To settle or not to settle, that is the question. Whether it's practical or simply expedient for a federal agency facing legal action to negotiate a compromise so it can use increasingly scarce resources elsewhere is hardly a Shakespearean dilemma. It is a growing problem.
The US Chamber of Commerce called this "sue-and-settle" process "regulating behind closed doors" in a new report. The process also excludes industries and other affected parties until the settlement is final. "We did this report because it shuts the business community out of the regulatory process," Chamber Senior Vice-Pres. William L. Kovacs said on May 20.
"Agencies do not maintain a centralized database," he continued. "They would not provide information to Congress even upon request. Once they begin this process, they agree to be under court supervision of a process driven by private parties."
The report cited 10 costly regulations resulting from sue-and-settle agreements. No. 3 on the list was the US Environmental Protection Agency's Aug. 16, 2012, requirement that the oil and gas industry use maximum available control technology to limit well site emissions. It is expected to cost producers up to $738 million/year.
EPA developed the regulation after settling a January 2009 lawsuit by environmental groups. It agreed the following December to update its new source performance standards for oil and gas drilling, its oil and gas MACT standard, and the air toxics "residual risk" standards, the report said.
"There are about 117 rules from such settlements, some of which are multiple requirements from one order," Kovacs said. "To add insult to injury, prevailing parties' attorney fees are usually paid."
Conceding authority
Successful project-specific challenges let environmental groups build a record to oppose other permit applications, noted Clara M. Poffenberger, a partner in Bingham McCutcheon LLP's Washington office. "By agreeing to a settlement, court-ordered or otherwise, EPA is conceding its authority to establish standards," she said.
The problem also has reached the US Fish and Wildlife Service. "As more nongovernmental organizations become interested in the Endangered Species Act, it's being used to drive polar bear protection and other broad polices," said Michael B. Wigmore, another Bingham McCutcheon partner.
A possible megasettlement to address the backlog of 251 species on FWS's ESA candidate list would affect businesses beyond extractive industries, he warned. "We're seeing consent decrees used to limit not just current, but future, administrations," Wigmore said.
The Chamber supports two bills, HR 1493 and S 714, which would require a 60-day public comment period before a settlement became final. It also has begun to catalog such cases. "We're basically doing the federal government's work," Kovacs said.
