Sue and Settle: The Performance Enhancement Drug (PED) of Public Regulators

When Bruce Yandle wrote his classic article in Reason Magazine entitled, “Bootleggers and Baptists: The Education of a Regulatory Economist,” he artfully explained how profit seeking law breakers sidled up with religious do-gooders to accomplish a common social objective: keeping liquor sales illegal. More and more examples of such unexpected bedfellows are appearing in Washington each year. To understand why, just think like a federal bureaucrat.

Imagine a senior administrator at the Environment Protection Agency (EPA) striving to promote a narrow interpretation of the public interest by regulating private market activity for the sake of saving the environment. What if he or she lacked sufficient political support to garner a budget of sufficient size and regulatory scope to be worthy of the agency’s lofty mission? One strategy would be to sidle up with special interest groups that seek similar restrictions on individual liberties, but lack the financial backing to successfully influence lawmakers to enact public policy that would create their desired outcomes.

What is the plan? Use the courts. The special interest groups can sue your federal agency for lack of performance in fulfilling its environmental mandate — at least to the degree of their personal satisfaction. A purposeful lack of Executive Branch ardor in defending the agency against a half-baked litigation claim will likely result in a binding judicial consent decree that is to be hammered out between the special interest group and the agency. Further, the outcomes specified in this negotiated decree are legally binding for the agency. The usual checks and balances in the political process that oversees the agency’s public policy design and implementation are not allowed to intervene in this private negotiation process.

This practice is called “Sue and Settle,” a phrase coined by U.S. representative Collin Peterson (D- MN) to describe what is basically a performance enhancement drug (PED) abused by federal agencies. It allows them to more effectively pursue greater limitations on individual liberties in the name of promoting the public interest by taking an end run around the usual procedural checkpoints of public oversight. In the end, the bureaucrat enjoys the enhanced scope and budget that his or her agency wanted all along, and the special interest group enjoys the subsequent rise in financial support resulting from the enhanced political effectiveness they have in influencing public policy design. Both sides win big as the public loses ever more of its liberties in a non-democratic process of public policy design and enforcement.

How extensive is the use of this PED by federal agencies? The U.S. Chamber of Commerce estimates that the EPA took advantage of this ploy 60 times between 2009 and 2012. The C of C found that when the Congress formally asked the EPA to submit information about the notices of other party’s intent to sue that they had received, the EPA refused to provide this information. This lack of transparency creates much tension between the Congress, which is tasked with making federal law, and the federal agencies, which are tasked with implementing federal law rather than creating new laws through private negotiations with unelected non-profits.

Perhaps we should start recording such “Sue and Settle” outcomes in the Federal Register with an asterisk.

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