House subcommittee probes whether fee-shifting has become a "profit engine" for some environmental nonprofits

A House subcommittee on oversight and investigations convened a hearing to examine what the chair described as a "profit engine driving environmental nonprofits," with members and witnesses disputing whether fee-shifting statutes and settlement practices incentivize litigation over conservation.

Chair Gosar framed the hearing by saying repetitive litigation produces taxpayer-funded attorney-fee awards and settlements that sustain some nonprofits’ operations. Gosar cited committee figures saying federal agencies paid an estimated $24,800,000 in Equal Access to Justice Act-related awards between fiscal 2019 and 2024, roughly 76% of which he said went to environmental nonprofits, and described roughly $20,200,000 in Endangered Species Act-related payments over five years.

"These lawsuits often just serve as delays and profit tools leading to repetitive reviews that drain agency resources," Gosar said in his opening remarks, adding he had introduced H.R. 2841 to increase transparency about major donors to NGOs receiving federal dollars.

Witnesses offered different but complementary critiques. Jonathan Wood, vice president for law and policy at the Property and Environment Research Center (PERC), told the panel that fee-shifting statutes can distort conservation incentives. Wood cited an Oregon example where a 355-acre tract in the Elliott State Forest sold for about $787,000 was the subject of litigation that led to nearly $1.2 million in attorney fees; he said the litigation required permitting but did not guarantee permanent conservation.

"If the groups had purchased the land, they would have achieved their best conservation outcome, but at significant expense," Wood said. He urged courts to make fee reasonableness determinations that account for what the litigation achieved and whether market alternatives would have produced better environmental outcomes.

Ken Braun of the Capital Research Center presented financial snapshots from nonprofit tax filings, noting that some groups have reported legal recoveries that make up sizable shares of their revenue. Braun cited sample figures that, he said, warrant greater transparency about settlement terms and public grant receipts.

Lawson Feit, a natural-resources attorney, distinguished between statutes such as the Equal Access to Justice Act (EJA), which includes caps and eligibility rules, and other environmental fee-shifting statutes that lack explicit rate limits. Feit said the two statutory classes create different incentives and recommended examining safeguards that would limit outsized recoveries.

Ranking Member Dexter defended fee-shifting as a tool that allows individuals and small organizations to hold government accountable, but she and other Democrats repeatedly warned that reforms should not unduly bar access to justice. Dexter said fee shifting was created so people "from all walks of life" could sue the government when it breaks the law.

Members asked witnesses how litigation-related delay affects on-the-ground projects. Wood said litigation often produces procedural outcomes that delay restoration work — for example, a forest-restoration project near Bozeman, Montana, that Wood said was delayed more than a decade and left the town vulnerable to wildfire — and that courts rarely tie fee awards to net environmental gains.

Witnesses proposed several reforms: fuller judicial reasonableness reviews that compare litigation to plausible alternatives, enhanced public reporting of settlements and judgment-fund payments, and, for very large recoveries, statutory ceilings or thresholds requiring additional oversight. Several witnesses suggested posting settlement terms and fee-award justifications publicly to allow independent scrutiny.

The subcommittee left the record open for written questions and documents; the chair said members had 10 days to submit questions for the witnesses and that the hearing record would be held open for those materials.

What happens next: Members on both sides signaled interest in legislative fixes and further document requests; the subcommittee will accept written questions and supplementary materials filed into the hearing record.