```

[Senate Hearing 114-80]
[From the U.S. Government Publishing Office]

                                                         S. Hrg. 114-80

 OVERSIGHT OF LITIGATION AT EPA AND FWS: IMPACTS ON THE U.S. ECONOMY, 
             STATES, LOCAL COMMUNITIES AND THE ENVIRONMENT

=======================================================================

                                HEARING

                               before the

 SUBCOMMITTEE ON SUPERFUND, WASTE MANAGEMENT, AND REGULATORY OVERSIGHT

                                 of the

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             AUGUST 4, 2015

                               __________

  Printed for the use of the Committee on Environment and Public Works

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

       Available via the World Wide Web: http://www.gpo.gov/fdsys

                                  ______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

96-844 PDF                     WASHINGTON : 2015 
-----------------------------------------------------------------------
  For sale by the Superintendent of Documents, U.S. Government Publishing 
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                          Washington, DC 20402-0001

               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                    ONE HUNDRED FOURTEENTH CONGRESS
                             FIRST SESSION

                  JAMES M. INHOFE, Oklahoma, Chairman
DAVID VITTER, Louisiana              BARBARA BOXER, California
JOHN BARRASSO, Wyoming               THOMAS R. CARPER, Delaware
SHELLEY MOORE CAPITO, West Virginia  BENJAMIN L. CARDIN, Maryland
MIKE CRAPO, Idaho                    BERNARD SANDERS, Vermont
JOHN BOOZMAN, Arkansas               SHELDON WHITEHOUSE, Rhode Island
JEFF SESSIONS, Alabama               JEFF MERKLEY, Oregon
ROGER WICKER, Mississippi            KIRSTEN GILLIBRAND, New York
DEB FISCHER, Nebraska                CORY A. BOOKER, New Jersey
MIKE ROUNDS, South Dakota            EDWARD J. MARKEY, Massachusetts
DAN SULLIVAN, Alaska

                 Ryan Jackson, Majority Staff Director
               Bettina Poirier, Democratic Staff Director
                              ----------                              

             Subcommittee on Superfund, Waste Management, 
                        and Regulatory Oversight

                  MIKE ROUNDS, South Dakota, Chairman
DAVID VITTER, Louisiana              EDWARD J. MARKEY, Massachusetts
MIKE CRAPO, Idaho                    THOMAS R. CARPER, Delaware
JOHN BOOZMAN, Arkansas               JEFF MERKLEY, Oregon
DAN SULLIVAN, Alaska                 CORY A. BOOKER, New Jersey
JAMES M. INHOFE, Oklahoma (ex        BARBARA BOXER, California (ex 
    officio)                             officio)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
                            C O N T E N T S

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                                                                   Page

                             AUGUST 4, 2015
                           OPENING STATEMENTS

Rounds, Hon. Mike, U.S. Senator from the State of South Dakota...     1
Markey, Hon. Edward J., U.S. Senator from the State of 
  Massachusetts..................................................     3
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma, 
  prepared statement.............................................   116

                               WITNESSES

Baker, Dallas, Air Director and Chief of Air Division, 
  Mississippi Department of Environmental Quality; National 
  President, Air and Waste Management Association................     6
    Prepared statement...........................................     8
    Responses to additional questions from Senator Inhofe........    12

Sgamma, Kathleen, Vice President of Government and Public 
  Affairs, Western Energy Alliance...............................    14
    Prepared statement...........................................    16
    Responses to additional questions from Senator Inhofe........    25

Grossman, Andrew M., Associate, BakerHostetler LLP; Adjunct 
  Scholar, Cato Institute........................................    39
    Prepared statement...........................................    41
    Responses to additional questions from Senator Inhofe........    59

Gomez, Alfredo, Director, Natural Resources and Environment, 
  Government Accountability Office...............................    65
    Prepared statement...........................................    67
    Responses to additional questions from Senator Inhofe........    88

Pidot, Justin, Associate Professor, University of Denver Sturm 
  College of Law.................................................    95
    Prepared statement...........................................    97

 
 OVERSIGHT OF LITIGATION AT EPA AND FWS: IMPACTS ON THE U.S. ECONOMY, 
             STATES, LOCAL COMMUNITIES AND THE ENVIRONMENT

                              ----------                              

                        TUESDAY, AUGUST 4, 2015

                               U.S. Senate,
         Committee on Environment and Public Works,
Subcommittee on Superfund, Waste Management, and Regulatory 
                                                 Oversight,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 9:34 a.m. in 
room 406, Dirksen Senate Building, Hon. Mike Rounds (chairman 
of the Subcommittee) presiding.
    Present: Senators Rounds, Markey, Inhofe, Boozman, Wicker, 
and Sullivan.

            OPENING STATEMENT OF HON. MIKE ROUNDS, 
          U.S. SENATOR FROM THE STATE OF SOUTH DAKOTA

    Senator Rounds. The Subcommittee on Superfund, Waste 
Management and Regulatory Oversight is meeting today to conduct 
a hearing on oversight of litigation at EPW and Fish and 
Wildlife Service, impacts on the United States economy, States, 
local communities and the environment.
    Today we are meeting to hear testimony on the impact 
environmental litigation has on the economy, States and 
communities. Both the Clean Air Act and the Endangered Species 
Act contain provisions allowing for citizens to file a citizen 
suit against a regulatory agency to assure an agency's 
compliance with Federal statutes.
    While originally well intentioned, these citizen suits are 
being used to perpetuate what is often referred to as a sue-
and-settle process that overwhelms regulatory agencies, 
resulting in settlement agreements and consent decrees 
requiring agencies to promulgate major regulations within an 
arbitrarily imposed timeline. These agreements are often 
negotiated behind closed doors with little or no transparency 
or public input.
    Although the ultimate parties responsible for the 
regulations are the States and regulated entities, they have 
been nearly completely cut out of the process and are not 
consulted about the practical effects of the settlement 
agreement. Public comments from the States and industries 
regarding the feasibility or impact of these regulations are 
routinely ignored.
    Further, these citizen suits allow nongovernmental 
organizations, or NGOs, and the Administration to advance their 
own policy agenda while circumventing the entire legislative 
process and Congress. As a result, major regulations that cost 
billions of dollars, stifle economic growth and inhibit job 
creation are being made by unelected bureaucrats in Washington 
who think they know what is best for everyone.
    Under the Clean Air Act, citizen suits have been used to 
impose major regulations without any input from Congress and 
have little to no input from States. A study by the U.S. 
Chamber of Congress found that EPA considered reconsideration 
of the 2008 Ozone National Ambient Air Quality Standards could 
cost up to $90 billion annually to comply with, making it the 
most expensive regulation in history.
    Further, States have been so entirely shut out of the 
process that their opposition is rarely given serious 
consideration. When the EPA promulgated sulfur dioxide 
regulations, every single State that commented about the 
regulation voiced its opposition. Rather than working with the 
States to address their concerns, the EPA ignored their 
comments and moved forward with the regulation.
    Additionally, the Fish and Wildlife Service is in the 
middle of potentially listing more than 250 species as 
endangered or threatened on the Endangered Species List. Called 
one of the largest Federal land grabs in modern times, this is 
the result of a mega-settlement between the Fish and Wildlife 
Service and the NGOs that intentionally overwhelmed the agency 
with listing petitions simply so that they could sue the Fish 
and Wildlife Service for failing to meet statutory deadlines.
    Because the Fish and Wildlife Service is now bound to 
court-imposed deadlines to make those listing decisions, the 
agency is rarely inclined to engage States, industries and 
landowners in real conservation efforts. As a result, these 
listings exemplify heavy handed Federal regulation rather than 
serious collaborative efforts to conserve and recover species.
    The impact of these lawsuits is being especially felt in 
South Dakota where our only coal plant, the Big Stone plant, is 
in the midst of a $400 million upgrade to comply with EPA's 
Regional Haze rule. This project is not even completed yet and 
now this plant may not even be able to operate at all in order 
to comply with the Administration's Clean Power Plan. The sue-
and-settle process has resulted in regulations that stifle 
innovation and hurt the future of this country by crushing the 
can-do American spirit that founded our Nation, settled the 
West, won two World Wars and put a man on the Moon.
    I would like to thank our witnesses for being here with us 
today. I look forward to hearing your testimony. Now I would 
like to recognize my friend Senator Markey for a 5-minute 
opening statement.
    Senator Markey.
    [The prepared statement of Senator Rounds follows:]

                    Statement of Hon. Mike Rounds, 
              U.S. Senator from the State of South Dakota

    The Environment and Public Works Subcommittee on Superfund, 
Waste Management, and Regulatory Oversight is meeting today to 
conduct a hearing on ``Oversight of Litigation at EPW and Fish 
and Wildlife Service: Impacts on the U.S. Economy, States, 
Local Communities and the Environment.''
    Today, we are meeting to hear testimony on the impact 
environmental litigation has on the economy, States and 
communities. Both the Clean Air Act and the Endangered Species 
Act contain provisions allowing for citizens to file a 
``citizen suit'' against a regulatory agency to assure an 
agency's compliance with Federal statutes.
    While originally well-intentioned, these citizen suits are 
being used to perpetuate what is often referred to as a ``sue 
and settle'' process that overwhelms regulatory agencies, 
resulting in settlement agreements and consent decrees 
requiring agencies to promulgate major regulations within an 
arbitrarily imposed timeline. These agreements are often 
negotiated behind closed doors, with little to no transparency 
or public input. Although the ultimate parties responsible for 
the regulations are the States and regulated entities, they 
have been nearly completely cut out of the process and are not 
consulted about the practical effects of the settlement 
agreement. Public comments from the States and industries 
regarding the feasibility or impact of these regulations are 
routinely ignored.
    Further, these citizen suits allow Non-Government 
Organizations--or NGOs--and the Administration to advance their 
own policy agenda while circumventing the entire legislative 
process and Congress. As a result, major regulations that cost 
billions of dollars, stifle economic growth and inhibit job 
creation are being made by unelected bureaucrats in Washington 
who think that they know what is best for everyone.
    Under the Clean Air Act, citizen suits have been used to 
impose major regulations without any input from Congress and 
little to no input from the States. A study by the U.S. Chamber 
of Congress found that EPA reconsideration of the 2008 Ozone 
National Ambient Air Quality Standards could cost up to $90 
billion annually to comply with--making it the most expensive 
regulation in history. Also, the utility MACT rules cost an 
estimated $12.6 billion in compliance costs, and the regional 
haze implementation rule cost approximately $2.16 billion to 
comply. These exorbitant compliance costs result in the closure 
of U.S. power plants and the loss of U.S. jobs, while the 
benefits they bring about are questionable.
    Further, States have been so entirely shut out of the 
process that their opposition is rarely given serious 
consideration. When the EPA promulgated sulfur dioxide 
regulations, every single State that commented about the 
regulation voiced its opposition. But rather than working with 
the States to address their concerns, the EPA ignored their 
comments and moved forward with the regulation.
    Additionally, the Fish and Wildlife Services is in the 
middle of potentially listing more than 250 species as 
endangered or threatened on the Endangered Species List. Called 
one of the largest Federal land grabs in modern times, this is 
the result of a mega-settlement between the Fish and Wildlife 
Service and NGOs that intentionally overwhelmed the agency with 
listing petitions simply so they could sue the Fish and 
Wildlife Service for failing to meet statutory deadlines. 
Because the Fish and Wildlife Service is now bound to court 
imposed deadlines to make these listing decisions, the agency 
is rarely inclined to engage States, industries and landowners 
in real conservation efforts. As a result, these listings 
exemplify heavy-handed Federal regulation rather than serious 
collaborative efforts to conserve and recover species.
    The impact of these lawsuits is being especially felt in 
South Dakota, where our only coal plant, the Big Stone plant, 
is in the midst of a $400 million upgrade to comply with EPA's 
regional haze rule. This project is not even completed yet, and 
now this plant may not even be able to operate at all in order 
to comply with the Administration's Clean Power Plan.
    The ``sue and settle'' process has resulted in regulations 
that stifle innovation and hurt the future of this country by 
crushing the can-do American spirit that founded our Nation, 
settled the West, won two World Wars and put a man on the Moon.
    I'd like to thank our witnesses for being with us here 
today, and I look forward to hearing your testimony.

          OPENING STATEMENT OF HON. EDWARD J. MARKEY, 
          U.S. SENATOR FROM THE STATE OF MASSACHUSETTS

    Senator Markey. Thank you, Mr. Chairman, very much.
    Today our Subcommittee hearing focuses on the effects of 
litigation on the Environmental Protection Agency and the Fish 
and Wildlife Service.
    Litigation has always shaped public health and our 
environment. For example, in 1989 when the EPA tried to ban 
asbestos under the Toxic Substances Control Act, industry sued 
and ultimately won, effectively rendering the entire law nearly 
impossible for the EPA to use.
    Recently the Supreme Court told the EPA it has to take 
another look at the cost estimates of its Mercury Air Toxic 
rule after industries in 20 States sued. Even before 
yesterday's Clean Power Plan rules were announced, 14 States 
and Murray Energy Corporation tried to game the legal system by 
filing a premature legal challenge to them.
    If we are going to look at the impact of litigation then we 
have to look at all participants. In one corner we have multi-
billion dollar corporations suing to stall or stop 
environmental protections from taking effect. They are putting 
profits above clean air and water. In another corner, we have 
members of the public using the statutory rights that Congress 
gave them to hold agencies accountable and help ensure 
environmental goals are met.
    For more than four decades, citizens sued provisions which 
are included in many environmental laws, like the Clean Air Act 
and Endangered Species Act have served as an essential 
oversight function. Citizen suits provide a mechanism for the 
public to ensure that agencies meet statutory deadlines and do 
what Congress has told them to do. The ability to recover 
reasonable cost and attorney's fees ensures that the little guy 
can take on the government and deep pocket industries when the 
law and the public interest have been violated.
    Citizen petitions and lawsuits also help to protect the 
environment. For example, not one species would have been 
listed under the Endangered Species Act during the Bush 
administration without citizen petitions. EPA's deadlines to 
reduce air pollution in national parks and wilderness were 
amiss for so many years after EPA first issued the rules in 
1999 that litigation brought by environmental groups in 2011 
was needed to hold both the States and the EPA accountable.
    EPA's Clean Air Act deadlines to control and reduce mercury 
emissions and other toxic pollutants from coal power plants 
were supposed to be met by 2002, but implementation of these 
regulations remains in litigation. Now some critics say these 
types of lawsuits are only brought by environmental 
organizations and that they lead to collusion between 
environmental groups and the agencies.
    But a look at the facts shows this is not the case. 
According to GAO citizen suits have not had an important effect 
on environmental rulemaking. Moreover, during a 16-year period 
almost half of the lawsuits against the EPA were brought by 
industry trade associations and private companies, not 
environmental groups. For example, the petroleum industry sued 
the EPA in 2013 over its renewable fuel standard and 
subsequently, happily settled that lawsuit.
    Some critics also say that citizen suits let the public or 
environmental groups dictate agency policy. But safeguards at 
the Department of Justice and the courts themselves prevent 
that from happening. A good case and point relates to the 
lawsuit filed by industry and the State of Alaska against the 
Clinton administration's 2001 Roadless Rule which was designed 
to protect national forest from logging, mining and road 
building. The Bush administration's 2003 settlement exempted 
millions of acres of land in Alaska from the rule and 
effectively rolled back the regulation.
    Ironically, this case prompted the first use of the phrase 
sue-and-settle. Just last week the court issued its final 
conclusion that the Bush administration had violated the law by 
changing its policy about whether the Tongass Forest needs 
protection from logging in the legal settlement instead of 
changing the regulation itself.
    I look forward to your testimony today. We appreciate all 
of the witnesses being here today, and we thank you, Mr. 
Chairman, for holding this hearing.
    Senator Rounds. Thank you.
    Senator Inhofe. Mr. Chairman, may I make one comment? Four 
of the five Republicans are also on the Armed Services, which 
are meeting at the same time. So you are going to have some 
people going back and forth here including the four of us.
    Senator Rounds. Thank you, sir. Senator Wicker, at this 
time I think you would like introduce our first witness.
    Senator Wicker. Thank you, Mr. Chairman and Mr. Ranking 
Member. I am one of those members of the Armed Services 
Committee, so we are juggling hearings this morning. But thank 
you, Mr. Chairman, for holding this important hearing on the 
sue-and-settle practice and for allowing me to say a word or 
two about a distinguished member of our panel of witnesses 
today. I am glad to welcome my fellow Mississippian, Dallas 
Baker who is Air Director and Chief of Air Division of the 
Mississippi Department of Environmental Quality.
    There are two reasons why Dallas is an outstanding witness 
for us today. First of all, he served the DEQ as an 
Environmental Engineer and has done so for some 20 years. He 
has been a tremendous asset to the State of Mississippi. In 
this capacity, he has worked closely with Federal agencies, 
local governments, and members of industry to navigate the 
permitting process and enhance DEQ's ability to serve citizens 
and companies in Mississippi.
    There is another role that makes him an outstanding witness 
today and that is that he serves as president of the Air and 
Waste Management Association. This gives a full understanding 
of the regulatory role played by a State agency. So I look 
forward to hearing his insights, and I hope other members of 
this Subcommittee can benefit from his insights on the 
different nature of the sue-and-settle regulation and the 
impact this practice has on States, local communities and the 
environment. Mr. Baker is a graduate of the University of 
Mississippi and a distinguished public servant, and thank you 
for allowing me to welcome him on behalf of the full committee 
and the State of Mississippi.
    Thank you, sir.
    Senator Rounds. Thank you, Senator Wicker. Our other 
witnesses joining us for today's hearing are Kathleen Sgamma, 
Vice President of Government and Public Affairs, Western Energy 
Alliance; Andrew M. Grossman, Associate, BakerHostetler LLP, 
Adjunct Scholar, Cato Institute; Mr. Alfredo Gomez, Director, 
Natural Resources and Environment, Government Accountability 
Office; and Justin Pidot, Associate Professor, University of 
Denver Sturm College of Law.
    Now we will turn to our first witness, Mr. Dallas Baker, 
for 5 minutes. Mr. Baker, you may begin.

   STATEMENT OF DALLAS BAKER, AIR DIRECTOR AND CHIEF OF AIR 
  DIVISION, MISSISSIPPI DEPARTMENT OF ENVIRONMENTAL QUALITY; 
    NATIONAL PRESIDENT, AIR AND WASTE MANAGEMENT ASSOCIATION

    Mr. Baker. Thank you, Senator Rounds and Senator Markey, 
for the invitation to be with you today.
    As Air Director of my State's environmental agency, I am 
responsible for maintaining clean air and the welfare of people 
back home. As of today, every air monitor we operate in 
Mississippi indicates we have clean air. This was no accident. 
Over the years, good planning, good air control technology and 
until recently good rulemaking played a part.
    My testimony today is meant to shed light on recent process 
changes but also to express my concerns of unintended 
consequences of the so-called sue-and-settle approach.
    In the past, we had ample time to participate in early 
rulemaking that reduced air emissions while minimizing the 
burden on the State and the private sector. Before a final rule 
was signed, the private sector had a chance to look at the main 
elements of the rule and in some cases had a seat at the table 
in the rulemaking process itself. They saw what was coming and 
they got prepared.
    We had a time to schedule listening sessions and provide 
comments back to EPA. We heard what would work and what would 
not work. In the past, I felt the EPA sufficiently considered 
our comments and was responsive, which I felt strengthened the 
final product. I am concerned by the recent shift in this 
dynamic between EPA and the States.
    The sue-and-settle method by definition keeps a State out 
of deliberations, yet it subjects us to the burden of reacting 
to it, whatever it is. Adding to the frustration and the 
details in methods used to arrive at the settlement are often 
sealed by the courts.
    One recent example of such a settlement is the Sulfur 
Dioxide Consent Decree. Back in March, the DEQ received a 
letter from EPA indicating a settlement agreement was reached 
between EPA, the Sierra Club, and the Natural Defense Council. 
The consent decree said the EPA failed to complete designations 
of containment status with the 2010 1-hour average 
SO2 standard.
    The letter identified a power plant operated by the South 
Mississippi Electric Power Association or SMEPA called the R.D. 
Morrow Generating Plant in Lamar County. The Morrow Plant was 
identified based on a mission threshhold set in the agreement. 
Lamar County is now in jeopardy of being designated as non-
obtainment for SO2. Our only acceptable option of 
preventing this was to model the emissions as Plant Morrow and 
submit a recommendation of obtainment by the decree deadline of 
September 18, 2015. SMEPA agreed to finance the modeling 
process which remains on going. Last week we got in early model 
results and as expected, Lamar County appears to be in 
attainment for the SO2 standard.
    The end result of the EPA sue-and-settle in this case was 
an expenditure of already stretched resources of the State and 
no environmental benefit.
    What is alarming to me was how quickly we had to react. In 
the SO2 example affected States were provided only 6 
months to make its recommendations. It took tremendous time and 
coordination to work it up to this point, and we still have 
work to do.
    Now remember, if SMEPA had not agreed to absorb the cost 
and fast track modeling we likely would have had to accept a 
non-attainment designation for Lamar County. That would have 
led to efforts of redesignation and more importantly work to 
remedy the economic impact even a temporary non-obtainment 
designation would place on the Lamar County area.
    So I am concerned of the presumed guilt here, meaning the 
area was presumed not in attainment simply by omission of one 
site. In the SEMPA case, DEQ believed Lamar to be in compliance 
with the standard and purely based on just experience. We 
operate two monitors located in that part of the State and much 
more industrial and more commercial areas than rural Lamar 
County. Those other monitors currently read well below the 
standard and in Lamar there is not much else there. We know 
Plant Morrow emissions; we did not believe the standards were 
at risk.
    The settlement also limits our abilities to plan and 
designate resources. Beyond it, EPA seems to have chosen more 
and more stringent posturing being less flexible to the States. 
We are asked to do more with less in less time.
    So good science, good technology and sufficient resource 
planning, an affective regulation development takes time. So 
appropriations and funding are scarce, new regulations such as 
the Clean Power Plan and the 2008 ozone modification are 
causing tremendous amounts of attention of our staff and we are 
limited and we are underfunded and over stretched.
    We feel that our planning is being disrupted perhaps by 
these. Our concern is that this would continue in practice and 
it makes it very difficult for the State and private sector as 
well as the agency itself to do proper planning.
    Thank you for your time and the invitation.
    [The prepared statement of Mr. Baker follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Rounds. Thank you, Mr. Baker. Now we will hear from 
Ms. Kathleen Sgamma.

STATEMENT OF KATHLEEN SGAMMA, VICE PRESIDENT OF GOVERNMENT AND 
            PUBLIC AFFAIRS, WESTERN ENERGY ALLIANCE

    Ms. Sgamma. Thank you Mr. Chairman, Ranking Member Markey, 
and members of the Subcommittee for the opportunity to be here 
today. I tried to lay out in my testimony how my industry, the 
oil and natural gas industry in the west, has delivered 
significant environmental and economic benefits to the Nation.
    I would characterize profits as being used for actually 
delivering environmental benefit, not for standing in the way. 
We have innovated and we have delivered several different 
environmental benefits. We produce more per unit of air 
emissions.
    We have shrunk the size of our footprint on the land 
significantly up to 70 percent with horizontal drilling. We 
continue to reduce and reuse water. We have been one of the 
main reasons why the United States has reduced greenhouse gas 
emissions. I am very proud of our environmental record.
    Besides that environmental benefit we have produced huge 
economic benefits for the Nation. This year alone we are saving 
customers about $1,800 in lower natural gas and oil prices and 
we are enabling the United States to use energy as a strategic 
resource. I am very proud of the record of my industry.
    But rather than recognizing that environmental benefit this 
Administration has doubled down on costly command-and-control 
regulation without commensurate environmental benefit. I have 
been asked to testify today to address the impact of litigation 
driven regulation on my industry and the economy. And while I 
cannot fully quantify all the different regulatory efforts 
against my industry right now just because of the sheer volume 
that we are handling, I have provided some examples in my 
testimony.
    I think what is really more important is the impact on job 
creation and economic development for the general citizenry. I 
am very sympathetic to the States. I know industry is not 
sympathetic but certainly when States are forced to expend huge 
resources responding to hundreds of species petitions, for 
example, or when their State implementation plans are suddenly 
pulled out from under them, they have to be redone or taken 
over by EPA. I think that is definitely an abuse of the sue-
and-settle method.
    Today Western Energy Alliance is releasing an update to our 
sue-and-settle analysis related to two environmental groups and 
their settlement agreements with the Department of the Interior 
in 2011. We show that another year later there was another 
chance for more bold petitions, more litigation. Those two 
groups, Wild Earth Guardians and Center for Biological 
Diversity, certainly were not satisfied with being handed 
unprecedented power by the Administration to set the agenda and 
the resource allocation of the Fish and Wildlife Service. They 
continue to sue; they continue to increase petitions to 
historically high levels.
    For example, they continue to have the majority of lawsuits 
related to endangered species, and they continue to submit 
petitions for species listing out of proportion with any other 
constituency. We have released those numbers today, and it is 
pretty much more of the same.
    When the Interior Department hands over that power to those 
two groups, one special interest, it is really forcing 
businesses, States, counties to put in place all kinds of 
different resources to show the Department how they are 
conserving species That is really not productive, because the 
best species protection is done on the ground by States and the 
local governments.
    We see the same pattern with EPA. My industry has also been 
a target of lawsuits that have resulted in sue-and-settles 
specifically for new source performance standards. It is more 
of targeting because EPA has failed to do the required reviews 
for 76 percent of all industry sectors. It is becoming a source 
use of targeting a specific non-favored industry.
    My time is up, I very much appreciate the opportunity 
today.
    [The prepared statement of Ms. Sgamma follows:
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Rounds. Thank you for your testimony, Ms. Sgamma.
    Our next witness is Mr. Andrew Grossman. Mr. Grossman, you 
may begin.

STATEMENT OF ANDREW M. GROSSMAN, ASSOCIATE, BAKERHOSTETLER LLP; 
                ADJUNCT SCHOLAR, CATO INSTITUTE

    Mr. Grossman. Mr. Chairman, Ranking Member Markey, members 
of the Subcommittee, thank you for holding this hearing today 
and inviting me to testify.
    My statement today will focus on both the EPA so-called 
Clean Power Plan, greenhouse gas regulations and the sue-and-
settle phenomenon. Not only is the Clean Power Plan a product 
of collusive settlement with the environmentalist groups and 
pro-regulation States, but it also illustrates a broader class 
of problematic agency action that has serious implications for 
the rule of law in this country.
    Sue-and-settle refers to a particular kind of collusion 
between agencies and outside groups who evade transparency and 
accountability mechanisms through friendly litigation and 
settlements. In a number of instances the Obama administration 
has chosen to enter into settlements that committed to taking 
action, often promulgating new regulations on a set schedule.
    Between 2008 and June 2013, 14 of the 17 major non-
discretionary rules issued by the EPA resulted from deadline 
lawsuits. The most recent example is the Clean Power Plan. EPA 
committed to regulate carbon dioxide emissions from the new and 
existing power plants under Section 111 of the Clean Air Act 
and in 2011 entered into a settlement with environmentalist 
groups and States. That settlement culminated in the signing of 
final rules this week.
    We are all familiar with the problems that arise when 
settlements between agencies and special interests are used to 
set agency priorities and duties. These include lack of 
transparency, lack of public participation, rushed and sloppy 
rulemaking, and above all, the evasion of proper accountability 
and oversight. Fundamentally these are rule of law issues.
    When an agency engages in legal chicanery to carry out its 
policy preferences, it undercuts the usual checks and balances 
that exist to promote moderation, pluralism and ultimately the 
public interest. This is not the only way the Clean Power Plan 
attempts to game the legal system. As many States pointed out 
after the rule was purposed, the rule's deep emission cuts and 
aggressive deadlines required State regulators to begin work on 
accommodating almost immediately. And that was a year ago.
    At this moment, utility regulators in every affected State 
are hard at work evaluating the rule, attempting to mitigate 
its impact on their electric systems and making irreversible 
decisions on things like transmission projects and utility 
retirements and investments. None of these expenditures of 
time, efforts and money are recoupable. And few of those 
decisions can be reversed if and when the rule is ultimately 
struck down by the courts, which I believe it likely will be.
    These concerns were brought to the EPA's attention and its 
response was to make the final rule's emission targets even 
more stringent and to place greater emphasis on investment and 
renewable energy.
    One can be forgiven for wondering whether the EPA strategy 
is to coerce its policy preferences into effect irrespective of 
its legal authority and before any court has the opportunity to 
stop it. After all, it was only a month ago that the Supreme 
Court held the EPA's Mercury Rule was unlawful after it had 
been in effect for over 3 years. As EPA Administrator Gina 
McCarthy explained to a talk show host, the decision would not 
have much of an impact, because most power plants are already 
in compliance and the investments required by the rule have 
already been made. Is it really so unreasonable for State 
officials and utilities who are being pushed to cut greenhouse 
gas emissions at breakneck speeds to wonder whether history is 
repeating itself with the Clean Power Plan?
    The common thread that links collusive settlements and this 
kind of regulation by fiat is that they attempt to shortcut the 
ordinary give and take of representative government. Agencies 
use deadline settlements to achieve their policy priorities 
even when those priorities might not be shared by other 
agencies and actors in the executive branch or by Congress.
    Likewise, the use of bureaucratic fiat can have the same 
effect, allowing agencies to achieve results that were never 
approved, in some cases were even specifically prohibited by 
Congress and to structure their actions to evade review by the 
courts. The administrative state is not supposed to work this 
way. But it is encouraging that Congress is paying attention to 
these issues and holding hearings like this one.
    With respect to sue-and-settle, members of this body and 
the House have worked together to introduce the Sunshine for 
Regulatory Decrees and Settlements Act, thoughtful legislation 
that cuts to the heart of that issue. Other hearings and other 
pieces of legislation focus on the substance of deadline 
provisions themselves. There is a growing realization, I think, 
that more work will have to be done to rein in the agencies and 
to reassert Congress's policymaking primacy. This is a very 
important effort.
    Again, I thank the Committee for the opportunity offer 
these remarks. I look forward to your questions.
    [The prepared statement of Mr. Grossman follows:]
    
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    Senator Rounds. Thank you, Mr. Grossman. We will now hear 
from our next witness, Mr. Alfredo Gomez from GAO. Mr. Gomez, 
you may begin.

  STATEMENT OF ALFREDO GOMEZ, DIRECTOR, NATURAL RESOURCES AND 
         ENVIRONMENT, GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Gomez. Chairman Rounds, Ranking Member Markey and 
members of the Subcommittee, good morning. I am pleased to be 
here today to discuss our work on environmental litigation 
against the Environmental Protection Agency and the U.S. Fish 
and Wildlife Service.
    As the primary agency charged with implementing many of the 
Nation's environmental laws such as the Clean Air Act and the 
Clean Water Act, EPA often faces litigation over its 
regulations and other actions. As many have already noted, 
citizens can sue EPA to compel the agency to take required 
actions such as issuing a rule on time and lawsuits often 
called deadline suits.
    The Fish and Wildlife Service also faces litigation over 
its regulations and actions to carry out the Endangered Species 
Act. The Department of Justice provides legal defense to both 
EPA and the Fish and Wildlife Service in court.
    So my statement today summarizes the results of reports on 
environmental litigation against EPA and the Fish and Wildlife 
Service. I will talk about three key points. First, information 
on the number of cases, second the legal costs that are 
available for EPA and the Fish and Wildlife Service, and third, 
the impact of deadline suits on EPA's rulemaking.
    The first point is that the number of environmental cases 
brought against EPA each year varied and showed no discernable 
trend. On average there were about 155 cases per year. Justice 
staff defended EPA on a total of about 2,500 cases in the 16-
year period ending in 2010. Most of these cases, or 59 percent, 
were filed under the Clean Air Act, 20 percent under the Clean 
Water Act, and the cases range from a high of 216 cases in 1997 
to a low of 102 cases in 2008.
    The plaintiffs filing these suits fell into several 
categories: 25 percent were trade associations, followed by 
private companies at 23 percent, local environmental groups and 
citizens groups made up 16 percent and national environmental 
groups made up 14 percent.
    Second, with regard to the cost of litigation against EPA, 
the cost also varied from year to year with no discernable 
trend. Specifically, the Department of Justice spent about $47 
million or on average $3.6 million annually to defend EPA in 
court. The Department of Treasury also paid about $14 million 
or about $2 million per year. As many of you know Treasury has 
to pay attorney fees and costs from the Department's judgment 
fund when plaintiffs win. EPA also paid approximately $1.6 
million in attorney's fees and cost or about $305,000 per year.
    The Fish and Wildlife Service, we reported on the limited 
information that the agency had available on lawsuits. The 
agency does not track cases and cost but pulled together some 
information showing that it had paid $1.6 million for attorney 
fees and cost related to 26 cases from fiscal years 2004 
through 2010.
    Third, in our report on EPA deadline suits we found that 
EPA issued 32 major rules in a 5-year period that we reviewed. 
Nine of those 32 rules EPA issued were following settlement 
agreements and deadline suits. These nine rules were all Clean 
Air Act rules. The terms of the settlements in these deadline 
suits set up a new schedule to issue the rules.
    An additional 5 of the 32 rules were issued to comply with 
court orders following deadline suits. The impact of 
settlements and court orders in deadline suits on EPA's 
rulemaking priorities was limited primary to one office within 
EPA. This is the Office of Air Quality Planning and Standards 
which is responsible for setting standards. Agency officials 
said that deadline suits affected the timing and order in which 
rules are issued. In other words, EPA has to priorities the 
rules that are under settlement agreements and court order 
first.
    In summary, the environmental statutes allow litigation to 
check the authority of Federal agencies as they carry out or 
fail to carry out their duties. Available data do not show 
discernable trends in the number of cases, the cost associated 
with litigation against EPA, and there is limited information 
on the Fish and Wildlife Service. Information on deadline suits 
we reviewed show that the effect of settlement agreements from 
these suits was on the timing and the order on which the rules 
are being issued.
    Mr. Chairman, Ranking Member Markey, that completes my 
statement.
    [The prepared statement of Mr. Gomez follows:]
    
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    Senator Rounds. Thank you Mr. Gomez. Our next witness is 
Mr. Justin Pidot. Mr. Pidot, you may begin.

 STATEMENT OF JUSTIN PIDOT, ASSOCIATE PROFESSOR, UNIVERSITY OF 
                  DENVER STURM COLLEGE OF LAW

    Mr. Pidot. Good morning, Mr. Chairman, Ranking Member 
Markey, members of the Subcommittee. Thank you for giving me 
the opportunity to testify today. My name is Justin Pidot. As 
you have heard, I am an Associate Professor at the University 
Of Denver Sturm College of Law. Prior to joining the faculty I 
was an appellate lawyer at the U.S. Department of Justice in 
the Environment Natural Resource Division.
    In my testimony today, I will be discussing the importance 
of environmental litigation brought against Federal agencies 
and settlements that the United States enters into to resolve 
such litigation.
    Litigation has always been an integral part of enforcing 
environmental law and administrative Law more generally. 
Congress created a cause action to challenge agency decisions 
and the failure of agencies to reach decisions when it enacted 
the Administrative Procedure Act in 1946. And Congress created 
more specific citizens provisions in many modern environmental 
statutes.
    The ability of the public to hold Federal agencies 
accountable has served us well. Environmental litigation is an 
essential check on the administrative state and holds the 
executive branch accountable to legislative decisions made by 
Congress and legal commitments made by agencies embodied in 
their regulations. Due to the deference afforded to Federal 
agencies, deference that I enjoyed every day when I was 
representing the Federal Government at the Department of 
Justice, environmental litigation is hardly carte blanche for 
courts, activist or businesses to rewrite agency priorities. 
Instead such litigation enforces legal obligations.
    Some environmental litigation terminates in the settlement 
or consent decree, as we have heard today, and it is to such 
situations that I will turn. The majority of environmental 
settlements arise out of lawsuits in which the Federal 
Government has essentially has no defense to liability. As a 
result, in my view, the most significant determinant of whether 
an environment lawsuit ends in a settlement is a simple one, 
due to lawyers representing the Federal Government at the 
Department of Justice believing that the Federal Government can 
prevail. A similar assessment of legal vulnerability is carried 
out by litigation attorneys, whether public or private, across 
the United States.
    Environmental settlements provide an array of benefits. 
First, settlements enhance rather than limit the defending 
agent's discretion in lawsuits the agency is likely to lose, 
because they allow the agency to participate in crafting a 
remedy rather than waiting for a judge to impose a remedy by 
judicial order.
    Second, settlements may save Government resources, 
particularly if entered into early in litigation. Third, a 
settlement saves taxpayer dollars by reducing the amount of 
attorneys' fees the Federal Government has to pay. Fourth, 
settlements conserve judicial resources.
    Moreover, I believe that effective mechanisms already exist 
to guard against improper settlements. Settlements must be 
approved by high-ranking officials of the Department of Justice 
and this independent review by lawyers of DOJ distance from the 
mission of a particular environmental agency guards against 
improper settlements. DOJ also has internal rules that place 
limitations on the terms that can be contained within 
settlements. Courts also play a role and have demonstrated 
their willingness to intervene where appropriate.
    I want to briefly respond to two primary criticisms of 
environmental settlements. First, some argue that settlements 
allow agencies to evade public debate. In my view this is 
generally not true. Most settlements involve either commitment 
by the agency to make a decision or more rarely to use 
particular procedures in making a decision. These sorts of 
decisions, where to invest resources, what procedures to use, 
do not require public participation under general principle of 
administrative law. In other words, there would be no public 
participation if the agency simply made those decisions even in 
the absence of a settlement.
    On rare occasions agencies enter settlements that involve a 
commitment to a substantive position. These decisions either 
regard primarily matters that will be wrapped into a public 
decisionmaking process and properly subject to judicial review, 
or the exceptional case where settlement makes a final 
substantive decision the Federal Courts already have ample 
authority and ample willingness to intervene.
    A second argument critics make is that environmental 
settlements allow environmental groups to set the agenda for 
Federal agencies. This criticism also fails in my view for the 
simple reason that it is Congress, not environmental groups, 
that establish the priorities that are being enforced. Congress 
has written environmental law to compel agencies to take 
action. And when agencies fail to take actions so required, 
litigation from whatever the source, environmental group or 
industry, simply holds agencies accountable to their statutory 
mandates.
    Environmental settlements make good litigation sense, and 
they do not empower agencies to evade their legal 
responsibilities. Criticisms of environmental settlements in my 
view are simply then criticisms of the underlying substantive 
environmental statutes. The costs of what some would describe 
as settlements are really the costs associated with 
environmental law, not environmental litigation.
    There is nothing broken about environmental settlements and 
there is no legal problem with settlement practices for 
Congress to fix. If Congress believes that the substance of 
environmental law needs to be adjusted that is a separate 
debate and one that should occur forthrightly in full daylight.
    Thank you very much.
    [The prepared statement of Mr. Pidot follows:]
    
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    Senator Rounds. Thank you for you testimony, Mr. Pidot.
    Senators will now each have 5 minutes for questioning. I 
will begin.
    Ms. Sgamma, in your testimony, as of October 2014, there 
have been 88 sue-and-settle cases arising under the Clean Air 
Act and 43 lawsuits challenging Fish and Wildlife Service 
decisions. Some of these suits are brought by States and 
industry groups. You point out that settlements shut out 
stakeholders and that there are few other options for 
substantive participation in the process.
    Do you believe that States and industry groups are 
resorting to lawsuits because their participation and comments 
are being shut out by both normal rule processes and by 
lawsuits?
    Ms. Sgamma. We certainly comment on many, many different 
regulatory proceedings every year and often feel that our 
comments are pretty much ignored. So in some case we have been 
more litigious in the last few years just to defend ourselves.
    If you look at the NSPS requirements that were finalized in 
2012 that were the result of an environmental lawsuit, really 
the rules resulting went far beyond what is required in an 8-
year review and went into rushing in very complex regulations 
on a very strict deadline that did not give the agency the 
chance to do real deliberative rulemaking. And that has spun 
several lawsuits and several administrative petitions.
    Senator Rounds. Thank you.
    Mr. Baker, your testimony focuses on the lack of State 
involvement and promulgating regulations that stem from 
lawsuits. Can you explain to us the collaborative making 
process the EPA previously engaged in with States when 
promulgating regulations and the quality and feasibility of the 
regulations coming out of that process, compared to the process 
that has developed in recent years and the quality of these new 
regulations?
    Mr. Baker. A good example would be the New Source 
Performance Standards that were promulgated in the 1990s and 
2000s. The rule, before it was even promulgated, put in the 
Register, we had an idea they were coming. We saw the writing 
on the wall that this particular industry, whatever it was, was 
going to be subject to a potential new rule. So we started 
looking at our individual facilities, their emissions; we tried 
to identify which ones would be affected. Then we started early 
outreach to those individual companies in Mississippi.
    Then as the proposed rule was posted on the register we 
began the comment period along with the private sector. There 
was stakeholder interaction. We felt that the EPA listened to 
not just to our comments on implementation of the rule but also 
the impacts to the environment and to the companies being 
regulated.
    At the end of the day we felt the controls that were in 
place minimized the disruptiveness of the operations and took 
into account costs. The timing was such that it was sometimes 
over a matter of years in the making and at the end of the day 
we felt that we were equipped and ready to implement the rule 
timely.
    Mississippi DEQ has a desire to be in compliance. We do not 
want to circumvent rule. We have seen the pace at which 
regulations are effecting Mississippi companies seem to be 
accelerated and our ability to comment to EPA seems to have 
been responded to with, just wait for the final rule, you will 
see what we will take into account. Sometimes we do not get the 
sense that EPA is listening to our concerns as in the past.
    But I think that the process up to this point has seen real 
gains in pollution control and we are proud in Mississippi to 
have relatively clean air. I am concerned that this approach is 
going to embolden advocacies that are not exactly healthy for 
Mississippi.
    Senator Rounds. Thank you. Senator Markey.
    Senator Markey. Thank you, Mr. Chairman, very much. Mr. 
Pidot, in 2011 the Fish and Wildlife Service settled litigation 
involving multiple cases that were consolidated together and 
involved the backlog of 250 species listing determinations 
under the Endangered Species Act. Isn't it true that the 
settlement merely required the Fish and Wildlife Service to 
make final decisions by a certain date as to whether or not the 
candidate species warranted listing?
    Mr. Pidot. Yes, Senator, that is true and indeed in a 
number of cases the Fish and Wildlife Service has decided that 
listing a species is not warranted under the settlement, and so 
the settlement did not compel the agency to list species.
    Senator Markey. Have any courts had the opportunity to 
consider whether the settlement agreement was an overreach of 
the agency authority and if so what was the result?
    Mr. Pidot. The consent decrees were entered so there would 
have been public interest review at the time the consent decree 
was entered by the MDL court. I do not know of any subsequent 
judicial review, although every decision the Fish and Wildlife 
Service makes to list or not list a species would be subject to 
judicial review or a party to seek and search review.
    Senator Markey. Are there any, Mr. Pidot, meaningful 
distinctions between the types of settlements agreements that 
typically involve litigation between industry and the agency 
and the types of settlement agreements that typically involve 
litigation between environmental groups and the agencies?
    Mr. Pidot. I think likely not on the defensive side. There 
is another class of settlements that are not really focused on 
at the moment which are settlements of enforcement cases where 
EPA or another Federal agency would be pursuing industry for 
violation of the law and there are another set of 
considerations that might arise in enforcement settlement. 
Although to my mind both are fully compliant with the rule of 
law.
    Senator Markey. Could you share an example of when a 
proposed settlement agreement was not approved by Department of 
Justice guidance required or when the court rejected a proposed 
settlement because it overreached?
    Mr. Pidot. I can offer an example of the latter. I do not 
have an example off-hand of the former when DOJ deliberations 
on individual settlements or subject to either to decline 
privilege generally held relatively close. But a good example 
of a court intervening would be the Conservation Northwest 
litigation in the Ninth Circuit under which a settlement 
consent decree was proposed that would have substantively 
modified the species being monitored under a forest plan to 
monitor the health of the forest. The Ninth Circuit said that 
such a modification of the forest plan would need to go through 
notice and comment rulemaking and therefore it was an abusive 
discretion for the District Court Judge to enter the consent 
decree.
    Senator Markey. Mr. Gomez, during your investigation of the 
EPA settlements and the Clean Air Act litigation did you see 
evidence that EPA agreed to do anything other than just set a 
new deadline? Did anyone submit public comments about the 
proposed settlements saying that the settlement was 
inappropriate?
    Mr. Gomez. In our review of the nine rules that resulted in 
settlement agreements, none of those settlement agreements 
dealt with anything that was changing the substance or nature 
of the rule. They were all essentially setting new schedules or 
interim deadlines. I am sorry, can you repeat your second 
question?
    Senator Markey. Public comments?
    Mr. Gomez. So not only did we review the content of the 
settlement agreements we also reviewed all of the public 
comments that were received for all of the settlement 
agreements.
    Senator Markey. So in essence they were just saying get 
your job done, set deadlines, get to work, get finished, right?
    Mr. Gomez. In the ones that we reviewed, yes.
    Senator Markey. Thank you. Mr. Gomez, critics of citizen 
suits argue that allowing attorney's fees and other cost to be 
recovered by the prevailing party is a way for litigants to 
profit. Can you tell us what limits there are on how fees can 
be recovered?
    Mr. Gomez. Sure. The Department of Justice is responsible 
for overseeing those payments, those payments in terms of the 
amounts of payment and where the payments come from, whether 
they come from the judgment fund or the agencies are based on 
the environmental statutes. The Department of Justice does 
review for example and is in negotiations with the plaintiffs 
in terms of how much it is going to reimburse. Department of 
Justice reviews, for example, the submissions of information in 
terms of attorney hours, the types of work that is being 
submitted.
    Senator Markey. So fees and cost are not awarded if the 
agency was substantially justified in the action it had taken?
    Mr. Gomez. I am sorry, can you repeat that?
    Senator Markey. Are fees and costs allowed if the agency is 
determined to have been substantially justified in the action 
it had taken? Or not taken?
    Mr. Gomez. Yes, that is correct.
    Senator Markey. Thank you, Mr. Chairman.
    Senator Rounds. Senator Inhofe.
    Senator Inhofe. Thank you, Mr. Chairman. Later today, we 
are going to release the EPW oversight report detailing the 
problems surrounding sue-and-settlement. There are already so 
many legal questions over the rules that I think it is going to 
be subjected to a lot of lawsuits. I get the impression that 
the EPA does not really care about that because the damage is 
already done.
    Mr. Grossman, what damage is done even if these rules are 
overturned so far?
    Mr. Grossman. Thank you, Senator. In litigation, not in my 
personal capacity as I am testifying here today, I represent 
the great State of Oklahoma. I can tell you the State of 
Oklahoma has spent an enormous amount of money and manpower and 
bureaucratic resources to figure out what it needs to do to 
comply with these rules and how it can keep the power on in the 
State and maintain electric affordability. It had to do this 
during the proposal phase of these rules, because the cuts they 
require are so aggressive and they are so disruptive to the 
electric system of the State, as is the case in many other 
States.
    At this point, States and utilities are making decisions 
that are irreversible in terms of investments and retirements. 
These are the costs and all of these costs are being borne 
before any substituent litigation over the rules.
    Senator Inhofe. Our Attorney General has been very active 
in working with you and you have one done a great job helping 
us. Is this kind of a typical outcome of a sue-and-settle case, 
that at EPA, they really do not care too much about what 
happens today the damage is already done?
    Mr. Grossman. I think that is right. I think that is right 
in a very specific sense. When an agency is engaging this kind 
of legal chicanery there is usually some reason for it. There 
is a reason that the environmentalist groups bring these suits 
and there is a reason that the agencies are happy to work with 
them and collude in settlements and other activities. And the 
reason is that it works.
    Senator Inhofe. I am not a lawyer, but it seems to me that 
this would strength the arguments for impacted parties' request 
for a judicial stay. Would you agree with that?
    Mr. Grossman. I would entirely.
    Senator Inhofe. Ms. Sgamma, you made the comment how you 
could really quantify the damage that is done by all of these 
regulations and it took me about a year and the Obama 
administration to realize that there is more and more and more 
coming, more damage that is coming.
    In fact, for the first time the agricultural groups have 
made the statement that there really is not anything in the Ag 
Bill that affects them, it is over-regulation of the EPA. How 
have environmental activists used sue-and-settle to hijack the 
listing process over the policy priorities of Fish and 
Wildlife?
    Ms. Sgamma. I think a good case in point is the Wild Earth 
Guardian suit which was 251 species that were on the candidate 
list. Now, there were hundreds of other ones that the Center 
for Biological Diversity settled on as well. But those specific 
to the candidate species list were absolutely setting the 
priorities of Fish and Wildlife Service. Because they have the 
option of putting less high priority cases on the candidate 
list, and here they were being forced to completely put those 
priorities aside and make decisions on those species list. 
Resources are diverted away from species that are truly 
endangered to those that are less high priority.
    Senator Inhofe. Yes, I understand that. Mr. Baker, do you 
believe that the current public comment process for the Clean 
Air Act settlement agreements provides the States a meaningful 
opportunity to participate in settlement agreements? You have 
heard us make the comment about who is involved in these 
settlement agreements. What do you think about that?
    Mr. Baker. We were aware there was a lawsuit in the 
SO2 data requirements rule example. But we were 
aware of the settlement in 18 days after the settlement 
occurred by letter. So, no, we were not afforded a chance to 
comment, to provide even any input.
    Senator Inhofe. Yes, that certainly is the case in 
Oklahoma. They are kind of left out.
    Mr. Chairman, my time has expired and as I have mentioned 
at the very beginning, simultaneously we have SASC Armed 
Services here during this and I have to go over to that. I 
appreciate very much the response to the questions and the 
testimony you have given. Thank you.
    Senator Rounds. Thank you. Senator Boozman.
    Senator Inhofe. I am sorry, Senator Boozman. I ask consent 
for my opening statement to be part of the record.
    Senator Rounds. Without objection.
    [The prepared statement of Senator Inhofe follows:]

                  Statement of Hon. James M. Inhofe, 
                U.S. Senator from the State of Oklahoma

    Thank you, Subcommittee Chairman Rounds, for convening 
today's oversight hearing, and thank you to our witnesses for 
being here to testify. Today's hearing is very timely given the 
President's finalized carbon mandates released just yesterday. 
These rules are truly the poster child for what is wrong with 
``sue-and-settle'' tactics under the Obama administration.
    In this case, the U.S. Environmental Protection Agency 
(EPA) and far-left environmental activists entered into a 
settlement agreement to issue unprecedented carbon cutting 
regulations for power plants by an unrealistic deadline. As 
with most ``sue-and-settle'' scenarios, EPA rushed the rules, 
based on shaky legal grounds and poor economic analysis, while 
circumventing important interagency review that is only meant 
to strengthen the quality of regulations.
    Indeed, the rules were not the result of a well thought out 
stakeholder driven and open regulatory process. Instead, they 
were years in the making behind closed doors, and after years 
of regulatory uncertainty and critical investment decisions by 
States and affected entities, it is likely a court will strike 
the rules. Yet, it appears the Obama EPA does not care about 
the final outcome of the rules as the years of potential 
litigation will only further distance current senior officials 
from responsibility for the devastating impacts of these rules. 
Showcasing this mentality, in response to the recent Supreme 
Court decision on EPA's mercury rule, current EPA Administrator 
Gina McCarthy shrugged off concerns over a court potentially 
vacating the rule because the investments were already made; 
essentially the damage has been done.
    This ``sue-and-settle'' to regulate now and litigate the 
merits later strategy is why ``sue-and-settle'' is counter to 
administrative law and principles for government transparency. 
When the Federal Government enters into a settlement agreement 
that binds the agency to future action, it should take place in 
the sunshine, not behind closed doors. However, the testimony 
we will hear today highlights how ``sue-and-settle'' undermines 
the public interest, by allowing special interests to set an 
agency's agenda while excluding States and other interested 
parties from the process. Limiting key stakeholders from the 
process to a cursory public comment period--after a settlement 
has already been reached--is too late in the process and does 
not afford those tasked with implementing the resulting 
regulations to fully analyze a proposal and plan accordingly.
    Testimony today will also shed light on ``sue-and-settle'' 
tactics used at the U.S. Fish and Wildlife Service (FWS) that 
similarly bind the Service to make Endangered Species Act (ESA) 
listings based on questionable science and rushed review. In 
these cases, special interests appear to target species that 
lock up areas for important development and job creation, 
rather than species that may have been most in need of 
potential protection under ESA.
    Above all, whether at EPA or FWS, a theme that will stand 
out from today's testimony is that the Obama administration has 
not been forthright with the American people in its regulatory 
plans. An open and transparent regulatory process that provides 
the opportunity for stakeholder and public participation can 
only result in better, more effective, and legally sound 
rulemaking decisions. Instead, the current regulatory regime 
employed by the Obama administration through ``sue-and-settle'' 
appears to only result in legally shaky rules that incentivize 
further litigation, expend more taxpayer dollars and agency 
resources, and ultimately stall meaningful environmental and 
public health benefits.
    I ask that my full statement be entered into the record. 
Thank you.

    Senator Boozman. Mr. Gomez, you mentioned that your 
statistics come from 2010, is that right?
    Mr. Gomez. Sir, the statistics in terms of the number of 
cases were for a 16-year period ending in 2010.
    Senator Boozman. Why are we not ending to 2014?
    Mr. Gomez. I am sorry, in terms of the number of cases 
filed up to 2014 we do not have that information. That 
information was from a report that we issued a few years ago.
    Senator Boozman. So we are like how many years behind?
    Mr. Gomez. So the statistics on 2,500 cases that were filed 
were for a 16-year period ending in 2010 so that was, I 
believe, from 1995 to 2010.
    Senator Boozman. I guess my point is it would be helpful to 
have somewhat current information, and I do not think that is 
current at all.
    Mr. Gomez. We do not have information since then in terms 
of the number of cases.
    Senator Boozman. I do not mean to belabor it, but is there 
a way of finding out?
    Mr. Gomez. What happened to us when we were doing that work 
is there is no aggregated data that the agencies had. For 
example, there were four different data sets that we looked at. 
Department of Justice had two of them, Department of Treasury 
had one and EPA had another. We had to sort of pull the 
information together and from that information we were able to 
identify who the plaintiffs were and also what statute they 
were suing under. That was about the extent of the information.
    Senator Boozman. In your testimony you stated that the 
information regarding lawsuits against the FWS is limited. Does 
GAO recommend that FWS provide more information about 
information regarding lawsuits against them?
    Mr. Gomez. That is really a good question. When we also did 
that report on Fish and Wildlife, there was not a lot of 
information. The agency was not collecting that information. 
However, because of congressional direction, now EPA and the 
Department of Interior have been providing information on 
attorney costs and fees as part of their budget justification. 
They started doing that in fiscal year 2014, but it goes back 
to 2011.
    There is now information that you can review on what EPA 
and the Department of Interior is submitting in terms of 
attorney fees and cost.
    Senator Boozman. I know EPA started posting notices to sue 
on its Web site in 2013. Does FWS post notices of intent to 
sue?
    Mr. Gomez. That is a good question. I do not know the 
answer to that. I will have to get back to you on that one.
    Senator Boozman. Thank you.
    Ms. Sgamma, again, in your testimony and during the course 
of the discussion, you have expressed support for limiting the 
ability of litigants to sue and settle behind closed doors 
without the involvement of the State. So actually you are in a 
position to having to do these things for States and local 
officials. You also mention limiting provisions that put the 
taxpayers on the hook for the cost the frivolous lawsuits. Can 
you again explain why that is so very, very important?
    Ms. Sgamma. Well, I think when you have the Administration 
pandering to one special interest and then it turns around and 
reimburses that special interest for setting and expending 
State and Federal resources, it seems like a poor use of 
taxpayer money. Especially when much of what they are trying to 
do is stop job creating projects or they are taking resources 
out of the economy with very expensive environmental 
regulation, that does not seem like a good use of taxpayer 
funds.
    Senator Boozman. Mr. Grossman, what else can we do to make 
sure the Government is making a good faith effort to defend 
against these frivolous lawsuits and stand up for the 
taxpayers?
    Mr. Grossman. Thank you, Senator. I think the answer is 
twofold and this is really reflected in the Sunshine 
Legislation that has been proposed. One is for courts to 
enforce a public interest standard and the second is for 
affected parties to be able to intervene and participate in the 
settlement negotiations to the extent that is viable, as well 
as in the approval process so that everything is out in the 
open, to the extent the agency is committing itself to do 
anything that is really considered in the broader context of 
the agency's mission.
    Senator Boozman. Good.
    Mr. Pidot, do you disagree with that, do you think these 
things ought to be out in the open as was suggested?
    Mr. Pidot. I think in general, litigation decisions are 
vested in the Department of Justice for a reason and that I 
respect.
    Senator Boozman. So what is the reason the public and 
Congress and everybody else should not know?
    Mr. Pidot. I think the reason, as I suggested in my 
testimony, in my view most of these cases are dead losers for 
the Government. The public interest in such a circumstance is 
resolving the cases as quickly as possible with the agency 
having the maximum ability to maintain its discretion in the 
face of an impending loss.
    So dragging out litigation is simply going to increase the 
cost to the taxpayer through attorney's fees, it is going to 
increase the cost to the Department of Justice. And the end 
result, if a settlement is not accomplished, you will have 
judges all across the country in hundreds of cases imposing 
conflicting injunctions against the Federal Government in a way 
that is much less organized and feasible than in a settlement.
    Senator Boozman. On the other hand, I think Ms. Sgamma and 
Mr. Baker would feel like in many of the settlements you simply 
could not have gotten a worse deal. Thank you, Mr. Chairman.
    Senator Rounds. Thank you. Senator Sullivan.
    Senator Sullivan. Thank you, Mr. Chairman, and I appreciate 
the witnesses' testimony today, and these are really important 
issues and I think they are not always well understood.
    Let me give you kind of sense of a bit of frustration on 
some things. I was Attorney General in the State of Alaska, and 
undertook a number of lawsuits against Federal agencies like 
the EPA when they were acting in a way that I thought was 
inconsistent with the law.
    I actually think that agency acts inconsistently with the 
law on a very regular basis. It is not just me who thinks that. 
The Supreme Court in the last two terms that it had, the 
Michigan case just came down and then the Utility Air 
Regulators case. Those are both examples where the highest 
court in the land said, you are either violating the 
Constitution, you are either violating the statute or you are 
either violating both.
    The trouble is that when you undertake lawsuits like that, 
they challenge EPA's authority, rogue agency action, which I 
believe they are doing. This WOTUS Rule of the U.S. regulation 
is another classic example. They are clearly trying to rewrite 
the Clean Water Act, they are clearly trying to expand their 
jurisdiction. I think there are 30 States that are now suing 
them. I think they are going to win.
    We are going to try and stop that because, and it is 
Democrats and Republicans, by the way, in this Congress who 
believe they are violating the law with regards to the waters 
of the U.S.
    But here is the challenge. You challenge these actions, 
they do not listen. The Administrator comes and feeds a line of 
whatever, says they are abiding by the law. The Supreme Court 
eventually says, no, you are not. I am sure that will happen 
with the WOTUS Rule as well.
    But they go ahead and do it anyway and it takes years to 
litigate. By the end of the day, even though you went into the 
Supreme Court in some ways you are already checkmated by a 
rogue agency that violates the law. The private sector has to 
abide by what they have said anyways because litigation took 6 
years to get to the Supreme Court. How do we try and defend 
against that? Because I think that is part of their strategy.
    Knowing that litigation takes 5 years, companies do not 
have 5 years or citizens do not have 5 years by which to just 
forget it if I am not going to abide by the regs until the 
Supreme Court rules. What is the approach we can take that 
prevents this kind of checkmate action even though they are 
losing term after term in the United States Supreme Court?
    Anyone thought on that? Because I think it is really an 
important issue and really is a vice that these agencies that 
act without legislative authority, ignore the Congress, ignore 
the statute but still the American citizens have to abide by 
what they are saying. By the time the Supreme Court rules 
against them it is too late. Any thoughts on that?
    Mr. Gomez. Yes, sir, if I could. First of all, I agree with 
your remarks and your observations. I think this has been a 
hallmark of some of the more expensive regulatory actions of 
this Administration's EPA. To a certain extent, a reasonable 
administration, one that was concerned with the lawfulness and 
legality of its actions, would be less aggressive in terms of 
trying to carry them out by fiat and a little bit more 
concerned about the legal niceties of following the law.
    Senator Sullivan. They are not niceties, they are actually 
requirements.
    Mr. Gomez. Right. Making sure that its actions are legally 
durable, that they will be upheld in the end and thereby not 
impose unnecessary costs on regulated parties. For Congress, 
one thing to think about may be potentially the availability of 
additional relief or a lower standard to obtain an injunctive 
relief for injunctions against certain types of major rules 
recognizing that a particular area such as under the Clean Air 
Act and otherwise there have been problems in that regard.
    So maybe it is more reasonable for courts, given the legal 
uncertainties in that area, to be a little bit less deferential 
to the agencies saying, this is very expensive, it is very 
legally complex. Let's just hold on a minute while we evaluate 
the legal merits.
    Senator Sullivan. Thank you, but do you think we can take 
action like that in terms of a law that mandates that? Because 
again, right now, they lose but they win.
    Mr. Gomez. Yes, Senator, I think setting standards at the 
goal particular cause of actions something that Congress has 
done for over 100 years.
    Senator Sullivan. Thank you. Mr. Chairman I have one more 
final question. I know I have run out of time.
    Senator Rounds. Quickly.
    Senator Sullivan. Thank you. I just had another question 
relating to the citizen suits and the special standings status 
of certain NGOs, whether it is under the Endangered Species Act 
or Clean Air Act, groups such as the Center for Biological 
Diversity. My understanding, and I really just need your 
thoughts on this, is that they have kind of a special standing 
status, they get public interest to do a kind of designation.
    I guarantee you that in my State of Alaska, these groups 
are not considered to carry out the public interest. They are 
viewed oftentimes as going against the public interest.
    This is not a partisan issue. In my State, any time there 
is a responsible resource development activity, most Democrats, 
Republicans, the vast majority of the citizens of my State 
desire these groups come in from the outside and sue to stop 
it. It is constant. It happens all the time. That is why we 
cannot build roads in Alaska.
    Senator Rounds. Sir, I am going to have to ask you to get 
to your question.
    Senator Sullivan. Sorry. So the question is, what is the 
status in the Federal law and do you think it actually 
represents public interest? Should other entities such as 
citizens who aren't NGOs, businesses who live in the States 
also have special standing ability? Or should these groups be 
given special treatment under the Federal Law when, at least in 
the example of Alaska they certainly do not represent the 
public interest?
    Mr. Gomez. Senator, if I may, I think your question raises 
a broader point about how it is that the Government comes to 
recognize and carry out what the public interest is. Think 
about how bizarre it is that we have a Congress that is the 
representative body of the people, we have executive agencies 
that are accountable to the President nominally, and yet we are 
relying on litigation by just random private parties who think 
they know what is best to go and sue agencies and say, we want 
you to do this before that.
    It is a very strange way to do things. I think it is 
perfectly appropriate for Congress to consider rather that is 
the best way for agencies to organize their priories and 
determine what in fact is the most pressing public interest.
    Senator Rounds. With that I want to thank all the members 
of this panel for taking your time to come in and participate 
with us. We most certainly appreciate your input into this 
process. You have taken time away from everything else to come 
in and be a part of today.
    I also want to take this time to thank our Senator Markey, 
our Ranking Member and all of our other colleagues who attended 
this hearing. The record for this hearing will be open for 2 
weeks which brings us to Tuesday, August 18.
    With that, once again, thank you for your time and 
participation. This hearing is adjourned.
    [Whereupon, at 10:40 a.m., the hearing was adjourned.]

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