By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She now spends most of her time in Asia researching a book about textile artisans. She also writes regularly about legal, political economy, and regulatory topics for various consulting clients and publications, as well as scribbles occasional travel pieces for The National.
Late last month, in Republicans to Use CRA to Roll Back ‘Midnight’ Rules and Benefit Oil Companies, I first wrote about how Republicans were poised to use the 1996 Congressional Review Act (CRA) to roll back regulations enacted during the waning hours of the Obama administration.
The CRA allows for Congress, by simple majority votes in both houses, to pass legislation rescinding any regulation that was finalized in the preceding 60 session days. The relevant legislation– a CRA resolution of disapproval– is brought to the floor of each chamber using expedited procedures, without need for prior committee consideration, and is not subject to Senate filibuster procedures.
The Congressional Research Service has determined that any rule made final on or after June 13, 2016, is in theory, vulnerable to a CRA resolution of disapproval, according to a New York Times DealBook article, Republicans’ Paths to Unraveling the Dodd-Frank Act. As is the case with other legislation, the CRA resolution must be presented to the President for signature or veto. In the case of a veto, the regulation could still be voided if a 2/3 majority in each house votes to override the presidential veto. Once the regulation is successfully rescinded, the regulatory agency is barred from bringing the rule back in “substantially the same form”, absent new authorizing legislation.
Two Measures Targeting Energy Companies Squelched
As I noted in my earlier post, rescinding regulations targeting energy companies is a top Republican priority. In Congress Moves to Rescind Two Obama-Era Energy Regulations, the Wall Street Journal reported earlier this month that separate legislation was sent to President Trump for signature that would squelch rules approved by the Securities and Exchange Commission in June requiring resource extraction issuers to disclose payments made to governments for the commercial development of oil, natural gas or minerals, as well as repeal a measure completed by the Interior Department in December toughening standards for coal mining near streams. Trump is expected to sign each bill.
The CRA has been around since 1996, when it was passed as part of the Contract with America. So why are we just now hearing of it? Prior to this administration, this legislation was only used once before, in 2001 to roll back an ergonomics rule finalized by the Occupational Safety and Health Administration during the Clinton administration.
Yet Republicans are not the only party to consider using the CRA’s authority to roll back rules enacted by an outgoing administration of another party. Practically speaking, the CRA is only likely to be invoked when that party that controls the Presidency changes. A President needs to sign the legislation rescinding the regulation, and is unlikely to do so for regulations passed during his tenure (or passed while the office was held by a member of the same party). It also seems necessary for the same party to control both houses of Congress– although as this 2015 piece, The Congressional Review Act, rarely used and (almost always) unsuccessful in The Hill explains, this did not stop a Republican-controlled Congress from trying to overturn a National Labor Relations Board rule by passing a resolution of disapproval. A presidential veto thwarted this tactic.
When did these two conditions last apply? Well, think back to 2009– when a Democrat had been solidly elected President, winning both the popular vote and electoral college, the party had a comfortable Senate majority (especially when the two Independents, who caucused with them, were included), as well as a greater House majority than Republicans currently enjoy. Unsurprisingly, as the New York Times reported in a January 2009 article Democrats Look for Ways to Undo Late Bush Administration Rules:
…Democrats say that they are also considering using the Congressional Review Act of 1996, an obscure and rarely used process that sets up fast-track procedures to overturn regulations.
The law allows Congress to rescind a rule by passing a “resolution of disapproval,” which cannot be filibustered. The resolution also requires presidential approval and can be invoked only for a few months after a rule is issued.
So, why wasn’t CRA used more extensively at that time? Well, the answer is that a successful CRA resolution of disapproval not only void a rule, it prevents the agency from reconsidering the issue, unless new authorizing legislation is passed, and thus shuts down further regulation of the area. Effectively, the legislation functions as a one-way ratchet, structurally favoring an anti-regulatory baseline.
CRA Pipeline: Ten Pending CRA-related Bills, Further Authority?
At the moment, at least 10 CRA bills are proceeding in some form through the House and Senate, according to an article in The Hill, The unintended consequences of the Congressional Review Act, and to date, “[t]he act itself has never been tested in court.”
At least 160 Obama-era regulations are subject to repeal under the CRA, according to an article, The Congressional Review Act: A Powerful Reform Tool, but Not a Panacea published in January by the law firm Squire Patton Boggs. The DealBook article cited above estimates that ten such vulnerable rules were authorized by Dodd-Frank.
Although I failed to mention the CRA in this earlier post, Mary Jo White Leaves Behind a Weakened SEC for Trump to Weaken Further, I noted at that time that the task of “unravel[ling] the entire multi-faceted Dodd-Frank regulatory program would be seriously complicated if the SEC had managed to complete rule-making procedures mandated previously by Congress, according to statutory deadlines.” Also worth mentioning is that one reason Democrats found it more difficult to unwind regulations issued during the tenure of George W. Bush, despite solid majorities, is that previous administration “imposed an early deadline on agencies to finalize them,” according to the January 2009 New York Times article cited above.
Yet perhaps the CRA’s authority might actually stretch further than the sources cited above suggest. Kimberley Strassel’s WSJ piece, A Regulatory Game Changer, has attracted lots of chatter, for its assertion that the CRA could be used to rescind rules that go back as far as 2009. Strassel makes two arguments. First, she points out that the CRA mandates any federal agency promulgating a rule to submit a report on said rule to the House and Senate, and recognizes that the 60-day window for invoking CRA is triggered by the later of when the rule is published in the Federal Register or when Congress receives the report. At least in theory, if current regulators were to submit the missing reports– no matter when the underlying rule was finalized– Congress could invoke the CRA and pass a resolution of disapproval and invalidate the rule. Strassel asserts that there are rules for which no required reports were filed, which suggests that potentially more rules could be rescinded under CRA procedures: “Bottom line: There are rules for which there are no reports.” Really? I’m willing to believe there are. Unfortunately, she fails to identify any specific rule.
Another potential problem, according to Strassel, is the CRA’s expansive definition of what counts as a “rule”– which extends beyond measures published in the Federal Register to include “guidance” that agencies issue (e.g., on transgender bathrooms or on campus sexual assault). This means in theory that the CRA could be invoked against any rules or guidance dating back to 1996, when it was passed, for which results were not correctly filed.
Whether either issue opens a major new avenue for CRA resolutions of disapproval or is a nothingburger depends on how many “missing” reports exist– whether they apply to rules or guidance– and if so, if Republicans choose to exploit such putative gaps.