While Congress and the media sleep, new rules remake the American economy.
The Biden Administration’s regulatory onslaught is more unrelenting than the heat. With Congress leaving town, the White House last week dumped another truckload of regulations that will cost Americans hundreds of billions of dollars. Corporate lawyers, enjoy the beach reading.
• The Transportation Department on Friday proposed a 696-page rule raising corporate average fuel economy (Cafe) standards that would effectively require 100% of new cars to be electric by 2032. This is even more aggressive than California’s EV mandate, which wouldn’t ban the sale of new gas-powered cars until 2035.
Passenger cars would have to achieve 66.4 miles a gallon in 2032, up from 44.1 mpg last year. The ramp-up for trucks and SUVs is even steeper—to 54.4 mpg from 32.1 mpg. Auto makers will have no way to comply but to make more EVs.
Here’s the kicker: The Energy Department is also proposing to reduce the “miles per gallon equivalent” for EVs. For example, the F-150 Lightning’s rating would decline to 67 mpg from 237 mpg. This means auto makers will have to produce even more EVs to meet Cafe mandates. They’ll be fined if they fall short.
A GM presentation to the White House estimated that industry penalties could total $300 billion, or about $4,300 per vehicle, from 2027 to 2031. Consumers and workers will pay the cost, and for what? The Administration claims the proposal will reduce CO2 emissions through 2050 by 885 million metric tons—about half as much as Canada’s wildfires are projected to release this year.
• The Administration on Friday also proposed a 236-page revision to National Environmental Policy Act (NEPA) guidelines that will require federal agencies to consider climate change and “environmental justice” in project reviews. If a utility wants to build a gas pipeline, agencies might have to evaluate if a solar plant would better promote environmental justice, however regulators define it.
NEPA was intended to protect local environments, but the Administration redefines “environment” to include the purported “global” effects of climate change. “Leases for oil and gas extraction or natural gas pipelines have local effects, but also have reasonably foreseeable global indirect and cumulative effects related to GHG emissions,” the revision states.
A footnote says this NEPA revision accords with the law’s decree that the federal government “assure for all Americans safe, healthful, productive, and esthetically and culturally pleasing surroundings.” The Administration is begging for another legal challenge under the Supreme Court’s major questions doctrine.
• The Administration is also quietly using collusive legal settlements with green groups to end-run judicial review of rules—a practice known as “sue and settle.” The Administration on July 21 settled a lawsuit with the Sierra Club by agreeing to remove 11 million acres in the Gulf of Mexico from future oil and gas development to protect the Rice’s whale.
The settlement will also restrict transit for oil and gas vessels—but no other ships—through a long strip where Rice’s whales haven’t even been found. This will make offshore leases less economically viable and undermine provisions in the Inflation Reduction Act that West Virginia Sen. Joe Manchin demanded in return for his vote.
• Last week Securities and Exchange Commission Chair Gary Gensler jammed through a rule requiring public companies to disclose to investors cyber-security breaches within four days of discovering them—no matter if they are still trying to repair their systems.
As GOP commissioner Hester Peirce noted in dissent, the unprecedented rule could “tell successful attackers when the company finds out about the attack, what the company knows about it, and what the financial fallout is likely to be (i.e., how much ransom the attacker can get)” and “will signal to other would-be attackers an opportune time to attack.”
• The rule will give private companies another reason not to go public—in addition to other disincentives the SEC is creating. For instance, the Public Company Accounting Oversight Board, a quasi-private entity overseen by the SEC, in June proposed rules that would vastly expand the remit of auditors under the Sarbanes-Oxley Act.
Public companies are required to hire external auditors to review their financial statements and accounting. The accounting board wants auditors to identify noncompliance with any regulation or law, whether or not they are financially material. This would vastly expand the scope and cost of audits.
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There’s much more to say about this regulatory typhoon, which the Administration is counting on the press corp to ignore, as it usually does. But we thought Americans might like to know what regulators are up to while they vacation. The Administration is imposing by regulation what it can’t pass through Congress and hoping nobody notices.
