Politics in Action: S.J.Res. 23, H.R. 3189 and H.R. 1210

The following was submitted to "From The G-Man" on November 17, 2015. 

STATEMENT OF ADMINISTRATION POLICY

S.J.Res. 23 – Disapproving EPA Rule on Greenhouse Gas Emissions from New, Modified, and Reconstructed Electric Utility Generating Units

(Sen. McConnell, R-KY, and 47 cosponsors)

The Administration strongly opposes S.J.Res. 23, which would undermine the public health protections of the Clean Air Act (CAA) and stop critical U.S. efforts to reduce dangerous carbon pollution from power plants.  In 2007, the Supreme Court ruled that the CAA gives the U.S. Environmental Protection Agency (EPA) the authority to regulate greenhouse gas (GHG) pollution.  In 2009, EPA determined that GHG pollution threatens Americans' health and welfare by leading to long-lasting changes to the climate that can, and are already, having a range of negative effects on human health and the environment.  This finding is consistent with conclusions of the U.S. National Academy of Sciences, the Intergovernmental Panel on Climate Change, and numerous other national and international scientific bodies.  Power plants account for roughly one-third of all domestic GHG emissions.  While the United States limits dangerous emissions of arsenic, mercury, lead, particulate matter, and ozone precursor pollution from power plants, the Carbon Pollution Standards and the Clean Power Plan put into place the first national limits on power plant carbon pollution.  The Carbon Pollution Standards will ensure that new, modified, and reconstructed power plants deploy available systems of emission reduction to reduce carbon pollution. 

S.J.Res. 23 would nullify carbon pollution standards for future power plants and power plants undertaking significant modifications or reconstruction, thus slowing our country's transition to cleaner, cutting-edge power generation technologies.  Most importantly, the resolution could enable continued build-out of outdated, high-polluting, and long-lived power generation infrastructure and impede efforts to reduce carbon pollution from new and modified power plants – when the need to act, and to act quickly, to mitigate climate change impacts on American communities has never been more clear.

Since it was enacted in 1970, and amended in 1977 and 1990, each time with strong bipartisan support, the CAA has improved the Nation's air quality and protected public health. Over that same period of time, the economy has tripled in size while emissions of key pollutants have decreased by more than 70 percent.  Forty-five years of clean air regulation have shown that a strong economy and strong environmental and public health protection go hand-in-hand.

Because S.J.Res. 23 threatens the health and economic welfare of future generations by blocking important standards to reduce carbon pollution from the power sector that take a flexible, common sense approach to addressing carbon pollution, if the President were presented with S.J.Res. 23, he would veto the bill. 

H.R. 3189 – Fed Oversight Reform and Modernization Act of 2015

(Rep. Huizenga, R-MI, and 20 cosponsors)

H.R. 3189 would establish requirements for policy rules, codify blackout periods of the Federal Open Market Committee, establish a cost-benefit requirement for other rulemakings by the Federal Reserve Board, and establish numerous, burdensome reporting requirements for the Federal Reserve Board and its members.  The Administration therefore strongly opposes H.R. 3189.

The Federal Reserve is an independent entity designed to be free from political pressures, and its independence is key to its credibility and its ability to act in the long-term interest of the Nation's economic health.  One of the most problematic provisions in the bill would require the Comptroller General to audit the conduct of monetary policy by the Federal Reserve Board and the Federal Open Market Committee.  The operations of the Federal Reserve are already subject to numerous audit requirements that ensure it is accountable to the Congress and the American people.  The only aspect of the Federal Reserve's operations not subject to audit is its monetary policy decision-making, and for good reason.  Subjecting the Federal Reserve's exercise of monetary policy authority to audits based on political whims of members of the Congress—of either party—threatens one of the central pillars of the Nation's financial system and economy, and would almost certainly have negative impacts on the Federal Reserve's work to promote price stability and full employment. 

H.R. 3189 also would impose numerous, burdensome requirements for the Federal Reserve Board rulemaking authorities, including the imposition of a duplicative requirement that the Federal Reserve Board undertake a proscriptive cost-benefit analysis and a post-adoption impact assessment when promulgating rules.  When a Federal agency, including an independent agency such as the Federal Reserve, promulgates a regulation, the agency must adhere to the robust substantive and procedural requirements of Federal law, including the Administrative Procedure Act, the Regulatory Flexibility Act, the Paperwork Reduction Act, and the Congressional Review Act, among other statutes.  Additionally, Executive Order 13579 encourages independent regulatory agencies to conduct reasoned cost-benefit analysis, engage in public participation to the extent feasible, and conduct a systematic retrospective review of regulations.  The provisions in this bill, therefore, would create unnecessary, duplicative, and onerous requirements for an entity tasked with ensuring the financial safety and soundness of the Nation's financial system. 

In addition, the bill would add a number of procedural hurdles that would impede the Federal Reserve's ability to engage with international regulatory bodies and divert its resources to unnecessary reporting requirements.  These provisions, along with provisions imposing parallel notification and consultation requirements on several other Executive Branch entities, could impair the President's exercise of his exclusive constitutional authority to conduct the Nation's diplomatic relations.

If the President were presented with H.R. 3189, his senior advisors would recommend that he veto the bill.

H.R. 1210 — Portfolio Lending and Mortgage Access Act

(Rep. Barr, R-KY, and 54 cosponsors)

As a result of the Ability-to-Repay rules issued by the Consumer Financial Protection Bureau, pursuant to the Truth in Lending Act, American consumers are protected against harmful mortgage products and abusive lending practices that were common in the run-up to the 2008 financial crisis.  Among other protections, the Consumer Financial Protection Bureau's Qualified Mortgage (QM) rule requires a lender to make a good faith effort to determine that a borrower has the ability to repay a mortgage, and that the loan does not include excessive upfront points and fees.  The final rule also contains special provisions and exemptions that are available only to small lenders or to small lenders that operate predominantly in rural or underserved areas.

H.R. 1210 would broaden the definition of qualified mortgages – those that qualify for the safe harbor – to include all mortgages held on a lender's balance sheet.  Under the bill, depository institutions that hold a loan in portfolio would receive a legal safe harbor even if the loan contains terms and features that are abusive and harmful to consumers.  The bill would limit the right of borrowers to file claims against holders of such loans and against mortgage originators who directed them to the loans.  H.R. 1210 also would open the door to risky lending by allowing balloon loans made in any geographic area to qualify for the safe harbor as long as they are held in portfolio.

The Administration strongly opposes this bill because it would undermine critical consumer protections by exempting all depository financial institutions, large and small, from QM standards—including very basic standards like verifying a consumer's income—as long as the mortgage loans in question are held in portfolio by the institution.  This bill would undermine the essential protections provided under the Qualified Mortgage rule.  The Congressional Budget Office estimates that the mortgages offered legal protections under the bill would likely default at a greater rate than the qualified mortgages with current legal protections.

For these reasons, if the President were presented with H.R. 1210, his senior advisors would recommend that he veto the bill. 

Source: The Executive Office of the President, Office of Management and Budget