All Eyes on Regulation in Post-Election Environment

Facing a Republican majority in the House and a slimmer Democratic majority in the Senate, President Obama and administrative agencies may increasingly turn toward regulation to accomplish policy goals. In contrast, new lawmakers and congressional leaders vow to use their power to roll back regulations, cut spending, and shrink the size of government.

The 112th Congress will be more skeptical of Obama's agenda than the 111th – in the midterm elections, many Republicans framed their campaigns as a referendum on Obama's presidency, and some Democrats distanced themselves from the White House. As a result, the administration will find it difficult, if not impossible, to score major victories in the next Congress.

A shift toward regulation carries both pros and cons. The administration can move at its own pace and shape policy without the compromises and delays inherent in legislating. However, in writing new rules, regulators are bound by statute, and regulation is usually not a powerful enough tool to enact major or systemic changes.

Previous presidents have encountered similar situations and have chosen to look at regulation differently in response to changes in Congress. After Republicans gained control of the House in the 1994 elections, President Bill Clinton shifted some of his focus toward the administrative side of government. Additionally, the Clinton administration expended time and energy responding to increased congressional oversight and investigation. President George W. Bush was also forced to deal with a less compliant Congress when Democrats regained control in the 2006 elections.

Congressional Republicans have shown a desire to tighten oversight of regulatory decisionmaking. The House Republicans' A Pledge to America, a policy agenda unveiled by House Republican leadership in September, calls for congressional approval of all "major" regulations – those expected to have annual costs or benefits to the economy of $100 million or more. "The Pledge's proposal will either result in significant delay or will completely stop the executive branch from carrying out its statutory and constitutional responsibilities," according to an analysis by OMB Watch.

A document released after the election by Rep. Eric Cantor (R-VA), the likely House Majority Leader, calls for House committees to review proposed and existing regulations and issue reports, presumably recommending alteration or repeal of regulations the committees dislike. The document derides regulation, commenting on its cost to businesses without mentioning its benefits to society as a whole.

Climate change regulations written by the U.S. Environmental Protection Agency (EPA) are a likely target of congressional scorn. The agency has finalized several rules under the Obama administration that limit climate-altering greenhouse gas emissions. The most controversial has been EPA's stationary source rule, which will curb emissions from power plants and other large facilities beginning in 2011. Conservative lawmakers and many in the business community have criticized the stationary source rule, as well as other clean air and climate rules EPA has pursued.

Some Republicans have attacked the scientific conclusions EPA has used to support its regulations. An attempt to overturn EPA's 2009 endangerment finding, which officially recognized greenhouse gases as a threat, was defeated in June, but similar attempts are likely to surface in the 112th Congress. Fifty percent of Republicans newly elected in the midterm elections deny the existence of human-caused climate change, according to, a blog of the Center for American Progress.

The Obama administration will need to continue to look to regulation if it intends to add to its climate change record. Climate and energy legislation, passed by the House in 2009 but stalled in the Senate, is dead in the 112th Congress, insiders say. EPA has other items on its regulatory agenda that could curb greenhouse gas emissions, including a rule proposed in October to improve fuel efficiency in large trucks and other heavy-duty vehicles.

A Republican-controlled House is also unlikely to prioritize bills expanding power and authority for regulatory agencies. A bill to improve mine safety in the wake of the Upper Big Branch explosion that killed 29 miners, a bill to require new safeguards for passenger vehicles in response to the recall of millions of defective Toyota vehicles, and a bill to expand protections for workers and whistleblowers who report unsafe conditions were all introduced in the 111th Congress but did not pass either chamber. If the bills do not pass during the upcoming congressional lame-duck session, given existing rhetoric on regulation, these bills are unlikely to advance in the near future.

That will oblige the administration to look to rulemaking as the method for protecting workers and consumers. The Mine Safety and Health Administration (MSHA), National Highway Traffic Safety Administration (NHTSA), and Occupational Safety and Health Administration (OSHA), not Congress, may be expected to take the lead in crafting new policy.

The fate of food safety legislation remains a mystery. Before recessing for the elections, Senate Majority Leader Harry Reid (D-NV) filed a cloture motion on the FDA Food Safety Modernization Act (S. 510), a bill to give the Food and Drug Administration (FDA) more regulatory authority, including the power to order recalls. The motion means the Senate could tee the bill up for passage during the lame-duck session coming up later in November. However, the Senate will likely only be in session for three weeks. Even if it does pass S. 510, the bill would need to be combined with a House version (passed in 2009) in a conference committee, and the conferenced bill would need to be approved again by both chambers. Food safety legislation has bipartisan support, but it is unclear whether House Republicans would prioritize passage of a bill in the 112th Congress or whether they would push to include greater spending and regulatory requirements found in current versions.

Health care and financial regulations are also sure to draw greater scrutiny. Rulemaking agencies will continue to write regulations implementing the health care reform bill and the financial regulatory reform bill, both of which many Republican lawmakers and candidates opposed. Targeting those regulations may prove to be a successful strategy in undermining the laws' impacts if the new Congress can agree on procedures to delay or kill the rules.

Congress can target health care and financial regulations in at least one of three ways. First, Congress has the power to review major regulations and send a resolution of disapproval to the president. Even if House Republicans were successful in getting such resolutions of disapproval through the Senate, they would most certainly face a presidential veto, which Congress would unlikely be able to override.

Second, Congress has the power to conduct oversight. Cantor’s plan of action calls for a significant increase in oversight in an attempt to control executive branch activity. Oversight committees are often the same ones that deal with legislation affecting the covered agencies. Thus, the fear of legislation may provide enough pressure to sway agencies.

Finally, Congress has the power of the purse. It can withhold funding from an agency to keep it from working on a particular regulation. This may be the most powerful course in trying to influence health care and financial regulations because it puts the president in a bind over whether to veto an entire spending bill over a specific restriction on a regulation.

Increased oversight and limiting funding are the most likely strategies opponents may adopt to restrict health care and financial regulations. Resolutions of disapproval have rarely succeeded in the past.

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