record. But the

bump from the 2018 tax cuts

are fading, and an aging

population and other demo-

graphic forces are holding

back potential growth.

Surveys also suggest that

employers have turned cau-

tious in large part because of

heightened uncertainties

caused by President

Trump’s trade conflicts. The

president has imposed tar-

iffs on many goods imported

to the U.S., and other na-

tions have retaliated with

import taxes on U.S. ex-

ports.

One result is that compa-

nies, especially in manufac-

turing, have slowed their hir-

ing or have stopped hiring al-

together.

Still, consumers, who

drive about 70% of U.S. econ-

omic activity, have remained

generally resilient.

In September, they mod-

estly stepped up their

spending, and their incomes

grew fast enough to let them

save more, too. A rising sav-

ing rate is encouraging be-

cause it suggests that house-

holds have leeway to keep

spending and supporting an

economic expansion that

has entered a record-break-

ing 11th year.

At the same time, busi-

nesses have been a drag on

the economy in recent

months. Collectively, they

have slashed their spending

on industrial machinery and

other equipment, mostly be-

cause the U.S.-China trade

war has made them reluc-

tant to commit to big pur-

chases. The tariffs between

the U.S. and China, the

world’s two largest econo-

mies, have also reduced U.S.

exports.

October is the usual start

of hiring for the holiday

shopping season. But the

rise of e-commerce and in-

creasing concentration of

wealth in large U.S. metros

have corresponded with the

loss of more than 20,000 jobs

at retailers over the past 12

months.

A slowdown in pay

growth is another source of

concern. Hourly average

earnings had been rising at a

3.4% annual rate back in

February, significantly

above the 3% pace in Octo-

ber.

The low unemployment

rate and a shortage of quali-

fied workers in many indus-

tries have nevertheless

failed to accelerate wages

across the job market as tra-

ditional economy theory

would suggest.

Despite strike,

job growth solid

U.S. unemployment

rate remains near a

five-decade low.

associated press

Federal food safety au-
thorities dropped a Hallow-
een surprise Thursday: 23
people in 12 states were sick-
ened by fecal bacteria traced
to romaine lettuce between
July and early September.
The Food and Drug Ad-
ministration said in its news
release that it did not publi-
cly disclose the E. coliout-
break because suspect pro-
duce was no longer available
to consumers when the U.S.
Centers for Disease Control
and Prevention determined
it was a possible culprit in
mid-September.
“The FDA and the U.S.
Centers for Disease Control
did not identify actionable
information for consumers
during this investigation.
Additionally, when romaine
lettuce was identified as the
likely source of the outbreak,
the available data at the
time indicated that the out-
break was not ongoing and
romaine lettuce eaten by
sick people was past its shelf
life and no longer available
for sale.”
Illnesses occurred be-
tween mid-July and early
September in California, Ar-
izona, Florida, Georgia, Illi-

nois, Maryland, North Car-

olina, Nevada, New York, Or-

egon, Pennsylvania and

South Carolina. No deaths

were reported, and 11 people

were hospitalized.

Neither agency returned

emails and calls Friday.

Nearly all food-borne ill-

nesses follow the same pat-

tern cited Thursday by the

agencies — in which much or

all of the affected product is

off the shelves before au-

thorities can conclusively

link it to an illness, said food-

safety litigator William Mar-

ler. That makes the FDA’s

reasoning for the delay in

disclosure seem “disingenu-

ous,” he said.

“The public has a right to

know,” Marler said. “We pay

their salaries.”

E. coli contamination

has plagued the lettuce in-

dustry in California and Ari-

zona for several years.

Last year, five people

died and more than 200 were

sickened in the worst multi-

state E. coli outbreak in a

decade. The bacteria strain

was traced to a cattle feedlot

near Yuma, Ariz. A second

outbreak that sickened

more than 50 people in mul-

tiple states was linked to ro-

maine lettuce from Califor-

nia’s Central Coast. The in-

cidents drew pledges from

the FDA to more closely

monitor produce from the

California-Arizona winter

growing regions.

Tainted romaine sickened 23

News comes months

after 12-state E. coli

outbreak because

produce was no longer

available, FDA says.

By Geoffrey Mohan

MORE THAN 20 people in 12 states, including California, fell ill after eating ro-

maine lettuce tainted by E. coli from July to early September, authorities say.

Justin SullivanGetty Images

The U.S. Supreme Court
has agreed to consider strip-
ping the Securities and Ex-
change Commission of its
power to recoup illegal prof-
its from wrongdoers, taking
up a challenge to one of the
agency’s most potent legal
weapons.
The appeal by Charles
Liu and Xin Wang contends
that “disgorgement” isn’t
one of the remedies Con-
gress has authorized the

SEC to seek against people

who violate the nation’s se-

curities fraud laws. The Cali-

fornia couple is fighting a

$27-million disgorgement or-

der.

Liu and Wang were found

to have defrauded people

seeking to take advantage of

the EB-5 visa program for

foreigners who make large

investments in the U.S. The

two were accused of falsely

telling investors the money

would be used for a cancer

treatment center. A federal

judge ordered the couple to

return $27 million they had

collected.

In total, the SEC won dis-

gorgement orders totaling

$2.5 billion in fiscal 2018,

compared with $1.4 billion in

other types of penalties.

Disgorgement is de-

signed to return ill-gotten

gains to people who were

harmed. Courts have tradi-

tionally viewed it as an “equi-

table” measure, which

means judges make awards

based on fairness rather

than strict legal rules.

The 2002 Sarbanes-Ox-

ley Act says judges hearing

SEC enforcement actions

can award “any equitable re-

lief ” they deem appropriate

for the protection of in-

vestors.

But Liu and Wang’s at-

torneys say the SEC has

sought so much money

through disgorgement that

it’s become a punitive mea-

sure, much like a penalty.

“The SEC collects huge

sums of money by pursuing a

penalty that it does not have

the power to seek in federal

court,” according to the ap-

peal.

Liu and Wang point to a

2017 Supreme Court

decision that said disgorge-

ment is covered by a five-

year statute of limitations

that applies to penalties.

That ruling explicitly de-

clined to say whether the

SEC has power to seek

disgorgement in the first

place.

The Trump administra-

tion and the SEC urged the

Supreme Court to reject the

appeal, saying Congress au-

thorized the commission to

seek disgorgement in three

separate statutes.

The administration told

the justices that the

Supreme Court “has repeat-

edly characterized disgorge-

ment as an equitable reme-

dy.”

Stohr writes for Bloomberg.

SEC disgorge power to be weighed

U.S. high court agrees

to hear a challenge by

a California couple

who are fighting a

$27-million order.

By Greg Stohr