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Clearer path for Obama regulatory agenda after 'nuclear option' paves the way

With congressional gridlock standing in the way of his legislative agenda, President Barack Obama is getting some fresh help in adding to his legacy in a different way – through government regulation.

Senate Majority leader Harry Reid speaks following the Senate's vote to instate a simple majority to approve executive branch and judicial nominees except for Supreme Court picks, saying "Washington has been in gridlock, gridlock, gridlock" and "we're sick of it."

When Senate Majority Leader Harry Reid invoked the “nuclear option” to change Senate rules and ended threatened filibusters of most presidential nominations, it was partly to allow Obama to install his appointees at regulatory agencies and to appoint judges who in many cases will help decide the fate of the regulations those appointees issue.

The rules change’s biggest impact could be felt at the United States Court of Appeals for the District of Columbia Circuit which will end up reviewing many of the regulations enacted by Obama’s appointees, helping increase the chances that the effects of Obama’s agenda will last long after he’s left the White House.

And by using the nuclear option Democrats will add three new Obama appointees to that important court, tilting the membership there to seven active judges appointed by Democratic presidents and four appointed by Republican presidents. A year ago the balance was four judges appointed by Republican presidents to three appointed by Democratic presidents.

It may not be as dramatic as passing sweeping legislation but the reach of the federal regulatory agencies is vast. A few examples:

  • Last week the Food and Drug Administration urged drug companies and farmers to use a standard of “judicious use” when giving antibiotics to cattle and other animals that will wind up as food on Americans’ dining room tables.
  • The Fish and Wildlife Service must decide whether to issue permits for energy projects that would affect endangered species such as the desert tortoise in the Mohave Desert. Here the Obama administration’s push for renewable energy may be on a collision course with species protection, said Ya-Wei “Jake” Li, the director of Endangered Species Conservation at the advocacy group Defenders of Wildlife. “Renewable energy projects and endangered species protection can coexist, but only if the administration begins placing higher priority on the needs of those species,” said Li.
  • The United States is poised to become a huge exporter of liquefied natural gas (LNG), partly due to the shale gas boom in states such as Pennsylvania. But LNG export requires approval of regulators at the Department of Energy and the building of LNG export facilities needs approval from other federal regulators.

Probably nowhere are the stakes higher than at the Environmental Protection Agency.

Obama made greenhouse gas (GHG) emissions a major theme of his State of the Union address last February, pledging that “if Congress won’t act soon to protect future generations, I will.”

President Obama called on the EPA to act, saying he refuses to condemn future generations to "a planet that's beyond fixing." NBC's Anne Thompson reports.

In June he issued a National Climate Action Plan which directed the EPA to set rules to cut emissions and prepare for climate changes. EPA issued a rule in September setting limits on GHG emissions from new electric generating plants.

“The biggest news in 2013 for the climate has been President Obama’s Climate Action Plan,” David Doniger, the policy director for Climate and Clean Air Program at the Natural Resources Defense Council, an environmental advocacy group, told a conference call last week. The plan “set in motion decisive steps to come to grips with the pollution that drives climate change.”

Now that the EPA has issued standards for new power plants, federal law requires that it also issue rules for existing power plants. (That will happen in 2015.)

According to the Congressional Research Service, it would impossible for coal-fired power plants to meet EPA’s standards without installing technology to capture and store much of the CO2 they produce. Such technology isn’t yet widely used and critics say it is unproven.

Coal-state lawmakers are trying to stop the EPA rules.

“Though EPA has yet to formally propose new standards for existing power plants, there is every indication that these standards will be unachievable as well,” said Sen. Joe Manchin, D- W.V. at a congressional hearing on the EPA rule in September. “The EPA is holding the coal industry to impossible standards and for the first time ever, the federal government is trying to force an industry to do something that is not technologically impossible to achieve at least for now.”

Manchin’s ally, Rep. Ed Whitfield, R- Ky., pointed out that when Congress addressed the GHG issue in 2010, the Democrats controlled both the House and the Senate, but the Markey-Waxman bill to control GHG emissions never made it through the Senate. Obama and his allies “cannot get it through. So now, they're attempting to do by regulations what cannot be done through legislation,” Whitfield said.

When it comes to environmental regulation, almost nothing is simple, quick, or uncontested. After the EPA issues its rules, litigation inevitably follows.

Last week the Supreme Court heard oral arguments in a case about rules which apply to air pollution that drifts across state lines. The high court is set to hear arguments in yet another significant case on the scope of EPA’s power on Feb. 24.

The EPA has been around for 43 years, but the newest federal regulatory agency has drawn as much scrutiny from Republican as the EPA has.

After a filibuster struggle that lasted for months, the Senate last July confirmed Richard Cordray as head of the Consumer Financial Protection Bureau (CFPB), the agency created by the Dodd-Frank law to supervise banks, credit card issuers, and other financial firms.

Many Republicans argue that Dodd-Frank gave too much power to CFPB and put it beyond the reach of congressional control by arranging for its funding to come from the Federal Reserve and not from annual congressional appropriations.

Lawyer Alan Kaplinsky, a CFPB expert at the Ballard Spahr law firm in Philadelphia, said the bureau’s big regulatory initiatives in 2013 were in the mortgage field “which is not surprising in light of the fact that the Dodd-Frank Act mandated that the CFPB issue a whole raft of regulations pertaining to the origination and servicing of residential mortgages.”

“The compliance costs for banks and others involved in the mortgage business are going to be much higher because all the rules of the road are changing,” Kaplinsky said.

In 2014 the CFPB will likely be issuing rules dealing with debt collection, pre-paid debit cards, and payday lenders. “They have a lot of things percolating,” he said.

Both the Affordable Care Act and Dodd-Frank became law in 2010. As with the ACA, Dodd-Frank’s impact – in the form of CFPB regulations -- will last for years and decades, validating Obama’s chief of staff Rahm Emanuel’s saying in 2009 that “You never want a serious crisis to go to waste.”