Legislation Generally Impacting Regulatory Agency Authority
Congress and the Trump Administration may be embarking on making far-reaching changes that will recalibrate the manner in which financial services are regulated in the United States, including amending the Dodd-Frank Act and its implementing rules. We expect to see vigorous debate regarding the appropriate approach to financial services regulation, leading to rewrites of the structures and goals of federal banking and securities agencies and other government agencies.
This page is dedicated to tracking Congressional proposals regarding legislation generally impacting regulatory agency authority.
For more information, please contact Robert J. Rhatigan.
Date | ActionSunset the CRA and Restore American Protections Act of 2017 (S. 1140) Sponsor: Sen. Booker (D-NJ) (Co-Sponsor – 1 D) House version (H.R. 2449) Sponsor: Rep. Cicilline (D-RI) (Co-Sponsor – 1 D) Key ProvisionsThe Bills would repeal the Congressional Review Act (CRA) which provides for Congress to disapprove rules adopted by federal agencies within a specified time period. The Bills would allow an agency whose rule has been disapproved to reinstate the rule by publishing it in accordance with the Administrative Procedure Act within one year of enactment. Potential ImpactThe CRA was enacted in 1996. Prior to this Congress only one rule was disapproved under the CRA. During the current Congress under Republican control fourteen rules issued under the Obama Administration have been disapproved. While it is highly unlikely that these bills would pass in the current Congress they do reflect the increasing focus on the balance between Congressional authority and delegation to agencies. | Important Links |
Date | ActionOffice of Information and Regulatory Affairs (OIRA Insight), Reform, and Accountability Act (the “Act”) H.R. 1009 Sponsor: Rep. Mitchell (R-MI) (Co-Sponsors – 4 R) House of Representatives passed: 241-184, March 1, 2017 Received in the Senate: March 2, 2017 Senate version S. 676 (substantially similar) Sponsor: Sen. Rounds (R-SD) Introduced: March 21, 2017 Key ProvisionsThe Act would codify the rulemaking principles and OMB review requirements that are contained in Executive Order 12866 (“EO”) issued by President Clinton in 1993. The Act would expand on the EO by imposing these requirements on independent agencies which have not previously been subject to the EO. Potential ImpactThe Executive Branch has been reluctant to mandate that independent agencies comply with executive orders regarding rulemaking activity. Under the Act, Congress would mandate independent agency participation in the Executive Branch rulemaking process. The Minority Committee report on the Act objected on the ground that independent agency rulemaking should not be subject to review by the White House. | Important Links |
Date | ActionThe Regulatory Accountability Act of 2017 (the “RAA”) (H.R. 5) Sponsor: Rep. Goodlatte (R-VA) (25 Co-Sponsors – 24 R, 1 D) House of Representatives passed: 238-183: Jan. 11, 2017 Received in Senate: Jan. 12, 2017 Key ProvisionsUnder the RAA, if a reviewing court determines that a statutory or regulatory provision is ambiguous, the reviewing court must not interpret the ambiguity as a delegation of legislative rulemaking authority to the agency and must not rely on such ambiguity as a justification for either broadly interpreting agency authority or deferring to an agency’s interpretation. The RAA would require agencies to conduct cost-benefit analyses in connection with proposed rules, which would include a reasoned determination in the final rule that the benefits of the rule justify its costs.The RAA would create a category of rules called “high-impact rules.” A high-impact rule is any rule that imposes an annual cost of $1 billion or more on the economy. The public must have at least 120 days to provide comments on high-impact rules. Additionally, unless waived by the agency and all participants in the rulemaking process, the agency must hold a hearing to determine the following: (1) whether there is a factual predicate for the rule; (2) whether there is an alternative method to achieve the objectives of the proposed rule at a lower cost; (3) if there are alternatives, which alternative would achieve the objectives at the lowest cost; (4) if the agency proposes to pursue a method more costly than the alternatives, whether the additional benefits of the agency’s method outweigh its additional costs; (5) whether the evidence upon which the agency bases the proposed rule meets the requirements of the Information Quality Act; and (6) other relevant issues. Potential ImpactThe RAA would overturn Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), in which the Supreme Court held that, provided that Congress had not directly addressed the issue, an agency’s reasonable interpretation of a statute is entitled deference. Under the RAA, the agency would no longer be entitled to deference, which would, in many instances, significantly strengthen the position of a party challenging an agency rule. Congress has not previously imposed a general cost-benefit requirement in connection with agency rulemaking. Unlike the SEC and CFTC, the OCC, FDIC, and Federal Reserve Board are not required by statute to conduct cost-benefit analyses in connection with proposed rules. The RAA would impose such requirements across all agencies and would also require agencies to make a determination that the benefits of a proposed rule justify the costs. This could make agency rulemaking more difficult and provide additional grounds to challenge agency rules. A requirement that the benefits of a rule justify the costs would appear to be a lower standard than the Supreme Court applied in Michigan v. EPA, 576 U.S. ___, (2015), where, in the context of rulemaking authority that required a rule to be “necessary and appropriate,” the Supreme Court found that an agency had to show that the benefits of the rule outweighed its costs. The RAA could significantly slow the rulemaking process. Agencies generally provide comment periods of 30-60 days. The RAA would require a comment period of at least 120 days for high-impact rules. In addition, opponents of a rule could seek to use the hearing process to challenge and delay high-impact rules. | Important Links |
Date | ActionThe Regulations from the Executive in Need of Scrutiny Act of 2017 (the “REINS Act”) (H.R. 26) Sponsor: Rep. Collins (R-GA) (Co-Sponsors – 160 R) Introduced in the House: Jan. 3, 2017 House of Representatives passed 237-187: Jan. 5, 2017 Proposed Effective Date: one year after enactment Senate version S. 21 (substantially similar, except that the S. 21 does not contain the “cut-go,” annual review, and sunset provisions) Sponsor: Sen. Paul (R-KY) (Co-Sponsors – 37 R) Key ProvisionsWould require classification of a proposed rule as a major or nonmajor rule based on an Office of Management and Budget (“OMB”) analysis. A “major rule” must be approved by a joint resolution of Congress generally within 70 session days of submission by the agency in order for the rule to take effect. A “major rule” is any rule determined by the OMB to cause: (1) economic impact greater than $100M; (2) a major increase in costs or prices for consumers, industries, agencies, or regions; or (3) significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign enterprises. A “nonmajor rule” may be disapproved by a joint resolution of Congress specified within a certain time period. An agency seeking to adopt a new rule would be required to amend or repeal an existing rule or rules to offset any annual costs associated with the new proposed rule (the “cut-go provision”). An agency would be required to submit 10 percent of its existing rules annually to Congress for review under the REINS Act. Beginning 10 years from enactment of the REINS Act, any rule where Congress has not enacted a joint resolution of approval shall not remain effective. Potential ImpactThe REINS Act would dramatically expand Congress’ role in the issuance of regulations. Under the current Congressional Review Act, Congress is limited to disapproving a rule, a power it has almost never exercised. In contrast, under the REINS Act, Congress would have to affirmatively approve a major rule in order for it to go into effect. If the bill were enacted, agencies would likely be very responsive to Congressional concerns regarding both proposed rules and existing rules as they come up for Congressional review. | Important Links |
Date | ActionH.R. 21 - Midnight Rules Relief Act of 2017 Sponsor: Rep. Issa (R-CA) House passed 238-184 on January 4, 2017. Senate version S. 34 Sponsor: Sen. Johnson (R-WI) (Co-Sponsors – 6 R) Key ProvisionsWould amend the Congressional Review Act (“CRA”) to allow a joint resolution of disapproval of regulations to apply to more than one regulation. Potential ImpactIf enacted, H.R. 21 would allow Congress to pass joint resolutions of disapproval under the CRA for a collection of regulations rather than a single regulation submitted for Congressional review. The bill could facilitate more expeditious Congressional action on disapproval of recently adopted regulations. | Important Links |