The U.S. House of Representatives today passed legislation co-sponsored by Rep. Trent Franks (R-AZ) that would prevent the U.S. Department of Justice (DOJ), and all other government agencies, from requiring defendants to donate money to outside groups as part of their settlement agreements with the federal government.
The bill, H.R. 5063, the Stop Settlement Slush Funds Act of 2016, targets a loophole that allows settlement agreements reached with the Department of Justice to include payments to groups unaffected by the action being settled.
“This bill is very simply about the Separation of Powers and who has the constitutional authority to determine how certain funds are spent. Congress, and not the DOJ, is responsible and H.R. 5063 addresses this institutional issue in a direct and bipartisan way,” Franks told Arizona Business Daily in May.
A December 2015 column by the Wall Street Journal's Kim Strassel spotlighted the "slush fund" issue.
"It works likes this," wrote Strassel. "The Justice Department prosecutes cases against supposed corporate bad actors. Those companies agree to settlements that include financial penalties. Then Justice mandates that at least some of that penalty money be paid in the form of 'donations' to nonprofits that supposedly aid consumers and bolster neighborhoods."
"The Justice Department maintains a list of government-approved nonprofit beneficiaries," continued Strassel. "And surprise, surprise: Many of them are liberal activist groups."
The bill’s primary sponsor, House Judiciary Chairman Bob Goodlatte (R-VA), praised passage of the bill.
According to a press release issued by Goodlatte’s office an investigation by the House Judiciary Committee “found that DOJ had engaged in a ‘pattern or practice’ of systematically subverting Congress’s spending power by using settlements from financial institutions to funnel money to left-wing activist groups.”
“Whether you are a Republican or a Democrat, the Constitution is clear: Congress shall have the power to appropriate,” said Goodlatte. “The practices discovered within the DOJ must be stopped. The passage of this bill by the House ensures the recovered funds are used to benefit direct victims and not special interests, and brings accountability to the Executive Branch as a whole.”
Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform, also praised House passage of the legislation.
“Enforcement officials should pursue justice in a manner consistent with the Constitution and the public interest, and not by how much money they can generate for third party allies,” said Rickard. “The Constitution gives Congress alone the power of the purse, but the DOJ and other government agencies have thwarted this through their use of settlement slush funds to funnel money to third party political allies.”
The House passed the bill by a vote of 241-174.
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