They Call It “Sue and Settle”

 

It could as easily be called “regulating behind closed doors.” There’s a high stakes game going on, and oil and gas are the parties who stand to lose the most.

By Julie Anderson

 

Some two years ago, state Senators Kel Seliger, Carlos Uresti, and Robert Duncan along with state Representatives Tryon Lewis and Jim Keffer gathered for a legislative hearing at the University of Texas-Permian Basin.

Also present at the hearing were two dune sagebrush lizards on display in a terrarium. These tiny reptiles some three inches in length were the focal point of the hearing. The story, as explained by Dr. Benjamin Tuggle, Southwest regional director with the U.S. Fish and Wildlife Service (FWS or agency), went something like this:

1. In 2001, the FWS indicated the lizard should be a candidate for listing under the Endangered Species Act (ESA).
2. Both WildEarth Guardians and the Center for Biological Diversity sued the FWS claiming the agency failed to list hundreds of species in a timely manner, one of which was the lizard.
3. The FWS settled the WildEarth Guardians lawsuit in 2010 and published in the Federal Register its proposed rule to add the lizard to the Federal List of Endangered and Threatened Wildlife.
4. The listing kicked off a year of public comment and data-gathering that was set to potentially end with the lizard’s listing as an endangered species in December 2011.
5.  Just before the deadline, the FWS agreed to delay its decision.
6. Throughout the public comment period and through the extension, the Permian Basin Petroleum Association (PBPA) created “a deep and wide coalition of local officials, private landowners, state and federal legislators, scientists, independent oil producers and major energy corporations with a clear mission: debunk the shoddy, so-called science on which the proposal was based,” as explained by PBPA President Ben Shepperd. Members of the coalition spent countless hours and thousands of dollars collecting facts and offering testimony to prove that the lizard’s welfare was not threatened by the agriculture and energy industries. In addition, the coalition highlighted the dramatic and negative effects the listing would have on the nation’s domestic energy industries.
7. In February 2012, the FWS reopened the public comment period on the Dec. 14, 2010, proposed endangered status for the dunes sagebrush lizard. The FWS also published the availability of a conservation agreement for the species in Texas.
8. In June 2012, the agency withdrew its proposed rule to list the lizard—a voluntary conservation plan was initiated to ensure the future of the lizard.
9. One year later, the Defenders of Wildlife and the Center for Biological Diversity sued the FWS over the withdrawal of the listing and the chosen plan of action.
10. In late September 2014, the U.S. District Court for the District of Columbia found in favor of the U.S. Fish and Wildlife Service’s 2012 decision not to list the lizard under the ESA. 

Exhausting, isn’t it? That’s Sue and Settle.

Defining Sue and Settle

As explained by the Washington Examiner, here’s how the process generally works:

First, the private environmental group sues the EPA in federal court seeking to force it to issue new regulations by a certain date. Then agency and group officials meet behind closed doors to hammer out a deal. Typically in the deal, the government agrees to do whatever the activists want. The last step occurs when the judge issues a consent decree that makes the deal the law of the land. No messy congressional hearings. No public comment period. No opportunity for anybody outside the privileged few to know how government regulatory policy is being shaped until it’s too late.

Of course, the scenarios are varied. For example, in the case of the lizard, the listing agreed upon in the lawsuit triggered a comment period, and hard-working defenders of the industry proved their point. But it wasn’t easy, and it wasn’t cheap.

“The past three-and-one-half years for me have been consumed by war with the FWS and quasi-environmental groups to protect the only industry in America that is providing high-paying jobs in the midst of a depression,” Shepperd said in May 2014. “The PBPA to a large degree made history when it successfully led the charge to debunk the junk science on which the proposed endangered listing of the dunes sagebrush lizard was based.”

There’s no rest for the weary. Immediately after the lizard came the chicken. In March 2014, the FWS listed the lesser prairie chicken as “threatened,” which is one level below endangered. The proposed listing is the result of a settlement agreement that the FWS entered into on Sept. 9, 2011, with the Center for Biodiversity.

Using its years of lizard experience, the PBPA moved quickly by filing its own lawsuit in the U.S. District Court for the Western District of Texas, Midland-Odessa Division, with co-plaintiffs Chaves, Eddy, Lea, and Roosevelt counties in New Mexico. The defendants included the Department of the Interior and the interior secretary, along with the Fish and Wildlife Service and its director.

The lawsuit alleges the U.S. Department of the Interior and the FWS violated federal law in listing the animal and failed to consider the benefits of conservation efforts already undertaken across the five states that comprise the bird’s habitat to improve habitat and diminish threats.

“While the FWS did include a special rule that will hopefully limit the regulatory impacts on oil and gas activity, I believe it still has the potential to be incredibly detrimental to energy production,” Texas Railroad Commissioner David Porter said upon the announcement of the threatened listing.

As Shepperd pointed out, the lizard and the chicken were only the first two of 258 species that the FWS has agreed to consider as endangered or threatened.

“The first two just happened to be in our own Permian back yard,” Shepperd stated. There are more than a hundred more to come in Texas alone.           

The lesser prairie chicken lawsuit is still in the preliminary stages, reported Angela Staples, general counsel for the PBPA.

A National Problem

Endangered species are just one element of sue and settle that affects the oil and gas industry, Staples, explained.

“The air and water agreements cost the industry hundreds of millions of dollars every year in regulatory costs,” she continued. In fact, the latest lawsuit listed on the EPA website filed by WildEarth Guardians is a clean air suit and references nine oil and gas companies (see below).

The economic cost of regulation through litigation is enormous, echoed Ann Norman, author of Environmental Regulation Through Litigation, a report released in August 2014 by the National Center for Policy Analysis. Consider the following:

• In 2012, agencies published rules totaling an estimated $112 billion in regulatory costs.
• Those costs pale in comparison to 2011, when regulators added $236.7 billion to the books.
• From 2009 to 2013, federal agencies released $494 billion dollars’ worth of final rules. 

These regulations run the gamut from dictating precisely how much sulfur a gallon of gasoline can hold to setting efficiency standards for microwaves, Norman reported.

In 2013, the U.S. Chamber of Commerce undertook an investigation of the sue and settle process in response to the growing number of complaints by the business community that it was being entirely shut out of regulatory decisions by key federal agencies. While the U.S. Environmental Protection Agency and the Fish and Wildlife Service have been leaders in settling—rather than defending—cases brought by advocacy groups, other agencies, including the U.S. Forest Service, the Bureau of Land Management, the National Park Service, the Army Corps of Engineers, the U.S. Department of Agriculture, and the U.S. Department of Commerce, have also agreed to this tactic.

As discussed in the report, titled Sue and Settle: Regulating Behind Closed Doors, researchers found that under the sue-and-settle process, the EPA chose at some point not to defend itself in lawsuits brought by special interest advocacy groups at least 60 times between 2009 and 2012. In each case, The EPA agreed to settlements on terms favorable to those groups. These settlements directly resulted in the EPA agreeing to publish more than 100 new regulations, many of which impose compliance costs in the tens of millions and even billions of dollars.

Agency Transparency

According to the report, in the past the EPA was asked by Congress to provide information about the notices of intent to sue received by the agency or the petitions for rulemaking served on the EPA by private parties; however, the agency did not comply. Rather, the EPA indicated that it “does not have a centralized process to individually characterize and sort all the different types of notices of intent the agency receives.”

However, the report acknowledged that the EPA had recently begun to disclose on its website the notices of intent to sue that it receives from outside parties.

“While this is a welcome development, this important disclosure needs to be required by statute and not just be a voluntary measure,” the report reads. Moreover, agencies such as the EPA also need to provide public notice of the filing of a complaint and/or petitions for rulemaking.”

The EPA website now includes a page titled Notices of Intent to Sue the U.S. Environmental Protection Agency (EPA), with the following explanation:

• Many of the environmental statutes that govern EPA actions contain provisions that allow citizens to sue EPA when EPA fails to perform an act or duty required by the statue. Unlike provisions allowing citizens to challenge final agency actions, these citizen suit provisions usually require a potential plaintiff to first provide the EPA with “notice of intent to sue” in advance of filing the lawsuit. Not all such notices result in lawsuits being filed.
• These citizen suit provisions include: section 304 of the Clean Air Act (CAA), section 505(a)(2) of the Clean Water Act (CWA), section 1449(a)(2) of the Safe Drinking Water Act (SDWA), section 11(g)(1)(A) of the Endangered Species Act (ESA), section 7002(a)(2) of the Resource Conservation and Recovery Act (RCRA), section 310(a)(2) of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), and section 326(a)(1)(B) or (C) of the Emergency Planning and Community Right-to-Know Act (EPCRA). http://www.epa.gov/ogc/noi.html. 

As of press time, the most recent listing was dated January 2015 and references a lawsuit filed by WildEarth Guardians stating, “The EPA has failed to take legally required action on the following permit applications for major sources of air pollution subject to its jurisdiction in Region 8 under Title V of the Clean Air Act.” The suit references nine oil- and gas-related companies and states, “These facilities all serve in the production and processing of oil and natural gas. By virtue of their location within the exterior boundaries of Indian Reservations, they are subject to EPA regulation under Title V in accordance with 40 C.F.R. § 71.” http://1.usa.gov/1DmjRNO

What You Can Do

No one is disputing the value of protecting air, water, land, and species.

“Like so many laws in America, the Endangered Species Act is based on noble intentions,” Shepperd stated. “The bison and the Bald Eagle are two animals that were nearly extinct and saved by prudent and appropriate public mandates.” However, in the cases of the lizard, chicken, and other proposed listings, the ESA in its current form is being exploited by activists groups by circumventing the logical and democratic process that allows for those affected to have a timely voice.

“PBPA members can call on members of Congress and demand they support reasonable ESA reform,” Shepperd declared.

Editor’s Note: To view the above-referenced article and reports, go to:

• http://washex.am/1D0J95n
  • http://uscham.com/1uKMToQ    
  • http://www.ncpa.org/pdfs/bg174.pdf

For additional information, go to:

• www.wildearthguardians.org (Federal Court Approves Historic Species Agreement, Friday 09/09/11)
• http://naturalresources.house.gov/blog/?postid=306049