(FORTUNE Magazine) – You get some idea of how life has changed--really changed--in the new, conservative Congress when the chemical industry has to come to the rescue of the Environmental Protection Agency. But action by the House of Representatives to cut 34% of EPA's proposed $7.3 billion budget for 1996 is eliciting strange cries of "unhand those regulators, you curs" from the regulatees. Is there something in the water?

"That much of a cut in one year would be disruptive and counterproductive," explains M.L. Mullins, a vice president at the Chemical Manufacturers Association. "We must protect the EPA's core programs that are essential to the credibility of the agency."

Certainly, industry lobbyists still clamor for environmental "reform," but some fear that too much too fast might induce an adverse reaction. The Senate begins debate after Labor Day on its proposed EPA cuts.

The House version of a VA/HUD 1996 appropriations bill, which contains the EPA reductions, includes 18 riders, catering to various lobbies, that curtail the EPA's ability to enforce many water- and air-quality regulations. Water standards for the Great Lakes could no longer be imposed, for example, and regulations mandated in 1990's Clean Air Act for toxic air pollutants at oil refineries would be unenforceable.

Many industry leaders expect circumspection from the Senate. Says William K. Lorenz, a principal of the Exton, Pennsylvania, consulting firm Environmental Resources Management, which works for Fortune 500 companies: "The reform train is leaving the station too fast. Sure, my clients want to change some environmental regulations that are broken, like Superfund, but they don't want overreaction."

Robert H. Campbell, CEO of Sun Co., suspects that Congress is misreading public sentiment: "I don't think people were voting last November to do away with environmental regulations. If some are not cost-effective, the public expects industry to work out solutions with Congress and the EPA." Agency boss Carol Browner may yet benefit from having forged close relationships with six industries to streamline regulations, reduce paperwork, and delete obsolete rules through her "common sense initiative."

Companies that have charted aggressive plans to reduce pollution will charge ahead, for nonregulatory reasons: "We've gotten hooked on emissions reductions," says Paul V. Tebo, Du Pont's vice president of safety, health, and environment. "The lowest-cost operators of the 21st century will be those with the least amount of environmental waste."

- Faye Rice