Overkill to Use Review Act on Nonbinding Guidance, Critics Say

April 19, 2018 Cheryl Bolen

The Senate voted April 18 to overturn nonbinding federal agency guidance using the Congressional Review Act process, a new legislative tactic critics said was needless overkill.

“It’s troubling that, for the first time, the CRA is being used to target nonbinding guidance documents, which agencies can amend or withdraw quickly and easily,” said Amit Narang, regulatory policy advocate at Public Citizen.

The Senate 51-47 passed a resolution of disapproval (S.J.Res. 57) that overturned a guidance bulletin issued in 2013 by the Consumer Financial Protection Bureau intended to stop discrimination in loan rates offered to car buyers.

The Senate used a process under the Congressional Review Act of 1996, which requires that all “rules” from agencies be submitted to the House, Senate, and Government Accountability Office before they can go into effect. The GAO has, in some cases, determined that guidance documents fit the definition of a “rule.”

Never Submitted

The CFPB never submitted its auto lending bulletin to the GAO, so last year, Sen. Patrick Toomey (R-Pa.) sent it instead and asked the GAO for its opinion. GAO determined in a letter last December the guidance bulletin was a “rule” for the purposes of the CRA.

Rescinding it would “nullify a particularly egregious overstep by President [Barack] Obama’s CFPB and notch another victory in this Congress’s record of rolling back overregulation,” said Senate Majority Leader Mitch McConnell (R-Ky.).

All Republicans voted in favor of the resolution, while all Democrats except for Sen. Joe Manchin (D-W.Va.) voted against. The resolution now moves to the House, and then must be signed by President Donald Trump.

An Easier Way

The Congressional Review Act provides a filibuster-proof, fast-track process for overturning agency rules, and has been used for that in the past.

Expanding its use, however, to include nonbinding agency guidance is new, regulatory analysts said. Over the past year, the analysts have said a much easier way to overturn agency guidance documents is simply for the agency to tear them up, with no congressional action needed.

Narang said the Senate “wasted valuable floor time repealing auto lending guidance that interim CFPB Director Mick Mulvaney could get rid of just by snapping his fingers.”

“If the Congress doesn’t like the rule, then a member can introduce a CRA resolution of disapproval, and we act on it,” Sen. Brian Schatz (D-Hawaii) said on the Senate floor.

“This is why what is happening right now is totally nuts,” he added. “What is happening right now is we are submitting agency guidance—not a rule, but agency guidance—which has no legal force, to the same procedures as the rules under the Congressional Review Act.”

Republicans have grown deeply skeptical of agency guidance documents as a whole, viewing them as shortcuts or ways to avoid the formal rulemaking process. Though guidance documents are not legally binding, they are often treated as such in agency enforcement actions.

The Guidance Out of Darkness (GOOD) Act (H.R. 4809, S. 2296) would require all agencies to list their guidance documents in one location, including memorandums, bulletins, notices, and press releases. The two companion bills easily moved out of their House and Senate committees this spring.

Some Welcome Guidance

For some reason, guidance seems to have taken on a pejorative tone, said W. Neil Eggleston, former Obama White House counsel and now a litigation partner at Kirkland & Ellis, at a conference April 17 hosted by the Federalist Society.

One thing that large companies like is certainty, Eggleston said. “They like to know what enforcement priorities are. They like to know how agencies are going to interpret their various different mandates,” he said.

In that sense, guidance is useful and helpful, he said. What is not useful and unhelpful is guidance that takes the place of a statute or a regulation and imposes new obligations or duties on the regulated community, he said.

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