Whitehouse, Carper Raise Alarm Over EPA Settlement Directive

Washington, DC – Following rollbacks of important air and water protections and reports of dramatically slowed environmental enforcement by the Environmental Protection Agency (EPA), Senators Sheldon Whitehouse (D-RI) and Tom Carper (D-DE) are questioning the EPA and the Department of Justice about a new directive that curtails Americans’ ability to hold the EPA accountable for enforcing key environmental laws.  The vaguely worded EPA policy makes it significantly harder for citizens and the EPA to enter consent decrees and settlements to ensure the timely completion of important environmental rules guaranteed by laws like the Clean Air Act and Clean Water Act.  The directive also states that before entering into a settlement, EPA will now seek the concurrence from the same industries whose air and water pollution it regulates. 

In a letter to EPA Administrator Scott Pruitt, the lawmakers highlight how the directive “drastically changes the previous practice of attempting to settle legitimate claims in a fair and efficient manner.  For example, where the EPA would have previously settled a deadline suit for clearly failing to meet a statutory deadline, the EPA appears to now intend to litigate that claim — absent agreement from the party(ies) that might be regulated if EPA takes action — resulting in excessive time and litigation costs to taxpayers and plaintiffs and yet leading to the same outcome: the Court setting a deadline for EPA action.”

The directive clears the way for polluting industries to wrest control of the agency that regulates them.  Whitehouse and Carper write in a letter to Justice Department Acting Assistant Attorney General Jeffrey Wood, “The Directive’s mandated consultation only with ‘regulated entities’ and ‘affected states,’ terms which are not defined, appears to give some nonparty entities, but not other members of the public, a seat at the settlement table.  Before settling any claim, EPA must now seek the blessing of the very entities it is supposed to regulate.  This raises serious concerns about agency capture.”

When issuing the directive in October 2017, Administrator Pruitt offered no facts to corroborate allegations of “collusion” by the previous administration and environmental groups, and gestured at a supposedly wide-ranging conspiracy to keep polluters from weighing in on settlement agreements.  Whitehouse and Carper note in their letter to Wood that the policy’s “unsupported allegations of prior collusion with outside environmental groups do the public a great disservice by sowing confusion about the important role the public plays in ensuring that EPA complies with and enforces public health and environmental protection laws.” 

For four decades, the EPA and the Justice Department have followed a Memorandum of Understanding that stipulates “the Attorney General shall retain control over the conduct of all litigation” and that the “negotiation of any agreement to be filed in court shall require the authorization and concurrence of the Attorney General.”  As Whitehouse and Carper point out, Pruitt’s new directive appears to infringe on the Justice Department’s prerogatives under the memorandum.  Whitehouse and Carper cite concerns from 57 former career EPA attorneys in asking the Justice Department’s Environment and Natural Resources Division to detail how this directive will affect its work in litigation and related settlement negotiations on behalf of the EPA. 

On Sunday, the New York Times reported that the EPA has dramatically slowed enforcement actions against polluters for violating key environmental laws.  The Times compiled a database of civil cases filed by the Trump EPA and the two previous administrations.  The data show a third fewer cases filed than President Obama’s EPA to this point in his first term and roughly a quarter fewer than President George W. Bush’s in the same period of time.

Full text of the Senators’ letters can be found below.  PDF copies of the letters are available here and here.

December 11, 2017

The Honorable Jeffrey H. Wood

Acting Assistant Attorney General

U.S. Department of Justice

Environment and Natural Resources Division

950 Pennsylvania Avenue, N.W.

Washington, DC 20530-0001

Dear Acting Assistant Attorney General Wood:

On October 16, 2017, Environmental Protection Administration (EPA) Administrator Scott Pruitt issued the “Directive Promoting Transparency and Public Participation in Consent Decrees and Settlement Agreements” (“the Directive”).[1]  By its terms, the Directive was motivated by alleged reports “that EPA has previously sought to resolve lawsuits filed against it through consent decrees and settlement agreements that appeared to be the result of collusion with outside groups.”  “When negotiating these agreements,” the Directive claims, “EPA excluded intervenors, interested stakeholders, and affected states from those discussions.”  The Directive mandates that now, whenever EPA receives notice of a complaint or petition for review, “EPA shall directly notify any affected states and/or regulated entities,” and “seek to receive the concurrence of any affected states and/or regulated entities before entering into a consent decree or settlement agreement.”

As outlined in a November 13, 2017 letter by fifty-seven former EPA career attorneys,[2] the Directive’s unsupported allegations of prior collusion with outside environmental groups “do the public a great disservice by sowing confusion about the important role the public plays in ensuring that EPA complies with and enforces public health and environmental protection laws.”  The Directive’s mandated consultation only with “regulated entities” and “affected states,” terms which are not defined, appears to give some nonparty entities, but not other members of the public, a seat at the settlement table.  Before settling any claim, EPA must now seek the blessing of the very entities it is supposed to regulate.  This raises serious concerns about agency capture.

This new directive should be of significant concern to the Environment and Natural Resources Division (ENRD) given its role representing the EPA in litigation and related settlement negotiations.  Since 1977, the Department of Justice (through ENRD) and EPA have operated under a Memorandum of Understanding which makes clear “the Attorney General shall retain control over the conduct of all litigation” and that the “negotiation of any agreement to be filed in court shall require the authorization and concurrence of the Attorney General.”  42 FR 48942, 48943.  Administrator Pruitt’s Directive appears to infringe upon the long-standing prerogatives of DOJ to conduct litigation and settlement negotiations in the matter it sees fit by obligating EPA to “seek to receive the concurrence of any affected states and/or regulated entities before entering into a consent decree or settlement agreement.”  The Directive also appears to limit DOJ’s ability to negotiate on the issue of attorney’s fees. 

To help us better understand how the new EPA Directive will affect DOJ’s ability to represent EPA in court, we respectfully request that you respond to the following questions by December 22, 2017:

1. What role, if any, did ENRD play in drafting, reviewing, commenting on, editing, or approving EPA’s October 16 Directive? 
2. In the course of its representation of EPA during the Obama Administration, when did ENRD enter into any consent decrees or settlement agreements that were the “result of collusion with outside groups”? Please specify and explain.
3. In the course of its representation of EPA during the Obama Administration, when did ENRD enter into any consent decrees or settlement agreements that violated the terms of the March 13, 1986 Memorandum from Attorney General Ed Meese titled, “Department Policy Regarding Consent Decrees and Settlement Agreements”? Please specify and explain.
4. If the answer to Questions 2 and 3 are “no,” does DOJ believe there is a basis for the assertion that “EPA has previously sought to resolve lawsuits filed against it through consent decrees and settlement agreements that appeared to be the result of collusion with outside groups”?
5. As noted above, the Directive provides that EPA shall notify, consult, and “seek to receive the concurrence of any affected states and/or regulated entities before entering into a consent decree or settlement agreement.”  Who is responsible for determining which “states and/or regulated entities” must be notified and consulted under the Directive?  What criteria will be used to determine if such determinations are made?  
6. How does ENRD interpret the Directive’s mandate to “take any and all appropriate steps to achieve the participation of affected states and/or regulated entities in the consent decree and settlement agreement negotiation process”?  What specific steps does ENRD deem appropriate?
7. Rule 24 of the Federal Rules of Civil Procedure provides the process by which affected or interested non-parties may intervene in a litigation as active parties. Given that there already exists a neutral legal process for including affected or interested parties, why is the new process articulated in the Directive necessary? How will ENRD implement the Directive in light of Rule 24?
8. Pursuant to the Directive, how will ENRD include affected states and/or regulated entities in settlement negotiations between the parties? Will ENRD allow these states and entities to participate in drafting the settlement agreement or consent decree, or will these states and entities have a more limited role (and if so, please describe it)?  What discretion, if any, does ENRD have to permit or prohibit particular affected states and/or regulated entities from participating in settlement discussions?
9. Under what circumstances would it be permissible for EPA and/or ENRD to have ex parte communication with affected states and/or regulated entities about potential consent decrees or settlement agreements without the participation of the plaintiff(s)?
10. How is EPA’s new concurrence requirement related to the obligation to provide notice and comment of proposed settlements in the Federal Register?  What responsibilities will ENRD and EPA notice and comment under the Directive?  How will ENRD weigh contribution from affected states and regulated entities received through the concurrence process as compared with comments received through notice and comment?  Will ENRD make input received in the concurrent process available to the court? 
11. How will implementation of the Directive affect the ENRD’s ability to assure the court that settlement negotiations are progressing well enough for the court to continue to hold the case in abeyance, given that the new concurrence requirement will likely have the effect of prolonging settlement negotiations?
12. Since October 16, 2017, in any pending or resolved matter, has ENRD, on behalf of EPA, and pursuant to the Directive, taken any steps “to achieve the participation of affected states and/or regulated entities in the consent decree and settlement agreement negotiation process”?  If so, please specify which matters, which affected states and/or regulated entities were consulted for participation, what input they provided, what result was reached (if applicable), and whether the consulted entities gave their concurrence in such result.  (Please note that, given the necessary involvement of non-parties to the litigation in such negotiations, any claim of privilege as to those consultations will have been waived.)
13. How do you anticipate the Directive will change ENRD’s litigation costs, including personnel costs?  Do you anticipate that you will have to hire additional attorneys and other staff in order to respond to increased case loads?  For example, all other things being equal will the Directive make it more expensive to litigate a deadline suit than before the Directive was in place?  Will the Directive’s requirements that EPA notify and seek the concurrence of affected states and regulated entities before entering into a settlement agreement increase the length of time necessary to resolve cases? 

Thank you for your prompt attention to these questions.

December 13, 2017

The Honorable Scott Pruitt

Administrator

Environmental Protection Agency

1200 Pennsylvania Ave. NW

Washington, DC 20004

Dear Administrator Pruitt,

We write to request information about the manner in which the Environmental Protection Agency (EPA) intends to implement your “Directive Promoting Transparency and Public Participation in Consent Decrees and Settlement Agreements” (“the Directive”), issued on October 16, 2017.^[3] In your accompanying memorandum,^[4] you indicate that the Directive was motivated by alleged reports “that EPA has previously sought to resolve lawsuits filed against it through consent decrees and settlement agreements that appeared to be the result of collusion with outside groups.”  The memorandum additionally claims that “[w]hen negotiating these agreements, EPA excluded interveners, interested stakeholders, and affected states from those discussions.” The memorandum goes on to announce that “the days of this regulation through litigation, or ‘sue and settle,’ are terminated.” The Directive could thus be read as a refusal by the EPA to settle any matter going forward, a position that would sharply contrast with national judicial trends.^[5] We are concerned that the Directive may introduce unnecessary delays and extra costs into a litigation process that was previously more straightforward, sensible and transparent.

There are a number of different types of lawsuits that can be filed against the EPA. For example, certain statutes, such as the Clean Air Act, include mandatory deadlines for the EPA to complete certain actions. If the EPA misses a deadline, any person can file a lawsuit—referred to as a deadline suit—to force it to complete these activities. Similarly, interested persons may file “unreasonable delay” suits alleging that the agency has taken too long to take an action required by statute but for which there is no specified statutory deadline. In addition, under the Administrative Procedure Act, the EPA must give interested persons the right to petition for the issuance, amendment, or repeal of a rule.^[6]  Moreover, some environmental statutes provide any person or state the opportunity to petition EPA for specific rulemaking actions.

According to the Directive, going forward, whenever EPA receives notice of a complaint or petition for review, “EPA shall directly notify any affected states and/or regulated entities,” and “seek to receive the concurrence of any affected states and/or regulated entities before entering into a consent decree or settlement agreement.” This drastically changes the previous practice of attempting to settle legitimate claims in a fair and efficient manner. 

For example, where the EPA would have previously settled a deadline suit for clearly failing to meet a statutory deadline, the EPA appears to now intend to litigate that claim irrespective of the merits— absent agreement from the party(ies) that might be regulated if EPA takes action —resulting in excessive time and litigation costs to taxpayers and plaintiffs and yet leading to the same outcome: the Court setting a deadline for EPA action.

Moreover, the Directive appears to create unnecessary alternatives to pre-existing mechanisms that already ensure transparency in lawsuits or give voice to impacted parties. Specifically, the federal court rules permit impacted stakeholders to join as parties. Further, impacted parties are also welcome to comment on the proposed settlement when it is published in the Federal Register. The Directive does not speak to why these mechanisms are inadequate.          

            To help us better understand how the new Directive will be interpreted and implemented by the EPA, we respectfully request that you respond to the following questions by January 19, 2017:

1. Since 1977, the Department of Justice (through its Energy and Natural Resources Division) and EPA have operated under a Memorandum of Understanding which makes clear “the Attorney General shall retain control over the conduct of all litigation” and that the “negotiation of any agreement to be filed in court shall require the authorization and concurrence of the Attorney General.”  42 FR 48942, 48943.  The new Directive appears to infringe upon the long-standing prerogatives of DOJ to conduct litigation and settlement negotiations in the matter it sees fit by obligating EPA to “seek to receive the concurrence of any affected states and/or regulated entities before entering into a consent decree or settlement agreement.”  The Directive also appears to limit DOJ’s ability to negotiate on the issue of attorney’s fees. What role, if any, did the Energy and Natural Resources Division play in drafting, reviewing, commenting on, editing, or approving EPA’s October 16 Directive? Please provide copies of any communications between the Department of Justice and the EPA about the Directive as it was being developed.
2. Many statutes require litigants to file a Notice of Intent (NOI) with the EPA so that the agency has an opportunity to remedy the alleged wrong before a formal complaint is filed in court. What impact, if any, does the Directive have on the agency’s handling of NOI’s? Does the Directive mean that EPA will allow everything to proceed to litigation? If not, will EPA seek concurrence from affected non-parties if it intends to address the claim before a lawsuit is filed?
3. As noted above, the Directive provides that the EPA shall notify, consult, and “seek to receive the concurrence of any affected states and/or regulated entities before entering into a consent decree or settlement agreement.”  Who is responsible for determining which “states
4. and/or regulated entities” must be notified and consulted under the Directive?  Would you also contact stakeholders who are not regulated entities but may be impacted by the settlement, such as local and tribal governments or community and non-governmental organizations? What criteria will be used to determine who should be notified? 
5. How does the EPA interpret the Directive’s mandate to “take any and all appropriate steps to achieve the participation of affected states and/or regulated entities in the consent decree and settlement agreement negotiation process”?  What specific steps does the EPA deem appropriate?
6. Rule 24 of the Federal Rules of Civil Procedure provides the process by which affected or interested non-parties may intervene in a lawsuit as active parties. Given that there already exists a neutral legal process for including affected or interested parties, why is the new process articulated in the Directive necessary? How will the EPA’s Directive be implemented in light of Rule 24? 
7. Pursuant to the Directive, how will the EPA include affected states and/or regulated entities in settlement negotiations between the parties? Will the EPA allow these states and entities to participate in drafting the settlement agreement or consent decree, or will these states and entities have a more limited role (and if so, please describe it)? Given that settlement discussions are considered confidential only between the parties in a lawsuit, do you acknowledge that the involvement of non-parties will waive that protection?
8. How is the EPA’s new concurrence requirement related to the EPA’s obligation to provide notice and comment of proposed settlements? How will the EPA weigh contributions from affected states and regulated entities received through the concurrence process as compared with comments received through notice and comment?  Will the EPA make input received in the concurrence process available to the court and the public, and if not, why not? 
9. How will implementation of the Directive affect the EPA’s counsel’s ability to assure the court that settlement negotiations are progressing well enough for the court to continue to hold the case in abeyance, given that the new concurrence requirement will likely have the effect of prolonging settlement negotiations?
10. Will the Directive treat lawsuits differently based on their expected impact or the nature of their claim for relief? Will the EPA treat deadline suits and the various types of petitions that are filed under environmental statutes differently? If so, please specify any differences.
11. Do you anticipate that it will cost more to litigate a “deadline suit” than before the Directive was in place? Will the Directive’s notification and concurrence requirements increase the length of time necessary to resolve cases? How do you anticipate the Directive will change EPA’s litigation costs, including personnel costs? Do you anticipate that you will have to hire additional attorneys and other staff in order to respond to increased caseloads? Have you conducted an analysis as to comparative costs of litigation vs. settlement for each type of litigation (and if so, please provide it)? Do you anticipate that potential budget cuts to EPA and/or to the Energy and Natural Resources Division, combined with the EPA’s intent to litigate all matters absent stakeholder consensus, will make it more difficult and costly for EPA to settle matters? If not, why not?
12. Please use the attached document to provide information for each complaint or petition brought against the EPA during the period January 20, 2009 to present. (Please note that, given the planned involvement of non-parties to the litigation in negotiations conducted on or after October 16, 2017, any claim of privilege as to those consultations will have been waived.) After your initial response, please provide an updated document covering new information to the Committee on a quarterly basis. 

Thank you very much for your attention to this important matter.  If you have any questions or concerns, please ask the appropriate members of your staff to contact Michal Freedhoff, a member of the Environment and Public Works Committee staff, at 202-224-8832, or Dan Dudis, a member of Senator Whitehouse’s staff, at 202-228-6294.

Sincerely,

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