ZETA's position on the EPA Congressional Review Act resolutions

The Senate is expected to take up resolutions this week under the Congressional Review Act that would disapprove EPA's 2013 waiver for California's Advanced Clean Cars I program and its 2022 reinstatement (S.J.Res. 207 and 208). ZETA opposes these resolutions — not only because of the economic harm they would cause, but also because of the precedent they would entrench.

These resolutions invert the design of the Congressional Review Act, whose authors explained that its review window exists “to provide Congress with an opportunity to act on resolutions of disapproval before regulated parties must invest the significant resources necessary to comply with a major rule.” Companies do not build factories, hire workers, or sign long-term contracts on the strength of a press release. They act on decisions the government has made — a permit issued, an approval granted, a license conferred, a waiver adjudicated — and they assume, reasonably, that a decision that has stood for years will keep standing. That assumption is the foundation of American investment. It is why capital that could go anywhere comes here.

These resolutions attack it directly. The policy authorized by the 2013 waiver has been in effect for thirteen years. It governs model years 2017 through 2025: vehicles already engineered, manufactured, certified, sold, and on the road. There is no forward-looking standard at stake. Manufacturers complied at real cost, made capital decisions around that compliance, and entered into private contracts with one another, with significant value to each party, to buy and sell the credits the program used to measure compliance. A resolution declaring that the waiver “shall have no force or effect” would reach back and erase the legal basis for all of it: obligations already met, transactions already closed, investments already made.

That is not deregulation. Deregulation changes the rules going forward and lets businesses adapt. These resolutions change the rules for the past, giving businesses no chance to adapt, because the decisions are already made and the money is already spent. The companies punished would be the ones that did exactly what the government told them to do.

Companies had every reason to rely on the policies these waivers authorized. Market-based compliance through credits, averaging, and trading was first put to work more than forty years ago by President Reagan’s EPA to phase down lead in gasoline, precisely because it let companies meet a standard in the way that made the most economic sense for them. It has been the model for programs backed by leaders of both parties, in Washington and in the states, ever since. This Congress may disapprove of market-based compliance, but retroactively voiding the contracts that innovation produced does real harm. It undermines the sanctity of contract, the presumption against retroactivity, and the basic proposition that when the federal government makes a decision and businesses build on it for over a decade, the decision holds.

The problem here is bigger than one waiver. The Congressional Review Act defines what a rule is subject to congressional review and what is not. It was never meant to reach adjudications, permits, or approvals, and it was never meant to reach back a decade. Under a precedent the Senate adopted last year, however, an agency’s say-so that a past action is a “rule” is enough to put that action on the fast track — even when the document the agency submits states on its face that it is not a rule subject to the Act, and regardless of what the Government Accountability Office or the Senate Parliamentarian concludes.

Fortunately, the act of reclassifying adjudicatory decisions as “rules” is not shielded from judicial review. A federal court has found EPA’s reclassification of these waivers likely unlawful, enjoined the agency from reclassifying any more of them, and ordered it to restore the status quo, including by withdrawing or correcting its report to Congress. As the court put it, if EPA did not reclassify these decisions, the only remaining conclusion is that “EPA may have purposely submitted a misleading report to Congress.” Yet the Senate process proceeds anyway.

To follow that logic to its conclusion, any agency, in any administration, could designate any past decision as a rule and send it to Congress. A simple majority could then void it — and, under the Act, bar the agency from ever doing anything substantially similar, a result no court can revisit once the resolution is signed. Permits, licenses, export authorizations, project approvals: each one becomes provisional, revocable by the next majority, no matter how many years or how many billions have been built on it. The tool being used today will not stay in the hands of the people using it. Conservatives who would object to a future Congress wielding this power against decisions they support should object now, while the precedent is still fresh enough to contain.

ZETA's members are investing billions of dollars in American manufacturing, from mines to battery plants to electrical equipment and infrastructure networks, in reliance on federal decisions of every kind, as every industry does. We urge the Senate to reject these resolutions and preserve the regulatory stability that makes that investment possible.