Wave of regulation looms in 2016
President Obama is preparing to unleash a wave of new regulations in 2016 as he looks to shore up his legacy on public protection issues during his final year in office.
The Securities and Exchange Commission, the Food and Drug Administration and the Department of Labor are all expected to finalize major federal rules that critics say are long overdue. The regulations include a final rule from the 2010 Dodd-Frank financial reform law that will force companies to compare the paychecks of their top executives with company performance, final rules for cigars and electronic cigarettes proposed well over a year ago, and a final regulation to protect constructions workers from deadly silica dust.
Here’s a look at the top regulations expected to come from the administration in 2016.
Pay for performance
The Securities and Exchange Commission (SEC) is expected to finalize its “pay for performance” rule that will require publicly traded corporations to disclose how much their top executives are paid and compare that to the companies’ overall financial performance.
The agency, which first proposed the rule in May, set an October 2016 deadline for the final rule last month. The SEC contends it will allow shareholders to make more informed decisions when electing directors.
Regulatory experts are expecting the Consumer Financial Protection Bureau (CFPB) to propose new rules in 2016 to protect consumers’ right to file or join a class-action lawsuit against a financial company.
More and more companies are adding arbitration clauses to contracts that prevent consumers from resolving a dispute through the court system. Instead, the language, which can often be found in credit card and cellphone contracts, typically states that disputes about a product can only be resolved by privately appointed individuals or arbitrators.
Dodd-Frank directed the CFPB to do a study of arbitration agreements and issue a report of its findings to Congress. After the agency completed the report in March, it announced plans to proceed with a rulemaking.
Industry and health groups may not agree on the rules, but both are exasperated by the delay in first-ever regulations from the Food and Drug Administration (FDA) for cigars and electronic cigarettes.
Health groups were frantic in the days leading up to the release of the $1.1 trillion government spending deal earlier this month, fearing that industry had successfully lobbied for a change that would have exempted many e-cigarette and cigar products from the restrictions.
Industry groups, however, came up empty-handed and will now wait to see if attempts to lobby the White House for last-minute changes paid off. Those organizations are most concerned about a provision in the proposed rule that would require all products that hit store shelves after Feb. 15, 2007, to apply retroactively for approval, a process that companies say would put them out of business.
The FDA originally said the final rules would be out last summer but changed the deadline to November. The White House Office of Management and Budget (OMB), which is reviewing the final rule, was still meeting with industry and health groups last week.
The Department of Labor is in the process of finalizing a years-in-the-making rule to protect workers from silica dust.
Peg Seminario, the AFL-CIO’s safety and health director, said the labor group has been awaiting the rule since 1997. Exposure to silica dust, common at construction worksites and shipyards, can cause an irreversible lung disease known as silicosis.
The Labor Department sent the final rule to the OMB last week for final review, a process that can take up to 90 days.
“I’m sure they will give it a thorough review and it’ll be issued sometime, we hope, in the first quarter of the year,” Seminario said.
The DOL is gearing up for a busy year, with plans to also finalize a rule that will require employers to report and keep records of workplace injuries and illnesses. Seminario said the draft of the final rule went to OMB in October. Labor groups are hoping to see a final rule in the first quarter.
Perhaps the most sweeping action to in the new year will be a final rule to extend overtime pay to nearly 5 millions white-collar workers. The Labor Department proposed the rule in June as a result of an executive order President Obama issued in May. Under the rule, any worker earning up to $50,000 annually would be eligible for overtime.
Department spokesman Jason Surbey said the agency is reviewing the more than 270,000 comments it received.
“We’re on track to issue a final rule by July 2016, with an effective date sometime after that,” he said.
The CFPB is planning a February rollout of its proposed rules to crack down on predatory payday lenders.
The agency released a framework for the rules in March that considered forcing lenders to ensure a borrower’s ability to repay a loan, limiting short-term credits to 45 days or less and establishing a 60-day “cooling-off” period for borrowers who take out three loans in a row.
Payday lenders have already balked at the rules, calling them unnecessary and damaging for consumers who have nowhere else to turn for their short-term lending needs.
The FDA is expected to issue final requirements in March for the sanitary transportation of animal and human food.
The rules, which were are mandated by the Food Safety Modernization Act of 2011, establish requirements for shippers, carriers and receivers to use sanitary practices to ensure that that food does not become contaminated when being transported. The final rules were originally expected to be released in April 2015.
The Labor Department is also expected to issue a final rule in 2016 that would require financial advisers to disclose more information to their clients about the compensation they receive. In October, under mounting pressure from business groups, Labor Secretary Tom Perez said the department planned to make some changes to the contentious regulations — commonly called the “fiduciary rule” — but would not detail what those changes would be.
The Environmental Protection Agency is expected to finalize new rules to limit methane emissions from the oil and gas sector. The rule would require drillers to use new technologies to track and block both accidental and purposeful leaks when producing and transmitting oil and gas. The EPA has set a June deadline for the release of this final rule.
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