Congress Applies the Congressional Review Act in a New Way – Voiding CFPB Bulletin on Indirect Auto Lending

President Trump on May 21, 2018 signed a Joint Resolution passed by Congress that disapproved the Consumer Financial Protection Bureau’s March 21, 2013 Bulletin on Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act (Auto Lending Bulletin). The action is significant because it is first instance in which Congress has used the Congressional Review Act (CRA) to void an agency action that was not treated by the agency as a substantive rule.¹ 

The CRA requires an agency to submit actions that qualify as a “rule” to both houses of Congress and the Government Accountability Office (GAO) before the rule can take effect. The CRA also allows the two houses to void an agency rule by passing a joint resolution of disapproval by a majority vote of each house, followed by the signature of the President. If a rule is disapproved under the CRA, the relevant agency is prohibited from issuing a new rule that is substantially the same unless expressly authorized by subsequent legislation.

The Auto Lending Bulletin disapproval occurred after the GAO issued letters to Senator Patrick Toomey finding that the Interagency Guidance on Leveraged Lending and the Auto Lending Bulletin constituted general statements of policy that were rules required to be submitted to Congress for its review in accordance with the CRA.² As such a submission had not occurred with respect to the Auto Lending Bulletin, the Senate and House both passed a resolution that voided the Bulletin under the CRA. 

Congress’ action raises a series of significant issues for financial regulatory agencies and regulated entities, with respect to both future and prior guidance. A number of these issues are set forth below. 

Actions with Respect to Future Guidance 

• Will regulatory agencies continue to issue written guidance and now routinely submit such guidance to Congress under the CRA? 
• Will regulatory agencies seek to strengthen their future guidance issuances that are submitted to Congress under the CRA, against Congressional disapproval by first publishing such guidance in proposed form and seeking public comment? 
• As a practical matter, how broadly will the GAO, applicable regulatory agencies and Congress construe the types of agency action that will be deemed to be rules that are required to be submitted to Congress for CRA review? 
• Will regulatory agencies become less inclined to issue guidance documents if such documents trigger a CRA review, or will regulatory agencies move more often to proceed to turn guidance into substantive rules (subject to any applicable Administration-imposed constraints on new rulemaking)? 

Actions with Respect to Prior Guidance 

• Will Congress take a CRA action with respect to the Interagency Guidance on Leveraged Lending? 
• Will Congress take CRA actions on other agency guidance issuances that were not submitted to Congress, and will Congress seek to undertake a systemic review of agency actions that remain subject to CRA review? 
• Since Congress was prepared to disapprove an agency guidance issuance that was more than five years old, is there any limit as to the age of guidance that might be subject to disapproval (other the enactment date of the CRA)? 
• What are the legal implications for agency use of guidance that was never submitted to Congress as may have been required by the CRA? 

Since early 2017, the CRA has moved from a long period of obscurity to a central role in the balance of power between Congress and the agencies. The recognition that a simple majority in the House and Senate can be readily used to invalidate agency action is likely to draw continuing enhanced scrutiny by Congress of both new and existing “rules.” This fact will also require agencies to take a fresh look at how they approach their means of signaling regulated entities as to agency expectations. 

Footnotes 

_{1) For further information regarding the CRA, please refer to Dechert OnPoint, The Congressional Review Act: Striking a New Balance between Congressional Control and Regulatory Initiative – The Fate of Leveraged Lending Guidance at Issue. 
2) See letter, dated October 19, 2017, from Susan A. Poling, GAO General Counsel, to Senator Patrick Toomey, with respect to the Interagency Guidance on Leveraged Lending; letter, dated December 5, 2017, from Thomas H. Armstrong, GAO General Counsel, to Senator Patrick Toomey, with respect to the Auto Lending Bulletin.}