[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


        A TIME TO REFORM: OVERSIGHT OF THE ACTIVITIES OF THE JUSTICE 
    DEPARTMENT'S CIVIL, TAX, AND ENVIRONMENT AND NATURAL RESOURCES 
                 DIVISIONS AND THE U.S. TRUSTEE PROGRAM

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


                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                           REGULATORY REFORM,
                      COMMERCIAL AND ANTITRUST LAW

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 8, 2017

                               __________

                           Serial No. 115-19

                               __________

         Printed for the use of the Committee on the Judiciary
         
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      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 SMITH, Texas                   ZOE LOFGREN, California
STEVE CHABOT, Ohio                   SHEILA JACKSON LEE, Texas
DARRELL E. ISSA, California          STEVE COHEN, Tennessee
STEVE KING, Iowa                     HENRY C. ``HANK'' JOHNSON, Jr., 
TRENT FRANKS, Arizona                    Georgia
LOUIE GOHMERT, Texas                 THEODORE E. DEUTCH, Florida
JIM JORDAN, Ohio                     LUIS V. GUTIERREZ, Illinois
TED POE, Texas                       KAREN BASS, California
JASON CHAFFETZ, Utah                 CEDRIC L. RICHMOND, Louisiana
TOM MARINO, Pennsylvania             HAKEEM S. JEFFRIES, New York
TREY GOWDY, South Carolina           DAVID CICILLINE, Rhode Island
RAUL LABRADOR, Idaho                 ERIC SWALWELL, California
BLAKE FARENTHOLD, Texas              TED LIEU, California
DOUG COLLINS, Georgia                JAMIE RASKIN, Maryland
RON DeSANTIS, Florida                PRAMILA JAYAPAL, Washington
KEN BUCK, Colorado                   BRAD SCHNEIDER, Illinois
JOHN RATCLIFFE, Texas
MARTHA ROBY, Alabama
MATT GAETZ, Florida
MIKE JOHNSON, Louisiana
ANDY BIGGS, Arizona

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

                                 ------                                

    Subcommittee on Regulatory Reform, Commercial and Antitrust Law

                   TOM MARINO, Pennsylvania, Chairman
                 BLAKE FARENTHOLD, Texas, Vice-Chairman
DARRELL E. ISSA, California          DAVID CICILLINE, Rhode Island
DOUG COLLINS, Georgia                HENRY C. ``HANK'' JOHNSON, Jr., 
KEN BUCK, Colorado                       Georgia
JOHN RATCLIFFE, Texas                ERIC SWALWELL, California
MATT GAETZ, Florida                  PRAMILA JAYAPAL, Washington
                                     BRAD SCHNEIDER, Illinois
                           
                           
                           C O N T E N T S

                              ----------                              

                              JUNE 8, 2017

                           OPENING STATEMENTS

                                                                   Page
The Honorable Bob Goodlatte, Virginia, Chairman, Committee on the 
  Judiciary......................................................     4
The Honorable Tom Marino, Pennsylvania, Chairman, Subcommittee on 
  Regulatory Reform, Commercial and Antitrust Law, Committee on 
  the Judiciary..................................................     1
The Honorable David Cicilline, Rhode Island, Ranking Member, 
  Subcommittee on Regulatory Reform, Commercial and Antitrust 
  Law, Committee on the Judiciary................................     2

                               WITNESSES

Mr. Chad A. Readler, Acting Assistant Attorney General, Civil 
  Division
    Oral Statement...............................................     7
Mr. Jeffrey H. Wood, Acting Assistant Attorney General, 
  Environment and Natural Resources Division
    Oral Statement...............................................     8
Mr. David A. Hubbert Acting Assistant Attorney General, Tax 
  Division
    Oral Statement...............................................    10
Mr. Clifford J. White III, Director, U.S. Trustee Program
    Oral Statement...............................................    12
Mr. Hans von Spakovsky, Esq, Senior Legal Fellow, Heritage 
  Foundation
    Oral Statement...............................................    28
Ms. Cleta Mitchell, Esq., Partner, Foley & Lardner LLP
    Oral Statement...............................................    30
Mr. Andrew M. Grossman, Esq., Partner, Baker & Hostetler LLP
    Oral Statement...............................................    31
Mr. Robert Weissman, Esq., President, Public Citizen
    Oral Statement...............................................    33

                        OFFICIAL HEARING RECORD

Responses to Questions for the Record from Mr. Chad A. Readler, 
  Acting Assistant Attorney General, Civil Division..............    00
Responses to Questions for the Record from Mr. Jeffrey H. Wood, 
  Acting Assistant Attorney General, Environment and Natural 
  Resources Division.............................................    00
Mr. David A. Hubbert Acting Assistant Attorney General, Tax 
  Division.......................................................    00
Responses to Questions for the Record from Prof. Bruce Grohsgal, 
  Esq., Helen S. Balick Visiting Professor in Business Bankruptcy 
  Law, Delaware Law School.......................................    00

              ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Statement submitted by the Honorable John Conyers, Jr., Michigan, 
  Committee on the Judiciary. This material is available at the 
  Committee and can be accessed on the Committee Repository at:

  http://docs.house.gov/meetings/JU/JU05/20170608/106076/HHRG-
    115-JU05-MState-C000714-20170608.pdf

Article submitted by the Honorable John Conyers, Jr., Michigan, 
  Committee on the Judiciary. This material is available at the 
  Committee and can be accessed on the Committee Repository at:

  http://docs.house.gov/meetings/JU/JU05/20170608/106076/HHRG-
    115-JU05-20170608-SD002.pdf

 
     A TIME TO REFORM: OVERSIGHT OF THE ACTIVITIES OF THE JUSTICE 
DEPARTMENT'S CIVIL, TAX AND ENVIRONMENT AND NATURAL RESOURCES DIVISIONS 
                      AND THE U.S. TRUSTEE PROGRAM

                              ----------                              


                         THURSDAY, JUNE 8, 2017

                  House of Representatives,
                 Subcommittee on Regulatory Reform,
                              Commercial and Antitrust Law,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 1:00 p.m., in 
Room 2141, Rayburn House Office Building, Hon. Blake Farenthold 
(Vice-Chairman of the Subcommittee) presiding.
    Present: Representatives Farenthold, Goodlatte, Ratcliffe, 
Gaetz, Cicilline, Conyers, Johnson of Georgia, Jayapal, and 
Schneider.
    Staff Present: Dan Huff, Counsel; Slade Bond, Minority 
Counsel; and Andrea Woodard, Clerk.
    Mr. Farenthold. Good afternoon. The Subcommittee on 
Regulatory Reform, Commercial and Antitrust Laws shall come to 
order. Without objection, the Chair is authorized to declare a 
recess of the Committee at any time. We welcome everyone to 
today's hearing on a time to reform: oversight of the 
activities of the Justice Department's Civil, Tax, Environment, 
and Natural Resources Divisions, and the U.S. Trustees Program. 
And I will now recognize myself for a brief opening statement.
    Welcome to this oversight hearing on four of the Justice 
Department components within this Subcommittee's jurisdiction. 
The new administration creates an opportunity for introspection 
and reform within the DOJ. This hearing will aid that process 
by reviewing abuses under the prior administration, determining 
whether the new DOJ leadership has started to initiate reforms, 
how far these reforms have progressed, and will explore, with 
the DOJ, what other forms will be appropriate.
    This Subcommittee has examined numerous examples of 
Administration lawyers straining the meaning of the statutes to 
justify activities never contemplated by Congress.
    For example, Operation Choke Point was a Justice-
Department-led program to deny merchants, like firearm dealers 
or payday lenders--that the Obama administration deemed 
objectionable--access to the financial networks they needed to 
survive. The DOJ has cited its special authority to issue 
administrative subpoenas when fighting fraud, ``affecting'' 
banks. But the claimed fraud in Operation Choke Point was far 
removed from banks, perpetrated ostensibly on the customers of 
their customers' customers. Furthermore, Committee oversight 
has found that the program was inflicting an unacceptable level 
of collateral damage on legitimate businesses, whether intended 
or not. That damage lingers, and I would like to know what the 
DOJ is planning to do to reverse it.
    In another instance, a New York Times expose revealed that, 
on the eve of an inevitable victory in court, the Department 
abruptly switched courses away from litigation and settled a 
discrimination case, despite vigorous objections from career 
attorneys within the DOJ. It appears the Department settled in 
order to pay off friends, including a plaintiff's lawyer, who 
was on President Obama's transition team. What can the 
Department's new management do to halt Justice Fund abuse?
    Another troubling pattern from the last administration was 
sue and settle abuse. This kind of abuse occurs when a 
regulatory agency agrees to settle a lawsuit with the friendly 
plaintiff, requiring it to implement a desired policy under the 
cloak of judicial authority, circumventing the normal 
rulemaking process, and paying both sides attorneys' fees.
    On May 27th, a report by the U.S. Chamber of Commerce found 
that, in 8 years, the Obama administration welcomed 137 Clean 
Air Act settlements, far more than the 93 settlements that the 
previous administration did over a preceding 12-year period. 
What steps is the DOJ considering to halt abusive sue and 
settle practices?
    Additionally, the Tax Division has been defending the 
Internal Revenue Service in lawsuits arising out of IRS's 
inappropriate targeting of conservative groups. The Sixth 
Circuit rebuked the Obama Justice Department's Tax Division 
lawyers for delaying one of the leading cases, saying: ``[T]he 
government is doing everything it possibly can to make this as 
complicated as it possibly can, to last as long as it possibly 
can, so that, by the time there is a result, nobody is going to 
care except the plaintiffs.''
    Finally, I am interested in an update from the U.S. 
Trustee's Office on its need for funding assistance, the 
reduction of fraud in the Asbestos Trust, and its oversight of 
Puerto Rico's bankruptcy processing filing its May 3, 2017 
filing.
    I appreciate the DOJ making witnesses available amidst this 
transition, and I hope this hearing will help the new 
management implement reforms by identifying problem areas and 
solutions. I also look forward to the suggestions of our second 
panel that has been carefully monitoring DOJ activities.
    At this time, the Chair will now recognize the Ranking 
Member of the Subcommittee on Regulatory Reform, Commercial and 
Antitrust Law, Mr. Cicilline from Rhode Island, for his opening 
statement.
    Mr. Cicilline. Thank you, Mr. Chairman. Today's hearing is 
an important opportunity to conduct oversight into the work of 
several components of the Justice Department within the 
Subcommittee's jurisdiction. The importance of legislative 
oversight cannot be overstated. It is a fundamental check and 
balance, key to the public's confidence in government, and it 
cannot be overstated.
    In less than 5 months, President Trump has fired Acting 
Attorney General Sally Yates after she informed the White House 
that National Security Advisor Michael Flynn was a security 
risk; fired FBI Director James Comey, who was overseeing an 
ongoing investigation into the Trump campaign's ties to 
Vladimir Putin; former National Intelligence Director James 
Clapper has called this ``egregious and inexcusable''; refused 
to disclose his tax returns, breaking with the tradition of 
Presidents from the last four decades; refused to release White 
House visitor logs; refused to release documents requested by 
Congress; appointed numerous officials with serious and 
unresolved conflicts of interest to key government positions; 
repeatedly attacked the Federal Judiciary, a co-equal branch of 
government, eroding trust in our legal system and the rule of 
law; and took the alarming and extreme step of instructing 
government officials to ignore congressional oversight requests 
unless supported by a Republican Committee Chair.
    Because my Republican colleagues have shown little interest 
in examining any of these matters, this hearing is one of the 
few opportunities that we have to hear from the Justice 
Department on the issues important to our constituents. Today's 
oversight hearing concerns the work of Civil, Environment, and 
Natural Resources and Tax Divisions along with the U.S. Trustee 
Program. The Civil Division is the largest litigating component 
of this Justice Department. Among its many other 
responsibilities, it is tasked with defending the President's 
unconstitutional Muslim travel ban.
    The President recently lashed out at his own Justice 
Department, stating on Twitter that it, ``Should have stayed 
with the original travel ban, not the watered-down politically-
correct version.'' The editorial board of the Wall Street 
Journal referred to these comments as ``reckless on multiple 
levels and merely the latest incident in which Mr. Trump, 
popping off, undermined his own lawyers.''
    George Conway, the husband of White House Counselor 
Kellyanne Conway, referred to the President's statements as 
sad, adding that ``every sensible lawyer in the White House's 
counsel office and every political appointee at DOJ would agree 
with me.'' Mr. Conway personally recently removed himself from 
contention for the appointment as permanent assistant attorney 
general of the Civil Division, suggesting that the President's 
toxic conduct and statements have discouraged qualified 
individuals from serving in this administration. It is 
important that we hear from the Civil Division on this matter.
    The Civil Division is also responsible for representing 
President Trump in lawsuits relating to conflicts of interest 
in his alleged violations of the Constitution's Foreign 
Emoluments Clause by profiting from foreign investments in his 
property, which has not been divested. Together with Ranking 
Member Mr. Conyers, I have co-sponsored H.R. 371, the 
``Presidential Conflicts of Interest Act'', to require the 
President and Vice President to disclose and divest any 
potential financial conflict of interest.
    The Environment and Natural Resources Division is 
responsible for enforcing the Nation's environmental laws to 
ensure that America's air, water, and lands are clean. Early 
this week, the Trump administration announced that it plans to 
appoint Jeffrey Bossert Clark, a climate skeptic, who 
represented BP in lawsuits related to the Deepwater Horizon 
spill, one of the Nation's worst environmental disasters. While 
he will not testify for today's hearings, I am concerned that 
these types of serious conflicts of interest will imperil the 
Environment Division's mission.
    The Tax Division litigates all matters under the Internal 
Revenue laws, collecting more each year than its entire budget. 
It also plays an important role in investigating and 
prosecuting offshore tax invasion, a significant concern of 
mine. Every year, U.S. corporations hide trillions of dollars 
of profits offshore, securing $90 billion in Federal income 
taxes. In April, I introduced H.R. 2005, the ``Offshore 
Prevention Act'', to keep jobs in America by eliminating tax 
breaks for companies that evade our tax laws by hiding income 
oversees. I look forward to hearing from the Tax Division on 
its enforcement efforts to level the playing field for 
hardworking Americans and small businesses.
    Finally, the U.S. Trustee Program is responsible for 
promoting integrity and efficiency of the bankruptcy system. I 
look forward to hearing from the program about its efforts to 
combat creditor abuse, particularly the practice of robo-
signing, and its other initiatives to protect consumer debtors. 
The American people demand and deserve transparency. It is 
critical that we hear from the Justice Department on how these 
matters affect its statutory responsibilities.
    In September, Chairman Goodlatte noted at this hearing, 
``It is an opportunity to conduct aggressive oversight of these 
four components of DOJ to determine where they are making 
decisions to uphold the law or follow the political whims of 
the administration.'' I agree, and I thank the witnesses for 
appearing today and look forward to your testimony. With that, 
I yield back, Mr. Chairman.
    Mr. Farenthold. Thank you, Mr. Cicilline. The Chair now 
recognizes the Chairman of the full Judicial Committee, Mr. 
Goodlatte of Virginia, for his opening statement.
    Chairman Goodlatte. Thank you, and I second your remarks 
about the need for reforms at DOJ. I am very pleased that 
already a major reform is in place. Yesterday, Attorney General 
Sessions announced a ban on payments to non-victim, third 
parties in Department of Justice settlements. I applaud the 
Attorney General's action. The new Justice Department's respect 
for the Separation of Powers stands in stark contrast to the 
behavior of the Obama Administration officials, who used their 
positions to funnel billions of settlement dollars to their 
political allies. The Committee will continue working to pass 
the bipartisan ``Stop Settlement Slush Funds Act of 2017'' 
which would ban this practice permanently.
    Additional reforms are also needed. The Department of 
Justice did not just force settling defendants to pay non-
victims. In 2013, a shocking New York Times expose revealed 
that the Obama administration bilked over a billion dollars 
from the tax payer-funded Judgement Fund and handed it to 
special interests.
    The vehicles for this giveaway were parallel, weak cases 
alleging bias by the Department of Agriculture. The Times 
described how, after a succession of Department of Justice 
legal victories, including in the Supreme Court, ``political 
appointees . . . engineered a stunning turnabout: they 
committed $1.33 billion to compensate . . . thousands of 
Hispanic and female farmers who had never claimed bias in 
court.'' The deal was ``fashioned in White House meetings, 
despite the vehement objections . . . of career lawyers . . . 
who had argued that there was no credible evidence of 
widespread discrimination.''
    The government's statistical expert from U.C. Berkeley told 
the Times regarding the parallel Keepseagle case, ``[i]f they 
had gone to trial, the government would have prevailed . . . It 
was just a joke . . . I was so disgusted. It was simply buying 
the support of Native Americans.''
    The Keepseagle settlement was based on the plaintiffs' 
lawyers' self-serving estimate that there were 19,000 
claimants. The plaintiff's attorneys collected $60.8 million in 
attorneys' fees. Just a year before, the lead plaintiffs' 
attorney, Joseph Sellers, had served on President Obama's 2008 
transition team.
    In the end, there were just 4,400 claimants--fewer than 
even the government had estimated--and $380 million left over. 
This was taxpayer money, but instead of demanding it back, DOJ 
agreed to direct it to non-victim third parties. This troubled 
the presiding judge who wrote: ``Although a $380 million 
donation by the Federal Government to charities . . . might 
well be in the public interest, the Court doubts that the 
Judgement Fund from which this money came was intended to serve 
such a purpose. The public would do well to ask why $380 
million is being spent in such a manner.''
    On May 25, 2017, I wrote the Attorney General, alerting him 
to a potential opportunity for the Department to recover the 
$380 million for taxpayers. I look forward to discussing 
remedies for the larger issue of Judgement Fund abuse.
    Overreach is not limited to the executive branch. District 
court judges are issuing preliminary injunctions outside of 
their jurisdictions and for the protection of nonparties.
    According to a forthcoming article in the Harvard Law 
Review, this is a recent development, not in accord with 
traditional practice. The traditional view was that court 
injunctions restrained the defendant's conduct, vis-a-vis the 
plaintiff, not vis-a-vis the world. Nationwide injunctions 
trample the sovereignty of sister courts. They also create a 
``shop till the statute drops'' problem. Opponents of 
government action can lose in 93 judicial districts, win one 
preliminary injunction in the 94th, and then government action 
can be stayed nationwide, despite it being upheld everywhere 
else. Such perverse results might be avoided if the Department 
of Justice insisted on the original understanding that courts 
do not have authority to issue such sweeping injunctions.
    There are many additional issues to cover. This hearing is 
one of a series that the Committee is holding on the Justice 
Department to identify areas that are in need of reform. I want 
to thank our witnesses for their participation here today, and 
I look forward to hearing their thoughts on restoring the 
Justice Department to its proper role. Mr. Chairman, I yield 
back.
    Mr. Farenthold. Thank you very much, Chairman. It is my 
understanding Mr. Conyers will submit a statement for the 
record, and Mr. Johnson has a brief opening statement in lieu 
of Mr. Conyers, so we will recognize the gentleman from 
Georgia.
    [Statement submitted by the Honorable John Conyers, Jr., 
Michigan, Committee on the Judiciary. This material is 
available at the Committee and can be accessed on the Committee 
Repository at: http://docs.house.gov/meetings/JU/JU05/20170608/
106076/HHRG-115-JU05-MState-C000714-20170608.pdf]
    Mr. Johnson of Georgia. Thank you. I thank the Chair, and I 
must recognize the fact that we are in the Trump administration 
now. The Obama administration has gone bye-bye. The need for 
oversight of the Obama administration has ended back on January 
20th over 100-and-some-odd days ago. And so, now it is time to 
do oversight into the operations of the Trump administration, 
and that is the focus of this hearing, and with that, I will 
yield back.
    Mr. Farenthold. Thank you very much. Actually, I think we 
need to swear in our witnesses, so gentleman, if you would 
please rise.
    Do you swear that the testimony that you are about to give 
before the Committee is the truth, the whole truth, and nothing 
but the truth, so help you God?
    Let the record reflect all witnesses have responded in the 
affirmative. You all may be seated.
    I would like to introduce our distinguished panel of 
witnesses: Chad A. Readler, if I am pronouncing that right, was 
appointed acting assistant attorney general for the Civil 
Division on January 30, 2017. Prior to joining the Department, 
Mr. Readler was a partner at the Jones Day law firm where he 
handled complex civil and criminal litigation matters with an 
emphasis on appellate litigation. Mr. Readler is a recipient of 
the Marshall Memorial Fellowship and previously served as a 
volunteer for Lawyers Without Borders, training Kenyan lawyers 
in Nairobi. Mr. Readler earned his bachelor's degree and his 
J.D. with honors from the University of Michigan. Following law 
school, he clerked for Judge Allen Norris of the U.S. court of 
appeals for the Sixth Circuit. Welcome, Mr. Readler.
    Jeffrey H. Wood was appointed Acting Assistant Attorney 
General of the Environment and Natural Resources Division on 
January 20, 2017. Prior to this appointment, Mr. Woods served 
as environmental counselor for U.S. Senator Jeff Sessions and 
as the Republican staff director for the U.S. Subcommittee on 
Clean Air and Nuclear Safety and Water and Wildlife. Mr. Wood 
has also worked in private practice, both as an environmental 
and energy lawyer and as in-house counsel for a transportation 
company. Mr. Wood earned his bachelor's degree and J.D. from 
Florida State University. A welcome to you as well, sir.
    David H. Hubbert was appointed Acting Assistant Attorney 
General of the Tax Division in January of 2017. He was 
previously Tax Division's Deputy Assistant Attorney General for 
several trial matters. Mr. Hubbert has vast experience with the 
Tax Division, overseeing litigation functions and the 
operations of the six regional, civil trial sections, the Court 
of Federal Claims section, and the Office of Civil Litigation. 
He also served as a trial attorney in both the civil and trial 
section and the appellate section covering various regions of 
the country. Mr. Hubbert earned his bachelor's degree in 
accounting from the University of Arizona and his J.D. cum 
laude from the University of Pennsylvania Law School. Welcome, 
sir.
    Mr. Clifford White III has served as the Director of the 
U.S. Trustee's Program since 2006. Mr. White has more than 30 
years in Federal service, and most of his tenure has been with 
the United States Trustee Program including formerly as a 
Deputy Director and an Assistant United States Trustee. Prior 
to joining the program, Mr. White served as the deputy 
assistant attorney general within the Department of Justice and 
is official at two other Federal agencies. He has been 
recognized with an Attorney General's award for distinguished 
service and was conferred the Presidential Award of Meritorious 
Executive in 2016 and Distinguished Executive in 2009. Mr. 
White earned his bachelor's degree and his J.D. with honors 
from George Washington University and the George Washington 
University Law School.
    So, gentleman, each of you have prepared and presented with 
us a written statement, which will be entered into the record 
in its entirety. I ask each witness to summarize his testimony 
in 5 minutes or less, and to help you stay within that, there 
is a timing device in front of you. The light will switch from 
yellow to green, indicating it is time to speed up, and you 
have 1 minute to conclude your testimony. When the light turns 
red, it indicates that your time has expired, so please wrap it 
up promptly, so we will get started with Mr. Readler. You are 
recognized for 5 minutes, sir.

STATEMENTS OF CHAD READLER, ACTING ASSISTANT ATTORNEY GENERAL, 
    CIVIL DIVISION; JEFFREY WOOD, ACTING ASSISTANT ATTORNEY 
  GENERAL, ENVIRONMENT AND NATURAL RESOURCES DIVISION; DAVID 
 HUBBERT, ACTING ASSISTANT ATTORNEY GENERAL, TAX DIVISION; AND 
       CLIFFORD WHITE III, DIRECTOR, U.S. TRUSTEE PROGRAM

                   STATEMENT OF CHAD READLER

    Mr. Readler. Good afternoon, Mr. Chairman, Ranking Member 
Cicilline, and Ranking Members of the Subcommittee. Thank you 
for inviting me to testify this afternoon about the work of the 
Civil Division of the Department of Justice. I was honored to 
join the Division on January 30th of this year. It is a 
privilege to lead the Division, and I appreciate the 
opportunity to discuss with you the important work we are 
doing, as well as to discuss our budget and resource needs for 
fiscal year 2018.
    The Civil Division is made up of more than 1,350 career 
employees including more than 1,000 attorneys. Each year, the 
Division handles tens of thousands of cases that involve 
billions of dollars in claims and recoveries. Even in my 
relatively brief tenure, I have been highly impressed by the 
capabilities and professionalism of our attorneys and support 
staff. The Division has the privilege of representing the 
United States, its agencies, members of Congress, Cabinet 
officers, and other Federal employees. Chief among our duties 
is defending and enforcing various Federal programs and 
actions. In so doing, the Division routinely confronts 
significant policy issues, often with constitutional 
dimensions. I would like to highlight a few examples of the 
significant and varied work done by the talented and dedicated 
public servants in the Division.
    First is national security: defending our Nation is one of 
the highest priorities of the Department and the Division. The 
Division's efforts to support our national security interest 
include defending lawsuits against government officials arising 
out of efforts to protect national security; defending policies 
and procedures related to the security of our borders, such as 
screening procedures for individuals entering the United 
States; defending against habeas petitions filed by individuals 
detained at Guantanamo Bay; defending against challenges to 
alleged surveillance activities conducted by the National 
Security Agency; and protecting against the disclosure of 
national security or classified information in the context of 
civil litigation.
    Second is defending immigration actions. The Division 
defends and prosecutes civil immigration matters in Federal 
court including actions challenging an order of removal. The 
Division also defends numerous cases brought by known or 
suspected terrorists and convicted criminals attempting to 
acquire immigration benefits or avoid removal. The Division 
also works to prevent known or specific terrorists from 
becoming naturalized citizens or to revoke such 
naturalizations. And, third, let me highlight our work in the 
area of fraud and consumer safety. The Division takes legal 
action against conduct that threatens the health or safety of 
American consumers, such as misbranding or adulteration of 
drugs and against conduct that seeks to defraud consumers or 
wrongly deplete the Federal fisc. We vigorously pursue false 
claims that target Federal healthcare programs. The 
pharmaceutical industry continues to account for part of the 
Division's health care fraud recoveries. In addition, the 
Division has put a special focus on elder fraud issues and has 
addressed both consumer fraud schemes targeting the elderly as 
well as fraud targeting medical services for the elderly.
    In each of the last 7 fiscal years, the government's health 
care fraud recoveries have equaled or exceeded $2 billion. The 
Division's efforts to include targeting fraud that contributed 
to the 2008 financial crisis. In the last year, the Division 
has recovered nearly $1.7 billion in losses from financial 
institutions that arose out of failed mortgages. The 
President's fiscal year 2018 budget request seeks 1,140 
positions and $291,758,000. While consistent with prior budget 
request in many respects, the proposed budget includes a 
request for an increase in funding for immigration litigation. 
These resources are necessary to maintain the superior legal 
representation services provided by the Division. We hope the 
House and Senate will fully fund the request.
    In closing, let me see it is an honor to work in the Civil 
Division and to participate in important and challenging work 
my talented colleagues perform on a daily basis. Mr. Chairman, 
I look forward to addressing any questions you or any members 
of the Subcommittee may have. Thank you.
    [Mr. Readler's written statement is available at the 
Committee or on the Committee Repository at: http://
docs.house.gov/meetings/JU/JU05/20170608/106076/HHRG-115-JU05-
Wstate-ReadlerC-20170608.pdf]
    Mr. Farenthold. Thank you very much and well within the 
time, then. Mr. Wood, you are recognized for 5 minutes.

                   STATEMENT OF JEFFREY WOOD

    Mr. Wood. Thank you, Representative Farenthold; Mr. 
Chairman, thank you. Ranking Member Cicilline and other Members 
of this Subcommittee, thank you for the opportunity to discuss 
the vital work of the Environment and Natural Resources 
Division, or ENRD.
    I currently serve as the acting assistant attorney general 
for ENRD where I have the privilege of leading the Nation's 
premiere team of environmental lawyers, paralegals, and staff. 
I am also proud to be part of the Department-wide team led by 
Attorney General Jeff Sessions, for whom I worked when he was a 
Senior Member of the Senate and Environment Public Works 
Committee. On Tuesday, the President announced his intent to 
nominate Jeff Clark to be our next Senate-confirmed AAG. We 
look forward to welcoming Mr. Clark back to ENRD, where he 
served from 2001 to 2005 as a deputy assistant attorney 
general.
    Over more than a century, ENRD has protected the country's 
air, land, and water; safeguarded the rights and resources of 
Indian tribes; and promoted responsible stewardship of 
America's wildlife, natural resources, and public lands. As 
detailed in my written statement, the Division's record of 
legal excellence continues to the present day. Looking forward, 
I believe ENRD is key to the successful implementation of 
President Trump's new directions for our Nation, including his 
call for an America First Energy Policy: a major reduction in 
regulatory burdens, particularly for agriculture and 
manufacturing, and rebuilding our Nation's infrastructure, 
while at the same time protecting the environment.
    To guide our work, I have emphasized four primary goals for 
ENRD at this time. First, we will pursue our core mission of 
protecting clean air, clean water, and clean land for all 
Americans though the vigorous enforcement of statutes and 
regulations and the defense of the lawful actions of our client 
agencies. Fundamentally, this is about respect for the 
Constitution and laws passed by Congress. As this Subcommittee 
is aware, ENRD is representing the United States in many cases 
involving agency actions now under review or reconsideration by 
the new administration. Agencies have inherent authority to 
review past decisions and to revise, replace, or repeal a 
decision to the extent permitted by law and supported by a 
reasoned explanation. As Justice Rehnquist once wrote, ``[a] 
change in administration brought about by the people casting 
their votes is a perfectly reasonable basis for an executive 
agency's reappraisal of the costs and benefits of its programs 
and regulations.'' In these kinds of cases, our aim is to avoid 
unnecessary litigation, support the integrity of the 
administrative process, and conserve the resources of the 
courts, the agencies, and other litigants.
    Second, a key goal is to effectively support and defend the 
infrastructure decisions of our client agencies. For example, 
ENRD is vigorously defending vital infrastructure projects 
today including the Dakota Access and Keystone XL Pipelines as 
well as many highway, port, and other projects of importance to 
communities around the Nation. Third, we will work 
cooperatively with the States and Indian tribes to achieve 
shared environmental goals. Many of the laws entrusted to us 
give a primary role to the States and tribes, and we aim to 
keep that important principle at the forefront of our minds as 
we fulfill our mission. In this regard, I have greatly 
appreciated the positive outreach from a wide range of 
stakeholders, especially our State partners, during the first 4 
months of my tenure at ENRD. State Attorney General Offices and 
State environmental officials have reached out or visited to 
share their perspectives about a broad range of issues.
    The Environmental Council of the States, the Association of 
Air Pollution Control Agencies, and other State groups have 
afforded me an opportunity to visit with their members to hear 
about their concerns and priorities. On many occasions, when 
discussing a matter that is taking place in a State, I have 
asked our attorneys a straightforward question: what does the 
State have to say about it? Fourth, we will accomplish our work 
as efficiently and effectively as possible, keeping in mind 
that every tax dollar we are given must be put to good and 
appropriate use for the American people.
    For fiscal year 2018, our Division has requested 
appropriations of approximately $115.6 million. Within that 
funding level, we also seek one proposed budget enhancement of 
approximately $1.8 million for additional attorneys and staff 
to support land acquisition and related efforts to secure the 
southern border of the United States. In closing, let me say 
again that I am proud of our team at ENRD. In just the last few 
months alone, the Division has obtained a record breaking 
monetary penalty in a criminal vessel pollution case, 
prosecuted multiple cases involving renewable fuels fraud, 
brought significant new actions involving violations of the 
Clean Air Act, and successfully intervened to stop illegal 
wildlife trafficking. These are just a few examples of the 
important work that ENRD lawyers, paralegals, and staff do 
every day on behalf of the American people. I appreciate the 
opportunity to participate in this hearing and would be happy 
to address your questions. Thank you.
    [Mr. Wood's written statement is available at the Committee 
or on the Committee Repository at: http://docs.house.gov/
meetings/JU/JU05/20170608/106076/HHRG-115-JU05-Wstate-WoodJ-
20170608.pdf]
    Mr. Farenthold. Thank you very much. Mr. Hubbert, you are 
recognized for 5 minutes.

                   STATEMENT OF DAVID HUBBERT

    Mr. Hubbert. Thank you, Chairman Farenthold, Ranking Member 
Johnson, and members of the Committee. Thank you for this 
opportunity to appear before you today to discuss the Tax 
Division's important work.
    The Tax Division's mission is to enforce the Internal 
Revenue's laws fully and fairly and consistently in Federal and 
State courts throughout the country. We do so through two types 
of litigation: civil investigations and cases and criminal 
investigations and prosecutions. In this litigation, we aim to 
promote voluntary compliance with the Nation's tax laws by 
deterring those who would avoid paying what they owe and 
promoting the sound development of law by carefully considering 
the legitimate issues raised in our cases. In each and every 
civil case, the Tax Division's attorneys strive to collect the 
proper amount due in owing, no more and no less. In each and 
every criminal case, Tax Division's attorneys authorize and 
prosecute cases after determining there is a reasonable 
culpability of conviction.
    In recent years, the Division typically has 6,000 civil 
cases in various stages, handles hundreds of civil and criminal 
appeals, and authorizes between 1,300 and 1,600 criminal tax 
investigations and prosecutions, which are then handled by the 
Division's prosecutors, prosecutors in the United States 
Attorney Offices, or some combination of the two. The Tax 
Division has currently approximately 350 attorneys and 145 
administrative professionals handling all of this work. I am 
honored to be able to represent them here today; they serve the 
American people with great skill and dedication.
    Among the Division's top priorities is civil and criminal 
employment tax enforcement. Employers have a legal 
responsibility to collect, account for, and pay over what they 
withhold from their employee's wages. Amounts withheld from 
their employee's wages represent nearly 70 percent of all 
revenue collected by the Internal Revenue Service. 
Unfortunately, billions of dollars of employment taxes go 
unpaid when employers fail to comply with their obligations; 
they are stealing not only from their employees, but also the 
U.S. Treasury, as well as gaining an unfair advantage over 
their honest competitors. Since 2014, the Tax Division has 
obtained more than 70 permanent injunctions against delinquent 
employers and pursued criminal investigations and prosecutions 
against those who willfully fail to comply with their 
obligations. These cases send a clear message that the conduct 
will not be tolerated. The Department remains committed to 
addressing this serious issue and leveling the playing field 
for all employers.
    Addressing offshore tax evasion remains a top priority in 
the Tax Division and the Department. Since 2008, the Department 
has criminally charged more than 130 U.S. taxpayers who used 
foreign, financial accounts to evade their tax and reporting 
obligations, and more than 40 individuals who facilitated that 
criminal conduct. In August 2013, the Department announced the 
Swiss Bank Program, which provided a path for Swiss banks to 
resolve their potential criminal liabilities in the United 
States. By January 2016, the Department had executed 78 
agreements with 80 Swiss banks and financial institutions 
collecting more than $1.3 billion in penalties. The information 
we received from that program provides substantial insight into 
the methods used to facilitate offshore tax evasion. Along with 
the IRS, we are reviewing the information to pursue ongoing and 
new criminal tax investigations and to support civil tax 
enforcement efforts. According to the Internal Revenue Service, 
it has received more than 55,000 voluntary offshore disclosures 
and collected more than $10 billion in taxes, interest, and 
penalty.
    Another significant area of concern is identity theft and 
stolen identity refund fraud, commonly referred to as SIRF, 
which involves stealing personal identifying information and 
filing fictitious tax returns to claim refunds. Through March 
2017, the Department authorized more than 1,400 SIRF 
investigations involving more than 2,400 subjects and 
authorized more than 1,100 prosecutions of more than 2,200 
individuals. While the ultimate goal is to stop fraudulent 
refunds at the door, and that ability is improving, the 
Department will continue to work with its law enforcement 
partners to prosecute these cases and hold those who engage in 
this conduct accountable. I have only touched on a few of the 
many issues being litigated by the Tax Division. Through our 
criminal and civil litigation, we send a clear message: when 
individuals or entities engage in this conduct to avoid or 
evade their legal, tax obligations, the Tax Division will use 
all available tools to firmly but fairly hold them accountable.
    In conclusion, I am honored to represent the bright, 
honest, and truly dedicated public servants working at the Tax 
Division, and I am happy to answer any questions you may have.
    [Mr. Hubbert's written statement is available at the 
Committee or on the Committee Repository at: http://
docs.house.gov/meetings/JU/JU05/20170608/106076/HHRG-115-JU05-
Wstate-HubbertD-20170608.pdf]
    Mr. Farenthold. Thank you very much. We appreciate your 
testimony. I know your job is very taxing.
    Mr. White, you are recognized for 5 minutes. Could you turn 
your microphone on and get real close to it? We bought the 
budget mics, so you need to be real close so we can hear you.

                  STATEMENT OF CLIFFORD WHITE

    Mr. White. Thank you for the reminder. Good afternoon, Mr. 
Chairman, Ranking Member, and members of the Subcommittee. I am 
grateful for the opportunity, once again, to report to you on 
the activities of the U.S. Trustee Program and to discuss our 
success in achieving our mission to promote the integrity and 
the efficiency of the bankruptcy system for the benefit of all 
stakeholders, debtors, creditors, and the public.
    As recited in greater detail in my written testimony, we 
perform a wide array of administrative, regulatory, and 
enforcement activities that are essential to the proper 
functioning of the bankruptcy system. Basic case administration 
depends upon our appointing and overseeing 1,400 private 
trustees who administer more than $10 billion in assets 
annually; i.e. protecting the rights of all stakeholders relies 
in significant measure on the neutral United States Trustee 
enforcing the law as the law was written by the Congress; and 
ferreting out fraudulent abuse depends upon the Program serving 
as the vigilant watchdog of the bankruptcy system. Since our 
last oversight hearing, the USTP has continued on a steady path 
of vigorous and balanced enforcement of the Bankruptcy Code. 
Each year we take more than 30,000 formal and informal civil 
enforcement actions and make about 2,000 criminal referrals to 
our law enforcement partners.
    A majority of these actions curb debtor abuse, but a 
cornerstone of our efforts also has been consumer protection. 
For example, we remain vigilant in policing mortgage servicer 
and other creditor misconduct. Earlier this year, we filed two 
additional settlements with Chase Bank to resolve violations 
involving improper billing and noticing of 16,000 accounts in 
bankruptcy. As remediation, Chase is providing about $2.8 
million in payments, refunds, and credits to affected 
homeowners. Several months ago, we also launched an initiative 
to address professional misconduct by consumer debtor lawyers 
including those who work across district lines and advertise on 
the Internet. Two national bankruptcy firms ceased operations 
as a result of enforcement efforts, and we are litigating and 
investigating other cases.
    In business bankruptcies, we frequently are the only party 
to uphold statutory mandates to restrain management 
professionals and other parties. In the Jevic Holding 
Corporation case, for example, we litigated on the side of 
truck drivers who were laid off the day before the company 
filed bankruptcy. Over our objection, the debtor obtained 
bankruptcy court approval to pay unsecured creditors but not 
the truck drivers whose claims were entitled a higher priority 
under the statute. Although we lost in the lower courts, our 
position prevailed in the Supreme Court.
    Among our new chapter 11 initiatives, we are reaching out 
to stakeholders in anticipation of developing guidelines 
governing our review of fees charged to the bankruptcy estate 
by financial professionals including investment bankers. In 
recent years, the fees of these professionals have grown and 
even exceeded attorneys' fees in some cases.
    Similarly, we are revising extant guidelines governing our 
review of conflicts in the employment of chief restructuring 
officers. Over the past decade, CROs have been hired more 
frequently, and the scope of their employment sometimes 
provides issues of corporate governance and conflicts of 
interest. Both of these guidelines will bring greater 
transparency and greater predictability in the bankruptcy 
system. In early May, as was mentioned by Mr. Farenthold, the 
Commonwealth of Puerto Rico filed for debt adjustment under 
Title III of PROMESA. As in municipal bankruptcies, the courts 
and the USTP play a more limited role than under corporate 
reorganization cases. Under PROMESA, we have two major duties: 
one, to appoint one or more creditor's committees that 
represent the interests of unsecured creditors including 
retirees, and, two, to review and object to professional fees. 
We are taking steps to perform both of these tasks.
    To achieve our mission, we are requesting an appropriation 
for fiscal year 2018 of $225.5 million. This is essentially the 
same amount appropriated in each of the past 3 years. Over 10 
years, our budget has increased by less than 2 percent, and our 
staffing level has decreased by 14 percent. We are grateful to 
this Committee for favorably acting on our proposal to increase 
quarterly fees paid into the U.S. Trustee System Fund. If 
enacted, it will ensure that appropriations made to the Program 
will be fully offset by revenues.
    We have achieved our mission in a period of scarce 
resources by adopting innovative work processes, allocating 
field staff to perform region-wide and nationwide tasks, and 
taking other prudent cost cutting steps. But more than that, 
the primary reason we have succeeded is the extraordinary 
dedication of my colleagues in the U.S. Trustee Program. They 
deserve respect and appreciation for their talent, for their 
service to the public, and for their noteworthy 
accomplishments. I would be happy to respond to any questions.
    [Mr. White's written statement is available at the 
Committee or on the Committee Repository at: http://
docs.house.gov/meetings/JU/JU05/20170608/106076/HHRG-115-JU05-
Wstate-WhiteC-20170608.pdf]
    Mr. Farenthold. Thank you very much, Mr. White. As is 
typical when I Chair a committee, since I am here the whole 
time, I reserve my questions for last out of respect for other 
members' time and it gives me an opportunity to back clean up 
so to speak. So, with that, we will recognize the gentleman 
from Florida for his line of questioning first.
    Mr. Gaetz. Thank you, Mr. Chairman. Mr. Wood, good to be 
here with a fellow Seminole. I wanted to ask some questions 
about the mechanism by which the Department of Justice enforces 
environmental laws. When the Department of Justice is bringing 
an action under the Clean Air Act, does it require any sort of 
pre-clearance or permission from the EPA?
    Mr. Wood. First, thank you. Go 'Noles. We are honored to be 
able to work in the defense of the Nation's Clean Air laws, and 
we work closely with EPA. Civil matters are not brought as a 
first matter by the Department of Justice. They are first 
referred to us from EPA, and we continue to work in 
consultation with them including in our Clean Air Act Cases.
    Mr. Gaetz. I also want to ask a question regarding your 
testimony on border security. You have indicated that land 
acquisition will be an essential component of building a wall 
on the southern border with Mexico. What would be the time 
frame for that acquisition?
    Mr. Wood. Thank you very much. So, there are approximately 
2,000 miles, as you know, along the southern border. 5 border 
Districts. We work closely with the U.S. Attorney's Offices in 
those districts. We have no specific time frame at this point 
and I would refer you to CBP on specific details related to the 
border construction. Our responsibility is to make sure that, 
to the extent that land acquisition is required, that it is 
done in compliance with the 5th Amendment, which we take very 
seriously.
    Mr. Gaetz. I also wanted to ask a question. I believe it 
is, I guess, a tax question. I am sorry, a trust question. It 
was mentioned in testimony that there is misuse of trust laws 
as it relates to marijuana businesses and their access to 
bankruptcy laws. If marijuana was no longer a Schedule 1 drug, 
but was instead a Schedule 3 drug, would those challenges 
continue to persist?
    Mr. White. Excuse me again for not pressing the microphone. 
I would have to consider that issue further, but as long as 
something is an illegal asset under Federal law, and if it 
cannot be sold under Federal law, then we would take steps to 
ensure it cannot be administered under the Federal bankruptcy 
law.
    We recently issued a directive which really restated 
longstanding policy that we have had in the program to move to 
dismiss or take other enforcement actions, which among other 
things, protects trustees who otherwise are not allowed to sell 
a marijuana asset. They cannot break Federal law in order to 
sell an asset to distribute to creditors in bankruptcy, and we 
also wanted to ensure that we are being made aware of all of 
the marijuana asset cases that have been filed so that we can 
intervene and take the appropriate action and be consistent in 
our enforcement. With regard to which schedule it is on, I 
would have to go back, and I would have to do some more 
research with that, but the basic point is, if it is illegal 
under Federal law to sell an asset, to sell a controlled 
substance, which you cannot do, or to possess a controlled 
substance, then we would take action to ensure that the Federal 
Bankruptcy Code does not provide an avenue to evade those 
Federal laws.
    Mr. Gaetz. Do we know how much in taxes is paid from 
marijuana companies in cash?
    Mr. White. I do not know.
    Mr. Gaetz. If we were able to have Federal law consistent 
with State law that allows marijuana transactions to occur, 
what would we anticipate would be the impact on creditors in 
circumstances where there is a failed marijuana business and 
their outstanding obligations?
    Mr. White. I do not know, dollar wise, what the size of the 
marijuana operations are that have come into bankruptcy, and so 
forth. But our job as watchdog of the bankruptcy system is to 
ensure that the laws as passed by Congress are upheld, and that 
is why we have taken the position through two administrations 
with regard to marijuana assets. They will not be administered 
through the bankruptcy system; trustees will not sell those 
assets. And yes, in some cases, that means that assets that 
otherwise would be liquidated by a trustee will not be 
distributed to creditors, but if the case is dismissed, it 
simply puts the parties in the same position they would be 
under State law had there never been a bankruptcy.
    Mr. Gaetz. Thank you for your indulgence, Mr. Chairman. I 
will yield back.
    Mr. Farenthold. Thank you very much, and we will now 
recognize the Ranking Member of the full Committee, Mr. 
Conyers, the best dressed man on this panel today.
    Mr. Conyers. Thank you so much for the compliment. Ladies 
and gentlemen, this is an important hearing, and I would like 
to begin by asking whoever talked about the Flint water crisis, 
or wants to talk about it, or deal with the situation. 
Americans deserve access to safe drinking water. What is the 
Environment and Natural Resources Division doing to ensure that 
the Flint Water Crisis is not repeated in other communities?
    Mr. Wood. Thank you for the question. It is a very 
important issue.
    Mr. Conyers. It is.
    Mr. Wood. I recognize that in recent months the 
administration released $100 million to address issues in 
Flint, Michigan. I know that there are important resources that 
will go to help. It is a bigger, national issue. Our mission at 
the ENRD is to ensure that all Americans have safe, clean 
drinking water and clean air, so we enforce the laws to ensure 
that that is provided for. One of our recent cases may be of 
interest on this point: we worked with the State of 
Mississippi, MDEQ, to prosecute an individual who had 
intentionally contaminated local drinking water. And so, we 
take this issue seriously nationwide, and we would be glad to 
talk to you or your staff about more details about our specific 
work in many other areas.
    Mr. Conyers. Do any of the other witnesses have any 
thoughts about what went on in Flint and would like to add to 
this part of our discussion? Okay.
    Let's look at the issue of identity theft. And whoever is 
prepared for some discussion about this, please join in. 
Criminals have electronically filed tax returns using the 
stolen identities and personal data of innocent taxpayers to 
file returns and obtain refunds fraudulently. How substantial 
or widespread is this problem? What efforts has the Division 
made to address this issue?
    Mr. Hubbert. Thank you for raising this issue. It is an 
important one. I think the Department has said from the outset 
of this problem that we were never going to prosecute our way 
out of it, and, really, the best way to address it is to have 
the fictitious refunds and the false returns stop at the door. 
And I think the Internal Revenue Service has reported that 
their efforts in that area have improved. I think the 
commissioner has stated that from 2016, there was a 46 percent 
decline in new victims from 2015, so there is some progress 
being made with the filters in stopping the refunds.
    With respect to what the Tax Division is doing, often these 
are more like street crimes than they are financial crimes, and 
so we have pushed out the authority to handle these cases to 
the U.S. Attorney's Office to the greatest extent we can. We 
have a cadre within the Tax Division that focus on these cases, 
so that when there is an unusual case or a matter that is 
unusually complex, we can provide resources to the U.S. 
Attorney's Office. Where there is a spike in a particular scam 
in an area, we have attorneys that we can send out there to 
help in the area, in that particular district, so we have tried 
to do what we can to make these cases move as efficiently as we 
can and as effectively. The sentences that the Department has 
been obtaining are significant, and we hope that those who 
would think about those crimes are being deterred from 
continuing.
    Mr. Conyers. Thanks you, Mr. Hubbert. Let me turn now from 
my last question to Mr. Clifford White III, the Director of the 
Trustee Program. With respect to the $60 fee that a Chapter 7 
trustee receives from administering a no asset case you note 
that the United States Trustee Program supports increasing this 
fee. Now, it is known that the Chapter 7 trustee administers a 
bankruptcy case primarily for the benefit of the creditors with 
respect to investigating any fraud and the availability of any 
assets. Accordingly, should the creditors pay for this fee and 
this fee increase for Chapter 7 trustees? Director White?
    Mr. White. Well, Mr. Conyers, our position on that has 
been, as a general proposition, that the no asset fee, which is 
what the $60 is--it is provided in every case, as you said--has 
not been increased for more than 20 years, and as a general 
proposition, ought to be increased. How that can be done in a 
way that is fair to all stakeholders has been a debate that has 
been had in Congress for some period of time, so we are not 
endorsing any particular proposal.
    I just make one additional point, however, Mr. Conyers, and 
that is that with regard to most of the trustees--when you say 
most of the trustee's work is liquidating assets and so forth--
in fact, they are dealing with thousands and thousands of 
cases--95 percent of all of the cases that they are assigned, 
in fact, have no assets. There will be no distribution, but it 
takes some fair degree of review of the papers filed in the 
case before they can come to that conclusion. So, for so many 
of these cases that are no assets and that no money goes to 
creditors at all, that is primarily where the rub comes with 
regard to the economics of not having changed that $60 fee for 
more than 20 years.
    Mr. Conyers. Thank you very much. My time has expired, and 
I may send questions to some of you to be added to our record 
today, and I yield back and thank the Chairman.
    Mr. Farenthold. Thank you very much, Mr. Ranking Member. 
Since I am the one left on our side, I will go ahead and do a 
few questions myself. I will start with Director White. There 
has been substantial press coverage about fraud and asbestos 
litigation and fraudulent claims made against the Asbestos 
Bankruptcy Trust. One bankruptcy judge cited a ``startling 
pattern of misrepresentation,'' and that is a quote by trial 
attorneys seeking payment from these trust sand from companies 
in bankruptcy. A former trial lawyer turned whistle-blower even 
stated that asbestos trusts are platforms for institutionalized 
fraud.
    Does the DOJ agree there is enough controversy related to 
fraud against bankruptcy trust to warrant a review by the DOJ?
    Mr. White. I cannot speak for all of the Justice 
Department, Mr. Farenthold, so let me just speak for the U.S. 
Trustee Program. It is a fact that there is a lack of 
transparency in corporate governance in post-confirmation 
trusts in general, and I have testified on that in the past as 
well. It was recognized, in fact, by a panel of bankruptcy 
experts assembled by the American Bankruptcy Institute as a 
commission to study the reform of Chapter 11. As a watchdog of 
the system, when you look at post-confirmation trusts, and 
asbestos trusts in particular, it is very clear there is no 
independent policeman. There is no watchdog for that; neither 
the court nor the U.S. Trustee Program have significant 
jurisdiction post-confirmation, so when you do not have an 
independent review of any kind of an entity in bankruptcy, 
including the asbestos trust, then you run certain risks for 
abuse.
    Mr. Farenthold. I appreciate it. I have got a lot of 
questions. I do not mean to cut you short, because this is a 
topic of interest to me, but I do have several questions for 
Mr. Wood on the Sue and Settle Program.
    As you know, under a process called sue and settle, 
agencies like the EPA and Department of Interior enter into 
court appointed agreements with outside environmental groups. 
These agreements mandate agency actions, reorganize agency 
priorities and funding, and bypass the laws that allow a public 
to provide a meaningful impact. What do you think the 
implications of sue and settle agreements given that agencies 
often end up diverting their focus from congressional 
priorities are?
    Mr. Wood. Thank you. That is a very important question and 
important issue. First, let me say our focus in our Division is 
on defending the lawful regulations and actions of our client 
agencies. Under my watch, there will be no collusion involving 
any sue and settle actions whatsoever. And with respect to the 
longstanding policy of the Department of Justice, we will abide 
by Attorney General Meese's memorandum. In fact, whenever 
settlement agreements are presented to my desk, we will look 
closely at that to make sure it abides by those requirements.
    Mr. Farenthold. Now, the other issue with sue and settle 
agreements is that following an agreement, the taxpayers' hard-
earned dollars usually goes to paying for the environmental 
groups' attorney fees. These expenses can hurtle into hundreds 
of thousands of dollars per settlement. Do you think we will be 
seeing fewer sue and settle cases if the environmental groups 
filing them could not recover attorney fees from the 
government?
    Mr. Wood. Well, I cannot comment on any specific 
legislative proposal, but I can say that it is important to 
make sure that any payment in any case is based soundly in law. 
The statutes provide that attorney's fees are not necessarily 
owed in every case, and in fact, attorney's fees are not owed 
if the position of the agency is substantially justified under 
the statute. However, that may not have been enforced as 
closely as we might have hoped it would have been in the past. 
But, certainly, looking at that issue is an important priority, 
I think, for Congress.
    Mr. Farenthold. On May 25, 2017, Chairman Goodlatte wrote a 
letter to the Attorney General alerting him to the potential 
opportunity for the DOJ to recover $380 million in taxpayer 
dollars that the Obama administration improperly handed to 
their political allies. This is real money, but the necessary 
motions would have to be filed quickly. Does anybody on the 
panel know if a decision has been made on this issue yet?
    Mr. Readler. Thank you, Mr. Chairman. I can address that 
question. First off, we appreciate Chairman Goodlatte's letter, 
and Chairman Goodlatte, I think, referenced in his opening 
remarks, there was a policy issued yesterday by the Attorney 
General that addresses the topic of payments to third parties, 
and it is a very important policy that the Department will 
adhere to. It emphasizes that victims in any given case will be 
compensated according with court order or settlement. But, 
otherwise, any additional dollars will be returned to the 
public fisc and not paid out to third parties. Now with respect 
to the Keepseagle case specifically, pursuant to longstanding 
Department practice, we do not comment on pending cases, but we 
are certainly aware of the request from the Chairman, and we 
are reviewing the issue.
    Mr. Farenthold. One final question on environment, the 
Environment Division is defending a Federal land grab relating 
to the Red River. The Bureau of Land Management has deemed that 
the Red Riverbed extends more than a mile into dry land in 
direct contradiction to the Supreme Court's ruling that said 
the boundaries follow the course of the stream. Are you all 
evaluating whether this legal action serves the public interest 
of justice, and if the Bureau of Land Management wishes to 
compensate Native American tribes with land, would it not be 
better to take the case to Congress rather than private 
citizens, Mr. Wood?
    Mr. Wood. Congressman, thank you for that question. I am 
familiar with the case, the Aderholt v. BLM case. I cannot 
speak to specifics about ongoing litigation that our Division 
is handling, but I can assure you that we are taking a close 
look at the matter.
    Mr. Farenthold. I see that my time has expired. Now I 
recognized the gentleman from Georgia, Mr. Johnson.
    Mr. Johnson of Georgia. Thank you, Mr. Chairman. Mr. 
Readler, the Trump administration has reportedly issued an 
order instructing agencies to refuse to respond to Democratic 
Congressional inquiries or information requests. Is that 
correct?
    Mr. Readler. Well, thank you for the question. I think that 
the terms of any order would speak for itself in terms of what 
the President has issued. Our policy, at the Department, is 
certainly, with respect to letters, that are issued from 
Congress--and I see those pretty regularly--that we do attempt 
to respond to all letters issued by Congress. Otherwise, with 
respect to oversight responsibilities, we certainly comply with 
requests from the chairman, and then take other matters under 
advisement.
    Mr. Johnson of Georgia. So you are saying that the Civil 
Division of the Justice Department will be responding to 
Democratic ranking members' of Committees, Subcommittees, 
requests for information including documents?
    Mr. Readler. Well, no. Those are issues that we take under 
advisement at the Department----
    Mr. Johnson of Georgia. Those would be covered under the 
order issued by the Trump administration not to respond.
    Mr. Readler. Well, the Department of Justice, of course, 
sets the legal position of the United States, and we will take 
all of those requests under advisement, and we will consider 
those against the backdrop of governmental law and the 
principles articulated by the administration.
    Mr. Johnson of Georgia. Will you respond to questions for 
the record from Democratic members of this Subcommittee as part 
of the record for this hearing?
    Mr. Readler. I am not sure I understand the question. Yes, 
I am certainly here to address the questions I can address. 
But, I obviously cannot comment on pending cases or pending 
requests.
    Mr. Johnson of Georgia. Earlier today, former FBI Director, 
James Comey, testified before the Senate Intelligence Committee 
that President Trump demanded his loyalty, telling him, ``I 
need loyalty. I expect loyalty.'' Have you pledged your loyalty 
to President Trump through communications or otherwise?
    Mr. Readler. Like the other members of the Department, we 
have all sworn allegiance to the Constitution to uphold the 
Constitution, and that is our guiding principle in terms of 
cases in addition to interpreting and applying the law and the 
facts as they take us in any specific case.
    Mr. Johnson of Georgia. So you have not been asked to swear 
your allegiance to President Trump?
    Mr. Readler. Again, I am not--no. The answer is we uphold 
the Constitution.
    Mr. Johnson of Georgia. Well, thank you. The Civil Division 
is responsible for all civil, immigration litigation including 
the Muslim Travel Ban. Is that correct?
    Mr. Readler. The Civil Division was chiefly responsible for 
defending the challenges to the executive orders given by the 
President including the executive orders that address travel 
issues. And I would really like to commend my colleagues, 
especially the career colleagues, at the Department of Justice 
who worked extremely hard in defending these cases under 
challenging circumstances, given the pace of those cases and 
the number of cases that have been filed. Those specific cases, 
of course, now are all pending litigation; there are two 
matters before the Supreme Court, and I, of course, cannot 
comment on any specific pending case.
    Mr. Johnson of Georgia. Well, gosh, I was going to find out 
whether or not you agreed that the orders that were issued by 
the President are indeed travel bans.
    Mr. Readler. Well, the----
    Mr. Johnson of Georgia. Is that true?
    Mr. Readler. The Department has taken a very consistent 
position are lawful exercises to the President's executive and 
constitutional powers.
    Mr. Johnson of Georgia. You do not want to go near the 
travel ban language?
    Mr. Readler. Well, the executive order, I think, speaks for 
itself.
    Mr. Johnson of Georgia. Has the President's manifestations 
on Twitter about the orders being Muslim or actually travel 
bans, has that hurt the Department's ability to prosecute its 
appeal?
    Mr. Readler. Well, again, I cannot comment on pending 
cases. We have two cases pending in the Supreme Court where we 
have vigorously defended the executive orders as lawful 
exercises of the President's constitutional and statutory 
authority, including authority granted the President by this 
body and a host of immigration laws.
    Mr. Johnson of Georgia. Thank you, Mr. Wood. President 
Trump recently announced that the United States will withdraw 
from the Paris Agreement, stating that the United States would 
be exposed to ``massive legal liability if we stay in.'' 
Leading environmental law experts strongly disagree with this 
statement, however. UCLA law professor James Salzman notes that 
President Trump's statement is ``not true'' because there is 
``no liability mechanism under the Paris Agreement.'' While 
Columbia law professor, Michael Berger, adds that the United 
States may be more exposed to lawsuits as a result to 
withdrawing from the Paris Agreement. Do you, Mr. Wood, agree 
with President Trump?
    Mr. Wood. Thank you, Congressman. We have a very 
significant role in the Division in defending the 
administration's actions including its actions pursuant to its 
America First Energy Policy, and we are actually engaged in 
those cases. Any questions with respect to the International 
Paris Accord, I would refer you to the State Department who is 
primarily responsible for those issues, but thank you for the 
question.
    Mr. Johnson of Georgia. Well, let me ask you this. Are you 
concerned that withdrawing from the agreement may result in 
increased liability for inaction as President Trump has warned?
    Mr. Wood. Well, thank you for the question. I think the 
President's statement stands for itself, and we will continue 
to vigorously defend all actions of the client agencies who 
were honored to serve to the extent those come up in court. 
Thank you.
    Mr. Johnson of Georgia. President Trump has referred to the 
international scientific consensus that climate change is real 
and caused by human activity as an ``expensive hoax'' that was 
created by and for the Chinese, in order to make U.S. 
manufacturing noncompetitive. Is that a statement that you 
agree with?
    Mr. Wood. Well, I would refer you to the EPA, for the 
administration's current position on climate change. Our 
responsibility at the Environment Division is to defend the 
lawful actions of our client agencies. That includes those 
actions in the regulatory context under the Clean Air Act, as 
well as the enforcement of the Clean Air laws, which we 
continue to vigorously do.
    Mr. Johnson of Georgia. Well, I take it you are not going 
to share your personal views on these issues.
    Mr. Wood. Thank you, sir. My personal views are not really 
relevant to my responsibility to enforce the law.
    Mr. Johnson of Georgia. Well, you are saying you are going 
to determine that my questions are not relevant, and so 
therefore, not answer them. Is that something that the 
administration has instructed you all to do?
    Mr. Farenthold. The gentleman's time has expired. We will 
let Mr. Wood answer the question, and then we will move on.
    Mr. Wood. Thank you, Congressman. I respect you and your 
question. I think it is an important issue. I do not diminish 
the issue whatsoever. I just would simply say, with respect to 
the administration's position, that is put forth by EPA and 
others. My responsibility as the head of the Environment 
Division at DOJ is to enforce the laws including the Clean Air 
Act and to defend the lawful actions of our client agencies. 
But I do respect you and the position that others have on that 
issue. Thank you.
    Mr. Johnson of Georgia. Thank you, sir.
    Mr. Farenthold. Thank you, Mr. Johnson. We will now 
recognize the second best dressed man on the panel today, the 
gentleman from Texas, Mr. Ratcliffe.
    Mr. Ratcliffe. Thank you, Mr. Chairman. I thank the 
witnesses for being here today. I think these are really 
important issues that we are talking about, because I and the 
vast majority of the constituents that I represent are of the 
opinion that there have been a number of instances over the 
last 8 years where the prior administration, the Obama 
administration, appeared to put politics above the rule of law. 
There were a variety of cases where we saw the Obama 
administration appear, in fact, to expressively subvert the 
will and the intent of Congress and the American people.
    One of those instances that comes to mind was Operation 
Choke Point where we saw that administration target banks that 
did business with certain disfavored retailers like pay day 
lenders and payment processors and disfavored industries like 
gun sellers and coal producers. More broadly, we also saw the 
targeting of conservative groups by the IRS merely because of 
their political beliefs. Now, those are just a few instances, 
but I will tell you that I am optimistic going forward that we 
have an opportunity to turn the page and restore accountability 
and put the rule of law back above politics. I say that because 
we saw an example of it just this week when the Trump 
administration announced its decision to halt these settlement 
slush funds that is to prohibit the practice of the Obama 
administration Department of Justice of systematically 
subverting Congress's spending power by requiring settling 
parties to donate money to various activist groups.
    Mr. Wood, I want to start with you because you stated in 
your written testimony we all know that ENRD plays an important 
role in enforcing our Nation's environmental laws, the Clean 
Water Act, the Clean Air Act. Knowing that these laws and 
corresponding regulations could hurt jobs, for instance, in 
mining and manufacturing, Congress specifically included in 
Section 321A of the Clean Air Act a requirement that the EPA 
conduct continuing evaluations of potential loss or shifts of 
employment that could result. I am sure that you are aware, and 
maybe some of my colleagues have already covered this, but 
there are cases pending in the Fourth Circuit where the Murray 
Energy Corporation sued the EPA under the Obama administration, 
asserting that the EPA's refusal to complete that job impact 
analysis irreparably harmed Murray Energy. The lower court 
agreed with Murray, noting that it would be an abuse of 
discretion for the EPA to refuse to conduct that evaluation for 
the impact that it might have on regulations for the coal 
industry.
    In recent arguments before the Fourth Circuit, I understand 
that the Department of Justice focused largely on procedural 
issues arguing that Murray lacks standing in urging that the 
case be dismissed, but the DOJ also recently filed a compliance 
plan with the District court, which indicated how the EPA would 
comply with the law. And I will tell you I was heartened when I 
saw the compliance plan, because at least in that sense it 
represented an effort on the part of this administration that 
was not evident under the prior administration, particularly 
because this effort, to me, seems consistent with the 
statements made by Administrator Pruitt and Attorney General 
Sessions on this issue as well.
    So, my question to you is this: if the Fourth Circuit 
agrees with the Department of Justice argument that Murray does 
not have standing, is the administration still committed to 
conducting the job's impact analysis requirement under the 
Clean Air Act?
    Mr. Wood. Thank you, Congressman. I am aware of the letter. 
I appreciate receiving the letter. As has been mentioned a few 
times on this panel today, we cannot speak to specific issues 
in pending litigation. I am aware of the filing that you 
mentioned, which was required under the District court's order, 
and I would refer any questions specifically related to EPA's 
plans to the EPA. I am proud of the work our lawyers are doing 
in all of our full range of cases. We take a close look at the 
law and the facts to make sure every position we are taking is 
well-grounded, and we will continue to do that. And I will 
commit to keep the Committee informed as to any developments 
that we can share with you about that case.
    Mr. Ratcliffe. Well, I appreciate the comments regarding 
pending litigation, but quite frankly, we would rather this not 
be pending litigation, because we would hope that you will be 
willing to comply with the job impact analysis required by law, 
but let me move on then. 321A of the Clean Air Act uses the 
term ``shall,'' yet this language is being interpreted as a 
``discretionary duty.'' Can you answer for me whether there is 
additional language that, as a member of Congress, we could 
include to clarify that this job loss analysis is required and 
is not a discretionary duty?
    Mr. Wood. Thank you, Congressman, for that comment. I 
cannot comment on specifics related to the pending case, as we 
have said, but I welcome that input, and we will be sure to 
keep this Committee informed on the case as it progresses.
    Mr. Ratcliffe. Then I will yield back, Mr. Chairman.
    Mr. Farenthold. Thank you, Mr. Ratcliffe. We will now 
recognize the gentleman from Illinois for 5 minutes.
    Mr. Schneider. Thank you, Mr. Chairman, and thank you to 
all of you for being here today, and more importantly, thanks 
for the work you, and I am going to extend it to the many 
people working in your Department's do, for our Nation every 
day.
    Mr. Wood, I would like to start with you. The materials 
that you submitted to the Subcommittee for this afternoon's 
hearing state that the mission includes ``promoting national 
security in military preparedness.'' In 2015, the Department of 
Defense released a report on the national security implications 
of climate change, finding that climate change will aggravate 
problems, such as poverty, social tension, environmental 
degradation, ineffectual leadership, and a weak political 
institution that threatens stability in a number of countries. 
During its confirmation hearing, Secretary of Defense, James 
Mattes, similarly observed that climate change is a challenge 
that requires a broader, whole of government response, and he 
went on to say that he would ensure that the Department of 
Defense plays its appropriate role within such a response by 
addressing national security aspects.
    So, my questions for you are what is your take of the 
assessments of the Department of Defense under both now the 
Obama and Trump administrations that climate change is a 
national security threat, and how will that or should that 
affect the work that you are doing in your Department?
    Mr. Wood. Thank you, Congressman. As I mentioned earlier 
with respect to a similar question, our role at the Environment 
and Natural Resources Division is to defend the lawful actions 
of our client agencies and to enforce the laws, including the 
Clean Air Act, which we are continuing to do. With respect to 
any issues related to the administration's position on 
international issues or on climate change, I refer you to the 
State Department and to the EPA.
    Mr. Schneider. But if I can, to the extent that the law and 
regulations are requiring actions of our government and 
pursuing, there is a difference perhaps of positions from the 
White House and the Department of Defense, how will that affect 
what you are trying to do?
    Mr. Wood. So our responsibility is to look at the law, look 
at the facts, look at the actions that our client agencies take 
in light of what the statutes that Congress has passed would 
require, and where the actions of the agencies are lawful and 
appropriate, to defend those vigorously in court, and that is 
what we are doing. I would note that the current 
administration, with the President's directive on an America 
First Energy Policy, is taking a fresh look, doing a review, or 
reconsideration in some cases, of previous regulations. Those 
kinds of reviews happen in the beginnings of virtually every 
administration. And the work of our lawyers right now includes 
assisting with those efforts to ensure that the agencies have 
the appropriate time to do a thoughtful review consistent with 
the Administrative Procedures Act and to ensure that they, to 
the extent that they make changes in positions, that those are 
vigorously defended in court, and we are honored to be able to 
work with our client agencies on those endeavors.
    Mr. Schneider. Thank you, and I will just say to the extent 
that the laws were drafted with the intention of ensuring the 
sustainability of our environment and to ensure national 
security, I look forward to you enforcing them or defending 
them as best as possible. Mr. Readler, if I can turn to you. 
You asked for a budgeting increase to add more lawyers. What 
would those lawyers be doing?
    Mr. Readler. We have a request for 20 additional lawyers in 
our Office of Immigration litigation. That is the office that 
handles both district court and appellate court that help to 
enforce the immigration laws of the United States working with 
DHS and other Federal partners.
    Mr. Schneider. Okay. Recent reports have talked about the 
administration unable to fill senior roles, and 93 U.S. 
attorney vacancies nationwide, are you having a challenge 
bringing on lawyers? Do you see it being difficult to bringing 
lawyers on, those additional lawyers you are talking about?
    Mr. Readler. I am not sure which specific lawyers you are 
referring to. U.S. attorneys are not hired through the Civil 
Division, so that would not be something we have oversight 
over, but we have some new lawyers joining us in the next few 
weeks.
    Mr. Schneider. And as far as recruiting, has it been a 
challenge finding lawyers willing to come to the administration 
in the current environment?
    Mr. Readler. I am not aware of challenges that we have for 
recruiting. As the political leadership, we are not directly 
involved with recruiting. There are a lot of rules with respect 
to hiring that we are expected to adhere to, but my general 
sense is that when their openings, there are many lawyers who 
are interested in working at the Justice Department and, 
specifically, in the Civil Division.
    Mr. Schneider. Great, and as my time is about to expire, I 
will yield back.
    Mr. Farenthold. Thank you very much, and if the Ranking 
Member will indulge me for two quick questions, I wanted to 
follow up. Mr. Readler, you said you requested additional 
funding for lawyers to handle immigration cases. I assume you 
need more judges because there is a backlog. Or, I am sorry, 
more lawyers because there is a backlog. Even with more 
lawyers, is there not backlog also for shortage of judges to 
adjudicate these issues?
    Mr. Readler. Yes, well, with respect to the Civil Division 
specifically, our lawyers handle the immigration cases really 
at the end of that process when cases are appealed from the 
Order of Immigration appeals to the Federal courts of appeals. 
But on the front end of that process with the Executive Office 
of Immigration Review, my understanding is that there is some 
backlog there, and that there have been separate requests to 
add judges to expedite that process or move those cases ahead, 
which would then, on the backend, create additional work for 
the Civil Division to handle appeals.
    Mr. Farenthold. Is your shortage of lawyers creating delays 
in adjudicating these cases as well where you are having to ask 
for continuances and things because of lawyer workload?
    Mr. Readler. I think currently we are doing a pretty good 
job of staying on top of those cases. We have about, on 
average, 7,000 appeals per year, but our capacity would 
increase, and we would be able to handle additional cases 
obviously with additional funding.
    Mr. Farenthold. Thank you. I appreciate your indulgence. We 
will now recognize gentlelady from Washington for her line of 
questioning.
    Ms. Jayapal. Thank you so much, Mr. Chairman. I am sorry I 
missed some of this hearing, but I did read the testimony, and 
I appreciate you all being here. I wanted to focus a little bit 
of attention on environmental regulation and specifically 
direct some questions to you, Mr. Wood. The Environment and 
Natural Resource Division is responsible for litigating 
environmental and natural resource cases on behalf of the 
United States including those that arise under the Clean Air 
Act, the Clean Water Act, and other environmental protective 
statutes, but I wanted to ask you, prior to your current 
position, you worked as a lobbyist for energy companies while 
also advising the Trump campaign. Is that correct?
    Mr. Wood. Thank you for your questions. I am very proud of 
the work that I have done as a private practice attorney, and I 
was, yes, a volunteer, as many lawyers do, for campaigns across 
the country. I exercised my First Amendment and constitutional 
right to volunteer for a campaign.
    Ms. Jayapal. Absolutely. But you were a lobbyist for energy 
companies as well, is that correct?
    Mr. Wood. I was a registered lobbyist, yes. Thank you.
    Ms. Jayapal. Thank you. And in that capacity, you 
represented Southern Company, a utility company that generates 
a third of its power from coal, is that correct?
    Mr. Wood. I am not sure of the specific reference that you 
make there to the statistic, but I did work on behalf of 
Southern Company and a variety of other clients.
    Ms. Jayapal. And in 2016, you referred to the Clean Power 
Plan and other environmental protections as, these are your 
words, ``contentious environmental rules that were the 
disappointment of many in the regulated community.'' Is that 
accurate?
    Mr. Wood. I am not sure where that quote comes from, but it 
sounds like something I may have said.
    Ms. Jayapal. And do you believe that the purpose of 
environmental protections is to please regulated entities?
    Mr. Wood. No, and I do not think that is the context in how 
I would have meant that quote. And clearly, in the capacity as 
the Assistant Attorney General, my constitutional and statutory 
duty is to vigorously enforce the laws. And I think, as my 
written testimony and my statement here today shows, we are 
actively and vigorously doing that across a full spectrum of 
our statutes, including the Clean Air Act and Clean Water Act 
and every other environmental and natural resources law. We 
have over 6,000 cases, matters, and appeals that are being 
well-handled by our team of over 400 career attorneys, and it 
has been an honor to work with them on that.
    Ms. Jayapal. That is good to hear, because it does concern 
some of us that the person that is the head of the EPA has 
actually sued the agency multiple times around these 
environmental regulations. So, should environmental projects 
that are contentious, using your word, solely because they are 
unsupported by a regulated agency still be enforced? I just 
wanted to clarify that.
    Mr. Wood. Clearly, we enforce every lawful regulation and 
statute on the books. And we take that obligation very 
seriously. I do as well, and we will continue to do so in this 
administration.
    Ms. Jayapal. Mr. Wood, I respect very much your work, and 
so please do not take this the wrong way, but there are some 
who have suggested that the appointment of a former coal 
lobbyist as the acting Assistant Attorney General of the 
Environment and Natural Resources Division is a form of 
political patronage by the Trump administration in return for 
millions of dollars in campaign contributions by coal 
executives and companies to the Trump campaign. And I wanted to 
give you chance to respond to that and tell us what you might 
say in response to many of my constituents who are writing to 
me about that specific issue.
    Mr. Wood. Thank you. I am very proud of the work I did in 
the private sector as an attorney representing great clients 
and had the opportunity to work on behalf of those clients, and 
my work is a matter of public record with respect to the 
filings that I have made, and those would reflect that much of 
my work was not in the area of coal, but more so in the area of 
nuclear. The only other thing that I would mention in that 
regard is that upon my arrival at the Department of Justice, I 
worked with the ethics officials there and was provided an 
ethics opinion regarding my recusal obligations. As I 
mentioned, we have 6,000 matters, cases, or appeals; a very 
small number of those involve issues for which I would have had 
some involvement previously, and I am recused from those. And I 
have abided by that ethics letter and will continue to do so, 
but thank you for your question.
    Ms. Jayapal. Thank you. I appreciate that. I have just a 
few minutes left, so let me ask one more question. Under the 
Obama administration, the ENRD prosecuted several coal 
companies for violating environmental laws. For example, in 
2015, Duke Energy pleaded guilty to nine criminal violations of 
the Clean Water Act for a massive coal ash spill. Your 
predecessor, John Cruden, stated that this massive spill, and 
these are his words, ``was a crime, and it was the result of 
repeated failures by Duke Energy subsidiaries to exercise 
control over coal ash facilities.'' Will you and the ENRD 
prosecute similar violations of the Clean Water Act and other 
environmental laws so that we can be assured that communities 
in rural areas, urban areas, across the country, can be 
protected against things like coal ash spills?
    Mr. Wood. Congressman, thank you for that question. I 
cannot speak to any specific case, but you have my assurance 
that the ENRD continues to vigorously enforce the Clean Water 
and Clean Air laws of the United States. We will continue to do 
so, and I think my written testimony accounts for several 
recent examples in just the past few months where we are doing 
exactly that. But thank you for your question.
    Ms. Jayapal. I appreciate that, and I tell you that 
communities across the country including in places like Flint, 
Michigan and rural communities that are suffering with toxic, 
toxic situations and death in many of their communities, will 
be counting on you and your leadership to make sure that we 
continue to take this extremely seriously and prosecute 
violations of the law. Thank you. I yield back.
    Mr. Farenthold. Thank you very much. The House has votes 
scheduled for 4:00. That is an hour and a half from now. We are 
now an hour and a half into this two-panel hearing, so we are 
kind of at the halfway point where we probably need to bring 
our second panel in. As much as I would like to do a second 
round of questioning with our distinguished panel, I do not 
think time will permit it. That being said, I would request 
that our witnesses entertain questions for the record that we 
will, most likely, submit to you, and if anybody has questions 
for the record, if you could get them to the staff within the 
next 5 legislative days. We will pass those along to you, and 
if would you all agree to answer those questions? And we got 
affirmative from everybody on the panel.
    So, with that being said, that will conclude our first 
panel. I want to thank you all for being here and for your 
testimony, and you are excused. We will now call the second 
panel for today's hearing, and we will give the staff time to 
set up, give everyone time to get settled, give me time to 
freshen up, and we will get going again here in about 4 
minutes.
    [Recess.]
    Mr. Farenthold. The Committee will come back to order. Have 
to bang here. I will begin by swearing in our second panel of 
witnesses before introducing them. If you all will please rise.
    Do you swear that the testimony that you are about to give 
before this Committee is the truth, the whole truth, and 
nothing but the truth, so help you God?
    Let the record reflect that all the witnesses answered in 
the affirmative, and you all may be seated. Thank you very 
much. We have got another great panel of witnesses as we 
continue our oversight in this Subcommittee.
    We will start with Mr. Hans von Spakovsky. I am going to 
call you Hans. Even though I have met you several times, but 
your name is a mouthful even for somebody who has a radio 
background like I do. Hans is a senior fellow in the Center for 
Legal and Judicial Studies at the Heritage Foundation. He was a 
commissioner for the Federal Election Commission for 2 years, 
and prior to that, he was a career counsel to the assistant 
attorney general for Civil Rights at the U.S. Department of 
Justice. He is a former, in-house counsel and also served in 
private practice. He is a 1981 graduate from MIT in a 1984 
graduate from the Vanderbilt University School of Law where my 
daughter is now attending. Go `Dores. He published many 
articles, studies, and reports for the Heritage Foundation, 
National Review, Fox News, Wall Street Journal, and numerous 
other publications and is a co-author on two books on election 
integrity and the U.S. Justice Department. Welcome, sir.
    Ms. Cleta Mitchell is a partner and political law attorney 
in the Washington, D.C. office of Foley and Lardner, LLP, and a 
member of the firm's political law practice. Mrs. Mitchell 
practices before the Federal Elections Commissions, the Ethics 
Committee of the U.S. House and Senate, and similar State and 
local enforcement bodies and agencies and represents numerous 
candidates, campaigns, and members of Congress, as well as 
State and national political party committees. Prior to joining 
Foley and Lardner, Ms. Mitchell served as a member of the 
Oklahoma House of Representatives where she chaired the 
Appropriations and Budget Committee. She also served on the 
Executive Committee on the National Conference of State 
Legislators. As a University Texas graduate, it pains me to 
tell you she earned her bachelor's degree with honors and J.D. 
from the University of Oklahoma.
    Andrew Grossman is a partner in the Washington, D.C. office 
of the law firm of Baker and Hostetler where he practices 
appellate and constitutional law. He is also an adjunct scholar 
of the Cato Institute, a think tank, and writes frequently on 
the law and legal policy. He was previously a fellow in the 
Meese Center for Legal and Judicial Studies at the Heritage 
Foundation. Mr. Grossman earned his bachelor's degree from 
Dartmouth College and his master's degree in public 
administration from the University of Pennsylvania and a J.D. 
from George Mason University School of Law, where he graduated 
magna cum laude. Congratulations and welcome.
    Mr. Robert Weissman is the president of Public Citizen, the 
Washington, D.C. public interest advocacy organization. He is a 
Chair of the Coalition for Sensible Safeguards, an alliance of 
more than 100 consumer small business, labor, scientific, 
research, faith, community, health, and environmental 
organizations united to protect health, safety, consumer, and 
environmental standards. Mr. Weissman has published extensively 
on issues related to corporate accountability. He is a graduate 
of Harvard College and the Harvard Law School.
    Each of the witnesses' statements, as with the first panel, 
will be entered into with record in its entirety. I ask all to 
summarize your testimony to fall within the 5 minutes that will 
be indicated on the clock in front of you. When it goes yellow, 
just like when you are driving, you speed up. No. You have just 
got 1 minute left to conclude your testimony. When it is red, 
please wrap it up as quickly as possible. So, Hans, we will 
start with you.

   STATEMENTS OF HANS VON SPAKOVSKY, MANAGER OF ELECTION LAW 
 REFORM INITIATIVE, SENIOR LEGAL FELLOW, HERITAGE FOUNDATION; 
    CLETA MITCHELL, PARTNER, FOLEY AND LARDNER LLP; ANDREW 
GROSSMAN, PARTNER, BAKER & HOSTETLER LLP; AND ROBERT WEISSMAN, 
                   PRESIDENT, PUBLIC CITIZEN

                STATEMENT OF HANS VON SPAKOVSKY

    Mr. von Spakovsky. Thank you, Mr. Chairman. The duty of the 
Civil Division is to defend the government, including its 
client agencies. Now, rule 1.3 of the Rules of Professional 
Conduct of lawyers in the District of Columbia also requires a 
lawyer to ``represent a client zealously and diligently within 
the bounds of the law.'' Most importantly, lawyers may not 
intentionally ``prejudice or damage a client during the course 
of a professional relationship.'' Thus, Civil Division lawyers 
have a professional obligation and an ethical duty to defend 
the actions of Federal agencies unless there are absolutely no 
circumstances, under which they can be defended, a situation 
that occurs only rarely.
    Yet, in a recent case involving the U.S. Election 
Assistance Commission, Division lawyers violated that 
professional duty. In a lawsuit involving the Federal Voter 
Registration Form, Civil Division lawyers took the side of the 
plaintiffs and refused to defend the agency. EAC Chair Christy 
McCormick sent a letter to former Attorney General Loretta 
Lynch and Judge Richard Leon, who was assigned to the case, 
expressing her ``grave concerns regarding the potential 
conflict of interest and failure of the Department of Justice 
to provide'' the EAC with proper representation.
    The Civil Division's erroneous claim that it could not 
defend the EAC were belied by the fact that Judge Leon ruled in 
favor of the EAC in his February 23, 2016 order, denying a 
requested temporary restraining order. In his order, Judge Leon 
commented on the misbehavior of DOJ, noting that the Division 
had taken ``the extraordinary step of consenting to plaintiff's 
request, not for a TRO, but for a preliminary injunction.'' He 
ruled for the EAC despite DOJ's failure to defend the 
Commission. In fact, at the hearing, which I attended, Judge 
Leon said that he had never seen such behavior by a government 
lawyer in his entire experience as a lawyer or a judge.
    There was also evidence in the case of a serious conflict 
of interest because of lawyers from the Civil Rights Division 
taking over the decision making regarding the main issue in the 
case, thus usurping the policymaking function of an 
independent, bipartisan Commission. The Civil Division was 
apparently so worried about this conflict becoming public that 
it asked for the deposition of Commissioner McCormick to be 
sealed. None of the lawyers involved in this violation of their 
professional obligations have been investigated or disciplined 
in any way.
    Second issue and this has been mentioned by the Chairman. 
One of the little-known costs for taxpayers is the Judgment 
Fund housed at the U.S. Treasury Department, a permanent, 
indefinite appropriation. This is used to aid judgments against 
the U.S. when it loses lawsuits, but it is also used to pay 
amounts negotiated by the Department of Justice, such as the 
Civil Division and the Environment Division to settle claims.
    Now, the Treasury Department does send a yearly report to 
Congress, and it maintains a webpage, but the information 
provided is so limited that it is not sufficient to identify 
what the government did wrong and who is benefitting from these 
government payments. No copy of the complaint judgment against 
the government or settlement agreement is made available. All 
of this information could be easily supplied by the Justice 
Department's various Divisions to the Treasury Department and 
made available for the public and members of Congress. The 
public deserve to know all the details of this, and this is the 
kind of transparency that we need.
    A third issue, an important issue in the International 
Refugee Assistance Project v. Trump case being handled by the 
Civil Division, is the issuance of injunctions by Federal 
district courts with limited geographic jurisdiction that apply 
nationwide or globally to unidentified aliens who are not even 
parties to a suit. All of this violates a U.S. Supreme Court 
decision, which the Civil Division, I do not think, has been 
asserting forcefully enough in all of its cases, including U.S. 
v. Mendoza. The key in that case was the usual role of 
collateral estoppel that applies to private parties does not 
apply to the government. That means that the government has the 
ability to apply the executive order to individuals who are not 
actual parties to the litigation.
    One other thing that the Congress should consider: that is 
the chaos caused by having cohorts all over the country issue 
potentially conflicting and duplicative decisions on the same 
issue. I think you should consider passing a law that says that 
any lawsuit contesting an executive order issued by the 
President has to be filed in the District of Columbia Federal 
district court. This would prevent different cases and 
different decisions from coming all over the court, and there 
are precedents for this kind of action. Thank you.
    [Mr. von Spakovsky's written statement is available at the 
Committee or on the Committee Repository at: http://
docs.house.gov/meetings/JU/JU05/20170608/106076/HHRG-115-JU05-
Wstate-vonSpakovskyH-20170608.pdf]
    Mr. Farenthold. Thank you very much. Ms. Mitchell, you are 
recognized for 5 minutes.

                  STATEMENT OF CLETA MITCHELL

    Ms. Mitchell. Thank you, Mr. Chairman, members of the 
Committee, and thank you for the opportunity to appear here 
today. I am appearing here today in my capacity as counsel to a 
number of organizations who were targeted by the IRS during the 
IRS targeting scandal, and subsequently, in my capacity as 
counsel to one of the groups which filed a suit against the IRS 
because of the targeting scandal.
    There are multiple cases that have been filed by different 
litigants that arose from the IRS targeting scandal, and all of 
those cases are defended by the Tax Division of the Department 
of Justice. And I am here to talk about our experiences in 
three areas with respect to the attorneys in the Department of 
Justice Tax Division.
    In a word, the DOJ tax attorneys have done, and continue to 
do, everything in their power to stall, delay, and block the 
orderly proceedings of these civil cases and to throw every 
monkey wrench they can invent, devise, or imagine to keep these 
plaintiffs from discovering the truth and the facts that 
resulted in the intentional delay of the normal processing of 
hundreds of applications for exempt status by citizens groups, 
solely because of their names and missions. The DOJ tax 
attorneys argue at every turn that none of these plaintiffs are 
entitled to any relief, but it is not that that I find so 
objectionable.
    What I find objectionable are three things that I am going 
to turn to now: the first is that I believe that it is the 
responsibility of the tax attorneys in the Department of 
Justice for the fact that the Lois Learner emails were lost. At 
the time that our lawsuit was filed in 2013, and under the 
Federal laws of civil procedure under several Federal statutes, 
and also the Committee on Oversight and Government Reform 
issued two subpoenas to preserve those documents/materials 
relevant to the IRS investigation, which were also under a 
litigation hold, resulting from our lawsuit. And yet, imagine 
our surprise in June of 2014 when we learned, through the 
media, that supposedly Lois Learner's emails were lost. We 
immediately sent a letter, which is attached to my testimony, 
to the Department of Justice tax attorneys and said we would 
like to immediately go to court, or ask them to allow us to 
collectively, jointly have an independent forensics expert team 
go into the IRS to see about recovering, locating, and 
retrieving these supposedly lost emails.
    They fought us at every step. They refused to agree to any 
kind of cooperative effort. We filed a motion for expedited 
discovery. They argued through the summer and ultimately 
prevailed, and no independent expert was appointed or allowed 
access to the servers, the backups, and et cetera.
    And what we learned, subsequently, is that, at the very 
time they were objecting to allowing access to those servers, 
the servers were erased at the very time. And it also is 
absolutely clear that they took no steps when the lawsuits were 
initially filed to do what normal litigants do, which is to 
ensure that your clients are not doing anything to lose any 
documents, materials, or evidence. They even objected to the 
fact that we called it evidence, so I believe that that falls 
squarely at their feet.
    And since that time and separately from that, I have 
attached a copy from the order of the Sixth Circuit of the 
court of appeals in which the court castigated the Justice 
Department attorneys, the trial court, castigated the Justice 
Department attorneys and said that their behavior, with regard 
to discovery, constituted studied obstructionism. It is very 
rare for an appellate court to call out the attorneys in a 
case, and in particular, to call out the government attorneys, 
but that is what the Sixth Circuit court did. These lawyers in 
the Department of Justice, Tax Division should not be allowed 
to continue to engage in this misconduct.
    The trial court in Cincinnati said that what the IRS had 
done was being perpetuated by what their attorneys were doing, 
and they have applied different legal theories completely, 
taking the same legal theory and applying it in one manner in 
one of the cases and in another manner in other cases, on 
whatever suits their purposes to try to obstruct and keep these 
lawsuits from coming to a conclusion.
    So, I would argue that it is time for Congress to do 
something and that the administration should do something to 
bring these long, pending lawsuits to a conclusion, which will 
only happen if the Department of Justice attorneys in the Tax 
Division stop obfuscating, stalling, and doing everything they 
can to keep it from happening. Thank you.
    [Ms. Mitchell's written statement is available at the 
Committee or on the Committee Repository at: http://
docs.house.gov/meetings/JU/JU05/20170608/106076/HHRG-115-JU05-
Wstate-MitchellC-20170608.pdf]
    Mr. Farenthold. Thank you very much. Mr. Grossman, you are 
up for 5 minutes.

                  STATEMENT OF ANDREW GROSSMAN

    Mr. Grossman. Thank you, Mr. Chairman, and thank you for 
holding this hearing today and inviting me to testify. My 
statement will focus on two issues concerning the Department's 
use of settlements to resolve litigation: one is the sue and 
settle phenomenon, and the other, which I will turn to first, 
is the Department's new policy announced yesterday morning 
generally prohibiting so-called slush funds.
    The new policy is to be commended. As the Subcommittee is 
all too aware, the previous administration believed that it 
could circumvent Congress's control of the purse by entering 
into settlements that required defendants to pay money not to 
the Treasury, but to third party organizations. These 
organizations, including activist groups, were not parties to 
these lawsuits; they were not victims; and the money they 
received was not compensation or restitution or attorney fees. 
This was pure, programmatic spending that requires 
Congressional appropriation. The previous administration's 
lawyers believed--incorrectly, in my view--that they could 
skirt that requirement by diverting funds from entering the 
Treasury. The Attorney General's new policy puts an end to that 
sleight of hand. It bars the Department from ``entering into 
any agreement on behalf of the United States in settlement of 
Federal claims or charges that directs or provides for a 
payment or loan to any non-governmental person or entity that 
is not a party to the dispute, excepting restitution and 
attorney fees and payments expressly authorized by statute.'' 
So, we should commend the Attorney General's action, but I will 
identify two respects in which it may fall short.
    The first concerns a particular type of slush fund 
settlement that draws money directly from the Treasury through 
the Judgement Fund Act to make payments to third party 
organizations for programmatic activities. Now, if requiring 
settling defendants to make payments to activist organizations 
intrudes on this body's appropriations power, then taking the 
money directly out of the Treasury to pay for programs that 
have never been authorized or appropriated is an even more 
serious violation. Now, the poster child for this kind of 
abuse, as you all know, is the Keepseagle settlement that was 
recently the subject of a split decision of the D.C. circuit. I 
will not discuss the case because the Subcommittee is well 
aware of it, but I will note that the Attorney General's new 
policy statement, at least as it is written, appears to be 
ambiguous on abuse of the judgement fund to make payments to 
third party organizations.
    I understand that there may be disagreement within the 
Department over whether such settlements should be allowed or 
not, although Mr. Readler's statement on the previous panel 
seems to suggest otherwise. I think this Subcommittee and the 
American people deserve to know with greater clarity what the 
Department's position is on this important issue and whether 
the Department believes that undertaking such payments is 
consistent with the governing statutory authority as well as 
constitutional authority. And I think they also deserve an 
answer to the Committee Chairman's letter regarding whether the 
Department will act to claw back the extra Keepseagle 
settlement money for the benefit of taxpayers before it goes 
out the door.
    The second shortcoming of the new policy is that it 
ultimately does not bind an administration that does not wish 
to be bound. In my view, the Constitution and statutory law 
already prohibit these kinds of settlements, but when everyone 
gets bought off, there is no adversary to oppose an unlawful 
settlement. A simple fix is required, a simple statutory fix. 
Judges should not be allowed to approve these kinds of 
settlements, and the Judgement Fund Act should be amended to 
make crystal clear that it does not authorize payments to third 
party organizations. This is required to prevent the gaming of 
our judicial system to circumvent Congress's power of the 
purse.
    Let me now turn quickly to the sue and settle issue. The 
Subcommittee is certainly familiar with the problem, and so I 
will not cover old ground. We all know that agencies in the 
previous administration used collusive settlements to advance 
regulatory agendas and to evade accountability. I can report 
that, so far, we have not witnessed any of this kind of abuse 
by the Trump administration. In fact, EPA administrator Scott 
Pruitt has declared that his agency, which was one of the worst 
offenders under the Obama administration, will not enter into 
settlements that set the agency's agenda, but EPA is only one 
agency, and I am disappointed to say that the Department of 
Justice has so far been relatively silent on this issue. The 
proper policy for the Department is not a mystery, because it 
is the one that was actually identified on the previous panel 
by Mr. Wood. That is the policy that was adopted in 1986 by Ed 
Meese, Ronald Reagan's Attorney General. The policy is 
straightforward: do not enter into settlements or consent 
decrees that convert discretionary authority into mandatory 
duty or that require the expenditure of unappropriated funds. 
If the Trump administration is serious about accountability, it 
should officially reaffirm the Meese policy.
    Action by Congress is also appropriate. As I explained in 
my written testimony, the Sunshine for Regulatory Decrees and 
Settlement Act, H.R. 469, adopts a thoughtful and comprehensive 
approach to this issue. More broadly, Congress should consider 
its use aspirational and unrealistic statutory deadlines 
combined with broad citizen suit provisions. As a matter of 
good public policy, a deadline that Congress does not expect an 
agency to meet is one that ought not to be on the books, and as 
a matter of constitutional principle, Congress should be the 
one enforcing rulemaking deadlines through its oversight and 
appropriations powers. Again, I thank the Committee for the 
opportunity to offer these remarks, and I look forward to your 
questions.
    [Mr. Grossman's written statement is available at the 
Committee or on the Committee Repository at: http://
docs.house.gov/meetings/JU/JU05/20170608/106076/HHRG-115-JU05-
Wstate-GrossmanA-20170608.pdf]
    Mr. Farenthold. Thank you very much. Mr. Weissman, you are 
up for 5 minutes, sir.

                  STATEMENT OF ROBERT WEISSMAN

    Mr. Weissman. Thank you very much, Mr. Chairman, Mr. 
Johnson, for the opportunity to be here today. I wanted to 
speak broadly to issues about corporate accountability at the 
Justice Department including both criminal and civil 
enforcement with a focus on issues related to Wall Street 
crimes and wrongdoing.
    In 2008, as we all know, Wall Street crashed our economy, 
and we are living with the after effects of that. Strikingly, 
though, the Wall Street banks in the financial sector, 
generally, were able to escape accountability for the 
widespread wrongdoing that occurred. There were effectively no 
criminal prosecutions by the Department of Justice and no 
criminal prosecutions either of the largest banks or the 
executives at those banks who are responsible for devastating 
harm across the economy. We found out eventually that the 
Department of Justice officials thought those institutions were 
too big to fail, too big to jail as well, too big to prosecute.
    Later in the Obama administration, there were a series of 
civil settlements reached with the banks, and those did obtain 
significant sums of money, but they were poorly executed. Those 
settlements did not disclose the underlying wrongdoing that the 
banks were alleged to have committed in some circumstances and 
gave, really, no basis for assessing whether the settlements 
reached correlated in any with the impact and damage that the 
banks had had on the economy.
    There was a related problem that goes back far before the 
Obama administration that we saw especially in the financial 
sector but more broadly as relates to corporate wrongdoers, 
which is the extraordinary use of deferred and non-prosecution 
agreements against corporate violators, as well as limited 
criminal accountability for corporate executives. It became the 
norm for corporations that broke the law to escape the 
requirement to plead guilty or to be convicted, instead 
entering into deferred or non-prosecution agreements that 
effectively amount to nothing more than a promise to not break 
the law in the future, which is a promise with no meaning 
whatsoever, since they are already obligated to not break the 
law in the future. As I discuss in my testimony, perhaps the 
most egregious instance involved HSBC for a massive money 
laundering scheme for which they were able to escape any kind 
of criminal liability.
    At the end of the Obama administration, in response to 
public criticism around these issues, we saw some, slight 
change. Importantly, we saw the issuance of the Yates 
Memorandum with a focus on trying to prosecute executives of 
corporations that engaged in wrongdoing. We saw some notable 
criminal prosecutions involving Mass E Energy and its executive 
Don Blankenship, The Peanut Corporation of America, and a 
couple other notable examples. We also saw in the last day of 
the administration the settlement with Volkswagen, which both 
obtained substantial compensation, launched indictments against 
a number of executives and managers, and required the company 
to plead guilty to criminal wrongdoing. So, we saw some 
progress in this area at the end of the administration.
    Unfortunately, in the early days of the Trump 
administration, signs are that things are going to reverse. 
Just recently, the Department of Justice entered into a non-
prosecution agreement with City Group in another money 
laundering case. This is the City Group's subsidiary in Mexico 
for what the Justice Department called vast criminal 
wrongdoing, but again, no criminal prosecution, no criminal 
plea. It is a worrisome sign of a return to those old days. We 
have seen astounding revolving door set of nominations for key 
positions in the Justice Department from the solicitor general 
on down. And we have seen, just earlier this week, a move to 
deny justice for victims of corporate wrongdoing through 
Attorney General Session's newly announced policy to prohibit 
settlement payments to third parties. If you look at the 
actuality of those settlements, they are designed to ensure 
full compensation, full restitution, for victims who often 
cannot be compensated directly. And I think this was an 
unfortunate move, which I worrisomely may be a harbinger of 
more gentle treatment for large corporations.
    Corporate crime and violence inflicts far more damage on 
society whether measured by dollars, injuries, or lives than 
street crime, as horrible as street crime is. And it is 
absolutely vital that the Department of Justice take corporate 
crime and wrongdoing seriously, prosecute it fully, and also 
engage in aggressive civil enforcement. I think the early signs 
of the Trump administration are troubling about whether it 
intends to do just that.
    [Mr. Weissman's written statement is available at the 
Committee or on the Committee Repository at: http://
docs.house.gov/meetings/JU/JU05/20170608/106076/HHRG-115-JU05-
Wstate-WeissmanR-20170608.pdf]
    Mr. Farenthold. Thank you very much, and we will begin some 
questioning, and since there is nobody else on my side, I will 
kick it off. Mr. Spakovsky, and I did get that right, I have a 
couple of questions for you. What is the scope of the duty of 
the DOJ to defend? When can they say yes? When can they say no 
to defending a government agency, and what is appropriate 
there?
    Mr. von Spakovsky. The longtime policy of the Justice 
Department, and it does not matter what administration is in 
the White House, the view has always been that it has a duty to 
defend all laws passed by Congress, even if the present 
administration might not like them, and also to defend all 
actions of agencies in the current administration, past 
administration, with the only exception being, for example, 
when it comes to Congress, laws that infringe on the 
constitutional authority of the President. And with regard to 
agency actions, only if there is absolutely no reasonable way 
of defending the agency's action and that almost never happens.
    Mr. Farenthold. Well, we have seen some issues where the 
Justice Department has not done that. Should the agencies be 
able to go out and get outside counsel to do that? What is the 
solution to that problem?
    Mr. von Spakovsky. Well, that is a problem. The case, for 
example, that I mentioned in my testimony, in fact, when the 
Justice Department, in essence, told the U.S. Elections 
Assistance Commission that they would not defend them, the 
Chairwoman of that Commission asked for permission to hire 
their own independent counsel to defend them, and the Justice 
Department has a say so over that, because the EAC has no 
independent litigating authority, said no. This was so 
disconcerting to Judge Leon that when the State of Kansas and 
the public interest legal foundation, which is a public 
interest legal, came in to intervene and say, ``well, if the 
Justice Department will not do its duty, we will defend the 
EAC.'' The judge did what is kind of unusual; he allowed them 
to intervene, and they actually defended the Federal agency. It 
was the most bizarre situation I have ever seen.
    Mr. Farenthold. We saw a similar situation here in 
Congress. Should the Justice Department be required to enforce 
things like contempt of Congress or a subpoena for a 
Congressional committee?
    Mr. von Spakovsky. I certainly think they should, yes.
    Mr. Farenthold. Ms. Mitchell, would you like to weigh in on 
that?
    Ms. Mitchell. Yes, I would. I think that Congress should 
take steps to establish a procedure whereby it does not have to 
go to the Executive Branch. I think there is a serious 
separation of powers issue when the legislative branch of 
government is dependent upon the executive branch to enforce a 
subpoena issued by the legislative branch of government. I 
think there are ways that the House and Senate could establish 
a rule and procedure through some of the ways that it has 
established litigation procedures in other areas. But I 
definitely think that this is a huge problem, and I think the 
Article 1 power of Congress is an issue when you have the 
Department of Justice refusing to enforce a Congressional 
subpoena, but imagine that this became particularly acute when 
you had the situation where the Congressional subpoena was 
issued to the Department of Justice.
    Mr. Farenthold. And you talked a little bit about DOJ and 
servers getting erased and tapes getting lost. If that had 
happened in a civil suit between private parties, it would be a 
huge spoliation claim, so why is the government different 
there?
    Ms. Mitchell. It should not be different, and I think that 
is one of the things that is really problematic with the 
Department of Justice and the Civil Division, particularly the 
tax attorneys. That is where I have had my experience, and I 
think that, you know, you have had trial courts and you have 
had the circuit courts both admonishing that the DOJ attorneys 
telling them to stop being so recalcitrant. If it were anybody 
else, these lawyers could be, themselves, personally subject to 
sanctions, and the party is entitled to damages. And it is just 
breathtaking to me that the fact of the matter is those 
attorneys in the Tax Division should have taken immediate steps 
in May of 2013. They really should have taken them sooner, but 
in May of 2013, when all of these lawsuits were filed, they 
should have immediately taken steps to ensure that nothing 
happened to any backups, any servers, any emails, any 
documents, and they did not do it.
    Mr. Farenthold. And now I have two quick questions for Mr. 
Weissman. Did you hear the Chairman's opening statement quoting 
from the New York Times' expose on the DOJ abusing the judgment 
fund to pay off allies over the vigorous objections of career 
prosecutors, and does that report trouble you?
    Mr. Weissman. I am sorry, Mr. Chair. I have to say I am 
most familiar with the Judgement Fund issue. I am more familiar 
with the issues related where the government is prosecuting the 
case as the plaintiff in the case against corporate defense.
    Mr. Farenthold. All right, and just on a related topic, 
would it trouble you if the DOJ reworded donation terms in 
settlements to ensure groups of particular ideological stripes 
were ineligible for donations?
    Mr. Weissman. If groups based on their ideology were 
ineligible?
    Mr. Farenthold. Right.
    Mr. Weissman. Sure, that would be troubling.
    Mr. Farenthold. Thank you. I see my time is expired. Would 
you like to go? Or Mr. Conyers? I will leave it up to you two 
to decide which one goes first. We will go to the Ranking 
Member of the full Committee, Mr. Conyers.
    Mr. Conyers. Thank you, and excuse my departures from time 
to time that are unavoidable. I wanted to start off with Public 
Citizen's witness. The New York Times indicated yesterday that 
officials across the government receive special waivers to 
disregard ethics rules. Did you happen to see that?
    Mr. Weissman. I did see that, yes.
    Mr. Conyers. And it offers additional evidence that 
lobbyists and industry executives have an unusual ability to 
shape policies benefitting their former clients and companies. 
So, that sounds astounding to me. Can you help me feel more 
comfortable with this report?
    Mr. Weissman. No, I think your concerns are well-justified, 
and that report actually is only a glimpse of the overall 
problem. The New York Times story was talking about the issue 
of waivers that have been issued after some considerable 
pressure that the administration had made available the waivers 
it has granted. There were not as many as we expected outside 
the White House. There were several extremely troubling 
examples from the White House. The reason the problem is worse 
than the New York Times story indicated is that it only related 
to the waivers. The bigger issue is the revolving door 
question, which I think is pervasive in the number of 
appointments that the Trump administration has made and is 
particularly the case at the Justice Department including in 
the example of the new nominee to run the Department of 
Environment and Natural Resources Division whose prior practice 
involved defending BP in the Gulf oil disaster to replace the 
acting, who as we heard earlier, who worked as a lobbyist for 
coal companies. That is emblematic of what is going on in the 
Justice Department and really throughout the government right 
now.
    Mr. Conyers. This becomes an incredibly important hearing, 
which I hope this Subcommittee and its leaders will continue to 
press on even after this hearing. I think we have not stumbled 
on, but we have revealed a lot of things that most people 
including members of the House do not know are going on. And I 
appreciate this panel very, very much. Mr. Weissman, Public 
Citizen, was the financial crisis caused by fraudulently 
securitized mortgage investment packages, caused in some way by 
the Department of Justice?
    Mr. Weissman. That was one of the main causes. The 
Department of Justice was not a facilitator of that. I would 
say of massive regulatory failure was, on the backend, I think, 
since there was really massive crime and wrongdoing associated 
with those activities, we should have seen the Department 
prosecuting people and corporations, and we did not.
    Mr. Conyers. What explains the dearth of the prosecutions 
of those involved in these fraudulent activities?
    Mr. Weissman. That is a hard question to answer, you know. 
I think one of the problems, actually, is exactly the same 
revolving door story that we see playing out on a worse scale 
now. We had high-level officials in the Obama Justice 
Department also come from the corporate defense bar, and I 
think they were very sympathetic to their former clients, or 
companies that might have been their former clients.
    Mr. Conyers. So, this had gone on before the present 
administration?
    Mr. Weissman. This is a problem that goes back as long as I 
know, actually, but I think we are seeing the worse we have 
seen in the Trump administration.
    Mr. Conyers. I will yield back the balance of my time, and 
I may send you some questions or comments that I would like to 
check your reaction to them. I thank the entire panel for their 
helpfulness.
    Mr. Farenthold. Thank you, Mr. Conyers. We will now 
recognize the gentleman from Georgia, the Ranking Member of the 
Subcommittee, Mr. Johnson.
    Mr. Johnson of Georgia. Thank you, Mr. Chairman. Mr. von 
Spakovsky----
    Mr. von Spakovsky. The Chief Justice of the Supreme Court 
also stumbled over it, so do not be embarrassed.
    Mr. Farenthold. I would just go with Hans. Trust me on 
this.
    Mr. Johnson of Georgia. I want to meet the challenge and 
get it right, but Mr. von Spakovsky, as a member of the Federal 
Elections Commission, you were accused of politicizing your 
position, or being unacceptably partisan, and it was alleged 
that you consistently used your position to disenfranchise poor 
and minority voters. And it is also alleged that as an official 
of the Justice Department that you advocated for the Department 
to apply the Voting Rights Act of 1965 in a ``race neutral 
manner.'' And throughout your career, it has been alleged that 
you have an obsession with the phantom and now debunked notion 
of so-called mass voter fraud all with the aim of suppressing 
Democratic Party voters. What do you say about these 
allegations, and what is the Heritage Foundation's position in 
so far as the Russian attempts to influence the recent 
presidential election?
    Mr. von Spakovsky. Well, I am happy to answer those 
questions, Mr. Chairman, although they are not quite on the 
topics of today. I will tell you that those claims that you 
made about me are defamatory, libelous lies, and if you would 
like, I would be happy to send you a copy of the 2013 Report of 
the Department of Justice Inspector General where he took a 
look at the cases that we handled at the Justice Department 
when I was there and the conclusion of the Inspector General 
against those accusations that you have just made was that 
there was no evidence whatsoever that any of the cases that we 
handled were done in a political or partisan manner. And that 
is in the IG report. You do not have to take my opinion for it.
    As to voter fraud, yes, that is an issue I work on. On that 
issue, I would be happy to send you a copy of the report that 
the Heritage Foundation has recently put together of close to 
500 cases from across the country, 800 individuals convicted of 
voter fraud. I think that is something that we should all be 
concerned about when it comes to the integrity of the election 
process.
    Mr. Johnson of Georgia. Okay, and the Heritage Foundation 
studies on the Russian involvement in the recent presidential 
elections, are there any underway this far?
    Mr. von Spakovsky. Well, I would cite to you the interview 
given by J. Johnson, the Secretary of Homeland Security during 
the Obama administration.
    Mr. Johnson of Georgia. No, I am talking about the Heritage 
Foundation.
    Mr. von Spakovsky. Yeah, well, I am telling you that our 
view agrees with that of J. Johnson who said that, one week 
after the November election, that there was no evidence of any 
kind that the Russians had hacked into the voting process, the 
ballot counting process, or any of the actual voting 
administration process, and I agree with that.
    Mr. Johnson of Georgia. Thank you, sir. Ms. Mitchell, is it 
not true that no organization was ever denied tax exempt status 
under the admittedly flawed criteria used by the IRS to process 
social welfare organizations for compliance with 501C4?
    Ms. Mitchell. Congressman, I actually do not think that 
that is a true statement. I think that there are several 
organizations that were denied their tax exempt status.
    Mr. Johnson of Georgia. All right, and Mr. Grossman, in 
your written testimony, you state that the Justice Department 
should readopt the Meese memo, which restricts the use of 
settlement policy to circumvent Federal statutes such as the 
Administrative Procedure Act. Are you aware that the Meese memo 
was iconified in 1991?
    Mr. Grossman. Yes.
    Mr. Johnson of Georgia. Thank you. Last but not least, Mr. 
Weissman. In your written testimony, you state that the recent 
Wells Fargo scandal where the bank fraudulently transferred 
millions of accounts raises both public and private enforcement 
questions. What effect does Wells Fargo's use of forced 
arbitration clauses in its consumer agreements have on the 
public's ability to hold the bank accountable for its 
misconduct?
    Mr. Weissman. Well, as you know, Mr. Johnson, this is a 
problem that is not unique to Wells Fargo. It is pervasive in 
the financial sector. The extraordinary misconduct of Wells 
Fargo though does throw into relief both the scale of its 
problem, its impact, and how absurd it is that corporations are 
permitted to force victims into arbitration rather than into 
civil courts.
    In this case, because victims have been forced under 
arbitration, they were disinclined to bring lawsuits in the 
first place, therefore, unable to join in a class or engage in 
mass discovery that probably would have uncovered this problem 
earlier. With the problem now well known, Wells Fargo is still 
defending itself from the grounds that victims should seek 
compensation and remedy not in the courts and not through class 
action mechanism, but through arbitration tribunals. That is to 
say, Wells Fargo is saying that victims who did not agree to 
have accounts created for them should be constrained by forced 
arbitration provisions and contracts related to other accounts 
they opened, not regarding these phantom accounts, which by 
definition, they never contracted for. And, nonetheless, Wells 
Fargo is making this claim and given the state of the law, it 
remains to be determined whether or not they will prevail on 
it.
    Mr. Johnson of Georgia. Well, they take that position 
because forced arbitration usually results in a decision in 
favor of the corporate interest. Is that correct?
    Mr. Weissman. That is right. These are tribunals that are 
stacked in favor of large corporations who were the repeat 
players and often have some influence over choosing who the 
arbitrators themselves are. They frequently make it impossible. 
The provisions of these contracts frequently make it impossible 
to join together as a class. Discovery is limited, and often 
the results remain secret so the public does not get the 
benefit of an open judicial system.
    Mr. Johnson of Georgia. Certainly, no record created, no 
right to appeal, no precedent or reliance on precedent in the 
decision making. No reliability for the consumer other than the 
fact that the deck is stacked against them.
    Mr. Grossman. Exactly so. We refer to them as rip off 
clauses or get-out-of-jail-free cards for large corporations.
    Mr. Johnson of Georgia. Thank you. With that, I yield back.
    Mr. Farenthold. Thank you very much, and as we have been 
through our round of questionings, and Mr. Conyers, I believe 
has gotten you all agree to respond to any questions for the 
record, I think it gives us an opportunity to conclude today's 
hearing, and I want to thank you for----
    Mr. Conyers. Mr. Chairman, may I have a unanimous consent 
to put in to the record the New York Times article dated June 
7th: ``Lobbyists Were Granted Ethics Waivers in Trump 
Administration?''
    Mr. Farenthold. Without objection, so ordered.
    [This material is available at the Committee or on the 
Committee Repository at: http://docs.house.gov/meetings/JU/
JU05/20170608/106076/HHRG-115-JU05-20170608-SD002.pdf]
    Mr. Farenthold. Again, I say thank you to our witnesses for 
attending. I enjoyed hearing your testimony and found it to be 
very helpful. Without objection, all members will have 5 
legislative days to submit additional, written questions for 
the witnesses or additional material for the record. With that, 
we are adjourned.
    [Whereupon, at 3:16 p.m., the Subcommittee was adjourned.]
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