Heads I Win, Tails You Lose

by Greg Walcher on July 7, 2016

coin tossIn April the U.S. Senate passed the first comprehensive energy policy bill in nearly a decade, and will now try to negotiate a compromise with a similar House bill passed earlier.

One section was of particular interest to people concerned about the massive growth of environmental lawsuits. It reinstates a requirement for federal agencies to track payments made under the “Equal Access to Justice Act” (EAJA). The bill does not restrict EAJA payments, but restores badly-needed transparency.

The EAJA was designed in 1980 to level the playing field between private citizens and the vast resources of the federal government. It allows people who sue the government to recover their legal fees and other costs if they win the case, or if the government settles before the case gets to court.

It sounds like common sense. But it turns out that EAJA is now mostly used not to help ordinary people fight the government, but to finance a global industry of giant environmental organizations. The original intent was clear. EAJA was passed as a rider to a small business bill, because Congress thought small businesses were facing arbitrary regulation by federal agencies. In fact, the committee concluded “that small businesses are the target of agency action precisely because they do not have the resources to fully litigate the issue.” EAJA was given a three-year trial period, with a sunset clause and reporting requirements, both of which were soon forgotten (big surprise).

Originally, the payments were available only to businesses of a limited size. But when a later amendment extended the same “protection” to nearly all citizens or groups, Congress had no idea what it had unleashed.

Soon, national environmental groups discovered a way to finance lawsuits to fight government policies with which they disagreed. Today, the scale of this legal activity is so staggering it can hardly be measured. One impressive attempt at Cornell Law School tracked over 260,000 civil lawsuits, showing the alarming expansion of American litigiousness. Civil lawsuits increased about 9 percent during the 15 years examined. But lawsuits related to the environment increased by a whopping 65 percent (from 555 in 1987 to over 1,000 by 2000 and every year since). In other words, three environmental lawsuits are filed in the U.S. every day, more than a third of them against the government. A more recent annual report of the Bureau of Justice Statistics shows an environmental lawsuit filed against the government every 36 hours.

Congress gradually realized EAJA might be financing something other than small businesses, and that American taxpayers might be paying both sides of very expensive lawsuits. A 2011 GAO report found that nearly $7 million, over a fourth of the legal fees paid by EPA, went to the Sierra Club and the Natural Resources Defense Council – two of the world’s largest environmental organizations, hardly strapped for cash.

Critics argued that a cozy relationship had developed in which environmental organizations would file what the agencies considered “friendly lawsuits,” designed to force the agency to do something it really wanted to do anyway. Then the agency would settle the case before it got to court – by agreeing to the demanded action, and paying the legal fees of the environmental group. As icing on the cake, the court would be asked to seal the case records, so the settlement details would never become public. A win for everyone, except the taxpayer.

Recent research by a Wyoming law firm showed that 14 major environmental groups have brought over 1,200 federal lawsuits in 19 states and DC, and collected over $37 million in legal expenses – not counting fees that are sealed in out-of-court settlements.

So when Congress began asking how much money was involved, the Clinton Administration got clever. It instructed federal agencies to stop collecting data on EAJA. So when Congress wants to know how much money is paid out after lost or settled lawsuits, and who it is paid to, agencies can truthfully say they have no idea.

Several reform attempts have gone nowhere, because it is hard to prove abuse of the process without data. I’m not sure if this new energy bill will eventually become law. But either way, it is irresponsible for Congress not to know how much money is being paid to whom. Absent that kind of transparency and accountability, it’s a two-sided coin with the same outcome – heads, the government wins; tails, the environmental lawyers win. Either way, you know who loses.

(A version of this column originally appeared in the Grand Junction Daily Sentinel April 13, 2016)

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