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Regulatory: The Obama Regulatory Agenda After the Elections

Republican capture of control of the House of Representatives has changed the mechanisms through which the Obama Administration will pursue its regulatory policy objectives and ensures that disputes between the political parties over regulations will be a recurring feature of the run-up to the 2012 elections.

Until November 2nd, the President led by obtaining landmark legislation from a Congress dominated by his party, and he had little need for concern about legislative oversight of his Administration's initiatives. The President has now lost the opportunity to obtain legislation granting him broad additional authority. He will have to advance his policies through unilateral Executive Branch actions, such as issuance of regulations, executive orders, heightened enforcement and aggressive interpretation of existing laws. The heads of Executive agencies also will have to reallocate their time and political capital to defend the inevitable House oversight hearings on controversial programs.

Initial efforts to implement the health care and financial services regulatory reform bill have shown that many provisions were imperfectly drafted and could have substantial unintended consequences that would harm the public interest. Unfortunately, the prospect of obtaining passage of technical corrections legislation has now evaporated, because the legislative effort would reopen old policy disputes over core policy decisions in those bills, without providing a realistic opportunity to cure the problems that have been revealed. The agencies charged with implementing these measures will have to use their authority to address these anomalies as best they can, and to use other techniques such as long phase-in periods and forbearance of enforcement to give regulated entities extensive grace periods to transition their businesses to the new regime.

The Administration's regulatory policy is likely to be a major bone of contention between the White House and Republicans in the new Congress. The focus likely will be the Environmental Protection Agency. In the years preceding the election of President Reagan, Republicans persuaded the public that EPA's efforts to regulate carcinogenic chemicals were needlessly restricting economic growth. At the mid-term, EPA is in the process of issuing an extraordinary number of very expensive rules, including four major Green House Gas rules; regulations that will force technology development to reduce emissions and increase mileage for autos, SUVs, and large trucks; and major upgrades in air pollution controls for electric power plants and other large industrial facilities. In this climate, similar political confrontations are virtually inevitable.

The President would veto any direct effort by Congress to invoke its formal authority under 5 U.S.C. ? 801 to disapprove a final EPA rule. Accordingly, the battle likely will be joined over Republican efforts to deny agencies the appropriations necessary to finalize or implement their rules. For example, the House will try to package measures to defund EPA with spending measures that are attractive to Democratic constituencies, thereby ratcheting up the political price that Democratic Senators up for reelection would pay for opposing these measures and that the President would pay for vetoing an omnibus spending bill. How successfully Republicans can pursue this strategy remains to be determined, however, because their leadership is determined not to precipitate a shutdown of the government over appropriations. That approach proved to be a disaster for Republicans in 1995-96 and contributed importantly to President Clinton's ability to recover from his defeat in the 1994 and ultimately to win reelection.

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

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John Cooney

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

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