Regulatory Reform Initiative Seeks Sunshine, Accountability, and Pro-Jobs Environment

Press Release

Working to create an environment for private-sector employers to create jobs and to increase transparency, Senator Chuck Grassley today introduced legislation that would end the practice of enacting federal regulations through sue-and-settle litigation. Senators John Cornyn, Jon Kyl, Rand Paul, Mike Lee, and Tom Coburn are original cosponsors of the reform proposal.

The Sunshine for Regulatory Decrees and Settlements Act responds to the use of consent decrees and settlement agreements in lawsuits against federal agencies to bind executive discretion. The end result is rulemaking that implements the priorities of pro-regulatory special interest groups and limits the discretion of succeeding administrations.

"The federal regulatory burden is a significant barrier to job creation, and sue-and-settle litigation damages the transparency, public participation and judicial review protections Congress has guaranteed for all of our citizens in the rulemaking process," Grassley said. "The goal of this bill is to make sure all citizens, especially those directly impacted by a proposed regulation, have a meaningful opportunity to participate in the rulemaking process. The procedure and process used to create these regulations are important, and they should be made in the open. America's system of lawmaking and judicial review shouldn't be distorted or manipulated."

"Importantly, this legislation will shed light on the growing practice of backdoor rulemaking by the Obama Department of Justice as it seeks to meet the demands of pro-regulation activist groups. And the fact that more and more agencies are missing their deadlines for issuing regulations -- and then "settling' lawsuits over those deadlines outside of the normal regulatory process -- makes this bill all the more necessary. My home state of Arizona has been directly impacted by this type of litigation-induced rulemaking. For example, one recent consent decree will adversely affect the Navajo Generating Station, resulting in increased energy costs for Arizonans and the loss of hundreds of jobs. This bill provides much needed relief from these types of regulatory abuses," Kyl said.

"An avalanche of federal regulations is burying America's job creators. Consent decrees and settlement agreements -- known as "sue and settle" -- are a driving force behind new and burdensome regulations, allowing special-interest groups to subvert the critical accountability requirements of federal rulemaking. The Sunshine for Regulatory Decrees and Settlements Act of 2012 will end these collusive practices, and will increase the fairness and transparency of the federal rulemaking process," Paul said.

"Sue-and-settle litigation is a troubling practice by which administrative agencies seek to circumvent the usual procedures for issuing regulations and instead impose burdensome rules through consent decrees or settlement agreements. This practice raises serious constitutional concerns and also harms our economy, which suffers from a complex and costly regulatory burden. The Sunshine for Regulatory Decrees and Settlements Act is a critical step forward as we work to make the federal government more transparent and fair, and less burdensome to the economy," Lee said.

Sue-and-settle driven rulemaking takes place under schedules that render notice-and-comment requirements a mere formality, depriving regulated entities, the public and the Office of Management and Budget's Office of Information and Regulatory Affairs (OIRA) of sufficient time to have any meaningful input on the content of final rules.

The sue-and-settle problem has occurred primarily in litigation against regulatory agencies over allegations that agency action has been unlawfully withheld or unreasonably delayed. Typically, the defendant agency has failed to meet a mandatory statutory deadline for a new regulation or is alleged to have unreasonably delayed discretionary action. In addition, agency actions are often politically sensitive, especially when the proposed regulation imposes high costs on the regulated businesses.

"These political concerns can give rise to a perverse incentive for the agency to cooperate with the litigation and negotiate a consent decree or settlement agreement," Grassley said. "Once a consent decree or settlement is in place, the agency has an excuse to expedite action while avoiding accountability."

With sue-and-settle cases, the resulting consent decree or settlement agreement comes as a surprise to the regulated community and the general public and often provides a short timeline for agency action. The lack of advance notice and minimal time allowed for the proposal and promulgation of regulations allows agencies to undercut the public participation and analytical requirements of regulatory process statutes. Accelerated timeframes for proposal and promulgation allow agencies to short-circuit review of new regulations by the OIRA. The incentive to do this is particularly strong when the plaintiff and the agency agree on what the content of the regulation should be, and seek to effectuate that agreement without input from interested parties and the OIRA.

The Sunshine for Regulatory Decrees and Settlements Act would:

* provide for greater transparency by requiring agencies publicly to post and report to Congress information on sue-and-settle complaints, consent decrees and settlement agreements;

* prohibit same-day filing of complaints and pre-negotiated consent decrees and settlement agreements in cases seeking to compel agency action;

* require that consent decrees and settlement agreements be filed only after interested parties have been able to intervene in the litigation and join settlement negotiations and only after any proposed decree or settlement has been published for public notice and comment;

* require courts considering approval of consent decrees and settlement agreements to account for public comments and compliance with regulatory process statutes and executive orders;

* require the Attorney General or, where appropriate, the defendant agency's head, to certify to the court that he has approved any proposed consent decree that includes terms that: (i) convert into a duty a discretionary authority of an agency to propose, promulgate, revise, or amend regulations, (ii) commit an agency to expend funds that have not been appropriated and budgeted for the action in question, (iii) commit an agency to seek a particular appropriation or budget authorization, (iv) divest an agency of discretion committed to the agency by statute or the Constitution, or (v) otherwise afford any relief that the court could not enter under its own authority; and

* make it easier for succeeding administrations to move the courts for modifications of a prior administration's consent decrees by providing for de novo review of motions to modify, if the circumstances have changed.

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