The Logic of Sue and Settle

WATER_Harpers Ferry_MHoldenBy Daniel Carpenter-Gold—May 6 at 5:46 p.m.

Courtney McVean and Justin Pidot’s article, Environmental Settlements and Administrative Law, appearing in Volume 39.1 of the Harvard Environmental Law Review, addresses the practice of federal agencies settling with interest groups in litigation over the agencies’ regulatory practices. This “sue and settle” practice is not new, but its use, particularly by the Environmental Protection Agency (“EPA”), has received increased resistance in recent years—the Chamber of Commerce, Center for Regulatory Solutions, and American Legislative Exchange Council have each published documents decrying EPA’s settlements in challenges to regulations brought by environmental organizations.

The article explains that “sue and settle” is appropriate, both as a legal question and a regulatory tool. Through a series of case studies, McVean and Pidot show that, while settlements may require an agency to allocate resources within their budget, take additional procedural steps, or even take action on a regulation by a certain deadline, these settlements remain within the bounds of agency discretion. Furthermore, the authors argue, the judiciary is both willing and able to refuse settlements or consent decrees that require agencies to act improperly.

McVean and Pidot do an excellent job of refuting the claim that agencies’ practice of settling with interest groups is inappropriate. But why is settlement such a popular tool in the first place?

As the authors note, a desire to conserve agency resources might not be as important as it would seem, since the Department of Justice—which would represent the agencies—almost never charges for its services. However, a potential reason for settlement is concern about setting legal precedent: as other scholarship has noted, defendants who expect to face many similar cases might be expected to pick to litigate only the cases they are most likely to win, and to either delay or settle any cases brought prior to winning favorable litigation to prevent the development of adverse precedent. Agencies might be slightly more constrained in this approach than other defendants because they will almost always be litigating in the D.C. Circuit—but this also makes the precedent of that court all the more crucial.

A third reason to pursue settlements is likely unique to agency suits: a desire to tie the hands of the agency. In addition to the substantial requirements that stem from the Administrative Procedure Act, agencies face vicious political and public-opinion battles in what has been called the “blood sport” of contemporary regulatory politics. So, although it might seem like a constraint on agency discretion, a binding agreement to take steps toward regulation could actually serve as a shield against political pressure to delay regulatory action.

Seen in this light, settlements are not just acceptable under administrative law, they might even be preferable in some circumstances. A recent example is a consent decree between EPA and a group of environmental organizations requiring the agency to “tak[e] final action” on proposed coal-ash regulations. EPA had attempted to formulate new regulations after a high-profile 2008 spill, but, even though the agency had resolved to issue a proposal by the end of 2009, it failed to do so due in part to industry pressure. National politics around the 2012 election led to further delay, and the regulation remained stalled until Earthjustice mounted a legal challenge to EPA’s inaction, resulting in a settlement under which EPA agreed to adopt new rules. As a result, EPA promulgated a promising (though perhaps not perfect) rule to regulate coal ash at the end of 2014.

Obviously it is impossible to know whether EPA administrators Lisa Jackson or Gina McCarthy would have rather issued regulations at an earlier date. But the fact that EPA had gone so far as to set a deadline for itself in 2009 indicates that it had hoped to be able to resolve the issue one way or the other. At least partially due to external resistance to further regulations on the coal industry, however, the regulation was pushed off for years, until a suit and settlement put the EPA back on track. It is hard not to see that as a benefit—not only for the environmental groups, but also for the agency itself.