November 29, 2016
Government Relations Alert
Government Relations Alert
President-elect Trump promised to overturn a number of the Obama Administration’s regulatory rules, which he could do by applying the Congressional Review Act. This alert discusses what U.S. businesses need to know.
The election of President-elect Donald Trump will result in legislation and regulatory policies that are significantly different from those of President Obama. This is no surprise, and such changes are common when the executive branch of government changes hands from one political party to another. President-elect Trump has stated that he will cancel “every unconstitutional executive action, memorandum and order” issued by President Obama. In addition, President-elect Trump has been meeting and planning with congressional leaders about significant legislative priorities that they will pursue. The outcome of these legislative efforts will unfold well beyond the closely watched first 100 days.
One unique feature of this transition is that President-elect Trump will have an opportunity to reverse a number of the Obama administration’s regulatory rules through a rarely used law, the Congressional Review Act (CRA). The CRA may prove to be a surprisingly rapid change agent for rules the Obama administration promulgated since spring 2016. How many rules does this include? Estimates range from dozens to hundreds of regulations.
The CRA was enacted in 1996 and requires all final regulations created by rule to be submitted to both houses of Congress and the Government Accountability Office (GAO) before the rule can take effect. Congress has 60 days to introduce and pass a joint resolution of disapproval with simple majorities in both the House and Senate if it wants to reverse the agency; however, there is a caveat that explains why the successful use of the CRA is such a rarity. Typically, a president who puts out a rule will veto any CRA resolution of disapproval, and such vetoes are nearly impossible to overcome.
While the CRA is rarely successful, the current regulatory regime, congressional schedule and change in the party controlling the White House make for a unique opportunity to overturn any new agency rules finalized since spring 2016.
The Congressional Research Service estimates that rules issued after May 30, 2016, may be subject to review under the CRA; however, ultimately, the House and Senate parliamentarians would interpret how far back each chamber could look at rules. There are varying estimates of how many rules could be reversed, but according to several accounts, the number of rules is in the hundreds. One particular feature of the CRA is that any rule that is overturned under it does not take effect and the rule may not be issued in substantially the same form unless authorized by law.
In addition to the hundreds of already-issued rules, the Obama administration released its fall regulatory agenda, which is a lengthy list of additional rules that could be finalized before President-elect Trump is sworn in on January 20, 2017. This list can be found here. It is possible that the Obama administration will try to issue as many of these rules as possible to leave a significant mark on the regulatory environment. With this lengthy list of new potential regulations in mind, House Majority Leader Kevin McCarthy sent department, agency and commission leaders a letter warning against such a deluge of new rules, stating that if such actions occurred, Congress may “if appropriate” overturn such rules using the CRA. Thus, it seems likely that Congress will spend time passing numerous CRA resolutions to undo at least some of these rules.
Currently, under the CRA, each rule requires a separate resolution of disapproval. This requirement, combined with a busy first six months of the new administration, will limit the number of rules Congress is able to consider using the CRA. While the House of Representatives passed legislation that would allow Congress to bundle rules as a package to be overturned under the CRA, without a change in the Senate’s procedural rules, even with President-elect Trump in place, we do not expect such legislation to pass, due to the unlikelihood that it could gain sufficient support in the Senate. Thus, Congress will not overturn every Obama administration rule; it will need to use the CRA judiciously.
A number of rules, such as the Department of Labor’s fiduciary and overtime rules, the Department of Education’s Borrower Defense to Repayment, and Health and Human Service reimbursement rules, have been suggested as probable CRA candidates, but given the stated desire to overturn the Obama regulatory agenda, we believe scores of other rules also may be considered under the CRA. How many will depend upon how much time the House and Senate want to dedicate to reversing the Obama administration’s rules, which may in turn depend upon how much stakeholders press for such changes.
The old adage about the squeaky wheel getting the grease is probably appropriate in determining how many rules will face undoing under the CRA. Industries that can demonstrate the need to reverse a rule, by showing the negative consequences of such a rule, stand to gain an opportunity to be included in any CRA rule reversals. Given the likely significant increase in the congressional and congressional staff workload, industries and companies hoping to benefit from rule reversals under the CRA should begin their efforts to educate and reach out to members and staff as soon as possible.
We can help your organization, big or small, with strategic planning, education and outreach. Our Government Relations and Public Policy team, which is led by former congressman the Hon. Thomas M. Reynolds, has decades of public policy experience, including service in Congress and working with departments and agencies throughout the federal government. Douglas Dziak served as general counsel on the U.S. Senate’s Homeland Security and Governmental Affairs Committee, as well as chief counsel and legislative director for Senator George Voinovich.
The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.