REGULATIONS:

House Republicans accuse EPA, enviros of collusion

Rep. Ed Whitfield (R-Ky.) believes that U.S. EPA has worked out a nifty way to make an end run around both Congress and the federal regulatory process when it wants to implement a new rule that may be politically sensitive.

All the agency has to do is get some green group to sue over some aspect of the desired rule, he said. Then EPA can roll over in the ensuing legal battle and head right to settlement proceedings, claiming it was "forced" by the court system and consent decrees to initiate the new rulemaking. It is a path devoid of both messy public comment periods and political accusations over whether EPA is moving unilaterally.

And if that wasn't enough, the group that sues EPA can even get its legal expenses covered for its trouble, Whitfield said. Their attorney's fees can be paid for out of federal government's Judgment Fund, which is set aside to pay for settlements in lawsuits against the government.

"We have reason to believe ... that EPA is out there encouraging these lawsuits," Whitfield said at a hearing yesterday before the House Energy and Commerce Committee on the impacts of government regulations on the business and manufacturing sectors.

Whitfield said the scenario likely played a role in an agreement earlier this year that caused the Tennessee Valley Authority to plan for the shutdown of 18 coal fired boilers and spend billions of dollars to put air pollution controls on its remaining coal plants.

EPA had to sign off on the April settlement, which was struck after environmental groups sued TVA claiming that several of the utility's plants were violating the Clean Air Act.

Whitfield's charges aren't exactly new. Industry groups and EPA critics have given a name to this special brand of rulemaking. It's called "sue and settle."

But yesterday's hearing was one of the most public -- and vociferous -- airings of the theory in many months.

Defenders of these types of suits disagree with the soundness of the "sue and settle" conspiracy, arguing that plaintiffs are often simply trying to get EPA to follow the laws already on the books and that EPA is not an organization that simply caves when lawsuits are filed.

Sierra Club spokeswoman Maggie Kao called the theory a "sad attempt to create a boogie man out of vital and broadly supported protections that have improved and saved millions of Americans' lives."

In testimony before a different Energy and Commerce subcommittee last month, David Goldston, government affairs director at the Natural Resources Defense Council, said, "The whole 'sue and settle' narrative is faulty."

But Chamber of Commerce Senior Vice President William Kovacs said at yesterday's hearing that sue and settle is the vehicle by which EPA has instituted at least 16 rules in recent years, including such controversial regulations as New Source Performance Standards for greenhouse gas emissions from electric utilities and refineries; revisions to the definition of solid waste under the Resource Conservation and Recovery Act; and Clean Air Act regulations on oil and gas drilling operations.

Kovacs complained in testimony submitted to the committee that because "sue and settle" rulemaking occurs as a result of EPA's agreements with environmental groups, the terms of the settlement are often one-sided and give little consideration to the industry sector that will be covered by the regulation.

And to make matters worse, Kovacs said, the Treasury Department's Justice Fund is set up in such a way that information on who and how much money is paid in the settlement process is not disclosed.

Subcommittee Chairman John Shimkus (R-Ill.) called the whole process "astounding" and "crazy" and ranking member Gene Green (D-Texas) said that the set up sounded like a "sweetheart deal."

Whitfield took the issue one step further by pointing out that EPA is in charge of billions of dollars in grant funding, which often winds up in the hands of the very groups that sue them.

"They have a large sum of money to give grants and many of those grants are going to the environmental groups that then turn around and file the lawsuits. And then they settle and enter into consent decrees and then they pay all the legal feels and it's almost like an in-house job here and it's not the way we need to do policy in the United States," he said.

Whitfield said the best way to start to untangle the sue-and-settle system would be to provide more sunlight on the Judgment Fund so that Congress can find out which EPA grantees are also making a killing when it comes to settlement actions.

House Oversight and Government Reform Chairman Darrell Issa (R-Calif.) is proposing to do just that with the "Judgment Fund Transparency Act of 2011." Introduced in April, the bill would disclose specific information when it comes to settlements including the name of the plaintiff, the name of the agency that submitted the claim, a brief description of the facts of the case and the amount paid.

That bill currently sits before the House Judiciary Committee.

Another bill recently introduced by Sen. John Barrasso (R-Wyo.) and Rep. Cynthia Lummis (R-Wyo.) would bar environmental groups that have a net worth of more than $7 million from having their legal fees paid for (E&ENEWS PM, May 25).

Following yesterday's hearing, Amit Narang, who serves as a regulatory policy expert for the advocacy group Public Citizen, said that the Chamber of Commerce and House Republicans are being hypocritical when they attack sue and settle, especially considering that they have also argued in favor of proposals that would incorporate more judicial review into the rulemaking process.

"If they're going to argue on the one hand that private citizens shouldn't be allowed to take their claims to court and force agencies to [enforce the laws on the books], how can they also advance an agenda that would allow for the courts to come in at multiple phases of the regulatory process and challenge rules before they have even been finalized?" Narang said.