    [House Hearing, 114 Congress]
    [From the U.S. Government Publishing Office]

                        OVERSIGHT OF THE JUDGEMENT FUND:
                      IRAN, BIG SETTLEMENTS, AND THE LACK
                                OF TRANSPARENCY

    =======================================================================

                                    HEARING

                                   BEFORE THE

                       SUBCOMMITTEE ON THE CONSTITUTION
                               AND CIVIL JUSTICE

                                     OF THE

                           COMMITTEE ON THE JUDICIARY
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                               SEPTEMBER 7, 2016

                                   __________

                               Serial No. 114-92

                                   __________

             Printed for the use of the Committee on the Judiciary

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Available via the World Wide Web: http://judiciary.house.gov
                                       ______

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                           COMMITTEE ON THE JUDICIARY

                       BOB GOODLATTE, Virginia, Chairman
    F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
        Wisconsin                        JERROLD NADLER, New York
    LAMAR S. SMITH, Texas                ZOE LOFGREN, California
    STEVE CHABOT, Ohio                   SHEILA JACKSON LEE, Texas
    DARRELL E. ISSA, California          STEVE COHEN, Tennessee
    J. RANDY FORBES, Virginia            HENRY C. ``HANK'' JOHNSON, Jr.,
    STEVE KING, Iowa                       Georgia
    TRENT FRANKS, Arizona                PEDRO R. PIERLUISI, Puerto Rico
    LOUIE GOHMERT, Texas                 JUDY CHU, California
    JIM JORDAN, Ohio                     TED DEUTCH, Florida
    TED POE, Texas                       LUIS V. GUTIERREZ, Illinois
    JASON CHAFFETZ, Utah                 KAREN BASS, California
    TOM MARINO, Pennsylvania             CEDRIC RICHMOND, Louisiana
    TREY GOWDY, South Carolina           SUZAN DelBENE, Washington
    RAUL LABRADOR, Idaho                 HAKEEM JEFFRIES, New York
    BLAKE FARENTHOLD, Texas              DAVID N. CICILLINE, Rhode Island
    DOUG COLLINS, Georgia                SCOTT PETERS, California
    RON DeSANTIS, Florida
    MIMI WALTERS, California
    KEN BUCK, Colorado
    JOHN RATCLIFFE, Texas
    DAVE TROTT, Michigan
    MIKE BISHOP, Michigan

               Shelley Husband, Chief of Staff & General Counsel
            Perry Apelbaum, Minority Staff Director & Chief Counsel
                                     ------

               Subcommittee on the Constitution and Civil Justice

                        TRENT FRANKS, Arizona, Chairman

                      RON DeSANTIS, Florida, Vice-Chairman

    STEVE KING, Iowa                     STEVE COHEN, Tennessee
    LOUIE GOHMERT, Texas                 JERROLD NADLER, New York
    JIM JORDAN, Ohio                     TED DEUTCH, Florida

                         Paul B. Taylor, Chief Counsel

                        James J. Park, Minority Counsel

                                C O N T E N T S

                                  ----------

                               SEPTEMBER 7, 2016

                                                                       Page

                               OPENING STATEMENTS

    The Honorable Trent Franks, a Representative in Congress from the
      State of Arizona, and Chairman, Subcommittee on the
      Constitution and Civil Justice.................................     1
    The Honorable Steve Cohen, a Representative in Congress from the
      State of Tennessee, and Ranking Member, Subcommittee on the
      Constitution and Civil Justice.................................     3
    The Honorable John Conyers, Jr., a Representative in Congress
      from the State of Michigan, and Ranking Member, Committee on
      the Judiciary..................................................     4
    The Honorable Bob Goodlatte, a Representative in Congress from
      the State of Virginia, and Chairman, Committee on the Judiciary    45

                                   WITNESSES

    Paul F. Figley, Professor, Associate Director of Legal Rhetoric,
      Washington College of Law--American University
      Oral Testimony.................................................     6
      Prepared Statement.............................................     8
    Jeffrey Axelrad, Professor, Professional Lecturer in Law, The
      George Washington University Law School
      Oral Testimony.................................................    32
      Prepared Statement.............................................    34
    Neil Kinkopf, Professor of Law, Georgia State University College
      of Law
      Oral Testimony.................................................    37
      Prepared Statement.............................................    39

              LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

    Prepared Statement of the Honorable Chris Stewart, a
      Representative in Congress from the State of Utah..............    46

                                    APPENDIX
                   Material Submitted for the Hearing Record

    Response to Questions for the Record from Paul F. Figley,
      Professor, Associate Director of Legal Rhetoric, Washington
      College of Law--American University............................    54

    OVERSIGHT OF THE JUDGEMENT FUND: IRAN, BIG SETTLEMENTS, AND THE LACK OF
                                  TRANSPARENCY

                                  ----------

                          WEDNESDAY, SEPTEMBER 7, 2016

                            House of Representatives

                       Subcommittee on the Constitution
                               and Civil Justice

                           Committee on the Judiciary

                                Washington, DC.

        The Subcommittee met, pursuant to call, at 10:30 a.m., in
    room 2237, Rayburn House Office Building, the Honorable Trent
    Franks, (Chairman of the Subcommittee) presiding.
        Present: Representatives Franks, Goodlatte, King, Cohen,
    Conyers, Jackson Lee.
        Staff Present: (Majority) John Coleman, Counsel; Jake
    Glancy, Clerk; (Minority) Perry Apelbaum, Staff Director &
    Chief Counsel; James J. Park, Chief Counsel; Susan Jensen,
    Senior Counsel; Veronica Eligan, Professional Staff Member; and
    Matthew Morgan, Professional Staff Member.
        Mr. Franks. Hearing will come to order. Welcome to all of
    you. I will now recognize myself for an opening statement. Our
    Nation's founding generation understood that the establishing
    popular control over government finance would provide an
    essential check on the executive branch. The tyrannical
    assertion of authority by the British Crown, as detailed in our
    Declaration of Independence, no doubt fostered this trust of
    unelected officials who were not directly accountable to the
    people.
        In order that the purse strings stay close to the people,
    Article I, section 9, clause 7 of the United States
    Constitution provides that, ``No money shall be drawn from the
    treasury but in consequence of appropriations made by law, and
    a regular statement and account of the receipts and
    expenditures of all public money shall be published from time
    to time.''
        History shows that there was once a time that Congress took
    seriously its role as guardian of the public Treasury and
    developed an organized method of raising revenue, appropriating
    that money for specific use, and accounting for the propriety
    and legality of its use.
        Nevertheless, Congress has now ceded so much of its fiscal
    control to the executive branch. Early this year, Matthew
    Spalding of Hillsdale College testified before the House Budget
    Committee at a hearing titled, ``Reclaiming Congressional
    Authority through the Power of the Purse.''
        In his written testimony he stated, ``Congress must hold
    the power of the purse not because it is necessarily better at
    exercising it than the President is--though it well may be--but
    because it has been given this particular power as a check on
    the executive. Even more important, Congress has an obligation
    to jealously maintain control of the nation's purse because it
    is the guardian of the public treasure, and so the public
    good.'' Today's hearing is about the Judgment Fund, which is a
    permanent, indefinite appropriation to pay judgment awards
    against the United States, as well as settlement negotiated by
    the Department of Justice.
        This fund, which is administrated by the Bureau of Fiscal
    Service at the Department of Treasury, is indefinite because it
    sets aside an unlimited amount of money to pay judgments
    against the United States. It is permanent because Congress is
    not required to appropriate money to fund its use each year.
        Indeed, the Judgment Fund's legislative history indicates
    that its purpose was to reduce the workload of Congress. For
    most payments, the Judgment Fund is an efficient means to
    ensure timely redress for those with legitimate claims against
    the United States. Yet, in cases settled under questionable
    circumstances in which it is not clear that the claim would
    have resulted in a monetary judgment in court, there is clear
    need for transparency. When the public wants information,
    including Congress, that information should be easily
    accessible.
        Now while the U.S. Department of Treasury provides an
    outline database for the ``purpose of tracking the status of
    approved Judgment Fund payments,'' it is difficult to search.
    The fields are incomplete, and it provides little information
    useful to the general public. The Treasury Department, at the
    request of the House of Representatives and the Senate
    Appropriations Committee, also submits an annual report to
    Congress, but it, likewise, provides completely inadequate
    information to easily identify a payment or to sufficiently
    provide for context for the payments listed.
        More recently, the public has sought information regarding
    a $1.7 billion settlement payment to the Islamic Republic of
    Iran related to the sale of military equipment, equipment
    stemming back to before the 1979 Iranian Revolution; $1.4
    billion was purportedly paid from the Judgment Fund as an
    interest on the principal amount.
        I find the entire situation stunning, and I would like to
    submit for the record an August 27, 2016 article written by
    Andrew McCarthy that was published by the National Review. In
    this article, Mr. McCarthy details that an astonishing lack of
    information available to the public regarding this payment. My
    hope is that today's hearing will bring some desperately needed
    transparency related to this matter. The Judgment Fund as a
    general issue, and what more may be done to reassert the
    appropriate and constitutional Congressional authority over the
    Nation's purse strings, and I want to thank the witnesses again
    for being here today, and I look forward to their testimony,
    and I now yield to the Ranking Member for an opening statement.
        Mr. Cohen. Thank you, Mr. Chair. We are back. That should
    be good: people's representatives in Washington. It is not
    necessarily good, though, because this Committee is the
    Subommittee on the Constitution. And I was so proud to be a
    Member of the Judiciary Committee when I was elected to
    Congress that I asked; it was my first choice to be on the
    Judiciary Committee: so important, fundamental, Constitution
    law, guaranteed rights.
        And here we are in an election year and this Committee has
    not had one single hearing on the Voting Rights Act, maybe as
    important of a law as exists to give people the most
    fundamental right: the right to vote, to have a say in who they
    elect.
        That is what America is about. You go around the country,
    and what do people talk about? America, civil justice system,
    the rule of law, and people getting democracy and the right to
    vote. And this Committee has not had one hearing on the Voting
    Rights Act that the Supreme Court ruled unconstitutional, which
    means we need to come back and do something about it, which Jim
    Sensenbrenner well knows and a few other republicans. Not many.
    Not many.
        At one point, to be on the bill to reestablish a Voting
    Rights Act, the Democrats wanted you to get a Republican for
    you to get on, so it would not be imbalanced, so I went on the
    floor to people I knew and people I thought might be okay and
    people I worked with, gone on CODELs with, and thought might
    have some interest to find Republican Members, so I could be on
    the bill. I might as well have gone to the South Indian Ocean
    and tried to find that airplane. It would have been easier than
    to find a Republican who was willing to put his name on a
    Voting Rights Act.
        That is what this Committee should be dealing with, is
    extending the opportunity for people to vote, and when the
    Supreme Court struck down the Voting Rights Act it said that
    the States that were suspect needed pre-clearance. Times have
    changed.
        Well, times have changed in a way, indeed, and they were
    not all in the solid south from going around the Carolinas and
    Georgia and Alabama and Mississippi and Louisiana and Texas.
    There were a few places in the rest of the country, so times
    change because some of the rest of the country got to be bad,
    too. But those are the primary states that have done things to
    jeopardize people's right to vote, so the courts have had to
    say, ``North Carolina, your law is not good. You are going to
    have to go change it.'' They also did one in the Midwest. I
    think it might have been Wisconsin, but anyway.
        That is what we ought to be doing, and some policeman are
    shooting people without due process. They are not resorting to
    the use of deadly force before using all other reasonable means
    of apprehension.
        And so the police do a lot of good work. The police are
    essential to government and an ordered society and liberty and
    freedom and all that stuff. But there has been a whole lot of
    African American folks killed and videoed, and it is no
    coincidence that they have not had videos around to see White
    people get killed because it is not happening. It is Black
    people getting killed, and that is a deprivation under color of
    law. And have we had one hearing about that? No, but we are
    here on some law passed when Ike was President, when
    republicans were republicans: 1950's. We got our priorities all
    messed up.
        We ought to be dealing with voting rights and due process
    and death, and that is what we ought to be instead of trying to
    pick a partisan fight with the Administration over bringing
    some people home from Iran and giving them back the money they
    gave us in the 1970's to buy weapons they never got and less
    interest than they desired because we negotiated a good deal on
    the interest. Lucky we had that opportunity to bring those guys
    home. I commend the Administration for what it did to bring
    those people home, including the reporter; he got a lot of
    attention, but there were other Americans whose lives were just
    as valuable.
        So I wish, Mr. Chairman, we would have hearings on the
    Voting Rights Act, on police shootings, on deadly force, on due
    process, and on the rights and the fundamentals that makes this
    Committee the Committee that it is and not go off on obscure
    topics to find ways to try to politicize the Administration and
    the election, and with that, I yield back the balance of my
    time.
        Mr. Franks. I thank the gentlemen, and the Chair now
    recognizes the full Judiciary Committee Ranking Member, Mr.
    Conyers of Michigan for his opening statement.
        Mr. Conyers. Thank you, Mr. Chairman. I begin by welcoming
    three professors: Professor Figley, Professor Kinkopf, and
    Professor Axelrad to our discussion this morning. I also
    commend our Ranking Subcommittee Member for his insight on
    directions that we might otherwise attend to in the course of
    this session.
        Now, the purpose of the hearing today is to examine the
    Judgment Fund of the Treasury Department created in 1956 to
    reduce its appropriations workload, and prior to establishing
    the fund, Congress devoted an inordinate amount of its time
    appropriating monies to satisfy run-of-the-mill, I would call
    them, legal judgments and settlements on a case-by-case basis.
        Today, the Fund permits agencies to obtain payment for
    legal judgments and settlements without having to request
    appropriations from Congress under limited, statutorily-
    prescribed circumstances. Unfortunately, some on the Committee
    are more interested in criticizing the Administration's recent
    settlement of longstanding claims with Iran than in conducting
    an oversight of the fund.
        To begin with, it was legally permissible for the State
    Department to request that the payments come from the Judgment
    Fund. The payment settled a longstanding claim made before the
    U.S.-Iran Claims Tribunal that related to a curtailed arms deal
    between the United States and the prerevolutionary government
    of Iran.
        The tribunal was created to hear claims between our country
    and the Iranian nationals and their respective governments that
    arose as a result of the deterioration in relations following
    the Iranian Revolution. In order to avoid an adverse judgment
    before the tribunal, the State Department negotiated a $1.7
    billion deal to settle the claim, of which $1.3 billion in
    interest payments came from the Judgment Fund itself.
        As Professor Figley points out in his testimony, this is
    legally permissible, and past Administrations going back
    decades have used the fund to settle claims with Iran. In
    addition to being perfectly legal, the Iran settlement saved
    taxpayers billions of dollars. According to the State
    Department, negotiators determined that the United States could
    have possibly owed Iran billions more for over 30 years worth
    of interest on the $400 million principal had the claim been
    adjudicated before the tribunal.
        Rather than demonstrate that the Judgment Fund may
    encourage executive branch officials to negotiate profligate
    settlements, the Iran payments instead show that the State
    Department was acting to protect United States' financial
    interest.
        And so finally, in terms of transparency, I note that the
    payments were disclosed to the public at the time that they
    were made, which was in January of this year, announced by the
    Obama administration itself.
        So while much has been made of the timing of the payments
    in relations to Iran's release of American prisoners, it is
    undisputed that the Administration made no effort to hide these
    payments or that separate, unrelated teams carried out the
    negotiations for the settlement and the prisoner release.
    Although few would oppose greater transparency for government
    actions, the majority's examples of purported executive branch
    overreach, and that is not all of the majority, but those that
    have in settlement negotiations fail to show that the
    Administration has misused the Judgment Fund.
        And so I look forward to the examinations and contributions
    of our witnesses we welcome here today, and I thank the
    Chairman.
        Mr. Franks. And I thank the gentleman, and without
    objection, other Members' opening statements will be made part
    of the record.
        So now, let me please introduce our witnesses. Our first
    witness is Professor Paul Figley. Professor Figley teaches
    torts and legal rhetoric at American University's Washington
    College of Law. Welcome, professor.
        Our second witness is Professor Neil Kinkopf. Professor
    Kinkopf teaches constitutional law, legislation, and civil
    procedure at Georgia State University College of Law. And
    welcome to you, professor.
        Our third and final witness is Professor Jeffrey Axelrad.
    Professor Axelrad is an adjunct professor at George Washington
    University Law School. And welcome to you, sir.
        Each of the witnesses' written statements will be entered
    into the record in its entirety. I ask that each witness
    summarize his or her testimony in 5 minutes or less. To help
    you stay within that time, there is a timing light in front of
    you. The light will switch from green to yellow, indicating
    that you have 1 minute to conclude your testimony. When the
    light turns red, it indicates that the witness' 5 minutes have
    expired.
        Before I recognize the witnesses, it is the tradition of
    the Committee that they be sworn, so if you would please stand
    and be sworn.
        Do you swear the testimony you are about to give before
    this Committee is the truth, the whole truth, and nothing but
    the truth so help you God? You may be seated. Let the record
    reflect that all the witnesses responded in the affirmative.
        So I now recognize our first witnesses, Professor Figley,
    and if you would please turn on your microphone, sir, before
    beginning.

     TESTIMONY OF PAUL F. FIGLEY, PROFESSOR, ASSOCIATE DIRECTOR OF
     LEGAL RHETORIC, WASHINGTON COLLEGE OF LAW--AMERICAN UNIVERSITY

        Mr. Figley. Thank you, Mr. Chairman. The proposals before
    the Committee today are nonpartisan. They are grounded in our
    constitutional system of checks and balances. The Founders,
    following the English model, assigned the power of the purse to
    the legislative branch. With regard to paying judgments and
    settlements, Congress has made decisions over the course of
    decades that, in their cumulative effect, have resulted in a
    significant transfer of power from Congress to the executive.
        While this transfer was neither foreseen nor intended it is
    real. At this point, Congress has ceded almost all authority
    over the payments of judgments and settlements and greatly
    reduced its ability to track those settlements. Many of those
    decisions made sense at the time.
        Prior to the emergence of the Internet, Congress withdrew
    requirements and reports about payments and judgments about
    settlements to reduce the paperwork that was then inaccessible
    for most purposes. Because there are no requirements for
    publication of those payments now, tracking payments to
    particular recipients, events, or attorneys is unduly
    complicated.
        Databases on Treasury Department websites are posted on a
    voluntary basis and exclude the names of recipients and
    individual attorneys. The lack of mandatory publication of
    Judgment Fund payments obscures any public accounting of those
    payments. For example, it masked the payment of $1.3 billion to
    Iran last January. It also undermines the Administration's Open
    Government Directive that calls for proactive dissemination of
    useful information ``online in an open format that can be
    retrieved, downloaded, indexed, and searched.''
        These problems would be solved by enactment of H.R. 1669.
    Congress, through the Judgment Fund statute, has granted
    authority to the executive to pay judgments and settlements.
    Congress had largely controlled such payments until 1956 when
    the Judgment Fund, with a cap of $100,000, was enacted.
        Since 1977, there has been no limit on the size of Judgment
    Fund payments. The Judgment Fund was created for the simple
    task of paying judgments and settlements of claims against the
    United States. While it provided for the executive branch to
    make those payments without Congressional approval, it was
    never intended to bypass Congress' authority to decide whether
    to fund programs or policy initiatives, but it has demonstrably
    been used in that way.
        The Judgment Fund as it now stands undermines Congress'
    power of the purse by providing an unlimited, unreviewable
    source of funds for some executive branch initiatives.
        Republican and Democratic Presidents used it to further
    foreign policy goals by settling claims assorted by other
    countries. The Obama administration used it to quietly pay $1.3
    billion to Iran to settle a class action suit for much more
    money than necessary and to fund a new claims program it
    created without Congressional approval or judicial supervision.
    But for the open-ended nature of the Judgment Fund, those
    Presidents would have had to seek money from Congress for their
    initiatives.
        Congress, in the exercise of its power of appropriation,
    could have then chosen to provide the funding or not. As James
    Madison explained in Federalist No. 58, ``the House of
    Representatives cannot only refuse, but they alone can propose
    the supplies requisite for support of government. They, in a
    word, hold the purse.'' Congress can and should restore its
    authority to decide whether to approve huge payments to foreign
    countries, to establish generous compensation programs, or to
    fund other initiatives suggested by the executives that are
    somehow connected to some claim against the government. It can
    do so by placing limits on the size of payments that can be
    made from the Judgment Fund. Thank you.
        [The prepared statement of Mr. Figley follows:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                   __________

        Mr. Franks. Thank you, professor. And I now recognize, as
    our second witness, Professor Axelrad. Sir, please turn on that
    microphone before speaking.

             TESTIMONY OF NEIL KINKOPF, PROFESSOR OF LAW,
                GEORGIA STATE UNIVERSITY COLLEGE OF LAW

        Mr. Kinkopf. Thank you, Mr. Chairman and Members of the
    Committee. It is a real honor to appear before you today. On
    July 3, 1988, the U.S.S. Vincennes was patrolling the Straits
    of Hormuz in the Persian Gulf. It identified an incoming
    aircraft as a hostile F14 fighter. It made 10 attempts to make
    contact with that fighter jet to establish its identity. None
    of those contacts was responded to, so the Vincennes shot the
    plane down.
        It turns out it misidentified the plane. It was not an F14
    fighter jet. It was Iran Air flight 655, a flight following its
    regular route from Tehran to Dubai. All 290 passengers aboard
    the plane were killed. The Reagan administration and following
    Bush administration dealt with the aftermath of this mistake.
    They settled claims filed by the Islamic Republic of Iran in
    the International Court of Justice ex gratia. Ex gratia means
    without admitting any liability.
        And in fact, there were very strong defenses. After all, we
    tried 10 times to contact the plane, and it never responded.
    So, without admitting liability, the United States determined
    to make a payment to Iran out of the Judgment Fund for
    humanitarian purposes, and that was the expressed purpose of
    the payment, not to settle a valid legal claim, but for
    humanitarian purposes that would promote our foreign policy
    interests.
        I raise this not because I want to engage in some kind of
    tit-for-tat or say, ``Well, Republicans do this; Democrats do
    this.'' That is not my point. My point is that this illustrates
    just how broad the Judgment Fund's legal authority is and how
    it has always been understood over the span of decades by
    Administrations from both political parties.
        Moreover, during that span, Congress has amended the
    Judgment Fund on numerous occasions, and in none of those
    amendments has it indicated a contrary view of the power
    granted by the Judgment Fund. Everything that the Obama
    administration has done is well within not only the letter of
    the Judgment Fund law, but within the spirit of that law.
    Paying a valid discrimination claim when the United States has
    admitted that, for decades on end, it discriminated on account
    of race against Native American, Hispanic, and female, and
    African American farmers and ranchers is not an abuse of the
    Judgment Fund. All right?
        The United States has admitted liability in those cases and
    compensating victims of that kind of constitutional deprivation
    is a valid function of the Judgment Fund. In fact, it is why it
    is there. So, the Obama administration has not acted in any way
    contrary to the letter or the spirit of the law. Now, Professor
    Figley has raised, I think, very important transparency issues
    with respect to the Judgment Fund.
        I think those issues should be addressed, and I think the
    legislation pending before this Committee with respect to the
    disclosure provisions would be salutary, would help the public
    to understand how the Judgment Fund is being used, and could
    provide a deterrent against abuse that might take place at some
    point in the future. Thank you.
        [The prepared statement of Mr. Kinkopf follows:]

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                                   __________

        Mr. Franks. Thank you, Professor. I will take a moment here
    to apologize for mis-introducing you. We had these turned
    around up here, and Professor Axelrad, the apology goes to you
    because I introduced you, and the other gentleman was in line
    to speak, so I apologize to both of you. But, Professor
    Axelrad.

    TESTIMONY OF JEFFREY AXELRAD, PROFESSOR, PROFESSIONAL LECTURER
          IN LAW, THE GEORGE WASHINGTON UNIVERSITY LAW SCHOOL

        Mr. Axelrad. Thank you for providing this opportunity to
    share my views on the Judgment Fund and on H.R. 1669. H.R. 1669
    proposes needed amendments to provisions the Judgment Fund
    statute. My testimony is based on the basic principles and
    legislative history of statutory provisions applicable to
    payment of judgments and settlements that are outlined in
    Professor Figley's statement.
        H.R. 1669 seeks to provide transparency when the Judgment
    Fund is the means of transferring funds from the public
    treasury to claimants and litigants with the exception of one
    provision, which I will discuss. Transparency of the bill is a
    sensible, modest requirement and furthers the public interest
    in learning who is receiving the payments.
        Moreover, it is appropriate that Congress reclaim its role
    in appropriating funds in each instance when the largest
    payments are made. I also suggest one provision of H.R. 1669 be
    deleted because the provisions value is less than the
    unintended consequences.
        The unintended consequences are predictable, significant
    confusion and diversion time and effort of government
    personnel. The Judgment Fund does have specific limits on its
    availability. An indispensable condition is the judgment or
    settlement be payable under certain sections of the United
    States Code. The Attorney General is charged with implementing
    the most significant of these statutory keys to the Judgment
    Fund.
        The usual key for payment of non-contractual disputes is 28
    U.S.C. section 2414, which gives the key to the Attorney
    General. This provision imposes a high and important
    responsibilities on the Attorney General. Most agencies do not
    have a direct fiscal incentive to guard against excessive
    payments from the Judgment Fund and that payments from the
    Judgment Fund do not reduce agency appropriations available for
    their programs.
        It is the Attorney General's special duty to guard against
    unauthorized or excessive payments. Incentive to yield to their
    perceived special need du jour is all too evident. It is to the
    Justice Department that the unpopular, hard task of guarding
    the Judgment Fund against abuse falls. Eternal vigilance and
    reason careful analysis must be the hallmark of the Justice
    Department's exercise of this responsibility.
        The revisions of H.R. 1669 and Professor Figley's proposed
    changes to H.R. 1669 further these vital functions and likely
    will enhance the ability of the Justice Department to stand
    firm against abuse of the Judgment Fund unless it is
    particularly clear that a payment is authorized.
        For the most part, the requirements of H.R. 1669 are
    straightforward. One proposed requirement should be removed.
    That requirement is the bill's provision to create and make
    public a brief description of the facts that gave rise to the
    claim. Many payments are made when the facts giving rise to the
    claim are disputed. The exercise of stating facts will slow
    down the process of seeking payment for all claims.
        The delay will be due not only to the additional burdens,
    but to efforts to avoid criticisms when the facts are
    debatable, as is often the situation of ordinary claims and
    litigation. Consideration of how to phrase the facts that gave
    rise to the claim would save a more than trivial amount of
    agency time and resources, which, in my view, can be devoted to
    more worthwhile activities.
        H.R. 1669 serves the goal of transparency in the
    expenditure of public funds by providing basic information on
    who receives the funds when the funds are paid pursuant to a
    settlement or a judgment. If the one subsection I have
    discussed is removed H.R. 1669 can achieve a salutatory outcome
    without significant cost. I would be happy to answer any
    questions.
        [The prepared statement of Mr. Axelrad follows:]

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                                   __________

        Mr. Franks. I now recognize the Chairman of the full
    Committee, Mr. Goodlatte, for a statement.
        Mr. Goodlatte. Thank you very much, Mr. Chairman. James
    Madison, in the Federalist No. 58 stated, ``The House of
    Representatives cannot only refuse, but they alone can propose
    the supplies requisite for the support of government. They, in
    a word, hold the purse, that powerful instrument by which we
    behold in the history of the British Constitution, an infant
    and humble representation of the people gradually enlarging the
    sphere of its activity and importance and finally reducing as
    far as it seems to have wished all of the overgrown
    prerogatives of the other branches of the government.
        This power of the purse may in fact be regarded as the most
    complete and effectual weapon with which any constitution can
    arm the immediate representatives of the people for obtaining a
    redress of every grievance and for carrying into effect every
    just and salutatory measure.''
        Today, we examine the effects that occur when this power is
    usurped by the executive branch. Indeed, in its current form,
    the Judgment Fund allows the executive branch to pilfer
    taxpayer dollars to fund its overgrown prerogatives, without
    requiring any Congressional action.
        Congress must check these abuses by conducting rigorous
    oversight and determining whether additional legislation is
    required to curb abuses of the Judgment Fund. In recent years,
    however, it has become apparent that little information is
    known about individual payments from the Judgment Fund,
    particularly with regard to the payment of settlements.
    Searches for individual payments from the Judgment Fund in a
    database maintained by the Treasury Department reveals little
    about the underlying facts, how the funds were uses, and even
    who received them. In a system of government in which Congress
    is accountable for the way in which taxpayer dollars are spent,
    this is unacceptable.
        I look forward to the witnesses' testimony today and to
    their recommendations regarding how Congress, the immediate
    representatives of people, can improve its oversight of this
    permanent, indefinite appropriation as well as improve
    transparency for the public. And I look forward to the
    questions, which will now ensue, with regard to that testimony.
    Thank you.
        Mr. Franks. And I thank the Chairman. And before I begin my
    question time here, I would like to first ask for unanimous
    consent to submit for the record a statement by Representative
    Chris Stewart of Utah, who is sponsor of H.R. 1669, the
    ``Judgment Fund Transparency Act of 2015.''
        I want to thank Mr. Stewart for his leadership on this
    issue and for his submission to this Committee. And without
    objection, it will be entered into the record.
        [The prepared statement of Mr. Stewart follows:]
              Prepared Statement of the Honorable Chris Stewart,
              a Representative in Congress from the State of Utah
        Thank you Mr. Chairman for allowing me to include this written
    statement for today's important oversight hearing of the Judgment Fund.
        The Judgment Fund is the mechanism that Congress established in
    1956 to pay settlements and judgments issued against the United States.
    It is a ``permanent, indefinite appropriation'' that is available to
    make payments without any review from Congress. By now we're all
    familiar with the Administration's decision to take $1.3 billion out of
    the fund, convert it to cash, and deliver it to Iran. Yet this isn't
    the only recent egregious use of the fund. Three years ago, the New
    York Times reported on what was likely an illegal billion dollar payout
    to thousands minority farmers who never even sued the government.
        The Treasury Department files a yearly report on the Judgment Fund
    with Congress and also maintains a webpage that can be searched.
    However, the cryptic and otherwise limited information related to each
    payout has made the database almost entirely useless. There is no
    information on what the government did wrong nor is there information
    on who benefited from a payout. Journalists and transparency groups
    revealed last month that between 2009-2015, the Federal Government paid
    over $25 million out of the Judgment Fund to ``unnamed'' or
    ``redacted'' recipients. It is unacceptable to leave the American
    people in the dark about how so much of their money is being spent.
        To address the shortcomings of the current Fund, I've sponsored
    legislation, H.R. 1669. This legislation will require Treasury to make
    public any payment from the judgment fund and include: The name of the
    agency named in the judgment; the name of the plaintiff or claimant;
    the amount paid in principal liability and any ancillary liability such
    as attorney fees, and interest; and a brief description of the facts
    which led to the claim.
        This bill is especially urgent given the Administration's brazen
    dishonesty with the American people about the circumstances behind the
    payment of $400 million worth of foreign currency to the Iranian
    regime. Not only has the President emboldened our enemy and provided
    cash to them despite the fact that they are determined to kill
    Americans and attack our country and allies, but he hid his actions
    from the American people. It took months for the Administration to
    admit the payment was ``leverage'' for the release of Americans held
    hostage. And yet even now, the Judgement Fund's website does not list
    the payment of this ransom to Iran.
        The Judgment Fund Transparency Act may not prevent bad decisions,
    but it will help expose those decisions to the American people. I hope
    that though this hearing, the Committee will be informed on how to
    improve this process and make the Judgment Fund a tool for the American
    public to understand the decisions made by their government. I urge the
    committee to pass this bill and send it to the floor.
                                   __________

        Mr. Franks. I will now proceed under the 5-minute rule of
    questions, and I begin by recognizing myself for 5 minutes.
        Professor Figley, if I can, I will begin with you, sir. I
    would like to share a portion of the investigative journal
    Claudia Rossett's review in the New York Sun in which she
    reported that the sum of $1.3 billion in interest paid by the
    United States to the Islamic Republic of Iran was not clearly
    identified on the Department of Treasury's website.
        ``The 13 payments that may explain what happened are found
    in an outline database maintained by the Judgment Fund. A
    search for Iran, since the beginning of this year, turns up
    nothing, but a search for claims in which the defendant is the
    State Department turns up 13 payments for $99,999,999.99.''
        Boy, you might be able to round that up pretty easily.
    ``They were all made on the same day, all sharing the same file
    and control reference numbers, all certified by the U.S.
    Attorney General, but each assigned a different identification
    number. They add up to $1,299,999,999.87 or 13 cents less than
    the $1.3 billion Misters Obama and Kerry announced in January.
        Together with a 14th payment of just over $10 million, the
    grand total paid out of Treasury from the Judgment Fund on that
    single day, January 19th, for claims pertaining to the State
    Department comes to roughly $1.31 billion. Treasury has
    provided no answers to my queries or anyone else's about
    whether these specific payments were made for the Iran
    settlement, nor why these transfers comprised 13 payments, each
    of which was 1 cent under $100 million, nor whether the $10
    million related to the same matter.
        So, professor, Ms. Rossett's digging only turned up more
    questions really. And it is clear that the public has a right
    to know how its taxpayer dollars are being spent. And while the
    same information is publicly available on the Treasury
    Department's website, it lacks sufficient detail to identify
    specific claims. What information, in your opinion, should be
    provided so that every American, if they so wish, can find out
    about specific payments from the Judgment Fund?
        Mr. Figley. If the Treasury Department Judgment Fund search
    database had columns for recipient and attorney, then we would
    have a lot more information than we have now. When I say that
    the Judgment Fund masked the payment of the $1.3 billion, it
    did so by allowing the payment to be made without identifying
    who the money went to.
        Mr. Franks. All right. Thank you, professor. So, Professor
    Axelrad, I will ask you; in your written testimony, you state
    that most agencies do not have a direct fiscal incentive to
    guard against excessive payments from the Judgment Fund and
    that payments from the Judgment Fund do not reduce agency
    appropriations available for their programs, kind of a
    disincentive right there.
        I mean, we have already as a Congress ceded so much of our
    Article 1 powers, which is a government is what it spends. This
    is of profound significance, and for agencies to be
    disincentivized to reduce these payments is kind of a lining up
    of the planets. It is the Attorney General's special duty to
    guard against unauthorized or excessive payments. Can you
    elaborate on this duty? And specifically, what are the
    statutory limitations on the Attorney General's authority with
    regard to the Judgment Fund?
        Mr. Axelrad. There are two kinds of limitations imposed on
    the Attorney General. First of all, the Judgment Fund statute
    itself must include a provision for the payment. 2414 of Title
    28 is such a key. It provides for payments where the Attorney
    General approves a settlement or decides not to further appeal
    from a judgment of a Federal court.
        In that event, the settlement must be under the underlying
    substantive statute. For instance, under the Federal Tort
    Claims Act, a lot of payments are made. If the claim is for a
    disputed claim where there might have been an accident or
    potential medical malpractice, the administrative procedure
    authorizes the payment even without litigation. But the Federal
    Tort Claims Act was a balance statute. It includes a number of
    exceptions.
        If an exception applies, the Attorney General cannot settle
    the claim using the Judgment Fund because Congress has limited
    the reach of the underlying substantive statute. The same rule
    applies under other substantive statutes.
        Mr. Franks. Thank you, professor. My time is up, so I now
    recognize Mr. Cohen, our Ranking Member, for 5 minutes of
    questions.
        Mr. Cohen. Thank you, Mr. Chair. As I said in my opening
    statement, I thought we should be dealing with and continue to
    feel we should be dealing with Voting Rights Act and
    deprivation of rights under color of law, the shooting of
    citizens, using all other forms of apprehension instead of
    resorting to deadly force.
        I think those are the issues we should care about, and
    criminal justice reform where people are being kept in jail for
    longer and longer periods of time, people not having their
    opportunity to have freedom when it is unnecessary to have6them
    incarcerated for long times for drug offenses: crack cocaine
    which we have found there is--we passed a bill to say it was an
    18-to-1 ratio instead of 100-to-1 ratio on crack and cocaine.
    President signed it; it is law. So for probably the only time
    in history, there has been a governmental body that has
    lessened the amount of evidence and, therefore accordingly, the
    sentence for a law that had been put on the books before.
        So, you know, we dealt with that a little bit, but that is
    part of criminal justice sentencing reform to try to say that
    our sentencing today should be commensurate with the crime,
    that we should not be the Gulag of the world which we pretty
    much are, putting more people in prison than any other country.
    And so those are the things I think we ought to be doing.
        Let me ask the three professors here, since we do not have
    the three tenors; we have three professors. None of you all
    think anything--the President or the Administration did in
    regard to Iran was illegal, do you? Anybody think it is
    illegal? No. I did not think so.
        And it is interesting that we have this hearing today. We
    come back after the longest recess in modern history, almost 2
    months away. Zika, opioids, Flint, Michigan, Voting Rights Act,
    Black Lives Matter; we come back with this. And coincidence,
    what a coincidence; Washington Post last night. ``Congressional
    Republicans want to censor the Obama administration for sending
    $400 million in ransom to Iran on the same day as American
    prisoners were released, an issue that will play big on the
    campaign trail 2 days before the election.''
        And it goes on to say that there is a resolution that has
    been introduced, and we may vote on it, et cetera, et cetera.
    It is a great coincidence that they have this resolution, and
    they want to cite the President and the Administration and
    censor them for something that we have three professors here,
    the scholars chosen, two by the majority party and one by us,
    that says they did not do anything wrong.
        But this is all part of the same game. We need to govern.
    We are not here as just a place to talk about issues and flame
    our electorate to see, maybe we can find an issue, and maybe
    they will elect our candidate, even though he is not in line
    with most of us. But maybe we will find a way to do it. It is
    pathetic.
        I yield to Ms. Jackson Lee if she would like. I know she is
    not a Member of this Committee, but if you would like to finish
    up my time, I yield to you for that purpose without objection.
        Ms. Jackson Lee. Mr. Ranking Member you are very kind and
    your question----
        Mr. Franks. The gentlelady needs to stand, please. Please
    continue, I am sorry.
        Ms. Jackson Lee. As I say, the Ranking Member is very kind.
    Thank you to the Chairman of the Subcommittee and the Chairman
    of the full Committee. Thank you to Mr. Conyers.
        As I was proceeding, I am glad that you already asked the
    question, Mr. Cohen, as to whether or not the expending of the
    Iran funds was illegal. It was not illegal. I am reading the
    history of the whole claims process here in the beginning, as
    interpreted by one of the--one of the individuals. But let me
    raise the question with Mr. Kinkopf.
        As you know in the early 1800's, we had Committees,
    Standing Committees reviewing every claim. And so let me just
    basically say the feasibility of doing that, even though we
    have a court of claims, the feasibility of Committees in
    Congress looking at claims, whether it be international or
    domestic, how feasible is that?
        Mr. Kinkopf. Not feasible at all.
        Ms. Jackson Lee. And the basis upon which I understand the
    most recent--well, the previous expenditure of funds dealing
    with the Iran nonnuclear proliferation had to do with an
    existing judgment. Am I correct?
        Mr. Kinkopf. That is correct.
        Ms. Jackson Lee. And so how would you interpret those
    expenditure of funds? As I read the Constitution, it says, ``On
    the basis of an existing judgment.''
        Mr. Kinkopf. The expenditure of those funds was perfectly
    legal and authorized by the law, by the Judgment Fund law.
        Ms. Jackson Lee. And so is there something that we can
    improve? Is there a basis for us to review, taking and
    separating apart the legitimate expenditure of funds under the
    Iran agreement and that expenditure? Is there something else
    that we should be looking at?
        Mr. Kinkopf. Well, I think it is legitimate to look at the
    transparency of the fund, you know? It is interesting, going to
    your first question, that no one has proposed that this
    authority be taken back to Congress, right? But, rather, that
    Congress do a better job of its oversight function with respect
    to the Judgment Fund.
        And I think that that is true, right? Congress' oversight
    role is important, not only with respect to the Judgment Fund,
    but with respect to all authority that is delegated to the
    executive branch, which is vast and necessary. So the Judgment
    Fund is but one instance of that broader phenomenon of
    governing. And your role is to exercise oversight, make sure
    the laws are being administered in a way that you approve of,
    and if not, then to legislate to get them to be what you want
    them to be.
        Ms. Jackson Lee. So finally, in this instance, they were
    done appropriately with those funds. Is that yes?
        Mr. Kinkopf. Absolutely.
        Ms. Jackson Lee. And so I have no quarrel with our reasoned
    review. But as I end, as my colleague has said, I do want to
    put on the record that we are in great need of the voting
    rights restoration. I hope that we will be doing a number of
    other elements from Zika to Flint and other things that I hope
    we will be able to do in a bipartisan way as well. With that, I
    yield back. Thank you.
        Mr. Franks. And I thank the gentlelady, and I apologize for
    interrupting her earlier. And we now recognize the Ranking
    Member of the full Committee, Mr. Conyers.
        Mr. Conyers. Thank you, Mr. Chairman, and welcome the
    observations of the gentlelady from Texas. Could I ask,
    Professor Kinkopf, do you think that we should limit high-
    dollar judgments from going before the Judgment Fund, or if an
    agreement is particularly high or unpopular, even, that we
    should do something different from what is being done?
        Mr. Kinkopf. Well, I think your question points to a
    problem with putting a cap based on dollar amount. One of the
    major problems of having Congress perform this function is one
    that history demonstrated, and that is getting your claim paid
    had more to do with your political connections than the merits
    of your claim, right? And so, putting a dollar cap on the
    Judgment Fund will return claims to Congress' jurisdiction, to
    Congress' power. And those same kind of political games that
    were played over a century before the adoption of the Judgment
    Fund can be played out again.
        And I think in the years since the Judgment Fund was
    adopted, it would be fair to observe that, if anything, sort of
    the ability of Congress to get along and not politicize matters
    has gone down rather than up.
        Mr. Conyers. Professor Figley, do you have an additional
    view that you would like to share with us on this? Please do.
        Mr. Figley. Yes, sir. The Judgment Fund works very well
    when it is used to pay individual claims. At some point, it is
    available for other purposes, and it is--I absolutely agree
    that the Obama administration had the authority under the
    Judgment Fund statute to pay and settle the Iranian claim for
    interest.
        But that is not to say that that was not a decision that
    had political overtones or something that Congress did not have
    an interest in. When you look to the use of the Judgment Fund
    to set up new programs, then I think there is a real problem,
    and that is what the Administration did with regard to the
    Hispanic and women farmers and ranchers process. The Judgment
    Fund was never intended to give discretion to any
    Administration to create new programs without financing
    obtained from Congress. I think a cap would solve that problem.
    Whether the cap should be $500 million or $2 billion I do not
    know.
        But very few individual cases are worth that much money.
    And if Congress must spend some time dealing with those very
    large cases, it may be time well spent. There are very few
    things we can track back and see that John Quincy Adams,
    Abraham Lincoln, and Millard Fillmore agreed upon. But they all
    agreed that legislative people should not be deciding
    individual claims.
        However, when it comes to major decisions involving huge
    amounts of money, Congress has an obligation, and the fact that
    the Judgment Fund has worked very well for many years on the
    vast majority of cases does not mean that Congress should not
    reassert its authority of this otherwise uncapped source of
    money.
        Mr. Conyers. Thank you, Mr. Chairman.
        Mr. Franks. And I thank the gentleman. This concludes
    today's hearing. I want to thank all of the witnesses for
    attending. I want to thank the audience, and I thank the
    Members.
        And without objection, all Members will have 5 legislative
    days to submit additional written questions for the witnesses
    or additional materials for the record. And with that, this
    hearing is adjourned.
        [Whereupon, at 11:26 a.m., the Subcommittee adjourned
    subject to the call of the Chair.]

                                A P P E N D I X

                                  ----------

                   Material Submitted for the Hearing Record

     Response to Questions for the Record from Paul F. Figley, Professor,
       Associate Director of Legal Rhetoric, Washington College of Law--
                              American University

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