The CRA: Schumer-led Senate Could Overturn Trump Deregulatory Legacy

The CRA: Schumer-led Senate Could
Overturn Trump Deregulatory Legacy
23 October 2020

In the event that Joe Biden becomes President, and the Senate shifts to Democratic control, it is highly
likely that the Democratic congress’ early 2021 agenda will involve the use of the Congressional Review
Act (the “CRA”) to invalidate certain regulations promulgated by the Trump Administration. The CRA
enables Congress to disapprove of, and thereby invalidate, ‘major’ final rules within a specified time
period of their issuance. Rules invalidated through the CRA cannot be reissued without substantial
changes, making the CRA a powerful Congressional check on the Executive Branch.

How the CRA Operates
Under the CRA, before a final rule can take effect, an agency must submit the rule to Congress and the Government
Accountability Office (“GAO”). When final rules are submitted to Congress pursuant to the CRA, notice of each
chamber’s receipt and referral appears in the respective House and Senate sections of the daily Congressional Record
devoted to “Executive Communications. The CRA contains provisions that may delay the effective dates of “major rules.”
This term refers to rules that, among other things, are likely to result in an annual effect on the economy of
$100,000,000 or more. Major rules take effect 60 days after the date that the rule is published in the Federal Register or
received by Congress, whichever is later.

Subject to certain exceptions, the CRA applies to “the whole or a part of an agency statement of general or particular
applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization,
procedure, or practice requirements of an agency.” In practice, the CRA applies to a broad swath of regulatory actions,
including interim final rules. Upon receipt of the rule by Congress, Members of Congress essentially have 60 legislative
days during which to act on a joint resolution disapproving the rule. In the Senate, there are expedited procedures for
consideration of the joint resolution of disapproval. In the House of Representatives, there are no such expedited
procedures.

A simple majority is required for passage in both the House and Senate. If both Houses of Congress pass the resolution, it
is sent to the President for signature or veto. If the President vetoes the joint resolution of disapproval, Congress can vote
to override the veto.

Notably, when one Congress adjourns and a new Congress is seated, as will be the case in January 2021, the disapproval
window “resets.” During the new Congress, final rules received by the previous Congress within the 60 legislative days
preceding adjournment become subject to the CRA. This so-called CRA “lookback” period begins on the 15th day of
session in the Senate and the 15th legislative day in the House.

CRA Precedent
Since the CRA was enacted in 1996, Congress has overturned 17 rules, 16 of which were Obama-era regulations. In the
early days of the Trump Administration, the Republican-controlled Congress made use of the CRA a major element of the
administration’s strategy to reverse the Obama Administration’s implementation of regulations in key sectors of the
economy. Republicans in the 115th Congress voted to repeal a range of environmental, labor, and health care regulations
dating as far back as July 2016, the final year of the Obama Administration.

Legislative Tradeoffs
Use of the CRA requires the use of precious legislative floor time in both Houses of Congress. For example, we would
expect use of the CRA in early 2021 to compete with other priorities such as confirming nominees in a Biden
Administration, as well as enacting additional stimulus measures and health care reform. There will inevitably be
difficult tradeoffs facing Democratic leaders in Congress during the Biden Administration’s first 100 days.

If there is a very narrow Democratic majority in the Senate next Congress, this may prove to be a significant challenge for
Democratic leaders in wielding the CRA efficiently. Repealing rules through the CRA will likely require every Democratic
Senator to vote with leadership. This may not be feasible at all times.

For example, Senator Joe Manchin (D-WV), who has a track record of tacking to the right on energy and environmental
issues, may be reluctant to roll back the Trump Administration’s agenda in this regard. Further, in the event that the
Senate splits 50-50, Vice President Kamala Harris would have to break the tie in her constitutional role as President of
the Senate. This could impact Senate Majority Leader Chuck Schumer’s calculus in terms of which CRA votes to
prioritize.

On the Chopping Block
Having watched a Republican President and Republican-controlled Congress act in 2017 to roll back parts of the Obama
Administration’s regulatory agenda, Congressional Democrats are preparing to return the favor when the 117th Congress
is seated in January 2021. Based on published reports and articles we would expect some potential targets for CRA action
to include:

    • The Trump Administration’s streamlining of the National Environmental Policy Act, which limits public review of
       federal projects and expedites permitting to build power plants, roads, pipelines and other infrastructure that may
       negatively impact the environment

    • The Environmental Protection Agency’s rollback of methane-specific restrictions for new source performance
       standards of natural gas production and processing facilities

    • A rule promulgated by the Environmental Protection Agency restricting the type of science research that can be
       used in developing health and environmental regulations

• The Security and Exchange Commission’s regulation governing the fiduciary relationship between investment
      advisers and their retail customers, called the Best Interest rule

    • The Department of Labor’s proposed rule to waive fiduciary requirements for brokers offering advice to certain
      types of retirement plans

    • The Department of Health and Human Services narrowing of sex and gender identity protections provided for
      individuals seeking access to certain health and education programs

    • The Department of Homeland Security’s Third-Country Asylum Rule, which limits the ability of asylum seekers
      entering the United States from the southern border from being approved to stay without first applying for
      protection in at least one third-country through which they transited en route

    • A Housing and Urban Development proposed rule allowing homeless shelters to turn away transgender individuals
      attempting to enter single-sex shelters that correspond with their gender identity

In anticipation of potential CRA resolutions of disapproval, given the short time frame associated with these, we would
advise clients to begin planning for potential CRA action now. We would be pleased to assist you with developing an
offensive or defensive strategy to suit your needs, as the case may be.

Authored by Michael Bell, Aaron Cutler, Jamie Wickett, Mike Gilliland, Ari Fridman, Kolo Rathburn

Contacts

              Michael Bell                                                   Aaron Cutler
              Partner                                                        Partner
              Washington, D.C.                                               Washington, D.C.
              michael.bell@hoganlovells.com                                  aaron.cutler@hoganlovells.com

              Jamie Wickett                                                  Mike Gilliland
              Partner                                                        Senior Counsel
              Washington, D.C.                                               Washington, D.C.
              james.wickett@hoganlovells.com                                 mike.gilliland@hoganlovells.com

              Ari Fridman                                                    Kolo Rathburn
              Senior Associate                                               Associate
              Washington, D.C.                                               Washington, D.C.
              ari.fridman@hoganlovells.com                                   kolo.rathburn@hoganlovells.com

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