SEC races clock to keep rules out of congressional kill zone
When the SEC finalizes rule proposals, the countdown begins on compliance deadlines for investment advisors and brokers. But the agency faces its own ticking clock when it comes to final proposals, thanks to next year’s elections.
Congress can kill regulations through a parliamentary procedure called the Congressional Review Act, or CRA. Congress has 60 legislative days after a rule is submitted to it to disapprove the rule by a majority vote. Final rules are usually filed with Congress around the time they’re published in the Federal Register.
If a rule is released in the months before an election, there’s a special look-back provision that allows a new Congress to pursue a CRA against rules that were approved during the previous Congress on a special fast-track procedure.
Regulations that go final during the summer or later in an election year can be vulnerable to a CRA when a new Congress is seated in January. Congressional disapproval of a regulation is most likely to occur when one party obtains a majority in both the House and Senate. That party also needs to control the White House to ensure the CRA will be signed by the president.
The SEC is pursuing an expansive agenda that contains 55 proposals in various stages of the rulemaking process. The roster has drawn strong criticism from congressional Republicans, who will be in a position to kill final rules that fall within the CRA look-back if the party wins the House, Senate and presidency.
The SEC is trying to avoid that scenario based on the final rule deadlines it has put on its latest regulatory agenda, according to an analysis by the law firm Sidley Austin.
“For example, the SEC appears to target finalization of many rules early enough that they could
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