| | | | |  | | By Kayla Guo and Tanya Snyder | With help from Alex Daugherty
| | | — Lots of questions remain about what Treasury’s proposal for an EV tax credit rule will mean for a host of interests. — The EPA approved California’s rule phasing out most gas-powered trucks. Six other states have adopted their own rule. — Four more states joined DOJ’s lawsuit to block the proposed JetBlue-Spirit merger. IT’S MONDAY: You’re reading Morning Transportation, your Washington policy guide to everything that moves. I’m your host, Kayla Guo. Send tips, thoughts, song lyrics and recipes you like to kguo@politico.com. Find us on Twitter @kaylaguo_, @alextdaugherty and @TSnyderDC. “Oh, I can see it, see it / If you believe it then you can / There’s no reason that this life can’t be (electric).”
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| | | A NEW ERA FOR EVs: It’ll be two more weeks before we have an official — initial — list of which electric vehicles qualify for the tax credit and which don’t. But once the Treasury Department’s proposed rule, released Friday, is published in the Federal Register on April 17 and goes into effect the next day, the universe of vehicles that’ll net you $7,500 back from the federal government will shrink dramatically. Some might qualify for half that much, while many won’t qualify at all. ‘Is this as good as it gets?’ Automakers and their allies on Capitol Hill greeted the guidance with a resigned shrug. “Is this as good as it gets?” mused John Bozzella, CEO of the Alliance for Automotive Innovation. Sen. Debbie Stabenow (D-Mich.) said Friday that while the IRA’s goal was to tackle the climate crisis and create jobs in the United States, “the electric vehicle tax credit language as written was not well thought out.” The other shoe is yet to drop: One important part of the law still doesn’t have implementation language, leaving more uncertainty for the auto industry and consumers. Starting in 2024, no battery components from “foreign entities of concern” (read: China) will be permitted at all. In 2025, that rule will apply to minerals, as well. Given China’s current dominance over EV battery production, getting Chinese materials completely out of the U.S. EV supply chain will be a monumental challenge. But Robbie Diamond, CEO of the energy security nonprofit SAFE, said, “How we define and enforce [the foreign entity of concern provision] will make or break the national security benefits of the IRA.” — Diamond is in favor of the side trade deals, current (Japan) and future (Europe), that will allow more U.S. allies to benefit from the tax credit, saying that “it’s imperative that we expand the circle of allies and partners who can benefit from and contribute to our supply chains” as long as it’s “coupled with strong audit provisions.” Checks and balances: But lawmakers on both sides of the aisle have concerns about trade pacts being negotiated and agreed to without congressional input. “I’ve said it before and I’ll say it again so there is no confusion: Congress will not, under any circumstance, forfeit our constitutionally mandated oversight [responsibility] of all trade matters,” said Rep. Adrian Smith (R-Neb.), who chairs the trade subcommittee of the Ways and Means Committee. Senate Finance Chair Ron Wyden (D-Ore.) and Ways and Means ranking member Rep. Richard Neal (D-Mass.) also forcefully reminded the administration last week that it “does not have the authority to unilaterally enter into free trade agreements” without working with Congress. — Concerns that leaders are circumventing the standard approval process for free trade agreements are cropping up across the Atlantic, too, Steven Overly and Barbara Moens report. In Brussels, four EU diplomats told POLITICO they are increasingly nervous about the critical minerals negotiations because the legal format of the final deal remains unclear.
| | | EPA GREEN-LIGHTS CLEAN TRUCKS RULE: The EPA on Friday approved California’s nation-leading rule to start phasing out most gas-powered heavy-duty vehicles, Camille von Kaenel and Alex Guillén report. — The approval is bound to transform the country’s truck market. The Advanced Clean Trucks rule, which California air officials adopted in 2020, requires manufacturers to sell increasing shares of zero-emissions trucks before 2035. At least six states — Massachusetts, Vermont, New York, New Jersey, Washington and Oregon — have already moved to adopt the rule, meaning it will cover almost a quarter of the nation’s auto market. — The American Trucking Association denounced the Biden administration’s approval of what it called a “damaging and unrealistic emissions rule,” and argued that it would hurt industry and leave the nation more vulnerable to a supply chain crisis.
| | | MERGER LATEST: Four states — California, New Jersey, North Carolina and Maryland — signed on to the Justice Department’s lawsuit seeking to block the JetBlue-Spirit merger. A trial is scheduled for October. SOUTHWEST REPORT: Southwest Airlines on Friday released the results of a report detailing failings surrounding the airline’s December meltdown that stranded tens of thousands of passengers for days around the holidays. The report, which was also conducted by an outside consulting firm hired by Southwest, said that “insufficient winter infrastructure” and computer software issues with rescheduling and rebooking passengers and crew were mostly to blame. The airline said a host of steps to improve winter operations will be complete by next winter, while software upgrades are already in place or will be completed by next winter. — While Southwest also said that it has “processed” more than 99 percent of refund and reimbursement requests, along with delivering almost all bags that were stranded, the airline has yet to answer detailed questions from Senate Commerce Chair Maria Cantwell (D-Wash.) about the amount of refund and reimbursement requests that were sought by passengers but ultimately denied by the airline.
| | | EVERYONE’S WAITING: When the FCC announced it was developing new rules on how C-V2X could be deployed, it left the door open for groups to obtain a waiver to deploy the technology before the final rules come out. But over two years after that announcement, the FCC has yet to approve any waivers — and FCC Chair Jessica Rosenworcel wrote in a letter released last week that the delay is because the FCC has to coordinate C-V2X waivers with the National Telecommunications and Information Administration, which must work with the Defense Department on possible interference to federal radar installations. The FCC is waiting for that process to finish before it addresses any waiver applications, Rosenworcel wrote in a response to a letter from Sens. Gary Peters (D-Mich.) and Cynthia Lummis (R-Wyo.). — The timing here is important for a couple reasons: Roadway deaths have surged since the pandemic descended, and this technology could help prevent crashes. In addition, the 2021 infrastructure law made several pots of money available to fund transportation safety technology, and those dollars are gathering dust as groups wait for waiver approvals. UNDER THE HOOD OF A FORD EV: Ford is releasing its 2023 Integrated Sustainability and Financial Report today. There’s plenty in there for the EV crowd, including information on the audits Ford and 30 of its suppliers have undergone over the EV mineral supply chain, “at all tiers to the mine site” and looking at their “due diligence management systems” for those minerals. You can check it out here.
| | | MORE TROUBLE FOR NORFOLK SOUTHERN: The Justice Department sued Norfolk Southern at the request of the EPA over the Feb. 3 toxic derailment, with federal prosecutors accusing the company of “unlawfully polluting the nation’s waterways,” Matt Berg reports. The DOJ is seeking injunctive relief, cost recovery and civil penalties to ensure Norfolk Southern pays the “full cost of the environmental cleanup,” according to the lawsuit, the latest in intense scrutiny Norfolk Southern and other Class Is have faced since the derailment in East Palestine, Ohio. — Norfolk Southern is “working with urgency, at the direction of the U.S. EPA,” Norfolk Southern spokesperson Connor Spielmaker said, adding that “we’ll keep working until we make it right” — a refrain that the company’s CEO Alan Shaw repeated many times in his recent appearances before Congress.
| | | — "Tesla and Musk lose ruling on factory union issues." New York Times. — "Ukraine by rail: Inside Zelenskyy's efforts to buoy a nation." AP News. — "FAA warns of staff shortages in trying to head off summer delays." Washington Post. — "Review | It’s easy to see what’s wrong with car culture. Fixing it is harder." Washington Post. — “Shell is acquiring EV charging network Volta for $169 million.” The Verge. — “Uber drivers to get incentives for charging vehicles at BP hubs.” Reuters. — “GM is cutting off access to Apple CarPlay and Android Auto for its future EVs.” The Verge. — “Nikola: electric vehicle stocks keep rolling downhill.” Financial Times.
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