Shall We Fight Or Will We Finish: Environmental Dispute Resolution in a Litigious Society

Carol E. Dinkins

Mrs. Dinkins is Deputy Attorney General of the United States. This Dialogue is adapted from a speech presented by Mrs. Dinkins at the October 1, 1984 Conservation Foundation Conference on Dispute Resolution held in Washington, D.C.

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I have spent most of my professional career involved in the practice of environmental law and have watched it expand and grow from a cottage industry in the sixties into a significant, diverse area of practice in the eighties. The dramatic growth in environmental law has stemmed, of course, from the enactment during this period of numerous environmental protection and resource management statutes. The 1970's began with the enactment of the National Environmental Policy Act,¹ which was designed to encourage federal decisionmakers to focus on the environmental ramifications of their actions. Later in the decade, Congress not only reenacted the Clean Air Act² and the Clean Water Act,³ but also enacted the Toxic Substances Control Act (TSCA),⁴ the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA),⁵ the Safe Drinking Water Act,⁶ the Resource Conservation and Recovery Act (RCRA),⁷ and began developing the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).⁸ I believe that no other area of law has expanded as dramatically in scope, coverage, and complexity over the past 15 years.

During this period of expansion of environmental law, the way we practice and use those statutes also has changed. One of the most obvious changes is that statutory schemes have become far more complex. The Clean Air Act is perhaps the best example of how a fairly complex statutory scheme has been made even more complex, placing severe demands upon the regulating agency and the regulated community. Similarly, we have witnessed dramatic expansion of accompanying regulatory regimes. The extremely complex regulations recently developed under RCRA provide a vivid example. Finally, if environmental law itself were not sufficiently perplexing, we have seen a blending of disparate legal concepts in environmental practice. For example, under CERCLA, general environmental and administrative law principles have been integrated with evolving tort concepts, a melding of administrative and common law principles that has posed significant challenges for both practitioners and the courts.

Quite naturally, the enormous increase in the number and the complexity of environmental laws and regulations has spawned a correlative increase in the amount of litigation relating to environmental issues. The growth in environmental litigation has had a particularly dramatic effect on the government. In the past decade, the federal government has been required to spend ever more time and money in court defending its actions and enforcing environmental standards. For example, from 1980 to 1983, the number of environmental enforcement attorneys at the Department of Justice more than doubled, and the Department filed more than 500 environmental enforcement actions. In criminal enforcement, convictions in fiscal year 1983 exceeded the combined total for all prior years. The growth in litigation is traceable both to an aggressive government litigation posture in protecting federal initiatives from legal challenges, and to the private bar's aggressive and imaginative efforts in developing and pursuing causes of action concerning the environmental impacts of federal development efforts and the economic impacts of federal environmental protection efforts.

To place in context any discussion of alternatives to litigation, we first must identify the proper role of litigation. Although litigation is often cumbersome, divisive, and costly, it does serve an essential function in the dispute resolution process. Congress at best is often imprecise. Congress creates its laws in a climate of competing interests where conflict is ultimately forged into compromise. The resulting products often contain ambiguities, apparently irreconcilable provisions, and indefinite standards. Litigation is an important tool to sharpen and hone legal requirements and to define more clearly the respective rights and responsibilities of parties under the law.

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For example, in the past several years, the Department has committed considerable litigation resources to defining more precisely the boundaries and requirements of CERCLA. To develop a lawful and effective hazardous waste clean-up program under CERCLA, we must resolve issues of joint and several liability, retroactive application of the Act, generator liability, and many others. Judicial construction of CERCLA has clarified our understanding of this key statute and, to a certain extent, has focused our mutual inquiry on fewer, more salient issues.

Similarly, litigation often is necessary to define the roles, rights, and responsibilities of the various institutions and branches of government regulating environmental matters. For example, last year in an important case, Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.,⁹ the Supreme Court ruled on a question with broad-ranging implications for administrative law. The Court held that an agency is empowered to fashion definitions for critical terms in statutes where Congress has been silent or ambiguous. The Court held that once an agency has fashioned such a rule, the judiciary is "without jurisdiction" to consider the propriety of that definition so long as the definition fits within the statutory context.

But while litigation provides the most certain and efficient method to resolve disputes relating to the law, it is an undeniably cumbersome and inefficient machanism to deal with facts. Once the legal ground rules are established, once the relative rights and responsibilities of the parties are precisely defined, litigation is not a satisfactory means to resolve disputes. The adversary process is not designed to quickly and fairly sort out the facts of a case. Rather, in litigation, facts are developed through a complex discovery process, in which each side typically will provide as little information as possible. Throughout the process, attorneys present their cases so that the court record is most favorable to their client's interest, and not necessarily to present a clear picture of what happened. Alternative mechanisms for dispute resolution could be of great use in helping resolve factual disputes once litigation has clarified the requisite legal framework provided by Congress.

Numerous alternative dispute resolution mechanisms can be used to shed light on the facts of a case. In their most informal context, these alternatives suggest nothing more sophisticated than face-to-face settlement discussions that either could forestall litigation or conclude it short of a trial. Beyond settlement, we inject more order and structure into the process as we move into the realm of mediation and arbitration, where third parties play a central role in the resolution of a dispute. As the role of the third party becomes more formalized, the process becomes quasi-judicial, as with administrative adjudication.

Each of these alternatives to litigation is valuable in resolving differences outside the courthouse. Each method is limited to some extent in its effectiveness, and each exacts its own costs from the participants. Some methods are effective in some contexts (such as enforcement actions), but less helpful in others (such as defensive actions). My experience has given me a definite perspective on how alternative dispute resolution mechanisms have worked in environmental law, how their use can be encouraged, and how they can serve a more useful and valuable function.

Perhaps the oldest and most often used alternative to litigation is settlement. Settlement negotiations allow parties to weigh the potential benefits of litigation against transactional costs and uncertainties, and settlement can avoid long, expensive courtroom battles. In viewing settlement as an alternative dispute resolution mechanism, we must focus on the mechanics of settlement and how we can develop a system that encourage settlement.

Over the past few years, for example, we have tried to make greater use of settlement in environmental enforcement. Our basic premise is that an active, effective enforcement program is vital to assure that our environmental goals are something more than good intentions set down on paper. Yet, all too often, the effectiveness of an enforcement program is simplistically gauged by the number of cases referred to the Justice Department for judicial enforcement. While the "bean counters" take great comfort when these figures increase, they must realize that the Justice Department referrals do not necessarily reflect the magnitude of the overall enforcement effort. Referrals are not like the visible tip of an iceberg, whose size is necessarily proportional to the size of that which lies beneath. Indeed, because enforcement litigation is resource intensive, increases in the number of referrals may signal a shrinking of other kinds of enforcement activity.

Judicial referrals, in and of themselves, cannot give us the enforcement program that we need in the environmental area. The simple truth is that we cannot bring every enforcement action or even a significant number of these actions to court. For example, under the Clean Air Act, we cannot bring every auto tampering case to federal district court. Neither we nor the courts have the resources to deal with the thousands of cases that could arise every year, given that, according to a 1983 study, as many as 16 percent of the catalytic convertors installed to clean auto exhausts have been dismantled or rendered in-operative. Yet, despite recognized limitations on our judicial resources, it is imperative that we mount a strong enforcement effort, so that we can decrease not only smog, but also lead concentrations in the air, particularly in our cities.

The auto tampering cases vividly illustrate the central issue in environmental enforcement — how to bring a sufficient number of cases to deter would-be violators, without clogging our court system with relatively minor actions. The answer lies in the establishment of an integrated enforcement program. Such a program makes extensive use of an agency's administrative authority to establish the salient facts and to resolve disputes. The judicial enforcement process is used only in the small fraction of disputes in which the size and magnitude of the offense makes settlement inappropriate.

To be effective, an integrated enforcement scheme must provide substantial incentives for settlement.The Corps of Engineers in its enforcement program under § 404¹⁰ of the Clean Water Act, which requires permits for filling wetlands, is a good example of a sequential enforcement [14 ELR 10400] scheme that works. In the 404 program, the initial contacts with violators are informal, with primary emphasis on resolving the problem. Subsequent contacts are more formalistic as a "notice of violation" is issued and the violator finds its options are fewer, more restrictive, and more expensive. Finally, when all else fails, the action is referred to the Justice Department for enforcement litigation. Once the matter is referred to the Justice Department, the violator's settlement options are even more restrictive and more expensive, and in appropriate cases its life is complicated by the government's efforts to enjoin further filling and the activities to be conducted on the illegally filled area.¹⁰

This sort of sequential, integrated approach can drastically reduce the number of enforcement actions requiring the attention of the courts. In fact, last year the Corps handled over 2,000 cases involving violations of § 404 and only five percent were ultimately referred to the Department of Justice. The remaining 95 percent were resolved using restoration agreements or by violators voluntarily submitting to the § 404 permitting process.

In environmental enforcement we all too often have found that government policies have inadvertently deterred rather than encouraged settlements. In certain situations, the negotiating position of the United States was inflexible, thus giving the violator little incentive to resolve the matter early. In other instances, agency officials emphasized increasing the apparent size of the iceberg by developing case referrals with little thought to preliminary negotiations with defendants. As a result, meaningful discussions commenced only after the case reached the Department of Justice and was ready for filing. In still other instances, settlement policies were vague, inconsistent, or not widely publicized, thus giving the regulated community no guidance on how and when the government would settle cases.

Both the regulatory agencies and the Department of Justice have worked hard to develop integrated enforcement programs. The agencies are developing enforcement procedures that demonstrate flexibility and reasonableness in the first instance, and that place a premium on the agency and private party developing and sharing information on what it will take to comply with the law. When this approach is successful, the law is served by compliance and the environmental problem is rectified at less cost to the government and the potential defendant. If it fails to achieve a positive result with this approach, the agency will develop the case into a judicial referral, at which time the Justice Department plays its role by filing cases in a timely manner and by taking an aggressive and less conciliatory approach to enforcement. Moreover, federal enforcement officials seek to clearly define enforcement goals and the processes of both the regulator and the litigator so that violators know that any escalation of the dispute will ultimately make compliance more expensive and more restrictive.

By developing this sequential approach to enforcement, the federal government provides more substantial inducements for settlement. We are currently working with the Environmental Protection Agency (EPA), the Corps of Engineers, the Department of the Interior, and other federal regulatory agencies to fine tune our enforcement programs and to develop broad-based enforcement strategies. We expect these efforts to return significant dividends by encouraging settlement and reducing our need to go into court, and ultimately, by promoting greater compliance with environmental statutes and regulations.

The same sort of sequential and flexible approach to settlement has been employed on the defensive side of our docket as well. For example, EPA and other federal agencies have begun experimenting with negotiated rulemaking to supplement existing rulemaking procedures, which too often have resulted in lengthy litigation, unnecessary delay and expense, and rules unsatisfactory to all concerned. Use of negotiated rulemaking may help reduce the potential for litigation. Informal consultation procedures enacted by Congress may also help. For example, the Outer Continental Shelf Lands Act¹¹ § 19¹² allows states that have an interest in or may suffer harm from outer continental shelf oil and gas development to comment informally on a proposed lease sale, and to suggest changes in the time, size, and location of the sale. So from the perspective of thegovernment litigator, who demands compliance with the law but wants to avoid delaying agency actions in litigation, settlement is an important alternative dispute resolution mechanism.

The transition from settlement into the more formalistic processes of mediation and arbitration comes as we inject a third party into the dispute resolution process. When only private parties are involved, dispute resolution usually gains useful structure when the new player sits down at the table. However, when the federal government is involved, the injection of a third party raises substantial legal concerns. Concepts of sovereign immunity and authority to compensate, the Anti-Deficiency Act, and other considerations unique to the federal government constrain the ability of federal officials to use these alternative mechanisms.

Nonetheless, government officials have experimented with both mediation and arbitration. The Department of Justice has made some use of mediation and has found that it can make a significant difference in certain cases. An example is Conservation Law Foundation of New England, Inc. v. Myers,¹³ Our client agency in that case, the Soil Conservation Service, was funding a water and flood control project in eastern Massachusetts. The Conservation Law Foundation challenged the estimate in the environmental impact statement prepared for the project of the acreage of forest land that would be lost. Our client was anxious to settle the controversy as quickly as possible because the project would have lost its funding if the contracts were not signed by the end of that fiscal year and any delay would have caused the project to become far more expensive. Plaintiffs also were anxious to settle the controversy because the challenged project was to provide a much-needed water supply to the community.

After agreeing to mediation, the parties began a series of face-to-face meetings assisted by a mediator from The Mediation Institute. A crucial question of fact surfaced during these meetings: the degree to which alternative [14 ELR 10401] ground water sources were contaminated and therefore not feasible alternatives to the project. The government was able to show to the plaintiff's satisfaction that there was no feasible alternative. Subsequent negotiations resulted in the Massachusetts Department of Environmental Management agreeing to use its best efforts to require municipalities to reimburse the state for forest and park lands taken for the municipal water supply projects. As a result the case was settled and in August 1982 the parties jointly moved for dismissal with prejudice.

In Conservation Law Foundation, mediation enabled quick resolution of the controversy, prevented unnecessary delays and increases in project costs, and allowed the parties to resolve their differences in an amicable fashion. This case was well suited for mediation because both parties had a strong interest in settlement and a realistic view of what they wanted and what they could ultimately achieve in litigation. Certainly there are other cases where mediation might avoid litigation.

Arbitration is even a more formal nonjudicial means of dispute resolution by a third party. Unlike a mediator, an arbitrator is given authority by the parties to render a decision resolving the dispute. Arbitration has found a home in commercial and labor law, and has been extended to other areas of practice as well. In many contexts, arbitration is an attractive alternative to litigation because it informally replicates many useful elements of court actions.

Congress has recognized that arbitration may be a useful mechanism to resolve disputes over claims for environmental damage and has sanctioned limited use of arbitration in CERCLA. Under § 112,¹⁴ a party asserting a claim against the Fund for monies spent in cleaning up a hazardous waste site can apply to the Fund for reimbursement. In the event EPA disputes the claim, the matter is submitted to arbitration for resolution. This provision of CERCLA is quite innovative and will be closely monitored once claimants begin to use it. Experience with CERCLA arbitration may also give us a better understanding of the usefulness of arbitration in resolving other types of environmental disputes.

Notwithstanding the inherent limitations upon the use of arbitration by the executive branch, arbitration can play a role in resolving disputes that are collateral to a federal environmental action. For example, one of the preliminary proposals from the Clean Sites, Inc. Working Group, the industry and conservationist joint venture in private hazardous waste cleanup, has been to use arbitration to apportion the contribution of responsible parties in clean-up actions initiated by the government under CERCLA and RCRA. While we need to evaluate carefully how such a mechanism would work in the event a federal agency was among the potentially responsible parties at a given site, we believe the proposal basically is a fair and an effective way to reach agreement outside the courtroom for sharing the costs of cleanup.

Attention should also be given to one other alternative dispute resolution mechanism — the administrative process. In disputes concerning energy regulation and federal land management, we have developed sophisticated administrative law systems that provide fact-finding processes less formal than the courts. For example, the Interior Board of Land Appeals, created in 1970, routinely considers federal land management decisions. These matters include mineral claims, geothermal leasing, oil and gas leasing, coal lease readjustments, herbicide spraying, and timber management and surface mining decisions. The Board received 1,160 appeals in 1983 and decided all but 10 of these cases. From 1970 to 1983, the Board issued 8,377 reported decisions, and only 466 of these decisions were appealed to federal court — less than six percent.

The administrative court option has also been used successfully in disputes arising under FIFRA and TSCA, and should be expanded to other areas of environmental law. Unfortunately, at this time, the ability of the regulatory agencies to use this alternative is sharply constrained by Congress. For example, under the Clean Air Act, EPA's administrative options are limited to orders requiring compliance within 30 days, thereby preventing the development of any effective administrative alternative. This leaves EPA in the untenable position of treating an auto tampering case in the same way it treats a major stationary source violation, preparing each for litigation in federal district court. Clearly, prosecuting such smaller cases in an administrative court makes moresense.

With this understanding of the available alternatives and the uses and constraints of each, I conclude by recognizing that the litigation explosion in environmental law has not been the creation of any one branch of government. Our courts have been far too liberal in hearing cases that are not a proper subject for judicial resolution and that should have been left to settlement by the parties. Executive branch attorneys too often have resorted to litigation when cases might have been settled. And Congress, in enacting the myriad of environmental laws, too often has ignored the need to allow or create alternatives to litigation. The three branches of our government must all recognize their role in ending the congestion in the courts and in encouraging use of alternatives to litigation.

Solving our litigation problem will also require the help of the private sector. Attorneys in the private sector, like those in government, must be willing to compromise and to discuss issues in a spirit of candor, foregoing minor tactical advantages to achieve a workable consensus. Moreover, the regulated community must recognize that the costs of fighting disputes to the bitter end will often outweigh the benefits. Environmental interests also must learn to approach environmental disputes with a greater sense of realism, viewing their ultimate objectives in light of the purposes and likely outcome of litigation. The public, and those of us privileged to serve the public, must recognize that many problems are better solved by compromise rather than conflict.

1. 42 U.S.C. §§ 4321-4361, ELR STAT. 41009.

2. 42 U.S.C. §§ 7401-7642, ELR STAT. 42201.

3. Formally known as the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251-1376, ELR STAT. 42101.

4. 15 U.S.C. §§ 2601-2629, ELR STAT. 41335.

5. As amended by the Federal Environmental Pesticide Control Act of 1972 and the Federal Pesticide Act of 1978, 7 U.S.C. §§ 136-136y, ELR STAT. 42308.

6. 42 U.S.C. §§ 300f-300j-10, ELR STAT. 41101.

7. 42 U.S.C. §§ 6901-6987, ELR STAT. 41901.

8. 42 U.S.C. §§ 9601-9657, ELR STAT. 41941.

9. __ U.S. __, 104 S. Ct. 2778, 14 ELR 20507 (1984).

11. 43 U.S.C. §§ 1331-1356, ELR STAT. 42456.

12. 43 U.S.C. § 1345, ELR STAT. 42464.

13. No. 82-294-MA (D. Mass. dismissed Aug. 31, 1982).

14. 42 U.S.C. § 9612, ELR STAT. 41951.