Citizen Suits, Environmental Settlements, and the Constitution: Part I

Joel Mintz

Sept. 14, 2020

This is the first post of a two-part set. Click to read Part II.

Over the past few years, the U.S. Department of Justice (DOJ) has shown increasing hostility to the use of Supplemental Environmental Projects (SEPs) in settlements of federal environmental enforcement cases. Aside from a series of ever-tightening SEP policies, however, DOJ has never asserted in court that these projects are unconstitutional. At least not yet.

In a case pending before the U.S. District Court for the Eastern District of Michigan, United States v. DTE Energy, Inc., the constitutionality of both SEPs and citizen suits in general may soon be at issue. The case began as a typical New Source Review matter in the Obama administration. The U.S. Environmental Protection Agency (EPA) asked the Justice Department to sue DTE on the grounds that equipment updates to some of the company's electric generating stations were sufficiently significant that its plants must be subject to the relatively stringent emission standards applicable to new and modified air pollution sources. The Sierra Club intervened in the lawsuit as a co-plaintiff under the citizen suit provision of the Clean Air Act.

After protracted litigation, the federal courts decided the New Source Review question in the government and Sierra Club’s favor. DTE then sought a settlement. However, DOJ and the Sierra Club disagreed as to what the terms of the settlement should be.

The government and DTE negotiated a consent decree calling for injunctive relief and the payment of civil penalties. The Sierra Club raised no objections to that decree. However, the organization sought to supplement the settlement by negotiating a “side agreement” with DTE. This pact, agreed to by DTE, called for a SEP that required the company to close three of its coal-burning power plants and set aside $2 million for additional mitigation measures.

DOJ objected to this side agreement. It filed a motion – pending before the District Court as of this writing – seeking dismissal of the Sierra Club/DTE settlement on the basis of the doctrine of constitutional avoidance. The government’s motion implies that if the side agreement is not voided, the court will need to decide whether that agreement violates the constitutionally mandated separation of powers and interferes with a “core function” of the president and the federal executive branch: enforcing federal law. Moreover, a citizen-negotiated SEP may be ruled a “taking” of the defendant’s property, DOJ argued.

Professor Richard Epstein filed an amicus curiae brief with the district court, siding with the government and contending that the Clean Air Act citizen suit provision unconstitutionally violates the unitary executive principal by dividing executive authority over law enforcement “among two masters.” In Epstein’s view, the federal government is constitutionally entitled to have sole control over all federal enforcement cases. According to his argument, citizen suit provisions in environmental statutes are unconstitutional per se.

The DTE Energy matter bears close watching. The constitutionality of citizen suits in general, and SEPs in particular, now seems likely to be before the trial court in the case, and quite possibly the federal appellate courts down the road. An initial analysis of the constitutional issues implicated in this case is thus called for. I will present an analysis of the takings question in the DTE Energy context in the remainder of this post, and then address the separation of powers and executive function questions in a subsequent post.

The basic notion of a taking is that a person or entity deprived of property by the government involuntarily, i.e., against their will, is due compensation from the government. SEPs, however, are entirely voluntary agreements between defendants in environmental enforcement cases and government agencies or citizen plaintiffs requiring measures that benefit public health or the environment. No defendant is compelled to enter into a SEP – incentivized to be sure, but not compelled. Defendants always have the option of settling with the government or citizen plaintiff on the basis of a somewhat larger monetary penalty without a SEP or continuing to litigate the enforcement case pending against them in the courts.

Nonetheless, many environmental defendants prefer to enter into SEP agreements, mostly because they perceive a public relations advantage in being able to publicize that they are sponsoring a project that benefits a segment of the public and/or the natural environment. When they volunteer to do so, no government entity has “taken” their property in any meaningful sense.

Judicial safeguards against wildly inappropriate legislation or regulation are certainly appropriate. However, those safeguards are best provided by the Constitution’s due process and equal protection clauses. The takings clause was originally intended to guard against uncompensated physical seizures of private property. Its scope is best limited to that narrow purpose. It is simply the wrong part of the Constitution on which to base judicial review of regulatory measures. If a defendant decides it's in their interest to enter into a SEP, they can't then turn around and claim that the government has "taken" something from them, and the Justice Department has no business making such claims on their behalf. No matter how badly the Trump EPA and Justice Department want to make life easy for polluters, they can't rewrite the Constitution by fiat.

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