Overnight Regulation: Consumer bureau cracks down on arbitration clauses | Rule on entrepreneur visas delayed | Schumer wants FDA to probe ‘snortable chocolate’

by Niv Elis - 07/10/17 4:57 PM ET

Welcome to Overnight Regulation, your daily rundown of news from the federal agencies, Capitol Hill, the courts and beyond. It’s Monday evening. Congress is kicking off its three-week sprint to the August recess, with a busy agenda. And there’s already talk about whether they will cut the recess short if senators can’t get their ObamaCare repeal-and-replace bill done.

THE BIG STORY: The Consumer Financial Protection Bureau (CFPB) on Monday issued a controversial rule to prevent companies from using arbitration clauses to prevent litigation over customer complaints.

The long-awaited rule targets credit card companies and banks who use arbitration clauses in customer contracts to block lawsuits over alleged wrongdoing or fraud. Such clauses often force consumers to settle complaints with financial companies through mediated arbitration, instead of filing a class-action lawsuit.

{mosads}”Arbitration clauses in contracts for products like bank accounts and credit cards make it nearly impossible for people to take companies to court when things go wrong,” said CFPB Director Richard Cordray.

Credit card companies and banks have argued that arbitration clauses are fair, simple, and cheaper ways to settle customer complaints, and that a CFPB ban would overstep its authority.

The new CFPB rule forces companies to write arbitration clauses in ways that wouldn’t prevent consumers from joining class-action lawsuits. It also forces financial firms to hand over information about “initial claims and counterclaims, answers to these claims and counterclaims, and awards issued in arbitration.”

The rule will take effect in 60 days, and will apply to contracts that begin 180 days after that.

CFPB’s arbitration rule is the latest major regulatory move by an agency Republicans have long considered heavy handed in its approach. They are targeting the agency for major reductions in power and independence.

Business groups are already speaking out against the rule and promising action against it.

Senior officials at the U.S. Chamber of Commerce, the powerhouse firm representing business interests, slammed the CFPB’s arbitration rule as a “brazen” act.

The American Bankers Association said the CFPB rule favors trial lawyers over consumers, and called arbitration “a convenient, efficient and fair method of resolving disputes at a fraction of the cost of expensive litigation, which helps keep costs down for all consumers.”

Sylvan Lane has everything you need to know here.

ON TAP FOR TUESDAY

A House Appropriations Subcommittee marks up the fiscal 2018 Transportation, Housing and Urban Development appropriations bill.

The Sustainable Energy Coalition is hosting the 20th Congressional Renewable Energy and Energy Efficiency EXPO + Policy Forum.

The Bipartisan Policy Center is hosting an event on “Solutions to long-term care financing in politically challenging times.” Former Sens. Tom Daschle (D-S.D.) and Bill Frist (R-Tenn.) will attend.

REG ROUNDUP

Immigration: In a setback for Silicon Valley, the Trump administration is delaying a rule that would have made it easier for foreign investors and entrepreneurs to enter the U.S.

The International Entrepreneur Rule, which was scheduled to go into effect on July 17, has been delayed until March 14, 2018, according to a notice from the Department of Homeland Security (DHS) posted to Federal Register’s website on Monday.

The notice reads, “This delay will provide DHS with an opportunity to obtain comments from the public regarding a proposal to rescind the rule” in light of President Trump’s executive order from earlier this year on immigration enforcement.

The rule, which was proposed by President Obama’s DHS last year, would have given the agency the authority to grant entrepreneurs “parole” on a case-by-case basis to enter the U.S. for up to 30 months, with the possibility of an extension.

Tech groups had pushed for the rule, arguing it would help startups.

The Hill’s Harper Neidig has more here.

Technology: The clash between media and tech is heating up.

A trade association representing hundreds of major media outlets is asking Congress to grant the press collective bargaining power to negotiate with Facebook and Google, two companies that have dominated the online ad revenue market.

The News Media Alliance said on Monday that the two internet giants have been siphoning ad revenue away from news organizations around the country and that the industry should be able to have “concrete discussions” in order to secure better conditions.

“Legislation that enables news organizations to negotiate collectively will address pervasive problems that today are diminishing the overall health and quality of the news media industry,” David Chavern, the group’s president and CEO, said in a statement.

Facebook and Google together rake in the majority of ad revenue generated on the internet, and critics like the News Media Alliance say that they are profiting off the decline of the news industry.

Harper Neidig has more here.

Technology: Democratic senators are urging the FCC to prepare for an anticipated wave of comments on the agency’s proposal to roll back the net neutrality rules and beef up their cybersecurity.

Supporters of the rule are planning a “Day of Action” on Wednesday and expect allies to register a large number of comments.

Sens. Ron Wyden (D-Ore.) and Brian Schatz (D-Hawaii) wrote to the agency on Monday, citing a May incident in which the FCC’s comment system went down, and urging officials to avoid similar problems.

“This was an unacceptable mistake that left Americans disenfranchised from your comment process,” they wrote.

The Electronic Communication Filing System (ECFS) was disabled on May 7th and 8th during what the agency said was a denial of distributed service attack (DDos). The cyber attack came as John Oliver, the host of HBO’s “Last Week Tonight” slammed FCC Chairman Ajit Pai’s plan to get rid of net neutrality and urged supporters to make their views knows.

The attack kept many from being able to share their comments on the FCC site.

“We are concerned that a similar attack may be planned to disrupt the Day of Action,” the senators added. “We encourage you to seek out and employ ECFS measures that allow for flexible scalability and alternative methods of filing.”

The Hill’s Ali Breland has the story here.

Transportation: Bye, America? Federal requirements to buy American-made products may be forcing some U.S. transit systems to spend more money, according to a new study from a center-right think tank.

The American Action Forum (AAF) released research Friday that found “Buy America” rules for Federal Transit Administration (FTA) grants could be raising procurement costs in some areas.

Washington’s beleaguered Metrorail system, according to the study, could have saved $700,000 on each of its 7000-series rail cars if it was able to purchase new cars at the price they cost overseas.

President Trump has repeatedly promised that his policies, including his massive infrastructure proposal, would require companies to buy and hire American.