Deep Dive Episode 190 – The Implications of the Latest Congressional Review Act Disapprovals
The Congressional Review Act (CRA) was used in 2017 to overturn 15 rules issued near the end of the Obama administration. The shift in political control in the White House and Congress this year set the stage for a possible repeat with respect to Trump administration rules. The CRA’s period for expedited congressional procedures (free of the Senate filibuster) has now expired for late Trump era regulations, and Congress overturned only three such rules. On June 24, Congress finished action to repeal the EEOC conciliation rule and the OCC (Comptroller) true lender rule, and it took final action to repeal the EPA methane rule the following day. President Biden has since signed all three resolutions, making them law.
This latest cycle of CRA actions merit general exploration as well as consideration of the specific rules at issue. What process did Congress use to disapprove the three rules? Why did it use the CRA relatively sparingly this year, and what will the impact be of the three disapprovals? The answers to the last two questions are arguably related. When Congress uses the CRA to repeal federal regulations, the respective agencies are automatically barred from issuing another rule that is “substantially the same” as the one disapproved without new statutory authorization. Though there is no court ruling on what the CRA’s anti-circumvention clause means, the resulting uncertainty may have skewed the CRA’s use in interesting ways.
In this live podcast, Todd Gaziano and Professor Jonathan Adler discuss the CRA, how it has been used, and the ramifications of its use on the three rules this year and on future federal regulations.
Although this transcript is largely accurate, in some cases it could be incomplete or inaccurate due to inaudible passages or transcription errors.
Evelyn Hildebrand: Welcome to The Federalist Society’s virtual event. This afternoon, July 14, we discuss the implications of the latest Congressional Review Act disapprovals. My name is Evelyn Hildebrand, and I’m an associate director of practice groups at The Federalist Society. As always, please note that all expressions of opinion are those of the experts on today’s call. Today, we are fortunate to have with us Mr. Todd Gaziano and Professor Jonathan Adler.
Todd Gaziano is chief of legal policy and strategic research and director for the separation of powers at Pacific Legal Foundation. His legal career includes positions in all three branches of the federal government, a commissioner on the US Commission on Civil Rights, and as a think tank scholar. Todd was subcommittee chief counsel for the Regulatory Reform Subcommittee The Federalist Society founder, David McIntosh, chaired in the mid-1990s. And of note, particularly, today, David McIntosh was the principal House sponsor of the Congressional Review Acts 25 years ago. Todd is also an executive committee member of both the Federalism and Separation of Powers and Civil Rights Practice Groups with The Federalist Society.
Professor Jonathan Adler is the Johan Verheij Memorial Professor of Law and Director of the Coleman P. Burke Center for Environmental Law at Case Western Reserve University School of Law where he teaches courses in environmental, administrative, and constitutional law. Professor Adler is the author or editor of seven books, and he’s also a regular contributor to National Review Online and a regular contributor to The Volokh Conspiracy blog.
We’re very pleased to welcome you both to our event this afternoon and we’re looking forward to this discussion. After our speakers give their opening remarks, we will turn to the audience for questions. Please enter questions in the Q&A at the bottom of your screen. If you’d like to ask a question orally, then please press the raise-your-hand button, which is also at the bottom of your screen. Otherwise, please enter those questions in the Q&A, and you can enter those questions at any time. With that, thank you for being with us today. Todd, the floor is yours.
Todd Gaziano: Well, thank you, much. And thanks, everyone for joining Jonathan and me and Evelyn. Jonathan and I, in our opening, are going to try to talk a little bit about the nuts and bolts of the Congressional Review Act. But I think most viewers and listeners know that. We’re going to spend a little more time on two other topics—one, why it was used to relatively less frequently in this year than it was four years ago and what that means for the future, and we’re also going to talk about the three rules that were overturned this year.
There were three rules that were issued near the end of the Trump administration that were recently disapproved, and that disapproval was signed by Biden. So those are now three laws enacted under the Congressional Review Act. So, to begin on our refresher course on the Congressional Review Act—and we won’t go into the excruciating detail we have, I think, at other times—it’s a law that requires agencies to submit all of their rules—and that’s broadly defined rules, including almost all guidance documents—to Congress before they can go into effect. Major rules have to be delayed, in their effectiveness, an extra 30 days for Congress to consider expedited procedures that the Congressional Review Act grants the Congress to consider it disapproving individual rules.
So, the main expedited procedure of significance, anyway, is that for a period of 60 session days—or legislative days depending on the house of Congress—for that period, particularly in the Senate, the filibuster doesn’t apply to the specialized resolutions of disapproval. So, many participants will remember that there were 15 rules disapproved four years ago in 2017 that were issued at the end of the Obama administration, and one more a year later that had not been submitted to Congress. So there was a total of 15 in 2017 and one more in 2018. And so this same sort of political alignment, except in reverse, existed at the beginning of this year.
The Congress only overturned three regulations. There’s a few reasons why Susan Dudley and I, in our program, predicted there might be fewer rules overturned this year. But I actually lost my bet and happily, I think — lost my bet that not as many were overturned as I still thought there would be. But I’m going to throw out one reason that Susan Dudley and I discussed, even then, would make it likely that this current Congress and administration would be somewhat more reluctant to use the Congressional Review Act. Then, Jonathan is going to add some of his thoughts on that before we talk about the three rules that were overturned.
And the main reason is that the Congressional Review Act has an automatic provision that says that the agency that issued an overturned rule cannot issue one that is substantially the same—that’s the term in the statute—ever again without congressional authorization in a statute. And a deregulatory congress or administration might not be afraid of that. And so four years ago, the Congress that overturned those 15 and 16 rules weren’t particularly concerned, but there was concern by a more pro-regulatory Congress and administration that the bar on substantially similar rules might prevent the agency from issuing stronger rules.
When we talk about the three rules that were overturned in the past month, we can actually discuss why they—Congress—wasn’t worried about those particular rules. But there was some discussion among activists, among members of Congress, and others that they were somewhat reluctant to use the CRA because of the bar. And the last point related to this, I’ll raise, is that only one rule that’s ever been overturned was reissued, and it was one that involved drug testing for unemployment recipients—a rule, by the way, I don’t know very well, but it was reissued only recently. And no court has ever attempted to interpret what the bar on substantially similar rules were.
Now, when the Trump administration reissued the rule, the rule itself did make findings as to — or statement as to why it was not substantially similar to the one that was overturned. And I think Jonathan agrees with me that that’s a good practice. But I’ll turn it over to him to discuss that and related issues.
Jonathan Adler: Thanks, Todd. It’s a pleasure to be here, happy to talk about the Congressional Review Act. Like you taught, and like Susan, I did not expect that the Congressional Act would get as much use this year as it did in 2017. And I think there are a bunch of reasons for that. And I think there are a bunch of reasons, more broadly, that the Congressional Review Act has been used, thus far, more often by the Republican Congresses and Republican administrations to undo Democratic rules or rules adopted under Democratic administrations than the reverse.
One reason, I think, is just the broader political context and understanding of the law—that The Congressional Review Act was adopted in a bipartisan way, was signed into law by President Clinton, but it is viewed as having an anti-regulatory bias. The idea here is that Congress delegates authority to agencies to use their technical expertise, to develop regulations that Congress recognizes it doesn’t have the knowledge and expertise to do itself, and that a CRA resolution somehow undoes that deal. It counters that delegation.
Now, CRA supporters will say, well, that’s Democratic accountability. That’s ensuring that the unelected folks at the agencies aren’t adopting regulations that don’t have a political support, that aren’t supported by the legislature that empowered the agency to adopt those regulations. But CRA critics, and certainly some groups that tend to support a broader federal regulation, view this as having an anti-regulatory bias because it will primarily be used for anti-regulatory purposes. And as a consequence, there are groups—various progressive groups—that to this day argue that the Congressional Review Act should be repealed.
Some of these groups have acknowledged, I think, a political reality that once a law has been used in both directions—once it’s been used by both sides—especially a procedural rule or a procedural law like the Congressional Review Act—a law that creates processes that can be used to undo actions taken by a prior administration—that that gives it a broader legitimacy. It cements its place into the firmament of administration law. And you could find on Twitter and on various websites arguments made by various groups warning that that’s a consequence of a Democratic congress using the Congressional Review Act to undo regulations that have been adopted by Republican administration.
I think as a practical matter, it’s also worth noting that, for regulations to be vulnerable, they have to be adopted near the end of an administration. The Bush administration was somewhat more careful than either the Clinton or the Obama administration or even the Trump administration had been about limiting the number of rules that were issued in that period of time that would make them vulnerable to repeal under the Congressional Review Act. The number of midnight regulations was fewer when Susan Dudley was running the Office of Information and Regulatory Affairs. She certainly made an effort to constrain the amount of midnight rulemaking that occurred. And so there were just fewer opportunities when the Obama administration came into office, whereas, when the Trump administration came in, now, there were more potential targets.
And so in some respects, this was the first time that any Democratic administration really had even to face the question of, do we try and repeal some of these rules, or do we not? The other issue that — or what I think has convinced at least some members of Congress and some progressive groups that the CRA was important to use is their consideration of the alternative—that the process of undoing a regulation generally requires doing just as much as was done to put that regulation in place in the first place. If you had to go through notice-and-comment rulemaking to adopt the rule, you generally are going to have to go through notice-and-comment regulation to undo that rule, and that can be very time-consuming. That can be very resource-intensive.
And so for a new administration that wants to work quickly, the Congressional Review Act can play this role of clearing the decks and, kind of, moving some stuff out of the way, getting rid of the prior administration’s policies so that the new administration can focus on developing its new policies rather than undoing those of its predecessor. And I think, especially in the wake the Supreme Court’s DACA decision, which I think really cemented the idea that there is no shortcut to altering the policy of your predecessor — in fact, you may have an added obligation to account for things like reliance interests, even if you believe your predecessor’s actions were unlawful as had been the case with DACA – that, I think, added some steam that wanted to use the CRA.
Todd mentioned that the legal bar in the Congressional Review Act — as he noted, we don’t have a judicial precedent or judicial participation of that language. My own view is that the Congressional Review Act provision — what I think of as an anti-circumvention provision — is relatively narrow and is likely to be interpreted fairly narrowly by courts, if and when the question arises. The primary purpose of this is to prevent Congress from having to play whac-a-mole with a recalcitrant agency. Right? So, Congress repeals the regulation. The agency can’t just pop regulation back into play and force Congress to repeal it again.
But an agency adopting a new rule that adopts a new approach to the same subject matter shouldn’t really be precluded by the Congressional Review Act because it requires that the new rule not be substantially the same. And we can all imagine other language that could have been used in the Congressional Review Act that would’ve had much broader preemptive effect. So I think the concerns that CRA resolutions would preclude the Biden administration from adopting new regulations on those various subjects were overstated. But I think, as a practical political matter, those concerns did result in Congress looking more narrowly at what possible Trump administration rules to repeal. And that’s one of the reasons why we only have three resolutions to talk about as opposed to the 15 or so that we saw at the beginning of the Trump administration. And I’ll turn it back to you, Todd.
Todd Gaziano: Well, thanks. And I agree with everything Jonathan said. I’ll just put a minor gloss on a couple of them. One is, I wasn’t — maybe I wasn’t clear in my opening. Now, the time for the Senate’s expedited procedure without the filibuster for rules issued in the Trump administration is over. So, that’s why we’re having this program today, because we know the universal rules that can use those expedited procedures. It is still conceivable, however, that there will be a rule issued by an independent agency, or something like that, that Congress and this administration will want to pick up.
But another gloss on what Jonathan said is, I also agreed publicly, and again today, that bar doesn’t need to be — the bar on issuing a substantially similar rule doesn’t need to prohibit most other rulemaking except that the legislative history noted it depends on the underlying statute and the authority that the original agency had. Sometimes Congress passes a statute that gives the agency, effectively, a binary choice, or sometimes the agency pretends that the statute does. And in issuing an original rule, it says, “We have no other choice other than to issue this rule. The statute leaves us no choice. It constrains us.”
And one of the purposes of the Congressional Review Act was to raise the stakes of that kind of statute-made-me-do-it kind of regulating and that the more important constraint is whether the statute really does give the agency a binary choice. But in that narrow set of regulatory constraints, it is possible that an agency would be left with no, or virtually no, discretion. But in most cases where Congress is giving far too broad delegation to the agencies to regulate, they can probably find other ways of regulating even in the face of a rule that’s been overturned.
In any event, I think we’re going to divide up the three rules to talk about how it played out this spring and why the concern about substantially similar may have not overridden Congress’s desire to zap them. And I’m going to talk about one and Jonathan is going to talk about two. And the one I’m going to talk about is the EEOC’s conciliation rule. And one reason why the current Congress and the administration didn’t like it, and in many other areas, it was at least possible for their own agency, their own appointees, to undo it. And Jonathan mentioned that it takes a lot more work, but that’s actually what they’re doing, or they seem to be doing, with most other rulemaking.
But the EEOC is a quasi-independent agency—some think it’s an independent agency—but it is currently headed by more Republican appointees than Democrat appointees. So, it’s a 3-2. So for those people who didn’t like the EEOC conciliation rule, there was no immediate option, at least, for the EEOC to overturn it. As far as what that rule did, Title VII and a number of other civil rights statutes require the complainant and the EEOC to engage in a conciliation process.
And some of the firms that were subject to the conciliation process had argued that EEOC was engaging in what amounted to a shakedown process without giving them enough factual basis in which to understand the nature of the complaint—without telling them whether the complaint was a pattern in practice or an individual, what the facts of the complaint are, what made them conclude that the law had been violated. And so based on that concern, the EEOC conciliation rule issued a proposed and then final rule near the end of the Trump administration arguing that requiring a little bit more information to be provided — would increase the likelihood that conciliation would settle the claim.
And that is obviously the goal of the civil rights statutes that require conciliation. And for example, it required that they state the sort of factual basis of the claim, if it wasn’t privileged, who the complainants were, what type of claim it was, what the legal basis was, and to provide the complainant a little additional time to determine whether they should settle or not. Well, apparently, Congress thought that those sort of bare-bones, sort of factual disclosures were too much for the EEOC.
I think you can tell that I was a supporter of the rule and thought that the complaints — that somehow the rule biased the conciliation process in favor of the firms — was not well-pled or well-argued. But, as a result of the disapproval, I suppose — maybe another thought about whether the substantially similar rule — whether the bar on substantially similar rules was a concern to those in Congress who were overturning it. Apparently, they thought the agency had free rein to engage in shakedowns and that there wasn’t really a worry that the EEOC needed a rule to justify its prior procedures. So that’s my explanation of what the rule actually did and why I think Congress was unconcerned with the judicial bar — I mean with the bar on substantially similar rules. And so with that, Jonathan, hopefully, you can describe the other two.
Jonathan Adler: Sure. So, I’m happy to talk about the two rules. The first of the other two rules, it was called the true lender rule, which had been adopted by the Office of the Comptroller of the Currency. And this rule was — what it did really depends on which side of the debate over that rule you were. According to the Trump administration, according to supporters of that rule, what it did was it clarified who constituted the lender for various loan arrangements and had the effect of making it easier for fintech companies and other newer firms to enter into partnerships with nationally regulated banks to offer various financial services, including loans. And this had the effect, among other things, of making credit more available to a wider array of consumers.
To critics, this made it easier for payday lenders, or those who might charge higher interest rates, to evade state-level regulation that limit the amount of interest that may be charged on various loans and other state-level regulation and therefore was a — the rule got in the way of consumer protection. For purposes of our discussion, I don’t think it’s important get in the way or to pick a side of this debate, but it’s important to understand that this is a long-standing debate about credit markets about whether or not allowing less regulation and allowing a wider array of loan instruments, in particular, is good for consumers because it gives consumers more legal alternatives if they need to obtain money, need short-term loans, versus those that are concerned that, in some cases, the terms of those loans might be unfair to consumers, in particular, because the interest rates are too high.
And what the Trump administration rule had done is it had clarified who would be the lender and made it easier for those that are in partnerships with banks to make the nationally regulated bank the lender for purposes of federal regulation and its preemption of at least some state regulation. Congress repealing this rule has the effect of eliminating the certainty and, essentially, the safe harbor for those sorts of arrangements and likely will have the effect of making it more difficult for fintech firms, in particular, to innovate and develop loan products in this space. So that was one of the other two rules that Congress repealed with the CRA.
The third one is one that, I think, is particularly significant. And maybe I say that because I focus on environmental regulation, and so I, of course, will think that the environmental regulation is the particularly significant one. But I want to explain why the Trump administration’s methane rule and its repeal by the Congressional Review Act is, I think, quite significant, not merely for regulatory policy, but also for how we think about the Congressional Review Act.
So here, the Obama administration had adopted a rule under the Clean Air Act regulating methane emissions from oil and gas development and from new oil and gas developments. And this was part of the Obama administration’s efforts to control greenhouse gases, and methane is a particularly potent greenhouse gas. And once the Obama administration realized that it was not going to be able to get a new greenhouse gas regulation bill through Congress, it looked at various ways it could try and use existing statutory authority to adopt new regulations limiting greenhouse gases. This methane rule was one of the more significant ones that the Obama administration adopted.
This rule was something the Trump administration targeted very early on. But it took the Trump administration a substantial amount of time to come up with a replacement. And it took them about three and half years. And that, I think, highlights the background we have to consider when thinking about the Congressional Review Act—that, for complex regulations, it can take a long time to go through the notice and comment rulemaking process. It took the Trump administration almost the entirety of its first term to undo an Obama rule and come up with a replacement—a replacement that both lessened the stringency of the regulation of emissions from oil and gas development, changed the way that emissions would be identified for regulation. And we can get into the technical aspects of that if folks are interested. But basically, the Trump rule wasn’t going to focus on methane as methane — as much as methane as a type of volatile organic compound that can otherwise be subject to regulation under the Clean Air Act.
The Trump administration also adopted an interpretation of some of the language in the Clean Air Act that had the purpose and effect of making it more difficult for the Environmental Protection Agency going forward to justify new regulations targeting greenhouse gas emissions of various sorts. And this combination of what the Trump administration did made this rule a particularly attractive target to environmental organizations, even to environmental organizations that historically have been somewhat suspicious of the Congressional Review Act, seeing it as a primarily deregulatory tool, as we’ve already talked about.
In this case, the repeal of the Trump administration rule has the effect, not only of getting rid of what the Trump administration did, but in effect, reinstalling the Obama administration rule because the Trump rule replaced the Obama rule. By repealing the Trump rule, the prior baseline is established. So, this is an example—clear example—of using the CRA in a pro-regulatory way—to undo a de-regulatory move in a way that restores the prior baseline of more stringent regulation and also wipes out the Trump administration’s interpretation of the Clean Air Act that could’ve been used to make it harder for the EPA to regulate greenhouse gas emissions going forward.
There are two possible legal issues to watch with regard to this, and it’s certainly possible that we will see litigation as a result of this particular use of the Congressional Review Act. First, there are at least some questions about this idea that undoing a rule springs a prior rule back into force. I do think that’s the way, given the way the Trump administration rule was written and done — I do think that is the effect here. But it’s certainly possible that we could see litigation challenging that—challenging the idea that the Obama administration rule comes back into force as opposed to there simply being no rule at all. I’d be skeptical of such a legal challenge, but we may see such a legal challenge. And as of any legal challenge, we’d want to see the arguments that are put forward should such a case be filed.
This was also a rule where there really was a debate about, “Okay, if this is done, and say the Biden administration or a future Harris administration or a future Ocasio-Cortez administration — once you adopt a new methane rule that’s even more stringent than the Obama rule, would this repeal get in the way of that?” And for reasons we’ve already talked about, I think the answer is no, but I think this is a context in which a future, more aggressive regulatory measure targeting methane from oil and gas development would be an appealing target to test the scope of substantially the same bar on reissuing regulations. And so of the three, I think this might be the one that might be the most likely to prompt litigation to help flesh out, at least, what the judicial understanding of the Congressional Review Act is.
The last thing about this methane rule is the Biden administration has said that climate change is one of its biggest priorities. It has said that it wants legislation. But other than an infrastructure bill that will have lots of goodies and lots of spending spread around the country to help facilitate its passage, it’s not clear how much appetite there is in Congress right now for a bill that would focus on the regulation of greenhouse gas emissions as opposed to funding infrastructure. And so if the Biden administration is going to fulfill its campaign promises to push for more stringent regulation of greenhouse gas emissions, the only option it really has is to use the regulatory process.
And clearing the deck of the Trump rule, both substantively, the fact that the Trump rule had exempted a lot of oil and gas producers and imposed fewer restrictions on greenhouse gas emissions from oil and gas production, as well as clearing the prior administration’s narrower interpretation of the Clean Air Act, it was really essential for the Biden administration. They really needed to get this rule out of the way if they were going to try and use the Clean Air Act more aggressively to regulate greenhouse gas emissions.
They’re still going to have a long arduous process to do that. It’s still going to be a very legally vulnerable process. I’ve written some things pointing out that the courts have been somewhat skeptical of aggressive interpretations of the Clean Air Act to justify expansive regulation of greenhouse gas emissions. From the standpoint of the Biden administration, if this is something they want to do—if they want to see more regulation of greenhouse gas emissions—it was really important for them to get this rule out of the way as quickly as possible. And so I think that is part of the reason this was one of the three rules that was ultimately targeted.
So, I will stop there and turn it back over to you, Todd. And I’m certainly happy to address any questions that we’re starting to get through the Q&A.
Todd Gaziano: Thank you. And I’ll turn it back to Evelyn, who will give people instructions again on how to submit — two options to submit questions. And I think she has agreed to help us identify people in the queue and read the questions to us.
Evelyn Hildebrand: Great. Thank you. Thank you both for your comments. This is very interesting. I think the same person who submitted some questions in the Q&A is also raising his hand, so I will just unmute Mr. Carlos Carpi (sp), and you can ask your questions verbally.
Carlos Carpi: Thank you very much. This is absolutely great. I wanted to ask two questions, but maybe the most important one was — first of all, I don’t speak for the World Bank in any way, shape, or form. And this transition instability, particularly, say that true lending regulations and these kinds of lack of clarity during these usages and then substantive delays in getting regulation through in a time where there seems to be a lot in the agenda for the financial sector.
I think the first question is, do you think it will come from the financial sector, some of the clarity from this CRA because maybe it has the kinds of resources to litigate this at the highest level? And the related question to that would be, how should international organizations understand this kind of instability? What fills the vacuum over the years? Because there’s a lot of technology and climate regulation coming down the pipe that will substantively change — the train is moving a little fast. I mean, it’s global in some sense. And it would be great to understand how we should be thinking about this on the regulatory agenda side. Thank you.
Todd Gaziano: Well, thank you. I’ll try to take a stab first, and hopefully, Jonathan will have more to say than I do. But as far as whether — I agree with one of your premises that the financial industry generally has the resources to challenge these things. But the fact of the matter is there is no—and maybe we should’ve clarified—there’s no judicial review over actually enacted resolutions of disapproval. There is a bar on judicial review that the courts have wrestled with the scope of.
At Pacific Legal Foundation, we’ve litigated to try to establish that there is judicial review of agencies’ failure to submit rules and that there would be judicial review over some of the questions that Jonathan Adler raised, which is what is the effect of the resolutions of disapproval in special cases? For example, if you try to reissue another rule, there’s a CRA — I’m sorry, Congressional Research Service paper that suggested that’s one that may evade the judicial review bar. But there is a pretty clear judicial bar on consideration of whether the repeal of the rule is effective if a majority of Congress uses expedited procedures to overturn it. And I would say that when Congress — a majority of both houses of Congress use procedures, there is a constitutional bar as well as a statutory bar on a court second-guessing something that we all recognize is a law.
So, there were a few attempts by CBD to challenge some of the rules overturned in the Trump administration. They fell pretty flat, appropriately so. So, I think they’re — I can’t, sort of, imagine the type of claim that the financial service sector could bring with respect to the true lender rule. But since that was another one that Jonathan was covering, I’ll leave that to him. I will mention that if someone doesn’t like the conciliation process that the OCC reverts to with the conciliation rule, they can still sue under the statute, under Title VII or the Age Discrimination Act, but they won’t have the benefit of the Trump rule. I don’t think they’ll be able to challenge that the Trump rule is still in effect.
So Jonathan, what other thoughts do you have, particularly on the environmental instability and international points?
Jonathan Adler: Yeah. A few thoughts. And, first, in addition — on the question of judicial review, in addition to the language in the Congressional Review Act, as a general matter, courts accept Congress’s characterization of what Congress has done as being binding. And even in the absence of a limitation on judicial review, the likelihood of a federal court, for example, telling Congress that it counted session days as improperly in deciding what regulation could be repealed through this process or not, that’s the sort of judgment that courts aren’t going to make. And we’ve seen both the DC Circuit and the Supreme Court decisions in a wide range of contexts, where the courts have said, “Look, we’re going to trust Congress’s claim.”
So, on the question of recess appointments, the Supreme Court is saying, “Look, if Congress says they’re in recess, they’re in recess.” In the DC Circuit, for the purposes of something called the enrolled bill rule, the DC Circuit is saying, “If Congress says this is the bill that was enrolled, then that’s what we’re accepting.” The legislature determines whether the legislature followed the legislature’s rules. And so the likelihood of challenging those procedural aspects of the CRA, I don’t think that there’s really much prospect of that—that courts are not going to be very sympathetic to those claims. If a majority of Congress is going to say, “We have the authority to repeal this and are enacting this resolution, as a form of legislation, and the president signed it, it’s good to go.” The sort of litigation you might get is over what the scope of the effect of that resolution is, but not whether or not the resolution was passed.
On the uncertainty point, I think, yes, it is true that the prospect of policies ping-ponging back and forth can create a degree of instability or uncertainty and that this matters in certain industries. And there’s no question about that. I’m skeptical that the CRA actually adds all that much uncertainty to that process. For one, it hasn’t been used all that much. In 25 years, it’s been used a grand total of 20 times — 21 times. It hasn’t been used all that — or maybe it’s 19 times. I mean, it hasn’t been used all that many times across the board or all regulatory subjects. Congress always has the ability to repeal regulations. This just makes it easier.
It allows Congress to do so with less obstruction, which matters now, given that we have a congress that is particularly dysfunctional, or where both parties are very reluctant to allow the other party to legislate. The CRA is, in some respects, more useful now. But we’ve seen in all sorts of contexts. Now, when Congress wants to act quickly, it can, and it can change policy quite dramatically if it wants, and that’s true with or without the CRA. And certainly, when agencies do things that are legally vulnerable, courts can strike them down, sometimes quite quickly, with a temporary injunction or preliminary injunction in some cases. So, I’m not convinced that the CRA, as a general matter, creates systemic uncertainty.
I think if a particular regulation is particularly controversial, the prospect of CRA repeal, just like the prospect of judicial challenge, does create uncertainty about that particular rule, and that’s something that we see and, I think, is, in part, a function of the decline of regular lawmaking by Congress. That is, if we’re concerned about whether or not we can be sure that new policies, when they are adopted, will be stable and secure over a long period of time, that’s an argument for getting Congress to legislate affirmatively more often in the first place. It’s not really an argument in my view, at least, against the Congressional Review Act. And I would say that’s true, not really in the financial sector, but especially in areas like environmental law where Congress has been incredibly reluctant to enact new legislation or amend old legislation. Right?
The Clean Air Act, the primary statute used to regulate greenhouse gas emissions, hasn’t been revised meaningfully in 30 years. The idea that there haven’t been significant changes in our understanding of air pollution and sources of air pollution and our understanding of how to control air pollution and what sorts of air pollution we should control hasn’t changed in 30 years is just crazy. But Congress hasn’t acted, and that’s the sort of thing we should be looking at.
In the financial sector, especially if you’re talking about fintech, same sort of thing. Statutory framework has not kept to pace with technological changes. In the telecommunications context, same thing. Right? The last big telecom law was what, ’96? Congress needs to be in the game more. And I think that is the way you get less uncertainty because you will have statutes that actually address current problems so we know that the statutory framework is more stable and that regulations adopted under that framework will have firmer legislative grounding than what happens now, which is agencies dig up 30-year-old statutes to try and deal with contemporary problems. And there’s often a mismatch.
And that creates uncertainty, not merely because of things like the CRA but, more importantly, because it creates a fertile ground for litigation. And I think that creates broader uncertainty than the CRA does. So that was a long answer. I hope that addressed Mr. Carpi’s concerns.
Evelyn Hildebrand: Great. Thank you both. We’ll now move to the next question from William Trackman. He asks, if a regulation becomes effective but repeals previously enacted regulation — old — I’ll start that again — the regulation becomes effective but appeals previously enacted old regulations, does the CRA repeal of the new regulation bring back to life the old regulations?
Jonathan Adler: I’m happy to start if you want, Todd.
Todd Gaziano: Yeah. Please. Yeah, you can.
Jonathan Adler: The short answer is we think so, but it depends. So, why we think so is, if you view the regulation as a discrete agency action, anything that undoes that regulation, whether it’s a new rulemaking, a congressional action, or a court judgment, typically has the effect of erasing that action and restoring the prior baseline. I think it depends because, sometimes, agencies repeal an old rule and adopt a new regulation in stages or in sequences. So sometimes it will depend on what it is that is actually the subject of the resolution of disapproval.
In the case of the methane regulation, Congress treated what the Trump administration did as a single action—a single regulatory rulemaking—that did a few things: repealed the Obama rule, adopted a replacement that created exemptions, and adopted certain interpretations of the Clean Air Act. And so that whole package is what Congress claims to have rescinded with the CRA resolution of disapproval and that President Biden signed. And while I noted that it’s certainly possible we might get a legal challenge to that, if I had to handicap that, I would say that Congress’s understanding of what was done with that rule is likely to be upheld. And in that case, that restores the prior baseline of the Obama rule.
That is to say, what the Trump administration did to change the code of federal regulations has been undone, and the prior state of the relevant provisions in the code of federal regulations has been restored. But again, there could be context, right, where an administration does something in stages. It first does a rule, getting rid of the prior administration’s rule. It then does a separate rule, come up with a new one — and in that context, Congress would probably have to go after both in order to have that same effect, and that’s certainly something that we should watch for in the future.
There have been a few examples of agencies strategically trying to cut up regulatory actions into constituent parts so as to either make CRA repeal more difficult or to make litigation more difficult. And we can certainly see that sort of thing going forward as well.
Todd Gaziano: I, again, agree with Jonathan, but I’ll just add a couple of sidenotes. It’s possible that an agency could successfully game the situation by doing the repeal rule early enough in the process and then the second rule so that the first rule is not within the expedited repeal window and that only the second rule is within the repeal window. But maybe I should have begun with a premise.
This question is made somewhat clear, and why I think Jonathan is right, because the original Congressional Review Act has a provision. And I used to be able to quote subsection whatever when I was studying this kind of stuff, but it says, if a rule is repealed, it shall—and here I’m paraphrasing from memory—it shall be treated if it was never in effect. Without that provision, there would be, I think, additional uncertainty as to whether a repeal brings back the prior status quo. But I think with that provision of the Congressional Review Act, at least in most cases, it sets a clear instruction that the courts must treat the world as if the repealed rule never existed.
So, given the facts of the methane rule, as Jonathan has related — the methane rule was the instrument that repealed the Obama rule. If it doesn’t exist, the Obama rule is still in existence. Now, the additional questions I submit, that are subject probably to litigation are, okay, if that means that the Obama rule now is viewed as being continuously in effect, but not really in effect, for three-and-a-half years, what about violations during that three-and-a-half-year period?
And I submit agencies, hopefully, will exercise discretion not to bring that because I would bring a due process claim. I would bring a due process claim to say, “Okay, for most intents and purposes going forward, we will treat the Obama rule as always being in effect. But it really wasn’t for three-and-a-half years, so you can’t bring your enforcement action against me.” But we’ll probably see citizen suits, right, Jonathan? Would you imagine citizen suits that might try to bring enforcement actions against people who didn’t obey the Obama –?
Jonathan Adler: Possible. I mean, it depends on — under the Clean Air Act, could you do something like that? Yeah. You could try. I wouldn’t think they would get very far. I mean, in general, I’m oversimplifying. In the environmental statutes, there are ways for the EPA to, essentially, oust citizen suits if there’s no claim that the EPA is violating the law as well. But we might see a test case of that sort. It’s certainly possible.
Evelyn Hildebrand: Great. I think a part of the next question from Jeffrey Wood has been answered. So I think, perhaps, I’ll just focus your discussion on the question of, what if a new rule modifies only parts of several prior rules and adds some new rules that were not addressed before? So I think that gets to the scope of the repeal if I’m understanding this correctly.
Todd Gaziano: Well, the Congressional Review Act might be amended in the future, but the Congressional Review Act passed 25 years ago doesn’t allow — oh, I see. What if a new rule only modifies part of — the Congressional Review Act only allows by way of Congress to repeal an entire rule. So, the Congressional Review Act doesn’t allow Congress to pick and choose which parts to repeal. But if the new rule only modified parts, and Congress repeals that, then those parts that were modified leap back into existence. I think that’s kind of the abstract answer, but it’s always a little more concrete to have examples. Maybe Jonathan has thought through the hypothetical better than me as a law professor.
Jonathan Adler: Well, I mean, it’s certainly a question that we could see. So, just to give kind of an example of something similar that we saw in the Obama administration — when the Obama administration was first adopting regulations governing greenhouse gases from traditional stationary sources, right—from utilities—it was concerned by the fact that adopting the Clean Air Act’s numerical emission thresholds to greenhouse gases would increase the universe of regulated firms by orders of magnitude.
And the Obama administration knew that just from an administration standpoint that would create a mess. There would be no way for the EPA or state regulatory agencies to process that many permit applications. But the Obama administration wanted to begin the process of subjecting, at least, the largest of these firms to greenhouse gas regulation, but they had this problem. There are numerical thresholds in the statutes. So they came up with this idea of adopting this regulation in multiple pieces, in part so as to make it more difficult for regulated entities to sue.
So you have what were referred to as timing and tailoring rules. One was a rule about when the obligations to control greenhouse gas emissions would take effect, and then a separate rule would then exempt the vast majority of firms caught by the statutory threshold from complying with the regulation. And their theory was is that the timing rule was safe from a statutory interpretation standpoint. It was a fairly straightforward, was safer, but the exemption was more legally questionable. But because it was relieving regulatory burdens, it would be harder for firms to challenge it because you generally can’t sue saying you’re regulating other people too little or my competitors too little.
And the DC Circuit initially bought that argument and said, “No, stand it,” and accepted the EPA’s strategic move. The Supreme Court, I think correctly, didn’t allow the EPA’s gamesmanship to survive. You could see something similar here, right? Let’s say a future administration says, “We want to reimpose this rule that Congress had repealed with the CRA. We know if we just adopt the same rule, or the same rule but ten percent more stringent, say, that that’s a sitting duck. That’s an incredibly vulnerable target.”
But what if we adopt a regulation that’s broader? So, let’s say for methane emissions or something like that, we’re going to adopt a rule that’s not just about oil and gas facilities, but it’s about a broader range of industries. And we are going to replicate the repealed rule’s approach to oil and gas, but it’s one rule. It also gives other sources of other similar types of emissions. Could we now say, “Well, because this big rule is not substantially the same because it has all these other parts, are we somehow immune from the CRA bar?” And that would present, I think, a really interesting legal question.
Because on the one hand, you would say, “Well, it’s a much broader, more extensive, more expansive regulatory action. It’s not substantially the same.” But on the other hand, we might recognize that what the agency is doing is precisely what the CRA is written to try and prevent, which is circumventing the effect of a congressional resolution of disapproval. And I would not be surprised if, at some point, we see an administration try and do something like that. And as a law professor, I’ll follow that litigation very eagerly because I’ll be very curious to see what the courts do. But I think that that sort of thing is definitely, definitely plausible, and I would not be at all surprised to see something like that in the future.
Todd Gaziano: And as a public interest litigation firm, we might decide to try to sue to make Jonathan’s life more interesting.
Evelyn Hildebrand: A very symbiotic relationship. Great. I think — and I’ll allow you to decide if this has already been answered, but has the CRA been tested, as far as constitutional validity, their limits on Congress’s ability to weigh in on regulations that are propagated by Article II agency? So has the CRA been tested as to constitutional validity? So, for example, if signature by the president of the congressional veto of a regulation resolves the problem.
Jonathan Adler: Short answer is, it does resolve the problem. So, I think what the question was alluding to is — there’s a case we always teach in law school—some people get it in common law, we usually cover it in administrative law or in legislation and regulation—INS v. Chadha, which the Supreme Court struck down what was called the unicameral legislative veto. So, Congress had used this in hundreds of statutes — had created a mechanism in the past to allow one house of Congress, by itself, to pass a resolution disapproving of an agency action and to have that nullify the agency action. And it wasn’t just used for regulations. It was used for all sorts of things.
In the case of Chadha, it was a suspension of an order of removal for an immigrant, or I guess for an unlawfully present alien in that case. And the Supreme Court said that was unconstitutional because by bicameralism and presentment wasn’t satisfied—that Congress, in delegating power to an agency, had created a legal baseline and that if Congress wants to undo that delegation of power, even just a tiny little bit by voiding an action, it would have to go through bicameralism and presentment again.
What the Congressional Review Act does, and was clearly written to do, was to say, “Okay, we have to go through bicameralism and presentment. This resolution has to be passed by both houses of Congress. It has to be signed by the president.” But there’s nothing in INS v. Chadha that tells Congress how to internally structure its rules in doing that. In fact, the Constitution expressly gives to each chamber in Congress the exclusive authority to determine their own internal rules. And so what the CRA just says, “We’re just going to make it easier for Congress to fulfill the constitutional process of bicameralism and presentment.”
And I do think there were some district court — and some challenges filed in a few district courts trying to claim that, somehow, the CRA was still was constitutionally infirm. Those cases did not go anywhere. There’s some group that I occasionally see on Twitter that still makes these arguments, but I don’t think they’re ever going anywhere because it’s pretty clear that if something goes through bicameralism and presentment, then bicameralism and presentment have been satisfied.
Todd Gaziano: Absolutely. There was a couple of wild claims that tried to say that once certain regulatory power was delegated to the agencies, Congress couldn’t intervene even with a new law, which, effectively, is what the CRA resolution of disapproval is. We intervened in one of them. It, as Jonathan said, did not go anywhere and the Ninth Circuit didn’t think it was a very hard question. And that was before most of the Trump appointments joined the Ninth Circuit, too. So, if you lose in the Ninth Circuit — or that time of the Ninth Circuit — you know your claim is pretty worthless. I don’t know if have time for one more. Evelyn?
Evelyn Hildebrand: If the two of you don’t have a hard stop, then we can certainly answer a final question.
Todd Gaziano: Sure.
Evelyn Hildebrand: Okay. Great. So again, from Mr. Carpi, could you comment on the scope issues of CRA and oversight functions, again, the financial industry? The chief source of concern is regulatory arbitrage and regulatory backsliding within the banking industry. The scope seems to be the heart of the matter from those looking from the outside. So, for example, what financial oversight is a rule and thus subject to CRA procedure? For example, the CRA was a subject of controversy in 2017 when the GAO determined that the leverage lending ratio was a rule, so it had to follow the procedural requirements of the CRA and the fund had a few reports on the matter.
Todd Gaziano: I can take a stab at that. The sponsors and drafters of the CRA defined rule extremely broadly, even more broadly than the type of rules that must get notice and comment, because they didn’t want the agencies to, sort of, gain the Congressional Review opportunity. And the CRA actually serves an additional purpose than actually having Congress overturn rules, but it actually provided a database just of how many rules there are. And for many years under the CRA, there were a number of studies by GAO and others that agencies were not interpreting the CRA correctly and submitting as many things as were required to Congress. But OMB has issued various guidances along the way, trying to nudge the agencies to do so.
And I think the experience that Congress had, particularly with a rule that the CFPB guidance document did not send to Congress, has been further helpful in nudging the agencies to interpret the definition of rule broadly. In that case, Congress deemed that CFPB should have sent the rule to Congress and deemed it to be submitted. I don’t agree with that particular process. But, as Jonathan said, Congress decides its own procedure and it includes the Congressional Review Act. So, it can decide when a rule has been submitted or is deemed submitted. And it, in fact, used the expedited procedures to overturn that CFPB rule.
I think that answers, at least, the heart of the question. Jonathan may have some other understanding and he can have the last word.
Jonathan Adler: I’ll tell you — and I agree with what Todd said. I mean, the CRA does adopt a broad understanding of rule. And if Congress believes something is a rule subject to the CRA, Congress’s conclusion on that point is going to hold sway. So, if Congress uses this procedure and it validates something that the agency thought was a guidance or the agency thought was a notice or something else, but Congress says, “No, it looks like a rule, has the function of a rule; we’re treating it like a rule,” Congress is going to prevail. Agency authority comes from delegations of power from Congress. Congress can take that power back or veto the use of that authority as it wants to.
That said, there is, I think, a recognition, not only that agencies may try and play some games with what’s a rule versus what’s a guidance — this has been a long-standing concern in administrative law. My students know that — we talk about what’s a legislative rule versus an interpretive rule, which affects whether or not the rule has to go through notice and comment. What if it’s a policy statement? What if it’s a guidance? What if it’s something else that’s not even mentioned in the EPA? And agencies play games with that to try and take advantage of exemptions from various procedural requirements. And that continues, I think, with the CRA as well.
The Administrative Conference of the United States, actually, has an RFP out looking at possible technical amendments to the CRA with things that don’t really change the substance, but that, on the margin, may just clarify some things. And one of the things that ACUS has identified as a possible subject of technical amendment is something that would formalize the process for identifying things that agencies don’t think are rules subject to the CRA but that Congress might think are rules subject to the CRA as a way of providing greater certainty there.
But agencies sometimes don’t want to play by the rules. That’s not a Republican or Democratic thing. That’s just agencies sometimes want to achieve what they think their mission is to achieve and sometimes try and skirt the rules to do that. And the CRA didn’t really change that. And there are places on the margin where that can happen under the CRA, such as agency trying to characterize something as a guidance or a policy statement or a policy manual, where if your colleague letter or whatever else — that we would all recognize as having the form and function of a rule.
Evelyn Hildebrand: Great. Do you have any final comments for our audience?
Todd Gaziano: Thanks for listening. The CRA becomes especially important — well, lately every four years, sometimes every eight years. I did want to mention, in response to something that Jonathan said, it was actually used for the first and only time in 2001 and then there was a long drought to 2017. But I think he’s also correct that, now that it’s been used both, sort of, ideological sides, it’s here to stay. And so we’re glad to try to talk about the implications. And maybe you won’t have to hear it from us again for four or eight years.
Jonathan Adler: I’ll just say, I agree that the CRA’s legitimacy, I think, now and — it being an accepted part of administrative law is greater now that it’s been used by both Republican and Democratic congresses. I think that’s good because I think the CRA is a small mechanism that encourages and, in some cases, forces members of Congress to indicate whether or not they support or oppose the regulatory measures that are being adopted by agencies. And I think that’s a good thing, purely from the standpoint of democratic accountability for the things that agencies do. And seeing the CRA as one small way on the margin that helps keep agencies within the scope of their delegated authority is a good thing. And I know I look forward to seeing it being used in various directions by various administrations and congresses and the future.
Evelyn Hildebrand: Great. Thank you. On behalf of The Federalist Society, I want to thank both of you, our experts, today for the benefit of your valuable time and expertise. And I want to thank our audience for participating and sending in your questions. We welcome listener feedback by email at [email protected]. As always, keep an eye on our website and your emails about announcements about upcoming Teleforum calls and virtual events. Thank you all for joining us today. We are adjourned.
Johan Verheij Memorial Professor of Law and Director, Coleman P. Burke Center for Environmental Law
Case Western Reserve University School of Law
Chief of Legal Policy and Strategic Research and Director, Center for the Separation of Powers
Pacific Legal Foundation
Federalist Society’s Administrative Law & Regulation Practice Group