We have previously written about the Congressional Review Act (“CRA”), which was enacted as part of the Contract with America Advancement Act of 1996.  The CRA created a fast-track legislative process for Congress to nullify a covered federal rule by passing a joint resolution of disapproval that would then be presented to the President for approval or veto.  Today we write about a proposed CRA reform measure that would enact a change in the congressional review procedure for “major rules” which has been characterized as “seismic.”

In the more than 20 years since the CRA was enacted, it reportedly has been used only once to disapprove a covered rule adopted by a federal agency.  Specifically, the controversial ergonomics rule adopted by the Occupational Safety and Health Administration toward the end of the Clinton Administration was successfully nullified pursuant to the CRA when the subsequent inauguration of a Republican President resulted in the same political party controlling both Houses of Congress and the Presidency.  The anomalous nature of this event is not surprising given that the political scenario required to enact a resolution of disapproval rarely occurs.

Dissatisfied with the ineffectiveness of the CRA as a means of asserting Congressional oversight over agency rulemaking, the House of Representatives (the “House”) recently passed a CRA reform measure known as the Regulations from Executive in Need of Scrutiny Act of 2017 (the “REINS Act”).  Officially titled an act to amend the CRA “to provide that major rules of the executive branch shall have no force or effect unless a joint resolution of approval is enacted into law,” the stated purpose of the REINS Act is “to increase accountability for and transparency in the Federal regulatory process.”  As expressed in its stated purpose, this measure reflects the view that “[o]ver time, Congress has excessively delegated its constitutional charge [to legislate] while failing to conduct appropriate oversight and retain accountability for the content of the laws it passes.”  A House Committee Report issued during the last Congress indicates, for example, that “the Obama Administration issued on average 81 new major regulations per year” from 2009 through 2013.  H.R. Rep. No. 114-214, pt. 1, at 10 (2015).

While it also would amend the CRA in other respects, the proposed REINS Act bears watching as it moves to the Senate because it would change fundamentally the review procedure for “major rules” subject to the CRA.  Subject to limited exceptions, the REINS Act would effectively stand the CRA on its head with respect to covered major rules by establishing special Congressional procedures and timelines within which a joint resolution of approval must be enacted into law before such a rule may take effect.  This is the converse of the current “negative option” approach for major rules under which a rule takes effect unless a joint resolution of disapproval is enacted.  In short, an affirmative ratification requirement would be substituted for a disapproval option.  The REINS Act explains that, “[b]y requiring a vote in Congress, [it] will result in more carefully drafted and detailed legislation, an improved regulatory process, and a legislative branch that is truly accountable to the American people for the laws imposed upon them.”

Generally speaking, a covered major rule could not take effect under the REINS Act unless a joint resolution of approval is enacted into law within 70 legislative (or session) days of receiving the rule and the accompanying report from the adopting agency.  However, a major rule could take effect for a 90-calendar-day period if the President issues an executive order determining that the major rule was issued pursuant to a statute implementing an international trade agreement, was necessary because of an imminent threat to health, safety or other emergency, or was necessary for the enforcement of criminal laws or national security.  If a joint resolution approving a major rule is not enacted within the required time period, the REINS Act provides that a joint resolution of approval concerning the same rule may not be considered in the same Congress by either the House or the Senate.

A “major rule” would include any covered rule, including an interim final rule, that “has resulted or is likely to result in . . . (A) an annual cost on the economy of $100,000,000 or more, adjusted annually for inflation; (B) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or (C) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets.”  The “major rule” status determination would be made by the Administrator of the Office of Information and Regulatory Affairs of the Office of Management and Budget.  Under the affirmative approval approach reflected in the REINS Act, rules of this nature also might be referred to more colloquially as rules in need of congressional scrutiny.

The House Committee Report issued during the last Congress observed that, “[a]though joint resolutions have in numerous cases been introduced to pressure agencies to modify or withdraw their rules, as time shows that Congress is unlikely to use the CRA effectively to disapprove of rules, the use of joint resolutions as a source of pressure [on administrative agencies] becomes less and less effective.”  H.R. Rep. No. 114-214, pt. 1, at 9 (2015).  However, if the REINS Act were to be passed by the Senate and signed by the President, there would be a dramatic shift in the balance of federal regulatory power between Congress and administrative agencies, and Congress would be compelled to take a position on major rules.  Consider, for example, the effect that the need to enact a joint resolution of approval might have on the highly controversial CFPB rulemaking proceedings relating to arbitration agreements and payday, vehicle title, and certain high-cost installment loans.

The REINS Act was received in the Senate on January 6, 2017, and referred to the Senate Committee on Homeland Security and Government Affairs.  We will continue to monitor this significant measure.