Prohibition on Settlement Payments to Non-Governmental Third Parties
| Published date | 16 December 2020 |
| Citation | 85 FR 81409 |
| Record Number | 2020-27189 |
| Section | Rules and Regulations |
| Court | The Attorney General Office |
Federal Register, Volume 85 Issue 242 (Wednesday, December 16, 2020)
[Federal Register Volume 85, Number 242 (Wednesday, December 16, 2020)]
[Rules and Regulations]
[Pages 81409-81411]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27189]
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DEPARTMENT OF JUSTICE
Office of the Attorney General
28 CFR Part 50
[Docket No. OAG 163; AG Order No. 4927-2020]
RIN 1105-AB62
Prohibition on Settlement Payments to Non-Governmental Third
Parties
AGENCY: Department of Justice.
ACTION: Final rule.
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SUMMARY: This final rule amends the Department's regulations to set
forth the principles of the Attorney General's Memorandum of June 5,
2017, prohibiting the inclusion of provisions in settlement agreements
directing or providing for a payment or loan to a non-governmental
person or entity that is not a party to the dispute, except in defined
circumstances.
DATES: Effective Date: December 16, 2020.
FOR FURTHER INFORMATION CONTACT: Robert Hinchman, Senior Counsel,
Office of Legal Policy, U.S. Department of Justice, Room 4252 RFK
Building, 950 Pennsylvania Avenue NW, Washington, DC 20530, telephone
(202) 514-8059 (not a toll-free number).
SUPPLEMENTARY INFORMATION: On June 5, 2017, then-Attorney General
Sessions issued a Memorandum to the Heads of all Department of Justice
Components and to all United States Attorneys titled, ``Prohibition on
Settlement Payments to Third Parties.'' In this Memorandum, he stated:
``Our Department is privileged to represent the United States and its
citizens in courts across our country. We take this responsibility
seriously. In the course of this representation, there may come a time
when it is in the best interests of the United States to settle a
lawsuit or end a criminal prosecution. Settlements, including civil
settlement agreements, deferred prosecution agreements, non-prosecution
agreements, and plea agreements, are a useful tool for Department
attorneys to achieve the ends of justice at a reasonable cost to the
taxpayer. The goals of any settlement are, first and foremost, to
compensate victims, redress harm, or punish and deter unlawful
conduct.''
However, certain previous settlement agreements involving the
Department included provisions requiring payments to various non-
governmental, third-party organizations as a condition of settlement
with the United States. Those third-party organizations were neither
victims nor parties to the lawsuits.
The June 5, 2017, Memorandum announced that the Department would no
longer engage in this practice. Pursuant to the June 5, 2017,
Memorandum, except in specific limited circumstances, ``Department
attorneys may not enter into any agreement on behalf of the United
States in settlement of federal claims or charges, including agreements
settling civil litigation, accepting plea agreements, or deferring or
declining prosecution in a criminal matter, that directs or provides
for a payment or loan to any non-governmental person or entity that is
not a party to the dispute.'' This policy is already incorporated into
the Justice Manual at https://www.justice.gov/jm/jm/1-17000-settlement-payments-third-parties.
This final rule amends the Department's regulations to reflect this
policy, with certain changes from the June 5, 2017, Memorandum to
clarify the scope of exceptions. This rule specifically clarifies that
the policy extends to a payment or loan, whether in cash or in kind, to
any non-governmental person or entity that is not a party to the
dispute. The Miscellaneous Receipts Act provides that Government
officials ``receiving money for the Government from any source shall
deposit that money with the Treasury.'' See 31 U.S.C. 3302(b).
``Receiving money for the Government'' includes the ``constructive
receipt'' of money ``if a federal agency could have accepted possession
and retains discretion to direct the use of the money.'' See Effect of
31 U.S.C. 484 on the Settlement Authority of the Attorney General, 4B
Op. O.L.C. 684, 688 (1980). This rule thus similarly forbids
circumvention of the policy reflected in this statute via the use of
in-kind payments.
[[Page 81410]]
This rule also revises the exceptions to the prohibition. Under the
rule, there are four limited exceptions to the policy's prohibition.
First, the prohibition does not apply to an otherwise lawful payment or
loan that provides restitution or compensation to a victim, though in
no case shall any settlement agreement require defendants in
environmental cases, in lieu of payment to the Federal Government, to
expend funds to provide goods or services to third parties for
Supplemental Environmental Projects. Second, the prohibition does not
apply when, in cases of foreign official corruption, a trusted third
party is required to facilitate the repatriation and use of funds to
directly benefit those harmed by the foreign corruption. Third, the
prohibition does not apply to payments for legal or other professional
services rendered in connection with the case. Fourth, the prohibition
does not apply to payments expressly authorized by statute or
regulation, including restitution and forfeiture. Finally, this rule
also deletes some examples of exception (c)(1).
The policy set forth in this final rule applies to all civil and
criminal cases litigated under the direction of the Attorney General
and includes civil settlement agreements, cy pres agreements or
provisions, plea agreements, non-prosecution agreements, and deferred
prosecution agreements.
Regulatory Certifications
Administrative Procedure Act
This rule relates to a matter of agency management or personnel and
is a rule of agency organization, procedure, or practice. Accordingly,
this rule is exempt from the usual requirements of prior notice and
comment and a 30-day delay in effective date. See 5 U.S.C. 553(a)(2),
(b), and (d).
Regulatory Flexibility Act
This regulation will not have an impact on small entities because
it pertains to personnel and administrative matters affecting the
Department. An analysis under the Regulatory Flexibility Act was not
required for this final rule because the Department was not required to
publish a general notice of proposed rulemaking for this matter. See 5
U.S.C. 601(2), 604(a).
Executive Orders 12866, 13563, and 13771--Regulatory Review
This regulation has been drafted and reviewed in accordance with
section 1(b) of Executive Order 12866, ``Regulatory Planning and
Review,'' and section 1(b) of Executive Order 13563, ``Improving
Regulation and Regulatory Review.''
This final rule is ``limited to agency organization, management, or
personnel matters'' and thus is not a ``rule'' for purposes of review
by the Office of Management and Budget under section 3(d)(3) of
Executive Order 12866. Accordingly this rule has not been reviewed by
the Office of Management and Budget.
This rule is not subject to the requirements of Executive Order
13771, ``Reducing Regulation and Controlling Regulatory Costs,''
because it is not a significant regulatory action under Executive Order
12866, and because it is ``related to agency organization, management,
or personnel'' and thus not a ``rule'' under Executive Order 13771,
section 4(b).
Executive Order 12988--Civil Justice Reform
This regulation meets the applicable standards set forth in
sections 3(a) and 3(b)(2) of Executive Order 12988, ``Civil Justice
Reform.''
Executive Order 13132--Federalism
This rule will not have substantial direct effects on the States,
on the relationship between the national government and the States, or
on the distribution of power and responsibilities among the various
levels of government. It is a rule of internal agency practice and
procedure. Therefore, in accordance with Executive Order 13132,
``Federalism,'' the Department has determined that this rule does not
have sufficient federalism implications to warrant the preparation of a
federalism summary impact statement.
Unfunded Mandates Reform Act of 1995
This rule will not result in the expenditure by State, local, and
tribal governments, in the aggregate, or by the private sector, of $100
million or more (adjusted annually for inflation) in any one year, and
it will not significantly or uniquely affect small governments.
Therefore, no actions are necessary under the provisions of the
Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1501 et seq.
Congressional Review Act
This action is not a major rule as defined by the Congressional
Review Act, 5 U.S.C. 804. This action pertains to agency management,
personnel, and organization and does not substantially affect the
rights or obligations of non-agency parties and, accordingly, is not a
``rule'' as that term is used by the Congressional Review Act, 5 U.S.C.
804(3)(B),(C). Therefore, the reporting requirements of 5 U.S.C. 801 do
not apply.
List of Subjects in 28 CFR Part 50
Administrative practice and procedure.
Accordingly, by virtue of the authority vested in me as Attorney
General, including 5 U.S.C. 301 and 28 U.S.C. 509, 510, part 50 of
title 28 of the Code of Federal Regulations is amended as follows:
PART 50--STATEMENTS OF POLICY
0
1. The authority citation for part 50 continues to read as follows:
Authority: 5 U.S.C. 301; 18 U.S.C. 1162; 28 U.S.C. 509, 510,
516, and 519; 42 U.S.C. 1921 et seq., 1973c; and Pub. L. 107-273,
116 Stat. 1758, 1824.
0
2. Add Sec. 50.28 to read as follows:
Sec. 50.28 Prohibition on settlement payments to non-governmental
third parties.
(a) The goals of a settlement agreement between the Department of
Justice and a private party are to compensate victims, redress harm, or
punish and deter unlawful conduct. It is generally not appropriate to
use a settlement agreement to require, as a condition of settlement,
payment to non-governmental, third-party organizations who are not
victims or parties to the lawsuit.
(b) Except as provided in paragraph (c) of this section, Department
attorneys shall not enter into any agreement on behalf of the United
States in settlement of federal claims or charges, including agreements
settling civil litigation, accepting plea agreements, or deferring or
declining prosecution in a criminal matter, that directs or provides
for a payment or loan, in cash or in kind, to any non-governmental
person or entity that is not a party to the dispute.
(c) Department attorneys may only enter into such agreements in
four specific situations:
(1) When the otherwise lawful payment or loan, in cash or in kind,
provides restitution or compensation to a victim, though in no case
shall any such agreements require defendants in environmental cases, in
lieu of payment to the Federal Government, to expend funds to provide
goods or services to third parties for Supplemental Environmental
Projects;
(2) When, in cases of foreign official corruption, a trusted third
party is required to facilitate the repatriation and use of funds to
directly benefit those harmed by the foreign corruption;
[[Page 81411]]
(3) When payment is for legal or other professional services
rendered in connection with the case; or
(4) When payment is expressly authorized by statute or regulation,
including restitution and forfeiture.
(d) This policy applies to all civil and criminal cases litigated
under the direction of the Attorney General and includes civil
settlement agreements, cy pres agreements or provisions, plea
agreements, non-prosecution agreements, and deferred prosecution
agreements.
Dated: December 4, 2020.
William P. Barr,
Attorney General.
[FR Doc. 2020-27189 Filed 12-15-20; 8:45 am]
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