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27–890 2018

A TIME TO REFORM: OVERSIGHT OF THE ACTIVITIES OF THE JUSTICE DEPARTMENT’S CIVIL, 

TAX, AND ENVIRONMENT AND NATURAL RESOURCES DIVISIONS AND THE U.S. TRUSTEE 

PROGRAM 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

JUNE 8, 2017 

Serial No. 115–19 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 


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(II) 

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR SMITH, Texas 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

DOUG COLLINS, Georgia 

RON DESANTIS, Florida 

KEN BUCK, Colorado 

JOHN RATCLIFFE, Texas 

MARTHA ROBY, Alabama 

MATT GAETZ, Florida 

MIKE JOHNSON, Louisiana 

ANDY BIGGS, Arizona 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., Georgia 

THEODORE E. DEUTCH, Florida 

LUIS V. GUTIE ́ RREZ, Illinois 

KAREN BASS, California 

CEDRIC L. RICHMOND, Louisiana 

HAKEEM S. JEFFRIES, New York 

DAVID CICILLINE, Rhode Island 

ERIC SWALWELL, California 

TED LIEU, California 

JAMIE RASKIN, Maryland 

PRAMILA JAYAPAL, Washington 

BRAD SCHNEIDER, Illinois 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 

SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND ANTITRUST LAW

TOM MARINO, Pennsylvania, Chairman 

BLAKE FARENTHOLD, Texas, Vice-Chairman 

DARRELL E. ISSA, California 

DOUG COLLINS, Georgia 

KEN BUCK, Colorado 

JOHN RATCLIFFE, Texas 

MATT GAETZ, Florida 

DAVID CICILLINE, Rhode Island 

HENRY C. ‘‘HANK’’ JOHNSON, JR., Georgia 

ERIC SWALWELL, California 

PRAMILA JAYAPAL, Washington 

BRAD SCHNEIDER, Illinois 


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C O N T E N T S 

JUNE 8, 2017 

OPENING STATEMENTS 

Page 

The Honorable Bob Goodlatte, Virginia, Chairman, Committee on the Judiciary ......................................................................................................................... 4 

The Honorable Tom Marino, Pennsylvania, Chairman, Subcommittee on Regulatory Reform, Commercial and Antitrust Law, Committee on the Judiciary ......................................................................................................................... 1 

The Honorable David Cicilline, Rhode Island, Ranking Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law, Committee on the Judiciary ........................................................................................ 2 

WITNESSES 

Mr. Chad A. Readler, Acting Assistant Attorney General, Civil Division 

Oral Statement ................................................................................................. 7 

Mr. Jeffrey H. Wood, Acting Assistant Attorney General, Environment and 

Natural Resources Division 

Oral Statement ................................................................................................. 8 

Mr. David A. Hubbert Acting Assistant Attorney General, Tax Division 

Oral Statement ................................................................................................. 10 

Mr. Clifford J. White III, Director, U.S. Trustee Program 

Oral Statement ................................................................................................. 12 

Mr. Hans von Spakovsky, Esq, Senior Legal Fellow, Heritage Foundation 

Oral Statement ................................................................................................. 28 

Ms. Cleta Mitchell, Esq., Partner, Foley & Lardner LLP 

Oral Statement ................................................................................................. 30 

Mr. Andrew M. Grossman, Esq., Partner, Baker & Hostetler LLP 

Oral Statement ................................................................................................. 31 

Mr. Robert Weissman, Esq., President, Public Citizen 

Oral Statement ................................................................................................. 33 

OFFICIAL HEARING RECORD 

Responses to Questions for the Record from Mr. Chad A. Readler, Acting 

Assistant Attorney General, Civil Division ........................................................ 00 

Responses to Questions for the Record from Mr. Jeffrey H. Wood, Acting 

Assistant Attorney General, Environment and Natural Resources Division .. 00 

Mr. David A. Hubbert Acting Assistant Attorney General, Tax Division ........... 00 

Responses to Questions for the Record from Prof. Bruce Grohsgal, Esq., 

Helen S. Balick Visiting Professor in Business Bankruptcy Law, Delaware 

Law School ............................................................................................................ 00 


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IV 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD 

Statement submitted by the Honorable John Conyers, Jr., Michigan, Committee on the Judiciary. This material is available at the Committee and 

can be accessed on the Committee Repository at: 

http://docs.house.gov/meetings/JU/JU05/20170608/106076/HHRG-115- 

JU05-MState-C000714-20170608.pdf 

Article submitted by the Honorable John Conyers, Jr., Michigan, Committee 

on the Judiciary. This material is available at the Committee and can 

be accessed on the Committee Repository at: 

http://docs.house.gov/meetings/JU/JU05/20170608/106076/HHRG-115- 

JU05-20170608-SD002.pdf 


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A TIME TO REFORM: OVERSIGHT OF THE ACTIVITIES OF THE JUSTICE DEPARTMENT’S 

CIVIL, TAX AND ENVIRONMENT AND NATURAL RESOURCES DIVISIONS AND THE U.S. 

TRUSTEE PROGRAM 

THURSDAY, JUNE 8, 2017 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND ANTITRUST LAW, Washington, DC. 

The Subcommittee met, pursuant to call, at 1:00 p.m., in Room 

2141, Rayburn House Office Building, Hon. Blake Farenthold (ViceChairman of the Subcommittee) presiding. 

Present: Representatives Farenthold, Goodlatte, Ratcliffe, Gaetz, 

Cicilline, Conyers, Johnson of Georgia, Jayapal, and Schneider. 

Staff Present: Dan Huff, Counsel; Slade Bond, Minority Counsel; 

and Andrea Woodard, Clerk. 

Mr. FARENTHOLD. Good afternoon. The Subcommittee on Regulatory Reform, Commercial and Antitrust Laws shall come to order. 

Without objection, the Chair is authorized to declare a recess of the 

Committee at any time. We welcome everyone to today’s hearing on 

a time to reform: oversight of the activities of the Justice Department’s Civil, Tax, Environment, and Natural Resources Divisions, 

and the U.S. Trustees Program. And I will now recognize myself 

for a brief opening statement. 

Welcome to this oversight hearing on four of the Justice Department components within this Subcommittee’s jurisdiction. The new 

administration creates an opportunity for introspection and reform 

within the DOJ. This hearing will aid that process by reviewing 

abuses under the prior administration, determining whether the 

new DOJ leadership has started to initiate reforms, how far these 

reforms have progressed, and will explore, with the DOJ, what 

other forms will be appropriate. 

This Subcommittee has examined numerous examples of Administration lawyers straining the meaning of the statutes to justify 

activities never contemplated by Congress. 

For example, Operation Choke Point was a Justice-Departmentled program to deny merchants, like firearm dealers or payday 

lenders—that the Obama administration deemed objectionable—access to the financial networks they needed to survive. The DOJ has 

cited its special authority to issue administrative subpoenas when 

fighting fraud, ‘‘affecting’’ banks. But the claimed fraud in Operation Choke Point was far removed from banks, perpetrated ostenVerDate Sep 11 2014 04:15 Jan 12, 2018 Jkt 027890 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 E:\HR\OC\A890.XXX A890

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sibly on the customers of their customers’ customers. Furthermore, 

Committee oversight has found that the program was inflicting an 

unacceptable level of collateral damage on legitimate businesses, 

whether intended or not. That damage lingers, and I would like to 

know what the DOJ is planning to do to reverse it. 

In another instance, a New York Times expose revealed that, on 

the eve of an inevitable victory in court, the Department abruptly 

switched courses away from litigation and settled a discrimination 

case, despite vigorous objections from career attorneys within the 

DOJ. It appears the Department settled in order to pay off friends, 

including a plaintiff’s lawyer, who was on President Obama’s transition team. What can the Department’s new management do to 

halt Justice Fund abuse? 

Another troubling pattern from the last administration was sue 

and settle abuse. This kind of abuse occurs when a regulatory 

agency agrees to settle a lawsuit with the friendly plaintiff, requiring it to implement a desired policy under the cloak of judicial authority, circumventing the normal rulemaking process, and paying 

both sides attorneys’ fees. 

On May 27th, a report by the U.S. Chamber of Commerce found 

that, in 8 years, the Obama administration welcomed 137 Clean 

Air Act settlements, far more than the 93 settlements that the previous administration did over a preceding 12-year period. What 

steps is the DOJ considering to halt abusive sue and settle practices? 

Additionally, the Tax Division has been defending the Internal 

Revenue Service in lawsuits arising out of IRS’s inappropriate targeting of conservative groups. The Sixth Circuit rebuked the 

Obama Justice Department’s Tax Division lawyers for delaying one 

of the leading cases, saying: ‘‘[T]he government is doing everything 

it possibly can to make this as complicated as it possibly can, to 

last as long as it possibly can, so that, by the time there is a result, 

nobody is going to care except the plaintiffs.’’ 

Finally, I am interested in an update from the U.S. Trustee’s Office on its need for funding assistance, the reduction of fraud in the 

Asbestos Trust, and its oversight of Puerto Rico’s bankruptcy processing filing its May 3, 2017 filing. 

I appreciate the DOJ making witnesses available amidst this 

transition, and I hope this hearing will help the new management 

implement reforms by identifying problem areas and solutions. I 

also look forward to the suggestions of our second panel that has 

been carefully monitoring DOJ activities. 

At this time, the Chair will now recognize the Ranking Member 

of the Subcommittee on Regulatory Reform, Commercial and Antitrust Law, Mr. Cicilline from Rhode Island, for his opening statement. 

Mr. CICILLINE. Thank you, Mr. Chairman. Today’s hearing is an 

important opportunity to conduct oversight into the work of several 

components of the Justice Department within the Subcommittee’s 

jurisdiction. The importance of legislative oversight cannot be overstated. It is a fundamental check and balance, key to the public’s 

confidence in government, and it cannot be overstated. 

In less than 5 months, President Trump has fired Acting Attorney General Sally Yates after she informed the White House that 


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National Security Advisor Michael Flynn was a security risk; fired 

FBI Director James Comey, who was overseeing an ongoing investigation into the Trump campaign’s ties to Vladimir Putin; former 

National Intelligence Director James Clapper has called this ‘‘egregious and inexcusable’’; refused to disclose his tax returns, breaking with the tradition of Presidents from the last four decades; refused to release White House visitor logs; refused to release documents requested by Congress; appointed numerous officials with 

serious and unresolved conflicts of interest to key government positions; repeatedly attacked the Federal Judiciary, a co-equal branch 

of government, eroding trust in our legal system and the rule of 

law; and took the alarming and extreme step of instructing government officials to ignore congressional oversight requests unless 

supported by a Republican Committee Chair. 

Because my Republican colleagues have shown little interest in 

examining any of these matters, this hearing is one of the few opportunities that we have to hear from the Justice Department on 

the issues important to our constituents. Today’s oversight hearing 

concerns the work of Civil, Environment, and Natural Resources 

and Tax Divisions along with the U.S. Trustee Program. The Civil 

Division is the largest litigating component of this Justice Department. Among its many other responsibilities, it is tasked with defending the President’s unconstitutional Muslim travel ban. 

The President recently lashed out at his own Justice Department, stating on Twitter that it, ‘‘Should have stayed with the 

original travel ban, not the watered-down politically-correct 

version.’’ The editorial board of the Wall Street Journal referred to 

these comments as ‘‘reckless on multiple levels and merely the latest incident in which Mr. Trump, popping off, undermined his own 

lawyers.’’ 

George Conway, the husband of White House Counselor 

Kellyanne Conway, referred to the President’s statements as sad, 

adding that ‘‘every sensible lawyer in the White House’s counsel office and every political appointee at DOJ would agree with me.’’ 

Mr. Conway personally recently removed himself from contention 

for the appointment as permanent assistant attorney general of the 

Civil Division, suggesting that the President’s toxic conduct and 

statements have discouraged qualified individuals from serving in 

this administration. It is important that we hear from the Civil Division on this matter. 

The Civil Division is also responsible for representing President 

Trump in lawsuits relating to conflicts of interest in his alleged violations of the Constitution’s Foreign Emoluments Clause by profiting from foreign investments in his property, which has not been 

divested. Together with Ranking Member Mr. Conyers, I have cosponsored H.R. 371, the ‘‘Presidential Conflicts of Interest Act’’, to 

require the President and Vice President to disclose and divest any 

potential financial conflict of interest. 

The Environment and Natural Resources Division is responsible 

for enforcing the Nation’s environmental laws to ensure that America’s air, water, and lands are clean. Early this week, the Trump 

administration announced that it plans to appoint Jeffrey Bossert 

Clark, a climate skeptic, who represented BP in lawsuits related to 

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mental disasters. While he will not testify for today’s hearings, I 

am concerned that these types of serious conflicts of interest will 

imperil the Environment Division’s mission. 

The Tax Division litigates all matters under the Internal Revenue laws, collecting more each year than its entire budget. It also 

plays an important role in investigating and prosecuting offshore 

tax invasion, a significant concern of mine. Every year, U.S. corporations hide trillions of dollars of profits offshore, securing $90 

billion in Federal income taxes. In April, I introduced H.R. 2005, 

the ‘‘Offshore Prevention Act’’, to keep jobs in America by eliminating tax breaks for companies that evade our tax laws by hiding 

income oversees. I look forward to hearing from the Tax Division 

on its enforcement efforts to level the playing field for hardworking 

Americans and small businesses. 

Finally, the U.S. Trustee Program is responsible for promoting 

integrity and efficiency of the bankruptcy system. I look forward to 

hearing from the program about its efforts to combat creditor 

abuse, particularly the practice of robo-signing, and its other initiatives to protect consumer debtors. The American people demand 

and deserve transparency. It is critical that we hear from the Justice Department on how these matters affect its statutory responsibilities. 

In September, Chairman Goodlatte noted at this hearing, ‘‘It is 

an opportunity to conduct aggressive oversight of these four components of DOJ to determine where they are making decisions to uphold the law or follow the political whims of the administration.’’ 

I agree, and I thank the witnesses for appearing today and look 

forward to your testimony. With that, I yield back, Mr. Chairman. 

Mr. FARENTHOLD. Thank you, Mr. Cicilline. The Chair now recognizes the Chairman of the full Judicial Committee, Mr. Goodlatte 

of Virginia, for his opening statement. 

Chairman GOODLATTE. Thank you, and I second your remarks 

about the need for reforms at DOJ. I am very pleased that already 

a major reform is in place. Yesterday, Attorney General Sessions 

announced a ban on payments to non-victim, third parties in Department of Justice settlements. I applaud the Attorney General’s 

action. The new Justice Department’s respect for the Separation of 

Powers stands in stark contrast to the behavior of the Obama Administration officials, who used their positions to funnel billions of 

settlement dollars to their political allies. The Committee will continue working to pass the bipartisan ‘‘Stop Settlement Slush Funds 

Act of 2017’’ which would ban this practice permanently. 

Additional reforms are also needed. The Department of Justice 

did not just force settling defendants to pay non-victims. In 2013, 

a shocking New York Times expose revealed that the Obama administration bilked over a billion dollars from the tax payer-funded 

Judgement Fund and handed it to special interests. 

The vehicles for this giveaway were parallel, weak cases alleging 

bias by the Department of Agriculture. The Times described how, 

after a succession of Department of Justice legal victories, including in the Supreme Court, ‘‘political appointees . . . engineered a 

stunning turnabout: they committed $1.33 billion to compensate 

. . . thousands of Hispanic and female farmers who had never 

claimed bias in court.’’ The deal was ‘‘fashioned in White House 


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meetings, despite the vehement objections . . . of career lawyers 

. . . who had argued that there was no credible evidence of widespread discrimination.’’ 

The government’s statistical expert from U.C. Berkeley told the 

Times regarding the parallel Keepseagle case, ‘‘[i]f they had gone 

to trial, the government would have prevailed . . . It was just a 

joke . . . I was so disgusted. It was simply buying the support of 

Native Americans.’’ 

The Keepseagle settlement was based on the plaintiffs’ lawyers’ 

self-serving estimate that there were 19,000 claimants. The plaintiff’s attorneys collected $60.8 million in attorneys’ fees. Just a year 

before, the lead plaintiffs’ attorney, Joseph Sellers, had served on 

President Obama’s 2008 transition team. 

In the end, there were just 4,400 claimants—fewer than even the government had estimated—and $380 million left over. This was 

taxpayer money, but instead of demanding it back, DOJ agreed to 

direct it to non-victim third parties. This troubled the presiding 

judge who wrote: ‘‘Although a $380 million donation by the Federal 

Government to charities . . . might well be in the public interest, 

the Court doubts that the Judgement Fund from which this money 

came was intended to serve such a purpose. The public would do 

well to ask why $380 million is being spent in such a manner.’’ 

On May 25, 2017, I wrote the Attorney General, alerting him to a potential opportunity for the Department to recover the $380 million for taxpayers. I look forward to discussing remedies for the 

larger issue of Judgement Fund abuse. 

Overreach is not limited to the executive branch. District court 

judges are issuing preliminary injunctions outside of their jurisdictions and for the protection of nonparties. 

According to a forthcoming article in the Harvard Law Review, 

this is a recent development, not in accord with traditional practice. The traditional view was that court injunctions restrained the 

defendant’s conduct, vis-a-vis the plaintiff, not vis-a-vis the world. 

Nationwide injunctions trample the sovereignty of sister courts. 

They also create a ‘‘shop till the statute drops’’ problem. Opponents 

of government action can lose in 93 judicial districts, win one preliminary injunction in the 94th, and then government action can be 

stayed nationwide, despite it being upheld everywhere else. Such 

perverse results might be avoided if the Department of Justice insisted on the original understanding that courts do not have authority to issue such sweeping injunctions. 

There are many additional issues to cover. This hearing is one 

of a series that the Committee is holding on the Justice Department to identify areas that are in need of reform. I want to thank 

our witnesses for their participation here today, and I look forward 

to hearing their thoughts on restoring the Justice Department to 

its proper role. Mr. Chairman, I yield back. 

Mr. FARENTHOLD. Thank you very much, Chairman. It is my understanding Mr. Conyers will submit a statement for the record, 

and Mr. Johnson has a brief opening statement in lieu of Mr. Conyers, so we will recognize the gentleman from Georgia. 

[Statement submitted by the Honorable John Conyers, Jr., Michigan, Committee on the Judiciary. This material is available at the 

Committee and can be accessed on the Committee Repository at: 


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http://docs.house.gov/meetings/JU/JU05/20170608/106076/ 

HHRG-115-JU05-MState-C000714-20170608.pdf] 

Mr. JOHNSON of Georgia. Thank you. I thank the Chair, and I 

must recognize the fact that we are in the Trump administration 

now. The Obama administration has gone bye-bye. The need for 

oversight of the Obama administration has ended back on January 

20th over 100-and-some-odd days ago. And so, now it is time to do 

oversight into the operations of the Trump administration, and 

that is the focus of this hearing, and with that, I will yield back. 

Mr. FARENTHOLD. Thank you very much. Actually, I think we 

need to swear in our witnesses, so gentleman, if you would please 

rise. 

Do you swear that the testimony that you are about to give before the Committee is the truth, the whole truth, and nothing but 

the truth, so help you God? 

Let the record reflect all witnesses have responded in the affirmative. You all may be seated. 

I would like to introduce our distinguished panel of witnesses: 

Chad A. Readler, if I am pronouncing that right, was appointed 

acting assistant attorney general for the Civil Division on January 

30, 2017. Prior to joining the Department, Mr. Readler was a partner at the Jones Day law firm where he handled complex civil and 

criminal litigation matters with an emphasis on appellate litigation. Mr. Readler is a recipient of the Marshall Memorial Fellowship and previously served as a volunteer for Lawyers Without 

Borders, training Kenyan lawyers in Nairobi. Mr. Readler earned 

his bachelor’s degree and his J.D. with honors from the University 

of Michigan. Following law school, he clerked for Judge Allen Norris of the U.S. court of appeals for the Sixth Circuit. Welcome, Mr. 

Readler. 

Jeffrey H. Wood was appointed Acting Assistant Attorney General of the Environment and Natural Resources Division on January 20, 2017. Prior to this appointment, Mr. Woods served as environmental counselor for U.S. Senator Jeff Sessions and as the Republican staff director for the U.S. Subcommittee on Clean Air and 

Nuclear Safety and Water and Wildlife. Mr. Wood has also worked 

in private practice, both as an environmental and energy lawyer 

and as in-house counsel for a transportation company. Mr. Wood 

earned his bachelor’s degree and J.D. from Florida State University. A welcome to you as well, sir. 

David H. Hubbert was appointed Acting Assistant Attorney General of the Tax Division in January of 2017. He was previously Tax 

Division’s Deputy Assistant Attorney General for several trial matters. Mr. Hubbert has vast experience with the Tax Division, overseeing litigation functions and the operations of the six regional, 

civil trial sections, the Court of Federal Claims section, and the Office of Civil Litigation. He also served as a trial attorney in both 

the civil and trial section and the appellate section covering various 

regions of the country. Mr. Hubbert earned his bachelor’s degree in 

accounting from the University of Arizona and his J.D. cum laude 

from the University of Pennsylvania Law School. Welcome, sir. 

Mr. Clifford White III has served as the Director of the U.S. 

Trustee’s Program since 2006. Mr. White has more than 30 years 

in Federal service, and most of his tenure has been with the United 


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States Trustee Program including formerly as a Deputy Director 

and an Assistant United States Trustee. Prior to joining the program, Mr. White served as the deputy assistant attorney general 

within the Department of Justice and is official at two other Federal agencies. He has been recognized with an Attorney General’s 

award for distinguished service and was conferred the Presidential 

Award of Meritorious Executive in 2016 and Distinguished Executive in 2009. Mr. White earned his bachelor’s degree and his J.D. 

with honors from George Washington University and the George 

Washington University Law School. 

So, gentleman, each of you have prepared and presented with us 

a written statement, which will be entered into the record in its entirety. I ask each witness to summarize his testimony in 5 minutes 

or less, and to help you stay within that, there is a timing device 

in front of you. The light will switch from yellow to green, indicating it is time to speed up, and you have 1 minute to conclude 

your testimony. When the light turns red, it indicates that your 

time has expired, so please wrap it up promptly, so we will get 

started with Mr. Readler. You are recognized for 5 minutes, sir. 

STATEMENTS OF CHAD READLER, ACTING ASSISTANT ATTORNEY GENERAL, CIVIL DIVISION; JEFFREY WOOD, ACTING ASSISTANT ATTORNEY GENERAL, ENVIRONMENT AND NATURAL RESOURCES DIVISION; DAVID HUBBERT, ACTING ASSISTANT ATTORNEY GENERAL, TAX DIVISION; AND 

CLIFFORD WHITE III, DIRECTOR, U.S. TRUSTEE PROGRAM 

STATEMENT OF CHAD READLER 

Mr. READLER. Good afternoon, Mr. Chairman, Ranking Member 

Cicilline, and Ranking Members of the Subcommittee. Thank you 

for inviting me to testify this afternoon about the work of the Civil 

Division of the Department of Justice. I was honored to join the Division on January 30th of this year. It is a privilege to lead the Division, and I appreciate the opportunity to discuss with you the important work we are doing, as well as to discuss our budget and 

resource needs for fiscal year 2018. 

The Civil Division is made up of more than 1,350 career employees including more than 1,000 attorneys. Each year, the Division 

handles tens of thousands of cases that involve billions of dollars 

in claims and recoveries. Even in my relatively brief tenure, I have 

been highly impressed by the capabilities and professionalism of 

our attorneys and support staff. The Division has the privilege of 

representing the United States, its agencies, members of Congress, 

Cabinet officers, and other Federal employees. Chief among our duties is defending and enforcing various Federal programs and actions. In so doing, the Division routinely confronts significant policy 

issues, often with constitutional dimensions. I would like to highlight a few examples of the significant and varied work done by the 

talented and dedicated public servants in the Division. 

First is national security: defending our Nation is one of the 

highest priorities of the Department and the Division. The Division’s efforts to support our national security interest include defending lawsuits against government officials arising out of efforts 

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lated to the security of our borders, such as screening procedures 

for individuals entering the United States; defending against habeas petitions filed by individuals detained at Guantanamo Bay; 

defending against challenges to alleged surveillance activities conducted by the National Security Agency; and protecting against the 

disclosure of national security or classified information in the context of civil litigation. 

Second is defending immigration actions. The Division defends 

and prosecutes civil immigration matters in Federal court including 

actions challenging an order of removal. The Division also defends 

numerous cases brought by known or suspected terrorists and convicted criminals attempting to acquire immigration benefits or 

avoid removal. The Division also works to prevent known or specific terrorists from becoming naturalized citizens or to revoke such 

naturalizations. And, third, let me highlight our work in the area 

of fraud and consumer safety. The Division takes legal action 

against conduct that threatens the health or safety of American 

consumers, such as misbranding or adulteration of drugs and 

against conduct that seeks to defraud consumers or wrongly deplete the Federal fisc. We vigorously pursue false claims that target Federal healthcare programs. The pharmaceutical industry continues to account for part of the Division’s health care fraud recoveries. In addition, the Division has put a special focus on elder 

fraud issues and has addressed both consumer fraud schemes targeting the elderly as well as fraud targeting medical services for 

the elderly. 

In each of the last 7 fiscal years, the government’s health care fraud recoveries have equaled or exceeded $2 billion. The Division’s 

efforts to include targeting fraud that contributed to the 2008 financial crisis. In the last year, the Division has recovered nearly 

$1.7 billion in losses from financial institutions that arose out of 

failed mortgages. The President’s fiscal year 2018 budget request 

seeks 1,140 positions and $291,758,000. While consistent with prior 

budget request in many respects, the proposed budget includes a 

request for an increase in funding for immigration litigation. These 

resources are necessary to maintain the superior legal representation services provided by the Division. We hope the House and Senate will fully fund the request. 

In closing, let me see it is an honor to work in the Civil Division 

and to participate in important and challenging work my talented 

colleagues perform on a daily basis. Mr. Chairman, I look forward 

to addressing any questions you or any members of the Subcommittee may have. Thank you. 

[Mr. Readler’s written statement is available at the Committee 

or on the Committee Repository at: http://docs.house.gov/meetings/JU/JU05/20170608/106076/HHRG-115-JU05-WstateReadlerC-20170608.pdf] 

Mr. FARENTHOLD. Thank you very much and well within the 

time, then. Mr. Wood, you are recognized for 5 minutes. 

STATEMENT OF JEFFREY WOOD 

Mr. WOOD. Thank you, Representative Farenthold; Mr. Chairman, thank you. Ranking Member Cicilline and other Members of 

this Subcommittee, thank you for the opportunity to discuss the 


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vital work of the Environment and Natural Resources Division, or 

ENRD. 

I currently serve as the acting assistant attorney general for 

ENRD where I have the privilege of leading the Nation’s premiere 

team of environmental lawyers, paralegals, and staff. I am also 

proud to be part of the Department-wide team led by Attorney 

General Jeff Sessions, for whom I worked when he was a Senior 

Member of the Senate and Environment Public Works Committee. 

On Tuesday, the President announced his intent to nominate Jeff 

Clark to be our next Senate-confirmed AAG. We look forward to 

welcoming Mr. Clark back to ENRD, where he served from 2001 

to 2005 as a deputy assistant attorney general. 

Over more than a century, ENRD has protected the country’s air, 

land, and water; safeguarded the rights and resources of Indian 

tribes; and promoted responsible stewardship of America’s wildlife, 

natural resources, and public lands. As detailed in my written 

statement, the Division’s record of legal excellence continues to the 

present day. Looking forward, I believe ENRD is key to the successful implementation of President Trump’s new directions for our 

Nation, including his call for an America First Energy Policy: a 

major reduction in regulatory burdens, particularly for agriculture 

and manufacturing, and rebuilding our Nation’s infrastructure, 

while at the same time protecting the environment. 

To guide our work, I have emphasized four primary goals for 

ENRD at this time. First, we will pursue our core mission of protecting clean air, clean water, and clean land for all Americans 

though the vigorous enforcement of statutes and regulations and 

the defense of the lawful actions of our client agencies. Fundamentally, this is about respect for the Constitution and laws passed by 

Congress. As this Subcommittee is aware, ENRD is representing 

the United States in many cases involving agency actions now 

under review or reconsideration by the new administration. Agencies have inherent authority to review past decisions and to revise, 

replace, or repeal a decision to the extent permitted by law and 

supported by a reasoned explanation. As Justice Rehnquist once 

wrote, ‘‘[a] change in administration brought about by the people 

casting their votes is a perfectly reasonable basis for an executive 

agency’s reappraisal of the costs and benefits of its programs and 

regulations.’’ In these kinds of cases, our aim is to avoid unnecessary litigation, support the integrity of the administrative process, 

and conserve the resources of the courts, the agencies, and other 

litigants. 

Second, a key goal is to effectively support and defend the infrastructure decisions of our client agencies. For example, ENRD is 

vigorously defending vital infrastructure projects today including 

the Dakota Access and Keystone XL Pipelines as well as many 

highway, port, and other projects of importance to communities 

around the Nation. Third, we will work cooperatively with the 

States and Indian tribes to achieve shared environmental goals. 

Many of the laws entrusted to us give a primary role to the States 

and tribes, and we aim to keep that important principle at the forefront of our minds as we fulfill our mission. In this regard, I have 

greatly appreciated the positive outreach from a wide range of 

stakeholders, especially our State partners, during the first 4 


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months of my tenure at ENRD. State Attorney General Offices and 

State environmental officials have reached out or visited to share 

their perspectives about a broad range of issues. 

The Environmental Council of the States, the Association of Air 

Pollution Control Agencies, and other State groups have afforded 

me an opportunity to visit with their members to hear about their 

concerns and priorities. On many occasions, when discussing a 

matter that is taking place in a State, I have asked our attorneys 

a straightforward question: what does the State have to say about 

it? Fourth, we will accomplish our work as efficiently and effectively as possible, keeping in mind that every tax dollar we are 

given must be put to good and appropriate use for the American 

people. 

For fiscal year 2018, our Division has requested appropriations of approximately $115.6 million. Within that funding level, we also 

seek one proposed budget enhancement of approximately $1.8 million for additional attorneys and staff to support land acquisition 

and related efforts to secure the southern border of the United 

States. In closing, let me say again that I am proud of our team 

at ENRD. In just the last few months alone, the Division has obtained a record breaking monetary penalty in a criminal vessel pollution case, prosecuted multiple cases involving renewable fuels 

fraud, brought significant new actions involving violations of the 

Clean Air Act, and successfully intervened to stop illegal wildlife 

trafficking. These are just a few examples of the important work 

that ENRD lawyers, paralegals, and staff do every day on behalf 

of the American people. I appreciate the opportunity to participate 

in this hearing and would be happy to address your questions. 

Thank you. 

[Mr. Wood’s written statement is available at the Committee or 

on the Committee Repository at: http://docs.house.gov/meetings/ 

JU/JU05/20170608/106076/HHRG-115-JU05-Wstate-WoodJ20170608.pdf] 

Mr. FARENTHOLD. Thank you very much. Mr. Hubbert, you are 

recognized for 5 minutes. 

STATEMENT OF DAVID HUBBERT 

Mr. HUBBERT. Thank you, Chairman Farenthold, Ranking Member Johnson, and members of the Committee. Thank you for this 

opportunity to appear before you today to discuss the Tax Division’s important work. 

The Tax Division’s mission is to enforce the Internal Revenue’s 

laws fully and fairly and consistently in Federal and State courts 

throughout the country. We do so through two types of litigation: 

civil investigations and cases and criminal investigations and prosecutions. In this litigation, we aim to promote voluntary compliance 

with the Nation’s tax laws by deterring those who would avoid paying what they owe and promoting the sound development of law by 

carefully considering the legitimate issues raised in our cases. In 

each and every civil case, the Tax Division’s attorneys strive to collect the proper amount due in owing, no more and no less. In each 

and every criminal case, Tax Division’s attorneys authorize and 

prosecute cases after determining there is a reasonable culpability 

of conviction. 


dlhill on DSK3GLQ082PROD with HEARING
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In recent years, the Division typically has 6,000 civil cases in 

various stages, handles hundreds of civil and criminal appeals, and 

authorizes between 1,300 and 1,600 criminal tax investigations and 

prosecutions, which are then handled by the Division’s prosecutors, 

prosecutors in the United States Attorney Offices, or some combination of the two. The Tax Division has currently approximately 

350 attorneys and 145 administrative professionals handling all of 

this work. I am honored to be able to represent them here today; 

they serve the American people with great skill and dedication. 

Among the Division’s top priorities is civil and criminal employment tax enforcement. Employers have a legal responsibility to collect, account for, and pay over what they withhold from their employee’s wages. Amounts withheld from their employee’s wages represent nearly 70 percent of all revenue collected by the Internal 

Revenue Service. Unfortunately, billions of dollars of employment 

taxes go unpaid when employers fail to comply with their obligations; they are stealing not only from their employees, but also the 

U.S. Treasury, as well as gaining an unfair advantage over their 

honest competitors. Since 2014, the Tax Division has obtained more 

than 70 permanent injunctions against delinquent employers and 

pursued criminal investigations and prosecutions against those 

who willfully fail to comply with their obligations. These cases send 

a clear message that the conduct will not be tolerated. The Department remains committed to addressing this serious issue and leveling the playing field for all employers. 

Addressing offshore tax evasion remains a top priority in the Tax 

Division and the Department. Since 2008, the Department has 

criminally charged more than 130 U.S. taxpayers who used foreign, 

financial accounts to evade their tax and reporting obligations, and 

more than 40 individuals who facilitated that criminal conduct. In 

August 2013, the Department announced the Swiss Bank Program, 

which provided a path for Swiss banks to resolve their potential 

criminal liabilities in the United States. By January 2016, the Department had executed 78 agreements with 80 Swiss banks and financial institutions collecting more than $1.3 billion in penalties. 

The information we received from that program provides substantial insight into the methods used to facilitate offshore tax evasion. 

Along with the IRS, we are reviewing the information to pursue ongoing and new criminal tax investigations and to support civil tax 

enforcement efforts. According to the Internal Revenue Service, it 

has received more than 55,000 voluntary offshore disclosures and 

collected more than $10 billion in taxes, interest, and penalty. 

Another significant area of concern is identity theft and stolen 

identity refund fraud, commonly referred to as SIRF, which involves stealing personal identifying information and filing fictitious 

tax returns to claim refunds. Through March 2017, the Department 

authorized more than 1,400 SIRF investigations involving more 

than 2,400 subjects and authorized more than 1,100 prosecutions 

of more than 2,200 individuals. While the ultimate goal is to stop 

fraudulent refunds at the door, and that ability is improving, the 

Department will continue to work with its law enforcement partners to prosecute these cases and hold those who engage in this 

conduct accountable. I have only touched on a few of the many 

issues being litigated by the Tax Division. Through our criminal 


dlhill on DSK3GLQ082PROD with HEARING
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and civil litigation, we send a clear message: when individuals or 

entities engage in this conduct to avoid or evade their legal, tax obligations, the Tax Division will use all available tools to firmly but 

fairly hold them accountable. 

In conclusion, I am honored to represent the bright, honest, and 

truly dedicated public servants working at the Tax Division, and I 

am happy to answer any questions you may have. 

[Mr. Hubbert’s written statement is available at the Committee 

or on the Committee Repository at: http://docs.house.gov/meetings/JU/JU05/20170608/106076/HHRG-115-JU05-WstateHubbertD-20170608.pdf] 

Mr. FARENTHOLD. Thank you very much. We appreciate your testimony. I know your job is very taxing. 

Mr. White, you are recognized for 5 minutes. Could you turn 

your microphone on and get real close to it? We bought the budget 

mics, so you need to be real close so we can hear you. 

STATEMENT OF CLIFFORD WHITE 

Mr. WHITE. Thank you for the reminder. Good afternoon, Mr. 

Chairman, Ranking Member, and members of the Subcommittee. I 

am grateful for the opportunity, once again, to report to you on the 

activities of the U.S. Trustee Program and to discuss our success 

in achieving our mission to promote the integrity and the efficiency 

of the bankruptcy system for the benefit of all stakeholders, debtors, creditors, and the public. 

As recited in greater detail in my written testimony, we perform 

a wide array of administrative, regulatory, and enforcement activities that are essential to the proper functioning of the bankruptcy 

system. Basic case administration depends upon our appointing 

and overseeing 1,400 private trustees who administer more than 

$10 billion in assets annually; i.e. protecting the rights of all stakeholders relies in significant measure on the neutral United States 

Trustee enforcing the law as the law was written by the Congress; 

and ferreting out fraudulent abuse depends upon the Program 

serving as the vigilant watchdog of the bankruptcy system. Since 

our last oversight hearing, the USTP has continued on a steady 

path of vigorous and balanced enforcement of the Bankruptcy Code. 

Each year we take more than 30,000 formal and informal civil enforcement actions and make about 2,000 criminal referrals to our 

law enforcement partners. 

A majority of these actions curb debtor abuse, but a cornerstone 

of our efforts also has been consumer protection. For example, we 

remain vigilant in policing mortgage servicer and other creditor 

misconduct. Earlier this year, we filed two additional settlements 

with Chase Bank to resolve violations involving improper billing 

and noticing of 16,000 accounts in bankruptcy. As remediation, 

Chase is providing about $2.8 million in payments, refunds, and 

credits to affected homeowners. Several months ago, we also 

launched an initiative to address professional misconduct by consumer debtor lawyers including those who work across district 

lines and advertise on the Internet. Two national bankruptcy firms 

ceased operations as a result of enforcement efforts, and we are litigating and investigating other cases. 


dlhill on DSK3GLQ082PROD with HEARING
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In business bankruptcies, we frequently are the only party to uphold statutory mandates to restrain management professionals and 

other parties. In the Jevic Holding Corporation case, for example, 

we litigated on the side of truck drivers who were laid off the day 

before the company filed bankruptcy. Over our objection, the debtor 

obtained bankruptcy court approval to pay unsecured creditors but 

not the truck drivers whose claims were entitled a higher priority 

under the statute. Although we lost in the lower courts, our position prevailed in the Supreme Court. 

Among our new chapter 11 initiatives, we are reaching out to 

stakeholders in anticipation of developing guidelines governing our 

review of fees charged to the bankruptcy estate by financial professionals including investment bankers. In recent years, the fees of 

these professionals have grown and even exceeded attorneys’ fees 

in some cases. 

Similarly, we are revising extant guidelines governing our review 

of conflicts in the employment of chief restructuring officers. Over 

the past decade, CROs have been hired more frequently, and the 

scope of their employment sometimes provides issues of corporate 

governance and conflicts of interest. Both of these guidelines will 

bring greater transparency and greater predictability in the bankruptcy system. In early May, as was mentioned by Mr. Farenthold, 

the Commonwealth of Puerto Rico filed for debt adjustment under 

Title III of PROMESA. As in municipal bankruptcies, the courts 

and the USTP play a more limited role than under corporate reorganization cases. Under PROMESA, we have two major duties: one, 

to appoint one or more creditor’s committees that represent the interests of unsecured creditors including retirees, and, two, to review and object to professional fees. We are taking steps to perform 

both of these tasks. 

To achieve our mission, we are requesting an appropriation for fiscal year 2018 of $225.5 million. This is essentially the same 

amount appropriated in each of the past 3 years. Over 10 years, 

our budget has increased by less than 2 percent, and our staffing 

level has decreased by 14 percent. We are grateful to this Committee for favorably acting on our proposal to increase quarterly 

fees paid into the U.S. Trustee System Fund. If enacted, it will ensure that appropriations made to the Program will be fully offset 

by revenues. 

We have achieved our mission in a period of scarce resources by 

adopting innovative work processes, allocating field staff to perform 

region-wide and nationwide tasks, and taking other prudent cost 

cutting steps. But more than that, the primary reason we have succeeded is the extraordinary dedication of my colleagues in the U.S. 

Trustee Program. They deserve respect and appreciation for their 

talent, for their service to the public, and for their noteworthy accomplishments. I would be happy to respond to any questions. 

[Mr. White’s written statement is available at the Committee or 

on the Committee Repository at: http://docs.house.gov/meetings/ 

JU/JU05/20170608/106076/HHRG-115-JU05-Wstate-WhiteC20170608.pdf] 

Mr. FARENTHOLD. Thank you very much, Mr. White. As is typical 

when I Chair a committee, since I am here the whole time, I reserve my questions for last out of respect for other members’ time 


dlhill on DSK3GLQ082PROD with HEARING
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and it gives me an opportunity to back clean up so to speak. So, 

with that, we will recognize the gentleman from Florida for his line 

of questioning first. 

Mr. GAETZ. Thank you, Mr. Chairman. Mr. Wood, good to be here 

with a fellow Seminole. I wanted to ask some questions about the 

mechanism by which the Department of Justice enforces environmental laws. When the Department of Justice is bringing an action 

under the Clean Air Act, does it require any sort of pre-clearance 

or permission from the EPA? 

Mr. WOOD. First, thank you. Go ’Noles. We are honored to be 

able to work in the defense of the Nation’s Clean Air laws, and we 

work closely with EPA. Civil matters are not brought as a first 

matter by the Department of Justice. They are first referred to us 

from EPA, and we continue to work in consultation with them including in our Clean Air Act Cases. 

Mr. GAETZ. I also want to ask a question regarding your testimony on border security. You have indicated that land acquisition 

will be an essential component of building a wall on the southern 

border with Mexico. What would be the time frame for that acquisition? 

Mr. WOOD. Thank you very much. So, there are approximately 

2,000 miles, as you know, along the southern border. 5 border Districts. We work closely with the U.S. Attorney’s Offices in those 

districts. We have no specific time frame at this point and I would 

refer you to CBP on specific details related to the border construction. Our responsibility is to make sure that, to the extent that 

land acquisition is required, that it is done in compliance with the 

5th Amendment, which we take very seriously. 

Mr. GAETZ. I also wanted to ask a question. I believe it is, I 

guess, a tax question. I am sorry, a trust question. It was mentioned in testimony that there is misuse of trust laws as it relates 

to marijuana businesses and their access to bankruptcy laws. If 

marijuana was no longer a Schedule 1 drug, but was instead a 

Schedule 3 drug, would those challenges continue to persist? 

Mr. WHITE. Excuse me again for not pressing the microphone. I 

would have to consider that issue further, but as long as something 

is an illegal asset under Federal law, and if it cannot be sold under 

Federal law, then we would take steps to ensure it cannot be administered under the Federal bankruptcy law. 

We recently issued a directive which really restated longstanding 

policy that we have had in the program to move to dismiss or take 

other enforcement actions, which among other things, protects 

trustees who otherwise are not allowed to sell a marijuana asset. 

They cannot break Federal law in order to sell an asset to distribute to creditors in bankruptcy, and we also wanted to ensure 

that we are being made aware of all of the marijuana asset cases 

that have been filed so that we can intervene and take the appropriate action and be consistent in our enforcement. With regard to 

which schedule it is on, I would have to go back, and I would have 

to do some more research with that, but the basic point is, if it is 

illegal under Federal law to sell an asset, to sell a controlled substance, which you cannot do, or to possess a controlled substance, 

then we would take action to ensure that the Federal Bankruptcy 

Code does not provide an avenue to evade those Federal laws. 


dlhill on DSK3GLQ082PROD with HEARING
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Mr. GAETZ. Do we know how much in taxes is paid from marijuana companies in cash? 

Mr. WHITE. I do not know. 

Mr. GAETZ. If we were able to have Federal law consistent with 

State law that allows marijuana transactions to occur, what would 

we anticipate would be the impact on creditors in circumstances 

where there is a failed marijuana business and their outstanding 

obligations? 

Mr. WHITE. I do not know, dollar wise, what the size of the marijuana operations are that have come into bankruptcy, and so forth. 

But our job as watchdog of the bankruptcy system is to ensure that 

the laws as passed by Congress are upheld, and that is why we 

have taken the position through two administrations with regard 

to marijuana assets. They will not be administered through the 

bankruptcy system; trustees will not sell those assets. And yes, in 

some cases, that means that assets that otherwise would be liquidated by a trustee will not be distributed to creditors, but if the 

case is dismissed, it simply puts the parties in the same position 

they would be under State law had there never been a bankruptcy. 

Mr. GAETZ. Thank you for your indulgence, Mr. Chairman. I will 

yield back. 

Mr. FARENTHOLD. Thank you very much, and we will now recognize the Ranking Member of the full Committee, Mr. Conyers, the 

best dressed man on this panel today. 

Mr. CONYERS. Thank you so much for the compliment. Ladies 

and gentlemen, this is an important hearing, and I would like to 

begin by asking whoever talked about the Flint water crisis, or 

wants to talk about it, or deal with the situation. Americans deserve access to safe drinking water. What is the Environment and 

Natural Resources Division doing to ensure that the Flint Water 

Crisis is not repeated in other communities? 

Mr. WOOD. Thank you for the question. It is a very important 

issue. 

Mr. CONYERS. It is. 

Mr. WOOD. I recognize that in recent months the administration 

released $100 million to address issues in Flint, Michigan. I know 

that there are important resources that will go to help. It is a bigger, national issue. Our mission at the ENRD is to ensure that all 

Americans have safe, clean drinking water and clean air, so we enforce the laws to ensure that that is provided for. One of our recent 

cases may be of interest on this point: we worked with the State 

of Mississippi, MDEQ, to prosecute an individual who had intentionally contaminated local drinking water. And so, we take this 

issue seriously nationwide, and we would be glad to talk to you or 

your staff about more details about our specific work in many other 

areas. 

Mr. CONYERS. Do any of the other witnesses have any thoughts 

about what went on in Flint and would like to add to this part of 

our discussion? Okay. 

Let’s look at the issue of identity theft. And whoever is prepared 

for some discussion about this, please join in. Criminals have electronically filed tax returns using the stolen identities and personal 

data of innocent taxpayers to file returns and obtain refunds fraudVerDate Sep 11 2014 04:15 Jan 12, 2018 Jkt 027890 PO 00000 Frm 00019 Fmt 6633 Sfmt 6602 E:\HR\OC\A890.XXX A890

dlhill on DSK3GLQ082PROD with HEARING
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ulently. How substantial or widespread is this problem? What efforts has the Division made to address this issue? 

Mr. HUBBERT. Thank you for raising this issue. It is an important one. I think the Department has said from the outset of this 

problem that we were never going to prosecute our way out of it, 

and, really, the best way to address it is to have the fictitious refunds and the false returns stop at the door. And I think the Internal Revenue Service has reported that their efforts in that area 

have improved. I think the commissioner has stated that from 

2016, there was a 46 percent decline in new victims from 2015, so 

there is some progress being made with the filters in stopping the 

refunds. 

With respect to what the Tax Division is doing, often these are 

more like street crimes than they are financial crimes, and so we 

have pushed out the authority to handle these cases to the U.S. Attorney’s Office to the greatest extent we can. We have a cadre within the Tax Division that focus on these cases, so that when there 

is an unusual case or a matter that is unusually complex, we can 

provide resources to the U.S. Attorney’s Office. Where there is a 

spike in a particular scam in an area, we have attorneys that we 

can send out there to help in the area, in that particular district, 

so we have tried to do what we can to make these cases move as 

efficiently as we can and as effectively. The sentences that the Department has been obtaining are significant, and we hope that 

those who would think about those crimes are being deterred from 

continuing. 

Mr. CONYERS. Thanks you, Mr. Hubbert. Let me turn now from 

my last question to Mr. Clifford White III, the Director of the 

Trustee Program. With respect to the $60 fee that a Chapter 7 

trustee receives from administering a no asset case you note that 

the United States Trustee Program supports increasing this fee. 

Now, it is known that the Chapter 7 trustee administers a bankruptcy case primarily for the benefit of the creditors with respect 

to investigating any fraud and the availability of any assets. Accordingly, should the creditors pay for this fee and this fee increase 

for Chapter 7 trustees? Director White? 

Mr. WHITE. Well, Mr. Conyers, our position on that has been, as 

a general proposition, that the no asset fee, which is what the $60 

is—it is provided in every case, as you said—has not been increased for more than 20 years, and as a general proposition, ought 

to be increased. How that can be done in a way that is fair to all 

stakeholders has been a debate that has been had in Congress for 

some period of time, so we are not endorsing any particular proposal. 

I just make one additional point, however, Mr. Conyers, and that 

is that with regard to most of the trustees—when you say most of 

the trustee’s work is liquidating assets and so forth—in fact, they 

are dealing with thousands and thousands of cases—95 percent of 

all of the cases that they are assigned, in fact, have no assets. 

There will be no distribution, but it takes some fair degree of review of the papers filed in the case before they can come to that 

conclusion. So, for so many of these cases that are no assets and 

that no money goes to creditors at all, that is primarily where the 


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rub comes with regard to the economics of not having changed that 

$60 fee for more than 20 years. 

Mr. CONYERS. Thank you very much. My time has expired, and 

I may send questions to some of you to be added to our record 

today, and I yield back and thank the Chairman. 

Mr. FARENTHOLD. Thank you very much, Mr. Ranking Member. 

Since I am the one left on our side, I will go ahead and do a few 

questions myself. I will start with Director White. There has been 

substantial press coverage about fraud and asbestos litigation and 

fraudulent claims made against the Asbestos Bankruptcy Trust. 

One bankruptcy judge cited a ‘‘startling pattern of misrepresentation,’’ and that is a quote by trial attorneys seeking payment from 

these trust sand from companies in bankruptcy. A former trial lawyer turned whistle-blower even stated that asbestos trusts are platforms for institutionalized fraud. 

Does the DOJ agree there is enough controversy related to fraud 

against bankruptcy trust to warrant a review by the DOJ? 

Mr. WHITE. I cannot speak for all of the Justice Department, Mr. 

Farenthold, so let me just speak for the U.S. Trustee Program. It 

is a fact that there is a lack of transparency in corporate governance in post-confirmation trusts in general, and I have testified on 

that in the past as well. It was recognized, in fact, by a panel of 

bankruptcy experts assembled by the American Bankruptcy Institute as a commission to study the reform of Chapter 11. As a 

watchdog of the system, when you look at post-confirmation trusts, 

and asbestos trusts in particular, it is very clear there is no independent policeman. There is no watchdog for that; neither the court 

nor the U.S. Trustee Program have significant jurisdiction postconfirmation, so when you do not have an independent review of 

any kind of an entity in bankruptcy, including the asbestos trust, 

then you run certain risks for abuse. 

Mr. FARENTHOLD. I appreciate it. I have got a lot of questions. 

I do not mean to cut you short, because this is a topic of interest 

to me, but I do have several questions for Mr. Wood on the Sue and 

Settle Program. 

As you know, under a process called sue and settle, agencies like 

the EPA and Department of Interior enter into court appointed 

agreements with outside environmental groups. These agreements 

mandate agency actions, reorganize agency priorities and funding, 

and bypass the laws that allow a public to provide a meaningful 

impact. What do you think the implications of sue and settle agreements given that agencies often end up diverting their focus from 

congressional priorities are? 

Mr. WOOD. Thank you. That is a very important question and 

important issue. First, let me say our focus in our Division is on 

defending the lawful regulations and actions of our client agencies. 

Under my watch, there will be no collusion involving any sue and 

settle actions whatsoever. And with respect to the longstanding policy of the Department of Justice, we will abide by Attorney General 

Meese’s memorandum. In fact, whenever settlement agreements 

are presented to my desk, we will look closely at that to make sure 

it abides by those requirements. 

Mr. FARENTHOLD. Now, the other issue with sue and settle agreements is that following an agreement, the taxpayers’ hard-earned 


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dollars usually goes to paying for the environmental groups’ attorney fees. These expenses can hurtle into hundreds of thousands of 

dollars per settlement. Do you think we will be seeing fewer sue 

and settle cases if the environmental groups filing them could not 

recover attorney fees from the government? 

Mr. WOOD. Well, I cannot comment on any specific legislative 

proposal, but I can say that it is important to make sure that any 

payment in any case is based soundly in law. The statutes provide 

that attorney’s fees are not necessarily owed in every case, and in 

fact, attorney’s fees are not owed if the position of the agency is 

substantially justified under the statute. However, that may not 

have been enforced as closely as we might have hoped it would 

have been in the past. But, certainly, looking at that issue is an 

important priority, I think, for Congress. 

Mr. FARENTHOLD. On May 25, 2017, Chairman Goodlatte wrote 

a letter to the Attorney General alerting him to the potential opportunity for the DOJ to recover $380 million in taxpayer dollars 

that the Obama administration improperly handed to their political 

allies. This is real money, but the necessary motions would have 

to be filed quickly. Does anybody on the panel know if a decision 

has been made on this issue yet? 

Mr. READLER. Thank you, Mr. Chairman. I can address that 

question. First off, we appreciate Chairman Goodlatte’s letter, and 

Chairman Goodlatte, I think, referenced in his opening remarks, 

there was a policy issued yesterday by the Attorney General that 

addresses the topic of payments to third parties, and it is a very 

important policy that the Department will adhere to. It emphasizes 

that victims in any given case will be compensated according with 

court order or settlement. But, otherwise, any additional dollars 

will be returned to the public fisc and not paid out to third parties. 

Now with respect to the Keepseagle case specifically, pursuant to 

longstanding Department practice, we do not comment on pending 

cases, but we are certainly aware of the request from the Chairman, and we are reviewing the issue. 

Mr. FARENTHOLD. One final question on environment, the Environment Division is defending a Federal land grab relating to the 

Red River. The Bureau of Land Management has deemed that the 

Red Riverbed extends more than a mile into dry land in direct contradiction to the Supreme Court’s ruling that said the boundaries 

follow the course of the stream. Are you all evaluating whether this 

legal action serves the public interest of justice, and if the Bureau 

of Land Management wishes to compensate Native American tribes 

with land, would it not be better to take the case to Congress rather than private citizens, Mr. Wood? 

Mr. WOOD. Congressman, thank you for that question. I am familiar with the case, the Aderholt v. BLM case. I cannot speak to 

specifics about ongoing litigation that our Division is handling, but 

I can assure you that we are taking a close look at the matter. 

Mr. FARENTHOLD. I see that my time has expired. Now I recognized the gentleman from Georgia, Mr. Johnson. 

Mr. JOHNSON of Georgia. Thank you, Mr. Chairman. Mr. 

Readler, the Trump administration has reportedly issued an order 

instructing agencies to refuse to respond to Democratic Congressional inquiries or information requests. Is that correct? 


dlhill on DSK3GLQ082PROD with HEARING
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Mr. READLER. Well, thank you for the question. I think that the 

terms of any order would speak for itself in terms of what the 

President has issued. Our policy, at the Department, is certainly, 

with respect to letters, that are issued from Congress—and I see 

those pretty regularly—that we do attempt to respond to all letters 

issued by Congress. Otherwise, with respect to oversight responsibilities, we certainly comply with requests from the chairman, 

and then take other matters under advisement. 

Mr. JOHNSON of Georgia. So you are saying that the Civil Division of the Justice Department will be responding to Democratic 

ranking members’ of Committees, Subcommittees, requests for information including documents? 

Mr. READLER. Well, no. Those are issues that we take under advisement at the Department—— 

Mr. JOHNSON of Georgia. Those would be covered under the order 

issued by the Trump administration not to respond. 

Mr. READLER. Well, the Department of Justice, of course, sets the 

legal position of the United States, and we will take all of those 

requests under advisement, and we will consider those against the 

backdrop of governmental law and the principles articulated by the 

administration. 

Mr. JOHNSON of Georgia. Will you respond to questions for the 

record from Democratic members of this Subcommittee as part of 

the record for this hearing? 

Mr. READLER. I am not sure I understand the question. Yes, I am 

certainly here to address the questions I can address. But, I obviously cannot comment on pending cases or pending requests. 

Mr. JOHNSON of Georgia. Earlier today, former FBI Director, 

James Comey, testified before the Senate Intelligence Committee 

that President Trump demanded his loyalty, telling him, ‘‘I need 

loyalty. I expect loyalty.’’ Have you pledged your loyalty to President Trump through communications or otherwise? 

Mr. READLER. Like the other members of the Department, we 

have all sworn allegiance to the Constitution to uphold the Constitution, and that is our guiding principle in terms of cases in addition to interpreting and applying the law and the facts as they 

take us in any specific case. 

Mr. JOHNSON of Georgia. So you have not been asked to swear 

your allegiance to President Trump? 

Mr. READLER. Again, I am not—no. The answer is we uphold the 

Constitution. 

Mr. JOHNSON of Georgia. Well, thank you. The Civil Division is 

responsible for all civil, immigration litigation including the Muslim Travel Ban. Is that correct? 

Mr. READLER. The Civil Division was chiefly responsible for defending the challenges to the executive orders given by the President including the executive orders that address travel issues. And 

I would really like to commend my colleagues, especially the career 

colleagues, at the Department of Justice who worked extremely 

hard in defending these cases under challenging circumstances, 

given the pace of those cases and the number of cases that have 

been filed. Those specific cases, of course, now are all pending litigation; there are two matters before the Supreme Court, and I, of 

course, cannot comment on any specific pending case. 


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Mr. JOHNSON of Georgia. Well, gosh, I was going to find out 

whether or not you agreed that the orders that were issued by the 

President are indeed travel bans. 

Mr. READLER. Well, the—— 

Mr. JOHNSON of Georgia. Is that true? 

Mr. READLER. The Department has taken a very consistent position are lawful exercises to the President’s executive and constitutional powers. 

Mr. JOHNSON of Georgia. You do not want to go near the travel 

ban language? 

Mr. READLER. Well, the executive order, I think, speaks for itself. 

Mr. JOHNSON of Georgia. Has the President’s manifestations on 

Twitter about the orders being Muslim or actually travel bans, has 

that hurt the Department’s ability to prosecute its appeal? 

Mr. READLER. Well, again, I cannot comment on pending cases. 

We have two cases pending in the Supreme Court where we have 

vigorously defended the executive orders as lawful exercises of the 

President’s constitutional and statutory authority, including authority granted the President by this body and a host of immigration laws. 

Mr. JOHNSON of Georgia. Thank you, Mr. Wood. President Trump 

recently announced that the United States will withdraw from the 

Paris Agreement, stating that the United States would be exposed 

to ‘‘massive legal liability if we stay in.’’ Leading environmental 

law experts strongly disagree with this statement, however. UCLA 

law professor James Salzman notes that President Trump’s statement is ‘‘not true’’ because there is ‘‘no liability mechanism under 

the Paris Agreement.’’ While Columbia law professor, Michael 

Berger, adds that the United States may be more exposed to lawsuits as a result to withdrawing from the Paris Agreement. Do you, 

Mr. Wood, agree with President Trump? 

Mr. WOOD. Thank you, Congressman. We have a very significant 

role in the Division in defending the administration’s actions including its actions pursuant to its America First Energy Policy, and 

we are actually engaged in those cases. Any questions with respect 

to the International Paris Accord, I would refer you to the State 

Department who is primarily responsible for those issues, but 

thank you for the question. 

Mr. JOHNSON of Georgia. Well, let me ask you this. Are you concerned that withdrawing from the agreement may result in increased liability for inaction as President Trump has warned? 

Mr. WOOD. Well, thank you for the question. I think the President’s statement stands for itself, and we will continue to vigorously defend all actions of the client agencies who were honored to 

serve to the extent those come up in court. Thank you. 

Mr. JOHNSON of Georgia. President Trump has referred to the 

international scientific consensus that climate change is real and 

caused by human activity as an ‘‘expensive hoax’’ that was created 

by and for the Chinese, in order to make U.S. manufacturing noncompetitive. Is that a statement that you agree with? 

Mr. WOOD. Well, I would refer you to the EPA, for the administration’s current position on climate change. Our responsibility at 

the Environment Division is to defend the lawful actions of our client agencies. That includes those actions in the regulatory context 


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under the Clean Air Act, as well as the enforcement of the Clean 

Air laws, which we continue to vigorously do. 

Mr. JOHNSON of Georgia. Well, I take it you are not going to 

share your personal views on these issues. 

Mr. WOOD. Thank you, sir. My personal views are not really relevant to my responsibility to enforce the law. 

Mr. JOHNSON of Georgia. Well, you are saying you are going to 

determine that my questions are not relevant, and so therefore, not 

answer them. Is that something that the administration has instructed you all to do? 

Mr. FARENTHOLD. The gentleman’s time has expired. We will let 

Mr. Wood answer the question, and then we will move on. 

Mr. WOOD. Thank you, Congressman. I respect you and your 

question. I think it is an important issue. I do not diminish the 

issue whatsoever. I just would simply say, with respect to the administration’s position, that is put forth by EPA and others. My responsibility as the head of the Environment Division at DOJ is to 

enforce the laws including the Clean Air Act and to defend the lawful actions of our client agencies. But I do respect you and the position that others have on that issue. Thank you. 

Mr. JOHNSON of Georgia. Thank you, sir. 

Mr. FARENTHOLD. Thank you, Mr. Johnson. We will now recognize the second best dressed man on the panel today, the gentleman from Texas, Mr. Ratcliffe. 

Mr. RATCLIFFE. Thank you, Mr. Chairman. I thank the witnesses 

for being here today. I think these are really important issues that 

we are talking about, because I and the vast majority of the constituents that I represent are of the opinion that there have been 

a number of instances over the last 8 years where the prior administration, the Obama administration, appeared to put politics above 

the rule of law. There were a variety of cases where we saw the 

Obama administration appear, in fact, to expressively subvert the 

will and the intent of Congress and the American people. 

One of those instances that comes to mind was Operation Choke 

Point where we saw that administration target banks that did 

business with certain disfavored retailers like pay day lenders and 

payment processors and disfavored industries like gun sellers and 

coal producers. More broadly, we also saw the targeting of conservative groups by the IRS merely because of their political beliefs. 

Now, those are just a few instances, but I will tell you that I am 

optimistic going forward that we have an opportunity to turn the 

page and restore accountability and put the rule of law back above 

politics. I say that because we saw an example of it just this week 

when the Trump administration announced its decision to halt 

these settlement slush funds that is to prohibit the practice of the 

Obama administration Department of Justice of systematically subverting Congress’s spending power by requiring settling parties to 

donate money to various activist groups. 

Mr. Wood, I want to start with you because you stated in your 

written testimony we all know that ENRD plays an important role 

in enforcing our Nation’s environmental laws, the Clean Water Act, 

the Clean Air Act. Knowing that these laws and corresponding regulations could hurt jobs, for instance, in mining and manufacturing, Congress specifically included in Section 321A of the Clean 


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Air Act a requirement that the EPA conduct continuing evaluations 

of potential loss or shifts of employment that could result. I am 

sure that you are aware, and maybe some of my colleagues have 

already covered this, but there are cases pending in the Fourth Circuit where the Murray Energy Corporation sued the EPA under 

the Obama administration, asserting that the EPA’s refusal to complete that job impact analysis irreparably harmed Murray Energy. 

The lower court agreed with Murray, noting that it would be an 

abuse of discretion for the EPA to refuse to conduct that evaluation 

for the impact that it might have on regulations for the coal industry. 

In recent arguments before the Fourth Circuit, I understand that 

the Department of Justice focused largely on procedural issues arguing that Murray lacks standing in urging that the case be dismissed, but the DOJ also recently filed a compliance plan with the 

District court, which indicated how the EPA would comply with the 

law. And I will tell you I was heartened when I saw the compliance 

plan, because at least in that sense it represented an effort on the 

part of this administration that was not evident under the prior administration, particularly because this effort, to me, seems consistent with the statements made by Administrator Pruitt and Attorney General Sessions on this issue as well. 

So, my question to you is this: if the Fourth Circuit agrees with 

the Department of Justice argument that Murray does not have 

standing, is the administration still committed to conducting the 

job’s impact analysis requirement under the Clean Air Act? 

Mr. WOOD. Thank you, Congressman. I am aware of the letter. 

I appreciate receiving the letter. As has been mentioned a few 

times on this panel today, we cannot speak to specific issues in 

pending litigation. I am aware of the filing that you mentioned, 

which was required under the District court’s order, and I would 

refer any questions specifically related to EPA’s plans to the EPA. 

I am proud of the work our lawyers are doing in all of our full 

range of cases. We take a close look at the law and the facts to 

make sure every position we are taking is well-grounded, and we 

will continue to do that. And I will commit to keep the Committee 

informed as to any developments that we can share with you about 

that case. 

Mr. RATCLIFFE. Well, I appreciate the comments regarding pending litigation, but quite frankly, we would rather this not be pending litigation, because we would hope that you will be willing to 

comply with the job impact analysis required by law, but let me 

move on then. 321A of the Clean Air Act uses the term ‘‘shall,’’ yet 

this language is being interpreted as a ‘‘discretionary duty.’’ Can 

you answer for me whether there is additional language that, as 

a member of Congress, we could include to clarify that this job loss 

analysis is required and is not a discretionary duty? 

Mr. WOOD. Thank you, Congressman, for that comment. I cannot 

comment on specifics related to the pending case, as we have said, 

but I welcome that input, and we will be sure to keep this Committee informed on the case as it progresses. 

Mr. RATCLIFFE. Then I will yield back, Mr. Chairman. 

Mr. FARENTHOLD. Thank you, Mr. Ratcliffe. We will now recognize the gentleman from Illinois for 5 minutes. 


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Mr. SCHNEIDER. Thank you, Mr. Chairman, and thank you to all 

of you for being here today, and more importantly, thanks for the 

work you, and I am going to extend it to the many people working 

in your Department’s do, for our Nation every day. 

Mr. Wood, I would like to start with you. The materials that you 

submitted to the Subcommittee for this afternoon’s hearing state 

that the mission includes ‘‘promoting national security in military 

preparedness.’’ In 2015, the Department of Defense released a report on the national security implications of climate change, finding 

that climate change will aggravate problems, such as poverty, social tension, environmental degradation, ineffectual leadership, and 

a weak political institution that threatens stability in a number of 

countries. During its confirmation hearing, Secretary of Defense, 

James Mattes, similarly observed that climate change is a challenge that requires a broader, whole of government response, and 

he went on to say that he would ensure that the Department of Defense plays its appropriate role within such a response by addressing national security aspects. 

So, my questions for you are what is your take of the assessments of the Department of Defense under both now the Obama 

and Trump administrations that climate change is a national security threat, and how will that or should that affect the work that 

you are doing in your Department? 

Mr. WOOD. Thank you, Congressman. As I mentioned earlier 

with respect to a similar question, our role at the Environment and 

Natural Resources Division is to defend the lawful actions of our 

client agencies and to enforce the laws, including the Clean Air 

Act, which we are continuing to do. With respect to any issues related to the administration’s position on international issues or on 

climate change, I refer you to the State Department and to the 

EPA. 

Mr. SCHNEIDER. But if I can, to the extent that the law and regulations are requiring actions of our government and pursuing, there 

is a difference perhaps of positions from the White House and the 

Department of Defense, how will that affect what you are trying to 

do? 

Mr. WOOD. So our responsibility is to look at the law, look at the 

facts, look at the actions that our client agencies take in light of 

what the statutes that Congress has passed would require, and 

where the actions of the agencies are lawful and appropriate, to defend those vigorously in court, and that is what we are doing. I 

would note that the current administration, with the President’s directive on an America First Energy Policy, is taking a fresh look, 

doing a review, or reconsideration in some cases, of previous regulations. Those kinds of reviews happen in the beginnings of virtually every administration. And the work of our lawyers right now 

includes assisting with those efforts to ensure that the agencies 

have the appropriate time to do a thoughtful review consistent with 

the Administrative Procedures Act and to ensure that they, to the 

extent that they make changes in positions, that those are vigorously defended in court, and we are honored to be able to work 

with our client agencies on those endeavors. 

Mr. SCHNEIDER. Thank you, and I will just say to the extent that 

the laws were drafted with the intention of ensuring the sustainVerDate Sep 11 2014 04:15 Jan 12, 2018 Jkt 027890 PO 00000 Frm 00027 Fmt 6633 Sfmt 6602 E:\HR\OC\A890.XXX A890

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ability of our environment and to ensure national security, I look 

forward to you enforcing them or defending them as best as possible. Mr. Readler, if I can turn to you. You asked for a budgeting 

increase to add more lawyers. What would those lawyers be doing? 

Mr. READLER. We have a request for 20 additional lawyers in our 

Office of Immigration litigation. That is the office that handles both 

district court and appellate court that help to enforce the immigration laws of the United States working with DHS and other Federal partners. 

Mr. SCHNEIDER. Okay. Recent reports have talked about the administration unable to fill senior roles, and 93 U.S. attorney vacancies nationwide, are you having a challenge bringing on lawyers? 

Do you see it being difficult to bringing lawyers on, those additional lawyers you are talking about? 

Mr. READLER. I am not sure which specific lawyers you are referring to. U.S. attorneys are not hired through the Civil Division, so 

that would not be something we have oversight over, but we have 

some new lawyers joining us in the next few weeks. 

Mr. SCHNEIDER. And as far as recruiting, has it been a challenge 

finding lawyers willing to come to the administration in the current 

environment? 

Mr. READLER. I am not aware of challenges that we have for recruiting. As the political leadership, we are not directly involved 

with recruiting. There are a lot of rules with respect to hiring that 

we are expected to adhere to, but my general sense is that when 

their openings, there are many lawyers who are interested in working at the Justice Department and, specifically, in the Civil Division. 

Mr. SCHNEIDER. Great, and as my time is about to expire, I will 

yield back. 

Mr. FARENTHOLD. Thank you very much, and if the Ranking 

Member will indulge me for two quick questions, I wanted to follow 

up. Mr. Readler, you said you requested additional funding for lawyers to handle immigration cases. I assume you need more judges 

because there is a backlog. Or, I am sorry, more lawyers because 

there is a backlog. Even with more lawyers, is there not backlog 

also for shortage of judges to adjudicate these issues? 

Mr. READLER. Yes, well, with respect to the Civil Division specifically, our lawyers handle the immigration cases really at the end 

of that process when cases are appealed from the Order of Immigration appeals to the Federal courts of appeals. But on the front 

end of that process with the Executive Office of Immigration Review, my understanding is that there is some backlog there, and 

that there have been separate requests to add judges to expedite 

that process or move those cases ahead, which would then, on the 

backend, create additional work for the Civil Division to handle appeals. 

Mr. FARENTHOLD. Is your shortage of lawyers creating delays in 

adjudicating these cases as well where you are having to ask for 

continuances and things because of lawyer workload? 

Mr. READLER. I think currently we are doing a pretty good job 

of staying on top of those cases. We have about, on average, 7,000 

appeals per year, but our capacity would increase, and we would 


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be able to handle additional cases obviously with additional funding. 

Mr. FARENTHOLD. Thank you. I appreciate your indulgence. We 

will now recognize gentlelady from Washington for her line of questioning. 

Ms. JAYAPAL. Thank you so much, Mr. Chairman. I am sorry I 

missed some of this hearing, but I did read the testimony, and I 

appreciate you all being here. I wanted to focus a little bit of attention on environmental regulation and specifically direct some questions to you, Mr. Wood. The Environment and Natural Resource 

Division is responsible for litigating environmental and natural resource cases on behalf of the United States including those that 

arise under the Clean Air Act, the Clean Water Act, and other environmental protective statutes, but I wanted to ask you, prior to 

your current position, you worked as a lobbyist for energy companies while also advising the Trump campaign. Is that correct? 

Mr. WOOD. Thank you for your questions. I am very proud of the 

work that I have done as a private practice attorney, and I was, 

yes, a volunteer, as many lawyers do, for campaigns across the 

country. I exercised my First Amendment and constitutional right 

to volunteer for a campaign. 

Ms. JAYAPAL. Absolutely. But you were a lobbyist for energy companies as well, is that correct? 

Mr. WOOD. I was a registered lobbyist, yes. Thank you. 

Ms. JAYAPAL. Thank you. And in that capacity, you represented 

Southern Company, a utility company that generates a third of its 

power from coal, is that correct? 

Mr. WOOD. I am not sure of the specific reference that you make 

there to the statistic, but I did work on behalf of Southern Company and a variety of other clients. 

Ms. JAYAPAL. And in 2016, you referred to the Clean Power Plan 

and other environmental protections as, these are your words, ‘‘contentious environmental rules that were the disappointment of 

many in the regulated community.’’ Is that accurate? 

Mr. WOOD. I am not sure where that quote comes from, but it 

sounds like something I may have said. 

Ms. JAYAPAL. And do you believe that the purpose of environmental protections is to please regulated entities? 

Mr. WOOD. No, and I do not think that is the context in how I 

would have meant that quote. And clearly, in the capacity as the 

Assistant Attorney General, my constitutional and statutory duty 

is to vigorously enforce the laws. And I think, as my written testimony and my statement here today shows, we are actively and vigorously doing that across a full spectrum of our statutes, including 

the Clean Air Act and Clean Water Act and every other environmental and natural resources law. We have over 6,000 cases, matters, and appeals that are being well-handled by our team of over 

400 career attorneys, and it has been an honor to work with them 

on that. 

Ms. JAYAPAL. That is good to hear, because it does concern some 

of us that the person that is the head of the EPA has actually sued 

the agency multiple times around these environmental regulations. 

So, should environmental projects that are contentious, using your 


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word, solely because they are unsupported by a regulated agency 

still be enforced? I just wanted to clarify that. 

Mr. WOOD. Clearly, we enforce every lawful regulation and statute on the books. And we take that obligation very seriously. I do 

as well, and we will continue to do so in this administration. 

Ms. JAYAPAL. Mr. Wood, I respect very much your work, and so 

please do not take this the wrong way, but there are some who 

have suggested that the appointment of a former coal lobbyist as 

the acting Assistant Attorney General of the Environment and Natural Resources Division is a form of political patronage by the 

Trump administration in return for millions of dollars in campaign 

contributions by coal executives and companies to the Trump campaign. And I wanted to give you chance to respond to that and tell 

us what you might say in response to many of my constituents who 

are writing to me about that specific issue. 

Mr. WOOD. Thank you. I am very proud of the work I did in the 

private sector as an attorney representing great clients and had the 

opportunity to work on behalf of those clients, and my work is a 

matter of public record with respect to the filings that I have made, 

and those would reflect that much of my work was not in the area 

of coal, but more so in the area of nuclear. The only other thing 

that I would mention in that regard is that upon my arrival at the 

Department of Justice, I worked with the ethics officials there and 

was provided an ethics opinion regarding my recusal obligations. 

As I mentioned, we have 6,000 matters, cases, or appeals; a very 

small number of those involve issues for which I would have had 

some involvement previously, and I am recused from those. And I 

have abided by that ethics letter and will continue to do so, but 

thank you for your question. 

Ms. JAYAPAL. Thank you. I appreciate that. I have just a few 

minutes left, so let me ask one more question. Under the Obama 

administration, the ENRD prosecuted several coal companies for 

violating environmental laws. For example, in 2015, Duke Energy 

pleaded guilty to nine criminal violations of the Clean Water Act 

for a massive coal ash spill. Your predecessor, John Cruden, stated 

that this massive spill, and these are his words, ‘‘was a crime, and 

it was the result of repeated failures by Duke Energy subsidiaries 

to exercise control over coal ash facilities.’’ Will you and the ENRD 

prosecute similar violations of the Clean Water Act and other environmental laws so that we can be assured that communities in 

rural areas, urban areas, across the country, can be protected 

against things like coal ash spills? 

Mr. WOOD. Congressman, thank you for that question. I cannot 

speak to any specific case, but you have my assurance that the 

ENRD continues to vigorously enforce the Clean Water and Clean 

Air laws of the United States. We will continue to do so, and I 

think my written testimony accounts for several recent examples in 

just the past few months where we are doing exactly that. But 

thank you for your question. 

Ms. JAYAPAL. I appreciate that, and I tell you that communities 

across the country including in places like Flint, Michigan and 

rural communities that are suffering with toxic, toxic situations 

and death in many of their communities, will be counting on you 

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tremely seriously and prosecute violations of the law. Thank you. 

I yield back. 

Mr. FARENTHOLD. Thank you very much. The House has votes 

scheduled for 4:00. That is an hour and a half from now. We are 

now an hour and a half into this two-panel hearing, so we are kind 

of at the halfway point where we probably need to bring our second 

panel in. As much as I would like to do a second round of questioning with our distinguished panel, I do not think time will permit it. That being said, I would request that our witnesses entertain questions for the record that we will, most likely, submit to 

you, and if anybody has questions for the record, if you could get 

them to the staff within the next 5 legislative days. We will pass 

those along to you, and if would you all agree to answer those questions? And we got affirmative from everybody on the panel. 

So, with that being said, that will conclude our first panel. I 

want to thank you all for being here and for your testimony, and 

you are excused. We will now call the second panel for today’s 

hearing, and we will give the staff time to set up, give everyone 

time to get settled, give me time to freshen up, and we will get 

going again here in about 4 minutes. 

[Recess.] 

Mr. FARENTHOLD. The Committee will come back to order. Have 

to bang here. I will begin by swearing in our second panel of witnesses before introducing them. If you all will please rise. 

Do you swear that the testimony that you are about to give before this Committee is the truth, the whole truth, and nothing but 

the truth, so help you God? 

Let the record reflect that all the witnesses answered in the affirmative, and you all may be seated. Thank you very much. We 

have got another great panel of witnesses as we continue our oversight in this Subcommittee. 

We will start with Mr. Hans von Spakovsky. I am going to call 

you Hans. Even though I have met you several times, but your 

name is a mouthful even for somebody who has a radio background 

like I do. Hans is a senior fellow in the Center for Legal and Judicial Studies at the Heritage Foundation. He was a commissioner 

for the Federal Election Commission for 2 years, and prior to that, 

he was a career counsel to the assistant attorney general for Civil 

Rights at the U.S. Department of Justice. He is a former, in-house 

counsel and also served in private practice. He is a 1981 graduate 

from MIT in a 1984 graduate from the Vanderbilt University 

School of Law where my daughter is now attending. Go ‘Dores. He 

published many articles, studies, and reports for the Heritage 

Foundation, National Review, Fox News, Wall Street Journal, and 

numerous other publications and is a co-author on two books on 

election integrity and the U.S. Justice Department. Welcome, sir. 

Ms. Cleta Mitchell is a partner and political law attorney in the 

Washington, D.C. office of Foley and Lardner, LLP, and a member 

of the firm’s political law practice. Mrs. Mitchell practices before 

the Federal Elections Commissions, the Ethics Committee of the 

U.S. House and Senate, and similar State and local enforcement 

bodies and agencies and represents numerous candidates, campaigns, and members of Congress, as well as State and national political party committees. Prior to joining Foley and Lardner, Ms. 


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Mitchell served as a member of the Oklahoma House of Representatives where she chaired the Appropriations and Budget Committee. She also served on the Executive Committee on the National Conference of State Legislators. As a University Texas graduate, it pains me to tell you she earned her bachelor’s degree with 

honors and J.D. from the University of Oklahoma. 

Andrew Grossman is a partner in the Washington, D.C. office of 

the law firm of Baker and Hostetler where he practices appellate 

and constitutional law. He is also an adjunct scholar of the Cato 

Institute, a think tank, and writes frequently on the law and legal 

policy. He was previously a fellow in the Meese Center for Legal 

and Judicial Studies at the Heritage Foundation. Mr. Grossman 

earned his bachelor’s degree from Dartmouth College and his master’s degree in public administration from the University of Pennsylvania and a J.D. from George Mason University School of Law, 

where he graduated magna cum laude. Congratulations and welcome. 

Mr. Robert Weissman is the president of Public Citizen, the 

Washington, D.C. public interest advocacy organization. He is a 

Chair of the Coalition for Sensible Safeguards, an alliance of more 

than 100 consumer small business, labor, scientific, research, faith, 

community, health, and environmental organizations united to protect health, safety, consumer, and environmental standards. Mr. 

Weissman has published extensively on issues related to corporate 

accountability. He is a graduate of Harvard College and the Harvard Law School. 

Each of the witnesses’ statements, as with the first panel, will 

be entered into with record in its entirety. I ask all to summarize 

your testimony to fall within the 5 minutes that will be indicated 

on the clock in front of you. When it goes yellow, just like when 

you are driving, you speed up. No. You have just got 1 minute left 

to conclude your testimony. When it is red, please wrap it up as 

quickly as possible. So, Hans, we will start with you. 

STATEMENTS OF HANS VON SPAKOVSKY, MANAGER OF ELECTION LAW REFORM INITIATIVE, SENIOR LEGAL FELLOW, 

HERITAGE FOUNDATION; CLETA MITCHELL, PARTNER, 

FOLEY AND LARDNER LLP; ANDREW GROSSMAN, PARTNER, 

BAKER & HOSTETLER LLP; AND ROBERT WEISSMAN, PRESIDENT, PUBLIC CITIZEN 

STATEMENT OF HANS VON SPAKOVSKY 

Mr. VON SPAKOVSKY. Thank you, Mr. Chairman. The duty of the 

Civil Division is to defend the government, including its client 

agencies. Now, rule 1.3 of the Rules of Professional Conduct of lawyers in the District of Columbia also requires a lawyer to ‘‘represent a client zealously and diligently within the bounds of the 

law.’’ Most importantly, lawyers may not intentionally ‘‘prejudice or 

damage a client during the course of a professional relationship.’’ 

Thus, Civil Division lawyers have a professional obligation and an 

ethical duty to defend the actions of Federal agencies unless there 

are absolutely no circumstances, under which they can be defended, a situation that occurs only rarely. 


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Yet, in a recent case involving the U.S. Election Assistance Commission, Division lawyers violated that professional duty. In a lawsuit involving the Federal Voter Registration Form, Civil Division 

lawyers took the side of the plaintiffs and refused to defend the 

agency. EAC Chair Christy McCormick sent a letter to former Attorney General Loretta Lynch and Judge Richard Leon, who was 

assigned to the case, expressing her ‘‘grave concerns regarding the 

potential conflict of interest and failure of the Department of Justice to provide’’ the EAC with proper representation. 

The Civil Division’s erroneous claim that it could not defend the 

EAC were belied by the fact that Judge Leon ruled in favor of the 

EAC in his February 23, 2016 order, denying a requested temporary restraining order. In his order, Judge Leon commented on 

the misbehavior of DOJ, noting that the Division had taken ‘‘the 

extraordinary step of consenting to plaintiff’s request, not for a 

TRO, but for a preliminary injunction.’’ He ruled for the EAC despite DOJ’s failure to defend the Commission. In fact, at the hearing, which I attended, Judge Leon said that he had never seen such 

behavior by a government lawyer in his entire experience as a lawyer or a judge. 

There was also evidence in the case of a serious conflict of interest because of lawyers from the Civil Rights Division taking over 

the decision making regarding the main issue in the case, thus 

usurping the policymaking function of an independent, bipartisan 

Commission. The Civil Division was apparently so worried about 

this conflict becoming public that it asked for the deposition of 

Commissioner McCormick to be sealed. None of the lawyers involved in this violation of their professional obligations have been 

investigated or disciplined in any way. 

Second issue and this has been mentioned by the Chairman. One 

of the little-known costs for taxpayers is the Judgment Fund 

housed at the U.S. Treasury Department, a permanent, indefinite 

appropriation. This is used to aid judgments against the U.S. when 

it loses lawsuits, but it is also used to pay amounts negotiated by 

the Department of Justice, such as the Civil Division and the Environment Division to settle claims. 

Now, the Treasury Department does send a yearly report to Congress, and it maintains a webpage, but the information provided is 

so limited that it is not sufficient to identify what the government 

did wrong and who is benefitting from these government payments. 

No copy of the complaint judgment against the government or settlement agreement is made available. All of this information could 

be easily supplied by the Justice Department’s various Divisions to 

the Treasury Department and made available for the public and 

members of Congress. The public deserve to know all the details 

of this, and this is the kind of transparency that we need. 

A third issue, an important issue in the International Refugee 

Assistance Project v. Trump case being handled by the Civil Division, is the issuance of injunctions by Federal district courts with 

limited geographic jurisdiction that apply nationwide or globally to 

unidentified aliens who are not even parties to a suit. All of this 

violates a U.S. Supreme Court decision, which the Civil Division, 

I do not think, has been asserting forcefully enough in all of its 

cases, including U.S. v. Mendoza. The key in that case was the 


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usual role of collateral estoppel that applies to private parties does 

not apply to the government. That means that the government has 

the ability to apply the executive order to individuals who are not 

actual parties to the litigation. 

One other thing that the Congress should consider: that is the 

chaos caused by having cohorts all over the country issue potentially conflicting and duplicative decisions on the same issue. I 

think you should consider passing a law that says that any lawsuit 

contesting an executive order issued by the President has to be 

filed in the District of Columbia Federal district court. This would 

prevent different cases and different decisions from coming all over 

the court, and there are precedents for this kind of action. Thank 

you. 

[Mr. von Spakovsky’s written statement is available at the Committee or on the Committee Repository at: http://docs.house.gov/ 

meetings/JU/JU05/20170608/106076/HHRG-115-JU05-WstatevonSpakovskyH-20170608.pdf] 

Mr. FARENTHOLD. Thank you very much. Ms. Mitchell, you are 

recognized for 5 minutes. 

STATEMENT OF CLETA MITCHELL 

Ms. MITCHELL. Thank you, Mr. Chairman, members of the Committee, and thank you for the opportunity to appear here today. I 

am appearing here today in my capacity as counsel to a number 

of organizations who were targeted by the IRS during the IRS targeting scandal, and subsequently, in my capacity as counsel to one 

of the groups which filed a suit against the IRS because of the targeting scandal. 

There are multiple cases that have been filed by different litigants that arose from the IRS targeting scandal, and all of those 

cases are defended by the Tax Division of the Department of Justice. And I am here to talk about our experiences in three areas 

with respect to the attorneys in the Department of Justice Tax Division. 

In a word, the DOJ tax attorneys have done, and continue to do, 

everything in their power to stall, delay, and block the orderly proceedings of these civil cases and to throw every monkey wrench 

they can invent, devise, or imagine to keep these plaintiffs from 

discovering the truth and the facts that resulted in the intentional 

delay of the normal processing of hundreds of applications for exempt status by citizens groups, solely because of their names and 

missions. The DOJ tax attorneys argue at every turn that none of 

these plaintiffs are entitled to any relief, but it is not that that I 

find so objectionable. 

What I find objectionable are three things that I am going to 

turn to now: the first is that I believe that it is the responsibility 

of the tax attorneys in the Department of Justice for the fact that 

the Lois Learner emails were lost. At the time that our lawsuit was 

filed in 2013, and under the Federal laws of civil procedure under 

several Federal statutes, and also the Committee on Oversight and 

Government Reform issued two subpoenas to preserve those documents/materials relevant to the IRS investigation, which were also 

under a litigation hold, resulting from our lawsuit. And yet, imagine our surprise in June of 2014 when we learned, through the 


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media, that supposedly Lois Learner’s emails were lost. We immediately sent a letter, which is attached to my testimony, to the Department of Justice tax attorneys and said we would like to immediately go to court, or ask them to allow us to collectively, jointly 

have an independent forensics expert team go into the IRS to see 

about recovering, locating, and retrieving these supposedly lost 

emails. 

They fought us at every step. They refused to agree to any kind 

of cooperative effort. We filed a motion for expedited discovery. 

They argued through the summer and ultimately prevailed, and no 

independent expert was appointed or allowed access to the servers, 

the backups, and et cetera. 

And what we learned, subsequently, is that, at the very time 

they were objecting to allowing access to those servers, the servers 

were erased at the very time. And it also is absolutely clear that 

they took no steps when the lawsuits were initially filed to do what 

normal litigants do, which is to ensure that your clients are not 

doing anything to lose any documents, materials, or evidence. They 

even objected to the fact that we called it evidence, so I believe that 

that falls squarely at their feet. 

And since that time and separately from that, I have attached 

a copy from the order of the Sixth Circuit of the court of appeals 

in which the court castigated the Justice Department attorneys, 

the trial court, castigated the Justice Department attorneys and 

said that their behavior, with regard to discovery, constituted studied obstructionism. It is very rare for an appellate court to call out 

the attorneys in a case, and in particular, to call out the government attorneys, but that is what the Sixth Circuit court did. These 

lawyers in the Department of Justice, Tax Division should not be 

allowed to continue to engage in this misconduct. 

The trial court in Cincinnati said that what the IRS had done 

was being perpetuated by what their attorneys were doing, and 

they have applied different legal theories completely, taking the 

same legal theory and applying it in one manner in one of the 

cases and in another manner in other cases, on whatever suits 

their purposes to try to obstruct and keep these lawsuits from coming to a conclusion. 

So, I would argue that it is time for Congress to do something 

and that the administration should do something to bring these 

long, pending lawsuits to a conclusion, which will only happen if 

the Department of Justice attorneys in the Tax Division stop obfuscating, stalling, and doing everything they can to keep it from happening. Thank you. 

[Ms. Mitchell’s written statement is available at the Committee 

or on the Committee Repository at: http://docs.house.gov/meetings/JU/JU05/20170608/106076/HHRG-115-JU05-WstateMitchellC-20170608.pdf] 

Mr. FARENTHOLD. Thank you very much. Mr. Grossman, you are 

up for 5 minutes. 

STATEMENT OF ANDREW GROSSMAN 

Mr. GROSSMAN. Thank you, Mr. Chairman, and thank you for 

holding this hearing today and inviting me to testify. My statement 

will focus on two issues concerning the Department’s use of settleVerDate Sep 11 2014 04:15 Jan 12, 2018 Jkt 027890 PO 00000 Frm 00035 Fmt 6633 Sfmt 6602 E:\HR\OC\A890.XXX A890

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ments to resolve litigation: one is the sue and settle phenomenon, 

and the other, which I will turn to first, is the Department’s new 

policy announced yesterday morning generally prohibiting so-called 

slush funds. 

The new policy is to be commended. As the Subcommittee is all 

too aware, the previous administration believed that it could circumvent Congress’s control of the purse by entering into settlements that required defendants to pay money not to the Treasury, 

but to third party organizations. These organizations, including activist groups, were not parties to these lawsuits; they were not victims; and the money they received was not compensation or restitution or attorney fees. This was pure, programmatic spending that 

requires Congressional appropriation. The previous administration’s lawyers believed—incorrectly, in my view—that they could 

skirt that requirement by diverting funds from entering the Treasury. The Attorney General’s new policy puts an end to that sleight 

of hand. It bars the Department from ‘‘entering into any agreement 

on behalf of the United States in settlement of Federal claims or 

charges that directs or provides for a payment or loan to any nongovernmental person or entity that is not a party to the dispute, 

excepting restitution and attorney fees and payments expressly authorized by statute.’’ So, we should commend the Attorney General’s action, but I will identify two respects in which it may fall 

short. 

The first concerns a particular type of slush fund settlement that 

draws money directly from the Treasury through the Judgement 

Fund Act to make payments to third party organizations for programmatic activities. Now, if requiring settling defendants to make 

payments to activist organizations intrudes on this body’s appropriations power, then taking the money directly out of the Treasury 

to pay for programs that have never been authorized or appropriated is an even more serious violation. Now, the poster child for 

this kind of abuse, as you all know, is the Keepseagle settlement 

that was recently the subject of a split decision of the D.C. circuit. 

I will not discuss the case because the Subcommittee is well aware 

of it, but I will note that the Attorney General’s new policy statement, at least as it is written, appears to be ambiguous on abuse 

of the judgement fund to make payments to third party organizations. 

I understand that there may be disagreement within the Department over whether such settlements should be allowed or not, although Mr. Readler’s statement on the previous panel seems to 

suggest otherwise. I think this Subcommittee and the American 

people deserve to know with greater clarity what the Department’s 

position is on this important issue and whether the Department believes that undertaking such payments is consistent with the governing statutory authority as well as constitutional authority. And 

I think they also deserve an answer to the Committee Chairman’s 

letter regarding whether the Department will act to claw back the 

extra Keepseagle settlement money for the benefit of taxpayers before it goes out the door. 

The second shortcoming of the new policy is that it ultimately 

does not bind an administration that does not wish to be bound. 

In my view, the Constitution and statutory law already prohibit 


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these kinds of settlements, but when everyone gets bought off, 

there is no adversary to oppose an unlawful settlement. A simple 

fix is required, a simple statutory fix. Judges should not be allowed 

to approve these kinds of settlements, and the Judgement Fund 

Act should be amended to make crystal clear that it does not authorize payments to third party organizations. This is required to 

prevent the gaming of our judicial system to circumvent Congress’s 

power of the purse. 

Let me now turn quickly to the sue and settle issue. The Subcommittee is certainly familiar with the problem, and so I will not 

cover old ground. We all know that agencies in the previous administration used collusive settlements to advance regulatory agendas 

and to evade accountability. I can report that, so far, we have not 

witnessed any of this kind of abuse by the Trump administration. 

In fact, EPA administrator Scott Pruitt has declared that his agency, which was one of the worst offenders under the Obama administration, will not enter into settlements that set the agency’s agenda, but EPA is only one agency, and I am disappointed to say that 

the Department of Justice has so far been relatively silent on this 

issue. The proper policy for the Department is not a mystery, because it is the one that was actually identified on the previous 

panel by Mr. Wood. That is the policy that was adopted in 1986 

by Ed Meese, Ronald Reagan’s Attorney General. The policy is 

straightforward: do not enter into settlements or consent decrees 

that convert discretionary authority into mandatory duty or that 

require the expenditure of unappropriated funds. If the Trump administration is serious about accountability, it should officially reaffirm the Meese policy. 

Action by Congress is also appropriate. As I explained in my 

written testimony, the Sunshine for Regulatory Decrees and Settlement Act, H.R. 469, adopts a thoughtful and comprehensive approach to this issue. More broadly, Congress should consider its use 

aspirational and unrealistic statutory deadlines combined with 

broad citizen suit provisions. As a matter of good public policy, a 

deadline that Congress does not expect an agency to meet is one 

that ought not to be on the books, and as a matter of constitutional 

principle, Congress should be the one enforcing rulemaking deadlines through its oversight and appropriations powers. Again, I 

thank the Committee for the opportunity to offer these remarks, 

and I look forward to your questions. 

[Mr. Grossman’s written statement is available at the Committee 

or on the Committee Repository at: http://docs.house.gov/meetings/JU/JU05/20170608/106076/HHRG-115-JU05-WstateGrossmanA-20170608.pdf] 

Mr. FARENTHOLD. Thank you very much. Mr. Weissman, you are 

up for 5 minutes, sir. 

STATEMENT OF ROBERT WEISSMAN 

Mr. WEISSMAN. Thank you very much, Mr. Chairman, Mr. Johnson, for the opportunity to be here today. I wanted to speak broadly 

to issues about corporate accountability at the Justice Department 

including both criminal and civil enforcement with a focus on 

issues related to Wall Street crimes and wrongdoing. 


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In 2008, as we all know, Wall Street crashed our economy, and 

we are living with the after effects of that. Strikingly, though, the 

Wall Street banks in the financial sector, generally, were able to 

escape accountability for the widespread wrongdoing that occurred. 

There were effectively no criminal prosecutions by the Department 

of Justice and no criminal prosecutions either of the largest banks 

or the executives at those banks who are responsible for devastating harm across the economy. We found out eventually that 

the Department of Justice officials thought those institutions were 

too big to fail, too big to jail as well, too big to prosecute. 

Later in the Obama administration, there were a series of civil 

settlements reached with the banks, and those did obtain significant sums of money, but they were poorly executed. Those settlements did not disclose the underlying wrongdoing that the banks 

were alleged to have committed in some circumstances and gave, 

really, no basis for assessing whether the settlements reached correlated in any with the impact and damage that the banks had had 

on the economy. 

There was a related problem that goes back far before the 

Obama administration that we saw especially in the financial sector but more broadly as relates to corporate wrongdoers, which is 

the extraordinary use of deferred and non-prosecution agreements 

against corporate violators, as well as limited criminal accountability for corporate executives. It became the norm for corporations that broke the law to escape the requirement to plead guilty 

or to be convicted, instead entering into deferred or non-prosecution 

agreements that effectively amount to nothing more than a promise 

to not break the law in the future, which is a promise with no 

meaning whatsoever, since they are already obligated to not break 

the law in the future. As I discuss in my testimony, perhaps the 

most egregious instance involved HSBC for a massive money laundering scheme for which they were able to escape any kind of 

criminal liability. 

At the end of the Obama administration, in response to public 

criticism around these issues, we saw some, slight change. Importantly, we saw the issuance of the Yates Memorandum with a focus 

on trying to prosecute executives of corporations that engaged in 

wrongdoing. We saw some notable criminal prosecutions involving 

Mass E Energy and its executive Don Blankenship, The Peanut 

Corporation of America, and a couple other notable examples. We 

also saw in the last day of the administration the settlement with 

Volkswagen, which both obtained substantial compensation, 

launched indictments against a number of executives and managers, and required the company to plead guilty to criminal wrongdoing. So, we saw some progress in this area at the end of the administration. 

Unfortunately, in the early days of the Trump administration, 

signs are that things are going to reverse. Just recently, the Department of Justice entered into a non-prosecution agreement with 

City Group in another money laundering case. This is the City 

Group’s subsidiary in Mexico for what the Justice Department 

called vast criminal wrongdoing, but again, no criminal prosecution, no criminal plea. It is a worrisome sign of a return to those 

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tions for key positions in the Justice Department from the solicitor 

general on down. And we have seen, just earlier this week, a move 

to deny justice for victims of corporate wrongdoing through Attorney General Session’s newly announced policy to prohibit settlement payments to third parties. If you look at the actuality of those 

settlements, they are designed to ensure full compensation, full restitution, for victims who often cannot be compensated directly. And 

I think this was an unfortunate move, which I worrisomely may be 

a harbinger of more gentle treatment for large corporations. 

Corporate crime and violence inflicts far more damage on society 

whether measured by dollars, injuries, or lives than street crime, 

as horrible as street crime is. And it is absolutely vital that the Department of Justice take corporate crime and wrongdoing seriously, 

prosecute it fully, and also engage in aggressive civil enforcement. 

I think the early signs of the Trump administration are troubling 

about whether it intends to do just that. 

[Mr. Weissman’s written statement is available at the Committee 

or on the Committee Repository at: http://docs.house.gov/meetings/JU/JU05/20170608/106076/HHRG-115-JU05-WstateWeissmanR-20170608.pdf] 

Mr. FARENTHOLD. Thank you very much, and we will begin some 

questioning, and since there is nobody else on my side, I will kick 

it off. Mr. Spakovsky, and I did get that right, I have a couple of 

questions for you. What is the scope of the duty of the DOJ to defend? When can they say yes? When can they say no to defending 

a government agency, and what is appropriate there? 

Mr. VON SPAKOVSKY. The longtime policy of the Justice Department, and it does not matter what administration is in the White 

House, the view has always been that it has a duty to defend all 

laws passed by Congress, even if the present administration might 

not like them, and also to defend all actions of agencies in the current administration, past administration, with the only exception 

being, for example, when it comes to Congress, laws that infringe 

on the constitutional authority of the President. And with regard 

to agency actions, only if there is absolutely no reasonable way of 

defending the agency’s action and that almost never happens. 

Mr. FARENTHOLD. Well, we have seen some issues where the Justice Department has not done that. Should the agencies be able to 

go out and get outside counsel to do that? What is the solution to 

that problem? 

Mr. VON SPAKOVSKY. Well, that is a problem. The case, for example, that I mentioned in my testimony, in fact, when the Justice 

Department, in essence, told the U.S. Elections Assistance Commission that they would not defend them, the Chairwoman of that 

Commission asked for permission to hire their own independent 

counsel to defend them, and the Justice Department has a say so 

over that, because the EAC has no independent litigating authority, said no. This was so disconcerting to Judge Leon that when the 

State of Kansas and the public interest legal foundation, which is 

a public interest legal, came in to intervene and say, ‘‘well, if the 

Justice Department will not do its duty, we will defend the EAC.’’ 

The judge did what is kind of unusual; he allowed them to intervene, and they actually defended the Federal agency. It was the 

most bizarre situation I have ever seen. 


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Mr. FARENTHOLD. We saw a similar situation here in Congress. 

Should the Justice Department be required to enforce things like 

contempt of Congress or a subpoena for a Congressional committee? 

Mr. VON SPAKOVSKY. I certainly think they should, yes. 

Mr. FARENTHOLD. Ms. Mitchell, would you like to weigh in on 

that? 

Ms. MITCHELL. Yes, I would. I think that Congress should take 

steps to establish a procedure whereby it does not have to go to the 

Executive Branch. I think there is a serious separation of powers 

issue when the legislative branch of government is dependent upon 

the executive branch to enforce a subpoena issued by the legislative 

branch of government. I think there are ways that the House and 

Senate could establish a rule and procedure through some of the 

ways that it has established litigation procedures in other areas. 

But I definitely think that this is a huge problem, and I think the 

Article 1 power of Congress is an issue when you have the Department of Justice refusing to enforce a Congressional subpoena, but 

imagine that this became particularly acute when you had the situation where the Congressional subpoena was issued to the Department of Justice. 

Mr. FARENTHOLD. And you talked a little bit about DOJ and 

servers getting erased and tapes getting lost. If that had happened 

in a civil suit between private parties, it would be a huge spoliation 

claim, so why is the government different there? 

Ms. MITCHELL. It should not be different, and I think that is one 

of the things that is really problematic with the Department of Justice and the Civil Division, particularly the tax attorneys. That is 

where I have had my experience, and I think that, you know, you 

have had trial courts and you have had the circuit courts both admonishing that the DOJ attorneys telling them to stop being so recalcitrant. If it were anybody else, these lawyers could be, themselves, personally subject to sanctions, and the party is entitled to 

damages. And it is just breathtaking to me that the fact of the matter is those attorneys in the Tax Division should have taken immediate steps in May of 2013. They really should have taken them 

sooner, but in May of 2013, when all of these lawsuits were filed, 

they should have immediately taken steps to ensure that nothing 

happened to any backups, any servers, any emails, any documents, 

and they did not do it. 

Mr. FARENTHOLD. And now I have two quick questions for Mr. 

Weissman. Did you hear the Chairman’s opening statement 

quoting from the New York Times’ expose on the DOJ abusing the 

judgment fund to pay off allies over the vigorous objections of career prosecutors, and does that report trouble you? 

Mr. WEISSMAN. I am sorry, Mr. Chair. I have to say I am most 

familiar with the Judgement Fund issue. I am more familiar with 

the issues related where the government is prosecuting the case as 

the plaintiff in the case against corporate defense. 

Mr. FARENTHOLD. All right, and just on a related topic, would it 

trouble you if the DOJ reworded donation terms in settlements to 

ensure groups of particular ideological stripes were ineligible for 

donations? 

Mr. WEISSMAN. If groups based on their ideology were ineligible? 


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Mr. FARENTHOLD. Right. 

Mr. WEISSMAN. Sure, that would be troubling. 

Mr. FARENTHOLD. Thank you. I see my time is expired. Would 

you like to go? Or Mr. Conyers? I will leave it up to you two to decide which one goes first. We will go to the Ranking Member of the 

full Committee, Mr. Conyers. 

Mr. CONYERS. Thank you, and excuse my departures from time 

to time that are unavoidable. I wanted to start off with Public Citizen’s witness. The New York Times indicated yesterday that officials across the government receive special waivers to disregard 

ethics rules. Did you happen to see that? 

Mr. WEISSMAN. I did see that, yes. 

Mr. CONYERS. And it offers additional evidence that lobbyists and 

industry executives have an unusual ability to shape policies benefitting their former clients and companies. So, that sounds astounding to me. Can you help me feel more comfortable with this report? 

Mr. WEISSMAN. No, I think your concerns are well-justified, and 

that report actually is only a glimpse of the overall problem. The 

New York Times story was talking about the issue of waivers that 

have been issued after some considerable pressure that the administration had made available the waivers it has granted. There 

were not as many as we expected outside the White House. There 

were several extremely troubling examples from the White House. 

The reason the problem is worse than the New York Times story 

indicated is that it only related to the waivers. The bigger issue is 

the revolving door question, which I think is pervasive in the number of appointments that the Trump administration has made and 

is particularly the case at the Justice Department including in the 

example of the new nominee to run the Department of Environment and Natural Resources Division whose prior practice involved 

defending BP in the Gulf oil disaster to replace the acting, who as 

we heard earlier, who worked as a lobbyist for coal companies. 

That is emblematic of what is going on in the Justice Department 

and really throughout the government right now. 

Mr. CONYERS. This becomes an incredibly important hearing, 

which I hope this Subcommittee and its leaders will continue to 

press on even after this hearing. I think we have not stumbled on, 

but we have revealed a lot of things that most people including 

members of the House do not know are going on. And I appreciate 

this panel very, very much. Mr. Weissman, Public Citizen, was the 

financial crisis caused by fraudulently securitized mortgage investment packages, caused in some way by the Department of Justice? 

Mr. WEISSMAN. That was one of the main causes. The Department of Justice was not a facilitator of that. I would say of massive 

regulatory failure was, on the backend, I think, since there was 

really massive crime and wrongdoing associated with those activities, we should have seen the Department prosecuting people and 

corporations, and we did not. 

Mr. CONYERS. What explains the dearth of the prosecutions of 

those involved in these fraudulent activities? 

Mr. WEISSMAN. That is a hard question to answer, you know. I 

think one of the problems, actually, is exactly the same revolving 

door story that we see playing out on a worse scale now. We had 

high-level officials in the Obama Justice Department also come 


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from the corporate defense bar, and I think they were very sympathetic to their former clients, or companies that might have been 

their former clients. 

Mr. CONYERS. So, this had gone on before the present administration? 

Mr. WEISSMAN. This is a problem that goes back as long as I 

know, actually, but I think we are seeing the worse we have seen 

in the Trump administration. 

Mr. CONYERS. I will yield back the balance of my time, and I may 

send you some questions or comments that I would like to check 

your reaction to them. I thank the entire panel for their helpfulness. 

Mr. FARENTHOLD. Thank you, Mr. Conyers. We will now recognize the gentleman from Georgia, the Ranking Member of the Subcommittee, Mr. Johnson. 

Mr. JOHNSON of Georgia. Thank you, Mr. Chairman. Mr. von 

Spakovsky—— 

Mr. VON SPAKOVSKY. The Chief Justice of the Supreme Court 

also stumbled over it, so do not be embarrassed. 

Mr. FARENTHOLD. I would just go with Hans. Trust me on this. 

Mr. JOHNSON of Georgia. I want to meet the challenge and get 

it right, but Mr. von Spakovsky, as a member of the Federal Elections Commission, you were accused of politicizing your position, or 

being unacceptably partisan, and it was alleged that you consistently used your position to disenfranchise poor and minority voters. 

And it is also alleged that as an official of the Justice Department 

that you advocated for the Department to apply the Voting Rights 

Act of 1965 in a ‘‘race neutral manner.’’ And throughout your career, it has been alleged that you have an obsession with the phantom and now debunked notion of so-called mass voter fraud all 

with the aim of suppressing Democratic Party voters. What do you 

say about these allegations, and what is the Heritage Foundation’s 

position in so far as the Russian attempts to influence the recent 

presidential election? 

Mr. VON SPAKOVSKY. Well, I am happy to answer those questions, Mr. Chairman, although they are not quite on the topics of 

today. I will tell you that those claims that you made about me are 

defamatory, libelous lies, and if you would like, I would be happy 

to send you a copy of the 2013 Report of the Department of Justice 

Inspector General where he took a look at the cases that we handled at the Justice Department when I was there and the conclusion of the Inspector General against those accusations that you 

have just made was that there was no evidence whatsoever that 

any of the cases that we handled were done in a political or partisan manner. And that is in the IG report. You do not have to take 

my opinion for it. 

As to voter fraud, yes, that is an issue I work on. On that issue, 

I would be happy to send you a copy of the report that the Heritage 

Foundation has recently put together of close to 500 cases from 

across the country, 800 individuals convicted of voter fraud. I think 

that is something that we should all be concerned about when it 

comes to the integrity of the election process. 


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Mr. JOHNSON of Georgia. Okay, and the Heritage Foundation 

studies on the Russian involvement in the recent presidential elections, are there any underway this far? 

Mr. VON SPAKOVSKY. Well, I would cite to you the interview 

given by J. Johnson, the Secretary of Homeland Security during 

the Obama administration. 

Mr. JOHNSON of Georgia. No, I am talking about the Heritage 

Foundation. 

Mr. VON SPAKOVSKY. Yeah, well, I am telling you that our view 

agrees with that of J. Johnson who said that, one week after the 

November election, that there was no evidence of any kind that the 

Russians had hacked into the voting process, the ballot counting 

process, or any of the actual voting administration process, and I 

agree with that. 

Mr. JOHNSON of Georgia. Thank you, sir. Ms. Mitchell, is it not 

true that no organization was ever denied tax exempt status under 

the admittedly flawed criteria used by the IRS to process social 

welfare organizations for compliance with 501C4? 

Ms. MITCHELL. Congressman, I actually do not think that that is 

a true statement. I think that there are several organizations that 

were denied their tax exempt status. 

Mr. JOHNSON of Georgia. All right, and Mr. Grossman, in your 

written testimony, you state that the Justice Department should 

readopt the Meese memo, which restricts the use of settlement policy to circumvent Federal statutes such as the Administrative Procedure Act. Are you aware that the Meese memo was iconified in 

1991? 

Mr. GROSSMAN. Yes. 

Mr. JOHNSON of Georgia. Thank you. Last but not least, Mr. 

Weissman. In your written testimony, you state that the recent 

Wells Fargo scandal where the bank fraudulently transferred millions of accounts raises both public and private enforcement questions. What effect does Wells Fargo’s use of forced arbitration 

clauses in its consumer agreements have on the public’s ability to 

hold the bank accountable for its misconduct? 

Mr. WEISSMAN. Well, as you know, Mr. Johnson, this is a problem that is not unique to Wells Fargo. It is pervasive in the financial sector. The extraordinary misconduct of Wells Fargo though 

does throw into relief both the scale of its problem, its impact, and 

how absurd it is that corporations are permitted to force victims 

into arbitration rather than into civil courts. 

In this case, because victims have been forced under arbitration, 

they were disinclined to bring lawsuits in the first place, therefore, 

unable to join in a class or engage in mass discovery that probably 

would have uncovered this problem earlier. With the problem now 

well known, Wells Fargo is still defending itself from the grounds 

that victims should seek compensation and remedy not in the 

courts and not through class action mechanism, but through arbitration tribunals. That is to say, Wells Fargo is saying that victims 

who did not agree to have accounts created for them should be constrained by forced arbitration provisions and contracts related to 

other accounts they opened, not regarding these phantom accounts, 

which by definition, they never contracted for. And, nonetheless, 


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Wells Fargo is making this claim and given the state of the law, 

it remains to be determined whether or not they will prevail on it. 

Mr. JOHNSON of Georgia. Well, they take that position because 

forced arbitration usually results in a decision in favor of the corporate interest. Is that correct? 

Mr. WEISSMAN. That is right. These are tribunals that are 

stacked in favor of large corporations who were the repeat players 

and often have some influence over choosing who the arbitrators 

themselves are. They frequently make it impossible. The provisions 

of these contracts frequently make it impossible to join together as 

a class. Discovery is limited, and often the results remain secret so 

the public does not get the benefit of an open judicial system. 

Mr. JOHNSON of Georgia. Certainly, no record created, no right 

to appeal, no precedent or reliance on precedent in the decision 

making. No reliability for the consumer other than the fact that the 

deck is stacked against them. 

Mr. GROSSMAN. Exactly so. We refer to them as rip off clauses 

or get-out-of-jail-free cards for large corporations. 

Mr. JOHNSON of Georgia. Thank you. With that, I yield back. 

Mr. FARENTHOLD. Thank you very much, and as we have been 

through our round of questionings, and Mr. Conyers, I believe has 

gotten you all agree to respond to any questions for the record, I 

think it gives us an opportunity to conclude today’s hearing, and 

I want to thank you for—— 

Mr. CONYERS. Mr. Chairman, may I have a unanimous consent 

to put in to the record the New York Times article dated June 7th: 

‘‘Lobbyists Were Granted Ethics Waivers in Trump Administration?’’ 

Mr. FARENTHOLD. Without objection, so ordered. 

[This material is available at the Committee or on the Committee Repository at: http://docs.house.gov/meetings/JU/JU05/ 

20170608/106076/HHRG-115-JU05-20170608-SD002.pdf] 

Mr. FARENTHOLD. Again, I say thank you to our witnesses for attending. I enjoyed hearing your testimony and found it to be very 

helpful. Without objection, all members will have 5 legislative days 

to submit additional, written questions for the witnesses or additional material for the record. With that, we are adjourned. 

[Whereupon, at 3:16 p.m., the Subcommittee was adjourned.] 


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COMMITTEE ON THE JUDICIARY 

SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND 

ANTITRUST LAW 

QUESTIONS FOR THE RECORD TO 

CHAD READLER 

ACTING ASSISTANT ATTORNEY GENERAL 

CIVIL DIVISION 

U.S. DEPARTMENT OF JUSTICE 

Questions submitted for the Record from Subcommittee Chairman Marino 

l. The Attorney General's memo says that the third-party payment ban covers "all" cases 

litigated by DOJ and includes "cy pres" provisions. Just to be absolutely certain, does this 

include cases in which DOJ is the defendant and a judgment is paid out ofthe Judgment 

Fund? 

RESPONSE: The June 5, 2017, Attorney General memorandum prohibits "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." The policy sets forth three limited exceptions, but none of those 

exceptions relates to whether the Government is a defendant. 

2. Certain state attorneys general are investigating whether false claims submitted to 

asbestos trusts violate state laws, including state false claims acts. For example, the Utah 

Attorney General has filed a legal action under the Utah False Claims Act based on the 

theory that Utah's Medicaid program may have been defrauded as a result of false claims 

submitted to asbestos trusts. The federal government could also examine whether 

Medicare has been defrauded as a result of similar false claims under the federal False 

Claims Act. Would you consider a parallel federal investigation? 

RESPONSE: It is our understanding that although, the State of Utah has not yet 

filed a state False Claims Act suit, it recently filed an action in state court to enforce 

Civil Investigative Demands for documents from four asbestos trusts that allegedly 

made improper payments to claimants. See Utah v. Armstrong World Indus. 

Asbestos Personal Injury Settlement Trust, No. 170901496 (3d Dist. Ct. Mar. 7, 2017). 

In this enforcement action, Utah has argued that improper payments by these 

private trusts could implicate the state's False Claims Act because (1) if the trust 

funds are depleted, states would bear the high cost of asbestos-related medical 

conditions, and (2) Medicare and Medicaid beneficiaries who receive funds from the 

trust may not be reimbursing those health care programs. The asbestos trusts have 

moved to dismiss the enforcement action, and that motion is pending. We will 

1 
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continue to monitor this matter to determine whether there is any appropriate 

action for the Department of Justice to undertake. 

Questions submitted for the Record from Judiciary Ranking Member John Conyers, Jr. 

I. Would you recommend any changes to the False Claim Act, including its qui tarn 

provisions, to make it an even more effective tool for the Civil Division? 

RESPONSE: The False Claims Act is a powerful tool in the Department's efforts to 

combat fraud on the Treasury. The Department believes the act is operating to 

protect taxpayer funds, and we do not currently recommend any changes to the 

False Claims Act. 

2. You mention in your prepared statement the work your Division does with respect to 

defending Bivens lawsuits against law enforcement officers. Would your defense work be 

made easier ifthere was a federal counterpart to section 1983 of title 42 of the United 

States Code? 

RESPONSE: The Civil Division does not, in the abstract, see any benefit to a federal 

counterpart to 42 U.S.C. § 1983, though our precise views would depend on the 

content of such a statute. Under current law, Bivens lawsuits provide a judicially 

created damages remedy implied directly under the Constitution, but the existence 

of a Bivens cause of action has been circumscribed by Supreme Court precedent and 

Bivens claims are subject to significant limitations and powerful defenses. The 

federal courts have limited these causes of action to certain specific contexts in 

which viable claims can be brought against federal officials. Claims falling outside 

of these contexts require the courts to consider and weigh the costs and benefits of 

allowing a damages action to proceed. Court precedent also focuses the claims in 

these cases on the defendant federal officials who were personally involved in the 

challenged conduct, thus eliminating respondeat superior liability. And each party 

bears its own attorneys' fees in Bivens cases. A federal counterpart to Section 1983 

could potentially undermine these limitations on Bivens cases and would likely 

increase the filing of potentially meritless claims against federal officials. Such a 

result would not reduce the overall burdens of Bivens litigation. 

3. How important is private enforcement of the Telephone Consumer Protection Act? 

RESPONSE: Congress enacted the Telephone Consumer Protection Act ("TCP A"), 

47 U.S.C. § 227, in large measure to address consumer "outrage[] over the 

proliferation of intrusive, nuisance calls to their homes from telemarketers." 47 

U.S.C. § 227 note, finding (6). Congress chose to permit private lawsuits to enforce 

some of the TCP A's provisions, 47 U.S.C. § 227(b )(3), ( c)(S), civil actions and 

forfeiture penalties by the Federal Communications Commission ("FCC"), and 

actions by state Attorneys General§ 227(g)(l). 

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Congress determined that private enforcement of the TCP A is important for at least 

three reasons. First, telemarketers and others engaged in abusive practices are 

aware that any consumer may bring a private case against them seeking statutory 

damages. In Congress's view, although complaint submissions can help government 

officials prioritize enforcement efforts, federal resources do not allow for the 

investigation of every consumer complaint. Second, Congress concluded, based on 

its findings concerning automated calls, nuisance and privacy concerns, see 47 

U.S.C. § 227 note, finding (12), that the TCP A's private right of action allows 

consumers to vindicate rights and seek compensation for injury. Third, Congress 

found that private consumer actions provide government enforcement officials with 

information and evidence on large-scale violators who may warrant government 

enforcement actions. As Congress recognized, discovery in private suits can lead to 

documents that make government investigations and enforcement actions more 

efficient and focused because private-party lawsuits and settlements can help 

establish that defendants were on notice that their telemarketing behavior was 

illegal. See United States v. Dislt Network LLC, _F. Supp. 3d_, No. 09-3073, 2017 

WL 2427297, at *40 (C.D. Ill. June 5, 2017) (handled by the Civil Division). 

Questions submitted for the Record from Subcommittee Ranking Member Cicilline 

1. The New York Times reported that "officials across the government" have received 

"special waivers to disregard ethics rules." According to The New York Times, these 

waivers "offer additional evidence that lobbyists and industry executives who can now 

shape policies benefiting their former clients and companies have been allowed to work in 

the Trump administration, even with the president's vow to 'drain the swamp' of influence 

peddling." Have you received an ethics waiver? If so, please describe the nature of the 

waiver and how it affects your role at the Civil Division. 

RESPONSE: I have received ethics waivers to work on three sets of cases. First, I 

received an Ethics Pledge waiver and an authorization under 5 C.F.R. § 2635.502 to 

work on American Insurance Ass'n and National Ass'n of Mutual Companies v. HUD 

(D.D.C.). I sought this waiver and this authorization because I previously represented 

Nationwide Mutual Insurance Company, which although not a plaintiff in its own 

right is one of over 300 members of the American Insurance Association, one of two 

plaintiffs in this litigation. My previous representation of Nationwide was not in 

connection with this case. Second, I received an authorization under 5 C.F.R. 

§2635.502 to work on PHH Corp. v. Consumer Financial Protection Bureau. I sought 

this authorization because I previously represented the Chamber of Commerce, which 

participated in this case as an amicus, not a party. I have been advised that no Ethics 

Pledge waiver was required since the Chamber of Commerce is not a party to the 

litigation. Finally, I received two authorizations under 5 C.F.R. §2635.502 to work on 

cases challenging the President's Executive Order on Terrorist Entry, colloquially 

referred to as the Travel Ban cases. I sought the first authorization because of the 

participation of my former firm as counsel for an amicus participant. I sought the 

second authorization in connection with certain cases in which the plaintiffs have 

3 
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sought documents from the President's campaign organization, Donald J. Trump for 

President, Inc., which is a former client. My ethics advisors informed me that no 

Ethics Pledge waiver was required for either of these matters. 

2. The White House has also released ethics waivers for any attorney who practiced at the 

Jones Day law finn to "participate in communications and meetings where Jones Day 

represents the President, his campaign, the transition, or political entities supporting the 

President."- As a former attorney at Jones Day, did you participate in communications and 

meetings where Jones Day represents the President, his campaign, the transition, or political 

entities supporting the President? If so, please describe whether you continue to be involved 

in this type of activity, the scope of the activity, whether this activity occurs or has occuned 

during your capacity as Acting Assistant Attorney General, and how it affects your role at 

the Justice Department. 

RESPONSE: I have not participated in any such communications or meetings. 

3. The Civil Division is responsible for defending President Trump in lawsuits relating to the 

President's alleged violation of the Constitution's restriction on accepting foreign gifts, or 

emoluments. Should the Department use government resources to defend President Trump 

in a case that solely concerns his private business interests? 

RESPONSE: By statute, the Department of Justice is responsible for the conduct of 

litigation in which an officer of the United States is a party. 28 U.S.C. § 516 provides: 

"Except as otherwise authorized by law, the conduct of litigation in which the United 

States, an agency, or officer thereof is a party ••• is reserved to officers of the 

Department of Justice, under the direction of the Attorney General.'' That is, unless 

otherwise authorized by law, "only attorneys of the Department of Justice under the 

supervision of the Attorney General may represent the United States or its agencies or 

officers in litigation." United States Attorneys' Manual4-1.100. The various suits 

filed against the President concerning his alleged violation of the Foreign Emoluments 

Clause of the Constitution are brought against him in his official capacity as President. 

Although the suit implicates the President's private business interests, the lawsuits put 

at issue whether the President, as a holder of an "Office of Profit or Trust," is in 

compliance with the Foreign Emoluments Clause. The Department of Justice 

therefore is properly representing the President in his official capacity in this 

litigation. 

Should the Department use government resources to defend President Trump in a case that 

solely concerns his private business interests? 

As discussed above, the Department is representing the President in suits filed against 

him in his official capacity. 

a. Is there a clear distinction between the interests of the federal government and those of 

the private interests of the President Trump? 

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The Department of Justice represents the President only in his official capacity and 

defends the Office of Presidency in the interest of the United States. The Department 

does not represent the private business interests of President Trump in these lawsuits. 

b. Are you aware of any payments received by the Trump International Hotel or other 

businesses in which the President has a fmancial interest from a foreign government or 

agent of a foreign government? 

I have no personal knowledge of such payments. 

4. Do you think that the FACT Act would lead to a reduction of fraud, and how would that 

impact payouts for future asbestos victims? 

RESPONSE: Regarding H.R. 906, which amends the bankruptcy code to increase 

required disclosure, we have no concerns about greater accountability or disclosure 

requirements for asbestos trusts. The language being considered by the House appears 

to strike a balance between disclosure of a trust's activities and individual privacy 

concerns. In some instances, to be sure, statutory disclosure requirements could be 

helpful in reducing fraud and ensuring a fair resolution for victims. However, we are 

not able to speculate as to whether the disclosure requirements proposed here would 

necessarily lead to a reduction offraud or impact payouts to affected asbestos victims. 

5. In 1978, former Attorney General Griffin Bell stated "the President is best served if the 

Attorney General and the lawyers who assist him are free to exercise their professional 

judgments," and, "[j]ust as important, they must be perceived by the American people as 

being free to do so." Do you believe that it is important for the Justice Department to appear 

independent of the White House and that Justice Department attorneys should exercise their 

own professional judgment in faithfully enforcing the law? 

RESPONSE: Except as otherwise provided by law, the Attorney General and officers 

of the Department of Justice have authority to conduct all litigation, civil and criminal, 

to which the United States, its agencies, or departments are parties. 28 U.S.C. § 516. 

This power should be exercised with wisdom and discretion and used to promote the 

Government's best interest and prevent injustice. The Attorney General assists the 

President in exercising his constitutional responsibility under Article II,§ 3 ofthc 

Constitution to "take Care that the Laws be faithfully executed." 

6. A recent report by the Justice Department Office of the Inspector General identified serious 

concerns relating to the handling of sexual misconduct within the Civil Division in violation 

of the Department's zero tolerance policy. According to the report, the Civil Division's 

penalties for substantiated allegations "were nothing more than written reprimands, title 

changes, and reassignment for cases in which the subject of the allegations were 

supervisory/senior attorneys." What is your response to the Inspector General's findings? 

Has the Civil Division implemented any of the Inspector General's recommendations to 

ensure the consistent enforcement ofthe Department's zero tolerance policy? 

5 
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RESPONSE: In the Civil Division's response to the Office of the Inspector General's 

(OIG) report regarding the Division's handling of sexual misconduct in prior years, 

the Division acknowledged the OIG's findings and concurred with their four 

recommendations. Accordingly, to improve the Division's handling of sexual 

harassment and misconduct allegations and enforce the Department's zero tolerance 

policy, the Division on its own initiative, as well as in response to the OIG's findings, 

has taken several steps to address the concerns discussed in the OIG report. 

Specifically, the Division has developed a system to electronically track allegations of 

misconduct made against Division employees; began offering supervisory training that 

includes a discussion of how supervisors should handle sexual misconduct allegations; 

reaffirmed the Division's commitment to preventing sexual harassment and 

misconduct in the workplace to all Civil Division employees and provided the 

Department's policy and information about how to report such allegations; hired a 

new Employee and Labor Relations Specialist to help ensure proper reporting of 

allegations; and started developing a revised awards policy. As a result of these efforts, 

I believe the overall effectiveness ofthe Division's employee relations program and 

handling of sexual misconduct allegations will improve and that the Department's zero 

tolerance policy will be enforced consistently. 

7. The Inspector General also reported that senior attorneys in the Civil Division received 

performance awards and public recognition despite being under investigation or recent 

disciplined for sexual misconduct. Do you agree that rewarding sexual misconduct is 

completely inappropriate and may, as the Inspector General note'd, "deter the reporting of 

future allegations and risks sending employees a message that Civil Division management 

does not take such complaints seriously"? 

8. RESPONSE: 

a. What steps have you taken to prevent this from occurring in the future? 

Since joining the Division in January 2017, I am not aware of any employees that have 

received awards or public recognition while being the subject of an ongoing sexual 

harassment or misconduct investigation. Currently, the Civil Division is developing 

guidance regarding awards given to and public recognition of an employee who is 

under investigation or has recently been disciplined for misconduct, including sexual 

harassment. 

b. Do you plan to report substantiated sexual misconduct cases for criminal investigation 

where appropriate? 

The Division's Human Resources Office will report substantiated sexual misconduct 

allegations to the front office, headquarters and OIG as appropriate in accordance 

with the Privacy Act, Department policy, and other applicable rules and regulations 

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that protect confidentiality, due process, and the integrity of investigation and 

management inquiries. 

7 
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COMMITTEE ON THE JUDICIARY 

SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND 

ANTITRUST LAW 

QUESTIONS FOR TilE RECORD TO 

JEFFREY H. WOOD 

ACTING ASSISTANT ATTORNEY GENERAL 

ENVIRONMENT AND NATURAL RESOURCES DIVISION 

U.S. DEPARTMENT OF JUSTICE 

Questions submitted for the Record from Subcommittee Chairman Marino 

1. According to a 2013 report by the Chamber of Commerce, six sue-and-settle regulations 

under the Clean Air Act and the Clean Water Act impose up to $101 billion in annual costs. 

These include the Utility MACT rule and Reconsideration of2008 Ozone NAAQS. Does 

DOJ factor the potential cost impacts of its settlements into its decisions over whether and 

how to craft settlements? 

RESPONSE: With regard to the "sue and settle" issue, first, let me say that the 

focus in our Division is on defending the lawful regulations and actions of our client 

agencies. Under my watch, there will be no collusion involving any sue and settle 

actions whatsoever. And, with respect to the policy of the Department of Justice, we 

will abide by Attorney General Meese's memorandum that provides guidance for 

settlements in these kinds of cases.1 For example, that policy restricts a settlement 

that would convert a discretionary authority to a mandatory duty for the agency. 

Whenever settlement agreements are presented for my review and signature, we will 

look closely to make sure it abides by that policy. 

More specifically to your question, I am unable to comment on the particulars of 

cases such as those addressed in the cited report, which were settled long before my 

tenure in the Environment and Natural Resources Division (ENRD). I can say, 

however, that the laws enacted by Congress at issue in a particular case will govern 

the evaluation of that case, and the applicable law may or may not allow the 

consideration of cost. Where consideration of cost is permissible, ENRD would not 

agree to settle a case unless the client federal agency has determined that the terms 

ofthe settlement are appropriate and feasible to implement. There is also a 

frequently recurring context where Congress has set statutory deadlines for certain 

agency actions and has, separately, authorized "any person" to file a lawsuit when 

the agency fails to meet those deadlines. Often in these contexts, the agency is left 

with few defenses, if any, and a frequent outcome is a settlement agreement or a 

consent decree between the agency and the plaintiff that resolves the lawsuit and 

establishes specific timeframes under which the agency agrees to take the 

1 Memorandum from Edwin Meese, III, Attorney General, to All Assistant Attorneys General and All United States 

Attorneys entitled "Department Policy Regarding Consent Decrees and Settlement Agreements" (March 13, 1986) 

(copy attached). See also 28 C.P.R. 0.160( d). 
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procedural action. In many of these cases, the "successful" plaintiff is entitled by a 

separate statute to recover attorneys' fees. Many have questioned the soundness of 

such a regime, especially given the sheer number of statutory deadlines. See, e.g., 

Jacob E. Gersen & Anne Joseph O'Connell, Deadlines in Administrative Law, 156 

U. Pa. L. Rev. 923,925 & n.7, 939-42,979-82 (2008). Usually, in those kinds of 

cases, the settlement bas required some kind of procedural action by the agency 

(e.g., a decision on whether to issue a proposed rnle by a certain date). A costbenefit analysis would usually await for the substantive rulemaking stage, consistent 

with any applicable statutes providing for consideration of costs. 

Questions submitted for the Record from Judiciary Ranking Member Conyers 

1. In your prepared statement, you describe certain "course corrections in key areas within the 

purview" of your Division. One of these directives pertains to reducing regulatory burdens 

with regard to energy development. How is this directive compatible with the 

Administration's apparent priority to protect clean air and clean water? If the Obama 

Administration's Clean Power Plan were implemented, would that have helped to protect 

clean air and reduce global warming? 

RESPONSE: As described in Executive Order 13783, the Administration believes 

that energy development should be done in a clean and safe manner and in 

compliance with our nation's environmental laws. If the EPA, the Department of 

the Interior, or other agencies revise or rescind regulations relating to energy 

development, it is ENRD's job to defend lawful agency actions if they are challenged 

in court. Further, ENRD will continue to vigorously enforce the nation's criminal 

and civil environmental laws against violators in all sectors ofthe economy, 

including energy development. On this point, I would refer you to our ENRD 

website, https://www.justice.gov/enrd/press-room, which provides information 

about several recent enforcement cases, including cases against the energy sector 

where violations have occurred. 

With regard to the Clean Power Plan (CPP), as I stated in my testimony to the 

Committee, I am recused from the existing CPP litigation. Specific questions 

related to the benefits associated with the CPP, including potential air quality 

improvements, are best addressed to EPA. Our client agencies, in this case EPA, 

develop policies and regulations for the protection of human health and the 

environment, consistent with federal statutes. ENRD defends the lawful actions of 

our client agencies and enforces federal environmental laws. 

2. What are your views about the Endangered Species Act? 

RESPONSE: The Endangered Species Act is a vital statute that provides valuable 

protection of fish, wildlife, and plant species that are at risk of extinction. As acting 

head ofENRD at the Department of Justice, my responsibility is to enforce laws like 

the Endangered Species Act and to defend the lawful actions of our client agencies 
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who implement it, including the Fish and Wildlife Service and the National Marine 

Fisheries Service. We are honored to serve these and other client agencies, and while 

some actions may be reviewed or reconsidered by our client agencies, we will 

continue to defend their actions to the extent they are challenged in court. Working 

closely with these and other federal agencies, we also use the criminal provisions of 

the Endangered Species Act and other wildlife protection statutes, such as the Lacey 

Act, to prosecute wildlife traffickers as part of the Administration's ongoing efforts 

to battle the scourge of wildlife trafficking. As recognized in Executive Order 13773, 

the Administration sees combating wildlife trafficking as an integral component of 

our broader efforts to dismantle transnational criminal organizations that present a 

threat to public safety and national security. The Department of Justice, along with 

the Departments of State and the Interior, co-chairs the 17-mcmber Presidential 

Task Force on Wildlife Trafficking, which leads and coordinates a whole-ofgovernment approach to addressing the global crisis in wildlife trafficking. 

Questions submitted for the Record from Subcommittee Ranking Member Cicilline 

1. In your written testimony, you state that your Division will be involved in the property 

condemnation process necessary to construct the Southwest Border Wall. 

RESPONSE: That is correct. The Division's Land Acquisition Section handles, in 

cooperation with the U.S. Attorneys' Offices, all condemnation matters referred to 

the Department of Justice by a federal agency. 

2. How many miles of Border Wall will need to be built? How many private properties will be 

needed to be confiscated for this project? 

RESPONSE: Any decisions as to whether and how to proceed with construction of a 

Border Wall, including how many miles will be built and where it will be located, 

would be made by the Department of Justice's client agencies, including the 

Department of Homeland Security (DHS), consistent with applicable Congressional 

authorization. Generally, the United States-Mexico border is approximately 1,986 

miles with 382 miles in Arizona, 141 miles in California, 181 miles in New Mexico, 

and 1,282 miles in Texas. I have been informed that, as it exists today, DHS has 

completed 654 miles of primary vehicle and pedestrian fencing. Of these 654 miles, 

307 miles are located in Arizona, 116 miles in California, 116 miles in New Mexico, 

and 115 miles in Texas. 

I have also been informed that at this early stage of development, DHS does not 

know how much additional land will be needed to construct a border wall and 

whether it will need to acquire land through condemnation. It is always DHS' 

preference to acquire private property through voluntary sale. However, in 

situations where voluntary acquisition is not possible, DHS may have to consider 

acquisition through condemnation. 
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3. How do you anticipate the Division's condemnation activity related to the Border Wall to 

affect low-income individuals, ranchers, or other persons who live along the border? 

RESPONSE: Acquisition of land for federal public works projects is guided by the 

U.S. Constitution, which requires payment of just compensation based on fair 

market value. We take this constitutional duty very seriously. The Uniform 

Relocation Assistance and Real Property Acquisition Policies Act provides further 

direction for this process, ensuring that the government provides fair market value 

to all those who have a real property interest in the land being acquired, including 

residents, tenants, and ranchers. The Act also provides for payment of moving and 

business expenses as needed to landowners who may be displaced or otherwise 

affected by the acquisition of land for federal projects. 

4. Will the Border Wall impinge on any environmentally sensitive areas or impact any 

endangered species? If so, will construction of the Border Wall trump these environmental 

concerns? 

RESPONSE: As noted above, any decisions as to whether and how to proceed with 

construction of a Border Wall, including any necessary assessments of 

environmental impacts, would be made by the Department of Justice's client 

agencies, including the Department of Homeland Security. Section 102(b)(l)(C) of 

the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (8 

U.S.C. §1103 note) states, "the Secretary of Homeland Security shall consult with 

the Secretary of the Interior, the Secretary of Agriculture, States, local 

governments, Indian tribes, and property owners in the United States to minimize 

the impact on the environment, culture, commerce, and quality of life for the 

communities and residents located near the sites at which such fencing is to be 

constructed." In the REAL ID Act of2005 (Pub. L. No. 109-13), Congress also 

authorized the Secretary of the Department of Homeland Security to elect to waive 

otherwise-applicable legal requirements if he/she deems it necessary. ENRD's role 

is to defend the lawful actions of our client agencies, in this case the Department of 

Homeland Security. 

5. Will the ENRD comply with the National Environmental Policy Act, the Endangered 

Species Act, and other applicable environmental protection statutes while acquiring 

privately owned lands for the purpose of constructing the Border Wall? 

RESPONSE: Any decisions as to whether the National Environmental Policy Act, 

the Endangered Species Act, or other environmental protection statutes apply, and 

how best to comply with these and other statutes while pursuing their priorities 

and mandates, are made by the Division's client agencies. The Division is 

responsible for defending lawsuits alleging that a federal agency decision does not 

comply with the environmental laws, including the National Environmental Policy 

Act, the Endangered Species Act, and other environmental protection statutes. 
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The Civil Division and ENRD are also responsible for defending any decisions by 

our client agencies to waive any such requirements consistent with other applicable 

law. 

Questions submitted for the Record from Congresswoman Jayapal 

1. Since 2008, climate scientists in peer-reviewed research have recommended reducing 

atmospheric C02 concentrations to 350ppm or less in order to avoid extreme risks of harm to 

current and future generations and irreversible climate change impacts, like sea level rise and 

species extinction. Since then, the two degree Celsius level of global warming above the 

preindustrial global average temperature was selected as a politically achievable target 

through the United Nations Framework Convention on Climate Change. How are you 

working within your division and with other agencies to ensure that this goal is met in order 

to prevent the negative public health and enviromnental impacts of climate change? 

RESPONSE: Climate change is an important issue and I appreciate the significant 

body of work tbat is going into understanding tbe interaction of man-made 

emissions of greenhouse gases and broader dynamics. At this time, the United 

States is not subject to any legally binding target set through the United Nations 

Framework Convention on Climate Change. Our focus is on enforcing and 

defending the laws of the United States. Our client agencies, such as EPA and the 

Interior Department, develop policies and regulations for the protection of human 

health and the environment, consistent with federal statutes. ENRD will continue to 

vigorously defend the lawful actions of our client agencies and enforce federal 

euvironmentallaws. 

Attachment 
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MEMORANDUM 

TO: 

FROM: 

SUBJECT: 

®ffttt nf tltl' 1Utnntl'1! C§l'Ul'tal 

llJaslprujtnn, ll. Ql. 2D53n 

13 March 1986 

All Assistant Attorneys General 

All United States Attorneys 

EDWIN MEESE III ... .J 

Attorney General~ 

Department Policy Regarding Consent 

Decrees and Settlement Agreements 

The following policy is'adopted to guide government 

attorneys involved in the negotiating of consent decrees and 

settlements. Adopted pursuant to the Attorney General's litigation and settlement authority, these guidelines are designed to ensure that litigation is terminated in a manner consistent with 

the proper roles of the Executive and the courts. They are to be 

followed in all cases tried by counsel under the direction of the 

Attorney General. 

I. General Policy on Consent 

Decrees and Set.tlement Agreements 

Consent decrees are negotiated agreements that are given judicial imprimatur when entered as an order of the court. 

Because of their uni<Jll.e status as b<:\th contract and ju.U.cial act, 

consent decrees serve as a useful device for ending litigation 

without trial, providing the plaintiff with an enforceable order, 

and insulating the defendant from the ramifications of an adverse 

judgement. In the past, however, executive departments and 

agencies have, on occasion, misused this device and forfeited the 

prerogatives of the Executive in orde;c to p:ceempt the exercise o$! 

those prerogatives by a subsequent Administration. These errors sometimes have resulted in an unwarranted expansion of the powe~s 

of judiciary -- often with the consent of qovernment parties -- at the expense of the executive and legislative branehes. 

The executive branch and the legislative branch may be 

unduly hindered by at least three types of provisions that have 

been found in consent decrees: 

1. A department or agency that, by consent decree, 

has agreed to promulgate regulations, may have relinquished its 

.power to amend those regulations or promulgate new ones without 

the participation of the court. 
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- 2 -

2. An agreement entered as a consent decree may divest the department or agency of discretion committed to it by the Constitution or by statute. The exercise of discretion, rather than residing in the Secretary or agency administrator, ultimately becomes subject to court approval or disapproval. 

3. A department or agency that has made a commitment in a consent decree to use its best efforts to obtain funding from the legislature may have placed the court in a position, to order such distinctly political acts in the course of enforcing the decree. 

In Section II these guidelines address, each of these concerns and limit authority to enter into consent decrees that would require the, Secretary or agency administrator to revise, amend, or promulgate regulations; that, would require the secretary or agency administrator , to expend funds which Congress has, not appropriat~~,• or to seek appropriatiliinll' from Congress; or that would, !Hi~~: the secretary or the a;g~ey administrator of dis- cretion granted by the Constitution or by statue. 

These limitations on entry into consent decrees that might include such provisions are required by the executive's position, that it is constitutionally impermissible for the 

courts to ente~ consent decrees containing such provisions where the courts would not have had the power to order such. relief had the matter been litigated. 

The limitations in Section II.A; of the guidelines are not intended. to discourage termination of litigation through negotiated settlements. The Attorney General bas plenary authority to settle cases tried under .his direction, including authority to enter into settlement agreements on terms that a court could not.order if the suit were tried to conclusion. Settlement agreements -- similar in form to consent decrees, but 

not entered as an order of tne. court -- remain a perfect;ly pe:i:lnissible ue\'i;ce. for the parcties. and should be st:ronqly encouraged. se<;:d:on Il.l!., ho'.m~.t places some restrictiol'ls on the substantive provisions which may properly be included in settlement agreements. For example, Section II.B.l. allows a department or agency to agree in a settlement document to revise, amend, or promulgate new regulatio.ns, but. only Sll long as the depul:)\\en~ or agen~y i~ not precluded 'from ~~n!lil\!f t.Mse. regu- latiOn!! p'\lrsuanl:. to the Ai'4'1•. Simil<ttly, ujlder Section ;q;.B .• 2. the. secretary or agen.;y adm~ni'iltrator lllll:( a•#:ee to exercbe hiS discretion in a particular manner, but may not divest himself entirely of the power to exercise that discretion as necessary in the future. The <:JUidelines further provi.de that in certain circumstances where the agreement constrains agency discretion, a settlement, agreement should specify that the. only sanction for the goverriment•s failure. to colllf?lY with a piovision ~fa settle- ment agre:ament $hall be the revival of the suit. RWival of the s.uit a,s the· sole reme.;iy removes ,the danger of a judicial order 
55 


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- 3 -

awarding damages or providing specific relief for breach of an undertaking in a settlement agreement. 

Finally, it must be recognized that the Attorney General has broad flexibility and discretion in the conduct of 

litigation .to :tesj?O.nd to the re;tlities of a particular case. Such flexibility can be exercise.d by the Att(!rney General in 

granting exceptipns to this policy. 

II. Policy Guidelines on Consent Decrees 

and Settlement Agreements 

A. Consent Decrees 

A. department or agency should not.limit its discretion b;r l;lonsent de~e w,ere ·it . wou.ld aa.sert that a s~ilar l:~itation 

imposed by i:J1j~~~~ l:lndl:lly cr' ~properly eon$trl!lins.ex,ji>cutive di$<:retion. .In ~aliti;Cu:J,:<tr, tlul!· Qepa:i;~EI~j:; o~ \!'~:tsU:<:e will not authC!rize any c:onsant dette• 1imfU:nq dej;>artment or agency authority in· the ~ollowing·manner: · 

1. The department or agency should not enter into a consent decree that converts into a mandatory duty the otherwise discretionary authority of the Secretary or agency administrator to revise, amend, or promulgate regulations. 

2. The department or agency should not enter into a consent decree that either commits the department or agency to expend fimds t:hal'. Congress has no.t apJ;Itl:l);lriated, and. that have not heel\ but;<;Jeted f.or the action in question, ol; ~it.s a department or a(Jency to 's~k a particular appropriation or budget au~ 

thorization. 

:3•• The deJ?llrtment or agency lilhoul<l .not. eniet: into a' 

consent del;lrea that dive!!;t!l; .the Seer.eta:~.or agen<;y administra~ 

tcir; oi; ¥fi suC:(lE;lSSors, .1)£ disc:retion ®Jiun:H'tE!d to hill\. by 90ll"" 

grass or tlie (: nst:!,~uti?n where liluch d.is;::t'etionaey power was q:tanted. . to respond to cl'tanqi'nl!' circulll!ltances,. · t9 malt:e pol icy or manaqer.il'l,l ~ices., or to protect the rights of' third parties. 

a. Settlement Agreements 

The D'i!'pilrtment: of Jus.tice will not authorize any settlement a<;Jreemebt that limits the diScretion of a department or agency in t)le. foll<;>wing- manner; 

1. The department or. agency should not enter into a settlement agrjaain!i'nt th.at interferes with the Secretary or aqency administ~:ator's authority to revise, amend, or pr0111ulqate regu- lations through the .Procedures set forth in the A.dministra.tive 

Procedure Act. 

2. The department or agency should not enter into a 

settlement aqreement that commits the Department or agency to 
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- 4 -

expend funds that Congress has not appropriated and that have not been budgeted for the action in question. 

In any settlement agreement in which the Secretary or agency administrator agrees to exercise his discretion in a particular way, where such discretionary power was committed to him by Congress or the Constitution to respond to changing circumstance~>, to make palicy or .managerial choices, or to protect the rights of third parties, the sole remedy for the 

department or agency's failure to comply with those terms of the 

settlement agreement should be the revival of the suit. 

c. Exceptions 

The Attorney General does not hereby yield his 

necessary discretion to deal with the realities of any given case. :t;f special c;lil:cumstanees require any departure from these 

guidelines, such proposed departure must be submitted for the 

approval of the Attorney General, tl'le Deputy Attorney Gen<:lral, or the. Associate Attorney ·General at l.'"ast two weeks before the consent decree is to be entered, or the settlement agreement 

signed, with a concise statement of the case and of reasons why 

departure from these guidelines will not tend to undermine their 

force and is consistent with the. constitutional prerogatives of 

the executive or the legislative branches. Written approval of 

the Attorney General, the Deputy Attorney General, or the 

Associate Attorney General will be re9uired to authorize 

departure from these guidelines. · 

Rtpioduced from the Holdings of the 

National Aro;:hive.<: a:;d Records Adminiunnion 

Record G.ruup 60, llipl.lt1mt111 nf Ju:;:kc 

rifts of Stephen Galcbach, t98S-f988 

Accessio11 060-89-1, 8ox 9 

Folde-r: SHG/tiligntion Sttalegy Workin~:, Grouu 
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COMMITTEE ON Tllli JUlHClAKY 

SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND 

ANTITRUST LAW 

QUESTIONS FOR THE RECORD TO 

DAVID A. HUBBERT 

ACTING ASSISTANT ATTORNEY GENERAL 

TAX DIVISION 

U.S. DEPARTMENT OF JUSTICE 

Question for the Record from Subcommittee Chairman Marino 

The Sixth Circuit, in U.S. v. NorCal Tea Party Patriots, issued this opinion: "the government is 

doing everything it possibly can, to make this as complicated as it possibly can, to last as long as 

it possibly can, so that by the time there is a result, nobody is going to care except the 

plaintiffs ... I question whether or not the Department of Justice is doing Jnstice.'' These are 

serious allegations from the Court. How has your division in particular responded to these 

allegations? Will you speak directly with the attorneys involved? 

RESPONSE: NorCal Tea Party Patriots, et.al. v. Internal Revenue Service, et at. (S.D. Obio -

61h Cir.) is currell,tly p!!nding btlfon the district court. While I ellnnot discuss the specific 

pendingi)ase, han tell you that the Depnrtm.cntis. eomll)itted to ensuring that allegations 

of misconduct are thoroughly investigated and that :tny substantiated findings of 

misconduct are properly addressed through the disCiplinary process. Every time a court 

makes a comment on the manner in which the Tax Division has handled a case or the 

arguments we have made, I review those with the supervisors involved in that ease. The 

Tax Division's attorneys will continue to work to live up to the highest standards ofthe 

Department of Justice in representing the interests of the United States and fully and fairly 

enforcing the tax laws. 
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COMMITTEE ON THE JUDICIARY 

SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND 

ANTITRUST LAW 

QUESTIONS FOR THE RECORD TO 

CLIFFORD J. WHITE III 

DIRECTOR 

U.S. TRUSTEE PROGRAM 

U.S. DEPARTMENT OF JUSTICE 

Questions submitted for the Record from Subcommittee Chairman Marino 

Asbestos Trusts 

1. Can you further elaborate on the statement you made at the hearing regarding the need for 

greater accountability for asbestos trusts? 

RESPONSE: There is a general lack of transparency in the operation and oversight of 

post-confirmation trusts, especially asbestos trusts. Among others things, there is a lack 

of reporting on the operations of such trusts and no clear recourse for stakeholders to 

challenge the claims review process or the administration of trust operations. The ABI 

Commission to Study the Reform of Chapter 11, on which I served as a non-voting ex 

officio member, recommended legislative changes to improve the corporate governance 

and transparency of post-confirmation trusts (although it did not address asbestos 

trusts specifically). 

Bankruptcy courts and the United States Trustees have limited statutory oversight 

authority following plan confirmation, so the standards and mechanisms of 

accountability that pertain to chapter 11 debtors do not apply to post-confirmation 

trusts. For example, the claims process is conducted without court review and 

generally is not subject to independent investigation. As a general principle, this lack of 

oversight and accountability may create opportunities for improper, unfair, or unwise 

conduct that are not easily remedied. 

In the case of asbestos trusts, the debtor usually has little incentive to ensure that the 

claims process is conducted properly because the debtor pays an agreed upon amount 

of money into the trust that is then used to pay current and future tort victims. The 

integrity of the claims process does not impact the reorganized debtor, which can carry 

on its business after discharge of its asbestos liability. By contrast, claimants suffering 

from asbestos disease, as well as those not yet diagnosed, may be adversely affected 

because the payment of illegitimate claims may dilute the amount of recoveries 

available to them. 

The potential magnitude of the problem with asbestos trusts was identified in the case 

of In re Garlock Sealing Technologies, 504 B.R. 71 (Bankr. W.D.N.C. 2014). The debtor 
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corporation challenged the aggregate amount of its asbestos liability for the purpose of 

formulating a plan of reorganization and establishing a trust in a claims estimation 

proceeding. Garlock is unusual because the debtor challenged its liability and obtained 

discovery about claims filed in other companies' cases. The debtor compared the 

claimants' assertions in other bankruptcy cases to their assertions against Garlock in 

non-bankruptcy state tort actions about which companies exposed them to asbestos. 

The bankruptcy court ultimately concluded that the asbestos claimants had filed 

inconsistent claims in a "startling pattern of misrepresentation" of exposure and 

determined that the debtor was liable for less than one-tenth of the $1.3 billion that the 

plaintiffs claimed was owed. The parties ultimately settled for an amount greater than 

the court's estimation, but still63 percent less than the claimants' initial valuation. 

2. Certain state attorneys general are investigating whether false claims submitted to asbestos 

trusts violate state laws, including state false claims acts. In fact, the Utah Attorney General 

has filed a legal action under the Utah False Claims Act based on the theory that Utah's 

Medicaid program may have been defrauded as a result of false claims submitted to asbestos 

trusts. The Federal government could also examine whether Medicare has been defrauded as 

a result of similar false claims under the federal False Claims Act. Would you consider a 

parallel federal investigation? 

RESPONSE: As noted in response to the previous question, we recognize that 

significant concerns have been raised about the administration of post-confirmation 

asbestos trusts. Generally, the existence of other federal and state investigations and 

legal actions is not a bar to USTP civil enforcement of bankruptcy violations in 

bankruptcy court. In many instances, misconduct that violates bankruptcy law also 

violates other federal or state laws. We conduct parallel investigations and where 

appropriate make criminal referrals to the United States Attorney as provided in 28 

U.S.C. § 586(a)(3){F). The USTP also may refer civil enforcement matters to other 

Department of Justice components and other federal or state agencies if we obtain 

information that non-bankruptcy laws appear to have been violated. 

The USTP lacks statutory authority to conduct an investigation into asbestos trusts 

because those trusts operate post-confirmation. Our post-confirmation authorities 

generally pertain only to pre-confirmation matters, like the review of estate 

professionals' fees, that continue under the jurisdiction of the court after confirmation 

of a reorganization plan. Notably, by statute, the USTP has even less pre-confirmation 

authority in asbestos cases than in other chapter 11 cases. For example, under 11 

U.S.C. § 524(g)(4)(B)(i), a future claims representative (FCR) is appointed before 

confirmation in asbestos bankruptcy cases to serve as a fiduciary for those who have 

not yet been diagnosed, but who later may suffer from asbestos disease. The USTP 

plays no role in the selection of a FCR, which is in contrast to its authority to appoint 

other independent persons to serve as fiduciaries in chapter 11 cases. 

2 
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Credit Counseling 

3. The Chairman of the Senate Judiciary Committee wrote to you recently about the need to 

strengthen pre-bankruptcy credit counseling for financially distressed consumers under the 

2005 Bankruptcy Abuse Prevention and Consumer Protection Act. The pre-bankruptcy 

counseling statute 11 U.S.C. 502(k) explicitly provides that banks and other lenders can be 

punished if consumers seek to settle debts prior to filing a bankruptcy and the lender does not 

engage in a debt reduction negotiation. What steps will you take to ensure that this required 

pre-bankruptcy counseling provides an opportunity for consumer to obtain reduced balance 

settlements? 

RESPONSE: We agree that the debt settlement provisions of 11 U.S.C. § 502(k) 

provide an important consumer protection. Under USTP regulations governing 

nonprofit budget and credit counseling agencies, 28 C.F.R § 58.20(1)(9), any counseling 

agency that does not provide the service of seeking to settle the client's debts with 

creditors shall provide the client with contact information for an approved agency that 

does perform such service. It is important that the USTP review agency compliance on 

an ongoing basis and ensure that credit counselors provide a meaningful review of nonbankruptcy options, including developing viable repayment plans. 

Questions submitted by Judiciary Ranking Member John Conyers, Jr. 

1. In your prepared statement, you mention that the number of motions filed by the U.S. Trustee 

Program to dismiss consumer cases deemed to be abusive "significantly increased" in fiscal 

year 2016. Please be specific what the numbers were for fiscal years 2015 and 2016, 

respectively. Does the U.S. Trustee Program encourage Chapter 13 trustees to object to stale 

proofs of claim? 

RESPONSE: The USTP takes a balanced approach to its civil enforcement efforts to 

redress fraud and abuse in the bankruptcy system. Although a majority of the actions 

are taken to address debtor violations, the USTP also focuses significant efforts on 

remedying wrongdoing by creditors and others who seek to exploit debtors. 

While motions to dismiss against consumer debtors relating to the means test under 

11 U.S.C. § 707(b)(2) were down in FY 2016, actions focusing on more serious conduct, 

such as the concealment of assets and false oaths, increased. Further, in my prepared 

statement, I specifically referenced an upturn in the number of actions taken under 11 

U.S.C. § 707(b)(3) to dismiss cases that are deemed abusive under a bad faith or totality 

ofthe circumstances standard. Between FY 2015 and FY 2016, the USTP saw an 

increase of 5 percent in such actions (from 673 to 707), with an overall success rate of 

nearly 98 percent for those motions that were decided during FY 2016. 

As to your question about objections to stale debt claims (i.e., claims that are beyond 

the state statute of limitations and must be withdrawn or denied upon objection), the 

USTP has actively encouraged trustees to object to such claims. For example, the 

3 
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Handbook for Chapter 13 Standing Trustees addresses the obligation to object to claims, 

and trustee training materials issued in 2014 specifically addressed stale debt claims. 

This topic also has been addressed in communications with the National Association of 

Chapter Thirteen Trustees (NACTT), including as recently as in a speech delivered by 

me on July 13,2017, at the NACTT's annual convention. According to an informal 

survey conducted by the NACTT, more than one-half ofthe trustees who responded 

said they file objections to stale debt claims. 

In addition to the efforts of the chapter 13 trustees in individual cases, the USTP has 

conducted major investigations into stale debt claims practices and taken enforcement 

action in which we assert that a creditor's knowing filing of a large volume of stale debt 

claims constitutes an abuse of the bankruptcy process that may be remedied by 

injunctive and monetary relief. We have sought court adjudication and these matters 

remain pending. 

2. In your prepared statement, you mention that the United States Trustee Program has an 

initiative directed at attorneys for consumer debtors who engage in professional misconduct. 

What initiative, if any, does the Program have to deal with the misconduct of attorneys who 

represent creditors? 

RESPONSE: Identifying and remedying improper conduct by debtors' counsel is an 

important part of the USTP's consumer protection efforts. Failure of counsel to satisfy 

their obligations under the Bankruptcy Code and Rules is detrimental not only to 

debtors, but also to trustees, creditors, the courts, and the entire bankruptcy system. 

The USTP fully utilizes the tools given to us by Congress to address misconduct by 

consumer debtors' attorneys. 

As noted in my testimony, between FY 2015 and FY 2016, the USTP increased the 

number of actions taken under 11 U.S.C. §§ 329 and 526 pertaining to the conduct of 

debtors' lawyers and debt relief agencies by more than 30 percent combined. The 

primary beneficiaries of these actions are the debtors themselves. In fact, the remedy 

usually provided under section 329 is the disgorgement of fees that were paid by the 

debtor. The USTP also is active in seeking other legal remedies for misconduct by 

debtors' attorneys. 

Though the USTP bas not defined a specific initiative to address improper conduct by 

creditors' counsel, we do act to address such conduct when identified. For example, the 

USTP previously entered into a settlement with a multi-state law firm representing 

mortgage creditors for misconduct related to the filing of proofs of claim and motions 

for relief from the automatic stay that contained inaccurate arrearage figures. As part 

of the settlement, the law firm agreed to implement policies and procedures to ensure 

accurate filings in compliance with the Bankruptcy Code and Rules, including 

designating a firm partner to execute a verified statement regarding the review 

performed in each case. 

4 
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Importantly, for more than a decade, the USTP has given enforcement priority to 

addressing abuse of the system by creditors. Among other things, we have reached six 

nationwide settlements against national mortgage servicers for violating the 

Bankruptcy Code and Rules, and taken other actions against unsecured claimants, 

including those holding credit card debt. Our actions in bankruptcy court alone have 

provided more than 100,000 homeowners with well over $100 million in monetary 

relief. Other USTP settlements with our federal and state partners have provided 

billions of dollars in relief to hundreds of thousands of consumers, including 

homeowners in chapter 13. 

a. If an attorney for a creditor knowingly files a false proof of claim, what does the 

Program do about that? 

RESPONSE: Often, creditor claims are filed by the creditor or their agents, not by 

their lawyers. If we have evidence that an attorney for a creditor knowingly filed a 

false claim, we would take appropriate civil action. In addition to enforcement actions 

in the bankruptcy court, the USTP may refer the attorney to state licensing and 

disciplinary authorities for violations of state ethical rules, as well as make a criminal 

referral to the United States Attorney as provided in 28 U.S.C. § 586(a)(3)(F). 

b. What does the Program do about a creditor's attorney who routinely files 

statutorily time-barred proofs of claim in bankruptcy cases? 

RESPONSE: In cases we have investigated, stale debt claims are f'Iled by creditors or 

their agents, not their lawyers. The focus of our discovery and enforcement actions 

have been on the creditors in whose name the claims were filed and the debt collectors 

who filed the claims on behalf of those creditors. As noted in our response to your 

question 1 above, we are engaged in intensive, ongoing litigation concerning the 

knowing filing of stale debt claims, so it would not be appropriate to discuss all possible 

parties who might be subject to sanctions if we prevail on the merits. 

0 

5