Analysts: Litigation Reform Needed to Curb Lawsuits Undermining Conservation

'Perverse incentives' encourage suits that drain federal coffers

A view of the U.S. Environmental Protection Agency (EPA) headquarters / Getty Images

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Well-endowed environmental advocacy groups have exploited the "perverse incentives" of federal laws with "sue and settle" arrangements that enrich trial lawyers at the expense of taxpayers while undercutting successful conservation efforts, according to congressional figures and attorneys who favor litigation reform.

Under former President Barack Obama, the number of federal environmental lawsuits spiked sharply with nonprofit green groups such as WildEarth Guardians, the Center for Biological Diversity, the Natural Resources Defense Council, Defenders of Wildlife, the Western Watersheds Project, and the Sierra Club seizing upon the Endangered Species Act (ESA) as their preferred tool.

The House Committee on Natural Resources collected data from the U.S. Department of Justice showing the federal government was the subject of more than 570 ESA lawsuits filed between 2009 and 2012 by green groups, costing U.S. taxpayers more than $15 million. The Center for Biological Diversity and WildEarth Guardians stand out from the pack as the "most litigious organizations" on the House committee’s list, with the Center for Biological Diversity filing 117 ESA lawsuits and WildEarth Guardians filing 55 lawsuits during this same time period.

"There are terrible, perverse incentives to litigate in our environmental laws that are borne out in the rising number of lawsuits we continue to see," Kent Holsinger, the manager and founder of a Denver-based law firm named Holsinger Law that specializes in lands, wildlife, and water law, said in an interview. "Most of these lawsuits raise issues under the ESA that allow environmental groups to collect taxpayer-funded attorneys’ fees. What we see is a vicious cycle of litigation that does nothing for conservation and instead just benefits the environmental groups filing the litigation."

Holsinger was one of several witnesses who appeared before the House Committee on Natural Resources on July 17 to testify on behalf of five new bills aimed at reforming the ESA. He was joined by members of Congress who are sponsoring the legislation and by federal and state officials who offered their perspective on the need for reform. Rep. Raul Grijalva (D., Ariz.), the ranking member on the committee, and Jeff Corwin, a wildlife biologist and Hollywood television host, spoke on behalf of preserving the ESA in its current form.

Holsinger’s firm has released a memorandum titled "Fighting Back Against Excessive Environmental Litigation" that makes the case for litigation reform that would end what he views as "abusive practices."

He cited the "citizen suit" provision of the ESA and the Equal Access to Justice Act (EAJA) as particularly problematic areas of the law that create openings for environmental groups to burden taxpayers with lawsuits without achieving anything in terms of conservation.

"Often times these environmental groups are creating the issues they litigate over and they overwhelm federal agencies with petitions," Holsinger explained. "When an agency fails to meet a deadline, they will file suits and collect attorneys’ fees under either the Endangered Species Act or the Equal Access to Justice Act. Reforming both of these laws to end abusive litigation is the lowest of low-hanging fruit. Instead of spending all this time, effort and resources on fruitless litigation, we could be spending time on real, on-the-ground conservation. That’s why these laws need to be changed."

"Sue-and-Settle" Agreements Surge Under Obama

Holsinger is also calling on lawmakers to limit "sue-and-settle" agreements between the federal government and environmental groups that typically result in litigation costs, including taxpayer-funded attorneys’ fees, being rewarded to the environmental groups as part of the settlement.

The Institute for Energy Research (IER), a Washington-based nonprofit group that promotes a free market approach to energy policy, describes "sue-and-settle" as a "tactic" environmentalists use when an administration sympathetic to their policy goals is in power.

"The idea behind ‘sue and settle' is to circumvent the normal regulatory, rule-making process so that environmental groups can achieve major policy changes without input from the public or Congress," said IER president Tom Pyle. "When politically well-connected green groups get to call all the shots with compliant government officials, it leaves no room for accountability and transparency."

"Sue-and-settle" agreements involving the Environmental Protection Agency and the Interior Department "almost quintupled" during Obama presidency in comparison to his predecessors, according to Holsinger’s memorandum on excessive environmental litigation. His legal team also found that "more than $49 million was quietly funneled to environmental groups through sue-and-settle tactics" during the Obama years.

A 2011 GAO report cited in the memorandum shows that between 1995 and 2010, three environmental groups received more than 40 percent of this entire sue-and-settle windfall. Earthjustice attorneys received about $4.7 million in attorneys' fees, while the Sierra Club attorneys received $999,687, and the NRDC attorneys received $252,004, the GAO report says.

Although legislation has repeatedly been introduced to curb "sue-and-settle," they have never been enacted. Environmental groups that benefit from the large settlements awarded through the ESA and the EAJA do not want the laws changed, working with their allies in Congress to block any proposals that would limit their ability to litigate, according to Jonathan Wood, an attorney specializing in environmental law with the Pacific Legal Foundation.

"What’s happened is that the Equal Access to Justice Act has become a huge profit maker for nonprofit environmental groups, and with the way it works now it’s heavily biased in favor of environmental groups," he said. "If you are representing property owners and challenging government regulations, you almost never get your fees paid. The most the Pacific Legal Foundation has ever gotten in the past few years from attorneys' fees under the Equal Access to Justice Act is 0.07 percent. But environmental groups get these attorneys' fees every time they win and they get a lot because this is now all set up as a one-way ratchet. Obviously, none of the environmental groups want to give this up so it’s very hard to change this legislatively."

The Pacific Legal Foundation is a nonprofit, public interest law firm based in Sacramento, Calif. that advocates on behalf of "private property rights, individual liberty, free enterprise, limited government, and a balanced approach to environmental protection.""

Wood and his colleagues would like to see reforms made to environmental laws that level the playing field on behalf of property rights.

Environmental groups see the matter very differently. The recovery of legal fees is needed as a check against abusive government practices, they say.

"Legal fees like these are only paid when the Center or another plaintiff has shown that the government failed to follow our nation’s laws," said Noah Greenwald, endangered species director for the Center for Biological Diversity. "Fee recovery ensures that average citizens and not just deep-pocketed corporations get their day in court when the government is in the wrong. This is important to endangered species, veterans wrongly denied benefits and countless others and is a bedrock provision of our democracy."

Greenwald disputed the notion that fee recovery serves as a source of funding.

"Over the past decade, legal fees collected by the Center amount to less than 5 percent of its annual budget," he said. "Similar fees are involved in civil rights cases. Industry, state governments and private citizens on all sides receive fees because holding the government accountable is an important check on the abuses of government. Industry lawsuits are among the most common lawsuits involving environmental issues."

A spokesperson for WildEarth Guardians defended the Equal Access to Justice Act as a necessary tool that can be applied against government officials who fail to enforce the laws.

"The fundamental issue here is the government's chronic willingness to break its own laws," said Bethany Cotton, the wildlife program director, for the group said in an email.  "Most of these laws include notice provisions, 60-90 days during which the government is notified of its violation(s) and has every opportunity to remedy those violations before we can even file a case. Unfortunately, the government rarely does so. … The easiest way to end attorneys' fees payments to public interest organizations is for the government to respect these key laws, and follow them in letter and intent."

Lack of Transparency

Many of the largest environmental groups reap significant rewards without any public disclosure regarding the cost to the taxpayers. This lack of transparency stems from a legislative change made in 1995 revoking the disclosure requirement originally part of the EAJA, Holsinger said.

For the time being, this means environmental groups can continue to "game the system" on the taxpayers' dime. He favors reinstituting the transparency requirements and imposing "net-worth caps" that could limit the legal fees now generated by "wealthy environmental groups."

The NRDC has $182 million in assets and has received at least $6.5 million in grants from the EPA since 2000, while the Sierra Club holds $79 million in assets, according to the Holsinger memorandum.

He is encouraging members of Congress to take up the Sunshine for Regulatory Decrees and Settlements Act of 2017 as legislative fix to the "abusive environmental litigation" made possible through the EAJA. The bill would require public notice of lawsuits and settlement agreements and provide for transparency in accounting for cost of these agreements. Holsinger is also keen on the five ESA reform bills now before Congress, which he said in his testimony would "redress significant flaws" to the law in its current form.

"Only 23 domestic species have been delisted due to recovery," he told House committee members. "In other words, we can celebrate the recovery of only 1 percent of all domestic listed species in the U.S. The regulatory burdens of the ESA have been severe while its successes have been sparse."

He cites the ESA litigation WildEarth Guardians and other green groups have filed concerning the status of a bird species known as the Gunnison sage-grouse in Colorado as an example of "abusive practices" that undercut successful conservation efforts at the local level.

While there are "a number of environmental organizations that do fine work, the ones that grab the headlines and raise money, are the ones that pursue litigation rather than conservation and profit tremendously from it," said Wood, the PLF attorney. "The way the Endangered Species Act works now is completely backwards with twisted incentives. Property owners are now punished for having a creature on their land. That’s not the way the law was supposed to work. A lot of the litigation we have now is not done in the pursuit of conservation and in fact undermines conservation."

A spokesperson for the House Natural Resources Committee said the "full slate of bills has not been finalized" but "various ESA reform measures will advance through committee in September." The floor schedule for the bills "will be determined after the bills move through committee," the spokesperson said.

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