California's “License to Kill" the American Auto Industry

Set in Renaissance Italy, Shakespeare’s beloved play Romeo and Juliet gave rise to a famous admonition that essentially says (albeit, in sixteenth century English) that we should not judge a book by its cover. Aware of the intense feud between her family, the Capulets, and her suitor’s kin, the Montagues, Juliet expressed her indifference to Romeo’s lineage by posing and answering this question: “What’s in a name? What we call a rose by any other name would smell as sweet.” Juliet points out that the feud between the two families does not diminish her love for Romeo. Her query has also come to stand for the proposition that a name matters less than the nature or content of what it labels.

Jump forward to the present. Juliet’s wisdom is relevant to an important administrative law issue pending before the Senate: whether Congress may use the Congressional Review Act (CRA) to nullify a decision by the Biden Administration that permits California to set a national motor vehicle emission standard. The CRA authorizes Congress to engage in an expedited process, one that eliminates the potential delay that would be occasioned by a Senate filibuster, to quickly obtain an up-or-down vote on an agency “rule” once it has been submitted to Congress and the General Accounting Office (GAO).

Before 1983, Congress could invoke the legislative veto provisions found in numerous federal statutes to nullify an unlawful or improvident agency rule merely by the negative vote of one or both chambers. However, that year, the Supreme Court held the legislative veto unconstitutional in INS v. Chadha. The CRA was Congress’s response, designed to approximate the legislative veto as much as possible without violating the Chadha decision. Suppose both chambers pass an identical resolution of disapproval and the President signs it. In that case, the resolution becomes a “Law” for Article I purposes with the two-fold effect of nullifying the particular agency rule at issue and barring the agency from readopting that rule absent an intervening act of Congress authorizing the agency to repromulgate it.

There might not seem to be much in common between the Bard’s well-known romantic play and an “obscure” law governing congressional lawmaking procedure known only to the legal and political cognoscenti (according to The New York Times). Nonetheless, they do intersect on the issue mentioned above. To help you understand how, let me give you some background.

The federal Clean Air Act (CAA) empowers the Environmental Protection Agency (EPA) to regulate motor vehicle emissions to improve air quality at an acceptable cost. To prevent a hodgepodge of emission standards from burdening the manufacturing sector, the act prohibits states from promulgating their own rules, such as lower caps on the amount of air pollution that vehicles may emit. Congress thereby granted the federal government exclusive authority to weigh the short- and long-term benefits of cleaner air and better public health against the short- and long-term economic costs of forcing the manufacturing industry to retool assembly plants and produce more expensive widgets. Because California had its own pre-existing clean air rules, the EPA may waive the federal standard to allow California and other states to fix a lower level of pollution for vehicles sold there.

The diurnis controversy involves motor vehicles. In 2022, California passed a law barring the in-state sale of new gasoline-powered cars by 2035 (a date that, purely coincidentally of course, would likely fall after the then-current legislators have left office). Given the CAA’s preemptive effect, that law could not take effect without a congressional amendment to the CAA or the federal government dispensing its provisions. No one expected that Congress or the Biden Administration’s EPA would approve a ban on gas-powered vehicles during the run-up to the 2024 elections, and, unsurprisingly, neither event happened. But, as two commentators have noted, “[w]hile Kamala Harris was campaigning on the claim that she would ‘never tell you what kind of car you have to drive,’ the Environmental Protection Agency was working overtime to ban the internal-combustion engine.”

That work paid off because every future election eventually passes into history. A month after the November 2024 election, the Biden Administration’s lame-duck EPA granted California a waiver, allowing the state’s 2022 law to take effect. While 2035 might seem like a long time off, California’s law will have a nationwide impact long before its effective date. Why? California and the 12 states (along with the District of Columbia) that incorporate its emission standards comprise more than a third of the new car market. If the EPA’s action were allowed, that third could no longer use gas-powered engines. The remaining states would be free to adopt the California statute as their own.

In any event, motor vehicle manufacturers cannot build one line of new cars, trucks, and SUVs for the “Gang of 14” and entirely separate lines for whatever number of the remaining jurisdictions do not follow suit. The upshot is that, as a practical matter, every new car would need to be built to satisfy the California zero-emission standard. And that effect will only be embiggened by a recent decision by Volkswagen, the world’s second-largest automaker, to retool its American plants to increase its production for this nation’s market.

That shift may not begin today or tomorrow, but it surely will begin long before the consumer demand forces Detroit to shift its production to presently undesired electric vehicles. It also certainly will start long before Congress orders that change. Regardless of the exact date the auto industry begins its switchover, the EPA’s lame duck action will have nationwide effect, an action with the same effect as an EPA order to manufacture only electric vehicles, an order the EPA lacks the authority to issue. And all that will occur without Congress taking any responsibility for rejecting the majority opinion of the public and for prohibiting the use of vehicles that the public has driven since Henry Ford’s Model-T went on sale in 1908.

The CRA enables Congress to prevent the Biden Administration’s EPA from declaring electric vehicles a fait accompli shortly after the voters in the November 2024 elections said nyet to the Green New Scam. Lee Zeldin, the new Trump Administration’s EPA Administrator, submitted the EPA’s rule to Congress in February. Earlier this month, the House of Representatives approved a joint resolution of disapproval that would nullify the EPA’s December 2024 CAA decision. Pending before the Senate is the issue of whether it will join the House in its disapproval of that rule. If the Senate does, President Trump will sign the resolution into law.

Two issues have arisen in connection with the Senate’s upcoming decision. One is that, like the Biden Administration’s EPA, the GAO and the Senate Parliamentarian have concluded that the EPA’s December 2024 waiver is not a “rule” for CRA purposes. The question is what, if any, weight those characterizations should have. The other is whether the Senate’s decision to disapprove the rule will nullify the Senate filibuster practice for all time. This result has been labeled the “nuclear option.” Neither concern is persuasive, nor should either one prevent the Senate from joining the House in disapproving of the Biden Administration’s “midnight” action.

Start with the obvious. The CRA does not vest the GAO or Senate Parliamentarian with any decision-making authority regarding what constitutes a CRA “rule.” The act contemplates that the GAO will only offer members of Congress its opinion on an agency’s submission by “provid[ing] a report on each major rule to the committees of jurisdiction in each House of the Congress” for the members to consider. Plus, the report will discuss the content of the agency action, whether the agency performed a cost-benefit analysis of the effect of that action, and whether the agency complied with several other statutes, such as the Unfunded Mandates Reform Act and the Paperwork Reduction Act.

Note that the CRA refers to a “report,” not a “ruling,” a “decision,” or a “vote.” Neither the Comptroller General nor the Senate Parliamentarian has the court-like authority to rule on the status of an agency’s action, let alone the power to vote “Yea” or “Nay” on that status when the resolution comes up for a vote on the Senate floor. Only “Congress” may “pass[] . . . a joint resolution of disapproval” under the CRA, and neither the Comptroller General nor the Senate Parliamentarian is a member of the Senate. To be sure, Senators should give the GAO’s and Senate Parliamentarian’s opinions whatever respect each one deserves based on the persuasive power of the reasoning offered by each one, but at the end of the day, each Senator must decide for himself or herself whether the EPA’s action is a CRA rule.

At one point, it could have been argued that Senators should treat the Comptroller General and Parliamentarian like Article I agencies and therefore should defer to the characterizations they used to describe a particular agency action. That would have treated the GAOs' and Parliamentarians' decisions like the Supreme Court of the United States had treated a legal opinion offered by a federal agency on the meaning of a statute. In Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., the Supreme Court held that a federal court must accept an agency’s reasonable interpretation of an ambiguous statute even if the court would have read the law differently. Given Chevron, an argument could have been made that Senators should treat the GAO’s and Parliamentarian’s interpretation of the CRA’s term “rule” in the same manner as a court would have treated an agency’s interpretation of a statutory term.

But regardless of whether that would have been a convincing argument before 2024, it certainly is unconvincing today, given that the Supreme Court overruled Chevron last year in Loper Bright Enterprises v. Raimondo. What is more, that is a sensible outcome. Neither the Comptroller General nor the Senate Parliamentarian is publicly elected to that position, and neither one is politically accountable to the public. Accordingly, Senators are free to disagree with the GAO-Parliamentarian characterization of EPA’s action, and they should feel no compunction against reaching an independent conclusion.

That raises the $64,000 question: Is a CAA waiver a “rule” for purposes of the CRA. The answer is, “Yes.”

The CRA takes its definition of the term “rule” from the definition found in the Administrative Procedure Act (APA), which defines that term more broadly than the average, everyday concept of a junior-varsity statute known as a “regulation.” The APA provides (in part) that the term “rule” means “the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy.” If allowed to go into effect, the EPA’s December 2024 decision to approve California’s 2022 statute would have the effect of changing the law on a nationwide basis, rejiggering the makeup of the entire motor vehicle industry, and making transportation an electric-vehicle only proposition, all without any action by Congress. Yes, the waiver literally applies only to California, but it would encompass the identical rules adopted by any other state. It should be clear that the agency could not accomplish such a revolutionary change in the products manufactured by that industry based on its interpretation of the CAA.

The EPA’s decision to permit California to disregard the CAA is unlike a fishing or hunting permit. Each one is issued to a particular party, is limited in place and time, and is neither transferable to someone else. The EPA’s permit is quite different. As mentioned, any other jurisdiction may adopt the same rule as California, and 14 have already done so. The auto industry will be unable to create separate manufacturing plants, one for the Gang of 14 and the other for the (potentially decreasing) number of states allowing gas-powered cars to be sold. EPA’s decision will have a dramatic, nationwide effect on the auto industry, the same effect that an EPA rule identical to the California law would have.

Consider this matter from a non-legal perspective. The EPA has done what pool players would call a “two cushion shot”: viz., banking the cue ball off two cushions before hitting the desired ball. The CAA does not authorize the EPA to demand that only electric vehicles be manufactured and sold or to prohibit the motor vehicle industry from continuing to do what it has done for more than a century: namely, build and sell gas-powered cars, trucks, and SUVs. Yet, the text of the CAA provides that, if the EPA grants California a waiver, every other state may adopt whatever California law the EPA has now approved. As this EPA decision shows, that result would enable the EPA to nullify the federal threshold on motor vehicle emissions by approving a zero emissions standard. That is not what Congress had in mind for the waiver or permit process; it is precisely what the CRA was enacted to halt.

The contrary argument goes as follows: The EPA did not issue a rule; the agency adjudicated California’s request for a waiver of the preemptive effect of federal law or a permit to enable the California statute to take effect. There is no material difference, the argument goes, between a mining permit or a waiver of a filing date and the decision to allow California and other states to outlaw internal-combustion engines in their own jurisdictions if they choose. Indeed, the Due Process Clause forbids the government from penalizing someone for doing precisely what the government has authorized him or her to do, as the Supreme Court has repeatedly held (here, here, and here). Moreover, treating a case-specific “waiver” or “permit” as a “rule” would enable Congress to overturn every action taken by an Executive Branch official, which was not the intention of the Congress that passed the CRA and is not a fair reading of that act’s text. Indeed, passing a CRA disapproval resolution of the California 2022 law would have the “nuclear” effect of altogether nullifying the Senate’s filibuster practice because the Senate could avoid a filibuster for every attempt to change a law.

That argument is unpersuasive. Adjudications, waivers, and permits, like contracts, leases, and so forth, grant specific parties the right to proceed with particular conduct. They are not across-the-board prohibitions or approvals because they do not regulate in the manner that an agency “rule” would have on private parties or state and local governments. A permit allows only Party X to take or refrain from taking any steps that Washington has required, not the rest of the alphabet. They are examples of the ordinary, everyday conduct or “stuff” that federal officials approve to enable people to avoid coercive conduct by the federal government, whether that be administrative, civil, or criminal in nature. By contrast, the EPA’s decision not only approved California’s application and allows every other state to adopt the same law, but it will inevitably have the intended effect of changing the composition of the nation’s fleets of cars, trucks, and SUVs.

Nor is the EPA’s decision an “adjudication.” That term describes a decision on the merits of a dispute between two people or entities by an independent third party. Here, the EPA was the decision-maker, and there was no dispute between California and the EPA. The state merely asked the agency to permit a new state law that would affect millions of parties not involved in the request, who were nowhere in sight, and who likely were unaware of the state’s request. The EPA’s decision to grant California’s request was not akin to a trial judge’s resolution of the issue put in play by a plaintiff’s complaint and the defendant’s answer. That decision was not part of an adjudication; it more closely resembled obtaining a permit than adjudicating a case or controversy.

Besides that, how the EPA’s decision is labeled—as a “waiver,” a “permit,” an “adjudication,” or as something else—matters far less than what that decision did. It started the nation down the road to eliminating gas-powered vehicles as one administration was being ushered out of the door in part for endorsing such actions. That is precisely what the CRA found objectionable, allowing the Senate to nullify. As for the argument that reviewing the EPA’s action under the CRA would be tantamount to repealing the Senate filibuster practice: Nullifying the EPA’s rule would not be an exercise of the so-called “nuclear option”; on the contrary, it’s not even the MOAB (Massive Ordinance Air Blast Bomb, or Mother of All Bombs). The EPA’s post-election decision to require a new direction for the driving nation would have the same nationwide effect as an EPA rule ordering that change because the decision was tantamount to the promulgation of a rule that altogether forbids gas-combustion engines by 2035. The EPA cannot directly forbid Detroit from making such vehicles by issuing a rule to that effect, so the agency should not be able to finagle the same result by taking a two-corner shot.

The bottom line is this: It is entirely reasonable for the Senate to treat the EPA’s 2024 decision to grant California a waiver—or whatever it is called—as a “rule” for CRA purposes. If a metaphor were necessary, there is a better one than calling the Senate’s action an exercise of the nuclear option. Because the EPA’s 2024 decision gives California a 007-like “license to kill” the gas-powered engine, a better metaphor would be simply calling the Senate’s action a “retirement” of what the EPA has done.

Paul J. Larkin is the John, Barbara, and Victoria Rumpel Senior Legal Research Fellow in the Edwin Meese III Center for Legal and Judicial Studies.