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Bill shines light on ‘sue and settle’ arrangements that short circuit Administrative Procedures Act

Washington, D.C. — U.S. Senators Marco Rubio (R-FL), Chuck Grassley (R-IA), and colleagues reintroduced legislation to end the practice of creating new federal red tape outside of the public rulemaking process. The tactic, known as sue-and-settle litigation, is used by federal agencies and like-minded special interest groups to impose new and burdensome regulations on businesses and communities without sufficient public notice or participation. The Sunshine for Regulatory Decrees and Settlements Act of 2021 shines a light on sue-and-settle litigation and restores the transparency, public scrutiny and judicial review protections of the rulemaking process. Identical legislation was introduced in the House of Representatives by Congresswoman Victoria Spartz (R-IN). 

“As policymakers work to strengthen American small businesses so they can grapple with the many challenges they face in today’s globalized economy, one continued burden these businesses have to deal with is sue-and-settle litigation,” Rubio said. “This practice results in countless American firms getting hit with surprise regulations, the result of negotiations the businesses have been frozen out of. This legislation gives American small businesses a say in the process, so they’re not left in the dark and without a voice in the rulemaking process.”
 
“Sue-and-settle tactics are used solely to hide an agency’s regulatory ambitions from the American people until it is too late,” Grassley said. “This practice hurts families, businesses and even entire states through burdensome red tape, and it makes a mockery of the public accountability and transparency protections established by the Administrative Procedure Act. This bill restores the American people’s seat at the table when agencies debate imposing new federal regulations.” 
 
Sue-and-settle actions are used by special interest groups to further their own regulatory interests. This strategy involves the threat of litigation against a federal agency to influence the agency’s regulatory priorities through closed-door negotiations that result in binding settlement agreements. The terms of these settlement agreements often force federal agencies to circumvent the public rulemaking process by requiring the agency to fulfill new regulatory mandates under accelerated timeframes. Unlike the normal rulemaking process, potentially-affected parties – such as businesses and state governments – are often kept completely in the dark about the negotiations. These agreements can bind federal agencies in succeeding administrations, limiting future executive discretion such as de-regulatory efforts.
 
To push back against the growing use of sue-and-settle litigation, the Sunshine for Regulatory Decrees and Settlements Act 2021 reinforces federal laws that were enacted to preserve transparency and public accountability protections in the rulemaking process. Specifically, the bill:
 

• Provides for greater transparency by requiring agencies to publicly post and report to Congress information on sue-and-settle complaints, consent decrees and settlement agreements;
• Prohibits the same-day filing of complaints and pre-negotiated consent decrees and settlement agreements in cases seeking to compel agency action;
• Requires that consent decrees and settlement agreements be filed only after interested parties have had the opportunity to intervene in the litigation and join settlement negotiations, and only after any proposed consent decree or settlement has been published for at least 60 days to provide for notice and comment;
• Requires courts considering approval of consent decrees and settlement agreements to account for public comments and compliance with regulatory process statutes and executive orders;
• Requires the Attorney General or, where appropriate, the defendant agency’s head, to certify to the court that he or she has approved any proposed consent decree that includes terms that:
• Convert into a duty an otherwise discretionary authority of an agency to take regulatory action;
• Commit an agency to expend funds that have not been appropriated and budgeted for the action in question;
• Commit an agency to seek a particular appropriation or budget authorization;
• Divest an agency of discretion committed to the agency by statute or the Constitution; or
• Otherwise affords relief that the court could not enter under its own authority; and
• Makes it easier for succeeding administrations to petition a court for modification of a prior administration’s consent decrees by providing for de novo review of motions to modify, if the circumstances have changed.

 
In addition to Rubio and Grassley, he Senate bill is cosponsored by John Cornyn (R-TX), Ted Cruz (R-TX), Marsha Blackburn (R-TN), Josh Hawley (R-MO) and Thom Tillis (R-NC).