The Impact of the CRA on Biden's Regulatory Agenda and the 2024 Elections
By Samuel Ramer and Bob Carmichael
July 2024
Much of the Biden administration's regulatory agenda could be undone if Republicans win control of the White House and both Chambers of Congress in November. In the case of any party transition, the new administration often reviews and seeks to nullify some of the regulations established by its predecessor, using a statute called the Congressional Review Act – the CRA. This statute allows Congress to overturn federal agency rules by passing a joint resolution of disapproval under a set of expedited legislative procedures. Such a joint resolution of disapproval under the CRA need only receive a simple majority in both chambers of Congress and cannot be filibustered in the Senate. But because a joint resolution under the CRA must be signed into law by the president, it is susceptible to a presidential veto unless it enjoys the support of veto-proof majorities in both the House and Senate. For example, a joint resolution to repeal the SEC's adoption of Staff Accounting Bulletin 121, regarding the balance sheet treatment of digital assets held in custody, was passed by Congress, with some level of bipartisan support from the Democrats. However, it was vetoed by President Biden, and without a sufficient majority willing to overturn that veto, SAB 121 remains in place.
While the veto threat has thus far protected the Biden administration's regulatory agenda from the CRA, there is one provision of the CRA that threatens some Biden administration regulations even after the elections. The CRA contains a "lookback" provision that allows a subsequent session of Congress to overturn agency rules submitted to Congress during the previous session of Congress, as long as those rules were submitted during the final 60 legislative working days of the House calendar or during the final 60 legislative working days of the Senate calendar. (Below, we discuss what it means to be submitted to Congress.) Because the lookback provision counts legislative working days but does not count non-working recess days, whether a rule is captured by the lookback provision changes if either chamber adds or removes legislative working days from its calendar. Absent changes to the current legislative calendar, this 60-day period has likely started for the current session of Congress, so any agency rules submitted in the remainder of this Congress could be subject to CRA review by the next Congress and – the next president.
The Biden administration's regulatory agenda implicates the SEC, the CFTC and the array of other federal agencies that regulate the banking industry. In addition to reaching most of the executive branch, the CRA applies to more than just rules promulgated through standard rulemaking procedures. The CRA's definition of "rules" includes other agency actions that are not "rules" in the traditional sense. For example, the CRA might empower Congress to overturn an interpretive rule, a general statement of policy, or a guidance document. (Excluded from the CRA's reach are any rules "of particular applicability;" rules "relating to agency management and personnel;" and any "rule of agency organization, procedure, or practice that does not substantially affect rights and obligations of non-agency parties.") So long as an agency's action can be construed as a "rule" submitted to Congress and it is not categorically excluded, Congress can undo it using the CRA. The Government Accountability Office – an independent, nonpartisan government agency within the legislative branch – determines which agency actions can be undone by the CRA.
Though the CRA applies to a variety of agency "rules," the statute can only be used to overturn those submitted to both chambers of Congress and the Government Accountability Office (GAO). The CRA requires federal agencies to submit a report on each new rule to both houses of Congress and to the GAO's Comptroller General for review before the rule can take effect. An agency typically submits a rule for these purposes near the time the rule is published in the Federal Register. Receipt of these rules is then recorded in the Congressional Record and in online databases maintained by Congress and the GAO. If an agency does not follow this submission process, a member of Congress can ask the GAO for a formal opinion stating that a rule is subject to the CRA and thus is susceptible to being overturned by a joint resolution of disapproval. That is what occurred with SAB 121; initially the SEC did not submit the bulletin as an "agency rule," but the GAO disagreed, deeming it a "rule" that should have been submitted to Congress. This GAO opinion exposed SAB 121 to Congress's disapproval power under the CRA.
The CRA's lookback provision might, for example, be used to overturn the long list of proposed SEC rules that could be adopted before the end of President Biden's current term. If Republicans win the White House and control Congress, they will need to pay attention to the legislative calendar if they want to use the CRA's lookback provision. First, they will need to determine which regulations submitted to the previous Congress can be overturned using the CRA's lookback provision by determining which rules were submitted during the final 60 legislative working days of the previous House and Senate calendars. Once they have determined which regulations were submitted to Congress during that 60-day period, they will need to look forward and determine the deadline for passing any joint resolutions of disapproval pursuant to the CRA. In this instance, the CRA deems a rule as submitted on the 15th legislative working day of the new session of Congress. The CRA's lookback provision then gives legislators 60 legislative working days to pass joint resolutions of disapproval overturning agency rules or actions submitted during the previous session of Congress. Once again, the number of actual legislative days will be determined by the House and Senate schedules.
Across the street from Congress, the Supreme Court recently overturned the Chevron doctrine, eliminating the requirement that courts defer to an agency's reasonable interpretation of an ambiguous statute when the agency's delegated authority under that statute is challenged. It is likely that the Loper Bright decision, which overturned Chevron, will bolster challenges to future agency actions. However, many of the previous agency regulations will not be eligible for re-litigation. With or without Loper Bright, challenging federal agencies in court is costly, time-consuming and unpredictable. The CRA is a more straightforward and immediate way to pursue deregulation at the beginning of a new administration, especially if the new administration arrives with solid working majorities in Congress.
In the wake of the 2016 election, Congress invalidated a record number of Obama administration regulations using the CRA. Should 2024's elections produce a unified Republican government, we could see another uptick in resolutions of disapproval undoing some of the Biden administration's regulatory agenda. However, such resolutions, even under expedited legislative rules, take time and effort, and Congress will have to develop a priority list of which regulations it will target. Industries that may seek to undo newly adopted regulations should develop strategies to engage Congress as it determines that priority list.