Administrator Scott Pruitt announced in October that the US Environmental Protection Agency (EPA) would take steps to limit the “sue-and-settle” practice employed by some outside groups as a means to implement desired policy changes or regulatory action at EPA.

EPA’s past practice of settling litigation through consent decrees and settlement agreements had been criticized for relinquishing some of the agency’s discretion over its policies and priorities. Steps outlined in Pruitt’s directive include:

  • EPA will make public any notice of intent to sue the Agency within fifteen days of receipt as well as any subsequent complaint or petition.
  • Upon receiving a complaint or petition, EPA has fifteen days to notify any affected states or regulated entities, with the goal of involving such parties in the negotiation process.
  • Any proposed consent decree or draft settlement – along with sufficient explanation of its contents – will be made available for public comment for at least thirty days.
  • EPA may elect to hold a public hearing on any proposed agreement.
  • If an agreement contains a deadline by which EPA must issue a final rule, it must do so with sufficient time for consideration of the rule and in accordance with notice-and-comment procedures.
  • EPA will maintain a searchable and categorized public list of consent decrees and settlement agreements to which it remains subject.

Some of these steps were already in place. For example, under some statutes, EPA is required to notice settlement agreements for comment. In other cases, EPA was noticing such agreements for public comment as a matter of policy.

The directive also specifies that if the Agency does enter into a consent decree or settlement agreement, it will seek to avoid payment of the opposing party’s attorneys’ fees. The impact of this pronouncement is unclear. If EPA refuses to settle unless the opposing party agrees to forego fees, the policy could deter settlement. If EPA settles but leaves fees up to the court, there is likely to be little change, judges generally can award attorneys’ fees if the settlement advances that party’s interests.

Overall, the directive should lead to more transparency and openness in the settlement process. While Administrator Pruitt also may hope the directive reduces outside parties’ incentive to sue EPA, this seems unlikely. The directive may actually lead to more protracted litigation, to the extent that it makes the settlement process more cumbersome, and, thus, hinders parties’ incentive to settle. This in turn could increase pressure on EPA’s limited resources, since settlements often are less time and resource intensive than litigation. Moreover, to the extent that EPA pursues litigation instead of settlement, the Agency risks judicially-imposed orders that have some potential to impose stricter deadlines or more intrusive remedies than could have been negotiated in settlement.

In response to Administrator Pruitt’s announcement, Representative Bob Goodlatte (R-VA), chairman of the House Judiciary Committee, called upon Congress to consider two complimentary pieces of legislation, each approved by the Judiciary Committee earlier this year. The first, H.R. 469, the Sunshine for Regulatory Decrees and Settlements Act, would require regulatory agencies to make public and report to Congress on any lawsuits, consent decrees, or settlement agreements to which they are a party. It would also put an end to same-day filing of complaints and pre-negotiated settlements. The second, H.R. 732, the Stop Settlement Slush Funds Act, would prevent funds received by an agency through a negotiated settlement agreement from going to any non-governmental entity. Last week, the House of Representatives voted in favor of each.