[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
______
U.S. GOVERNMENT PUBLISHING OFFICE
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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
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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:]
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__________
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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
__________
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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