Federal Register / Vol. 85, No. 242 / Wednesday, December 16, 2020 / Rules and Regulations 81409 

§ 1.274–14 Disallowance of deductions for 

certain transportation and commuting 

benefit expenditures. 

(a) General rule. Except as provided in 

this section, no deduction is allowed for 

any expense incurred for providing any 

transportation, or any payment or 

reimbursement, to an employee of the 

taxpayer in connection with travel 

between the employee’s residence and 

place of employment. The disallowance 

is not subject to the exceptions provided 

in section 274(e). The disallowance 

applies regardless of whether the travel 

between the employee’s residence and 

place of employment includes more 

than one mode of transportation, and 

regardless of whether the taxpayer 

provides, or pays or reimburses the 

employee for, all modes of 

transportation used during the trip. For 

example, the disallowance applies if an 

employee drives a personal vehicle to a 

location where a different mode of 

transportation is used to complete the 

trip to the place of employment, even 

though the taxpayer may not incur any 

expense for the portion of travel in the 

employee’s personal vehicle. The rules 

in section 274(l) and this section do not 

apply to business expenses under 

section 162(a)(2) paid or incurred while 

traveling away from home. The rules in 

section 274(l) and this section also do 

not apply to any expenditure for any 

qualified transportation fringe (as 

defined in section 132(f)) provided to an 

employee of the taxpayer. All qualified 

transportation fringe expenses are 

required to be analyzed under section 

274(a)(4) and § 1.274–13. 

(b) Exception. The disallowance for 

the deduction for expenses incurred for 

providing any transportation or 

commuting in paragraph (a) of this 

section does not apply if the 

transportation or commuting expense is 

necessary for ensuring the safety of the 

employee. The transportation or 

commuting expense is necessary for 

ensuring the safety of the employee if 

unsafe conditions, as described in 

§ 1.61–21(k)(5), exist for the employee. 

(c) Definitions. The following 

definitions apply for purposes of this 

section: 

(1) Employee. The term employee 

means an employee of the taxpayer as 

defined in section 3121(d)(1) and (2) 

(that is, officers of a corporate taxpayer 

and employees of the taxpayer under 

the common law rules). 

(2) Residence. The term residence 

means a residence as defined in § 1.121– 

1(b)(1). An employee’s residence is not 

limited to the employee’s principal 

residence. 

(3) Place of employment. The term 

place of employment means the 

employee’s regular or principal (if more 

than one regular) place of business. An 

employee’s place of employment does 

not include temporary or occasional 

places of employment. An employee 

must have at least one regular or 

principal place of business. 

(d) Applicability date. This section 

applies to taxable years beginning on or 

after December 16, 2020. 

Sunita Lough, 

Deputy Commissioner for Services and 

Enforcement. 

Approved: December 4, 2020. 

David J. Kautter, 

Assistant Secretary of the Treasury (Tax 

Policy). 

[FR Doc. 2020–27505 Filed 12–15–20; 8:45 am] 

BILLING CODE 4830–01–P 

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. 

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, thirdparty 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 nongovernmental 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. 


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81410 Federal Register / Vol. 85, No. 242 / Wednesday, December 16, 2020 / Rules and Regulations 

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 nonagency 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 

■ 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. 

■ 2. Add § 50.28 to read as follows: 

§ 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; 


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Federal Register / Vol. 85, No. 242 / Wednesday, December 16, 2020 / Rules and Regulations 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] 

BILLING CODE 4410–BB–P 

DEPARTMENT OF THE INTERIOR 

Fish and Wildlife Service 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

50 CFR Part 424 

[Docket No. FWS–HQ–ES–2020–0047, 

FF09E23000 FXES1111090FEDR 212; 

Docket No. 201210–0335] 

RIN 1018–BE69; 0648–BJ44 

Endangered and Threatened Wildlife 

and Plants; Regulations for Listing 

Endangered and Threatened Species 

and Designating Critical Habitat 

AGENCY: U.S. Fish and Wildlife Service, 

Interior; National Marine Fisheries 

Service, National Oceanic and 

Atmospheric Administration, 

Commerce. 

ACTION: Final rule. 

SUMMARY: We, the U.S. Fish and 

Wildlife Service (FWS) and the National 

Marine Fisheries Service (NMFS) 

(collectively referred to as the 

‘‘Services’’ or ‘‘we’’), add a definition of 

‘‘habitat’’ to our regulations that 

implement section 4 of the Endangered 

Species Act of 1973, as amended (Act). 

This rulemaking responds to Supreme 

Court case law regarding the designation 

of critical habitat and provides 

transparency, clarity, and consistency 

for stakeholders. 

DATES: 

Effective date: This final regulation is 

effective on January 15, 2021. 

Applicability date: This revised 

regulation applies to critical habitat 

rulemakings for which a proposed rule 

is published after January 15, 2021. 

ADDRESSES: Public comments and 

materials received, as well as supporting 

documentation used in the preparation 

of this final regulation, are available on 

the internet at http://

www.regulations.gov in Docket No. 

FWS–HQ–ES–2020–0047. 

FOR FURTHER INFORMATION CONTACT: Gary 

Frazer, U.S. Fish and Wildlife Service, 

Department of the Interior, Washington, 

DC 20240, telephone (202) 208–4646; or 

Samuel D. Rauch, III, National Marine 

Fisheries Service, Office of Protected 

Resources, 1315 East-West Highway, 

Silver Spring, MD 20910, telephone 

(301) 427–8403. If you use a 

telecommunications device for the deaf 

(TDD), call the Federal Relay Service 

(FRS) at (800) 877–8339. 

SUPPLEMENTARY INFORMATION: 

Background 

On August 5, 2020, the Services 

published a proposed regulatory 

definition of ‘‘habitat’’ in the Federal 

Register (85 FR 47333); the definition 

would be added to title 50 of the Code 

of Federal Regulations in part 424 (50 

CFR part 424). In that proposed rule, we 

provided the background for our 

proposed definition in terms of the 

statute, legislative history, and case law. 

In this final rule, we focus our 

discussion on changes from the 

proposed rule based on comments we 

received during the comment period 

and our further consideration of the 

issues raised. For background on the 

statutory and legislative history and 

case law relevant to this regulation, we 

refer the reader to the proposed rule (85 

FR 47333, August 5, 2020). 

In finalizing the specific changes to 

the regulation in this document and 

setting out the accompanying clarifying 

discussion in this preamble, the 

Services are establishing a prospective 

standard only. Although this regulation 

is effective 30 days from the date of 

publication as indicated in DATES above, 

it will apply only to relevant 

rulemakings for which the proposed 

rule is published after that date. Thus, 

the prior version of the regulations at 50 

CFR part 424 will continue to apply to 

any rulemakings for which a proposed 

rule was published before the effective 

date of this rule. Nothing in this final 

revised regulation is intended to require 

that any previously completed critical 

habitat designation be reevaluated on 

the basis of this final regulation. 

Discussion of Changes From the 

Proposed Rule 

In this section, we discuss changes 

between the proposed regulatory 

definition and the definition we are 

finalizing for the term ‘‘habitat,’’ as that 

term is used in the context of critical 

habitat designations and which will be 

set forth in the implementing 

regulations at 50 CFR 424.02. 

We proposed a regulatory definition 

of ‘‘habitat’’ as that term is used in the 

context of critical habitat designations 

under the Act. In addition to the 

proposed definition, we also sought 

comment on an alternative definition. 

The Act defines ‘‘critical habitat’’ in 

section 3(5)(A), establishing separate 

criteria depending on whether the 

relevant area is within or outside of the 

geographical area occupied by the 

species at the time of listing, but it does 

not define the broader term ‘‘habitat.’’ 

See 16 U.S.C. 1532(5)(A). The Services 

have not previously adopted a 

definition of the term ‘‘habitat’’ through 

regulations or policy; rather, we have 

traditionally applied the criteria from 

the definition of ‘‘critical habitat’’ based 

on the implicit premise that any specific 

area satisfying that definition was 

habitat. 

However, the Supreme Court recently 

held that an area must logically be 

‘‘habitat’’ in order for that area to meet 

the narrower category of ‘‘critical 

habitat’’ as defined in the Act 

Weyerhaeuser Co. v. U.S. FWS, 139 S. 

Ct. 361 (2018). The Court stated: ‘‘. . . 

Section 4(a)(3)(A)(i) does not authorize 

the Secretary to designate [an] area as 

critical habitat unless it is also habitat 

for the species.’’ Id. at 368; see id. at 369 

n.2 (‘‘we hold that an area is eligible for 

designation as critical habitat under 

section 4(a)(3)(A)(i) only if it is habitat 

for the species’’). Given this holding in 

the Supreme Court’s opinion in 

Weyerhaeuser, we are adding a 

regulatory definition of ‘‘habitat.’’ 

Under the text and logic of the statute, 

the definition of ‘‘habitat’’ must 

inherently be at least as broad as the 

statutory definition of ‘‘critical habitat.’’ 

To give effect to all of section 3(5)(A), 

the definition of ‘‘habitat’’ we are 

finalizing is broad enough to include 

both occupied areas and unoccupied 

areas, because the statute defines 

‘‘critical habitat’’ to include both 

occupied and unoccupied areas. 139 S. 

Ct. at 369 (‘‘[h]abitat can, of course, 

include areas where the species does 

not currently live, given that the statute 

defines critical habitat to include 

unoccupied areas’’). 

We received numerous comments that 

the proposed and alternative definitions 

lacked clarity, were ambiguous, and 

used terms that needed to be defined 

further. Additionally, commenters 

identified specific issues with some of 

the terms used in the proposed and 

alternative definitions and were 


khammond on DSKJM1Z7X2PROD with RULES