On February 2 the House of Representatives passed House Joint Resolution 37, which would nullify the Fair Pay & Safe Workplaces rule issued on August 25, 2016. If the identical pending joint resolution is passed by the Senate, S. J. Res. 12, and signed by the President, the entire rule will have no force and effect and no similar regulation could be issued in the future without express Congressional authorization. The legislation did not reverse the accompanying Department of Labor guidance or the underlying Obama Executive Order, but both would also be effectively nullified by voiding the regulation.
The rule, had it been in effect, would establish an affirmative obligation on contractors to publicly disclose any alleged violations of the various labor laws, regardless of whether the alleged violation has been adjudicated. But, as we previously reported, the majority of the controversial rule, as well as the Department of Labor’s guidance and the underlying Executive Order 13673 signed by President Obama on July 31, 2014, had already been stayed by a federal district court as result of multiple infirmities, including violation of the First Amendment, violation of contractors’ Due Process rights, violation of the Federal Arbitration Act, and the rule was preempted by federal labor laws, among other violations.
The district court did not enjoin the portion of the rule that requires government contractors to disclose to employees certain information about their hours worked, overtime hours, pay and deductions for each pay period. If the joint resolution passes the Senate and is signed into law, the so-called “paycheck transparency” requirement will also be voided.
It is not entirely clear why Congress is taking action to reverse the rule, the authority for which was an Obama executive order that has already been found to be unconstitutional and could be reversed by the stroke of a pen by President Trump. If the President took that action, the regulations would effectively be nullified, seemingly an easier route to achieve the same result (but, unlike congressional action, reversal of an executive order would not retroactively rescind the rule). As discussed in a BNA article published in January, for a number of reasons, including the fact that the Obama Administration itself estimated the rule would have imposed $4 billion in costs in the next decade without any quantifiable offsetting benefit, this executive order seemed a prime candidate for reversal by President Trump.
The authority the House relied on to disapprove of the rule is the Congressional Review Act (CRA), 5 USC § 801-808. That CRA was included as part of the Small Business Regulatory Fairness Act signed into law on March 29, 1996. It gives Congress the authority to pass joint resolutions rejecting a rule within 60 legislative days (placing any rule issued after mid-June 2016 within the scope of this review) after a regulation is passed. If both houses pass joint resolutions of disapproval and the President signs the resolution, the regulation is nullified, and provisions that had already been effective are retroactively negated. Importantly, enactment of the joint resolution of disapproval also means that the rule may not be issued in “substantially the same form” as the rejected rule unless specifically authorized by Congress.
While CRA resolutions are not subject to filibuster if certain parliamentary requirements are met, a separate resolution is required for each rule. Also, debate is limited to not more than 10 hours to be divided equally between those favoring and opposing the joint resolutions. Some commentators have noted that means the Senate would have to devote significant floor time to the reversal of a regulation, suggesting this may be a limiting factor to the use of the CRA.
The CRA has rarely been used because a sitting president is unlikely to veto legislation reversing a regulation recently promulgated by that administration, so the only rules that are likely targets of CRA action are those issued in the last six months or so of an administration prior to another party winning a presidential election. The flurry of regulatory activity in the closing months of the Obama Administration and President Trump’s victory presents one of those rare opportunities for the CRA to have a significant impact.
In the past week, the House has passed CRA resolutions to reverse multiple Obama Administration rules, including a Department of Interior rule that critics alleged was designed to regulate the coal mining industry out of business (the “Stream Protection Rule”), an SEC rule requiring heightened financial disclosure by extractive industries, and a Bureau of Land Management rule regulating methane venting and flaring. The joint resolutions disapproving the Stream Protection Rule and the methane venting and flaring rule have already passed the Senate and is awaiting the President’s signature, which is likely given it is in accord with President Trump’s commitment to significantly reduce the regulatory burden on businesses and his commitment to energy independence. Resolutions that would reverse a number of other rules, including those issued by the Fish & Wildlife Service, the National Park Service, the Department of the Treasury, the IRS, the EPA, the Bureau of Consumer Financial Protection, the Department of Education, the Department of Health and Human Services, and the Office of Natural Resources Revenue, have also been introduced. The actions, which would not have been possible had the Obama Administration issued the rules prior to the middle of 2016, are a stern rebuke of the Obama Administration’s perceived regulatory overreach that added billions of dollars in costs to U.S. business.
The actions are only one component of Congresses reassessment of the Executive Branch’s regulatory power. Legislation has already passed the House in this Congress that would place significant limitations on the Executive Branch’s rule making authority, including H.R. 5, the Regulatory Accountability Act of 2017, that would, among other things, limit the long-standing judicial review standard that grants tremendous discretion to agencies interpretation of how to implement statutory mandates, and H.R. 21, the Midnight Rules Relief Act of 2017, that would amend the CRA to allow for a joint resolution to disapprove of more than one rule at a time, and that would require Congressional approval of major regulations.
Together, the Congress and the White House have signaled a strong desire to pare back the administrative state. While President Trump may not achieve his ambitions goal of reducing the number of regulations by 75%, it seems clear that, at least in the near to mid-term, regulations that impose significant costs on the economy will not be permitted without Congressional authorization. It is also clear that the Fair Pay & Safe Workplaces regulation is doomed.