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House passes proposed Congressional Review Act amendments authorizing en bloc consideration in resolutions of disapproval for “midnight rules”

Posted in CFPB Rulemaking

We have previously written about the Congressional Review Act (“CRA”), a law enacted in 1996 that establishes a procedure by which Congress can nullify a covered rule adopted by a federal agency.  According to a Congressional Research Service (“CRS”) memorandum dated January 3, 2017, the CRA “was largely intended to assert control over agency rulemaking by establishing a special set of expedited or ‘fast track’ legislative procedures for this purpose, primarily in the Senate.”

Before a covered rule can take effect, the CRA requires the federal agency promulgating the covered rule to submit, to each House of Congress and to the Comptroller General, a report that includes a copy of the rule, a general statement relating to the rule, and the proposed effective date of the rule.  The CRA affords Congress an opportunity to review the rule and, within specified time periods, to submit and act upon a joint resolution disapproving it.  While a joint resolution of disapproval must be approved by both Houses of Congress, it cannot be filibustered in the Senate and can be passed with only a simple majority.  A joint resolution of disapproval that is passed by both Houses of Congress is then sent to the President for executive approval or veto.

For purposes of the review procedure, a “joint resolution” is defined, in part, as one which resolves “That Congress disapproves the rule submitted by the _____ relating to _____, and that such rule shall have no force or effect” with “[t]he blank spaces being appropriately filled in.”  This statutory text appears to contemplate a joint resolution relating only to a single rule.

Recently, however, the House of Representatives passed the Midnight Rules Relief Act of 2017 (H.R. 21) by a vote of 238 to 184.  If passed by the Senate and approved by the President, this measure would amend the CRA “to provide for en bloc consideration in resolutions of disapproval for ‘midnight rules’ and for [related] purposes.”  Specifically, assuming that the time periods for submitting and acting upon a disapproval resolution have not expired, the measure provides that “a joint resolution of disapproval may contain one or more . . . rules if the report . . . for each such rule was submitted during the final year of a President’s term.” (Emphasis added.)  In addition to authorizing the inclusion of more than one such “midnight” rule in a joint resolution of disapproval, the measure also would add to the CRA a provision specifying the language to be used for a joint resolution disapproving multiple midnight rules.

Representative Goodlatte, one of the co-sponsors of the measure, explained during the House debates that this legislation is necessary to facilitate Congressional disapproval of multiple midnight regulations: “Administration after administration, there is a spike in rulemaking activity during the last year of a President’s term – particularly between election day and Inauguration Day, but even in the months before then. . . . [T]he Congressional Review Act currently allows Congress to disapprove of regulations – including midnight regulations – only one at a time.  A wave of midnight regulations can easily overwhelm Congress’ ability to use one-rule-at-a-time resolutions as an effective check.”  He further stated that, “[a]ny outgoing Administration understanding that it has this Sword of Damocles hanging over its head will surely hesitate much more before abusing midnight rules.”

In addition to any new midnight rules that may be submitted to the new Congress for review before the end of President Obama’s term, the CRS memorandum dated January 3, 2017 unofficially “estimates that agency final rules submitted to Congress on or after June 13, 2016, will be subject to renewed review periods in 2017 by a new President and a new Congress.”  (“Renewed” review periods refers to a “reset” of the review period in the next session of Congress that occurs “if Congress adjourns its annual session sine die less than 60 legislative days in the House of Representatives or 60 session days in the Senate after a rule is submitted to it.”)  As things currently stand, the prepaid card rule adopted on or about October 5, 2016 would appear to be the only significant CFPB rule potentially impacted by this measure.  However, the proposed arbitration rule also may be impacted if the CFPB finalizes it during the waning days of the Obama Administration.

The Midnight Rules Relief Act of 2017 was received in the Senate on January 5, 2017, and has been referred to the Senate Committee on Homeland Security and Government Affairs.  We will continue to monitor this measure.