Audit, Compliance and Risk Blog

Trump Administration Further Tightens Controls Over Agency Rulemaking

Posted by Jon Elliott on Tue, Apr 30, 2019

Congress 2The Trump Administration has taken another step to centralize its control over federal agencies’ rulemakings and policy-setting. Rulemaking has always reflected tensions between the politicians who adopt laws, and the agency staff who interpret and apply them through formal rules and information guidance and procedures. Depending how entrenched career staff are in their agencies, there may also be tensions between the elected executive (President, governor, etc.) and his or her agencies, even after his or her appointees are nominally in charge.

On April 11, 2019, the acting director of the federal Office of Management and Budget (OMB) issued a “Memorandum for the Heads of Executive Departments and Agencies” setting forth broader and more detailed requirements that nearly all proposed federal rules – including formally adopted rules as well as less formal policies and guidance documents – be submitted for OMB review before being issued. This memo applies statutory provisions from the Congressional Review Act (CRA; I discussed 2018 amendments to the 1996 CRA here).

What is the Congressional Review Act?

The CRA was passed early in 1996, toward the end of President Clinton’s first term, and after the Republicans had secured majorities in both house of Congress. CRA allows Congressional leaders to review regulations and reject those they oppose. Congress was particularly concerned that the Democratic Administration might enact so-called “midnight regulations” before the 1996 election. Accordingly:

  • Federal agencies must submit a copy of each new rule to Congress, along with a concise general statement relating to the rule, including whether it is a major rule (i.e., under any of the three criteria described in the next section), and its effective date.

  • Congress then has a total of 60 days after submission in which both houses are in session, to review the rule and adopt a resolution of disapproval.

  • When a rule is adopted with fewer than 60 days remaining, the 60-day clock restarts when the next Congress convenes. (I wrote about 2017 reviews of Obama Administration rules from 2016 here).

The 2018 amendments to CRA adopted an expansive definition of “rule”:

“'rule” means 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 and includes the approval or prescription for the future of rates, wages, corporate or financial structures or reorganizations thereof, prices, facilities, appliances, services or allowances therefor or of valuations, costs, or accounting, or practices bearing on any of the foregoing[.]”

Proposed resolutions of disapproval are drafted as legislation and assigned to appropriate Congressional committees, and if voted out to the floor are then voted on by the full house. A resolution that passes both houses is sent to the President for signature or veto.

What Does The New Memo Change?

The new memo conforms OMB and federal agency practice to the expanded reach of the 2018 amendments to CRA, and also to the Trump Administration’s efforts to reduce federal regulation (for example, I wrote about his 2017 regulatory reform executive order here).  Agencies’ procedural responsibilities are fairly clear, but the standards for OMB oversight are largely left to OMB’s judgment.

  • Applying an expansive definition of “major rule” subject to review

Congressional reach under the CRA depends on the definition of a “major rule” subject to review and possible rejection. The new memo expands requirements for agencies to report information to OMB, ostensibly so OMB can ensure that agencies comply with CRA including submission of appropriate information to Congress.

I provide the definition of “rule” above; until 2018 this term was applied only to formal rules adopted after notice-and-comment procedures, but Congress expanded it to include guidance and policy documents … which means that nearly any agency pronouncement could potentially be a “rule” for CRA purposes.

As noted above, CRA has always provided three independent criteria for a “rule” to be considered “major”, although until now the overwhelming focus has been on the first of these:

  • "An annual effect on the economy of $100,000,000 or more.

  • A major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions.

  • 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 new memo emphasizes that all three criteria will now be used. The memo provides detailed “principles” for agencies to apply to the economic impact analysis for the first criterion, but provides only very general ideas about how to address the other two criteria.

  • Establishing detailed procedural requirements applicable to nearly all rule reviews

The memo provides formal procedures under which agencies will coordinate with OMB’s Office of Information and Regulatory Affairs (OIRA) to review proposed rules to determine which qualify as “major”:

  • Each agency is to keep OMB/OIRA informed of upcoming rules by submitting lists with relevant information, and the agency’s recommendation whether the rule is major.

  • If the agency considers a rule non-major, OMB has 10 days to agree, or to disagree and start a major review.

  • If the agency considers a rule major, it must submit the rule to OMB for a formal determination at least 30 days before publication in the Federal Register.

  • The agency is to submit analysis and information sufficient for OMB to make a determination.

  • OIRA will review each submission and determine whether the rule is major.

  • After a determination the agency sends Congress and the Government Accountability Office (GAO) and may publish the rule in the Federal Register, with the effective date deferred at least 60 days to allow time for Congressional CRA review of any rule Congress decides is major.

OMB “anticipates” that it will define categories of rules that are “presumptively not major,” in cooperation with individual agencies’ senior officials.

Now What?

These new provisions become effective May 11, 2019. After that time, agencies will follow the procedural requirements. As decisions are made in specific situations, federal agencies and regulated entities will be able to see how OMB develops and applies its standards for review and determination. The importance of OMB’s determinations will be higher than in recent years, because they are likely to be the last step in actual reviews – since Congressional control is now split between the Republican Senate and the Democratic House of Representatives, it seems unlikely that both houses will object to the same rule.

Self-Assessment Checklist

Is the organization subject to any federal regulation?

If so, has the administering and/or enforcing agency issued any guidance to regulated entities, indicating its general approach to any compliance issues under its jurisdiction?

If so, has the agency submitted its existing “major” rules or policy or guidance documentation to OMB for review?

If so, is the agency developing any new “major” rules or policy or guidance documentation that will require OMB review?

Where Can I Go For More Information?

Specialty Technical Publishers (STP) provides a variety of single-law and multi-law services, intended to facilitate clients’ understanding of and compliance with requirements. 

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About the Author

Jon Elliott is President of Touchstone Environmental and has been a major contributor to STP’s product range for over 25 years. 

Mr. Elliott has a diverse educational background. In addition to his Juris Doctor (University of California, Boalt Hall School of Law, 1981), he holds a Master of Public Policy (Goldman School of Public Policy [GSPP], UC Berkeley, 1980), and a Bachelor of Science in Mechanical Engineering (Princeton University, 1977).

Mr. Elliott is active in professional and community organizations. In addition, he is a past chairman of the Board of Directors of the GSPP Alumni Association, and past member of the Executive Committee of the State Bar of California's Environmental Law Section (including past chair of its Legislative Committee).

You may contact Mr. Elliott directly at:

photo credit: Free Public Domain Illustrations by rawpixel United States Capitol in Washington, D.C. Original image from Carol M. Highsmith’s America, Library of Congress collection. Digitally enhanced by rawpixel. via photopin (license)

Tags: Business & Legal, EHS, EPA