With the federal elections looming later this year, now is a good time to review the power of the Congressional Review Act (CRA). Congress can use the CRA to invalidate regulations issued by a past administration. If a new Democratic majority captures the US Congress and a Democrat becomes President in 2021, the CRA could be used to undo certain regulations advanced by the Trump Administration, particularly if those regulations are promulgated in the second half of 2020.
Enacted in 1996, the CRA empowers the legislative branch to invalidate regulations and regulatory guidance issued by executive branch agencies. The CRA creates a mechanism, called a joint resolution of disapproval, by which Congress may nullify an agency finalized rule. Because of its design elaborated upon in this report CRA plays an important role in setting the timeline for the executive branch to finalize regulations, especially in an election year. The Trump Administration may seek to finalize regulations by Memorial Day 2020 to protect them from congressional disapproval. Should Democrats capture both chambers of Congress and President Trump does not win re-election, the next Congress could use the CRA to nullify some of the Trump Administration’s regulations that fit within the CRA parameters.
Under the CRA, agency action that is “designed to implement, interpret, or prescribe law or policy” is deemed a rule and therefore may be reviewed by Congress. This broad definition comes from the Administrative Procedure Act and encompasses the majority of substantive regulations. There are two significant classes of exemptions. The first is for rules that concern monetary policy proposed or implemented by the board of governors of the Federal Reserve System. Second, any rule relating to internal agency organization or personnel is also exempt, as long as that policy does not substantially affect the rights or obligations of non-agency parties. All rules that meet the aforementioned definition and are not exempt can be subject to the CRA.
The US Government Accountability Office (GAO) has developed a process in which members of Congress can request a formal legal opinion on whether a particular agency action qualifies as a rule under the CRA. If GAO affirms that an agency action constitutes a rule, Congress may “use the CRA procedures to consider legislation overturning an agency action despite the agency not submitting that action to Congress.”
Under the Administrative Procedure Act, a proposed rule may go into effect as early as 30 days after it is published in the Federal Register, except in special circumstances. For major rules, the effective date typically is 60 days after the rule is published. A rule is “major” if the Office of Management and Budget determines that it will have a certain level of economic impact.
The CRA authorizes Congress to issue a joint resolution of disapproval within 60 days of its receipt of a rule. This means that even if a non-major rule goes into effect 30 days following its publication in the Federal Register, Congress retains the ability to disapprove it under the 60-day timeline.
Another component of the CRA timeline that is especially significant in an election year is sine die adjournment. If Congress adjourns sine die (without establishing a day to appear again) within 60 days of a rule being submitted, the CRA clock starts over in the new session of Congress. A sine die adjournment typically happens at the end of every legislative session, meaning that the 116th Congress will conclude at the end of 2020 without a set date on which to reappear as the 117th Congress. This means that when the new Congress convenes, the CRA countdown will restart for any rule that did not expire in the previous Congress.
After President Trump took over the White House in January 2017, Congress worked with the Administration to use the CRA to overturn 14 regulations that the Obama Administration had promulgated in its final weeks. The Republican-controlled Congress was able to suspend these regulations because the 60-day window had not closed. Congress and the Trump Administration also advanced an interpretation of the CRA that would allow them to repeal federal rules stretching back decades. The analysis relies on language in the CRA specifying that the 60-day clock starts when rules are submitted to Congress. If a rule is not officially submitted to Congress, then the clock has not started, even if the rule is being enforced by the executive branch.
For example, the GAO agreed with Sen. Toomey’s office that the Consumer Financial Protection Bureau’s guidance regulating third-party auto lenders had not been submitted properly to Congress in 2013, and therefore could be resubmitted and invalidated under the CRA. Congress did just that by passing S.J.Res.57 through both the US House of Representatives and the US Senate and securing President Trump’s signature on May 21, 2018.
While the Trump Administration has worked with Congress to use CRA, it is also aware that these mechanisms could be used against its own regulatory actions, should the administration change in 2021. The US presidential and congressional elections will be held on November 3, 2020, and the presidential inauguration will be January 20, 2021. Given the flexibility of the congressional calendar, the strong likelihood that Congress will adjourn sine die in December 2020, and the time it likely would take a new administration to file a resolution of disapproval, the Trump Administration likely is working to finalize regulations by Memorial Day 2020 to ensure that the 117th Congress does not subject those regulations to CRA review.
The CRA is one of the many complicated procedural laws that dictate the balance between the executive and legislative branches of the US government. This law will likely play a key role in driving regulatory policy in 2020. With an election looming, the CRA places pressure on the Trump Administration to finalize key regulations in the first half of the year, a lengthy process that typically involves first issuing a Notice of Proposed Rulemaking and collecting public comments. With these factors in mind, we will continue to keep you updated on the Administration’s regulatory actions in 2020.