Attorney General Jeff Sessions issued a memo on June 5, 2017 to all Department of Justice components and 94 U.S. Attorney’s Offices prohibiting them from entering into any agreement in settlement of federal claims or charges that directs or provides for a settlement payment to non-governmental, third parties that were not directly harmed by the conduct.
When the federal government settles a case against a corporate wrongdoer, any settlement funds should go first to the victims and then to the American people – not to bankroll third-party special interest groups or the political friends of whoever is in power,
said Attorney General Jeff Sessions.
Unfortunately, in recent years the Department of Justice has sometimes required or encouraged defendants to make these payments to third parties as a condition of settlement.
Under the last Administration, the DOJ repeatedly required settling parties to pay settlement funds to third party community organizations that were not directly involved in the litigation or harmed by the alleged conduct.
This abuse of enforcement power was particularly prevalent during the last eight years in pursuant of alleged violations of environmental laws. By way of good example, I wrote in this blog in 2013 in a post First Ever Criminal Prosecution For Deaths Of Birds By Wind Turbine,
As part of the plea agreement, a $400,000 fine will be directed to the North American Wetlands Conservation Fund. The company will also pay $100,000 in restitution to the State of Wyoming, and perform community service by making a $160,000 payment to the congressionally chartered National Fish and Wildlife Foundation. Duke Energy is also required to contribute $340,000 to a conservation fund for the purchase of land, or conservation easements on land, in Wyoming containing high use golden eagle habitat.
Last year environmental enforcement by the DOJ resulted in more than $6 Billion in administrative, civil penalties and criminal fines; and that does not include the $14.7 Billion Volkswagen Clean Air Act violation settlement, and more than $1 Billion in commitments of responsible parties to clean up Superfund sites. So, we are talking about a lot of money.
Pursuant to the Attorney General’s memorandum,
With this directive, we are ending this practice and ensuring that settlement funds are only used to compensate victims, redress harm, and punish and deter unlawful conduct.
There are instances 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 DOJ attorneys to achieve the ends of justice at a reasonable cost to the taxpayer. It is now again clear that the lawful and proper goals of any settlement are, first and foremost, to compensate victims, redress harm, or punish and deter unlawful conduct.
Effective immediately, DOJ 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.
Stopping the misuse of settlement dollars will level the playing field for responsible businesses, allowing for the orderly administration of justice, while protecting the natural environment in communities across the country.