Cromnibus a sneak preview for regulation wars to come

Republicans in Congress this week used their leverage in the budget process to invalidate provisions in several controversial Obama administration regulations. The most prominent one (and the one that almost derailed the passage of the budget) prohibited the Federal Deposit Insurance Corporation (FDIC) from requiring that large banks separate trading in derivatives from traditional (FDIC-backed) bank accounts.

There were other, less publicized provisions in the so-called “cromnibus” that rolled back or restricted regulatory activity. Requirements for reduced sodium content and increased use of whole grains in school lunches were delayed. A rule issued by the Environmental Protection Agency (EPA) under the Clean Water Act was also rescinded, but a larger rule (the Waters of the United States, or WOTUS rule) was left untouched. Other environmental regulations were also halted, including ones on light bulb efficiency and endangered species listing. Finally, some provisions of recently issued Department of Transportation regulations requiring more rest for truck drivers were rescinded.

{mosads}Regulatory riders on a piece of must-pass budget legislation will be a common subject of debate over the next two years after Republicans gain control of the Senate and strengthen their hold on the House in January. Republican control of Congress and the approaching end of his term will lead President Obama to use his regulatory authorities to a greater extent in 2015 and 2016 than he has up until now.

There will be much rhetoric out of Congress about turning back the Obama administration regulatory tide. But as long as Obama is in office, their options for doing so are limited. Whether they pass regulatory reform bills or try to overturn individual regulations using the Congressional Review Act, the threat of Obama’s veto pen is looming. And while their victory in November was impressive, Republicans do not have enough votes to override a presidential veto without considerable Democratic support.

As I’ve written before, there is one effective way for a Republican Congress to roll back regulatory initiatives. As they did this past week, the new Congress will (hopefully) pass two budgets over the next two years. Those budgets will be the subject of negotiation between the two houses of Congress and Obama. It is virtually certain that the president will have to accept more regulatory riders on the budget than he did in the cromnibus, given the increase in Republican representation in Congress.

The debate over the cromnibus will be replayed on a larger scale from October through December 2015 (the budget debate in 2016 will take place in the shadow of presidential and congressional elections, which will make it very different). Republicans will try to roll back as many regulations as possible, but their leadership is unlikely to risk a politically damaging shutdown. Obama will be trying to protect as many of his regulations as possible, using the threat of a veto and a resulting shutdown to do so. But as this week showed, he will tolerate some regulatory rollbacks in order to keep the government running. Both sides will have to carefully judge how much political support they have for their positions.

This past month, the makers of the new “Star Wars” movie whetted the appetites of their fans everywhere for the new sequel coming out next December with a widely viewed online preview. Similarly, observers of regulatory policy and fans of political brinkmanship and late-night congressional debates got a sneak preview of a much larger show coming out next year. As with the “Star Wars” preview, there is no way of knowing whether the full feature will live up to the hopes of supporters or opponents of regulation.