A bill introduced Thursday in the U.S. House would bar federal officials from enforcing settlement agreements that direct payments to third parties, unless those payments directly remedy harm or pay for services in the case.
Rep. Lance Gooden (R-TX) is introducing the Stop Settlement Slush Funds Act, legislation designed to prohibit federal officials from directing payments from legal settlements to entities not directly harmed in a given case or not providing specific services within the litigation. According to the bill, any such payments must either serve as restitution for actual harm caused by the defendant or be compensation for services directly related to the case.
“We cannot allow judicial settlements to become a funding stream for left-wing activist groups waging war against the America First agenda,” Gooden told Breitbart News exclusively. “The Stop Settlement Slush Funds Act closes this loophole once and for all, restoring transparency, accountability, and integrity to the federal settlement process.”
The legislation codifies a prohibition enforced by Attorney General Pam Bondi as one of her first actions following confirmation, targeting what supporters describe as abuse of executive authority. One of the law’s key provisions bars any government official from entering into or enforcing a settlement agreement that requires a payment to a third party unless it directly remedies harm or pays for services rendered in the case. Violations of this provision would subject officials to the same penalties applicable under section 3302 of Title 31, United States Code.
The bill also institutes new reporting and oversight requirements. Each federal agency would be required to submit annual reports to the Congressional Budget Office for seven years, detailing settlement agreements that meet the narrow exceptions permitted under the law—specifically those involving restitution or service payments. Agencies would need to disclose the settlement parties, the sources of funds involved, and the method and purpose of fund distribution.
In addition, the bill mandates annual audits by agency inspectors general. These audits must be made publicly accessible and submitted to the Judiciary, Budget, and Appropriations Committees of both the House and Senate, reporting any agreements found in violation of the statute. No new appropriations are authorized for implementing these reporting requirements.
The legislation is backed by a coalition of Republican lawmakers, including Reps. Claudia Tenney (NY-22), David Rouzer (NC-07), Barry Moore (AL-01), Tom Tiffany (WI-07), Chip Roy (TX-21), Andy Ogles (TN-05), Gary Palmer (AL-06), Russell Fry (SC-07), and Addison McDowell (NC-06).
Examples cited in a one-pager supporting the bill illustrate how settlement agreements have been used in the past. Following the 2008 financial crisis, then-Attorney General Eric Holder entered into agreements with major banks that allowed them to receive double credit toward their settlement obligations for donations to groups including La Raza, the National Community Reinvestment Coalition, and the Neighborhood Assistance Corporation — characterized in the document as leftist activist groups. In a 2005 case, then-U.S. Attorney Chris Christie required a pharmaceutical company to donate to his law school alma mater to endow a chair in ethics. Another agreement required Gibson Guitar Corp. to contribute to the National Fish and Wildlife Foundation to resolve a criminal investigation.
“Settlement agreements should compensate harmed parties or return funds to the U.S. Treasury, not serve as a workaround to Congress’s constitutional power of the purse,” remarked Alexander Ciccone, the organization’s Policy and Government Affairs Manager. “The Stop Settlement Slush Funds Act ends a longstanding abuse of settlement authority that allows the Department of Justice to direct payments to third-party entities without proper congressional oversight.”
The bill previously passed the House in the 118th Congress and has now been reintroduced by Gooden in the 119th, aiming to renew legislative momentum for the measure.