Week in Review

IN THE NEWS

• The U.S. Senate passed the Water Resources Development Act of 2016—legislation that is updated by Congress every few years and which governs the policy and projects of the U.S. Army Corps of Engineers—and included $220 million in funding under the Safe Drinking Water Act for Flint, Michigan and other communities harmed by lead-tainted drinking water, a provision that the Senators from Michigan advocated for, but which is currently is absent from the version of the bill moving in the U.S. House of Representatives.

• The Regulatory Integrity Act—a bill that would bar agencies from using social media to engage in non-substantive promotion of rulemakings—passed the U.S. House of Representatives in a 250-171 vote along party lines, and President Obama has allegedly threatened to veto the bill if it reaches his desk. Representative Tim Walberg (R-Mich.), one of the bill’s sponsors, said the bill is intended to “increase transparency and help ensure that the American people’s voices are heard” in the rulemaking process, but House Democrats reportedly expressed concerns that the bill could chill public discourse by preventing agencies from discussing pending rules.

• The debate over the Dakota Access pipeline—a 1,170 mile pipeline that would cross through North Dakota and that has been the subject of protests from the Standing Rock Sioux tribe, who say the pipeline would pass through lands which are historically and culturally important to the tribe, including Lake Oahe, a dammed section of the Missouri River—saw several key developments this week, as the U.S. Department of Justice, Department of the Army, and the U.S. Department of the Interior temporarily blocked the construction of the pipeline under Lake Oahe, mere minutes after the U.S. District Court for the District of Columbia denied an injunction, requested by the Standing Rock Sioux, that would have stopped pipeline construction.

• The House Financial Services Committee approved the Financial Choice Act, moving the bill to the House floor. Included in the bill, which would effectively serve as a replacement for the Dodd-Frank Wall Street Reform and Consumer Protection Act, is a provision that would allow banks to avoid certain financial regulations contained in Dodd-Frank if they maintain higher capital levels, as well as a provision for restructuring the leadership of the Consumer Financial Protection Bureau (CFPB)—an agency that was created by Dodd-Frank—by replacing its director with a five-person bipartisan commission.

• The U.S. Department of Housing and Urban Development (HUD) released a final rule under the Fair Housing Act to “formalize standards for use in investigations and adjudications involving allegations of harassment on the basis of race, color, religion” and other protected categories—a rule that details how the agency will respond to allegations of “quid pro quo”—or “this for that”—harassment and “hostile environment harassment,” including by providing definitions and illustrations.

• The U.S. House of Representatives Judiciary Committee approved, by a vote of 15-5, the Midnight Rules Relief Act, a bill that would amend the Congressional Review Act—a law that currently gives Congress the opportunity to overturn a promulgated regulation by passing a resolution within 60 days of the regulation’s finalization—and allow Congress to, with one vote, overturn all regulations finalized within the final 60 days of the congressional session, a change which the bill’s Republican sponsors claim is necessary to prevent outgoing administrations from imposing major regulations “without the transparency and scrutiny expected in normal regulatory implementation,” although Democratic members of the committee reportedly expressed concerns that the legislation would result in Congress unnecessarily overturning good regulations along with those of real concern.

• New York Governor Andrew Cuomo announced a “first-in-the-nation” proposed rule, issued by the state’s Department of Financial Services, that would place a number of new requirements on financial institutions—including developing a cybersecurity program and policy, designating a “Chief Information Security Officer,” and various precautions for dealing with third-party companies who have access to sensitive information. Governor Cuomo lauded the rule, which he said will help “guarantee the financial services industry upholds its obligation to protect consumers,” while some experts have reportedly predicted that the new measures “could cost [financial institutions] and insurers millions of dollars.”

• The Center for Biological Diversity and Friends of the Earth reportedly moved to dismiss their complaint against the U.S. Environmental Protection Agency (EPA) for failing to regulate aircraft emissions, a move that comes after the EPA issued a finding in July 2016 that certain aircraft emissions “contribute to the pollution that causes climate change and endangers Americans’ health and the environment.” The EPA’s finding was a prerequisite to further regulation of aircraft emissions, but the environmental groups had argued that the EPA’s “continued failure to act constitute[d] unreasonable delay.”

• The National Federation of Independent Business (NFIB), a trade group for small businesses, formally petitioned the Department of Labor (DOL) to delay the deadline for compliance with its overtime rule, referring to the deadline as “arbitrary,” with the organization’s president and CEO Juanita Duggan claiming that “many [small businesses] don’t have the resources, the personnel, or the time to meet the deadline.” The group is requesting that the DOL push the deadline back six months to June 1, 2017.

WHAT WE’RE READING THIS WEEK

• The U.S. Chamber of Commerce released a report assessing what it described as the “massive legislative and regulatory response” to the 2008 financial crisis, and concluded that while “some of the root causes of the crisis” have been addressed, “[t]he 1930s regulatory system remains in place with layers added to it” such that “[r]egulators were not provided with the tools to keep up with dynamic, evolving global capital markets.” To help the United States achieve a “modern financial regulatory system,” the report provided a list of focus areas for the next president—including the creation of a “Presidential Commission on Financial Regulatory Restructuring,” changes to the rulemaking process, and a host of other reforms.

• In the final report of a three-part series entitled “Improving the Accountability of Federal Regulatory Agencies,” Professor Marcus Peacock of the George Washington University Regulatory Studies Center sought to determine why eight major U.S. government reform initiatives didn’t succeed in improving the accountability of federal agencies. Peacock found that the failures were largely due to a “lack of sustained leadership and unfaithful execution by agencies,” and identified three characteristics that could make future regulatory reform efforts more likely to succeed: “codification in law, creation of an independent organization to help execute the law, and establishing a framework for interagency competition.”

• Jacob Olcott, vice president of business development at cybersecurity platform BitSight, argued in The Hill that regulators must step up cybersecurity enforcement measures. Though he praised recent cybersecurity developments from the Securities and Exchange Commission (SEC) and the Department of Health and Human Services (HHS), Olcott felt that more could be done, including replacing what he referred to as “point-in-time” cybersecurity monitoring with technologies that continuously monitor cybersecurity performance.