Ending Collusion between EPA and Outside Groups

by Stoel Rives LLP

Stoel Rives LLP

EPA Administrator E. Scott Pruitt begins his October 16, 2017, directive on transparency and public participation in consent decrees and settlement agreements by stating, “EPA has previously sought to resolve lawsuits filed against it through consent decrees and settlements that appeared to be the result of collusion with outside groups.” Administrator Pruitt declares “EPA will not resolve litigation through backroom deals with any type of special interest group.” Directive Promoting Transparency and Public Participation in Consent Decrees and Settlement Agreements, October 16, 2017. 

The directive and its supporting memorandum manifest three themes that Administrator Pruitt emphasized during his confirmation and early days on the job: (1) the importance of process, (2) adherence to rule of law, and (3) cooperative federalism. The Administrator admonishes previous EPA staff for executing consent decrees and settlements with “outside groups” that reshuffled and rushed the rulemaking agenda, abdicated executive authorities to the judiciary, ignored the interests of states, and interfered with the “powers of persuasion” that the participants in rulemaking processes can use to achieve better results for the American people.

To cure these ills, Administrator Pruitt establishes procedures to promote transparency and public participation in the consent decree and settlement processes involving lawsuits against EPA. Among the mandatory actions that Administrator Pruitt calls for are: (1) more online notice of letters of intent to sue and judicial filings; (2) notice to states and stakeholders in the regulated community; (3) an end to consent decree terms that the court lacks authority to order or that otherwise convert a discretionary duty to a mandatory duty to issue, revise, or amend regulations; (4) an end to awards of attorneys’ fees to plaintiffs or petitioners because in settlement there is no prevailing party; (5) terms allowing sufficient time for rulemaking; and (6) online public comment, possible public hearing, and explanation of statutory authority for any consent decree or settlement. Some of these actions are in EPA’s control, others -- like attorney fees -- are not.

According to the U.S. Chamber of Commerce, the top-ten list of most costly regulations resulting from sue and settle litigation include the Utility MACT Rule, the Lead Renovation, Repair and Painting Rule, the Oil and Natural Gas MACT Rule, the Boiler MACT Rule, NAAQS rules for Particulate Matter (PM2.5) and Ozone, Regional Haze rules, and Standards for Cooling Water Intake Structures. The U.S. Chamber of Commerce supported legislation to end the secretive settlement process that costs businesses millions of dollars in economic growth. Administrator Pruitt vowed repeatedly in early interviews to end the sue and settle practice where an outside group sues, sets the agency’s regulatory agenda through settlement, and bypasses the executive branch’s authority by putting the judiciary in charge of enforcing timelines, process steps, and outcomes.

Administrator Pruitt’s keen attention to due process, rule of law, and cooperative federalism are on full display in the directive and supporting memorandum. His appeals for transparency and public participation are noble. His goals of improving the lives and livelihoods of the American people are shared. Administrator Pruitt’s interpretation of how these principles are manifest in prior agency practice comports with his promises to the U.S. Chamber of Commerce and other groups that are outspoken critics of sue and settle litigation. His directive does not change the existing legal authority of “outside groups” to sue EPA when EPA’s statutory obligations are unfulfilled, however. Nor does his dissatisfaction with past settlements that resulted in promulgation of environmental regulations diminish the likelihood that these cases will be initiated in the future and that outside groups will request attorney’s fees. When initiated EPA will have to litigate or settle the claims. In any case, expect that resolution of these lawsuits will certainly take longer under the new transparency and public process procedures, increasing uncertainty and unpredictability for the regulated community.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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