EPA’s decision to clamp down on ‘sue and settle’ tactics is a good start

After months of speculation, Environmental Protection Agency Administrator Scott Pruitt checked off another item on the Trump administration’s deregulatory agenda with a recent directive to EPA staff limiting the agency’s ability to enter into settlements with outside interest groups.

This tactic, known colloquially as “sue and settle,” has been abused in recent years by environmental groups and others who seek to circumvent the traditional rulemaking process. While Pruitt’s effort will help reform sue and settle at the EPA, the administration and Congress should take their efforts even further. 

{mosads}The sue-and-settle process occurs when outside groups bring a lawsuit against a federal agency — for example, for failing to enact a regulation or meet a statutory deadline — and the agency responds by immediately entering into settlement negotiations. These settlements are often enforced by court-approved consent decrees and the details are hammered out in private. In the past, agencies like the EPA have even encouraged these types of lawsuits as a convenient workaround to the normal rulemaking process used for promulgating regulations. The result is a form of regulatory capture in which outsiders can steer the agenda and priorities of federal agencies.

One of the most notorious examples of sue and settle was the controversial standard the EPA enacted in 2012 to curb mercury emissions from power plants, which was estimated to impose $10 billion in annual compliance costs. The Obama administration’s Clean Power Plan is another prominent example. Nor were these rare occurrences; from 2009-2012, the EPA entered into 60 sue-and-settle agreements. It has been big business for lawyers, as a 2011 Government Accountability Office report found that environmental groups received millions of dollars in attorneys’ fees from sue-and-settle cases.

Pruitt’s directive seeks to rein in abuses by requiring the EPA to disclose any lawsuits brought against it publicly, grant parties potentially affected by a suit the ability to participate in any settlement discussions and permit the public to review and comment on any proposed settlement agreements, just they do with most proposed regulations. These reforms will bring much-needed transparency and accountability to a process that traditionally has taken place behind closed doors. Best of all, it will enhance the public’s ability to hold the EPA accountable for the decisions they make.

But it’s important to remember that the sue-and-settle phenomenon is not new. The Trump administration could and should expand the scope of reform by drawing on lessons learned during the Reagan administration.

Given the court-ordered nature of many settlement agreements, the Reagan administration grew increasingly frustrated that it was bound by Carter-era sue-and-settle agreements. As a result, Attorney General Edwin Meese issued what is known as the Meese Memo, which set standards for the type of settlements agencies should and should not agree to. For instance, any settlement that took away an agency’s discretion over the decision of whether to promulgate a certain regulation was considered an impermissible infringement on executive branch prerogatives.

Meese’s logic was grounded in separation of powers concerns and the possibility that agencies were inappropriately divesting their powers during settlements negotiations. While Meese was careful to allow exceptions to the U.S. Justice Department policy, so long as the attorney general signed off, the memo helped stem the tide of abusive sue-and-settle practices.

Unfortunately, only a few years later, the Clinton administration took steps to loosen the requirements of the Meese Memo. The Trump Justice Department should extend its sue-and-settle reforms beyond the EPA by reviving the Meese principles.

But even a reaffirmation of the Meese Memo cannot be counted on to end sue-and-settle abuses permanently. A future Democratic administration could quickly reverse any executive actions taken by Trump, just as Clinton did with the Meese Memo. Truly durable regulatory reform can only come from Congress. This summer, the House Judiciary Committee approved the Sunshine for Regulatory Decrees and Settlements Act, which would codify many of the reforms in Pruitt’s directive and the Meese Memo and apply them across all federal agencies.

In addition to requiring more transparency and opportunity for the public to review and comment on proposed settlements, the legislation would beef up oversight by requiring federal agencies to submit annual reports to Congress detailing the settlements and consent decrees into which they have entered. It would also call on courts to exercise more scrutiny in approving such settlements.

It may seem like a fool’s errand to rely on Congress to do much of anything these days, especially in our hyper-partisan times. But until Congress acts, the sue-and-settle bogeyman will never fully be slayed.

C. Jarrett Dieterle is a governance policy fellow at the R Street Institute think tank in Washington, D.C.