Federal Register / Vol. 89, No. 236 / Monday, December 9, 2024 / Rules and Regulations 97525 

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* * * * * 

[FR Doc. 2024–28090 Filed 12–6–24; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF JUSTICE 

Office of the Attorney General 

28 CFR Part 50 

[Docket No. OAG 177; AG Order No. 6101– 

2024] 

RIN 1105–AB62 

Guidelines and Limitations for 

Settlement Agreements Involving 

Payments to Non-Governmental Third 

Parties 

AGENCY: Department of Justice. 

ACTION: Final rule. 

SUMMARY: This final rule adopts without 

change the interim final rule issued by 

the Department of Justice 

(‘‘Department’’ or ‘‘DOJ’’) on May 10, 

2022, that revoked a prohibition on the 

inclusion of provisions in settlement 

agreements directing or providing for a 

payment or loan to a non-governmental 

person or entity not a party to the 

dispute, subject to limited exceptions. 

DATES: This rule is effective December 9, 

2024. 

FOR FURTHER INFORMATION CONTACT: 

Robert Hinchman, Senior Counsel, 

Office of Legal Policy, U.S. Department 

of Justice, telephone (202) 514–8059 

(not a toll-free number). 

SUPPLEMENTARY INFORMATION: The 

Department has established a docket for 

this action on the www.regulations.gov 

site under Docket DOJ–OAG–2022– 

0001. All documents in the docket are 

listed on the http://www.regulations.gov 

website. 

I. Summary of This Rulemaking 

A. Overview of This Rule 

On December 16, 2020, the 

Department issued a regulation 

prohibiting, subject to limited 

exceptions, the inclusion of provisions 

in settlement agreements directing or 

providing for a payment or loan, in cash 

or in kind, to any non-governmental 

person or entity not a party to a dispute. 

Prohibition on Settlement Payments to 

Non-Governmental Third Parties, 85 FR 

81409 (‘‘the December 2020 Rule’’) 

(adding 28 CFR 50.28). On May 10, 

2022, DOJ published for public 

comment an interim final rule (‘‘IFR’’) 

that revoked the December 2020 Rule, 

Guidelines and Limitations for 

Settlement Agreements Involving 

Payments to Non-Governmental Third 

Parties, 87 FR 27936. 

The IFR also solicited public 

comment on an Attorney General 

memorandum posted on the DOJ 

website in conjunction with the IFR, the 

Memorandum for the Heads of 

Department Components and United 

States Attorneys from the Attorney 

General, Re: Guidelines and Limitations 

for Settlement Agreements Involving 

Payments to Non-Governmental Third 

Parties (May 5, 2022) (the ‘‘May 2022 

Memorandum’’), https://

www.justice.gov/d9/pages/attachments/ 

2022/05/05/02._ag_guidlines_and_

limitations_memorandum_0.pdf (last 

visited Oct. 31, 2024). 

This preamble responds to comments 

received on the IFR. As reflected in this 

preamble, the Department is not making 

any changes to the rule or to the May 

2022 Memorandum. 

That said, DOJ is using the 

opportunity of this final rule to publicly 

announce that it will add two 

provisions to the section of the Justice 

Manual (https://www.justice.gov/jm/ 

justice-manual) addressing third-party 

payments, section 1–17.000, Settlement 

Agreements Involving Payments to NonGovernmental Third Parties, as 

discussed later in this preamble. 

B. Background Explanation for This 

Rule 

The Department, as explained in this 

preamble, has concluded that its action 

in May 2022 to revoke 28 CFR 50.28 and 

establish the current policy continues to 

be appropriate. The Department has 

authority to settle litigation incident to 

the Attorney General’s power to 

supervise litigation for the United 

States. Authority of the United States to 

Enter Settlements Limiting the Future 

Exercise of Executive Branch Discretion, 

23 Op. O.L.C. 126, 135 (1999) 

(‘‘Authority of the United States to Enter 

Settlements’’). The Department regularly 

settles civil and criminal matters to 

compensate victims, redress harms, and 

punish and deter unlawful conduct 

without the costs and delay that can 

accompany trials. For decades and 

across Administrations, Department 

components entered into settlement 

agreements that involved payments to 

certain third parties as a means of 

addressing harms arising from 

violations of Federal law. 

It has been the consistent view of the 

Office of Legal Counsel (‘‘OLC’’), 

acknowledged when the December 2020 

Rule was promulgated, that settlements 

involving payments to nongovernmental third parties can comport 

with the Miscellaneous Receipts Act 

(‘‘MRA’’), 31 U.S.C. 3302(b). See 

Memorandum for William P. Barr, 

Attorney General, from Steven A. Engel, 

Assistant Attorney General, Office of 

Legal Counsel, Re: Final Rule 

Prohibiting Settlement Payments to 

Non-Governmental Third Parties at 2 

(Dec. 4, 2020) (‘‘December 2020 OLC 

Memo’’) (citing Application of the 

Government Corporation Control Act 

and the Miscellaneous Receipts Act to 

the Canadian Softwood Lumber 

Settlement Agreement, 30 Op. O.L.C. 

111, 119 (2006) (‘‘Softwood Lumber’’)), 

https://www.justice.gov/oip/foia-library/ 

foia-processed/general_topics/ 

settlement_guidelines_third_parties_2_

14_23/download (last visited Oct. 31, 

2024). 

In 2017, the Attorney General issued 

a memorandum prohibiting Department 

attorneys from entering into case 

resolutions in civil and criminal matters 

providing for certain third-party 

payments. See Memorandum for All 

Component Heads and United States 

Attorneys from the Attorney General, 


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1The Department will limit these new provisions 

to civil settlements covered by the May 2022 

Memorandum but not exempted under the four 

circumstances described therein. Plea agreements 

are always subject to court review and approval, 

ensuring the protection of the public’s interest and 

the rights of the defendant. The timing and other 

process requirements of a criminal proceeding also 

make it less feasible to apply these new 

requirements in criminal cases. 

Re: Prohibition on Settlement Payments 

to Third Parties (June 6, 2017). In 2020, 

through the December 2020 Rule, the 

Department amended its regulations to 

add 28 CFR 50.28, memorializing 

prohibitions set forth in the 2017 

memorandum and additionally 

expressly prohibiting expenditure of 

funds ‘‘to provide goods or services to 

third parties for Supplemental 

Environmental Projects.’’ 85 FR 81410. 

In 2022, after considering the views of 

the Department’s components and their 

experience with 28 CFR 50.28, the 

Attorney General concluded that the 

regulations at 28 CFR 50.28 were too 

restrictive and should be revoked, see 

87 FR 27937, and issued an IFR 

revoking 28 CFR 50.28, see 87 FR 

27936–38. The Attorney General 

determined that, when properly 

tailored, agreements providing for 

payments to third parties are lawful and 

allow the United States to more fully 

accomplish the goals of civil and 

criminal enforcement. Id. at 27937. For 

example, the Department usually seeks 

a penalty and injunctive relief to resolve 

violations of Federal environmental 

statutes. However, the harms caused by 

these violations, including harms to the 

communities most directly impacted by 

them, can be difficult to redress in 

particular cases. Id. For instance, in 

environmental enforcement cases, the 

Department may seek a defendant’s 

agreement to make third-party payments 

in the form of a Supplemental 

Environmental Project (‘‘SEP’’) to 

counteract some of the downstream 

effects of a violation, and often as well 

to prevent future harm. Id. A SEP is a 

type of project or activity that a 

defendant undertakes as part of the 

settlement of an environmental 

enforcement action. As an illustration, a 

defendant refinery that violated its 

Clean Air Act permit by emitting excess 

volatile organic compounds (‘‘VOCs’’) 

agreed to perform a SEP to abate leadbased paint hazards in child-occupied 

facilities and lower-income residences 

located within a 50-mile radius of the 

refinery, in addition to an appropriate 

penalty and other relief. VOCs can 

accelerate the weathering and 

deterioration of lead-based paint, 

increasing potential lead exposure. The 

project, therefore, was designed to 

reduce a downstream harm to local 

residents, exacerbated by the 

defendant’s conduct. 

The May 2022 Memorandum contains 

important safeguards to ensure that case 

resolutions containing third-party 

payments are appropriately tailored. 

Permissible settlements with third-party 

payments must satisfy conditions that 

define with particularity the nature and 

scope of any third-party project; require 

a strong connection between the 

underlying violation(s) and the project; 

prevent the Federal Government from 

proposing the selection of a particular 

third party to receive payments; restrict 

the Federal Government’s role after a 

settlement is entered; require that such 

settlements occur before an admission 

or finding of liability in favor of the 

United States; prohibit use of such 

settlements to satisfy existing statutory 

obligations or to provide additional 

resources to perform any activity for 

which a Federal agency receives a 

specific appropriation; and prohibit 

certain practices such as unrestricted 

cash donations. May 2022 

Memorandum at 3. Such settlements are 

also subject to approval by the Deputy 

Attorney General or the Associate 

Attorney General. Id. at 3–4. 

The May 2022 Memorandum also 

exempts four types of payments from 

these requirements, including payments 

providing restitution to non-party 

victims to directly remedy the harm the 

lawsuit seeks to redress, as well as 

payments for legal or professional 

services undertaken in connection with 

the case being settled, consistent with 

pre-2017 practice. Id. at 4. (The 

exception for legal or professional 

services includes payments to 

contractors implementing injunctive 

relief; payments to monitors, arbitrators, 

mediators, or other neutral third parties; 

and payments for other categories of 

legal and professional services.) In 

developing the new policy, the 

Department sought to address specific 

concerns that had been raised over such 

payments, while preserving the 

availability of these payments as a 

potential remedy when appropriate. In 

2022, DOJ incorporated the terms of the 

May 2022 Memorandum in Justice 

Manual section 1–17.000. 

C. Justice Manual Revisions 

As part of the process of reviewing 

comments on the IFR and May 2022 

Memorandum, the Department has 

determined that it will add two 

provisions to the Justice Manual section 

1–17.000.1 In particular, the Department 

is sensitive to the perception that it will 

‘‘strong-arm’’ defendants to agree to 

third-party payments by declining to 

agree to a settlement unless the 

defendant agrees to make one or more 

third-party payments. It also recognizes 

the concern that the lack of public input 

into the development of third-party 

payments, and the difficulty of 

obtaining information on settlements 

that include such provisions, could lead 

to a lack of accountability and could 

give rise to claims of ‘‘cronyism’’ or 

favoritism. As discussed in greater 

detail below, see infra Part II.B.5.1, 

these concerns do not suggest that thirdparty payments writ large are unlawful, 

or that a rule prohibiting third-party 

payments is the only way to guard 

against them. Instead (and as also 

discussed in greater detail throughout 

this preamble), the Department has 

concluded that it can respond to these 

concerns through the more flexible 

approach of making changes to the 

Justice Manual, a course that preserves 

the benefits of third-party payments 

while responding in a more surgical 

manner to the concerns raised. 

Specifically, with respect to concerns 

that the Department will ‘‘strong-arm’’ 

defendants into agreeing to third-party 

payments, the forthcoming revisions to 

the Justice Manual will specify that the 

Department may decline to agree to 

settle a civil claim in the absence of a 

particular remedy where the remedy in 

question would be available relief were 

the case litigated to judgment; but that 

if the third-party payment is not within 

the scope of the remedies the court 

could order, the Department will 

negotiate such a payment as part of a 

settlement only if the defendant 

expresses interest in doing so. For 

example, to resolve an antitrust 

investigation or filed case, the Antitrust 

Division may condition a settlement on 

the entity’s agreement to divest itself of 

certain assets, because that is relief the 

Antitrust Division could receive if it 

litigated the case to judgment. See, e.g., 

United States v. E.I. du Pont de 

Nemours & Co., 366 U.S. 316, 331 

(1961); see generally California v. Am. 

Stores Co., 495 U.S. 271, 280–81 (1990) 

(‘‘[I]n Government actions divestiture is 

the preferred remedy for an illegal 

merger or acquisition.’’). (Because these 

benefits would go to another unrelated 

entity, such a condition could 

potentially have the appearance of a 

third-party payment.) The Department 

believes that this division—between 

relief available if the case were litigated 

to judgment and relief that would not 

be—is an appropriate way to guard 

against concerns that the Department 

would strong-arm defendants into 

agreeing to third-party payments. In 

cases in which a court could order a 

particular remedy but a defendant is not 


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Federal Register / Vol. 89, No. 236 / Monday, December 9, 2024 / Rules and Regulations 97527 

2Existing laws require public disclosure of 

settlement terms in certain circumstances. The 

Antitrust Procedures and Penalties Act, codified at 

15 U.S.C. 16(b)–(h), provides for a notice-andcomment process before a consent decree can be 

finalized in civil antitrust cases. The Clean Air Act 

includes a similar requirement, 42 U.S.C. 7413(g), 

as do laws relating to cleanup and control of 

hazardous materials. See 42 U.S.C. 9622(d)(2) and 

(i); 42 U.S.C. 6973(d); see also 28 CFR 50.7 

(providing for a notice-and-comment process in 

civil ‘‘actions to enjoin [the] discharges of 

pollutants.’’). Where legal requirements such as 

these do not apply, and to minimize disrupting or 

delaying the resolution of a wide range of routine 

matters, the Department will limit the Justice 

Manual requirement to cases involving a third-party 

payment that a court could not order in law or in 

equity. Where a court could order such relief, the 

public is already on notice that it might do so. 

3Regulations.gov contains seventeen comments, 

one of which is a superseded version of a comment 

omitted from review at the request of the 

commenter. FDMS.gov contains one additional 

document, which is not a comment on the IFR and 

May 2022 Memorandum. 

willing to include it in a settlement, the 

Department has the option of litigating 

the case to judgment in order to secure 

the relief in question without the 

defendant’s consent. In those cases in 

which a settlement term is not backed 

by a possible judicial remedy in this 

way, the Department is sensitive to the 

concern raised by commenters and 

views it as preferable (although not 

legally required) to include this 

additional safeguard to ensure that the 

defendant is amenable to the relief in 

the form of a third-party payment. 

As to claims that information about 

settlements that include third-party 

payments is not readily available and 

that such settlements are concluded 

without adequate participation from the 

public, the Department will add a 

provision to the existing Justice Manual 

requirements that would provide 

additional opportunities for the public 

to participate in certain civil 

settlements.2

II. Public Comments on the IFR and 

May 2022 Memorandum 

A. Summary of Public Comments 

The comment period for the IFR and 

the May 2022 Memorandum closed on 

July 11, 2022, and the Department 

received 16 public comments.3 The 

comments express both support for and 

opposition to the IFR and May 2022 

Memorandum. DOJ is exercising its 

discretion to respond to public 

comments here. 

B. Response to Comments 

1. Applicability of the MRA 

Comments: According to some 

commenters, under the 1980 OLC 

opinion Effect of 31 U.S.C. § 484 on the 

Settlement Authority of the Attorney 

General, 4B Op. O.L.C. 684 (1980) 

(‘‘Effect of 31 U.S.C. § 484’’), money 

available to the United States is 

constructively received and must be 

directed to the U.S. Treasury to comply 

with the MRA. Those commenters argue 

that any deviation from this result, such 

as an agency directing settlement money 

to a non-governmental third party, is a 

violation of that requirement. In 

particular, some commenters claim that 

SEPs are a violation of the MRA because 

the money used for them is public and 

the value of the SEP is exchanged, 

without congressional authorization, for 

a proportional reduction in the ultimate 

civil penalty that could have been 

payable to the U.S. Treasury. And still 

others contend that private defendants 

violate 31 U.S.C. 3302(c) by making 

third-party payments pursuant to 

settlements. 

One commenter states that DOJ fails 

to explain why it applies the doctrine of 

constructive receipt from tax law cases 

(requiring the Government to exercise 

substantive control over the funds 

without significant limitation) to this 

context and argues that the Department 

has ‘‘cherry-picked a version of 

constructive receipt in an attempt to 

thwart equity.’’ 

Several commenters claim that SEPs 

are illegally diverted penalties except 

for the two instances in which SEPs are 

expressly authorized by statute: 42 

U.S.C. 16138, which grants the 

Executive Branch permission to seek 

SEPs related to diesel emissions 

reductions; and 42 U.S.C. 7604(g)(2), 

which gives courts discretion to order 

that penalties received under the 

citizens suit provision of the Clean Air 

Act be used to fund beneficial 

mitigation projects that are consistent 

with that Act and enhance the public 

health or the environment, up to 

$100,000. Commenters assert that 

Congress’s enactment of these 

provisions indicates that Congress views 

these types of payments as otherwise 

impermissible. 

One commenter argues that the 2006 

Softwood Lumber OLC opinion is not 

persuasive and, even if it were, the 

commenter claims that it would not 

authorize SEPs, which the commenter 

claims are designed entirely to exchange 

monetary penalties destined for the 

Treasury for a particular project. This 

commenter also suggests that caselaw 

supporting the legality of these 

payments cannot be reconciled with 

subsequent Supreme Court decisions 

and statutory provisions related to 

diesel emissions projects and citizens 

suits under the Clean Air Act, and cites 

Comptroller General/U.S. Government 

Accountability Office (‘‘GAO’’) opinions 

as supportive. Commenters further 

invoke a memorandum authored by 

then-Assistant Attorney General for 

ENRD Jeffrey Bossert Clark, 

Supplemental Environmental Projects 

(‘‘SEPs’’) in Civil Settlements with 

Private Defendants (Mar. 12, 2020) 

(‘‘Clark Memorandum’’), in support of 

their view that third-party settlements 

(and SEPs in particular) violate the 

MRA. 

Other commenters cite with approval 

the OLC view (reflected in the May 2022 

Memorandum) that settlement-funded 

projects do not violate the MRA if they 

are executed prior to a finding of the 

defendant’s liability and if the United 

States does not retain control over the 

projects following settlement except for 

purposes of oversight of the settlement. 

Citing U.S. Environmental Protection 

Agency Supplemental Environmental 

Projects Policy 2015 Update (Mar. 10, 

2015) (‘‘2015 SEP Policy’’), commenters 

make the point that SEPs are not 

substitutes for monetary penalties 

because settlements that include a SEP 

must always include a settlement 

penalty that recoups the economic 

benefit a violator gained from 

noncompliance with the law, as well as 

appropriate penalties that reflect the 

environmental and regulatory harm 

caused by the violations. These 

commenters state that SEPs are a factor 

to consider in making the decision to 

settle and on what terms to settle. By 

confusing SEPs with penalties or 

diversions of Treasury funds, these 

commenters argue, the previous 

Administration misconstrued decades of 

Federal practice. 

Response: The Department 

appreciates commenters’ statements that 

settlement-funded projects do not 

violate the MRA if they comply with the 

criteria set forth in Softwood Lumber; 

and that agreeing to SEPs as part of 

settlement agreements is consistent with 

those criteria. 

The Department disagrees with 

commenters’ contention that any 

settlement that includes a payment to a 

non-government third party violates the 

MRA and continues to conclude that the 

MRA permits such settlements in 

certain circumstances. The MRA 

requires that ‘‘an official or agent of the 

Government receiving money for the 

Government from any source shall 

deposit the money in the Treasury as 

soon as practicable without deduction 

for any charge or claim.’’ 31 U.S.C. 

3302(b). The funds paid under these 

types of settlements, however, are not 

‘‘drawn from the Treasury’’ and have 

not been ‘‘receiv[ed] . . . for the 

Government’’ by the United States. 

Consistent with authoritative OLC 

opinions and advice, the Department 


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4The Department also notes that these 

Comptroller General decisions did not address the 

MRA’s applicability when the Federal Government 

does not ‘‘retain post-settlement control over the 

disposition or management of the funds or any 

projects carried out under any such settlement, 

except for ensuring that the parties comply with the 

settlement.’’ Softwood Lumber, 30 Op. O.L.C. at 

119. Moreover, all those decisions involved 

administrative agencies with statutory authority to 

both impose and also settle administrative 

penalties—a situation distinct from that addressed 

by the Department’s May 2022 Memorandum and 

IFR. And those decisions focused on concerns 

raised when agencies enter settlements under 

which third parties carry out actions within the 

agencies’ own statutory responsibilities, and with 

no nexus to the underlying violations—concerns 

that, again, the May 2022 Memorandum and the IFR 

address. 

has long understood that the MRA 

applies when an official or agent of the 

Government either actually or 

‘‘constructively’’ receives money for the 

Government. See Effect of 31 U.S.C. 

§ 484, 4B Op. O.L.C. at 688. ‘‘The 

doctrine of constructive receipt will 

ignore the form of a transaction in order 

to get to its substance,’’ and the 

Department has accordingly concluded 

that a Federal agency will be considered 

to be in ‘‘constructive receipt’’ of money 

‘‘if a federal agency could have accepted 

possession and retains discretion to 

direct the use of the money.’’ Id. 

To ensure that a settlement including 

payment to a third party does not 

violate the MRA through constructive 

receipt, OLC has ‘‘consistently advised 

that (1) the settlement be executed 

before an admission or finding of 

liability in favor of the United States; 

and (2) the United States not retain postsettlement control over the disposition 

or management of the funds or any 

projects carried out under the 

settlement, except for ensuring that the 

parties comply with the settlement.’’ 

Softwood Lumber, 30 Op. O.L.C. at 119; 

see also id. at 119–20 (citing past 

precedent, including Effect of 31 U.S.C. 

§ 384). ‘‘If these two criteria are met, 

then the governmental control over 

settlement funds is so attenuated that 

the government cannot be said to be 

‘receiving money for the Government’ ’’ 

under the MRA. Id. 

The May 2022 Memorandum also 

does not implicate anti-augmentation 

concerns, which the Comptroller 

General decisions cited by commenters 

invoke in addition to the MRA. See also 

Applicability of the Miscellaneous 

Receipts Act to an Arbitral Award of 

Legal Costs, 42 Op. OLC 1, 3 (2018) 

(‘‘[A]n agency may not augment its 

appropriations from outside sources 

without statutory authority’’). The May 

2022 Memorandum specifies that 

settlements may not ‘‘be used to satisfy 

the statutory obligation of the Justice 

Department or any other federal agency 

to perform a particular activity. Nor 

shall any such settlement provide the 

Justice Department or any other federal 

agency with additional resources to 

perform a particular activity for which 

the Justice Department or any other 

federal agency, respectively, receives a 

specific appropriation.’’ May 2022 

Memorandum at 3. 

Thus, as stated in the May 2022 

Memorandum, ‘‘[i]t has been the 

consistent view of the Office of Legal 

Counsel, including in 2020 when the 

Justice Department’s current regulation 

[now-revoked 28 CFR 50.28] was 

promulgated, that settlements involving 

payments to non-governmental third 

parties, if properly structured, do not 

violate the Miscellaneous Receipts Act.’’ 

Id. at 1. In support of this statement, the 

May 2022 Memorandum cites the OLC 

memorandum approving the nowrevoked December 2020 Rule for form 

and legality, which recognized the 

longstanding position of the Department 

that properly structured settlement 

agreements do not violate the MRA. 

December 2020 OLC Memo at 2. This 

memorandum stated that the rule was 

‘‘consistent with the policy underlying 

the MRA—that Congress, and not the 

agency, should determine when 

government resources may be spent on 

behalf of third parties.’’ Id. But it 

elaborated that the rule ‘‘does not reflect 

an interpretation of the statute itself and 

thus prohibits certain payments to third 

parties that this Office has concluded 

that the MRA otherwise allows,’’ id., as 

detailed in the cited Softwood Lumber 

OLC opinion. And the May 2022 

Memorandum explicitly incorporates 

the two criteria that Softwood Lumber 

identifies—the ‘‘settlement must be 

executed before an admission or finding 

of liability in favor of the United States, 

and the Justice Department and its 

client agencies must not retain postsettlement control over the disposition 

or management of the funds or any 

projects carried out under any such 

settlement, except for ensuring that the 

parties comply with the settlement.’’ 

May 2022 Memorandum at 3. 

To the extent that commenters 

disagree with the Softwood Lumber 

opinion or believe it inapplicable, they 

do not offer authoritative judicial 

precedents or similar authoritative 

sources meaningfully undercutting its 

reasoning or its support for the current 

Department policy as set forth in the 

May 2022 Memorandum. Softwood 

Lumber remains applicable to this 

context, for several reasons. 

First, Comptroller General opinions 

cited by commenters were addressed in 

the Softwood Lumber opinion itself, 

which noted that concerns in those 

matters were ‘‘inapposite’’ because the 

MRA is inapplicable where there has 

been no constructive receipt of money 

for the Government. 30 Op. O.L.C. at 

121. (The same rationale applies to 

other GAO documents one commenter 

cites.) 4 The Department did not depart 

from that principle in the December 

2020 Rule. Moreover, the Department 

has incorporated in some of the 

restrictions in the May 2022 

Memorandum measures that address 

some of the other concerns raised in 

those Comptroller General opinions. 

The May 2022 Memorandum also 

explicitly incorporates the two criteria 

set forth in the Softwood Lumber OLC 

opinion—the ‘‘settlement must be 

executed before an admission or finding 

of liability in favor of the United States, 

and the Justice Department and its 

client agencies must not retain postsettlement control over the disposition 

or management of the funds or any 

projects carried out under any such 

settlement, except for ensuring that the 

parties comply with the settlement.’’ 

May 2022 Memorandum at 3. Moreover, 

in all events, decisions of GAO and the 

Comptroller General ‘‘are not binding on 

Executive Branch agencies’’; instead, 

‘‘the opinions of the Attorney General 

and th[e] Office [of Legal Counsel] are 

controlling.’’ Prioritizing Programs to 

Exempt Small Businesses From 

Competition in Federal Contracts, 33 

Op. O.L.C. 284, 302 (2009). 

Second, the Softwood Lumber opinion 

does not, contrary to commenters’ 

views, limit its understanding of the 

criteria for consistency with the MRA to 

its own facts or to the specific examples 

it cites. It instead articulates the two 

criteria for compliance broadly and 

refers to them as ‘‘general principles’’ 

applicable regardless of whether the 

United States is a plaintiff or defendant. 

30 Op. O.L.C. at 120. See also December 

2020 OLC Memo at 2 (citing Softwood 

Lumber for the principle that the MRA 

generally permits ‘‘certain payments to 

third parties’’). 

Third, it is irrelevant that one 

commenter deems unpersuasive two 

circuit-level decisions sometimes 

invoked to support the legality of 

settlement payments—Public Interest 

Research Group v. Powell Duffryn 

Terminals, Inc., 913 F.2d 64, 81 (3d Cir. 

1990), and Sierra Club v. Electronic 

Controls Design, 909 F.2d 1350, 1354 

(1990). Softwood Lumber does not rely 

on these decisions. The commenter, 

moreover, criticizes these decisions in 

part on the ground that ‘‘Congress has 

subsequently indicated that SEPs (and 

thus all Third-Party Payments) violate 


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5 Indeed, as one recent article put it, ‘‘there is no 

evidence in the text or legislative history of the 

2008 . . . amendment to show that Congress 

intended for the amendment to preclude EPA from 

accepting SEPs absent clear congressional 

authorization.’’ Daniel Alvarez et al., Clearing the 

Continued 

the MRA’’ and the Anti-Deficiency Act 

(‘‘ADA’’) ‘‘absent explicit congressional 

authorization,’’ referring to Congress’s 

express authorization of SEPs in 42 

U.S.C. 16138. The Department disagrees 

with the commenter’s reading of that 

provision, for reasons given below. 

Finally, the commenter claims that 

Kokesh v. SEC, 137 S. Ct. 1635 (2017), 

clarified that what constitutes a 

‘‘penalty’’ is a functional inquiry. 

Kokesh, however, held that monetary 

disgorgement ordered by the SEC 

constitutes a penalty within the 

meaning of 28 U.S.C. 2462. Id. at 1641– 

45. Kokesh did not involve a settlement, 

and it is not relevant to when money 

paid under a settlement is received by 

the Federal Government under the 

MRA. 

Fourth, when commenters contend 

that private defendants violate 31 U.S.C. 

3302(c) by making third-party payments 

pursuant to settlements, they assume 

that funds in the hands of private 

defendants are ‘‘public money’’ subject 

to the MRA. Under Softwood Lumber, 

however, such funds are not public 

monies. And the commenters’ argument 

improperly conflates funds in the hands 

of private litigants, before any 

determination of liability, with penalties 

imposed after trial that may in some 

circumstances constitute public money. 

See Pub. Int. Rsch. Grp., 913 F.2d at 81 

n.32 (noting that section 3302(c)(1) 

applies to penalties imposed after a 

trial, but recognizing that outside of 

penalties, ‘‘a [private] party may 

compromise its claim however it sees 

fit’’); United States v. Smithfield Foods, 

Inc., 982 F. Supp. 373, 374 (E.D. Va. 

1997) (finding with respect to a Clean 

Water Act penalty imposed after a trial 

that ‘‘a penalty, which is imposed 

pursuant to a federal statute, in a suit 

brought by the federal government, . . . 

constitutes ‘public money.’ As such, it 

must be deposited with the Treasury, in 

accordance with the Miscellaneous 

Receipts Act, unless otherwise specified 

by Congress’’). 

Fifth, the Attorney General has not 

‘‘cherry-picked’’ a favorable definition 

of ‘‘constructive receipt’’ to avoid 

violation of the MRA. To the contrary, 

the 1980 OLC opinion cited by the 

commenter applied the doctrine of 

‘‘constructive receipt’’ as a ‘‘practical’’ 

constraint to guard against elevating 

form over substance in evaluating 

whether a settlement violated the MRA. 

Effect of 31 U.S.C. 484, 4B Op. O.L.C. 

at 688. In addition, as the comment 

itself acknowledges, there is no 

definitive version of the constructive 

receipt doctrine that is clearly 

applicable to the types of settlements at 

issue here and that differs from the 

Department’s approach. Moreover, as 

Effect of 31 U.S.C. 484 notes, the 

Department and Federal agencies had 

previously applied the same definition 

in other contexts, including to conclude 

that an individual in some 

circumstances does not ‘‘accept’’ funds 

when the individual does not retain 

control over the disposition of those 

funds. Id. at 688 n.11. That further 

undercuts the argument that the 

Department has chosen a particular 

version of the doctrine in order to 

permit circumvention of the MRA. 

The Department also disagrees with 

the assertion that 42 U.S.C. 16138 

(enacted in 2008) undercuts the legality 

of payments to third parties. That 

provision addresses EPA’s authority to 

accept diesel emissions reduction SEPs. 

The commenter broadly states that the 

‘‘clear implication’’ of this provision is 

that diesel emission SEPs (and 

accordingly all third-party payments) 

violate the MRA and the ADA absent 

express congressional authorization. But 

this claim ignores the text, context, and 

history of section 16138, which make 

clear that Congress enacted the 2008 

provision to address a narrow concern 

that EPA then believed had newly 

arisen from Congress’s express 

appropriations for diesel retrofit 

projects. 

As an initial matter, nothing in the 

text of section 16138 indicates that it 

broadly prohibits the Federal 

Government from entering into 

settlement agreements that include 

payments to third parties. On the 

contrary, by its terms, it provides that 

the EPA ‘‘may accept . . . diesel 

emissions reduction Supplemental 

Environmental Projects’’ that meet 

certain criteria ‘‘as part of a settlement 

of any alleged violates of environmental 

law.’’ 42 U.S.C. 16138. To the extent 

that the commenter relies on the 

interpretive cannon expressio unius est 

exclusio alterius—that expressing one 

item of an associated group or series 

excludes another—that canon applies 

‘‘only when circumstances support a 

sensible inference that the term left out 

must have been meant to be excluded.’’ 

NLRB v. SW Gen., Inc., 580 U.S. 288, 

302 (2017) (quotation marks and 

brackets omitted). Here, it is not 

‘‘sensible’’ to ‘‘infer[ ],’’ id., that 

Congress intended to disrupt the 

Federal Government’s long-standing 

practice of entering into settlement 

agreements that include third-party 

payments from a provision that 

authorizes the Federal Government to 

agree to one such type of agreement— 

i.e., those that include ‘‘diesel emissions 

reduction Supplemental Environmental 

Projects,’’ 42 U.S.C. 16138. 

The history and context of section 

16138 confirm this conclusion. As the 

Senate report accompanying the 

legislation states, SEPs had historically 

‘‘been an important funding stream for 

diesel retrofit projects.’’ S. Rep. No. 

110–266, at 2 (2008). The report notes 

that SEPs are ‘‘projects [that] are 

undertaken by a defendant as part of a 

settlement in an environmental 

enforcement action . . . . They 

specifically do not include actions 

which a defendant is otherwise legally 

required to perform. So they generate 

environmental and public health 

benefits that would not have occurred 

without the settlement.’’ Id. However, 

after Congress first funded the diesel 

retrofit program in 2005, the report 

continues, ‘‘EPA apparently . . . 

concluded that the Agency generally 

should cease funding diesel retrofit 

projects via SEPs. EPA believes that 

allowing diesel retrofits to be funded by 

SEPs once Congress has specifically 

appropriated monies for that purpose 

could violate the Miscellaneous 

Receipts Act.’’ Id. The Senate report 

explains that the new provision was 

‘‘intended to clarify that Congress did 

not intend the funding of the Diesel 

Emissions Reduction Act to affect EPA’s 

ability to enter into SEPs that fund 

diesel retrofit projects.’’ Id. Rather, 

‘‘Congress never intended the Diesel 

Emissions Reduction Act to limit EPA’s 

ability to negotiate additional diesel 

retrofit projects as part of enforcement 

settlements.’’ Id. at 3. 

This history makes clear that Congress 

enacted the 2008 provision to address 

the narrow concern that, at the time, 

EPA believed had arisen from 

Congress’s express appropriations in 

2005 for diesel retrofit projects. 

Congress clarified that it had ‘‘never 

intended’’ to limit EPA’s ability to 

negotiate SEPs when it funded the 

diesel retrofit program. Id. Neither the 

text nor the history or context of how 

section 16138 came about suggest that 

Congress understood SEPs to violate the 

MRA as a general matter. To the 

contrary, Congress was aware of EPA’s 

and the Department’s practice of using 

SEPs in environmental enforcement 

settlements and enacted this provision 

to support that practice and ensure that 

diesel retrofit projects would continue 

to be included. See S. Rep. No. 110–266, 

at 2.5


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Air on Supplemental Environmental Projects, 54 

Env’t L. Rep. 10382, 10394 (2024). 

6The two provisions were closely linked in the 

legislative history of the 1990 Clean Air Act 

Amendments. The conference report describes the 

two provisions together in a single sentence, stating 

that ‘‘[t]he House amendment establishes a special 

treasury fund similar to the one created in the 

Senate bill, and also authorizes courts in citizen 

suits to order that penalties be used in beneficial 

mitigation projects’’ and noting that ‘‘[t]he 

conference agreement adopts the House position.’’ 

Congressional Research Service, A Legislative 

History of the Clean Air Act Amendments of 1990, 

at 946 (1993). Again, nothing here suggests that 

Congress intended to upend the practice of agreeing 

to third-party payments as part of settlement 

agreements. 

The Department also disagrees with 

the same commenter’s argument that 42 

U.S.C. 7604(g)(2) undercuts the legality 

of payments to third parties in 

settlements, including SEPs. That 

provision allows a court to order that up 

to $100,000 of a penalty award in a 

citizen suit brought under the Clean Air 

Act to be used for ‘‘beneficial mitigation 

projects which are consistent with’’ the 

Clean Air Act and ‘‘enhance the public 

health or the environment’’ in lieu of 

being deposited in the U.S. Treasury. 42 

U.S.C. 7604(g)(2). Like 42 U.S.C. 16138, 

nothing in the text of section 7604(g)(2) 

suggests that, in adopting that provision, 

Congress intended to upend the practice 

of agreeing to third-party payments as 

part of settlement agreements. Nor is 

that a ‘‘sensible inference,’’ SW Gen., 

580 U.S. at 302; section 7604(g)(2) is 

limited to cases brought by private 

citizens to abate pollution under the 

Clean Air Act and authorizes courts to 

order certain environmental projects in 

lieu of penalties—authority that, absent 

this provision, courts would lack. 

The history of that provision confirms 

its limited scope. Section 7604(g)(2) was 

adopted as part of the Clean Air Act 

Amendments of 1990, Public Law 101– 

549, tit. VII, sec. 707, 104 Stat. 2399, 

2682–83. One provision of that law, 

codified at 42 U.S.C. 7604(g)(1), created 

a special fund into which penalties 

imposed in Clean Air Act citizen suit 

actions ‘‘shall be deposited’’; the very 

next subsection, section 7604(g)(2), then 

provided that ‘‘notwithstanding 

paragraph (1)’’ courts had the authority 

to instead order the use of such civil 

penalty monies for beneficial mitigation 

projects. The close connection between 

these subsections—including the fact 

that section 7604(g)(2) twice crossreferences section 7604(g)(1)—further 

indicates that section 7604(g)(2) was 

directed specifically to judicial 

remedies in citizen litigation under the 

Clean Air Act.6 Congress’s decision to 

authorize a court to order certain 

defined projects in the limited context 

of these private suits after a court 

determination of liability and penalty 

assessment has no bearing on the 

Government’s authority to seek 

appropriate relief in a settlement. 

In addition, the Department disagrees 

with commenters who contend that a 

third-party payment in the form of a 

SEP amounts to an agreement to trade 

back part of the penalty that would 

constitute public money subject to the 

MRA. Such trading back of penalties for 

third-party payments is not authorized 

by this rule or the May 2022 

Memorandum. To the extent 

commenters suggest that such trade 

backs are permissible under the 2015 

SEP Policy, the Department notes that 

while that policy is beyond the scope of 

this rulemaking, it also does not 

authorize such trade backs. Nor does the 

Government violate the MRA simply 

because it settles a penalty claim that, 

if pursued to judgment, would have 

yielded public money subject to the 

MRA. Instead, the factors outlined in 

Softwood Lumber identify when the 

Government has constructively received 

money under the MRA. 

Finally, the Department notes that the 

Clark Memorandum—which 

commenters cited in connection with 

this topic and for purposes of other 

topics—has been withdrawn and was 

not adopted more broadly by the 

Department. See Memorandum for 

ENRD Section Chiefs and Deputy 

Section Chiefs from Deputy Assistant 

Attorney General Jean E. Williams, Env’t 

& Nat. Res. Div., U.S. Dep’t of Just., 

Withdrawal of Memoranda and Policy 

Documents (Feb. 4, 2021), https://

www.justice.gov/enrd/page/file/ 

1364716/dl (last visited Oct. 31, 2024). 

Any related memoranda to the 

withdrawn Clark Memorandum and 

associated litigation filings also were 

not adopted more broadly by the 

Department. The Department has also 

addressed arguments made in the Clark 

Memorandum (which several 

commenters have repeated) elsewhere 

in this document. 

2. The Anti-Deficiency Act 

Comments: Some commenters state 

that the ADA, 31 U.S.C. 1341, was 

enacted to implement the 

Appropriations Clause of the U.S. 

Constitution. According to these 

commenters, it is a violation of the ADA 

for a settlement agreement to divert any 

funds from the U.S. Treasury into 

private hands without congressional 

authorization. 

Other commenters state that there is 

no violation of the ADA because in 

these settlements, the Federal 

Government never received any funds to 

expend without congressional 

appropriation. 

Response: The Department agrees that 

settlements that include third-party 

payments do not violate the ADA. The 

ADA generally prohibits any 

expenditure or obligation of public 

money exceeding an amount ‘‘available 

in an appropriation or fund for the 

expenditure or obligation. . . .’’ 31 

U.S.C. 1341(a)(1)(A). As discussed 

above, see supra Part II.B.1, where a 

settlement is ‘‘executed before an 

admission or finding of liability in favor 

of the United States’’ and where the 

United States does not ‘‘retain postsettlement control over the disposition 

or management of the funds or any 

projects carried out under any such 

settlement, except for ensuring that the 

parties comply with the settlement,’’ the 

Government has not ‘‘ ‘received money 

for the Government.’ ’’ Softwood 

Lumber, 30 Op. O.L.C. at 119 (quoting 

31 U.S.C. 3302(b)). In such settlements, 

no Government official or employee 

expends public money or creates an 

obligation of the Government. 

3. Constitutionality of the Department’s 

Actions 

Comments: Multiple commenters 

state that the power to tax and the 

power to spend are granted only to 

Congress under Article I of the 

Constitution. They state that under the 

Appropriations Clause, only Congress 

has the authority to direct how Federal 

dollars are spent, and that body enacts 

annual appropriations measures 

mandating how Federal agencies do so. 

These commenters contend that the 

long-standing practices of the 

Department reflected in the May 2022 

Memorandum circumvent these 

constitutional obligations. Additionally, 

commenters argue that through these 

settlements, DOJ is usurping the role of 

the legislature, without clear direction 

from Congress to do so. One commenter 

also claims that SEPs and similar 

payments to third parties use ‘‘lawful 

enforcement authority to extract 

unlawful settlements,’’ which, in the 

commenters’ view, is inconsistent with 

the requirement in Article II of the 

Constitution that ‘‘the executive take 

Care that the Laws be faithfully 

executed.’’ 

Response: Third-party settlements 

entered into consistent with Softwood 

Lumber and the May 2022 

Memorandum are consistent with the 

Constitution, as well as the MRA. The 

Constitution provides that ‘‘[n]o Money 

shall be drawn from the Treasury, but in 

Consequence of Appropriations made 

by Law,’’ U.S. Const. art. I, sec. 9, cl. 7, 

and that ‘‘[t]he Congress shall have 


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Power . . . to pay the Debts and provide 

for the common Defence and general 

Welfare of the United States,’’ id. art. I, 

sec. 8, cl. 1. In such settlements, no 

money is ‘‘drawn from the Treasury.’’ 

Nor does Congress’s authority to 

provide for the ‘‘general Welfare’’ 

preclude the Executive Branch from 

settling litigation on terms that are 

otherwise consistent with applicable 

law. 

The MRA helps ‘‘preserve[ ] 

Congress’s constitutional control over 

the expenditure of public funds.’’ 

Applicability of the Miscellaneous 

Receipts Act to an Arbitral Award of 

Legal Costs, 42 Op. O.L.C. l, at *3 (Mar. 

6, 2018). Similar to how the Framers of 

the Constitution limited the 

Appropriations Clause’s commands to 

‘‘Money . . . drawn from the Treasury,’’ 

Congress limited the MRA to ‘‘money’’ 

‘‘receiv[ed] . . . for the Government.’’ 

And as discussed above in the responses 

to commenters, see supra Parts II.B.1 

and II.B.2, funds paid under settlements 

that include third-party payments are 

not ‘‘drawn from the Treasury’’ and 

have not been ‘‘receiv[ed] . . . for the 

Government’’ by the United States. 

Commenters are also incorrect that the 

May 2022 Memorandum circumvents 

the Appropriations Clause and the 

MRA; on the contrary, the May 2022 

Memorandum goes beyond what the 

Appropriations Clause and the MRA 

require. See May 2022 Memorandum at 

2–4. To the extent the constitutional 

arguments of commenters also rely on 

their interpretation of the MRA or ADA, 

the Department addresses those 

arguments above. 

Moreover, appropriately structured 

third-party payments are consistent 

with the discretion the Constitution 

accords the Executive Branch in 

enforcing the statutes enacted by 

Congress, which—absent a limitation by 

Congress—includes the authority to 

resolve claims by settlement on 

appropriate terms. Authority of the 

United States to Enter Settlements, 23 

Op. O.L.C. at 135 (‘‘The settlement 

power is sweeping, but the Attorney 

General must still exercise her 

discretion in conformity with her 

obligation to ‘enforce the Acts of 

Congress.’ ’’ (citation omitted)). While 

the Take Care Clause can impose certain 

limitations on that power, see id. at 138, 

the commenter offers no explanation for 

why all third-party settlements violate 

that provision beyond the conclusory 

statement that they ‘‘obviously’’ do. 

4. Revocation of the December 2020 

Rule and Issuance of the May 2022 

Memorandum as Arbitrary and 

Capricious 

Comments: Several commenters argue 

that the revocation of the December 

2020 Rule is arbitrary and capricious or 

not grounded in law, or otherwise claim 

that DOJ lacks sufficient bases to justify 

the action. They argue that DOJ’s 

conclusion that the December 2020 Rule 

is ‘‘more restrictive and less tailored 

than necessary,’’ 87 FR 27937, does not 

support repealing the entire rule. They 

further argue that the Department’s 

statement that settlement policies ‘‘have 

traditionally been addressed through 

memoranda,’’ id., is not sufficient to 

justify repeal. 

Commenters assert that the 

Department placed the prior policy in 

regulations and that failing to do so here 

is a ‘‘bad system of management’’ 

because there is ‘‘no central repository’’ 

where the public and officials could 

locate memos governing the agency. 

One commenter states further that the 

May 2022 Memorandum describing the 

Department’s new policy cites to an 

OLC memorandum that has not been 

produced via a Freedom of Information 

Act (‘‘FOIA’’) request and so itself is not 

available to the public. 

Response: It is well-established that 

‘‘[a]gencies are free to change their 

existing policies as long as they provide 

a reasoned explanation for the change.’’ 

Encino Motorcars, LLC v. Navarro, 579 

U.S. 211, 221 (2016). ‘‘When an agency 

changes its existing position, it ‘need 

not always provide a more detailed 

justification than what would suffice for 

a new policy created on a blank slate.’ ’’ 

Id. (quoting FCC v. Fox Television 

Stations, Inc., 556 U.S. 502, 515 (2009)). 

‘‘But the agency must at least ‘display 

awareness that it is changing position’ 

and ‘show that there are good reasons 

for the new policy.’ ’’ Id. (quoting Fox 

Television Stations, 556 U.S. at 515). 

The IFR and the May 2022 

Memorandum describe sound reasons 

for the revocation of 28 CFR 50.28 and 

a change in policy. Appropriately 

tailored ‘‘agreements providing for 

payments to third parties are lawful and 

allow the United States to more fully 

accomplish the primary goals of civil 

and criminal enforcement: 

Compensating victims, remedying harm, 

and punishing and deterring unlawful 

conduct.’’ 87 FR 27937. ‘‘For example, 

the harms caused by violations of 

Federal environmental statutes . . . can 

be difficult to redress directly in 

particular cases’’; and in such 

circumstances, third-party payments 

(including SEPs) can ‘‘help achieve an 

enforcement action’s goals.’’ Id. Please 

see the other responses in this 

document to comments raising specific 

legal and policy concerns, especially 

Parts II.B.1 and 5, that underscore the 

reasons the Department changed policy. 

Turning to the question of the form of 

the new policy, the Department 

observes that the previous 

Administration itself recognized that 28 

CFR 50.28 was ‘‘ ‘limited to agency 

organization, management, or personnel 

matters’. . . .’’ 85 FR 81410 (citing 5 

U.S.C. 553(a)(2), (b), and (d)). The same 

is true with respect to the IFR and with 

respect to this final rule. In such areas, 

Federal agencies have flexibility as to 

how they act and memorialize their 

actions. Cf. Perez v. Mortg. Bankers 

Ass’n, 575 U.S. 92, 101 (2015) (‘‘Because 

an agency is not required to use noticeand-comment procedures [under the 

APA] to issue an initial interpretive 

rule, it is also not required to use those 

procedures when it amends or repeals 

that interpretive rule.’’). Moreover, as 

the IFR states in announcing the 

revocation of 28 CFR 50.28, DOJ policies 

addressing the goals of settlements have 

‘‘traditionally’’ been announced in 

memoranda. 87 FR 27937. Also of note, 

the previous Administration did not 

undertake a notice-and-comment 

rulemaking process; instead, it 

promulgated 28 CFR 50.28 as an 

immediately effective final rule. 

Likewise, in 2022, DOJ revoked this 

provision as an interim final rule and 

released simultaneously the May 2022 

Memorandum and posted it to the DOJ 

website. See https://www.justice.gov/ 

media/1221546/dl?inline= (last visited 

Oct. 31, 2024). At its discretion, the 

Department took the further step of 

requesting public comment as to those 

actions and is responding to significant 

submitted public comments in this final 

rule. 

In response to the commenter who 

suggests that a memorandum is not 

appropriate because of the lack of a 

‘‘central repository’’ for Department 

policy and states that the policy should 

be in the Justice Manual or Code of 

Federal Regulations, the Department 

notes that the memorandum is reflected 

in the Justice Manual, which is publicly 

available on the Justice.gov website. See 

Settlement Agreements Involving 

Payments to Non-Governmental Third 

Parties, section 1–17.000. Including 

these provisions in the Justice Manual is 

preferable because Justice Manual 

provisions can be readily amended, 

allowing the Department to adjust the 

guidance governing additional 

circumstances and fact patterns as 

needed. The Justice Manual governs the 

litigation practices of the Department 


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and is followed by Department 

litigators; a regulation is not needed for 

this purpose. Further, the Department 

has announced with this notice that it 

will make changes to these Justice 

Manual provisions, demonstrating the 

benefits of this approach. 

Finally, as to the question of the 

release under FOIA of December 2020 

OLC Memo, which is referenced in 

footnote two of the May 2022 

Memorandum, DOJ did release this 

document (posted on February 16, 2023) 

and it is available in the FOIA Reading 

Room at https://www.justice.gov/oip/ 

foia-library/foia-processed/general_

topics/settlement_guidelines_third_

parties_2_14_23/download (last visited 

Oct. 31, 2024). 

5. The Attorney General’s Guidelines 

and Limitations as Public Policy 

5.1. Examples of Past Department of 

Justice Conduct as a Basis for Not 

Revoking the December 2020 Rule and 

Issuing the May 2022 Memorandum 

Comments: Some commenters state 

that during the Clinton, Bush, and 

Obama Administrations, the Department 

entered into settlement agreements 

containing third-party payments that 

violated the statutory and constitutional 

provisions discussed in the previous 

topics; and further stated that these 

settlement agreements reflect bad public 

policy. Examples offered include 

settlements with financial institutions 

following the 2008–09 financial crisis; 

settlements addressing ‘‘housing 

counseling assistance’’ programs; cy 

pres settlements in other consumer and 

civil rights cases; and settlements in 

environmental cases. Commenters 

argued that these settlements 

demonstrate that case resolutions will 

lead to favoritism or ‘‘cronyism.’’ 

Several commenters further asserted 

that Congress declined to enact funding 

for some programs where similar 

activities were subsequently at least 

partially funded through third-party 

payments. Commenters also alleged that 

the Federal Government ‘‘strong-armed’’ 

defendants in some of these settlements 

to make payments to politically favored 

entities. Requiring defendants to donate 

to activist groups selected by the 

Department, they argue, raises serious 

legal and ethical issues, erodes public 

trust, and is analogous to ‘‘corruption.’’ 

Commenters also expressed concern 

about the ‘‘lack of transparency’’ 

surrounding third-party payments, and 

about decisions made by 

‘‘unaccountable bureaucrats.’’ 

Response: Some of the points raised 

by commenters do not relate to the 

substance of the action on which the 

Department is seeking comment. For 

example, cy pres class action 

settlements are expressly outside the 

scope of the Department’s action. See 

May 2022 Memorandum at 1 n.2. 

A general prohibition by rule on 

third-party payments is unnecessary for 

several reasons. First, with respect to 

conflict-of-interest concerns, 

Department attorneys are subject to 

strict conflict of interest rules imposed 

by the Department and their respective 

State bars that apply in the context of 

litigation, including the settlement of 

claims. Second, the Department has 

concluded that, although the 

commenters’ concerns are unfounded 

based on past settlements, it can best 

proactively address such concerns 

through the use of policies like the May 

2022 Memorandum, or changes to the 

Justice Manual, rather than a less 

flexible rulemaking process. Indeed, the 

May 2022 Memorandum sets forth 

guidelines designed to ensure that thirdparty settlements are not used for 

improper purposes, including a 

requirement that projects ‘‘have a strong 

connection to the underlying violation 

or violations of federal law at issue’’ and 

a provision barring the Department and 

its client agencies from ‘‘propos[ing] the 

selection of any particular third party to 

receive payments to implement any 

project carried out under any such 

settlement.’’ May 2022 Memorandum at 

3. These guidelines adequately guard 

against cronyism and political 

favoritism while preserving the benefits 

of third-party payments. Third (and 

relatedly), the Department notes that 

allowing for third-party payments can 

increase trust in the judicial process by, 

for example, allowing settlements to be 

more responsive to affected 

communities. 

For similar reasons, the Department 

disagrees that a rule prohibiting thirdparty payments is necessary to ensure 

transparency. As detailed earlier in this 

preamble, see supra Part I.C, 

transparency concerns can be addressed 

through other means, including the 

revisions to the Justice Manual 

described there. Those revisions 

appropriately balance concerns of 

transparency and efficiency with the 

benefits that can accrue from third-party 

settlements in a way that a rule banning 

third-party settlements would not. Nor 

is a rule necessary to ensure that 

unaccountable actors are not making 

important settlement decisions. Rather, 

the Department can ensure 

accountability through other means, 

such as subjecting settlements that 

include third-party payments to 

approval requirements similar to those 

required for other significant 

departmental actions. See May 2022 

Memorandum at 3–4 (settlements 

involving a payment to a nongovernmental third party must obtain 

the approval of the Deputy Attorney 

General or the Associate Attorney 

General, with certain exceptions). 

To the extent that commenters suggest 

that Congress’s decision not to fund 

certain activities is evidence that it is 

improper for the Department to agree to 

third-party payments that would fund 

such activities, they have not provided 

any reason to draw an inference that 

Congress’s inaction evinces an intent to 

affirmatively disapprove such 

settlements. 

Some commenters identified 

particular past payments to third-party 

organizations that they view as 

inappropriate, including settlements 

involving allegations of lending 

discrimination that required the 

defendant to make payments to thirdparty organizations to conduct general 

public education and awareness projects 

and a 2006 environmental nonprosecution agreement requiring a thirdparty payment in the form of ‘‘$1 

million to the Alumni Association for 

the United States Coast Guard Academy, 

New London, Connecticut to fund an 

Endowed Chair of Environmental 

Studies.’’ The Department, while not 

conceding to the commenters’ 

characterizations of these settlements, is 

sensitive to the need to give the public 

confidence that settlements providing 

for payments to third parties are 

appropriately tailored. In that vein, the 

May 2022 Memorandum provides that 

‘‘[n]o such settlement shall require 

payments to non-governmental third 

parties solely for general public 

educational or awareness projects; 

solely in the form of contributions to 

generalized research, including at a 

college or university; or in the form of 

unrestricted cash donations.’’ 

5.2. Selection of Third-Party Recipients 

Comments: One commenter would 

revise the May 2022 Memorandum to 

allow DOJ and EPA to work with 

affected community members in two 

respects: to devise appropriate SEPs and 

to suggest appropriate third-party 

recipients. The commenter says that the 

May 2022 Memorandum can be read to 

give defendants ‘‘sole control’’ in 

selecting projects because it prohibits 

Department selection of a specific third 

party and allows the defendant to 

propose projects. The commenter argues 

that impacted communities may know 

how best to remedy harm done to them, 

and they should not be required to work 

directly with the party causing the 

harm. Such revisions, the comment 


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continues, would also help to prevent 

funding of organizations improperly 

favored by defendants. 

Several commenters argue that under 

the May 2022 Memorandum, DOJ has 

too great a role in the selection of the 

recipients of third-party payments, 

which will lead to the funding of 

‘‘political allies.’’ Other commenters 

similarly express concerns about 

‘‘steer[ing] settlement funds to political 

allies,’’ ‘‘picking winners,’’ or funneling 

funds to ‘‘advocacy groups’’ for ‘‘favored 

programs.’’ 

Response: The Department 

acknowledges the concerns with 

allowing defendants sole authority to 

select third-party recipients, but in 

order to avoid the appearance that the 

Department is directing the inclusion of 

particular projects or third parties into 

a settlement, declines to adopt a policy 

under which the Department would 

make such selections. And the 

Department has addressed these 

concerns through other means to help 

ensure appropriate project selection. For 

example, under the May 2022 

Memorandum, ‘‘projects must have a 

strong connection to the underlying 

violation,’’ ‘‘be consistent with the 

underlying statute,’’ and ‘‘advance at 

least one of [the statute’s] objectives.’’ 

May 2022 Memorandum at 3. ‘‘The 

project should also be designed to 

reduce the detrimental effects of the 

underlying violation . . . to the extent 

feasible and reduce the likelihood of 

similar violations in the future.’’ Id. 

Moreover, the Department and its client 

agencies ‘‘may specify the type of 

entity’’ to be the beneficiary of any 

projects carried out, id., and may 

‘‘disapprove of any third-party 

implementer or beneficiary that the 

defendant proposes’’ provided that the 

disapproval is based upon objective 

criteria for assessing qualifications and 

fitness outlined in the settlement 

agreement. Id. The May 2022 

Memorandum also expressly precludes 

certain payments that would ordinarily 

be too broad to satisfy the criteria above: 

Settlements may not ‘‘require payments 

to non-governmental third parties solely 

for general public educational or 

awareness projects; solely in the form of 

contributions to generalized research 

. . . or in the form of unrestricted cash 

donations.’’ Id. Thus, these provisions 

rule out Federal selection of any 

particular recipient but permit the 

United States to disapprove a particular 

recipient based on objective grounds 

laid out in the settlement agreement. 

In addition, the Department can 

address the concerns about defendants 

selecting projects in other ways. The 

May 2022 Memorandum ‘‘provides 

internal Justice Department guidance 

only.’’ May 2022 Memorandum at 2. 

Nothing prevents a community from 

engaging with the defendant at any 

time, including regarding potential 

SEPs. Moreover, once a defendant 

expresses interest in or proposes a thirdparty payment as part of a judicial 

settlement, Department attorneys and 

their client agencies may encourage the 

defendant to seek input from affected 

communities on their proposal. 

Defendants may choose to consult with 

the community to identify the 

community’s needs and concerns in 

advance of agreeing to a settlement, 

which would help satisfy the 

Department’s requirement that thirdparty payments have a strong 

connection to the allegations and 

advance the underlying statutory 

purpose. The Department will also add 

a provision to Justice Manual section 1– 

17.000 that provides for public 

comment on certain settlements that 

include these types of payments, see 

supra Part I.C, so the public will be able 

to provide input on the particular 

remedies identified in the settlement. 

Finally, with respect to concerns that 

the Department would steer settlement 

funds to political allies, pick winners, or 

funnel funds to favored groups and 

programs, the requirements detailed 

above operate to ensure, as stated in the 

May 2022 Memorandum, that thirdparty payments function properly as 

‘‘critical tools for addressing violations 

of federal law and remedying the harms 

those violations cause.’’ May 2022 

Memorandum at 2. The Department 

would not support the use of partisan or 

viewpoint-based criteria in determining 

how to implement a third-party 

payment, as those would not be 

‘‘objective criteria,’’ id. at 3; such 

criteria could give rise to an inference 

that a potential recipient of a third-party 

payment was rejected based on the 

Department’s disfavoring of that 

particular partisan characteristic or 

viewpoint. 

5.3. Guidelines and Limitations: 

Adequacy To Constrain Settlement 

Discretion 

Comment: One commenter views the 

May 2022 Memorandum as ‘‘windowdressing that will reopen avenues of 

past abuse’’ of the Department’s 

settlement discretion. In this 

commenter’s view, the guidelines still 

permit the Department to indicate the 

category of recipient of third-party 

payments and to disapprove specific 

recipients based on criteria the 

Department itself selects, and even the 

express prohibition of certain types of 

third-party payments can be 

circumvented by allowing some 

minimal funding of another type of 

activity or minimal statement of 

conditions for cash donations. The 

commenter made several further similar 

criticisms addressed below. 

Response: The Department disagrees 

with the characterization that the May 

2022 Memorandum does not sufficiently 

constrain its settlement discretion. On 

the contrary, the memorandum’s 

provisions impose significant and 

appropriate constraints on the use of 

this tool. The guidelines and limitations 

operate together to ensure that 

settlement agreements providing for 

payments to non-governmental third 

parties are structured properly, and are 

consistent with applicable law. See May 

2022 Memorandum at 2–3. The 

requirement that the Deputy Attorney 

General or Associate Attorney General 

approve a settlement containing a thirdparty payment also promotes 

consistency in application of the May 

2022 Memorandum’s terms. See id. at 3– 

4. 

The commenter states that the 

prohibition on third-party payments 

‘‘solely’’ for general public educational 

or awareness projects or generalized 

research is not constraining because a 

settlement could ‘‘allocate any amount 

of the settlement money to some other 

activity that is not public education, 

awareness, or generalized research’’ in 

order to ‘‘skirt this limitation.’’ That 

misunderstands the relevant limitation. 

The term ‘‘solely’’ is intended to 

recognize that a project that otherwise 

complies with the guidelines set forth in 

the May 2022 Memorandum could also 

have an incidental effect of public 

education or awareness or could have 

incidental benefits to generalized 

research. The Department now clarifies 

that no portion of a settlement may be 

directed at these prohibited purposes. 

For example, a settlement addressing 

the lead-based-paint violations of a 

commercial renovator may include a 

third-party payment in the form of a 

project to remediate lead-based paint in 

a nearby school. The settlement may 

have the incidental effect of educating 

school attendees, their families, and the 

local community about the dangers of 

lead paint, but no portion of the thirdparty project could be directly used for 

a public awareness campaign. 

The commenter further argues that the 

requirement of a ‘‘strong connection to 

the underlying violation or violations of 

federal law at issue in the enforcement 

action,’’ May 2022 Memorandum at 3, is 

not a significant constraint. The 

commenter suggests that this provision 

requires only a connection to the broad 

purposes of the underlying statute, 


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which the commenter states is ‘‘highly 

subjective.’’ The Department disagrees. 

The same provision of the May 2022 

Memorandum states that ‘‘[t]he project 

should also be designed to reduce the 

detrimental effects of the violation or 

violations at issue to the extent feasible 

and reduce the likelihood of similar 

violations in the future.’’ May 2022 

Memorandum at 3. Linking the project 

to the detrimental effects of the 

violation (and preventing recurrence) 

requires a strong connection to the 

harms associated with the underlying 

violation; for violations that affect a 

particular geographic area, this 

requirement will also mandate that the 

project be linked to that area. 

The commenter describes the 

limitation that a project ‘‘should also be 

designed to reduce the detrimental 

effects of the underlying violation or 

violations at issue to the extent feasible 

and reduce the likelihood of similar 

violations in the future,’’ id., as 

expressing an ‘‘aspirational preference, 

not a requirement of agency 

settlements.’’ This is incorrect. The May 

2022 Memorandum requires that a 

properly structured settlement must 

address this factor ‘‘to the extent 

feasible.’’ May 2022 Memorandum at 3. 

This qualification recognizes that, in 

some instances, it may be difficult to 

reduce the detrimental effects of a past 

violation of law where those effects are 

widely shared. 

The commenter states that the 

provision limiting third-party payments 

for activities for which an agency 

receives a specific appropriation will 

not be effective, stating that ‘‘[t]o 

sidestep these guidelines, an outside 

group need only describe the project for 

which it may receive settlement funds 

in a manner that differentiates the 

project from an agency’s appropriations 

or statutory obligations.’’ This is also 

incorrect. The Department will review 

any proposals for overlap between a 

project and appropriations that an 

agency receives and will not rely solely 

on the description of the project by the 

defendant or any other party. 

The commenter also questions the 

benefits of the provisions of the May 

2022 Memorandum providing for 

review and approval by the Deputy 

Attorney General or Associate Attorney 

General of settlements that include 

payments to non-governmental third 

parties. The Department has long 

required that certain significant 

settlements be approved by the Deputy 

Attorney General or Associate Attorney 

General. 28 CFR 0.160, 0.161. These 

requirements ensure that certain types 

of case resolution receive appropriate 

review and attention within the 

Department. The provisions of the May 

2022 Memorandum requiring such 

approval for settlements including 

payments to non-governmental third 

parties are consistent with these 

longstanding provisions and will 

similarly ensure that the memorandum’s 

provisions are applied consistently and 

uniformly. 

The commenter also appears to 

presume that DOJ controls the 

development of third-party payment 

provisions. The Department will adopt 

a provision in Justice Manual section 1– 

17.000 clarifying that in negotiating a 

civil case resolution, the Department 

and its client agencies may condition a 

settlement on the inclusion of a thirdparty payment if the third-party 

payment constitutes relief that a court 

would have authority to order under 

applicable law or in equity, but that 

otherwise such provisions may only be 

included if the defendant expresses 

interest in doing so. Outside the context 

of relief that a court could order, then, 

these provisions will be included only 

where the defendant expresses interest 

in doing so. Second, the defendant has 

the lead on developing the proposed 

project, which must have a ‘‘strong 

connection’’ to the violation of Federal 

law underlying the case. 

In addition, in many civil cases, 

following the conclusion of settlement 

negotiations, there is a public process 

for entry of a proposed Federal consent 

decree. 15 U.S.C. 16(b)–(h); 28 CFR 50.7. 

Once the United States files the 

proposed consent decree in Federal 

court, there is typically a period in 

which the general public may comment, 

including on any provisions addressing 

third-party payments. The Federal court 

then considers any resulting comments 

and exercises its own independent 

judgment in deciding whether to 

approve such a decree. The Department 

will add a provision to Justice Manual 

section 1–17.000 requiring a public 

comment process for certain civil thirdparty payments subject to the May 2022 

Memorandum, so that the public will 

have additional opportunities for input 

on such provisions. This requirement 

will afford additional transparency for 

settlements including such remedies. 

5.4. Guidelines and Limitations: 

Prohibition on Post-Settlement Control 

Comment: According to one 

commenter, the recipients of third-party 

payments under the May 2022 

Memorandum are not subject to 

reporting obligations to ensure oversight 

and accountability because DOJ and its 

client agencies cannot ‘‘ ‘retai[n] postsettlement control over the disposition 

or management of the funds or any 

projects carried out under any such 

settlement.’ ’’ 

Response: The prohibition against 

post-settlement control is designed to 

address the requirements of the MRA. 

See supra Part II.B.1. This does not 

mean, however, that DOJ will not 

oversee the settlement and ensure the 

defendant’s compliance with it. In fact, 

the fourth guideline in the May 2022 

Memorandum specifically allows for 

this: 

Any such settlement must be executed 

before an admission or finding of liability in 

favor of the United States, and the Justice 

Department and its client agencies must not 

retain post-settlement control over the 

disposition or management of the funds or 

any projects carried out under any such 

settlement, except for ensuring that the 

parties comply with the settlement. 

May 2022 Memorandum at 3 (emphasis 

added) (citing Softwood Lumber, 30 Op. 

O.L.C. at 119). 

In addition, Federal consent decrees 

and settlements in civil cases contain 

standard provisions to ensure 

compliance, typically including 

stipulated penalties for failure to 

complete required actions spelled out in 

the agreement. Settlement agreements 

including a third-party payment may 

also contain specific terms addressing 

implementation and compliance. The 

Government can seek enforcement of 

these provisions to ensure compliance 

with the terms of the settlement or 

consent decree. Furthermore, following 

the conclusion of settlement 

negotiations, the Department will 

require opportunity for public comment 

on certain settlements that incorporate 

third-party payments in Justice Manual 

section 1–17.000, which will provide a 

mechanism for additional accountability 

on such terms. See supra Part I.C. (Such 

a public process is often already 

required by law, 15 U.S.C. 16(b)–(h), 28 

CFR 50.7.) 

6. Comments Regarding SEPs 

6.1. Characterization of SEPs in the May 

2022 Memorandum 

Comment: One commenter states that 

the May 2022 Memorandum and IFR 

appear to ‘‘fundamentally 

misunderstan[d] what SEPs are and how 

they are designed to function’’ by 

treating them as ‘‘a remedy for the 

underlying violation.’’ The commenter 

goes on to provide his understanding of 

what a SEP is by reference to EPA’s 

2015 SEP Policy and in contrast to the 

remedy the commenter identifies as 

mitigation. The commenter made 

several further similar criticisms 

addressed below. 

Response: This comment discusses 

one potential type of third-party 


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payment used in the environmental 

context, ‘‘Supplemental Environmental 

Projects.’’ EPA’s 2015 SEP Policy 

specifically addresses such projects. The 

Department’s May 2022 Memorandum 

is distinct from EPA’s 2015 SEP Policy, 

and comments on EPA’s policy are 

outside the scope of the Department’s 

request for comments, although the 

Department notes in this respect that the 

EPA policy never characterizes, as the 

comment suggests, SEPs as projects 

undertaken ‘‘in exchange for a lower 

civil penalty.’’ Similarly, the May 2022 

Memorandum does not authorize thirdparty payments in any context to be 

made ‘‘in exchange for a lower civil 

penalty.’’ 

The Department’s memorandum does 

reference SEPs as one potential category 

of third-party payment that can be an 

appropriate remedy in a Department 

settlement. (Note that not all SEPs 

necessarily involve third-party 

payments, however.) The Department 

will respond to this comment to the 

extent that it addresses aspects of the 

May 2022 Memorandum, as distinct 

from EPA’s 2015 SEP Policy. 

This commenter asks why ‘‘[t]he May 

[2022] Memo and the Interim Final Rule 

do not explain why courts’ equitable 

authority is insufficient to remedy the 

harms from violations of federal 

environmental law.’’ At the outset, 

remedying harm is not the only purpose 

of these types of third-party payments; 

they also operate to ‘‘punish and deter 

future violations.’’ May 2022 

Memorandum at 1. As to their function 

in remedying harm, the May 2022 

Memorandum states that some 

categories of harms, including in 

environmental cases, ‘‘can be difficult to 

redress directly in particular cases.’’ Id. 

at 1–2. Where a violation has attenuated 

or indirect effects (such as the example 

where excess air pollution accelerated 

weathering and increased lead exposure 

from deteriorating lead-based paint), it 

may not be feasible to identify the scope 

of those affected with precision. In 

settling a case, litigants are not subject 

to the same limitations that apply to 

judicial remedies and can agree to 

remedies that may go beyond those that 

a court would typically order. See, e.g., 

Frew v. Hawkins, 540 U.S. 431 (2004); 

Local No. 93, Int’l Ass’n of Firefighters, 

AFL–CIO v. City of Cleveland, 478 U.S. 

501 (1986); United States v. Charles 

George Trucking, 34 F.3d 1081 (1st Cir. 

1994); United States v. BP Prods. N. 

Am., Inc., No. 2:23–CV–166, 2023 WL 

5125148 (N.D. Ill. Aug. 9, 2023). In 

Firefighters, the Supreme Court stated 

that when considering a consent decree 

that would resolve a matter within its 

jurisdiction and within the general 

scope of the case pleadings and would 

‘‘further the objectives of the law upon 

which the complaint was based,’’ ‘‘a 

federal court is not necessarily barred 

from entering [that] consent decree 

merely because the decree provides 

broader relief than the court could have 

awarded after a trial.’’ 478 U.S. at 525. 

The remedies that theoretically a 

court could order can require more 

precise accounting of effects and 

injuries than may be practicable in some 

instances. Further, to fully remedy the 

underlying harm caused by the 

violation(s) might require more remedial 

action than a court may order in a 

particular statutory scheme. The May 

2022 Memorandum requires that any 

project funded by a defendant ‘‘be 

consistent with the underlying statute 

being enforced and advance at least one 

of the objectives of that statute,’’ 

ensuring that the project will be 

consistent with congressional intent in 

enacting the applicable statutory 

framework. May 2022 Memorandum at 

3. 

Indeed, some of the other commenters 

provided examples of types of harms 

that cannot be adequately addressed 

without remedies of this type. See infra 

Part II.B.6.2. These harms can arise over 

long time scales, in circumstances in 

which there are multiple sources of 

exposure; in addition, it may be 

apparent that a particular area or 

community has experienced unusual 

environmental harms, but difficult to 

apportion causation from any individual 

source. For example, in 2015, the 

United States, the State of Michigan, 

and AK Steel Corporation agreed to a 

settlement to resolve claims for 

particulate matter violations of the 

Clean Air Act at AK Steel’s Dearborn, 

Michigan steel plant, which is located 

in a mixed industrial area with multiple 

sources of pollution affecting 

neighboring communities. The 

settlement required AK Steel to pay a 

$1.35 million civil penalty and 

implement injunctive relief to address 

the violations. The settlement also 

required AK Steel to perform a SEP, 

consisting of the purchase and 

installation of dynamic air filters in the 

air conditioning systems at the Salina 

elementary and middle schools. The 

projects, which cost $337,000, reduced 

students’ exposure to fine particulates— 

from the steel plant but commingled 

with pollution from other sources in the 

airshed—while in school. Examples like 

this illustrate why the Department 

concluded that ‘‘[w]hen used 

appropriately, these agreements allow 

the government to more fully 

compensate victims, remedy harm, and 

punish and deter future violations.’’ 

May 2022 Memorandum at 1. 

6.2. SEPs as Public Policy 

Comments: A number of commenters 

express support for the IFR’s restoration 

of the use of third-party payments in the 

form of SEPs in judicial environmental 

enforcement settlements. In the view of 

these commenters, SEPs serve to 

provide fuller mitigation for harm 

caused by violations and are a tailored 

approach to address challenges for 

communities who routinely face 

noncompliance from industries. As one 

commenter states, ‘‘SEPs represent a 

unique opportunity in the 

environmental enforcement context to 

secure some form of restitution for 

communities harmed by violations 

given the difficulty of identifying and 

quantifying full individual harm from a 

violating pollution source to support 

adequate direct mitigation. It is often 

difficult, if not impossible, to fully trace 

all human ailments or natural problems 

to a particular pollution source, 

especially over long periods of time.’’ 

Absent the availability of this settlement 

tool, another commenter notes, 

‘‘enforcement actions are less able to 

reduce or offset the detrimental effects 

that the unlawful behavior has already 

had on affected communities.’’ Some 

commenters state that the Department’s 

changes will support State efforts to 

address equity, public health, and 

welfare issues in communities adversely 

affected by environmental violations 

and at no additional cost to the 

taxpayer, and note that 37 States have 

SEP policies allowing such projects in 

settlements. 

The Department received multiple 

comments discussing the benefits of the 

changes in policy reflected in the 

Department’s May 2022 Memorandum 

for communities and others affected by 

violations of law. Commenters describe 

how third-party payments in the form of 

SEPs have been used to provide more 

complete relief for communities affected 

by environmental pollution, particularly 

overburdened communities. Some of 

these comments specifically note that 

environmental violations can cause 

harms that cannot be adequately 

addressed without this type of remedy. 

Some commenters, however, view 

third-party payments, including SEPs, 

as ‘‘corrupt’’ tools inadequate to remedy 

public rights or deter violators, arguing 

that SEPs and third-party payments 

undercut deterrence, do not prevent 

pollution in the case of environmental 

enforcement, and incentivize ‘‘corrupt’’ 

actions by officials to reward favored 

entities with payments. Similarly, 

another commenter questions the 


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deterrent effect of settlement agreements 

containing third-party payments in the 

form of SEPs and characterizes SEPs as 

‘‘ad hoc’’ and as presenting ‘‘likely 

inefficient ways to combat pollution.’’ 

Response: These comments discuss 

one particular type of settlement 

instrument, SEPs. As noted in DOJ’s 

response to topic 6.1 above, see supra 

Part II.B.6.1, comments on the terms of 

the 2015 SEP Policy are outside the 

scope of the Department’s request for 

public comment. 

That said, the Department agrees with 

commenters that SEPs can provide 

benefits. Federal environmental statutes 

seek to protect public health writ large 

but, as applied in the context of a 

violating facility, it is often the people 

who live near and downwind of that 

facility who bear more of the harm. 

These harms can arise over long time 

scales, in circumstances in which there 

are multiple sources of exposure; in 

addition, it may be apparent that a 

particular area or community has 

experienced unusual environmental 

harms, but difficult to show causation 

from any individual source, as 

discussed. Third-party payments may be 

crafted to ensure that the case resolution 

accounts for the reality on the ground. 

The Department disagrees that SEPs 

decrease the deterrent effect of Federal 

law and that they are inefficient ways to 

combat pollution. The commenter does 

not provide data to support these 

statements. In fact, the ability to include 

third-party payments in case 

resolution—in addition to a civil 

penalty and injunctive relief—increases 

the deterrent value of the Department’s 

enforcement actions by expediting and 

facilitating settlement, enabling the 

Department to prosecute more violators 

and ensuring that violators are held 

accountable for all harms, including 

those harms that may be intangible or 

difficult to quantify, or where victims 

are no longer available to pursue 

individual claims. Certain third-party 

payments may also serve to deter and 

prevent violations, such as providing 

air-monitoring equipment to a 

surrounding community in a Clean Air 

Act enforcement case. 

In addition, the Department does not 

depend solely upon third-party 

payments to accomplish its litigation 

objectives. Resolving violations of 

environmental laws by settlement is a 

complicated task, involving the 

weighing of a variety of factors, which 

the Department undertakes in 

accordance with applicable law and 

Departmental policy. Key 

considerations for the Department 

include compensating victims, 

redressing harms, and punishing and 

deterring unlawful conduct without the 

costs and delay of trial. The Department 

assesses that third-party payments can 

support these goals, and the Department 

disagrees with some commenters’ 

suggestion that limiting the 

Department’s enforcement tools to civil 

penalties after judgment will maximize 

deterrence, much less optimally serve 

the many goals of the Department’s 

enforcement activities. 

Whether a third-party payment is 

appropriate as part of case resolution is 

only one consideration for the 

Department when negotiating a 

settlement but including such a 

payment may contribute to a resolution. 

Such settlement agreements can be 

significantly more efficient than 

litigating every case to judgment 

because they save agencies and 

taxpayers significant time and expense. 

Those savings allow the Department to 

pursue more cases that will deter more 

violators from more future unlawful 

conduct. With respect to the 

commenters’ claims of favoritism, see 

the discussion in topics 5.1 and 5.2 

above of such claims and of constraints 

on selection of third parties and 

projects. See supra Part II.B.5.1 and 

II.B.5.2. 

Finally, the Department notes that 

courts have entered Federal consent 

decrees containing SEPs for decades. As 

one court stated when approving a 

settlement with U.S. Steel involving 

SEPs at a value of $1.9 million and a 

$2.2 million civil penalty: 

Could the agreement be different? Of 

course. Could it demand more from U.S. 

Steel by way of a fine, for example? Again, 

of course it could. But making such a 

demand may have caused U.S. Steel to walk 

away from the bargaining table and set the 

parties on a course of protracted litigation. 

This is to say that there is no single fair and 

reasonable resolution, but rather a range of 

them. And, in my judgment, the Consent 

Decree proposed in this case is plainly 

within that range. 

United States v. U.S. Steel Corp., No. 

12–CV–304–PPS–APR, 2017 WL 

1190953, at *3 (N.D. Ind. Mar. 30, 2017). 

7. Implementation of the May 2022 

Memorandum 

7.1. Publication of Future Memoranda 

Comment: One commenter requests 

that DOJ make publicly available all 

future memoranda addressing thirdparty payments in settlements because 

they have been ‘‘highly controversial 

and problematic.’’ 

Response: DOJ recognizes the 

importance of and greatly values 

transparency and public participation in 

enforcement matters where it is possible 

given the sensitivity of bringing specific 

litigation. The Department published 

the May 2022 Memorandum (see 

response to topic 4 above, supra Part 

II.B.4) and voluntarily sought public 

comment on it. The requirements of the 

May 2022 Memorandum are publicly 

available in Justice Manual section 1– 

17.000, as will be the Department’s 

revisions to that section. The 

Department will provide in the new 

Justice Manual provision for a public 

process on certain civil settlements that 

incorporate third-party payments. See 

supra Part I.C. The Department is aware 

of the public interest in this topic and 

will seek to make future memoranda in 

this area public to the extent it is 

feasible to do so. 

7.2. Including Affected Communities 

Comments: Multiple commenters 

address ways in which impacted 

communities and individuals should 

participate more fully in the settlement 

process and be better supported in 

doing so. Several commenters asked 

DOJ and EPA specifically to affirm the 

continued validity of EPA’s 2015 SEP 

Policy and to update EPA’s 2003 

community engagement guidance with 

‘‘meaningful’’ engagement practices or 

made similar suggestions on ways to 

increase engagement. See U.S. 

Environmental Protection Agency, 

Interim Guidance for Community 

Involvement in Supplemental 

Environmental Projects (2003). Several 

commenters also encourage continued 

implementation of the training and 

outreach practices in a recently issued 

Department memorandum. 

Response: Commenters suggest a 

variety of mechanisms to increase the 

role of communities in selecting and 

implementing SEPs. DOJ recognizes the 

importance of remedying the harms to 

the communities most directly impacted 

by violations of the Federal 

environmental laws. As noted above, 

comments that relate to the details of 

the 2015 SEP Policy or other EPA 

policies are outside the scope of this 

request for public comment. 

The Department recently addressed 

the need for meaningful engagement 

with at least a subset of impacted 

communities in a memorandum entitled 

Comprehensive Environmental Justice 

Enforcement Strategy. See 

Memorandum for Heads of Department 

Components, United States Attorneys 

from the Associate Attorney General, 

Comprehensive Environmental Justice 

Enforcement Strategy (May 5, 2022) 

(‘‘Comprehensive Environmental Justice 

Enforcement Strategy Memorandum’’), 

https://www.justice.gov/asg/file/ 

1217741-0/dl?inline (last visited Oct. 31, 

2024). Pursuant to the strategy, all 


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Federal Register / Vol. 89, No. 236 / Monday, December 9, 2024 / Rules and Regulations 97537 

litigating components at DOJ shall 

consider appropriate outreach efforts to 

identify areas of environmental justice 

concern in relevant communities. Id. at 

6–7. As the commenter suggested, 

designated environmental justice 

coordinators in each U.S. Attorney’s 

Office have been trained to serve as 

point people for community outreach. 

Id. at 3 and 6. And cases initiated under 

the strategy will include the 

development of case-specific 

community outreach plans to obtain 

input on community concerns or 

potential case remedies. Id. at 6–7. 

Regarding comments addressing 

consideration of community input in 

the development of SEPs in enforcement 

actions, comments on EPA’s policy are 

outside the scope of the Department’s 

request for comments. But DOJ notes 

that in December 2023 EPA began 

piloting the use of an email inbox to 

receive ideas from the public 

concerning potential projects for 

settlement negotiations. Further 

information is available at U.S. 

Environmental Protection Agency, 

Supplemental Environmental Projects 

(SEPs), https://www.epa.gov/ 

enforcement/supplementalenvironmental-projects-seps#sepidea 

(‘‘USEPA SEPs website’’) (last visited 

Oct. 31, 2024). 

The Department appreciates 

commenters’ suggestions for potential 

assistance to impacted communities 

from the DOJ Environmental Crime 

Victim Assistance program, and for 

funding streams from DOJ and EPA to 

compensate community-based 

organizations for their expertise. 

However, these comments are outside 

the scope of the IFR. 

7.3. Working With Tribal Governments 

Comment: One commenter expresses 

general support for SEPs, urges DOJ and 

EPA to address the aspects of SEPs that 

are relevant to Federally recognized 

Indian Tribes (‘‘Tribes’’) in Indian 

country, and offers recommendations to 

the Department based on previous 

experiences with SEPs. The commenter 

suggests working with Tribes early to 

avoid SEPs that are ‘‘rigid’’ or 

‘‘unworkable,’’ and to achieve 

environmental justice. 

Response: The Department has a 

policy on Tribal Consultation (Nov. 30, 

2022), which can be found at https://

www.justice.gov/d9/2022-12/dojmemorandum-tribal-consultation.pdf 

(last visited Oct. 31, 2024). Consistent 

with this policy, DOJ is committed to 

engaging in ongoing communication 

with Tribes. While settlement 

negotiations fall outside of our formal 

consultation policy, DOJ engages in 

communication with Tribes beyond 

consultation such as listening sessions, 

meetings with individual Tribes, and 

informal discussions with Tribal 

leaders. 

The Department is a co-plaintiff with 

Tribes in a number of environmental 

enforcement matters. In such cases, the 

co-plaintiff Tribe is an active participant 

in settlement negotiations and able to 

discuss SEPs as an element of relief for 

the claims the Tribe advances. 

As noted in DOJ’s previous response, 

see supra Part II.B.7.2, the Department 

recently addressed the need for 

meaningful engagement with impacted 

communities in its Comprehensive 

Environmental Justice Enforcement 

Strategy Memorandum. Consistent with 

the strategy, all parts of the Department 

shall consider appropriate outreach 

efforts to identify areas of 

environmental justice concern, 

including each U.S. Attorney’s Office in 

communities within its district. 

Designated environmental justice 

coordinators in each U.S. Attorney’s 

Office have been trained to serve as 

point people for community outreach. 

And cases initiated under the strategy 

will include the development of casespecific community outreach plan. In 

addition, the strategy requires certain 

Department components to consider 

how to: ‘‘(1) facilitate consideration of 

these unique [Tribal environmental 

justice] issues in cases brought pursuant 

to this Strategy; (2) identify 

opportunities to work with the 

governments of Federally recognized 

Tribes, including consortia of such 

Tribes; (3) work with other Federal 

agencies to coordinate investigative 

resources and enforcement authorities; 

and (4) recommend ways to address and 

incorporate Tribal concerns into the 

Department’s enforcement work.’’ 

Comprehensive Environmental Justice 

Enforcement Strategy Memorandum at 

3. 

The Department appreciates the 

commenter’s suggestions for Tribal setasides, whether in the context of 

mitigation or a third-party payment, 

depending on the particular case, and 

greater transparency regarding the 

impact of emissions on tribal 

communities. These comments are 

outside the scope of the IFR, and the 

Department does not address them 

further. 

7.4. Effectiveness of the 2015 SEP Policy 

Comment: One commenter asks DOJ 

and EPA to affirm that EPA’s 2015 SEP 

Policy remains in effect or to readopt it 

if does not. The commenter indicates 

that even if it was never withdrawn or 

replaced, having administrative 

procedural clarity would be beneficial. 

Response: Where DOJ is working with 

EPA as a client agency, the Department 

certainly discusses case resolution with 

it by reference to relevant EPA policy 

documents. Whether EPA continues to 

apply a particular policy, including its 

2015 SEP Policy, is within that agency’s 

purview and beyond the scope of this 

action. DOJ understands the 2015 policy 

to be in effect as reflected in several 

responses to comments and points 

commenters to EPA’s website, which 

itself cites the 2015 SEP Policy. See 

USEPA SEPs website. 

IV. Regulatory Certifications 

A. Administrative Procedure Act 

This rule relates to a matter of agency 

management or personnel and is a rule 

of agency organization, procedure, or 

practice. As such, this rule is exempt 

from the usual requirements of prior 

notice and comment and a 30-day delay 

in effective date. See 5 U.S.C. 553(a)(2), 

(b), and (d). The rule is effective upon 

signature. In its discretion, the 

Department sought post-promulgation 

public comment on the IFR and is 

responding to public comment. 

B. Regulatory Flexibility Act 

An analysis under the Regulatory 

Flexibility Act was not required for this 

rule because the Department was not 

required to publish a general notice of 

proposed rulemaking for this matter. 

See 5 U.S.C. 601(2), 604(a). 

C. Executive Orders 12866, 13563, and 

14094—Regulatory Review 

This rule has been drafted and 

reviewed in accordance with section 

1(b) of Executive Order 12866, 

‘‘Regulatory Planning and Review,’’ 

section 1(b) of Executive Order 13563, 

‘‘Improving Regulation and Regulatory 

Review,’’ and Executive Order 14094, 

‘‘Modernizing Regulatory Review.’’ 

This rule is ‘‘limited to agency 

organization, management, or personnel 

matters’’ and thus is not a ‘‘rule’’ for 

purposes of review by the Office of 

Management and Budget under section 

3(d)(3) of Executive Order 12866. 

Accordingly, this rule has not been 

reviewed by the Office of Management 

and Budget. 

D. Executive Order 12988—Civil Justice 

Reform 

This regulation meets the applicable 

standards set forth in sections 3(a) and 

3(b)(2) of Executive Order 12988, ‘‘Civil 

Justice Reform.’’ 


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97538 Federal Register / Vol. 89, No. 236 / Monday, December 9, 2024 / Rules and Regulations 

E. Executive Order 13132—Federalism 

This rule will not have substantial 

direct effects on the States, on the 

relationship between the National 

Government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government. It is a rule of 

internal agency practice and procedure. 

Therefore, in accordance with Executive 

Order 13132, ‘‘Federalism,’’ the 

Department has determined that this 

rule does not have sufficient federalism 

implications to warrant the preparation 

of a federalism summary impact 

statement. 

F. Unfunded Mandates Reform Act of 

1995 

This rule will not result in the 

expenditure by State, local, and Tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

(adjusted annually for inflation) in any 

one year, and it will not significantly or 

uniquely affect small governments. 

Therefore, no actions are necessary 

under the provisions of the Unfunded 

Mandates Reform Act of 1995, 2 U.S.C. 

1501 et seq. 

G. Congressional Review Act 

This rule is not a major rule as 

defined by the Congressional Review 

Act, 5 U.S.C. 804. This action pertains 

to agency management, personnel, and 

organization and does not substantially 

affect the rights or obligations of nonagency parties. Accordingly, it is not a 

‘‘rule’’ as that term is used in the 

Congressional Review Act, 5 U.S.C. 

804(3)(B), (C), and the reporting 

requirements of 5 U.S.C. 801 do not 

apply. 

H. Paperwork Reduction Act of 1995 

This final rule does not impose any 

new reporting or recordkeeping 

requirements under the Paperwork 

Reduction Act of 1995, 44 U.S.C. 3501– 

3521. 

List of Subjects in 28 CFR Part 50 

Administrative practice and 

procedure. 

Accordingly, for the reasons set forth 

in the preamble, the interim final rule 

amending 28 CFR part 50, which 

published at 87 FR 27936 on May 10, 

2022, is adopted as final without 

change. 

Dated: December 3, 2024. 

Merrick B. Garland, 

Attorney General. 

[FR Doc. 2024–28866 Filed 12–6–24; 8:45 am] 

BILLING CODE 4410–BB–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 100 

[Docket No. USCG–2024–0999] 

Special Local Regulations; Marine 

Events Within the Eleventh Coast 

Guard District 

AGENCY: Coast Guard, DHS. 

ACTION: Notification of enforcement of 

regulations. 

SUMMARY: The Coast Guard will enforce 

multiple special local regulations 

codified in federal regulations for 

recurring marine events taking place in 

December 2024 located in the Los 

Angeles Long Beach Captain of the Port 

Area. This action is necessary and 

intended to provide for the safety of life 

and property on navigable waterways 

during these events. During the 

enforcement periods, the operator of any 

vessel in the regulated area must 

comply with directions from the Patrol 

Commander or any official patrol vessel 

displaying a Coast Guard ensign. 

DATES: The Coast Guard will enforce the 

regulations listed in 33 CFR 100.1104, 

for the locations described in event 

entries (5) through (16) in Table 1 to 

§ 100.1104 during December 2024, 

according to the schedule listed in the 

SUPPLEMENTARY INFORMATION section of 

this document. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions about this 

notification of enforcement, call or 

email LCDR Kevin Kinsella, U.S. Coast 

Guard Sector Los Angeles—Long Beach; 

telephone (310) 521–3860, email D11- 

SMB-SectorLALB-WWM@uscg.mil. 

SUPPLEMENTARY INFORMATION: The Coast 

Guard will enforce multiple special 

local regulations for annual events in 

the Captain of the Port Los Angeles 

Long Beach Zone listed in 33 CFR 

100.1104 Table 1 to § 100.1104 for 

events occurring in the month of 

December as listed. 

1. Entry (5) Morro Bay Holiday Boat 

Parade (also known as (a.k.a.) Morro Bay 

Lighted Boat Parade). From 4 p.m. to 9 

p.m. on December 7, 2024. 

2. Entry (6) Santa Barbara Holiday 

Boat Parade (a.k.a. Santa Barbara 

Annual Boat Parade of Lights). From 

5:30 p.m. to 9 p.m. on December 8, 

2024. 

3. Entry (7) Ventura Harbor Holiday 

Boat Parade (a.k.a. Ventura Harbor 

Parade of Lights). From 6:30 p.m. to 8 

p.m. daily on December 13, 2024 and on 

December 14, 2024. 

4. Entry (8) Channel Islands Harbor 

Holiday Boat Parade (a.k.a. Channel 

Islands Harbor Parade of Lights). From 

7 p.m. to 9 p.m. on December 14, 2024. 

5. Entry (9) Marina del Rey Holiday 

Boat Parade. From 5:30 p.m. to 10 p.m. 

on December 14, 2024. 

6. Entry (10) King Harbor Holiday 

Boat Parade. From 4:30 p.m. to 10 p.m. 

on December 14, 2024. 

7. Entry (11) Port of Los Angeles 

Holiday Boat Parade (a.k.a. LA Harbor 

Holiday Afloat Parade). From 5:30 p.m. 

to 9:30 p.m. on December 7, 2024. 

8. Entry (12) Parade of 1,000 Lights 

(a.k.a. Shoreline Yacht Club Annual 

Christmas Boat Parade). From 5:30 p.m. 

to 7:30 p.m. on December 14, 2024. 

9. Entry (13) Naples Island Holiday 

Boat Parade (a.k.a. Naples Boat Parade). 

From 6:30 p.m. to 7:30 p.m. on 

December 21, 2024. 

10. Entry (14) Huntington Harbor 

Holiday Boat Parade (a.k.a. 62nd 

Annual Huntington Harbour Boat 

Parade). From 5 p.m. to 9 p.m. daily on 

December 14, 2024, and on December 

15, 2024. 

11. Entry (15) Newport Beach Holiday 

Boat Parade (a.k.a. 126th Annual 

Christmas Boat Parade). From 6:30 p.m. 

to 9 p.m. daily on December 18, 2024, 

and on December 22, 2024. 

12. Entry (16) Dana Point Holiday in 

the Harbor (a.k.a. 49th Annual Dana 

Point Harbor Boat Parade of Lights). 

From 6:30 p.m. to 8:30 p.m. daily on 

December 13, 2024, December 14, 2024, 

and December 15, 2024. 

Pursuant to 33 CFR 100.1104, all 

persons and vessels not registered with 

the sponsor as participants or as official 

patrol vessels are considered spectators. 

The ‘‘official patrol’’ consists of any 

Coast Guard; other Federal, state, or 

local law enforcement; and any public 

or sponsor-provided vessels assigned or 

approved by the cognizant Coast Guard 

Sector Commander to patrol each event. 

No spectator shall anchor, block, loiter, 

nor impede the through transit of 

participants or official patrol vessels in 

the regulated areas during all applicable 

effective dates and times unless cleared 

to do so by or through an official patrol 

vessel. When hailed and/or signaled by 

an official patrol vessel, any spectator 

located within a regulated area during 

all applicable effective dates and times 

shall come to an immediate stop. The 

Patrol Commander (PATCOM) is 

empowered to control the movement of 

all vessels in the regulated area or to 

restrict vessels from entering the 

regulated area. The Patrol Commander 

shall be designated by the cognizant 

Coast Guard Sector Commander; will be 

a U.S. Coast Guard commissioned 

officer, warrant officer, or petty officer 


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