December 16, 2016

Congressional Review Act Too Weak to Stop 'Midnight Regulations'

Sherzod Abdukadirov

Former Research Fellow

Nita Ghei

Director of Policy Editing
Summary

In the 20 years since its adoption, the Congressional Review Act (CRA) was effective in stopping a regulation only once. Increased congressional oversight through the entire regulatory process is the long-term solution. The CRA is at best a weak stopgap.

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As is the case with every outgoing administration, the Obama administration is rushing to push through a flood of regulations in its final days.

In response, congressional lawmakers are increasingly turning to the reviewing procedure under the Congressional Review Act (CRA) as a potential solution.

But while it may be useful in stemming this flow of the last minute rush to regulate, the CRA offers only a temporary solution. A regulatory reform that ensures effective congressional oversight throughout the regulatory process would be a more effective way to deal with the problem.

The so-called "midnight regulations," passed in the last quarter after the election, typically are rushed through and are accompanied by low-quality analysis.

This means that taxpayer resources are not likely used most effectively in addressing societal problems.

Under the CRA, Congress can use expedited procedures to overturn a regulation during a period of 60 "session days" (days in which Congress is in session), by passing a joint resolution of disapproval. This resolution is not subject to the procedural requirements in the Senate that make a filibuster possible, making it easier for Congress to use the procedure.

Passed as part of the "Contract with America" in 1996, the CRA was meant to give Congress the power to oversee the regulatory activity of the executive branch.

The statute proved to be ineffective.

The president can still veto the joint resolution and is likely to use the veto to defend the regulations promoted by his or her administration. Consequently, the CRA resolution requires veto-proof majorities in both houses in order to overcome the veto.

In the 20 years since its adoption, the CRA was effective in stopping a regulation only once.

However, 2017 — when both the incoming administration and Congress will be controlled by the same party — provides a rare case where the CRA may be effective. Congress will have the majorities in both houses to pass a joint resolution. And the incoming Trump administration will feel no need to defend the policies of its predecessor.

One potential rule that may be overturned through a CRA procedure is the overtime pay rule, which extended the overtime pay to employees with base salaries between $23,660 and $47,476. The rule's implementation has already been delayed by a federal court, though Congress may have the last word on its fate.

While it promises to increase pay for millions of Americans, more careful analysis indicates that it is unlikely to deliver. Private firms will likely respond to the rule with a number of cost-cutting measures, such as cutting base salaries, reducing output or investing in productivity, which will considerably reduce the rule's impact.

At the same time, the rule imposes considerable bureaucratic costs on firms, which now have to track hours for many of their employees.

That being said, a one-off success of the CRA to tamp down the onslaught of regulation may risk diverting lawmakers' attention from its overall failure. It takes an extraordinary constellation of events for it to finally be effective.

Further, it is only effective in blocking low-quality regulation enacted by the previous administration. Once the Trump administration begins to implement its own regulations, it will likely veto any congressional attempts to disapprove new regulations.

The long-term solution to regulatory overreach will require comprehensive reform, which increases both transparency and accountability in the process. Such reform would require agencies to submit high-quality economic analysis of regulatory impact.

In addition, it would need to break the executive branch's current monopoly on economics and scientific analysis, thereby ensuring that Congress is better informed in its oversight of regulatory agencies.

Increased congressional oversight through the entire regulatory process is the long-term solution. The CRA is at best a weak stopgap.