GOP in uncharted territory rolling back rules through resolutions

Republicans are not only ending Obama-era regulations, they are hoping to slam the door on future regulatory actions in an unprecedented campaign that could have an impact for years to come.

The GOP Congress has repealed 14 rules from the Obama administration and one new rule from the independent Consumer Financial Protection Bureau (CFPB) since President Trump took office.

Regulations that have been rolled back include regulatory actions that limited the state’s ability to drug test for unemployment benefits, created new reporting requirements for potential government contractors who have violated labor laws and protected consumer rights to settle disputes with financial institutions in court.

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Under the procedure that Republicans are using, a federal agency is barred from issuing a “substantially similar” regulation in the future without an act of Congress.

Whether the GOP can rule out future action, however, remains to be seen. The whole process, based on the 1996 Congressional Review Act (CRA), is uncharted territory.

The legislation, which gives Congress 60 legislative days to repeal a rule after it’s finalized, has only been successfully used once prior to the Trump administration — in 2001 — to dump an ergonomics rule from the Occupational Safety and Health Administration.

No agency has ever tried to challenge a resolution of disapproval passed under the CRA, so there’s no precedent on what’s considered a “substantially similar” rule.

Amit Narang, a regulatory policy advocate at Public Citizen’s Congress Watch division, claimed the law is vague and shouldn’t be seen as a roadblock to future rulemakings.

“I do not believe agencies should be reading this as preventing them from regulating in areas where CRA resolutions have been passed,” he said.

Even Republicans, Narang said, are confused about what the law actually does. He noted a CRA resolution to repeal the Obama-era rule limiting methane emissions from oil and natural gas drilling failed in May after three Republicans joined Democrats to reject the measure.

Sen. Rob Portman (R-Ohio) claimed he voted for the CRA resolution because Interior Secretary Ryan Zinke had promised him he would take significant steps to reduce methane waste.

Sen. John McCain (R-Ariz.), however, rejected the resolution because he feared it would have prevented the federal government, under any administration, from issuing a rule that is similar.

“Two GOP senators are basically reading the same language in opposite ways and it’s making a huge difference in how they vote,” Narang said. “It’s a good illustration of how problematic the language is and how sloppy the drafting of the statute was.”

Narang said an agency could potentially circumvent a CRA resolution by issuing a new, broader rule.

“Theoretically, a stronger rule would not be substantially similar,” he said.

But Todd Gaziano, senior fellow in constitutional law at the conservative Pacific Legal Foundation, said by passing a CRA resolution, Congress is ultimately changing by law the amount of regulatory authority an agency has.

“I know people who love regulations will come up with lawless ways to violate the new law, but context will matter,” he said.

If an agency were to rewrite a rule so it accomplishes the same goal as the previous rule, he said courts would strike it down.

“There are many people who will have imaginative ways of pushing the law, but we ought to presume agencies will not entertain those ideas. … When they do, the courts will be open to limit attempts that are too cute by half,” he said.

Gaziano, who was counsel to former Rep. David McIntosh (R-Ind.) in the 90s and helped draft the language of the CRA, said the law’s main goal is to increase accountability in federal rulemaking.

“It’s a neutral, good government, public accountability law,” he said. “The CRA wouldn’t have been worth [President Bill] Clinton signing and [former Senate Majority Leader] Harry Reid supporting it if meant the agency could just issue the same rule or something with minor changes.”

Dan Goldbeck, a senior regulatory policy analyst at the conservative American Action Forum, said the CRA so far has been an effective check on agencies, particularly independent agencies like the CFPB.

He said it’s tough to say if the law truly limits agencies from issuing a similar rule in the future, but it’s unlikely agencies will try.

“I think a lot of it has to do with scarcity of resources,” he said. “If you are going to devote so much time and energy and staff in recrafting another version only to be shot down, that’s taking away from other priorities that may be more efficient and useful.”

Experts say they doubt CFPB will try to reissue their rule that was nixed this week.

Gaziano said banning arbitration agreements in financial contracts were at the heart of the rule Congress disapproved. He argues there’s no way for CFPB Director Richard Cordray to reissue a rule that bars arbitration and get away with it.

“I don’t think even Cordray, as power hungry as he is, would engage in that clear a law violation,” he said.

What’s interesting is that regulatory experts say the CRA could extend to regulatory guidance in addition to rules. Susan Dudley, a former administrator for the Office of Information and Regulatory Affairs who now heads George Washington University’s Regulatory Studies Center, pointed to the letter the Government Accountability Office (GAO) sent Sen. Pat Toomey (R-Pa.) earlier this month.

The letter affirmatively answers Toomey’s question of whether joint 2013 guidance on leveraged lending from the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation could be considered a rule under the CRA.

The GAO said the interagency guidance “is a general statement of policy designed to assist financial institutions in providing leveraged lending to credit-worthy borrowers in a sound manner” and “as such, is a rule subject to the requirements of CRA.”

While lawmakers have only 60 legislative days to pass a CRA resolution, Dudley noted that the clock doesn’t start ticking until the rule is sent to the director of the GAO.

“In this case, I’m guessing the agencies didn’t consider it a rule subject to CRA, so they never sent it to GAO,” she said.