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Congress uses CRA to overturn CFPB Arbitration Rule

Last night, the Senate used the Congressional Review Act to pass H.J. Res. 111, which overturns the Consumer Financial Protection Bureau’s (CFPB) Arbitration Agreements Rule. The rule would have banned banks and other financial institutions from including arbitration clauses in contracts with their customers.

This most recent use of the CRA demonstrates how its traditional use remains a powerful tool to rollback regulations, even ten months after the previous president has left office. Many people have recognized the power of the CRA to overturn regulations that were adopted in the final months of an administration, and Congress overturned 14 such rules.

But the CRA also allows Congress to act as a check on so-called “independent agencies,” like the CFPB. The president tends to have less influence over these types of agencies, because he has limited authority to dismiss the agency heads. As a result, these agencies tend to lack accountability to any elected official, except through the CRA.

Unfortunately, each use of the CRA draws criticisms from those that misunderstand the constitutional structure of separation of powers. On one law professor listserv this morning, an administrative law professor decried that 50 senators could overturn a regulation without “having to explain why.” Critics of the CRA, like this professor and the Center for Biological Diversity, believe that administrative agencies have unlimited power to make regulations, and Congress has little or no control over how those agencies act.

In fact, the Constitution places the legislative power with Congress and executive agencies have no inherent authority. Sometimes Congress chooses to delegate its legislative authority to executive agencies (which can raise other constitutional issues), but it does not have to. And just as Congress is not required to delegate authority to the executive branch, it can also place restrictions on any delegation or rescind any previous delegation of rulemaking authority.

The CRA is one tool that allows Congress to place limits on an agency. It allows Congress to quickly pass a joint resolution that, if signed by the President, becomes a law. That law helps define Congress’s delegation to an agency executive, by preventing the agency from passing rules that are substantially similar to the rule rescinded by a CRA resolution. Far from creating a constitutional issue, the CRA helps restore some balance of power between the branches by giving elected officials the final say over new regulations.

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