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Regulatory: Zeroing Out Regulations

House Republicans have announced that they will try to block implementation of parts of the new health care and financial reform laws adopted in 2010 and EPA rules regulating Green House Gas (GHG) emissions that become effective in January. How could they hope to succeed when they control only one body of Congress and the President would veto any legislation that sought to repeal these measures? The answer is that the new Republican majority will try to pass laws "zeroing out" the appropriations necessary for the agencies to develop or enforce the rules required to implement these measures. These legislative battles are likely to be a major focus of federal regulatory activity in 2011.

"Zeroing out" is a term developed by federal budget experts to describe a situation in which a new law explicitly precludes an agency from expending appropriated funds to implement a law that Congress previously had enacted. A typical "zeroing out" provision might state that "Notwithstanding any other provision of law, the agency shall expend no funds appropriated by Congress" to take a specific action. The Snail Darter decision, TVA v. Hill, 437 U.S. 153 (1978), established that subsequent passage of legislation explicitly denying appropriations to carry out a defined function can neutralize a substantive law previously passed by Congress and deprive it of any practical effect. The law remains on the books, however, and springs back to life if Congress fails in any future year to zero out the agency's appropriations for that purpose.

The President could block a freestanding effort to defund implementation of these laws or to overturn parts of a new statute or to reject a rule that is an Administration priority, and the Republicans do not have the votes to override a veto. How could they hope to succeed? The answer is by packaging the "zeroing out" language as one provision in an omnibus spending law that provides funding for critical government functions. For example, in the mid-1980s, a Democratic House majority successfully zeroed out funding for Reagan Administration efforts to overthrow the Nicaraguan Contras by insisting on inclusion of a defunding measure in bills that provided appropriations for national defense priorities, such as new technologies the President sought to confront the Soviet military. The White House ultimately calculated that the political embarrassment and adverse policy consequences of a bill that funded its most important policy priorities would be so great that the President would have to swallow hard and sign the bill.

House Republican leaders are analyzing President Obama's policy priorities to determine which policy initiatives he might be willing to trade off against funding for higher priorities. They also will seek to identify "must pass" funding legislation to which zeroing out provisions could be attached, such as a supplemental appropriations bill to fund a shooting war.

One potential target for zeroing out is the EPA rule limiting GHG emissions from large industrial facilities. For example, the House majority might pass an urgent spending measure that zeros out funding for those measures and try to pressure Democratic senators in coal-producing States who face reelection in 2012 into supporting defunding. In response, the Administration could seek to solidify opposition in the Senate through policy arguments and appeals to the Democratic caucus to preserve the President's political authority. Such a contest could serve as an early test whether a Republican defunding strategy could succeed or whether federal agencies will have the ability to develop and implement their regulatory programs for the remainder of the President's tenure.

John F. Cooney is a partner in the Washington, D.C., office of Venable.

Read John Cooney's previous column.

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John Cooney

John F. Cooney is a partner in the Washington, D.C., office of Venable.

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