In recent years many advocates, including the US Chamber of Commerce and the US House of Representatives, have raised concerns about a rulemaking tactic of US EPA, known colloquially as “sue and settle” rulemaking. Sue and settle concerns arise under the Clean Air Act (CAA) when an environmental group files suit against US EPA, but rather than defend the suit US EPA agrees as part of a negotiated settlement to expedited deadlines for rule or plan development. Thus, the deal reached by the US EPA and the environmentalists often undercuts meaningful opportunities to develop and present evidence supporting a competing viewpoint on substantive issues during the rulemaking process.While the court overseeing the settlement has a responsibility to consider the effect the settlement may have on the public interest, if other viewpoints are not represented in the deadline case, the court may approve and enter the settlement with little consideration of affected business interests. Thus, US EPA has used sue and settle consent decree deadlines to justify imposing federal action in state-delegated domains, shortening rulemaking comment periods and denying extensions of time to develop data in support business interests. Based on our recent experience, these sue and settle tactics are adversely affecting informed and balanced rulemaking under the CAA.

The sue and settle tactic has been most notably used in the context of Regional Haze regulation.2 Under the CAA, states are provided primary authority to define Regional Haze emissions limits and retrofit controls for the sources located within their borders. US EPA promulgated regulations to guide state efforts, but those regulations were effectively challenged. States waited for US EPA to promulgate lawful rules to provide guidance on the development of acceptable regional haze state implementation plans (SIPs). In the meantime, however, environmental organizations sued US EPA for missing its statutory deadline to approve regional haze SIPs in 34 states. US EPA entered into a consent decree with environmental petitioners agreeing to aggressive deadlines by which the agency was required to accept or reject SIPs or promulgate federal implementation plans (FIPs) to supplant the state action. Approvable SIPs were developed and presented in many states, but faced with the court-ordered deadline US EPA chose to bypass the SIP process and propose FIPs as an expedited path to impose US EPA’s more aggressive and more expensive Regional Haze solutions. Absent the consent decree deadline, US EPA would be hard pressed to justify this circumvention of the Regional Haze provisions of the CAA, which unquestionably delegate primary responsibility to the states for developing and implementing Regional Haze plans. Courts will ultimately decide whether this is a proper exercise of federal authority.

A clear example of this occurred with regard to the Regional Haze FIP for the taconite industry in Minnesota and Michigan. After investing resources and thousands of staff hours on development of a SIP in Minnesota, the state was understandably frustrated when US EPA imposed a FIP on its unique taconite industry. US EPA’s FIP bypassed the states’ superior understanding of the taconite furnaces subject to Regional Haze requirements and the state’s proposed plan for case-by-case evaluation of retrofit technologies. US EPA did not even take time to conduct the modeling required to demonstrate whether investing hundreds of millions of dollars in additional controls would generate any perceptible improvement to visibility in affected Class I areas. Instead, US EPA’s deadline-driven action left business interests scrambling to educate the agency on their industry sector and to produce the data necessary to counter US EPA’s flawed assumptions that threatened devastating quality and energy penalties. This is not the Regional Haze process that Congress intended when it delegated Minnesota and Michigan primary authority to regulate the Regional Haze emissions of the sources within their borders.

Further, when US EPA proposed its Regional Haze FIP for the taconite industry, US EPA allowed just 45 days to comment on a rule that would impose more than US$300 million in controls not included in the states’ SIPs. US EPA then rejected requests for extensions of time (even to the 60 days recommended by Executive Order) on the sole basis that it would cause the agency to violate a court-ordered deadline for final promulgation of a FIP. It did not seem to matter to the agency that the additional time was necessary to generate the vendor quotes and regional modeling critical to a proper evaluation of the proposed FIP and its visibility improvement. Therefore, as US EPA rushes toward final action without this information, the adverse effect of sue and settle tactics on deliberative rulemaking could not be more apparent.

In direct reaction to these types of examples, members of Congress are responding to sue and settle tactics with proposed legislation. This legislation in the House of Representatives would require US EPA to collect comments on its consent decrees before submission of the consent decree to the court for approval. See Sunshine for Regulatory Decrees and Settlements Act, H.R. 3862, 112th Cong. (2012). The bill would also establish a right for affected parties to intervene in litigation prior to entry of a consent decree. The bill is before the House Committee on the Judiciary, and has been placed on the House calendar. Further, the Republican party platform statement seeks “an end to the [US]EPA’s participation in ‘sue and settle’ lawsuits, sweetheart litigation brought by environmental groups to expand the Agency’s regulatory activities against the wishes of Congress and the public,” giving this issue national prominence going into the November elections.

However, unless a divided Congress is able to act on this or similar legislation, industries covered by US EPA regulations may still find themselves subject to additional requirements stemming from consent decrees between the government and environmental groups. Indeed, according to the Congressional statement of support for H.R. 3862, sue and settle cases have already led to new or modified standards for cement manufacturers, coal miners, oil and gas companies, electric utilities and solid waste facilities.With sue and settle rulemaking occurring with more frequency, companies must remain vigilant and work closely with counsel to identify strategies for mitigating the adverse effect of deadline suits and other potential sue and settle litigation that may threaten business interests and quality rulemaking efforts. These strategies may include:

  1. Seeking court approval to allow affected business interests to intervene in deadline suit litigation and to object to unreasonable settlements that inadequately protect stakeholders.
  2. Identifying opportunities to comment on proposed settlements to alert courts to non-party interests affected by the terms of the settlement. Some consent decrees are lodged with a court and then published for public comment before final entry so the court has the benefit of public input before deciding on whether the settlement is in the public interest.
  3. Challenging US EPA’s use of court-ordered deadlines to compromise the rulemaking process or to usurp state authority.

Business interests seeking to intervene in deadline suits today will benefit from Congressional testimony and numerous articles identifying material adverse effects produced from deadline suit settlements.