[Senate Hearing 114-80]
[From the U.S. Government Publishing Office]
S. Hrg. 114-80
OVERSIGHT OF LITIGATION AT EPA AND FWS: IMPACTS ON THE U.S. ECONOMY,
STATES, LOCAL COMMUNITIES AND THE ENVIRONMENT
=======================================================================
HEARING
before the
SUBCOMMITTEE ON SUPERFUND, WASTE MANAGEMENT, AND REGULATORY OVERSIGHT
of the
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
AUGUST 4, 2015
__________
Printed for the use of the Committee on Environment and Public Works
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Available via the World Wide Web: http://www.gpo.gov/fdsys
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COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
JAMES M. INHOFE, Oklahoma, Chairman
DAVID VITTER, Louisiana BARBARA BOXER, California
JOHN BARRASSO, Wyoming THOMAS R. CARPER, Delaware
SHELLEY MOORE CAPITO, West Virginia BENJAMIN L. CARDIN, Maryland
MIKE CRAPO, Idaho BERNARD SANDERS, Vermont
JOHN BOOZMAN, Arkansas SHELDON WHITEHOUSE, Rhode Island
JEFF SESSIONS, Alabama JEFF MERKLEY, Oregon
ROGER WICKER, Mississippi KIRSTEN GILLIBRAND, New York
DEB FISCHER, Nebraska CORY A. BOOKER, New Jersey
MIKE ROUNDS, South Dakota EDWARD J. MARKEY, Massachusetts
DAN SULLIVAN, Alaska
Ryan Jackson, Majority Staff Director
Bettina Poirier, Democratic Staff Director
----------
Subcommittee on Superfund, Waste Management,
and Regulatory Oversight
MIKE ROUNDS, South Dakota, Chairman
DAVID VITTER, Louisiana EDWARD J. MARKEY, Massachusetts
MIKE CRAPO, Idaho THOMAS R. CARPER, Delaware
JOHN BOOZMAN, Arkansas JEFF MERKLEY, Oregon
DAN SULLIVAN, Alaska CORY A. BOOKER, New Jersey
JAMES M. INHOFE, Oklahoma (ex BARBARA BOXER, California (ex
officio) officio)
C O N T E N T S
----------
Page
AUGUST 4, 2015
OPENING STATEMENTS
Rounds, Hon. Mike, U.S. Senator from the State of South Dakota... 1
Markey, Hon. Edward J., U.S. Senator from the State of
Massachusetts.................................................. 3
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma,
prepared statement............................................. 116
WITNESSES
Baker, Dallas, Air Director and Chief of Air Division,
Mississippi Department of Environmental Quality; National
President, Air and Waste Management Association................ 6
Prepared statement........................................... 8
Responses to additional questions from Senator Inhofe........ 12
Sgamma, Kathleen, Vice President of Government and Public
Affairs, Western Energy Alliance............................... 14
Prepared statement........................................... 16
Responses to additional questions from Senator Inhofe........ 25
Grossman, Andrew M., Associate, BakerHostetler LLP; Adjunct
Scholar, Cato Institute........................................ 39
Prepared statement........................................... 41
Responses to additional questions from Senator Inhofe........ 59
Gomez, Alfredo, Director, Natural Resources and Environment,
Government Accountability Office............................... 65
Prepared statement........................................... 67
Responses to additional questions from Senator Inhofe........ 88
Pidot, Justin, Associate Professor, University of Denver Sturm
College of Law................................................. 95
Prepared statement........................................... 97
OVERSIGHT OF LITIGATION AT EPA AND FWS: IMPACTS ON THE U.S. ECONOMY,
STATES, LOCAL COMMUNITIES AND THE ENVIRONMENT
----------
TUESDAY, AUGUST 4, 2015
U.S. Senate,
Committee on Environment and Public Works,
Subcommittee on Superfund, Waste Management, and Regulatory
Oversight,
Washington, DC.
The Subcommittee met, pursuant to notice, at 9:34 a.m. in
room 406, Dirksen Senate Building, Hon. Mike Rounds (chairman
of the Subcommittee) presiding.
Present: Senators Rounds, Markey, Inhofe, Boozman, Wicker,
and Sullivan.
OPENING STATEMENT OF HON. MIKE ROUNDS,
U.S. SENATOR FROM THE STATE OF SOUTH DAKOTA
Senator Rounds. The Subcommittee on Superfund, Waste
Management and Regulatory Oversight is meeting today to conduct
a hearing on oversight of litigation at EPW and Fish and
Wildlife Service, impacts on the United States economy, States,
local communities and the environment.
Today we are meeting to hear testimony on the impact
environmental litigation has on the economy, States and
communities. Both the Clean Air Act and the Endangered Species
Act contain provisions allowing for citizens to file a citizen
suit against a regulatory agency to assure an agency's
compliance with Federal statutes.
While originally well intentioned, these citizen suits are
being used to perpetuate what is often referred to as a sue-
and-settle process that overwhelms regulatory agencies,
resulting in settlement agreements and consent decrees
requiring agencies to promulgate major regulations within an
arbitrarily imposed timeline. These agreements are often
negotiated behind closed doors with little or no transparency
or public input.
Although the ultimate parties responsible for the
regulations are the States and regulated entities, they have
been nearly completely cut out of the process and are not
consulted about the practical effects of the settlement
agreement. Public comments from the States and industries
regarding the feasibility or impact of these regulations are
routinely ignored.
Further, these citizen suits allow nongovernmental
organizations, or NGOs, and the Administration to advance their
own policy agenda while circumventing the entire legislative
process and Congress. As a result, major regulations that cost
billions of dollars, stifle economic growth and inhibit job
creation are being made by unelected bureaucrats in Washington
who think they know what is best for everyone.
Under the Clean Air Act, citizen suits have been used to
impose major regulations without any input from Congress and
have little to no input from States. A study by the U.S.
Chamber of Congress found that EPA considered reconsideration
of the 2008 Ozone National Ambient Air Quality Standards could
cost up to $90 billion annually to comply with, making it the
most expensive regulation in history.
Further, States have been so entirely shut out of the
process that their opposition is rarely given serious
consideration. When the EPA promulgated sulfur dioxide
regulations, every single State that commented about the
regulation voiced its opposition. Rather than working with the
States to address their concerns, the EPA ignored their
comments and moved forward with the regulation.
Additionally, the Fish and Wildlife Service is in the
middle of potentially listing more than 250 species as
endangered or threatened on the Endangered Species List. Called
one of the largest Federal land grabs in modern times, this is
the result of a mega-settlement between the Fish and Wildlife
Service and the NGOs that intentionally overwhelmed the agency
with listing petitions simply so that they could sue the Fish
and Wildlife Service for failing to meet statutory deadlines.
Because the Fish and Wildlife Service is now bound to
court-imposed deadlines to make those listing decisions, the
agency is rarely inclined to engage States, industries and
landowners in real conservation efforts. As a result, these
listings exemplify heavy handed Federal regulation rather than
serious collaborative efforts to conserve and recover species.
The impact of these lawsuits is being especially felt in
South Dakota where our only coal plant, the Big Stone plant, is
in the midst of a $400 million upgrade to comply with EPA's
Regional Haze rule. This project is not even completed yet and
now this plant may not even be able to operate at all in order
to comply with the Administration's Clean Power Plan. The sue-
and-settle process has resulted in regulations that stifle
innovation and hurt the future of this country by crushing the
can-do American spirit that founded our Nation, settled the
West, won two World Wars and put a man on the Moon.
I would like to thank our witnesses for being here with us
today. I look forward to hearing your testimony. Now I would
like to recognize my friend Senator Markey for a 5-minute
opening statement.
Senator Markey.
[The prepared statement of Senator Rounds follows:]
Statement of Hon. Mike Rounds,
U.S. Senator from the State of South Dakota
The Environment and Public Works Subcommittee on Superfund,
Waste Management, and Regulatory Oversight is meeting today to
conduct a hearing on ``Oversight of Litigation at EPW and Fish
and Wildlife Service: Impacts on the U.S. Economy, States,
Local Communities and the Environment.''
Today, we are meeting to hear testimony on the impact
environmental litigation has on the economy, States and
communities. Both the Clean Air Act and the Endangered Species
Act contain provisions allowing for citizens to file a
``citizen suit'' against a regulatory agency to assure an
agency's compliance with Federal statutes.
While originally well-intentioned, these citizen suits are
being used to perpetuate what is often referred to as a ``sue
and settle'' process that overwhelms regulatory agencies,
resulting in settlement agreements and consent decrees
requiring agencies to promulgate major regulations within an
arbitrarily imposed timeline. These agreements are often
negotiated behind closed doors, with little to no transparency
or public input. Although the ultimate parties responsible for
the regulations are the States and regulated entities, they
have been nearly completely cut out of the process and are not
consulted about the practical effects of the settlement
agreement. Public comments from the States and industries
regarding the feasibility or impact of these regulations are
routinely ignored.
Further, these citizen suits allow Non-Government
Organizations--or NGOs--and the Administration to advance their
own policy agenda while circumventing the entire legislative
process and Congress. As a result, major regulations that cost
billions of dollars, stifle economic growth and inhibit job
creation are being made by unelected bureaucrats in Washington
who think that they know what is best for everyone.
Under the Clean Air Act, citizen suits have been used to
impose major regulations without any input from Congress and
little to no input from the States. A study by the U.S. Chamber
of Congress found that EPA reconsideration of the 2008 Ozone
National Ambient Air Quality Standards could cost up to $90
billion annually to comply with--making it the most expensive
regulation in history. Also, the utility MACT rules cost an
estimated $12.6 billion in compliance costs, and the regional
haze implementation rule cost approximately $2.16 billion to
comply. These exorbitant compliance costs result in the closure
of U.S. power plants and the loss of U.S. jobs, while the
benefits they bring about are questionable.
Further, States have been so entirely shut out of the
process that their opposition is rarely given serious
consideration. When the EPA promulgated sulfur dioxide
regulations, every single State that commented about the
regulation voiced its opposition. But rather than working with
the States to address their concerns, the EPA ignored their
comments and moved forward with the regulation.
Additionally, the Fish and Wildlife Services is in the
middle of potentially listing more than 250 species as
endangered or threatened on the Endangered Species List. Called
one of the largest Federal land grabs in modern times, this is
the result of a mega-settlement between the Fish and Wildlife
Service and NGOs that intentionally overwhelmed the agency with
listing petitions simply so they could sue the Fish and
Wildlife Service for failing to meet statutory deadlines.
Because the Fish and Wildlife Service is now bound to court
imposed deadlines to make these listing decisions, the agency
is rarely inclined to engage States, industries and landowners
in real conservation efforts. As a result, these listings
exemplify heavy-handed Federal regulation rather than serious
collaborative efforts to conserve and recover species.
The impact of these lawsuits is being especially felt in
South Dakota, where our only coal plant, the Big Stone plant,
is in the midst of a $400 million upgrade to comply with EPA's
regional haze rule. This project is not even completed yet, and
now this plant may not even be able to operate at all in order
to comply with the Administration's Clean Power Plan.
The ``sue and settle'' process has resulted in regulations
that stifle innovation and hurt the future of this country by
crushing the can-do American spirit that founded our Nation,
settled the West, won two World Wars and put a man on the Moon.
I'd like to thank our witnesses for being with us here
today, and I look forward to hearing your testimony.
OPENING STATEMENT OF HON. EDWARD J. MARKEY,
U.S. SENATOR FROM THE STATE OF MASSACHUSETTS
Senator Markey. Thank you, Mr. Chairman, very much.
Today our Subcommittee hearing focuses on the effects of
litigation on the Environmental Protection Agency and the Fish
and Wildlife Service.
Litigation has always shaped public health and our
environment. For example, in 1989 when the EPA tried to ban
asbestos under the Toxic Substances Control Act, industry sued
and ultimately won, effectively rendering the entire law nearly
impossible for the EPA to use.
Recently the Supreme Court told the EPA it has to take
another look at the cost estimates of its Mercury Air Toxic
rule after industries in 20 States sued. Even before
yesterday's Clean Power Plan rules were announced, 14 States
and Murray Energy Corporation tried to game the legal system by
filing a premature legal challenge to them.
If we are going to look at the impact of litigation then we
have to look at all participants. In one corner we have multi-
billion dollar corporations suing to stall or stop
environmental protections from taking effect. They are putting
profits above clean air and water. In another corner, we have
members of the public using the statutory rights that Congress
gave them to hold agencies accountable and help ensure
environmental goals are met.
For more than four decades, citizens sued provisions which
are included in many environmental laws, like the Clean Air Act
and Endangered Species Act have served as an essential
oversight function. Citizen suits provide a mechanism for the
public to ensure that agencies meet statutory deadlines and do
what Congress has told them to do. The ability to recover
reasonable cost and attorney's fees ensures that the little guy
can take on the government and deep pocket industries when the
law and the public interest have been violated.
Citizen petitions and lawsuits also help to protect the
environment. For example, not one species would have been
listed under the Endangered Species Act during the Bush
administration without citizen petitions. EPA's deadlines to
reduce air pollution in national parks and wilderness were
amiss for so many years after EPA first issued the rules in
1999 that litigation brought by environmental groups in 2011
was needed to hold both the States and the EPA accountable.
EPA's Clean Air Act deadlines to control and reduce mercury
emissions and other toxic pollutants from coal power plants
were supposed to be met by 2002, but implementation of these
regulations remains in litigation. Now some critics say these
types of lawsuits are only brought by environmental
organizations and that they lead to collusion between
environmental groups and the agencies.
But a look at the facts shows this is not the case.
According to GAO citizen suits have not had an important effect
on environmental rulemaking. Moreover, during a 16-year period
almost half of the lawsuits against the EPA were brought by
industry trade associations and private companies, not
environmental groups. For example, the petroleum industry sued
the EPA in 2013 over its renewable fuel standard and
subsequently, happily settled that lawsuit.
Some critics also say that citizen suits let the public or
environmental groups dictate agency policy. But safeguards at
the Department of Justice and the courts themselves prevent
that from happening. A good case and point relates to the
lawsuit filed by industry and the State of Alaska against the
Clinton administration's 2001 Roadless Rule which was designed
to protect national forest from logging, mining and road
building. The Bush administration's 2003 settlement exempted
millions of acres of land in Alaska from the rule and
effectively rolled back the regulation.
Ironically, this case prompted the first use of the phrase
sue-and-settle. Just last week the court issued its final
conclusion that the Bush administration had violated the law by
changing its policy about whether the Tongass Forest needs
protection from logging in the legal settlement instead of
changing the regulation itself.
I look forward to your testimony today. We appreciate all
of the witnesses being here today, and we thank you, Mr.
Chairman, for holding this hearing.
Senator Rounds. Thank you.
Senator Inhofe. Mr. Chairman, may I make one comment? Four
of the five Republicans are also on the Armed Services, which
are meeting at the same time. So you are going to have some
people going back and forth here including the four of us.
Senator Rounds. Thank you, sir. Senator Wicker, at this
time I think you would like introduce our first witness.
Senator Wicker. Thank you, Mr. Chairman and Mr. Ranking
Member. I am one of those members of the Armed Services
Committee, so we are juggling hearings this morning. But thank
you, Mr. Chairman, for holding this important hearing on the
sue-and-settle practice and for allowing me to say a word or
two about a distinguished member of our panel of witnesses
today. I am glad to welcome my fellow Mississippian, Dallas
Baker who is Air Director and Chief of Air Division of the
Mississippi Department of Environmental Quality.
There are two reasons why Dallas is an outstanding witness
for us today. First of all, he served the DEQ as an
Environmental Engineer and has done so for some 20 years. He
has been a tremendous asset to the State of Mississippi. In
this capacity, he has worked closely with Federal agencies,
local governments, and members of industry to navigate the
permitting process and enhance DEQ's ability to serve citizens
and companies in Mississippi.
There is another role that makes him an outstanding witness
today and that is that he serves as president of the Air and
Waste Management Association. This gives a full understanding
of the regulatory role played by a State agency. So I look
forward to hearing his insights, and I hope other members of
this Subcommittee can benefit from his insights on the
different nature of the sue-and-settle regulation and the
impact this practice has on States, local communities and the
environment. Mr. Baker is a graduate of the University of
Mississippi and a distinguished public servant, and thank you
for allowing me to welcome him on behalf of the full committee
and the State of Mississippi.
Thank you, sir.
Senator Rounds. Thank you, Senator Wicker. Our other
witnesses joining us for today's hearing are Kathleen Sgamma,
Vice President of Government and Public Affairs, Western Energy
Alliance; Andrew M. Grossman, Associate, BakerHostetler LLP,
Adjunct Scholar, Cato Institute; Mr. Alfredo Gomez, Director,
Natural Resources and Environment, Government Accountability
Office; and Justin Pidot, Associate Professor, University of
Denver Sturm College of Law.
Now we will turn to our first witness, Mr. Dallas Baker,
for 5 minutes. Mr. Baker, you may begin.
STATEMENT OF DALLAS BAKER, AIR DIRECTOR AND CHIEF OF AIR
DIVISION, MISSISSIPPI DEPARTMENT OF ENVIRONMENTAL QUALITY;
NATIONAL PRESIDENT, AIR AND WASTE MANAGEMENT ASSOCIATION
Mr. Baker. Thank you, Senator Rounds and Senator Markey,
for the invitation to be with you today.
As Air Director of my State's environmental agency, I am
responsible for maintaining clean air and the welfare of people
back home. As of today, every air monitor we operate in
Mississippi indicates we have clean air. This was no accident.
Over the years, good planning, good air control technology and
until recently good rulemaking played a part.
My testimony today is meant to shed light on recent process
changes but also to express my concerns of unintended
consequences of the so-called sue-and-settle approach.
In the past, we had ample time to participate in early
rulemaking that reduced air emissions while minimizing the
burden on the State and the private sector. Before a final rule
was signed, the private sector had a chance to look at the main
elements of the rule and in some cases had a seat at the table
in the rulemaking process itself. They saw what was coming and
they got prepared.
We had a time to schedule listening sessions and provide
comments back to EPA. We heard what would work and what would
not work. In the past, I felt the EPA sufficiently considered
our comments and was responsive, which I felt strengthened the
final product. I am concerned by the recent shift in this
dynamic between EPA and the States.
The sue-and-settle method by definition keeps a State out
of deliberations, yet it subjects us to the burden of reacting
to it, whatever it is. Adding to the frustration and the
details in methods used to arrive at the settlement are often
sealed by the courts.
One recent example of such a settlement is the Sulfur
Dioxide Consent Decree. Back in March, the DEQ received a
letter from EPA indicating a settlement agreement was reached
between EPA, the Sierra Club, and the Natural Defense Council.
The consent decree said the EPA failed to complete designations
of containment status with the 2010 1-hour average
SO2 standard.
The letter identified a power plant operated by the South
Mississippi Electric Power Association or SMEPA called the R.D.
Morrow Generating Plant in Lamar County. The Morrow Plant was
identified based on a mission threshhold set in the agreement.
Lamar County is now in jeopardy of being designated as non-
obtainment for SO2. Our only acceptable option of
preventing this was to model the emissions as Plant Morrow and
submit a recommendation of obtainment by the decree deadline of
September 18, 2015. SMEPA agreed to finance the modeling
process which remains on going. Last week we got in early model
results and as expected, Lamar County appears to be in
attainment for the SO2 standard.
The end result of the EPA sue-and-settle in this case was
an expenditure of already stretched resources of the State and
no environmental benefit.
What is alarming to me was how quickly we had to react. In
the SO2 example affected States were provided only 6
months to make its recommendations. It took tremendous time and
coordination to work it up to this point, and we still have
work to do.
Now remember, if SMEPA had not agreed to absorb the cost
and fast track modeling we likely would have had to accept a
non-attainment designation for Lamar County. That would have
led to efforts of redesignation and more importantly work to
remedy the economic impact even a temporary non-obtainment
designation would place on the Lamar County area.
So I am concerned of the presumed guilt here, meaning the
area was presumed not in attainment simply by omission of one
site. In the SEMPA case, DEQ believed Lamar to be in compliance
with the standard and purely based on just experience. We
operate two monitors located in that part of the State and much
more industrial and more commercial areas than rural Lamar
County. Those other monitors currently read well below the
standard and in Lamar there is not much else there. We know
Plant Morrow emissions; we did not believe the standards were
at risk.
The settlement also limits our abilities to plan and
designate resources. Beyond it, EPA seems to have chosen more
and more stringent posturing being less flexible to the States.
We are asked to do more with less in less time.
So good science, good technology and sufficient resource
planning, an affective regulation development takes time. So
appropriations and funding are scarce, new regulations such as
the Clean Power Plan and the 2008 ozone modification are
causing tremendous amounts of attention of our staff and we are
limited and we are underfunded and over stretched.
We feel that our planning is being disrupted perhaps by
these. Our concern is that this would continue in practice and
it makes it very difficult for the State and private sector as
well as the agency itself to do proper planning.
Thank you for your time and the invitation.
[The prepared statement of Mr. Baker follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Rounds. Thank you, Mr. Baker. Now we will hear from
Ms. Kathleen Sgamma.
STATEMENT OF KATHLEEN SGAMMA, VICE PRESIDENT OF GOVERNMENT AND
PUBLIC AFFAIRS, WESTERN ENERGY ALLIANCE
Ms. Sgamma. Thank you Mr. Chairman, Ranking Member Markey,
and members of the Subcommittee for the opportunity to be here
today. I tried to lay out in my testimony how my industry, the
oil and natural gas industry in the west, has delivered
significant environmental and economic benefits to the Nation.
I would characterize profits as being used for actually
delivering environmental benefit, not for standing in the way.
We have innovated and we have delivered several different
environmental benefits. We produce more per unit of air
emissions.
We have shrunk the size of our footprint on the land
significantly up to 70 percent with horizontal drilling. We
continue to reduce and reuse water. We have been one of the
main reasons why the United States has reduced greenhouse gas
emissions. I am very proud of our environmental record.
Besides that environmental benefit we have produced huge
economic benefits for the Nation. This year alone we are saving
customers about $1,800 in lower natural gas and oil prices and
we are enabling the United States to use energy as a strategic
resource. I am very proud of the record of my industry.
But rather than recognizing that environmental benefit this
Administration has doubled down on costly command-and-control
regulation without commensurate environmental benefit. I have
been asked to testify today to address the impact of litigation
driven regulation on my industry and the economy. And while I
cannot fully quantify all the different regulatory efforts
against my industry right now just because of the sheer volume
that we are handling, I have provided some examples in my
testimony.
I think what is really more important is the impact on job
creation and economic development for the general citizenry. I
am very sympathetic to the States. I know industry is not
sympathetic but certainly when States are forced to expend huge
resources responding to hundreds of species petitions, for
example, or when their State implementation plans are suddenly
pulled out from under them, they have to be redone or taken
over by EPA. I think that is definitely an abuse of the sue-
and-settle method.
Today Western Energy Alliance is releasing an update to our
sue-and-settle analysis related to two environmental groups and
their settlement agreements with the Department of the Interior
in 2011. We show that another year later there was another
chance for more bold petitions, more litigation. Those two
groups, Wild Earth Guardians and Center for Biological
Diversity, certainly were not satisfied with being handed
unprecedented power by the Administration to set the agenda and
the resource allocation of the Fish and Wildlife Service. They
continue to sue; they continue to increase petitions to
historically high levels.
For example, they continue to have the majority of lawsuits
related to endangered species, and they continue to submit
petitions for species listing out of proportion with any other
constituency. We have released those numbers today, and it is
pretty much more of the same.
When the Interior Department hands over that power to those
two groups, one special interest, it is really forcing
businesses, States, counties to put in place all kinds of
different resources to show the Department how they are
conserving species That is really not productive, because the
best species protection is done on the ground by States and the
local governments.
We see the same pattern with EPA. My industry has also been
a target of lawsuits that have resulted in sue-and-settles
specifically for new source performance standards. It is more
of targeting because EPA has failed to do the required reviews
for 76 percent of all industry sectors. It is becoming a source
use of targeting a specific non-favored industry.
My time is up, I very much appreciate the opportunity
today.
[The prepared statement of Ms. Sgamma follows:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Rounds. Thank you for your testimony, Ms. Sgamma.
Our next witness is Mr. Andrew Grossman. Mr. Grossman, you
may begin.
STATEMENT OF ANDREW M. GROSSMAN, ASSOCIATE, BAKERHOSTETLER LLP;
ADJUNCT SCHOLAR, CATO INSTITUTE
Mr. Grossman. Mr. Chairman, Ranking Member Markey, members
of the Subcommittee, thank you for holding this hearing today
and inviting me to testify.
My statement today will focus on both the EPA so-called
Clean Power Plan, greenhouse gas regulations and the sue-and-
settle phenomenon. Not only is the Clean Power Plan a product
of collusive settlement with the environmentalist groups and
pro-regulation States, but it also illustrates a broader class
of problematic agency action that has serious implications for
the rule of law in this country.
Sue-and-settle refers to a particular kind of collusion
between agencies and outside groups who evade transparency and
accountability mechanisms through friendly litigation and
settlements. In a number of instances the Obama administration
has chosen to enter into settlements that committed to taking
action, often promulgating new regulations on a set schedule.
Between 2008 and June 2013, 14 of the 17 major non-
discretionary rules issued by the EPA resulted from deadline
lawsuits. The most recent example is the Clean Power Plan. EPA
committed to regulate carbon dioxide emissions from the new and
existing power plants under Section 111 of the Clean Air Act
and in 2011 entered into a settlement with environmentalist
groups and States. That settlement culminated in the signing of
final rules this week.
We are all familiar with the problems that arise when
settlements between agencies and special interests are used to
set agency priorities and duties. These include lack of
transparency, lack of public participation, rushed and sloppy
rulemaking, and above all, the evasion of proper accountability
and oversight. Fundamentally these are rule of law issues.
When an agency engages in legal chicanery to carry out its
policy preferences, it undercuts the usual checks and balances
that exist to promote moderation, pluralism and ultimately the
public interest. This is not the only way the Clean Power Plan
attempts to game the legal system. As many States pointed out
after the rule was purposed, the rule's deep emission cuts and
aggressive deadlines required State regulators to begin work on
accommodating almost immediately. And that was a year ago.
At this moment, utility regulators in every affected State
are hard at work evaluating the rule, attempting to mitigate
its impact on their electric systems and making irreversible
decisions on things like transmission projects and utility
retirements and investments. None of these expenditures of
time, efforts and money are recoupable. And few of those
decisions can be reversed if and when the rule is ultimately
struck down by the courts, which I believe it likely will be.
These concerns were brought to the EPA's attention and its
response was to make the final rule's emission targets even
more stringent and to place greater emphasis on investment and
renewable energy.
One can be forgiven for wondering whether the EPA strategy
is to coerce its policy preferences into effect irrespective of
its legal authority and before any court has the opportunity to
stop it. After all, it was only a month ago that the Supreme
Court held the EPA's Mercury Rule was unlawful after it had
been in effect for over 3 years. As EPA Administrator Gina
McCarthy explained to a talk show host, the decision would not
have much of an impact, because most power plants are already
in compliance and the investments required by the rule have
already been made. Is it really so unreasonable for State
officials and utilities who are being pushed to cut greenhouse
gas emissions at breakneck speeds to wonder whether history is
repeating itself with the Clean Power Plan?
The common thread that links collusive settlements and this
kind of regulation by fiat is that they attempt to shortcut the
ordinary give and take of representative government. Agencies
use deadline settlements to achieve their policy priorities
even when those priorities might not be shared by other
agencies and actors in the executive branch or by Congress.
Likewise, the use of bureaucratic fiat can have the same
effect, allowing agencies to achieve results that were never
approved, in some cases were even specifically prohibited by
Congress and to structure their actions to evade review by the
courts. The administrative state is not supposed to work this
way. But it is encouraging that Congress is paying attention to
these issues and holding hearings like this one.
With respect to sue-and-settle, members of this body and
the House have worked together to introduce the Sunshine for
Regulatory Decrees and Settlements Act, thoughtful legislation
that cuts to the heart of that issue. Other hearings and other
pieces of legislation focus on the substance of deadline
provisions themselves. There is a growing realization, I think,
that more work will have to be done to rein in the agencies and
to reassert Congress's policymaking primacy. This is a very
important effort.
Again, I thank the Committee for the opportunity offer
these remarks. I look forward to your questions.
[The prepared statement of Mr. Grossman follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Rounds. Thank you, Mr. Grossman. We will now hear
from our next witness, Mr. Alfredo Gomez from GAO. Mr. Gomez,
you may begin.
STATEMENT OF ALFREDO GOMEZ, DIRECTOR, NATURAL RESOURCES AND
ENVIRONMENT, GOVERNMENT ACCOUNTABILITY OFFICE
Mr. Gomez. Chairman Rounds, Ranking Member Markey and
members of the Subcommittee, good morning. I am pleased to be
here today to discuss our work on environmental litigation
against the Environmental Protection Agency and the U.S. Fish
and Wildlife Service.
As the primary agency charged with implementing many of the
Nation's environmental laws such as the Clean Air Act and the
Clean Water Act, EPA often faces litigation over its
regulations and other actions. As many have already noted,
citizens can sue EPA to compel the agency to take required
actions such as issuing a rule on time and lawsuits often
called deadline suits.
The Fish and Wildlife Service also faces litigation over
its regulations and actions to carry out the Endangered Species
Act. The Department of Justice provides legal defense to both
EPA and the Fish and Wildlife Service in court.
So my statement today summarizes the results of reports on
environmental litigation against EPA and the Fish and Wildlife
Service. I will talk about three key points. First, information
on the number of cases, second the legal costs that are
available for EPA and the Fish and Wildlife Service, and third,
the impact of deadline suits on EPA's rulemaking.
The first point is that the number of environmental cases
brought against EPA each year varied and showed no discernable
trend. On average there were about 155 cases per year. Justice
staff defended EPA on a total of about 2,500 cases in the 16-
year period ending in 2010. Most of these cases, or 59 percent,
were filed under the Clean Air Act, 20 percent under the Clean
Water Act, and the cases range from a high of 216 cases in 1997
to a low of 102 cases in 2008.
The plaintiffs filing these suits fell into several
categories: 25 percent were trade associations, followed by
private companies at 23 percent, local environmental groups and
citizens groups made up 16 percent and national environmental
groups made up 14 percent.
Second, with regard to the cost of litigation against EPA,
the cost also varied from year to year with no discernable
trend. Specifically, the Department of Justice spent about $47
million or on average $3.6 million annually to defend EPA in
court. The Department of Treasury also paid about $14 million
or about $2 million per year. As many of you know Treasury has
to pay attorney fees and costs from the Department's judgment
fund when plaintiffs win. EPA also paid approximately $1.6
million in attorney's fees and cost or about $305,000 per year.
The Fish and Wildlife Service, we reported on the limited
information that the agency had available on lawsuits. The
agency does not track cases and cost but pulled together some
information showing that it had paid $1.6 million for attorney
fees and cost related to 26 cases from fiscal years 2004
through 2010.
Third, in our report on EPA deadline suits we found that
EPA issued 32 major rules in a 5-year period that we reviewed.
Nine of those 32 rules EPA issued were following settlement
agreements and deadline suits. These nine rules were all Clean
Air Act rules. The terms of the settlements in these deadline
suits set up a new schedule to issue the rules.
An additional 5 of the 32 rules were issued to comply with
court orders following deadline suits. The impact of
settlements and court orders in deadline suits on EPA's
rulemaking priorities was limited primary to one office within
EPA. This is the Office of Air Quality Planning and Standards
which is responsible for setting standards. Agency officials
said that deadline suits affected the timing and order in which
rules are issued. In other words, EPA has to priorities the
rules that are under settlement agreements and court order
first.
In summary, the environmental statutes allow litigation to
check the authority of Federal agencies as they carry out or
fail to carry out their duties. Available data do not show
discernable trends in the number of cases, the cost associated
with litigation against EPA, and there is limited information
on the Fish and Wildlife Service. Information on deadline suits
we reviewed show that the effect of settlement agreements from
these suits was on the timing and the order on which the rules
are being issued.
Mr. Chairman, Ranking Member Markey, that completes my
statement.
[The prepared statement of Mr. Gomez follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Rounds. Thank you Mr. Gomez. Our next witness is
Mr. Justin Pidot. Mr. Pidot, you may begin.
STATEMENT OF JUSTIN PIDOT, ASSOCIATE PROFESSOR, UNIVERSITY OF
DENVER STURM COLLEGE OF LAW
Mr. Pidot. Good morning, Mr. Chairman, Ranking Member
Markey, members of the Subcommittee. Thank you for giving me
the opportunity to testify today. My name is Justin Pidot. As
you have heard, I am an Associate Professor at the University
Of Denver Sturm College of Law. Prior to joining the faculty I
was an appellate lawyer at the U.S. Department of Justice in
the Environment Natural Resource Division.
In my testimony today, I will be discussing the importance
of environmental litigation brought against Federal agencies
and settlements that the United States enters into to resolve
such litigation.
Litigation has always been an integral part of enforcing
environmental law and administrative Law more generally.
Congress created a cause action to challenge agency decisions
and the failure of agencies to reach decisions when it enacted
the Administrative Procedure Act in 1946. And Congress created
more specific citizens provisions in many modern environmental
statutes.
The ability of the public to hold Federal agencies
accountable has served us well. Environmental litigation is an
essential check on the administrative state and holds the
executive branch accountable to legislative decisions made by
Congress and legal commitments made by agencies embodied in
their regulations. Due to the deference afforded to Federal
agencies, deference that I enjoyed every day when I was
representing the Federal Government at the Department of
Justice, environmental litigation is hardly carte blanche for
courts, activist or businesses to rewrite agency priorities.
Instead such litigation enforces legal obligations.
Some environmental litigation terminates in the settlement
or consent decree, as we have heard today, and it is to such
situations that I will turn. The majority of environmental
settlements arise out of lawsuits in which the Federal
Government has essentially has no defense to liability. As a
result, in my view, the most significant determinant of whether
an environment lawsuit ends in a settlement is a simple one,
due to lawyers representing the Federal Government at the
Department of Justice believing that the Federal Government can
prevail. A similar assessment of legal vulnerability is carried
out by litigation attorneys, whether public or private, across
the United States.
Environmental settlements provide an array of benefits.
First, settlements enhance rather than limit the defending
agent's discretion in lawsuits the agency is likely to lose,
because they allow the agency to participate in crafting a
remedy rather than waiting for a judge to impose a remedy by
judicial order.
Second, settlements may save Government resources,
particularly if entered into early in litigation. Third, a
settlement saves taxpayer dollars by reducing the amount of
attorneys' fees the Federal Government has to pay. Fourth,
settlements conserve judicial resources.
Moreover, I believe that effective mechanisms already exist
to guard against improper settlements. Settlements must be
approved by high-ranking officials of the Department of Justice
and this independent review by lawyers of DOJ distance from the
mission of a particular environmental agency guards against
improper settlements. DOJ also has internal rules that place
limitations on the terms that can be contained within
settlements. Courts also play a role and have demonstrated
their willingness to intervene where appropriate.
I want to briefly respond to two primary criticisms of
environmental settlements. First, some argue that settlements
allow agencies to evade public debate. In my view this is
generally not true. Most settlements involve either commitment
by the agency to make a decision or more rarely to use
particular procedures in making a decision. These sorts of
decisions, where to invest resources, what procedures to use,
do not require public participation under general principle of
administrative law. In other words, there would be no public
participation if the agency simply made those decisions even in
the absence of a settlement.
On rare occasions agencies enter settlements that involve a
commitment to a substantive position. These decisions either
regard primarily matters that will be wrapped into a public
decisionmaking process and properly subject to judicial review,
or the exceptional case where settlement makes a final
substantive decision the Federal Courts already have ample
authority and ample willingness to intervene.
A second argument critics make is that environmental
settlements allow environmental groups to set the agenda for
Federal agencies. This criticism also fails in my view for the
simple reason that it is Congress, not environmental groups,
that establish the priorities that are being enforced. Congress
has written environmental law to compel agencies to take
action. And when agencies fail to take actions so required,
litigation from whatever the source, environmental group or
industry, simply holds agencies accountable to their statutory
mandates.
Environmental settlements make good litigation sense, and
they do not empower agencies to evade their legal
responsibilities. Criticisms of environmental settlements in my
view are simply then criticisms of the underlying substantive
environmental statutes. The costs of what some would describe
as settlements are really the costs associated with
environmental law, not environmental litigation.
There is nothing broken about environmental settlements and
there is no legal problem with settlement practices for
Congress to fix. If Congress believes that the substance of
environmental law needs to be adjusted that is a separate
debate and one that should occur forthrightly in full daylight.
Thank you very much.
[The prepared statement of Mr. Pidot follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Rounds. Thank you for you testimony, Mr. Pidot.
Senators will now each have 5 minutes for questioning. I
will begin.
Ms. Sgamma, in your testimony, as of October 2014, there
have been 88 sue-and-settle cases arising under the Clean Air
Act and 43 lawsuits challenging Fish and Wildlife Service
decisions. Some of these suits are brought by States and
industry groups. You point out that settlements shut out
stakeholders and that there are few other options for
substantive participation in the process.
Do you believe that States and industry groups are
resorting to lawsuits because their participation and comments
are being shut out by both normal rule processes and by
lawsuits?
Ms. Sgamma. We certainly comment on many, many different
regulatory proceedings every year and often feel that our
comments are pretty much ignored. So in some case we have been
more litigious in the last few years just to defend ourselves.
If you look at the NSPS requirements that were finalized in
2012 that were the result of an environmental lawsuit, really
the rules resulting went far beyond what is required in an 8-
year review and went into rushing in very complex regulations
on a very strict deadline that did not give the agency the
chance to do real deliberative rulemaking. And that has spun
several lawsuits and several administrative petitions.
Senator Rounds. Thank you.
Mr. Baker, your testimony focuses on the lack of State
involvement and promulgating regulations that stem from
lawsuits. Can you explain to us the collaborative making
process the EPA previously engaged in with States when
promulgating regulations and the quality and feasibility of the
regulations coming out of that process, compared to the process
that has developed in recent years and the quality of these new
regulations?
Mr. Baker. A good example would be the New Source
Performance Standards that were promulgated in the 1990s and
2000s. The rule, before it was even promulgated, put in the
Register, we had an idea they were coming. We saw the writing
on the wall that this particular industry, whatever it was, was
going to be subject to a potential new rule. So we started
looking at our individual facilities, their emissions; we tried
to identify which ones would be affected. Then we started early
outreach to those individual companies in Mississippi.
Then as the proposed rule was posted on the register we
began the comment period along with the private sector. There
was stakeholder interaction. We felt that the EPA listened to
not just to our comments on implementation of the rule but also
the impacts to the environment and to the companies being
regulated.
At the end of the day we felt the controls that were in
place minimized the disruptiveness of the operations and took
into account costs. The timing was such that it was sometimes
over a matter of years in the making and at the end of the day
we felt that we were equipped and ready to implement the rule
timely.
Mississippi DEQ has a desire to be in compliance. We do not
want to circumvent rule. We have seen the pace at which
regulations are effecting Mississippi companies seem to be
accelerated and our ability to comment to EPA seems to have
been responded to with, just wait for the final rule, you will
see what we will take into account. Sometimes we do not get the
sense that EPA is listening to our concerns as in the past.
But I think that the process up to this point has seen real
gains in pollution control and we are proud in Mississippi to
have relatively clean air. I am concerned that this approach is
going to embolden advocacies that are not exactly healthy for
Mississippi.
Senator Rounds. Thank you. Senator Markey.
Senator Markey. Thank you, Mr. Chairman, very much. Mr.
Pidot, in 2011 the Fish and Wildlife Service settled litigation
involving multiple cases that were consolidated together and
involved the backlog of 250 species listing determinations
under the Endangered Species Act. Isn't it true that the
settlement merely required the Fish and Wildlife Service to
make final decisions by a certain date as to whether or not the
candidate species warranted listing?
Mr. Pidot. Yes, Senator, that is true and indeed in a
number of cases the Fish and Wildlife Service has decided that
listing a species is not warranted under the settlement, and so
the settlement did not compel the agency to list species.
Senator Markey. Have any courts had the opportunity to
consider whether the settlement agreement was an overreach of
the agency authority and if so what was the result?
Mr. Pidot. The consent decrees were entered so there would
have been public interest review at the time the consent decree
was entered by the MDL court. I do not know of any subsequent
judicial review, although every decision the Fish and Wildlife
Service makes to list or not list a species would be subject to
judicial review or a party to seek and search review.
Senator Markey. Are there any, Mr. Pidot, meaningful
distinctions between the types of settlements agreements that
typically involve litigation between industry and the agency
and the types of settlement agreements that typically involve
litigation between environmental groups and the agencies?
Mr. Pidot. I think likely not on the defensive side. There
is another class of settlements that are not really focused on
at the moment which are settlements of enforcement cases where
EPA or another Federal agency would be pursuing industry for
violation of the law and there are another set of
considerations that might arise in enforcement settlement.
Although to my mind both are fully compliant with the rule of
law.
Senator Markey. Could you share an example of when a
proposed settlement agreement was not approved by Department of
Justice guidance required or when the court rejected a proposed
settlement because it overreached?
Mr. Pidot. I can offer an example of the latter. I do not
have an example off-hand of the former when DOJ deliberations
on individual settlements or subject to either to decline
privilege generally held relatively close. But a good example
of a court intervening would be the Conservation Northwest
litigation in the Ninth Circuit under which a settlement
consent decree was proposed that would have substantively
modified the species being monitored under a forest plan to
monitor the health of the forest. The Ninth Circuit said that
such a modification of the forest plan would need to go through
notice and comment rulemaking and therefore it was an abusive
discretion for the District Court Judge to enter the consent
decree.
Senator Markey. Mr. Gomez, during your investigation of the
EPA settlements and the Clean Air Act litigation did you see
evidence that EPA agreed to do anything other than just set a
new deadline? Did anyone submit public comments about the
proposed settlements saying that the settlement was
inappropriate?
Mr. Gomez. In our review of the nine rules that resulted in
settlement agreements, none of those settlement agreements
dealt with anything that was changing the substance or nature
of the rule. They were all essentially setting new schedules or
interim deadlines. I am sorry, can you repeat your second
question?
Senator Markey. Public comments?
Mr. Gomez. So not only did we review the content of the
settlement agreements we also reviewed all of the public
comments that were received for all of the settlement
agreements.
Senator Markey. So in essence they were just saying get
your job done, set deadlines, get to work, get finished, right?
Mr. Gomez. In the ones that we reviewed, yes.
Senator Markey. Thank you. Mr. Gomez, critics of citizen
suits argue that allowing attorney's fees and other cost to be
recovered by the prevailing party is a way for litigants to
profit. Can you tell us what limits there are on how fees can
be recovered?
Mr. Gomez. Sure. The Department of Justice is responsible
for overseeing those payments, those payments in terms of the
amounts of payment and where the payments come from, whether
they come from the judgment fund or the agencies are based on
the environmental statutes. The Department of Justice does
review for example and is in negotiations with the plaintiffs
in terms of how much it is going to reimburse. Department of
Justice reviews, for example, the submissions of information in
terms of attorney hours, the types of work that is being
submitted.
Senator Markey. So fees and cost are not awarded if the
agency was substantially justified in the action it had taken?
Mr. Gomez. I am sorry, can you repeat that?
Senator Markey. Are fees and costs allowed if the agency is
determined to have been substantially justified in the action
it had taken? Or not taken?
Mr. Gomez. Yes, that is correct.
Senator Markey. Thank you, Mr. Chairman.
Senator Rounds. Senator Inhofe.
Senator Inhofe. Thank you, Mr. Chairman. Later today, we
are going to release the EPW oversight report detailing the
problems surrounding sue-and-settlement. There are already so
many legal questions over the rules that I think it is going to
be subjected to a lot of lawsuits. I get the impression that
the EPA does not really care about that because the damage is
already done.
Mr. Grossman, what damage is done even if these rules are
overturned so far?
Mr. Grossman. Thank you, Senator. In litigation, not in my
personal capacity as I am testifying here today, I represent
the great State of Oklahoma. I can tell you the State of
Oklahoma has spent an enormous amount of money and manpower and
bureaucratic resources to figure out what it needs to do to
comply with these rules and how it can keep the power on in the
State and maintain electric affordability. It had to do this
during the proposal phase of these rules, because the cuts they
require are so aggressive and they are so disruptive to the
electric system of the State, as is the case in many other
States.
At this point, States and utilities are making decisions
that are irreversible in terms of investments and retirements.
These are the costs and all of these costs are being borne
before any substituent litigation over the rules.
Senator Inhofe. Our Attorney General has been very active
in working with you and you have one done a great job helping
us. Is this kind of a typical outcome of a sue-and-settle case,
that at EPA, they really do not care too much about what
happens today the damage is already done?
Mr. Grossman. I think that is right. I think that is right
in a very specific sense. When an agency is engaging this kind
of legal chicanery there is usually some reason for it. There
is a reason that the environmentalist groups bring these suits
and there is a reason that the agencies are happy to work with
them and collude in settlements and other activities. And the
reason is that it works.
Senator Inhofe. I am not a lawyer, but it seems to me that
this would strength the arguments for impacted parties' request
for a judicial stay. Would you agree with that?
Mr. Grossman. I would entirely.
Senator Inhofe. Ms. Sgamma, you made the comment how you
could really quantify the damage that is done by all of these
regulations and it took me about a year and the Obama
administration to realize that there is more and more and more
coming, more damage that is coming.
In fact, for the first time the agricultural groups have
made the statement that there really is not anything in the Ag
Bill that affects them, it is over-regulation of the EPA. How
have environmental activists used sue-and-settle to hijack the
listing process over the policy priorities of Fish and
Wildlife?
Ms. Sgamma. I think a good case in point is the Wild Earth
Guardian suit which was 251 species that were on the candidate
list. Now, there were hundreds of other ones that the Center
for Biological Diversity settled on as well. But those specific
to the candidate species list were absolutely setting the
priorities of Fish and Wildlife Service. Because they have the
option of putting less high priority cases on the candidate
list, and here they were being forced to completely put those
priorities aside and make decisions on those species list.
Resources are diverted away from species that are truly
endangered to those that are less high priority.
Senator Inhofe. Yes, I understand that. Mr. Baker, do you
believe that the current public comment process for the Clean
Air Act settlement agreements provides the States a meaningful
opportunity to participate in settlement agreements? You have
heard us make the comment about who is involved in these
settlement agreements. What do you think about that?
Mr. Baker. We were aware there was a lawsuit in the
SO2 data requirements rule example. But we were
aware of the settlement in 18 days after the settlement
occurred by letter. So, no, we were not afforded a chance to
comment, to provide even any input.
Senator Inhofe. Yes, that certainly is the case in
Oklahoma. They are kind of left out.
Mr. Chairman, my time has expired and as I have mentioned
at the very beginning, simultaneously we have SASC Armed
Services here during this and I have to go over to that. I
appreciate very much the response to the questions and the
testimony you have given. Thank you.
Senator Rounds. Thank you. Senator Boozman.
Senator Inhofe. I am sorry, Senator Boozman. I ask consent
for my opening statement to be part of the record.
Senator Rounds. Without objection.
[The prepared statement of Senator Inhofe follows:]
Statement of Hon. James M. Inhofe,
U.S. Senator from the State of Oklahoma
Thank you, Subcommittee Chairman Rounds, for convening
today's oversight hearing, and thank you to our witnesses for
being here to testify. Today's hearing is very timely given the
President's finalized carbon mandates released just yesterday.
These rules are truly the poster child for what is wrong with
``sue-and-settle'' tactics under the Obama administration.
In this case, the U.S. Environmental Protection Agency
(EPA) and far-left environmental activists entered into a
settlement agreement to issue unprecedented carbon cutting
regulations for power plants by an unrealistic deadline. As
with most ``sue-and-settle'' scenarios, EPA rushed the rules,
based on shaky legal grounds and poor economic analysis, while
circumventing important interagency review that is only meant
to strengthen the quality of regulations.
Indeed, the rules were not the result of a well thought out
stakeholder driven and open regulatory process. Instead, they
were years in the making behind closed doors, and after years
of regulatory uncertainty and critical investment decisions by
States and affected entities, it is likely a court will strike
the rules. Yet, it appears the Obama EPA does not care about
the final outcome of the rules as the years of potential
litigation will only further distance current senior officials
from responsibility for the devastating impacts of these rules.
Showcasing this mentality, in response to the recent Supreme
Court decision on EPA's mercury rule, current EPA Administrator
Gina McCarthy shrugged off concerns over a court potentially
vacating the rule because the investments were already made;
essentially the damage has been done.
This ``sue-and-settle'' to regulate now and litigate the
merits later strategy is why ``sue-and-settle'' is counter to
administrative law and principles for government transparency.
When the Federal Government enters into a settlement agreement
that binds the agency to future action, it should take place in
the sunshine, not behind closed doors. However, the testimony
we will hear today highlights how ``sue-and-settle'' undermines
the public interest, by allowing special interests to set an
agency's agenda while excluding States and other interested
parties from the process. Limiting key stakeholders from the
process to a cursory public comment period--after a settlement
has already been reached--is too late in the process and does
not afford those tasked with implementing the resulting
regulations to fully analyze a proposal and plan accordingly.
Testimony today will also shed light on ``sue-and-settle''
tactics used at the U.S. Fish and Wildlife Service (FWS) that
similarly bind the Service to make Endangered Species Act (ESA)
listings based on questionable science and rushed review. In
these cases, special interests appear to target species that
lock up areas for important development and job creation,
rather than species that may have been most in need of
potential protection under ESA.
Above all, whether at EPA or FWS, a theme that will stand
out from today's testimony is that the Obama administration has
not been forthright with the American people in its regulatory
plans. An open and transparent regulatory process that provides
the opportunity for stakeholder and public participation can
only result in better, more effective, and legally sound
rulemaking decisions. Instead, the current regulatory regime
employed by the Obama administration through ``sue-and-settle''
appears to only result in legally shaky rules that incentivize
further litigation, expend more taxpayer dollars and agency
resources, and ultimately stall meaningful environmental and
public health benefits.
I ask that my full statement be entered into the record.
Thank you.
Senator Boozman. Mr. Gomez, you mentioned that your
statistics come from 2010, is that right?
Mr. Gomez. Sir, the statistics in terms of the number of
cases were for a 16-year period ending in 2010.
Senator Boozman. Why are we not ending to 2014?
Mr. Gomez. I am sorry, in terms of the number of cases
filed up to 2014 we do not have that information. That
information was from a report that we issued a few years ago.
Senator Boozman. So we are like how many years behind?
Mr. Gomez. So the statistics on 2,500 cases that were filed
were for a 16-year period ending in 2010 so that was, I
believe, from 1995 to 2010.
Senator Boozman. I guess my point is it would be helpful to
have somewhat current information, and I do not think that is
current at all.
Mr. Gomez. We do not have information since then in terms
of the number of cases.
Senator Boozman. I do not mean to belabor it, but is there
a way of finding out?
Mr. Gomez. What happened to us when we were doing that work
is there is no aggregated data that the agencies had. For
example, there were four different data sets that we looked at.
Department of Justice had two of them, Department of Treasury
had one and EPA had another. We had to sort of pull the
information together and from that information we were able to
identify who the plaintiffs were and also what statute they
were suing under. That was about the extent of the information.
Senator Boozman. In your testimony you stated that the
information regarding lawsuits against the FWS is limited. Does
GAO recommend that FWS provide more information about
information regarding lawsuits against them?
Mr. Gomez. That is really a good question. When we also did
that report on Fish and Wildlife, there was not a lot of
information. The agency was not collecting that information.
However, because of congressional direction, now EPA and the
Department of Interior have been providing information on
attorney costs and fees as part of their budget justification.
They started doing that in fiscal year 2014, but it goes back
to 2011.
There is now information that you can review on what EPA
and the Department of Interior is submitting in terms of
attorney fees and cost.
Senator Boozman. I know EPA started posting notices to sue
on its Web site in 2013. Does FWS post notices of intent to
sue?
Mr. Gomez. That is a good question. I do not know the
answer to that. I will have to get back to you on that one.
Senator Boozman. Thank you.
Ms. Sgamma, again, in your testimony and during the course
of the discussion, you have expressed support for limiting the
ability of litigants to sue and settle behind closed doors
without the involvement of the State. So actually you are in a
position to having to do these things for States and local
officials. You also mention limiting provisions that put the
taxpayers on the hook for the cost the frivolous lawsuits. Can
you again explain why that is so very, very important?
Ms. Sgamma. Well, I think when you have the Administration
pandering to one special interest and then it turns around and
reimburses that special interest for setting and expending
State and Federal resources, it seems like a poor use of
taxpayer money. Especially when much of what they are trying to
do is stop job creating projects or they are taking resources
out of the economy with very expensive environmental
regulation, that does not seem like a good use of taxpayer
funds.
Senator Boozman. Mr. Grossman, what else can we do to make
sure the Government is making a good faith effort to defend
against these frivolous lawsuits and stand up for the
taxpayers?
Mr. Grossman. Thank you, Senator. I think the answer is
twofold and this is really reflected in the Sunshine
Legislation that has been proposed. One is for courts to
enforce a public interest standard and the second is for
affected parties to be able to intervene and participate in the
settlement negotiations to the extent that is viable, as well
as in the approval process so that everything is out in the
open, to the extent the agency is committing itself to do
anything that is really considered in the broader context of
the agency's mission.
Senator Boozman. Good.
Mr. Pidot, do you disagree with that, do you think these
things ought to be out in the open as was suggested?
Mr. Pidot. I think in general, litigation decisions are
vested in the Department of Justice for a reason and that I
respect.
Senator Boozman. So what is the reason the public and
Congress and everybody else should not know?
Mr. Pidot. I think the reason, as I suggested in my
testimony, in my view most of these cases are dead losers for
the Government. The public interest in such a circumstance is
resolving the cases as quickly as possible with the agency
having the maximum ability to maintain its discretion in the
face of an impending loss.
So dragging out litigation is simply going to increase the
cost to the taxpayer through attorney's fees, it is going to
increase the cost to the Department of Justice. And the end
result, if a settlement is not accomplished, you will have
judges all across the country in hundreds of cases imposing
conflicting injunctions against the Federal Government in a way
that is much less organized and feasible than in a settlement.
Senator Boozman. On the other hand, I think Ms. Sgamma and
Mr. Baker would feel like in many of the settlements you simply
could not have gotten a worse deal. Thank you, Mr. Chairman.
Senator Rounds. Thank you. Senator Sullivan.
Senator Sullivan. Thank you, Mr. Chairman, and I appreciate
the witnesses' testimony today, and these are really important
issues and I think they are not always well understood.
Let me give you kind of sense of a bit of frustration on
some things. I was Attorney General in the State of Alaska, and
undertook a number of lawsuits against Federal agencies like
the EPA when they were acting in a way that I thought was
inconsistent with the law.
I actually think that agency acts inconsistently with the
law on a very regular basis. It is not just me who thinks that.
The Supreme Court in the last two terms that it had, the
Michigan case just came down and then the Utility Air
Regulators case. Those are both examples where the highest
court in the land said, you are either violating the
Constitution, you are either violating the statute or you are
either violating both.
The trouble is that when you undertake lawsuits like that,
they challenge EPA's authority, rogue agency action, which I
believe they are doing. This WOTUS Rule of the U.S. regulation
is another classic example. They are clearly trying to rewrite
the Clean Water Act, they are clearly trying to expand their
jurisdiction. I think there are 30 States that are now suing
them. I think they are going to win.
We are going to try and stop that because, and it is
Democrats and Republicans, by the way, in this Congress who
believe they are violating the law with regards to the waters
of the U.S.
But here is the challenge. You challenge these actions,
they do not listen. The Administrator comes and feeds a line of
whatever, says they are abiding by the law. The Supreme Court
eventually says, no, you are not. I am sure that will happen
with the WOTUS Rule as well.
But they go ahead and do it anyway and it takes years to
litigate. By the end of the day, even though you went into the
Supreme Court in some ways you are already checkmated by a
rogue agency that violates the law. The private sector has to
abide by what they have said anyways because litigation took 6
years to get to the Supreme Court. How do we try and defend
against that? Because I think that is part of their strategy.
Knowing that litigation takes 5 years, companies do not
have 5 years or citizens do not have 5 years by which to just
forget it if I am not going to abide by the regs until the
Supreme Court rules. What is the approach we can take that
prevents this kind of checkmate action even though they are
losing term after term in the United States Supreme Court?
Anyone thought on that? Because I think it is really an
important issue and really is a vice that these agencies that
act without legislative authority, ignore the Congress, ignore
the statute but still the American citizens have to abide by
what they are saying. By the time the Supreme Court rules
against them it is too late. Any thoughts on that?
Mr. Gomez. Yes, sir, if I could. First of all, I agree with
your remarks and your observations. I think this has been a
hallmark of some of the more expensive regulatory actions of
this Administration's EPA. To a certain extent, a reasonable
administration, one that was concerned with the lawfulness and
legality of its actions, would be less aggressive in terms of
trying to carry them out by fiat and a little bit more
concerned about the legal niceties of following the law.
Senator Sullivan. They are not niceties, they are actually
requirements.
Mr. Gomez. Right. Making sure that its actions are legally
durable, that they will be upheld in the end and thereby not
impose unnecessary costs on regulated parties. For Congress,
one thing to think about may be potentially the availability of
additional relief or a lower standard to obtain an injunctive
relief for injunctions against certain types of major rules
recognizing that a particular area such as under the Clean Air
Act and otherwise there have been problems in that regard.
So maybe it is more reasonable for courts, given the legal
uncertainties in that area, to be a little bit less deferential
to the agencies saying, this is very expensive, it is very
legally complex. Let's just hold on a minute while we evaluate
the legal merits.
Senator Sullivan. Thank you, but do you think we can take
action like that in terms of a law that mandates that? Because
again, right now, they lose but they win.
Mr. Gomez. Yes, Senator, I think setting standards at the
goal particular cause of actions something that Congress has
done for over 100 years.
Senator Sullivan. Thank you. Mr. Chairman I have one more
final question. I know I have run out of time.
Senator Rounds. Quickly.
Senator Sullivan. Thank you. I just had another question
relating to the citizen suits and the special standings status
of certain NGOs, whether it is under the Endangered Species Act
or Clean Air Act, groups such as the Center for Biological
Diversity. My understanding, and I really just need your
thoughts on this, is that they have kind of a special standing
status, they get public interest to do a kind of designation.
I guarantee you that in my State of Alaska, these groups
are not considered to carry out the public interest. They are
viewed oftentimes as going against the public interest.
This is not a partisan issue. In my State, any time there
is a responsible resource development activity, most Democrats,
Republicans, the vast majority of the citizens of my State
desire these groups come in from the outside and sue to stop
it. It is constant. It happens all the time. That is why we
cannot build roads in Alaska.
Senator Rounds. Sir, I am going to have to ask you to get
to your question.
Senator Sullivan. Sorry. So the question is, what is the
status in the Federal law and do you think it actually
represents public interest? Should other entities such as
citizens who aren't NGOs, businesses who live in the States
also have special standing ability? Or should these groups be
given special treatment under the Federal Law when, at least in
the example of Alaska they certainly do not represent the
public interest?
Mr. Gomez. Senator, if I may, I think your question raises
a broader point about how it is that the Government comes to
recognize and carry out what the public interest is. Think
about how bizarre it is that we have a Congress that is the
representative body of the people, we have executive agencies
that are accountable to the President nominally, and yet we are
relying on litigation by just random private parties who think
they know what is best to go and sue agencies and say, we want
you to do this before that.
It is a very strange way to do things. I think it is
perfectly appropriate for Congress to consider rather that is
the best way for agencies to organize their priories and
determine what in fact is the most pressing public interest.
Senator Rounds. With that I want to thank all the members
of this panel for taking your time to come in and participate
with us. We most certainly appreciate your input into this
process. You have taken time away from everything else to come
in and be a part of today.
I also want to take this time to thank our Senator Markey,
our Ranking Member and all of our other colleagues who attended
this hearing. The record for this hearing will be open for 2
weeks which brings us to Tuesday, August 18.
With that, once again, thank you for your time and
participation. This hearing is adjourned.
[Whereupon, at 10:40 a.m., the hearing was adjourned.]
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