The most immediate effect will be felt at the U.S. Court of Appeals for the District of Columbia Circuit. Widely regarded as second only to the Supreme Court in influence, it plays a central role in upholding or knocking down federal regulations. The panel is evenly divided between Republicans and Democrats but has three vacancies that Obama has been attempting to fill.
The court is likely to help decide whether Obama can enact new Environmental Protection Agency regulations limiting greenhouse-gas emissions by power plants — a key element of his second-term plan to combat climate change — as well as a variety of other rules affecting the environment and the financial industry.
Republicans have blocked Obama’s three nominees to the court so far. The Senate’s action Thursday all but ensures that they will take seats on the panel in coming months, moving the advantage to Democrats by a 7 to 4 margin.
“It shifts the court quite substantially to the left,” said Amanda Cohen Leiter, a law professor at American University who previously clerked on the court. “This rebalances it to a considerable degree, and that’s exactly what Republicans were afraid of.”
Democrats say the shift in the court will be especially important given that Obama’s legislative proposals have little chance to prevail in the GOP-controlled House.
“With Congress gridlocked, much of the second term’s success is going to be based on his administrative actions and this should ensure that at least those actions get a fair hearing in this critical court,” said Douglas Kendall, founder of the left-leaning Constitutional Accountability Center.
Republicans, however, said the Senate’s move represented an outrageous repudiation of the minority party’s right to influence policy.
“This is the most important and most dangerous restructuring of Senate rules since Thomas Jefferson wrote them at the beginning of our country,” said Sen. Lamar Alexander (Tenn.). “It’s another raw exercise of political power to permit the majority to do anything it wants, whenever it wants to do it.”
The most contentious issue likely to face the appeals court are climate regulations being pursued by the EPA. The agency has already announced tough new rules limiting greenhouse-gas emissions by new power plants using its authority under the Clean Air Act and is pursuing new — and far more controversial — rules for existing power plants as well.
The measures represent Obama’s most ambitious effort to combat climate change in his second term — coal-fired power plants are a key source of carbon emissions — at a time when such proposals have no chance of passage in Congress.
The court is expected to hear a series of other legal challenges as well, including lawsuits related to elements of the Affordable Care Act, the Consumer Financial Protection Bureau and new air-quality standards.
In recent years, the D.C. Circuit has been hostile to a provision of Obama’s health-care law that required insurance plans to provide contraceptive coverage and to several regulations under the Dodd-Frank Act overhauling the financial industry. It also blocked new rules to limit interstate air pollution and challenged the president’s authority to name recess appointees in the first term.
“We’ve seen over the last few years that the judges there now have taken a hard line against the regulatory agencies,” said Annette Nazareth, a lawyer at Davis Polk and former commissioner at the Securities and Exchange Commission. “You’re going to bring people who are going to have a different perspective.”
The impact of the Senate action extends to the executive branch as well. With a narrow Democratic majority in the Senate, Obama will now be likely to win confirmation of high-level appointees for numerous agencies, including the Department of Homeland Security, the Federal Reserve and the Federal Housing Finance Agency, without needing to rely on Republicans in order to reach 60 votes.
With the likely confirmation of Janet Yellen as Fed chairman, Obama must fill three remaining seats on the central bank’s governing committee. Obama is more likely to be successful naming officials to the Fed who favor continuing the central bank’s efforts to stimulate the economy — defying Republican skeptics who call the efforts financially perilous.
Usually, the White House pairs nominees focused on generating growth — known as “doves” in Fed lingo — with candidates favored by Republicans who are more focused on inflation, known as “hawks.”
“The White House no longer needs to craft a well-balanced, politically acceptable package comprised of both doves and hawks,” said Isaac Boltansky, an analyst with Compass Point Research.
What’s more, Obama is all but assured to see the confirmation of his nominee to lead the FHFA, a little-known but important agency that oversees Fannie Mae, Freddie Mac and much of the nation’s housing market.
The administration has been pushing FHFA to offer credit to more borrowers as well as to refinance mortgages at low rates. The current leadership has resisted those entreaties, citing taxpayer-protection concerns.
Julia Gordon, a senior fellow at the Center for American Progress, said confirmation of Obama’s nominee, Rep. Mel Watt (D-N.C.), probably would mean a change in policy.
“It’s great news for people who want to buy a home, because there’s so much more that FHFA can be doing to help to expand access to credit, which is very tight right now,” she said.
In addition, the FHFA has the power to restructure Fannie Mae and Freddie Mac, which can control who gets a home loan and for how much. The companies are under federal control after being bailed out in 2008 during the financial crisis.