New U.S. Chamber Report Exposes Growing Costs of Regulating Behind Closed Doors

Sunday, May 19, 2013 - 8:00pm

“Sue and Settle” Process Used to Issue Many New Regulations

WASHINGTON, D.C.— The “sue and settle” process, where environmental advocacy groups sue federal agencies to issue regulations by a specific deadline, is being abused, resulting in interested parties being shut out of regulatory decisions by key federal agencies, particularly the Environmental Protection Agency (EPA), according to a detailed new report released today by the U.S. Chamber of Commerce.

The report, titled Sue and Settle: Regulating Behind Closed Doors, identifies at least 60 different occasions between 2009 and 2012 where the EPA chose not to defend itself in lawsuits brought by special interest advocacy groups and in each case agreed to settlements on terms favorable to those groups. These settlements directly resulted in EPA agreeing to propose more than 100 new regulations, many of which would impose compliance costs in the tens of millions and even billions of dollars. The Fish and Wildlife Service (FWS) has also been receptive to sue and settle lawsuits, agreeing to propose adding over 700 new candidates to the Endangered Species list.

“It is clear that the sue and settle process is increasingly being used as a technique to shape agencies’ regulatory agendas, without input from the public or the regulated community,” said Bill Kovacs, the Chamber’s senior vice president for the Environment, Technology and Regulatory Affairs.  “From a new wave of endangered species listings to the EPA’s federalization of the Chesapeake Bay cleanup program, to the federal takeover of regional haze programs, this report outlines how recent sue and settle arrangements have been used to serve the ends of a few favored interest groups.”

As a result of the sue and settle process, the agency submits to the binding terms of settlement agreements, using congressionally appropriated funds to achieve the demands of specific outside groups. This process also allows agencies to avoid the normal protections built into the rulemaking process—review by the Office of Management and Budget and the public, and compliance with executive orders—as the agency’s new obligation is created.

Regulations resulting from sue and settle agreements include the Utility MACT rule, costing up to $9.6 billion annually; the Chesapeake Bay Clean Water Act Rules, costing up to $18 billion; and the various regional haze rules that EPA has imposed on the states, which are estimated to total $2.16 billion in new costs. FWS spent more than 75% of their FY 2011 allocation for endangered species listing and critical habitat designation to take actions required by court orders or settlement agreements resulting from litigation.

“Sue and settle allows agencies to avoid the normal protections built into the rulemaking process, including Congressional oversight and reviews by the public,” Kovacs added. “The most effective solution to sue and settle lies with Congress, and they should pass recently-introduced legislation to address this issue without delay. Our hope is that by shining the light on how this process is abused by special interest groups, we can enact much-needed reforms to protect the integrity of the rulemaking process.”

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.