As President Barack Obama enters the final year of his term in office, his far-reaching regulatory agenda for 2016 is full of labor and employment proposals that have eluded his predecessors. "In Washington, no bad idea ever goes away," or so the saying goes; indeed, like the Phoenix rising from the ashes, several of President Obama's regulatory proposals resurrect old proposals that failed under earlier administrations. Those proposals include: government contractor accountability, otherwise known as government contractor "blacklisting" for past labor and employment law violations; a dismantling of the advice exemption in the "persuader activity" reporting requirements under the Labor-Management Reporting and Disclosure Act; and revising the regulations for the overtime exemption for "white collar" employees under Part 541 of the Fair Labor Standards Act (FLSA).
All are a response to the Obama administration's inability to get labor and employment laws passed in Congress. All, in one form or another, failed as proposed regulations in previous administrations. And all are prominent on the latest regulatory agenda. Other than a desire to burnish the administration's regulatory legacy, why are these proposals being pushed so aggressively in the last year of the Obama presidency?
One reason is the little-known Congressional Review Act (5 U.S.C. 801-808), enacted as Section 251 of the Contract with America Advancement Act of 1996, also known as the Small Business Regulatory Enforcement Fairness Act (SBREFA). The Congressional Review Act (CRA) empowers Congress, on an expedited basis, to decide a privileged motion (a “resolution of disapproval”) to disapprove a “major” federal regulation (defined as one with a cost of at least $100 million) within 60 legislative days of the regulation’s promulgation, by a simple 51-vote majority in the Senate and a 218-vote majority in the House. However, to complete the process of invalidating a regulation, the resolution of disapproval must either be signed by the president, or, in the event of a presidential veto of the resolution, the veto must be overridden by a two-thirds majority vote in both houses of Congress. If invalidated, the regulation must not only be withdrawn, but also thereafter never resubmitted in the same or substantially similar form. Thus, the CRA ensures that major regulations which bypass the legislative process of a reluctant Congress are still subject to review and possible rejection by Congress under the CRA.
Yet Congress has succeeded only once in defeating a federal regulation on a CRA vote: the Occupational Safety and Health Administration’s ergonomics standard, disapproved by the 107th Congress in 2001.
“Wow,” you must be thinking. “That's a powerful legislative tool! Why doesn't Congress exercise that authority more often?” Simply stated, it's not that easy. A resolution of disapproval may be vetoed by the President (an outcome to be expected when the regulation has been promulgated by the president's own regulatory agencies) and would thereafter need a two-thirds supermajority vote to override the veto. This high bar killed Congress’s resolution of disapproval of the National Labor Relations Board's (NLRB) new representation election rules in 2015: Congress failed to override President Obama's veto of the resolution of disapproval which had passed the Senate 53-46 and the House 232-186—far short of the two-thirds supermajority necessary to override a presidential veto.
Thus, here in 2016 the threat of a CRA vote likely drives the Obama administration to push for rapid promulgation of final regulations while President Obama is still in office and able to veto and resolution of disapproval from Congress. Given the uncertain outcome of the 2016 elections, it would be risky for the administration to promulgate final regulations at a point late enough in the year that the 60-legislative day clock for issuance of a resolution of disapproval could extend beyond President Obama’s current term. In that case, the resolution could then be signed by a new president upon entering office in 2017.
So, with Congress expected to adjourn early in 2016 to allow time for members to campaign for reelection, May is probably the latest a regulation could safely (from the administration’s perspective) be promulgated without being disapproved by the Republican congressional majority and subsequently reviewed on a resolution of disapproval by the next president.
Thus, the CRA serves as powerful motivation for regulatory action in 2016 while President Obama is still in office.
Of course, controversial federal regulations may be defeated in other ways as well. For instance, Congress may pass an appropriations rider denying funds for a federal agency to enforce a particular regulation. However, the appropriations bill to which the rider is attached would also be subject to a presidential veto. Alternatively, the federal courts might also overturn a federal regulation upon a legal challenge. That's what happened to the NLRB's ill-fated "notice posting rule," which was invalidated by decisions of the Fifth Circuit and D.C. Circuit Courts of Appeals. Further still, "midnight" federal regulations issued in the closing days of an outgoing administration could be rescinded by an incoming president before their effective date, which is what happened when incoming president George W. Bush rescinded the "persuader activity" midnight regulations issued in January 2001 by outgoing president Bill Clinton.
For these reasons, employers should expect 2016, the final year of President Obama’s term, to be a time of new federal labor and employment regulations pending before federal agencies.