The Republican Congress and the soon-to-be Republican White House could look to undo some of the Obama administration regulatory activity that’s occurred over the past eight years when President-elect Trump is inaugurated and a new session of Congress begins in January. Congress has the ability to overturn any final rules the Obama administration issued after late-May 2016 through the Congressional Review Act, a little-used oversight mechanism. Some in Congress and the new administration may also eye other avenues to repeal older Obama-era rules or initiatives.
Passed in 1996 as part of then-Speaker of the House Newt Gingrich’s “Contract with America,” the Congressional Review Act (CRA) allows Congress to overturn any final rule within 60 legislative days of issuance. Unlike most pieces of legislation, overturning a rule through the CRA only requires a simple majority in both the House and Senate. Come January, Republicans in Congress, together with soon-to-be President Trump, have a finite window to overturn some of the newest Obama administration regulations.
According to an estimate from the Congressional Research Service, any final rule issued after May 30, 2016, would be subject to disapproval under the CRA in the next year. Newly released borrower defense to repayment rules (which included significant revisions to the financial standards under which institutions are allowed to participate in the Title IV programs) and teacher preparation program regulations (which also made adjustments to the TEACH Grant Program) would both be eligible for rejection by Congress under the CRA. Congress has only ever successfully overturned one rule in the 20 years since passage of the CRA. The only repeal under the CRA came in 2001 when newly-inaugurated President George W. Bush overturned a Clinton Department of Labor workplace ergonomics rule.
More information on the CRA process can be found in this POLITICO DataPoint infographic.
On November 15, House Majority Leader Kevin McCarthy (R-CA) sent a letter to all executive branch departments and agencies cautioning leaders “against finalizing pending rules or regulations in the Administration’s last days,” citing congressional authority under the CRA. Rules concerning state authorization for distance education have yet to be finalized by the Department of Education (ED), even though a proposed rule was released in July. If the final rule is not introduced before President-elect Trump takes office, the Trump administration can halt the development of all rules at any stage in the rulemaking process, as President Obama did on his first day in office in 2009.
The Department of Labor’s overtime rule, released May 18, 2016, could be subject to the CRA if Congress were to recess earlier than scheduled, though if current calendars hold, the May 30, 2016 deadline would stand. Of note, a U.S. District Court issued a preliminary injunction on November 22 postponing implementation of the rule, which could delay rulemaking enough to allow the Trump administration to significantly alter or scrap the regulation altogether.
While using the CRA represents the surest bet to overturn a rule—as only a simple majority in the House and Senate is required for passage—rules released prior to the May 30, 2016 deadline would be exempt from congressional scrutiny. Nevertheless, Congress and the Trump administration will have several other options at their disposal to halt older regulations.
Congress has the power to include policy provisions in appropriations bills to block federal funds from going to enforce a regulation, effectively repealing the regulation, though it would remain on the books for future administrations. Republicans have included these policy provisions, or “policy riders,” in recent appropriations bills, but have always faced a veto-threat from President Obama and opposition from Democrats in the Senate. These include provisions in the House appropriations bill passed out of committee in July blocking ED from moving forward with or enforcing several regulations, including gainful employment, state authorization, teacher preparation, and the definition of credit hour. Congress also has the ability to repeal a regulation simply through a piece of legislation. In 2012, the House passed a bipartisan bill, supported by NASFAA, to repeal state authorization and credit hour rules, but the bill was not considered in the then-Democratic-led Senate.
Both options here would prove to be challenging for Republicans, as passage in the Senate hinges on surpassing a 60-vote threshold, and Republicans will hold only 52 seats in January.
The Trump administration can re-direct resources within ED to limit the ability to enforce a regulation. Alternatively, the new administration can issue a new rule repealing or revising the entirety, or pieces of, (an) old regulation(s). Under the Higher Education Act, as amended, all Title IV-related rulemaking must undergo negotiated rulemaking, so the repeal-through-regulation process would take some time. However, Trump ED officials would have the authority to dispense with negotiated rulemaking if “the Secretary determines that applying such a requirement with respect to given regulations is impracticable, unnecessary, or contrary to the public interest,” as found in HEA Sec. 492(b)(2). “Good cause” exceptions to the rulemaking process could be subject to a legal challenge. An example of court action that invalidated regulations based on procedural grounds occurred in 2011, when the U.S. District Court for the District of Columbia struck down the distance education provision of the 2010 state authorization rule, saying that ED did not properly execute comment period requirements under the Administrative Procedures Act.
It should be noted that regulations differ from executive actions. Executive actions can be reversed immediately. President Obama’s signature executive action to shield undocumented immigrants from deportation, known as Deferred Action for Childhood Arrivals (DACA), could be among the first to go under the new administration. One major executive action in the higher education space was the 2012 “VA Principles of Excellence” executive order that resulted in the evolvement of the Financial Aid Shopping Sheet.
NASFAA will continue to monitor the shifting political, legislative, and regulatory dynamics surrounding the federal student aid programs as the Trump administration prepares to take office over the next two months.
Publication Date: 11/28/2016