Regulatory Issues

Regulatory Issues

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Hundreds of federal rules are making their way through the regulatory pipeline at government agencies and the White House.

Many of the forthcoming regulations are required under the Dodd-Frank Act, ObamaCare and other federal laws approved by Congress. But battles rage daily in Washington over their final shape and scope.

Here is a look at 25 of the most closely watched, contentious and substantive:


1. Volcker Rule

Agencies: Securities and Exchange Commission, Office of the Comptroller of the Currency, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation, Federal Reserve

Status: Final rule pending

Description: Few, if any, of the more than 200 rules required by the Dodd-Frank Wall Street reform law have been watched as closely as the Volcker rule, named for former Federal Reserve Chairman Paul Volcker.

A fundamental piece of the landmark financial reform law, the Volcker rule would prohibit banks that get federal backing from engaging in risky speculative trading. The goal behind the provision is simple: banning financial institutions from gambling with taxpayer money, a practice that helped cause the 2008 economic crisis.

However, the rule has been plagued with delays stemming from outside pressure from critics who've said draft regulations, first unveiled in late 2011, were either too restrictive or too weak.

Further complicating the issue is the number of regulatory agencies working on the rule. In May, Volcker himself complained that there were too many agencies crafting the delayed Dodd-Frank rules, creating "a recipe for indecision, neglect and stalemate."

What's next: It is not clear exactly how soon the rule will be finalized. Regulators working on it said this summer that the Dodd-Frank regulations would be substantially complete by year's end.

2. Corporate political spending

Agency: Securities and Exchange Commission (SEC)

Status: Pre-proposed rule stage

Description: Responding to the dramatic increase of corporate money in politics, a group of law professors and advocates began pushing the SEC in 2011 to enact regulations requiring publicly traded companies to disclose campaign spending to their shareholders.

Since then, more than half a million public comments have poured in, mostly in favor of the proposal.

The SEC announced in December that it was considering proposing the regulation. All eyes are on new Chairwoman Mary Jo White, who took the helm of the agency at a time when it already faces a daunting set of rule-making obligations under the Dodd-Frank Act.

Proponents of the rule contend that investors have a right to know how companies are spending their money.

But critics call the initiative a thinly veiled effort to drive business interest out of politics. Further, they argue, the SEC is ill equipped to wade into the campaign finance issues, which are usually the jurisdiction of the Federal Election Commission (FEC).

What's next: Even if proposed, the regulations would face a lengthy rule-making process — including a formal public comment period — before they could be finalized.

3. Mortgage lending (QRM)

Agencies: Federal Reserve, Federal Deposit Insurance Corporation, Federal Housing Finance Agency, U.S. Department of Housing and Urban Development, Securities and Exchange Commission, Office of the Comptroller and Currency.

Status: Proposed rule

Description: Housing regulators quelled widely held industry fears in late August, when they revamped a set of draft mortgage lending rules.

The initial proposed regulations for qualified residential mortgages (QRM), issued two years prior as part of an effort to protect the economy from another housing bubble burst, were viewed as too stringent.

Banking groups, credit unions and consumer advocates alike pressed the agencies to overhaul the QRM proposal, saying it required unnecessary risk retention and capital requirements, and would make most mortgages too expensive. Of particular concern, they said, was a provision that would have required 20 percent down payments from buyers wishing to qualify.

The revised proposal unveiled in August scrapped that provision and brought the lending standards in line with separate regulations unveiled by the Consumer Financial Protection Bureau (CFPB) in August.

The CFPB's qualified mortgage regulations, designed to ensure borrowers are able to repay their loans on time, were finalized in January, with a series of amendments adopted in September.

What's next: The agencies are requesting comment on the revised proposed rule by Oct. 30.

4. Conflict minerals

Agency: Securities and Exchange Commission (SEC)

Status: Final rule

Description: The Dodd-Frank Act's financial reform law contained an obscure provision requiring manufacturers to publicly disclose whether their products contain certain minerals from the war-torn Democratic Republic of Congo.

The rule, championed by human rights advocates, is meant to rid U.S. supply chains of "conflict minerals" that fund warlords in the Central African nation, thereby drying up demand and decreasing the violence.

Critics argue that effort is well outside the SEC's mission and area of expertise. As a result, they argue, the de facto U.S. embargo on certain minerals has spilled into legitimate Congolese markets and has proven to be a burden on American businesses.

A federal appeals court upheld the rule in July, following a legal challenge from business groups. But recent research has shown that only a small fraction of companies are prepared to comply with the regulations.

What's next: The deadline for compliance is in May.

5. Executive pay

Agency: Securities and Exchange Commission (SEC)

Status: Proposed rule

Description: The SEC this month released a controversial Dodd-Frank rule making companies disclose how much their chief executives are paid compared to the average worker.

The measure, written in the wake of the 2008 financial crisis and during an uproar about high pay for executives at major Wall Street firms, has divided lawmakers and activists largely along party lines.

Democrats and union advocates have supported the rule, which they say will help workers when they meet to negotiate their salary. They also maintain that advertising how much CEOs are paid will help expose and reduce patterns of income inequality across the country.

Business groups and Republicans have opposed the new measure, arguing it would place an unnecessary burden on companies and be incredibly complicated to calculate.

In June, the House Financial Services Committee approved legislation that would repeal the Dodd-Frank requirement that calls for the rule.

What's next: The commission voted to propose the rule on Sept. 18. It is accompanied by a 60-day public comment period. The SEC will review all feedback before finalizing the regulation.

6. Fiduciary rule

Agency: Department of Labor

Status: Not yet proposed

Description: The Labor Department is working on a new version of a rule designed to prevent financial advisers from profiting at the expense of their clients.

The rule would expand the definition of the term "fiduciary" under the Employee Retirement Income Security Act, which would have the effect of raising standards for brokers and advisers who deal with retirement accounts.

However, even before it has been released to the public, the regulation has attracted criticism from members both parties who worry it could prevent average investors from getting access to the best available advice.

The Labor Department first tried to propose the rule in 2010, but it was pulled after criticism from the financial services industry and others.

Additionally, the SEC is considering releasing a similar rule.

Lawmakers have worried that the two rules could lay out conflicting restrictions and could make it difficult for many brokers to handle Individual Retirement Accounts.

In June, the House Financial Services Committee approved a bill requiring the Labor Department to wait until 60 days after the SEC finalizes its regulations to take action.

What's next: The proposal was originally anticipated in October, but an assistant Labor Department secretary said in September that it would not be ready until at least November.

Energy and Enviroment

7. New power plants

Agency: Environmental Protection Agency (EPA)

Status: Proposed rule

Description: The EPA moved forward this month with a major pillar of President Obama's ambitious plan to tackle climate change in his second term: emission limits for new power plants.

Regulators finished drafting the rule for new power plants just days after Obama announced his climate agenda in a speech at Georgetown University, though it remained under review at the White House until it was proposed last week.

The rule is a do-over of sorts for the EPA, which tried regulating carbon pollution from power plants in 2012. But that effort garnered 2 million comments from the public, many of them negative, and the agency missed its April deadline to finalize the rule.

Republicans, industry groups and supporters of coal energy accused the first proposal of being too harsh. The revamped version earned similar treatment, including criticism from some coal country Democrats.

The new version of the rule includes different standards for emissions from coal and natural gas facilities, and requires coal plants use a pollution-reduction tool that power companies have said is too expensive.

What's next: The proposed regulation's appearance in the Federal Register started the clock on a 60-day comment period, which will include at least one public hearing on the plan.

8. Existing power plants

Agency: Environmental Protection Agency (EPA)

Status: Pre-proposed stage

Description: Even more contentious than the regulations for new plants is a yet-to-be unveiled rule imposing new emissions standards on existing plants.

Energy firms are expected to be especially vocal in their opposition to the rule, and the EPA faces technical challenges in lowering emissions from plants now in operation.

The coal industry in particular stands to take a major hit, as some suggest the new standards could be set at a level impossible for plants to meet with currently available technology.

Critics warn that the rule could deal a fatal blow to the coal power industry, which supplies more than a third of the country's electricity.

The major battles over the existing power plant rule are probably still a year off; the EPA's deadline to unveil a draft is still several months away.

Both power plant rules will present major tests for the newly installed EPA Administrator Gina McCarthy and the president's climate agenda.

What's next: The EPA faces a June 2014 deadline to propose the rule, which is to be finalized one year after that.

9. Clean water

Agency: Environmental Protection Agency (EPA)

Status: Proposed rule

Description: The EPA is beginning work on a rule to outline which streams, ponds and lakes it has the authority to regulate.

Technically, the agency is outlining what the Clean Water Act means when it requires that the agency protect the "water of the United States."

Two recent Supreme Court cases have raised questions about the extent of the EPA's authority to enforce pollution limits on smaller bodies of water. According to the agency, as much as nearly 60 percent of all streams in the country could be left without any safeguards if it is unable to regulate "non-navigable" bodies of water.

The proposed regulation builds on a 2011 guidance prepared jointly by the EPA and the Army Corps of Engineers, which was under review at the White House for more than 19 months.

What's next: The EPA released its draft report on which waters it can regulate in September and is accepting comments through October.

10. Low-sulfur gas

Agency: Environmental Protection Agency (EPA)

Status: Proposed rule

Description: The EPA in March issued draft regulations intended to cut pollution from automobiles — a major source of smog.

Under the contentious proposal, refiners would be forced to lower sulfur content of gasoline by more than 60 percent to 10 parts per million by 2017.

The requirements spelled out in the "Tier 3" gasoline standards are intended to improve the performance of catalytic converters and would slash both tailpipe and evaporative emissions from vehicles ranging in size from cars to certain heavy-duty vehicles.

Citing motor vehicles as an important source of air pollution, the EPA estimates that more than 158 million Americans currently experience unhealthy levels of air linked to respiratory and cardiovascular problems.

Automakers have backed the rule, but the powerful American Petroleum Industry opposes it, warning the regulations would lead to higher gas prices for consumers. The EPA maintains the rule would increase pump prices by less than a penny per gallon.

What's next: An extended public comment period ended in July. It is not clear how soon the agency might issue a final rule.

11. Eagle permits

Agency: U.S. Fish and Wildlife Service (FWS)

Status: Proposed rule

Description: Protected bald eagles and golden eagles are among the hundreds of thousands of birds killed every year when they run into wind turbines.

The FWS gives wind farms permits to allow for some of the eagles' deaths as long as they institute "advanced" conservation plans.

Currently, those permits last for five years, but the wind energy industry, which is growing by as much as 30 percent each year, has pushed for a longer time frame. The industry has complained that the five-year plans don't match the way they plan to build new wind farms.

The FWS has proposed to begin granting permits that last up to 30 years.

That will make the permits more like others granted for actions that incidentally kill or disturb endangered species, which can last for decades.

Environmentalists, however, have struck back. They say the administration needs to develop a better framework to analyze how wind farms affect eagles and what measures can be used to prevent more from being killed.

What's next: The final regulation has been under review at the White House's Office of Information and Regulatory Affairs since April for what was supposed to be a 90-day review. Its release is expected shortly.


12. Individual mandate

Agency: Internal Revenue Service (IRS)

Status: Finalized rule

Description: The centerpiece and most controversial portion of the Affordable Care Act, the individual mandate, requires that almost all Americans either obtain health insurance or pay a fine.

The mandate was also at the center of the Supreme Court's ruling last year that upheld the constitutionality of ObamaCare.

In the first year, people who do not obtain health insurance will be charged $95 per person or 1 percent of household income, though that fee will rise to $695 or 2.5 percent of income in 2016. After that, it will grow according to a cost-of-living formula.

There are a number of exceptions to the mandate.

Members of Native American tribes, people temporarily uninsured while they are between jobs and people who would qualify for Medicaid but live in states that have not expanded the program, among others, will not have to pay the penalty for going uninsured.

The IRS refers to the mandate as a "shared responsibility payment," and is tasked with charging the penalty.

What's next: The mandate goes into effect Jan. 1, 2014.

13. Employer mandate

Agencies: Treasury, Internal Revenue Service

Status: Delayed

Description: ObamaCare's critics never liked the landmark healthcare reform bill's "employer mandate," which would require businesses with more than 50 workers to offer insurance or face penalties.

But that didn't stop them from blasting the Obama administration's July announcement that the mandate was being postponed for a year.

The decision came in the face of pressure from business groups warning that uncertainty about how to report information to the Internal Revenue Service could create havoc.

Those reporting regulations were ultimately laid out on Sept. 5, fewer than four months before the provision was initially scheduled to take effect. By delaying the provision for a year, the Obama administration said it was giving the employers more time to adapt to the rules.

Critics, including many congressional Republicans, questioned whether the administration should have the discretion to choose which portions of the law must be implemented in accordance with statutory deadlines.

The IRS, meanwhile, noted that the vast majority of companies with 50 or more workers — roughly 95 percent — already offer healthcare coverage.

What's next: The mandate is now slated to take effect in January 2015, but the Treasury Department is encouraging employers to begin complying with the regulations next year on a voluntary basis.

14. Calorie labels

Agency: Food and Drug Administration (FDA)

Status: Proposed rule

Description: Under the Affordable Care Act,the FDA is required to issue regulations mandating that chain restaurants and vending machines post notices explaining how many calories are in the food they sell to the public.

The regulation would make restaurants and fast food joints with 20 or more locations serving the same food declare the calories information on the menu. Additionally, vending machine operators with 20 or more machines would have to post calorie information on a sign adjacent to the machine.

Supporters of the rule say that it would help consumers make informed decisions about the food they eat and help to fight obesity in the United States.

Some franchise restaurant and grocery organizations have fought back, arguing that it would be extremely difficult and expensive for them to calculate and post calories for all the food they serve.

Movie theaters, bowling alleys and other businesses would be exempt from the requirement because their primary purpose is not selling food.

What's next: The regulation is still in development at the FDA, and will soon be sent to the White House for a final review.

15. Food safety

Agency: Food and Drug Administration (FDA)

Status: Extended public comment period pending

Description: The largest food safety overhaul in 70 years has been fraught with delays, but action appears likely this fall.

Back in January, the FDA unveiled proposed rules under the Food Safety Modernization Act, signed by President Obama exactly two years earlier.

The sweeping regulations reflect a sea change in the country's strategy for combating food-borne illnesses, replacing a system focused on responding to contamination to one designed to prevent it, using a host of new standards on farms and in food production facilities.

Industry and consumer groups largely embraced the regulations as workable. But the rules have been beset by repeated delays, as the FDA extended the public comment period.

The most recent delay, announced in August, was meant to align deadlines for the food safety regulations with those for related rules involving food imports. Those rules involve third-party audits and a new supplier verification program.

The latest extension, the FDA reasoned, would give affected businesses a chance to "consider the interrelationships" between all the pending food safety regulations.

What's next: Comments on all of the proposals are now due Nov. 15.

16. E-cigarettes and cigars oversight

Agency: Food and Drug Administration (FDA)

Status: Rule still in development

Description: The FDA is expected to issue new rules that would expand federal oversight of tobacco products.

The agency currently regulates cigarettes and smokeless tobacco, but the new regulations would add oversight of cigars and e-cigarettes, which vaporize nicotine without making smoke, in a similar manner.

New rules could mean new restrictions, fees and limits on the ways that the tobacco companies can market their products.

The pending regulation has exposed a split between major tobacco manufacturers, which support it as a means to ensure a level playing field, and small cigar companies that feel the FDA is overreaching its authority.

Cigar advocates say that the law governing tobacco products, the Tobacco Control Act, was meant to keep children from smoking and stop people from becoming addicted. Their products, they assert, don't meet those criteria.

Cancer awareness and other public health advocates have supported the FDA's effort.

What's next: The proposal has been under development at the FDA for many months, though members of Congress have pushed it to hurry up. Once the draft regulations are proposed they will be subjected to a public comment period and possible revisions before being finalized.

Workplace and Safety Labor

17. Combustible dust

Agency: Occupational Safety and Health Administration (OSHA)

Status: In development

Description: The OSHA has spent years working on a rule for a wide variety of so-called combustible dust, which can ignite and explode while suspended in the air.

No current standard addresses all workplace combustible dust, which unions and safety advocates have worried exposes workers to dangers on the job.

A new standard would likely impact a wide range of industries, from agriculture to heavy machinery, affecting millions of workers.

After multiple stakeholder meetings and an initial attempt to write new rules in 2009, those efforts have largely stalled.

The dust was at the root of a 2008 sugar refinery explosion that killed 14 people. Between 1980 and 2005, 119 people were killed and another 718 were injured by combustible dust, according to a federal chemical safety board.

What's next: Before issuing any major new rules that will likely affect small businesses, OSHA needs to coordinate with the Small Business Administration and convene a panel to discuss the rule's effects on smaller companies. In its semiannual regulatory guidebook, the Obama administration suggested that consultation could happen in November.

18. Silica exposure

Agency: Occupational Safety and Health Administration (OSHA)

Status: Proposed rule

Description: More than a decade in the making, a proposed rule to limit workers' exposure to harmful silica dust has become symbolic of regulatory delays during the two-plus years it has languished at the White House's Office of Information and Regulatory Affairs (OIRA).

Silica dust, common at construction sites and shipyards, has been linked to health problems, including cancer. The regulations, if enacted, could save as many as 700 lives annually, according to the OSHA.

Unions and safety advocates heralded the draft regulations' release last month, saying they hope action on the long-stalled rule means the Obama administration is serious about clearing a backlog of regulations under review atthe OIRA.

But industry groups are split over whether it is necessary, especially considering estimated economic impacts stretching into the billions of dollars.

What's next: OSHA is holding a 90-day comment period, and plans to convene a series of public hearings.

19. Home care workers

Agency: Labor Department

Status: Final rule

Description: The Obama administration in January revived a years-long push to give minimum wage and overtime wage rights to in-home healthcare workers.

Proposed changes to the 1974 Fair Labor Standards Act would end the "companion exemption" that denies those rights to direct-care aides.

The final rule's release this month was cheered by labor unions and other proponents, who say it reflects a long-overdue acknowledgement of the burgeoning in-home health industry. The Labor Department says there are currently around 1.8 million domestic care workers, though other estimates place the number far higher.

Industry groups warn the rule will cause in-home care expenses to skyrocket, with the brunt of the costs to be passed along to consumers. The regulations, they contend, could thrust an otherwise healthy sector of the economy into upheaval.

Just how much the rule would cost to the more than $84 billion in-home care industry is unclear. The administration has labeled it economically significant, meaning it carries an estimated annual price tag of $100 million or more.

What's next: The regulations are now set to take effect in 2015.


20. Puppy mills

Agency: Department of Agriculture (USDA)

Status: Final rule

Description: The new regulation would bring online puppy mills under oversight from the USDA.

Animal welfare organizations have said that a loophole that lets stores sell pets online and via telephone without inspections has allowed for "puppy mills" to abuse and harm the animals without fear of penalty.

The USDA regulation would change that. It would require the online stores to get a license and meet federal animal health and safety standards.

The rule would end an exemption for stores that sell pets remotely from minimum animal treatment standards set for commercial outlets by the Animal Welfare Act. Advocates say that law was developed before the Internet and not written with the current marketplace in mind.

Animal breeder groups have welcomed the new rule as a way to reassure consumers about the standards for online pet stores.

The rule would not apply to owners with four or fewer breeding female animals.

What's next: The final rule was released in September. The USDA will phase in implementation for online stores.

21. Bus seat belts

Agency: Transportation Department

Status: Final rule under White House review

Description: The rise of Megabus and other popular intercity bus services is accompanied by proposed regulations requiring seatbelts on motor coaches.

The rule is a response to recommendations from the National Transportation Safety Board and is required by transportation legislation passed in 2012.

The regulations, which the Department of Transportation estimates will cost about $13,000 per new 54-seat motor coach to implement, arrived at the White House in February. It is considered a major rule, in that it has a total annual economic impact of $100 million.

The rule was initially to be finalized the following month, but it stalled at the White House Office of Information and Regulatory Affairs (OIRA).

The National Highway Traffic Safety Administration says 19 passengers are killed each year in motor coach accidents, and the seat belt rule would reduce the risk of death in a rollover crash by 77 percent.

What's next: The rule is waiting final review at OIRA, and it is unclear how soon it would be issued.

22. Same-sex benefits

Agencies: All government

Status: Ongoing

Description: The Supreme Court's decision in June to overturn the ban on federal benefits for same-sex couples set off a massive overhaul of regulations across the U.S. government.

The ruling's regulatory implications were not missed by the high court, with Justice Anthony Kennedy writing for the majority that the overturned Defense of Marriage Act prohibitions were "applicable to over 1,000 federal statutes and the whole realm of federal regulations."

Thus began the government's response, one agency at a time. Several, including the Justice, Defense and Labor departments have issued guidances updating their policies in accordance with the ruling.

Gay rights proponents are pressuring agencies to interpret the ruling broadly and incorporate new language into the hundreds of regulations that currently define marriage as between a man and woman.

What's next: Many agencies are still in the process of updating their regulations to comply with the decisions.

23. Export controls

Agencies: State Department, Commerce Department

Status: Partially complete

Description: The Obama administration is in the midst of the largest overhaul of federal export controls in U.S. history.

The president announced the plan during his first year in office, but the highly complex and sensitive effort has taken years to implement — and that process is only now underway.

Rooted in the Cold War era, current rules require companies to get federal permission to export tens of thousands of items that appear on control lists. There is wide consensus that the process is outdated and needlessly protects nuts, bolts and other seemingly benign items that could be used to build weapons.

The pending regulations, long sought by American businesses, are meant to ease the flow of goods while still accounting for national security concerns.

The effort involves moving thousands of military items that no longer warrant the tight controls of the State Department's U.S. Munitions List to a more flexible list at the Commerce Department. Ultimately, the two lists would be merged and overseen by a new export control agency, which would be charged with licensing exports and enforcing the new regulations.

In April, the administration issued hundreds of pages of new regulations reflecting the first of 19 categories of items.

What's next: All of the proposed changes are expected to be unveiled by the end of the year.

24. Fair Housing

Agency: Department of Housing and Urban Development (HUD)

Status: Proposed rule

Description: HUD's attempt to revise the way its programs evaluate race quickly became a lightning rod among conservatives after it was proposed in July.

Conservatives have jumped on the proposal and accused the agency of trying to engineer neighborhoods to make them more racially integrated.

As proposed, the new rule would give states and housing agencies data on race, education and other factors for them to include in developing new housing policies and strategies.

Critics on the right have lambasted it as an attempt by the Obama administration to "social engineer the American people."

Civil rights groups, however, have welcomed the proposal as a way to encourage economic growth among minority communities.

What's next: The comment period on the proposal closed Sept. 17. The agency will then review the hundreds of comments it has received and make any revisions it decides are necessary.

25. Rearview camera

Agency: National Highway Transportation Safety Administration (NHTSA)

Status: Proposed rule

Description: Congress passed the Cameron Gulbransen Kids Transportation Safety Act in 2008, which specifically called for NHTSA to require that new automobiles come equipped with rearview cameras by 2011.

Two years after the deadline, the final regulation, designed to prevent drivers from accidentally backing over small children, has still not yet been issued.

For a year and a half, the regulation sat at the White House's regulations office. Then in July, the highway agency hit the brakes again, saying that it needed to do further analysis.

A 2010 analysis found that the rule would cost automakers up to $2.7 billion per year. Proponents of the measure, however, argue the cost has declined as more companies install camera systems on their own. Plus, they say the benefits of preventing the death of a child are incalculable.

According to the advocacy group, 228 children are killed every year by being backed over.

What's next: The NHTSA expects to finish its new analysis by the end of 2014. After that it will need to go through the formal rule-making process, which will take several months.

Source - The Hill

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