Statement of Judiciary Committee Chairman Lamar Smith Full Committee Markup of H.R. 3862, the “Sunshine for Regulatory Consent Decrees and Settlements Act of 2012”

Statement of Judiciary Committee Chairman Lamar Smith
Full Committee Markup of
H.R. 3862, the “Sunshine for Regulatory Consent Decrees and Settlements Act of 2012”

Chairman Smith: America’s small businesses and job creators need relief from the flood of new regulations and red tape made in Washington.  Small-business owners cite government regulations as the single most important problem they face today.  Americans now work an estimated 77 days per year just to cover the cost of the federal regulatory burden.

The Obama Administration’s response is not to put the brakes on new regulation but to step on the accelerator.  In just three years, it has imposed 106 new major regulations on the private sector.  These regulations cost $46 billion annually and impose almost $11 billion in initial implementation costs.

That is four times the number of major regulations the Bush Administration imposed in a similar period—at more than five times the cost.  It is the opposite of what America needs to recover from its economic distress. 

A heavy contributor to the burden of new regulation is the use of consent decrees and settlement agreements to force federal agencies to issue new rules.  Regulators often cooperate with pro-regulatory organizations to advance their mutual agendas in this way.

The scheme agencies use is simple.  An organization that wants new regulations alleges that an agency has violated a duty to declare new rules.  The agency and the plaintiff work out a deal under the cover of litigation.  The deal puts the agency under judicially-backed deadlines to issue the rules.

These deadlines often give the public little opportunity to comment on proposed rules.  Deals can even require agencies to propose specific regulatory language negotiated by the agency and its regulation-friendly plaintiff.

Those to be regulated typically do not know about these deals until the plaintiffs’ complaints and the proposed decrees or settlements are filed in court.  By then, it is too late. 

Regulated businesses and individuals are unlikely to be able to intervene in the litigation.  The court usually approves the deals before regulated parties have an opportunity to affect whether new regulatory costs will be imposed on them.

The Obama Administration has entered into numerous consent decrees and settlement agreements like this. 

Examples include a consent decree that requires new performance standards for greenhouse gas emissions under the Clean Air Act.  They also include settlement agreements that require the Fish and Wildlife Service to take actions involving hundreds of species under the Endangered Species Act. Deadlines set in these and other decrees and settlements may be used to bind the hands of future administrations.

The “Sunshine for Regulatory Consent Decrees and Settlements Act of 2012” puts an end to the abuse of this practice.  It assures that those to be regulated have a fair opportunity to participate in the resolution of litigation that affects them. 

It ensures that courts have all the information they need before they approve proposed decrees and settlements.  And it provides needed transparency on the ways agencies conduct their business.

Also, the bill respects the basic rights of plaintiffs and defendants to manage litigation between them.  As a result, the bill offers an effective and balanced remedy.