EPA Settlement of Citizen Suits May End Under Trump

Toxics Law Reporter™ delivers the most comprehensive, authoritative, and objective coverage of significant developments in toxic tort, hazardous waste, and related insurance litigation, all with...

By Peter Hayes

Settlements of environmental citizen suits brought to compel EPA action could grind to a halt under the Trump administration.

The government will likely be fighting—rather than settling—these cases, which are often brought over missed deadlines and other rule-making obligations mandated by federal statutes and related agreements.

The U.S. Chamber of Commerce, which is the top lobbying spender in the country and whose members include leading U.S. companies, says the change to what it derogatorily terms “sue and settle” is a matter of fairness.

The Chamber wants to end the settlement process, or at least change it to include input from the regulated communities involved. This will ensure the Environmental Protection Agency won’t agree to important concessions to environmentalists behind closed doors, it says.

The energy and chemical industries—some of the most frequent targets of EPA actions—are among those likely to gain the most from changes to the citizen suit settlement process.

But critics, including environmental groups and some law professors who’ve litigated environmental cases on behalf of the Justice Department, disagree about the benefits of any such changes.

They say doing away with, or altering, the settlement process for citizen suits isn’t necessary and would impede the public’s ability to ensure that the federal government is living up to its statutory and other obligations.

Such changes also won’t affect the substantive outcomes of EPA rulemakings because all significant actions still have to go through the formal rulemaking process, they say. What will result, according to detractors, is delayed regulatory action and wasted government resources and costs.

One way or another, however, changes to “sue and settle” are likely.

“By regulation or law, it will happen,” said William Kovacs, senior vice president for the Environment, Technology & Regulatory Affairs at the U.S. Chamber, which has long advocated against the settlement of such citizen suits.

And if those avenues fail, incoming Attorney General Jeff Sessions could simply direct the Justice Department not to negotiate, something another business attorney who’s litigated environmental regulatory matters said is a good possibility.

“The government could change its negotiation practices, and decline to negotiate,” defense attorney Jamie Conrad said.

“It’s about transparency and the right of parties to intervene,” Kovacs told Bloomberg BNA.

More Than Missed Deadlines?

Typically these kinds of cases are brought by environmental groups to force EPA compliance when the agency has missed a deadline, Professor Justin Pidot at the University of Denver, Sturm College of Law, said.

Pidot teaches environmental and natural resources law, and has written on the subject of environmental settlements. He was an appellate litigator in the Justice Department’s Environment and Natural Resources Division.

These settlements don’t involve substantive changes, he said. “You can’t do through settlement what would require rulemaking,” he said.

“Looking at the historical record of these settlements, the government is likely to lose and, through settlement, it’s able to get a better deal for the government,” he said.

‘Conducted Secretly.’

But the U.S. Chamber and its allies dispute Pidot’s characterization of the impact environmentalists’ citizen suits can have. They say the resulting settlements, which are negotiated out of public view, can go far beyond agreeing to deadlines.

“What bothers people the most is the negotiations are conducted secretly,” Conrad, with Conrad Law & Policy Counsel in Washington, said. “The complaint and consent decree are filed on the same day.”

Conrad represents companies, associations and coalitions on regulatory and legislative issues. His experience includes all major federal environmental statutes, with particular emphasis on the Clean Air Act, the Clean Water Act, the Resource Conservation & Recovery Act, and Superfund.

“People feel blind-sided,” he said. Parties can later comment on the consent decree, “but I’m not aware of DOJ ever changing a proposed consent decree based on comments.”

Outside of secrecy, two other major problems arise out of deals to resolve environmentalists’ citizen suits against the EPA, according to Conrad.

“The first is environmental groups are essentially setting deadlines for the agency,” said Conrad.

“But the bigger issue is, in exchange for getting more time, the agency agrees to propose certain options,” he said. “Once the agency commits to propose an option, it’s hard to go back and reconsider. They can’t propose A and then say X in the final rule.”

Sunshine Act

On Jan. 12, 2017, bills were introduced in the House and Senate that would allow parties to intervene before the filing of a consent decree between the government and an outside group. The legislation would also require publication of the proposed consent decree in the Federal Register and a 60-day comment period.

The companion measures, known as the Sunshine for Regulatory Decrees and Settlements Act of 2017 ( H.R. 469, S. 119), “will certainly pass in the House,” Kovacs, of the Chamber, said.

But even if the legislation’s fate is less certain in the Senate, the changes could also be pursued as a rulemaking, Kovacs said.

“The issue the bill addresses is a real problem,” said Conrad.

But Pidot, the professor and former Justice Department prosecutor, said curtailing or placing new limits on the EPA’s ability to negotiate settlements over missed statutory deadlines would do more harm than good.

“The point of settlements is to reduce costs,” Pidot said. “Allowing parties to intervene and say `don’t settle’ would mean more attorney fees and a greater burden on taxpayers.”

Gumming Up The Works

The proposed changes “would gum up the works, which may be part of the strategy—starving the federal government,” Pidot said.

“The real agenda is to reduce regulation,” he said. “This is one lever the antiregulatory community has latched onto.”

Eric Schaeffer, executive director of the Environmental Integrity Project in Washington, agrees. He said the legislation is “designed to make it next to impossible to hold EPA accountable for missing statutory deadlines.”

The Environmental Integrity Project is a nonprofit organization established by former EPA enforcement attorneys to advocate for enforcement of environmental laws.

“The general idea, I think, is just to tack on a lot of empty time to make everything take longer,” Schaeffer said.

“The government never agrees in advance as to what decision it will make in these settlements,” he said. “So the idea that these decisions are pre-determined is nonsense.”

“The settlements set deadlines for completing a review and making a decision,” Schaeffer said. But the EPA also can decide to make no changes, or it may propose a new standard.

“Any proposal goes through the full notice and comment process before a final decision is made, which is open to the entire world,” said Schaeffer.

Schaeffer also said that the citizen suit settlement process has been upheld by the courts when it’s met with industry challenges in the past.

He cited as an example a consent decree that pushed the EPA to issue a 2015 rule on effluent limitations standards for steam electric power generators (40 CFR 423).

In that instance, he said, the EPA failed to set limits in the early 1980s for coal ash and scrubber wastewater, “which are by far the largest source of toxic discharges from coal plants,” despite a Clean Water Act requirement mandating them.

After his organization filed a notice of intent to sue, he said, the Utility Water Act Group, an association of energy companies, filed a motion to intervene.

But the energy group’s efforts to involve itself in the suit, and the resulting settlement process, were rejected by both a federal trial court and the U.S. Court of Appeals for the D.C. Circuit ,Schaeffer said.

The appeals court found no injury to UWAG resulting from the process. “The consent decree does not require EPA to promulgate a new, stricter rule,” the court said.

“Instead, it merely requires that EPA conduct a rulemaking and then decide whether to promulgate a new rule—the content of which is not in any way dictated by the consent decree—using a specific timeline.”

Chesapeake Bay, Stormwater Discharge Permits

But the Chamber of Commerce and Conrad point to their own examples when they say citizen suit settlements can lead to secretive, substantive changes in environmental groups’ favor.

The Chesapeake Bay Clean Water Act rules are one example cited by the Chamber.

In that instance, several environmental organizations sued the EPA alleging the agency wasn’t taking necessary measures to protect the East Coast watershed. The parties entered into a settlement in 2010.

“The agency later cited the binding agreement as the legal basis for its expansive action on TMDLs and stormwater,” the Chamber said in a 2013 report, referring to strict limits, known as the Total Maximum Daily Load, for allowable pollution.

“Because the rulemakings resulted from a settlement agreement that set tight timelines for action, the public never had access to the information, which would have been necessary in order to comment effectively on the modeling and the assumptions EPA used,” the report said.

Conrad cited as another example a consent decree arising out of litigation challenging EPA’s Clean Water Act “Multi-Sector General Permit” for stormwater discharges.

In that case, he said, “EPA and DOJ agreed to seven pages of things that EPA would agree to propose,” including excluding users of coal tar-based pavement sealant from coverage under the permit.

“The science underlying this issue is quite hotly contested, and EPA has not previously sought comments on the issue in any regulatory context,” he said. “This decree now puts EPA firmly on the side of banning the stuff.”

‘Alternative Facts.’

But one of the environmental groups heavily involved in the negotation of the Chesapeake Bay consent decree contests the business group’s version of events about the effects of that settlement.

“The assertion that EPA issued the Chesapeake Bay TMDL because of the consent decree is alternative facts,” Jon Mueller, vice president for litigation with the Chesapeake Bay Foundation in Annapolis, Md., told Bloomberg BNA .

“There were a number of reasons why EPA had to act,” he said, “including a Congressional mandate, President Obama’s executive order and earlier consent decrees.”

A 2000 agreement called for reductions by 2010, but by 2007, it was clear those targets wouldn’t be met, Mueller said. “That’s when EPA began to hold numerous public meetings and received thousands of comments on the Bay TMDL.”

The argument that the settlement process involving citizen suits against the EPA is broken “is a myth created in Congress and the U.S. Chamber” by those “who don’t like to have parties sue EPA in deadline suits,” Mueller said.

Sessions Could Act Unilaterally

In the end, Conrad said, even though there’s pending legislation, the Trump administration doesn’t need Congress, or, for that matter, new rulemaking, to make changes to “sue and settle” happen.

“Jeff Sessions could instruct DOJ to do what these bills require,” Conrad said.

And all indications point to both Sessions, the new Justice Department chief, and Scott Pruitt, the expected incoming chief of the EPA, being on the same page on the issue.

As Oklahoma attorney general, Pruitt sued the EPA over the settlement practice. And, in his confirmation hearing on Jan. 18, Pruitt said he “will not engage in sue and settle if confirmed.”

As far as Sessions is concerned the Sunshine Act was first introduced in 2012. Among its sponsors? The former Republican Senator from Alabama.

To contact the reporter on this story: Peter Hayes in Washington at PHayes@bna.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.