Contractor ‘Blacklisting Rule’ Killed Under the Congressional Review Act

By: Melanie M. Dunajeski, Drewry Simmons Vornehm, LLP

Back in 2014, then President Obama issued an Executive Order – “Fair Pay and Safe Workplaces” – requiring federal contractors to disclose violations of labor laws going back three years, and to create transparency with respect to employee pay practices. In an effort to make the impact of the EO more permanent (and in the absence of congressional support), the Executive Order was the basis for later Obama Administration rulemaking by the Federal Acquisition Regulatory Council and a Department of Labor guidance that employer opponents dubbed the “Blacklisting Rule”. Proponents of the rulemaking claimed that the rule supported fair pay practices and shone a light on contractors who had serious or pervasive labor or safety issues. Opponents claimed that the rule placed unnecessary regulatory burdens on government contractors that exceeded the limits of the law.  Indeed, as soon the Council enacted the rule in August 2016, it was stayed by an injunction granted by a Texas Federal Court judge when a lawsuit was filed, claiming the Obama Administration exceeded its rulemaking authority in enacting the rule.  Assuming arguendo that the rule could survive the court challenges, rolling back the rule would require further administrative procedures, notice and comment periods – with one narrow exception – the Congressional Review Act.

This little-known mechanism was adopted back in 1996 and allowed Congress 60 “session days” from the time of the rule’s enactment to pass a resolution disapproving the rule, which then must be signed by the President, or in the event that the President vetoes, the veto must be over ruled by Congress. Before Donald Trump assumed the Presidency in January 2017, the 20-year-old law had been used only once in 2001 to roll back an ergonomic rule promulgated by the Clinton OSHA Administration. However, with the advent of the Trump-era White House and Republican majorities in both houses of Congress, the stage was set for wholesale attacks on late Obama Administration rulemaking.  Congress acted swiftly to pass a Joint Resolution disapproving the rule, and the President signed the Resolution on Monday March 27th, making permanent the prior injunction.

However, the reach of the Congressional Review Act extends past the current administration.  In the event a subsequent administration friendly to the subject of this blocked rule wishes to reinstate the rule in substantially the same form, it cannot proceed through the usual rule-making process. Instead, under the provisions of the Congressional Review Act, that rule must be “specifically authorized by a law enacted after the date of the joint resolution disapproving the original rule.”

As a practical matter, while the repeal of this rule may eliminate the regulatory burden increased reporting placed on contractors and employers, it doesn’t change the fact that federal contractors are still subject to the rules and laws governing doing business with the federal government, as well as the myriad labor and employment laws governing their relationships with their employees.  Federal contractors will continue to experience suspension or limitation of their rights to contract with the government, and federal enforcement actions will continue where companies run afoul of NLRB, EEOC or OSHA.