[Federal Register Volume 85, Number 242 (Wednesday, December 16, 2020)]
[Rules and Regulations]
[Pages 81409-81411]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27189]


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DEPARTMENT OF JUSTICE

Office of the Attorney General

28 CFR Part 50

[Docket No. OAG 163; AG Order No. 4927-2020]
RIN 1105-AB62


Prohibition on Settlement Payments to Non-Governmental Third 
Parties

AGENCY: Department of Justice.

ACTION: Final rule.

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SUMMARY: This final rule amends the Department's regulations to set 
forth the principles of the Attorney General's Memorandum of June 5, 
2017, prohibiting the inclusion of provisions in settlement agreements 
directing or providing for a payment or loan to a non-governmental 
person or entity that is not a party to the dispute, except in defined 
circumstances.

DATES:  Effective Date: December 16, 2020.

FOR FURTHER INFORMATION CONTACT: Robert Hinchman, Senior Counsel, 
Office of Legal Policy, U.S. Department of Justice, Room 4252 RFK 
Building, 950 Pennsylvania Avenue NW, Washington, DC 20530, telephone 
(202) 514-8059 (not a toll-free number).

SUPPLEMENTARY INFORMATION: On June 5, 2017, then-Attorney General 
Sessions issued a Memorandum to the Heads of all Department of Justice 
Components and to all United States Attorneys titled, ``Prohibition on 
Settlement Payments to Third Parties.'' In this Memorandum, he stated: 
``Our Department is privileged to represent the United States and its 
citizens in courts across our country. We take this responsibility 
seriously. In the course of this representation, there may come a time 
when it is in the best interests of the United States to settle a 
lawsuit or end a criminal prosecution. Settlements, including civil 
settlement agreements, deferred prosecution agreements, non-prosecution 
agreements, and plea agreements, are a useful tool for Department 
attorneys to achieve the ends of justice at a reasonable cost to the 
taxpayer. The goals of any settlement are, first and foremost, to 
compensate victims, redress harm, or punish and deter unlawful 
conduct.''
    However, certain previous settlement agreements involving the 
Department included provisions requiring payments to various non-
governmental, third-party organizations as a condition of settlement 
with the United States. Those third-party organizations were neither 
victims nor parties to the lawsuits.
    The June 5, 2017, Memorandum announced that the Department would no 
longer engage in this practice. Pursuant to the June 5, 2017, 
Memorandum, except in specific limited circumstances, ``Department 
attorneys may not enter into any agreement on behalf of the United 
States in settlement of federal claims or charges, including agreements 
settling civil litigation, accepting plea agreements, or deferring or 
declining prosecution in a criminal matter, that directs or provides 
for a payment or loan to any non-governmental person or entity that is 
not a party to the dispute.'' This policy is already incorporated into 
the Justice Manual at https://www.justice.gov/jm/jm/1-17000-settlement-payments-third-parties.
    This final rule amends the Department's regulations to reflect this 
policy, with certain changes from the June 5, 2017, Memorandum to 
clarify the scope of exceptions. This rule specifically clarifies that 
the policy extends to a payment or loan, whether in cash or in kind, to 
any non-governmental person or entity that is not a party to the 
dispute. The Miscellaneous Receipts Act provides that Government 
officials ``receiving money for the Government from any source shall 
deposit that money with the Treasury.'' See 31 U.S.C. 3302(b). 
``Receiving money for the Government'' includes the ``constructive 
receipt'' of money ``if a federal agency could have accepted possession 
and retains discretion to direct the use of the money.'' See Effect of 
31 U.S.C. 484 on the Settlement Authority of the Attorney General, 4B 
Op. O.L.C. 684, 688 (1980). This rule thus similarly forbids 
circumvention of the policy reflected in this statute via the use of 
in-kind payments.

[[Page 81410]]

    This rule also revises the exceptions to the prohibition. Under the 
rule, there are four limited exceptions to the policy's prohibition. 
First, the prohibition does not apply to an otherwise lawful payment or 
loan that provides restitution or compensation to a victim, though in 
no case shall any settlement agreement require defendants in 
environmental cases, in lieu of payment to the Federal Government, to 
expend funds to provide goods or services to third parties for 
Supplemental Environmental Projects. Second, the prohibition does not 
apply when, in cases of foreign official corruption, a trusted third 
party is required to facilitate the repatriation and use of funds to 
directly benefit those harmed by the foreign corruption. Third, the 
prohibition does not apply to payments for legal or other professional 
services rendered in connection with the case. Fourth, the prohibition 
does not apply to payments expressly authorized by statute or 
regulation, including restitution and forfeiture. Finally, this rule 
also deletes some examples of exception (c)(1).
    The policy set forth in this final rule applies to all civil and 
criminal cases litigated under the direction of the Attorney General 
and includes civil settlement agreements, cy pres agreements or 
provisions, plea agreements, non-prosecution agreements, and deferred 
prosecution agreements.

Regulatory Certifications

Administrative Procedure Act

    This rule relates to a matter of agency management or personnel and 
is a rule of agency organization, procedure, or practice. Accordingly, 
this rule is exempt from the usual requirements of prior notice and 
comment and a 30-day delay in effective date. See 5 U.S.C. 553(a)(2), 
(b), and (d).

Regulatory Flexibility Act

    This regulation will not have an impact on small entities because 
it pertains to personnel and administrative matters affecting the 
Department. An analysis under the Regulatory Flexibility Act was not 
required for this final rule because the Department was not required to 
publish a general notice of proposed rulemaking for this matter. See 5 
U.S.C. 601(2), 604(a).

Executive Orders 12866, 13563, and 13771--Regulatory Review

    This regulation has been drafted and reviewed in accordance with 
section 1(b) of Executive Order 12866, ``Regulatory Planning and 
Review,'' and section 1(b) of Executive Order 13563, ``Improving 
Regulation and Regulatory Review.''
    This final rule is ``limited to agency organization, management, or 
personnel matters'' and thus is not a ``rule'' for purposes of review 
by the Office of Management and Budget under section 3(d)(3) of 
Executive Order 12866. Accordingly this rule has not been reviewed by 
the Office of Management and Budget.
    This rule is not subject to the requirements of Executive Order 
13771, ``Reducing Regulation and Controlling Regulatory Costs,'' 
because it is not a significant regulatory action under Executive Order 
12866, and because it is ``related to agency organization, management, 
or personnel'' and thus not a ``rule'' under Executive Order 13771, 
section 4(b).

Executive Order 12988--Civil Justice Reform

    This regulation meets the applicable standards set forth in 
sections 3(a) and 3(b)(2) of Executive Order 12988, ``Civil Justice 
Reform.''

Executive Order 13132--Federalism

    This rule will not have substantial direct effects on the States, 
on the relationship between the national government and the States, or 
on the distribution of power and responsibilities among the various 
levels of government. It is a rule of internal agency practice and 
procedure. Therefore, in accordance with Executive Order 13132, 
``Federalism,'' the Department has determined that this rule does not 
have sufficient federalism implications to warrant the preparation of a 
federalism summary impact statement.

Unfunded Mandates Reform Act of 1995

    This rule will not result in the expenditure by State, local, and 
tribal governments, in the aggregate, or by the private sector, of $100 
million or more (adjusted annually for inflation) in any one year, and 
it will not significantly or uniquely affect small governments. 
Therefore, no actions are necessary under the provisions of the 
Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1501 et seq.

Congressional Review Act

    This action is not a major rule as defined by the Congressional 
Review Act, 5 U.S.C. 804. This action pertains to agency management, 
personnel, and organization and does not substantially affect the 
rights or obligations of non-agency parties and, accordingly, is not a 
``rule'' as that term is used by the Congressional Review Act, 5 U.S.C. 
804(3)(B),(C). Therefore, the reporting requirements of 5 U.S.C. 801 do 
not apply.

List of Subjects in 28 CFR Part 50

    Administrative practice and procedure.

    Accordingly, by virtue of the authority vested in me as Attorney 
General, including 5 U.S.C. 301 and 28 U.S.C. 509, 510, part 50 of 
title 28 of the Code of Federal Regulations is amended as follows:

PART 50--STATEMENTS OF POLICY

0
1. The authority citation for part 50 continues to read as follows:

    Authority: 5 U.S.C. 301; 18 U.S.C. 1162; 28 U.S.C. 509, 510, 
516, and 519; 42 U.S.C. 1921 et seq., 1973c; and Pub. L. 107-273, 
116 Stat. 1758, 1824.


0
2. Add Sec.  50.28 to read as follows:


Sec.  50.28  Prohibition on settlement payments to non-governmental 
third parties.

    (a) The goals of a settlement agreement between the Department of 
Justice and a private party are to compensate victims, redress harm, or 
punish and deter unlawful conduct. It is generally not appropriate to 
use a settlement agreement to require, as a condition of settlement, 
payment to non-governmental, third-party organizations who are not 
victims or parties to the lawsuit.
    (b) Except as provided in paragraph (c) of this section, Department 
attorneys shall not enter into any agreement on behalf of the United 
States in settlement of federal claims or charges, including agreements 
settling civil litigation, accepting plea agreements, or deferring or 
declining prosecution in a criminal matter, that directs or provides 
for a payment or loan, in cash or in kind, to any non-governmental 
person or entity that is not a party to the dispute.
    (c) Department attorneys may only enter into such agreements in 
four specific situations:
    (1) When the otherwise lawful payment or loan, in cash or in kind, 
provides restitution or compensation to a victim, though in no case 
shall any such agreements require defendants in environmental cases, in 
lieu of payment to the Federal Government, to expend funds to provide 
goods or services to third parties for Supplemental Environmental 
Projects;
    (2) When, in cases of foreign official corruption, a trusted third 
party is required to facilitate the repatriation and use of funds to 
directly benefit those harmed by the foreign corruption;

[[Page 81411]]

    (3) When payment is for legal or other professional services 
rendered in connection with the case; or
    (4) When payment is expressly authorized by statute or regulation, 
including restitution and forfeiture.
    (d) This policy applies to all civil and criminal cases litigated 
under the direction of the Attorney General and includes civil 
settlement agreements, cy pres agreements or provisions, plea 
agreements, non-prosecution agreements, and deferred prosecution 
agreements.

    Dated: December 4, 2020.
William P. Barr,
Attorney General.
[FR Doc. 2020-27189 Filed 12-15-20; 8:45 am]
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