United States: Restraining The Current Regulatory State Through The Congressional Review Act

With a Republican sweep of Congress and the executive branch, there will be a concerted effort this year to reform and restrain the current regulatory state. The incoming Trump Administration and Republican Congress have a number of options to repeal regulations issued by the Obama Administration, with the Congressional Review Act (CRA) being one vehicle for affirmatively undoing some of the regulatory actions of the last six months.1

The CRA is an oversight tool that Congress may use to repeal or prevent a regulation issued by a federal agency from taking effect. The 1996 law grants Congress: (1) proper notification of new agency regulations; and (2) the authority to use a joint resolution of disapproval to overturn a rule that may not meet the congressional intent. Under the CRA, a joint resolution of disapproval can only repeal an interim final rule or final rule in its entirety, as it does not necessarily apply to draft regulations, and Congress cannot use it to reform parts of a rule.

Congress has only successfully overturned one rule under the CRA since its enactment in 1996, the final rule on ergonomics standards issued by the Occupational Safety and Health Administration (OSHA) under the Clinton Administration. In 2001, the joint resolution of disapproval passed with bipartisan support in both the Senate (by a vote of 56-44, with 6 Democrats supporting the resolution) and the House (by a vote of 223-206, with 16 Democrats supporting the resolution and 13 Republicans voting against it). Interestingly, during President Obama's first two years in office, Congress did not use the CRA to repeal any Bush Administration final rules, despite the Democratic control of Congress.

Five Key Takeaways

  1. As Congress has only repealed a rule under the CRA once before, more than 15 years ago, there are many unknown questions, including procedural questions and how a federal agency can engage on the issue following a repeal of the rule.
  2. For rules issued by the Obama Administration on or after January 3, 2017, Congress has 60 legislative days from when the agency publishes each rule in the Federal Register or when Congress receives the rule report, whichever date is later, to use the CRA to repeal the regulation.
  3. For a rule issued by the Obama Administration from June 13, 2016 (the parliamentarian in each chamber will set the actual date) through January 2, 2017, Congress has 60 legislative days starting from January 31 in the House and January 24 in the Senate to use the CRA to repeal the regulation.
  4. Any use of the CRA cannot be filibustered in the Senate, which disadvantages those Democrats looking to challenge Republican efforts to restrain the current regulatory state.
  5. Repealing a rule under the CRA likely foreclosures opportunities for a federal agency to reengage on the matter through a rulemaking for at least the next four years.

Congressional Review

The CRA requires federal agencies to provide Congress with proper notification of an interim final rule or final rule in order for Congress to review the rule before it takes effect. Under the CRA, before an interim final rule or a final rule can take effect, the federal agency must submit a report of the rule to each chamber of Congress and the Government Accountability Office (GAO). In general, the report must include: (1) a copy of the rule; (2) a general statement related to the rule, including a notation of whether it is a major rule; and (3) the proposed effective date of the rule.

Overall, the CRA applies to rules issued by executive branch departments and agencies, as well as independent agencies and commissions. The CRA adopts the definition of "rule" under Section 551 of the Administrative Procedure Act (APA), which is broad in scope because it includes rules not subject to the notice and comment process.2 The CRA, however, does have exceptions for its definition of "rule."3

The CRA also distinguishes between a rule and a major rule; however, these distinctions do not significantly change the congressional disapproval procedures. The CRA adopts the definition used by the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget (OMB), with an exception.4 The treatment of major and non-major rules under the CRA primarily differs in two ways: (1) when an agency can establish the effective date of a rule for major rules; and (2) GAO must submit an additional report to Congress for a major rule.

Congressional Disapproval Procedure

60-Day Congressional Review Period

When an agency publishes a rule in the Federal Register or when Congress receives the rule report, whichever date is later, the 60 "days-of-continuous-session" for Congress to consider a joint resolution of disapproval begins.5 While the 60-day period is commonly said to be based on legislative days, it is actually calculated based on calendar days, including weekends and holidays. If either chamber leaves for more than three days pursuant to an adjournment resolution, then those days are not included in the calculation. Therefore, the 60-day period can differ in the House or Senate.

While the 60-day period to review interim final or final rules issued in the last six months by the Obama Administration may be set to expire, the Republicans in the 115th Congress have an advantage with a lesser known provision of the CRA that allows for more time. Under the CRA, when Congress receives a rule report within 60 days of final adjournment of a two-year congressional session, there is a reset of the 60-day clock at the beginning of the new session. This means that the 115th Congress will have a new 60-day period, which will begin on the 15th day of the new session (January 31 in the House and January 24 in the Senate), to pass joint resolutions of disapproval. During this period, both chambers will have the authority to disapprove interim and final rules issued by the Obama Administration since June 13, 2016, according to the Congressional Research Service (CRS), although the parliamentarian in each chamber will determine the actual date.6

Introducing a CRA Joint Resolution of Disapproval

Similar to a bill, a resolution must pass the House and Senate with identical text. The member of Congress introducing the resolution must use text as directed by the CRA, which reads: "That Congress disapproves the rule submitted by the XX relating to XX, and such rule shall have no force or effect." The blank spaces being appropriately filled in.7

There is much discussion on the Hill about whether the term "joint resolution" under the CRA allows for Congress to include more than one rule within a joint resolution of disapproval. Based on the plain reading of the required disapproval resolution text, the language is singular when referring to a rule. Given that Congress has only successfully repealed a final rule under the CRA once, there is no precedent on whether introducing one joint resolution of disapproval to repeal multiple rules complies with the CRA. This uncertainty also is evidenced in the House's passage of the Midnight Rules Relief Act of 2017 (H.R. 21) on January 4. The bill amends the CRA to ensure Congress can disapprove multiple regulations through one resolution. The House passed the bill under the suspension calendar, and the bill now awaits action in the Senate, which will likely not be considered until after President-elect Trump is sworn into office to avoid a presidential veto.

Some congressional offices also have raised questions about whether a CRA resolution of disapproval should include preamble text or statements specifying congressional intent and objections to the rule under review. While the preamble does not have the force of law, some argue that it could provide clarity and guidance as to which provisions of the rule members of Congress take issue with in passing a joint disapproval resolution. CRS finds that while CRA procedure does not preclude a resolution of disapproval from containing a preamble, procedural questions are raised about voting on preamble text. One question is whether the Senate vote on preamble text under "fast track" procedures, as it is typical to vote on the preamble of a joint resolution after passage of the resolution.

"Fast Track" Procedures in the Senate

The CRA includes "fast track" procedures in the Senate for committee and floor consideration of a joint resolution of disapproval, whereas the House does not need "fast track" procedures given the House rules that limit debate on legislation. One of the expedited procedure's advantage is eliminating filibuster attempts in the Senate. Once 20 calendar days (not legislative days) have passed from the start of the "fast track" period (a committee receiving the rule report or the rule is published in the Federal Register), 30 Senators can sign and file a petition on the floor to have the committee discharged from considering the rule. Alternatively, the rule can bypass the committee and a joint resolution of disapproval for that rule considered on the floor, if the House passes its disapproval resolution and sends it to the Senate for consideration.

When a resolution of disapproval is reported out of committee or discharged from the committee, any Senator can make a non-debatable motion to proceed with its consideration on the floor. The motion and passage only requires a simple majority and is filibuster proof. Thus, if the motion passes, debate is limited to 10 hours and the Senate then votes on the resolution. With Republicans controlling 52 seats in the Senate, they will likely have the votes to secure passage.

Considering the Other Chamber's Passed Resolution of Disapproval

When one chamber passes its joint resolution of disapproval and it is received by the other chamber, the CRA does not require the receiving chamber to refer the measure to a committee, but does require the chamber to consider its own disapproval resolution. While the receiving chamber must consider and debate its own measure, the CRA requires the vote on final passage to be on the joint resolution passed by the other chamber (similar to how Congress may deal with appropriations bills). The requirement ensures that both chambers are taking legislative action on the same joint resolution, as well as not passing a joint disapproval resolution with differing text in each chamber. Therefore, it is often strategic for the chamber receiving the disapproval resolution to have introduced and considered a companion resolution.

Given these requirements and the fact that the Senate's top priority is confirming President-elect Trump's cabinet nominations, we expect most of the disapproval resolutions to start in the House and then sent to the Senate for its consideration.

The Impact of a Joint Resolution of Disapproval

Congress can use the CRA as a blunt instrument to not only repeal a rule, but also foreclosure opportunities for a federal agency to reengage on the matter through a rulemaking. Once a joint resolution of disapproval is signed by the President or Congress successfully defeats a veto by the President, the resolution immediately repeals the rule in its entirety. What will then remain unclear is how a federal agency will promulgate rules on that particular issue in the future. Under the CRA, once a rule is repealed through a joint resolution of disapproval, a federal agency may not reissue the rule in "substantially the same form" (a term the CRA does not define), nor issue a new rule in the substantially same form until Congress passes legislation authorizing the rulemaking. As Congress has only used the CRA once to successfully repeal the Department of Labor's final rule on ergonomics and the Department has never reengaged on the matter, there is no precedent, including litigation history, for what constitutes a rule in "substantially the same form."

Considerations

If you are interested in having Congress repeal a rule under the CRA, we offer three considerations to inform your decision.

  • Is your aim to have a rule repealed? Under the CRA, a joint resolution of disapproval seeks to repeal an interim final rule or final rule in its entirety. One disadvantage of repealing a rule under the CRA is that if Congress considers a joint resolution of disapproval on a major rule and the measure fails, this could cause the major rule to go into effect sooner by speeding up the date of implementation. Of note, unless Congress amends the CRA through the Midnight Rules Relief Act, it is most likely that both chambers will have to pass a disapproval resolution for each Obama Administration rule and not pass an omnibus disapproval resolution. This could affect how many disapproval resolutions Congress can pass in the 60-day period. It is expected that some of the rules Congress will prioritize in trying to repeal include the Environmental Protection Agency's Clean Power Plan and Waters of the United States rules, the Department of Labor's overtime rule, and the Department of the Interior's moratorium on coal mining permits. There is a possibility that repealing some of these rules will receive bipartisan support.
  • Is your interest in having the rule reformed? It remains unclear whether Congress can pass a joint resolution of disapproval with a preamble clarifying the reasons why it repealed the rule, which means that the CRA may not be the best legislative instrument for Congress to give federal agencies guidance on how to improve on its rulemaking on that matter. Additionally, if your intent is for Congress to repeal a rule in order for the federal agency to reengage in another rulemaking on that same issue, the "in substantially the same form" provision makes it unclear whether a federal agency can reissue a revised rule or issue a new rule on the matter. As such, repealing a rule under the CRA may foreclose these opportunities.
  • If the rule cannot be repealed under the CRA, what are other options? Congress still has the authority to repeal rules in its entirety or in part outside of the CRA. For example, the House has already passed the Regulations from the Executive In Need of Scrutiny (REINS) Act of 2017 (H.R. 26), a bill that would address regulatory overreach by requiring congressional approval on all major rules with an annual economic impact of US$100 million or more before going into effect. It also would require agencies to repeal existing regulations to offset the costs of new regulations and would eliminate any existing rule not examined by Congress during a ten year period. The Senate has introduced a companion bill, which is awaiting consideration. In addition to Congress, President-elect Trump can exercise his presidential powers to repeal and reform rules through executive orders, presidential directives, presidential memoranda, and presidential proclamations. Additionally, rulemakings in accordance with the APA can achieve the objective of repealing a rule, however, the process is long and complicated. Further, federal agencies have the authority to reinterpret rules, which at times can have the effect of repealing a rule. Reinterpretation of rules is not subject to the APA. Our firm's Advisory titled, Presidential Powers: Avenues Available to President Trump to Change Law and Policy discusses these avenues in greater detail.

Footnotes

1. Title II, Subtitle E, P.L. 104-121, 5 U.S.C. §§ 601 et seq.

2. 5 U.S.C. § 804(3).

3. Id. The term "rule" does not include: (1) any rule of particular applicability, including a rule that approves or prescribes for the future rates, wages, prices, services, or allowances therefor, corporate or financial structures, reorganizations, mergers, or acquisitions thereof, or accounting practices or disclosures bearing on any of the foregoing; (2) any rule relating to agency management or personnel; or (3) any rule of agency organization, procedure, or practice that does not substantially affect the rights or obligations of non-agency parties.

4. 5 U.S.C. § 804(2). OIRA defines a major rule as: (1) an annual effect on the economy of US$100,000,000 or more; (2) a major increase in costs or prices for consumers, individual industries, federal, state, or local government agencies, or geographic regions; or (3) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets. The adopted definition does not apply to rules issued under the Telecommunications Act of 1996 and amendments thereafter.

5. The CRA specifies that Congress officially receives the rule report when it is submitted to the Office of the Speaker of the House or is referred to the appropriate Senate committee.

6. Congressional Research Service, Agency Final Rules Submitted on or After June 13, 2016, May be Subject to Disapproval by the 115th Congress, December 15, 2016.

7. 5 U.S.C. § 802(a).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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