WASHINGTON » The summons from the president came without warning the Thursday before Labor Day. As she was driven the four blocks to the White House, Lisa P. Jackson, the administrator of the Environmental Protection Agency, suspected that the news would not be good. What she did not see coming was a rare public rebuke the president was about to deliver by rejecting her proposal to tighten the national standard for smog.

President Barack Obama had decided against ratcheting up the ozone rule because of the cost and the uncertainty it would impose on industry and local governments. He told Jackson that she would have an opportunity to revisit the Clean Air Act standard in 2013 — if they were still in office.

The White House announced the decision the next morning, infuriating environmental and public health advocates. They called it a bald surrender to business pressure, an act of political pandering and, most galling, a cold-blooded betrayal of a loyal constituency.

Industry groups and their Republican allies praised the move. But then they reeled off a dozen other proposed environmental, labor and health regulations they also wanted killed.

In the weeks since that decision, the administration has made a number of other environmental decisions, sending mixed messages that left both environmentalists and industry lobbyists perplexed. Two major clean air rules have been delayed, at least temporarily. The Interior Department announced a significant 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, the pipeline delay and the president’s stated promise to carry through on other clean air measures 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 Jackson against the White House chief of staff, William M. Daley, a son and brother of bare-knuckled Chicago mayors who was brought in to help repair relations with business and Congress. It also shows the clout of Cass R. Sunstein, the legal powerhouse who serves, mostly behind the scenes, 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’s scientific advisory panel at the time, but never enacted. Environmental and public health groups challenged the Bush standard in court.

Jackson asked health and environmental groups to hold their lawsuit in abeyance while she reconsidered the ozone standard. Until then, an outdated ozone standard of 84 ppb, set by the EPA of the Bill Clinton administration in 1997, remained the law.

Delay followed delay until the spring of this year, when 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.

ANOTHER VOICE

In charge of Obama’s effort to reduce regulatory costs and burdens was Sunstein, on leave from teaching at Harvard and a onetime colleague of Obama’s at the University of Chicago Law School. One of the most respected liberal legal scholars of his generation, he is known for his at-times unconventional thinking on regulation and economic behavior.

Sunstein had his pick of jobs in the new administration. He chose the obscure regulatory affairs office as a potential laboratory for his sometimes iconoclastic views. He has sought creative ways to encourage responsible economic and environmental behavior without using the heavy hand of the state.

Sunstein never really warmed to the proposed ozone rule, not least because it would, by law, be subject to revision again in 2013. He also noted that in nearly half of the EPA’s own case studies, the cost of the new rule would outweigh the benefits, raising additional alarms.

One outside adviser, who watched the process closely but declined to be identified for fear of losing access to policymakers, said the ozone rule provided the perfect opportunity for Sunstein to make his mark.

"Cass was itching, itching, itching to send a return letter," the adviser said.

Although she was under intense pressure from business and congressional Republicans, Jackson believed the White House would back her. In mid-July, she hosted a delegation of trade group officials at EPA headquarters so they could present their concerns. Among those present were leaders of the U.S. Chamber of Commerce, the National Association of Manufacturers, the Business Roundtable and the American Petroleum Institute.

They tried a hard sell, according to R. Bruce Josten, the chief lobbyist for the Chamber of Commerce, noting that the new rule would push hundreds of counties out of compliance with the Clean Air Act. They suggested she wait until the next review in 2013.

Josten added: "The funny thing was nobody wanted to come right out and say, ‘Are you guys thinking this through? Your boss is up for re-election next year, do you really want to shut down industrial permitting? You’re going to have a major negative impact on the economy."’

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 N. 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.

John Engler, the former Republican governor of Michigan and president of the Business Roundtable, noted the burden to state and local officials.

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. Her air quality director, B. Keith Overcash, wrote the EPA pleading for a delay. "Lack of employment, loss of health care, and in some cases, loss of a home, also affect the health of our citizens," he said.

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 D. 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.

© 2011 The New York Times Company