HR7387-119

What This Bill Does

The Stop Settlement Slush Funds Act prohibits federal officials or agents from entering or enforcing civil settlement agreements on behalf of the United States that direct payments to anyone other than the United States, unless the payment directly remedies actual harm caused by the payer, including environmental harm, or pays for services rendered in connection with the case. Violating officials face the same penalties that apply for violating the miscellaneous receipts statute. The bill applies prospectively to settlements after enactment. Each agency head must report qualifying third-party settlement payments to CBO annually for seven years, and each agency inspector general must publicly report any settlement entered in violation of the Act to House and Senate Judiciary, Budget, and Appropriations committees.

Who Benefits and How

Federal taxpayers and Congress benefit because settlement money is less likely to be routed to outside organizations without a direct-remedy connection and because CBO and inspectors general receive reporting duties. Settlement victims and environmental remediation projects still benefit when a payment directly remedies actual harm. Agency inspectors general gain a clear mandate to expose violations publicly.

Who Bears the Burden and How

Federal agencies, DOJ litigators, and agency counsel must stop using settlements that direct payments to unrelated third parties and must document allowed restitution or service payments. Outside organizations that previously could receive settlement-directed donations lose that revenue path unless they are directly remedying actual harm or providing case services. Agency heads, CBO, and inspectors general must absorb annual reporting work without new appropriations.

Key Provisions

• Prohibits federal settlement agreements from directing payments to third parties unless the payment directly remedies actual harm or pays for case-related services.
• Subjects violating federal officials to penalties equivalent to miscellaneous receipts statute violations.
• Requires agency heads to report qualifying third-party settlement payments to CBO annually for seven years without new appropriations.
• Requires agency inspectors general to publicly report settlement violations to House and Senate Judiciary, Budget, and Appropriations committees.