Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, the Stop Settlement Slush Funds Act would prohibit the Federal Government from entering into or enforcing any settlement agreement requiring donations to remediate…
Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, the Stop Settlement Slush Funds Act would prohibit the Federal Government from entering into or enforcing any settlement agreement requiring donations to remediate harms that are not ``directly and proximately'' caused by a wrongdoer's unlawful conduct.
I, regretfully, oppose this measure for several reasons. To begin with, the bill would prohibit these types of settlement agreements even though they have been successfully used to remedy various harms, particularly those caused by reckless corporate actors.
For example, these settlement agreements helped facilitate an effective and comprehensive response to the predatory and fraudulent mortgage lending activities of financial institutions that nearly caused the economic collapse of our Nation, and that led to the Great Recession.
In fact, settlement agreements with two of these culpable financial institutions, Bank of America and Citigroup, required a donation of less than 1 percent of the overall settlement amount to fund foreclosure prevention and remediation programs to help harmed consumers.
Now, contrary to the majority's claim, the Justice Department did not use any of these settlement agreements to fund active groups. Notwithstanding the production of hundreds of pages of documents by the Justice Department, along with hundreds of pages of documents produced by private parties, we have not seen a shred of evidence that the government included unlawful or politically motivated terms in its settlement agreements with Bank of America or Citigroup.
The majority also asserts that these settlement agreements are used by the Justice Department and other agencies to circumvent the congressional appropriations process. But existing law already prevents agencies from augmenting their own funds.
By law, donations included in settlement agreements must have a clear nexus to the prosecutorial objectives of the enforcement agency. And both the Government Accountability Office and the Congressional Research Service have concluded that settlement agreements providing for secondary remediation do not violate Congress' constitutional power of the purse.
Finally, H.R. 732 would prevent the remediation of systemic harms in civil and criminal enforcement actions.
These settlement agreements allow parties to resolve their civil or criminal liability by voluntarily remediating the harms caused by their unlawful conduct. For some types of unlawful conduct, such as discrimination based on race or religion, secondary remediation of harms may be the only remedy available for systemic violations of the law.
The victims of such conduct are typically not themselves parties to the underlying action. Therefore, secondary remediation in the form of voluntary compliance and training programs serves as an important tool in these cases to protect victims of discrimination. Yet H.R. 732 would effectively prohibit such relief.
Given these serious problems and some others presented by the bill, I strongly am led to oppose H.R. 732.
Mr. Chairman, I reserve the balance of my time.
Mr. Chairman, I yield 5 minutes to the gentleman from Rhode Island (Mr. Cicilline), a distinguished member of the House Judiciary Committee, who is ranking member on the Subcommittee on Regulatory Reform, Commercial and Antitrust Law.
Mr. Chairman, I yield 30 seconds to the gentleman from Tennessee (Mr. Cohen).
Mr. Chairman, I yield the gentleman from Tennessee an additional 30 seconds.
Mr. Chairman, I yield 3 minutes to the gentleman from New York (Mr. Nadler), who is the ranking member on the Subcommittee on Courts, Intellectual Property, and the Internet.
Mr. Chairman, I yield 3 minutes to the distinguished gentleman from Georgia (Mr. Johnson), who is a member of the Judiciary Committee.
Mr. Chairman, I yield 30 seconds to the gentleman from Georgia (Mr. Johnson).
Mr. Chairman, I yield 3 minutes to the distinguished gentleman from New Jersey (Mr. Pascrell).
Mr. Chair, I yield an additional 30 seconds to the gentleman.
Mr. Chairman, I yield 3 minutes to the gentlewoman from Texas (Ms. Jackson Lee), the ranking member of the Crime, Terrorism, Homeland Security, and Investigations Subcommittee of the Judiciary Committee.
Mr. Chair, I yield an additional 20 seconds to the gentlewoman.
Mr. Chairman, I yield 2 minutes to the gentleman from New York (Mr. Meeks).
Mr. Chair, I yield an additional 1 minute to the gentleman.
Mr. Chairman, in closing, I note that a broad coalition of public interest organizations, including Public Citizen, Americans for Financial Reform, the National Urban League, among others, strongly oppose H.R. 732. They warn: ``This measure would undermine law enforcement goals by reducing the availability of suitable remedies to address these kind of injuries to the public caused by illegal conduct.''
This bill is, in effect, a gift to lawbreakers that comes at the expense of families and communities impacted by injuries that cannot be addressed by direct restitution, and so I have to ask: Why are we giving a gift to lawbreakers in the guise of H.R. 732?
If you value, as I do, upholding the rule of law, then you will join me and many others in opposing this seriously flawed measure.
I thank everyone who has participated in this discussion, and I yield back the balance of my time.
Mr. Chairman, I rise in opposition to the amendment.
Mr. Chair, Members of the House, this amendment makes a bad bill even worse. To begin with, it would prohibit cy-pres distributions pursuant to which parties attempt to find the next best use of funds that remain after a class action settlement has been finally administered. Cy-pres is especially important in actions where the recovery is so small for an individual class member that he or she may not bother to make a claim or where a distribution is not practical.
For example, courts under cy-pres may permit unclaimed settlement funds to provide indirect compensation to the class, such as future price reductions or remediation efforts. As a result of this amendment, however, the unclaimed settlement funds would be returned to the very entities that caused the injury in the first place. Simply put, this amendment would benefit the wrongdoers to the detriment of the victims they harmed.
In addition, this amendment would restrict the amount of compensation a victim could receive under a settlement agreement to the extent the victim was actually harmed by the wrongdoer. The amendment completely ignores the pragmatic realities of systemic harms, such as widespread long-term or latent environmental damage like lead-contaminated public water drinking systems--think of Flint, Michigan--where the extent of a victim's exposure to such harms may be difficult and, perhaps, even impossible to quantify.
In a letter opposed to this amendment, a group of public interest organizations, including Earthjustice, Public Citizen, Alliance for Justice, the Center for Justice & Democracy, and the American Association for Justice, said it is terrible public policy because wrongdoers would benefit from a windfall for cheating and harming consumers, undoing the accountability or deterrence function of the entire settlement. This is absolutely the wrong result, and so I urge that this amendment be rejected.
Mr. Chairman, I yield back the balance of my time.
Mr. Chair, I have an amendment at the desk.
Mr. Chairman, my amendment would exempt from H.R. 732 settlement agreements that direct funds to remediate the indirect but catastrophic effects of unlawful conduct resulting in lead contamination in public drinking water.
Lead contamination in public drinking water is potentially a national public health crisis as older cities continue to rely on aging lead pipes for the delivery of public drinking water.
A report from the American Water Works Association estimates that this problem could potentially affect millions of water service lines. For example, Highland Park, located in my district, has been dealing with issues resulting from aging lead pipes. Just last month, officials closed public water fountains and fixtures due to unsafe samples of lead in public drinking water.
The well-publicized Flint water crisis is another painful example of the disastrous consequences of lead contamination in public drinking water.
The director of the pediatric residents at Hurley Children's Hospital in Flint wrote: ``To understand the contamination of this city, think about drinking water through a straw coated in lead. As you sip, lead particles flake off into the water and are ingested. Flint's children have been drinking water through lead-coated straws.''
The Flint water crisis has generated numerous lawsuits by individuals, local and State agencies, and public interest organizations such as the Natural Resources Defense Council and the American Civil Liberties Union.
While these cases tend to involve numerous victims directly affected by unlawful conduct, they can also affect the interests of persons who are not parties to the case or are likely to receive compensation for unlawful conduct.
Given the systemic nature of lead contamination in drinking water, settlement agreements resolving civil and criminal liability related to the Flint water crisis may require setting aside funds for unidentifiable victims, directing payments to address generalized harm, or establishing an environmental compliance program to avoid lead contamination in the future.
Unfortunately, these entirely legitimate forms of indirect remediation of environmental harms would be prohibited by H.R. 732.
Mr. Chair, accordingly, I urge my colleagues to support the amendment, and I reserve the balance of my time.
Mr. Chairman, I yield the balance of my time to the gentleman from Michigan (Mr. Kildee).
Mr. Chair, I yield back the balance of my time.
Mr. Chair, I demand a recorded vote.
Mr. Speaker, I demand a recorded vote.