Sue and Settle: Regulating Behind Closed Doors

Jun 18, 2013

Environmental advocacy groups with a strong mind to advance their agendas are increasingly using a clever, albeit abusive, way to game the regulatory process. It’s called “sue and settle,” and it’s resulting in interested parties—states, industries, and businesses—being shut out of major regulatory decisions. What’s most corrosive about this practice is that key federal agencies are in on it.

Here’s how it works: An environmental advocacy group sues a federal agency, usually the Environmental Protection Agency (EPA), to issue regulations by a specific deadline. Then the agency chooses not to defend itself against the lawsuit. Instead, the group and the agency work out an agreement. It should surprise no one that the settlement tends to favor the interest group.

Once the draft settlement agreement is lodged with the court, those who disagree with it or will be harmed by its stipulations have little opportunity to offer input. In some cases, public comment is invited at this stage, but it is too little too late. The courts typically give these consent decrees their stamp of approval as if they are settlements between private parties—and not sweeping agreements between key regulatory agencies and special interest groups.

Sue and settle is more common than you may think. The U.S. Chamber of Commerce just released a report, Sue and Settle: Regulating Behind Closed Doors, that identifies at least 60 different occasions between 2009 and 2012 where EPA settled with interest groups. These settlements directly resulted in EPA agreeing to propose more than 100 new regulations, many of which would impose tens of millions of dollars, or even billions, in compliance costs.

A dramatic example is Utility MACT, one of the most costly and consequential rules to come out of EPA. Environmental groups filed a lawsuit seeking to force EPA to issue “maximum achievable control technology” air quality for power plants. The agency settled in less than a year and agreed to take regulatory action not mandated by the Clean Air Act. The resulting rule will cost our economy $9.6 billion annually. It could shutter coal-fired power plants across the country, jeopardizing U.S. jobs and an essential staple of our energy supply. And all because of a settlement reached behind closed doors and without the involvement of the industries, businesses, and communities that would be impacted.

Congress must rein in this injurious practice by passing the Sunshine for Regulatory Decrees and Settlements Act of 2013. For our part, the Chamber will continue to spotlight this issue at www.SueandSettle.com. We will fight any effort by any agency or interest group to set national policy out of the light of public scrutiny.

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