In early September, President Obama decided against ratcheting up the national standard for smog because of the cost and the uncertainty it would impose on industry and local governments.
The decision infuriated environmental and public health advocates, who called it a bald surrender to business pressure and a cold-blooded betrayal of a loyal constituency.
In the weeks since, the administration has made a number of other environmental decisions, sending mixed messages that perplexed both environmentalists and industry lobbyists. Two major clean air rules have been delayed. The Interior Department announced an expansion of offshore drilling over the next five years. Last week, the administration said it would delay a decision on the bitterly contested Keystone XL oil pipeline until after the 2012 election.
Taken together, the moves mark the White House’s growing awareness of the costs of environmental regulation in a battered economy.
Many of the president’s supporters remain unsettled, fearing that the ozone decision meant he was abandoning environmental issues. But White House officials cite two major vehicle emissions rules and the pipeline delay as evidence of the administration’s devotion to their causes.
But the full retreat on the smog standard was the first and most important environmental decision of the presidential campaign season that is now fully under way. An examination of that decision, based on interviews with lobbyists on both sides, former officials and policymakers, illustrates the new calculus on political and policy shifts as the White House sharpens its focus on the president’s re-election.
The decision pitted Lisa Jackson, the administrator of the Environmental Protection Agency, against the White House chief of staff, William Daley. It also shows the clout of Cass Sunstein, the legal powerhouse who serves as the president’s regulatory czar with the mission of keeping the costs of regulation under control.
Revisiting a law
In his inaugural address, Obama promised to “restore science to its rightful place” in making government environmental policy. He also pledged to revisit environmental rules set by the administration of George W. Bush that his administration felt were too weak.
The standard for ozone was last set in 2008 by the Bush administration at a level of 75 parts per billion, above the range of 60-70 ppb recommended by the EPA at the time.
Jackson determined that the standard should be set at 65 ppb to meet the Clean Air Act’s requirement that it be protective of public health “with an adequate margin of safety.” At 65 ppb, the agency calculated, as many as 7,200 deaths, 11,000 emergency room visits and 38,000 acute cases of asthma would be avoided each year.
Jackson knew that standard would cause political heartburn at the White House, so before submitting it she met with Daley at least three times in June to try to deal with any concerns. Daley, rightly sensing the uproar from business and local governments, sharply questioned the costs and burdens as well as the timing of the new rule but never explicitly asked her to hold off or pull back.
Jackson returned to Daley with a compromise, agreeing to settle for a somewhat weaker standard, as well as measures to provide significant flexibility in compliance.
The ozone rule became a symbol of what opponents called a “regulatory jihad” and brought out a swarm of industry lobbyists and Republicans in Congress who identified it as one of their top targets. They organized letter-writing campaigns, ran ads in journals seen by Washington policymakers and put the ozone rule at the top of the list of administration environmental initiatives they wanted repealed in the fall.
They claimed the rule would cost $90 billion a year — far above EPA’s estimates — and put much of the industrial heartland out of business. Local and state officials complained to Congress and the White House that they lacked the resources to enforce the new rule. Even some Democratic lawmakers warned the White House that the regulation would damage their re-election prospects.
Maneuvering
The business lobbyists started working the White House. Daley and Sunstein agreed to meet with them on Aug. 16, the same day they were to meet with public health and environmental groups.
For the West Wing gathering that day, Jack Gerard, the pugnacious head of the American Petroleum Institute, brought maps showing the areas that would be out of compliance with the proposed regulation in a vivid swath of red states across the Midwest and along the East Coast, states that Obama won in 2008. They did not need to spell out the implications.
Daley was well aware of state and local concerns. One of the strongest appeals came from North Carolina, a state Obama narrowly won in 2008. The state’s governor, Bev Perdue, a Democrat, argued against the new ozone rule.
A few hours later, the other side gathered around the same table in the Roosevelt Room. Daley, Sunstein and Gina McCarthy, the top clean air official at the EPA, sat at the table; a half-dozen more junior aides lined the walls.
Charles Connor, president of the American Lung Association and a childhood friend of Daley’s, opened by discussing the adverse health impacts of ozone. He introduced Monica Kraft, a pulmonologist at Duke University and the president-elect of the American Thoracic Society. She emphasized the damage smog does to the lungs of even healthy young children.
Daley listened politely, then asked, “What are the health impacts of unemployment?” It was a question straight out of the industry playbook.
As the meeting was breaking up, Daley said, “As you know, it’s a very difficult economic time.”
Still, the group left believing that the rule would go forward.
The decision
The timing turned out to be terrible. The White House was locked in an ugly battle with Republicans over raising the debt ceiling, job creation had stalled and the presidential campaign was already under way with a singular focus on Obama’s stewardship of the foundering economy.
“There was always a notion that they were looking for a regulation to use as an example of the reform initiative, a poster child, and this was potentially it,” said a senior EPA official who asked not to be identified on a matter involving discussions with the White House. “We knew one was coming. We just didn’t know which one.”
Since Obama took office, Sunstein’s agency has reviewed more than 1,800 rules. Most were approved with some changes and set into law. About 130, including 11 from the EPA, were voluntarily and quietly pulled back for further work.
Only one — the ozone standard — was so publicly rejected.
