U.S. Chamber Report Critical Of "Sue and Settle" Process

May 20: A report released by the U.S. Chamber of Commerce entitled, Sue and Settle: Regulating Behind Closed Doors, indicates that the "sue and settle" process, where environmental advocacy groups sue Federal agencies to issue regulations by a specific deadline, is being abused, "resulting in interested parties being shut out of regulatory decisions by key federal agencies, particularly the Environmental Protection Agency" (U.S. EPA). The report identifies at least 60 different occasions between 2009 and 2012 where the EPA chose not to defend itself in lawsuits brought by special interest advocacy groups and in each case agreed to settlements on terms favorable to those groups. The settlements directly resulted in EPA agreeing to propose more than 100 new regulations, many of which would impose compliance costs in the tens of millions and even billions of dollars. The Fish and Wildlife Service (FWS) has also been receptive to sue and settle lawsuits, agreeing to propose adding over 700 new candidates to the Endangered Species list. The "sue and settle" issue has been a major concern of Senate Republicans during the nomination process for the President's nominee of Gina McCarthy to head EPA [See WIMS 5/16/13].

    Bill Kovacs, the Chamber's senior vice president for the Environment, Technology and Regulatory Affairs said, "It is clear that the sue and settle process is increasingly being used as a technique to shape agencies' regulatory agendas, without input from the public or the regulated community. From a new wave of endangered species listings to the EPA's federalization of the Chesapeake Bay cleanup program, to the federal takeover of regional haze programs, this report outlines how recent sue and settle arrangements have been used to serve the ends of a few favored interest groups."

    In a release the Chamber indicates that as a result of the sue and settle process, the agency submits to the binding terms of settlement agreements, using congressionally appropriated funds to achieve the demands of specific outside groups. This process also allows agencies to avoid the normal protections built into the rulemaking process -- review by the Office of Management and Budget and the public, and compliance with executive orders -- as the agency's new obligation is created.

    The Chamber indicates that regulations resulting from sue and settle agreements include the Utility MACT rule, costing up to $9.6 billion annually; the Chesapeake Bay Clean Water Act Rules, costing up to $18 billion; and the various regional haze rules that EPA has imposed on the states, which are estimated to total $2.16 billion in new costs. FWS spent more than 75% of their FY 2011 allocation for endangered species listing and critical habitat designation to take actions required by court orders or settlement agreements resulting from litigation. Kovacs added, "Sue and settle allows agencies to avoid the normal protections built into the rulemaking process, including Congressional oversight and reviews by the public. The most effective solution to sue and settle lies with Congress, and they should pass recently-introduced legislation to address this issue without delay. Our hope is that by shining the light on how this process is abused by special interest groups, we can enact much-needed reforms to protect the integrity of the rulemaking process."

    Representative Doug Collins (R-GA), and Senator Charles Grassley (R-IA), have introduced companion legislation, H.R.1493 & S.714, respectively, to eliminate "sue and settle." The Members issued a joint release on April 11, 2013. Senator Grassley said, "Sue-and-settle litigation damages the transparency, public participation and judicial review protections Congress has guaranteed for all of our citizens in the rulemaking process.  And, it's a tremendous burden on job-creating businesses, especially small businesses. This kind of regulatory litigation also adversely affects the ability of the executive branch to engage in sound and principled decision-making. The goal of this bill is to make sure all citizens, especially those directly impacted by a proposed regulation, have a meaningful opportunity to participate in the rulemaking process and help ensure the procedure and process used to create these regulations are made in the open. America's system of lawmaking and judicial review shouldn't be distorted or manipulated."

    Representative Collins said, "The Obama Administration has empowered agencies to subvert the legislative process and manipulate the rulemaking system to achieve their pro-regulation agenda. Strong reforms are needed to protect communities and businesses against burdensome regulations that circumvent the rulemaking process. This legislation sheds light on the regulation through litigation that is crippling small businesses in my district and across the nation. Improving the public participation and transparency protections of the Administrative Procedure Act is vital to preserving the integrity of the rulemaking process."

    As part of the nomination process for Gina McCarthy for EPA Administrator, Senator David Vitter (R-LA) has indicated that among other concessions, EPA has agreed to: ". . . post notices of intent on the EPA website as well as commits to establishing a website to post petitions for rulemaking submitted to the Agency." Additionally, Republicans have requested EPA to: "Give intervenors immediate notice of any initiation of settlement discussions that come from legal actions brought against the Agency."

    Access a release from the Chamber (click here). Access an overview, list of rules, recommendations, executive summary, and the complete 54-page report (click here). Access a release from the Members on the legislation (click here). Access the release, letter and agreements from Sen. Vitter (click here). Access legislative details for S.714 (click here). Access legislative details for H.R.1493 (click here). [#All]

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