Waste of the Day: Feds Pay Nonprofits That Sue the Government

Topline: Since 2013, the federal government has paid over $20 million to cover attorneys’ fees for organizations engaged in “sue and settle” litigation, according to new data obtained by Open the Books.

Sue and settle becomes a tool of executive agency rulemaking

Key facts: “Sue and settle” is an arrangement where a private party sues a federal agency, but the parties reach a settlement without ever going to court. The settlement is legally binding, which can allow federal agencies to create new regulations without ever consulting Congress.

The practice is most common in the Environmental Protection Agency, which has expanded the reach of the Clean Air Act and Clean Water Act beyond Congress’ original intent by settling lawsuits with environmental advocates. The EPA accounted for most of the $20 million taxpayer cost.

The nonprofit Sierra Club received over $4 million to pay their attorneys after settling lawsuits with the federal government, including $1.7 million during President Joe Biden’s administration. Four other organizations, including the Northwest Environmental Advocates and Center for Biological Diversity, each received more than $1 million since 2013.

The government spent $10.9 million on “sue and settle” during Biden’s four years as president — more than the eight previous years combined, which included Donald Trump’s first term and Barack Obama’s second term.

The EPA is also awarding grants to nonprofits that previously sued the EPA. For example, Air Alliance Houston received $228,000 during Trump’s first term to cover its attorney fees. This January, Air Alliance Houston received a $3 million grant under the Inflation Reduction Act to “redress environmental and climate injustices.”

Biden’s EPA revived the practice – so what is Lee Zeldin waiting for?

Scott Pruitt, the EPA administrator during Trump’s first term, issued a directive in 2017 to ban “sue and settle,” but the Biden administration brought the practice back. Current EPA Administrator Lee Zeldin has not formally restored the ban. Open the Books has filed a Freedom of Information Act request to learn how much the EPA spent on litigation in 2025.

A spokesperson for the EPA told Open the Books,

Outside activist groups should not dictate EPA’s agenda or federal environmental policy. The Trump Administration is keenly aware of concerns with sue-and-settle practices and commits to not engage in them.

Search all federal, state and local salaries and vendor spending with the world’s largest government spending database at OpenTheBooks.com.

Background: There have been instances where the EPA’s legal settlements give off the appearance of an inside job. Walter Olson, a legal scholar at Cato Institute, told Open the Books about lawsuits in which a nonprofit sued a federal agency, and one of the nonprofit’s employees then took a job at the federal agency before the lawsuit was resolved. Such employees might be more agreeable to settlements that benefit their former coworkers at the nonprofit.

Olson explained,

The people who staff regulatory agencies very often come from the same communities that litigate against agencies. In a Republican administration, this might include some regulated businesses, or law firms representing regulated businesses. In a Democratic administration, it might mean some of the environmental groups.

Summary: The Constitution gives Congress the power to pass laws and regulations, but taxpayers have been funding a practice that undermines that ability.

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com.

This article was originally published by RealClearInvestigations and made available via RealClearWire.