I 

113TH CONGRESS 

2D SESSION H. R. 4324 

To require adequate information regarding the tax treatment of payments 

under settlement agreements entered into by Federal agencies, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 27, 2014 

Mr. CARTWRIGHT (for himself, Mr. NUGENT, Ms. LOFGREN, Mr. COLE, Mrs. 

LUMMIS, and Mr. ENYART) introduced the following bill; which was referred to the Committee on Oversight and Government Reform, and in 

addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such 

provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To require adequate information regarding the tax treatment 

of payments under settlement agreements entered into 

by Federal agencies, and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

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

5 Act of 2014’’. 


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

4 (a) REQUIREMENTS FOR SETTLEMENT AGREE5 MENTS.— 

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

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

8 following: 

9 ‘‘§ 307. Information regarding settlement agreements 

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

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

12 means a settlement agreement (including a consent 

13 decree) that— 

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

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

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

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

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

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

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


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

2 ‘‘(1) REQUIREMENT.— 

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

5 shall make publicly available in a searchable 

6 format in a prominent location on the Web site 

7 of the Executive agency— 

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

9 agreement entered into by the Executive 

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

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

15 ‘‘(II) the names of the parties 

16 that settled claims under the covered 

17 settlement agreement; 

18 ‘‘(III) a description of the claims 

19 each party settled under the covered 

20 settlement agreement; 

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

24 under the settlement agreement; 


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

3 under the settlement agreement; and 

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

5 amount the settling party is obligated 

6 to pay that has been designated as a 

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

9 covered settlement agreement; and 

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

11 agreement entered into by the Executive 

12 agency. 

13 ‘‘(B) CONFIDENTIALITY PROVISIONS.—The 

14 requirement to disclose information or a copy of 

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

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

20 portion thereof). 

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

22 agency shall ensure that— 

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

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


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

2 the covered settlement agreement; and 

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

5 is publicly available until— 

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

7 after the date of the covered settlement 

8 agreement; or 

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

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

12 at least the date that is 5 years after the 

13 date of the covered settlement agreement. 

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

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

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

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

21 States, which shall explain— 

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

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


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1 about the conduct of the Federal Government and 

2 the expenditure of Federal resources. 

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

6 non-Federal person under a covered settlement agreement 

7 shall— 

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

9 amount to be paid under the covered settlement 

10 agreement by a non-Federal person— 

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

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

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

15 purposes of the Internal Revenue Code of 1986; 

16 and 

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

19 agreement— 

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

21 Government or a State or local government; or 

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

23 ‘‘(e) REPORTING.— 

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

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


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1 entered into a covered settlement agreement during 

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

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

7 that fiscal year; 

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

10 that fiscal year had any terms or conditions 

11 that are required to be kept confidential; and 

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

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

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

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

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

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

25 end the following: 

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


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1 (b) SECURITIES REPORTING.— 

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

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

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

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

7 any claim filed for a deduction under the Internal 

8 Revenue Code of 1986 during the reporting period 

9 that relates to a payment required under a covered 

10 settlement agreement. 

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

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

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

18 added by subsection (a); and 

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

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

22 (c) REVIEW OF CONFIDENTIALITY OF SETTLEMENT

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

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

25 United States shall submit to Congress a report regarding 


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1 how Executive agencies (as defined under section 105 of 

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

3 of a settlement agreement or the existence of a settlement 

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

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

Æ 


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