This last column of the year takes a different approach to regulatory practice – a survey of some of the realities of Congressional “review” in the omnibus Consolidated Appropriations Act, 2016 (CAA16), signed into law December 18, 2015. This massive appropriation includes many different styles of Congressional oversight and intervention – from outright prohibition, to repealing underlying statutory authority, to enforcement limitation, and more. Many appropriations provisions affect significant regulatory actions, a few of which deserve attention here.
Congressional Review Act v. Appropriations: For years, many have touted the Congressional Review Act (CRA) as a means of Congressional decisionmaking about regulations, but the CRA is illusory. The CRA only codifies House and Senate rules for expedited processing of a proposed “joint resolution of disapproval” of an agency final regulation, but the President of the United States (POTUS) must still sign the resulting joint resolution. Congress has succeeded only once in setting aside a regulation under the CRA and POTUS has twice recently pocket-vetoed resolutions of disapproval. Only a veto-proof two-thirds majority in both the House and Senate can succeed against an opposed President. Brinksmanship on “must pass” appropriations provides a richer target for disapprovals and CAA16 is rife with disapprovals and changes. Reasonable minds may disagree on categorization, but perhaps the following may help.
Repealers: Nothing says ‘no’ to a regulation more than repealing that statute that authorized the regulation in the first place. For example, the Department of Agriculture (DOA) promulgated “Country of Origin Labeling” (COOL) regulations in light of statutory delegations. Extensive litigation ultimately ended in the United States Court of Appeals for the District of Columbia Circuit (en banc) holding in American Meat Institute v. DOA that agencies could compel disclosure of factual information beyond the purpose of avoiding deception or fraud without conflicting with the First Amendment of the United States Constitution.
The World Trade Organization (WTO), however, determined that the statute and COOL regulations violated trade treaties and, therefore, authorized Mexico and Canada to impose tariffs on United States goods. In CAA16, Congress repealed the underlying statutory provisions relating to the problematic products (beef and pork). DOA must now remove its now-outmoded regulations from the CFR and has already announced that it will and that, “Effective immediately, USDA is not enforcing the COOL requirements for muscle cut and ground beef and pork outlined in the January 2009 and May 2013 final rules.”
Prohibitors: Some CAA16 provisions prohibit an agency from regulating a specific activity. CAA16, for example, expressly prohibits the Food and Drug Administration (FDA) from regulating the “dried spent grain byproducts of the alcoholic beverage production process, irrespective of whether such byproducts are solely intended for use as animal feed” – the beer rule. The provision eliminates authority in the subject area even though the FDA already had relented on that subject.
Clarifiers: Short of repeal of the underlying authority, Congress might indicate disapproval by clarifying a statute in a different way than asked. The D.C. Circuit previously held in Loving v. IRS that the Internal Revenue Service (IRS) lacked authority to regulate paid tax preparers under an ancient (pre-income tax) statute and in American Institute of Certified Public Accountants [(AICPA)] v. IRS that public accountants had sufficiently plead competitive standing to challenge the voluntary reformation of the program. The IRS sought statutory authority for a mandatory program, but Congress, in CAA16, not only did not grant regulatory authority, but amended the statute to specifically permit public accountants, attorneys and other “enrolled agents” to use professional designations such as “enrolled agent,” “EA,” or “E.A.” The IRS, thus, lost regulatory ground.
Defunders: The most common Congressional intervention defunds an activity. The Securities and Exchange Commission (SEC) has, for some time, considered a petition for rulemaking to require publicly traded corporations to disclose political contributions. CAA16 illustrates the classic subject matter limitation of funding by prohibiting the SEC from using funds appropriated by the “Act” to “finalize, issue, or implement any rule, regulation, or order” not only requiring disclosure, but “regarding” disclosure of political contributions, contributions to tax exempt organizations, or dues paid to trade associations.
In some instances, the concept of regulation is enough to set off a prohibition. CAA16 prohibits use of funding “made available in this Act or any other Act” to promulgate or implement any regulation requiring the issuance of Clean Air Act (CAA) permits for “carbon dioxide, nitrous oxide, water vapor, or methane emissions resulting from biological processes associated with livestock production.” The next section is more explicit in prohibiting use of the “funds made available in this or any other Act may be used to implement any provision in a rule, if that provision requires mandatory reporting of greenhouse gas emissions from manure management systems.”
CAA16 prohibits the Department of the Treasury (DOTr) and the IRS, for example, from using funds from “this or any other Act” to “issue, revise, or finalize” regulations, revenue rulings, or other guidance on a specific issue. That issue was whether an organization operates exclusively for the promotion of social welfare “[d]uring fiscal year 2016”. The target here was an IRS proposed rule published in 2013 and may be animated, in part, by perceived political actions taken by IRS officials.
The Department of Energy (DOE) may not use funds under CAA16 to regulate “BPAR incandescent reflector lamps, BR incandescent reflector lamps, and ER incandescent reflector lamps” in its energy efficient program. In this instance, CAA16 bars implementation of both the regulatory section in the CFR and the statutory provision.
CAA16 bars the Consumer Product Safety Commission (CPSC), on the other hand, during FY16, from finalizing or implementing the Safety Standard for Recreational Off-Highway Vehicles (i.e. ATVs) until after the National Academy of Sciences completes a specified study.
These examples alone reflect a number of different internal limitations become apparent – limitation on the appropriations structure, time, subject, and action. Some are permanent, some temporary. Each, however, relates to the finalization of a regulation. At least one, the “manure management system” provision, effectively bars a rule before the unnamed Environmental Protection Agency (EPA) can promulgate a rule by rendering it unenforceable, perhaps ab initio. The same provisions even include the unnecessary repetition of an express “notwithstanding any other provision of law” that the courts have found not to be taken literally. Some have suggested that casting restrictions in stone leaves open the possibility, for example, that the SEC may consider “proposing” a disclosure rule, perhaps in the hope that a future appropriation will not bar finalization. This may be true, but also runs the risk of further limitations.
Delayers: Some provisions merely slow the post-regulatory process. CAA16 blocks the FDA efforts to “implement, administer, or enforce” the Food Labeling; Nutrition Labeling of Standard Menu Items in Restaurants and Similar Retail Food Establishments promulgated on December 1, 2014, for a period of time. As the name implies, the rule would require restaurants and grocery stores to list the number of calories in prepared food. The appropriation defers the rule until the latter of December 1, 2016, or one year after the Department of Health and Human Services (HHS) publishes specific, stated implementation guidance.
Similarly, no funds under the Act, or any other Act, may be used to enforce specific provisions of the Department of Transportation (DOT) Federal Motor Carrier Safety Administration (FMCSA) “hours of service” rules until the Secretary and Inspector General approve a specific statutory report that establishes that the provisions create a “statistically significant improvement” in safety. The language here delineates the affected provisions by citation to the Code of Federal Regulations sections to limit the prohibition.
The first provision does not limit the regulation or the effective date, but bars the agency from acting on the regulation. The second provision contains an added specification that seeks also to strip the regulation of its “force and effect,” but the language is somewhat garbled and may be problematic.
Nibblers: CAA16 nibbles at the edges of the EPA and Army Corps of Engineers final Clean Water Act: Definition of “Waters of the United States” (WOTUS) rule. WOTUS is being challenged in the United States Court of Appeals for the Sixth Circuit (stayed nationwide) and numerous district courts (subject to a 13-State preliminary injunction in one case) because of disagreement over the jurisdictional provisions of the Clean Water Act (CWA). CAA16 limits the future of the rule by barring any funds under the Act from being “used to require a permit for the discharge of dredged or fill material” from specific paragraphs of the water pollution control statute. The specified activities include normal farming, silviculture, and ranching activities (such as plowing, seeding, cultivating, minor drainage, harvesting for the production of food, fiber, and forest products), or upland soil and water conservation practices, or for the purpose of construction or maintenance of farm or stock ponds or irrigation ditches, or the maintenance of drainage ditches.
Similarly, the Engineers are barred from using any funds to “develop, adopt, implement, administer, or enforce any change to the regulations in effect on October 1, 2012, pertaining to the definitions of the terms ‘fill material’ or ‘discharge of fill material’ for the purposes of the Federal Water Pollution Control Act.
WOTUS would define jurisdiction for the EPA and Engineers, and dredge and fill within that jurisdiction would require expensive and time-consuming permits. The provisions reflect a successful campaign to avoid the most problematic effects of a regulation. The highly technical language (which could obscure meaning) is again limited to this Act, and must be included in future appropriations to continue its efficacy.
Real Congressional Review: At the end of the day, Congress does have the capacity, sometimes, to impose its will on agency regulations. This capacity may be limited by the dynamics of budget brinksmanship, but it remains a far more functional tool than the CRA.