[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]