Congressional Update

Last week was a big week all over Washington, starting with a ruling from the U.S. Court of Appeals for the District of Columbia Circuit dismissing a challenge from refining, biofuel and downstream oil interests including the Energy Marketers of America (EMA) to California’s actions to mandate state-wide adoption of EVs (read more here). While California is currently able to execute its own standards via an Administration-approved waiver to the Clean Air Act, EMA and other petitioners challenged the waiver on the ground that it exceeded EPA’s statutory authority because the Clean Air Act does not authorize EPA to waive preemption for California standards that are aimed at addressing climate change rather than California’s unique local pollution problems, and because California had not shown that it needed its EV mandate because there was no evidence that they would have any effect on any climate-change impacts in California. The court ruled that the groups bringing the case lacked the legal standing to challenge the waiver as they failed to demonstrate that automakers would change their production plans or prices if the court vacated EPA’s waiver. Former President Trump has promised to revoke the waiver if reelected, something he’d also did in 2019. Litigants can file a petition for a “writ of certiorari,” which is a document asking the Supreme Court to review the case. More details to come.

The Judiciary branch wasn’t the only one that was busy, with members of Congress busy at work. First, with summer – and road trip season – fast approaching, Senate Majority Whip Dick Durbin (D-IL) and Minority Whip John Thune (R-SD) are requesting the White House once again permit E15 sales. The Administration argues that permitting of E15 helps combat increased gas prices as millions of Americans load up their cars for family trips and, while the Administration has finalized a rule to allow E15 year-round, it does not begin until next year. For the last two years, the White House has issued such summer waivers with the justification that the ongoing war in Ukraine led to a spike in prices, and Sens. Durbin and Thune argue that this is still the case and that it is now even worse with the Israeli-Palestinian conflict.

Separately, in advance of Tax Day on Monday, the House Small Business Committee held a hearing entitled “Tax Day: Exploring the Adverse Effects of High Taxes and Complex Tax Code,” which focused on the impacts of the 2017 Tax Cuts and Jobs Act (TCJA), which is set to expire in 2025. As is tradition, the witnesses advocated for a simplification of the tax code, which they argue would make our system more consistently predictable. This is especially critical for small businesses as the inconsistencies lead to burdensome administrative requirements. They also advocated for renewing several of TCJA’s more popular measures, including Section 199A which, barring some limitations, allows a 20 percent deduction on qualified business income earned in a pass-through business.

Also, the Senate passed S.J Res. 61, which is a Congressional Review Act resolution that would roll back the Federal Highway Administration’s (FHWA) Greenhouse Gas Final Rule. While it passed with bipartisan support in the Senate, it will likely pass the Republican-led House, though the White House has already issued a veto threat, which would likely be the end of the line for such a measure. Still, bicameral passage would be a blow for President Biden as he enters election season.

Finally, the White House Office of Information and Regulatory Affairs (OIRA) has finalized review of the Department of Labor’s overtime rule, which means that it could be issued any day. Once effective, the rule would change the regulations surrounding overtime pay and, by all expectations, would raise the minimum salary threshold for overtime-eligible employees to roughly $60,000. In other words, employees earning less than that would be required to be paid overtime. The rule also amends the provisions around white-collar jobs, so the impact of this rule would likely not be limited to those typically considered overtime eligible.