Memo Would Require NCUA, Other Agencies To Submit New Rules To White House For Approval

WASHINGTON–The Trump Administration has announced new rules that would require independent federal agencies such as NCUA to submit any rules or guidance for review ahead of approval.


The announcement followed by just days a surprising move involving the NCUA chairman that sources told is another example of the administration seeking to gain a stronger hold over independent agencies.

Analysts said the move is part of a broader effort by the White House to take more control over the federal government, including independent agencies such as the CFPB, SEC, Federal Election Committee and even the Federal Reserve (with exemptions around its rate-setting powers) that have typically operated without strong oversight.

The new rules were announced by the Office of Management and Budget in a memo with the subject line “Guidance on Compliance with the Congressional Review Act.” According to the memo, effective May 11, agencies must submit all proposed rules and regulatory guidance to the Office of Information and Regulatory Affairs (OIRA), which will then determine whether a proposed rule is “major” or “minor” according to standards laid out in the Congressional Review Act. 

If the proposed rule is major, it can’t go into effect until Congress has 60 legislative days to vote on whether or not to allow the rule, the OMB memo says. Should Congress vote against the proposed rule, the agency involved is prohibited from devising a replacement rule ever, unless a new law enacted by Congress after the rule was rejected directs the agency to do so, the memo states.

The memo offers a definition of what is major and what is minor.

Early Questions

One early question: is the memo “law,” or just a memo from the White House? Legal analysts said the debate will likely involve arguments around separation of powers. Other observers said the new rules could also create a logjam in Congress.

The Congressional Review Act was passed in 1996, but most federal agencies have not submitted their proposed rules for OIRA review or congressional approval. Instead, most go through the process of publishing draft rules for public comment and then adoption of a final rule.

Congressional analysts said from 1996 until 2017, Congress rarely used its powers under the Congressional Review Act (CRA) to reject a rule, but that has changed under the Trump Administration.

When President Trump took office, he signed an executive order requiring all federal agencies to repeal two rules for every one new rule adopted, but independent agencies such as NCUA were exempt from the requirement. But those same agencies are not exempt from the CRA.

‘Expansive Definition’

“The CRA applies to all Federal agencies, including the historically independent agencies,” the memo reads. “Furthermore, the CRA adopts the Administrative Procedure Act's (APA) expansive definition of ‘rule,’ which includes, subject to certain exceptions, “the whole or a part of an agency statement of general… applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency."

The new requirement is also broad.

“The CRA applies to more than just notice-and-comment rules; it also encompasses a wide range of other regulatory actions, including, inter alia, guidance documents, general statements of policy, and interpretive rules,” the memo states. “The CRA provides exemptions for rules: ‘of particular applicability’; ‘relating to agency management or personnel’; or ‘of agency organization, procedure, or practice that do…not substantially affect the rights or obligations of non-agency parties.’ The CRA also specifically exempts rules concerning monetary policy developed by the Board of Governors of the Federal Reserve System or the Federal Open Market Committee and rules promulgated under the Telecommunications Act of 1996 and subsequent amendments. These limited and explicit exemptions underscore that all other rules must follow the requirements of the CRA.”

Analysts say an early reading of the new rules suggest it could create headaches for compliance, as agencies may be hesitant to issue new guidance as that guidance may be caught up in Congress.

The Change at NCUA

Separately, the change in the chairmanship at NCUA is also said to be another indicator of the control the administration is seeking over the independent federal agencies. The swearing in of Rodney Hood as NCUA chairman came as a surprise to just about everyone involved, including, sources said, the now former chairman, J. Mark McWatters.

Sources told that McWatters and NCUA were not told until shortly before it was to take place, that Hood was to be sworn in as the new chairman. McWatters then had to swear Hood into his new role.

The expectation would be that McWatters would serve as chairman until his term expired in August, and then Hood would be elevated to the chairmanship with the administration nominating a replacement for McWatters, who was nominated by President Obama for the board. When McWatters departs the board, all three NCUA board members will have been nominated by President Trump.

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Copyright Year: 2019
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