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Lobbyists’ Focus: How a Law Becomes a Rule

K Street Will Be Watching Closely as Health Care and Financial Regulation Laws Are Put Into Effect

With the prospect of gridlock on Capitol Hill and the recent passage of complicated health and financial reform laws that now must be implemented, many lobbyists are shifting their focus from Congress to the executive branch, where federal agencies are hammering out regulations that will have far-reaching effects.

Instead of organizing fly-ins of supporters and underwriting advertising campaigns, lobbyists are securing meetings with key agency officials and submitting lengthy and highly technical comments to regulators.

K Street shops and trade associations are also supplementing their staffs with lawyers and other experts skilled at navigating the regulatory maze and challenging administrative actions.

“This is not sexy at all. It is a different kind of lobbying,” said Scott Talbott, senior vice president of the Financial Services Roundtable.  Staffers at the association, whose membership includes banks, insurance and credit companies, are spending the bulk of their time tracking the implementation of the financial reform law signed by President Barack Obama last summer.

“Halftime is over,” Talbott said. “The legislators have left the field and the regulators have taken over.”

When Federal Communications Commission chairman Julius Genachowski outlined his ideas to regulate the internet earlier this month, he had already spoken with chief executives of AT&T Inc. and Verizon Communications Inc., according to FCC records. The top lobbyists for the communications giants had been in touch with Genachowski’s chief of staff about the net neutrality plan to be considered by the FCC at its Dec. 21 meeting.

A parade of executives from the nation’s top financial firms, including Goldman Sachs Group Inc., Citibank, Bank of America Corp. and Morgan Stanley, have met with SEC regulators to discuss provisions of the financial reform law, according to commission records.

But lobbyists are quick to add that they are not completely ignoring Congress, whom they still rely on to nudge bureaucrats or overturn rules their clients oppose.

The oil industry is lobbying Congress to stop the White House from pushing through actions it disagrees with, such as reinstating the ban on offshore oil drilling in the eastern Gulf of Mexico and off the Atlantic coast. The industry is also at odds with the EPA for drafting rules on greenhouses gases.

Jack Gerard, the president of the American Petroleum Institute, which represents big oil companies, told reporters last week that he hopes Congress will step in and exert more control over the agencies.  Gerard said the industry wants to “make sure that unelected bureaucrats are not setting the energy policy of this country.”

Andrew Rosenberg, a lobbyist and principle in the firm of Thorn Run Partners, said lawmakers help him get messages through to health care officials for his clients.

Rosenberg said he was able to encourage staffers from four Senate offices to get on the phone with staffers with the Centers for Medicare and Medicaid Services to express the concerns of his clients.

Wary that the Obama administration will use legislative gridlock as an excuse to wield power through rulemaking, the U.S. Chamber of Commerce is launching a campaign that will include paid media and legal challenges to curb what it sees as overzealous regulating.

“The bulk of the administration’s focus, with the Republicans leading the House, will be on the regulatory and rule-making process,” chamber spokeswoman Tita Freeman said.

The campaign, which will likely be up and running in January, will include the hiring of a regulatory economist as well as beefing up communications and advocacy efforts, she said.

The chamber’s litigation center has filed lawsuits to challenge rulemaking by the Securities and Exchange Commission regarding nominating candidates to boards through proxy access and the Environmental Protection Agency’s efforts to regulate greenhouse gases, Freeman said.

Other groups have also been making changes to deal with the laborious task of responding to agency rulemaking. America’s Health Insurance Plans, which represents leading health insurance companies, spent much of the past two years fighting the administration and Democratic lawmakers as they crafted the health reform law.

Now the association’s staff is immersed in responding to federal regulators charged with turning sometimes-vague legislative language into detailed and enforceable rules.

“Unlike other stakeholders, virtually every page of the 2,000-page law impacts our industry one way or the other,” AHIP spokesman Robert Zirkelbach said.

The association submitted 22 comment letters alone on just one Health and Human Services regulation issued last month that requires health insurers to spend 80 percent to 85 percent of consumers’ premiums on direct care for patients, Zirkelbach said.

The health insurance association has also recruited two new senior staffers that the group thinks can address the different challenges. For the job of General Counsel, AHIP tapped Joe Miller, who came from the Justice Department, where he was assistant chief of the litigating section in charge of health care and health insurance. The association also hired Daniel Durham to be executive vice president for policy and regulatory affairs. Durham had previously been vice president for policy at the Pharmaceutical Research and Manufacturers of America, where he was involved in negotiations on the health reform measure.  Durham also previously worked at HHS and the Office of Management and Budget.

The proliferation of rulemaking is proving to be a job bonanza for lawyers with regulatory expertise, said Richard Hunt, president of the Consumer Bankers Association. Hunt said CBA just hired a new attorney to help deal with the regulations for the financial services law. At the same time, he said, the association lost an outside legal consultant who specialized in federal regulation and was snapped up by the Bank of America.

“If you are a trial lawyer or a regulatory lawyer, you are fully employed for the next four years,” he said.

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