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|Regulatory Reform Initiative Seeks Sunshine, Accountability, and Pro-Jobs Environment|
|News Releases - Business & Economy|
|Written by Grassley Press|
|Friday, 13 July 2012 12:26|
WASHINGTON – Working to create an environment for private-sector employers to create jobs and to increase transparency, Senator Chuck Grassley today introduced legislation that would end the practice of enacting federal regulations through sue-and-settle litigation. Senators John Cornyn, Jon Kyl, Rand Paul, Mike Lee, and Tom Coburn are original cosponsors of the reform proposal.
The Sunshine for Regulatory Decrees and Settlements Act responds to the use of consent decrees and settlement agreements in lawsuits against federal agencies to bind executive discretion. The end result is rulemaking that implements the priorities of pro-regulatory special interest groups and limits the discretion of succeeding administrations.
“The federal regulatory burden is a significant barrier to job creation, and sue-and-settle litigation damages the transparency, public participation and judicial review protections Congress has guaranteed for all of our citizens in the rulemaking process,” Grassley said. “The goal of this bill is to make sure all citizens, especially those directly impacted by a proposed regulation, have a meaningful opportunity to participate in the rulemaking process. The procedure and process used to create these regulations are important, and they should be made in the open. America’s system of lawmaking and judicial review shouldn’t be distorted or manipulated.”
“Importantly, this legislation will shed light on the growing practice of backdoor rulemaking by the Obama Department of Justice as it seeks to meet the demands of pro-regulation activist groups. And the fact that more and more agencies are missing their deadlines for issuing regulations – and then ‘settling’ lawsuits over those deadlines outside of the normal regulatory process – makes this bill all the more necessary. My home state of Arizona has been directly impacted by this type of litigation-induced rulemaking. For example, one recent consent decree will adversely affect the Navajo Generating Station, resulting in increased energy costs for Arizonans and the loss of hundreds of jobs. This bill provides much needed relief from these types of regulatory abuses,” Kyl said.
“An avalanche of federal regulations is burying America’s job creators. Consent decrees and settlement agreements – known as “sue and settle” – are a driving force behind new and burdensome regulations, allowing special-interest groups to subvert the critical accountability requirements of federal rulemaking. The Sunshine for Regulatory Decrees and Settlements Act of 2012 will end these collusive practices, and will increase the fairness and transparency of the federal rulemaking process,” Paul said.
“Sue-and-settle litigation is a troubling practice by which administrative agencies seek to circumvent the usual procedures for issuing regulations and instead impose burdensome rules through consent decrees or settlement agreements. This practice raises serious constitutional concerns and also harms our economy, which suffers from a complex and costly regulatory burden. The Sunshine for Regulatory Decrees and Settlements Act is a critical step forward as we work to make the federal government more transparent and fair, and less burdensome to the economy,” Lee said.
Sue-and-settle driven rulemaking takes place under schedules that render notice-and-comment requirements a mere formality, depriving regulated entities, the public and the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) of sufficient time to have any meaningful input on the content of final rules.
The sue-and-settle problem has occurred primarily in litigation against regulatory agencies over allegations that agency action has been unlawfully withheld or unreasonably delayed. Typically, the defendant agency has failed to meet a mandatory statutory deadline for a new regulation or is alleged to have unreasonably delayed discretionary action. In addition, agency actions are often politically sensitive, especially when the proposed regulation imposes high costs on the regulated businesses.
“These political concerns can give rise to a perverse incentive for the agency to cooperate with the litigation and negotiate a consent decree or settlement agreement,” Grassley said. “Once a consent decree or settlement is in place, the agency has an excuse to expedite action while avoiding accountability.”
With sue-and-settle cases, the resulting consent decree or settlement agreement comes as a surprise to the regulated community and the general public and often provides a short timeline for agency action. The lack of advance notice and minimal time allowed for the proposal and promulgation of regulations allows agencies to undercut the public participation and analytical requirements of regulatory process statutes. Accelerated timeframes for proposal and promulgation allow agencies to short-circuit review of new regulations by the OIRA. The incentive to do this is particularly strong when the plaintiff and the agency agree on what the content of the regulation should be, and seek to effectuate that agreement without input from interested parties and the OIRA.
The Sunshine for Regulatory Decrees and Settlements Act would:
· provide for greater transparency by requiring agencies publicly to post and report to Congress information on sue-and-settle complaints, consent decrees and settlement agreements;
· prohibit same-day filing of complaints and pre-negotiated consent decrees and settlement agreements in cases seeking to compel agency action;
· require that consent decrees and settlement agreements be filed only after interested parties have been able to intervene in the litigation and join settlement negotiations and only after any proposed decree or settlement has been published for public notice and comment;
· require courts considering approval of consent decrees and settlement agreements to account for public comments and compliance with regulatory process statutes and executive orders;
· require the Attorney General or, where appropriate, the defendant agency’s head, to certify to the court that he has approved any proposed consent decree that includes terms that: (i) convert into a duty a discretionary authority of an agency to propose, promulgate, revise, or amend regulations, (ii) commit an agency to expend funds that have not been appropriated and budgeted for the action in question, (iii) commit an agency to seek a particular appropriation or budget authorization, (iv) divest an agency of discretion committed to the agency by statute or the Constitution, or (v) otherwise afford any relief that the court could not enter under its own authority; and
· make it easier for succeeding administrations to move the courts for modifications of a prior administration’s consent decrees by providing for de novo review of motions to modify, if the circumstances have changed.
Click here for the legislative text of S.3382.
Below is Grassley’s floor statement about his proposed legislation.
Floor Statement of U.S. Senator Chuck Grassley
Mr. President, I rise today to introduce important regulatory reform legislation.
Recently, when describing the state of our economy, President Obama said that the private sector was “doing fine.”
I disagree. And I think that the American people disagree with the President’s statement.
There are 12.7 million Americans unemployed and another 8.2 million underemployed. 5.4 million Americans have been unemployed for 27 weeks or more.
That’s not “doing fine.”
The federal government needs to do everything possible to create an environment that will allow private sector employers to create jobs. To accomplish that, common sense would tell us that the government needs to remove barriers to job creation rather than erect new ones. The federal government needs to listen to employers so it can learn from them exactly what it can do to help.
Unfortunately, the Obama administration hasn’t listened. In fact, unbelievably, it’s actually doing the opposite of what employers are saying they need.
Employers are saying that they need relief from job killing regulations.
For example, according to a Gallup survey, small-business owners in the United States are most likely to say that complying with government regulations is the biggest problem facing them today.
Indeed, the burden of regulations is overwhelming. Recently, the Small Business Administration estimated that the federal regulatory burden has reached $1.75 trillion per year.
So what has the Obama administration’s response been?
It’s planning to increase the number of regulations.
The Obama administration’s regulatory agenda has thousands of regulations in its production line, more than a hundred of which will have a major impact on the economy. Those are on top of more than one thousand regulations already completed.
I’m sorry to say that the news gets even worse. On top of the thousands of new regulations it wants to impose, it appears that the administration is trying to get around the procedures governing how regulations are enacted.
In recent years, consent decrees and settlement agreements have been used to circumvent the laws and procedures that govern how regulations are enacted and to speed up the process in ways that limit the public’s ability to fully participate and to exercise the rights guaranteed by our laws.
These consent decrees or settlement agreements may come as a surprise to the regulated industry and the public. And they usually establish truncated deadlines for the agency to promulgate a regulation.
The lack of advance notice and the expedited schedule for the proposal and promulgation of regulations allows an agency to avoid the input that comes with meaningful public participation. It may also allow agencies to short-circuit the analytical requirements of regulatory process statutes, such as the Administrative Procedure Act. Expedited deadlines further allow agencies to undercut the review of proposed regulations by the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA).
The practice of using consent decrees and settlement agreements to enact regulations has become known as “sue-and-settle” litigation.
The dangers of sue-and-settle litigation and of government by consent decree are not a new problem.
Nearly thirty years ago, Judge Malcom Wilkey of the D.C. Circuit warned about the dangers of collusive consent decrees. In his dissenting opinion in Citizens for a Better Environment v. Gorsuch, Judge Wilkey explained:
Government by consent decree enshrines at its very center those special interest groups who are party to the decree. They stand in a strong tactical position to oppose changing the decree, and so likely will enjoy material influence on proposed changes in agency policy.
As a policy device, then, government by consent decree serves no necessary end. It opens the door to unforeseeable mischief; it degrades the institutions of representative democracy and augments the power of special interest groups. It does all of this in a society that hardly needs new devices that emasculate representative democracy and strengthen the power of special interests.
Because the Obama administration is trying to dramatically increase the number of regulations, we must make sure that the laws and procedures governing rulemaking are followed and followed in a meaningful way.
The debate about sue-and-settle litigation is important because it raises questions about fairness, transparency and public participation in administrative rulemaking. It also raises the issue of whether meaningful judicial review is taking place.
Under the Administrative Procedure Act and other laws, the public and affected persons, in particular, have a right to adequate notice and an opportunity to comment on a proposed regulation. They also have a right to have their comments fully considered.
However, when sue-and-settle litigation is used real, public participation is effectively eliminated.
Generally speaking, the agreement on how to regulate is reached without the full input of the people and businesses that are affected. Discussions are held and agreements may be reached between government officials and special interest groups outside the public process. This is particularly true where career employees and political appointees at agencies share the agenda of the special interest group suing the agency and use the lawsuit as an opportunity to implement their common goals.
Also, the negotiated deadlines for creating the new regulation can be so accelerated that the public’s comments might receive little or no true consideration.
And keep in mind that these regulations often involve complex scientific and economic issues. Those issues cannot generally be fully and properly considered under a truncated time frame.
Another fundamental aspect of rulemaking is the opportunity to challenge a decision by participating as an intervenor. However, with sue-and-settle litigation, special interest groups and the government may reach an agreement before a lawsuit is even filed. This eliminates the opportunity for members of the public to intervene in the case to protect their interests.
Even where a settlement occurs after affected parties may have been granted intervention, these parties have little or no chance to participate in settlement discussions because they are not invited by the government and the special interest groups.
Moreover, when an agency creates a regulation through sue-and-settle litigation, it reorganizes its work by promising to take specific actions at specific times, before or instead of other projects that may be of greater benefit to the public.
Also, sue-and-settle litigation helps officials and administrations to avoid accountability. Instead of having to answer to the public for controversial regulations and policy decisions, officials are able to point to a court order and maintain that they were required or forced to promulgate a controversial regulation.
The case of American Nurses Association v. Jackson is an example of the sue-and-settle phenomenon.
In that case, a group of environmental organizations sued the Environmental Protection Agency (EPA) in December 2008, challenging the agency’s failure to create emissions standards for pollutants from power plants under the Clean Air Act. Subsequently, the Utility Air Regulatory Group (UARG), representing the utility industry, intervened as a defendant in the case.
On October 22, 2009, the plaintiffs and the EPA filed a proposed consent decree. It was the result of a deal struck exclusively between them. They did not include the UARG in their discussions. Although the judge expressed concerns about the exclusion of the UARG from the settlement discussions, she was satisfied when the plaintiffs and the EPA informed her that this practice was the “norm.”
Under the consent decree, the EPA conceded that it had failed to perform a mandatory duty under the Clean Air Act by failing to issue a “maximum achievable control technology” (MACT) regulation for power plants. The EPA pledged that it would issue a proposed regulation by March 16, 2011 and a final regulation by November 16, 2011.
The UARG objected to the consent decree. It argued that the proposed decree improperly limited the government’s discretion because it required the EPA to find that standards under § 112(d) of the Clean Air Act were required. Consequently, the decree prevented the agency from either declining to issue standards or adopting other standards instead of the more burdensome MACT standard.
Although acknowledging the significance of the UARG’s arguments, the judge nevertheless rejected them in its short opinion approving the consent decree.
As to the language limiting the EPA’s discretion in the rulemaking, the judge stated that the EPA believed itself to be obligated to promulgate § 112(d) standards and, “and by entering this consent decree the Court [wa]s only accepting the parties’ agreement to settle, not adjudicating whether EPA’s legal position [wa]s correct.” The judge simply believed that “[i]f necessary, [the] UARG c[ould] challenge [the] EPA's final rule and its legal position.”
With regard to the UARG’s argument that the time frame within which the EPA proposed to carry out the rulemaking was insufficient, the judge noted that she “appreciate[d]” the concern that the schedule was too short for the critical and expensive regulatory decisions that would be made. Nevertheless, she held that it was enough that the proposed consent decree allowed for a change of the schedule if needed.
The judge’s reasoning on this point was interesting given that she acknowledged in a footnote that under the consent decree, the UARG could not petition for an extension of the deadlines.
In the end, the judge acknowledged that the concerns raised by the UARG were not insubstantial. However, she did not believe that she could gauge the adequacy, or lack thereof, of the schedule. Consequently, in a somewhat cavalier manner the judge concluded that: “[s]hould haste make waste, the resulting regulations will be subject to successful challenge. … If EPA needs more time to get it right, it can seek more time.”
Unfortunately, it appears that the EPA’s proposed regulation contained significant errors. Indeed, the EPA did not analyze the impact of its regulation on electric reliability or provide sufficient time for industry to do so.
In November of 2011, the UARG brought its concerns to the judge, asking for relief from the consent decree.
In particular, it argued that more time was needed to respond to the voluminous comments submitted during the rulemaking process, to fix the serious flaws, and to then more carefully consider the promulgation of a rule with such serious and far-reaching consequences. For example, the schedule under the consent decree only allowed 104 days for the EPA to consider and respond to 20,000 unique, public comments received before it published the final rule. In total, there were 960,000 comments submitted.
The UARG’s motion was supported by twenty-four states and Governor Terry Branstad on behalf of the people of Iowa. As part of their amicus brief, they pointed out that the American Coalition for Clean Coal Electricity (ACCCE) had estimated that the rule promulgated under the consent decree would result in the loss of 1.44 million jobs in the United States between 2013 and 2020. Because of the rule, the ACCCE also predicts national electricity price increases in 2016 to average 11.5%, with an increase of 23.5% in some regions.
The EPA issued a final rule on December 21, 2011 and has argued that the UARG’s motion is moot.
As it stands, the rule is among the most costly of rules ever promulgated by the EPA with the agency estimating that the annualized cost at $9.6 billion in 2015. Industry estimates are even higher. Petitions for reconsideration of the rule are pending and more lawsuits are likely.
The EPA could have done it right the first time by crafting a sensible, workable rule that both protects the environment and can be implemented without causing unnecessary job losses or higher electricity prices for hard-working families. Instead, we have flawed, controversial regulation that may have to be rewritten.
Although we don’t know how this will all turn out, we have to remember that the process by which this rule was created was the product of a consent decree.
In sum, when special interest groups and agencies engage in sue-and-settle litigation, the end product is a regulation that implements the priorities of the special interest groups. Moreover, these regulations are created under schedules that render notice-and-comment rights a mere formality, eliminating the opportunities for regulated entities, the public and the OIRA to have any input on the content of final regulations.
That is why I’m introducing the Sunshine for Regulatory Decrees and Settlements Act of 2012. Senators Kyl, Cornyn, Coburn, Lee, and Paul are cosponsors of the bill.
Representative Benjamin Quayle of Arizona has introduced a companion bill in the House.
The Sunshine bill endeavors to solve the problems I’ve outlined. It does this by enacting reasonable pro-transparency measures. I’ll just outline a few of those measures.
First, the Sunshine bill provides for greater transparency, requiring agencies publicly to post and report to Congress information on sue-and-settle complaints, decrees and settlements.
Second, the bill prohibits same-day filing of complaints and pre-negotiated consent decrees and settlement agreements in cases seeking to compel agency action. Instead, it requires that consent decrees and settlement agreements be filed only after interested parties have been able to intervene in the litigation and join settlement negotiations and only after any proposed decree or settlement has been published for notice and comment.
Third, the Sunshine bill requires courts considering whether to approve proposed consent decrees and settlement agreements to account for public comments and compliance with regulatory process statutes and executive orders. This bill would facilitate public participation by allowing comment on any issue related to the matters alleged in the complaint or addressed in the proposed agreement. Government agencies would be required to respond to comments, and the court would assess whether the proposed schedule allows sufficient time for real and meaningful, public comment on the regulation.
Fourth, the bill requires the Attorney General or, where appropriate, the defendant agency’s head, to certify to the court that he or she has approved any proposed consent decree or settlement agreement that includes terms that: (i) convert into a duty a discretionary authority of an agency to propose, promulgate, revise, or amend regulations, (ii) commit an agency to expend funds that have not been appropriated and budgeted, (iii) commit an agency to seek a particular appropriation or budget authorization, (iv) divest an agency of discretion committed to it by statute or the Constitution, or (v) otherwise afford any relief that the court could not enter under its own authority.
Finally, the Sunshine bill makes it easier for succeeding administrations to successfully move the courts for modifications of a prior administration’s consent decrees by providing for de novo review of motions to modify if the circumstances have changed.
Sue-and-settle litigation damages the transparency, public participation and judicial review protections Congress has guaranteed for all of our citizens in the rulemaking process.
Regulations are laws. The procedure and process used to create them are important. They are part of our system. The American system of lawmaking and judicial review is a model for the world. Our system should not be distorted or manipulated.
Regulations must be made in the open, through the procedures and processes established under our laws.
The Sunshine for Regulatory Decrees and Settlements Act will help to ensure that established and well-grounded protections remain in place, while maintaining the government’s ability to enter into consent decrees and settlement agreements, when appropriate.
I urge all of my colleagues to work with me and to support this legislation.
Mr. President, I yield the floor.
 Citizens for a Better Environment v. Gorsuch, 718 F.2d 1117, 1137 (D.C. Cir. 1983) (Wilkey, J., dissenting).
 American Nurses Association v. Jackson, Civil Action No. 1:08-cv-2198-RMC (D.D.C.).
 American Nurses Association v. Jackson, Civil Action No. 1:08-cv-2198-RMC, 2010 WL 1506913 (D.D.C. Apr. 15, 2010).
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