Deep Dive Episode 129 – Environmental Citizen Suits and SEPs: Do Constitutional and Nondelegation Concerns Outweigh Environmental Benefits?
Environmental laws such as the Clean Air Act allow private plaintiffs and environmental advocacy groups to file citizen suits alongside the government’s environmental enforcement actions against polluters. The Environmental and Natural Resources Division of the Department of Justice is now pushing to end the practice in a federal case involving DTE Energy, Michigan’s largest electrical utility and a major operator of natural gas pipelines. The Sierra Club intervened on the government’s side and is seeking court approval of a side agreement in which DTE would close three coal plants, in addition to the penalties and mitigation secured by the Justice Department.
Such Supplemental Environmental Projects (or SEPs) are supposed to supplement the government’s enforcement actions. But critics – and now the DOJ – argue that SEPs often supplant the penalty that the government has sought in its enforcement action. Such provisions, critics say, amount to a delegation of a core executive function that the Constitution vests in the president. It allows private advocacy groups to override the government’s enforcement priorities with their own, and then profit from coercive use of penalties that arise under environmental protection laws, the faithful execution of which is entrusted to the president and to the officials under his control. Critics say that any citizen suit claims arising under federal environmental laws that also give rise to enforcement actions should be extinguished when the enforcement action is resolved.
To the extent advocacy groups induce private companies to agree to such SEPs by promising to give up on claims arising under federal environmental laws subject to federal enforcement, should the practice of SEPs be viewed as an unconstitutional infringement on a core executive function? Should the government’s ability to extinguish such private claims be viewed as a taking?
Although this transcript is largely accurate, in some cases it could be incomplete or inaccurate due to inaudible passages or transcription errors.
Micah Wallen: Good afternoon and welcome to The Federalist Society’s Fourth Branch Podcast for the Regulatory Transparency Project. My name is Micah Wallen, and I am the Assistant Director of Practice Groups at the Regulatory Transparency Project at The Federalist Society. As always, please note that all expressions of opinion are those of our guest speakers on today’s call.
Today we are fortunate to bring you a discussion titled “Environmental Citizen Suits and SEPs: Do Constitutional and Nondelegation Concerns Outweigh Environmental Benefits?” For our moderator today, we are pleased to have Mario Loyola, who is a Senior Fellow for the Competitive Enterprise Institute as well as a member of the Environmental Executive Practice Group Committee here at The Federalist Society. Mario will be introducing our other panelists today.
If our audience would like to learn more about all of our speakers and their important work, you can visit www.regprogect.org where we have listed all of their bios. In a moment, I’ll be turning it over to Mario to get us started and moderate the conversation. As one last note, after opening remarks and discussion, we will have a period of audience Q&A, so please be thinking of questions during the remarks that you’d like to ask our speakers. With that, thank you for joining us. Mario, the floor is yours.
Mario Loyola: Thank you, Micah. Thank you everyone who’s joining us today. And thank you to the panelists that I’ll be introducing in just a moment. This is an important case, Sierra Club v. DTE, that’s in federal district court right now. It raises some very important issues, not just of environmental regulation, but also of constitutional law and separation of powers, so I look forward to a lively discussion today.
Environmental law such as the Clean Air Act allow private plaintiffs, environmental advocacy groups to file citizen suits alongside the government’s environmental enforcement actions. The Environment and Natural Resources Division of the Department of Justice is now pushing to end the practice in this particular case involving DTE Energy, which is Michigan’s largest electrical utility and a major operator of natural gas pipelines.
The Sierra Club has intervened and is seeking approval, or at least recognition, of the side agreement that it reached with DTE in which it would close — in which DTE would close three coal plants in addition to providing penalties and, quote, unquote, “mitigation.” And my understanding is the latest posture in the case is that we’re waiting to see if the district court will schedule oral arguments.
In particular, I hope that the panelists will focus on the $2 million fund that’s part of the side agreement in addition to DTE’s agreement to close the three coal plants, which raise particular problems of its own, not least under the Miscellaneous Receipts Act. So these side agreements, which often take the form of supplemental environmental projects, or SEPs, are supposed to supplement the government’s enforcement actions, but the question that arises here is whether they are in some degree supplanting it.
So with that tee up, I want to thank the three panelists that are joining us today, and I’ll announce them here in the order in which I hope they will speak. Richard Epstein is the Laurence Tisch Professor of Law and Director of the Classical Liberal Institute at New York University School of Law. Eric Groten is a Partner at the law firm of Vinson & Elkins in Austin, Texas, and one of the most prominent air lawyers in Texas. And Joel Mintz is Professor Emeritus of Law and William Trout Senior Fellow in Public Interest Law at the Shepard Broad College of Law at Nova Southeastern University.
And with that, Professor Epstein, if you’d like to kick it off. I’m going to try to keep the panelists’ speech to about 10 or 12 minutes so that we can have a round of discussion after the three have given their introductory comments, and then have, hopefully, plenty of time for Q&A. Professor Epstein, thank you for joining us.
Prof. Richard Epstein: Hello. Sorry. I had my mute on because I didn’t want to disturb anybody, but always honored to be here and speak about the particular issues. And I will try to observe the rules against temple trespass so as to give equal time to all.
When I got involved in this case, one of my former students, Elliot Gaiser, said to me, “I’d like you to think about joining an amicus brief which deals with the particular settlement.” The government had its own rules about how it is that they thought that there’s a principle of constitutional avoidance and a variety of things that they should be able to maintain sole and exclusive control over all cases by way of criminal or civil prosecution under the Clean Air Act.
And the position that was proposed to me and which I eventually thought was correct was this is not quite right. You cannot have two masses when you start to deal with criminal prosecutions, and what you really need to do is to make sure that the federal government, to the extent that it does have prosecutorial authority, has sole and exclusive control over the entire case, just as it does in any other kind of civil litigation, and that once you start to bring somebody else in to the table and give them rights as participants, as interveners and so forth, what you’re going to do is to have some kind of divided authority, which is inconsistent with the notion of having a unitary executive. And all in all, I think that that is probably the correct contention.
Now, these things become very complicated because whenever you have these particular actions, it is often the case that somebody enters into a consent decree, which is a private agreement which is basically approved by the court. And in this particular case, the government entered into the consent decree demanding certain things of DTE, and it was also the case that the Sierra Club signed on to that particular decree.
Well, I don’t think the second signature is appropriate, but one of the ways you can do it is to say, “Okay, you signed on to it. You’re bound by it.” The question is what does that mean? And the position of the Sierra Club, which they expressed quite eloquently and forcefully in their supplemental pleadings on this particular case, is we cannot demand that anything else be done by a consent decree with legal power. But there’s nothing on God’s green earth — environmental groups, of course — which prevents us from entering into a, quote, unquote, “voluntary agreement” with DTE by which they agreed to make additional steps that are consistent with the purposes of this particular statute, namely to shut down certain coal bearing plants and to take other steps at mitigation in order to improve air quality that takes place.
In order to try to create the case for this, what they did is they filed four affidavits by individuals who claim that any form of pollution that takes place would have a disparate impact upon them because they were sensitive to any kind of environmental degradation. This was an effort for them to claim that these individuals suffered special damages, and so therefore what they had was an additional right above and beyond that of being parts of the general public.
And there’s no question, if you look at various Supreme Court authority, most notably the Friends of the Earth case, these notions of particularistic pleadings are often used to get around some of the limitations that are imposed upon Article III standards. And so the question is whether or not when you see all of this stuff, is this an appropriate way in which to work? And here, I think it’s very important to make sure what the argument is, which is the only thing I’m contending for here is that these collateral agreements, whether or not enforceable by a court and the interventions which were done as a right, are appropriate.
There are all sorts of other things that start to take place which I think are outside of this particular scope. And so, in particular, one thing I think that’s clearly outside the particular scope in this case is where the government decides to put forward some regulation and the Sierra Club or many other environmental groups think that the action is ultra vires and so forth. This is not a case in which you’re talking about divided executive authority because, in fact, the agencies are opposed and adverse to the government issue. And this happens all the time, for example, when under NIPA you have a suit brought by the Sierra Club against the Army Corps of Engineers in an effort to stop the project.
I think there are some serious issues as to how you regulate that particular prospect, but I don’t think that those issues relate to separation of powers and the unitary executive. I think they relate to the question of how it is you want to deal with the administrative standing on the one hand, and also whether or not you have a uniform standard of deference to the agency when it approves a project as well as in those cases when it does not.
And the second thing I think that’s important to understand is that this case has nothing to do, as far as I can see, with the question of whether or not a private party has a right of action, an independent action in tort when you’re dealing with a case having to deal with pollution. This is an issue on which there is, I think, unsatisfactory Supreme Court authority. Some time ago, there was a situation with the City of Chicago who wanted to sue the City of Milwaukee. And the question was whether or not you have a private right of action under the Clean Water Act when the whole area was subject to comprehensive regulation by the federal government.
And the position that I took many years ago and which I would still take today is as follows. It turns out that there’s nothing inconsistent by allowing private rights of action for pollution to people who can demonstrate special damages, even if the government has a comprehensive regulatory shield.
The danger of allowing the government to enter into a settlement with a private party is quite simply that if they enter into a collusive settlement, the settlement will also often provide that a given party is allowed to continue pollution for a certain period of years. That pollution may impose special losses on ordinary private individuals. And to say, in effect, that the government can work the settlement is to basically take those private rights of action and to wipe them out, which I think is inconsistent with the kinds of property rights that these courses of action present.
Now, the question is, is the Sierra Club presenting that kind of claim here? And I think the answer is clearly not. In order to do that, what you would want them to do is to bring a private right of action independent of the enforcement proceedings, which could begin either before or after anything takes place in which they identify those individuals who were subject to disparate harm.
The question is what’s the definition of disparate harm that one wants to impose when you’re talking about these cases? And I think in these particular circumstances, the correct deposition is not to say that there are some members of the general public who are more vulnerable to air pollution than other individuals. If you’re dealing with any situation in which you have comprehensive enforcement over large tracts of land, there will always be people who fit in that particular situation. So essentially, you could never get any government monopoly on public enforcement. A routine claim of this particular sort would take place.
Instead, what I think you have to do is to show what was required in many of the early cases. One of the best decisions on it is a case called Richards, which was decided by my favorite unknown Supreme Court justice, Mahlon Pitney, in which he went back to the, essentially, 1536 distinction between general and special damages and said, “It’s one thing for you to leak pollution into the general area, and it’s another thing for you to take a fan and to force all that pollution in a way in which it happens to impact in terms of its quantity and amount far greater than any given set of individuals than it does on the public at large.” And in those cases, it seems to me, it would be inappropriate to allow this to happen.
So what’s going on here is it’s kind of a strange situation. To some extent, you’re trying to increase the power of the government by stopping the situation that took place here. And in another case, what you’re trying to do is to decrease the power of the government by allowing ordinary common law nuisance cases to start to take place under the traditional parameters that deal with that issue. And there are, I think, lots of abuses of public nuisance cases, but when you start having massive pollution directed against a given person, I don’t think you’re close to the particular area of abuse.
Now, what is, I think, the problem that you start to see with these particular cases can be thought of in connection with the sort of generalized notion of what is it that counts as field preemption to see why the difficulties here are very, very serious. As a matter of general law, if it turns out you think that the government has occupied a particular field and has decided to impose a penalty up to X, the common understanding is that when they decided to go as far as X, they decided to do not X. And so, therefore, what happens is it prevents and additional action from taking place.
And I think that’s the appropriate model to use in this area. If you’re just dealing with the public enforcement side and you’re not dealing with the private rights of action, if the government decides to go as far as X and decides not to go any further, then it would be wrong to have any parasitic agreement which allowed that to take place. The Sierra Club wants to say, “Well, this is not quite right because what happens here is it’s a voluntary agreement, and we’re not seeking any judicial enforcement.”
But it’s not the question of enforcement that matters. The question that really matters is could they have ever gotten to this particular kind of an agreement, even from voluntary settlement, if it hadn’t been for its participation in the underlying lawsuit? And these things are going to have all sorts of collateral consequences, even if they’re not going to be enforced. What you do is you enter them into the books as a corporation. If you don’t keep your particular promise, you’re subject to derivative suits for breach of fiduciary duty and so forth.
And so I think, in effect, nonenforcement ought not to be the test. Sierra Club also mentions that it’s not taking any money in these particular cases when it brings the suit. And that to me is, again, an irrelevant consideration. If, in fact, these suits were fully warranted, attorneys fees are going to be fully warranted as well. But I don’t think you make something justified by showing that you’re not going to get money for it. What you have to do is to show, in effect, that your actions are important.
And the second point that I think one has to worry about is it’s a mistake to simply look at these cases of joint control by looking at what is going to happen after the particular situation is done. These are the parties that intervene in the case, and they’re necessarily going to influence the way the evidence comes in, the way the witnesses are going to be presented, and so forth. And that, I think, is something that should not be allowed.
So I’m just going to end on the simple kind of observation that in dealing with criminal enforcement as opposed to administrative regulation and so forth, or civil enforcement, the government should have these exclusive rights. And collateral agreements, which necessarily follow on and depend on the original collective settlement to which a party like the Sierra Club has been a party should not be allowed.
In fact, the whole point of this particular exercise is to say that they should not be allowed in the criminal prosecution at all. Even though when they’re cases of traditional common law special damages, a private right of action should be able to go both before, during, and after the prosecutions that the government brings either civilly or criminally under the Clean Air Act.
And if I’m looking at my time, I think I have basically met my limit, so I am not going to trespass on anybody else’s hour. Take care.
Mario Loyola: Thank you, Professor. Counselor Groten?
Eric Groten: Thanks, Mario. And thanks to The Federalist Society, I think, first and foremost for simply existing. I’m glad you’re out there doing your good work. And way down the list, as well, thanks for inviting me to join such distinguished company to talk about a question at least I thought long settled, which is whether the Clean Air Act imposes any constraints on its misuse.
After five members of the Supreme Court held that, under the Clean Air Act, a constituent of clean air that’s vital to life on earth must be regulated as an air pollutant, and after having unsuccessfully argued to the D.C. Circuit with cert denied that valid regulations have to be shown to accomplish a meaningful environmental impact — that turned out to be a loser — I’d have thought that the answer is no, that the Clean Air Act authorizes pretty much any action that’s wrapped in clean air or now sort of climate clothing.
I have to say, though, that the new filings by DOJ’s Environmental Natural Resources Division in the Eastern District of Michigan as well as a new case out of the Fifth Circuit I think sheds some hope and light at least in the narrow corner of the Clean Air Act in which citizen suits reside. I will say to the extent that the light is cast by constitutional arguments, I’ll certainly defer to the distinguished professors on this panel.
In my law practice, if you’re making a com law argument, you probably lost this point. And in the extremely unlikely event that you win, those wins don’t come cheap. So I can probably count on about no fingers the number of times that I’ve included a com law argument as any point of error.
But the issue today before us isn’t really exclusively, at least, one of constitutional constraints, but one of statutory interpretation because it’s maybe tempered a little bit by constitutional avoidance. So as Professor Epstein introduced, our context today is the role of so-called private attorneys general under the Clean Air Act. And that act, like all long-standing now 50-year-old environmental statutes authorized citizen suits and have since their birth.
These laws, including the one in Section 304 of the Clean Air Act, presuppose a few things. First, that the Executive Branch assigned to enforce the law hasn’t done so, but it further presumes that the cause of enforcing the Clean Air Act is sufficiently important as to warrant a court to get involved. People are getting hurt by air pollution and the government isn’t doing anything about it. So Congress empowered the affected people to take action in their own defense.
Well, into that theoretical pleasant model are built — there’s several logical limitations. First, of course, is you have to have the Executive Branch at least aware of the problem, and hence, there’s an obligation to provide a 60-day notice. Second, that the Executive Branch does nothing in response before the citizen can file suit. Third, the violations have to be persisting because the notion here isn’t to go authorize citizens to go collect penalties on government’s behalf; it’s to go stop something that’s ongoing. So if there’s nothing persisting, there’s nothing to enjoin their citizen suit. And then, finally, and certainly not least, is that some human or humans are being harmed.
So it’s roughly under those circumstances alone that someone can file a district court law suit, and with a relatively trivial but, I think, legally instructive limitation, which is the addition of the opportunity for the citizen planning it to get up to $100,000 basically in a slush fund, which was added in the 1990 amendments, they can really sue for injunctive relief only. To the extent penalties are awarded, it’s to the government, not to the plaintiffs. And it’s for the purpose of stopping the violation that’s hurting them. And as well, and not insignificant point, of course, they can get attorney’s fees.
So that was the pleasant theory of the private attorney general going back to the early 1970s and what’s been the practice. And this is where Groten gets very cynical, or stays that way, which is I think that the biggest distortion of the fine theory, and this will come as no surprise to those of you here who may occasionally read the journal of the law of unintended consequences is that a law intended to protect the little guy from a nonfeasant Executive Branch on a very large industry, which the big three are Sierra Club, Environmental Defense Fund, and RDC, which are often very much aligned with a very active Executive Branch.
And for the most part, these environmental organizations are both lawyer and client, and at times, lobbyist. They are deciding policy priorities by identifying prominent targets, and then they go find, as needed, someone who lives nearby to wave the magic standing wand, and then they file their notices.
Well, after those lawsuits get filed, there’s several ways that the case, broadly speaking, can go. One is that the government acts and the NGO is placated and does nothing, and the case proceeds by the government, for the government, and with whatever outcomes it achieves. A related possibility is that the government acts, the NGO intervenes, as is its right under 304, and it sits in the back seat of the case while the government drives the car, but at the end, they make their claim for fees for having supported the outcome and for donations for having supported the outcome.
The third outcome possibility is that the government doesn’t sue, so the NGO does. Or if it doesn’t actually sue, it engages with the company shy of actually filing a complaint and then comes up with an intent to create a private settlement that settles the case. In all of these scenarios progressing the case, there’s no conflict, at least among the plaintiffs, the government and the NGO.
And then there’s the circumstance that brings us together today in which the government does act. It has a very different idea of the right outcome than does the NGO, or maybe even thinks that the right action is no action. And that is the conflict that gives rise to DTE. I know nothing behind — I can only read what I read on the face of the pleadings. I have no involvement in the DTE case and have not talked to any of the lawyers involved in it.
So from outside appearances, it seems to have started — well, it started a long time ago. It’s proceeded almost ad infinitum as a fairly typical so-called NSR case in which TPA and the national NGOs have, over the last couple of decades, taken assuming coal plants over so-called life-extension projects. So it would claim that these projects triggered a permitting process that should have led to scrubbers or bag houses or other expensive controls, and failure to do that also was violations yielding millions and millions of penalty liabilities.
In some cases, the Executive Branch has been happy to let the NGO go alone, but far more often, DOJ would take the lead. But until DTE, I’m not aware of circumstances in which disputes arose as to the outcome. And the private AG had nothing more to do than bless the settlement, collect some attorney’s fees, and basically some PR credit while the actual attorney general, not the private attorney general did what he or she was supposed to do.
But on DTE, I’d say the roads diverged. This is pure speculation on my part, outside looking in, but it appears that all parties had been moving toward a deal where DTE would give up some portion of its fleet, which, frankly, market or other governmental forces are compelling anyway, and it would accept other injunctive relief and supplemental environmental projects and mitigation to resolve both plaintiffs’ claims.
But again, and this is pure surmise, at some point after 2016, DOJ probably didn’t want to be seen in the position of fostering the shut-downs of extraneous coal plants. Again, surmise, I’m assuming DTE didn’t care about giving up these other plants because it was going to do so anyway, and the deal makes it look pretty good in this day of the ascendency of ESG issues.
So at some point, and I’m assuming it’s probably after 2016, the plaintiffs parted ways. The DOJ was behind a deal that’s reflected in the consent decree that called for the usual controls on the plant as well as the option to shut them down, but it did not want to approve as a SEP or as a mitigation project. DTE had apparent commitments to shut it down anyway.
And then Sierra Club also wanted the clean busses that were in the SEP to be electric rather than merely, quote, “lower emitting.” I will say as a sidebar that Sierra Club seems to be in favor of electrifying everything, but not always making electricity. Anyway, the Sierra Club had agreed with DTE that DTE would provide basically a $2 million fund for unspecified environmental projects. And so those are the fundamental differences between how the parties wanted to resolve the case.
The legal issue, of course, now fully briefed before the Eastern District of Michigan, is which plaintiff is in charge of the case. The elements of the settlement on which all parties agreed in the consent decree but also before the court is that separate settlement agreement between DTE and Sierra Club which memorializes the agreement to shut down the plants, to electrify busses, and set up the $2 million fund. The court was asked to approve both of them, and the consent decree refers to this side deal as well. So ENRD, including over the signature of the attorney general in charge of the ENRD, Jeff Clark, had filed a motion opposing that side agreement.
And it’s, like I say, been fully briefed, including with the amicus brief filed by Professor Epstein which raises separation of powers issues. And of course it’s above my core power to add or detract from whatever he has said there about that question. But the gist of the statutory issue is basically from EPA standpoint — or the government’s standpoint, I’m the AG, you’re the private AG, and I get to control the case. See Ellis v. Gallatin Steel from the Sixth Circuit in 2004.
The gist of Sierra Club’s position is that, well, even if so, as to your claims, our side deal is just a private deal that DTE is happy to enter into. It doesn’t interfere with what they’re doing, and so it doesn’t, in fact, need court approval. I would say one possible problem with the Sierra Club’s position, although as Professor Epstein indicated, it’s certainly well defended, is that the side deal does release the Clean Air Act claims, and its right to sue is created by the Clean Air Act, and so obviously, it should be constrained by the Clean Air Act. Is the Clean Air Act citizen suit intended as a lever or a gun to threaten bad things and get whatever the private plaintiff wants, or is it intended to accomplish particular legislatively conscribed outcomes? And that’s really what’s at issue here.
I think DOJ does a pretty good job pointing out that the privacy of the agreement allegedly is a bit of a subterfuge and could be an exception that swallows the rule. And it also makes the point that if Sierra Club wants to say this really has nothing to do with the lawsuit, and then that there’s no quid pro quo because DTE is doing this, quote, “voluntarily,” which truly voluntary, there shouldn’t be need for any written document at all. And if it’s not voluntary, then obviously the Clean Air Act is implicated.
As to the merits, putting aside whether it’s the side agreement as properly before the court, I think as an intervener, at most the Sierra Club can get what the government can get. That makes some sense. And I think the government itself would be unlikely to be able to get the additional relief that Sierra Club is rested for DTE here, including the shutdown of the fleet, a particular kind of clean bus, and this $2 million fund. And specifically, as to the latter, it exceeds by about a factor of 20 the size of the fund authorized under 304. And I don’t think that the obligation to shut down a plant that is brought into compliance is within the court’s power to order under Section 113 of the act.
So this case is in kind of a strange posture with the defendant agreeing to a side deal. And some may ask if this is a tough case that risks making bad law, but I think the principle applies independent of the defendant here. It’s up to the AG to control the case, and that principle is threatened when the Clean Air Act becomes a club that’s used to yield outcomes that exceed the boundaries of that statute. In fact, I don’t think this case could arise without a pliant defendant precisely because the AG does control the outcome. If you settle with the government, the intervener has very little power to complain unless the settlement is a sham.
So it’s kind of simple here. I think if the NGO intervenes and can track the case to relief beyond what EPA is demanding, EPA isn’t in control of the case, and the defendant has to satisfy both masters. And that certainly complicates negotiations and extends them.
That’s all on — just one other thing to point out, and all I will do is point it out, is one recent development that also gives some hope to returning the citizen suit to its intended interstitial role of protecting the little guy, and that’s the notion there actually needs to be a little guy who’s being harmed and needs the federal court to step in. And what I refer you to is the most recent opinion in a Fifth Circuit appeal of an award of a penalty in a Clean Air Act citizen suit against Exxon. Baytown — it’s captioned Environment Texas, the ExxonMobil.
And what the panel there held is that the plaintiff has to show standing with regard to each claim in its citizen suit, and there were thousands. And I particularly commend to you Judge Oldham’s partial concurrence and partial dissent. It’s a joy to read, both for style and substance. And he does a very good job describing the erosion of Article III walls around citizen suits. And I hope his language and the panel holding gets picked up by others.
And with that, I’ll somewhat belatedly turn it back over to you, Mario. Thanks.
Mario Loyola: Thank you, Eric. And so in introducing Professor Mintz, I’d like to interject with a moderator’s prerogative kind of framing question here, which I hope Professor Mintz may spend a minute to touch on in addition to his other comments, which is that this a sort of strange and somewhat intellectually challenging issue even to wrap your head around because on the one end of the spectrum, you have potential private plaintiffs that have private claims that arise under tort law or nuisance law or even particular statutes that obviously cannot be extinguished by anything that a federal enforcer does or doesn’t do because that would be a taking.
Then on the other hand, you have the enforcement actions of the federal government, and to the extent those enforcement actions of the federal government and prosecutorial decisions of the federal government can be overridden, in effect, by something that a private plaintiff is doing, you have a particular kind of a nondelegation problem, it seems to me, or a separation of powers problem in addition to a nondelegation problem because in a typical nondelegation case, Congress is saying, “Executive Branch, do what ever you would — pass whatever law you would like.”
But here, it’s sort of like the courts are taking something that Congress has written to parcel out an executive function and delegate it to a private citizen against the wishes of the Executive Branch, which is both a nondelegation problem, and on top of that, a separation of powers problem.
And it’s hard to understand where on the spectrum between those two situations this problem really lies because if there is a public policy problem here, it would seem to arise only in the case where the consideration moving to DTE is Sierra Club’s willingness to give up on claims that ought to be distinguished — that ought to be extinguishable by the settlement agreement that the Department of Justice reaches with DTE. And to the extent that there is consideration moving to DTE from Sierra Club for the side agreement that does not arise under the Clean Air Act, then to that extent, there should not be a policy problem, unless I’m missing something.
So with that sort of hopefully coherent description of my confusion about this, I hand it off to Professor Mintz. Thank you very much.
Prof. Joel Mintz: Thank you, Mario. At the outset, before I address these issues, I just wanted to very briefly thank Professor Richard Epstein publicly for his outstanding torts case book. I’ve taught a course in torts from that book for 36 years, and I thought it was and still is a wonderful teaching tool. So thank you, Richard, for your hard work of editing and writing that very fine case book.
Prof. Richard Epstein: You’re more than welcome.
Prof. Joel Mintz: Well, my pleasure.
But at any rate, turning to the subject matter of this event, since the description of this panel focused on constitutional issues, I want to address first in the more general sense the constitutional issues raised regarding the constitutionality of citizen suits and supplemental environmental programs, or SEPs, and those are nondelegation of executive power and the Takings Clause. I’ll address them in that order.
I was a little surprised that Professor Epstein, who wrote so famously about takings, did not mention the Takings Clause in his analysis of the DTE cases. But in any event, I respectfully disagree with the conclusions of the prior two speakers. And I’ll speak more generally about constitutionality and then address the DTE energy cases and respond to the other speakers’ points.
First, with regard to the delegation of executive functions question, notably, neither the Constitution itself nor the Federalist Papers provide any clear indication of what constitutes an executive function, nor do they anywhere use the phrase core executive function. One respected scholar, Julian Mortenson, has done extensive historical research that suggests that the founding generation understood the phrase executive power as used in the Vesting Clause to simply mean the power to execute pre-existing law. That power extended only to implementation of pre-existing legal norms and directives created under a prior exercise of legal authority. So without legislative direction, executive power is really something of an empty vessel.
As mentioned, the Constitution does not include the phrase core executive function. It notes that the President is to play an important role in directing the military as Commander in Chief, and that the President is a key actor with respect to U.S. foreign policy. You could limit the definition of executive function to those two roles of the President. There’s absolutely no mention in the Constitution or the Federalist Papers of a role for the President in prosecution or law enforcement. The role of the President in law enforcement evolved only later. It’s well accepted. I don’t question that it’s a significant role of the executive, but it’s not in the original Constitution or in the Federalist Papers.
There are many historical precedents for delegations of executive functions, including prosecutorial functions to private parties. None were ever successfully challenged in the courts. Those precedents go well back into early English law. Let me mention a couple of illustrations. First, the English Water Pollution Act of 1388 allowed members of the public along with public governmental authorities to bring suit to abate what would now be referred to as public nuisances involving water pollution.
In 18th century England, the courts recognized so-called common informer actions. They allowed private parties that aid public officials in apprehending and convicting criminal law violators to receive a share of the money that those violators were compelled to pay in punishment for their noncompliance.
While the U.S. Civil War was raging, and in its immediate aftermath, prosecution of federal crimes was substantially the work of private attorneys who were retained by the federal government. And that arrangement actually lasted until the Department of Justice was established by statute in 1870.
And finally, the colonies and later the U.S. states inherited a long-standing English common law action, the so-called qui tam action. This mechanism was similar in many respects to English common law informer suits. It authorizes private parties known as relators to initiate law suits against parties in violation of legal requirements. The government is empowered to take over the pursuit of those suits, and where fines are ultimately collected from defendants, the relator is entitled to a portion of the money collected.
Qui tam actions were codified by Congress, most recently in the False Claims Act in 2006. And like the other enforcement activities I mentioned that were delegated to private parties, the legality and the constitutionality of qui tam actions has never been successfully challenged. Moreover, significantly, the legislative history of the citizen suit provision of the 1970 Clean Air Act makes clear that that section, Section 304, was very much patterned after the qui tam suit.
Turning to the Clean Air Act provision that authorizes citizen suits and its legislative history, the legislative history that pertains to Section 304 of the statute clarifies the reasoning of Congress underlying those suits. And the legislative history of this provision makes three things clear. First, Congress wanted to have citizen enforcement supplement but not replace federal and state enforcement. Secondly, Congress had the sense that the problems of air pollution and noncompliance with regulatory standards were simply too big for governments alone to solve. And third, Congress recognized that governmental enforcement priorities might not address environmental problems created for certain citizens or in certain parts of the country.
I believe those congressional perceptions and goals are rational, they’re well based in empirical reality, and that they are consistent with the Constitution. There is, in fact, a body of case law developed in the lower federal courts that has upheld Congress’s power to delegate enforcement authority to private citizens.
To cite one of many examples in the relatively recent case of North Carolina Shellfish Growers v. Holly Ridge Association, the Eastern District of North Carolina ruled that a delegation of enforcement authority to private citizens, quote, “does not offend the separation of powers, nor does it impermissibly undermine the authority of the executive.” I think that case and similar cases were rightly decided. Citizen suits are actually a valid and prudent check and balance on potential abuses of executive authority they supplement, but they do not supplant that authority.
Turning to SEPs, I think it’s significant to note that SEPs are no more or less than a mechanism to encourage settlement of enforcement cases. No defendant is actually compelled to enter into a SEP. Defendants always have the option of settling with the government on the basis of a monetary penalty with or without a SEP, and also settling with private party, or continuing to litigate the enforcement case pending against them in the courts. Many defendants do prefer to enter into SEP agreements with the government or a citizen plaintiff, mostly because they see a public relations advantage in being able to publicize the fact that they’re sponsoring projects that benefit members of the public and/or benefit the environment.
Turning to the takings question, which I think does underly some of what’s involved here, for several reasons, I don’t think that either SEPs or citizen suits run afoul of the Takings Clause, at least as it is appropriately interpreted. First, at least to me, the basic notion of a taking implies that a person or entity is being deprived of property involuntarily; that is, against their will. However, as I pointed out, SEPs are voluntary agreements. Under them, in exchange for an opportunity to pay lower monetary penalties and to obtain some potentially beneficial publicity, defendants in enforcement cases agree to sponsor publicly beneficial projects. They need not do so. And thus, the private resources those defendants are relinquishing to sponsor a SEP are being given up voluntarily and, by definition, do not constitute a taking.
Secondly, I was persuaded back in the 1990s by a critique of Professor Epstein’s takings series that was advanced by a scholar named William Michael Treanor. Under Treanor’s analysis, the original intent of the Takings Clause was not to further the social contract area of John Locke. Instead, the Founders predominantly had what we would now call a civic republican perspective. They tended to view the purpose of the state as being to promote public virtue. Thus, their intention was to limit the application of the Takings Clause to actual physical seizures of private property, not to apply it to regulatory restrictions on the use of property.
I’m not an originalist, but I do think that the original intent counts for something. And I think what Treanor contends the Founders intended was and is the best way to construe the Takings Clause. I do think there should be constitutional limitations on wildly inappropriate government regulations, but unless physical seizures of property are involved, I think the limitations on that sort of irrational regulation should be imposed by the Due Process and Equal Protection Clauses of the Constitution and not the Takings Clause. And moreover, I think the ultimate check on overly oppressive regulatory mandates should be through the democratic political process in which Congress has a central policymaking role, and the President also has a role.
Just turning briefly to the DTE case and some of what was said there, essentially, I think what happened here is that there are really two lawsuits that have converged, even though they started out as being a single suit under the citizen suit provision. There were two agreements reached. The federal government reached an agreement with DTE with no SEP. The Sierra Club reached an agreement with DTE with a SEP that supplements the federal agreement. And the Sierra Club significantly did not object to the federal agreement. It concurs in it.
So I think what’s happening here is that the Sierra Club agreement is supplementing the federal agreement, just as Section 304 contemplates. And the issue of delegation of executive power really isn’t raised. And since Sierra Club’s agreement with DTE was voluntary and involved no physical seizure of property, it was not a taking.
The other speakers have argued and suggested that there should only be a government monopoly on enforcement and that government action essentially in the enforcement area preempts the field. Well, that’s simply not the current law. And because of the reasons that Congress had in passing that law, I think that what’s gone on is entirely lawful.
Mr. Groten described the private attorney general theory as a pleasant theory and suggested that large environmental organizations are not the little guys, they’re actually big plaintiffs. Well, there are large organizations that bring these suits, but many suits have also been brought under the citizen suit provision by smaller entities, including local governments, churches, smaller NGOs, and small community groups.
And he also suggested that if the agreement is voluntary, there’s no need for a written agreement. To me, that’s just too narrow a definition of voluntary. The notion that the AG should control the case solely is just not consistent with Congress’s intent, and I think that intent was written into a law that’s constitutional. So I’ll stop there.
Mario Loyola: Thank you, Professor Mintz. Professor Epstein, before we go to questions, and Eric, would you like to just take a minute or two to respond to any of what Professor Mintz just said?
Prof. Richard Epstein: Oh, absolutely. I think we should probably take this in order. Let me begin. There are obviously two issues here, the separation of powers issue, and it turns out then there is the takings issue. And I commented mainly on the first rather than on the second because I think the second was a bit more complicated.
On the first issue, I think the wrong way to think about a separation of powers question is to always start with the inquire of what did Congress intend. If you’re trying to talk about separation of powers as a serious constraint on the way in which governments behave, it’s a constraint on Congress. So if it turns out that there are functions that are given by the Constitution to the Executive Branch of government, no legislation, even passed unanimously by both houses of Congress and even if confirmed by the sitting President, can strip you of executive power. So the fact that this Clean Air Act is doing that is neither here nor there. The issue is whether or not this becomes an executive function.
Don’t mention that the phrase core executive function does not appear in the Constitution. I can suggest an answer that probably half of the terms that we use to describe the constitutional law don’t appear in the Constitution. What happens is they have to be read in there in order to make good on what’s going on. So the Constitution says nothing about the police power. It says nothing about unconstitutional conditions. It says nothing about sovereign immunity. And what you have to do, as in all cases, is to figure out the way in which these various conceptions are going to take place.
And to say that it is not a core executive function to be in charge of criminal prosecution makes the Constitution utterly incoherent. It would mean, for example, that not only could Congress decide to authorize citizens suits, but it could decide to keep the executive from the enforcement of the criminal law. After all, this definition is unclear. Why is it you can’t take that out? I think that that is simply wrong.
Just one other point. There are few theories with which I have more violent disagreement than the approach of Treanor which says, in effect, that under the Constitution, takings are limited to physical takings. The line between a physical and a regulatory taking in context after context is extremely difficult to try to figure out.
And in fact, what happens is you need, not as a matter of history but as a matter of simply constitutional logic, to recognize that if government occupation is, in fact, the sole test, you can have a situation where the government can tell an owner of property, “We’re not going to enter into it. We’re not going to use it. We’re not going to dispose of it. You may own this property, but you’re not allowed to use it yourself.” And that’s not a physical taking, but on the other hand, is tantamount to that. So all of constitutional law has to develop a series of, shall we say, auxiliary reactions which cover cases that are close enough to those things which are explicitly expressed. Otherwise, constitutional guarantees are worthless.
And in the most famous of the regulatory takings cases I’ll just mention are the very poor decision of Justice Brennan in Penn Central. Under state law, it turns out air rights are, in fact, a property. And they have been taken in a physical sense, I suppose, and certainly in a regulatory sense. And it seems to me it would be really very, very odd to say that state law constitutions as to whether or not there’s a physical taking of air rights which the government is not going to occupy but is going to prevent anybody else from occupying, that should get you out of the constitutional guarantee. It seems to me to lead to all sorts of circumvention of basic constitutional guarantees. So I do think that the Takings Clause has an immense amount to do with most of these cases.
I didn’t raise it in this particular case because I do think, to the extent that DTE has decided it wants to go along with that, it’s a tricky argument. You have to say is this really a voluntary agreement, given the fact that it was part of a criminal prosecution or not. I’d rather not go there.
I think that the correct answer in this case is executive functions are exclusively vested under the Constitution in the federal branch, and the Congress by way of legislation cannot upset that, even if it thinks that the scheme is wise. I turn out to think that in many cases, it’s not wise.
But I don’t think we want to get in to that debate. I think the debate we want to get into is the debate as to whether or not Congress can trim down the executive function by parceling it out to somebody else. And to that question, I think the answer is no. So I’ll stop there.
Mario Loyola: Thank you. And do you want to jump in, Eric, or should we proceed?
Eric Groten: Yeah, I’ll just pick at one thread of what Professor Mintz had to say. And thank you, Professor Mintz, for offering a very wide ranging set of observations. But one that I sort of paused on was your notion that really what DTE represents is two different lawsuits with two different resolutions, and I don’t think that that premise is entirely correct.
This was a citizen suit — or rather, excuse me, was an enforcement action initiated by EPA as plaintiff into which Sierra Club intervened. And so at this point, what we have is a single law suit brought by EPA in which Sierra Club has intervened and which it is now effectively trying to commandeer to its own conclusion.
And I’m not sure that that’s — resisting it from its ability to do that is at all inconsistent with the legislative history of 304 as you outlined, first that, correct, Congress intended for citizen suits to supplant but not replace federal enforcement. Here, the result sought by Sierra Club would supplant what the government is doing. The second premise of 304 and its brothers and sisters in the environmental statutes is that the government is — air pollution is too big a problem for just the government to solve. Well, that’s not the problem in this particular case. Obviously, the government pursued in a very aggressive way the same claims that the Sierra Club is pursuing.
And similarly, with regard to the government might have different priorities that take it away from any particular situation befalling the particular potential citizen plaintiff, again, too, those are not our facts here. So I’m not sure that I heard much to dissuade the notion that what the government is doing here — or excuse me, what the Sierra Club is asking for here is a bit at odds with what the Clean Air Act requires.
Mario Loyola: Great. Thank you, Eric. And Micah, can I suggest that we go to an audience question, and then give Professor Mintz the priority in responding to that question and to some of what we just heard?
Micah Wallen: Absolutely. Let’s go ahead and open up the floor for audience questions. Not seeing any question light up the line right away. Mario, I’ll toss it back over to you.
Mario Loyola: Well, then I’ll toss it right back over to Professor Mintz to respond as he will in a couple of minutes. Professor Mintz?
Prof. Joel Mintz: Yeah, okay. Well, a couple of points were made here. Professor Epstein mentioned in his view that what the Congress intended is not really the question. The issue is really what are the constraints on Congress? I think that’s certainly at issue in a sense, but I think that — respectfully, I think that Professor Epstein understates Congress’s broad enumerated powers in Article I. There are limits in the Constitution on Congress’s powers, but at the same time, Congress has broad discretion to set the policies which the President is to faithfully execute. And I think that there is significant latitude for Congress to make the judgement that it did with regard to citizen suits.
And with regard to Mr. Groten’s point about settlements, I think that the way I see it, at least, the Sierra Club is really not commandeering this lawsuit because it has agreed to everything that the government wants. What it is doing actually is simply supplementing the settlement. There are two separate agreements.
His analysis of the origins of the lawsuit are correct. They started out in the traditional mode of intervening in a Section 304 suit. But as things evolved, there were two separate negotiations that resulted in two separate agreements, and I think they should be viewed separately for that reason. So we just view the lawsuit in a bit of a different way.
Micah Wallen: All right. Still not seeing a question coming through the queue. With that, Mario, I’ll toss it to you for any closing remarks from you or our panel today.
Mario Loyola: Well, I’ll let Professor Epstein have a closing remark.
Prof. Richard Epstein: What I want to say about all of this stuff is that when you’re thinking about environmental actions, there is a kind of assumption that’s present in much of what is said by Joel, which is more is better. And it seems to me that that is often a mistaken assumption. Often, the levels of enforcement do not mean necessarily more. It can be too much.
And so when you start thinking about the citizen suits in connection with these particular issues, the question always has to be raised, just that. Have you gone too far? Is this overkill? And it’s a mistake, I think, for somebody to say, no, more is kind of going to be better. And when you get an organization like the Sierra Club and large numbers of things, you can actually tie things up beyond all recognition. And excessive enforcement of environmental laws is as bad as the excessive enforcement of any other laws.
Just one comment. I’ve written extensively about NIPA and open rules and the way in which it tends to operate. And I think that’s the case in which a statute which originally made some sense has essentially gone way off the rails. So I would want to say again about this that there are reasons for structures that denied Congress the broad discretion. I quite agree under current law that is the way in which things work.
I think more traditionally, under the classical liberal conceptions of a constitution, the degree of freedom and the allocation of functions between different branches of government is much more constrained, and there is no question that when I think about these sorts of issues, I am much more in that particular camp than the modern camp.
As I mentioned earlier on, there is certainly in the administrative law the whole Chevron doctrine situation to which I am fiercely opposed precisely because I think it gives too much direction. So that was the last remark that I wanted to make. I wish somebody had asked a question from the audience, but nonetheless, there it is.
Mario Loyola: Well, thank you to all the panelists —
Micah Wallen: — We actually did have a question…
Mario Loyola: Go ahead, Micah.
Micah Wallen: We had one question come through right at the beginning of Professor Epstein’s remarks. We’ll go ahead and squeeze that in before we close out today.
Caller 1: Yeah, hi. This is a little bit tangentially related because it involves state rather than federal, but with something like an informer suit or a state qui tam thing, is the private enforcer who’s been sort of given license by the government to beat up on the defendant, are they a state actor that would subject them to the 1983 actions and that sort of thing for overenforcement?
Prof. Richard Epstein: I think that the answer to the question is probably yes. If you start going back, whenever you start talking about takings, for example, it would be an absolute farce to say that the Takings Clause does not apply when the government authorizes a private party to take somebody’s property, and then the government tries to say, “Well, they did it. We didn’t. And so the fact that they’re now insolvent doesn’t matter.”
The Loretto case made it very clear that when you’re dealing with physical takings, authorized actions by private parties are, in fact, covered. And I would think under qui tam actions, that should be. Otherwise, what you do is you have a situation in which a delegatee can do something that the principal can do in the sense that its own financial lack of resources then becomes a huge ability for it to go after people, and I don’t think that’s any part of the sensible constitutional design.
Prof. Joel Mintz: This is Joel. Are we out of time, or can I respond just very briefly to what Professor Epstein last said about the idea that more is not necessarily better with regard to enforcement? Hello? Are we still on?
Mario Loyola: Yes.
Prof. Joel Mintz: Okay, thanks. Well, just very briefly, that may be true, I think, but I’d also note an article that appeared in a 2017 issue of the New England Journal of Medicine which pointed out that up to that point in time, EPA implementation of the Clean Air Act significantly and steadily reduced air pollution that creates or worsens disease. From 1970 through 2017, notwithstanding a 50 percent increase in the U.S. population and a 250 percent increase in gross domestic product, criteria pollutants such as carbon monoxide, lead, nitrogen oxide, particulate matter, and so on, were reduced by 70 percent, and toxic air pollution was also very substantially reduced. Enforcement had a lot to do with those improvements. So I think at least in a certain sense, more is better.
Prof. Richard Epstein: No, I disagreed with vehemently with that particular characterization. The single most important driver of this is technological innovation. And it turns out that whether you’re talking about air pollution or any other thing, the rate of defects has gone down by between 75 and 90 percent previously. And it’s not enforcement. There’s so many private losses that are done.
And so if you just look at surgeries, for example, they’re much, much safer. If you look at automobiles, they’re much, much safer. The idea that somehow these initiatives are driven by government reaction is wrong because the regulators simply do not know how to make new technologies work.
And I think of all the sources that I regard as suspect on any issue having to do with public policy, the New England Journal of Medicine is right at the top of my list. They are invariably statist, and in my view, they’re almost invariably wrong when they take that posture.
Prof. Joel Mintz: Okay. Well, we could go on…
Prof. Richard Epstein: We certainly could.
Prof. Joel Mintz: I think we can agree to disagree on that.
Mario Loyola: Hey, this was just getting fun.
Prof. Richard Epstein: All right.
Mario Loyola: Well, thank you all very much for that, and Micah?
Micah Wallen: All right. We’d like to express our gratitude to all of our speakers for the benefit of their valuable time and expertise today. We welcome listener feedback by email at [email protected] Thank you to everyone for joining us, and we are adjourned.
Laurence A. Tisch Professor of Law and Director, Classical Liberal Institute
New York University School of Law
Vinson & Elkins LLP
Professor Emeritus of Law and C. William Trout Senior Fellow in Public Interest Law
Shepard Broad College of Law, Nova Southeastern University
Competitive Enterprise Institute