REGULATION NATION: Obama enlists new lieutenants in second-term push

President Obama has assembled a new cadre of lieutenants to enact policy shifts through regulation during his second term.

Many of the agency heads and top-ranking officials will be tasked with implementing scores of federal rules that will help shape Obama’s legacy. 

“In general, in a political environment in which passing new legislation is very difficult, most of the policy action is likely to come through actions taken within the executive branch,” said Philip Wallach, a fellow at the Brookings Institution. “Much of that is going to be regulation.”
 
{mosads}To a large degree, that means trying to implement and cement the landmark healthcare and financial laws passed in his first term. It also means completing long-sought measures to protect workers’ rights, public safety and the integrity of the food supply. 
 
The centerpiece of the regulatory push is a series of regulations intended to reduce global warming through unprecedented limits on emissions from power plants.

“It’s a very ambitious plan that would really tackle climate change head on,” said Daniel J. Weiss, director of climate strategy for the Center for American Progress.

“Every second-term president thinks about their legacy,” Weiss said.
 
But the climate initiative, along with much of Obama’s regulatory plan, faces stiff opposition from industry groups and congressional Republicans, who argue current regulations are already hindering growth.
 
“We’re leading the world in reduced emissions. We’re down to almost 20-year lows,” said Eric Wohlschlegel, a spokesman with the American Petroleum Institute. “Is EPA taking into its regulations the impact that the costs are going to have on American jobs and Americans’ global competitiveness?”
 
On the other side, public interest groups and Democrats have long complained that the administration, faced with industry resistance, has delayed critical efforts to safeguard the public.
 
Just how many of the rules are enacted — and how strong they will be — will depend, in part, on Obama’s handpicked regulators.

In the span of three days in mid-July, the Senate confirmed Labor Secretary Thomas Perez, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray and Environmental Protection Agency Administrator Gina McCarthy.
 
All three oversee agencies with significant rule-making authority and are seen as likely to regulate with gusto.
 
Perez comes to the Labor Department at a time when 10 separate rules await review at the White House’s clearinghouse for regulations: the Office of Information and Regulatory Affairs (OIRA). 
 
Among them are rules that would limit construction workers’ exposure to harmful silica dust and reduce the buildup of combustible dust in factories and mills. Both have languished for years in draft form.
 
Peg Seminario, longtime director of safety at the AFL-CIO, blamed the stalled rules on a gradual breakdown of the rule-making process.

“I have seen the system and process for developing and issuing worker safety rules devolve from one that worked to produce needed rules in a relatively timely manner to the current broken and dysfunctional system, which is failing to protect workers and costing workers’ lives,” she testified before a Senate panel last month.
 
Cordray, meanwhile, has taken an assertive stance at the CFPB, which was created two years ago in response to the 2008 economic crisis.
 
Obama appointed him to the post in controversial fashion in January 2012, during what the White House viewed as a Senate recess — but others did not.
 
With questions swirling about the legitimacy about the appointment, the agency moved forward with major rules addressing mortgage lending, student loans and financial services that target veterans.
 
He was formally confirmed on July 16.
 
Observers expect the 2-year-old CFPB to remain on the offensive as officials tackle new regulations for prepaid cards, debt services and payday loans.
 
“I don’t think its going to be like this forever, but I think in the near term, while Cordray is in office, I can’t imagine that he’s going to take his foot off the accelerator,” said Alan Kaplinsky, a partner at the law firm of Ballard Spahr.
 
Leading the charge on the climate initiative will be McCarthy, who has spent decades as a regulator in state and national offices, most recently as head of the EPA’s air and radiation office.
 
In speeches, McCarthy has signaled that she plans to make Obama’s climate agenda a top priority. At the top of her list are tough new emissions standards for new and existing power plants.
 
Republicans and business groups opposed McCarthy’s nomination and argued that Obama was trying to circumvent Congress.
 
“That’s just sour grapes crushed into whining,” said John Walke of the Natural Resources Defense Council. “The truth is that the courts have fully upheld EPA’s authority to regulate climate change under the Clean Air Act.”
 
But the final say over regulations, several experts said, resides at 1600 Pennsylvania Ave., where White House officials have taken a heavy hand in many of the largest regulatory decisions during Obama’s tenure, sometimes overruling agency heads.

“The fundamental problem of the Obama administration is, everything is controlled out of the White House,” said Rena Steinzor, a University of Maryland law professor who serves as president of the left-leaning Center for Progressive Reform.
 
White House chief of staff Denis McDonough, on the job since January, has emerged as a major player in regulatory decisions. At a recent dinner with GOP lawmakers, President Obama reportedly identified McDonough as a point of contact on regulatory issues after Sen. Pat Roberts (R-Kan.) voiced concerns.
 
Afterward, McDonough approached Roberts on the topic, according to Sarah Little, a spokesman for the senator. The lawmaker followed up by sending a letter with a list of regulations he sees as problematic, but there has been no response from the White House, Little said.
 
McDonough has a significant track record on environmental issues. In the mid 2000s, he served as a fellow at the liberal-leaning Center for American Progress, where he penned numerous papers urging action on climate change.
 
“Denis McDonough will be an ally on these issues,” said Weiss, who drew a parallel between the White House’s current makeup and the last years of the Clinton administration, when John Podesta served as chief of staff.
 
During that period, major regulations to protect forests from development were enacted and the administration set aside public land by designating 18 national monuments.
 
Regardless of party, presidents are considered to lean more heavily on their executive and regulatory powers in their second terms, experts said.
 
Susan Dudley, who led the White House’s regulations office in the final years of George W. Bush’s administration, termed it the “Cinderella effect.” She recalled that federal agencies and lawmakers pushed the White House to finalize rules before Bush left office.
 
“The pressure was intense, and it was not only intense from political appointees at agencies who knew they were turning into pumpkins and needed to get their priorities done, but the career staff too,” she said.
 
“I was getting calls from members of Congress because they had regulations that they wanted to get done and, by golly, they didn’t want any OIRA administrator interfering in that. So it was really interesting, the pressure all around.”

EDITORS’ NOTE: This is the second in a series of stories that will look at the growth of the regulatory state and its impact on the country.