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FACT SHEET: H.R. 732, THE STOP SETTLEMENT SLUSH FUNDS ACT OF 2017

Oct 24, 2017
Fact Sheets

 

H.R. 732 Would Undermine Civil Law Enforcement and Harm the Public

 

H.R. 732, the “Stop Settlement Slush Funds Act of 2017,” is a deeply flawed measure that would undermine the ability of civil law enforcement agencies to provide relief to victims of systemic misconduct. The bill would prohibit settlement agreements that authorize payments to parties not “directly and proximately” harmed by the unlawful conduct of the settling defendant. In doing so, H.R. 732 would prevent civil enforcement agencies from tailoring remedies to address generalized harms to unidentifiable victims, public health and safety, or the environment.

 

  • Eliminates Critical Public Interest Protections. H.R. 732 applies to all civil enforcement settlements thereby potentially affecting the enforcement of a broad range of civil rights, environmental, consumer protection, and servicemember relief laws. In 2016, the Justice Department stated in its strenuous opposition to a substantively identical version of the bill that it would “unwisely constrain the government’s settlement authority and preclude many permissible settlements that would advance the public interest,” while interfering with the Department’s ability to address, remedy, and deter systemic harm caused by unlawful conduct.

 

  • Ambiguous Drafting Will Create Needless Litigation and Delay. As drafted, H.R. 732 is inherently vague and will invite legal challenges to proposed settlements, deter agencies from pursuing settlements, and ultimately force courts to define key areas of the bill’s provisions.

 

  • Imposes Draconian Penalties on Any Federal Official. As a result of the bill’s wide-ranging punitive provisions, which would apply even to Federal judges and Federal employees generally, the bill would have a chilling effect on the efficient resolution of civil cases through settlement agreements.

 

  • H.R. 732 Is a Dangerous Solution to a Non-Existent Problem. H.R. 732 is yet another Republican solution in search of a problem that is rife with unintended consequences. Longstanding appropriations law and agency policy—as recognized by the Government Accountability Office and the Congressional Research Service—prevent civil enforcement agencies from directing funds to politically-favored groups or circumventing Congress’ appropriations role. There is absolutely no evidence that any settlement under investigation by the Republicans included so-called slush funds, despite voluminous document production by these federal agencies and private parties.

 

The cumulative effect of H.R. 732 would be to deter agencies from the efficient resolution of civil complaints through settlement agreements. By forcing agencies into needless litigation, the bill would waste agency time and resources as well as taxpayer dollars and delay the timely enforcement of the law and the provision of full relief for victims. In the context of a veto threat, the Obama Administration stated that a substantively identical version of the bill considered in the 114th Congress was “unnecessary and would harm the public interest.”

 

 

OPPOSITION TO H.R. 732

  • A broad coalition of public-interest organizations, including Americans for Financial Reform, EarthJustice, Sierra Club, and Public Citizen:

 

This bill would be a gift to lawbreakers at the expense of families and communities suffering from injuries that cannot be addressed by direct restitution because the bill would prevent federal law enforcement agencies from negotiating forms of relief that would address injuries to the public that may be either non-quantifiable or indeterminate. These forms of relief are crucial when harm is difficult to monetize, such as damage to the environment, the collateral consequences to communities resulting from predatory lending by financial institutions, or unknown health outcomes to individuals resulting from chemical exposures in the workplace.

 

Under current law, the legitimacy and utility of federal enforcement settlements that include payments to third parties is clear, as long as such payments bear a nexus to the prosecutorial objectives of the agency. This bill would supplant the wisdom of federal law enforcement official to craft appropriate remedies.

 

H.R. 732 is unnecessary because the practice of providing relief to the public through payments to non-profits and other community organizations was discontinued by the current Department of Justice. Thus, the bill is just another example of Congressional overreach into executive branch decision-making. Not only does it disregard the needs of future Administrations, but the bill is sloppily crafted, failing to provide even a basic definition of the “donations” or payments in question.

 

  • The National Urban League:

This legislation seeks to block federal law enforcement from including in negotiated settlements payments that provide relief to victims of predatory lending. Specifically, the bill targets federally-certified housing counseling intermediaries such as the National Urban League by preventing these organizations from providing housing counseling relief to communities that have been preyed upon by financial institutions that have broken the law. HR 732 fails to recognize the critical role and positive benefits that housing counseling organizations now play in addressing and ensuring that the discriminatory practices and abuses, like those that led to the housing and financial crisis, never happen again.

 

  • Other groups that oppose H.R. 732 include:

 

Alliance for Justice, Asbestos Disease Awareness Organization, Center for Auto Safety, Center for Biological Diversity, Center for Science in the Public Interest, Consumer Action, Farmworker Justice, Friends of the Earth, Georgia Watch, Impact Fund, Kidsandcars.org, League of Conservation Voters, National Association of Consumer Advocates, National Consumers League, Protect All Children’s Environment, Rose Foundation for Communities and the Environment, U.S. PIRG, and the Waterkeeper Alliance.