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[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]

                            OVERSIGHT OF THE
                             JUDGMENT FUND

=======================================================================

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON THE CONSTITUTION 
                           AND CIVIL JUSTICE

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 2, 2017

                               __________

                            Serial No. 115-6

                               __________

         Printed for the use of the Committee on the Judiciary
         
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                       COMMITTEE ON THE JUDICIARY

                   BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
    Wisconsin                        JERROLD NADLER, New York
LAMAR SMITH, Texas                   ZOE LOFGREN, California
STEVE CHABOT, Ohio                   SHEILA JACKSON LEE, Texas
DARRELL E. ISSA, California          STEVE COHEN, Tennessee
STEVE KING, Iowa                     HENRY C. ``HANK'' JOHNSON, Jr., 
TRENT FRANKS, Arizona                    Georgia
LOUIE GOHMERT, Texas                 THEODORE E. DEUTCH, Florida
JIM JORDAN, Ohio                     LUIS V. GUTIERREZ, Illinois
TED POE, Texas                       KAREN BASS, California
JASON CHAFFETZ, Utah                 CEDRIC L. RICHMOND, Louisiana
TOM MARINO, Pennsylvania             HAKEEM S. JEFFRIES, New York
TREY GOWDY, South Carolina           DAVID CICILLINE, Rhode Island
RAUL LABRADOR, Idaho                 ERIC SWALWELL, California
BLAKE FARENTHOLD, Texas              TED LIEU, California
DOUG COLLINS, Georgia                JAMIE RASKIN, Maryland
RON DeSANTIS, Florida                PRAMILA JAYAPAL, Washington
KEN BUCK, Colorado                   BRAD SCHNEIDER, Illinois
JOHN RATCLIFFE, Texas
MARTHA ROBY, Alabama
MATT GAETZ, Florida
MIKE JOHNSON, Louisiana
ANDY BIGGS, Arizona

           Shelley Husband, Chief of Staff & General Counsel
        Perry Apelbaum, Minority Staff Director & Chief Counsel
                                 ------                                

           Subcommittee on the Constitution and Civil Justice

                       STEVE KING, Iowa, Chairman

                  RON DeSANTIS, Florida, Vice-Chairman

TRENT FRANKS, Arizona                STEVE COHEN, Tennessee
LOUIE GOHMERT, Texas                 JAMIE RASKIN, Maryland
TREY GOWDY, South Carolina           JERROLD NADLER, New York

                            C O N T E N T S

                              ----------                              

                             MARCH 2, 2017

                                                                   Page

                           OPENING STATEMENTS

The Honorable Steve King, Iowa, Chairman, Subcommittee on the 
  Constitution and Civil Justice.................................     1
The Honorable Steve Cohen, Tennessee, Ranking Member, 
  Subcommittee on the Constitution and Civil Justice.............     3
The Honorable Bob Goodlatte, Virginia, Chairman, Committee on the 
  Judiciary......................................................     5

                               WITNESSES

Paul Figley, Associate Director of Legal Rhetoric, American 
  University Washington College of Law:
    Oral Statement...............................................     6
Neil Kinkopf, Professor of Law, Georgia State University College 
  of Law:
    Oral Statement...............................................     8
Chris Jacobs, Founder and CEO, Juniper Research Group:
    Oral Statement...............................................     9

              ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Letter submitted by the Honorable Eric Thorson, Inspector General of 
    the U.S. Department of the Treasury. This material is available at 
    the Committee and can be accessed on the committee repository at:

    http://docs.house.gov/meetings/JU/JU10/20170302/105620/HMTG-115-
JU10-20170302-SD002.pdf

Statement submitted by the Honorable John Conyers, Jr., Michigan, 
    Ranking Member, Committee on the Judiciary. This material is 
    available at the Committee and can be accessed on the committee 
    repository at:

    http://docs.house.gov/meetings/JU/JU10/20170302/105620/HMTG-115-
JU10-MState-C000714-20170302.pdf

Statement submitted by the Honorable Steven Cohen, Tennessee, Ranking 
    Member, Subcommittee on the Constitution and Civil Justice. This 
    material is available at the Committee and can be accessed on the 
    committee repository at:

    http://docs.house.gov/meetings/JU/JU10/20170302/105620/HMTG-115-
JU10-MState-C001068-20170302.pdf

 
                  OVERSIGHT OF THE JUDGMENT FUND

                              ----------                              

                        Thursday, March 2, 2017

                       House of Representatives,

          Subcommittee on the Constitution and Civil Justice,

                      Committee on the Judiciary,

                            Washington, DC.

    The subcommittee met, pursuant to call, at 9:00 a.m., in 
Room 2141, Rayburn House Office Building, Hon. Steve King, 
[Chairman of the Subcommittee] presiding.
    Present: Representatives King, Goodlatte, DeSantis, Franks, 
and Cohen.
    Staff Present: John Coleman, Counsel; Jake Glancy, Clerk; 
James Park, Minority Chief Counsel; Veronica Eligan, Minority 
Professional Staff Member; and Matthew Morgan, Professional 
Staff Member.
    Mr. King. The Subcommittee on the Constitution and Civil 
Justice will come to order. Without objection, the chair is 
authorized to declare a recess of the committee at any time. We 
welcome everyone to today's hearing and on the oversight of the 
Judgment Fund, and I now recognize myself for an opening 
statement.
    Today's hearing is about the Judgment Fund, which was 
established by statute to pay court judgments and Justice 
Department compromise settlements of actual or imminent 
lawsuits against the government. Payment through the Judgment 
Fund is administered by the Judgment Fund Branch, which is a 
part of the United States Department of Treasury Bureau of 
Fiscal Service. We have seen in recent years that the vast 
bureaucracy of the Federal Government can have the effect of 
obscuring the facts and circumstances of payments from the 
Judgment Fund.
    When the public seeks to scrutinize executive actions like 
the Iran settlement, the potential risk corridor settlement, or 
settlements under the Equal Credit Opportunity Act, Congress is 
at the mercy of Federal agencies to provide information. This 
dynamic exists because the Judgment Fund as a permanent 
appropriation recognizes, excuse me, requires no congressional 
action for payments to be made.
    Today's hearing was in part intended to gather information 
from Federal officials about how the Judgment Fund is 
administered. We extended invitations to the Government 
Accountability Office, the GAO, and the United States 
Department of Treasury to testify on this topic. Neither 
produced witnesses. I am particularly dismayed that given GAO's 
years of involvement on matters relating to the Judgment Fund, 
it is unable to voluntarily offer information to contribute to 
today's hearing; no reason was provided.
    I intend to follow up with GAO to ensure that this 
committee's questions are answered. Nevertheless, at this 
committee's request, the Inspector General of the U.S. 
Department of the Treasury, the Honorable Eric Thorson, 
submitted a letter addressing his office's recent inquiry into 
the Iran Settlement, which I would like to submit for the 
record. And without objection, it is so ordered.

   LETTER SUBMITTED BY THE HONORABLE ERIC THORSON, INSPECTOR 
         GENERAL OF THE U.S. DEPARTMENT OF THE TREASURY

    This material is available at the Committee and can be 
accessed on the committee repository at: http://docs.house.gov/
meetings/JU/JU10/20170302/105620/HMTG-115-JU10-20170302-
SD002.pdf.
    Mr. King. The conclusion reached by the Inspector General, 
as well as the description of the materials that the Treasury 
Department officials relied upon in determining whether the 
Department of Justice's request for payment in this settlement 
should be approved, show that the Treasury Department's 
regulatory and manual-based requirements, appear to set a low 
bar for approval of payment requests.
    For example, the approval of the Iran Settlement claim, 
relied, in part, on verbal notifications that the Judgment 
Fund's statutory requirements were met, and that is according 
to Inspector General Thorson. Fiscal Services chief counsel 
told us and the Office of Inspector General, that the 
settlement agreement was not provided to Judgment Fund Branch 
personnel due to its sensitive nature and legally, the Judgment 
Fund Branch is not required to review the settlement agreement.
    Fiscal Services chief counsel told us, and a Judgment Fund 
Branch employee confirmed that the chief counsel verbally 
notified the Judgment Fund Branch employee that the settlement 
agreement was final as authorization for the Judgment Fund to 
approve the payment. In other words, a verbal approval.
    Moreover, the Inspector General's letter reveals that the 
lack of publicly available precedence regarding approval of the 
Judgment Fund request makes it difficult for the public and 
Congress to understand the approval process. The Treasury 
Department does not issue decisions regarding Judgment Fund 
requests, which would document the agency's reasoning.
    To make matters worse, the documents that Treasury relied 
upon in making a decision are not publicly available. 
Therefore, no recent body of precedent exists to assure 
Congress and the public that the Judgment Fund's use in any one 
case was proper.
    My hope is that the testimony from today's distinguished 
panel will inform the committee regarding the current state of 
the Judgment Fund and that they will provide recommendations 
about what congressional actions are needed. Indeed, Article I, 
Section 9, Clause 7 of the Constitution states, ``No money 
shall be drawn from the Treasury, but in consequence of 
appropriations made by law, and a regular statement and account 
of the receipts and expenditures of all public money shall be 
published from time to time.'' This provision, known as the 
Appropriation Clause, is the foundation of Congress' power of 
the purse.
    Today's hearing is about safeguarding that power, and as I 
have watched some of these cases come before the news and had 
difficulty in getting answers about the Judgment Fund, what 
goes into it and what comes out of it and to whom and why and 
asks some direct questions of some of the members of the 
previous administration, I would just like to let this 
committee know that I am determined to drill into the bottom of 
this.
    We have a congressional obligation to do oversight. We have 
a constitutional authority that we need to protect, and part of 
our job also is to restore our Article I authority, hopefully 
one day in its entirety. And so with that, I would conclude my 
opening statement, and I would recognize the gentleman from 
Tennessee, Mr. Cohen, for his opening statement.
    Mr. Cohen. Thank you, Mr. Chairman. The Judgment Fund is an 
issue that the chairman and I probably will agree on. There is 
an issue about privacy, but in a bill that we passed on the 
floor which I was a sponsor with Doug Collins on, Congressman 
Collins, H.R. 1033, it respected the privacy rights of parties 
who were reimbursed for the litigation cost and that particular 
bill striking a balance between transparency and privacy 
interests and prohibited the release of information of the 
disclosure which is prohibited by law or court order.
    If we can get to that in this bill where we do not release 
information that is prohibited, the disclosure thereof by law 
or court order, I think we can have a bill that is bipartisan 
and gets through this committee with unanimity and it to go to 
transparency which is important in all government affairs. 
Transparency is so important with funds.
    It is important with testimony before Senate Committees and 
testimony in court and all other things. Transparency is very 
important, so I think this is a good thing, and I was proud to 
be the lead Democratic sponsor in the Open Book on Equal Access 
to Justice Act which passed three days ago, and I think it 
gives us a pathway to get this bill to go through in a 
unanimous fashion and without controversy on the floor. And the 
folks that didn't respond, should have responded, of course. I 
would like to enter into the record my statement, which I am 
not going to go through entirely, and Mr. Conyers' statement, 
without objection.
    Mr. King. Without objection, so ordered.

 STATEMENT SUBMITTED BY THE HONORABLE STEVEN COHEN, TENNESSEE, 
  RANKING MEMBER, SUBCOMMITTEE ON THE CONSTITUTION AND CIVIL 
                            JUSTICE

    This material is available at the Committee and can be 
accessed on the committee repository at: http://docs.house.gov/
meetings/JU/JU10/20170302/105620/HMTG-115-JU10-MState-C001068-
20170302.pdf.

    STATEMENT SUBMITTED BY THE HONORABLE JOHN CONYERS, JR., 
      MICHIGAN, RANKING MEMBER, COMMITTEE ON THE JUDICIARY

    This material is available at the Committee and can be 
accessed on the committee repository at: http://docs.house.gov/
meetings/JU/JU10/20170302/105620/HMTG-115-JU10-MState-C000714-
20170302.pdf.
    Mr. Cohen. But today, there are important matters, and 
while these are important matters, more important matters, 
which is the issue of testimony before the Senate and 
confirmation hearings and Russia's involvement in our election 
process or possible involvement, I guess we kind of know there 
was involvement now.
    The chairman and I both were on a recent journey when we 
met with some Russian Duma officials. I can say based on a 
small bit of information we got from them, that the Russian 
Duma Officials are just like the Russian Duma officials of 20, 
30, 50 years ago. They have not changed, and as the old 
expression, ``Once KGB, always KGB,'' which applies to Mr. 
Putin, and I read something today about some intelligence 
officials that so many people in Russia are considered 
intelligence officials. They said once an intelligence 
official, always an intelligence official.
    Well, once a Duma member, same thing. And we met with some 
other folks in private who let us know that Russia does not 
have the same interests that America has, which we should know, 
and I know the chairman and I share that perspective. There is 
an issue about Mr. Sessions being the Attorney General and some 
of the questions he answered during his confirmation hearings 
asked by Mr. Franken orally and by Senator Leahy in writing 
that call into question his veracity at that hearing, when he 
said he did not have any contact with any Russian officials, 
and in fact, they now announced he had two meetings with 
Russian Ambassadors.
    There may be a hedge that he can have and some wiggle room, 
but the Attorney General like Caesar's wife, Caesar's wife was 
supposed to be beyond reproach. The Attorney General should not 
need wiggle room, and if there is a wiggle room answer, the 
Attorney General should be totally forthcoming, and in this 
case where there is an issue of his veracity, then it is an 
issue whether he should even remain as Attorney General, but 
there is certainly an issue whether he should appoint a special 
counsel to look into any possible transgressions between the 
Trump campaign and the Russians in influencing our elections, 
he should appoint a special counsel.
    Wiggle room is something we cannot have with lady justice 
and with our Attorney General, and that is all he has right now 
is wiggle room. He was asked a direct question, Mr. Chair, by 
Senator Franken, and he said, ``No, I have not met with the 
Russians,'' and in fact, now he says he had twice, one time 
even in September. Russia just keeps coming up, and in the 
President's speech, he made a point of saying we are going to 
make some new friends.
    We are not only going to be friendly with the old world and 
support NATO which is great and good, and I was surprised and 
the first one, I think, to my feet on the--if anybody was on 
their feet on the floor on that--because we need to support our 
friends in the Balkans and the Baltic regions and Georgia and 
Malta and Ukraine and every place else that is threatened by 
the big bear, but he said we are going to make some new 
friends, and what he was saying, he did not say it but what he 
was saying was Russia, and he pointed toward the Democrats, and 
he said, with his right hand, we need to get beyond some of our 
small, trivial differences and move on.
    He did not say what those were, but I suspect those were 
his income taxes, his involvement with Russia, other foreign 
interests, the Emoluments Clause issues that are going on and 
serious issues that fall within the jurisdiction of this 
committee and this subcommittee I would submit as well. And I 
would ask the chair to consider hearings concerning Russia's 
hacking of our election, the Attorney General's involvement or 
lack of involvement in those discussions, and any other issues 
concerning Mr. Trump, his taxes.
    You know, what he should have said when he started, Mr. 
Chair, he had a good speech written for him, and he delivered 
it pretty well, pretty good, pretty good, but instead of 
starting with the last day of Black History Month and the 
Jewish Cemetery desecration, and the threats on the Jewish 
Community Centers, which was nice and good, he should have 
started with, ``There is some problems in this country, and we 
need to resolve them, we need to come together, and I am going 
to lead by releasing my income taxes,'' that would have gone a 
long way towards bringing this country together and making him 
truly a President.
    So, with that I would ask the chair to consider some 
hearings on these issues, and I know the chair is a patriot and 
holds America first in his heart and is no big fan of the 
former Soviet Union and Russia and some of the things they do. 
I yield back the balance of my time.
    Mr. King. The gentleman yields back the balance of his 
time, and his words are duly considered, and the chair will now 
recognize the chairman of the full Judiciary Committee, Mr. 
Goodlatte, of Virginia for his opening statement.
    Chairman Goodlatte. Thank you, Mr. Chairman. Mr. Chairman, 
James Madison in Federalist No. 58 stated, ``The House of 
Representatives cannot only refuse, but they alone can propose, 
the supplies requisite for the support of government. They, in 
a word, hold the purse, that powerful instrument by which we 
behold, in the history of the British Constitution, an infant 
and humble representation of the people gradually enlarging the 
sphere of its activity and importance, and finally reducing, as 
far as it seems to have wished, all the overgrown prerogatives 
of the other branches of the government. This power of the 
purse may, in fact, be regarded as the most complete and 
effectual weapon with which any constitution can arm the 
immediate representatives of the people, for obtaining a 
redress of every grievance, and for carrying into effect every 
just and salutary measure.''
    In its current form, the Judgment Fund, when abused, allows 
the executive branch to pilfer taxpayer dollars to fund its 
overgrown prerogatives without any congressional action or 
oversight.
    In such cases, Congress' check on these abuses is rigorous 
oversight to determine whether additional legislation is 
required. In recent years, it has become apparent that little 
information is known about individual payments from the 
Judgment Fund, particularly with regard to the payment of 
settlements.
    Searches for individual payments from the Judgment Fund in 
a database maintained by the Treasury Department reveals little 
about the underlying facts, how the funds were used, and even 
who received them. In a system of government in which Congress 
is accountable for the way in which the taxpayer dollars are 
spent, this is unacceptable.
    I look forward to the witnesses' testimony today and to 
their recommendations regarding how Congress, the immediate 
representatives of the people, can improve our oversight of 
this permanent, indefinite appropriation, as well as improve 
transparency for the public. Thank you, Mr. Chairman.
    Mr. King. I would like to thank the chairman of the full 
committee. In recognizing that the ranking member of the full 
committee's statement has been entered into the record, and 
without objection, other members' opening statements will be 
made part of the record, and let me now introduce the 
witnesses.
    Our first witness is Professor Paul Figley. Professor 
Figley is the associate director of Legal Rhetoric at American 
University Washington College of Law. And our second witness is 
Professor Neil Kinkopf. Professor Kinkopf is a Professor of Law 
at Georgia State University College of Law. And our third and 
final witness is Chris Jacobs, and Mr. Jacobs is the founder 
and CEO of the Juniper Research Group.
    Each of the witnesses' written statements will be entered 
into the record in its entirety, and I ask that each witness 
summarize their testimony in 5 minutes or less. And to help you 
stay within that time limit, there is a light in front of you.
    I expect you are familiar with that light, gentlemen. And 
that switch will turn from green to yellow when there is one 
minute left and, of course, when it is red, it means the same 
thing here as it does out on the streets of Washington, D.C. 
and, however, we want you to summarize your statement and 
complete your thought. And before I recognize the witnesses, it 
is the tradition of the committee that they be sworn in.
    So, I would ask the witnesses to please stand and raise 
your right hand. Do you swear that the testimony you are about 
to give before this committee is the truth, the whole truth, 
and nothing but the truth, so help you God? Thank you, 
gentlemen.
    Let the record reflect that all the witnesses responded in 
the affirmative. And I now recognize the first witness for his 
testimony, Professor Figley, and please proceed with your 5 
minutes, Professor Figley.

    STATEMENTS OF PAUL FIGLEY, ASSOCIATE DIRECTOR OF LEGAL 
 RHETORIC, AMERICAN UNIVERSITY WASHINGTON COLLEGE OF LAW; NEIL 
KINKOPF, PROFESSOR OF LAW, GEORGIA STATE UNIVERSITY COLLEGE OF 
 LAW; AND CHRIS JACOBS, FOUNDER AND CEO, JUNIPER RESEARCH GROUP

                  STATEMENT OF MR. PAUL FIGLEY

    Mr. Figley. Thank you, Mr. Chairman. Through the 
Appropriations Clause, Congress holds the power of the purse. 
For administrative convenience, in 1956, it established the 
Judgment Fund as the means of paying most settlements in 
judgments against the Federal Government. Since 1977, the 
Judgment Fund has automatically made those payments regardless 
of their amount and without congressional review.
    The Judgment Fund is not an all-purpose fund for judicial 
disbursements, rather it can be used only where there is a 
substantive right to compensation based on the expressed terms 
of a specific statute. The Attorney General and his delegees 
have broad authority to settle imminent litigation under his 
supervision. They do not have authority to circumvent limits 
Congress places on statutes that authorize the payment of money 
damages.
    The Judgment Fund system is in trouble. Two settlements, 
each exceeding $100 million, show the problem. Each paid much 
more money than the government was likely to lose in court. The 
decisions to settle them on generous terms appear politically 
motivated. The suits involved claims similar to those brought 
by black farmers in the Pigford Litigation that alleged USDA 
discrimination in farm programs in violation of the Equal 
Credit Opportunity Act. The Pigford Litigation in the 
settlements amounting to over $2.2 billion for which Congress 
made specific appropriations.
    In Keepseagle, Native Americans brought a class action 
alleging USDA discrimination. Although no class was certified 
for monetary relief, the suit was settled in 2010 for $760 
million, including a settlement fund of $680 million 
established with Judgment Fund money. The settlement grossly 
miscalculated the number of claimants.
    When fewer than 4,500 farmers perfected claims, it paid 
them about $300 million. That left $380 million in the 
settlement fund. Because the settlement agreement lacked a 
provision requiring reversion of leftover money, that money was 
not returned to the Treasury. Various Native American groups 
are still litigating how to use it.
    Eventually, that $380 million of Judgment Fund money will 
be spent on something other than valid claims against the 
government. In the Garcia and Love cases, Hispanic farmers and 
women farmers filed similar class action suits. In both cases, 
the district court's decisions to deny class certifications 
were affirmed on appeal, and the Supreme Court denied 
certiorari. Then in 2011, USDA and the Department of Justice 
unilaterally announced a new claims program for Hispanic and 
women farmers, including they said, at least $1.33 billion from 
the Judgment Fund.
    The executive branch created this claims program without 
legislative input or judicial supervision and financed it with 
Judgment Fund money. The litigative risk posed by Garcia and 
Love did not justify the new program. No class had been or ever 
would be certified, making the prospect of sizable adverse 
judgments extremely remote. Politics motivated creation of the 
program.
    For example, eight Senators wrote to President Obama 
arguing that about $2.25 billion had been allotted to, 
``Resolve USDA discrimination against black farmers,'' and 
calling for equal treatment for Hispanic farmers. Agency 
descriptions portrayed the new program as comparable, saying it 
included, ``At least $1.33 billion in the Judgment Fund.'' In 
fact, no special fund was created. The total amount paid to 
claimants was about $160 million.
    By creating this program through administrative decree, the 
administration intentionally bypassed the appropriation 
process. Secretary Vilsack argued, ``We do not have to have an 
appropriation from Congress for Garcia-Love.'' This is 
something that can be resolved as is the case with virtually 
every other claim against the United States from the Judgment 
Fund, but the Judgment Fund is properly available only to 
settle valid legal claims.
    The Judgment Fund is now on the executive's radar as an 
easy way to finance new programs and initiatives that are 
somehow related to claims against the government. Absent 
legislation, it is likely to be used again. The problem is not 
partisan.
    While the Keepseagle Settlement and the Hispanic woman 
farmer claims process were products of the Obama 
administration, it is fair to anticipate that the other 
administrations will follow the same path if that path remains 
open. The tension here is between Congress and the executive 
branch. Congress' power of the purse is a key part of the 
Constitution's system of checks and balances. To preserve that 
power, Congress should place a limit on the size of payments 
that the executive branch can make from the Judgment Fund.
    Mr. King. Thank you, Professor Figley. And now I will 
recognize Professor Kinkopf for his testimony. Professor.

                 STATEMENT OF MR. NEIL KINKOPF

    Mr. Kinkopf. Thank you, Mr. Chairman and Mr. Ranking 
Member. It is a real honor to appear before you today, 
especially to do this as sort of an encore performance. We were 
here in September, and I do not want to repeat what I said 
then. Much of what I had to say at that time I repeated it in 
my written statement to you. I will not repeat that here. I 
just want to say I completely agree with the comments that I 
think all of the opening statements made to the effect that 
transparency is good, right? Who could be against transparency? 
Accountability is good, and accountability and transparency for 
the Judgment Fund are important.
    Like any government program, the Judgment Fund and its 
administration relies on the good faith administration of those 
individuals, those human people who actually administer the 
program, and it is just and legitimate for this committee to 
engage in oversight to make sure that those functions are being 
performed in good faith.
    I want to respond a bit to what Professor Figley had to 
say. Well, first of all, the Obama administration's use of the 
Judgment Fund is completely within the letter of the law, and 
there can be no doubt about that. It is also completely and 
fully within the practice of administrations of both political 
parties going back to the inception of the Judgment Fund.
    So, nothing that the Obama administration did was or could 
be regarded as illegal. Nothing the Obama administration did is 
unprecedented. Moreover, I think the way to look at some of the 
settlements entered into during the Obama administration is not 
from the perspective of what a private law firm representing a 
private party might do. The motto of the Justice Department is, 
``Qui Pro Domina Justitia Sequitur.'' Those who advocate in 
behalf of justice.
    It is a common saying around the Justice Department that, 
``The Justice Department wins when justice is served.'' With 
respect to the farm litigation, the Department of Agriculture 
engaged in discrimination on race and gender for decades. It is 
not the proper function of the Government of the United States 
to make it difficult for people to receive just compensation 
for government discrimination perpetrated over decades, and so 
the fact that perhaps the Justice Department could have hidden 
behind various legal defenses in order to avoid paying the just 
compensation for injuries it imposed on citizens is not at all 
an illegitimate function. It is, in fact, in the highest and 
best traditions of the Department of Justice. With that, I will 
yield the balance of my time.
    Mr. King. Thank you, Professor Kinkopf, for his testimony. 
And I will recognize Mr. Jacobs for his.

                 STATEMENT OF MR. CHRIS JACOBS

    Mr. Jacobs. Thank you, Mr. Chairman. Chairman King, Ranking 
Member Cohen, members of the subcommittee, thank you for 
inviting me to testify. As Chairman King stated, my name is 
Chris Jacobs, and I focus my career on analyzing issues in 
health policy, including more than 6 years here on Capitol 
Hill. My entire written statement is before you, so I will not 
repeat it, but instead emphasize three main points regarding 
the use of the Judgment Fund as it pertains to health insurer 
claims regarding risk corridors currently pending in the Court 
of Federal Claims.
    First, past precedence suggests that by prohibiting the use 
of taxpayer funds for the risk corridor program, Congress has 
otherwise provided for claims payments, rendering the Judgment 
Fund inaccessible to insurers' claims. The nonpartisan 
Congressional Research Service reached this conclusion more 
than one year ago, consistent with prior opinions by both the 
Governmental Accountability Office and the Justice Department's 
Office of Legal Counsel.
    Second, the amount of money in dispute regarding risk 
corridor dwarfs most other Judgment Fund payments. Losses for 
the risk corridor program in 2014 and 2015 have totaled 
approximately $8.3 billion. When final numbers are tabulated, 
total losses over the program's 3 years, that is 2014, 2015, 
and 2016, will likely exceed $10 billion at minimum. By 
comparison, the Washington Post noted last September, that the 
Department of Health and Human Services claims paid out from 
the Judgment Fund over the last decade total only $18 million.
    A potential Judgment Fund verdict or settlement regarding 
risk corridors would vastly exceed last year's Iran settlement 
and the Pigford and other settlements discussed by Professor 
Figley in his testimony.
    Third, last fall the Obama administration made no secret of 
the fact they wished to settle the risk corridor cases by the 
Judgment Fund to circumvent the express congressional 
prohibition in the Department of Health and Human Services 
using taxpayer dollars to fund the program. I understand that 
the status of risk corridors and the healthcare law, in 
general, have become a matter of no small dispute between the 
two parties, but Members in Congress of both political parties, 
both Republican and Democrat, should be aware of the 
consequences of such an executive encroachment on Congress' 
most important power, the power of the purse, for the roles 
could easily be reversed in a subsequent case regarding another 
issue.
    For this reason, I believe that Congress and this committee 
should consider codifying past practice and precedence by 
enacting language to clarify that where the legislature has 
enacted limitations or restrictions on appropriations. Congress 
says, therefore, otherwise provided for payment of claims, and 
the Judgment Fund should remain off limits in those cases.
    Thank you very much for the opportunity to testify this 
morning, and I look forward to your questions.
    Mr. King. Thank you, Mr. Jacobs. And I will now recognize 
myself for my 5 minutes of questioning. I want to first turn to 
Professor Kinkopf and ask you--USDA engaged in discrimination 
for decades, and I am going to presume you were referring to 
all four of the cases that we have discussed here, the 
Keepseagle and Garcia and Love and Pigford?
    Mr. Kinkopf. Yes.
    Mr. King. And then, are you aware of any individuals that 
work for the USDA that were identified as discriminators?
    Mr. Kinkopf. No, I am not.
    Mr. King. And would you not question how it would be that 
we could pay off billions of dollars in damages but not find a 
single perpetrator within our USDA?
    Mr. Kinkopf. I would not say that there were no such 
perpetrators. The Department of Agriculture conceded that this 
had happened. I do not know names. The Department of 
Agriculture conceded that this had happened, and once that 
happens, I think it is perfectly legitimate for the Justice 
Department to say we are going to compensate the victims of 
that discriminatory----
    Mr. King. I do not remember Dan Glickman's confession to 
that back sometime in the 1990s, and I do not remember any 
evidence with regard to that discrimination. It always seemed 
curious to me that the department that could make such a 
confession and put such an all-out effort out to identify 
people who are victims of discrimination could not identify a 
single perpetrator to fire or to at least use as an example.
    I turn to Professor Figley. Are you aware of any 
perpetrators within the USDA with regard to these cases?
    Mr. Figley. I am not, and there was some discussion.
    Mr. King. Your microphone, please.
    Mr. Figley. I am not, and there was some discussion that 
there were pretty good defenses that might have been available. 
The point that, if that answers your question.
    Mr. King. Well, thank you. Did you have a tally on the 
totals that were paid out on the four cases that you testified 
on? Did that get added up?
    Mr. Figley. I could add it up, I have not. It was about 
$2.25 billion for Pigford.
    Mr. King. Does that begin with a B?
    Mr. Figley. 1.1 or 1.2 billion dollars for Keepseagle, the 
Hispanic movement of farmers ended up only $160 million, 
although it had been portrayed as a billion-dollar program.
    Mr. King. So, the totals you have given me would be 
consistent with the total given by Mr. Jacobs that the risk 
corridors will end up being considerably more than all four 
cases that have to do with discrimination at USDA?
    Mr. Figley. Yes.
    Mr. King. You would agree with that statement?
    Mr. Figley. Yes.
    Mr. King. And I want to turn back to you, Professor 
Kinkopf, and ask you when you said that Obama is completely 
within the letter of the law and nothing was unprecedented 
regarding these cases, and I will acknowledge that the 
authority granted seems to be within that authority granted but 
would your statement also include, and I would just ask what 
your position would be.
    Do you think if this was litigated and taken back to 
Article I, Section 9, Clause 7, no money shall be drawn from 
the Treasury but in consequence of appropriations made by law? 
I could complete that, but would you not understand that 
clause? Do you expect that could be litigated with regard to 
taking it back to the Constitution if someone had standing, 
could the argument then be made that this kind of expenditures 
and the billions of dollars are consistent with the 
Constitution?
    Mr. Kinkopf. The Judgment Fund is an appropriation by law.
    Mr. King. Slush fund appropriation by law.
    Mr. Kinkopf. So, as long as it is within the judgment and 
it is an appropriation by law and it is within the 
Constitution.
    Mr. King. But in consequence for appropriation made by law 
and a regular statement in account of the receipts and 
expenditures of all money shall be published from time to time. 
Has that been complied with?
    Mr. Kinkopf. What the Constitution requires has been 
complied with, although you also point to what has long been a 
problem with the receipts provision, which is no one has 
standing because there are any number of off budget 
expenditures that are made. CIA expenditures are kept secret. 
There is no provision for that in the Constitution, right? So, 
with how practice has come to understand that clause, the 
Judgment Fund is within it.
    Now, the measures you are considering to improve 
transparency I think are salutary, and I would support. I do 
not think the Constitution requires them, although I think you 
are quite right to perceive it if I am understanding the 
premise of your question that legislation that would require 
greater transparency would promote those constitutional values.
    Mr. King. Thank you, Professor Kinkopf, and I appreciate 
your testimony promoting a more transparency, and I appreciate 
the bipartisan look at this transparency, and I want to let 
people know that not am I only determined to get to the bottom 
of this, but I believe we have a constitutional obligation to 
do so, and when billions of dollars stack up without even 
questioning the motivations for that, and I hear discussions 
about our Attorney General and his integrity, I am thinking 
about the answers I did not get from the previous Attorney 
General.
    And so with that, I see that my time has expired, and I now 
recognize the ranking member for his questioning.
    Mr. Cohen. Thank you, Mr. Chair. I find it unfortunately, 
frequent that my friends--and the chair is one of my friends on 
the other side, often in these issues about Trump 
administration and Russia, go back and refer to something that 
might have happened with Obama and they go but, but, but this 
happened then, and it is not really important what happened 
then, that is in the history books.
    It is what is happening now on our watch, and to go back 
and suggest that, oh, something happened then, does not mean 
you should be mute on issues that are before us today. 
Professor Kinkopf, you were involved with the Justice 
Department, can the Attorney General do his job if he is under 
a cloud of suspicion of giving false testimony before a Senate 
panel?
    Mr. Kinkopf. It certainly makes the job difficult. I would 
not say it is impossible to do the job, I guess yes, it is 
possible to do the job. It is much more difficult, depending on 
how serious the cloud is.
    Mr. Cohen. You were a counsel to Senator Biden during the 
impeachment trial of President Clinton.
    Mr. Kinkopf. That is true.
    Mr. Cohen. The gravamen of that case was that he lied. It 
was not the fact that he engaged in oral sex with an intern. It 
was the fact that he lied about it, is that correct?
    Mr. Kinkopf. That is correct.
    Mr. Cohen. So, lying is real important under oath.
    Mr. Kinkopf. That is correct.
    Mr. Cohen. What is the proper remedy or where should this 
Congress go when there is an issue about whether somebody gave 
false testimony to the Senate under confirmation hearings?
    Mr. Kinkopf. Well, if there is a serious and credible basis 
for believing someone has given false testimony, then I think 
Congress should take that very seriously and consider a 
contempt citation and hearings in support of that.
    Mr. Cohen. And would that be limited to the Senate where 
the testimony was given or could it be this particular House as 
well, and the Judiciary Committee sits in and involves the 
integrity of our government and our Attorney General.
    Mr. Kinkopf. This committee certainly has legitimate 
oversight authority with respect to the Justice Department, so 
it would be a legitimate exercise, and perhaps if the Senate 
wanted to look into it, they might take precedence because it 
was a Senate hearing.
    Mr. Cohen. And Mr. Jacobs, I see you had some experience 
with Mr. Pence?
    Mr. Jacobs. That is correct.
    Mr. Cohen. Sometimes, we have had people suggest that this 
is just Democrats being upset about losing the election. I want 
everybody to know my concern is not the Democrats. I am 
concerned the Democrats lost the election. I am concerned that 
the Russians might have influenced it, but I am more concerned 
about the idea that we do not have somebody like Vice President 
Pence as President who we do not have to have concerns about 
possibly doing irrational things and blowing up the universe.
    Your former boss has served on this committee, had a well-
earned reputation for being honest, somewhat little bleep with 
the general, but it was clear that the general who led him 
astray, and we would look forward to you being in the executive 
branch.
    So, it is not necessarily an issue with Republicans, it is 
the particular person who is not really a Republican. He has 
taken over the party in a coup. A coup at the ballot box, but 
that is just kind of where we are.
    On this law, Professor Figley, assuming I understand where 
you are coming from on the farmer's suit and Professor Kinkopf 
his, I do not it has to be settle a case that is done, you have 
to have a place to pay it. This law would just make it public 
and give notice. So, if that was done, we would know have known 
more about it earlier about the T-note payments, but it would 
not necessarily make it illegal, is that correct? Under this 
proposed law?
    Mr. Figley. Under the Openness Law, that bill, it would not 
make any difference. As I understand it, this hearing is on a 
broader topic at the Judgment Fund. If there was a cap placed 
on the Judgment Fund, that would have made a difference.
    Mr. Cohen. Okay, well that might be the case. My time is 
about up. I am going to ask you a personal question just to see 
if it is my eyes and my memory, has anybody else thought you 
looked a little bit like Paul Newman?
    Mr. Figley. Oh, I wish. Well, thank you. I will take that 
home and see if it flies with my wife.
    Mr. Cohen. Good. I yield back the balance.
    Mr. King. Again, I thank the witnesses for your testimony.
    Mr. Figley. Chairman, if I might make two brief points.
    Mr. King. You are recognized.
    Mr. Cohen. Paul Newman.
    Mr. Figley. I wish. Professor Kinkopf suggested that 
nothing done by the Obama administration was unprecedented. 
Creating a new claims program without any input from Congress 
is unprecedented, and he suggested that the Department of 
Justice's best tradition calls for not hiding behind legal 
defenses. It is the role of the Department of Justice to apply 
the law equally to everyone, and when Congress places 
substantive legal defenses into the law, it is not for 
individuals within the Department of Justice to decline to use 
those defenses.
    The only way, and I speak now from 30 years' experience of 
Justice, the only way that Justice can fulfill its obligations 
is to apply the law to every claim, whether the claimant is 
Little Sisters of the Poor or Hells Angels gang. It is not for 
us to pick winners and losers, that is for Congress to decide, 
and we must as Department of Justice attorneys assert every 
proper legal defense in every case unless Congress gives us the 
discretion not to do so.
    Mr. King. Thank you, professor, and since we have broken 
from protocol, I would acknowledge either one of the other two 
witnesses if you have concluding statement or are you 
comfortable with what you have delivered today?
    Mr. Kinkopf. I am comfortable with what I have delivered, I 
would simply add that what Professor Figley just said is 
correctly the perspective of a line attorney in the Department 
of Justice; however, at the higher levels of decision making, 
at the cabinet level, much bigger policy concerns do and should 
come into account, and concern about preserving the civil 
rights of individual citizens and compensating those who have 
been injured, are legitimately within that ambit, and I think 
were legitimately taken into account by the Justice Department 
in these cases.
    Mr. King. Thank you, professor. Mr. Jacobs is comfortable 
with his testimony. He would like to have it capped off here, 
and I would conclude with this that the statement I made 
earlier that I intend to drill into this, and get as complete 
an audit as this can be achieved and to examine the 
implications, especially if there is political motivation that 
is indicated with where these dollars have been distributed, I 
think we should recognize that, and I think the public should 
know, and they can make their decisions when they go to the 
ballot box.
    So, universal statement here is transparency. I will do my 
share to achieve that transparency, and I am confident Mr. 
Cohen will as well.
    I thank the witnesses for your testimony here today and 
without objection, all members will have 5 legislative days to 
submit additional written questions for the witnesses or 
additional materials for the record. This hearing is now 
adjourned.
    [Whereupon at 9:47 a.m., the subcommittee adjourned subject 
to the call of the chair.]
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