Trump Administration Exerts More Control on Independent Agencies

In a move that could increase Trump Administration influence over independent agencies such as the NCUA and CFPB, the Office of Management and Budget announced Thursday it will require all agencies to submit regulations and guidance for its review before they can be released.

If the OMB determines that the rule or guidance is “major,” agencies will be required to submit them to Congress, which could choose to nullify them under the Congressional Review Act.

Independent agencies, such as the NCUA and CFPB, have not been required to submit rules or guidance to the OMB.

Government watchdog groups termed the memo a major power grab by the administration, while conservatives said it will increase accountability.

“The memo fundamentally undermines the independence of agencies that Congress made independent from the White House for good reason,” Amit Narang, a regulatory policy advocate with Public Citizen’s Congress Watch Division, said.

Congressional review is generally focused on rules that have an annual effect on the economy of $100 million or more.

Agencies under direct control of the president already submit proposed and final rules to the OMB’s Office of Information and Regulatory Affairs before they are issued. And while presidents have encouraged independent agencies to submit rules to the OMB, the agencies are not required to send them.

The NCUA has said in the past that it does not send proposed rules to the OMB but does submit final rules to the agency. The CFPB, as an independent agency, is also not required to submit its rules for review.

It remains to be seen if the memo will force a showdown between the administration and independent agencies.

Carrie Hunt, NAFCU’s EVP of government affairs and general counsel, said the trade group wants to ensure that the NCUA remains independent.

“While currently, the NCUA submits the majority of its rules and regulations to the Office of Management and Budget for an information collection review prior to implementation, the procedures outlined in the memorandum go further than that,” she said. “NAFCU shares the goal of the White House to avoid runaway regulation but wants to ensure that the NCUA can maintain its independence as well.”

The new policy could have a significant impact on financial regulators, according to Elizabeth Eurgubian, CUNA’s deputy chief advocacy officer and senior counsel.

The policy “could, in the future, delay and possibly stop some of the more significant and controversial guidance released by financial regulators,” she said.

Regulators have issued guidance in such areas as payday lending, disparate impact in auto lending and high-risk customers, she said.

“As a result, the administration’s actions will likely increase credit union regulators’ accountability when using a regulatory vehicle that has long been criticized as giving regulators unlimited authority with little oversight,” Eurgubian added.

Meanwhile, an NCUA spokesman said agency officials are still reviewing the memo and have no comment on it.

The memo is the latest attempt by the Trump Administration to rein in federal agencies, which it views with a great deal of skepticism, John McKechnie, senior partner at Total Spectrum, said.

“So, this OMB memo is the latest manifestation of that skepticism, and it should be taken seriously as an attempt to rein in what the administration generally considers to be government-wide bureaucratic overreach,” he said. “The interesting part will come when some agency pushes back, or in some way attempts to skirt the memo’s dictates.”

The memo sets the stage for possible battles over enforcement, a policy analyst with one group said.

“This would be a foot in the door for OMB review of independent agencies,” said Sean Moulton, senior policy analyst at the Project for Government Oversight, which monitors regulatory issues. “Congress created these independent agencies to be independent.”

He added, “This is a very long limb that OMB is climbing out on and I’m not sure they have the [legal authority] to do it.”

But conservatives applauded the administration effort.

“The Constitution states that only Congress can make laws, but that doesn’t always stop overzealous bureaucrats from making up regulations that effectively have the force of law, but without oversight from the legislative branch,” Sen. Tom Cotton (R-Ark.) said.

“Too often, powerful federal agencies have ignored and circumvented laws requiring public scrutiny and input on major regulations,” Sen. Pat Toomey (R-Pa.) commented.

And the conservative Pacific Freedom Foundation endorsed the administration’s plan.

“Agencies have doubled down on undemocratic guidance documents, refusing to submit thousands of these economically and politically significant rules to Congress while enforcing them against the public,” foundation Senior Attorney Jonathan Wood said. “The clear implication of OMB’s memorandum is that these unlawfully withheld rules must be sent to Congress and cannot be enforced until they are.”