[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
         MANDATE MADNESS: WHEN SUE AND SETTLE JUST ISN'T ENOUGH

=======================================================================

                                HEARING

                               before the

                SUBCOMMITTEE ON TECHNOLOGY, INFORMATION
                POLICY, INTERGOVERNMENTAL RELATIONS AND
                           PROCUREMENT REFORM

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 28, 2012

                               __________

                           Serial No. 112-185

                               __________

Printed for the use of the Committee on Oversight and Government Reform


         Available via the World Wide Web: http://www.fdsys.gov
                      http://www.house.gov/reform



                  U.S. GOVERNMENT PRINTING OFFICE
76-368                    WASHINGTON : 2012
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202ï¿½09512ï¿½091800, or 866ï¿½09512ï¿½091800 (toll-free). E-mail, [email protected].  


              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana                  ELIJAH E. CUMMINGS, Maryland, 
JOHN L. MICA, Florida                    Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania    EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio              CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York          GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona               MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho              DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania         BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee          PETER WELCH, Vermont
JOE WALSH, Illinois                  JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina           CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida              JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania

                   Lawrence J. Brady, Staff Director
                John D. Cuaderes, Deputy Staff Director
                     Robert Borden, General Counsel
                       Linda A. Good, Chief Clerk
                 David Rapallo, Minority Staff Director

   Subcommittee on Technology, Information Policy, Intergovernmental 
                    Relations and Procurement Reform

                   JAMES LANKFORD, Oklahoma, Chairman
MIKE KELLY, Pennsylvania, Vice       GERALD E. CONNOLLY, Virginia, 
    Chairman                             Ranking Minority Member
JASON CHAFFETZ, Utah                 CHRISTOPHER S. MURPHY, Connecticut
TIM WALBERG, Michigan                STEPHEN F. LYNCH, Massachusetts
RAUL R. LABRADOR, Idaho              JACKIE SPEIER, California
PATRICK MEEHAN, Pennsylvania
BLAKE FARENTHOLD, Texas


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on June 28, 2012....................................     1

                               WITNESSES

Mr. E. Scott Pruitt, Attorney General, State of Oklahoma
    Oral Statement...............................................     5
    Written Statement............................................     8
Mr. Roger R. Martella, Jr., Partner, Sidley Austin LLP, Former 
  General Counsel, U.S. Environmental Protection Agency
    Oral Statement...............................................    32
    Written Statement............................................    34
Mr. William L. Kovacs, Senior Vice President, U.S. Chamber of 
  Commerce
    Oral Statement...............................................    43
    Written Statement............................................    45
Mr. Robert Percival, Robert F. Stanton Professor of Law, 
  Director, Environmental Law Program, University of Maryland 
  Francis King Carey School of Law
    Oral Statement...............................................    65
    Written Statement............................................    67
Mr. William Yeatman, Assistant Director, Center for Energy and 
  Environment, Competitive Enterprise Institute
    Oral Statement...............................................    75
    Written Statement............................................    77

                                APPENDIX

The Honorable Jackie Speier, a Member of Congress from the State 
  of California, Opening Statement...............................    99
The Honorable James Lankford, a Member of Congress from the State 
  of Oklahoma, Draft Remarks.....................................   101
United States Environmental Protection Agency, Letter to the 
  Honorable James Lankford.......................................   103
Office of the Attorney General, Department Policy Regarding 
  Consent Decrees and Settlement Agreements......................   105
Associated Builders and Contractors, Inc., Letter to The 
  Honorable James Lankford and The Honorable Gerald Connolly.....   110
Letter to The Honorable Lisa Jackson, Administrator, 
  Environmental Protection Agency from The Honorable James 
  Lankford.......................................................   111


         MANDATE MADNESS: WHEN SUE AND SETTLE JUST ISN'T ENOUGH

                              ----------                              


                        Thursday, June 28, 2012

                  House of Representatives,
   Subcommittee on Technology, Information Policy, 
Intergovernmental Relations and Procurement Reform,
              Committee on Oversight and Government Reform,
                                                   Washington, D.C.
    The subcommittee met, pursuant to call, at 9:02 a.m., in 
Room 2203, Rayburn House Office Building, Hon. James Lankford 
[chairman of the subcommittee] presiding.
    Present: Representatives Lankford, Kelly, Labrador, 
Connolly and Speier.
    Staff Present: Alexia Ardolina, Assistant Clerk; Joseph A. 
Brazauskas, Counsel; Brian Daner, Counsel; Linda Good, Chief 
Clerk; Kristina M. Moore, Senior Counsel; Noelle Turbitt, 
Assistant Clerk; Jeff Wease, Deputy CIO; Jaron Bourke, Minority 
Director of Administration; Adam Koshkin, Minority Staff 
Assistant; Suzanne Owen, Minority Health Policy advisor; and 
Cecelia Thomas, Minority Counsel.
    Mr. Lankford. The committee will come to order.
    This is a hearing from the Oversight and Government Reform, 
Technology and Procurement Reform and Intergovernmental 
Relations Subcommittee. We exist to secure two fundamental 
principles: First, that Americans have the right to know the 
money Washington takes from them is well spent; and, second, 
Americans deserve an efficient and effective government that 
works for them.
    Our duty on the Oversight and Government Reform Committee 
is to protect these rights. Our solemn responsibility is to 
hold government accountable to taxpayers because taxpayers do 
have a right to know what they get from their government. We 
will work tirelessly in partnership with citizen watchdogs to 
deliver the facts to the American people and bring genuine 
reform to the Federal bureaucracy. This is the mission of the 
Oversight and Government Reform Committee.
    We have a significant amount of attention that is going to 
happen today focused on the red tape, and that has happened 
across all of Congress recently from both parties actually 
trying to make us more efficient. This is an issue that does 
hold us back from our own growth in prosperity.
    Today's hearing we are going to focus on examining the 
highly questionable practice that's been perfected by the 
Environmental Protection Agency known as ``sue and settle.'' 
This has emboldened the administration to pursue an aggressive 
green agenda while escaping political accountability for the 
costs and burdens of these regulations and what they impose on 
job creators.
    The process is rather simple. Environmental groups will sue 
the EPA, demanding the agency issue a regulation on an 
accelerated timeframe. Rather than fighting the lawsuit, EPA 
quickly agrees to the special interest demands. These 
settlement agreements are reached after closed-door 
negotiations between EPA and environmental groups, where other 
interested parties are excluded. Once the settlement agreement 
is approved by a Federal Court in a consent decree, the EPA is 
legally bound to engage in the rulemaking.
    It is important to note that when a court approves the 
consent decree, it does not consider the merits. The court is 
merely accepting and ratifying what the parties agreed to.
    In the past 3 years, the administration has conducted 
approximately 60 settlements with special interests. Twenty-
nine of these agreements bound the EPA to make major policy 
changes. The plaintiffs in these cases are often the very same 
reoccurring players: The Sierra Club, NRDC, Defenders of 
Wildlife, Wild Earth Guardians, Center for Biological 
Diversity. These special-interest groups not only hold a 
special seat at the table with the EPA, EPA is effectively 
paying them to sue the agency. In 2011 alone, taxpayers 
reimbursed these groups millions of dollars to participate in 
these sue-and-settle agreements.
    In addition to examining this outrageous practice, we will 
hear today about two particular egregious cases where EPA 
defied all norms of transparency, sidelined interested parties, 
and is now in the process of imposing extraordinary burdensome 
regulations. These two cases are EPA's regional haze 
regulations and its greenhouse gas standards for power plants.
    In the case of regional haze, Congress was crystal clear 
that this is purely an aesthetic visibility program and is to 
be administered by the States, not by the EPA. Through sue and 
settle, EPA is attempting to federalize the program in imposing 
costs well beyond what the State had determined was necessary 
or justified. Ultimately, EPA's proposal will cost billions of 
dollars for visibility improvements that are undetectable to 
the human eye.
    In the second case study, New Source Performance Standards 
for electric utilities, EPA concluded settlement negotiations 
on December 23rd, 2010, and agreed to promulgate NSPS for 
greenhouse gases for both new and existing electric generating 
units under section 111(a) and 111(d) of the Clean Air Act. At 
the time this settlement was reached, EPA was not in violation 
of any mandatory duty, and as such the litigants didn't have a 
legal leg to stand on. And yet the Agency settled, committing 
the Agency to make major policy changes without interested 
parties at the table, and they rewarded litigants with a cash 
prize they were never entitled to.
    These two case studies are but two examples of the dozens 
of policy changes EPA has committed to in sweetheart sue-and-
settle arrangements with special interests.
    Time and again when the EPA is criticized for the excessive 
burden imposed by their Agency, whether it be Utility MACT, 
Boiler MACT, Florida water quality standards, regional haze, 
NSPS, EPA's response is suspiciously similar: The Agency had no 
discretion to extend the timeline to hear additional points of 
view. It is under a court order to finalize those regulations 
by date certain. Of course, that court order was agreed to by 
EPA in the first place.
    Let's be clear: What EPA claims the law requires them to do 
is nothing more than what EPA agreed to do in a collusive 
agreement with special-interest allies. The lack of 
transparency is designed to circumvent other regulatory checks 
Congress has put in place.
    Environmental regulations only work when they are made in 
an open process that involves all stakeholders. Sue-and-settle 
rulemaking is an affront to that process.
    Finally, I want to tell you that we very much wanted a 
representative from the EPA here today to respond to these 
concerns that our panelists will raise and that I am raising. 
However, despite adequate notice, EPA has refused to provide a 
witness for today's proceedings. I am hopeful we can find a 
date in the near future when they can make an appropriate 
witness available to respond and add to detail to our questions 
today.
    With that, I would like to recognize the person filling in 
for our ranking member today Ms. Speier for an opening 
statement.
    Ms. Speier. Mr. Chairman, thank you. And let me say at the 
outset, first I would like to offer this into the record and 
ask unanimous consent that it be placed in the record. This is 
a letter from the United States Environmental Protection Agency 
dated June 22.
    The chair mentioned that there was ample time offered to 
those at EPA to have a participant here. Actually, the first 
request came in on June 14th. They checked their travel 
schedules and other hearing requirements and found that one of 
the--both of the people that would be appropriate to testify at 
this hearing could not make it. So rather than finding a date 
that could accommodate both our schedules, this hearing went 
forward without having EPA represented, which frankly does not 
meet my standards as a committee that is supposed to be about 
oversight and hearing from the parties. So I would like to 
submit this for the record.
    Mr. Lankford. Without objection.
    Mr. Lankford. And one additional side note. We responded 
back to them when they said these three individuals were not 
available, asked for other individuals, asked for people by 
name. They responded back they had no one available. We asked 
for basically what the reasons were there was no one available 
on any of the topics on it, and we just received back a 
correspondence on that. So we do look forward to having them to 
get a chance to discuss this at a further hearing.
    Ms. Speier. All right. Thank you, Mr. Chairman.
    I must say that I have been a member of this committee for 
4 years. I chaired a committee on oversight when I was in the 
State legislature in California for 6 years. And oversight 
hearings are supposed to be objective evaluations of an issue. 
It is in the interests of both the Democrats and the 
Republicans in Congress to find where there are problems and to 
fix them. But when hearings are entitled, as most hearings in 
this committee recently, with a point of view, we are not being 
objective, we are not looking at both sides, we are ramming 
down a particular principle, and I find that particularly 
disconcerting.
    The focus of today's subcommittee hearing is on consent 
decrees and settlement agreements to commonplace court 
procedures that give parties in lawsuits the opportunity to 
settle their differences, while avoiding prolonged trials and 
mounting legal expenses. These procedures help parties in court 
cases reach compromises that bring advantages to both sides.
    In lawsuits against the Environmental Protection Agency, 
whether brought by State or local governments, private 
companies, environmental groups or local citizens, a consent 
decree often leads to a timelier and less expensive resolution 
for all involved. Consent decrees and settlements provide 
resolution and certainty, while allowing EPA to do its job and 
protect the public interest. That is the commonsense, 
noncontroversial context for today's hearing. Or at least it 
should be.
    Unfortunately, the majority has chosen to break with this 
historic support for these environmental protections, which are 
overwhelmingly popular with the public, and which they once 
helped create, in order to push a false narrative to fit a 
propollution agenda. Terms to describe consent decrees like 
``mandate madness'' and ``sue and settle'' are catchy political 
slogans, but they are based on a flawed understanding of how 
our environmental laws work.
    Accusations that environmental groups are somehow dictating 
government policy through court settlements rings just as 
hollow. In fact, an August 2011 GAO report covering the years 
1995 to 2010 found, and I repeat this, no discernible, no 
discernible trend in lawsuits against the EPA. Now, this is the 
GAO, which is a separate entity that is independent, making 
that statement. However, it did note that private companies and 
industry trade associations accounted for 48 percent of those 
lawsuits, while local and national environmental and citizen 
groups collectively accounted for 30 percent.
    So what are we saying here? Is black white and white black? 
The reality is that EPA gets sued a lot, not just by green 
groups, but more often than not by polluting industries, which 
are better funded and choose to fight their violations in court 
instead of cleaning up their acts. ``Sue and settle'' is a 
manufactured term and a distraction from the real sue-and-
pollute strategy that these corporations prefer.
    Existing law already provides ample means for parties to 
comment on and seek changes to consent decrees that they don't 
like. However, partisan attempts to rewrite those rules that 
have served the courts and the American people so well for 
decades is a solution in search of a problem.
    I would like to thank our witnesses here for appearing 
before the subcommittee, and I would like to say that I look 
forward to your testimony. We will see.
    Mr. Lankford. Thank you.
    Mr. Lankford. All the Members will have 7 days to submit 
opening statements and extraneous material for the record.
    I would like to recognize our panel. The Honorable Scott 
Pruitt is the attorney general of my State, of the State of 
Oklahoma. I know that he also has an appointment across the 
street at the Supreme Court. There is something happening today 
at 10 o'clock, I understand, over there, I have heard some sort 
of rumor on that. And our State was also part of that, so he 
will be part of that as well. So we will excuse you around 9:30 
today after we hear your testimony.
    Mr. Roger Martella is a partner at Sidley Austin LLP and a 
former general counsel of the U.S. Environmental Protection 
Agency. Thank you for being here as well.
    Mr. William Kovacs is senior vice president for environment 
and technology and regulatory affairs at the U.S. Chamber of 
Commerce.
    Mr. Robert Percival is the director of the environmental 
law program, professor of law at the University of Maryland 
Francis King Carey School of Law. Thank you for being here very 
much.
    And Mr. William Yeatman--is that correct, Yeatman--is the 
assistant director for the Center for Energy and Environment at 
the Competitive Enterprise Institute. Thank you for being here.
    Pursuant to committee rules, all witnesses are sworn in 
before they testify. If you would please rise and raise your 
right hands, please.
    Do you solemnly swear or affirm that the testimony you're 
about to give to this committee will be the truth, the whole 
truth, and nothing but the truth so help you God?
    Thank you.
    Let the record reflect all witnesses answered in the 
affirmative.
    You may be seated.
    In order to allow time for discussion, I would like you to 
limit your oral testimony to 5 minutes. You will see there the 
time, but we will also be attentive to that as well. We are not 
going to try to cut people off in the middle of it, but we 
would like you to be attentive to that. Your written statement, 
of course, has already been submitted for the record itself.
    I would like to recognize Mr. Scott Pruitt to begin our 
testimony today.

                       WITNESS STATEMENTS

                  STATEMENT OF E. SCOTT PRUITT

    Mr. Pruitt. Chairman Lankford, Ranking Member Connolly and 
members of the subcommittee, good morning, and thank you for 
inviting me to appear before you today to present my concerns 
on the legal and policy implications of recent actions that the 
chairman identified taken by the U.S. Environmental Protection 
Agency. This is a critical issue for Oklahoma, and I appreciate 
the attention that the chairman and this subcommittee is 
devoting to this matter.
    First I would like to be clear about my intentions today 
regarding environmental policy. My comments will in no way 
disregard the law or the provisions we as a Nation or States 
have put into place to protect our natural resources. We take 
seriously our responsibility to preserve and protect these 
valuable natural assets so that they may be enjoyed by our 
children and grandchildren.
    This responsibility requires a delicate balance between 
environmental and economic interests, which is why Congress, 
when drafting the Clean Air Act and the Regional Haze Program, 
gave deference and authority to the States, not a Federal 
agency, to take economic factors into consideration when 
deciding what actions needed to be taken and over how many 
years for implementation. With these considerations in mind, 
the State of Oklahoma submits that Oklahoma stakeholders, not 
the EPA, should make decisions on regional haze where outcomes 
directly affect Oklahomans.
    Congress was clear when they drafted the Clean Air Act and 
other environmental laws they intended for States and EPA to 
work together. They intended for cooperative federalism to take 
place to reach outcomes that protect our environment and at the 
same time take into consideration the economic costs. 
Unfortunately, this has not been the case over the past 3 
years.
    In Oklahoma's case, the regional haze matter, the EPA 
ignored its own provisions and denied our carefully crafted 
State plan in place of an unwarranted Federal plan. The State 
plan was not devised on a whim, but created after careful 
consideration and input from all the stakeholders in the State, 
including the Oklahoma Department of Environmental Quality. We 
followed the rules. The EPA did not.
    If the EPA's unlawful Federal plan is allowed to move 
forward, utility rates in the State of Oklahoma will rise as 
much as 20 percent over a 3-year period, and the economic harm 
to the State will be irreparable. To stop the Federal plan, I, 
on behalf of the State, filed an appeal to the EPA's final rule 
and asked the tenth circuit for a stay. In a rare decision, as 
this committee will recognize, the court granted a stay this 
month, which we believe recognizes the potential merits of our 
case.
    Once we became aware of actions by the EPA in Oklahoma, we 
began to dig deeper into the current EPA practices across the 
country. What we found was a complete abrogation of notice and 
public comment requirements when instituting Federal plans, as 
well as a setting of an environmental agenda through consent 
decrees. In several instances the EPA filed consent decrees on 
the same day that environmental groups filed lawsuits. This was 
in spite of the fact that these cases involved, as you know, 
Mr. Chairman, involved complex legal issues that typically 
would take weeks to review and respond. Such actions raised 
questions and concerns about the motives and transparency 
behind EPA's activities.
    Attorneys general are in the process of evaluating the 
EPA's alarming practice of relying on consent decrees to deny 
States their important role as a partner under cooperative 
federalism. We are also concerned with the use of these consent 
decrees to implement Federal law. These decisions have put 
States in the position of dealing with burdensome regulations 
and harmful outcomes through processes in which they have no 
say.
    In conclusion, the EPA's refusal to follow its own rules 
and create its agenda through consent decrees has denied States 
due process and ignored the foundation of cooperative 
Federalism set forth by Congress under the Clean Air Act. With 
the backing of the administration, the EPA is conducting, we 
believe, superlegislative activity that Congress has not 
authorized.
    Members must take seriously their role in passing 
legislation and not delegate their authority to agencies 
through unchecked rulemaking and questionable settlements. 
These issues are of great importance to the State of Oklahoma 
because Oklahomans value our State's natural resources which 
provide sustenance to Oklahoma's citizens and fuel our economic 
development.
    I look forward to answering any questions the chairman and 
the committee may have. Thank you.
    Mr. Lankford. Thank you.
    [Prepared statement of Mr. Pruitt follows:]

    [GRAPHIC] [TIFF OMITTED] T6368.001
    
    [GRAPHIC] [TIFF OMITTED] T6368.002
    
    [GRAPHIC] [TIFF OMITTED] T6368.003
    
    [GRAPHIC] [TIFF OMITTED] T6368.004
    
    [GRAPHIC] [TIFF OMITTED] T6368.005
    
    [GRAPHIC] [TIFF OMITTED] T6368.006
    
    [GRAPHIC] [TIFF OMITTED] T6368.007
    
    [GRAPHIC] [TIFF OMITTED] T6368.008
    
    [GRAPHIC] [TIFF OMITTED] T6368.009
    
    [GRAPHIC] [TIFF OMITTED] T6368.010
    
    [GRAPHIC] [TIFF OMITTED] T6368.011
    
    [GRAPHIC] [TIFF OMITTED] T6368.012
    
    [GRAPHIC] [TIFF OMITTED] T6368.013
    
    [GRAPHIC] [TIFF OMITTED] T6368.014
    
    [GRAPHIC] [TIFF OMITTED] T6368.015
    
    [GRAPHIC] [TIFF OMITTED] T6368.016
    
    [GRAPHIC] [TIFF OMITTED] T6368.017
    
    [GRAPHIC] [TIFF OMITTED] T6368.018
    
    [GRAPHIC] [TIFF OMITTED] T6368.019
    
    [GRAPHIC] [TIFF OMITTED] T6368.020
    
    [GRAPHIC] [TIFF OMITTED] T6368.021
    
    [GRAPHIC] [TIFF OMITTED] T6368.022
    
    [GRAPHIC] [TIFF OMITTED] T6368.023
    
    [GRAPHIC] [TIFF OMITTED] T6368.024
    
    Mr. Lankford. Mr. Martella.

              STATEMENT OF ROGER R. MARTELLA, JR.

    Mr. Martella. Thank you.
    Chairman Lankford, Ranking Member Connolly and members of 
the committee, thank you for providing me the opportunity and 
the honor to appear before you today.
    I would like to start with the uncontroversial proposition 
that rulemaking activities should be built upon three bedrock 
principles of transparency, public participation and judicial 
review. The Administrative Procedure Act guarantees these 
principles and protections for all citizens when the government 
engages in rulemaking, and these procedural protections that 
are inherent to our democratic system are just as critical to 
protecting the environment as the substantive laws and rules 
themselves.
    However, the APA and our process for enacting effective 
Federal regulations is confronting new challenges that in some 
cases are bypassing these protections. Today I want to share 
with you my concern about recent efforts to circumvent the 
protections of transparency, public participation and judicial 
review in an emerging phenomenon that provides an off ramp to 
these principles.
    The concern arises out of a growing trend where certain 
groups increasingly are employing a so-called sue-and-settle 
approach to the government on regulatory issues. Such an 
approach effectively provides an off ramp that ignores these 
bedrock protections, such as, first, a lack of transparency. In 
such settlements, discussions and agreements typically are 
reached with a subset of interested parties without full 
stakeholder input, and frequently take place outside the 
boundaries of the public process.
    Second, a lack of public participation. In such settlements 
public participation is foreclosed three times. First, the 
agreement on how to regulate is reached without full input of 
stakeholders; second, the negotiated deadlines for final rules 
are frequently so quick that the public's comments might 
receive little weight in the actual subsequent rulemaking; 
third, because the final rule must be the logical outgrowth of 
the proposal, settlement agreements that influence even the 
proposed rule effectively preordain the final outcome without 
full public participation.
    Third, a lack of judicial review. In such settlements 
parties frequently reach an agreement before a lawsuit is even 
filed or defended, thus depriving interested parties from 
intervening in the litigation to defend their interests where 
intervention has been granted.
    Fourth, a conflation of government and nongovernmental 
roles. In such settlements the NGO plaintiffs effectively set 
the priorities and timelines for how the government enacts 
certain rulemakings over other competing concerns and 
resources, in turn influencing policies and priority settings 
far beyond the reach of a particular settlement. These concerns 
are not theoretical or abstract, but have been rising with 
increasing frequency in the last several years.
    One recent example alluded to by the chairman includes the 
greenhouse gas New Source Performance Standards for utilities. 
In December of 2008, an NGO group predicted publicly it would 
be successful in convincing the EPA to phase out new coal-fired 
power plants by setting a New Source Performance Standard at a 
level that no coal-fired power plant could meet. Exactly 2 
years later, on December 23, 2010, EPA announced a consent 
decree with the very same NGO committing the Agency to propose 
and finalize this very rule even though it was not required to 
do so.
    Importantly, EPA agreed to promulgate such standards 
without any prior input from a single stakeholder in those 
affected impacted industries. When the ultimate proposal came 
out on March 27th of this year, it was virtually identical to 
what the NGO had predicted in 2008 and barred the construction 
of new coal-fired facilities in the United States. Because of 
the unique nature of NSPS proposals, the rule is already in 
effect, even though EPA has yet to respond to a single 
stakeholder comment from industry on the issue. Thus, as a 
result of this settlement, we now have an effective rule that 
is barring new facilities without first offering transparency 
to the industry impacted, allowing for public participation 
before the rule took effect, and providing no real means of 
judicial review at this time.
    Finally, Mr. Chairman, just to emphasize a point, I do 
strongly support and encourage efforts to pursue settlement 
agreements and consent decrees whenever feasible. I don't 
intend my comments to suggest it's always inappropriate for a 
settlement agreement to provide some definition of scope to a 
proposed rule. However, my overarching recommendation to this 
subcommittee is to address and improve the process by which 
these agreements are reached in the first instance.
    By promoting fairness, transparency and public 
participation of interested stakeholders in the first instance, 
settlement agreements will better reflect a wide range of 
interests that must be balanced, result in stronger and more 
defensible outcomes, and improve the success of the subsequent 
rulemaking process.
    Thank you very much for this opportunity today to share my 
views.
    Mr. Lankford. Thank you.
    [Prepared statement of Mr. Martella follows:]

    [GRAPHIC] [TIFF OMITTED] T6368.025
    
    [GRAPHIC] [TIFF OMITTED] T6368.026
    
    [GRAPHIC] [TIFF OMITTED] T6368.027
    
    [GRAPHIC] [TIFF OMITTED] T6368.028
    
    [GRAPHIC] [TIFF OMITTED] T6368.029
    
    [GRAPHIC] [TIFF OMITTED] T6368.030
    
    [GRAPHIC] [TIFF OMITTED] T6368.031
    
    [GRAPHIC] [TIFF OMITTED] T6368.032
    
    [GRAPHIC] [TIFF OMITTED] T6368.033
    
    Mr. Lankford. Mr. Kovacs.

                 STATEMENT OF WILLIAM L. KOVACS

    Mr. Kovacs. Thank you, Mr. Chairman and members of the 
committee. I am not going to try to go over old ground that 
others have discussed, so I am going to briefly hit sue and 
settle, but I also would like to talk about how it impacts 
jobs, and I think that's where the business committee really 
comes in.
    But in essence, sue and settle is really a good-government 
concern. It's transparency, public participation and the impact 
on jobs. And really what we are talking about is when you look 
at sue and settle, this is a subset of the interested community 
that is actually entering into contract negotiations. They are 
contracts.
    When the contract is decided, it is decided without the 
rest of the public involved. And I think from the business 
community point of view, being involved in those contract 
negotiations should be a fundamental right that we have under 
the Administrative Procedure Act, which the Congress passed 
decades ago to literally open up the process to the citizens 
and for participation between the citizens.
    So when this contract is executed and is filed with the 
court, the court doesn't review the substance. What the court 
does is the court reviews the representations of the parties. 
And when it enters a judgment, that judgment cannot be 
disturbed unless it's shown that there is an abuse of 
discretion by the court, which is an almost impossible 
standard. And then when the final rule comes out, even if it's 
identical to what the agency and the environmental groups 
sought, our chances of overturning that based on an arbitrary 
and capricious standard are very, very low. So once the 
contract is made, the decision is made as to how to go forward.
    But let me talk about the more practical aspects of it. 
Environmental litigation is costing this country tens of 
thousands and hundreds of thousands and millions of jobs. In 
2010, the U.S. Chamber did a study called Project No Project 
and we looked at environmental litigation across the country 
from the point of view of what was the private sector trying to 
finance in 2010. And we looked at just electric generation. We 
could have looked at cell towers, big box stores, cement 
companies. We could have looked at anything. We looked simply 
at electric generation.
    There were 351 projects where developers were trying to get 
permits. They could not get the permits. And the impact of not 
getting the permits meant that they could not invest $576 
billion, which would have created 1.9 million jobs a year 
during the 7 years of construction.
    That is the impact of environmental litigation. There are 
ways to address it, and the Judiciary Committee is doing some 
of that. That is not my point here.
    The second point in sue and settle--and this is very, very 
specific because there is great data from the Department of 
Labor--when sue and settle occurs, it is a specific regulation 
on a specific industry. Take Utility MACT, take NSPS, take 
whatever you want, but that regulation is targeted at an 
industry. Jobs will be lost in that industry.
    And let's assume that everything that the other side says 
is true, that jobs are created somewhere, and there is full 
employment everywhere, and, in fact, more jobs are created. But 
what your own statistics from your Department of Labor show is 
that the jobs that are created aren't created in the same 
communities, they are created in different communities. So what 
happens is you have a real person with a real job that is lost 
in a real community that is impacted; and then on the other 
side of the equation, you have jobs created somewhere that they 
can't get.
    Let me give you the statistics, because this is really what 
the key is. The Bureau of Labor Statistics every 3 years does a 
study of displaced workers, and the sampling is of about, just 
so we've got the numbers, 15 million workers. And of the 7 
million workers that were what we would call long-term 
displaced, they didn't have a job for 3 years--or they had 
worked for 17 years, but were out of a job during the survey--
out of that, out of those 7 million workers, a majority of 
those workers were not able to get a job during the entire 
survey period, meaning that if the survey was 2007 to 2009, in 
2010 51 percent of those workers did not have jobs. Now, that 
is displaced from all, and we've got to keep that in mind. But 
once you lose a job in an impacted area, you're not going to 
get another one. And of the 49 percent who actually ended up 
getting jobs, we have 55 percent getting lower wages.
    So when you look at the impact of regulations, you look 
at--and litigation, you look at it twofold. One is you don't 
create the jobs, and that, I think, the Project No Project 
study clearly determines. And the second part of it is when you 
lose a job due to a regulation, even if jobs are created in 
other industries, that community is really impacted and that 
worker is impacted, and that's something we have to keep in 
mind.
    And the most frustrating part is that since 1977, this 
Congress mandated that EPA do a continuing analysis of job loss 
and shifts in employment due to regulations, and in 35 years 
the Agency has never conducted that study. And this is what is 
so frustrating about it. On one hand, we want to turn 
everything into a mandate and let the Agency do what it wants, 
but Congress can give the Agency a mandate to worry about jobs, 
and the Agency won't do it.
    Thank you very much.
    Mr. Lankford. Thank you, Mr. Kovacs.
    [Prepared statement of Mr. Kovacs follows:]

    [GRAPHIC] [TIFF OMITTED] T6368.034
    
    [GRAPHIC] [TIFF OMITTED] T6368.035
    
    [GRAPHIC] [TIFF OMITTED] T6368.036
    
    [GRAPHIC] [TIFF OMITTED] T6368.037
    
    [GRAPHIC] [TIFF OMITTED] T6368.038
    
    [GRAPHIC] [TIFF OMITTED] T6368.039
    
    [GRAPHIC] [TIFF OMITTED] T6368.040
    
    [GRAPHIC] [TIFF OMITTED] T6368.041
    
    [GRAPHIC] [TIFF OMITTED] T6368.042
    
    [GRAPHIC] [TIFF OMITTED] T6368.043
    
    [GRAPHIC] [TIFF OMITTED] T6368.044
    
    [GRAPHIC] [TIFF OMITTED] T6368.045
    
    [GRAPHIC] [TIFF OMITTED] T6368.046
    
    [GRAPHIC] [TIFF OMITTED] T6368.047
    
    [GRAPHIC] [TIFF OMITTED] T6368.048
    
    [GRAPHIC] [TIFF OMITTED] T6368.049
    
    [GRAPHIC] [TIFF OMITTED] T6368.050
    
    [GRAPHIC] [TIFF OMITTED] T6368.051
    
    [GRAPHIC] [TIFF OMITTED] T6368.052
    
    [GRAPHIC] [TIFF OMITTED] T6368.053
    
    Mr. Lankford. Mr. Pruitt, I know you have got to be able to 
scoot out of here as well. You are excused from the panel. 
Thank you for being here.
    Mr. Pruitt. Thank you, Mr. Chairman.
    Mr. Lankford. Mr. Percival.

                  STATEMENT OF ROBERT PERCIVAL

    Mr. Percival. Thank you, Mr. Chairman. Thank you for 
inviting me. I am Robert Percival, the director of the 
environmental law program at the University of Maryland Law 
School.
    I'm afraid I'm going to be a bit of a skunk at the party. 
I've been practicing environmental law for 31 years. When I 
first started practicing environmental law, it was during the 
early days of the Reagan administration. And what I've heard 
here today is complaints about how environmental regulation, 
which had long been a bipartisan issue, is killing jobs and 
killing the economy.
    Every time a new major program was being implemented, the 
feature of environmental law in the United States that has so 
distinguished us is the fact that we have citizen 
participation. We allow for citizen suits, and virtually every 
major program had to be implemented only because the agencies 
were forced by citizen suits to implement it.
    As Congresswoman Speier indicated, most lawsuits brought 
against the EPA are actually brought by industry groups. That's 
part of the system. We allow ordinary citizens to go into court 
to make sure that EPA abides by the law.
    When the Reagan administration proposed to phase lead out 
of gasoline, there were cries of doom, we were going to have 
gasoline shortages. It has been one of the most successful 
environmental regulations in the world, adopted by virtually 
every country in the world.
    We had a very healthy economy until the global economic 
problems in 2008. At the same time we had environmental law 
that made us the envy of the world. All you have to do is go to 
China, as I do fairly regularly, and you see these young 
public-interest lawyers in China who would love to have a 
system like we have where they can hold their government 
accountable.
    And what I have heard today is that illegal regulations are 
being adopted, that the public is being cut out of the process 
because of these settlements. Similar charges were investigated 
way back in the Reagan administration in 1986, when Attorney 
General Edwin Meese came up with the Meese Memorandum to 
provide guidelines for what agencies could agree to when they 
reached settlements. And as I indicated in my testimony, 
settlements are a prominent feature of the U.S. legal system, 
and they're expressly favored by public policy because they 
have so many benefits.
    The characterization of collusive litigation and sue and 
settle, I believe, is simply a fantasy. To be sure, agency 
policies are going to change when there is a change in 
Presidential administration. Administrations have the ability 
to change course, and if we have a new Republican 
administration coming into office in January, you may see a 
situation where EPA is more frequently reaching settlements 
with industry groups.
    But there has not been any change in EPA that has in any 
way cut out the public from the process. There are already very 
important safeguards that prevent that; standing requirements 
that require concrete adverseness among litigants, the need to 
obtain judicial approval of settlements, and, most importantly, 
the requirements of the Administrative Procedure Act that 
preclude agencies from making commitments concerning the 
substance of rules.
    The D.C. circuit and other U.S. courts of appeal have not 
been shy about striking down EPA regulations, as Mr. Martella 
well knows, if they are, in fact, illegal, or if the 
Administrative Procedure Act has been violated. But the charge 
that EPA is out of control and as a result acting illegally I 
think was quite well refuted on Tuesday when the D.C. circuit 
came down with its Coalition for Responsible Regulation v. EPA 
decision upholding EPA's greenhouse gas regulations, saying 
that everything EPA did essentially was correct.
    So I simply am not on board with the notion that we need to 
do more to discourage settlements. I think that will only make 
it more difficult for agencies to benefit the public, whether 
it's in a Democrat administration or a future Republican 
administration.
    Thank you.
    Mr. Lankford. Thank you, Mr. Percival.
    [Prepared statement of Mr. Percival follows:]

    [GRAPHIC] [TIFF OMITTED] T6368.054
    
    [GRAPHIC] [TIFF OMITTED] T6368.055
    
    [GRAPHIC] [TIFF OMITTED] T6368.056
    
    [GRAPHIC] [TIFF OMITTED] T6368.057
    
    [GRAPHIC] [TIFF OMITTED] T6368.058
    
    [GRAPHIC] [TIFF OMITTED] T6368.059
    
    [GRAPHIC] [TIFF OMITTED] T6368.060
    
    [GRAPHIC] [TIFF OMITTED] T6368.061
    
    Mr. Lankford. Mr. Yeatman.

                  STATEMENT OF WILLIAM YEATMAN

    Mr. Yeatman. Chairman Lankford, distinguished members of 
the subcommittee, thank you very much for inviting me to 
testify this morning. My name is William Yeatman. I work at the 
Competitive Enterprise Institute. We are a free-market think 
tank here in Washington, D.C.
    Wonderful. I am getting a visual aid.
    I am here this morning to speak to you about how EPA is 
using the sue-and-settle--so-called sue-and-settle consent 
decrees to usurp the States' rightful authority on regional 
haze.
    First a short primer on the regional haze regulation. It's 
a Clean Air Act regulation, and its purpose is to improve the 
view at national parks and wilderness areas. This point bears 
repeating. It's an aesthetic regulation, not a public health 
regulation. Due to this fact, the Congress intended for the 
States to be the lead decisionmakers on regional haze policy, 
on visibility improvement policy.
    Despite State primacy, the Environmental Protection Agency 
has already imposed three Federal implementation plans for 
regional haze on Oklahoma, New Mexico and North Dakota over the 
staunch objection of State officials. EPA's plans would cost 
almost $400 million per year more than the States' plans, which 
were crafted with all due process over the course of years. Sue 
and settle featured prominently in EPA's actions in these 
Federal implementation plans, and I'll briefly sketch out how 
it worked for each of these States.
    In a northern California court, EPA agreed to deadlines on 
regional haze as part of a settlement agreement with Wild Earth 
Guardians. The States were not notified and were not part of 
this agreement. They were notified after the fact, but were not 
part of the agreement.
    On the eve of the consent decree deadline, EPA objected to 
the process used by States for their regional haze 
determinations. They didn't take on the determinations directly 
due to State primacy accorded by the Clean Air Act on regional 
haze policy. Instead, they objected to the process. Usually it 
was the State's cost-effectiveness analysis. That's what they 
went after. This didn't reject the State's plan outright; 
rather, it held it in abeyance, sort of holding pattern. Then 
EPA claimed that, pursuant to the consent decree, it had no 
choice but to run roughshod over the State and impose its own 
preferred plan, Federal implementation plan.
    So that is how it has worked in each of these three States, 
this three-part strategy, already, and as I mentioned, 
Oklahoma, New Mexico and North Dakota, $400 million per year of 
cost over what the States had determined was necessary to 
comply with the regional haze rule. EPA's proposed fix for 
Wyoming and Nebraska, these would cost $120 million per year 
more than the States' plans. Utah and Arkansas are likely next.
    And for what? What is the ultimate benefit of these Federal 
implementation plans? Thanks to Colorado State University 
professors, they have actually created software that allows us 
to visualize visibility impairment. It is known as WinHaze. It 
is available on the Internet for free. I downloaded that 
software. I input the EPA's own data, its own baseline data, 
and its own visibility improvement data. What I found was 
rather striking. I have two images to convey what I did find.
    On the left here, this is Oklahoma, Wichita Mountains 
National Park. This is the most affected Class 1 area of the 
EPA's Federal implementation plan for Oklahoma. This is the 
result. This is the putative benefits of the regulation right 
here.
    On the left we've got the State's controls. On the right 
we've got EPA's controls. Notably, this is the largest 
disparity between State and EPA controls. This is the biggest 
improvement engendered by any of EPA's actions on regional haze 
today. This improvement, quote/unquote, was worth $282 million 
per year in control costs, in compliance costs. So this is a 
side-by-side photo.
    Up on the monitor--aww jeepers, we had it there right 
before, but perhaps it's the not there anymore. We'll get it 
back.
    Up on the monitor, in addition to side-by-side images, 
WinHaze, the aforementioned software, allows us to do split 
images, so it's, in essence, a melding of two. On the left 
half, those are the State controls. On the right half, right 50 
percent, those are EPA's controls. The split image is meant to 
accentuate any difference between the two visibility results.
    As you can tell, or at least certainly to my eyes, there is 
no difference. Even the split image, which is supposed to 
accentuate the difference, is invisible. I cannot tell the 
difference. Last night at the Competitive Enterprise Institute, 
I lined up my colleagues and had them each look at this 
placard. None of them could distinguish a difference. So in 
essence, it appears to be all pain and no gain with respect to 
this regional haze regulation.
    That concludes my testimony. I look forward to taking your 
questions. Thank you very much.
    Mr. Lankford. Thank you.
    [Prepared statement of Mr. Yeatman follows:]

    [GRAPHIC] [TIFF OMITTED] T6368.062
    
    [GRAPHIC] [TIFF OMITTED] T6368.063
    
    [GRAPHIC] [TIFF OMITTED] T6368.064
    
    [GRAPHIC] [TIFF OMITTED] T6368.065
    
    [GRAPHIC] [TIFF OMITTED] T6368.066
    
    [GRAPHIC] [TIFF OMITTED] T6368.067
    
    [GRAPHIC] [TIFF OMITTED] T6368.068
    
    [GRAPHIC] [TIFF OMITTED] T6368.069
    
    Mr. Lankford. Thanks to all of you.
    I now recognize myself for 5 minutes, and we will begin 
some rounds of questions here.
    Mr. Martella, you've dealt with this in the past. Tell me 
what is typical in the EPA for a consent decree and working 
through the process, because you had mentioned it's not 
inappropriate, and I would agree with you that not all 
settlements are inappropriate. But you also outlined a couple 
key statements. You said that we have to deal with the actual 
public policy and make sure the public is engaged in that.
    What would you set as a policy for this? Mr. Percival 
mentioned the Meese memo on it in the past. Is there a certain 
process that you would look at for that?
    Mr. Martella. Sure, and thank you for the question. I would 
like to clarify that. I fully support settlements and consent 
decrees in every opportunity. In an ideal world, all litigation 
would be settled. I was a Justice Department attorney before 
EPA, and my incentive was always to settle over going to trial, 
as it is today.
    I think, though, you have to look at a number of factors, 
the first being the merits of the case that's coming in. It's 
not in the government's interests to be settling frivolous 
cases. And so for the group, whether it's an industry group or 
an NGO group, I am not trying to, you know, preference one over 
another, any group that comes to the EPA and says, we are going 
to assert this frivolous claim to get you to do something, will 
you settle it with us, the agency should be comfortable 
standing up in court and telling the court, this is frivolous; 
we are not going to be giving up our discretionary obligations 
just because somebody wants us to.
    I think, unfortunately, that is my gripe is that I'm seeing 
a lack of willingness to defend cases I think are frivolous, or 
at least where legitimate arguments could be made to defend 
them, and the result is it's shifting resources. All of a 
sudden EPA is now adopting the folks who are coming in, their 
policies and their priorities as opposed so what the Agency's 
priorities are.
    Mr. Lankford. Let me ask you about that then. The citizen 
suits that are set up there are really designed to force EPA to 
do its mandatory responsibilities. Am I correct on that?
    Mr. Martella. That's exactly what the intent should be, 
yes.
    Mr. Lankford. Correct. So if a citizen suit pushes them to 
do a discretionary responsibility, has that extended their--the 
NGO's ability to be able to then take something as uniquely 
EPA's responsibility?
    Mr. Martella. I think that's, you know, fundamentally kind 
of transforming the purpose of the citizen suits. A citizen 
suit, as you point out, is the government was required to do 
something, it didn't do it. When you now enter the realm of 
we're going to make you do something you're not required to do 
because we think it is important even if you don't think it is 
important, the government has limited resources, and that 
becomes a fundamental reallocation of resources.
    Mr. Lankford. Can a citizen suit also create a new policy; 
change previous policy and create a new policy off a citizen 
suit?
    Mr. Martella. Right, and we saw that in the New Source 
Performance----
    Mr. Lankford. Is that appropriate? Is that an appropriate 
use of a consent decree?
    Mr. Martella. I don't believe that's what Congress 
intended.
    Mr. Lankford. So we've got some basics here. If it is a 
mandatory responsibility, and it doesn't extend to new policy, 
then you would suggest that is a better policy; that if a 
consent decree creates new policy or expands an existing 
policy, or if it mandates something for future administrations 
of something that's clearly discretionary, then it's also 
expanded beyond its bounds.
    Mr. Martella. I would agree with that.
    Mr. Lankford. Are you familiar with the Meese memorandum 
Mr. Percival mentioned before?
    Mr. Martella. Yes, sir.
    Mr. Lankford. I would ask unanimous consent to submit the 
Meese memorandum for the record. Without objection.
    This highlights three areas. It says the department or 
agency should not enter into a consent decree that converts 
into a mandatory duty otherwise discretionary authority.
    The second aspect of this is departments or agencies should 
not enter into a consent decree that either commits the 
department or agency to expend funds that Congress has not 
appropriated and that have not been budgeted for the action in 
question.
    And the third thing, the department or agency should not 
enter into a consent decree that divests the Secretary or 
agency, Administrator or his successors of discretion committed 
to him by Congress or the Constitution where such discretionary 
power was granted with the changing circumstances.
    Any issues with those three?
    Mr. Martella. I think those are principles that I would 
hope would be vigorously applied to today. They are sound 
principles both intended to preserve the government's own 
ability to set its own policies, but also avoid an infinite 
loop where people are constantly forcing the government to new 
obligations that it can't meet, and people go back to court, 
and it ends up being less efficient for the courts.
    Mr. Lankford. Right. This is currently not what we're doing 
now, right?
    Mr. Martella. I would argue we've given examples today of 
things that are inconsistent with those principles.
    Mr. Lankford. This is really about process. This is not 
about trying to throw out all citizen suit possibilities. This 
is about trying to see if process is being followed through 
correctly, and if we are achieving the end result or if we are 
creating new legislation in a way that is outside of this 
Congress.
    Mr. Martella. It's about public participation, it's about 
transparency, it's about affirming the principles of the 
Administrative Procedure Act that Professor Percival referred 
to.
    Mr. Lankford. I was very interested in the fact that when 
the consent decree was formed dealing with Oklahoma, when that 
decree was formed, there were some timelines that were set on 
those, and for those timelines to change or to get an extension 
of those timelines, the State of Oklahoma would have to return 
to the environmental groups to request permission for an 
extension of the timeline.
    Do you see that being appropriate, that a State would go to 
an environmental group to request permission to have an 
extension with the EPA? Does that seem like an appropriate 
extension to you?
    Mr. Martella. I don't want to speak for the Attorney 
General, but I would imagine that States would be very 
concerned about their sovereignty being intruded upon.
    Mr. Lankford. That seems just a little odd to me that in a 
consent decree that's been signed off on, that we don't come 
back to the EPA for an extension permission, we go back to 
environmental groups to acquire permission for that.
    With that, I would like to recognize Ms. Speier for 5 
minutes.
    Ms. Speier. Mr. Chairman, thank you.
    And let me say at the outset, I have a great deal of 
respect for the chairman. I think there are some issues here 
that could really be looked at, and I'm willing to do them. But 
I must say that doing it in this manner doesn't get us to a 
constructive resolution.
    To Mr. Martella, you suggest that maybe sometimes we should 
be defending cases. I think one of the questions we need to ask 
is is there enough staff to defend these cases? If you don't 
have enough staff to defend the cases, then sue and settle is 
exactly where we're going to go.
    To Mr. Kovacs, your comments about regulation and how it's 
a job killer is something that is articulated over and over 
again. But I look to the deregulation of the financial services 
industry with the Gramm-Leach-Bliley Act and with the number of 
laws that were passed by this Congress after that act, and we 
now have 50 million people out of work in this country because 
the financial service industry came to a shutdown, and this 
government had to bail out that industry to the tune of over $1 
trillion. So in terms of jobs lost, I think you can make the 
case that when you deregulate, sometimes there is greater job 
loss.
    Now, to you, Dr. Percival, I'm going to turn over the rest 
of my time to you, because I believe this hearing is, frankly, 
not as constructive as it could be. I would like to do a whole 
hearing on the haze in Oklahoma, because if, in fact, that is 
what is presented by Mr. Yeatman, then we should look at it, 
and we shouldn't have third parties dictating to States whether 
or not there's an extension. Those are legitimate issues we 
should be talking about. But I'm not interested in kangaroo 
hearings, and that's what I think this is.
    So, Professor, please make any comments you would like to 
make about what everyone else has said.
    Mr. Percival. Thank you.
    I still, you know, come back to the point that this is not 
a situation where third parties are dictating what regulations 
are adopted. That still has to be done through the 
Administrative Procedure Act. Now, it is true that EPA, when it 
fails to perform a mandatory duty, then can be hauled into 
court, and a schedule is negotiated for how you're going to 
cure this violation of law.
    The Meese memorandum, which I wrote the Law Review article 
that I submitted with my testimony about, I thought was unwise 
policy because it was designed essentially to say that the only 
remedy for the government not carrying out the commitments we 
make in a settlement should be reviving the litigation rather 
than having an enforceable consent decree that actually 
increased the value of the government's work.
    Now, you say if it's true that the haze rules are 
outrageous and illegal, the tenth circuit steps in, you get 
them overturned in court. We have that open process, and EPA 
will have wasted a whole lot of time doing something illegal. 
People said that's what they were doing with respect to 
greenhouse gas emissions, but the D.C. circuit has confirmed 
that that certainly wasn't the case.
    The argument that somehow this private group is going to be 
able to dictate whether or not there could be an extension of 
time, if EPA feels it needs an extension of time, it can ask 
the court for an extension of time, and its word is probably 
going to be given some deference. But what we have seen in case 
after case is a situation where rules that Congress mandated be 
adopted a decade ago still have not been promulgated, and 
deadline after deadline passes, and sometimes courts say, 
enough is enough, and the rule ends up getting promulgated, 
but, as I mentioned in my testimony, even then the agency is 
free to reconsider them if they think that the rules are not 
adequately supported.
    Ms. Speier. You have more time.
    Mr. Percival. Oh, okay.
    So what I would like to emphasize is that this is well-trod 
territory. Since 1986, when there was the big kerfluffle over 
the Meese memorandum, this charge was made that somehow 
environmental groups were dictating the priorities of EPA. When 
everyone looked into it, it turned out it wasn't true then. 
There is absolutely nothing that has fundamentally changed 
about EPA during the Obama administration. It's not a situation 
where the Agency is being dictated to by a group of 
environmental groups.
    If, in fact, it's true that the agency is being sued in a 
situation where it does not have a mandatory duty, then the 
plaintiffs don't have a leg up in court. They don't have any 
possibility of winning that lawsuit. And that can be challenged 
when the court is trying to approve a consent decree if, in 
fact, they're trying to say this is a mandatory duty and it's 
not.
    So I'm saying the system works pretty well for both 
industry and environmental groups. EPA unfortunately gets beat 
up on by all sides, has its budget cut and the like, and the 
result is that you see a situation where the Agency is always 
the bogeyman, and occasionally, because our judiciary functions 
so well, you see a decision like the decision on Tuesday 
upholding the greenhouse gas regulations that tells the Agency, 
you are doing something that, in fact, complies completely with 
the law.
    Ms. Speier. Thank you.
    Mr. Lankford. I would like to recognize Mr. Kelly for 5 
minutes.
    Mr. Kelly. I thank the chairman.
    I do believe this is--I would not use the term ``kangaroo 
court.'' I really am interested, Mr. Martella, I've watched 
this. Coming from Pennsylvania, I am watching now what's going 
on. If we could go to just a little bit of background.
    We're having coal plants shut down, all right? I know that 
there's 11 plants in Pennsylvania just shutting down. Slide 
number 3, if you could just go to that, please, for a minute. 
This is the President before he became President: ``So if 
somebody wants to build a coal-powered plant, they can; it is 
just that it will bankrupt them because they're going to be 
charged a huge sum for all that greenhouse gas that's being 
emitted.''
    Now, I watched another clip this morning of the President 
explaining how cap and trade would work because some people 
just don't get it, so you have to force feed them into this, 
which I think is kind of an unusual take on things. I think 
there's a much better way to do it.
    With New Source Performance Standards, let me ask you, what 
was the Sierra Club--what was their involvement in the New 
Source Performance Standards?
    Mr. Martella. Well, what we know is December of 2008, the 
Sierra Club wrote an article that was public saying that their 
goal for the administration was to set a New Source Performance 
Standard that would make sure that no new coal-powered power 
plant could be built. Two years after that, the administration 
entered into a settlement with them setting a deadline for 
proposing such a standard. That agreement was entered into. It 
affected both the utilities and refineries, but no one ever 
consulted with the utilities and refineries in setting the 
schedule.
    Just a couple months ago in March, the EPA enacted the very 
proposal that looked identical to what the Sierra Club had 
written in 2008, and, again, without any prior consultation 
with the industries actually impacted by the substance of the 
proposal.
    Mr. Kelly. Without objection, Mr. Chairman, I wanted to 
enter into the record the newsletter from the Sierra Club.
    Mr. Lankford. Without objection.
    Mr. Kelly. I am interested, because this process that takes 
place, you call it an off-ramp decision, and so for those of us 
that come from the normal world, the regular world, the 
commonsense--and I don't mean to in any way diminish people 
that come from the legal world where they use--things don't 
have to make sense to you, commonsense, you have to have a law 
decree to understand some of it.
    I believe that if you're not at the table, you're on the 
menu. So when we have these decisions being made by groups, and 
it comes forward like that, would you have--in your former 
position at EPA, would you have litigated the New Source 
Performance Standards?
    Mr. Martella. I believe, you know, I would have liked to 
have seen the government stand up in court and explain why it 
should not be forced to do this. And, in fact, Congress has 
given EPA a process that would have solved this for everybody 
without having invoked this impact. EPA could have done an 
Advanced Notice of Proposed Rulemaking. That would have allowed 
it to study the issue. Everyone could have been at the table. I 
share your point, everyone should be at the table. But it 
wouldn't have had the immediate impact of shutting down coal-
fired power plants.
    So there was clearly was an option before EPA that I would 
have advocated for to go with an Advanced Notice of Proposed 
Rulemaking that would not have had the immediate impact while 
shutting folks out.
    Mr. Kelly. Okay. So was there a mandatory duty?
    Mr. Martella. I would have been--if I was back at the 
Justice Department, I would have been very happy to stand up in 
the court and argue to the court there was no mandatory duty 
here. I would have felt very comfortable with that argument.
    Mr. Kelly. And I think--listen, I don't think there's 
anybody in this country that doesn't want clean air and clean 
water. I think we are all serious in that. But there is also a 
factor of our economic freedom. And as we continue to take a 
look at this--I'm just trying, coming out of the private 
sector, understanding as we continue to turn on our back on 
things that are very abundant, accessible and affordable, which 
I believe in the fossils, we are turning our back on those and 
going in another direction that really costs the American 
consumer, which is who we represent, the American people, not 
just Republicans or Democrats, but everybody. Their costs of 
living under some of these new regulations are going to 
skyrocket because energy costs are going off the board.
    As I said, in Pennsylvania we see power plants shutting 
down all the time. The trend is, okay, well, fine, we're going 
to go to natural gas. And now we are finding out, you know 
what? Well, you know what, that's a little bit better than 
coal, but we're finding problems with that, too. So sometimes 
you can mandate yourself into a situation where it's so 
untenable.
    Mr. Kovacs, because I do believe it's about jobs, I really 
do, and if we're going to turn this thing around that we're in 
right now, this decline that we're in, it's going to be about 
getting people back to work and having more people being able 
to obtain the standard of living that makes sense and they can 
support a family on.
    There's a slide. If we can go to slide number 4. I think 
this is really something that we need to take a look at.
    This is a statement that was made by Curtis Spalding. He 
says, ``Lisa Jackson has put forth a very powerful message to 
the country. Just 2 days ago, the decision on greenhouse gas 
performance standards and saying basically gas plants are the 
performance standard, which means if you want to build a coal 
plant, you got a big problem. This was a huge decision. You 
can't imagine how tough that was, because you got to remember 
if you go to West Virginia, Pennsylvania, and all those places, 
you have coal communities who depend on coal. And to say that 
we just think those communities should just go away, we can't 
do that. But she has to do what the law and the policy 
suggested, and it's painful. It's painful every step of the 
way.''
    Now, this is about jobs, and you mentioned some metrics 
about the numbers of jobs that were being walked away from.
    Mr. Kovacs. Sure. The Bureau of Labor Statistics does this 
displaced worker survey, and it's 7 million. So this isn't a 
random survey. It's 7 million for long-term unemployed. If you 
take long-term/short-term, it's 15 million. So we're talking 
about whoever is unemployed and displaced. And what it finds is 
that the workers who lose a job, the long-term workers, the 
coal miners, the person who works in the utility plants, does 
not get a job within the survey period, which is a 3-year 
period. And after the survey period, 51 percent of those long-
term workers who were unemployed--and this is going to a 
regulation that takes an industry out--51 percent of those 
still did not have jobs afterwards. And of the 49 percent who 
got jobs, 55 percent were below what they made before.
    So that's the impact. And of the jobs that are created, if 
you take a job out of Pennsylvania or West Virginia, and you 
build a battery plant in Michigan or California, they're 
different workers. So you have a real-life impact on the 
workers where the displacement occurs, and you have a 
theoretical or modeled worker somewhere else.
    But the second point, which is, I think, more important, is 
that since 1977, Congress imposed a very--mandated a duty on 
EPA--the language is ``shall''--mandated that when they do a 
major regulation, that they do a jobs analysis and a shift in 
employment analysis. And that was specifically to find out what 
is the impact of these major economic regulations. And EPA has 
never done that, and that is mandatory.
    And what I think, and this is my last point, as I listen to 
this, we're talking about mandatory duties and discretionary 
duties and how you convert them, but here is a clear example of 
a mandatory duty that EPA has never attempted even to do, and 
that's really where I think the disgrace is, because they had 
the opportunity to link up what they were doing, what the 
Bureau of Labor Statistics were doing, and to find out what the 
impact of the regulations are. And if there was true public 
participation, and they truly cared about jobs, then they would 
be doing that analysis.
    Mr. Kelly. Thank you.
    Mr. Lankford. I'd like to recognize the ranking member Mr. 
Connolly.
    Mr. Connolly. Mr. Chairman, I know at the full committee we 
have descended into the bad habit of prejudging the outcome of 
a hearing in the selection of the title. I had hoped we would 
not do that in this subcommittee. To have a hearing entitled 
``Mandate Madness: When Sue and Settle Just Isn't Enough'' kind 
of gives away the game. I don't think it's an intellectually 
honest pursuit. I don't think this hearing is an intellectually 
honest pursuit.
    I'm glad, I guess, you have provided a forum for folks who 
don't like the Environmental Protection Agency or don't like 
environmental regulation to have a forum. And I can't express 
enough my disappointment in the structure of this hearing and 
in the title itself.
    I'm all for an honest intellectual pursuit of the issue of 
unfunded mandates or burdensome mandates that may, in fact, be 
unproductive. I come from local government, where we had a 
struggle with that ourselves. I'm not unsympathetic. But to 
basically simply provide a forum for ranting about the EPA and 
its mission with very little empirical evidence to back it up 
is very troubling to this Member of Congress.
    Mr. Connolly. I had hoped we would continue, or try to 
continue, a tradition in this subcommittee where we actually 
pursue issues in as neutral and objective a way as possible. I 
don't think that's going to happen here, and I register my 
disappointment.
    I yield back.
    Mr. Lankford. I would--I would say that it might be good to 
go through some of the notes in the testimony and such that is 
here to be able to examine the process and how things have 
significantly changed in the process of this, because there has 
been a significant change. This issue is a process issue, and 
that has shifted, and it needs to be an appropriate process so 
the citizens have the opportunity to hear and be heard.
    Mr. Connolly. Mr. Chairman, may I ask, is it your 
contention that the title of a hearing called ``Mandate 
Madness'' is an objective title? That's just an objective, 
honest pursuit of public policy?
    Mr. Lankford. You know, the hearing itself deals with the 
policy issues. This is not a hearing about a title. This is a 
hearing about the facts in the case.
    Mr. Connolly. Titles--titles matter, Mr. Chairman.
    Mr. Lankford. Yes, they do, but the facts matter even more.
    Mr. Connolly. Well, I think the facts get skewed when the 
title clearly channels those facts in a certain direction.
    Mr. Lankford. Well, fortunately, this is not a court. This 
is a case where we have to bring things to light, and it has 
been done by----
    Mr. Connolly. It most certainly is not a court; otherwise a 
fair hearing on both sides would, in fact, be provided.
    Mr. Lankford. We would be glad to have a fair hearing for 
all people involved since we have consent decrees that don't 
give a fair hearing to all involved. That would be wonderful.
    Mr. Connolly. That's your opinion, sir. That's not my 
opinion.
    Mr. Lankford. I recognize Mr. Labrador.
    Mr. Labrador. Mr. Chairman, that's actually the purpose of 
a hearing is to share both opinions, but apparently one side 
only wants their opinion heard and not the other. And we've 
actually been holding a hearing so we can give the other side 
the opportunity for them to actually state their opinions, but 
instead they want to just make statements about the fairness or 
unfairness of this hearing, which is rather shameful.
    Mr. Kovacs, I just have two questions for you, and then 
take as much time as you want, and then I'll yield the rest of 
my time to the chairman. But I just heard Professor Percival 
state that there has been no change between the Bush 
administration and the Obama administration with respect to the 
EPA. Can you recall who in the Bush administration said that 
there was a plan to crucify regulated industries? Do you know 
what I am referring to?
    Mr. Kovacs. Yes, sir.
    Mr. Labrador. Can you explain what the change has been 
between the Bush administration and the Obama administration?
    Mr. Kovacs. Well, certainly the--let's take a step back as 
I answer this. And to make it very clear, we're not here to 
argue that we want to eliminate citizen suits or what is 
mandatory and what is discretionary. We're here to say that as 
the EPA begins to exercise its discretion as to whether to sue 
or not, that the impacted parties need a seat at the table. And 
by a seat, we don't mean sitting there and negotiating, but 
when the environmental group and the EPA come to that 
understanding, before it is filed with the court and has a 
court order attached to it, did it go out for comment. And if 
there is an impact on the--on the regulated community, that 
they have a right to use intervention within that court.
    Right now the regulated community is locked out of that 
process. And so what happens, as I explained in my opening 
statement, is once the decision is made, the chances--and there 
is a court order, the chances of reversing that are virtually 
nil through the process. That decision has been made.
    So when you get into asking the question, how have things 
been different, the issue of sue and settle has been around for 
decades, and that's why you have the Meese memo. The Reagan 
administration looked at it and said, this is not a process 
that the government should be actively involved in because 
it's--it's ceding the discretion of the agency to private 
groups, who then, because of the consent decree, literally have 
an involvement in that issue forever. And just the comment was 
made before where you have to go back to the environmental 
group to change the deadlines.
    The private party actually by contract gets a right. Let me 
repeat this. The private party by contract gets a right to be 
part of the supervision, not the regulator community, and, 
frankly, EPA cedes its authority.
    So what has changed is although you had sue-and-settle 
agreements going on for decades, right now you have, as the 
chairman mentioned in his opening, somewhere around 60 of them. 
And they're filed--like in regional haze that William Yeatman 
was talking about, the States of Oklahoma, North Dakota, and 
New Mexico were involved, but the lawsuit was brought in 
Oakland, California.
    And so the first notice that they--that the States and the 
attorney generals and the Governor had was when the settlement 
agreement was actually entered and approved by the courts, and 
then they got notice. So what's changed is it's gone from a few 
a year to being the policy of the administration. That's the 
change. And that's the 60 of them that you have.
    And in some of these instances, to give you an idea of how 
broad they are, there was one in Oakland, California--seems to 
be a popular court--where there are actually 28 rules that were 
subject to 1 consent decree regulating two-thirds of the 
industries in the United States.
    Mr. Labrador. Excellent. And I liked some of your comments. 
You said that the decision has already been made, that there 
has been no opportunity to be heard, but yet this hearing has 
been called a kangaroo court. I find that really fascinating.
    As you know, the Endangered Species Act is often the 
premise to these sue-and-settle rulemakings. Last week I was in 
a different hearing, Natural Resources hearing, and we heard 
testimony that the EP--that the ESA actually creates jobs. And 
in your experience, how does the ESA actually create jobs?
    Mr. Kovacs. Well, I always go back to Milton Friedman's 
comment when he was--he was in China one time, and he was 
asking why they were building a dam with shovels, and the 
Chinese replied, well, that's what the regulations call for, 
because we are trying to create jobs through--in essence 
through regulation. And Friedman's remark was, well, if that's 
the case, why don't you just use spoons? You'll create more.
    So the purpose of a regulation should be to undertake and 
to achieve what Congress intends of the--the public interest. 
And in, for example, the Endangered Species, I think, you know, 
you do have a situation where you are going to have more boots 
on the ground, you're going to have more inspectors, you're 
going to have more government paperwork, you're going to have 
more petitions for protection. You're going to create jobs 
there, but the key is you lose; you lose jobs because the land 
that's impacted, and if you go into some of the energy issues, 
in many instances is so vast that you've taken large areas of 
the United States out of development.
    And that's why I keep on going back to the Bureau of Labor 
Statistics displaced workers. When a regulation comes in, it 
impacts a specific industry. Whether it be coal, cement, 
logging, we've got a lot of instances of that. And maybe jobs 
are created in Washington, D.C., but the jobs that are lost in 
Pennsylvania or New Mexico are not the same, are not--are not--
these people do not get the jobs in Washington, D.C. And it's 
the community that's displaced. And I keep on coming back. 
These are real workers who are really displaced, whose families 
are displaced, whose communities are harmed. And that doesn't 
mean that jobs aren't created somewhere else. They might be. 
But that community has been harmed by that regulation.
    Mr. Labrador. Thank you.
    Mr. Chairman, I--it has been my experience as a practicing 
attorney for 15 years, and just watching and observing, you 
know, debates, that when you can't debate the facts, you resort 
to ad hominem attacks.
    You're one of the people I respect the most here in 
Congress. You've been one of the most fair individuals. And to 
come here this morning and listen to two different members of 
the minority attack you personally has been pretty distasteful. 
I thought I was just coming to a regular hearing, actually a 
pretty boring hearing, I thought that it was going to be. But 
maybe what we should do is see if the opinions of the chairman 
or the opinions of the ranking member prevail after having a 
full and fair hearing this morning.
    I yield back.
    Mr. Connolly. Mr. Chairman.
    Mr. Lankford. This is--just a moment. I will definitely 
yield to you.
    This is what makes America a great country is that we do 
have divergent opinions, and all opinions are open here. Of all 
places, in the House of Representatives, every opinion should 
be heard on that one. And with that, I'd be honored to yield to 
the ranking member.
    Mr. Connolly. Mr. Chairman, I want to directly respond to 
my colleague.
    No ad hominem attack was made against Mr. Lankford. My 
remarks were strictly limited to the nature of this hearing.
    Mr. Labrador. He is the chairman.
    Mr. Connolly. He may be. I am the ranking member of the 
committee. I still don't like the hearing, and I am entitled to 
not like the hearing.
    I have never cast a negative word about Mr. Lankford. In 
fact, we have worked well together. I consider him a friend. 
And I would ask you to withdraw those words, because no ad 
hominem attack was ever made against Mr. Lankford in this 
hearing.
    Mr. Labrador. Before you got here, Mr. Connolly, this was 
called a kangaroo court by a member of your party. You came in, 
and you had some pretty distasteful statements about this. So 
I--I came this morning to hear both sides and----
    Mr. Connolly. Mr. Labrador, I can't, any more than you 
can--you can't take responsibility for other members of your 
party. I can take responsibility for my remarks. I think you 
would agree, since you pointed out you practiced law for 15 
years, so pretend you're in a courtroom.
    What you heard from the ranking member of this subcommittee 
was a critique of the intellectual foundation of this hearing 
and a critique of the nature of the title of this hearing that 
I consider to be intellectually dishonest. None of that had 
anything to do with Mr. Lankford as a person or as the chairman 
of the committee other than I don't--I don't like the judgment 
exercised. But it's not about him personally. Would you not 
agree?
    Mr. Labrador. We can agree to disagree. Thank you.
    Mr. Connolly. Mr. Chairman, I would have hoped my colleague 
would have given me the courtesy of acknowledging no ad hominem 
attack was made against you by this Member.
    Mr. Labrador. I have no further comments. I just made my 
comments because I--I was surprised by the nature of the 
attacks from your side. But we don't need to debate this.
    Mr. Connolly. Well, Mr. Chairman, a charge was made that an 
ad hominem attack was made. I would point out to Mr. Labrador 
there are actually rules in the House of Representatives about 
ad hominem attacks.
    Mr. Kelly. Mr. Chairman, could I ask for regular order, 
please?
    Mr. Lankford. We do need to move on, Mr. Connolly. I am 
going to do a quick round here and would be honored to be able 
to yield you time in that time just to be able to allow all 
voices to be heard, all opinions to be heard.
    Mr. Connolly. I would have thought a point of personal 
privilege would have been respected, Mr. Chairman.
    Mr. Lankford. Well, it has been.
    I would like just to do a 3-minute round here of questions 
so we can do some follow-up on it and get a chance to pull some 
things together.
    I would also like to submit for the record, ask unanimous 
consent, a letter from the Association of Builders and 
Contractors. They make a statement in this letter. With that, 
so ordered.
    It says, when settlements are agreed to, they're often--
they often mandate that rulemakings go forward and frequently 
establish arbitrary timeframes for completion without 
stakeholder review or public comment. And they continue on from 
there.
    Where this originated from was over the past year and a 
half, and multiple hearings and multiple settings that I have 
been in, I have heard members in leadership and individuals who 
work with the EPA say to me, we have to do that because the 
court ordered us to do that. They couldn't point to a specific 
piece. It was a court order that mandated us to do that.
    So it started me on a journey to go back and start to pull 
some of these court orders and to say, where did that court 
order come from, and exactly what did they order? What I found 
is many of these consent decrees did not order them directly to 
take a specific action; it ordered them to review policy, as is 
appropriate, if it had not been reviewed, and it was a 
mandatory responsibility. But then they took that statement of 
it has to be reviewed and greatly expanded where it would go 
and then hid behind the statement, ``We were ordered by a court 
to do that.''
    We were also--new policies were created. The NSPS, as Mr. 
Kelly mentioned before, where it went from new construction to 
now existing construction, that's entirely new policy that's 
been created by--without public comment, without input in the 
stakeholders. That's something uniquely different than we're 
just creating some sort of regulation, running it through the 
Administrative Procedures Act; now we're creating new policy 
based on the consent decree. That's a giant shift in what has 
occurred.
    There are also moments where outside litigants are placed 
in authority over States, or States are not given primacy to 
make a decision. Now they have to request permission of a 
litigant, and the States were not given the opportunity to be 
at the table. What we have is a situation where the people that 
are affected by it do not have the opportunity to actually 
address their grievance. They don't have an opportunity to be 
able to express that unless they have a court case, unless they 
go through a process and try to reverse something, which is 
difficult to do. As Attorney General Pruitt mentioned before we 
are currently in the tenth circuit in Oklahoma and just had a 
stay because it was extended too far. It was a case gone too 
far.
    Now, that is very difficult when you're planning for a 
power plant construction that is incredibly expensive and very 
capital intensive, now you don't know what the rules are. And 
at any moment they could shift, and you have to sue and 
countersue and try to work through the process, all the time 
planning on a billion-dollar construction project. This creates 
instability.
    We have a stable process for this, and the concern is that 
we're shifting away from that stable process, and we're now 
creating regulations based on preferences and based on a 
consent decree without the appropriate people at the table. And 
I'm simply asking the question, who sets the timelines, who 
comes up with this, who has the opportunity to actually speak 
and comment into these issues, and shouldn't it be the people 
that are affected.
    With that, I would like to recognize Mr. Connolly for 3 
minutes.
    Mr. Connolly. Mr. Chairman, I have no questions for this 
panel.
    Mr. Lankford. Mr. Kelly.
    Mr. Kelly. I thank the chairman.
    And, Mr. Martella, I want to go back to this, because I 
think what the chairman is hitting on is something that's very 
critical here. Of course, it looks--the court's only accepting 
the parties' agreement to settle and not adjudicating whether 
the EPA's legal position is correct, and I think that goes to 
the crux of the problem.
    Now, we can tap dance around all of the other issues, but 
the truth of the matter is when we change, and there's a new 
administration that comes in, they also have the ability to 
appoint to these different agencies the structure of it and how 
it's going to go forward. So if I have an agenda in place, what 
I do is I place into effect people who are going to go along 
with my agenda, and then I tell them, you know what, we got a 
problem, we can't legislate it, could you possibly take us to 
court, sue us, and then we'll settle out of court, and then it 
will become law without the judiciary system? So please explain 
that to people, because I think that's where we're missing the 
point today.
    Mr. Martella. And I think, you know, that' the contrast 
between what our democratic system, you know, wants and then 
what is happening in some cases. Our system is all about 
transparency, that--the notion that government leaders are not 
going into back rooms with a subset of folks who are interested 
by things. It's all about public participation, that everyone 
has an equal role to play in a process, and it's about having 
an opportunity to challenge things in court.
    I think some of the examples you've heard today, again, 
we're not here to say settlements are bad things. What we're 
worried about is when we don't have that level playing field of 
transparency and public participation.
    And just to give you one more example, back to NSPS, when 
EPA entered the consent decree with NGOs, there were other 
parties in the litigation. Trade associations had intervened, 
and in order to intervene in a case, it's not automatic. You 
have to prove to a court that you're adversely impacted, you 
could be adversely impacted by this case. And then the court 
says, okay, you could be harmed here, so I'm going to give you 
a right to participate.
    The concern with the NSPS is despite the fact the court had 
already found those parties could be adversely impacted, they 
were at no point part of the settlement discussions. They were 
never brought into the room. And that's what, to me, I think, 
is kind of the fundamental flaw I have with our notion of 
transparency and public participation.
    Mr. Kelly. And I've got to tell you, when I'm back home in 
western Pennsylvania--the thing about the American people, they 
trust us so much with the process, and they have great faith in 
the process until they find out they've been gamed.
    Mr. Martella. Right.
    Mr. Kelly. And so if I can effectively structure a 
situation to come out with the answer that I need or that I 
want and somehow do an end run, it's not what made America 
great. And I think that's the thing that frustrates us all. And 
when we look at why people are losing faith in the way the 
Federal Government works, it is because we have been able to 
take what was there and available to us, and tools that were 
supposed to be there for all people, and we have gamed them by 
people who know how to maneuver.
    And I got to tell you, it is deeply disappointing to me to 
sit and watch this and have it come down to something that it 
was never supposed to. It has morphed into something entirely 
different than what the American people believe, what they have 
faith in, and what the Founders started off with to begin. And 
that's where it comes to--the wheels come off of it.
    And I appreciate what you have done. And I know that this 
agreement came about because it was legislation that was 
defeated. So when the legislation went down, we found a way to 
game it and do a settlement that becomes law without everybody 
being at the table. As I said earlier, if you're not at the 
table, you're on the menu. And I'm telling you right now that 
we are being gamed to a point where no wonder the American 
people are losing faith in the people they have sent to 
represent them. So I thank you.
    I yield back, Mr. Chairman, and I thank you for your 
patience. And thank you for calling this hearing. It is 
essential that the people of the United States--not the people 
who are in the Beltway understand how to game it, but the 
people of the United States understand that they do have their 
day in court, and they should have been heard. And when they 
find out there was an out-of-court settlement made, that just 
rubs them the wrong way. And you know what? It doesn't pass the 
smell test.
    Mr. Lankford. I would like to thank the witnesses for being 
here today. This is a very important issue, and this is 
something that has to be resolved.
    One of the things this committee has responsibility for is 
process, make sure process is followed. We also have a 
responsibility of dealing with the relationship between the 
States and cities, counties and the Federal Government. And it 
is essential that the States, cities, counties do their 
responsibility and the Federal Government does theirs. And you 
do bring things to light, and I appreciate all opinions coming 
out and being able to be shared today. And we will continue on 
a process of this Congress checking into these issues to make 
sure that we continue to follow through. So, thank you.
    With that, the committee stands adjourned.
    [Whereupon, at 10:20 a.m., the subcommittee was adjourned.]

    [GRAPHIC] [TIFF OMITTED] T6368.070
    
    [GRAPHIC] [TIFF OMITTED] T6368.071
    
    [GRAPHIC] [TIFF OMITTED] T6368.072
    
    [GRAPHIC] [TIFF OMITTED] T6368.073
    
    [GRAPHIC] [TIFF OMITTED] T6368.074
    
    [GRAPHIC] [TIFF OMITTED] T6368.075
    
    [GRAPHIC] [TIFF OMITTED] T6368.076
    
    [GRAPHIC] [TIFF OMITTED] T6368.077
    
    [GRAPHIC] [TIFF OMITTED] T6368.078
    
    [GRAPHIC] [TIFF OMITTED] T6368.079
    
    [GRAPHIC] [TIFF OMITTED] T6368.080
    
    [GRAPHIC] [TIFF OMITTED] T6368.081
    
    [GRAPHIC] [TIFF OMITTED] T6368.082
    
    [GRAPHIC] [TIFF OMITTED] T6368.083
    
    [GRAPHIC] [TIFF OMITTED] T6368.084
    
    [GRAPHIC] [TIFF OMITTED] T6368.085
    
    [GRAPHIC] [TIFF OMITTED] T6368.086
    
    [GRAPHIC] [TIFF OMITTED] T6368.087
    
                                 
