EPA Administrator Promises to End Regulation through Litigation 

“The Days of Regulation Through Litigation are Over”

The Environmental Protection Agency (EPA) continues to make headlines under the leadership of Administrator Scott Pruitt. He recently announced an agency-wide directive to end “sue and settle” practices that involve the settlement of litigation intended to effect regulatory changes.

“The days of regulation through litigation are over,” Pruitt said in a press statement.  “We will no longer go behind closed doors and use consent decrees and settlement agreements to resolve lawsuits filed against the Agency by special interest groups where doing so would circumvent the regulatory process set forth by Congress. Additionally, gone are the days of routinely paying tens of thousands of dollars in attorney’s fees to these groups with which we swiftly settle.”

The directive, titled Directive Promoting Transparency and Public Participation in Consent Decree and Settlement Agreements (the Directive), aims to end what Pruitt characterizes as the agency’s practice of too readily settling lawsuits brought by public interest groups that “seek to force federal agencies to issue regulations that advance [those groups’] interests and priorities, on their specified timeframe.” Under the Obama Administration, the EPA came under fire for entering into settlement agreements that required the agency to take action that was not statutorily required or commit to a specific timeline to act. In addition to arguing that the terms were often favorable to environmentalists to the detriment of regulated entities, critics of the practice also maintained that because the settlements were negotiated behind closed doors, Congress and the public were unable to participate in the creation of environmental policy.

In support of the Directive, Pruitt also issued a memo, titled Adhering to the Fundamental Principles of Due Process, Rule of Law, and Cooperative Federalism in Consent Decrees and Settlement Agreements. It outlines the legal reasoning behind ending the so-called “sue and settle” policy, maintaining that it violates due process, the rule of law, and cooperative federalism.

“By using sue and settle to avoid the normal rulemaking processes and protections, an agency empowers special interests at the expense of the public and parties that could have used their powers of persuasion to convince the agency to take an alternative action that could better serve the American people,” the memo states. It further argues that previous sue-and-settle tactics undermined the principle of cooperative federalism by “excluding the states from meaningfully participating in procedural and substantive Agency actions.”

New Procedural Requirements Under “Sue and Settle” Directive

The EPA Directive outlines a new procedural framework for all future consent decrees and settlement agreements executed by the agency. It states:

• EPA’s Office of General Counsel must publish online a notice of intent to sue the Agency within fifteen days of receiving the notice from the potential litigant(s).
• When EPA receives actual notice of a complaint or a petition for review regarding an environmental law, regulation, or rule in which the Agency is a defendant or respondent in federal court, the Office of General Counsel must publish online that complaint or petition for review within fifteen days of receiving service of the complaint or petition for review.
• EPA must directly notify any affected states and/or regulated entities of a complaint or petition for review within fifteen days of receiving service of the complaint or petition for review. It will be the policy of the Agency to take any and all appropriate steps to achieve the participation of affected states and/or regulated entities in the consent decree and settlement agreement negotiation process. Accordingly, EPA must seek to receive the concurrence of any affected states and/or regulated entities before entering into a consent decree or settlement agreement.
• Within thirty days of this directive, EPA must publish online a searchable, categorized list of the consent decrees and settlement agreements that continue to govern Agency actions, providing a brief description of the terms of each consent decree and settlement agreement, including attorney’s fees and costs paid. EPA must update this list by publishing any new final consent decree or settlement agreement within fifteen days of its execution.
• EPA must not enter into a consent decree with terms that the court would have lacked the authority to order if the parties had not resolved the litigation. EPA must also not enter into a consent decree or settlement agreement that converts an otherwise discretionary duty of the Agency into a mandatory duty to issue, revise, or amend regulations.
• If EPA agrees to resolve litigation through a consent decree or settlement agreement, and therefore there is no “prevailing party,” then the Agency must seek to exclude the payment of attorney’s fees and costs to any plaintiff or petitioner in the litigation. EPA must not seek to resolve the question of attorney’s fees and costs “informally.”
• If a consent decree or settlement agreement includes any deadline by which EPA must issue a final rule, the Agency must provide sufficient time (1) to modify its proposed rule if necessary, consistent with applicable laws and guidance on rulemaking, including any required interagency review or consultation, (2) to provide adequate notice and comment on the modified proposal, and (3) to conduct meaningful Agency consideration of the comments received on the modified proposal.
• EPA must post online for review and comment by the public any proposed consent decree lodged in federal court or draft settlement agreement to resolve claims against the Agency. EPA must also publish a notice of the lodging of the proposed consent decree or draft settlement agreement in the Federal Register.

Implications for Environmental Litigation

At this point, it is unclear how the agency-wide Directive and its gauntlet of procedural hurdles will impact suits against the EPA. Environmental groups and other outside organizations are still entitled to bring lawsuits seeking to enforce federal regulations like the Clean Water or Clean Air Act. However, any proposed settlement agreements or consent decrees with EPA are likely to receive additional scrutiny internally, particularly if they appear to influence or potentially alter the agency’s regulatory agenda.

The new procedural rules will also bring greater transparency to ongoing environmental litigation involving the EPA. In addition, publication of notices of intent to sue and proposed settlements will also serve as advance notice for businesses and other entities that may be impacted by any settlement and allow them the opportunity to weigh in with the agency prior to its reaching any final decision in order to provide their input and particular point of view on the matter without necessarily becoming parties to the pending litigation.

If you have any questions or if you would like to discuss the matter further, please contact me, William Baker, at 201-806-3364.