II 

Calendar No. 566 

113TH CONGRESS 

2D SESSION S. 1898 

To require adequate information regarding the tax treatment of payments 

under settlement agreements entered into by Federal agencies, and for 

other purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 8, 2014 

Ms. WARREN (for herself, Mr. COBURN, Mr. LEVIN, and Mr. BEGICH) introduced the following bill; which was read twice and referred to the Committee on Homeland Security and Governmental Affairs 

SEPTEMBER 16, 2014 

Reported by Mr. CARPER, with an amendment 

[Strike out all after the enacting clause and insert the part printed in italic] 

A BILL 

To require adequate information regarding the tax treatment 

of payments under settlement agreements entered into 

by Federal agencies, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Truth in Settlements 

5 Act of 2014’’. 


tkelley on DSK3SPTVN1PROD with BILLS
2 

•S 1898 RS

1 SEC. 2. INFORMATION REGARDING SETTLEMENT AGREE2 MENTS ENTERED INTO BY FEDERAL AGEN3 CIES. 

4 (a) REQUIREMENTS FOR SETTLEMENT AGREE5 MENTS.— 

6 (1) IN GENERAL.—Chapter 3 of title 5, United 

7 States Code, is amended by adding at the end the 

8 following: 

9 ‘‘§ 307. Information regarding settlement agreements 

10 ‘‘(a) DEFINITIONS.—In this section— 

11 ‘‘(1) the term ‘covered settlement agreement’ 

12 means a settlement agreement (including a consent 

13 decree) that— 

14 ‘‘(A) is entered into by an Executive agen15 cy; 

16 ‘‘(B) relates to an alleged violation of Fed17 eral civil or criminal law; and 

18 ‘‘(C) requires the payment of a total of not 

19 less than $1,000,000 by one or more non-Fed20 eral persons; 

21 ‘‘(2) the term ‘entity within the Federal Gov22 ernment’ includes an officer or employee of the Fed23 eral Government acting in an official capacity; and 

24 ‘‘(3) the term ‘non-Federal person’ means a 

25 person that is not an entity within the Federal Gov26 ernment. 


tkelley on DSK3SPTVN1PROD with BILLS
3 

•S 1898 RS

1 ‘‘(b) INFORMATION TO BE POSTED ONLINE.— 

2 ‘‘(1) REQUIREMENT.— 

3 ‘‘(A) IN GENERAL.—Subject to subpara4 graph (B), the head of each Executive agency 

5 shall make publicly available in a searchable 

6 format in a prominent location on the Web site 

7 of the Executive agency— 

8 ‘‘(i) a list of each covered settlement 

9 agreement entered into by the Executive 

10 agency, which shall include, for each cov11 ered settlement agreement— 

12 ‘‘(I) the date on which the par13 ties entered into the covered settle14 ment agreement; 

15 ‘‘(II) the names of the parties 

16 that settled claims under the covered 

17 settlement agreement; 

18 ‘‘(III) a description of the claims 

19 each party settled under the covered 

20 settlement agreement; 

21 ‘‘(IV) the amount each party set22 tling a claim under the covered settle23 ment agreement is obligated to pay 

24 under the settlement agreement; 


tkelley on DSK3SPTVN1PROD with BILLS
4 

•S 1898 RS

1 ‘‘(V) the total amount the set2 tling parties are obligated to pay 

3 under the settlement agreement; and 

4 ‘‘(VI) for each settling party, the 

5 amount the settling party is obligated 

6 to pay that has been designated as a 

7 civil penalty or fine, or otherwise spec8 ified as not tax deductible under the 

9 covered settlement agreement; and 

10 ‘‘(ii) a copy of each covered settlement 

11 agreement entered into by the Executive 

12 agency. 

13 ‘‘(B) CONFIDENTIALITY PROVISIONS.—The 

14 requirement to disclose information or a copy of 

15 a covered settlement agreement under subpara16 graph (A) shall apply to the extent that the in17 formation or copy (or portion thereof) is not 

18 subject to a confidentiality provision that pro19 hibits disclosure of the information or copy (or 

20 portion thereof). 

21 ‘‘(2) PERIOD.—The head of each Executive 

22 agency shall ensure that— 

23 ‘‘(A) information regarding a covered set24 tlement agreement is publicly available on the 

25 list described in paragraph (1)(A)(i) until at 


tkelley on DSK3SPTVN1PROD with BILLS
5 

•S 1898 RS

1 least the date that is 5 years after the date of 

2 the covered settlement agreement; and 

3 ‘‘(B) a copy of a covered settlement agree4 ment made available under paragraph (1)(A)(ii) 

5 is publicly available until— 

6 ‘‘(i) at least the date that is 1 year 

7 after the date of the covered settlement 

8 agreement; or 

9 ‘‘(ii) for a covered settlement agree10 ment under which a non-Federal person is 

11 required to pay not less than $50,000,000, 

12 at least the date that is 5 years after the 

13 date of the covered settlement agreement. 

14 ‘‘(c) PUBLIC STATEMENT.—If the head of an Execu15 tive agency determines that a confidentiality provision in 

16 a covered settlement agreement, or the sealing of a covered 

17 settlement agreement, is required to protect the public in18 terest of the United States, the head of the Executive 

19 agency shall issue a public statement stating why such ac20 tion is required to protect the public interest of the United 

21 States, which shall explain— 

22 ‘‘(1) what interests confidentiality protects; and 

23 ‘‘(2) why the interests protected by confiden24 tiality outweigh the public’s interest in knowing 


tkelley on DSK3SPTVN1PROD with BILLS
6 

•S 1898 RS

1 about the conduct of the Federal Government and 

2 the expenditure of Federal resources. 

3 ‘‘(d) REQUIREMENTS FOR WRITTEN PUBLIC STATE4 MENTS.—Any written public statement issued by an Exec5 utive agency that refers to an amount to be paid by a 

6 non-Federal person under a covered settlement agreement 

7 shall— 

8 ‘‘(1) specify which portion, if any, of the 

9 amount to be paid under the covered settlement 

10 agreement by a non-Federal person— 

11 ‘‘(A) is a civil or criminal penalty or fine 

12 to be paid for a violation of Federal law; or 

13 ‘‘(B) is expressly specified under the cov14 ered settlement agreement as not deductible for 

15 purposes of the Internal Revenue Code of 1986; 

16 and 

17 ‘‘(2) describe in detail any actions the non-Fed18 eral person shall take under the covered settlement 

19 agreement— 

20 ‘‘(A) in lieu of payment to the Federal 

21 Government or a State or local government; or 

22 ‘‘(B) in addition to such a payment. 

23 ‘‘(e) REPORTING.— 

24 ‘‘(1) IN GENERAL.—Not later than January 15 

25 of each year, the head of an Executive agency that 


tkelley on DSK3SPTVN1PROD with BILLS
7 

•S 1898 RS

1 entered into a covered settlement agreement during 

2 the previous fiscal year shall submit to each com3 mittee of Congress with jurisdiction over the activi4 ties of the Executive agency a report indicating— 

5 ‘‘(A) how many covered settlement agree6 ments the Executive agency entered into during 

7 that fiscal year; 

8 ‘‘(B) how many covered settlement agree9 ments the Executive agency entered into during 

10 that fiscal year had any terms or conditions 

11 that are required to be kept confidential; and 

12 ‘‘(C) how many covered settlement agree13 ments the Executive agency entered into during 

14 that fiscal year for which all terms and condi15 tions are required to be kept confidential. 

16 ‘‘(2) AVAILABILITY OF REPORTS.—The head of 

17 an Executive agency that is required to submit a re18 port under paragraph (1) shall make the report pub19 lically available in a searchable format in a promi20 nent location on the Web site of the Executive agen21 cy.’’. 

22 (2) TECHNICAL AND CONFORMING AMEND23 MENT.—The table of sections for chapter 3 of title 

24 5, United States Code, is amended by adding at the 

25 end the following: 

‘‘307. Information regarding settlement agreements.’’. 


tkelley on DSK3SPTVN1PROD with BILLS
8 

•S 1898 RS

1 (b) SECURITIES REPORTING.— 

2 (1) IN GENERAL.—Each issuer of securities 

3 that is required to file annual or other periodic re4 ports with the Commission under section 13 or 

5 15(d) of the Securities Exchange Act of 1934 (15 

6 U.S.C. 78m, 78o(d)) shall describe in such a report 

7 any claim filed for a deduction under the Internal 

8 Revenue Code of 1986 during the reporting period 

9 that relates to a payment required under a covered 

10 settlement agreement. 

11 (2) DEFINITIONS.—As used in this sub12 section— 

13 (A) the term ‘‘Commission’’ means the Se14 curities and Exchange Commission; 

15 (B) the term ‘‘covered settlement agree16 ment’’ has the meaning given that term in sec17 tion 307 of title 5, United States Code, as 

18 added by subsection (a); and 

19 (C) the term ‘‘issuer’’ has the same mean20 ing as in section 3 of the Securities Exchange 

21 Act of 1934 (15 U.S.C. 78c). 

22 (c) REVIEW OF CONFIDENTIALITY OF SETTLEMENT

23 AGREEMENTS.—Not later than 6 months after the date 

24 of enactment of this Act, the Comptroller General of the 

25 United States shall submit to Congress a report regarding 


tkelley on DSK3SPTVN1PROD with BILLS
9 

•S 1898 RS

1 how Executive agencies (as defined under section 105 of 

2 title 5, United States Code) determine whether the terms 

3 of a settlement agreement or the existence of a settlement 

4 agreement will be treated as confidential, which shall in5 clude recommendations, if any, for legislative or adminis6 trative action to increase the transparency of Government 

7 settlements while continuing to protect the legitimate in8 terests that confidentiality provisions serve. 

9 SECTION 1. SHORT TITLE. 

10 This Act may be cited as the ‘‘Truth in Settlements 

11 Act of 2014’’. 

12 SEC. 2. INFORMATION REGARDING SETTLEMENT AGREE13 MENTS ENTERED INTO BY FEDERAL AGEN14 CIES. 

15 (a) REQUIREMENTS FOR SETTLEMENT AGREE16 MENTS.— 

17 (1) IN GENERAL.—Chapter 3 of title 5, United 

18 States Code, is amended by adding at the end the fol19 lowing: 

20 ‘‘§ 307. Information regarding settlement agreements 

21 ‘‘(a) DEFINITIONS.—In this section— 

22 ‘‘(1) the term ‘covered settlement agreement’ 

23 means a settlement agreement (including a consent 

24 decree) that— 


tkelley on DSK3SPTVN1PROD with BILLS
10 

•S 1898 RS

1 ‘‘(A) is entered into by an Executive agen2 cy; 

3 ‘‘(B) relates to an alleged violation of Fed4 eral civil or criminal law; and 

5 ‘‘(C) requires the payment of a total of not 

6 less than $1,000,000 by one or more non-Federal 

7 persons; 

8 ‘‘(2) the term ‘entity within the Federal Govern9 ment’ includes an officer or employee of the Federal 

10 Government acting in an official capacity; and 

11 ‘‘(3) the term ‘non-Federal person’ means a per12 son that is not an entity within the Federal Govern13 ment. 

14 ‘‘(b) INFORMATION TO BE POSTED ONLINE.— 

15 ‘‘(1) REQUIREMENT.— 

16 ‘‘(A) IN GENERAL.—Subject to subpara17 graph (B), the head of each Executive agency 

18 shall make publicly available in a searchable for19 mat in a prominent location on the Web site of 

20 the Executive agency— 

21 ‘‘(i) a list of each covered settlement 

22 agreement entered into by the Executive 

23 agency, which shall include, for each covered 

24 settlement agreement— 


tkelley on DSK3SPTVN1PROD with BILLS
11 

•S 1898 RS

1 ‘‘(I) the date on which the parties 

2 entered into the covered settlement 

3 agreement; 

4 ‘‘(II) the names of the parties that 

5 settled claims under the covered settle6 ment agreement; 

7 ‘‘(III) a description of the claims 

8 each party settled under the covered 

9 settlement agreement; 

10 ‘‘(IV) the amount each party set11 tling a claim under the covered settle12 ment agreement is obligated to pay 

13 under the settlement agreement; 

14 ‘‘(V) the total amount the settling 

15 parties are obligated to pay under the 

16 settlement agreement; and 

17 ‘‘(VI) for each settling party— 

18 ‘‘(aa) the amount, if any, the 

19 settling party is obligated to pay 

20 that is expressly specified under 

21 the covered settlement agreement 

22 as a civil or criminal penalty or 

23 fine; and 

24 ‘‘(bb) the amount, if any, 

25 that is expressly specified under 


tkelley on DSK3SPTVN1PROD with BILLS
12 

•S 1898 RS

1 the covered settlement agreement 

2 as not tax deductible; and 

3 ‘‘(ii) a copy of each covered settlement 

4 agreement entered into by the Executive 

5 agency. 

6 ‘‘(B) CONFIDENTIALITY PROVISIONS.—The 

7 requirement to disclose information or a copy of 

8 a covered settlement agreement under subpara9 graph (A) shall apply to the extent that the in10 formation or copy (or portion thereof) is not sub11 ject to a confidentiality provision that prohibits 

12 disclosure of the information or copy (or portion 

13 thereof). 

14 ‘‘(2) PERIOD.—The head of each Executive agen15 cy shall ensure that— 

16 ‘‘(A) information regarding a covered settle17 ment agreement is publicly available on the list 

18 described in paragraph (1)(A)(i) until at least 

19 the date that is 5 years after the date of the cov20 ered settlement agreement; and 

21 ‘‘(B) a copy of a covered settlement agree22 ment made available under paragraph (1)(A)(ii) 

23 is publicly available until— 


tkelley on DSK3SPTVN1PROD with BILLS
13 

•S 1898 RS

1 ‘‘(i) at least the date that is 1 year 

2 after the date of the covered settlement 

3 agreement; or 

4 ‘‘(ii) for a covered settlement agreement 

5 under which a non-Federal person is re6 quired to pay not less than $50,000,000, at 

7 least the date that is 5 years after the date 

8 of the covered settlement agreement. 

9 ‘‘(c) PUBLIC STATEMENT.—If the head of an Executive 

10 agency determines that a confidentiality provision in a cov11 ered settlement agreement, or the sealing of a covered settle12 ment agreement, is required to protect the public interest 

13 of the United States, the head of the Executive agency shall 

14 issue a public statement stating why such action is required 

15 to protect the public interest of the United States, which 

16 shall explain— 

17 ‘‘(1) what interests confidentiality protects; and 

18 ‘‘(2) why the interests protected by confiden19 tiality outweigh the public’s interest in knowing 

20 about the conduct of the Federal Government and the 

21 expenditure of Federal resources. 

22 ‘‘(d) REQUIREMENTS FOR WRITTEN PUBLIC STATE23 MENTS.—Any written public statement issued by an Execu24 tive agency that refers to an amount to be paid by a nonVerDate Sep 11 2014 23:13 Sep 16, 2014 Jkt 039200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6203 E:\BILLS\S1898.RS S1898

tkelley on DSK3SPTVN1PROD with BILLS
14 

•S 1898 RS

1 Federal person under a covered settlement agreement 

2 shall— 

3 ‘‘(1) specify which portion, if any, of the amount 

4 to be paid under the covered settlement agreement by 

5 a non-Federal person— 

6 ‘‘(A) is expressly specified under the covered 

7 settlement agreement as a civil or criminal pen8 alty or fine to be paid for a violation of Federal 

9 law; or 

10 ‘‘(B) is expressly specified under the covered 

11 settlement agreement as not deductible for pur12 poses of the Internal Revenue Code of 1986; 

13 ‘‘(2) if no portion of the amount to be paid 

14 under the covered settlement agreement by a non-Fed15 eral person is expressly specified under the covered 

16 settlement agreement as a civil or criminal penalty or 

17 fine, include a statement specifying that is the case; 

18 and 

19 ‘‘(3) describe in detail— 

20 ‘‘(A) any actions the non-Federal person 

21 shall take under the covered settlement agreement 

22 in lieu of payment to the Federal Government or 

23 a State or local government; and 

24 ‘‘(B) any payments or compensation the 

25 non-Federal person shall make to other non-FedVerDate Sep 11 2014 23:13 Sep 16, 2014 Jkt 039200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6203 E:\BILLS\S1898.RS S1898

tkelley on DSK3SPTVN1PROD with BILLS
15 

•S 1898 RS

1 eral persons under the covered settlement agree2 ment. 

3 ‘‘(e) CONFIDENTIALITY.—The requirement to disclose 

4 information under subsection (d) shall apply to the extent 

5 that the information to be disclosed (or portion thereof) is 

6 not subject to a confidentiality provision that prohibits dis7 closure of the information (or portion thereof). 

8 ‘‘(f) REPORTING.— 

9 ‘‘(1) IN GENERAL.—Not later than January 15 

10 of each year, the head of an Executive agency that en11 tered into a covered settlement agreement during the 

12 previous fiscal year shall submit to each committee of 

13 Congress with jurisdiction over the activities of the 

14 Executive agency a report indicating— 

15 ‘‘(A) how many covered settlement agree16 ments the Executive agency entered into during 

17 that fiscal year; 

18 ‘‘(B) how many covered settlement agree19 ments the Executive agency entered into during 

20 that fiscal year had any terms or conditions that 

21 are required to be kept confidential; and 

22 ‘‘(C) how many covered settlement agree23 ments the Executive agency entered into during 

24 that fiscal year for which all terms and condi25 tions are required to be kept confidential. 


tkelley on DSK3SPTVN1PROD with BILLS
16 

•S 1898 RS

1 ‘‘(2) AVAILABILITY OF REPORTS.—The head of 

2 an Executive agency that is required to submit a re3 port under paragraph (1) shall make the report pub4 lically available in a searchable format in a promi5 nent location on the Web site of the Executive agen6 cy.’’. 

7 (2) TECHNICAL AND CONFORMING AMEND8 MENT.—The table of sections for chapter 3 of title 5, 

9 United States Code, is amended by adding at the end 

10 the following: 

‘‘307. Information regarding settlement agreements.’’. 

11 (b) SECURITIES REPORTING.— 

12 (1) IN GENERAL.—Each issuer of securities that 

13 is required to file annual or other periodic reports 

14 with the Commission under section 13 or 15(d) of the 

15 Securities Exchange Act of 1934 (15 U.S.C. 78m, 

16 78o(d)) shall describe in such a report any claim filed 

17 for a deduction under the Internal Revenue Code of 

18 1986 during the reporting period that relates to a 

19 payment required under a covered settlement agree20 ment. 

21 (2) DEFINITIONS.—As used in this subsection— 

22 (A) the term ‘‘Commission’’ means the Se23 curities and Exchange Commission; 

24 (B) the term ‘‘covered settlement agreement’’ 

25 has the meaning given that term in section 307 


tkelley on DSK3SPTVN1PROD with BILLS
17 

•S 1898 RS

1 of title 5, United States Code, as added by sub2 section (a); and 

3 (C) the term ‘‘issuer’’ has the same meaning 

4 as in section 3 of the Securities Exchange Act of 

5 1934 (15 U.S.C. 78c). 

6 (c) REVIEW OF CONFIDENTIALITY OF SETTLEMENT

7 AGREEMENTS.—Not later than 6 months after the date of 

8 enactment of this Act, the Comptroller General of the United 

9 States shall submit to Congress a report regarding how Ex10 ecutive agencies (as defined under section 105 of title 5, 

11 United States Code) determine whether the terms of a settle12 ment agreement or the existence of a settlement agreement 

13 will be treated as confidential, which shall include rec14 ommendations, if any, for legislative or administrative ac15 tion to increase the transparency of Government settlements 

16 while continuing to protect the legitimate interests that con17 fidentiality provisions serve. 


tkelley on DSK3SPTVN1PROD with BILLS
Calendar No. 566 

113TH CONGRESS 

2D SESSION S. 1898 

A BILL 

To require adequate information regarding the tax 

other purposes. ments entered into by Federal agencies, and for treatment of payments under settlement agreeSEPTEMBER 16, 2014 

Reported with an amendment 


tkelley on DSK3SPTVN1PROD with BILLS