    [House Hearing, 115 Congress]
    [From the U.S. Government Publishing Office]

                 EXAMINING `SUE AND SETTLE' AGREEMENTS: PART I

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

                                  JOINT HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                     THE INTERIOR, ENERGY, AND ENVIRONMENT

                                    AND THE

                                SUBCOMMITTEE ON
                           INTERGOVERNMENTAL AFFAIRS

                                     OF THE

                             COMMITTEE ON OVERSIGHT
                             AND GOVERNMENT REFORM
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED FIFTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  MAY 24, 2017

                                   __________

                               Serial No. 115-26

                                   __________

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

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

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

                                   __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    26-559 PDF                  WASHINGTON : 2017

    ----------------------------------------------------------------------------------------
    For sale by the Superintendent of Documents, U.S. Government Publishing Office,
    http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
    U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
    E-mail, gpo@custhelp.com.

                  Committee on Oversight and Government Reform

                         Jason Chaffetz, Utah, Chairman
    John J. Duncan, Jr., Tennessee       Elijah E. Cummings, Maryland,
    Darrell E. Issa, California              Ranking Minority Member
    Jim Jordan, Ohio                     Carolyn B. Maloney, New York
    Mark Sanford, South Carolina         Eleanor Holmes Norton, District of
    Justin Amash, Michigan                   Columbia
    Paul A. Gosar, Arizona               Wm. Lacy Clay, Missouri
    Scott DesJarlais, Tennessee          Stephen F. Lynch, Massachusetts
    Trey Gowdy, South Carolina           Jim Cooper, Tennessee
    Blake Farenthold, Texas              Gerald E. Connolly, Virginia
    Virginia Foxx, North Carolina        Robin L. Kelly, Illinois
    Thomas Massie, Kentucky              Brenda L. Lawrence, Michigan
    Mark Meadows, North Carolina         Bonnie Watson Coleman, New Jersey
    Ron DeSantis, Florida                Stacey E. Plaskett, Virgin Islands
    Dennis A. Ross, Florida              Val Butler Demings, Florida
    Mark Walker, North Carolina          Raja Krishnamoorthi, Illinois
    Rod Blum, Iowa                       Jamie Raskin, Maryland
    Jody B. Hice, Georgia                Peter Welch, Vermont
    Steve Russell, Oklahoma              Matthew Cartwright, Pennsylvania
    Glenn Grothman, Wisconsin            Mark DeSaulnier, California
    Will Hurd, Texas                     John Sarbanes, Maryland
    Gary J. Palmer, Alabama
    James Comer, Kentucky
    Paul Mitchell, Michigan

                       Jonathan Skladany, Staff Director
                      Rebecca Edgar, Deputy Staff Director
                        William McKenna General Counsel
                              Drew Feeley, Counsel
                             Kiley Bidelman, Clerk
                     David Rapallo, Minority Staff Director
              Subcommittee on the Interior, Energy and Environment

                       Blake Farenthold, Texas, Chairman
    Paul A. Gosar, Arizona, Vice Chair   Stacey E. Plaskett, Virgin Islands
    Dennis A Ross, Florida                   Ranking Minority Member
    Gary J. Palmer, Alabama              Jamie Raskin, Maryland
    James Comer, Kentucky                (Vacancy)
                                         (Vacancy)
                                     ------

                   Subcommittee on Intergovernmental Affairs

                         Gary Palmer, Alabama, Chairman
    Glenn Grothman, Wisconsin, Vice      Val Butler Demings, Florida,
        Chair                                Ranking Minority Member
    John J. Duncan, Jr., Tennessee       Mark DeSaulnier, California
    Trey Gowdy, South Carolina           (Vacancy)
    Virginia Foxx, North Carolina        (Vacancy)
    Thomas Massie, Kentucky
    Mark Walker, North Carolina

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on May 24, 2017.....................................     1

                                   WITNESSES

    Mr. William Kovacs, Senior Vice President, Environment,
      Technology and Regulatory Affairs, U.S. Chamber of Commerce,
      Washington, D.C.
        Oral Statement...............................................     7
        Written Statement............................................     9
    Ms. Darcy Helmick, Simplot Livestock Co., Grand View, Idaho
        Oral Statement...............................................    25
        Written Statement............................................    27
    Mr. Justin Pidot, Associate Professor, University of Denver Sturm
      College of Law
        Oral Statement...............................................    34
        Written Statement............................................    36
    Mr. Kent Holsinger, Holsinger Law, LLC, Denver, Colorado
        Oral Statement...............................................    55
        Written Statement............................................    57

                                    APPENDIX

    Opening Statement of Chairman Blake Farenthold...................    78

                 EXAMINING `SUE AND SETTLE' AGREEMENTS: PART I

                                  ----------

                            Wednesday, May 24, 2017

                      House of Representatives,
             Subcommittee on the Interior, Energy, and
            Environment Joint with the Subcommittee on
                              Intergovernmental Affairs
                  Committee on Oversight and Government Reform,
                                                       Washington, D.C.
        The subcommittees met, pursuant to call, at 2:08 p.m., in
    Room 2154, Rayburn Office Building, Hon. Hon. Blake Farenthold
    [chairman of the Subcommittee on Interior, Energy, and
    Environment], presiding.
        Present from the Subcommittee on Interior, Energy and
    Environment: Representatives Farenthold, Plaskett.
        Present from the Subcommittee on Intergovernmental Affairs:
    Representatives Palmer, Grothman, Demings, DeSaulnier.
        Also Present: Representative Smith
        Mr. Farenthold. The Subcommittee on the Interior, Energy,
    and the Environment and the Subcommittee on Intergovernmental
    Affairs will come to order.
        Without objection, the chair is authorized to declare a
    recess at any time.
        You all will have to excuse me. I am a little hoarse today.
        Voice. [Off audio.]
        Mr. Farenthold. Oh, I am good. Thank you.
        Today our subcommittee will begin to examine the
    consequences of sue and settle agreements, which have become
    increasingly common in recent years. Sue and settle agreements
    occur behind closed doors, outside the regulatory framework set
    out by the Administrative Procedures Act, a/k/a, the APA, with
    very little transparency, and often appear to thwart
    congressional intent and review.
        Today, we will begin the discussion on sue and settle
    agreements, their impact, and potential solutions to what I
    consider to be an unacceptable and possibly unconstitutional
    expansion of both judicial and executive regulatory power. We
    need a solution that returns legislative authority to Congress,
    and, equally importantly, lets the American people see and have
    input into the process.
        Specifically, today we will examine sue and settle
    agreements that impact environmental policy through the
    Endangered Species Act, the Clean Air Act, and the Clean Water
    Act.
        The APA has long ensured transparency and public engagement
    in the Federal rulemaking process. Federal agencies have
    enacted countless environmental rules and regulations using
    this framework. However, the sue and settle process short
    circuits this long-used and congressionally-created rulemaking
    process.
        Many of our Nation's most famous environmental statutes,
    such as the Clean Air Act or the Endangered Species Act, allow
    for citizen suits, which ensure that the government is held
    accountable to these laws. However, through sue and settle,
    citizens and environmental interest groups have found a way to
    exploit these provisions by suing Federal agencies for failing
    to complete specific actions by a certain date and time, and
    then coming to a favorable friendly settlement with the
    government regulators. These agreements are quietly negotiated
    away from the public eye and finalized by the court.
        While one may argue the merits of the system, it
    unfortunately is susceptible to manipulation and abuse. This
    tactic results in the agency agreeing to prioritize the
    plaintiff's agenda, not Congress' or the American people's. In
    an effort to comply, the agency can inadvertently be forced to
    divert large quantities of their time, money, and other
    resources to filling just one of these consent decrees.
        A prime example of this kind of manipulation was when
    WildEarth Guardians and the Center for Biological Diversity
    proposed that the U.S. Fish and Wildlife Service, or the FWS,
    expand the Endangered Species Act to include more than 720
    additional species. When FWS failed to accomplish this daunting
    task during the necessary time, the two groups sued. The
    negotiated agreement allowed WildEarth Guardians and the Center
    for Biological Diversity to virtually dictate the Agency's
    priorities moving forward, which ultimately cost 75 percent of
    FWS' funds that were allocated to the Endangered Species
    Listing and Critical Habitat designation.
        The sue and settle process creates an unfair system. The
    winners are the small few who manage to manipulate the Federal
    government into doing their bidding. The losers are the
    taxpayers whose hard-earned money goes to pay for attorneys for
    both sides of the case, and focuses agency resources on the
    plaintiff's priority for listing and enforcement, as opposed to
    the other responsibilities of the agency, Congress, and the
    American people.
        Recently, Congressman Doug Collins introduced the Sunshine
    for Regulation and Regulatory Decrees and Settlement Act of
    2017 to increase transparency and public engagement by ensuring
    there is notice and input for public comment. I think this is a
    good first step, and I thank Congressman Collins for
    introducing this bill, and I look forward to exploring
    additional suggestions, solutions, and issues with our panel
    today.
        I would now like to recognize our ranking member, Ms.
    Plaskett, for her opening statement.
        Ms. Plaskett. Thank you, Mr. Chairman, and thank our other
    committee members for being here. And, Chairman Palmer, thank
    you for your work as well.
        Thank you for calling today's hearing and bringing
    attention to the issues regarding sue and settle practices. As
    members of Congress, it is our duty to ensure the safety and
    rights of the American people. It is important that our
    citizens are able to bring suit against the government. It is
    one of the essential factors in our rulemaking process. We must
    hold our government agencies accountable, and this is exactly
    what this committee and citizen suits are designed to do.
        The concept of sue and settle in environmental litigation
    to bypass requirements and normal statutory process is simply
    not as stated by many here in this hearing. Agencies must
    comply with the law as written by Congress, including the
    requirements for notice and comment provided in the
    Administrative Procedures Act. While agencies can commit to a
    schedule for performing their mandatory duties, agencies cannot
    settle litigation by making commitments concerning the
    substance of final regulations they will issue.
        There already are long-established procedures that prevent
    Federal agencies from entering into consent decrees and
    settlement agreements that circumvent these rulemaking
    procedures. These safeguards include standing requirements that
    require concrete adverseness among litigants, the need to
    obtain judicial approval of settlements, and requirements of
    the Administrative Procedure Act that preclude agencies from
    making commitments concerning the substance of future rules.
        The GAO report on the so-called sue and settle phenomenon
    in 2014 largely put to rest many of the claims of impropriety
    in the process. Under President Trump's Administration, private
    companies will benefit substantially if there is, in fact, a
    concept of sue and settle. Private companies will be able to
    use the concept of sue and settle in order to roll back agency
    regulations protecting our environment. However, we do not
    believe that sue and settle, in fact, occurs, and that the
    rulemaking process must, in fact, be there.
        President Trump and his Administration has made it clear
    with his budget proposal that protecting our environment is not
    a priority. President Trump proposed to cut EPA by 31.4
    percent, the main focus of taking care of the oil and chemical
    industries. We should not further burden Federal courts and
    agencies with new obstacles to settlements that will result in
    more protracted litigation.
        I look forward to discussing this topic in more depth, and
    thank you again, Mr. Chairman, for bringing this subject to our
    attention.
        Mr. Farenthold. Thank you. I will now recognize Mr. Palmer,
    the chairman of the Subcommittee on Intergovernmental Affairs,
    for his opening statement.
        Mr. Palmer. Thank you, Mr. Chairman. As noted, today we are
    examining sue and settle agreements between environmental
    advocacy groups and Federal agencies. And I would first like to
    thank our witnesses for appearing, and look forward to your
    testimony and your answers to our questions.
        The sue and settle phenomenon refers to a process where
    outside activist groups will sue the Federal agency for
    violating a provision of Federal law. It is not just Federal
    agencies. It is State and local governments as well. It has
    been going on for quite a while. It first came to my attention
    around 2004 when Senator Lamar Alexander of Tennessee
    introduced the Federal Consent Decree Fairness Act.
        What happens in these lawsuits I think the witnesses will
    know, but I will go ahead and explain that. The parties will
    often choose to settle by entering into a consent decree rather
    than facing a trial. In many of these cases, it is apparent
    that the agencies collaborate beforehand with the groups to set
    up the terms of the decree without public notice or third-party
    input. These are legally binding agreements that are approved
    by a judge, and they are enforceable by contempt, and can only
    be modified by court order, which takes them completely outside
    of the legislative process and the administrative process.
        These agreements can last for decades and end up costing
    more than if the parties had gone to trial. There are numerous
    examples of this, and they are broad in their application,
    whether it is education consent decrees, consent decrees
    involving environmental issues. We have had them in Alabama. As
    a matter of fact, the largest bankruptcy in the history of
    North America is Jefferson County in Alabama that all started
    with a consent decree involving our storm sewer system.
        These agreements have consent provisions that extend beyond
    the scope of the original law violated, and I want to emphasize
    that. Because it is a consent decree, and whether or not the
    defendant is ever in compliance is controlled by a control
    group or a special master, these things can extend beyond the
    original complaint. They are an effective tool for advocacy
    groups to unilaterally dictate the priorities of an agency's
    agenda or a local county commission, or city council, or a
    State for that matter.
        They are also done outside the Administrative Procedures
    Act. In a February 2017 report, the GAO, the Government
    Accountability Office, found that two environmental groups, the
    Center for Biological Diversity and WildEarth Guardians, filed
    more than half of the Endangered Species Act deadline suits
    between 2005 and 2015. According to GAO, these suits resulted
    in more than 1,600 actions affecting 1,441 species in just a
    10-year period.
        Comparatively, the GAO found that only 76 species have been
    delisted since the enactment of the Endangered Species Act.
    Even in these cases, 19 of these species were delisted because
    of data errors in the original listing, and only 47 occurred as
    a result of recovery efforts. This indicates that the structure
    of the Endangered Species Act is not conducive to its purported
    goal.
        These actions place an enormous burden on States, local
    governments, industry stakeholders, and taxpayers who are shut
    out of the negotiations, but are left to foot the bill.
    Moreover, interest groups can petition the government to cover
    their attorney's fees through the Department of Treasury's
    Judgment Fund, which is a permanent, indefinite appropriation
    of taxpayer money for payments of certain final judgments.
    Consequently, American taxpayers are paying the legal costs for
    groups that are suing them.
        This does not even account for the funds that are expended
    by the Department of Justice to provide representation for
    Federal agencies entering into these lawsuits. The public is
    kept largely in the dark throughout the process, and few
    resources are available to inform them of what is happening and
    who is responsible. I daresay the vast majority of the
    residents of Jefferson County had no idea that this all began
    with a consent decree.
        Because of the incomplete data and lack of proper
    categorization, we are unable to fully evaluate the total
    amount taxpayers pay out as a result of settlement agreements.
    For example, in my previous experience, you know, leading an
    Alabama think tank, I was unable to obtain a complete list of
    all Federal consent decrees that apply to the State from the
    Department of Justice because of inadequate record keeping.
    This lack of transparency limits our constitutional duty to
    conduct oversight of management of taxpayer resources.
        I have heard too many stories from State and local
    officials where special interest attorneys dictated critical
    actions ranging from pipe sizes to bridge infrastructure
    instead of engineers and administrators with specific expertise
    or private citizens whose homes and livelihoods were
    compromised. I have heard too many stories where State and
    local governments and their citizens were forced to
    reprioritize billions of dollars in resources by those in
    Washington who claim to be serving the public's greater
    interest. In cases where settlement agreements failed to
    accomplish their stated goal but their terms remain in effect,
    there is absolutely no accountability.
        It is time for the Federal government to move away from
    emphasizing its role as prosecutor or political monitor and
    return to serving as the American people's partner in setting
    priorities that best represent their interests. I am encouraged
    that the committee is highlighting the important aspect of sue
    and settle.
        I look forward to today's hearing as an important first
    step in examining these practices, and I yield back.
        Mr. Farenthold. Thank you very much. I will now recognize
    Ms. Demings, ranking member of the Subcommittee on
    Intergovernmental Affairs, for her opening statement.
        Ms. Demings. Thank you so much, Mr. Chairman, and thank you
    so much to our witnesses for joining us today.
        While this is the first hearing on sue and settle
    agreements in the 115th Congress, it is the fourth hearing that
    departs from the false premise that Federal regulations only
    harm economic development and America's spirit of enterprise.
    If you begin with that false premise, every environmental
    protection regulation is harmful.
        The chemical industry would have us believe that the Obama
    Administration and EPA scientists colluded--colluded-- with
    environmental groups to issue regulations intended to harm
    industry. This is a notion that the Government Accountability
    Office has rejected time and again.
        In the last hearing the committee held on legal settlements
    of environmental lawsuits, a 2011 Government Accountability
    Office report found no discernible trend that would indicate
    collaboration or collusion in lawsuits against the EPA. A
    December 2014 GAO report confirmed this assessment, and found
    that from May 2008 to June 2013, EPA only issued nine rules
    resulting from settlements for rules that were between 10
    months and 23 years delinquent under the mandatory statute
    deadlines. Each of these was subject to robust public comment
    before the final rule was issued.
        Let me be clear. Congress passes a law, and Federal
    agencies issue a rule or regulation. If the EPA or any other
    Federal agency fails to perform a mandatory duty under that
    law, they are susceptible to a legal challenge for violating
    the law that Congress passed. The 2014 GAO report found that
    the majority, if not all, EPA settlements were under the
    decades-old law, the Clean Air Act.
        Another false premise is the inaccurate notion that
    environmental groups are behind most of the litigation against
    the government. In fact, industry trade associations and
    private companies initiated nearly half of all cases filed
    against the EPA between 1995 and 2010. I have not heard my
    Republican colleagues demonstrate equal concern about these
    industry lawsuits.
        For a successful vibrant and modern economy, economic
    development must go hand-in-hand with environmental protection
    and conservation. We certainly know that in Florida, my State,
    where more than 70 percent of the 75 million foreign and
    domestic visitors enjoy Florida's natural resources, including
    the beaches, springs, and hiking trails while in the Sunshine
    State. When the government is in violation of the law,
    settlement agreements can prevent prolonged trials and
    staggering legal expenses, particularly at agencies already
    struggling to carry out their mission.
        I thank you today, witnesses, for sharing your testimony,
    and I look forward to continuing this very important
    discussion.
        Thank you, Mr. Chairman, and I yield back.
        Mr. Farenthold. Thank you. I will hold the record open for
    5 legislative days for members who would like to submit a
    written opening statement.
        Mr. Farenthold. I would also now like to recognize our
    panel of witnesses. I am pleased to welcome Mr. William Kovacs,
    senior vice president of environment, technology, and
    regulatory affairs with the U.S. Chamber of Commerce. We have
    also got Ms. Darcy Helmick. She is with Simplot Livestock
    Company in Grand View, Idaho. Mr. Kent Holsinger. Is that how
    you say it?
        Mr. Holsinger. Holsinger.
        Mr. Farenthold. Holsinger Law Firm, LLC in Denver,
    Colorado. And we have Mr. Justin Pidot. Is that correct? He is
    the associate professor of law at the Denver Sturm College of
    Law in Denver, Colorado.
        Welcome to all of you.
        Pursuant to committee rules, all witnesses will be sworn
    before they testify. Would you please rise and raise your right
    hands?
        Do you solemnly swear or affirm that the testimony you are
    about to give will be the truth, the whole truth, and nothing
    but the truth?
        [Chorus of ayes.]
        Mr. Farenthold. Let the record reflect that all witnesses
    answered in the affirmative. You may be seated.
        In order to allow time for discussion, we would appreciate
    it if you would limit your oral testimony to 5 minutes. Your
    entire written statement will be made part of the record.
        You will find in front of you you have a timer that will
    count down. As you are getting near the end, the light will go
    from green to yellow and then eventually to red. If you would
    wrap it up then, we would appreciate it. I am sure all the
    members of the panel would definitely like to ask you guys some
    questions.
        So, we will start with Mr. Kovacs. You are recognized for 5
    minutes. Sir, bring the microphone nice and close. We are
    budget conscious here, so we bought the inexpensive mics that
    you got to get real close to your mouth.

                           WITNESS STATEMENTS

                      STATEMENT OF WILLIAM KOVACS

        Mr. Kovacs. Thank you, Chairman Farenthold, and Chairman
    Palmer, Ranking Members Plaskett and Demings, for inviting me
    to discuss examining the sue and settle agreements.
        As many of you have said, sue and settle occurs when an
    agency agrees to the demands of an interest group by
    voluntarily entering into an approved consent decree. And it's
    the consent decree that really changes a little bit of what is
    going on because it's not a settlement agreement. We can get
    into that later. But it binds the agency to future actions, and
    sometimes it binds future Administrations.
        Here's how the problem starts. An Agency like EPA, and
    we'll just start with that, they miss somewhere between 84
    percent and 96 percent of its deadlines, and once a deadline is
    missed, the interest group can sue the Agency. And since EPA
    misses virtually all of its deadlines, the interest group can
    go in and select which rules out of hundreds of rules it wants
    to advance. It's through this selection process that the
    interest groups establish the priorities of the Agency.
    Moreover, by using a consent decree, the only parties that can
    enforce the consent decree is the interest group, the agency,
    or the court. The public is completely out of the process.
        Democrat and Republican Administrations have for years used
    the sue and settle process. At times it may be needed as a
    tool. We're not against the entire process. However, its use in
    the last several years has dramatically increased, both in the
    number of consent decrees filed, but also in the types of
    actions covered. For example, by using sue and settle tactics,
    groups have been able to expand their influence over agency
    priorities from prioritizing the issuance of regulations to the
    imposition of Federal implementation plans instead of State
    plans, and to the imposition of permanent conditions on private
    parties.
        When the Chamber first looked at the sue and settle process
    and these consent decrees, we were told by EPA and Justice that
    they did not maintain a unified database for such lawsuits, and
    we were assured that there were very few. We undertook
    research, which culminated in the first report, Sue and Settle:
    Regulating Behind Closed Doors, which lists well over a hundred
    new regulations from these consent decrees between the years
    2009 and 2012. Our most recent report, Damage Done 2013 to
    2016, found that there were actually more Clean Air Act sue and
    settle agreements filed between 2013 and 2016 than between 2009
    and 2012. It's about 77 to 60.
        We recognize that Administrator Pruitt has stated he's
    going to end the process of sue and settle. However, it's still
    a very important issue, and legislation is needed because the
    practice is something that can be repetitive in the future.
        While there are several ways to address this issue, the
    simplest approach is found in H.R. 469, the Sunshine for
    Regulations and Regulatory Decrees Settlement Act, which
    focuses on transparency and public participation. This is
    really crucial. We are not trying to change any of the law in
    terms of how the process goes or the discretion of the
    agencies. What we're trying to do under 469 is to bring
    transparency to the process.
        And H.R. 469 does three things. One, it provides a 60-day
    notice to the public so that the public can provide comments to
    the agency on the consent decree. Second, it's requiring the
    agency to provide a summary of the public's comments to the
    court so the court can review the comments before it signs off
    on the consent decree. And finally, it allows interested
    parties the right to intervene if they can establish that their
    rights are not being adequately protected by the defending
    party.
        The bottom line is that transparency and public
    participation should apply when agencies are making public
    policy decisions, regardless of who is in the White House or
    who controls the agencies.
        Thank you very much, and I look forward to answering
    questions.
        [Prepared statement of Mr. Kovacs follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Farenthold. Thank you very much.
        Ms. Helmick, you are up next for 5 minutes.

                       STATEMENT OF DARCY HELMICK

        Ms. Helmick. Chairman Farenthold, Chairman Palmer, Ranking
    Member Plaskett, Ranking Member Demings, and members of the
    subcommittees, thank you for inviting me to appear before you
    today.
        My name is Darcy Helmick. I'm a 4th generation rancher from
    Idaho. I ranch with my parents and my brother, and my
    grandparents and extended family also ranch in Idaho where they
    have done so for more than a hundred years. I'm following along
    in those footsteps. I recently bought 30 of my own cows, and
    I'm working with my brother on transitioning into more
    responsibility on my family's operation.
        Professionally, I'm the land manager for Simplot Land &
    Livestock based in Grand View, Idaho. In that capacity, I
    oversee grazing permits in four States: Idaho, Oregon, Nevada,
    and Utah. In my experience dealing with the Federal grazing
    system and western land use in general, offensive litigation
    tactics by outside activist groups have served to totally
    derail business operations.
        The legal process is a crucially important part of owning a
    Federal lands grazing permit. While it is critical that we
    maintain the right of citizens to litigate when necessary,
    reform is needed to prevent that right from being abused or
    exploited. Federal agencies must be able to perform job
    activities that maintain protection of multiple use, and ensure
    the intent of Congress during and in the wake of offensive
    litigation. It is also critical that permitted public land
    users have a role in any settlement agreements, and that
    Federal employees at a local level have input.
        Unreasonable timelines have become the norm, and, once
    imposed during settlement, are rarely reached. The
    repercussions of those missed timelines heavily impact
    permitted public land users, and result in a level of
    uncertainty that is prohibitive in any business environment.
    Ultimately, this is often the goal of these litigants.
        I have two brief examples of this. The first one is the
    Jarbidge litigation case based just outside of Twin Falls,
    Idaho. There was a permit renewal process where a special
    interest group litigated over the permit renewals. That
    resulted in an injunction against livestock grazing on 28
    grazing allotments. We were able to enter into a stipulated
    settlement agreement with all parties, requiring the Agency to
    complete some tasks before a deadline of February 28th, 2011.
        Subsequent litigation from the same environmental group as
    well as some wildfires prevented the BLM from completing that
    task, which resulted in the injunction coming back, and
    livestock having to be removed from all 28 of all those
    allotments while further litigation was completed, which
    allowed us to return to the grazing allotments just over 80
    days later.
        A second example is with the Endangered Species Act, which
    was mentioned earlier, that had to do with bull trout habitat
    on grazing allotments. Although the Forest Service was already
    in the process of re-initiating informal consultation, an
    outside interest group litigated against it. We as the permit
    holders joined with the Forest Service and were successful in
    the litigation.
        However, because of the time that was obligated to
    litigation, the Forest Service and Fish and Wildlife Service
    were not able to complete informal consultation before the
    existing consultation expired. Therefore, before our turnout
    date in 2017, which was May 8th, the Forest Service called me
    and told me I wasn't authorized to turn cattle out until that
    consultation was completed. Those cows are still at the gate
    waiting to be turned out as we sit here today.
        The chilling effects of these sue and settle tactics are
    felt throughout our communities. Not only is litigation
    expensive, the cost to the communities go far beyond legal
    costs. While litigation directly or indirectly forces a removal
    or reduction of cattle, families are forced to make decisions
    that impact their bottom line and potential ability to continue
    operations.
        These tactics also serve to limit young producers from
    entering the industry, which will inevitably lead to further
    erosion of the footprint of ranching in the West as well as
    open space. As a 4th generation cattle producer, it is in my
    blood to continue with my family business. My experience
    dealing with litigation and public lands gives me pause when
    considering these options.
        It is critical that we as Americans maintain the ability to
    sue our government agencies when warranted, and it is also
    critical that impacted stakeholders have a seat at the table
    when other parties litigate to ensure our investments are
    protected and we have some kind of certainty moving forward.
    But above all, we must ensure the integrity of the entire
    system by preventing abuse and manipulation by motivated
    activist groups.
        The issue of sue and settle litigation abuse is one that
    simply must be addressed if family ranching operations and
    rural economies are going to survive another generation. Thank
    you.
        [Prepared statement of Ms. Helmick follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Farenthold. Thank you.
        Mr. Pidot, you are up for 5.

                       STATEMENT OF JUSTIN PIDOT

        Mr. Pidot. Thank you, Mr. Chairman.
        Mr. Farenthold. We can barely hear you there. Bring that
    microphone in real close.
        Mr. Pidot. Thank you, Mr. Chairman, Chairman Palmer,
    Ranking Member Plaskett, Ranking Member Demings. I appreciate
    the time to talk with you today.
        My name is Justin Pidot. I'm an associate professor at the
    University of Denver Sturm College of Law, where I teach and
    write about issues of environmental law, natural resources, and
    administrative law. I also served as a deputy solicitor at the
    Department of Interior during the Obama Administration, and was
    an appellate lawyer at the Environment and Natural Resources
    Division of DOJ at the Bush Administration and beginning of the
    Obama Administration.
        The subject of this hearing today, the so-called sue and
    settle phenomenon, to my mind, respectfully to my colleagues on
    the panel, isn't really a phenomenon at all. I'm not denying
    that the United States enters into settlements. Of course the
    United States enters into settlements. It enters into lots of
    settlements, and it enters into settlements across all
    contexts.
        Settlements have become a core component of the American
    justice system. All we need to do is look at the docket of the
    Federal courts to see one reason this is so. They have a
    backlog of historic proportions when it comes to civil
    litigation. So, in all contexts, parties look for other means
    of resolving disputes. And every lawyer knows that our clients'
    best interests often lie with negotiating rather than
    litigating.
        Now, I say that there's no sue and settle phenomenon also
    because environmental settlements are simply the result of
    hardworking civil servants at the Department of Justice and at
    the client agencies whom they represent, doing their best to
    advance the interests of the United States. There's nothing
    nefarious, inappropriate, or even surprising about
    environmental settlements.
        In fact, in my experience, lawyers for the United States,
    both at the Department of Justice and at the Department of
    Interior, consider precisely the same factors when they think
    about settlements that private lawyers think about. They think
    about litigation risk. They think about the cost that
    continuing to litigate will impose. And they think about
    whether or not that risk and those costs justify making a
    particular concession to the party that has brought the suit.
        Now, in some ways government lawyers are different because
    government lawyers also think long and hard about whether the
    terms in a settlement circumvent administrative law constraints
    or public participation requirements. This is the result of
    both the institutional role that the Department of Justice
    plays. Every settlement, every consent decree is signed off on
    at the Department of Justice by a lawyer who is not sitting in
    the client agency by a lawyer who's thinking about the rule of
    law, who's thinking about the long-term institutional
    credibility of the United States. And indeed, settlements and
    consent decrees must be signed off on at a relatively high
    level at the Department of Justice.
        The Department of Justice also has specific policies that
    constrain the kinds of settlements and consent decrees that the
    government can enter into, and specifically disallows
    settlements that would make substantive commitments that should
    occur through notice and comment rulemaking. And despite what
    Administrator Pruitt says, I can't imagine the new
    Administration will do anything different. When a lawyer is
    faced with a case where the risk of success is very low, where
    the cost of litigation is very high, and where you can make a
    deal that is workable for your agency, there really is no other
    path to pursue to provide competent representation.
        Now instead, most of the concerns that we've heard today,
    to my ears at least, sound less like concerns about settlements
    and more like concerns about environmental law broadly. For
    example, in the written testimony, concerns were raised about
    the requirement that Fish and Wildlife Service respond to
    petitions asking it to list species on the Endangered Species
    List. The Section 4 process is not an issue of settlement. It's
    an issue of what substantive law enacted by Congress requires.
        The same thing in the Clean Air Act. The Clean Air Act
    creates a particular relationship between Federal agencies and
    State agencies where the Federal government has oversight over
    State agencies. And so, there, too, once again, we had the pure
    application of the Clean Air Act.
        Now, impeding these efforts, impeding the Federal
    government from doing its job as a matter of satisfying its
    substantive obligations in the guise of attacking process and
    litigation tactics upsets out Nation's commitment to the rule
    of law, because when citizen groups or other groups bring a
    lawsuit and they are going to succeed, that means the Federal
    government is acting illegally. And in that circumstance,
    preventing that lawsuit from occurring suggests that the
    government does not need to be held accountable.
        And if Congress wants to debate those substantive
    environmental law issues, then that's the debate that we should
    be having, not sort of a debate about whether or not a
    particular settlement was somehow collusive in a way that has
    never been evidenced.
        Thank you.
        [Prepared statement of Mr. Pidot follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Farenthold. Thank you.
        Mr. Holsinger, you are recognized for 5 minutes, sir.

                      STATEMENT OF KENT HOLSINGER

        Mr. Holsinger. Thank you, Mr. Chairman, Mr. Chairman,
    Ranking Members, members of the subcommittees. My name is Kent
    Holsinger. I'm the managing partner of Holsinger Law, LLC.
    We're a small natural resources law firm based in Denver,
    Colorado. We represent clients on matters related to lands,
    wildlife, and water law, and in that capacity, we've seen
    firsthand the effectS of sue and settle.
        It's an honor to testify on this important matter.
        I think one of the most significant challenges in this
    regard is that we have a small number of radical environmental
    groups that are gaming the system at the taxpayers' expense.
    And as a result, we're wasting our scarce resources that could
    be spent on real on-the-ground conservation efforts, and that
    needs to change.
        Ironically, many of these groups are creating their own
    problems. As an example, the Center for Biological Diversity
    and WildEarth Guardians have been very adept at using Section 4
    under the Endangered Species Act. It provides that any person
    can petition to list a species. But these groups and others
    over the past 10 years or so have started to petition to list
    hundreds of species at a time, and that's just not possible for
    the agencies to handle, the Fish and Wildlife Service, NOAA
    Fisheries.
        As a result, they miss deadlines, and these same
    environmental groups that petition then sue over the logjam
    that they've created. They settle often over a deadline, rinse
    and repeat again and again and again. I'll spend a lot of my
    remarks on statistics from groups like these.
        As an example, 2000 to 2009, CBD, 409 lawsuits. WildEarth
    Guardians, 180. 2009 to 2012, the same groups, CBD, 117
    lawsuits, WildEarth Guardians, 55. From mid-March of 2017, the
    Center for Biological Diversity has been a party to, filed, or
    co-filed over 16 lawsuits. Now, that number might be wrong. I
    didn't look Monday, or Tuesday, or today. It could be higher.
        We've reviewed Federal court records for these groups
    specifically since electronic records were first kept beginning
    back in 1990. These two groups--now WildEarth Guardians used to
    be Forest Guardians Incentive Group--have been party to over
    1,500 lawsuits, most of which against the Departments of
    Interior and Agriculture, most of which citing the Endangered
    Species Act as a claim.
        Ironically, these groups are also collecting grants from
    the government. WildEarth Guardians in 2016, $800,000 in
    Federal grants. 2015, $500,000 in Federal grants. NRDC, another
    litigious group, collected $6.5 million from EPA over the past
    several years.
        According to the GAO, some three organizations are getting
    about 40 percent, 41 percent of all the attorney fees on sue
    and settle agreements. In one particularly egregious case, NRDC
    spent about 6 years litigating in its case against the Interior
    Department, winning a pyrrhic victory and remand of a
    biological opinion and collecting nearly $2 million in
    taxpayer-funded attorney fees.
        The regulatory costs, as other witnesses have mentioned,
    are astronomic. We don't know for certain what they might be
    because no one keeps those records. That's one of the reasons
    that the Sunshine Act that other folks have talked about I urge
    the subcommittees to support. But these regulatory costs are
    enormous as a result of the litigation, and reforms are long
    overdue.
        Transparency is sorely needed. There need to be records
    kept about who's filing suit, what sort of settlements they're
    collecting, who's earning fees and how. These groups are also
    abusing the opportunity to earn fees under the Equal Access to
    Justice Act with hourly rates that I've personally seen over
    $500 per hour. And these groups, many of them, their budgets
    dwarf those of the clients that we typically represent, even
    those in the oil and gas trade associations.
        So, I again appreciate very much the opportunity to testify
    today. I urge support to remove the perverse incentives for
    litigation in environmental laws, the Equal Access to Justice,
    the Endangered Species Act, and other Federal laws.
        Thank you.
        [Prepared statement of Mr. Holsinger follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Farenthold. Thank you, and I will recognize myself now
    for 5 minutes of questioning.
        First of all, Ms. Helmick, I got to know what happens to
    the cattle that are sitting out at the gate waiting to get in
    to graze. My understanding is, you know, once you have grazed a
    pasture to a certain level, it is time to move the cattle on or
    start feeding. What do you end up doing with these cattle that
    you cannot get on to fresh pasture?
        Ms. Helmick. Correct, thank you for the question. The first
    example that I mentioned is a very unique example because the
    deadline expired at the end of the grazing year, which is
    February 28th. What we have going on on February 28th is that
    is when baby calves are being born. It is also a time of year
    when usually the weather is not the best.
        We were able to get a small extension until May 1 to allow
    those baby calves to get a little bigger, but then what we had
    to do was find property elsewhere to take those cattle, take
    trucks out to the location, gather the cattle, which incurs
    additional stress and health issues to the cattle, and then
    hauled them to some private lands.
        Now, we feel blessed that we are large enough that we had
    enough private property, and the injunction only lasted 80
    days, which allowed us to have adequate excess feed to provide
    for them. But in other cases, you are absolutely right. They
    would have to be moved to a location where they would be fed
    hay or some other means of forage.
        Mr. Farenthold. All right. Thank you. Mr. Pidot, you
    testified that you felt like this was a perfectly legitimate
    way to do this because the agencies were not getting the job
    done in a timely fashion following the statute. That is kind of
    my summary of it. But does not defending these lawsuits and
    focusing the resources, as the consent decrees and settlement
    agreements dictate, actually make it more difficult for them to
    go on about business as usual that they should be doing under
    the statute as opposed to having to deal with all the
    litigation and results of that litigation?
        Mr. Pidot. Thank you for the question, Mr. Chairman.
    Respectfully, I do not think so. Once an agency has been sued,
    if it is facing, as is often the case, an almost sure loss. I
    mean, in these deadlines lawsuits, any litigator will tell you
    the United States is going to lose the lawsuit. What is going
    to happen if they lose the lawsuit? The district court judge is
    going to enter an injunction, and that injunction is going to
    impose deadlines and procedures on the agency for reaching a
    decision on the timeline that the district court judge wants.
    If ----
        Mr. Farenthold. All right. So, they have already missed the
    deadline Congress has put on them.
        Mr. Pidot. Yep, and a district court judge will look at
    that and be, let us say, displeased that the agency has missed
    the congressional deadline, and may well impose a very short
    deadline.
        Mr. Farenthold. And you say the agencies, you know, let me
    back up. I am a lawyer, and when you go to court, you
    traditionally have sides with very adverse interests. I mean,
    to the point, you know, you sometimes have to hold them off
    from getting into fisticuffs on the courthouse steps. But both
    these activist groups and whatever agency, how are their
    interests dissimilar enough that you have a true case or
    conflict there?
        This is what concerns me is they both want to get the job
    done with protecting the environment, let us say, since we are
    focusing on environment, though this goes for a variety of
    issues. Where is the conflict?
        Mr. Pidot. Well, Mr. Chairman, I think if you represent the
    United States, you might personally feel like you would like to
    protect the environment. But concretely in your job, your job
    is to take the obligations that Congress has imposed on the
    agency through various statutes, and to the best of your
    ability ensure that the agency is pursuing those objectives in
    a way that is legally sound.
        Now, outside groups, and that is true whether or not you
    have an oil and gas company coming and seeking a permit or CBD
    coming and making a petition. So, the adversity is that in both
    cases you have an outside group, oil and gas companies seeking
    a permit, CBD seeking a listing, which simply want the
    substantive end result.
        Mr. Farenthold. I am running out of time. I would like to
    get Mr. Holsinger's take on that. Do you think there is enough
    there? I noticed, Ms. Helmick, when that litigation came, she
    joined the suit, her company probably at her expense. But I
    would be interested in your take on whether there is a true
    controversy there and enough difference of opinion that you end
    up with an arm's length settlement.
        Mr. Holsinger. Mr. Chairman, one of the things that has
    boggled my mind for some time goes to the example you cited in
    your opening statement, the 2011 settlement agreement between
    WildEarth Guardians and Center for Biological Diversity.
    Section 4 of the ESA governs listing and delisting. It provides
    that you can petition to list a species. Why the Agency did not
    say that is it, that is all you get, WildEarth Guardians,
    Center for Biological Diversity, has always been beyond me.
        So, I have long wondered if that is a circumstance where
    maybe the Agency folks, some of the Agency folks, did not like
    the idea of having to commit to list an additional 700 and some
    species where there is only 1,600 or so to start with.
        Mr. Farenthold. All right. Well, I see I am out of time. If
    we have time to do a second round, I will ask some more
    questions. We will go to Ms. Plaskett now for her 5 minutes.
        Ms. Plaskett. Thank you, Mr. Chairman. And I just wanted to
    take that discussion a little further that the chairman brought
    up in this notion of an arm's length litigation. You know, the
    purpose of the EPA is to make our environment cleaner, protect
    human health, and protect wildlife, we are automatically
    assuming that that is very much squarely within radical
    environmental groups. I do not know if that is necessarily the
    case.
        I live in a jurisdiction which has had major friction with
    EPA, particularly over listings of wildlife because it in some
    way impedes our development when they have listings of coral
    that allow us not to do dredging or to create hotels or resorts
    in the area. And we are competing with the rest of the
    Caribbean, which does not have EPA and does not have the
    restrictions that we have. That creates conflict.
        But I want to know in a new Administration, such as the new
    EPA director, Director Pruitt, if an oil or chemical company
    were to bring a suit against EPA, are we saying now because of
    the teachings or the philosophy of President Trump to restrict
    environmental, you know, Mr. Pidot, would you say that that was
    an arm's length lawsuit if they were to bring a lawsuit in that
    matter, or Mr. Holsinger, would you say that that would be then
    an inappropriate person, or would that be for a judge to
    determine if they were proper litigants in a matter?
        Mr. Pidot. Well, if you do not mind me answering the first
    quickly. I think that the history of the Department of Justice
    has been one of incredible integrity, committed civil servants
    who keep their eye on the rule of law to my mind. And I would
    expect that people at the Department of Justice would maintain
    that tradition moving forward, and that settlement practices
    would continue to be the kind of practices that civil servants
    can be proud of when the interests of the United States are
    being represented zealously by lawyers.
        Now, I guess that could change, but I would need to see a
    pretty robust factual record to suggest that something
    fundamental had changed about the way the Federal government
    went about its business. And I have not seen evidence of that
    to date.
        Mr. Holsinger. Madam Ranking Member, what we have not seen,
    what I have not seen, is a history of the abuse of these
    provisions of the environmental laws on the side of industry as
    we have on the side of these environmental groups. And I named
    two in particular that over 1,500 times have litigated these
    issues. I know of no corollary anywhere, so clearly this is an
    example of these folks, a very small number of folks, that are
    simply gaming the system.
        Ms. Plaskett. By that, we are making the assumption that
    the lawsuits can actually change policy of the EPA. Are we
    saying that in the lawsuits that the settlements allow EPA to
    actually change the policy, or is it related simply to what you
    have stated, which was, in fact, the timing by which they make
    the reviews?
        Mr. Holsinger. Well, in these cases that I cited, it is
    mostly against the Departments of Agriculture and Interior, and
    many of them on deadline issues.
        Ms. Plaskett. So, those cases were not EPA specifically.
        Mr. Holsinger. That is correct.
        Ms. Plaskett. Okay.
        Mr. Holsinger. Most of them were not.
        Ms. Plaskett. All right. So, GAO rejects the notion of sue
    and settle, and has stated time and time again, and here is a
    quote, a 2011 GAO report regarding an environmental case's
    status, ``No trend was discernible in the number of
    environmental cases brought by EPA as the number of cases filed
    in Federal court varied over time.'' The Government
    Accountability Office even confirms that these settlements
    almost never impact the ultimate outcome of how an agency acts.
    In a December 2014 report, GAO stated, ``EPA issued 32 major
    rules from May 2008 through June of 2013. According to EPA
    officials, the agency issued nine of these rules following
    settlements in deadline suits.''
        Mr. Pidot--``T'' is silent, right? Very French. Were you
    aware that GAO concluded that settlements almost never impact
    the final rule in agency issues?
        Mr. Pidot. I was aware, Madam Ranking Member, and it does
    comport with my experience while working for the Federal
    government.
        Ms. Plaskett. And were you aware that the GAO concluded
    that the effect of these settlements is to require an agency to
    make a decision, yes or no, up or down?
        Mr. Pidot. Yes, that was my experience as well, and I was
    aware that GAO had made that conclusion.
        Ms. Plaskett. You know, and one of the things we have not
    discussed in the sue and settle, the supposed phenomenon, and
    the issue of these deadlines and EPA not meeting it, is it true
    that EPA is unable to complete these reviews on time, and that
    they are consistently underfunded and under resourced? I do not
    know if any of you have a question with regard to that or a
    response.
        Mr. Pidot. Well, if the question for me, I mean, I think,
    Madam Ranking Member, you are correct that one of the
    challenges facing EPA and the Fish and Wildlife Service is
    consistent underfunding, such that the enormous number of
    obligations that have been imposed on the agencies by Congress
    often are not met. But that to me has nothing to do with
    lawsuits or settlements. It is about congressional objectives
    established in statutes, and in agencies that have not been
    given enough capacity to meet those objectives.
        Ms. Plaskett. Thank you very much. Mr. Chairman, thank you
    for your indulgence.
        Mr. Farenthold. No problem. Mr. Palmer, you are now
    recognized for 5 minutes.
        Mr. Palmer. Thank you, Mr. Chairman. Mr. Holsinger,
    listening to the testimony and listening to the questions and
    responses, I want to get this back what I think is the real
    problem. I understand there is a legitimate role for consent
    decrees and private suits, you know, outside the public realm,
    and I understand there is at times a legitimate role, forum
    involving government. But I think we are currently in a
    situation where we are outside what would be acceptable.
        So, my question is do you believe that consent decrees that
    impose rules or do lawmaking and appropriate taxpayer funds
    outside of the elected government--Congress, State
    legislatures, county commissions, city councils--bless you.
        Ms. Plaskett. Thank you.
        Mr. Palmer. We will strike that from the record.
        Ms. Plaskett. Do not strike that. I need that blessing.
        Mr. Palmer. Okay. Reclaiming my time. Let me restate this,
    that where lawmaking and appropriating is taking place outside
    of elected government, whether that is Congress, State
    legislatures, county commissions, city councils, that it could
    deny people their right to representative government.
        Mr. Holsinger. Yes. Thank you, Mr. Chairman. I agree
    wholeheartedly, and, in fact, a couple of examples come to
    mind. We have been in the natural resources field in the West
    for a little over a decade now, and in that time we have been
    involved in about a dozen Federal court cases, give or take.
    Several of those were cases brought by environmental groups in
    which we intervened to try to have a seat at the table in
    litigation.
        And in many of those instances, the Administration, in
    settlement negotiations with the plaintiff only, cut a deal to
    do something as a result of the litigation, which even we as
    litigants in the case had no knowledge of, no opportunity to
    participate in, let alone the public. And back to the example
    of the 2011 settlement with U.S. Fish and Wildlife Service.
    That completely changed the direction of the Agency, their
    priorities, and what they spent a huge amount of their time and
    resources on.
        So, those are great examples of instances where sue and
    settle led to real regulatory impacts that the rest of had no
    opportunity to participate in.
        Mr. Palmer. So, the bottom line is, and I have seen this
    played out numerous times, is that you have got government
    agencies, whether at the Federal, State, or local level, that
    are being run by attorneys and judges rather than mayors, and
    governors, and elected representatives. And, you know, I have a
    high regard for the folks that work at the Department of
    Justice, but with all due respect, Mr. Pidot, they do not have
    legislative appropriated power. That is reserved to the elected
    representatives of the people.
        That is the big issue here. It is really not about
    regulations and environmental law. It is about who makes the
    law. It is about who enforces the law, who appropriates the
    money. The Department of Justice's responsibility is to enforce
    the law. It is not to make law. It is not to enter into a
    private agreement with outside groups outside the legislative
    process.
        And I think what we are really focused on here is how do we
    restore representative government to the people at every level.
    That is a huge problem because, as I say, you have got these
    lawyers and judges, and some of these decrees have gone on for
    decades. And most of the people, they have gone on so long that
    the voters do not even know they exist.
        So, I would like to ask you, Mr. Pidot, would you support
    date certain sunset dates for consent decrees?
        Mr. Pidot. Would you repeat the question? I am sorry,
    Chairman Palmer.
        Mr. Palmer. Do you support date certain sunset dates for
    consent decrees? That is a yes or no. Okay.
        Mr. Pidot. Yes, in some circumstances. I mean, I think it
    really depends on ----
        Mr. Palmer. Well, why would you not in any circumstance? If
    there is a specific remedy to achieve the objectives of the
    litigation, why could we not have a date certain? I mean, why
    would we, for instance, in a State have a governor get elected
    to office that inherits a consent decree with on opportunity
    whatsoever to get a remedy to that so they get out from under
    that?
        Mr. Pidot. Well, Mr. Chairman, can I give you an example of
    where I would uncomfortable with a date certain? I think maybe
    in contrast it will illuminate my thoughts.
        Mr. Palmer. May I extend my time, Mr. Chairman?
        Mr. Farenthold. Without objection.
        Mr. Palmer. Go ahead.
        Mr. Farenthold. I will give you another minute.
        Mr. Pidot. So, for example, there was a consent decree
    entered against Reserve Mining Company in Minnesota dealing
    with a discharge of asbestos into the waters of Lake Michigan,
    I believe. It was not a date certain consent decree because
    what was agreed to in the consent decree is that the company
    going into the future would never discharge asbestos in this
    particular way again. And so, in a circumstance like that, how
    do ----
        Mr. Palmer. But that does not mitigate against having a
    date certain for this because the issue here is whether or they
    are not they are in compliance. If they are not in compliance,
    they are still outside the law, and our agencies have the
    ability to enforce that law. Let me ask you this. Do you
    support defining compliance language so specifically that it is
    clear that a decree requirement has been fulfilled, because
    that would apply to your example.
        Mr. Pidot. I have not seen compliance language that is so
    specific in any settlement with the United States ----
        Mr. Palmer. That is the problem. You do not define it, and
    it goes on and on and on, and the taxpayers are on the hook for
    it and do not even know it. I thank you for your indulgence,
    Mr. Chairman.
        Mr. Farenthold. Thank you. We will now recognize Ms.
    Demings for her 5 minutes of questioning.
        Ms. Demings. Thank you so much, Mr. Chairman. Mr.
    Holsinger, in your testimony here today, I believe that you
    said that many of the advocacy groups that bring suits against
    the Federal government also collect hundreds of thousands of
    dollars in grants. Do you believe that groups who bring suits
    because they feel the Federal government has violated the law
    in some way should not be entitled to receive Federal grants?
        Mr. Holsinger. Not necessarily, Ranking Member. But what I
    do believe is we have certain groups that are absolutely ----
        Ms. Demings. I just want to understand your reason for
    making that statement today in this hearing.
        Mr. Holsinger. Right. So, these two particular groups that
    I mentioned, Center for Biological Diversity and WildEarth
    Guardians, are the most litigious environmental groups that I
    have ever seen in any context whatsoever with 1,500 lawsuits
    over the past few decades. I have a hard time grappling with
    the notion that they should be receiving government grants
    while they are in an endless cycle of litigation against the
    Federal government.
        Ms. Demings. You also said that 41 percent of all attorney
    fees are collected, about 41 percent, in the cases. As a
    practicing attorney, have you ever claimed or recovered
    attorney fees under a Federal statute that provides for a
    market-based recovery of reasonable attorney fees?
        Mr. Holsinger. Ranking Member, the statistic was that 41
    percent of all the attorney fees collected under the Equal
    Access to Justice Act were to select, I think, three
    environmental groups. So, again, these are folks that are suing
    over and over again.
        Ms. Demings. As a practicing attorney, have you ever
    claimed or recovered attorney fees under a Federal statute that
    provides for market-based recovery of reasonable attorney fees?
        Mr. Holsinger. Yes, we have. We filed suit under the
    Freedom of Information Act when agencies failed to divulge
    information that they were already required to make public. And
    we did have settlements agreements in regards to two of those
    cases.
        Ms. Demings. Are your attorney rates above or under the
    attorney cap or fee cap you are advocating for today?
        Mr. Holsinger. My rates are far below what I have seen
    environmental groups collect, but they are above the fee cap,
    and we did not use the Equal Access to Justice Act.
        Ms. Demings. Please give your answer again.
        Mr. Holsinger. Yes, our rates are far below what I have
    seen environmental groups collect under the Equal Access for
    Justice Act, and in our particular circumstance, we negotiated
    agreements over fees. I cannot talk about the terms pursuant to
    the court orders, but I can tell you that they were for a
    fraction of the time and expense that we spent on the cases.
        Ms. Demings. Mr. Pidot, is it not a fact that most
    litigation today is brought by corporations and not
    environmental groups?
        Mr. Pidot. The evidence that I am aware of supports that,
    Ranking Member.
        Ms. Demings. Mr. Holsinger, when private companies sue the
    EPA, will you maintain that the EPA should not settle these
    cases?
        Mr. Holsinger. No, not necessarily. What I have an issue
    with is groups that are suing thousands of times over
    meaningless deadlines.
        Ms. Demings. Mr. Pidot, litigants often settle their
    disputes out of court rather than engage in litigation. Is that
    correct?
        Mr. Pidot. Yes, ma'am.
        Ms. Demings. They do this to save time and money in
    addition to avoiding, I believe, avoiding the risk of adverse
    rulings. Would you say that is probably correct as well?
        Mr. Pidot. Yes.
        Ms. Demings. For example, in the context of the ESA,
    settlements have allowed the Fish and Wildlife Service to focus
    on species recovery work as opposed to spending time in court.
        Mr. Pidot. I think that is exactly right and exactly the
    purpose of the settlements that have been discussed.
        Ms. Demings. Do you think that this is a good practice for
    the Federal government to save taxpayers money by settling
    cases that would otherwise result in additional litigation
    costs?
        Mr. Pidot. Absolutely, and furthermore, the Endangered
    Species Act is concerned with every species. And the fact that
    there are thousands of species that need protection under the
    Endangered Species Act is not an indicator that is what is
    broken is the fact that people are filing suit. What is broken
    is that we have not been able to adequately conserve these
    species such that they do not need listing.
        So, I see the problem, I think, backwards from my
    colleague, and see this as really a failure on the part of the
    Federal government. And these are interest groups trying to
    hold the agency accountable to what Congress directed it to do.
        Ms. Demings. Thank you so much, Mr. Chairman. I yield back.
        Mr. Farenthold. Thank you, and I will recognize the
    gentleman from Wisconsin from 5 minutes.
        Mr. Grothman. Yeah, could either Mr. Kovacs or Mr.
    Holsinger give me examples of some of these suits, how they
    affected a private property owner, like Ms. Helmick? Give me a
    couple of examples.
        Mr. Holsinger. Yes, as an example, the 2011 settlement
    agreement with the Fish and Wildlife Service that radically
    altered the Agency's priorities, its budgets, its listing
    program, led to decisions and very short timelines to list or
    not list species, one of which was the Gunnison sage grouse
    that was listed in Colorado on this incredibly abbreviated
    timeline dictated by the settlement agreement itself, which I
    think is absolutely contrary to the statutory mandate that
    these decisions be made by the best available science.
        As a result, private landowners in the range of Gunnison
    sage grouse now have cuts in how they can graze, when they can
    graze, where they can graze. There are restrictions on where
    people can travel, and how they can travel, and at what time of
    year. So, there are drastic impacts on the ground as a direct
    result from this excessive litigation.
        Mr. Grothman. I would think our forefathers would wonder if
    the result of that lawsuit, which unquestionably reduces the
    value of somebody's property, would be considered a taking. Do
    you want to comment on that? Should it be?
        Mr. Holsinger. Well, there is no question that it increases
    the burdens both from a regulatory standpoint and an economic
    standpoint. It is making harder to make a living. And let us
    face it, one of the overriding concerns that we have these days
    is that the regulatory red tape is just strangling our country,
    and really impeding us from not only good things economically,
    but doing good conservation work. We even get tied up in
    litigation and process and red tape when we are trying to do
    good things on the ground, and that is just ----
        Mr. Grothman. Do you think maybe whenever, and I am not
    sure which organization there Mr. Pidot worked for, or did you
    just work for Justice I guess?
        Mr. Pidot. And the Department of Interior.
        Mr. Grothman. Oh, and Department of Interior. Do you think
    if there was some requirement, let us say, on this endangered
    species stuff, and I dealt with some of it in Wisconsin with a
    complete lack of common sense with our local Department of
    Natural Resources. If the Federal government had to pay out, if
    it affected what you could on your property, do you think that
    would maybe cause a little bit of cost benefit analysis to go
    on? I am asking Mr. Holsinger. I will come to you again, Mr.
    Pidot, in a second, or Mr. Kovacs for that matter.
        Mr. Holsinger. You know, it is a complicated area of the
    law, but I do not think there is any question that the extent
    of the regulations, many of which result from these sue and
    settle agreements, are harming people and that they should have
    some recourse.
        Mr. Grothman. Do the private property owners become a party
    to those sort of things?
        Mr. Holsinger. It is very difficult for them to do so.
    First of all, they are busy. They are trying to earn a living.
    They are grazing cattle. They are irrigating. They are ----
        Mr. Grothman. Under normal circumstances on one of these
    sue and settle agreements, do the property owners who maybe
    have a huge financial loss because of the actions of Interior
    or whatever, do they get involved legally, or do they just have
    to watch the world go by and their property value dissipate?
        Mr. Holsinger. We have represented property owners in some
    cases just like this. And even when they can come together and
    participate in the litigation, as I mentioned, the plaintiffs
    and the Federal defendants cut a deal, and they have no say in
    it.
        Mr. Grothman. They do not have to sign off. In other words,
    the government can just ----
        Mr. Holsinger. Exactly.
        Mr. Grothman.--sign them down the river, take away their
    property, and there is nothing they can do. Okay. Do you want
    to comment on that, too, Mr. Kovacs?
        Mr. Kovacs. Sure. I think one of the issues here is, no,
    they do not participate. Even when they have been granted
    intervention, the court will not recognize them if there is a
    consent decree. So, of the several hundred cases that we looked
    at, there were only two in which they were allowed to
    participate. In both instances, the court decided not to allow
    them into the discussions and, therefore, just signed the
    consent decree.
        One other point I have got if I can take 20 seconds?
        Mr. Grothman. Sure, take 20 seconds.
        Mr. Kovacs. If you are looking for a large impact on
    landowners, look at the Chesapeake Bay, which takes several
    States into account. There was a question as to whether or not
    the EPA even had authority to regulate what goes into the water
    along certain banks. In other words, the TMDLs, what is the
    quality of the water. In that particular instance, there was
    not even legal authority, but there was a lawsuit and there was
    a sue and settle. And now you have all of the States that
    border the Bay are now regulated.
        Mr. Grothman. Okay. Mr. Farenthold, I have one more
    question.
        Mr. Farenthold. Without objection, we will extend your time
    another 90 seconds.
        Mr. Grothman. Okay, thanks. First of all, I want you to all
    know you are doing a great job, and as soon as Mr. Palmer, Mr.
    Farenthold, and I get back on the floor in about an hour, we
    are really going to rub it in on these congressmen who did not
    show up because they missed a great show.
        I guess that is it. I will not ask the other questions.
    Well, I will ask for Mr. Pidot because it is something we
    wonder about. We had another hearing, another subcommittee
    before, and we feel one of the problems with the government is
    they only see things from the perspective of the government,
    not the huge burdens that the government can place on the
    private property owner.
        I was noticing right now you are a professor, but for a
    while you did work for Interior, and you worked for Justice I
    think. Did you ever, prior to being hired on at Interior,
    Justice, work for somebody or represent somebody where you had
    to be on the other end of government, in other words, the
    private property owner, that sort of thing, or when you got
    hired at Justice or Interior, did you solely come from a
    background of kind of government background?
        Mr. Pidot. Thank you for the question. During law school, I
    worked at a legal aid clinic where I was working with and
    pursuing wage and hour claims on behalf of indigent
    individuals. Beyond that, my work has primarily been either pro
    bono work. I am currently representing some tribes in some pro
    bono matters, environmental groups, or the government.
        Mr. Grothman. Okay. Ms. Helmick, I am sorry for what you
    have to put up with from the government.
        Mr. Farenthold. Thank you very much. The chair notes the
    presence today of Congressman Jason Smith of Missouri. We
    appreciate your interest in this topic, and welcome your
    participation, and ask unanimous consent that Congressman Smith
    be permitted to fully participate in today's hearing.
        Without objection, so ordered.
        And your timing is perfect because you are up for 5 minutes
    of questioning, sir.
        Mr. Smith. Thank you, Mr. Chairman, for allowing me to
    enjoy and participate in your wonderful committee hearing
    today. This is an important issue to me, so I am grateful to be
    here to ask a few questions.
        I have numerous pieces of different legislation discussing
    the topics of today. I also have legislation addressing this
    issue called the Stop Taxpayer Funded Settlement Act. My bill
    is very simple. It removes a key incentive for environmental
    groups to sue Federal agencies by preventing those agencies
    from paying the environmental groups' attorney's fees. This
    would apply to any settlement under the Clean Air and Clean
    Water Act and the Endangered Species Act. These are taxpayer
    dollars paying for outcomes in which the public have little to
    no opportunity to participate.
        On that topic, I have a couple of questions. Mr. Kovacs,
    are these groups basically receiving their attorney's fees from
    the taxpayers?
        Mr. Kovacs. Yes.
        Mr. Smith. Also, is it easy to track the taxpayer expense
    for sue and settle legislation?
        Mr. Kovacs. It is getting easier, but 6 years ago when we
    started, it was virtually impossible. We were told both by
    Justice as well as EPA that they did not keep unified records.
        Mr. Smith. Is it common for a lot of these environmental
    groups to receive thousands, sometimes hundreds of thousands of
    dollars, in attorney's fees?
        Mr. Kovacs. Yes.
        Mr. Smith. Mr. Holsinger, is it not true that some of the
    groups that regularly sue EPA and other agencies and receive
    large taxpayer attorney's fees actually have large financial
    resources?
        Mr. Holsinger. Yes. In fact, I recall one case were
    involved in we were shocked to compare an oil and gas trade
    association's annual budget to that of WildEarth Guardians, and
    WildEarth Guardians absolutely dwarfed its budget.
        Mr. Smith. Do you believe that the provisions allowing
    recovery of attorney's fees for sue and settle cases are being
    abused by environmental groups?
        Mr. Holsinger. Absolutely by some.
        Mr. Smith. Mr. Pidot?
        Mr. Pidot. It is Pidot.
        Mr. Smith. Pidot. Do you believe it is right for
    environmental groups with large budgets and millions in assets
    to collect six-figure attorney's fees off of sue and settle,
    especially when the lawsuits are non-adversarial?
        Mr. Pidot. My apologies. I am sure I can accept all the
    premises of the question, Congressman. I think that the
    proceedings are adversarial, and I do think it is right for
    settlements where a plaintiff is going to recover anyway for
    those to include attorney's fees because the alternative is for
    them to continue litigating and to receive more attorney's
    fees. So, the settlement saves taxpayer dollars. It does not
    consume extra taxpayer dollars to my thinking.
        Mr. Smith. So, let get this right. Any lawsuit where there
    has been a settlement, you would consider that adversarial.
        Mr. Pidot. As I mentioned earlier, I am aware of no
    evidence that there is collusion that goes on between the
    Department of Justice lawyers and the agency lawyers and people
    who have sued them. So ----
        Mr. Smith. Yes or no, is there any settlement case that
    would be in your eyes considered not adversarial?
        Mr. Pidot. In my eyes, no. Every case that is brought is an
    adversarial case.
        Mr. Smith. Okay. That is plain enough. Mr. Kovacs, do you
    believe it would harm the mission of agencies, such as the EPA
    and Fish and Wildlife, if they were to no longer be obligated
    to pay out these attorney's fees?
        Mr. Kovacs. I do not believe it would harm the mission of
    the agency, no.
        Mr. Smith. Nor do I. Thank you, Mr. Chairman. It is a
    pleasure to be in your committee.
        Mr. Farenthold. Thank you. We appreciate your
    participation. I do have a couple more questions. Do you have
    more questions?
        Ms. Plaskett. Go right ahead.
        Mr. Farenthold. Do you mind if I just ask a couple more? I
    will do one quick round of questions to follow up.
        Mr. Kovacs, I just want to make sure we have laid the
    groundwork here. Who establishes the laws and deadlines being
    enforced through these sue and settlement agreements? It is
    Congress, right?
        Mr. Kovacs. It is Congress.
        Mr. Farenthold. We set up the laws. Now, in your opinion,
    how does the practice of sue and settle bypass the laws that
    promote transparency, public input, and other safeguards such
    as notice and comment under the Administrative Procedures Act
    or review at OIRA?
        Mr. Kovacs. See, I think that is the crux of the issue.
    What happens when you have an agency like EPA where they miss
    all of the deadlines, you have the ability to go in and pick
    and choose what issues are going to be the priority for the
    Agency. And then when you pick that particular issue, let us
    say the utility mac has to be on the list, then all of a sudden
    the Agency, because it is under a court order, has to put that
    to the top of the pile. And once it is at the top of the pile,
    it is gone.
        And to give you an idea of how big of a disparity, there
    are about 8,000 regulations from EPA over the last 9 years, and
    you have roughly about 150 ----
        Mr. Farenthold. Correct.
        Mr. Kovacs.--sue and settle cases. It gives you an idea of
    where their priority is and where their money goes.
        Mr. Farenthold. All right. And I am going to go out on a
    limb and ask this question to Mr. Pidot. Do you agree that
    Congress anticipates that agencies will normally comply with
    the laws that we enact, like the Administrative Procedures Act,
    the Regulatory Flexibility Act, Paperwork Reduction Act, and
    all these other laws, as well as meet the deadlines that
    Congress sets? Do you believe that they are trying to do that?
        Mr. Pidot. Yes, I believe that is what Congress expects,
    and I also believe that is what the agencies attempt to do.
        Mr. Farenthold. All right. So, what is the necessity of
    these suits then if you believe that the agencies are doing the
    best they can? How do they improve the situation and not make
    it worse by taking away time and resources that could be done
    going through the prescribed methodology Congress put in place?
        Mr. Pidot. Two parts to my answer, Chairman. First, the
    fact that I ordinarily believe the agencies do the right thing
    does not mean agencies always get it right. Agencies are
    sometimes wrong about the law. They can be wrong about the
    facts. And ----
        Mr. Farenthold. But most of these suits are about
    deadlines.
        Mr. Pidot. And they also can fail to meet their obligations
    that Congress imposed. Now, the reason I said there are two
    parts to my answer, if you will bear with me, is that the
    decision whether or not to initiate a rulemaking is not itself
    a decision subject to the EPA. Under these settlements, all
    that happens is the agency now commences its public process.
        So, all of the EPA provisions that apply to the Agency's
    decision-making process are met. OIRA review is met. All of
    those boxes are checked. The Agency has followed their legal
    obligation. This is a prior question of do we initiate a
    rulemaking or not.
        And with respect to that question, there are no EPA
    constraints. OIRA is not involved. And indeed, the only person
    who is involved is Congress, and Congress has told the Agency
    do it and do it now. So, when someone holds them to account for
    that legislative command, to my mind that advances the rule of
    law.
        Mr. Farenthold. Mr. Holsinger, do you agree that the sue
    and settle practice helps and is a positive, or do you think it
    is a negative and interferes with the intent of Congress?
        Mr. Holsinger. I think ----
        Mr. Farenthold. Microphone, please.
        Mr. Holsinger. Mr. Chairman, there is great abuse of the
    process that has mired the agencies in needless litigation.
    There is no question about that.
        Mr. Farenthold. All right. And I want to go back to a
    couple of questions for Mr. Kovacs as we round this out. Are
    environmental groups using sue and settle tactics to overturn
    State policy at the Federal level as well?
        Mr. Kovacs. Well, they certainly have in all of the
    regional haze SIPs and FIPs that they have put in.
        Mr. Farenthold. And what impact do these sue and settle
    agreements ----
        Mr. Kovacs. Mr. Chairman, could I just add one point?
        Mr. Farenthold. Sure.
        Mr. Kovacs. I do not want to correct the professor, but
    when you have a sue and settle agreement, OIRA is not involved
    at that point in time because what happens is the deadlines get
    crunched. And when the deadlines are crunched, it is a court
    order that they have to meet, not an OIRA review. And that is a
    major event because then there is no real review over what the
    agency procedure is going to be and what the rule might be. It
    is a timing problem.
        Mr. Farenthold. All right. And I just want to get back to
    the States for a second. What impact do these sue and
    settlement agreements, Mr. Kovacs, have against State policies
    in terms of labor and budget? What are the burdens on the
    State?
        Mr. Kovacs. Sure. Once the sue and settle is imposed upon
    the State and they have to do a FIP, they literally have to go
    back and change all of their administrative code. That is the
    first thing. They then have to shuffle resources. So, when you
    have two or three of these hitting a State at a time, whatever
    the State is doing at that time, it has to now move those
    resources to apply to what EPA has just settled.
        Mr. Farenthold. All right. Thank you very much. I
    appreciate you folks' input, and hopefully it will go to
    working towards making this situation better and making more
    folks aware of what is going on.
        Ms. Plaskett, I appreciate your and Ms. Demings'
    participation in this hearing, as well as the members on my
    side.
        So, there being no further questioning going on, I am going
    to thank our witnesses for their testimony and their
    appearances.
        And without objection, the subcommittee is adjourned.
        [Whereupon, at 3:28 p.m., the subcommittees were
    adjourned.]

                                    APPENDIX

                                  ----------

                   Material Submitted for the Hearing Record

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                                     [all]