EPA Building

TL;DR: Ending Sue And Settle, Taxation Without Legislation, And Dividers Gonna Divide?

Ending Sue And Settle, Taxation Without Legislation, And Dividers Gonna Divide?

EPA Building

Here’s what you need to know…

Last week, Environmental Protection Agency (EPA) Administrator Scott Pruitt issued a directive to end so-called “sue and settle” practices within the agency. Hailed by business interests and conservatives as a “victory for democratic consent over legal extortion,” and lamented by environmental activists, this move will have a profound impact on energy and environmental policy battles well into the future.

So what is “sue and settle,” and how will Pruitt’s move to limit the practice change the strategies and tactics of environmental activists going forward?

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  • What Is Sue And Settle? Special interest groups use this strategy to file lawsuits in order to force federal executive agencies to adopt regulations that advance their interests and priorities. Rather than go to court, the groups reach a settlement with the agency that furthers their interests. In doing so, sue and settle circumvents the regulatory process set by Congress, avoids the transparency that comes with legislating, and allows for changes that otherwise would not be implemented to be enacted on a quicker timetable. Between 2009 and 2012, the Obama Administration’s EPA chose not to defend itself in at least 60 lawsuits brought against it by special interest advocacy groups, resulting in settlements that created 100 new regulations – including the Clean Power Plan – that are estimated to cost tens of millions, and even billions, of dollars in compliance costs.
  • So What About The Money? In addition to policy incentives, sue and settle also provides a major profit incentive for special interest groups. A 2011 Government Accountability Office report stated that millions of dollars were awarded to environmental organizations for litigation against the EPA between 1995 and 2010, including Earthjustice, Sierra Club, and the Natural Resources Defense Council. The practice is not uncommon among different interest groups, targeting different agencies. For example, the nonprofit Center for Food Safety, which files lawsuits over genetically-modified foods and farming practices, received more than half of its 2012 revenue from legal fees collected through successful litigation. The settling agency also covers attorneys’ fees for the groups, millions of dollars in the case of the Center for Food Safety. This is because the groups are considered to be the “prevailing party” in a settlement with an agency.
  • How Is The EPA Limiting This Practice? Administrator Pruitt’s directive limits sue and settle in several ways. To increase transparency and accountability, the agency is now required to make public any notices received from groups that intend to sue it; any complaints or petitions received about an environmental law, rule, or regulation it oversees which is before the courts; and provide time to receive and consider public comment on pending settlement agreements. Notably, the directive also calls for the EPA to publish attorneys’ fees and no longer automatically pays them when the Agency settles out of court. This will immediately save taxpayer dollars while simultaneously increase the cost for special interest groups to sue.
  • How Will Green Activists Respond? Environmental groups, like the Sierra Club, have already made it clear they will not be deterred from challenging the EPA in court. They are digging in for “trench warfare” in which they are anticipating lawsuits aimed at “making the EPA enforce its own rules and abide by agreed-upon timelines.” Green activists will also likely continue to pressure regulators and legislators in the court of public opinion to further their policy goals by using sympathetic groups to promote their message.
  • What Are The Next Steps For Policymakers? Other cabinet officials may do well to follow Pruitt’s example and limit sue and settle practices in their respective agencies. In addition, legislators in both the House of Representatives and Senate have pushed for curbing sue and settle for some time. With Pruitt’s directive issued, the burden is now on Congress to write legislation that prevents a future Administrator, in a future Administration, from easily reviving this practice.

Curbing sue and settle at the EPA may be a win for transparent government and the judicious use of taxpayer dollars, but this victory is far from permanent. What’s more, environmental groups are already adapting their tactics to compete in policy debates going forward. However, it remains to be seen whether these adapted tactics will be enough to compensate for the ending of sue and settle, which has previously provided major sources of revenue and policy advancements in the past.

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