U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

92–453 PDF 2004

REAUTHORIZATION OF THE U.S. DEPARTMENT

OF JUSTICE: EXECUTIVE OFFICE FOR U.S. ATTORNEYS, CIVIL DIVISION, ENVIRONMENT AND

NATURAL RESOURCES DIVISION, EXECUTIVE OFFICE FOR U.S. TRUSTEES, AND OFFICE OF

THE SOLICITOR GENERAL

HEARING

BEFORE THE

SUBCOMMITTEE ON 

COMMERCIAL AND ADMINISTRATIVE LAW

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

MARCH 9, 2004

Serial No. 79

Printed for the use of the Committee on the Judiciary

(

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

(II)

COMMITTEE ON THE JUDICIARY 

F. JAMES SENSENBRENNER, JR., Wisconsin, Chairman 

HENRY J. HYDE, Illinois 

HOWARD COBLE, North Carolina 

LAMAR SMITH, Texas 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

WILLIAM L. JENKINS, Tennessee 

CHRIS CANNON, Utah 

SPENCER BACHUS, Alabama 

JOHN N. HOSTETTLER, Indiana 

MARK GREEN, Wisconsin 

RIC KELLER, Florida 

MELISSA A. HART, Pennsylvania 

JEFF FLAKE, Arizona 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

JOHN R. CARTER, Texas 

TOM FEENEY, Florida 

MARSHA BLACKBURN, Tennessee 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

MARTIN T. MEEHAN, Massachusetts 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

TAMMY BALDWIN, Wisconsin 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California

PHILIP G. KIKO, Chief of Staff-General Counsel 

PERRY H. APELBAUM, Minority Chief Counsel 

SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW

CHRIS CANNON, Utah Chairman

HOWARD COBLE, North Carolina 

JEFF FLAKE, Arizona 

JOHN R. CARTER, Texas 

MARSHA BLACKBURN, Tennessee 

STEVE CHABOT, Ohio 

TOM FEENEY, Florida 

MELVIN L. WATT, North Carolina 

JERROLD NADLER, New York 

TAMMY BALDWIN, Wisconsin 

WILLIAM D. DELAHUNT, Massachusetts 

ANTHONY D. WEINER, New York

RAYMOND V. SMIETANKA, Chief Counsel 

SUSAN A. JENSEN, Counsel 

DIANE K. TAYLOR, Counsel 

JAMES DALEY, Full Committee Counsel 

STEPHANIE MOORE, Minority Counsel 

(III)

C O N T E N T S 

MARCH 9, 2004

OPENING STATEMENT 

Page 

The Honorable Chris Cannon, a Representative in Congress From the State 

of Utah, and Chairman, Subcommittee on Commercial and Administrative 

Law ........................................................................................................................ 1

The Honorable Melvin L. Watt, a Representative in Congress From the State 

of North Carolina, and Ranking Member, Subcommittee on Commercial 

and Administrative Law ...................................................................................... 5

WITNESSES 

The Honorable Thomas L. Sansonetti, Assistant Attorney General, Environment and Natural Resources Division, United States Department of Justice 

Oral Testimony ..................................................................................................... 7

Prepared Statement ............................................................................................. 8

The Honorable Peter D. Keisler, Assistant Attorney General, Civil Division, 

United States Department of Justice 

Oral Testimony ..................................................................................................... 11

Prepared Statement ............................................................................................. 13

Mr. Guy A. Lewis, Director, Executive Office for United States Attorneys, 

United States Department of Justice 

Oral Testimony ..................................................................................................... 17

Prepared Statement ............................................................................................. 19

Mr. Lawrence A. Friedman, Director, Executive Office for United States, 

Trustees, United States Department of Justice 

Oral Testimony ..................................................................................................... 21

Prepared Statement ............................................................................................. 23

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared statement of the Honorable Theodore B. Olsen, Solicitor General 

of the United States, United States Department of Justice, submitted for 

the record .............................................................................................................. 1

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Post-hearing responses from the Honorable Thomas L. Sansonetti .................... 38

Post-hearing responses from the Honorable Peter D. Keisler ............................. 43

Post-hearing responses from Mr. Guy A. Lewis .................................................... 66

Post-hearing responses from Mr. Lawrence A. Friedman .................................... 72

(1)

REAUTHORIZATION OF THE U.S. DEPARTMENT OF JUSTICE: EXECUTIVE OFFICE FOR 

U.S. ATTORNEYS, CIVIL DIVISION, ENVIRONMENT AND NATURAL RESOURCES DIVISION, 

EXECUTIVE OFFICE FOR U.S. TRUSTEES, 

AND OFFICE OF THE SOLICITOR GENERAL 

TUESDAY, MARCH 9, 2004

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON COMMERCIAL

AND ADMINISTRATIVE LAW, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC.

The Subcommittee met, pursuant to call, at 3:05 p.m., in Room 

2141, Rayburn House Office Building, Hon. Chris Cannon (Chair of 

the Subcommittee) Presiding. 

Mr. CANNON. The Subcommittee will come to order. 

The Subcommittee on Commercial and Administrative Law is 

meeting this afternoon to receive testimony from five components 

of the Department of Justice as part of the Subcommittee’s continuing oversight efforts. These components are the Environment 

and Natural Resources Division, the Civil Division, the Executive 

Office for United States Attorneys, the Executive Office for the 

United States Trustees and the Office of the Solicitor General. 

However, no witness will appear at today’s hearing on behalf of the 

Solicitor General’s office. Written testimony has been submitted. 

[The prepared statement of Mr. Olsen follows:]

PREPARED STATEMENT OF THEODORE B. OLSEN

Mr. Chairman and Members of the Subcommittee: Thank you for inviting me to 

submit testimony regarding the Office of the Solicitor General in connection with 

the Committee’s hearing. 

I. THE SOLICITOR GENERAL’S DUTIES

When Congress created the position of Solicitor General in 1870, it expressed high 

ambitions for the Office: the Solicitor General is the only officer of the United States 

required by statute to be ‘‘learned in the law,’’ 28 U.S.C. Section 505. The Committee Report accompanying the 1870 Act stated: ‘‘We propose to have a man of sufficient learning, ability, and experience that he can be sent . . . into any court 

wherever the Government has an interest in litigation, and there present the case 

of the United States as it should be presented.’’

In modern times, the Solicitor General has exercised responsibility in three general areas. 

1. The first, and perhaps best-known, function of the Solicitor General is his representation of the United States in the Supreme Court. The late former Solicitor 

General Erwin Griswold captured the nature of this responsibility in observing:

2

The Solicitor General has a special obligation to aid the Court as well as serve 

his client. . . . In providing for the Solicitor General, subject to the direction 

of the Attorney General, to attend to the ‘‘interests of the United States’’ in litigation, the statutes have always been understood to mean the long-term interests of the United States, not simply in terms of its fisc, or its success in particular litigation, but as a government, as a people.

This responsibility, of course, includes defending federal statutes challenged as 

unconstitutional on grounds that do not implicate the executive branch’s constitutional authority when a good faith defense exists. The Solicitor General also defends 

regulations and decisions of Executive Branch departments and agencies, and is responsible for representing independent regulatory agencies before the Supreme 

Court. 

The Supreme Court practice of the Solicitor General includes filing petitions for 

review on behalf of the United States. In this regard, as the Supreme Court has 

stated:

This Court relies on the Solicitor General to exercise such independent judgment and to decline to authorize petitions for review in this Court in the majority of the cases the Government has lost in the courts of appeals.

The Solicitor General also responds to petitions filed by adverse parties who were 

unsuccessful in the lower federal courts in criminal prosecutions or civil litigation 

involving the government. Where review is granted in a case in which the United 

States is a party, the Solicitor General is responsible for filing a brief on the merits 

with the Court and he or a member of his staff presents oral argument before the 

Court. The Solicitor General also files amicus curiae, or friend-of-the-court, briefs in 

cases involving other parties where he deems it in the best interest of the United 

States to do so. Although most amicus filings occur only after review has been 

granted, the Solicitor General also submits amicus briefs at the petition stage when 

invited by the Court to do so or, in rare instances when Supreme Court resolution 

of the questions presented may affect the administration of federal programs or policies. The Supreme Court requested the Solicitor General to file an amicus brief at 

the petition stage 24 times during the October Term 2002 and has done so 7 times 

during the current Term (2003). The Solicitor General generally seeks and receives 

permission to participate in oral argument in those cases in which the government 

has filed an amicus brief on the merits. 

2. The second category of responsibilities discharged by the Solicitor General relates to government litigation in the federal courts of appeals, as well as in state, 

and sometimes even foreign, appellate courts. Authorization by the Solicitor General 

is required for all appeals to the courts of appeals from decisions adverse to the 

United States in federal district courts. The Solicitor General’s approval is also required before government lawyers may seek en banc, or full appellate court, review 

of adverse decisions rendered by a circuit court panel. Additionally, government 

intervention or participation as amicus curiae in federal appellate courts (as well 

as state or foreign appellate courts) must be approved by the Solicitor General. In 

addition, once a case involving the government is lodged in a court of appeals, any 

settlement of that controversy requires the Solicitor General’s assent. In cases of 

particular importance to the government, lawyers from the Office of Solicitor General will directly handle litigation in the lower federal courts. Recent examples include the Microsoft antitrust appeal, important criminal procedural issues when addressed by the courts of appeals en banc, and cases involving enemy combatants. 

3. In the third category of responsibilities are decisions with respect to government intervention in cases where the constitutionality of an Act of Congress ‘‘affecting the public interest’’ has been brought into question at any level within the federal judicial system. In such circumstances, 28 U.S.C. Section 2403 requires that the 

Solicitor General be notified by the court in which the constitutional challenge has 

arisen and be given an opportunity to intervene with the full rights of a party. 

Although OSG’s mission and strategic objectives will not change in FY 2005, the 

challenges it faces will. OSG is facing new expectations unprecedented in its history. 

It is being called upon to assume added responsibilities. For example, the Solicitor 

General was asked by the Attorney General and the White House to assume litigation responsibilities in the lower courts with regard to a number of challenges to 

the legality of detaining enemy combatants captured during the ongoing military operations in Afghanistan and other aspects of the global war on terrorism. These 

cases are being handled by a team of government lawyers headed by the Solicitor 

General. 

* * * * *

3

1Of the 70 merits briefs filed, some were consolidated resulting in 1 oral argument. 

The various decisions discussed above for which the Solicitor is responsible are 

arrived at only on the basis of written recommendations and extensive consultation 

among the Office of the Solicitor General and affected offices of the Justice Department, Executive Branch departments and agencies, and independent agencies. 

Where differences of opinion exist among these components and agencies, or between them and the Solicitor General’s staff, written views are exchanged and meetings are frequently held in an attempt to resolve or narrow differences and help the 

Solicitor General arrive at a final decision. Where consideration is given to an amicus curiae filing by the government in non-federal government litigation in the Supreme Court or lower federal appellate courts, it is not uncommon for the Solicitor 

or members of his staff to meet with counsel for the parties in an effort to understand their respective positions and interests of the United States that might warrant its participation. 

II. ORGANIZATION OF THE SOLICITOR GENERAL’S OFFICE

The Office of the Solicitor General has a staff of 48, of which 22 (including the 

Solicitor General) constitute its legal staff and the remainder serve in managerial, 

technical, or clerical capacities. Of the 22 attorneys, four are Deputy Solicitors General, senior lawyers with responsibility for supervising matters in the Supreme 

Court and lower courts within their respective areas of expertise. Seventeen attorneys serve as Assistants to the Solicitor General. These lawyers are assigned a 

‘‘docket’’ of cases presenting a wide spectrum of legal problems under the guidance 

and supervision of the Deputies. Additionally, OSG employs four lawyers who are 

recipients of the Bristow Fellowships, a one-year program open to highly qualified 

young attorneys, generally following a clerkship with a federal court of appeals’ judge. Bristow Fellows assist the Deputies and Assistants in a variety of tasks related to the litigation responsibilities of the Office. All of the attorneys in the Office 

have outstanding professional credentials. 

The authorized personnel levels and budget of the Office of the Solicitor General 

have remained relatively stable in recent years. The Fiscal Year 2004 funding level 

is 49 workyears and $7,889,000. 

Most of these funds are committed for nondiscretionary items. For example, only 

two items, personnel-related costs and GSA rent, consume nearly 83 percent of the 

budget. However, the Office is employing various strategies to offset the otherwise 

rising costs, such as re-engineering our brief preparation process, modifying service/

maintenance contracts and reducing overtime costs. The Office of the Solicitor General requests $8,538,000 for FY 2005, including in- creases for inflationary costs, and $293,000 to cover two new attorney positions. 

These additional positions will assist the Office in managing its increasing work 

load and representing the interests of the United States Government. 

III. OFFICE WORKLOAD

The following statistics may provide a helpful way of measuring the Office’s heavy 

workload given the relatively small staff of attorneys. During the 2002 Term of the 

Supreme Court (June 29, 2002 to June 27, 2003), the Solicitor General’s Office handled approximately 3,731 cases in the Supreme Court. We filed full merits briefs in 

70 cases considered by the Court (and presented oral argument in 62 of those 

cases), 1 which represented 81% of the cases that the Supreme Court heard on the 

merits in that Term. The government prevailed in 79% of the cases in which it participated. We filed 23 petitions for a writ of certiorari or jurisdictional statements 

urging the Court to grant review in government cases, 349 briefs in response to petitions for certiorari filed by other parties, and waivers of the right to file a brief in 

response to an additional 3,262 petitions for certiorari. In response to invitations 

from the Supreme Court, we also filed 24 briefs as amicus curiae expressing the 

government’s views on whether certiorari should be granted in cases in which the 

government was not a party, and filed 3 amicus briefs without invitation at the petition stage. The above figures do not include the Office’s work in cases filed under 

the Supreme Court’s ‘‘original’’ docket (cases, often between States but involving the 

federal government, in which the Supreme Court sits as a trial court), and they also 

do not include the numerous motions, responses to motions, and reply briefs that 

we filed relating to matters pending before the Court. 

During this same one-year period, the Office of the Solicitor General reviewed 

more than 2,129 cases in which the Solicitor General was called upon to decide 

whether to petition for certiorari; to take an appeal to one of the federal courts of 

appeals; to participate as an amicus in a federal court of appeals or the Supreme 

4

Court; or to intervene in any court. Thus, during this one-year period, the Office 

of the Solicitor General handled well over 5,860 substantive matters on subjects 

touching on virtually all aspects of the law and the federal government’s operations. 

IV. CONCLUSION

In carrying out the foregoing responsibilities, my staff and I have productively 

and efficiently adhered to the time-honored traditions of the Office of the Solicitor 

General—to be forceful and dedicated advocates for the government, as well as officers of the Court with a special duty of candor and fair dealing.

Mr. CANNON. By the way of explanation, our oversight responsibilities require us to examine the performance of these Justice 

Department components, evaluate how well they are positioned to 

achieve their goals and determine both the adequacy of their funding levels and the need for changes in legislation to facilitate their 

mission. I should state at the outset, this has not and will not be 

the only encounter the Subcommittee has with the Justice Department components within our jurisdiction. It is our intention to continually monitor the activities of these components during the coming year. I do not anticipate that will entail unwanted confrontation, but rather it will be undertaken in the spirit of cooperation 

that I am sure will be shared by other Members of the Subcommittee. 

I believe that effective oversight requires that we must listen in 

order to learn so that we can intelligently question and suggest. We 

do not undertake this process, though, without expectations from 

the Department of Justice, expectations that are shared not only by 

the American people but also, I am sure, by the agency itself. We 

expect the Department of Justice should have and should continue 

to perform competently and fairly. It has been—it should be conscious of the awesome power of the Government that has been entrusted to it and of its responsibility to ensure that it is exercised 

in the interest of justice and for the common good. We will work 

with the components we hear from today and continue to critically 

study their activities and needs. 

I wish to stress the significance of today’s hearing for both the 

Justice Department and Subcommittee Members. The information 

we receive from the witnesses today will be of immediate value in 

determining the adequacy of funding levels proposed by the President in his budget request for the Department of Justice. It also 

greatly influences the crafting of the Department’s reauthorization 

legislation. 

The Subcommittee’s oversight efforts were particularly instrumental in having several provisions included in the reported 

version of H.R. 3036, the 3-year reauthorization of the Justice Department, which is expected to be considered shortly by the House. 

One of these provisions mandates the use of Federal—as opposed 

to private sector—facilities for Justice Department employee training, unless specifically exempted by the Attorney General with an 

accompanying report to the Congress. The second provision requires a senior official in the Justice Department to be designated 

to assume primary responsibility for privacy policy. The third requires the preparation of an annual report to Congress on bankruptcy criminal enforcement and abuse prevention. 

The components that we will receive testimony from this afternoon account for funding that exceeds $2 billion. They discharge 

5

broad litigating, appellate, support and administrative responsibilities. So broad is their mission that the attention that we give to 

their performance can significantly improve the lives, safety and 

well-being of every American. 

I now turn to my colleague, Mr. Watt, the distinguished Ranking 

Member of this Subcommittee, and ask if he has any opening remarks. 

Mr. WATT. Thank you, Mr. Chairman. 

I appreciate the Chairman calling the hearing, and I will follow 

the Chairman’s entreaty in his statement at the point of which he 

said we should listen and learn. 

So we have got four witnesses. I welcome all of you and look forward to your testimony and particularly welcome Mr. Friedman 

back. He was here more recently, I think, than some of the others, 

talking about bankruptcy and some other issues. So I look forward 

to your testimony and underscore the significance of it, given the 

magnitude of the budgets and the scope of responsibility that your 

particular divisions have on the American people. 

Thank you and yield back. 

Mr. CANNON. Thank you. 

Without objection, the gentleman’s entire statement will be 

placed in the record. 

Also without objection, all Members may place their statements 

in the record at this point. 

Is there any objection? Hearing none, so ordered. 

Without objection, the Chair will be authorized to declare recesses of the Subcommittee today at any point. Hearing none, so 

ordered. 

I ask unanimous consent that Members have 5 legislative days 

to submit written statements for inclusion in today’s hearing 

record. So ordered. 

Now, Mr. Coble, would you like to do an opening statement? 

Mr. COBLE. I thank you and the Ranking Member for having 

called the hearing today and welcome our witnesses here. And not 

unlike you and my colleague and the colleague from North Carolina, I am prepared to listen and learn. 

Mr. CANNON. I suspect it is going to be a very interesting day. 

I would like to introduce our witnesses. The first witness is 

Thomas Sansonetti, who serves as the Assistant Attorney General 

in charge of the Environment and Natural Resources Division of 

the Department of Justice. Prior to his career appointment, Mr. 

Sansonetti was the Solicitor for the Department of Interior from 

1990 to 1993. During his tenure there, Mr. Sansonetti signed the 

$1.1 billion Exxon Valdez oil spill settlement after serving as one 

of the six Federal negotiators. He was also appointed counsel to the 

Endangered Species Committee for the spotted owl hearings in Oregon. 

Previously, Mr. Sansonetti served as Interior Associate Solicitor 

for Energy and Resources from 1987 to 1989, which was just after 

I left the Interior Department as an Associate Solicitor there. He 

was Administrative Assistant and Legislative Director for Wyoming 

Congressman Craig Thomas during the 101st Congress. President 

George W. Bush also appointed him to chair the Presidential Advisory Council on Western Water Resources. 

6

Mr. Sansonetti received both a BA and an MBA from the University of Virginia and received his law degree from Washington and 

Lee University. 

Our next witness is Mr. Peter Keisler, Assistant Attorney General of the Department’s Civil Division. Mr. Keisler has served in 

this capacity since July of 2003 and was previously the Principal 

Deputy Associate Attorney General and Acting Associate Attorney 

General. Prior to joining the Department of Justice in 2002, he was 

a partner in the Washington, D.C., office of Sidley Austin Brown 

& Wood. He also served as Associate Counsel to the President during the Reagan administration and was a law clerk to Justice Anthony Kennedy of the U.S. Supreme Court. 

Mr. Keisler graduated magna cum laude from Yale college and 

earned his law degree from Yale Law School in 1985. 

Our third witness is Guy Lewis, who is the Director of the Executive Office for United States Attorneys at the Department of Justice. Mr. Lewis is the former United States Attorney from the 

Southern District of Florida, where he had been an assistant since 

1988 prior to being appointed as the United States Attorney in 

2000. 

Mr. Lewis received his undergraduate degree from the University 

of Tennessee and his law degree from the University of Memphis. 

Our final witness is Mr. Lawrence Friedman, who serves as the 

Director of the Executive Office of the United States Trustees. This 

office provides direction and guidance to the United States Trustees Program, which is responsible for overseeing the administration 

of bankruptcy cases and private trustees. This program operates 

nationwide, except for the States of North Carolina and Alabama, 

through a system of 21 regions, each of which is headed by a 

United States trustee. 

Prior to his appointment as Director, Mr. Friedman was a partner in the Southfield, Michigan, law firm of Friedman and Kohut, 

where his practice focused on consumer and business bankruptcy 

as well as commercial litigation. Mr. Friedman received his undergraduate degree from Hillsdale College in Hillsdale, Michigan, and 

his law degree from Thomas M. Cooley Law School in Lansing, 

Michigan. 

I extend to each of you my warm regards and appreciation for 

your willingness to participate in today’s hearing. In light of the 

fact that your written statements will be included in the record, I 

request that you limit your oral remarks to 5 minutes. Accordingly, 

please feel free to summarize or highlight the salient points of your 

testimony. 

You will note that we have a lighting system that starts with a 

green light. After 4 minutes, it turns to yellow; and after a minute, 

it turns to a red light. 

It is my habit to tap the gavel at 5 minutes. We would appreciate 

it if you would finish up your thoughts in that time frame. You 

don’t need to stop. Sometimes when you are down there reading or 

talking, we forget the light. That is a general reminder and doesn’t 

mean to cut you off in the middle of your statement or your thinking. 

After all the witnesses have presented their remarks, the Subcommittee Members in the order they arrive will be permitted to 

7

ask questions of the witnesses subject to the 5-minute limit and alternating between sides. 

Mr. Sansonetti, would you proceed with your testimony, please. 

STATEMENT OF THE HONORABLE THOMAS L. SANSONETTI, 

ASSISTANT ATTORNEY GENERAL, ENVIRONMENT AND NATURAL RESOURCES DIVISION, UNITED STATES DEPARTMENT 

OF JUSTICE 

Mr. SANSONETTI. Chairman Cannon, Congressman Watt and 

Members of the Subcommittee, I am pleased to be here today and 

welcome this opportunity to tell you about the Environment and 

Natural Resources Division. I will summarize our work and then 

discuss the resources that the President and the Department are 

requesting for the Division for fiscal year 2005. 

If Congress approves our funding for the Hazardous Materials 

Transportation Initiative, which will help achieve the Department’s 

strategic goal of protecting against the threat of terrorism, and, 

secondly, our Tribal Trust Fund Litigation Initiative, which will 

provide necessary resources to defend multibillion dollar claims 

against the public fisc, then the Division will receive the first real 

increase in its budget in the last decade. 

The Division’s mission is to enforce civil and criminal environmental laws that protect the health and environment of our citizens and to defend suits challenging environmental and conservation laws, programs and activities. We also handle matters concerning Indian rights and claims and Federal property acquisition. 

We have approximately 400 lawyers handling over 7,000 active 

cases, and we represent virtually every Federal agency, with cases 

in every judicial district in the United States. Our principal clients 

include the EPA and the Departments of Interior, Defense and Agriculture. Many of our cases involve defensive litigation regarding 

alleged violations of the United States of environmental laws, for 

example, in connection with Federal highway construction or an 

airport expansion. Another portion of our docket consists of nondiscretionary litigation involving land acquisition for important national projects. 

When our defensive and our eminent domain litigation is considered together, approximately one-half of our attorney time is spent 

on nondiscretionary cases. Now this fact has important resource 

implications as we can’t always anticipate what our workload is 

going to be. Nevertheless, we are committed to ensuring that 

American taxpayers are getting their money’s worth. 

Despite budget constraints and declining resources beginning in 

the 1990’s, we have achieved significant cost-effective results. Fiscal year 2003 was a record-breaking year for civil penalties in environmental cases, $203 million we pulled in; and we also saw the 

largest civil penalty against a single company in history, $34 million. In fact, we have secured civil penalties and criminal fines for 

the Treasury that far exceed our budget and obtained benefits for 

human health and the environment to provide an impressive return on the taxpayer’s dollar. We have also protected the taxpayers 

from invalid or overbroad monetary claims, sometimes for hundreds of millions of dollars. 

8

One important way that we leverage our resources, we have 

forged partnerships with U.S. Attorneys’ Offices and State and 

local officials across the Nation. My written testimony provides 

some examples that illustrate the success of these partnerships. 

We approach all of our work with the spirit of teamwork and cooperation in federalism that is the hallmark of effective environmental protection. 

Now, for fiscal year 2005, the President has requested a little 

over $105 million as part of the Department’s GLA appropriation. 

Much of the increase over the fiscal year 2004 appropriation is for 

required adjustments and allowances, but we are also requesting 

$14.6 million for two initiatives, the Hazardous Materials Transportation Initiative and the Tribal Trust Litigation Initiative. As I 

mentioned at the beginning, the funding for both of these initiatives is critical. 

The Hazardous Materials, or HAZMAT, Transportation Initiative 

will help the Department achieve the strategic goal of protecting 

America against the threat of terrorism by making it more difficult 

for terrorists and other criminals to transport hazardous materials 

illegally. It will also promote compliance with the HAZMAT transportation laws so as to reduce the inherent risks posed by the 

transportation of HAZMAT and boost the enforcement efforts of the 

United States Attorneys and the State and local law enforcement 

agencies. In fact, we have already partnered with the U.S. Attorneys Office in the Southern District of Ohio to successfully prosecute Emery Worldwide Airlines under this initiative, as is discussed in greater detail in my written testimony. 

Now the Tribal Trust Fund Litigation Initiative is essential for 

the Government to effectively defend itself in 22 lawsuits brought 

by various Indian tribes alleging that the United States has mismanaged tribal assets and failed to provide an accounting of the 

money collected, managed and disbursed by the United States on 

the tribes’ behalf. Some cases seek an order requiring the United 

States to perform a multi-million dollar, multi-year accounting, 

while other cases seek a money judgment for the claimed losses. In 

the cases filed so far, the tribes are claiming they are owed more 

than $200 billion, and there may be more claims coming. 

In conclusion, the Environment and Natural Resources Division’s 

work is challenging and complex. I am proud of the people in my 

Division who consistently provide excellent, cost-effective legal 

services to the American people. 

I would be happy to answer any questions that you have about 

the Division and its work. 

Mr. CANNON. Thank you, Mr. Sansonetti. I can assure we have 

some questions. 

[The prepared statement of Mr. Sansonetti follows:]

PREPARED STATEMENT OF THOMAS L. SANSONETTI

INTRODUCTION

Chairman Cannon, Congressman Watt, and Members of the Subcommittee, I am 

pleased to be here today, along with my colleagues from the Department of Justice. 

I welcome this opportunity to discuss the Environment and Natural Resources Division, one of the principal litigating Divisions within the Department of Justice, and 

to answer any questions that the Subcommittee may have about the Division. 

9

In my testimony today, I will first summarize the Division’s work and provide an 

outline of the scope of our responsibilities. Our work is essential to the implementation of Congressional programs to protect the nation’s environment and its natural 

resources, and to defend federal agencies sued by others. We have a long and distinguished history, and the Division’s attorneys have built a record that demonstrates 

their commitment to legal excellence. In the second part of my testimony, I will discuss the resources that the Administration is requesting for the Division as part of 

its fiscal year 2005 budget. In particular, I will focus on the monies we are requesting for two ENRD initiatives—the Hazardous Materials Transportation Initiative, 

which will promote homeland security, and the Tribal Trust Fund Litigation Initiative, which will provide resources to defend multi-billion dollar claims against the 

public fisc. If Congress decides to approve funding for these two important initiatives, it would constitute the first real increase that the Division’s budget has seen 

in the last decade. 

OVERVIEW OF THE ENVIRONMENT AND NATURAL RESOURCES DIVISION

The Environment and Natural Resources Division’s mission is to enforce civil and 

criminal environmental laws and programs to protect the health and environment 

of United States citizens, and to defend suits challenging environmental and conservation laws, programs and activities. We represent the United States in matters 

concerning the protection, use and development of the Nation’s natural resources 

and public lands, wildlife protection, Indian rights and claims, and the acquisition 

of federal property. We represent virtually every federal agency in over 7,000 active 

cases in every judicial district in the nation utilizing the efforts of approximately 

400 lawyers at the present time. Our lawyers are frontline litigators, approximately 

10% of whom are located in field offices around the United States, and we are considering how to expand our field office presence even further. Our principal clients 

include the U.S. Environmental Protection Agency, and the Departments of Agriculture, Commerce, Defense, Energy, the Interior, and Transportation. We also recently added the Department of Homeland Security to our roster of client agencies. 

Many of our cases involve defensive litigation in which the United States is being 

sued for alleged violations of the environmental laws, for example in connection 

with federal highway construction, airport expansion, or military training. Effective 

lawyering in these cases is critical to agency implementation of Congressionally 

mandated programs and protection of the public fisc. This large defensive docket, 

which is non-discretionary, has important implications for the Division’s resources 

because it means that we cannot always anticipate our future workload. 

In addition to these defensive cases, another significant portion of our docket consists of non-discretionary eminent domain litigation. This work, undertaken pursuant to Congressional direction or authority, involves the acquisition of land for important national projects such as the construction of federal courthouses and the 

construction or expansion of border stations for the Immigration and Naturalization 

Service. When our defensive and eminent domain litigation is considered together, 

approximately half of our attorney time is spent on non-discretionary cases. 

The Division is committed to ensuring that American taxpayers are getting their 

money’s worth. Despite budget constraints and declining resources beginning in the 

1990’s, we have achieved significant, cost-effective results for the public. In December 2003, the Attorney General announced that Fiscal Year 2003 was a record 

breaking year for the recovery of civil penalties in environmental cases. Court 

awards and consent decrees achieved by ENRD and our colleagues in the United 

States Attorney’s Offices resulted in more than $203 million in penalties for civil 

violations of the nation’s environmental laws. The Division also obtained the largest 

civil penalty in its history against a single company for environmental violations 

when it settled a Clean Water Act enforcement action on the eve of trial against 

the Colonial Pipeline Company in exchange for a $34 million penalty. Colonial also 

agreed to implement a comprehensive repair and maintenance program for its 5,500 

mile pipeline, which had spilled 1.45 million gallons of oil in North Carolina, South 

Carolina, Tennessee, Georgia, and Louisiana. 

Conserving the Superfund to ensure prompt cleanup of hazardous waste sites is 

also a top priority for the Division, which seeks to return money to the Superfund 

from responsible parties and obtain cleanup orders and commitments from those 

most responsible for the hazardous substances at the site. In fact, when court-ordered injunctive relief for Superfund, the Clean Air Act, Clean Water Act, and hazardous waste enforcement laws is combined, we obtained more than $7.9 billion in 

cleanup and compliance commitments in the first two fiscal years of this Administrations, our best years ever, and Fiscal Year 2003 was another successful year in 

that regard. 

10

Altogether, the Division has secured civil penalties, criminal fines, and cleanup 

costs for the United States Treasury that far exceed its share of the Department’s 

budget, and obtained benefits for human health and the environment that provide 

an impressive return on the taxpayer’s dollar. We also have protected the taxpayer 

from invalid or overbroad monetary claims against the United States, claims that 

sometimes involve hundreds of millions of dollars. 

But the Division’s accomplishments cannot simply be summed up in numerical 

terms. The Division also achieves immediate on-the-ground benefits for the American people. For example, in a recent case in Massachusetts, a local power plant 

agreed to a settlement that will result in significant air quality improvements for 

Boston school children and North Shore commuters, as well as a restored salt marsh 

in Chelsea and construction of a new commuter bike path across the Mystic River 

that will link the cities of Everett and Somerville. Among the projects to which 

plant owner Exelon Mystic LLC committed is retrofitting 500 Boston school buses 

with pollution control equipment, which it will supply with ultra low-polluting diesel 

fuel. The project, which will benefit more than 28,000 school children who ride the 

buses every day, will reduce tailpipe emissions from the buses by more than 90 percent, or more than 30 tons a year, and will make Boston the first major city in the 

country to have retrofitted its entire school bus fleet. 

One important way that we leverage our resources and enhance our effectiveness 

is by forging partnerships with U.S. Attorneys’ Offices and state Attorneys General 

and other state and local officials across the nation. Through Law Enforcement Coordinating Committees and other task forces developed both by the Division and the 

U.S. Attorneys’ Offices across the country, we have increased cooperation among 

local, state, and federal environmental enforcement offices. Our commitment to cooperative federalism has result in success after success, as shown by cases such as 

the far-reaching Clean Air Act settlement with agri-business giant Archer Daniel 

Midlands in which eleven States and three counties joined, and another settlement 

with Nucor Steel involving 14 steel mills in which four States joined. In each of 

these cases, the States that partnered with the Division to bring the actions have 

shared in the civil penalties as well as the benefits from the injunctive relief obtained. To assure continuity in these practices, the Division joined the National Association of Attorneys General and EPA in announcing and distributing our ‘‘Guidelines for Joint State/Federal Civil Environmental Enforcement Litigation,’’ which 

will assist states and the federal government in the conduct of joint civil environment enforcement litigation. 

These are only a few of the Division’s many cases, but they are representative of 

the high-quality, cost-effective work that the Division’s staff performs every day on 

behalf of the American taxpayer. If you are interested in learning more about the 

Division’s work, please visit our website at http://www.usdoj.gov/enrd/pressroom.htm. 

ENRD’S BUDGET REQUEST FOR FISCAL YEAR 2005

The Division receives its annual appropriation from the General Legal Activities 

(GLA) portion of the Justice Department’s appropriation. For fiscal year 2005, the 

President has requested $105,457,000 for the Division within the Justice Department’s GLA appropriation. Much of the increase over the FY 2004 appropriation is 

due to required or inflationary adjustments and allowances, including pay raises, 

other salary adjustments, and increases for GSA rent, which will allow the Division 

to maintain its current level of operations. However, as part of his proposed budget, 

the President is also requesting $14,601,000 for two ENRD initiatives—the Hazardous Materials Transportation Initiative (for which the President requests 

$594,000) and the Tribal Trust Fund Litigation Initiative. These initiatives, if funded, will, respectively, promote homeland security and enable the Division to effectively defend the United States against a wave of claims for billions of dollars. They 

would also constitute the first real increase that the Division’s budget has seen in 

the last decade. For the reasons that I will now give, funding for both initiatives 

is critical. 

The Hazardous Materials Transportation Initiative has two purposes. First, it will 

help the Department achieve its strategic goal of protecting America against the 

threat of terrorism by making it more difficult for terrorists and other criminals to 

transport hazardous materials (‘‘hazmat’’) illegally, thereby helping to prevent, disrupt, and defeat terrorist operations before they occur. Second, it will ensure that 

industries regulated under the hazmat transportation laws comply with those laws 

so as to reduce the inherent risks posed by the transportation of hazardous materials. The Hazmat Initiative is concentrated on three tasks: 1) development of strategy and coordination with other federal, state and local agencies; 2) development of 

11

criminal prosecutions and referrals for civil enforcement actions; and 3) development 

and implementation of a training program to assist federal, state and local prosecutors and investigators in uncovering and prosecuting such illegal activity. These 

measures will effectively marshal and focus all available resources, create an immediate deterrent effect, and ensure long-term effectiveness through training of United 

States Attorneys and state enforcement offices around the country, and will give 

state and local law enforcement agencies a considerable boost. In fact, we have already had one major successful prosecution under this initiative, involving Emery 

Worldwide Airlines, Inc., which fortunately did not involve terrorist activity, but did 

result in a $6 million criminal penalty and Emery’s commitment to develop a compliance program to detect and prevent future violations. 

The Tribal Trust Fund Litigation Initiative is essential for the government to effectively defend itself in twenty-two current lawsuits brought by various Indian 

Tribes alleging that the U.S. has mismanaged tribal assets including the money collected, managed and disbursed by the U.S. on behalf of the Tribes. Some of these 

cases seek an order requiring the U.S. to perform a multi-million dollar, multi-year 

accounting, and others seek a money judgment for losses the Tribes claim they have 

suffered. In the twenty-two cases filed so far, the Tribes are claiming that they are 

owed more than $200 billion—and approximately 300 other Tribes may be preparing 

claims for similar amounts. These Tribal Trust cases are similar to the significant 

Cobell v. Norton lawsuit, a class action on behalf of 300,000 individual Indians. Although there are some significant differences between the tribal trust cases and 

Cobell in that the tribal trust cases concern tribal assets rather than individual assets and there is potentially much more money at stake, they are similar in that 

they both involve millions of historical accounting documents spanning more than 

a century of economic activity, and the issues are legally and factually complex. 

This initiative will enable the Department of Justice to effectively defend the 

United States in the first wave of cases filed seeking recompense for Tribal Trust 

accounts, and maintain an adequate staffing level in our remaining non-discretionary caseload. Failure to provide sufficient resources for these cases could lead 

to additional allegations of contempt, substantial and unnecessary monetary awards 

at taxpayer expense, and a public loss of confidence in the federal government in 

general. 

CONCLUSION

The work of the Environment and Natural Resources Division is both challenging 

and complex. It is vitally important to the implementation of Congressional programs and priorities regarding public health and the environment, to the protection 

of the public fisc, and to the advancement of the public interest generally. We have 

an exceptional record of assuring that polluters are made to comply with the law, 

that responsible private parties are made to cleanup Superfund sites rather than 

leaving the taxpayer on the hook, and that criminal defendants are punished appropriately. I am proud of the people in my Division, who consistently provide topnotch, cost-effective legal services to the American people and who dedicate their 

lives to assuring that the rule of law is met and complied with by all parties. 

I would be happy to answer any questions you might have about the Division and 

its work.

Mr. CANNON. Mr. Keisler, would you give us your testimony. 

STATEMENT OF THE HONORABLE PETER D. KEISLER, ASSISTANT ATTORNEY GENERAL, CIVIL DIVISION, UNITED STATES 

DEPARTMENT OF JUSTICE 

Mr. KEISLER. Thank you, Mr. Chairman and Congressman Watt 

and Congressman Coble. It is a great privilege for me to appear before you at this oversight hearing and to discuss the work of the 

Civil Division and to respond to any questions you have. 

The Civil Division, as you know, represents the United States in 

court in a wide variety of matters. We don’t make policy, but we 

represent the people who do. Virtually every executive branch 

agency as well as Members of Congress are clients of ours at one 

time or another, and the cases we handle therefore touch upon virtually every aspect of the operations of the Federal Government. 

12

We defend the constitutionality of acts of Congress when they 

are challenged and the lawfulness of Government regulations. We 

seek to recover monies lost to the Government through fraud. We 

help to administer sensitive national compensation programs. We 

enforce important consumer protection statutes; and we represent 

the Government in a wide range of cases, contract cases, tort cases, 

immigration cases. 

We have 716 attorneys who do this, supported by over 300 support personnel; and they work very hard. They work hard because, 

while we had pending cases numbering about 20,000 in 2001, it 

has climbed now to 35,000, an increase of 75 percent in just 3 

years. 

I am very pleased to be able to report that, notwithstanding the 

challenges that that kind of caseload imposes, we have had a very 

successful year and a lot of positive developments to report. We 

had record recovery last year in cases of fraud against the Government. We and the U.S. Attorneys’ Offices, working together, recov- ered $2.2 billion of monies that otherwise had been lost. That is a 

partnership between Guy Lewis’ U.S. Attorneys’ Offices and the 

Civil Division that we are proud of. In the last 3 years, we exceeded the $1 billion mark each time, 

which is also a record. 

We also successfully defended the Government, which, as you 

know, is the largest commercial actor in the world, the largest purchaser of goods and services, in a range of commercial cases in 

which claims that we believe were meritless and the judges were 

convinced eventually were meritless in the billions and billions of 

dollars were dismissed. 

We successfully defended congressional authority and executive 

authority against numerous challenges. 

We convicted Internet pharmacy operators who were illegally 

selling prescription drugs. 

We successfully defended the Federal Trade Commission and 

Federal Communication Commission’s Do Not Call registry to protect people who wish to be protected from the intrusion of telemarketing. 

We have helped administer sensitive national compensation programs like the Radiation Exposure Compensation Program, the 

Vaccine Program. 

We worked closely with Special Master Ken Feinberg to help implement the 9/11 Victims Compensation Fund. We were particularly gratified that, at the close of the deadline for filing in that 

program, upwards of 98 percent of the eligible families who lost a 

loved one to that attack participated in the program, which we regard as a strong vote of confidence in its fairness and sensitivity. 

We get involved in terrorism litigation when that happens on the 

civil side. We are particularly proud of the work we have done in 

the terrorist financing area, defending the Government’s actions in 

court when they are challenged, to help the Government shut down 

the flow of money to international terrorist organizations. 

We are in the same position as the Environment and Natural Resources Division in the sense that most of our work is defensive. 

Ninety percent are not cases we bring or initiate but cases that are 

brought against the Government to which we must respond. That 

13

has, as Tom said, obvious budgetary implications; and it makes it 

difficult to predict the workload. 

What we do try to do is keep this Committee and your colleagues 

closely and promptly informed about where we see those trends 

going so you can consider what action you wish to take—budgetary, 

policy, whatever—and we can work together for solutions when 

problems like that arise. If there are spikes or trends and certain 

types of cases are going way up, as we are experiencing in the immigration area right now, where we had 5,700 pending cases in 

2001 and 12,000 in 2003, then we try to get that information to you 

promptly so we can work together to talk about how to address it. 

When in a compensation program there is a threat that the number of eligible valid claims will swamp the amount of money to pay 

them, as there is in the Radiation Exposure Compensation Program, we try to bring that to your attention quickly and work together. 

My testimony describes some of the areas in which we feel we 

need additional resources. Immigration and the radiation program 

are among them, and I would be happy to address that. 

Let me thank you, Mr. Chairman, for the opportunity to appear 

before you and to answer your questions. 

Mr. CANNON. Thank you, Mr. Keisler. We do have questions on 

those issues, and we will return to those. 

[The prepared statement of Mr. Keisler follows:]

PREPARED STATEMENT OF PETER D. KEISLER

Chairman Cannon, Congressman Watt, and Members of the Subcommittee: 

I appreciate the opportunity to discuss the work of the Civil Division of the Department of Justice and our budget and resource needs for Fiscal Year 2005. 

The Division represents the interests of the United States in a wide range of civil 

matters. Our cases encompass virtually every aspect of the Federal government—

from defending the constitutionality of Federal statutes to recovering money from 

those who have committed fraud in connection with government programs, to the 

administration of national compensation programs to the representation of Federal 

agencies in a host of matters that arise as part and parcel of Government operations—contract disputes, allegations of negligence and discrimination, loan defaults, and immigration matters. We have 716 dedicated public servants who serve 

as attorneys in the Division and 336 full and part time employees who provide essential paralegal, administrative, and clerical support. 

Over the last year and a half, the Civil Division has:

• Working with the United States Attorneys, recovered more than two billion 

dollars lost through fraud against health care and defense programs;

• Protected the public fisc from billions of dollars in claims arising from the 

Government’s commercial activities;

• Defended against challenges to Congressional and Executive exercises of 

power;

• Convicted Internet pharmacy operators for illegally selling prescription drugs;

• Defended the legality of the ‘‘Do Not Call’’ list; and

• Played a major role in the administration of congressional programs, such as 

the September 11th Victim Compensation Fund; the Division has also continued its work with the Vaccine Injury Compensation Program, and the Radiation Exposure Compensation Act.

• Further, in the months since the September 11th attacks, there has been a 

substantial increase in civil litigation challenging the Federal government’s 

coordinated response to those attacks and the Administration’s policies designed to prevent future acts of terrorism. The Civil Division currently handles some 100 pieces of litigation directly related to the September 11 attacks 

and the country’s response to those attacks.

14

• The Civil Division also helped to secure convictions in a court in Athens, 

Greece of 15 members of the notorious Greek terrorist group 17 November. 

NATIONAL SECURITY

Among the laws and policies of most importance to the Administration, the Congress, and the public are those intended to protect our nation’s security. Our leadership has committed itself to devoting all resources necessary to disrupt, weaken, 

and eliminate terrorist networks; to prevent or thwart terrorist operations; and to 

bring justice to perpetrators of terrorist attacks. And we in the Civil Division are 

privileged to contribute to this mission through our representation of the United 

States in litigation that relates to the Federal Government’s efforts to protect 

against threats to our national security. In fulfilling our litigation responsibilities, 

we take seriously the Attorney General’s charge to think outside the box, but never 

outside the Constitution. 

Indeed, civil cases related to the war on terrorism often raise unprecedented 

issues that require novel legal strategies. And the consequences are large, as litigation losses in this area could undercut policies crucial to the security of our citizens. 

Civil Division attorneys defend challenges to the USA PATRIOT Act and the 

AntiTerrorism Act, lead efforts to defend the decision to freeze the assets of terrorist 

organizations, and ensure that immigration hearings may proceed without risking 

harm to our nation’s counterterrorism strategy. Our attorneys defend enforcement 

actions involving the detention and removal of suspected alien terrorists, defend 

designations of Specially Designated Global Terrorists, and defend our CommanderIn-Chief in suits seeking to enjoin the country’s military actions in Iraq. Of the 37 

counterterrorism-related court decisions handed down in FY 2003, we prevailed in 

35—a success rate of 95 percent. 

In light of the increasingly crucial role that the Civil Division plays in the Nation’s counterterrorism efforts, the President requests in his FY 2005 budget an increase of 11 positions (eight attorneys and three support staff), 6 FTE, and $856,000 

for counterterrorism litigation. 

* * * * *

While national security cases are paramount, they still represent a small fraction 

of the over 35,000 cases and matters pending with the Civil Division. This vast and 

diverse workload is handled by our trial attorneys who spend their time on the front 

lines of litigation—preparing motions, taking depositions, negotiating settlements, 

conducting trials, and pursuing appeals. 

PROTECTING THE PUBLIC FISC

Our dockets are filled with cases that involve substantial monetary claims against 

the Government. The significance of these claims cannot be overstated. 

Our responsibilities have included: (1) the 122 Winstar suits in which hundreds 

of financial institutions have sought tens of billions of dollars for alleged losses that 

occurred in the wake of banking reforms enacted in the 1980s; (2) the Cobell class 

action—perhaps the largest ever filed against the Government; and (3) the Spent 

Nuclear Fuel cases, in which nuclear utilities allege a multi-billion dollar breach of 

contract against the Department of Energy for its failure to begin acceptance and 

disposal of spent nuclear fuel. 

In these and thousands of other defensive monetary matters, our mission is to ensure that the will of Congress and the actions of the Executive Branch are vigorously and fairly defended, and that meritless claims are not paid from the public 

fisc. Thus far, we have been largely successful. Fifty-five of the original 122 Winstar

suits have been resolved without the government paying any money whatsoever. 

And in fiscal year 2003, we defeated, in total, $12 billion in unmeritorious claims 

asserted against the United States. 

In any given year about 15 to 20 percent of our cases involve affirmative litigation 

to enforce Government regulations and policies, and to recover money owed the Government from commercial transactions, bankruptcy proceedings, and fraud. In one 

such case, the hospital chain Columbia/HCA agreed to pay the government a total 

of $1.7 billion in criminal fines and civil penalties for systematically defrauding federal health care programs. The conclusion of this multi-year probe in June 2003 

marked the largest recovery ever reached by the government in a health care fraud 

investigation. Rivaling HCA in terms of size and potential recoveries are numerous 

ongoing investigations against many pharmaceutical companies or other related entities, charging various allegations of fraud on the Medicare and Medicaid programs 

in the pricing or delivery of drugs. Recoveries in the last three years have already 

exceeded $1 billion with potential recoveries totaling $1.5 billion in the next three 

15

years. In total, in fiscal year 2003, the Civil Division, working in concert with the 

United States Attorneys, recovered approximately $2.2 billion in fraud suits and investigations, thus setting precedents that will deter future efforts to defraud the 

American people. 

WORKLOAD TRENDS

In 2001, the Civil Division handled about 20,000 cases and matters with a staff 

of 722 trial attorneys. In just two years our pending caseload grew 75 percent to 

nearly 35,000, while the number of trial attorneys has actually dropped to 716. 

During this time we witnessed significant growth in appellate cases and matters—driven largely by the steep rise in challenges to immigration enforcement actions. Cases in the Court of Federal Claims, the Court of Appeals for the Federal 

Circuit, the Court of International Trade, and in foreign courts continued to account 

for a very significant portion of our workload—some 34 percent. In contrast, the 

number of trial cases assigned to district courts declined both numerically and as 

a proportion of our total workload. Most notably, the sharpest increases are attributable to our expanding responsibilities for administering compensation programs. 

ALTERNATIVES TO LITIGATION

The Vaccine Injury Compensation Program was created in 1986 by the National 

Childhood Vaccine Injury Act—to encourage childhood vaccination by providing a 

streamlined system for compensation in rare instances where an injury results. To 

date, nearly 1,800 people have been paid in excess of $1.4 billion. 

In FY 2003, nearly 2,500 claims were filed under the Program, compared with 

just 213 in FY 2001—a nearly twelve-fold increase largely attributable to claims alleging that a vaccine preservative, thimerosal, caused autism. As the Court of Federal Claims increases its staff of Special Masters, we expect further growth in vaccine-related work. By the end of FY 2005, more than 3,400 additional cases are expected to be filed. 

The Vaccine Injury Compensation Trust Fund derives its funding from an excise 

tax on vaccine manufacturers and is used to make compensation payments to eligible claimants and to reimburse the Court of Federal Claims, and the Departments 

of Justice and Health and Human Services for expenses related to the administration of the Program. The annual appropriations that set the Civil Division’s reimbursement level have stayed flat at $4,028,000 since 1996. The FY 2005 President’s 

Budget seeks an increase in reimbursable authority of $2,305,000 to handle the exponential growth in vaccine injury claims alleging injuries caused by thimerosal. Increasing the Civil Division’s reimbursement level so it can adequately address this 

significant workload growth will help to assure that qualifying claims are paid while 

the long term viability of the Trust Fund is protected. 

Congress passed the Radiation Exposure Compensation Act (RECA) in 1990 to 

offer an apology and compensation to people who suffered disease or death as a result of the nation’s nuclear weapons program during the Cold War era. 

In July 2000, RECA Amendments were enacted. Major changes included new categories of beneficiaries; expansion of eligible diseases, geographic areas, and time 

period; and a reduction in the radiation threshold that miners must meet to receive 

compensation. As a result, over 3,800 new claims were filed in FY 2001—more than 

in the prior six years combined. 

Awards rose sharply too, from an average of about $20 million a year to over $172 

million in 2002 alone. To administer the expanded program and avoid the development of backlogs, the Consolidated Appropriations Act for Fiscal Year 2004 earmarked an additional $1,000,000 for FY 2004 over the base of $1,996,000. 

The Amendments also precipitated a need for additional Trust Fund resources. In 

FY 2001, Congress appropriated an emergency supplemental appropriation to address immediate requirements. Long-term needs were addressed through the Fiscal 

Year 2002 National Defense Authorization Act. That Act made the RECA Trust 

Fund a mandatory appropriation and established annual funding caps through FY 

2011 totaling $655 million. The caps set by the Act were based on the assumption 

that there would be a sharp decline in the number of claims approved each year. 

To date, the claims have not been declining as rapidly as assumed, and it has become obvious that these annual Trust Fund caps are insufficient for eligible claimants. The General Accounting Office recognized this problem in its April 2003 report 

to Congress. In FY 2003, approximately $10 million in awards could not be paid 

until FY 2004. For FY 2004, funds are projected to be exhausted this summer, 

meaning that almost $28 million, will not be paid until FY 2005. Without an increase, FY 2005 funds are projected to be exhausted by December, bringing the cumulative shortfall to $72 million. Accordingly, to ensure that adequate resources are 

16

available to pay all eligible claimants through FY 2005, the President’s Budget 

seeks a discretionary appropriation of $72 million. 

The most recent addition to the Division’s responsibility for compensation programs is the September 11th Victim Compensation Fund of 2001. The Air Transportation Safety and System Stabilization Act (P.L. 107–42) created the Program to pay 

compensation to families of deceased individuals and to those physically injured as 

a result of the September 11th terrorist attacks. 

The sheer complexity of the determinations and the deep, emotional context of the 

decision-making makes the Program one of the Division’s greatest challenges arising 

out of the devastation of September 11th. 

Under the law, all claims were to be filed by December 22, 2003. The success of 

the Program is borne out by the eligible claimants’ phenomenal level of participation. Under the leadership of Special Master Kenneth Feinberg, the Program received a total of 7,357 claims, 2,970 death and 4,387 injury. An extraordinary 98 

percent of those eligible filed a death claim, far exceeding the Special Master’s most 

optimistic projections in December 2001. 

The Program has already paid over $2 billion to claimants. The amounts approved 

for deceased victims range from $250,000 to $6.9 million. Awards approved for physically injured (but not deceased) victims ranged from $500 to $7.9 million. 

There remains much work to be done before the last award is issued. Justice and 

compassion demand that claims be resolved as expeditiously as possible. For FY 

2004, a total of $38.3 million was appropriated to ensure the Program has access 

to the resources needed to meet the administration’s goal—to judiciously resolve all 

claims in FY 2004. 

Due to the volume of claims filed immediately before the deadline, some percentage of claims may not be finally closed in FY 2004. The FY 2005 President’s Budget 

seeks $11.4 million to ensure that each and every claim is fully resolved, each payment is made, and the substantial amount of administrative close-out operations is 

completed seamlessly. 

Because the enacting legislation provided an indefinite appropriation for making 

compensation payments, there will be sufficient funds to pay an estimated $5.4 billion in approved claims over the life of the program. 

IMMIGRATION LITIGATION

The Office of Immigration Litigation (‘‘OIL’’) defends the Government’s immigration laws and policies, and handles challenges to immigration enforcement actions. 

At no time in history has this mission been so important, and never before has it 

consumed as large a percentage of the Civil Division’s resources as it does today. 

Immigration attorneys have defended the government’s efforts to detain and remove known terrorists and other criminal aliens. In addition, OIL has helped to preserve the government’s policy of closing hearings for aliens who were deemed to be 

of interest to the post-9/11 terrorism investigation. Vigorous defense of these cases 

is critical to the nation’s counter-terrorism strategy. 

Immigration has been, by far, the fastest growing component of the Civil Division’s docket. The Civil Division handles all federal court challenges to decisions of 

the Board of Immigration Appeals (the ‘‘BIA’’). These challenges have more than 

doubled in the past five years. Whereas OIL handled roughly 5,700 cases in 2001, 

it handled over 12,000 in 2003. 

The primary reason for this growth is that the BIA has reduced a 56,000 case 

backlog, as a result of the Attorney General’s initiative to streamline the agency’s 

procedures. As the BIA’s output has increased, so has our workload. Moreover, further contributing to the growth in immigration cases are three other factors: (1) an 

increase in new BIA cases as a result of heightened immigration enforcement; (2) 

the substantial increase in the percentage of BIA decisions that are appealed to the 

federal courts; and (3) the Supreme Court’s recent decisions opening up additional 

avenues for judicial review that Congress attempted to foreclose just eight years 

ago. 

This enormous growth is driving the per attorney caseload to over 130 cases in 

FY 2004, a more than doubling of the historic caseload of 60 cases per attorney. 

Without additional resources in FY 2005, the attorney caseload is expected to exceed 

160 cases per attorney, which is more than three cases per week. The Divisions’s 

temporary, stopgap measure of assigning immigration cases to other Branches (such 

as Torts and Commercial)—which do not share OIL’s experience in immigration law 

and which do not have the capacity to handle these cases indefinitely—is not a permanent solution. 

OIL attorneys are the last line of defense in immigration enforcement. Any attempt to strengthen our borders and to protect ourselves from terrorists must enVerDate 0ct 09 2002 08:47 Jun 17, 2004 Jkt 089266 PO 00000 Frm 00020 Fmt 6633 Sfmt 6621 G:\WORK\COMM\030904\92453.000 HJUD1 PsN: 92453
17

sure that OIL has adequate resources to defend the BIA’s decisions. A failure to provide these resources would necessarily weaken our country’s efforts to protect homeland security. 

The President therefore requests in his FY 2005 budget a program increase of 30 

positions (22 attorneys and eight support staff), 15 FTE, and $3,500,000 for immigration litigation. 

PERFORMANCE

By concentrating on the Civil Division’s top priorities, this testimony provides little elaboration on the thousands of cases and matters that form the traditional core 

of our work. 

The Civil Division has a longstanding commitment to maximizing the effectiveness of scarce Government resources. It is with pride that I can report that performance targets across the board were met or exceeded in FY 2003—as we succeeded 

in recovering substantial funds owed to the Government, defeating unmeritorious 

claims and prevailing the vast majority of cases involving challenges to the programs of some 200 agencies that are our clients. 

PRESIDENT’S BUDGET REQUEST

The President’s FY 2005 request seeks 1,115 positions, 1,157 FTE and 

$193,110,000. Included in this request are the base resources required to maintain 

superior legal representation services that have yielded such tremendous success. 

Please note that the reduced funding for administration of the September 11th Victim Compensation Fund results in the overall request level being $19.4 million less 

than the FY 2004 appropriated level. 

The President’s request includes additional funds to: defend the government in 

some of the most contentious terrorism-related cases; support the Office of Immigration Litigation’s key role in protecting our nation’s borders; handle the exponential 

growth in vaccine injury claims alleging injuries caused by thimerosal; and ensure 

adequate resources are available to pay all eligible RECA claimants. 

At this time, Mr. Chairman, I would be happy to address any questions you or 

Members of the Subcommittee may have.

Mr. CANNON. Mr. Lewis. 

STATEMENT OF GUY A. LEWIS, DIRECTOR, EXECUTIVE OFFICE 

FOR UNITED STATES ATTORNEYS, UNITED STATES DEPARTMENT OF JUSTICE 

Mr. LEWIS. Good afternoon, Mr. Chairman, Congressman Watt, 

Members of the Subcommittee. Thank you very much for the opportunity to be here. 

I, too, am pleased to appear here with my colleagues from the 

Department of Justice. It is also my honor to be representing the 

outstanding men and women of the 94 United States Attorneys’ Offices around the country, the prosecutors that are on the front lines 

trying cases, and the support staff that are making these cases 

happen. 

Let me thank you, Mr. Chairman, and this Committee and your 

staffs for your continued support of the important work being done 

by the United States Attorneys Offices around the country. The 

Nation’s prosecutors are a critical part of the Department of Justice 

in fulfilling our promise to the American people and to protect 

them from terrorism, from corporate fraud, from the gun violence 

that occurs and basically enforcing the criminal laws as well as the 

civil law in each district. 

The U.S. Attorneys Offices are responsible primarily for investigating and prosecuting criminal cases as well as civil cases. We 

work with the FBI, the DEA, other departments like Homeland Security and our State and local partners. I said many times as a 

U.S. Attorney in South Florida, we couldn’t do what we do without 

18

participation from State and local officials. U.S. attorneys serve not 

only as the chief Federal law enforcement agent, as I said, in their 

district, they are also the chief Federal civil litigator in their districts as well. 

Let me briefly outline our 2005 budget request. In fiscal year 2005 we are requesting a budget of just over $1.5 billion to support 

more than 10,000 positions. As part of that request, we are seeking 

an additional $12.4 million to support an increase of 148 positions. 

The President, the Attorney General, and the Deputy Attorney 

General have directed that we focus our efforts, and that we invest 

our monies in the programs that are critical to the Department’s 

strategic goals; and we are doing that. 

Our request recognizes that prevention of terrorism and prosecution of terrorist acts are the most important responsibility of every 

U.S. Attorney. In fiscal year ’03, the United States Attorneys responded to the Attorney General’s directive to use the full array of 

antiterrorism statutes to detect and disrupt terrorist activities and 

to prosecute terrorist cases. 

Last year alone, the U.S. Attorneys’ Offices around the country 

were involved in more than 1,000 terrorism and terrorism-related 

cases, last year alone, including many that you know of—John 

Walker Lindh, Zacarias Massaoui, the Lackawanna Six up in New 

York, the shoe bomber in Massachusetts, the Ernest James Ujama 

case in Washington State who was the defendant who pled guilty 

for providing material support to the Taliban. 

Another priority for the United States Attorneys in ’03 was the 

prosecution of corporate fraud. We have spent a lot of time and effort trying to prosecute those cases that, again, many that you have 

seen in the news and otherwise. 

The President, as you know, formed the Corporate Fraud Task 

Force in ’02, and a number of United States Attorneys Offices 

around the country have participated in that task force. Since ’02, 

over 300 major corporate fraud cases have been brought, resulting 

in over 250 convictions. Again, very strong cases that I think send 

the right message. 

Another important priority for the United States Attorneys is the 

flow of illegal firearms. Project Safe Neighborhood, a very important program from the President and from the Department. Last 

year alone, we were up over 68 percent in terms of prosecutions of 

Federal gun crimes. 

The enhancement that we request is offset by a number of cost 

saving, managerial moves that we are making. We are going 

through and making some cuts because, frankly, we are—the net 

change to our program with the request and the offsets is a $5.8 

million mark. So we are going through and tightening our belt in 

a number of areas. That has been difficult, but we are going to 

make that happen. 

In conclusion, Mr. Chairman, Members of the Committee, the 

men and women of the United States Attorneys Office and the Executive Office are dedicated to working hard to earn the public’s 

trust. We appreciate your continued support. This Committee support has been very important to the people out in the field that 

really are making the cases, and we appreciate your continued support. 

19

I would be glad to answer any questions at the end of the hearing. 

Mr. CANNON. Thank you, Mr. Lewis. 

[The prepared statement of Mr. Lewis follows:]

PREPARED STATEMENT OF GUY A. LEWIS

Mr. Chairman, and Members of the Subcommittee, I am pleased to appear before 

you today with my colleagues from the Department of Justice. 

INTRODUCTION

It is my honor to be here representing the outstanding women and men of the 

94 United States Attorneys’ offices, and I thank you on their behalf for your continuing support of their efforts. The Executive Office for United States Attorneys 

(EOUSA) provides administrative support for the United States Attorneys, their offices, and their staffs around the country. EOUSA provides leadership and support 

on every issue involving the U.S. Attorneys’ offices, including their overall operations, budgets, management, personnel matters, and performance evaluations. In 

addition, EOUSA serves as the voice of the United States Attorneys within the Department of Justice. 

OVERVIEW

Each United States Attorney serves as both the chief federal law enforcement officer and the chief federal litigator, both criminal and civil, in their respective districts, and works closely with the six litigating divisions of the Department of Justice. 

The investigation and prosecution of terrorism continues to be the number one 

priority for every United States Attorney. The United States Attorneys are aggressively pursuing criminal investigations throughout the United States, prosecuting 

and, whenever possible, preventing terrorist-related activity aimed at the United 

States and its citizens. Some of the important terrorism prosecutions during the 

past year include:

• Eastern District of Virginia. Zacarias Moussaoui was charged with six 

counts of conspiracy connected with the September 11 attacks. John Walker 

Lindh pled guilty to aiding the Taliban and was sentenced to 20 years in prison. Seven defendants known as the Northern Virginia Jihad have been 

charged with conspiracy to violate the Neutrality Act, a number of weapons 

offenses, and in the case of one defendant, conspiracy to provide material support to al-Qaida.

• Western District of New York. The so-called ‘‘Lackawanna Six’’ pled guilty 

to providing material support to Osama bin Laden and al-Qaida and have 

been sentenced to significant terms in prison.

• District of Massachusetts. Richard Reid, the ‘‘shoe bomber,’’ pled guilty to 

terrorism charges and was sentenced to life in prison.

• District of New Jersey. Hemant Lakhani was charged with attempting to 

smuggle shoulder-fired missiles into the United States and sell them to a person whom he believed to be a representative of a terrorist group.

In fighting the war on terrorism, the United States Attorneys have been greatly 

aided by the tools made available by the Congress through the USA PATRIOT Act. 

The Patriot Act has been invaluable in allowing investigators to use in terrorism 

cases the same tools long used in organized crime, drug trafficking, fraud and other 

types of cases. The Patriot Act has also aided our efforts by allowing for the sharing 

of information among government agencies so that we can better ‘‘connect the dots’’

in the course of investigating terrorism cases. In addition, the Act has proven effective in updating the law to reflect new types of threats and technologies used by 

terrorists and by helping the government uncover, track, and freeze terrorist finances worldwide. The United States Attorneys very strongly urge the Congress to 

renew those provisions of the Patriot Act that are due to expire next year. 

The prosecution of corporate fraud also continues to be a priority for the United 

States Attorneys. Since the creation of the Corporate Fraud Task Force by President 

Bush in 2002, over 300 corporate fraud cases have been filed, with more than 250 

convictions obtained through December 31, 2003. Some examples of the United 

States Attorneys’ successes in this area during the past year include the following:

20

• Middle District of Pennsylvania. Five former executives of Rite-Aid, Inc., 

the nation’s third largest drug store chain, pled guilty to various charges in 

connection with a scheme to inflate the company’s earnings. Five defendants 

pled guilty and a sixth was convicted by a jury.

• Southern District of Texas. Three former executives of Dynegy, Inc. were 

indicted on charges relating to a complex scheme of accounting fraud intended 

to mislead the investing public. Two defendants pled guilty and a third was 

convicted.

• Northern District of Alabama. Several former executives of HealthSouth 

Corporation were charged with offenses arising out of their scheme to artificially inflate the company’s earnings, misrepresent its true financial condition, and mislead lenders. To date, fourteen defendants have pled guilty.

The Department’s continued emphasis on prosecuting corporate fraud during 2003 

also included investigations into mutual fund and hedge fund fraud. To date, more 

than 35 such investigations have been opened. 

Another important priority for the United States Attorneys is the aggressive enforcement of our nation’s gun laws through Project Safe Neighborhoods (PSN). PSN 

continues to provide a multi-faceted approach to deterring and punishing gun crime 

by providing every United States Attorney with the tools they need to combat the 

gun problem in their respective districts. The number of federal firearms prosecutions has increased significantly every year that PSN has been in place, increasing 

68% since the program began. In FY2003, the Department filed 10,556 federal firearms cases, the highest number ever recorded. The United States Attorneys are 

committed to working closely with state and local authorities to ensure that those 

who violate our nation’s gun laws are prosecuted to the fullest extent of the law. 

Prosecuting human trafficking cases is another priority for the United States Attorneys. Trafficking victims are being lured to this country in alarming numbers, 

with false promises of better economic opportunity, only to be forced to work under 

inhumane conditions in prison-like factories or as prostitutes. Examples of recent 

trafficking cases include the following:

• Western District of Texas. Several defendants have recently been charged 

with, inter alia, transportation of minors for sexual activity. According to the 

indictment, the defendants participated in a conspiracy to recruit and smuggle female aliens under the age of 18 from Mexico to the United States.

• Southern District of Texas. Jose Ricardo Sanchez Morales, of Honduras, 

was sentenced to 78 months in federal prison for unlawfully transporting 11 

undocumented aliens, one of whom died when the vehicle they were being 

transported in was involved in a roll-over accident.

• District of Nevada. Quinton Williams was sentenced to 125 months in prison for operating an interstate prostitution business in which he transported 

women, including minors, from various cities to Las Vegas for prostitution.

The United States Attorneys will continue to devote considerable resources to aggressively prosecuting this most heinous of crimes. 

While we have achieved considerable success in the past year, more can and must 

be done to ensure the safety of our communities. Our Fiscal Year 2005 budget request will enable us to meet this challenge. 

FISCAL YEAR 2005 BUDGET REQUEST

To carry out our mission in Fiscal Year 2005, we are requesting a budget of just 

over $1.5 billion to support 10,262 positions. As part of our request, we are seeking 

$12.4 million to support an increase of 148 positions. 

The President, Attorney General, and Deputy Attorney General have continued to 

ask that we look for opportunities to re-prioritize activities before seeking new resources, that we concentrate our investment in programs that are of the highest priority and greatest value, and that we abandon activities that are not effective. Our 

2005 budget request complies with these requests and includes savings to help us 

fund the enhancements we seek. 

The request before you recognizes that the prevention of terrorism and the investigation and prosecution of terrorist acts are the most important priorities of every 

United States Attorney. Our 2005 request also recognizes that, in addition to the 

pressing priority of terrorism, there are other crime problems that must be addressed at the federal level. To this end, our request also seeks the resources necessary for the continued support of the Corporate Fraud Task Force, PSN, and other 

important initiatives. 

21

As additional attorneys have been allocated to our offices in past years to address 

the strategic priorities of fighting terrorism, corporate fraud, and gun violence, a 

continuing need exists for additional support staff assistance. As a result, we are 

asking for 26 new paralegal positions in order to address the current workforce imbalance and enhance attorney productivity. 

In addition to our role as the federal government’s prosecutors, the civil divisions 

within the United States Attorneys’ offices handled over d that, in addition to the 

pressing priority of terrorism, there are still other crime problems that we must address. One example of this is firearmsThe Administration, in partnership with state 

and local law enforcement agencies, is As a result, w191,000 civil cases this past 

fiscal year and collected money on behalf of the Treasury equal to over seven times 

the cost of our civil programs. Our request for 24 new civil defensive positions will 

ensure that our offices can continue to adequately defend the United States in civil 

actions brought against the federal governmentofficials and agencies,. 

Our Fiscal Year 2005 budget request for enhancements totaling 148 positions and $12.4 million also includes $18.2 million in program offsets. As a result, the net 

change to our program is a negative $5.8 million. The United States Attorneys will 

be reducing their Office of Legal Education travel by $1.8 million. Also, the Department proposes toWe will offset the additional $5.1 million in pay annualization 

through other management efficiencies, and. Finally, the United States Attorneys 

will be further reducinge their non-personnel expenses by an additional $11.3 million. in management efficiencies, such as reductions in legal research. 

We recognize that stewardship of appropriated funds is a serious responsibility, 

and our commitment to sound management runs deep. Consistent with As suggested in the President’s Management Agenda, without proper planning, the skill 

mix of the federal workforce will not reflect tomorrow’s changing mission. T the 

composition of the United States Attorneys’ workforce recognizes that it must adapt 

in terms of size and competencies to accommodate changes in mission, technology, 

and labor markets. We are also in the process of offering a buyout available to 600 

employees in specific job series , toin order to facilitate restructuring toward a more 

technological and efficient workforce. with attorneys and paralegals with information technology skills and budget analysts with auditing and accounting backgrounds. We expect to achieve substantial savings through these efforts. 

CONCLUSION

In conclusion, the men and women of the United States Attorneys’ offices and the 

Executive Office for United States Attorneys are dedicated to fighting terrorism, 

protecting our neighborhoods and schools from gun violence and drug-related 

crimes, upholding civil rights, and prosecuting those who commit corporate fraud. 

We believe that our FY 2005 budget request is a responsible one that will allow us 

to maintain the important programs designed to carry out the Department’s priorities within its strategic plan. We hope to build on our successes in cooperation with 

this Subcommittee and with its support for the President’s FY 2005 Budget request 

for the offices of the United States Attorneys. 

Again, we appreciate your continued support for the United States Attorneys’ offices, and I look forward to answering any questions that you may have.

Mr. CANNON. The record should also reflect the attendance of Mr. 

Chabot from Ohio, our colleague and friend. 

Mr. Friedman. 

STATEMENT OF LAWRENCE A. FRIEDMAN, DIRECTOR, EXECUTIVE OFFICE FOR UNITED STATES TRUSTEES, UNITED 

STATES DEPARTMENT OF JUSTICE 

Mr. FRIEDMAN. Thank you, Mr. Chairman, Congressman Watt 

and Members of the Committee. I appreciate the opportunity to appear before you today to discuss the President’s fiscal year 2005 

budget request and to update you on some of the U.S. Trustee Program’s most recent accomplishments. 

Our mission is to enforce the bankruptcy laws, to protect the 

bankruptcy system from fraud and abuse and to supervise the administration of bankruptcy cases. We carry out broad, administrative, regulatory and litigation duties under both title 11, the Bankruptcy Code, and under title 28 of the United States Code. 

22

It is an exciting time in the history of the program. We are transforming the agency into a litigating component dedicated to combating fraud and abuse. With 1.6 million new bankruptcy cases 

filed last year, we are enforcing our civil bankruptcy laws and assisting prosecutors in obtaining criminal convictions. 

In fiscal year 2002, the program launched a National Civil Enforcement Initiative to identify and remedy debtor fraud and abuse 

and to protect consumer debtors against unscrupulous attorneys 

and others who prey upon those in dire financial straits. Our results are impressive. During fiscal year 2003, program offices took 

more than 41,000 civil enforcement actions, yielding more than half 

a billion dollars in remedies. The potential benefit to creditors due 

to these actions is more than three times the program’s fiscal year 

2003 appropriation. 

Examples of the type of abuses we have addressed include false 

statements and the concealment of assets in Kentucky, where a 

debtor failed to disclose various property interests, including an 

ownership interest in six companies, full use of a Lexus and a 

401(k) and a brokerage account; 

Substantial abuse in Tennessee, where joint debtors earning 

$145,000 annually sought to discharge $184,000 in credit card debt 

while continuing to live an extravagant lifestyle, including a new 

Cadillac and a timeshare in Hawaii; 

Sanctioning of petition preparers in the Northern District of California, who preyed upon an elderly woman with dementia, attempting to use the bankruptcy system to gain access to equity in her 

home; 

Attorney misconduct in Indiana, where attorneys at a law firm 

there coerced their clients to pay fees without disclosure and without court authorization; 

And unscrupulous credit solicitations in New Jersey, where a finance company purported to have approval of the bankruptcy court 

to authorize automobile financing. 

I can tell you from my visits to more than 70 of the 95 program 

offices that a significant benefit of the initiative has been the 

invigoration of the program staff. Field offices are sharing successful practices in their districts with others in the program, and 

there is an energy that is spreading throughout the country. Similarly, we have integrated the private trustees into this effort, and 

this has maximized the role they play in protecting the integrity 

of the system. 

Finally, I have attended hundreds of meetings throughout the 

country this year with judges, practitioners and others in the bankruptcy community and have found wide support for our efforts to 

improve the system. 

Some abuses of the bankruptcy system merit criminal sanction 

in addition to civil action. Bankruptcy fraud is also linked to other 

crimes such as tax fraud, mortgage fraud, credit card fraud and 

identity theft. The program identifies criminal violations, and assists in their investigation and prosecution of bankruptcy crimes. 

Program staff cooperate with and provide specialized expertise to 

other components of the Department, including U.S. Attorneys and 

the FBI. 

23

A key improvement in the criminal enforcement area has been 

the program’s creation in July of 2003 of the Criminal Enforcement 

Unit staffed by experienced career prosecutors. A second key improvement has been the development of a new criminal enforcement tracking system to more accurately track allegations and referrals and to identify types of crimes and trends that are occurring. 

The program’s fiscal year 2005 budget request of $174,355,000 is 

essentially a current services budget. It will allow us to continue 

our enforcement efforts and to provide a modest enhancement for 

our information technology program. 

In closing, I would like to say I am very proud of the effort of 

the dedicated men and women of the United States Trustee Program. Through their commitment and tenacity, they are transforming this agency into a professional litigating organization. I 

also want to thank the Members of the Subcommittee, your staffs 

and the rest of the Members for their support of the program. 

I am pleased to respond to your questions. 

Mr. CANNON. Thank you, Mr. Friedman. 

[The prepared statement of Mr. Friedman follows:]

PREPARED STATEMENT OF LAWRENCE A. FRIEDMAN

Mr. Chairman and Members of the Subcommittee: 

I appreciate the opportunity to appear before you once again on behalf of the Department of Justice to discuss the important work of the United States Trustee Program, outline for you some of our accomplishments over the last year, and walk you 

through the President’s FY 2005 budget request for the Program. 

The United States Trustee Program (‘‘the Program’’) is the component of the Department of Justice with responsibility for the oversight of bankruptcy cases and 

trustees. Our mission is to enforce the Federal bankruptcy laws, protect the bankruptcy system from fraud and abuse, and supervise the administration of bankruptcy cases. We carry out broad administrative, regulatory, and litigation duties 

under both title 11 (the Bankruptcy Code) and title 28 of the United States Code. 

It is an exciting time in the history of the United States Trustee Program. We 

are transforming the agency into a litigating component of the Department dedicated to combating fraud and abuse. Although estimates of the amount of bankruptcy abuse vary widely, it is clear that fraud and abuse add up to billions of dollars at stake for creditors, as well as added costs for consumers. Overseeing nearly 

1.6 million of the new bankruptcy cases filed last year, the Program is vigorously 

enforcing the nation’s civil bankruptcy laws and assisting prosecutors in obtaining 

criminal convictions. 

CIVIL AND CRIMINAL ENFORCEMENT

The National Civil Enforcement Initiative 

In FY 2002, the Program launched a National Civil Enforcement Initiative (NCEI) 

with two major objectives:

• To identify and remedy debtor fraud and abuse, and

• To protect consumer debtors against unscrupulous attorneys and others who 

prey upon those in dire financial straits.

To accomplish these objectives, we are using existing statutory tools to combat 

fraud and abuse in the bankruptcy system and to protect consumers. Civil enforcement actions include taking steps to dismiss abusive filings, deny discharges to ineligible or dishonest debtors, limit improper refilings by debtors, curb unfair practices by attorneys, sanction unscrupulous bankruptcy petition preparers and scam 

operators, and attack identity fraud in bankruptcy. 

Since the inception of the NCEI in October 2001, civil enforcement related 

projects have included the development and implementation of annual enforcement 

strategies in all 95 field offices; the appointment of national civil enforcement coordinators who oversee the Initiative by issuing standard guidance, providing technical assistance and training, and coordinating multi-district litigation; the formaVerDate 0ct 09 2002 08:47 Jun 17, 2004 Jkt 089266 PO 00000 Frm 00027 Fmt 6633 Sfmt 6621 G:\WORK\COMM\030904\92453.000 HJUD1 PsN: 92453
24

tion of a civil enforcement resource team consisting of some of the Program’s most 

experienced attorneys, financial analysts, and litigation support personnel; and the 

marshalling of resources to assist staff in their enforcement responsibilities. 

The results of the NCEI are impressive. During fiscal year 2003, Program offices 

reported taking more than 41,000 formal and informal civil enforcement actions, 

yielding more than $500 million in debts not discharged in chapter 7, fines, and 

other remedies. The potential benefit to creditors as a result of these actions is more 

than three times the Program’s FY 2003 appropriation of $155.7 million. 

The ability to measure the results achieved by Program staff in civil enforcement 

is possible through the Program’s development of an automated Significant Accomplishments Reporting System that is available to our staff on their desktop computers. This new system was launched in May 2003, and provides a tool for managers to measure both the amount of civil enforcement activity in their offices and 

the bottom line results of their efforts. 

A significant benefit of the NCEI has been the invigoration of the Program’s staff. 

Identifying abuse and successfully combating it is generating a feeling of pride and 

accomplishment among our staff at all levels. Field offices are sharing successful 

practices in their districts with others in the Program, and there is an energy that 

is spreading not only among the Program’s regions and districts, but to the greater 

bankruptcy community as well. We are confident that our efforts to make this Initiative known to all parties in the bankruptcy system will increase voluntary compliance with the bankruptcy statutes and rules. 

Some recent examples of the Program’s civil enforcement successes include:

• Substantial Abuse: In the Middle District of Tennessee, joint debtors earned 

$145,000 annually and sought to discharge $184,000 in credit card debt while 

continuing to live an extravagant lifestyle, which included keeping a new 

Cadillac and a timeshare in Hawaii. After the U.S. Trustee filed a motion 

seeking dismissal for substantial abuse, the debtors converted to a chapter 13 

repayment plan.

• False Statements and Concealment of Assets: In the Eastern District of 

Kentucky, a debtor failed to disclose various property interests, including 

ownership interests in six companies, free use of a Lexus, a 401(k) account, 

and a brokerage account. After trial, the court denied the debtor’s discharge 

based upon the debtor’s ‘‘reckless disregard’’ in completing his bankruptcy petition and his failure to disclose assets.

• Bankruptcy Petition Preparers (BPP’s): In the Northern District of California, an elderly woman with dementia deeded her home jointly to herself 

and two Bankruptcy Petition Preparers (BPPs). To delay her creditors, the 

BPPs placed the woman in bankruptcy. The BPPs then sold the home belowmarket value and attempted to dismiss the bankruptcy case to collect their 

purported share of the equity. The Bankruptcy Court granted the U. S. Trustee’s request for relief under § 110 and certified the case to the District Court. 

The District Court subsequently awarded the elderly debtor $62,680 in damages, based on a motion by the case trustee. The District Court also ordered 

the BPPs to pay a $4,948 fine.

• Attorney Misconduct: In the Southern District of Indiana, attorneys at a 

law firm were collecting fees from clients without disclosure and without 

proper court authorization. Based on action by the U.S. Trustee, attorneys at 

the firm were barred from filing new bankruptcy cases in Region 10 (Central 

and Southern Districts of Illinois and Northern and Southern Districts of Indiana), removed as counsel in approximately 100 pending chapter 13 cases, 

and the court froze $20,000 in fees for distribution to replacement counsel or 

overcharged debtors.

The Program’s civil enforcement efforts also have led to significant decisions by 

Circuit Courts of Appeal. For example, the U. S. Court of Appeals for the Sixth Circuit recently decided a case in favor of the U. S. Trustee. In In re Behlke (6th Cir.), 

lllF.3dll (2004 WL 314905 6th Cir. Feb. 20, 2004), decided on February 20, 

2004, the Sixth Circuit affirmed the dismissal of a chapter 7 case on grounds of substantial abuse pursuant to 11 U.S.C. § 707(b). The court ruling clarified existing law 

in a number of respects. Among other things, the court held that an ‘‘ability to 

repay’’ analysis could include a debtor’s voluntary payments to a 401(k) retirement 

plan. The court also rejected arguments that there was no substantial abuse because the debtor could repay only a modest percentage of general unsecured debt. 

In Behlke, the Sixth Circuit held that it was not in error to dismiss the debtors’

case when the debtors could repay 14 percent ($22,824) of their unsecured debt over 

three years and 23 percent ($38,040) over five years. 

25

Debtor Audit Pilot Project 

Since bankruptcy, like the income tax, is based on self-reporting, the accuracy and 

veracity of bankruptcy schedules are pivotal to the integrity of the bankruptcy system. In September 2003, the Program started a six-month Debtor Audit Pilot 

Project to develop better techniques to identify the presence or absence of significant 

errors in bankruptcy schedules. 

The Program contracted with six certified public and forensic accounting and investigative firms to review an estimated 64,000 chapter 7 consumer bankruptcy petitions filed in 10 districts around the country. These firms are conducting ‘‘paper’’

audits in an estimated 1,400 of these cases. The cases are being selected in one of 

two ways for audit from cases filed between October 1, 2003 and March 31, 2004. 

First, one out of every 250 cases is randomly selected for an audit. Second, cases 

are targeted based on certain income and debt thresholds that have been defined 

for each field office during the pilot. While Program staff have long conducted these 

types of reviews, this pilot is the first time that independent public firms have been 

retained to conduct the reviews. The pilot project will be fully completed by the end 

of the fiscal year. 

Criminal Enforcement 

Some abuses of the bankruptcy system merit criminal sanction in addition to civil 

action. The U.S. Trustee Program advances criminal enforcement by identifying 

criminal violations and assisting in the investigation and prosecution of bankruptcy 

crimes. Program staff cooperate with and provide specialized expertise to other components of the Department, including the U. S. Attorneys and the FBI. Bankruptcy 

fraud is often linked to other crimes such as tax fraud, mortgage fraud, credit card 

fraud, and identity theft. Consequently, the Program’s efforts involve extensive collaboration with many other Federal and state agencies. 

In March 2003, the Department’s Office of the Inspector General (OIG) issued a 

report regarding the Program’s efforts to prevent bankruptcy fraud and abuse. The 

report generally endorsed our civil and criminal enforcement initiatives and provided helpful guidance on the implementation of those activities. 

A key improvement in the criminal enforcement area has been the Program’s creation, in July 2003, of a Criminal Enforcement Unit (CrEU) to strengthen its criminal referrals; serve as a resource on bankruptcy fraud issues nationwide; train Program staff, private trustees, and law enforcement personnel; build relationships 

with the law enforcement and bankruptcy communities; and support the prosecution 

of and, in some cases, directly assist in the investigation and prosecution of bankruptcy crimes. 

The CrEU is headed by a veteran prosecutor, formerly with the Public Integrity 

Section of the Criminal Division. He is assisted by an Assistant U.S. Trustee, who 

has been active in our criminal enforcement effort for many years, and a team of 

three career prosecutors located around the country, who have devoted their professional lives to the investigation and prosecution of complex white-collar crime and 

have strong ties to U. S. Attorneys offices. 

Program staff assist the U. S. Attorneys in the prosecution of criminal referrals 

by participating in investigations and at trial by serving as expert witnesses or as 

Special Assistant U. S. Attorneys (SAUSAs). In addition, approximately two-thirds 

of the Program’s 95 field offices participate in bankruptcy fraud working groups 

headed by U. S. Attorneys. 

Most criminal cases identified by the Program involve the concealment of assets. 

For example, a Federal jury recently convicted husband and wife chapter 7 debtors 

in Des Moines, Iowa, of concealing approximately $6 million in real estate, equipment, livestock, and cash during their bankruptcy proceeding, United States v. Alfred and MaryAnn Ryder. This case was referred to the U. S. Attorney by the U. 

S. Trustee. 

Many different fraudulent schemes involve the bankruptcy system. Among other 

duties, the CrEU will focus on emerging bankruptcy crimes.

• One emerging fraudulent scheme targeted by the CrEU is the credit card 

bust-out. The primary objective of a bust-out is to use multiple credit card accounts to obtain hundreds of thousands of dollars through credit card cash advances or the purchase of goods that are then sold for cash. In a credit card 

bust-out, individuals run up large credit card debts and then file bankruptcy 

to discharge the debt. Typically, the purchases and cash advances occur within a two to three month period. Often, individuals are recruited by others who 

promise to split the cash and proceeds. After the fraud is perpetrated, the recruiters may recommend a bankruptcy lawyer who files the paperwork and 

arranges for the debts to be discharged. Possible charges in these schemes inVerDate 0ct 09 2002 08:47 Jun 17, 2004 Jkt 089266 PO 00000 Frm 00029 Fmt 6633 Sfmt 6621 G:\WORK\COMM\030904\92453.000 HJUD1 PsN: 92453
26

clude: Bankruptcy Fraud, 18 U.S.C. § 157(1); Credit Card Fraud, 18 U.S.C. 

§ 1029(a); Mail and Wire Fraud, 18 U.S.C. § 1341 and § 1343; and Bank 

Fraud, 18 U.S.C. § 1344. Recently, the Program assisted the United States Attorney for the District of New Jersey to obtain a credit card bust-out conviction involving fraudulent charges totaling $6.8 million over a 7-year span, 

U.S. v. Ali Qaraeen.

• Other emerging areas are the use of mortgage foreclosure and equity schemes 

that utilize the bankruptcy system’s automatic stay provisions and schemes 

where individuals use falsified or forged bankruptcy documents by individuals 

in an attempt to persuade creditors that they have either filed bankruptcy or 

received a bankruptcy discharge.

A second key improvement in the Program’s criminal enforcement efforts has been 

the development of a new, automated Criminal Enforcement Tracking System 

(CETS) that more accurately tracks allegations, as well as referrals made to law enforcement authorities. The new national system contains a number of important features:

• Preliminary Allegations: The new system permits the tracking of pre-referral 

matters. For example, if a private party notifies a U. S. Trustee of a potential 

bankruptcy crime, a file can be opened in CETS in a ‘‘pre-referral’’ status, allowing staff to track the matter until it is either referred to law enforcement 

or closed out.

• Criminal Referrals: Using a national numbering system, the system will track 

all actual referrals, from the date of referral to the date of disposition. We 

will work with the Bureau of Justice Statistics and the Executive Office for 

United States Attorneys (EOUSA) to determine if it is possible to match our 

referrals with official disposition data maintained by EOUSA.

• Type of Crime: Field offices will identify the type of crime that may have been 

committed (e.g., concealment of assets, destructions of records). This new 

tracking system will help us not only to measure the volume of our criminal 

referrals, but also to identify types of crime referred and trends.

CETS is in the pilot stage and will be fully implemented in the field by the end 

of FY 2004. 

Training 

Our civil and criminal enforcement efforts and our transition to a litigating component of the Department have been bolstered by the training we offered at the National Bankruptcy Training Institute (NBTI) located at the National Advocacy Center (NAC) in Columbia, South Carolina. Using the resources available at the NAC, 

we have reached out to many participants in the bankruptcy process to improve 

skills and share ideas and techniques that improve the administration of bankruptcy cases and help to combat fraud and abuse. 

Over the last three fiscal years, the NBTI has hosted more than 1,800 students 

at 42 training courses in four major categories: civil and criminal enforcement; litigation; business and finance; and management and administration. Our enforcement classes emphasize proven field practices and methods for identifying fraud and 

abuse. In addition, all courses, including those for non-attorney personnel, have a 

unit on civil enforcement. Participants in the training have included not only Program staff, but also private trustees and individuals from other components of the 

bankruptcy system. 

OTHER PROGRAM ACTIVITIES

In addition to its focus on civil and criminal enforcement, the Program continues 

to carry out its many other duties. Other major areas of activity include our chapter 

11 reorganization responsibilities and the oversight of private trustees. 

Chapter 11 Reorganization Responsibilities 

The United States Trustee Program oversees the administration of chapter 11 

debtors and enforces the Bankruptcy Code to help ensure that all parties, including 

small creditors, are protected in accordance with the law. As part of this oversight, 

the Program prescribes and analyzes periodic financial and operating reports, appoints official committees to represent the interests of large and small creditors, 

monitors professionals employed in the cases to protect against conflicts of interest, 

reviews professional fees, and takes action to convert or dismiss faltering cases. 

In the last three years, some of the largest bankruptcy cases in history have been 

filed. With the accompanying allegations of financial impropriety and fraud, the potential loss of confidence in our business infrastructure and its corporate leaders has 

27

increased exponentially. As a result, in appropriate cases, the Program has taken 

additional steps to ensure the accountability and transparency of the bankruptcy 

system. 

In the Enron and WorldCom cases, the Program appointed special examiners to 

investigate alleged fraud and mismanagement. In Enron, the Program appointed 

eminent bankruptcy expert Neal Batson and, in WorldCom, the Program appointed 

former Attorney General Richard Thornburgh. Over a period of approximately 18 

months, each examiner completed exhaustive studies of the causes of the companies’

collapse and identified those who may be liable to the shareholders and creditors. 

The Enron examiner identified $7 billion in pre-bankruptcy transactions that 

were improper and which contributed to the collapse of the company. He also identified $6 billion in improper claims against the estate by banks and other financial 

institutions which contributed to the fraud. Finally, the examiner identified lawyers, 

directors, and others whom he concluded may be sued by Enron or others whose 

investments and retirement savings were wiped out. 

The WorldCom examiner revealed gross corporate mismanagement, including alleged inappropriate conduct by some senior officials who remained employed by the 

company after the bankruptcy filing. The examiner’s reports detailed tax avoidance 

schemes deemed improper and which continued long after the bankruptcy filing. 

The examiner identified accountants, officers, institutions, and others who may be 

liable to the debtor for their nonfeasance or improper actions, and estimated that 

that the company potentially may try to recover billions of dollars. 

Oversight of Private Trustees 

United States Trustees are responsible for appointing and supervising about 1,400 

private trustees who administer bankruptcy estates and distribute dividends to 

creditors. The Program trains trustees and evaluates their overall performance, reviews their financial operations, ensures the effective administration of estate assets, and intervenes to investigate and recover loss of estate assets when embezzlement, mismanagement, or other improper activity is alleged. 

The Program works closely with the various bankruptcy trustee associations to 

improve case administration and to address other matters of mutual concern and 

interest. These efforts have resulted in a marked improvement in the degree of cooperation and collegiality between the Program and the private bankruptcy trustees. 

Progress on this front is evident in a number of initiatives over the past few years, 

as exemplified by the following examples:

• The Program and the trustees are jointly focusing their efforts on the National Civil Enforcement Initiative.

• The Program and trustee associations are working together to provide educational seminars on meaningful topics designed to improve core competencies, such as finding assets, maximizing returns to creditors, and enhancing the integrity of the bankruptcy system.

• The Program has worked jointly with the National Association of Bankruptcy 

Trustees and the National Association of Chapter Thirteen Trustees to develop Standards of Excellence and to improve the quality and effectiveness of 

trustee performance.

• Program staff and private trustees have worked successfully to develop critical management reports, updated standards for insurance and bonding, and 

a new information technology security initiative. 

FY 2005 BUDGET REQUEST

The Program is entirely self-funded through user fees paid by participants in the 

bankruptcy system. Approximately 60 percent of our funding comes from quarterly 

fees paid in chapter 11 (reorganization) cases and 40 percent from filing fees, interest earnings, and other miscellaneous revenues. 

For FY 2005, the Program is requesting essentially a current services budget with 

a modest enhancement for information technology. The President’s budget request 

transmitted to the Congress in February totals $174,355,000, 1,198 permanent positions (265 attorneys) and 1,190 work years. The request represents an increase of 

$8.2 million over the FY 2004 enacted appropriation of $166,157,000. The increase 

is comprised of adjustments necessary to maintain a current services base level, and 

an enhancement of $2 million for our Information Technology (IT) program. 

We have made significant progress in the last few years in our efforts to modernize information systems and implement sound IT investment practices. The Program has hired a Chief Information Officer and implemented an Information Technology Investment Management (ITIM) process. We have established an IT advisory 

28

group of key Program managers and an Executive Review Board to review IT investment concepts in conjunction with Program priorities and available resources. 

This process ultimately ensures that the Program is spending its IT dollars wisely 

and in accordance with performance management goals. 

The requested FY 2005 increase will fund the following activities:

• Life-Cycle Replacement/Technology Refreshment of Equipment 

($1,375,000) This initiative will permit the Program to replace a portion of 

its equipment in accord with industry IT recommendations. The funding will 

replace our JCON and Database Management Servers and 500 personal computers.

• Electronic Case Filing (ECF) Initiative ($625,000) This request will enhance the Program’s Automated Case Management System to examine the 

feasibility of integrating the management of electronic documents received 

from the bankruptcy courts with the extraction of key data from those documents. It is an initial step in developing the capability to streamline the collection of bankruptcy case information, including amounts and types of liabilities, as well as types and values of assets. This information will be invaluable in our identification of abusive filings.

Our FY 2005 ECF Initiative builds on the Program’s FY 2003 and 2004 efforts 

to work alongside the courts and with the private trustees to transition to the 

courts’ ECF System. As of the end of 2003, approximately 60 percent of the bankruptcy courts had converted to the new ECF system, with the remaining bankruptcy 

courts planned for 2004. The implementation of ECF has allowed the Program and 

private trustees to enhance and streamline the exchange of electronic data. 

In late 2003, the courts implemented a new ECF module, jointly developed with 

the U. S. Trustee Program that provides for the efficient exchange of bankruptcy 

data and associated electronic records. This new module paves the way for our FY 

2005 request to enhance financial data extraction from electronic records and to further reduce manual review of bankruptcy petitions and schedules for potential fraud 

and abuse. 

Other Information Technology accomplishments include:

• The creation of a central repository of all bankruptcy data that staff will 

begin to access in late FY 2004 to identify nationwide trends in serial filers, 

as well as other potential civil and criminal abuses at the national and local 

levels.

• With the migration to a centralized data system, the Program is working to 

establish a remote ‘‘continuity of operations’’ (COOP) site, which will serve as 

a back-up for all the Program’s electronic data. Should our primary IT operation be compromised in any way, the COOP site would become fully operational.

• Since May 2003, all Program staff have been entering their civil enforcement 

activities in ‘‘real-time’’ mode into the Significant Accomplishments Reporting 

System (SARS) readily available through their desktop computer. This new 

system gives Program managers a tool to summarize their offices’ immediate 

impact on the bankruptcy system and to monitor staff resources to ensure activities are occurring in accordance with Program goals.

• As mentioned earlier, the Program is currently piloting a Criminal Enforcement Tracking System (CETS), which allows the real-time tracking of criminal activities. This new system will be available to all offices in late FY 2004.

Our efforts to improve our IT infrastructure have enhanced the Program’s ability 

to collect performance data and integrate it with the budget. This has led to the 

creation of a new outcome performance measure—‘‘Potential Additional Returns to 

Creditors Through Civil Enforcement and Related Efforts.’’ This new measure provides an indicator of the public benefit of the United States Trustee Program’s work. 

CONCLUSION

I am proud of the efforts of the dedicated men and women of the United States 

Trustee Program. They have not only kept abreast of record-breaking filings and 

moved the cases through the bankruptcy system efficiently, but they have exercised 

creativity in identifying and addressing abuses. They also have demonstrated flexibility in streamlining procedures and processes so that they can devote their energy 

to addressing fraud and abuse. Through their commitment and tenacity, they are 

transforming this agency into a professional litigating organization that is being recVerDate 0ct 09 2002 08:47 Jun 17, 2004 Jkt 089266 PO 00000 Frm 00032 Fmt 6633 Sfmt 6621 G:\WORK\COMM\030904\92453.000 HJUD1 PsN: 92453
29

ognized within the greater bankruptcy community for its contributions to combating 

fraud and abuse. 

In closing, I would like to thank this Subcommittee for the assistance you have 

provided the Program through your support of resource requests and your foresight 

and guidance on substantive issues. I look forward to continuing to work with you 

on matters of mutual interest and critical importance.

Mr. CANNON. You mentioned that your program cost has three 

times the benefit to creditors, and let me suggest to society and 

creditors you get a lot more than that because a lot of people don’t 

commit fraud because they know you are going to be out there, and 

that is one of the reasons your program is important to us. This 

is an extraordinary, cumbersome process, and we appreciate your 

role in being here today. 

Let me assure the Members of the Committee, those here and 

not here, that you will have an opportunity to provide written 

questions. We are not going to get through a tenth of the questions 

that we have. We think it is important we get those questions to 

you and work through some of these issues. 

Mr. Watt, would you like to take 5 minutes? 

The gentleman is recognized for 5 minutes. 

Mr. WATT. Thank you, Mr. Chairman. 

Let me start with Mr. Sansonetti and Mr. Keisler, just because 

you all function a little bit different than the other two gentlemen, 

and inquire of you in this way. A lot of our representational assumptions are built on the fact that if people pay their own legal 

costs and companies pay their own legal costs, they will be 

incentivized to be more responsible for their actions. Our system is 

set up a little bit different here in the sense that we fund your operations independently of the agencies that you represent. 

I am wondering whether you could conceive of a system where 

that changed, where basically Federal agencies would come to the 

Justice Department, retain—in effect, retain the Justice Department’s services for the legal needs that they have and be charged 

for that and have that included in their budget as a means of making them more cognizant of what the expectations are legally, more 

cognizant of the cost of litigation and particularly—I don’t mean to 

signal one thing out, but this tribal trust thing, it seems to me if 

this were being done out of the Interior Department’s budget or 

whoever has responsibility for administering those programs and 

the funding for the litigation was coming out of their budget, I 

wonder whether they might have been more responsible than they 

appear to have been in the handling of their fiduciary responsibilities. I know you can’t assume that they did anything wrong, but 

I am talking about a theoretical model that would be modeled on 

the same set of assumptions that the private side of our life is modeled on, which I think works reasonably well and encourages more 

responsibility, more cost consciousness. 

Mr. SANSONETTI. Peter, let me take a crack at that. We could 

spend a good hour or two just on this one subject. It is a great 

question. I am going to answer it for you from the standpoint of 

being the Assistant Attorney General For the Environment and 

Natural Resources Division. 

About a third of my cases come from the Department of the Interior, for instance; and once upon a time, having been the Solicitor 

at the Department of Interior for 3 years, from ’90 to ’93, the fact 

30

is is that we have basically got the system set up right now kind 

of the way England runs. If you have folks that are solicitors, you 

handle everything up to the point of going into a court. You grab 

the guy with the white-powdered wig, and he goes in there as the 

barrister and actually argues the case. 

So right now, for instance, in these tribal trust cases, there is a 

financial responsibility on Interior to come up with the money inside their budget to produce the documents for the accounting. So 

they have got a whole line item over there that is supposed to be 

for tribal trust help. I am sure they have one for Cobell as well, 

the difference being he is handling the Cobell case where the individuals are involved. I have the 22 cases where we are talking 

about tribes seeking their money. 

Interior is actually involved from the get-go as far as having to 

spend its own money to protect itself because they have to come up 

with the witnesses, the documents and papers. It is their people 

that are being deposed, et cetera; and their solicitor’s offices are the 

ones that got involved in this case immediately. 

When you get sued, though, no longer do they have the ability 

to go into court under our system to represent themselves. That is 

when they come to us. 

As far as an incentive is concerned, if they had to pay for my attorneys to defend them, obviously, the way budgets are, they 

couldn’t afford it. One of the biggest incentives, though, that hung 

over the head of those at DOI, the Damocles sword, is actually 

whether or not, once a judgment comes out, that they did do something wrong. If any of the monies have to come out of an individual 

agency’s account, that is when you get peoples’ attention real quick. 

So it is not so much on the front end who is going to have pay 

money to help defend, because you are right. They could be innocent, too. The real stick comes in the back end. 

Mr. KEISLER. Congressman Watt, it is a very thought—provoking 

question; and I have two responses that I would like to share. One 

is that what Tom said is absolutely correct about how material it 

is whether an agency or Department is thinking a judgment is 

going to come out of its own budget or out of a judgment fund, 

which to an agency or a Department may seem like free money. 

I can tell you that the discussions I have about settling cases 

with departments and agencies are very, very different when the 

money is going to come out of the agency’s budget than when it is 

going to come out of the judgment fund. One thing the Justice Department regards itself as is the protector of the judgment fund, to 

make sure that we only enter into responsible settlements. Because 

from an agency’s perspective, you settle a case, if you don’t have 

to pay the price tag—no depositions, no document discovery—a 

whole lot of trouble is taken off your shoulders. 

Having said that, there is one critical difference between the private sector model and our model. When I was in the private sector, 

the client would ask my advice. I would give the client my advice. 

And if the client directed me to do the opposite, as long as it was 

ethical, I would salute and go do it. 

That is not the relationship the Justice Department has with its 

client agencies. Under the statute, the Attorney General and the 

Justice Department control the course of the litigation. We consult 

31

very carefully and very closely with the clients, but if they want 

to settle a case and we don’t, if they want to bring a case and we 

don’t, if they want to appeal and we don’t, it is ultimately our determination that holds. If they were paying for it, that could get 

in the way of that process. 

I think that process serves very important goals in making sure 

the United States speaks with one voice in court, that you don’t 

have different departments and agencies taking different, conflicting positions and serves a very useful centralizing function 

within the Government and in speaking for the Government to 

Congress, the courts and the public. But it is certainly, as I said, 

a very thought-provoking issue and there are certain aspects of it 

that are attractive. 

Mr. WATT. I think I am well over my time, not because I used 

it in asking the question, but because of the thoughtful answers I 

got from these two gentlemen. If we go around, I might get to the 

other side with an equally provocative question, but I will let that 

go. 

Mr. CANNON. A very thoughtful question, and we appreciate the 

thoughtful answers. 

The gentleman from North Carolina, Mr. Coble, is recognized for 

5 minutes. 

Mr. COBLE. Thank you, Mr. Chairman. 

Mr. Lewis, you indicated that the ’05 budget is $1.5 billion. I was taking notes as you spoke, and I took the amount of $12.4 million. 

In my hurried effort, I assume that is for the support of proposed 

increased positions, is that correct? 

Mr. LEWIS. Yes, sir. 

Mr. COBLE. How many will there be? 

Mr. LEWIS. One hundred forty-eight positions. 

Mr. COBLE. That will bring you to 10,300 total? 

Mr. LEWIS. Yes, sir. 

Mr. COBLE. Mr. Keisler, I want to talk about whistle-blowing 

cases, of which I am supportive, by the way. I have heard horror 

stories that in some cases the whistle-blower is the one that ends 

up being the victim. Could you elaborate or could you assuage my 

discomfort about that? 

Mr. KEISLER. Any whistle-blower who comes forward to report 

some action of wrongdoing always takes a great personal risk. If 

you assume the classic whistle-blower case, an insider in a company, they are going against their colleagues, they are threatened 

with loss of a job, and sometimes it can be a long time before the 

case is ultimately proved. So there is at least a period of time of 

great uncertainty and jeopardy and financial difficulty for many 

whistle-blowers. There is nothing we can do to completely take that 

risk and cost and uncertainty out of the system. 

The one thing that has been done in these fraud cases since 1986 

with the qui tam amendments to the False Claims Act is that there 

are great incentives for those people to come forward. Because, at 

the end of the day, if they and we do succeed in proving a fraud, 

they get a substantial piece of the recovery, 15 to 25 percent in 

cases in which we participate, higher in cases in which we don’t. 

When we are talking about fraud in the health care or the defense 

contractor area, which sometimes can be tens, even hundreds of 

32

millions of dollars, you know, at the end of that process, there can 

be some significant compensation. But it is true that as that process works its way through it can impose great costs. 

Mr. COBLE. If you all learn of any abuse today, I am sure you 

will share it with us. 

Mr. Lewis, you indicated you all are tightening your belts, and 

I think all of us are tightening our belts in this fragile economic 

times. Give us some examples by which you all are doing that. 

Mr. LEWIS. We have gone through and we have identified a number of areas where we are going to save money. One is in the Office 

of Legal Education. We have a wonderful facility down in Columbia, South Carolina, called the National Advocacy Center, which 

does a terrific job of training and teaching. Over 20,000 students 

were trained there last year. We are going to have to cut back in 

terms of some of our training. 

We are trying to figure out how to use more effectively our Justice Television Network, our ability to go out from Columbia in a 

small television studio there to all the U.S. Attorneys Offices. Each 

Assistant U.S. Attorney has a computer on her or his desk that allows us to telecommunicate with that person. So we are trying to 

figure out ways to do that. 

We are trying to offset through management efficiencies. We are 

trying to reduce nonpersonnel expenses of the U.S. Attorneys and 

the offices by over $11 million. We are looking at a process of early 

buyouts for some 600 employees around the country. That is going 

to save us a lot of money. I believe the U.S. Attorneys understand 

how important it is for us to be fiscally responsible. 

Mr. COBLE. I thank the gentleman. 

Mr. CANNON. I would like to yield another 5 minutes to the 

Ranking Member, Mr. Watt. 

We have a large group of students in the audience today. We appreciate you being here. We generally are a little bit more raucous 

than this, but we appreciate the fact that you guys are very, very 

quiet and the record would not know that you were here without 

an overt comment. 

Mr. COBLE. They hail from where? 

UNIDENTIFIED SPEAKER. The Close Up Foundation here in Washington, D.C. I have 22 high school students representing the honorable States of Alabama, Arizona, California, Connecticut, Michigan 

and Montana. 

Mr. CANNON. Thank you very much for that introduction and 

welcome today. This is a great program that you guys are involved 

in. We hope you learn a lot from it and get engaged in the political 

process and maybe even engaged politically running for office. 

Could we have a bipartisan agreement that that is a hard life? 

Mr. Watt, would you like to ask an equally thought-provoking 

question? 

Mr. WATT. Thank you, Mr. Chairman. 

I just happened to hear a report the other day about what we 

are doing in Iraq, and I am wondering if Mr. Lewis could enlighten 

us on whether the resources that we are providing to assist with 

the preparation and prosecution of Saddam Hussein is coming out 

of Justice or is it coming out of Defense or how is that being hanVerDate 0ct 09 2002 08:47 Jun 17, 2004 Jkt 089266 PO 00000 Frm 00036 Fmt 6633 Sfmt 6601 G:\WORK\COMM\030904\92453.000 HJUD1 PsN: 92453
33

dled. Then if I have any more follow-up questions I will ask him 

in writing. I just wanted to know where to direct the questions to. 

Mr. LEWIS. The Department, as you know, has a counterterrorism section within the Department that is overseeing much 

of the Nation’s litigation with regard to terrorism. I don’t have the 

specifics or the details, but I will be glad to get them for you and 

forward to you some of the issues. But the Department is looking 

at issues in terms of prosecutors and others to assist the Iraqi government in terms of prosecution. 

Mr. WATT. I heard the figure $350 million in the news report. I 

have no idea whether that is an accurate figure or not. Whatever 

the figure is, would that come out of Defense or would it come out 

of Justice? 

Mr. LEWIS. Frankly, Congressman, I am not 100 percent sure on 

where the source money is going to come from. I know that, as you 

know, the Justice Management Division, JMD, handles a large part 

of the Department’s budget. We, the Executive Office, primarily 

focus on the field prosecutors. I will be glad to follow up on that. 

Mr. WATT. That would be helpful. I didn’t mean to catch you off 

guard. If you could find out and give us some parameters within 

which either you all or Defense are operating and what the impact 

that is going to have as a budgetary proposition, that would be 

helpful. 

I yield back, Mr. Chairman. 

Mr. CANNON. Thank you, Mr. Watt. 

Let me just point out to the witnesses I am going to wrap up 

fairly quickly and try and stay within my 5 minutes. But I would 

like to start, Mr. Friedman, with a question of you. 

In light of last year’s DOJ Inspector General’s audit report on the 

United States Trustee Program’s efforts to prevent bankruptcy 

fraud and abuse—which I think was critical of the program’s efforts to detect criminal fraud and abuse—what efforts has the program undertaken to respond to the audit report’s findings? 

Mr. FRIEDMAN. Mr. Chairman, I appreciate the opportunity to respond to the question. 

The OIG report that came down about this time last year actually studied a period of time in the program prior to this Administration and my taking over at the program in March of 2002. But 

what the OIG report has done is assisted us and given us guidance 

and confirmation of the steps that we had already implemented 

and continue to implement to move forward in our mission of identifying and detecting and prosecuting fraud and abuse within the 

system. 

For example, we created a significant accomplishments reporting 

system, a way of tracking the cases in which we are identifying 

fraud and abuse within the system and reporting that. We have recently rolled out a pilot program on the criminal enforcement 

tracking system in order to better track the cases that we have 

identified for criminal prosecution and the work that we do in conjunction with the U.S. Attorney’s Offices around the country and 

Mr. Lewis’ office as well, and that system will be rolled out nationwide this year. 

We have taken a number of other steps that, as I said, the OIG 

report gives confirmation to that we are headed in the right direcVerDate 0ct 09 2002 08:47 Jun 17, 2004 Jkt 089266 PO 00000 Frm 00037 Fmt 6633 Sfmt 6601 G:\WORK\COMM\030904\92453.000 HJUD1 PsN: 92453
34

tion which has assisted us in the identification of 41,000 actions 

last year and over half a billion dollars. 

Mr. CANNON. We would hope to—what you are doing is very important, and we hope to give you some assistance with a Bankruptcy Reform Act, which we hope the other body acts upon it 

sometime this year. 

Mr. Sansonetti, I would like to ask a couple of questions about 

the Endangered Species Act and the Equal Access to Justice payments that are going to plaintiffs. There is a lot of anxiety over 

here I think on both sides of the aisle but certainly out West where 

there are fewer people but a disproportionate number of actions on 

endangered species. Can you give us a little information on how 

many actions you have pending and the burden that is on you? In 

addition, what our payouts under the Equal Access to Justice were 

last year, if you know, and what do you anticipate about future 

payouts. 

Mr. SANSONETTI. I will have to get back to you as far as the exact 

number of cases. I have mentioned we have over 7,000 cases in my 

entire Division, but exactly the number of those that happened to 

fall into the area of our wildlife and marine resource section, I 

don’t know off the top of my head, nor do I know the exact dollar 

figure. But I would note the nature of the problem, and you are 

very correct that it is a large one. 

The fact is that we have got about 25 to 27 folks that are dedicated to defending wildlife and marine resource actions nationwide. 

The number of dollars that are available for the Department of the 

Interior’s Fish and Wildlife Service, for instance, and the number 

of dollars that are available for our National Marine Fisheries 

Service, which handles the endangered species cases and saltwater, 

offland at the Department of Commerce have not been enough to 

keep up with the demands on the system. 

For instance, under section 4, the Endangered Species Act, once 

a group comes forward with a petition that says that a particular 

plant or a particular animal should be listed as either threatened 

or endangered, what do you think about that, Fish and Wildlife 

Service, then they have a set amount of time to get back to those 

petitioners and say, our biologists or our botanists looked at this 

and the answer is, yes, we are going to propose it for threatened 

or endangered listings or, no, you are wrong. We don’t think it 

needs to be. 

So many petitions are out there that the potential listings are 

overwhelming the number of people at the Department of Interior 

to look at each and every case. Consequently, they miss the deadline. 

The petitioner then files suit. Interior calls us. We have to send 

one of our folks in from our Washington, D.C., office to Spokane, 

California, whatever. These cases are, frankly, laydowns for the petitioners in front of a judge. He says, hey, you had so much time 

under the Endangered Species Act. Did you come within your 180 

days? Well, no, we haven’t gotten to it yet. Well, then you lose. 

Then he sets a timetable, and you have to come back with a response. Because the Endangered Species Act also says that the 

winner in those cases gets to prevail on attorney’s fees, then we 

have little say. 

35

Of course, the judge is going to say, I grant you your attorney’s 

fees. They submit their fees. We have to go over them to make sure 

they are reasonable. But in every event they end up taking those 

fees, turn around and file another lawsuit. It is a big problem. 

Mr. CANNON. I ask unanimous consent to extend my time by 3 

minutes. 

Hearing no objection, Mr. Lewis, could I ask you a couple of 

questions on your situation as currently being engaged with what 

U.S. Attorneys have done? 

We have had a couple of cases recently in Utah that were thrown 

out after the Federal Government made its case. In one case, the 

defendant was told by the FTC that they would settle with him if 

he would show them his financial net worth and then they would 

decide how much they wanted to take. He said, why don’t you tell 

me what I did wrong and then we will work out a solution, which 

they refused to do. 

At the end of their case, they provided a list of 350 witnesses 

they were going to call. That cost attorney time at $300, $400 an 

hour to check the witnesses out. They had to do it because they 

were given those witnesses and the witnesses did not make the 

case that the FTC said they would make and the case was dismissed. The man got $200,000, as I recall, in attorney’s fees, leaving him a million dollars shy because the FTC had the opportunity 

to beat him up. Now you had a U.S. Attorney who was present during the presentation of that case. 

In addition to that, we had a very famous case in Salt Lake City 

with the Salt Lake Olympic Committee. That was a case right out 

of Washington, but you also had a U.S. Attorney from Utah 

present, did you not, at that case? 

Mr. LEWIS. We actually didn’t have anyone in the Olympic case 

from the U.S. Attorney’s. Paul Warner had been conflicted out. 

Mr. CANNON. Dropping that case since you didn’t have any involvement in it, this is a terrible problem when the prosecutorial 

authority is misused and dramatically misused. The three witnesses that were called in the FTC case didn’t say anything near 

what it would take to make a case. I did not look at the record, 

but I looked at what the judge said afterward, and I looked at what 

the witnesses had said afterward. They didn’t get in the ball park. 

So it looks like a terrific misuse of prosecutorial discretion. 

How do you deal with agencies like the FTC. 

Mr. LEWIS. It is likely that the U.S. Attorneys Office itself 

wouldn’t have been involved in a prosecution involving the FTC. I 

am not sure if it was a regulatory action where the FTC would 

have gone in to enforce a regulation. 

Mr. CANNON. You had a U.S. Attorney, I think, there with the 

FTC lawyers. They were presenting the case, and he was the local 

counsel. But do you train your U.S. Attorneys to look at those cases 

where they are sitting at the bar with members of the prosecution 

team? 

Mr. LEWIS. We do, and what occurs often is, working with the 

gentlemen at this table, when a matter that is uniquely within the 

province of, say, the Civil Division, the U.S. Attorney will act as 

a local counsel where we try to go in. Many times, it doesn’t hapVerDate 0ct 09 2002 08:47 Jun 17, 2004 Jkt 089266 PO 00000 Frm 00039 Fmt 6633 Sfmt 6601 G:\WORK\COMM\030904\92453.000 HJUD1 PsN: 92453
36

pen; sometimes it does. We go in and attempt to participate in the 

case, attempt to assist in any way we can. 

I am not familiar specifically with this FTC case. 

Mr. CANNON. I am only using the FTC case because it is a pretty 

dramatic example. But let me focus the question more clearly. 

If a U.S. Attorney goes into a case brought by the FTC or another agency where the U.S. Attorney is acting as local counsel, 

how much authority or influence do they have over the case and 

how it is presented? Do they have the time to look at the case and 

say, wait, this is a stinker, or do they just have to walk in and sit 

down and hope the agency has a competent team? 

Mr. LEWIS. I like to think that we, more often than not, perform 

the latter in terms of trying to work with the outside agency. 

Again, going back to my experience in Miami as a U.S. Attorney, 

it wasn’t unusual that we would be working with the Tax Division, 

Civil Rights Division, very active with the ENRD, Civil Division 

where we would be working together. There were those instances 

where the U.S. Attorney’s Office was not actively involved—Social 

Security cases, for example, that would be prosecuted. Because of 

the volume, we just didn’t have the time or the opportunity to actively participate in those kinds of cases. 

I do know one thing that is important is that the U.S. Attorney 

who is in that district, she or he—as far as the judges are concerned, as far as the community is concerned, as far as the legal 

bar is concerned, she or he is responsible for the litigation that occurs in that district. So that is something I will be glad to look at 

and follow up on, because it is an important issue. 

Mr. CANNON. Actually, in this particular case, I would like that 

follow-up. Because this seems to me to be one of the cracks where 

we have a huge potential failure of the system. In the case where 

we have a million dollars this guy spent defending himself, heaven 

help the guy who doesn’t have a million dollars to stand against 

the Government, the FTC and not the U.S. Attorney. I appreciate 

that. 

Without objection, the record will be left open 7 days for further 

questions. We do have many questions, and I wish we had more 

time today, but we are probably getting a good staffing out of this 

anyway. I want to thank my staff and the minority staff that do 

a marvelous job on this Committee. With that, we will adjourn. 

[Whereupon, at 4 p.m., the Subcommittee was adjourned.] 

(37)

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

38

POST-HEARING RESPONSES FROM THE HONORABLE THOMAS L. SANSONETTI


ENRD.eps
39


Sanson1.eps
40


Sanson2.eps
41


Sanson3.eps
42


Sanson4.eps
43

POST-HEARING RESPONSES FROM THE HONORABLE PETER D. KEISLER


CD.eps
44


Keisler1.eps
45


Keisler2.eps
46


Keisler3.eps
47


Keisler4.eps
48


Keisler5.eps
49


Keisler6.eps
50


Keisler7.eps
51


KeisA1.eps
52


KeisA2.eps
53


KeisA3.eps
54


KeisB1.eps
55


KeisB2.eps
56


KeisB3.eps
57


KeisC1.eps
58


KeisC2.eps
59


KeisC3.eps
60


KeisC4.eps
61


KeisD1.eps
62


KeisD2.eps
63


KeisD3.eps
64


KeisD4.eps
65


KeisD5.eps
66

POST-HEARING RESPONSES FROM MR. GUY A. LEWIS


EOUSA.eps
67


Lewis1.eps
68


Lewis2.eps
69


Lewis3.eps
70


Lewis4.eps
71


Lewis5.eps
72

POST-HEARING RESPONSES FROM MR. LAWRENCE A. FRIEDMAN


EOUST.eps
73


Fried1.eps
74


Fried2.eps
75


Fried3.eps
76


Fried4.eps
77


Fried5.eps
78


Fried6.eps
79


Fried7.eps
80


Fried8.eps
81


Fried9.eps
82


Fried10.eps
83


Fried11.eps
84


Fried12.eps
85


Fried13.eps
86


Fried14.eps
87


Fried15.eps
88


Fried16.eps
89


Fried17.eps
90


Fried18.eps
91


Fried19.eps
92

Æ


Fried20.eps