Procedural requirements like the APA’s notice-and-comment process are often viewed as burdens on agencies to be avoided when possible. My new paper in the Administrative Law Review provides evidence for that view. But this view is not always correct (if it were, many questions in this area would be less interesting!). In some cases, agencies can use such procedural requirements to their advantage.
A recent decision from the Consumer Financial Protection Bureau may be an illustrative example. In 2013, the Bureau issued a rule requiring lenders to combine two important disclosure forms in the home mortgage process. This required lenders to significantly rework significant parts of their internal computer and compliance systems, requiring real time and money.
As the August 2015 compliance deadline loomed, the lenders expressed significant concern over being ready and requested more time. The Bureau repeatedly rebuffed these requests. It was probably concerned that giving more time would send the wrong message to lenders about the importance of compliance. It may have also felt pressure from consumer advocacy groups. As the August 2015 deadline drew closer, pressure built on the CFPB to give lenders more time to comply. Legislation in the House was gaining some bipartisan support to effectively provide more time. The CFPB may have felt caught between a rock and a hard place.
Oddly, administrative procedure offered a way out. The CFPB recently realized that it accidentally failed to file a required report under the Congressional Review Act. As a result, the rule legally had to be delayed for at least a couple of weeks. Given that, it was easier to delay the rule until October 1. In short, an administrative blunder allowed the CFPB to deflate the building political pressure without seeming to back down or send the wrong message to lenders. It’s an interesting example of how agencies can use procedural requirements to their advantage.