[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
EXAMINING `SUE AND SETTLE' AGREEMENTS: PART I
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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
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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
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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
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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
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