EPA Administrator Scott Pruitt Issues New Directive Designed to Bring “Sue and Settle” Practice to a Close

On Monday October 16, EPA Administrator Scott Pruitt published a directive outlining a series of new regulatory measures intended to curtail the “sue and settle” tactic frequently utilized by environmental groups to enforce policy changes.  The term refers to a practice most commonly employed by environmental groups when suing the EPA for neglecting deadlines or failing to perform non-discretionary acts under the Clean Water Act (CWA), Endangered Species Act (ESA), or Clean Air Act (CAA).  In order to avoid a lengthy legal battle, the EPA and environmental groups typically reach a settlement agreement or draft a consent decree whereupon the agency forfeits discretionary power and adopts the group’s proposed regulation.

In a memorandum accompanying the directive, Pruitt outlines three fundamental principles of government that he believes “sue and settle” practices undermine: “(1) the importance of process, (2) adherence to the rule of law, and (3) the applicability of cooperative federalism.”  He asserts that “sue and settle” tactics enable environmental groups to circumvent traditional due process by “us[ing] a consent decree or settlement agreement to bind the Agency to proceed with a rulemaking with a certain end in mind on a schedule negotiated with the litigants.”  Pruitt goes on to opine that past sue-and-settle tactics not only “disrespect the rule of law and improperly elevate the powers of the federal judiciary” but also have “undermined this principle of cooperative federalism by excluding the states from meaningfully participating in procedural and substantive Agency actions.”

The directive sets forth a series of procedures the agency will follow going forward for the ostensible purpose of “promot[ing] transparency and public participation in the consent decree and settlement agreement process involving lawsuits against EPA.”  Among the directives is the requirement that the EPA “directly notify any affected states and/or regulated entities of a complaint or petition for review within fifteen days of receiving service of the complaint or petition for review” as well as a provision stating that “if a consent decree or settlement agreement includes any deadline by which the EPA must issue a final rule, the Agency must provide sufficient time (1) to modify its proposed rule if necessary, consistent with applicable laws and guidance on rulemaking, […] (2) to provide adequate notice and comment on the modified proposal, and (3) to conduct meaningful Agency consideration of the comments received on the modified proposal.” Furthermore, the directive asserts that “if EPA agrees to resolve litigation through a consent decree or settlement agreement, and therefore there is no ‘prevailing party,’ then the Agency shall seek to exclude the payment of attorney’s fees and costs to any plaintiff or petition in the litigation.”  

This new directive has received vocal criticism from a number of environmental advocacy groups such as The National Resources Defense Council (NRDC), Earthjustice, and the Sierra Club, who argue that the procedures outlined in the directive is intended to deter such organizations from suing EPA to hold the agency accountable for its actions or inactions.   In addition, these organizations fear the new policy requiring public hearings and notice to states and regulated entities will complicate and delay settlements.  In Pruitt’s new directive, if EPA enters into a consent decree or settlement, it must contact any states and regulated entities that may be affected by such an agreement to solicit their input and hold public hearings about the proposed agreements.

The new EPA policy could have immediate impact in the State of North Dakota.  North Dakota has challenged a court-approved consent decree that was finalized between the EPA and environmental groups in 2016.  Pruitt’s Oct. 16 directive to curtail consent decrees with public interest groups supports North Dakota’s arguments against the consent decree, that the state claims amounts to backdoor policy changes without the input of states and regulated entities.

Based on the new directive, EPA will not enter into consent decrees that impose requirements beyond applicable statutory requirements imposed on regulated entities. In the North Dakota case, the EPA consent decree included requirements above and beyond the relevant law, the Resource Conservation and Recovery Act (RCRA).  The consent decree resulted from allegations by environmental groups that the EPA had failed to revise its regulations for waste materials from oil and gas production since 1988, despite being required under the RCRA to review and, if necessary, revise them every three years.  Under the consent decree, the EPA agreed to review the regulations by March 2019 and determine whether new rules are necessary. The agreement was approved by a D.C. District Court in December.  North Dakota was excluded from the negotiations concerning the consent decree and sought to intervene in the court review of the settlement, but the lower court ruled that North Dakota lacked standing.  In its appeal to the D.C. Circuit, North Dakota has argued that the lower court precluded North Dakota from participating in proceedings that would directly impact it, even if no new regulations were yet on the books.  Oral arguments in the case are scheduled for Nov. 7.

This new EPA directive will impact entities and industries regulated by EPA. Now, when EPA enters into consent agreements with NGOs pertaining to regulations that apply to entities in industry groups represented by environmental law firms, environmental attorneys will have an opportunity to participate in the notice and comment period and weigh in on the agreement proposed.  The environmental lawyers at Bick Law LLP will continue to monitor the progress of this directive.