'Sue and Settle' Threatens Business

Mar 22, 2012

Environmental and consumer advocacy groups have found a new way to use the federal regulatory process to force overly burdensome regulations onto business.

It works like this: Environmental and consumer advocacy groups file a lawsuit claiming that the federal government has failed to meet a deadline or has not satisfied some regulatory requirement. The agency can then either choose to defend itself against the lawsuit or settle it. Often times, it settles by putting in place a “court-ordered” regulation desired by the advocacy group, thus circumventing the proper rulemaking channels and basic transparency and accountability standards. This tactic is called “sue and settle,” a name coined by Rep. Colin Peterson (D-MN).

Those most often targeted by this type of litigation are the Environmental Protection Agency; the departments of the Interior, Transportation, Agriculture, and Defense: the Fish & Wildlife Service; and the Army Corps of Engineers. Citizen suit provisions in most major environmental statutes make EPA, Interior, and others that administer environmental laws easy targets.

Through sue and settle, agencies have instituted dozens of large, burdensome rules in recent years, including such controversial regulations as new standards for greenhouse gas emissions from electric utilities and refineries; revisions to the definition of solid waste; and Clean Air Act regulations on oil and gas drilling operations.

To make matters worse, many of the legal fees arising from these cases are paid by U.S. taxpayers. Attorneys’ fees can be paid for out of the Equal Access to Justice Act and the Treasury Department’s Judgment Fund, both of which are set up in such a way that information on whom and how much money is paid in the settlement process is undisclosed.

“There seems to be a pattern of activist lawsuits followed by EPA settlements resulting in new regulations to comply with the settlement, and impacted industries are kept in the dark,” says Rep. Ben Quayle (R-AZ). Quayle introduced H.R. 3862, the Sunshine for Regulatory Decrees and Settlements Act, which makes agency rulemaking more transparent and ensures that the public is given an opportunity to comment. 

Quayle first became active on sue and settle issues after EPA and nine environmental groups entered into a consent agreement that will affect the Navajo Generating Station, which serves electric customers in Arizona, California, and Nevada. The consent agreement known as Utility MACT has the potential to raise Arizonans’ electricity costs by 20%, according to Quayle.

America’s family farmers are also subject to many of the regulations put in place as a result of sue and settle lawsuits. For example, a current case against EPA for failing to adequately consult with other agencies regarding the effects of nearly 300 EPA-registered pesticides on more than 200 endangered and threatened species nationwide was described by Tom Nassif, president and CEO of the Western Growers Association, as “the mother of all lawsuits” during a House committee hearing on sue and settle last year. An EPA settlement in this mega case “could cause severe economic harm and loss of jobs to tens of thousands of farmers and cripple their ability to grow America’s source of food and fiber on more than 112 million acres of farmland across the country, not just in California,” Nassif warned panel members.

Quayle says that more sue and settle regulations could come out of the Dodd-Frank financial regulatory law, which has already missed a series of regulatory deadlines. “Anyone with standing could bring a case, and the courts have been lenient in deciding who has standing.”

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