[House Hearing, 115 Congress] [From the U.S. Government Publishing Office] EXAMINING ``SUE AND SETTLE'' AGREEMENTS: PART II ======================================================================= JOINT HEARING BEFORE THE SUBCOMMITTEE ON INTERGOVERNMENTAL AFFAIRS AND THE SUBCOMMITTEE ON THE INTERIOR, ENERGY, AND ENVIRONMENT OF THE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED FIFTEENTH CONGRESS FIRST SESSION __________ JULY 25, 2017 __________ Serial No. 115-36 __________ 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 27-740 PDF WASHINGTON : 2018 ---------------------------------------------------------------------------------------- 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 Trey Gowdy, South Carolina, 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 Matt Cartwright, Pennsylvania Glenn Grothman, Wisconsin Mark DeSaulnier, California Will Hurd, Texas Jimmy Gomez, California Gary J. Palmer, Alabama James Comer, Kentucky Paul Mitchell, Michigan Greg Gianforte, Montana Sheria Clarke, Staff Director Robert Borden, Deputy Staff Director William McKenna General Counsel Kelsey Wall, Professional Staff Member Kiley Bidelman, Clerk David Rapallo, Minority Staff Director 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 Matt Cartwright, Pennsylvania Virginia Foxx, North Carolina Wm. Lacy Clay, Missouri Thomas Massie, Kentucky (Vacancy) Mark Walker, North Carolina Mark Sanford, South Carolina ------ Subcommittee on the Interior, Energy, and Environment Blake Farenthold, Texas, Chairman Paul A. Gosar, Arizona, Vice Chair Stacey E. Plaskett, Virgin Islands Dennis Ross, Florida Jamie Raskin, Maryland Gary J. Palmer, Alabama Jimmy Gomez, California James Comer, Kentucky (Vacancy) Greg Gianforte, Montana C O N T E N T S ---------- Page Hearing held on July 25, 2017.................................... 1 WITNESSES The Hon. John Engler, Former Governor, State of Michigan Oral Statement............................................... 5 Written Statement............................................ 8 David Sanders, Ph.D., Executive Vice-President of Systems Improvement, Casey Family Programs, Seattle, Washington Oral Statement............................................... 13 Written Statement............................................ 15 Mr. Robert Weissman, President, Public Citizen, Washington, D.C. Oral Statement............................................... 20 Written Statement............................................ 22 Mr. Carl E. Geffken, City Administrator, Fort Smith, Arkansas Oral Statement............................................... 51 Written Statement............................................ 53 APPENDIX Opening Statement of Chairman Gary Palmer........................ 76 Alabama Policy Institute article titled, ``Consent Decrees in Institutional Reform Litigation: Strategies for State Legislatures'' submitted for the record by Chairman Palmer..... 79 EXAMINING ``SUE AND SETTLE'' AGREEMENTS: PART II ---------- Tuesday, July 25, 2017 House of Representatives, Subcommittee on Intergovernmental Affairs, joint with the Subcommittee on the Interior, Energy, and Environment, Committee on Oversight and Government Reform, Washington, D.C. The subcommittees met, pursuant to call, at 10:05 a.m., in Room 2154, Rayburn House Office Building, Hon. Gary J. Palmer [chairman of the Subcommittee on Intergovernmental Affairs] presiding. Present from Subcommittee on Intergovernmental Affairs: Representatives Palmer, Grothman, Duncan, Foxx, Walker, Demings, DeSaulnier and Clay. Present from Subcommittee on the Interior, Energy, and Environment: Representatives Farenthold, Gosar, Ross, Palmer, Gianforte, Plaskett, and Raskin. Also Present: Representative Womack. Mr. Palmer. The chair notes the presence of our colleague, Congressman Womack of Arkansas. We appreciate your interest in this topic and welcome your participation today. I ask unanimous consent that Congressman Womack be allowed to fully participate in today's hearing. Without objection, so ordered. This hearing is the second part of a set of hearings to examine the impact of certain Federal settlements referred to as ``sue and settle.'' The sue-and-settle phenomenon refers to a process where an outside group will sue a Federal agency, State, or local government for an alleged violation of Federal law or constitutional right. The parties will often choose to settle by entering into a consent decree agreement rather than face a long and costly trial. These legally binding consent decree agreements are then approved by a judge and enforceable by contempt and can only be modified by court order. Consent decrees can last for decades and end up costing more than if the parties had gone to trial because the parties can use consent decrees to set provisions that extend beyond the scope of the original violation of law, they have become an effective tool to circumvent policymaking by elected representatives in order to push a political agenda across governmental institutions. These actions place an enormous burden on States, local governments, industry stakeholders, and taxpayers, who may be shut out of the negotiations but are left to foot the bill. Under the threat of enforcement by contempt charge, State budgets are being reorganized. Local governments across the country are spending multiple decades and billions of dollars to comply with impossible mandates through never-ending Federal oversight. Penalties for the inevitable violation of decrees redirect funds from these communities to Washington. Worse, some feel afraid to speak to Congress about what they are experiencing. Multiple State and local leaders cited fear of political retaliation from Federal court monitors if they were to appear to testify before the committee on this issue. This is unacceptable and a threat to the principles of Federalism. Unfortunately, I have witnessed this firsthand in my home State of Alabama. I watched as a consent decree between Jefferson County and the Environmental Protection Agency ballooned from a $1.5 billion estimate to cost over $3 billion to address the storm sewer issue in Jefferson County. Sewer rates quadrupled over four years in order to pay for the project, and Jefferson County became the Nation's largest municipal bankruptcy in history until Detroit filed in 2013. Because of incomplete data and the lack of proper categorization, we are unable to fully evaluate the total amount taxpayers spend as a result of collusive settlement agreements. For example, in my previous experience 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 recordkeeping. This lack of transparency limits our constitutional duty to conduct oversight of the management of taxpayer resources. 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 interest. Recently, Congressman Doug Collins introduced the Sunshine for Regulations and Regulatory Decrees and Settlements Act of 2017 to increase transparency and public engagement by ensuring opportunity for public notice and comment on consent decrees and other settlement agreements. I thank Congressman Collins for his leadership on this issue, and I look forward to exploring additional solutions with our panel today. Mr. Palmer. I now recognize Mrs. Demings, ranking member of the Subcommittee on Intergovernmental Affairs, for her opening statement. Mrs. Demings. Thank you so much, Mr. Chairman, and thank you for our witnesses for being here. Thank you for holding this hearing today. Today, we have the opportunity to discuss the Federal Government's responsibility to ensure that Americans can buy safe food, have clean air and water and access to the ballot box. Our great democracy has many ways to do this, but perhaps the most fundamentally ``little D'' democratic tool is concerned citizens working together to hold Federal agencies, the watchers, accountable under the law. Unfortunately, some of my colleagues view these citizen actions as irrelevant annoyances that slow down progress. The result is legislation that seeks to make harder and more expensive for Americans to use the courts to compel government agencies to uphold and comply with the law. These are not small stakes. One of the most frequent reasons for suits is missed deadlines that leave the public unprotected. A 2012 study of public health and safety rulemaking with congressionally mandated deadlines showed, and I quote, ``most rules are issued long after their deadlines, which ultimately are putting American lives at risk,'' unquote. I would like to take this opportunity to highlight just one rule criticized as, quote, ``too expensive,'' which was long delayed until, ultimately, a lawsuit pushed the final rule over the finish line. In 2008, the House and Senate unanimously passed a bill to help prevent back-over accidents, which tragically kill more than 200 Americans and injure more than 15,000 every year. Most often the person injured or killed is a young child, too small to be seen in a rearview or sideview mirror. Despite a statutory deadline in 2011, a final rule would not come until 2014, and then only because of public outrage, and yes, litigation. When will new passenger vehicles be required to have cameras? In 2018, 10 years after the bill became law and several years after auto manufacturers voluntarily installed cameras on virtually every new car. Mr. Weissman, I look forward to hearing more about Public Citizen's work to finalize this long-delayed rule. When it comes down to it, some in Congress and the administration would be fine with indefinitely slowing the rulemaking process, leaving Americans, the people that we swore to represent, particularly the most vulnerable at risk of injury from unsafe products and unscrupulous corporations. Please be assured that won't happen without a fight. I thank our witnesses for sharing their testimony today, and I look forward to this very important discussion. Thank you very much, Mr. Chairman, and I yield back. Mr. Palmer. Thank you. I will hold the record open for five legislative days for any members who would like to submit a written statement. We will now recognize our panel of witnesses. I am pleased to welcome the Honorable John Engler, former Governor of the State of Michigan; Dr. David Sanders, executive vice president of systems improvement for the Casey Family Programs, Seattle Washington; and Mr. Robert Weissman, president of Public Citizen, Washington, D.C. I now recognize Congressman Womack to introduce our last witness. Mr. Womack. Thank you, Mr. Chairman, and my thanks to the chairman and to the ranking members for allowing for this testimony here today. At the outset, I would just like to associate myself with the remarks of the chairman in his opening comment. It is not my job here today to pass judgment on the subject matter of the activities that are under consideration here today. Moreover, it is my intent to introduce a friend and somebody that I have an enormous amount of respect for because he happens to be the city administrator of the largest city in the 3rd District of Arkansas, that being the city of Fort Smith. His name is Carl Geffken, and he is no stranger to the subject matter today because he was hired by the city of Reading, Pennsylvania, as a director of finance, and in 2011, just for the benefit of the audience here this morning, Reading was deemed the poorest city in the United States of America. In slightly less than two years' time and after entering the Pennsylvania Fiscally Distressed Municipalities Program, the city of Reading had a $12 million general fund reserve and a revitalized plan to manage its consent decree. The cost of the consent decree was reduced from $475 million to $200 million. Now, Carl, in his quest to get back into municipality government after some time in Berks, Pennsylvania, as a chief operating officer, accepted the job as city administrator in the city of Fort Smith, Arkansas, and inherited a pretty egregious consent decree that has strapped the people and the administration of the city of Fort Smith. It's nearly a half-a-billion dollars in improvements to its wastewater treatment facilities over a 12-year period of time, and already the citizens of Fort Smith have endured three, three rate increases. Median household income is going down, the price to pay for its sewer facilities going up. So, we are delighted that Carl is here to speak on this subject. He speaks with great authority, and we are proud to know that he is running the show in the city of Fort Smith, Arkansas. And with that, Mr. Chairman, I yield back my time. Mr. Palmer. I thank the gentleman. I would like to recognize the gentlewoman from the Virgin Islands, Ms. Plaskett, who is the ranking member on the Subcommittee for Interior, Energy, and Environment for her opening statement. Ms. Plaskett. Thank you, Mr. Chairman, and thank you for calling today's hearing. The practice we are discussing today is really very unremarkable: enforcement actions by government agencies. Congress passes the Nation's Federal laws, and Federal agencies must implement them by issuing regulations and enforcing them. When those agencies fail to do that, they are in jeopardy of a court order requiring them to do so. Congress has passed laws allowing citizens to sue Federal agencies when they fail to enforce the laws that Congress has passed. Because of citizen suits, Americans have had recourse when their right to vote has been threatened. Because of citizen suits, Americans have had recourse when housing discrimination threatened their chance at attaining their piece of the American dream. Because of citizen suits, doors have literally been open to Americans with disabilities to create a more inclusive and accommodating society. My colleagues would like to diminish citizens' access to court to enforce Federal statutes. Today, the Republican justification is that Federal regulations and citizen suits to enforce them impose a burden on State Governments. Instead, they would leave States alone to comply with Federal law to the extent that it is convenient for those States. I say ask the people of Flint, Michigan, if that makes sense to them because if we have learned nothing else from the tragedy of water poisoning in Flint, Michigan, it is that State Governments should not be left to their own devices to enforce health and safety regulations. The Governor's own Health Department director, a member of his inner circle and cabinet, has been charged with felonies that contributed to the poisoning, so has the Governor's appointee who ran the city of Flint under an emergency management law. And the Governor has accepted responsibility for that tragedy. Voting rights, housing laws, education, discrimination, in terms of disabilities, all of these things, because of the right of citizens to sue to enforce Federal regulations. Some States do need help to comply with Federal rules, and the Federal Government should provide that support and help. An infrastructure bill and funding that addresses the funding problems of State and local governments would be a step in the right direction. But curbing Federal health and safety regulations is not. Contrary to what my Republican colleagues might say, Federal regulations have a positive impact on the economy. A 2016 study conducted by OMB looked at a range of regulations across the economy and found that their benefits far outweighed their costs. OMB said, quote, ``found that a decade's worth of major Federal regulations had produced annual benefits to the U.S. economy of between $269 billion and $872 billion, while imposing aggregate costs between $74 billion to $110 billion.'' In spite of these facts, congressional Republicans aim to diminish the use of citizen suits. That is why I believe we are called here to today's hearing, but what we should learn from the hearing is the incredible value to the public's health, welfare, and environment that Federal regulations and citizen suits have had. I really look forward to the lively discussion that I know we are going to be having, and thank you again, Mr. Chairman, for calling us all to this hearing. Mr. Palmer. I thank the gentlewoman and now would like to welcome our witnesses. Pursuant to committee rules, all witnesses will be sworn in before they testify. Please rise and raise your right hands. [Witnesses sworn.] Mr. Palmer. Thank you. Please be seated. Let the record reflect that the witnesses answered in the affirmative. In order to allow time for discussion, we would appreciate it if you would please limit your testimony to five minutes. Your entire written statement will be made part of the record. I would like to recognize now Governor John Engler for his testimony. WITNESS STATEMENTS STATEMENT OF JOHN ENGLER Mr. Engler. Thank you very much, Mr. Chairman. Chairman Palmer, Chairman Farenthold, ranking members, subcommittee members of the committee--two committees on Oversight and Government Reform, thank you for the invitation to appear this morning as you continue your examining of sue-and-settle agreements. And I appreciate the work of the two subcommittees on this important topic, and I'm certainly appreciative of the excellent staff who's helped to make the logistics of my appearance here this morning so easy. I want to begin this morning by quoting from a foreword to a publication, Mr. Chairman, you're very familiar with because it was prepared by the Alabama--or for the Alabama Policy Institute located in Birmingham, Alabama. And I brought a copy of it that I--it's entitled ``Consent Decrees in Institutional Reform Litigation: Strategies for State Legislatures.'' And I think, given that I'm--my background is 20 years as a State lawmaker and then 12 years as Governor, I have a distinctly State perspective and a strong bias toward a robust Federalist system and the role that States and local government play in that. And I would like to leave one for the staff so that it might be added to the record. I think that it is an important document. Mr. Engler. And the foreword that I want to quote was written in 2008 by then-Senator, now Attorney General Jeff Sessions, and maybe it's good to show him some love today. It seems maybe in short supply. But Sessions in 2008 wrote this, and this is quoting extensively from him: ``One of the most dangerous and rarely discussed exercises of raw power is the issuance of expansive court decrees. Consent decrees have a profound effect on our legal system as they constitute an end run around the democratic process. Such decrees are particularly offensive when certain governmental agencies secretly delight in being sued because they hope a settlement will be reached, resulting in the agency receiving more money than what the legislative branch or other funding sources would otherwise have deemed justified. Thus, the taxpayers ultimately fund the settlement enacted through this undemocratic process. ``A consent decree is the equivalent of a legislative enactment created at the hands of the courts, often less subject to modification. By entering into the decrees, current State executives such as Governors or Attorneys General can bind the hands of future State executives and legislatures. A predecessor's consent decree is difficult to alter or end, and, in practice, a decree can last for many years, longer than the remedy that was needed.'' Sessions actually went on to describe a remarkable in my view and somewhat unimaginable example that he personally dealt with when he became Attorney General in Alabama. His predecessor had somehow agreed to a consent decree that mandated an increase in the number of justices on the State Supreme Court in that State. I thought that went pretty far, and Sessions viewed that as essentially amending the Alabama Constitution. Now, he was, as a new Attorney General, successful in taking an appeal and eventually having the Eleventh Circuit Court of Appeals reject that consent decree. While the Alabama example, pretty creative example, it is the tip of the iceberg, representing merely hundreds of consent decrees that cover an array of subjects. And for the most part they remain in force today. And the cost of compliance and the usurping of State and local decision-making I think will be truly stunning when the true scope of the abuse is made known by the work that your committees are doing, and that's why I was pleased to be able to join you today to put a spotlight on the end run around accountability that this litigation often represents. And I certainly look forward to discussing some of the judicial battles that we were engaged in when I was elected Governor of Michigan as we sought to end costly consent decrees and restore public policymaking to those who were elected to the legislative and executive branches. Now, winning reform is not going to be easy. Activists, they always insist institutional reform litigation, merely their effort to impose broad, long-term reform of government programs and laws on backward or recalcitrant States or local governments, but often the reality is quite a bit different. These same activists have made their case, given their arguments, and then lost either in elections or in legislative forums, and so their last shot at achieving their policy objectives is litigation. And then these lawsuits are designed to convince State and local governments now to settle through a consent decree and you can avoid the long, expensive trial. But as I point out in my testimony, there are some real weaknesses in that approach. Congress has grappled with this in the past. I cite a proposal from some years back, but I will not--I'll save that for the questions. But I want to just say the bottom line I think for Federal policymakers, the State and local governments you represent are asking for help, the restoration of their right to exercise the powers reserved for them under the Constitution. They'd like to be held accountable for their own decisions and have those decisions made by men and women who actually are elected, and they want policy choices according to the wishes of their constituents and set the spending priorities based on those choices and be freed from having unelected judges, you know, controlling and reporting for years to court-appointed monitors who have no accountability. Thank you, Mr. Chairman. [Prepared statement of Mr. Engler follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Mr. Palmer. I thank the gentleman for his testimony. Dr. Sanders? STATEMENT OF DAVID SANDERS Mr. Sanders. Good morning. I'm David Sanders, executive vice president of Systems Improvement at Casey Family Programs. Casey Family Programs is the Nation's largest operating foundation focused on foster care and child protection. We work directly with child welfare systems in all 50 States, the District of Columbia, two U.S. territories, and 16 tribal nations. Before coming to Casey, I led the child protection systems in both Los Angeles and Minneapolis, and I recently served as chair of the Federal Commission to Eliminate Child Abuse and Neglect Fatalities. Today, I'd like to provide a national perspective on the topic of child protection consent decrees and offer observations about system reform, oversight, and support, and successful opportunities for improvement. Casey Family Programs convened three meetings in 2011, 2014, and 2016 to discuss this issue. These meetings, including--included leaders and staff from child protection agencies who had been sued who were under consent decrees, in- house counsel, Attorney General offices, and others. Before I share what we learned during these meetings, I'd like to provide some context. Over a period of 40 years, class-action lawsuits have governed some aspect of child welfare or child protection practice in nearly 30 States. Numerous jurisdictions have had multiple lawsuits filed against them. The consent decrees have an average lifespan of 16.8 years, but some have been in place for decades. Currently, about 15 States are operating under a consent decree. Only two have exited successfully--Alabama and Utah-- and most recently, Tennessee just announced its exit from Federal oversight after 17 years. However, the terms of Tennessee's exit agreement include oversight of the agency by an independent commission for 18 months. Here are some important insights from States. First, consent decrees can place large demands on State in terms of both cost and time. We estimate that the legal monitoring and consulting fees can reach or surpass $15 million on average. Second, States often felt the consent decrees were cookie- cutter agreements that didn't adequately address the unique challenges facing their communities and systems. Third, the measures that systems are obliged to monitor are often inconsistent with current best practices defined under the Child and Family Service Reviews developed by the U.S. Department of Health and Human Services. In many cases, it's because the measures predate these critical Federal benchmarks. At the same time, the measures are significantly more difficult to achieve than the Federal measures. In working with States, it's become clear that, by their very nature, consent decrees are based on process measures instead of outcomes measures, in other words, how things are done versus what the outcomes actually are for children. And more importantly, because the decrees essentially lock child welfare services in place, the eight States are unable to use system flexibility and adopt new and improved practices. The bottom line is this: Consent decrees have not led to improved outcomes for children. We believe a better-balanced approach that recognizes the right of States and plaintiffs and uses alternative oversight mechanisms will be important. Overall, we should create a more productive path for child welfare agencies to address the needs of their system in a problem-solving approach that involve Governors, legislators, the judiciary, other agencies, the community, and advocates. The use of evidence-based practice, knowledge of brain science and trauma, the special attention needed for certain populations like very young children, the need for cross-agency coordination, the importance of partnerships with the community, and the ever-evolving use of technology and data, including to help us identify who's at greater risk--at greater risk for maltreatment in the future are fundamentally changing the path to success for child welfare systems. Reform efforts should have processes in place to adapt to these new opportunities. Which brings me to my final point. Child welfare cannot serve the needs of all children and families who are or may become at risk. Many of the children and families who are involved with child welfare agencies are already known to other agencies beyond the child protection system itself. But consent decrees place responsibility for performance and improvement solely on the child welfare agency. Child safety is a community responsibility, and any discussion of the merit or challenges of consent decrees ought to consider how to best support collaboration and shared responsibility as a means of achieving successful reform without the necessity of a lawsuit. Thank you. [Prepared statement of Mr. Sanders follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Mr. Palmer. I thank the gentleman. The chair recognizes Mr. Weissman for his testimony. STATEMENT OF ROBERT WEISSMAN Mr. Weissman. Thank you, Mr. Chairman. In 2002, Dr. Greg Gulbransen was backing his SUV into his driveway. As he did every evening, he paused, looked in his rearview mirror, looked over his shoulder, saw nothing behind him, and backed into the driveway. What he didn't see was that his two-year-old son Cameron had run into the driveway behind him, and he backed over his son and killed him. It's unimaginable. Dr. Gulbransen I would say is a hero of mine. I don't think I could have survived that, but he did and chose to turn his tragedy into a crusade to make sure that other parents didn't suffer the same horror that he did. He lobbied this Congress and in 2008 succeeded in getting passed the Cameron Gulbransen Act, which required automakers to adopt technologies to prevent that from every happening again. That technology existed then and it exists now. We're familiar with it. It's effectively rearview cameras in cars. The legislation that this Congress adopted required the Department of Transportation to adopt a rule by 2011 to force automakers to install this technology and to prevent this horror from happening in the future. The Department of Transportation did not act by 2011. Instead, it gave itself four extensions, although it was unable to show, as the statute requires, that there was some reason for those extensions. In 2013, my organization Public Citizen sued the Department of Transportation to force it to comply with the rule and the deadline established by this Congress. In 2014, although we did not settle the case, it was dismissed because the agency finally committed to do what the Congress had required it to do, years later. The consequence of that delay is that we have a lot more Cameron Gulbransens. We have hundreds of children. We may not know their names, as we do Cameron, but they were run over in preventable accidents. That's what it means when regulations aren't issued on time, as required by this Congress. Now, this is actually a small example, but it's a heart-wrenching one. As I explain in my written testimony, regulations adopted pursuant to congressional action save this country enormous amounts of money, they make our economy stronger, they protect the lives of Americans, prevent corporate rip-offs, and achieve a variety of social aims. Unfortunately, agencies are growing slower in issuing new regulations. My written testimony discusses research we've done on this. For substantial regulations, it is very difficult for an agency to get a rule done in the course of a single presidential term. Delays aren't just growing; they are the norm when it comes to statutory deadlines. Those are deadlines required by this Congress. The agencies routinely fail to meet those deadlines. When they do fail to meet the deadlines established by this Congress, organizations like mine are proud to step in and enforce the standards, the deadlines that you have established. We did that in the Cameron Gulbransen case. We do it in others. Those deadline suits or enforcement suits hold agencies accountable to the Congress and help achieve the important objectives that Congress has sought to do. They do not lock the agencies into any substantive outcome. They only force the agencies to comply with schedules already determined by this Congress. They don't actually comply; they just comply less slowly than they otherwise would. These are lawsuits that the Congress should both embrace and appreciate as enforcement mechanisms for the laws that you have passed. I want to say just a final quick word on the issue generally of settlements apart from enforcement or deadline suits. As I discuss in my testimony, I think there are some serious issues at the Department of Justice regarding where is an enforcement agency and entering into settlements or not prosecuting corporations for wrongdoing. I think there is bipartisan--there's been expressed bipartisan concern about that issue, whether it's civil settlements or deferred or non- prosecution agreements regarding big banks and other large corporations, and I think that would be an area of very fruitful investigation by this committee. Thank you very much. [Prepared statement of Mr. Weissman follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Mr. Palmer. I thank the gentleman. I now recognize Mr. Geffken for his testimony. STATEMENT OF CARL E. GEFFKEN Mr. Geffken. Thank you, Chairman. Chairmen Palmer and Farenthold, I am pleased to join you and your fellow subcommittee members for today's important hearing on public policy considerations behind Federal litigation settlements. On behalf of the city of Fort Smith, Arkansas, I want to thank the committee for allowing me to share with you our experiences regarding the Fort Smith consent decree with the EPA and the State of Arkansas. I can assure you the city has taken this consent decree seriously. In fact, not only has the city raised its sewer rates 167 percent in three years, but it also has complied with all the provisions contained in the consent decree to date. We seek successful implementation of all sewer utility improvements within the consent decree. However, the city has major concerns about future compliance because aspects of it are unattainable for the city. Fort Smith has a population of 87,351, but it is also a regional metropolitan center in northwestern Arkansas of about 300,000 and the largest manufacturing hub in the State. Unfortunately, it has experienced some manufacturing setbacks due to business relocation and foreclosure. Twenty-nine percent of Fort Smith's population live below the Federal poverty line, while the national average is 14.7 percent. One of more troubling statistics is the fact that the median household income for the city is decreasing. When the consent decree was finalized in 2015, the MHI was $37,600, 32 percent lower than the national average. Today, Fort Smith's MHI is now projected to be $33,500, 11 percent lower than two years ago. While our resident's incomes dropped 11 percent, the sewer utility bills have increased 167 percent to pay for the initial work on the consent decree. Leading up to the consent decree, the city was under an administrative order with the EPA, one of the oldest active administrative orders in the country. However, the city was actively attempting to improve the compliance issues raised by the EPA by investing $200 million in its sewer infrastructure. Unfortunately, having one of the oldest administrative orders may have made us a target for enforcement. Despite our willingness to comply, the Department of Justice and the Arkansas State Attorney General browbeat and coerced Fort Smith into accepting a consent decree. The city was presented with two options: spending millions in legal fees required to contest the consent decree or accept it. The consent decree has many features and requirements in it that are typical of many other decrees. However, there are six items in the consent decree the city believes are not realistic and need modifying. The six items are, first, the city has only 12 years to complete the consent decree; however, there are at least 12 cities who were granted 20 to 25 years to comply. Second, the consent decree contains a detailed and prescribed list of tasks that must be performed over the 12 years. It does not allow for adequate flexibility or an iterative approach to maximize public benefits with limited dollars available. Third, the cost of the consent decree exceeds the Federal guideline of 2 percent of median household income. The sewer portion alone of the city's utility bill is already at 2.2 percent of MHI, and rates will need to increase further in order to complete the consent decree. Funds over and above the amount needed for the consent decree will be needed for non- consent decree projects. Fourth, stipulated penalties in consent decrees are counterintuitive. Assessing penalties is a tool to change behavior. However, Fort Smith worked on sewer issues prior to the consent decree. When a city is complying with its consent decree, assessing penalties only reduces the funds available to comply in the future. Fifth, Fort Smith's consent decree is flawed in that there is a set, fixed time to complete it, but the ultimate scope of the projects and the actual cost of these projects was unknown when the consent decree was finalized. And sixth, the consent decree requires Fort Smith to repair structural problems instead of focusing on spending those dollars where it will have the greatest impact. The city shares its experiences and concerns with both subcommittees to show that Fort Smith has made every effort to comply with the Federal Clean Water Act. The city is spending a great deal of time, money, and effort on the consent decree. However, the current consent decree has a price tag of over $450 million. That makes it the single largest project in the city's history, and it is more than two years of Fort Smith's total budget for all government functions. In addition, the cost of this agreement has resulted in utility rate fatigue amongst our residents. As the Fort Smith sewer utility rates rise, our city becomes less competitive for private economic investment. What company would choose a city in which sewer utility rates are three to four times higher than non-consent decree cities? This results in cities becoming poorer and exacerbates decreasing investments in cities. It is an unrealistic attempt to coerce compliance. Cities in consent decrees become less able to comply financially. The modification that we will eventually propose to the EPA will be aggressive in compliance, affordable to the community, and provide the greatest public benefits for the dollars invested. Thank you for the opportunity to share the Fort Smith perspective on Federal consent decrees, and I will be pleased to answer any questions you may have. [Prepared statement of Mr. Geffken follows:] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Mr. Palmer. I thank the witnesses for the testimony. The chair now recognizes the gentleman from Tennessee, Mr. Duncan, for five minutes. Mr. Duncan has left the hearing. The chair recognizes the gentleman from Arizona, Mr. Gosar, for questions for five minutes. Mr. Gosar. Thank you, Mr. Chairman. As we talk about sue-and-settle and their associated cost, I want to focus a little bit on the EPA. In the last few years, we have seen the EPA run rampant, imposing extraordinary costs on States. We know that the EPA and other Federal agencies collect fines and enforce penalties when consent decrees have been violated. Mr. Geffken, do you know where these fines go once they are collected? Mr. Geffken. Representative, I believe they go into the Federal coffers. I know when Fort Smith entered its consent decree, it had to pay $300,000, and the main goal of our--of the consent decree relates to sewer sanitary system overflows, and we were hit with stipulated penalties that were thankfully waived after much pushing back, but that was to go into the Federal coffers back to the EPA. Mr. Gosar. Into the EPA ---- Mr. Geffken. Yes, sir. Mr. Gosar.--specifically? Mr. Geffken. Yes, sir. Mr. Gosar. Okay. Now, do you ever receive assistance through Federal grants to assist in being compliant? Mr. Geffken. No, sir, neither in the city of Reading, nor in the city of Fort Smith. The only benefits we can get are usually from the States if they have available funds. Mr. Gosar. Are you aware of any other municipality getting any type of grant to assist them? Mr. Geffken. No, sir. Mr. Gosar. Okay. So other than being fined for noncompliance and then being stuck with the bill to fix the problem, how else can consent decrees be duplicative? Mr. Geffken. One more time, sir? Mr. Gosar. So being fined for noncompliance and then being stuck with a bill to fix the problem, how else are consent decrees duplicative? Mr. Geffken. They--well, that's--your first example is the most telling, that we're having to spend $450 million and then, while we're in the consent decree, if there is a violation, which we could be charged a stipulated penalty. But in terms of other duplicative actions, you know, there are areas that we already have NPDES permit levels, and that is one area that we have the consent decree that requires certain actions, and yet there are certain--there are other compliance avenues that we have that duplicate the need to update and maintain our system. Mr. Gosar. Now, we have obviously seen a number of changes with the new administration, so how have things differed between the last administration and this one? Mr. Geffken. At this point I can honestly say that we have seen a greater benefit to having discussions and a willingness to take our requests under consideration. Mr. Gosar. So more flexibility? Mr. Geffken. Yes, more flexibility. Mr. Gosar. Isn't it true that the EPA, under the direction of Administrator Scott Pruitt, recently waived all penalties owned by the city of Fort Smith? Mr. Geffken. That is correct. Mr. Gosar. Now, can you explain the impact these fines make both in terms of the additional fees associated with them and in terms of being waived? Mr. Geffken. Well, we had the--we were going to be assessed approximately $400,000 for violating the corrective actions that are in the consent decree, and that was reduced to $120,900. And we spoke with the EPA and the Department of Justice, and they were able to waive that after much discussion. We were very grateful for that flexibility, but it is still--that is money that's taken away from doing other work. We offered to spend that money to clean sewer lines in order to go on green projects, and it was denied until such time as there was a change in the direction and greater flexibility. Mr. Gosar. Now, many times specialists are called in to investigate as well. Do you know how many of these cases are settled at a rate inconsistent with the manner set forward with Congress? Mr. Geffken. I'm sorry, I didn't hear that one. Mr. Gosar. Yes. Do you know how many of these cases are settled at a rate consistent with the manner set forward from Congress? Mr. Geffken. Well, many of them actually do result in consent decrees. Mr. Gosar. Right. Mr. Geffken. Instead of moving forward and looking to go through the legislative path, we wind up having cities that are poorer like Reading and starting to look like Fort Smith that are having to take their scarce resources and put them in one project instead of being able to spend it on many different areas that the city needs. Mr. Gosar. Yes. What I am alluding to is in many cases in a sue-and-settle application and particularly highlighting maybe an endangered species, what ends up happening, we don't see a rate that is being utilized that is consistent with Congress. What we see is specialists actually being jacked up because there are only so many people that have so many--have the expertise in certain areas. And it is very inconsistent with what Congress. Last but not least, in our first question in talking about fees, I don't think Congress dictates how the agency actually spends those. They are up to the agencies' flexibility to whatever they would like to do, and so that is problematic in that regards to perpetuating certain agenda items that may not be consistent with what Congress. Giving you an example of that is the Waters of the U.S. Here, you had parts of five Supreme Court rulings defying the EPA even going to that aspect, and yet they still did. And so once again, it took an action by the States to reel them back in to actually stop the promulgation of a false type of narrative. So I want to thank you very, very much for your testimony today, and with that, I yield back. Mr. Palmer. The chair recognizes the gentlewoman from Florida and ranking member, Mrs. Demings, for her questions. Mrs. Demings. Thank you so much, Mr. Chairman. Mr. Weissman, I want to take just a few minutes to discuss the benefits of rulemaking as it pertains to public health. According to the Center for Disease Control, foodborne illnesses contribute to about 48 million illnesses, 128,000 hospitalizations, and 3,000 deaths per year. The Food Safety Modernization Act is one of the most pivotal pieces of legislation that transformed our food safety industry. President Obama signed it, as I am sure you know, in 2011. Mr. Weissman, how will the Food Safety Modernization Act help to prevent foodborne illnesses and prevent the loss of economic activity attributable to sicknesses and deaths caused by those illnesses? Mr. Weissman. Well, thank you, Ranking Member. The act was passed after an amazing series of outbreaks of disease, salmonella, listeria, and other outbreaks. Because neither the--no agency, including USDA or FDA, had proper authority to ensure cleanliness in the fields and in processing factories. The Food Safety Modernization Act gave new authorities to the agencies, required them to issue some rules, which, as an aside, they were slow in issuing but is projected to save really thousands of lives by cleaning up our food supply. And I think in this case, as in many others--and your question alludes to this--the benefit is not just to the people who will avoid being sick, which is reason enough. There are massive economic benefits as well. When the cantaloupe industry is suddenly hit with an outbreak and no one buys cantaloupes, it affects the farmers, it affects the workers in the fields, it affects the stores that are selling the food, it affects the restaurants that wanted to serve dishes made with cantaloupe. It really goes all the way up, as it were, the food chain. It has broad economic impact. Mrs. Demings. You led, Mr. Weissman, with the story of Cameron Gulbransen, and you are right; it is a small example. He was two years old. But certainly, his death will have major lasting impact. Once the Kids Transportation Safety Act was passed, the transportation industry delayed implementing it. So, Mr. Weissman, what does history teach us? Why can't we just rely on the industry to prevent health and safety problems without Federal laws and regulations? Mr. Weissman. Well, on this, the history is overwhelming. Self-regulation will not work. The--although industry is incredibly innovative and sometimes on its own introduces lifesaving innovations, by and large, it also has a history of covering up defects in a wide array of products, failing to adopt new technologies that could save lives or protecting the environment, and responds primarily to new government mandates. When it does so, the retrospective analysis shows the costs are dramatically less than the industry insisted they would be, almost without exception, but the benefits are really enormous. There are endless examples of this, including many in the auto industry. In addition to this issue that we talk about with rearview cameras, we just think about the many abuses in the auto industry in recent years, including the GM ignition switch disaster where they covered up for at least six years and potentially longer what they knew about a flaw in their car leading to, as they've acknowledged, 174 preventable deaths, potentially many more. Now, people who were involved in accidents relating to that defect were prosecuted personally for manslaughter or for unsafe driving or sometimes driving under the influence. The problem wasn't the driver; the problem was the manufacturer. The manufacturer was not criminally prosecuted. They got off with a deferred prosecution and a payment of $900 million, a lot to you and me but not to them and, again, evidence both of their recklessness and their readiness to cover up safety problems unless forced by government to do the right thing. Mrs. Demings. Thank you so very much. Mr. Chairman, thank you, and I yield back. Mr. Palmer. The chair now recognizes the gentlewoman from North Carolina, Ms. Foxx, for her questions. Ms. Foxx. Thank you, Mr. Chairman. And I want to thank our witnesses for being here today and shedding light on this very important issue to all of us. Governor Engler and City Administrator Geffken, I would like to ask you a question. States are responsible for the administration of many Federal programs, including medical insurance, environment projects, housing, and food stamps. In fact, the Chamber of Commerce found that States administer 96.5 percent of all Federal delegated environment programs, yet Federal categorical grants to States fund no more than 28 percent of the amounts needed to run the programs. Can you explain how consent decrees compound the problem of Federal unfunded mandates? Governor Engler and then Administrator? Mr. Engler. Thank you, Madam Chair. I think this is--you put your finger right on one of the real important abuses that exist. There are Federal mandates. Special education was one where there was a promise initially that, as you're familiar, half that was going to be funded by the Federal Government. I don't know that funding has ever exceeded, you know, 20 percent of the total cost. It's--but there are efforts then to use the litigation at the State level--and I'm--I know we're talking a lot about Federal laws and Federal agency rulemaking, but at the State level, it's a different issue. And your question goes to the heart of it. The litigation is designed to push the State into setting different spending priorities on the basis of which activist group happens to be pursing the litigation. It could be an education, it could be over in the environmental area, it could be a prisoners' rights group, but this is a process that we call the appropriations process at the State level where committees of the House and Senate fight these things out with the Governor's budget. The consent decree is an effort to come in on top of that, and one of the things that I--was in my testimony I will just stress, you have to look at who these parties are. Sometimes, in the legislature there's a difference between the two parties and we may have a different priority than the Governor but we-- we've seen examples, and I can recall one where the corrections agency couldn't get what they wanted in the legislature, actually encouraged the litigation against the Department. The Department then says, oh, we've been sued; we better settle. They reach an agreement, which is to do exactly what they couldn't do politically in the legislature. Then they show up back at the legislature saying, hey, we've got a court order; we've--you have no choice. And at that point you don't. In my case, I happened to later on get elected Governor and went back to court to say we need to be freed from these consent decrees. And these were consent decrees--in Michigan's case, I got elected in 1990. One of these started in 1977; the others started in 1984. So to get to your question, whether it's education or any of these other areas, this is all a fight about spending priorities and who gets to decide, and I always come down on the side of let those who get elected fight these fights out. They're political questions. They're not legal questions unless there's an assertion there's been a deprivation of some federally constitutionally protected right, and in many of these cases, I think that's a very dubious proposition. Ms. Foxx. Mr. Geffken? Mr. Geffken. Thank you, Representative Foxx. In the case of the consent decree dealing with wastewater and stormwater issues, we believe that the EPA has pressured the States to step aside from their primary enforcement role and relinquish that back to EPA. And then the problem that we have with consent decrees is that both the Department of Justice and EPA, they do want comprehensive relief and not have the continued time--they don't want to spend continued time or money on overseeing these massive programs. And so frequently, rather than allowing communities to develop an integrated or innovative program, let's say, in five-year increments, they want 20 or 25, unfortunately, only 12 in the case of the city of Fort Smith. And so you wind up getting caught up and your hands are tied that in the case of Fort Smith, we see where we now need-- where we need to spend our money on improving the goal of the consent decree because we do believe in making sure that there is clean water. However, we are required to replace pipes that are ranked on a specific and agreed-upon scale that if it's a problem of four or five, the pipe needs to be replaced. It may not be causing an issue yet, but it must be replaced due to the consent decree instead of allowing us to focus where we can have the greatest bang for the buck. The problem we're looking at is that we agree with the Clean Water Act. We want to make sure our residents have clean water and that everything is handled and treated properly, but the cure in some instances is killing the patient. Ms. Foxx. Thank you, Mr. Chairman. I yield back. Mr. Palmer. The chair now recognizes the gentlewoman from the Virgin Islands, Ms. Plaskett, for her questions. Ms. Plaskett. Thank you very much, Mr. Chairman. Mr. Geffken, although you are from Arkansas and my first husband is from Arkansas so I have a bias against it, Arkansas has been good to me. One of my sons is a graduate of University of Arkansas Pine Bluff in applied mathematics, so--but one of the things that you said is very intriguing to me and I would love to find a colleague across the aisle who might be interested in working on this issue is when you talk about the fines in the consent decrees and that they are going specifically to the Federal Government. While I understand the punitive impetus in creating those fines, I think that for areas like your own and I know in the Virgin Islands that those fines mean that there is less money to actually do the work that needs to be done. And so if there is a way that we can, through legislation, work on some of these areas being able to be fined necessarily but that money somehow be funneled back into working on the issues that the consent decree is for, I would be happy to work with someone on something like that. I think that is really important. EPA has created fines for the Virgin Islands that are very, very restrictive to us growing our economy, and so that is something that I hear you on and would be willing to support you, despite being from Arkansas. [Laughter.] Ms. Plaskett. But, Mr. Weissman, I wanted to thank you for your testimony as well and wanted to talk with you about the economic importance and the economic rather detriment or contribution that consent decrees have had. That is something that is very, very important to me, and I think that, as lawmakers, in creating these laws, that is something that we require to be done on the front end. It has been your testimony and studies that we have been looking at in the Office of Management and Budget has found that major Federal regulations have produced annual benefits to the U.S. economy of between $269 billion and $872 billion. Mr. Weissman, does this surprise you that the net impact, the net impact of Federal regulations is positive, meaning there is an overall economic benefit to those regulations? Mr. Weissman. It's--you're correct, and it's not surprising to me both because I'm aware well of that data, which, as you say, shows, depending on the range, benefits exceed costs of-- by 2-1/2 to 1 or maybe as much as 12 to 1 over the decade period that you're referring to, so 12 to 1 is quite substantial. Ms. Plaskett. So can I ask, when we talk about--I mean, there are costs, and we have heard testimony today about the costs, which are real. How does that economic benefit actually take place, and where is that benefit being felt? Where does it play itself out in our economy? Mr. Weissman. Well, there are a lot of areas. The benefits are generally diffused. They're not focused on individual persons or individual corporations. They may be the benefits of averted illness, averted asthma, averted death in the case of the Cameron Gulbransen Act that we were talking about. They may be in consumer savings by the introduction of generic drugs, for example. They may be in the area of averted harm to the economy in the area of many of the Dodd-Frank rules. They may be savings to consumers by preventing rip-offs, and on and on. It's worth pointing out that the regulatory processes that currently exist requirements what some might say--and this is prior to the Trump Administration--an excessive focus on costs. It is almost never the case that an agency proceeds with a rulemaking where the costs, as defined in a corporate-friendly way, exceed the benefits. There are about two examples that I'm aware of over the last decade, and in those cases, Congress required the agencies to act. It's also--I'll pause there. Ms. Plaskett. So, you know, you are talking then about the requirements. I know that Congress itself requirements the cost of prospective regulations be considered before a final rule is ordered, and additionally--excuse me--OMB's annual report to Congress on agency compliance requires that each agency conduct a cost-benefit analysis and select the least-costly, most cost- effective or least-burdensome alternative before promulgating any proposed or final rule that may result in expenditures of more than $100 million in at least one year by State, local, tribal governments or by private sectors. So the Federal agencies are already required to do extensive economic analysis prior to issuing those regulations? Mr. Weissman. Yes. It varies by agency, by statute, and how the OIRA rules apply, but the general statement that agencies are required to look hard at costs before proceeding is correct. Ms. Plaskett. Thank you. And it appears I have run out of time. I yield back. Thank you. Mr. Palmer. The gentlewoman yields back. The chair recognizes the gentleman from Montana, Mr. Gianforte, for his questions. Mr. Gianforte. Yes, Thank you, Mr. Chairman and Ranking Member. My questions are for Mr. Geffken. Were you aware that the Justice Department's Environment and Natural Resources Division identified the city of Fort Smith as, quote, ``the most important case'' in all the settlements they negotiated by the division in 2015? Mr. Geffken. Thank you, Representative Gianforte. I did not know that. That is troubling to a city administrator because the board of directors approved the consent decree begrudgingly. When you have the world's largest law firm coming down and saying that, well, if you don't accept this, I have the complaint ready to be filed immediately. From my experience, I would have called them on that. I did not know that that is what it was. Mr. Gianforte. Yes. And in the fiscal year 2015 Accomplishments Report the Department of Justice wrote, quote, ``The city of Fort Smith agreed to spend what it estimates to be more than $480 million,'' end quote, on upgrades to its sewer system and $700,000 in civil penalties and costs. Do you believe that the EPA and the Department of Justice targeted Fort Smith with the intent to pressure the city into a consent decree? Mr. Geffken. I would have to answer in the affirmative on that. I mean, we did have the oldest administrative order outstanding. However, we did have--we did spend over $200 million to come into compliance. And we had replied to the EPA on several occasions, but as is wont of happening, you do not get much reply back. We've asked many times who else has a consent decree that is only 12 years? Who else has a consent decree where the bill, the cost is already over 2 percent of median household income? We have yet to receive any of that information ourselves. So, to say that Fort Smith was targeted, I mean, I would believe so. The--in many instances it's good to make an example of someone, but unfortunately, the Federal consent decree will cost each and every household in Fort Smith over $15,000. Mr. Gianforte. Yes. And also in your comments you said, quote, that the Justice Department ``browbeat and coerced Fort Smith into accepting this consent decree.'' What are some of the ways that they did that? Mr. Geffken. Well, as I mentioned before, one of the largest ways that--during the negotiations that if there was a contentious point, the city and its attorney were told that if you don't accept it, the complaint is already written and we'll just go ahead and file it. And this being my second consent decree, I wasn't there, but I have done a lot of my research with the city's attorneys and the staff that were there, and when you have the Department of Justice and the--at the time the former State Attorney General saying you need to take this, you need to accept this, it's very hard for a city that's on its own, you know, 87,000 people to try to say no to the United States Government, or the United States, as they're referred to. Mr. Gianforte. Yes. And you also mentioned--you told the committee that, prior to entering into the consent decree, the EPA had sent you a letter acknowledging and thanking the city for the work it had performed prior to that point. Mr. Geffken. Yes, sir. Mr. Gianforte. When did the EPA and the Department of Justice's approach to Fort Smith shift from a collaborative relationship to one that was more antagonistic? Mr. Geffken. I believe that was the 2013 time period is when that shift came. There was also a change in the staff assigned to the Fort Smith case at the Department of Justice. And so it did go from a more collaborative ``let's work together.'' And just as Representative Plaskett may know, that in Arkansas, the majority of funding is raised through sales tax, not through property tax as in Pennsylvania, New Jersey, New York where I'm from. So, the citizens approved a 1 cent sales tax to pay off debt, which is a large commitment by such a small city to raise $200 million. Mr. Gianforte. And just to put a point on it, if you could just summarize very quickly, what are some of the ways that consent decree has harmed the community of Fort Smith, particularly the lower-income families? Mr. Geffken. Well, you know, we have people--we have residents that worry when their rent for their, you know, husband, wife--and it is literally two children will go from $350 to $450 per month ---- Mr. Gianforte. Okay. Thank ---- Mr. Geffken.--and then ---- Mr. Gianforte. Thank you, Mr. Geffken. Mr. Geffken. Thank you. Mr. Gianforte. Yes. I yield back. Mr. Palmer. The gentleman yields. The chair now recognizes the gentleman from Missouri, Mr. Clay, for questions. Mr. Clay. Thank you, Mr. Chairman. The underlying issue of this hearing is the value of civic participation. Citizen suits are an avenue for Americans to right wrongs and compel the government to do better. When Americans bring attention to agency noncompliance, they act as an extension of their government, a lever to enforce the laws. Republicans would like to discourage that. If they get their way, they will foreclose a channel that has literally saved lives, not to mention money. Mr. Weissman, what are some chief benefits from successful citizen suits? Mr. Weissman. Thank you very much, Mr. Clay. The example I highlighted is one. I highlight in my testimony another 20-year effort on the part of my organization to have a rule issued requiring new truck drivers to be adequately trained. In the environmental area, citizen suits are quite common to enforce, again, congressionally made law and congressionally established deadlines, particularly in the clean air area with many lives saved and asthma attacks averted. The list is really very, very long, and it's-- unfortunately, it's so long because there should be no need for these suits. These are suits, again, just to enforce what Congress has directed the agencies to do. Mr. Clay. And thank you for that response. You know, some of the legislation congressional Republicans support would delay the rulemaking process, make agency action more expensive or impractical. The main goal is to do away with consent decrees, yet continuing litigation can often be far costlier than settling. I know a little bit about consent decrees because I represent Ferguson, Missouri. And we entered into a consent decree last year with the Justice Department that made significant changes to the way the criminal justice system was conducted in that community, and it has reaped benefits for that community. So, Mr. Weissman, can you elaborate on the cost- effectiveness of consent decrees? Mr. Weissman. Thank you, sir. Well, you know, in regard to the consent decrees involving local and State Governments, I'm sure there are many examples and some cited here where things have gone awry, but the predicate for all of those lawsuits is the failure by a State or local government to comply with federally established rights. That's for sure what was happening in Ferguson, as well as in many police departments around the country. I think there is overwhelming agreement that those consent decrees, not unimportant, have meaningfully improved police performance in cities across the country. Mr. Clay. They certainly have. And, Dr. Sanders, thank you for your work in the foster care space at the Casey Foundation that impacts so many lives in such a meaningful way. You have seen firsthand how States have devoted more resources to foster care programs in response to consent decrees, correct? Mr. Sanders. That's correct. Mr. Clay. And it sounds like in this context foster youth are positively impacted when States in crisis are forced to act via consent decrees? Do you agree? Mr. Sanders. I would agree in some cases. In other cases, it doesn't appear that there have actually been improvements for children, their--improvements in their outcomes. Mr. Clay. Well, and I would think that that would be debatable because we know of--we all know of some atrocities that occur in the system, so anything that improves that, that protects the lives of those young people has to be beneficial. You know, Congress should not continue down a path that weakens civil participation and citizens' abilities to stand up for their rights. And I would hope that if we get anything out of this hearing, Mr. Chairman, is that citizens still need to participate in our process in an open process. And with that, I yield back. Mr. Palmer. I thank the gentleman for that last point. The chair now recognizes the gentleman from Wisconsin, Mr. Grothman, for his questions. Mr. Grothman. Well, Dr. Sanders, I will keep you going here. You cite in your testimony that child welfare consent decrees work against the people that are trying to help. Can you give us examples or elaborate on that a little bit? Mr. Sanders. Over the last 15 years, there have been numerous developments in brain science, in research around predictive analytics, other efforts that have resulted in improvements in the ability of government agencies to protect children. The consent decrees often lock States into agreements that were made at a point in time and don't allow the kind of flexibility that can be implemented to increase the likelihood that children will be protected. So, examples would include some of the States like Tennessee that were sued more than 15 years ago and aren't able to implement some of the research changes that have occurred more recently to improve lives of children. Mr. Grothman. Let's take an example of a kid. We will call him Joshua, you know, a fictional kid maybe, but Joshua, a child who--how would we deal with him without the consent decree and because of the consent decree, how are we dealing with him, hurting him? Mr. Sanders. I may take the liberty and suggest that part of the solution would be if there were an ability to modify the consent decrees more regularly based on changes in Federal regulation, changes in State performance, et cetera. That doesn't happen as much as we think it should. So, in Joshua's case, it's quite possible that Joshua, as a result of the consent decree, would be seen more frequently by a social worker. What might not happen is that Joshua's social worker would be better trained in trauma-informed practice, which is emerging as a way to keep children safe. And so the visits might occur, but the actual improvements in Joshua's performance and by the social worker may not occur. Mr. Grothman. Can you give me an example of, say, in Joshua's case this is what happens to him under the consent decree and this is what we would be able to do differently? Mr. Sanders. So under the consent decree we can assure that the State will send a social worker out to see Joshua. Under a consent decree, that would occur. What would not occur is that that social worker may be trained in new techniques that would result in Joshua actually being safer. Mr. Grothman. Okay. In New Jersey in 2004 because of a consent decree, the State invested billions of dollars in its child welfare program, but they still haven't been able to exit their consent decree. In March of this year the Federal judge overseeing the case called New Jersey's program a national model. If the program is really so successful according to the Federal judge, why hasn't the State been able to exit from the consent decree? Mr. Sanders. I'm not entirely sure. What I speculate based on knowing something about New Jersey is that there are measures that have not yet been achieved that were part of the initial settlement agreement, and there is a continuing need to improve on specific measures that were agreed to at the time and that there is not 100 percent compliance. Mr. Grothman. Okay. Governor Engler, I think the whole problem here with consent decrees is it kind of gets at our whole form of government, okay? Like it or not, every November and spring elections, people show up and vote for people who they want to have vote on our laws. The idea behind consent decrees is that this system of elections doesn't work very well, and we'd be better off determining our laws when some bureaucrats and judges and lawyers get together and decide what they will be, right? So it is kind of--the whole idea is opposed to kind of our whole form of government. But can you give us some examples of consent decrees that you think were damaging to Michigan in your term as Governor? Mr. Engler. Sure. We had a Federal judge--this started in 1977, but Judge Feikens, the late Judge John Feikens was in charge of the women's prisons in Michigan, and he referred to those as his women and he was very solicitous about what needed to be done in those prisons and he had lots of opinions. And we had a monitor that he had appointed, and basically, he was in charge of the prisons. He was setting policy and instructing us to, you know, follow that. We had another judge who was dealing with prisoners who were dealing with mental illness, and in that case, when I became Governor, we were being fined I think $25,000 a day was the suggested fine for the State because of the previous administration failing to comply with the consent decree. In both of those cases, what I found from our corrections experts, the people running the department, is that they thought having to take the temperature of the oatmeal being served or to be monitoring the temperature of the showers or a number of other reporting requirements were imposed had gone far beyond the pale. And they were arguing that you had differences in opinion respecting different philosophies I suppose that--of how we ought to run this system. And we even had at a point a requirement that we could only put one person in a cell, which we had--we thought that was pretty limiting in terms of our prison capacity. The latest one, which I made the decision as Governor not to enter into consent decrees. I said, look, we'll litigate these. My legal services actually are free. I've got the Attorney General to do that, so we'll fight these. And so we did not do that, but after I left, my successor entered into a consent decree which now has run, you know, for several years. It's going to be $50 million a year is what they're saying. This one is Dwayne B. v. Granholm against the Human Services, and it was brought by a New York group called Children's Rights, Inc., a perfect example, activist showing up and saying this is how you ought to run it. We'd already paid I think $6 million in attorney's fees for them. They're involved with the monitoring and they're involved with the sort of day-to-day departmental operation. The State has been trying to modify that under Governor Snyder. They had a renegotiation of the consent decree. They end up with 211 goals that were part of the modified settlement agreement. And so they're not running these agencies when you're in that kind of situation. And your premise of the question is very important again and is something that Congresswoman Foxx mentioned. Who decides? And I think it ought to be the men and women who get elected. And if there's a deprivation of a constitutional right, that's not been a finding in this. This is just a difference, a fight over how you ought to run this system. And I thought Dr. Sanders' testimony--one of the things he pointed out, sometimes you're mandated to spend a lot of money even on technology because that's what the masters in Washington or the agencies want. That comes maybe at the expense of training the caseworker that's dealing one-on-one with the client. Mr. Grothman. Thank you. I wish I had more time. Mr. Palmer. The gentleman's time is expired. The chair now recognizes the gentleman from Florida, Mr. Ross, for his questions. Mr. Ross. Thank you, Mr. Chairman. And I thank the panelists for being here as well. As a litigator for a little over 25 years, one of the things my client and I would discuss is the cost of defense because we understand, of course, that the economics of being sued, regardless of the principles, weigh just as heavily. And so therefore, you see a similar situation here under the APA under the sue-and-settle procedure, and the way we have addressed it in civil litigation of course has been with regard to presumptions, burdens of proof, recovery of attorney's fees, limitation of attorney's fees, and that has had somewhat of an impact in trying to keep just frivolous cases from being filed in an effort to try to force a settlement, again, irrespective of the principles but basically just on the economics of continuing to defend the litigation. So my question to the panel is what would be the most impactful way of reforming the process, the APA, in order to reduce these consent decrees? And, Governor, I'll start off with you. Mr. Engler. I had mentioned the Federal Consent Decree Fairness Act. That was a few years ago, but they wanted--there was sort of three goals in that act, and I think those are worthy of discussion in terms of--at least as it relates to State and local government. Mr. Ross. Right. Mr. Engler. One, permit the State and local defendants to apply for a modification or a vacation of the consent decree -- -- Mr. Ross. Based on a significant change in circumstances or just ---- Mr. Engler. Well, the way they ---- Mr. Ross.--within the discretion of the ---- Mr. Engler. The way they set it up if there was a change in government, for example, as a new Governor coming in, I maybe wasn't in that fight, maybe I've got a different approach. I mean, I literally went down to a Federal judge's office and sat there and we talked through why he was unhappy and what had been done. I said, look, I haven't been here, but here's how we're going to approach this. Mr. Ross. Got you. Mr. Engler. Eight, nine years later, we got out of the consent decree. I mean--but--so that was a piece of it. The other element was to just to say that there ought to be on a periodic basis a review of these consent decrees just because, again, Dr. Sanders' ---- Mr. Ross. Right. Mr. Engler.--situation changes. The other that I think is important is that there ought to be--is there any finding of a constitutional issue here? Because sometimes--I mean, you literally have a political fight being sort of fought out in this, and your observation about the cost of defense, that sort of is a seductive argument. Mr. Ross. Politically, from an economic--yes, you--I mean, you are almost forced into entering into a consent decree because you have to justify the expense of defending it. Mr. Engler. Yes, but I would say to the Governors and the Attorneys General--I actually think the problem is a little bit the other way. I think that sometimes somebody is--there might be an alignment of political interests trying to do an end run around the political system that hasn't previously agreed with that point of view. Mr. Ross. Got you. Mr. Engler. And that ---- Mr. Ross. Thank you, Governor. Mr. Engler.--is also a reason for review. Mr. Ross. Thank you. Anybody else? Yes, sir, Mr. Geffken. Mr. Geffken. Thank you, Mr. Ross. You know, when it comes to EPA consent decrees and dealing with water, wastewater, when it--the consent decrees are comprehensive in nature, so instead of just focusing on the issue at hand--and this is a 147-page document that's $475 million, and its primary goal was to take care of 22 sanitary system overflow points. And the problem becomes--it becomes much more than that. It becomes looking into fats, oils, and greases. It comes into examining each and every pipe and being very prescriptive and not iterative. And it also--and the biggest way to move forward with this is to allow an integrated planning prospect for consent decrees, so not only having a five-year window and then reexamining where we're going and moving forward but also making sure that we're not shortchanging the other aspects. You know, the city of Fort Smith spent millions to expand Lake Fort Smith, its primary reservoir. It spent millions creating a new reservoir, Lee Creek. Now, it's spending hundreds of millions of dollars on wastewater, and we still need to build a brand-new 48-inch transmission line to come into the city. Mr. Ross. I understand. Mr. Geffken. As it stands, we have to now raise water rates, and this is probably ---- Mr. Ross. Right. Mr. Geffken.--the first that residents are going to be hearing that, but also then we've raised our sewer rates 167 percent in such a very short period of time, so an integrated iterative plan that takes affordability into account but while not taking our eyes off the ultimate goal. Mr. Ross. Thank you. One second. Yes, sir, Governor? Mr. Engler. Yes. One thing that Mr. Weissman and I--we see the problem. We may have analyzed it differently, but it goes to what also can be done. We talked about--he testified about the openness of the process at the Federal level. One of the concerns I've got at the Federal level is the size of these fines, and I just totaled up in his testimony, J.P. Morgan, $13 billion; Citigroup, seven. Anyway, the list of just the banks was over $56 billion. That just works out to about two years' funding for the Justice Department. Nobody knows where the $56 billion went, and that would be a good question for the committee ---- Mr. Ross. Okay. Mr. Engler.--to determine. Where does the money go? And there ought to be a lot of openness because part of the problem with this is that these settlements get made, and the disposition of the funds is handled administratively, and I think the Attorney General is trying to end that practice, but that ought to be--those ought to be appropriated dollars if the injury was to the public. That's two years' funding for the Department. Mr. Ross. Thank you. I yield back. Mr. Palmer. The gentleman yields. I now recognize myself for questions. And first of all, Governor, you had asked that ``Consent Decrees in Institutional Reform Litigation: Strategies for State Legislatures'' be entered into the record, without objection, but for transparency's sake, I must confess that I am a coauthor of that report. One of the points I want to make here is that we are not arguing that all consent decrees are bad. In fact, consent decrees are a legitimate and useful tool in the legal system. They have proven so in both public and private cases. The point and focus of this hearing is the abuse of consent decrees, and I think we got a little off-track on that, particularly when they are used to circumvent the legislative process, which denies citizens their right to governance through their elected representatives. It is particularly egregious in the direct manner in which they bind State and local governments in administering their programs and allocating their resources. Illinois is a prime example of this. They are currently under 80 consent decrees, some dating back to the 1970s. And just from your perspective as a former Governor, having served in elected office--and I also for transparency's sake, I have known the Governor for 20 years--you want that transparency and that accountability to the voters, which is denied them when they are under a consent decree and particularly when the consent decree is being administered by an unelected judge, an unelected control group, unelected bureaucrats, and unelected special master. Is that not problematic for representative government? Mr. Engler. That's exactly right, and there simply is no accountability there, at least no accountability back to voters. And we haven't talked about the role of monitors either today, but the Federal judge is appointing somebody to kind of be the master to oversee. And in the case of the ongoing litigation in Michigan, there's somebody that's reporting every six months back to the Federal judge. Now, the criteria for picking the monitors is sort of in the province of the Federal judge. That's often, you know, I suppose a qualified university professor or there's a little cottage industry of monitors that are out there. But the reality is that when there's 211 sort of factors that are being monitored, there's not much discretion left for the agency head or the legislature to set priorities or adjust priorities as new information becomes available, new technology emerges. One of the boondoggles that's been out there in the child welfare world has been the whole SACWIS implementation. Dr. Sanders is very familiar with this, but, I mean, States have spent literally tens of millions of dollars trying to meet a Federal mandate there. This is on data collection. And the way this has been done I would advise nobody would ever do a data project that way. But we--I faced that situation, and we were-- by the time I was elected, we were several tens of millions of dollars into the project. It would cost many more millions to start over, and it was going to cost many more millions to finish. We simply slogged on to try to get that done and still wasn't adequate, and yet that's the kind of micromanagement you're getting. Another area where--and a lot of this area--and again, Dr. Sanders' testimony is important, especially when it comes to children and children's welfare, the cross-agency cooperation and collaboration that's necessary today often is precluded by the very Federal laws that are passed here. They don't allow the flexibility to bring the mental health services, the public health services, the education services all together, and in fact each of the programs often has their own administrator when we'd be better off--I've said you have to be very smart sometimes to be trapped in poverty because you've got so many different agencies with so many different programs who want to look out for you, and we ought to be able to literally appoint an individual who could draw all the services together. Mr. Palmer. Well, in Dr. Sanders' testimony he mentioned a couple of cases, Alabama being one of them, R.C. v. Hornsby, in which we were able to work through a consent decree to a reasonable solution. But there was another consent decree in Alabama involving the State highway department in which we literally spent enough money just on legal fees to repave every mile of interstate highway in Alabama twice. And for those who don't think we have paved roads, we have got lots of paved roads. That is the problem is the ability to work your way through these. And Dr. Sanders' testimony particularly I think is relevant in the area of children that as science changes, as techniques change, those aren't taken into account. Dr. Sanders, I would like to know, have you seen circumstances where full compliance with a consent decree is impossible? And I am thinking of New Jersey, which has been held up as a model, but they are still under a consent decree. Mr. Sanders. Thank you for the question. We actually in one of our convenings had a data expert from Emory University take a look at the--some of the agreements and found that it was impossible to achieve all of the measures that were required at the same time. And in part that happened because the negotiations for the consent agreement weren't made with data experts; they were made with attorneys, and they weren't familiar with some of the measures. And so it was--it would not be possible for some States to exit, given the current measures. Mr. Palmer. Thank you, Dr. Sanders. Mr. Geffken, who filed the suit against Fort Smith? Mr. Geffken. I believe that actually came from the State and EPA ---- Mr. Palmer. Okay. So was ---- Mr. Geffken.--against the city in order to make--to make the city of Fort Smith compliant regarding sanitary system overflows. Mr. Palmer. And you believe they were trying to make an example of Fort Smith? Mr. Geffken. I do based on the information I've just heard from Representative Gianforte. Yes, that was unknown to me when I went there. I knew we had a large problem, and I knew it was being addressed by spending several hundred million dollars. Again, it--the whole process of a consent decree ties one's hands, and you're not able to apply the latest technology or focus on actually what yields ---- Mr. Palmer. How much ---- Mr. Geffken.--the best benefit. Mr. Palmer. How much did you say this is costing the residents of Fort Smith, say, an average household? What is it? Mr. Geffken. Fifteen thousand dollars. Mr. Palmer. Fifteen thousand dollars, and the median household income is ---- Mr. Geffken. Thirty-three thousand five hundred. Mr. Palmer. Thirty-three thousand five hundred. This is one of the examples, again, where overregulation and the abuse of consent decrees does great harm to low-income people. I grew up pretty much dirt poor. My dad had an eighth-grade education. It would have been staggering to us to have had the type of increases in sewer payments that you guys have had in Fort Smith or that we have had in Jefferson County in Alabama and Shelby County. We are going through the same thing, and it has had a negative impact on the ability to grow the economy. And just to give you an idea of how overregulation harms the economy, Gallup put out a report, pointed out that prior to 2008 there were 100,000 more businesses starting up than were closing. By 2014 in the United States now 70,000 more businesses are closing than starting up, and the primary problem is regulation. One of the problems that we point out in that paper that Governor Engler cited is the inability to track these consent decrees. We went to the Justice Department, we went to the judiciary to try to see if they categorize these in such a way that we could look at Arkansas or look at Michigan or the State of Washington and determine, you know, what consent decrees apply to those States, the State or local government. They don't track it that way. So, I would ask, Dr. Sanders and Mr. Weissman, should Congress consider legislation requiring Federal agencies, particularly the Justice Department and the judiciary to track and categorize and publish a list of these consent decrees? Dr. Sanders? Mr. Sanders. We found with the child welfare consent decrees that there actually wasn't any single place where it was--the information was captured, and so we've started to do that just based on the convenings and discussions with States. If--that presents a number of issues, and it seems that it would be a good direction for Congress to take a look at, at a minimum tracking the consent decrees, as well as the cost and the results. Mr. Palmer. Mr. Weissman, would you have a problem with the Federal Government tracking these and publishing a list so that they could be easily identified? Mr. Weissman. Absolutely not. I think that that would be highly desirable. I think, you know, there's some difference between this consent decrees where the Federal Government initiated the case versus where the--you know, a decentralized thing by a citizen group. But in--so the second would be harder to compile but would be desirable in any case. Mr. Palmer. Well, it really wouldn't because if the Federal Government entered into a consent decree, it doesn't matter who initiated the suit. It is a matter of tracking these so that there is a concise list. Governor Engler? Mr. Engler. I think the courts also ought to have an obligation here. There ought to be something in the judicial system where each of the--I don't know if it's the circuit court who oversees the district courts in their region, you know, whether the circuits would have it or somehow the court administrator--the Federal judges ought to know how many consent decrees they're actually enforcing in their jurisdictions, and that may be an easier way to get it than trying to go to the agencies and--because who knows? But they're all--there's a limited number of Federal judges and Federal, you know, circuit courts, and maybe that's--that--they should know their caseload, and that's part of it. Mr. Palmer. I would like to thank our witnesses for taking the time to appear before us today, and I would particularly like to thank the ranking member, Mrs. Demings, for her indulging me going a little bit longer. If there is no further business, without objection, the subcommittees stand adjourned. [Whereupon, at 11:40 a.m., the subcommittees were adjourned.] APPENDIX ---------- [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [all]