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Friday
Feb172017

It’s Official: Trump Signs Resolution Repealing the Resource Extractive Industries Rule Pursuant to the Congressional Review Act: Now What?

President Trump recently signed Joint House Resolution 41, sponsored by Congressman Bill Huizenga, R-MI. This bill eliminates the resource extractive industries rule (discussed here and here). According to Rep. Huizenga, the “bill eliminates a burdensome regulation put in place by the Securities and Exchange Commission (SEC) that hurts our economy by putting American companies at a disadvantage globally.”  Whether one agrees with Rep. Huizenga or with others who view the resource extractive industries rule as a vital tool in fighting global corruption is an interesting debate, but there much more at stake here than this rule.  What is of greater import is the method by which the rule was repealed. 

The repeal of the resource extractive industries rule was done pursuant to the Congressional Review Act. It marks what is the first time this year the CRA has been used “successfully” and only the second time in history.  The first was in 2001 when then President George W. Bush signed a resolution of disapproval of an ergonomics rule adopted in 2000 during the Clinton Administration.   In order to understand the importance of this, a brief overview of the Congressional Review Act is in order.

The CRA, authored by Representative David McIntosh (R–IN), was signed into law by President Clinton in 1996 as part of the “Contract with America.”  The Act is intended to make it easier for Congress to repeal regulations.  Congress can of course stop any legislation it wants to but the CRA provides a streamlined process for Congress to disapprove a final rule and does not allow for filibuster.  Importantly, the CRA states that

A rule that does not take effect (or does not continue) under paragraph (1) may not be reissued in substantially the same form, and a new rule that is substantially the same as such a rule may not be issued, unless the reissued or new rule is specifically authorized by a law enacted after the date of the joint resolution disapproving the original rule.

The CRA Review Process

The CRA process begins with a notification to Congress from an agency that is has adopted a new regulation. The notification triggers a 60-day period in which Congress can introduce a “resolution of disapproval” of a rule. Rules that are still within this 60-day period when Congress adjourns will have a fresh 60-day review period at the start of the next Congress.  The 60-day period is calculated in terms of “legislative” days, not actual calendar days. As calculated by the Congressional Research Service (CRS), this means that rules adopted as far back as June 3, 2016, are still within this review period

As with all legislation, once approved by Congress, the resolution of disapproval goes to the President for signature or veto. If the President signs the CRA resolution into law, or Congress overrides a presidential veto, the regulation is deemed “disapproved” and will not take effect.  Moreover, as mentioned above, the CRA prohibits the agency from promulgating any rule which is “substantially the same” as the one disapproved. 

The Trump Administrations Use of the CRA

The repeal of the resource extractive industries rule is by no means the only use of the CRA by the Trump administration.  It is difficult to get an exact count of how many regulations are under attack given how quickly the motions to approve resolutions of disapproval are coming.  A recent Washington Post article estimated that in the first ten days of the Trump administration thirty-seven such motions have been made.  Regulations on tap for repeal include, among others, Rules under the Dodd–Frank financial regulation law, sick leave for federal contractors, offshore drilling rules, energy mandates for home appliances, and rule that would bar gun ownership by some who have been deemed mentally impaired by the Social Security Administration.  There is much to say about this unprecedented use of the CRA—for now however it is worth considering the legal limbo the SEC now finds itself in due to the repeal of the resource extractive industries rule. 

Legal Limbo Caused by the CRA 

Let us consider where the SEC is left after the repeal of the resource extractive industries rule.  Section 1504 of Dodd-Frank still stands.  Pursuant to that statute, the SEC must “issue final rules that require each resource extraction issuer to include in an annual report of the resource extraction issuer information relating to any payment made by the resource extraction issuer…”

So the SEC is legally required to issue a rule that satisfies the above requirement.  According to a CRA Fact Sheet, the agency has one year to do so-- “[i]f a statute or court establishes a deadline for promulgating a rule, the CRA joint resolution of disapproval does not prohibit an agency from issuing future rules as required by the deadline. Instead, the deadline to do so is extended by one year from the date of the joint resolution of disapproval.” Thus, the SEC has until February 2018 to issue a new rule.

However, recall that under the CRA the agency cannot issue a rule that is substantially the same as the rule that was subject to a resolution of disapproval.  So now what?  A court could seek to define what “substantially similar” means in the context of the CRA—something that has not yet been done. "There's no body of law on that, so everything that happens is going to be critically important," said Lisa Gilbert, director of Public Citizen's Congress Watch division.  But any judicial attempt to provide clarity may be hampered by a provision in the CRA that states, “no determination, finding, action, or omission under this chapter shall be subject to judicial review.”

Of course, this may become moot if Trump succeeds in totally gutting Dodd-Frank.  Nevertheless, until that happens we are in uncharted waters.

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