Sue and Settle, the Friendly Lawsuit That Writes Rules Without You in the Room

There is a kind of lawsuit in which the plaintiff and the defendant spend more time in the same room, on the same side of the table, than they ever spend fighting. One side files a complaint. The other side files an answer that says, in effect, "Fair point." A settlement is negotiated in private. A judge signs it. And a regulatory program that would normally take years of public argument is suddenly on a court-approved timetable, with a deadline that the agency's own officials may privately welcome.

Washington has a name for it, and the name is not a compliment: sue and settle. Let me walk you through how it works, why the people who dislike it have a point, why the people who defend it also have a point, and what a citizen who is not at the table can do.

How a deadline suit works

Start with the plain mechanics, because the trick depends on them.

Many federal environmental and regulatory statutes contain hard deadlines for agency action. Congress told the agency to do something by a certain date, or to review a standard every few years. Take the Clean Air Act as the example. It directs the Environmental Protection Agency to set national ambient air quality standards, and to review and revise them periodically, at five-year intervals. Other provisions require the agency to issue rules for specified categories of pollution sources by dates certain.

The Clean Air Act, like many other statutes, contains a citizen suit provision. Section 304(a)(2) allows any person to sue the EPA Administrator for failure to perform an act or duty that is not discretionary. The plaintiff must first send a notice, and wait 60 days, before filing. The point of the provision is to make sure that a duty Congress imposed does not go undone just because the agency would rather do something else.

That is a reasonable idea. If Congress says "by this date," the agency should not be free to ignore it. And the courts, not the agency, decide whether the deadline has been missed.

Where the friendly part comes in

Now picture a deadline suit that is not a fight. An advocacy group, call it a national environmental organization, sends its 60-day notice. The agency, which is behind schedule on a dozen duties, knows it has missed the date. It has two choices. It can litigate and probably lose, spending money and goodwill. Or it can negotiate a consent decree: a settlement approved and enforced by a court that commits the agency to take specified actions by specified dates.

The consent decree is where the real work happens, and here is why a skeptic worries. A decree does not have to stop at "issue the rule you were already required to issue." It can set a schedule for the rule, specify what the proposal will address, and fix the dates by which the agency will propose and finalize it. If the agency and the plaintiff agree, a court enters it. The rule's outline is now fixed, and the shape of the debate that follows is narrower than it was before.

Further, a consent decree binds the agency's successors. When a new administration takes office with different priorities, it finds the schedule already written, and the agency is bound by an order of a federal court. The Supreme Court acknowledged the problem in the context of state governments in Frew v. Hawkins (2004), noting that broad consent decrees can limit the powers of future officials, while holding that the decree there was enforceable and that the safeguard lies in the court's power to modify decrees. The same logic applies to federal agencies. A decree made by one administration can function as a policy lock-in for the next.

And where was the public during all of this? Those who will bear the costs of the rule, such as the manufacturers, the farmers, the utilities and their customers, were not at the table. In many cases they did not even know a lawsuit was pending. The two parties who negotiated the settlement were the party who wanted the rule and the party who was willing to write it.

The objection that agencies really do miss deadlines

Before I press the point, let me state the best defense of the practice, because it is the strongest argument and a fair reader will want to hear it.

The defense goes like this. Congress writes deadlines. Agencies regularly miss them, often by years. The citizen suit is Congress's own remedy for that failure, and it works. If an advocacy group sues to force the agency to do what the statute requires, it is enforcing the law as written, not making policy. A settlement that sets a realistic schedule is a practical solution that saves the agency from a worse court order. And the courts, not the advocacy group, retain control, because a judge must approve the decree. Besides, industry groups use the same tool: they sue agencies too, to force action they want. Sue and settle is not a plot. It is how an overstretched agency manages its docket.

That is a good argument, and I would not dismiss it. Three parts of it are right.

• Agencies do miss deadlines. The workload the statutes impose is large, and the agencies' budgets are fixed by Congress.
• Citizen suits are a legitimate enforcement tool. Congress wrote them into the statute.
• Both sides of the political spectrum have used litigation to shape agency action.

So the reform conservatives should want is not the abolition of deadline suits. It is transparency and discipline in how the resulting settlements are made.

The numbered case for reform

Here is the argument as I would make it to a skeptic.

1. A deadline suit enforces a duty, but a settlement can reach well beyond it. The statute says the agency must act by a date. It does not say what the rule's content will be. A decree that fixes content or sequence is making policy through a court order.
2. The people most affected are not parties. Under ordinary litigation rules, a person who is not a party cannot be bound by a settlement. But regulated parties, and the families who pay the costs through prices and jobs, live with the result in practice. The rule that emerges has been shaped without them.
3. The public comment process comes after the bargain. The Administrative Procedure Act guarantees notice and comment before a rule is final. That is a real right. But when a court has already fixed the schedule, and the agency has already agreed to a particular approach, the comment process is the last act of a play whose plot was written elsewhere. The Clean Air Act itself requires the EPA to publish a proposed consent decree for public comment before it is entered; but by then the deal has been struck, and an agency that has promised the court a deliverable has little room to change.
4. Decrees bind successors. One administration's litigation settlement becomes another administration's constraint. That is a transfer of authority from an elected Executive to a negotiated document.
5. The agency may be a willing partner. An agency that favors a rule but expects public resistance may welcome a lawsuit that gives it cover: "The court made us do it." That is a loss of accountability. Voters cannot hold a judge responsible in an election.

The conclusion is not that every consent decree is illegitimate. It is that this procedure is a bypass of the open rulemaking process, and the burden should be on the agency to justify it.

The 2017 response

The issue became a policy fight, and in 2017 the Executive Branch acted on it. In June of that year Attorney General Jeff Sessions issued a memorandum ending the Justice Department's practice of agreeing to settlement payments to third parties. In the past, settlements with the government sometimes directed money to outside organizations that were not parties to the case, such as advocacy and community groups, as part of the deal. The Justice Department's stated concern was that the practice let the executive direct money to outside groups in settlements that Congress had not appropriated for that purpose.

The reasoning ties back to the Constitution. Article I, Section 9, Clause 7 says: "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law." Money that goes from a government settlement to a favored outside group, without an appropriation, is at least in tension with that clause. The power of the purse belongs to Congress. A settlement that quietly redirects money is a small version of the same problem as a settlement that quietly redirects policy.

In October 2017 the Environmental Protection Agency under Administrator Scott Pruitt announced a directive limiting what it called sue-and-settle practice, which, according to press reports, also barred third-party payments and was aimed at closed-door settlements. I would encourage the reader to look up the text of both documents, as policy memoranda can be rescinded by later administrations, and the current status is worth checking.

That raises the obvious weakness of an executive reform: what one Attorney General writes, the next can erase. A memo is not a statute. If the reform is to last, it must be enacted. Several bills over the years have proposed requirements such as public notice of deadline suits, an opportunity for affected parties to intervene, and limits on a decree's reach. See the discussion of rulemaking discipline in Make Congress Vote on Every Major Rule, and Watch Accountability Return.

Why the Founders would care

The Framers would not have used the phrase "sue and settle," but they would have recognized the problem. They worried about faction, which Madison defined in Federalist 10 as a group of citizens "united and actuated by some common impulse of passion, or of interest" that works against the rights of other citizens or the permanent interests of the community. A faction with a settled interest in a regulatory outcome can, in an open legislature, be checked by competing factions. In a negotiation between two parties behind closed doors, no competing faction is present.

The second concern is the one Madison pressed in Federalist 47, covered in Madison Called It the Very Definition of Tyranny, and Agencies Hold All Three: the mixing of the powers. A rule made through a consent decree has, in a sense, three authors: an advocacy group that wants it, an agency that writes it, and a court that enforces the schedule. The legislative power was supposed to belong to Congress. The lesson of the founding is that lawmaking should happen where the people's representatives can be seen doing it and held responsible.

And there is the earlier point about unfinished business. Congress wrote the deadlines. If agencies miss them in large numbers, the remedy lies in part with Congress: write statutes with realistic timelines, fund the agencies to meet them, and stop passing laws that promise the impossible. See A Two-Page Law From 1970 Now Produces Studies Longer Than a Novel for how a short statute becomes a very long process.

A little humor, because we have earned it

Think about the poetry of the arrangement. One party sues the agency for missing a deadline. The agency responds that it agrees it missed the deadline. They then spend months negotiating how to fix the problem that both of them acknowledge. Meanwhile the manufacturer that will pay for the result is not in the room, the customer who will pay higher prices is not in the room, and the Congress that wrote the deadline in the first place is somewhere else, holding a hearing about the lack of progress on regulatory reform. Everyone is at the table except the people who will live with the outcome. It is the only dinner party in America where the guest list is set by the people who will eat the food and the people who will pay for it are not invited.

I mean that as a joke at the process, not at the people in it. Many of the lawyers on all sides are doing exactly what their jobs require. The fault is in the system that makes the closed-door settlement the easiest path.

What a citizen can do

You are not powerless in this. Here is a short list.

• Watch the Federal Register for proposed consent decrees. In environmental cases the agency must publish notice and take comment. The notice is short; the comment period is short; and nobody reads them. If you or your organization is affected, comment.
• Ask your Representative whether the agency has any deadline suits pending. The answers may be public through the committees or the court dockets.
• Support legislation that gives affected parties notice and a chance to intervene. The point is to put the missing party at the table.
• Read the court docket. Federal court dockets are public records, and settlements are filed there.

See also How to File a FOIA Request and Get a Federal Agency to Answer You for a way to get records of how an agency has handled deadline litigation.

The case in brief

1. Deadline suits under statutes like the Clean Air Act are a legitimate way to force agencies to do what Congress required, and agencies really do miss deadlines.
2. The problem arises when a friendly suit ends in a consent decree that fixes the shape or timing of a rule, binds successor administrations, and leaves out the parties who will bear the costs.
3. Notice and comment comes after the bargain, so the public's role is reduced to the last step.
4. The Justice Department's 2017 policy on third-party settlement payments and the EPA's 2017 directive were executive responses, but a memorandum can be reversed.
5. The durable fix is statutory: notice of deadline suits, a right for affected parties to intervene, and limits on a decree's reach, together with Congress writing realistic deadlines.

What you can do: Search the Federal Register for "consent decree" notices from an agency that affects your work or community, read one, and file a comment before the deadline.