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Pruitt takes steps to halt 'sue and settle' despite debate over its existence

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Pruitt takes steps to halt 'sue and settle' despite debate over its existence

Many Democrats say it does not exist. The U.S. Government Accountability Office has concluded on more than one occasion that there is no such thing. Nevertheless, some Republicans and the new U.S. Environmental Protection Agency leadership are taking steps to eradicate "sue and settle" regulation.

"The sue/settle concept is real," EPA Administrator Scott Pruitt said May 24 at a conference in Washington, D.C.

The EPA should engage stakeholders about a possible regulation, respond to comments and then issue a rule, but that frequently has not happened in recent years, Pruitt said. Instead, he asserted, regulation often has been accomplished through the legal system, with the EPA agreeing to consent decrees behind closed doors without engaging with stakeholders beyond the parties to the court proceeding.

"One of the things that I've inherited as administrator is a host of consent decrees," Pruitt said. "Consent decrees that have been negotiated, and as I look at those consent decrees, I ask the question: Why did we agree to that?"

While he believes consent decrees are warranted under certain circumstances, Pruitt nevertheless insisted that such settlements should not be used to engage in rulemaking. "That subverts the process that Congress has set up," according to the EPA chief.

Pruitt therefore said he has attempted to combat sue and settle by issuing a directive to staff explaining that "the days of ruling by litigation and the judicial system are over." EPA Spokeswoman Amy Graham later clarified that the directive was verbal, and the agency did not respond to additional questions on the matter.

Accountability

Consent decrees often are the result of citizen suits, which under the Clean Air Act can be brought by essentially any party. But Rep. Blake Farenthold, R-Texas, said during a May 24 hearing on sue and settle litigation held by two subcommittees of the U.S. House of Representatives Oversight and Government Reform Committee that environmental groups in particular have found a way to exploit the well-meaning statute. The groups often sue the agency for failing to complete a specific action by a certain time and then reach a "favorable friendly settlement" with regulators, he noted.

"These agreements are negotiated away from the public eye and finalized by the court. While one may argue the merits of the system, it unfortunately is susceptible to abuse," Farenthold said. "The sue and settle process creates an unfair system. The winners are the small few who manage to manipulate the federal government into doing their bidding." Meanwhile, the taxpayers are on the hook for attorneys' fees associated with the legal challenge and agency resources are redirected to remedy whatever issue was the subject of the citizen suit, the lawmaker added.

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The terms of the agreements can last for decades and they can end up costing more than if the issue had gone to trial, Rep. Gary Palmer, R-Ala., said. He noted that they also sometimes include issues that were not a part of the original complaint.

The U.S. Chamber of Commerce has been a frequent critic of sue and settle regulation, estimating that the practice has led to the EPA creating more than 100 new regulations and imposed possibly billions of dollars in costs on industry. Examples of regulations issued due to sue and settle practices include the 2008 National Ambient Air Quality Standards for ozone; the regional haze implementation rules; and the Utility Maximum Achievable Control Technology rule for power plants, which later came to be known as the Mercury and Air Toxics Standards.

Testifying during the House hearing, the Chamber's senior vice president for environment, technology and regulatory affairs, William Kovacs, cheered Pruitt's early efforts to eradicate sue and settle practices from the agency. If an existing piece of legislation addressing sue and settle, dubbed the Sunshine for Regulatory Decrees and Settlements Act, fails to pass through Congress, Kovacs urged Pruitt to come up with his own regulation to end the practice.

Many Democrats do not believe that sue and settle exists and consider citizen suits to be one of the essential pieces of the country's rulemaking process. "We must hold our government agencies accountable, and this is exactly what this committee and citizen suits are designed to do," said Rep. Stacey Plaskett of the Virgin Islands.

Plaskett said the characterization of such legal proceedings as sue and settle simply is not accurate. The lawmaker asserted that agencies can only commit to a schedule for performing mandatory duties and cannot settle litigation by making commitments to the actual substance of any regulations they intend to issue.

"Under President [Donald] Trump's administration, private companies will benefit substantially if there is in fact a concept of sue and settle," Plaskett said. "Private companies will be able to use the concept ... to roll back agency regulations protecting our environment."

Both Plaskett and Rep. Val Demings of Florida recalled that the GAO has concluded that concerns over sue and settle are overstated. In December 2014, the federal government watchdog agency found that the EPA issued nine major rules as a result of seven settlement agreements between May 31, 2008, and June 1, 2013. The GAO, which refers to such lawsuits as "deadline suits," concluded that the impact of those settlements on EPA rulemakings is limited.

In a similar August 2015 report, the GAO found that trade associations and private companies filed nearly 50% of all deadline suits against the EPA, while local and national environmental groups together filed 30%. The vast majority of all cases filed were under the Clean Air Act, although other statutes implemented by the EPA allow citizen suits as well.

"I have not heard my Republican colleagues demonstrate equal concern about these industry lawsuits," Demings said.

Collusion

The Chamber has suggested that the previous administration participated in "collusion" with environmental groups, given that the practice of settling lawsuits rose significantly during President Barack Obama's time in office. An October 2014 report from the University of Virginia School Of Law analyzed the Chamber's claims that sue and settle effectively is secret rulemaking.

In that report, UVA differentiated between "decision-forcing" and "substantive" consent decrees: the former requires the EPA to make a decision but does not determine a specific outcome, while the latter demands that the agency take a particular action. Contrary to Plaskett's suggestion that the EPA can only agree to act on a specified timeline, the UVA report said the agency can consent to take a particular action, although such agreements are rare.

Decision-forcing settlements do not impinge on the EPA's discretion or the effective use of public comment processes, and they are a valuable tool to reduce the demands placed on the judicial system and free environmental agencies to concentrate on the performance of their statutory duties, according to the report. But although substantive agreements provide similar benefits, UVA found that they may threaten effective public engagement in the rulemaking process.

UVA did not agree, however, that sue and settle is a form of collusion between the administration and environmental groups. The report also refuted the Chamber's claim that consent agreements reached with environmental groups circumvent the public will, explaining that the vast majority of suits brought by those groups result in decision-forcing consent decrees. In fact, only four of the 79 suits examined by UVA that were filed by environmental groups between 2009 and 2013 sought substantive agreements.

"Sue-and-settle, when used by environmental group plaintiffs, is not principally about secret, backdoor rulemaking," UVA said. The report did note, though, that environmental plaintiffs in the cases examined may not have felt the need to seek substantive agreements because "the pro-environmental Obama EPA [was likely to] reach the same substantive relief that the environmental plaintiffs [desired] simply by being forced to make a decision."

UVA also looked at industry groups' use of such lawsuits. While that effort involved examining a much smaller sample of cases, UVA determined that industry groups were much more likely to seek substantive relief than environmental groups.

"Sue-and-settle suits brought by industry groups have a 55.6% frequency of seeking substantive consent decrees, while sue-and-settle suits brought by environmental groups have only a 5.1% frequency of seeking such relief," the report said. "This is a statistically significant difference."

But real or not, Pruitt has targeted sue and settle as a priority for the EPA under his leadership. During his confirmation hearing, Pruitt was asked by Sen. Ed Markey, D-Mass., if he intended to settle the ongoing Clean Power Plan litigation — a case in which he participated as attorney general of Oklahoma.

"Sue and settle is wrong. I will not engage in a sue and settle practice if confirmed as EPA administrator," Pruitt responded. He declined initially to recuse himself from litigation in which he participated as attorney general, but has since stepped back from a number of high profile cases.

Despite his pledge, Pruitt in his first 100 days in office signaled a willingness to work with industry groups to review environmental rules, much as Plaskett warned. Responding to industry group petitions to his agency, Pruitt has moved to review numerous regulations promulgated by the Obama administration that are beyond the scope of regulatory reform requested by Trump, such as the effluent limitation guidelines for steam electric power plants and the coal combustion residuals rule.