The U.S. Chamber of Commerce Institute for Legal Reform (ILR) submitted comments to the Department of Justice (DOJ) opposing the agency’s reversal of its prohibition on settlement agreements that direct funds to non-governmental third parties. ILR argues that allowing federal agencies to revive this practice undermines Congressional authority over federal spending and enables agencies to force defendants to fund advocacy groups favored by the administration, rather than compensating victims or taxpayers.
The document details the history and abuses of such settlement practices, citing investigations that revealed hundreds of millions of dollars were diverted to outside organizations through DOJ settlements. ILR highlights examples where settlement funds were used to support projects and groups aligned with political interests, bypassing Congressional oversight and appropriations. The comments emphasize that these practices have led to a lack of accountability and transparency, with agencies wielding significant discretion over the allocation of settlement money.
ILR calls for the DOJ to reinstate its prior policy prohibiting the diversion of settlement funds to non-governmental entities, arguing that the new guidelines are insufficient to prevent misuse and political favoritism. The organization contends that settlement funds should be used to compensate victims and taxpayers, not to subsidize programs chosen by federal officials, and warns that the current policy risks eroding public trust in the DOJ and the rule of law.
