Regulation through Litigation

The misuse of consent decrees, in which special interest groups sue federal agencies and then influence regulation outside of the normal rulemaking process through settlement, has become a familiar tactic in recent years by some special interest groups.  The approach is concerning as it often bypasses administrative processes designed to provide transparency and public participation. The oil and natural gas industry has found itself in the middle – consistently being the subject of “regulatory workaround” under these settlements, but without a voice in the process. Federal and state regulatory schemes can be quite complex, and establishing rules requires substantial agency resources and time to fully consider all the potential unintended consequences.

Regulation of industry has also been effectuated through targeted agency information gathering campaigns.  Such efforts circumvent the due process protections offered under the Administrative Procedures Act that formal rulemakings must follow. Similarly, the threat of a major agency enforcement action as a primary means for data collection and increasing compliance requirements has become a concerning trend.  Companies today operating in good faith within existing laws often find themselves on the receiving end of massive information requests at significant cost in absence of any alleged or formal Notice of Violation.

In some cases, companies find themselves under a threat of a designed to facilitate open-ended investigations.  These information requests can be very detailed and onerous for the regulated entity to complete. In many instances, the agency will eventually approach the operator with the threat of a significant fine unless agreeing to enter into a consent decree requiring additional environmental controls, arguably beyond what is required by law.

In both of these scenarios, the due processes designed to protect American rights and provide for a responsible government are circumvented.  In contrast, regulatory programs designed to be fair, workable, and that balance burden with benefits, and that are developed through transparent, thorough consideration are much more successful at achieving broad industry acceptance and thereby compliance.