HJRES-90-119
Referred to the Subcommittee on Commodity Markets, Digital Assets, and Rural Development.
Sponsored by Stephanie Bice (R-OK)
What it does
This joint resolution would use the Congressional Review Act (CRA) to nullify a final guidance document issued by the Commodity Futures Trading Commission (CFTC) on October 15, 2024. That guidance set out factors — including transparency and permanence — that regulated derivatives exchanges must consider when listing voluntary carbon credit derivative contracts for trading. If enacted, the guidance would be void and the CFTC would be prohibited from issuing a substantially similar rule without new congressional authorization.
Who benefits
Derivatives exchanges and financial firms that found the CFTC guidance burdensome or uncertain. Companies that buy and sell voluntary carbon credits and prefer less regulated markets. Fossil fuel producers and industrial emitters who use carbon credit markets to offset emissions and may prefer looser listing standards. Libertarian and free-market policy advocates who oppose agency guidance documents as informal rulemaking. Congress, which would reassert oversight authority over CFTC rulemaking.
Who is hurt
Environmental organizations and climate-focused investors who argue that transparency and permanence standards are necessary to prevent low-quality carbon credits from entering derivatives markets. Corporations with net-zero commitments that rely on credible carbon markets to meet climate pledges, as market integrity concerns could undermine the value of their offsets. Retail and institutional investors in carbon credit derivatives who may face greater uncertainty about underlying asset quality. International partners and foreign carbon market participants who look to U.S. regulatory standards as a benchmark.
Supporters argue
Supporters argue that the CFTC's guidance document — issued without notice-and-comment rulemaking — imposed de facto regulatory requirements on carbon credit derivatives markets without clear statutory authorization, raising concerns under the major questions doctrine established in West Virginia v. EPA (2022). They contend that voluntary carbon markets are still nascent and that prescriptive federal guidance stifles market innovation and liquidity, and that Congress — not an agency acting unilaterally — should set the parameters for how these novel financial instruments are regulated.
Opponents argue
Opponents argue that the CFTC guidance addressed a documented problem: the voluntary carbon credit market has been plagued by fraud and low-quality credits, with investigative reporting and academic studies finding that a significant share of widely traded offsets deliver little or no real emissions reduction. They contend that removing minimum standards for transparency and permanence would expose derivatives markets to manipulation and undermine the integrity of carbon pricing mechanisms that businesses and investors depend on to make long-term capital decisions.
Constitutional context
The Congressional Review Act gives Congress authority to disapprove agency rules under the Necessary and Proper Clause (Art. I, §8, cl. 18) as an exercise of its oversight power. The underlying CFTC guidance may itself face scrutiny under the major questions doctrine (West Virginia v. EPA, 2022) and post-Loper Bright independent judicial review (2024), since courts no longer defer to agency interpretations of their own statutory authority — meaning the guidance's legal footing was already contested before this resolution was introduced.
Checks and balances
Congress would gain authority by voiding the CFTC guidance; the CFTC would lose the ability to re-issue a substantially similar rule without explicit new congressional authorization, shifting regulatory power from the executive branch back to the legislative branch.
Historical precedent
Congress has used the Congressional Review Act to nullify agency guidance documents before, most notably in 2017 when it repealed several Obama-era rules across multiple agencies, establishing that guidance documents qualifying as "rules" under the CRA are subject to congressional disapproval.