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Congress Advances Legislation Limiting Consent Decrees, Settlement Agreements

Posted 26 June 2012 | By

A legislative proposal to limit the ease with which regulatory agencies are able to compel companies to enter into consent decrees is rapidly advancing in the House of Representatives.

The Sunshine for Regulatory Decrees and Settlements Act (SRDSA) of 2012 (H.R. 3862) received approval from the Committee on the Judiciary on 27 March 2012 in a 20-10 vote.

As Regulatory Focus reported in February, consent decrees are often used by the US Food and Drug Administration (FDA) to settle charges between manufacturers and the agency. A prominent example is FDA's 26 January 2012 consent decree against Indian generics manufacturer Ranbaxy, which compels the company to make changes in light of manufacturing problems at some of its facilities.

To Republican members of the House's Committee on the Judiciary, these actions are seen as having deleterious effects on companies.

"A heavy contributor to the burden of new regulation is the use of consent decrees and settlement agreements to force federal agencies to issue new rules," Judiciary Chairman Lamar Smith (R-TX) said in a statement. "Those to be regulated typically do not know about these deals until the plaintiffs' complaints and the proposed decrees or settlements are filed in court.  By then, it is too late."

Under SRDSA, agencies would be unable to seek a consent decree with a company until after other affected parties were able to intervene in the action. This would allow the public and industry to comment on any pending consent decrees through the use of a comment period and the acceptance of amicus curiae briefs with the court and agency.

The Congressional Budget Office's (CBO) scored the legislation as having a minor budgetary impact of $7 million through 2017 largely as the result of the consent decree process taking longer and consuming additional agency resources.

CBO's scoring is usually the final process before a piece of legislation is brought up for a vote before the entire House of Representatives.

CBO - H.R. 3862, Sunshine for Regulatory Decrees and Settlements Act of 2012

House - Markup of Sunshine for Regulatory Decrees and Settlements Act (SRDSA) of 2012

Chairman Smith - Statement on SRDSA

Regulatory Focus - Proposed Bill Would Limit Use of Consent Decrees, Settlement Agreements  