Despite the public perception that Pruitt and President Trump’s other regulators are working to reverse all that Obama’s regulators implemented, it’s arguable that the only lasting regulatory results of Trump’s time in office so far are products of Capitol Hill: 16 Congressional Review Act (CRA) resolutions of disapproval and modest legislation to amend the 2010 Dodd–Frank Act.
There’s no debate that Trump’s deregulatory agenda has resulted in published regulatory savings for the nation. According to the American Action Forum, since 2017, regulators have published nearly 60 final rules that cut costs, including three that would reduce total burdens by more than $1 billion. However, for those to become real savings will require that the changes survive judicial scrutiny, and currently there is a host of lawsuits challenging virtually every major deregulatory action. The EPA alone has lost seven deregulatory attempts in the courts over the last 18 months.
The administration won’t lose every suit, but the president’s deregulatory legacy will be substantially muted by the courts and by Congress if Democrats retake control after this fall’s elections. Obviously, a new occupant in the White House in 2021 will immediately seek to reverse the deregulatory posture of the Trump administration and his policies could be an afterthought a decade from now. That’s a far cry from President Ronald Reagan’s record of regulatory reform.
CRA’s second act? / Before 2017, the CRA had only been invoked successfully once, to rescind an ergonomics rule in 2001. But in less than two years of the Trump administration, 16 regulations have been axed, including five major rules. With total cost savings from CRA rescissions exceeding $4 billion, that’s a legacy of achievement in an environment where costs seemingly increase daily.
What is more noteworthy from a philosophical, partisan, and structural perspective, however, is that both Democrats and Republicans now look to the CRA to address rules from the executive of which they disapprove. Two years ago, some Democrats and progressives argued the CRA was unconstitutional and special interest groups still push for Congress to tie its own hands by repealing the CRA. But every Democrat in the Senate is now on record as wanting to overturn the Federal Communications Commission’s recent net neutrality repeal.
In CRA debates during the first few months of the Trump administration, some progressives were arguing the CRA was merely a cudgel to destroy important health and safety protections. Now Democrats have realized that it can also be a tool to check an executive they don’t like. Those instances will be rare for Democrats, but frequent enough that they might as well keep the CRA in play for regulations they view as overly noxious. Why any party in Congress would want to abdicate a powerful statutory check on the executive is a mystery, even if the CRA does have a perceived anti-regulatory bias.
Arguably more important than the bipartisan embrace of the CRA is its new use to revoke regulatory guidance, not just formal regulations. This spring, the Senate narrowly struck down the Consumer Financial Protection Bureau’s (CFPB) 2013 auto-lending guidance, marking the first time the CRA had ever been used to strike down a guidance document. The idea of using the CRA in this way was originally raised in a Wall Street Journal op-ed in 2017. This was dismissed by some conservatives out-of-hand because of widespread skepticism that the CRA could apply to guidance beyond the 60-day legislative window, essentially the last six months of most presidential administrations. Supporters of the notion reminded critics that regulators rarely submit guidance to Congress, which means the 60-day clock doesn’t start ticking. Thanks to a public lobbying campaign by Sen. Pat Toomey (R–PA) and the Pacific Legal Foundation, the idea that Congress could strike down guidance, even decades-old guidance, gradually gathered steam, culminating in a Government Accountability Office (GAO) opinion that the CRA could be used to strike down certain past guidance if it had never been submitted to Congress as the statute requires.
With its 51–47 vote on the auto-lending guidance, the Senate established Congress’s ability to review years-old administrative actions, rescind them (with presidential approval or a veto override), and ensure that they may never be reissued “in substantially the same form.” (See “Should We Fear ‘Zombie’ Regulations?” Summer 2017.) The implications of Congress striking down this little-known CFPB rule will have to be examined further by scholars, but it is a near certainty that even Democrats will avail themselves of this power if they gain control of both chambers of Congress and the West Wing.
Yes, a Democratic president could have his agencies overturn a Trump guidance document, but using the CRA to prevent conservatives from issuing substantially similar guidance in the future is an incredible power that Congress has only begun to exploit. It may not be the talk of the town now, but the ability to strike down major regulatory guidance, indeed virtually every action of a president, is a notable shift in the balance of power between the executive and legislative branches. President Trump likely won’t tout this accomplishment as a regulatory landmark, but he should.
Dodd–Frank’s haircut / Finally, although there was intense lobbying in Congress over legislation (S. 2155) to amend Dodd–Frank, more politically salient events in D.C. largely swept this accomplishment under the rug. Although it wasn’t complete Dodd–Frank repeal, it was a notable achievement because of the narrow Republican majority in the Senate. Few probably expected the bill to get 67 votes in the Senate or for 33 Democrats to back the bill in the House. Lawmakers did this knowing they were paring back some of Dodd–Frank’s most notorious provisions: the Volcker Rule, tighter qualified mortgage standards, “Systematically Important Financial Institution” designations for banks with $50 billion in assets, and stress tests for most large banks. The bill essentially exempted many small- and medium-sized banks from Dodd–Frank’s most onerous regulations.
More importantly, Democrats did so in the wake of a publicity assault by Sen. Elizabeth Warren (D–MA) and other progressive groups. Many on the left pilloried Democrats who voted in favor of the regulatory change, arguing they provided a sop to the largest banks in the world, caved in on important financial safeguards, and bent to the will of Republicans and Trump (the more important political point). Warren even raised money off of Democrats who voted for the changes.
A more comprehensive Dodd–Frank reform bill that libertarians and conservatives truly wanted was never going to garner 60 votes in this political environment, much less 67 in the Senate. Nevertheless, it’s a remarkable feat that Democrats like Michael Bennett (D–CO), Jeanne Shaheen (D–NH), and Maggie Hassan (D–NH) voted for the bill when even seemingly noncontroversial under-secretaries struggle to get 52 confirmation votes in the Senate. Consider that Bennet votes with Trump’s position just 28% of the time according to FiveThirtyEight.com, Shaheen 33%, and Hassan 32%. Yet, despite their opposition to the president and their perceived willingness not to frustrate fellow Democrats, they still voted to reform Dodd–Frank, albeit modestly.
With the passage of the amendment legislation, Congress did more to reform financial regulation than many perceive. Volcker rule relief is now permanent for community banks. That might seem somewhat trivial, even as community banks slowly disappear, but just as it took four regulatory agencies years to give life to the rule, so it would take the coordination of those four to deliver substantial relief. This process would take years and could generate more delays through court challenges. Congress managed to provide relief in a few months and overturning the changes won’t be easy for a future Congress. That accomplishment shouldn’t be dismissed as small potatoes. Getting 67 votes on any regulatory reform package is rare, especially when it’s related to Dodd–Frank. Just ask House and Senate leaders how the slogging was on Affordable Care Act repeal.
Conclusion / In regulatory policy, success can take years. Those gains can then prove fleeting once the next administration takes the reins. President Obama’s regulatory “tsunami” was viewed as one of the largest expansions of the regulatory state since Franklin Delano Roosevelt. Records were broken, entire new agencies were conceived, and—with plenty of progressives on the D.C. Circuit Court of Appeals—many assumed Obama’s regulatory achievements would be a legacy, not an ephemeral blip.
As soon as the Trump administration came to power, his underlings immediately attempted to press the “undo” button on every notable regulation from the past eight years. However, with progressive outrage and courts sometimes standing in the way, lasting progress through administrative action will be slow to achieve. That is why President Trump and fans of deregulation should give Congress a pat on the back for their unheralded work reforming regulation. From striking down 16 rules to ensuring that Congress can scrutinize and rescind old regulatory guidance, there is a new era in congressional regulatory oversight, one Democrats could one day embrace as well. The CRA is now entrenched as a tool both parties can use to check the excesses of the executive and his regulators. Congress also managed to produce a substantive, albeit limited, reform of Dodd–Frank.
These reforms delivered a broader constitutional balance between Congress and the president. Now, whenever new guidance is penned, the executive will have to think twice about the implications for Congress down the road. Even conservative administrations will have to contemplate Democrats gathering the votes on a CRA resolution to strike down an executive action.
On January 20, 2017, few speculated that these achievements could become a reality. Sure, some regulations would fall, but would Democrats embrace the CRA? Would guidance be up for grabs? Would 67 senators vote to upend parts of Dodd–Frank? One could argue President Trump cemented his regulatory legacy in his first 18 months in office, yet the public took little notice.
