The House Appropriations Committee voted yesterday to eliminate funds for the president's regulatory review staff within the Office of Management and Budget, and inserted language to prevent the president from sheltering the activity within another agency's budget.

House Energy and Commerce Committee Chairman John D. Dingell (D-Mich.), Government Operations Committee Chairman Jack Brooks (D-Tex.) and Appropriations Committee Chairman Jamie L. Whitten (D-Miss.) are leading an effort to eliminate the office on grounds that the OMB is exceeding its authority by "second-guessing" regulatory agencies.

OMB Director James C. Miller III threatened to recommend a veto of the entire $13.8 billion Treasury, Postal Service and general government appropriation because of the dispute over the $5.4 million for the regulatory office.

"The denial of funds for the Office of Information and Regulatory Affairs constitutes an unacceptable restriction on the executive branch's constitutional prerogatives and responsibility to oversee regulatory affairs," Miller said.

The Appropriations Committee moved by voice vote yesterday to "defund" the regulatory office, which, in addition to reviewing rules for consistency, burdensomeness and costs, also has a mandate to cut paperwork and to supervise statistical and information policies.

The OMB has been accused of sitting on regulations, weakening them, intimidating bureaucrats who propose them, undermining their implementation, and operating in secret.

Prospects for House passage of the "defunding" measure are considered good, but its future in the Senate is unclear.

Senatorial criticism of the OMB's role in regulation was temporarily halted when Sens. David F. Durenberger (R-Minn.) and Carl Levin (D-Mich.) worked out a "sunshine" agreement in which it promised to reveal how it influences the outcome of rules.

Within days after announcement of the agreement, however, a hitch developed. The OMB failed to implement the sunshine rules and Durenberger and Levin wrote Miller accusing him of reneging on the deal.

All parties now describe the breakdown of the agreement as a "misunderstanding" that is expected to be worked out.

The House is scheduled to vote Friday on the appropriation.

Wendy Lee Gramm, director of the regulatory office, said that she was "disappointed" by yesterday's committee vote but that she will "work very hard in the Senate and in the conference to try and get the budget the president wanted for this activity."