Guidelines and Limitations for Settlement Agreements Involving Payments to Non-Governmental Third Parties, 97525-97538 [2024-28866]

Agencies

• Department of Justice
• Office of the Attorney General

[Federal Register Volume 89, Number 236 (Monday, December 9, 2024)]
[Rules and Regulations]
[Pages 97525-97538]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-28866]


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DEPARTMENT OF JUSTICE

Office of the Attorney General

28 CFR Part 50

[Docket No. OAG 177; AG Order No. 6101-2024]
RIN 1105-AB62


Guidelines and Limitations for Settlement Agreements Involving 
Payments to Non-Governmental Third Parties

AGENCY: Department of Justice.

ACTION: Final rule.

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SUMMARY: This final rule adopts without change the interim final rule 
issued by the Department of Justice (``Department'' or ``DOJ'') on May 
10, 2022, that revoked a prohibition on the inclusion of provisions in 
settlement agreements directing or providing for a payment or loan to a 
non-governmental person or entity not a party to the dispute, subject 
to limited exceptions.

DATES: This rule is effective December 9, 2024.

FOR FURTHER INFORMATION CONTACT: Robert Hinchman, Senior Counsel, 
Office of Legal Policy, U.S. Department of Justice, telephone (202) 
514-8059 (not a toll-free number).

SUPPLEMENTARY INFORMATION: The Department has established a docket for 
this action on the www.regulations.gov site under Docket DOJ-OAG-2022-
0001. All documents in the docket are listed on the https://www.regulations.gov website.

I. Summary of This Rulemaking

A. Overview of This Rule

    On December 16, 2020, the Department issued a regulation 
prohibiting, subject to limited exceptions, the inclusion of provisions 
in settlement agreements directing or providing for a payment or loan, 
in cash or in kind, to any non-governmental person or entity not a 
party to a dispute. Prohibition on Settlement Payments to Non-
Governmental Third Parties, 85 FR 81409 (``the December 2020 Rule'') 
(adding 28 CFR 50.28). On May 10, 2022, DOJ published for public 
comment an interim final rule (``IFR'') that revoked the December 2020 
Rule, Guidelines and Limitations for Settlement Agreements Involving 
Payments to Non-Governmental Third Parties, 87 FR 27936.
    The IFR also solicited public comment on an Attorney General 
memorandum posted on the DOJ website in conjunction with the IFR, the 
Memorandum for the Heads of Department Components and United States 
Attorneys from the Attorney General, Re: Guidelines and Limitations for 
Settlement Agreements Involving Payments to Non-Governmental Third 
Parties (May 5, 2022) (the ``May 2022 Memorandum''), https://www.justice.gov/d9/pages/attachments/2022/05/05/02._ag_guidlines_and_limitations_memorandum_0.pdf (last visited Oct. 
31, 2024).
    This preamble responds to comments received on the IFR. As 
reflected in this preamble, the Department is not making any changes to 
the rule or to the May 2022 Memorandum.
    That said, DOJ is using the opportunity of this final rule to 
publicly announce that it will add two provisions to the section of the 
Justice Manual (https://www.justice.gov/jm/justice-manual) addressing 
third-party payments, section 1-17.000, Settlement Agreements Involving 
Payments to Non-Governmental Third Parties, as discussed later in this 
preamble.

B. Background Explanation for This Rule

    The Department, as explained in this preamble, has concluded that 
its action in May 2022 to revoke 28 CFR 50.28 and establish the current 
policy continues to be appropriate. The Department has authority to 
settle litigation incident to the Attorney General's power to supervise 
litigation for the United States. Authority of the United States to 
Enter Settlements Limiting the Future Exercise of Executive Branch 
Discretion, 23 Op. O.L.C. 126, 135 (1999) (``Authority of the United 
States to Enter Settlements''). The Department regularly settles civil 
and criminal matters to compensate victims, redress harms, and punish 
and deter unlawful conduct without the costs and delay that can 
accompany trials. For decades and across Administrations, Department 
components entered into settlement agreements that involved payments to 
certain third parties as a means of addressing harms arising from 
violations of Federal law.
    It has been the consistent view of the Office of Legal Counsel 
(``OLC''), acknowledged when the December 2020 Rule was promulgated, 
that settlements involving payments to non-governmental third parties 
can comport with the Miscellaneous Receipts Act (``MRA''), 31 U.S.C. 
3302(b). See Memorandum for William P. Barr, Attorney General, from 
Steven A. Engel, Assistant Attorney General, Office of Legal Counsel, 
Re: Final Rule Prohibiting Settlement Payments to Non-Governmental 
Third Parties at 2 (Dec. 4, 2020) (``December 2020 OLC Memo'') (citing 
Application of the Government Corporation Control Act and the 
Miscellaneous Receipts Act to the Canadian Softwood Lumber Settlement 
Agreement, 30 Op. O.L.C. 111, 119 (2006) (``Softwood Lumber'')), 
https://www.justice.gov/oip/foia-library/foia-processed/general_topics/settlement_guidelines_third_parties_2_14_23/download (last visited Oct. 
31, 2024).
    In 2017, the Attorney General issued a memorandum prohibiting 
Department attorneys from entering into case resolutions in civil and 
criminal matters providing for certain third-party payments. See 
Memorandum for All Component Heads and United States Attorneys from the 
Attorney General,

[[Page 97526]]

Re: Prohibition on Settlement Payments to Third Parties (June 6, 2017). 
In 2020, through the December 2020 Rule, the Department amended its 
regulations to add 28 CFR 50.28, memorializing prohibitions set forth 
in the 2017 memorandum and additionally expressly prohibiting 
expenditure of funds ``to provide goods or services to third parties 
for Supplemental Environmental Projects.'' 85 FR 81410.
    In 2022, after considering the views of the Department's components 
and their experience with 28 CFR 50.28, the Attorney General concluded 
that the regulations at 28 CFR 50.28 were too restrictive and should be 
revoked, see 87 FR 27937, and issued an IFR revoking 28 CFR 50.28, see 
87 FR 27936-38. The Attorney General determined that, when properly 
tailored, agreements providing for payments to third parties are lawful 
and allow the United States to more fully accomplish the goals of civil 
and criminal enforcement. Id. at 27937. For example, the Department 
usually seeks a penalty and injunctive relief to resolve violations of 
Federal environmental statutes. However, the harms caused by these 
violations, including harms to the communities most directly impacted 
by them, can be difficult to redress in particular cases. Id. For 
instance, in environmental enforcement cases, the Department may seek a 
defendant's agreement to make third-party payments in the form of a 
Supplemental Environmental Project (``SEP'') to counteract some of the 
downstream effects of a violation, and often as well to prevent future 
harm. Id. A SEP is a type of project or activity that a defendant 
undertakes as part of the settlement of an environmental enforcement 
action. As an illustration, a defendant refinery that violated its 
Clean Air Act permit by emitting excess volatile organic compounds 
(``VOCs'') agreed to perform a SEP to abate lead-based paint hazards in 
child-occupied facilities and lower-income residences located within a 
50-mile radius of the refinery, in addition to an appropriate penalty 
and other relief. VOCs can accelerate the weathering and deterioration 
of lead-based paint, increasing potential lead exposure. The project, 
therefore, was designed to reduce a downstream harm to local residents, 
exacerbated by the defendant's conduct.
    The May 2022 Memorandum contains important safeguards to ensure 
that case resolutions containing third-party payments are appropriately 
tailored. Permissible settlements with third-party payments must 
satisfy conditions that define with particularity the nature and scope 
of any third-party project; require a strong connection between the 
underlying violation(s) and the project; prevent the Federal Government 
from proposing the selection of a particular third party to receive 
payments; restrict the Federal Government's role after a settlement is 
entered; require that such settlements occur before an admission or 
finding of liability in favor of the United States; prohibit use of 
such settlements to satisfy existing statutory obligations or to 
provide additional resources to perform any activity for which a 
Federal agency receives a specific appropriation; and prohibit certain 
practices such as unrestricted cash donations. May 2022 Memorandum at 
3. Such settlements are also subject to approval by the Deputy Attorney 
General or the Associate Attorney General. Id. at 3-4.
    The May 2022 Memorandum also exempts four types of payments from 
these requirements, including payments providing restitution to non-
party victims to directly remedy the harm the lawsuit seeks to redress, 
as well as payments for legal or professional services undertaken in 
connection with the case being settled, consistent with pre-2017 
practice. Id. at 4. (The exception for legal or professional services 
includes payments to contractors implementing injunctive relief; 
payments to monitors, arbitrators, mediators, or other neutral third 
parties; and payments for other categories of legal and professional 
services.) In developing the new policy, the Department sought to 
address specific concerns that had been raised over such payments, 
while preserving the availability of these payments as a potential 
remedy when appropriate. In 2022, DOJ incorporated the terms of the May 
2022 Memorandum in Justice Manual section 1-17.000.

C. Justice Manual Revisions

    As part of the process of reviewing comments on the IFR and May 
2022 Memorandum, the Department has determined that it will add two 
provisions to the Justice Manual section 1-17.000.\1\ In particular, 
the Department is sensitive to the perception that it will ``strong-
arm'' defendants to agree to third-party payments by declining to agree 
to a settlement unless the defendant agrees to make one or more third-
party payments. It also recognizes the concern that the lack of public 
input into the development of third-party payments, and the difficulty 
of obtaining information on settlements that include such provisions, 
could lead to a lack of accountability and could give rise to claims of 
``cronyism'' or favoritism. As discussed in greater detail below, see 
infra Part II.B.5.1, these concerns do not suggest that third-party 
payments writ large are unlawful, or that a rule prohibiting third-
party payments is the only way to guard against them. Instead (and as 
also discussed in greater detail throughout this preamble), the 
Department has concluded that it can respond to these concerns through 
the more flexible approach of making changes to the Justice Manual, a 
course that preserves the benefits of third-party payments while 
responding in a more surgical manner to the concerns raised.
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    \1\ The Department will limit these new provisions to civil 
settlements covered by the May 2022 Memorandum but not exempted 
under the four circumstances described therein. Plea agreements are 
always subject to court review and approval, ensuring the protection 
of the public's interest and the rights of the defendant. The timing 
and other process requirements of a criminal proceeding also make it 
less feasible to apply these new requirements in criminal cases.
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    Specifically, with respect to concerns that the Department will 
``strong-arm'' defendants into agreeing to third-party payments, the 
forthcoming revisions to the Justice Manual will specify that the 
Department may decline to agree to settle a civil claim in the absence 
of a particular remedy where the remedy in question would be available 
relief were the case litigated to judgment; but that if the third-party 
payment is not within the scope of the remedies the court could order, 
the Department will negotiate such a payment as part of a settlement 
only if the defendant expresses interest in doing so. For example, to 
resolve an antitrust investigation or filed case, the Antitrust 
Division may condition a settlement on the entity's agreement to divest 
itself of certain assets, because that is relief the Antitrust Division 
could receive if it litigated the case to judgment. See, e.g., United 
States v. E.I. du Pont de Nemours & Co., 366 U.S. 316, 331 (1961); see 
generally California v. Am. Stores Co., 495 U.S. 271, 280-81 (1990) 
(``[I]n Government actions divestiture is the preferred remedy for an 
illegal merger or acquisition.''). (Because these benefits would go to 
another unrelated entity, such a condition could potentially have the 
appearance of a third-party payment.) The Department believes that this 
division--between relief available if the case were litigated to 
judgment and relief that would not be--is an appropriate way to guard 
against concerns that the Department would strong-arm defendants into 
agreeing to third-party payments. In cases in which a court could order 
a particular remedy but a defendant is not

[[Page 97527]]

willing to include it in a settlement, the Department has the option of 
litigating the case to judgment in order to secure the relief in 
question without the defendant's consent. In those cases in which a 
settlement term is not backed by a possible judicial remedy in this 
way, the Department is sensitive to the concern raised by commenters 
and views it as preferable (although not legally required) to include 
this additional safeguard to ensure that the defendant is amenable to 
the relief in the form of a third-party payment.
    As to claims that information about settlements that include third-
party payments is not readily available and that such settlements are 
concluded without adequate participation from the public, the 
Department will add a provision to the existing Justice Manual 
requirements that would provide additional opportunities for the public 
to participate in certain civil settlements.\2\
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    \2\ Existing laws require public disclosure of settlement terms 
in certain circumstances. The Antitrust Procedures and Penalties 
Act, codified at 15 U.S.C. 16(b)-(h), provides for a notice-and-
comment process before a consent decree can be finalized in civil 
antitrust cases. The Clean Air Act includes a similar requirement, 
42 U.S.C. 7413(g), as do laws relating to cleanup and control of 
hazardous materials. See 42 U.S.C. 9622(d)(2) and (i); 42 U.S.C. 
6973(d); see also 28 CFR 50.7 (providing for a notice-and-comment 
process in civil ``actions to enjoin [the] discharges of 
pollutants.''). Where legal requirements such as these do not apply, 
and to minimize disrupting or delaying the resolution of a wide 
range of routine matters, the Department will limit the Justice 
Manual requirement to cases involving a third-party payment that a 
court could not order in law or in equity. Where a court could order 
such relief, the public is already on notice that it might do so.
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II. Public Comments on the IFR and May 2022 Memorandum

A. Summary of Public Comments

    The comment period for the IFR and the May 2022 Memorandum closed 
on July 11, 2022, and the Department received 16 public comments.\3\ 
The comments express both support for and opposition to the IFR and May 
2022 Memorandum. DOJ is exercising its discretion to respond to public 
comments here.
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    \3\ Regulations.gov contains seventeen comments, one of which is 
a superseded version of a comment omitted from review at the request 
of the commenter. FDMS.gov contains one additional document, which 
is not a comment on the IFR and May 2022 Memorandum.
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B. Response to Comments

1. Applicability of the MRA
    Comments: According to some commenters, under the 1980 OLC opinion 
Effect of 31 U.S.C. Sec.  484 on the Settlement Authority of the 
Attorney General, 4B Op. O.L.C. 684 (1980) (``Effect of 31 U.S.C. Sec.  
484''), money available to the United States is constructively received 
and must be directed to the U.S. Treasury to comply with the MRA. Those 
commenters argue that any deviation from this result, such as an agency 
directing settlement money to a non-governmental third party, is a 
violation of that requirement. In particular, some commenters claim 
that SEPs are a violation of the MRA because the money used for them is 
public and the value of the SEP is exchanged, without congressional 
authorization, for a proportional reduction in the ultimate civil 
penalty that could have been payable to the U.S. Treasury. And still 
others contend that private defendants violate 31 U.S.C. 3302(c) by 
making third-party payments pursuant to settlements.
    One commenter states that DOJ fails to explain why it applies the 
doctrine of constructive receipt from tax law cases (requiring the 
Government to exercise substantive control over the funds without 
significant limitation) to this context and argues that the Department 
has ``cherry-picked a version of constructive receipt in an attempt to 
thwart equity.''
    Several commenters claim that SEPs are illegally diverted penalties 
except for the two instances in which SEPs are expressly authorized by 
statute: 42 U.S.C. 16138, which grants the Executive Branch permission 
to seek SEPs related to diesel emissions reductions; and 42 U.S.C. 
7604(g)(2), which gives courts discretion to order that penalties 
received under the citizens suit provision of the Clean Air Act be used 
to fund beneficial mitigation projects that are consistent with that 
Act and enhance the public health or the environment, up to $100,000. 
Commenters assert that Congress's enactment of these provisions 
indicates that Congress views these types of payments as otherwise 
impermissible.
    One commenter argues that the 2006 Softwood Lumber OLC opinion is 
not persuasive and, even if it were, the commenter claims that it would 
not authorize SEPs, which the commenter claims are designed entirely to 
exchange monetary penalties destined for the Treasury for a particular 
project. This commenter also suggests that caselaw supporting the 
legality of these payments cannot be reconciled with subsequent Supreme 
Court decisions and statutory provisions related to diesel emissions 
projects and citizens suits under the Clean Air Act, and cites 
Comptroller General/U.S. Government Accountability Office (``GAO'') 
opinions as supportive. Commenters further invoke a memorandum authored 
by then-Assistant Attorney General for ENRD Jeffrey Bossert Clark, 
Supplemental Environmental Projects (``SEPs'') in Civil Settlements 
with Private Defendants (Mar. 12, 2020) (``Clark Memorandum''), in 
support of their view that third-party settlements (and SEPs in 
particular) violate the MRA.
    Other commenters cite with approval the OLC view (reflected in the 
May 2022 Memorandum) that settlement-funded projects do not violate the 
MRA if they are executed prior to a finding of the defendant's 
liability and if the United States does not retain control over the 
projects following settlement except for purposes of oversight of the 
settlement. Citing U.S. Environmental Protection Agency Supplemental 
Environmental Projects Policy 2015 Update (Mar. 10, 2015) (``2015 SEP 
Policy''), commenters make the point that SEPs are not substitutes for 
monetary penalties because settlements that include a SEP must always 
include a settlement penalty that recoups the economic benefit a 
violator gained from noncompliance with the law, as well as appropriate 
penalties that reflect the environmental and regulatory harm caused by 
the violations. These commenters state that SEPs are a factor to 
consider in making the decision to settle and on what terms to settle. 
By confusing SEPs with penalties or diversions of Treasury funds, these 
commenters argue, the previous Administration misconstrued decades of 
Federal practice.
    Response: The Department appreciates commenters' statements that 
settlement-funded projects do not violate the MRA if they comply with 
the criteria set forth in Softwood Lumber; and that agreeing to SEPs as 
part of settlement agreements is consistent with those criteria.
    The Department disagrees with commenters' contention that any 
settlement that includes a payment to a non-government third party 
violates the MRA and continues to conclude that the MRA permits such 
settlements in certain circumstances. The MRA requires that ``an 
official or agent of the Government receiving money for the Government 
from any source shall deposit the money in the Treasury as soon as 
practicable without deduction for any charge or claim.'' 31 U.S.C. 
3302(b). The funds paid under these types of settlements, however, are 
not ``drawn from the Treasury'' and have not been ``receiv[ed] . . . 
for the Government'' by the United States.
    Consistent with authoritative OLC opinions and advice, the 
Department

[[Page 97528]]

has long understood that the MRA applies when an official or agent of 
the Government either actually or ``constructively'' receives money for 
the Government. See Effect of 31 U.S.C. Sec.  484, 4B Op. O.L.C. at 
688. ``The doctrine of constructive receipt will ignore the form of a 
transaction in order to get to its substance,'' and the Department has 
accordingly concluded that a Federal agency will be considered to be in 
``constructive receipt'' of money ``if a federal agency could have 
accepted possession and retains discretion to direct the use of the 
money.'' Id.
    To ensure that a settlement including payment to a third party does 
not violate the MRA through constructive receipt, OLC has 
``consistently advised that (1) the settlement be executed before an 
admission or finding of liability in favor of the United States; and 
(2) the United States not retain post-settlement control over the 
disposition or management of the funds or any projects carried out 
under the settlement, except for ensuring that the parties comply with 
the settlement.'' Softwood Lumber, 30 Op. O.L.C. at 119; see also id. 
at 119-20 (citing past precedent, including Effect of 31 U.S.C. Sec.  
384). ``If these two criteria are met, then the governmental control 
over settlement funds is so attenuated that the government cannot be 
said to be `receiving money for the Government' '' under the MRA. Id.
    The May 2022 Memorandum also does not implicate anti-augmentation 
concerns, which the Comptroller General decisions cited by commenters 
invoke in addition to the MRA. See also Applicability of the 
Miscellaneous Receipts Act to an Arbitral Award of Legal Costs, 42 Op. 
OLC 1, 3 (2018) (``[A]n agency may not augment its appropriations from 
outside sources without statutory authority''). The May 2022 Memorandum 
specifies that settlements may not ``be used to satisfy the statutory 
obligation of the Justice Department or any other federal agency to 
perform a particular activity. Nor shall any such settlement provide 
the Justice Department or any other federal agency with additional 
resources to perform a particular activity for which the Justice 
Department or any other federal agency, respectively, receives a 
specific appropriation.'' May 2022 Memorandum at 3.
    Thus, as stated in the May 2022 Memorandum, ``[i]t has been the 
consistent view of the Office of Legal Counsel, including in 2020 when 
the Justice Department's current regulation [now-revoked 28 CFR 50.28] 
was promulgated, that settlements involving payments to non-
governmental third parties, if properly structured, do not violate the 
Miscellaneous Receipts Act.'' Id. at 1. In support of this statement, 
the May 2022 Memorandum cites the OLC memorandum approving the now-
revoked December 2020 Rule for form and legality, which recognized the 
longstanding position of the Department that properly structured 
settlement agreements do not violate the MRA. December 2020 OLC Memo at 
2. This memorandum stated that the rule was ``consistent with the 
policy underlying the MRA--that Congress, and not the agency, should 
determine when government resources may be spent on behalf of third 
parties.'' Id. But it elaborated that the rule ``does not reflect an 
interpretation of the statute itself and thus prohibits certain 
payments to third parties that this Office has concluded that the MRA 
otherwise allows,'' id., as detailed in the cited Softwood Lumber OLC 
opinion. And the May 2022 Memorandum explicitly incorporates the two 
criteria that Softwood Lumber identifies--the ``settlement must be 
executed before an admission or finding of liability in favor of the 
United States, and the Justice Department and its client agencies must 
not retain post-settlement control over the disposition or management 
of the funds or any projects carried out under any such settlement, 
except for ensuring that the parties comply with the settlement.'' May 
2022 Memorandum at 3.
    To the extent that commenters disagree with the Softwood Lumber 
opinion or believe it inapplicable, they do not offer authoritative 
judicial precedents or similar authoritative sources meaningfully 
undercutting its reasoning or its support for the current Department 
policy as set forth in the May 2022 Memorandum. Softwood Lumber remains 
applicable to this context, for several reasons.
    First, Comptroller General opinions cited by commenters were 
addressed in the Softwood Lumber opinion itself, which noted that 
concerns in those matters were ``inapposite'' because the MRA is 
inapplicable where there has been no constructive receipt of money for 
the Government. 30 Op. O.L.C. at 121. (The same rationale applies to 
other GAO documents one commenter cites.) \4\ The Department did not 
depart from that principle in the December 2020 Rule. Moreover, the 
Department has incorporated in some of the restrictions in the May 2022 
Memorandum measures that address some of the other concerns raised in 
those Comptroller General opinions. The May 2022 Memorandum also 
explicitly incorporates the two criteria set forth in the Softwood 
Lumber OLC opinion--the ``settlement must be executed before an 
admission or finding of liability in favor of the United States, and 
the Justice Department and its client agencies must not retain post-
settlement control over the disposition or management of the funds or 
any projects carried out under any such settlement, except for ensuring 
that the parties comply with the settlement.'' May 2022 Memorandum at 
3. Moreover, in all events, decisions of GAO and the Comptroller 
General ``are not binding on Executive Branch agencies''; instead, 
``the opinions of the Attorney General and th[e] Office [of Legal 
Counsel] are controlling.'' Prioritizing Programs to Exempt Small 
Businesses From Competition in Federal Contracts, 33 Op. O.L.C. 284, 
302 (2009).
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    \4\ The Department also notes that these Comptroller General 
decisions did not address the MRA's applicability when the Federal 
Government does not ``retain post-settlement control over the 
disposition or management of the funds or any projects carried out 
under any such settlement, except for ensuring that the parties 
comply with the settlement.'' Softwood Lumber, 30 Op. O.L.C. at 119. 
Moreover, all those decisions involved administrative agencies with 
statutory authority to both impose and also settle administrative 
penalties--a situation distinct from that addressed by the 
Department's May 2022 Memorandum and IFR. And those decisions 
focused on concerns raised when agencies enter settlements under 
which third parties carry out actions within the agencies' own 
statutory responsibilities, and with no nexus to the underlying 
violations--concerns that, again, the May 2022 Memorandum and the 
IFR address.
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    Second, the Softwood Lumber opinion does not, contrary to 
commenters' views, limit its understanding of the criteria for 
consistency with the MRA to its own facts or to the specific examples 
it cites. It instead articulates the two criteria for compliance 
broadly and refers to them as ``general principles'' applicable 
regardless of whether the United States is a plaintiff or defendant. 30 
Op. O.L.C. at 120. See also December 2020 OLC Memo at 2 (citing 
Softwood Lumber for the principle that the MRA generally permits 
``certain payments to third parties'').
    Third, it is irrelevant that one commenter deems unpersuasive two 
circuit-level decisions sometimes invoked to support the legality of 
settlement payments--Public Interest Research Group v. Powell Duffryn 
Terminals, Inc., 913 F.2d 64, 81 (3d Cir. 1990), and Sierra Club v. 
Electronic Controls Design, 909 F.2d 1350, 1354 (1990). Softwood Lumber 
does not rely on these decisions. The commenter, moreover, criticizes 
these decisions in part on the ground that ``Congress has subsequently 
indicated that SEPs (and thus all Third-Party Payments) violate

[[Page 97529]]

the MRA'' and the Anti-Deficiency Act (``ADA'') ``absent explicit 
congressional authorization,'' referring to Congress's express 
authorization of SEPs in 42 U.S.C. 16138. The Department disagrees with 
the commenter's reading of that provision, for reasons given below. 
Finally, the commenter claims that Kokesh v. SEC, 137 S. Ct. 1635 
(2017), clarified that what constitutes a ``penalty'' is a functional 
inquiry. Kokesh, however, held that monetary disgorgement ordered by 
the SEC constitutes a penalty within the meaning of 28 U.S.C. 2462. Id. 
at 1641-45. Kokesh did not involve a settlement, and it is not relevant 
to when money paid under a settlement is received by the Federal 
Government under the MRA.
    Fourth, when commenters contend that private defendants violate 31 
U.S.C. 3302(c) by making third-party payments pursuant to settlements, 
they assume that funds in the hands of private defendants are ``public 
money'' subject to the MRA. Under Softwood Lumber, however, such funds 
are not public monies. And the commenters' argument improperly 
conflates funds in the hands of private litigants, before any 
determination of liability, with penalties imposed after trial that may 
in some circumstances constitute public money. See Pub. Int. Rsch. 
Grp., 913 F.2d at 81 n.32 (noting that section 3302(c)(1) applies to 
penalties imposed after a trial, but recognizing that outside of 
penalties, ``a [private] party may compromise its claim however it sees 
fit''); United States v. Smithfield Foods, Inc., 982 F. Supp. 373, 374 
(E.D. Va. 1997) (finding with respect to a Clean Water Act penalty 
imposed after a trial that ``a penalty, which is imposed pursuant to a 
federal statute, in a suit brought by the federal government, . . . 
constitutes `public money.' As such, it must be deposited with the 
Treasury, in accordance with the Miscellaneous Receipts Act, unless 
otherwise specified by Congress'').
    Fifth, the Attorney General has not ``cherry-picked'' a favorable 
definition of ``constructive receipt'' to avoid violation of the MRA. 
To the contrary, the 1980 OLC opinion cited by the commenter applied 
the doctrine of ``constructive receipt'' as a ``practical'' constraint 
to guard against elevating form over substance in evaluating whether a 
settlement violated the MRA. Effect of 31 U.S.C. 484, 4B Op. O.L.C. at 
688. In addition, as the comment itself acknowledges, there is no 
definitive version of the constructive receipt doctrine that is clearly 
applicable to the types of settlements at issue here and that differs 
from the Department's approach. Moreover, as Effect of 31 U.S.C. 484 
notes, the Department and Federal agencies had previously applied the 
same definition in other contexts, including to conclude that an 
individual in some circumstances does not ``accept'' funds when the 
individual does not retain control over the disposition of those funds. 
Id. at 688 n.11. That further undercuts the argument that the 
Department has chosen a particular version of the doctrine in order to 
permit circumvention of the MRA.
    The Department also disagrees with the assertion that 42 U.S.C. 
16138 (enacted in 2008) undercuts the legality of payments to third 
parties. That provision addresses EPA's authority to accept diesel 
emissions reduction SEPs. The commenter broadly states that the ``clear 
implication'' of this provision is that diesel emission SEPs (and 
accordingly all third-party payments) violate the MRA and the ADA 
absent express congressional authorization. But this claim ignores the 
text, context, and history of section 16138, which make clear that 
Congress enacted the 2008 provision to address a narrow concern that 
EPA then believed had newly arisen from Congress's express 
appropriations for diesel retrofit projects.
    As an initial matter, nothing in the text of section 16138 
indicates that it broadly prohibits the Federal Government from 
entering into settlement agreements that include payments to third 
parties. On the contrary, by its terms, it provides that the EPA ``may 
accept . . . diesel emissions reduction Supplemental Environmental 
Projects'' that meet certain criteria ``as part of a settlement of any 
alleged violates of environmental law.'' 42 U.S.C. 16138. To the extent 
that the commenter relies on the interpretive cannon expressio unius 
est exclusio alterius--that expressing one item of an associated group 
or series excludes another--that canon applies ``only when 
circumstances support a sensible inference that the term left out must 
have been meant to be excluded.'' NLRB v. SW Gen., Inc., 580 U.S. 288, 
302 (2017) (quotation marks and brackets omitted). Here, it is not 
``sensible'' to ``infer[ ],'' id., that Congress intended to disrupt 
the Federal Government's long-standing practice of entering into 
settlement agreements that include third-party payments from a 
provision that authorizes the Federal Government to agree to one such 
type of agreement--i.e., those that include ``diesel emissions 
reduction Supplemental Environmental Projects,'' 42 U.S.C. 16138.
    The history and context of section 16138 confirm this conclusion. 
As the Senate report accompanying the legislation states, SEPs had 
historically ``been an important funding stream for diesel retrofit 
projects.'' S. Rep. No. 110-266, at 2 (2008). The report notes that 
SEPs are ``projects [that] are undertaken by a defendant as part of a 
settlement in an environmental enforcement action . . . . They 
specifically do not include actions which a defendant is otherwise 
legally required to perform. So they generate environmental and public 
health benefits that would not have occurred without the settlement.'' 
Id. However, after Congress first funded the diesel retrofit program in 
2005, the report continues, ``EPA apparently . . . concluded that the 
Agency generally should cease funding diesel retrofit projects via 
SEPs. EPA believes that allowing diesel retrofits to be funded by SEPs 
once Congress has specifically appropriated monies for that purpose 
could violate the Miscellaneous Receipts Act.'' Id. The Senate report 
explains that the new provision was ``intended to clarify that Congress 
did not intend the funding of the Diesel Emissions Reduction Act to 
affect EPA's ability to enter into SEPs that fund diesel retrofit 
projects.'' Id. Rather, ``Congress never intended the Diesel Emissions 
Reduction Act to limit EPA's ability to negotiate additional diesel 
retrofit projects as part of enforcement settlements.'' Id. at 3.
    This history makes clear that Congress enacted the 2008 provision 
to address the narrow concern that, at the time, EPA believed had 
arisen from Congress's express appropriations in 2005 for diesel 
retrofit projects. Congress clarified that it had ``never intended'' to 
limit EPA's ability to negotiate SEPs when it funded the diesel 
retrofit program. Id. Neither the text nor the history or context of 
how section 16138 came about suggest that Congress understood SEPs to 
violate the MRA as a general matter. To the contrary, Congress was 
aware of EPA's and the Department's practice of using SEPs in 
environmental enforcement settlements and enacted this provision to 
support that practice and ensure that diesel retrofit projects would 
continue to be included. See S. Rep. No. 110-266, at 2.\5\
---------------------------------------------------------------------------

    \5\ Indeed, as one recent article put it, ``there is no evidence 
in the text or legislative history of the 2008 . . . amendment to 
show that Congress intended for the amendment to preclude EPA from 
accepting SEPs absent clear congressional authorization.'' Daniel 
Alvarez et al., Clearing the Air on Supplemental Environmental 
Projects, 54 Env't L. Rep. 10382, 10394 (2024).

---------------------------------------------------------------------------

[[Page 97530]]

    The Department also disagrees with the same commenter's argument 
that 42 U.S.C. 7604(g)(2) undercuts the legality of payments to third 
parties in settlements, including SEPs. That provision allows a court 
to order that up to $100,000 of a penalty award in a citizen suit 
brought under the Clean Air Act to be used for ``beneficial mitigation 
projects which are consistent with'' the Clean Air Act and ``enhance 
the public health or the environment'' in lieu of being deposited in 
the U.S. Treasury. 42 U.S.C. 7604(g)(2). Like 42 U.S.C. 16138, nothing 
in the text of section 7604(g)(2) suggests that, in adopting that 
provision, Congress intended to upend the practice of agreeing to 
third-party payments as part of settlement agreements. Nor is that a 
``sensible inference,'' SW Gen., 580 U.S. at 302; section 7604(g)(2) is 
limited to cases brought by private citizens to abate pollution under 
the Clean Air Act and authorizes courts to order certain environmental 
projects in lieu of penalties--authority that, absent this provision, 
courts would lack.
    The history of that provision confirms its limited scope. Section 
7604(g)(2) was adopted as part of the Clean Air Act Amendments of 1990, 
Public Law 101-549, tit. VII, sec. 707, 104 Stat. 2399, 2682-83. One 
provision of that law, codified at 42 U.S.C. 7604(g)(1), created a 
special fund into which penalties imposed in Clean Air Act citizen suit 
actions ``shall be deposited''; the very next subsection, section 
7604(g)(2), then provided that ``notwithstanding paragraph (1)'' courts 
had the authority to instead order the use of such civil penalty monies 
for beneficial mitigation projects. The close connection between these 
subsections--including the fact that section 7604(g)(2) twice cross-
references section 7604(g)(1)--further indicates that section 
7604(g)(2) was directed specifically to judicial remedies in citizen 
litigation under the Clean Air Act.\6\ Congress's decision to authorize 
a court to order certain defined projects in the limited context of 
these private suits after a court determination of liability and 
penalty assessment has no bearing on the Government's authority to seek 
appropriate relief in a settlement.
---------------------------------------------------------------------------

    \6\ The two provisions were closely linked in the legislative 
history of the 1990 Clean Air Act Amendments. The conference report 
describes the two provisions together in a single sentence, stating 
that ``[t]he House amendment establishes a special treasury fund 
similar to the one created in the Senate bill, and also authorizes 
courts in citizen suits to order that penalties be used in 
beneficial mitigation projects'' and noting that ``[t]he conference 
agreement adopts the House position.'' Congressional Research 
Service, A Legislative History of the Clean Air Act Amendments of 
1990, at 946 (1993). Again, nothing here suggests that Congress 
intended to upend the practice of agreeing to third-party payments 
as part of settlement agreements.
---------------------------------------------------------------------------

    In addition, the Department disagrees with commenters who contend 
that a third-party payment in the form of a SEP amounts to an agreement 
to trade back part of the penalty that would constitute public money 
subject to the MRA. Such trading back of penalties for third-party 
payments is not authorized by this rule or the May 2022 Memorandum. To 
the extent commenters suggest that such trade backs are permissible 
under the 2015 SEP Policy, the Department notes that while that policy 
is beyond the scope of this rulemaking, it also does not authorize such 
trade backs. Nor does the Government violate the MRA simply because it 
settles a penalty claim that, if pursued to judgment, would have 
yielded public money subject to the MRA. Instead, the factors outlined 
in Softwood Lumber identify when the Government has constructively 
received money under the MRA.
    Finally, the Department notes that the Clark Memorandum--which 
commenters cited in connection with this topic and for purposes of 
other topics--has been withdrawn and was not adopted more broadly by 
the Department. See Memorandum for ENRD Section Chiefs and Deputy 
Section Chiefs from Deputy Assistant Attorney General Jean E. Williams, 
Env't & Nat. Res. Div., U.S. Dep't of Just., Withdrawal of Memoranda 
and Policy Documents (Feb. 4, 2021), https://www.justice.gov/enrd/page/file/1364716/dl (last visited Oct. 31, 2024). Any related memoranda to 
the withdrawn Clark Memorandum and associated litigation filings also 
were not adopted more broadly by the Department. The Department has 
also addressed arguments made in the Clark Memorandum (which several 
commenters have repeated) elsewhere in this document.
2. The Anti-Deficiency Act
    Comments: Some commenters state that the ADA, 31 U.S.C. 1341, was 
enacted to implement the Appropriations Clause of the U.S. 
Constitution. According to these commenters, it is a violation of the 
ADA for a settlement agreement to divert any funds from the U.S. 
Treasury into private hands without congressional authorization.
    Other commenters state that there is no violation of the ADA 
because in these settlements, the Federal Government never received any 
funds to expend without congressional appropriation.
    Response: The Department agrees that settlements that include 
third-party payments do not violate the ADA. The ADA generally 
prohibits any expenditure or obligation of public money exceeding an 
amount ``available in an appropriation or fund for the expenditure or 
obligation. . . .'' 31 U.S.C. 1341(a)(1)(A). As discussed above, see 
supra Part II.B.1, where a settlement is ``executed before an admission 
or finding of liability in favor of the United States'' and where the 
United States does not ``retain post-settlement control over the 
disposition or management of the funds or any projects carried out 
under any such settlement, except for ensuring that the parties comply 
with the settlement,'' the Government has not `` `received money for 
the Government.' '' Softwood Lumber, 30 Op. O.L.C. at 119 (quoting 31 
U.S.C. 3302(b)). In such settlements, no Government official or 
employee expends public money or creates an obligation of the 
Government.
3. Constitutionality of the Department's Actions
    Comments: Multiple commenters state that the power to tax and the 
power to spend are granted only to Congress under Article I of the 
Constitution. They state that under the Appropriations Clause, only 
Congress has the authority to direct how Federal dollars are spent, and 
that body enacts annual appropriations measures mandating how Federal 
agencies do so. These commenters contend that the long-standing 
practices of the Department reflected in the May 2022 Memorandum 
circumvent these constitutional obligations. Additionally, commenters 
argue that through these settlements, DOJ is usurping the role of the 
legislature, without clear direction from Congress to do so. One 
commenter also claims that SEPs and similar payments to third parties 
use ``lawful enforcement authority to extract unlawful settlements,'' 
which, in the commenters' view, is inconsistent with the requirement in 
Article II of the Constitution that ``the executive take Care that the 
Laws be faithfully executed.''
    Response: Third-party settlements entered into consistent with 
Softwood Lumber and the May 2022 Memorandum are consistent with the 
Constitution, as well as the MRA. The Constitution provides that ``[n]o 
Money shall be drawn from the Treasury, but in Consequence of 
Appropriations made by Law,'' U.S. Const. art. I, sec. 9, cl. 7, and 
that ``[t]he Congress shall have

[[Page 97531]]

Power . . . to pay the Debts and provide for the common Defence and 
general Welfare of the United States,'' id. art. I, sec. 8, cl. 1. In 
such settlements, no money is ``drawn from the Treasury.'' Nor does 
Congress's authority to provide for the ``general Welfare'' preclude 
the Executive Branch from settling litigation on terms that are 
otherwise consistent with applicable law.
    The MRA helps ``preserve[ ] Congress's constitutional control over 
the expenditure of public funds.'' Applicability of the Miscellaneous 
Receipts Act to an Arbitral Award of Legal Costs, 42 Op. O.L.C. _, at 
*3 (Mar. 6, 2018). Similar to how the Framers of the Constitution 
limited the Appropriations Clause's commands to ``Money . . . drawn 
from the Treasury,'' Congress limited the MRA to ``money'' ``receiv[ed] 
. . . for the Government.'' And as discussed above in the responses to 
commenters, see supra Parts II.B.1 and II.B.2, funds paid under 
settlements that include third-party payments are not ``drawn from the 
Treasury'' and have not been ``receiv[ed] . . . for the Government'' by 
the United States. Commenters are also incorrect that the May 2022 
Memorandum circumvents the Appropriations Clause and the MRA; on the 
contrary, the May 2022 Memorandum goes beyond what the Appropriations 
Clause and the MRA require. See May 2022 Memorandum at 2-4. To the 
extent the constitutional arguments of commenters also rely on their 
interpretation of the MRA or ADA, the Department addresses those 
arguments above.
    Moreover, appropriately structured third-party payments are 
consistent with the discretion the Constitution accords the Executive 
Branch in enforcing the statutes enacted by Congress, which--absent a 
limitation by Congress--includes the authority to resolve claims by 
settlement on appropriate terms. Authority of the United States to 
Enter Settlements, 23 Op. O.L.C. at 135 (``The settlement power is 
sweeping, but the Attorney General must still exercise her discretion 
in conformity with her obligation to `enforce the Acts of Congress.' '' 
(citation omitted)). While the Take Care Clause can impose certain 
limitations on that power, see id. at 138, the commenter offers no 
explanation for why all third-party settlements violate that provision 
beyond the conclusory statement that they ``obviously'' do.
4. Revocation of the December 2020 Rule and Issuance of the May 2022 
Memorandum as Arbitrary and Capricious
    Comments: Several commenters argue that the revocation of the 
December 2020 Rule is arbitrary and capricious or not grounded in law, 
or otherwise claim that DOJ lacks sufficient bases to justify the 
action. They argue that DOJ's conclusion that the December 2020 Rule is 
``more restrictive and less tailored than necessary,'' 87 FR 27937, 
does not support repealing the entire rule. They further argue that the 
Department's statement that settlement policies ``have traditionally 
been addressed through memoranda,'' id., is not sufficient to justify 
repeal.
    Commenters assert that the Department placed the prior policy in 
regulations and that failing to do so here is a ``bad system of 
management'' because there is ``no central repository'' where the 
public and officials could locate memos governing the agency. One 
commenter states further that the May 2022 Memorandum describing the 
Department's new policy cites to an OLC memorandum that has not been 
produced via a Freedom of Information Act (``FOIA'') request and so 
itself is not available to the public.
    Response: It is well-established that ``[a]gencies are free to 
change their existing policies as long as they provide a reasoned 
explanation for the change.'' Encino Motorcars, LLC v. Navarro, 579 
U.S. 211, 221 (2016). ``When an agency changes its existing position, 
it `need not always provide a more detailed justification than what 
would suffice for a new policy created on a blank slate.' '' Id. 
(quoting FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 
(2009)). ``But the agency must at least `display awareness that it is 
changing position' and `show that there are good reasons for the new 
policy.' '' Id. (quoting Fox Television Stations, 556 U.S. at 515). The 
IFR and the May 2022 Memorandum describe sound reasons for the 
revocation of 28 CFR 50.28 and a change in policy. Appropriately 
tailored ``agreements providing for payments to third parties are 
lawful and allow the United States to more fully accomplish the primary 
goals of civil and criminal enforcement: Compensating victims, 
remedying harm, and punishing and deterring unlawful conduct.'' 87 FR 
27937. ``For example, the harms caused by violations of Federal 
environmental statutes . . . can be difficult to redress directly in 
particular cases''; and in such circumstances, third-party payments 
(including SEPs) can ``help achieve an enforcement action's goals.'' 
Id. Please see the other responses in this document to comments raising 
specific legal and policy concerns, especially Parts II.B.1 and 5, that 
underscore the reasons the Department changed policy.
    Turning to the question of the form of the new policy, the 
Department observes that the previous Administration itself recognized 
that 28 CFR 50.28 was `` `limited to agency organization, management, 
or personnel matters'. . . .'' 85 FR 81410 (citing 5 U.S.C. 553(a)(2), 
(b), and (d)). The same is true with respect to the IFR and with 
respect to this final rule. In such areas, Federal agencies have 
flexibility as to how they act and memorialize their actions. Cf. Perez 
v. Mortg. Bankers Ass'n, 575 U.S. 92, 101 (2015) (``Because an agency 
is not required to use notice-and-comment procedures [under the APA] to 
issue an initial interpretive rule, it is also not required to use 
those procedures when it amends or repeals that interpretive rule.''). 
Moreover, as the IFR states in announcing the revocation of 28 CFR 
50.28, DOJ policies addressing the goals of settlements have 
``traditionally'' been announced in memoranda. 87 FR 27937. Also of 
note, the previous Administration did not undertake a notice-and-
comment rulemaking process; instead, it promulgated 28 CFR 50.28 as an 
immediately effective final rule. Likewise, in 2022, DOJ revoked this 
provision as an interim final rule and released simultaneously the May 
2022 Memorandum and posted it to the DOJ website. See https://www.justice.gov/media/1221546/dl?inline= (last visited Oct. 31, 2024). 
At its discretion, the Department took the further step of requesting 
public comment as to those actions and is responding to significant 
submitted public comments in this final rule.
    In response to the commenter who suggests that a memorandum is not 
appropriate because of the lack of a ``central repository'' for 
Department policy and states that the policy should be in the Justice 
Manual or Code of Federal Regulations, the Department notes that the 
memorandum is reflected in the Justice Manual, which is publicly 
available on the Justice.gov website. See Settlement Agreements 
Involving Payments to Non-Governmental Third Parties, section 1-17.000. 
Including these provisions in the Justice Manual is preferable because 
Justice Manual provisions can be readily amended, allowing the 
Department to adjust the guidance governing additional circumstances 
and fact patterns as needed. The Justice Manual governs the litigation 
practices of the Department

[[Page 97532]]

and is followed by Department litigators; a regulation is not needed 
for this purpose. Further, the Department has announced with this 
notice that it will make changes to these Justice Manual provisions, 
demonstrating the benefits of this approach.
    Finally, as to the question of the release under FOIA of December 
2020 OLC Memo, which is referenced in footnote two of the May 2022 
Memorandum, DOJ did release this document (posted on February 16, 2023) 
and it is available in the FOIA Reading Room at https://www.justice.gov/oip/foia-library/foia-processed/general_topics/settlement_guidelines_third_parties_2_14_23/download (last visited Oct. 
31, 2024).
5. The Attorney General's Guidelines and Limitations as Public Policy
5.1. Examples of Past Department of Justice Conduct as a Basis for Not 
Revoking the December 2020 Rule and Issuing the May 2022 Memorandum
    Comments: Some commenters state that during the Clinton, Bush, and 
Obama Administrations, the Department entered into settlement 
agreements containing third-party payments that violated the statutory 
and constitutional provisions discussed in the previous topics; and 
further stated that these settlement agreements reflect bad public 
policy. Examples offered include settlements with financial 
institutions following the 2008-09 financial crisis; settlements 
addressing ``housing counseling assistance'' programs; cy pres 
settlements in other consumer and civil rights cases; and settlements 
in environmental cases. Commenters argued that these settlements 
demonstrate that case resolutions will lead to favoritism or 
``cronyism.'' Several commenters further asserted that Congress 
declined to enact funding for some programs where similar activities 
were subsequently at least partially funded through third-party 
payments. Commenters also alleged that the Federal Government ``strong-
armed'' defendants in some of these settlements to make payments to 
politically favored entities. Requiring defendants to donate to 
activist groups selected by the Department, they argue, raises serious 
legal and ethical issues, erodes public trust, and is analogous to 
``corruption.'' Commenters also expressed concern about the ``lack of 
transparency'' surrounding third-party payments, and about decisions 
made by ``unaccountable bureaucrats.''
    Response: Some of the points raised by commenters do not relate to 
the substance of the action on which the Department is seeking comment. 
For example, cy pres class action settlements are expressly outside the 
scope of the Department's action. See May 2022 Memorandum at 1 n.2.
    A general prohibition by rule on third-party payments is 
unnecessary for several reasons. First, with respect to conflict-of-
interest concerns, Department attorneys are subject to strict conflict 
of interest rules imposed by the Department and their respective State 
bars that apply in the context of litigation, including the settlement 
of claims. Second, the Department has concluded that, although the 
commenters' concerns are unfounded based on past settlements, it can 
best proactively address such concerns through the use of policies like 
the May 2022 Memorandum, or changes to the Justice Manual, rather than 
a less flexible rulemaking process. Indeed, the May 2022 Memorandum 
sets forth guidelines designed to ensure that third-party settlements 
are not used for improper purposes, including a requirement that 
projects ``have a strong connection to the underlying violation or 
violations of federal law at issue'' and a provision barring the 
Department and its client agencies from ``propos[ing] the selection of 
any particular third party to receive payments to implement any project 
carried out under any such settlement.'' May 2022 Memorandum at 3. 
These guidelines adequately guard against cronyism and political 
favoritism while preserving the benefits of third-party payments. Third 
(and relatedly), the Department notes that allowing for third-party 
payments can increase trust in the judicial process by, for example, 
allowing settlements to be more responsive to affected communities.
    For similar reasons, the Department disagrees that a rule 
prohibiting third-party payments is necessary to ensure transparency. 
As detailed earlier in this preamble, see supra Part I.C, transparency 
concerns can be addressed through other means, including the revisions 
to the Justice Manual described there. Those revisions appropriately 
balance concerns of transparency and efficiency with the benefits that 
can accrue from third-party settlements in a way that a rule banning 
third-party settlements would not. Nor is a rule necessary to ensure 
that unaccountable actors are not making important settlement 
decisions. Rather, the Department can ensure accountability through 
other means, such as subjecting settlements that include third-party 
payments to approval requirements similar to those required for other 
significant departmental actions. See May 2022 Memorandum at 3-4 
(settlements involving a payment to a non-governmental third party must 
obtain the approval of the Deputy Attorney General or the Associate 
Attorney General, with certain exceptions).
    To the extent that commenters suggest that Congress's decision not 
to fund certain activities is evidence that it is improper for the 
Department to agree to third-party payments that would fund such 
activities, they have not provided any reason to draw an inference that 
Congress's inaction evinces an intent to affirmatively disapprove such 
settlements.
    Some commenters identified particular past payments to third-party 
organizations that they view as inappropriate, including settlements 
involving allegations of lending discrimination that required the 
defendant to make payments to third-party organizations to conduct 
general public education and awareness projects and a 2006 
environmental non-prosecution agreement requiring a third-party payment 
in the form of ``$1 million to the Alumni Association for the United 
States Coast Guard Academy, New London, Connecticut to fund an Endowed 
Chair of Environmental Studies.'' The Department, while not conceding 
to the commenters' characterizations of these settlements, is sensitive 
to the need to give the public confidence that settlements providing 
for payments to third parties are appropriately tailored. In that vein, 
the May 2022 Memorandum provides that ``[n]o such settlement shall 
require payments to non-governmental third parties solely for general 
public educational or awareness projects; solely in the form of 
contributions to generalized research, including at a college or 
university; or in the form of unrestricted cash donations.''
5.2. Selection of Third-Party Recipients
    Comments: One commenter would revise the May 2022 Memorandum to 
allow DOJ and EPA to work with affected community members in two 
respects: to devise appropriate SEPs and to suggest appropriate third-
party recipients. The commenter says that the May 2022 Memorandum can 
be read to give defendants ``sole control'' in selecting projects 
because it prohibits Department selection of a specific third party and 
allows the defendant to propose projects. The commenter argues that 
impacted communities may know how best to remedy harm done to them, and 
they should not be required to work directly with the party causing the 
harm. Such revisions, the comment

[[Page 97533]]

continues, would also help to prevent funding of organizations 
improperly favored by defendants.
    Several commenters argue that under the May 2022 Memorandum, DOJ 
has too great a role in the selection of the recipients of third-party 
payments, which will lead to the funding of ``political allies.'' Other 
commenters similarly express concerns about ``steer[ing] settlement 
funds to political allies,'' ``picking winners,'' or funneling funds to 
``advocacy groups'' for ``favored programs.''
    Response: The Department acknowledges the concerns with allowing 
defendants sole authority to select third-party recipients, but in 
order to avoid the appearance that the Department is directing the 
inclusion of particular projects or third parties into a settlement, 
declines to adopt a policy under which the Department would make such 
selections. And the Department has addressed these concerns through 
other means to help ensure appropriate project selection. For example, 
under the May 2022 Memorandum, ``projects must have a strong connection 
to the underlying violation,'' ``be consistent with the underlying 
statute,'' and ``advance at least one of [the statute's] objectives.'' 
May 2022 Memorandum at 3. ``The project should also be designed to 
reduce the detrimental effects of the underlying violation . . . to the 
extent feasible and reduce the likelihood of similar violations in the 
future.'' Id. Moreover, the Department and its client agencies ``may 
specify the type of entity'' to be the beneficiary of any projects 
carried out, id., and may ``disapprove of any third-party implementer 
or beneficiary that the defendant proposes'' provided that the 
disapproval is based upon objective criteria for assessing 
qualifications and fitness outlined in the settlement agreement. Id. 
The May 2022 Memorandum also expressly precludes certain payments that 
would ordinarily be too broad to satisfy the criteria above: 
Settlements may not ``require payments to non-governmental third 
parties solely for general public educational or awareness projects; 
solely in the form of contributions to generalized research . . . or in 
the form of unrestricted cash donations.'' Id. Thus, these provisions 
rule out Federal selection of any particular recipient but permit the 
United States to disapprove a particular recipient based on objective 
grounds laid out in the settlement agreement.
    In addition, the Department can address the concerns about 
defendants selecting projects in other ways. The May 2022 Memorandum 
``provides internal Justice Department guidance only.'' May 2022 
Memorandum at 2. Nothing prevents a community from engaging with the 
defendant at any time, including regarding potential SEPs. Moreover, 
once a defendant expresses interest in or proposes a third-party 
payment as part of a judicial settlement, Department attorneys and 
their client agencies may encourage the defendant to seek input from 
affected communities on their proposal. Defendants may choose to 
consult with the community to identify the community's needs and 
concerns in advance of agreeing to a settlement, which would help 
satisfy the Department's requirement that third-party payments have a 
strong connection to the allegations and advance the underlying 
statutory purpose. The Department will also add a provision to Justice 
Manual section 1-17.000 that provides for public comment on certain 
settlements that include these types of payments, see supra Part I.C, 
so the public will be able to provide input on the particular remedies 
identified in the settlement.
    Finally, with respect to concerns that the Department would steer 
settlement funds to political allies, pick winners, or funnel funds to 
favored groups and programs, the requirements detailed above operate to 
ensure, as stated in the May 2022 Memorandum, that third-party payments 
function properly as ``critical tools for addressing violations of 
federal law and remedying the harms those violations cause.'' May 2022 
Memorandum at 2. The Department would not support the use of partisan 
or viewpoint-based criteria in determining how to implement a third-
party payment, as those would not be ``objective criteria,'' id. at 3; 
such criteria could give rise to an inference that a potential 
recipient of a third-party payment was rejected based on the 
Department's disfavoring of that particular partisan characteristic or 
viewpoint.
5.3. Guidelines and Limitations: Adequacy To Constrain Settlement 
Discretion
    Comment: One commenter views the May 2022 Memorandum as ``window-
dressing that will reopen avenues of past abuse'' of the Department's 
settlement discretion. In this commenter's view, the guidelines still 
permit the Department to indicate the category of recipient of third-
party payments and to disapprove specific recipients based on criteria 
the Department itself selects, and even the express prohibition of 
certain types of third-party payments can be circumvented by allowing 
some minimal funding of another type of activity or minimal statement 
of conditions for cash donations. The commenter made several further 
similar criticisms addressed below.
    Response: The Department disagrees with the characterization that 
the May 2022 Memorandum does not sufficiently constrain its settlement 
discretion. On the contrary, the memorandum's provisions impose 
significant and appropriate constraints on the use of this tool. The 
guidelines and limitations operate together to ensure that settlement 
agreements providing for payments to non-governmental third parties are 
structured properly, and are consistent with applicable law. See May 
2022 Memorandum at 2-3. The requirement that the Deputy Attorney 
General or Associate Attorney General approve a settlement containing a 
third-party payment also promotes consistency in application of the May 
2022 Memorandum's terms. See id. at 3-4.
    The commenter states that the prohibition on third-party payments 
``solely'' for general public educational or awareness projects or 
generalized research is not constraining because a settlement could 
``allocate any amount of the settlement money to some other activity 
that is not public education, awareness, or generalized research'' in 
order to ``skirt this limitation.'' That misunderstands the relevant 
limitation. The term ``solely'' is intended to recognize that a project 
that otherwise complies with the guidelines set forth in the May 2022 
Memorandum could also have an incidental effect of public education or 
awareness or could have incidental benefits to generalized research. 
The Department now clarifies that no portion of a settlement may be 
directed at these prohibited purposes. For example, a settlement 
addressing the lead-based-paint violations of a commercial renovator 
may include a third-party payment in the form of a project to remediate 
lead-based paint in a nearby school. The settlement may have the 
incidental effect of educating school attendees, their families, and 
the local community about the dangers of lead paint, but no portion of 
the third-party project could be directly used for a public awareness 
campaign.
    The commenter further argues that the requirement of a ``strong 
connection to the underlying violation or violations of federal law at 
issue in the enforcement action,'' May 2022 Memorandum at 3, is not a 
significant constraint. The commenter suggests that this provision 
requires only a connection to the broad purposes of the underlying 
statute,

[[Page 97534]]

which the commenter states is ``highly subjective.'' The Department 
disagrees. The same provision of the May 2022 Memorandum states that 
``[t]he project should also be designed to reduce the detrimental 
effects of the violation or violations at issue to the extent feasible 
and reduce the likelihood of similar violations in the future.'' May 
2022 Memorandum at 3. Linking the project to the detrimental effects of 
the violation (and preventing recurrence) requires a strong connection 
to the harms associated with the underlying violation; for violations 
that affect a particular geographic area, this requirement will also 
mandate that the project be linked to that area.
    The commenter describes the limitation that a project ``should also 
be designed to reduce the detrimental effects of the underlying 
violation or violations at issue to the extent feasible and reduce the 
likelihood of similar violations in the future,'' id., as expressing an 
``aspirational preference, not a requirement of agency settlements.'' 
This is incorrect. The May 2022 Memorandum requires that a properly 
structured settlement must address this factor ``to the extent 
feasible.'' May 2022 Memorandum at 3. This qualification recognizes 
that, in some instances, it may be difficult to reduce the detrimental 
effects of a past violation of law where those effects are widely 
shared.
    The commenter states that the provision limiting third-party 
payments for activities for which an agency receives a specific 
appropriation will not be effective, stating that ``[t]o sidestep these 
guidelines, an outside group need only describe the project for which 
it may receive settlement funds in a manner that differentiates the 
project from an agency's appropriations or statutory obligations.'' 
This is also incorrect. The Department will review any proposals for 
overlap between a project and appropriations that an agency receives 
and will not rely solely on the description of the project by the 
defendant or any other party.
    The commenter also questions the benefits of the provisions of the 
May 2022 Memorandum providing for review and approval by the Deputy 
Attorney General or Associate Attorney General of settlements that 
include payments to non-governmental third parties. The Department has 
long required that certain significant settlements be approved by the 
Deputy Attorney General or Associate Attorney General. 28 CFR 0.160, 
0.161. These requirements ensure that certain types of case resolution 
receive appropriate review and attention within the Department. The 
provisions of the May 2022 Memorandum requiring such approval for 
settlements including payments to non-governmental third parties are 
consistent with these longstanding provisions and will similarly ensure 
that the memorandum's provisions are applied consistently and 
uniformly.
    The commenter also appears to presume that DOJ controls the 
development of third-party payment provisions. The Department will 
adopt a provision in Justice Manual section 1-17.000 clarifying that in 
negotiating a civil case resolution, the Department and its client 
agencies may condition a settlement on the inclusion of a third-party 
payment if the third-party payment constitutes relief that a court 
would have authority to order under applicable law or in equity, but 
that otherwise such provisions may only be included if the defendant 
expresses interest in doing so. Outside the context of relief that a 
court could order, then, these provisions will be included only where 
the defendant expresses interest in doing so. Second, the defendant has 
the lead on developing the proposed project, which must have a ``strong 
connection'' to the violation of Federal law underlying the case.
    In addition, in many civil cases, following the conclusion of 
settlement negotiations, there is a public process for entry of a 
proposed Federal consent decree. 15 U.S.C. 16(b)-(h); 28 CFR 50.7. Once 
the United States files the proposed consent decree in Federal court, 
there is typically a period in which the general public may comment, 
including on any provisions addressing third-party payments. The 
Federal court then considers any resulting comments and exercises its 
own independent judgment in deciding whether to approve such a decree. 
The Department will add a provision to Justice Manual section 1-17.000 
requiring a public comment process for certain civil third-party 
payments subject to the May 2022 Memorandum, so that the public will 
have additional opportunities for input on such provisions. This 
requirement will afford additional transparency for settlements 
including such remedies.
5.4. Guidelines and Limitations: Prohibition on Post-Settlement Control
    Comment: According to one commenter, the recipients of third-party 
payments under the May 2022 Memorandum are not subject to reporting 
obligations to ensure oversight and accountability because DOJ and its 
client agencies cannot `` `retai[n] post-settlement control over the 
disposition or management of the funds or any projects carried out 
under any such settlement.' ''
    Response: The prohibition against post-settlement control is 
designed to address the requirements of the MRA. See supra Part II.B.1. 
This does not mean, however, that DOJ will not oversee the settlement 
and ensure the defendant's compliance with it. In fact, the fourth 
guideline in the May 2022 Memorandum specifically allows for this:

    Any such settlement must be executed before an admission or 
finding of liability in favor of the United States, and the Justice 
Department and its client agencies must not retain post-settlement 
control over the disposition or management of the funds or any 
projects carried out under any such settlement, except for ensuring 
that the parties comply with the settlement.

May 2022 Memorandum at 3 (emphasis added) (citing Softwood Lumber, 30 
Op. O.L.C. at 119).
    In addition, Federal consent decrees and settlements in civil cases 
contain standard provisions to ensure compliance, typically including 
stipulated penalties for failure to complete required actions spelled 
out in the agreement. Settlement agreements including a third-party 
payment may also contain specific terms addressing implementation and 
compliance. The Government can seek enforcement of these provisions to 
ensure compliance with the terms of the settlement or consent decree. 
Furthermore, following the conclusion of settlement negotiations, the 
Department will require opportunity for public comment on certain 
settlements that incorporate third-party payments in Justice Manual 
section 1-17.000, which will provide a mechanism for additional 
accountability on such terms. See supra Part I.C. (Such a public 
process is often already required by law, 15 U.S.C. 16(b)-(h), 28 CFR 
50.7.)
6. Comments Regarding SEPs
6.1. Characterization of SEPs in the May 2022 Memorandum
    Comment: One commenter states that the May 2022 Memorandum and IFR 
appear to ``fundamentally misunderstan[d] what SEPs are and how they 
are designed to function'' by treating them as ``a remedy for the 
underlying violation.'' The commenter goes on to provide his 
understanding of what a SEP is by reference to EPA's 2015 SEP Policy 
and in contrast to the remedy the commenter identifies as mitigation. 
The commenter made several further similar criticisms addressed below.
    Response: This comment discusses one potential type of third-party

[[Page 97535]]

payment used in the environmental context, ``Supplemental Environmental 
Projects.'' EPA's 2015 SEP Policy specifically addresses such projects. 
The Department's May 2022 Memorandum is distinct from EPA's 2015 SEP 
Policy, and comments on EPA's policy are outside the scope of the 
Department's request for comments, although the Department notes in 
this respect that the EPA policy never characterizes, as the comment 
suggests, SEPs as projects undertaken ``in exchange for a lower civil 
penalty.'' Similarly, the May 2022 Memorandum does not authorize third-
party payments in any context to be made ``in exchange for a lower 
civil penalty.''
    The Department's memorandum does reference SEPs as one potential 
category of third-party payment that can be an appropriate remedy in a 
Department settlement. (Note that not all SEPs necessarily involve 
third-party payments, however.) The Department will respond to this 
comment to the extent that it addresses aspects of the May 2022 
Memorandum, as distinct from EPA's 2015 SEP Policy.
    This commenter asks why ``[t]he May [2022] Memo and the Interim 
Final Rule do not explain why courts' equitable authority is 
insufficient to remedy the harms from violations of federal 
environmental law.'' At the outset, remedying harm is not the only 
purpose of these types of third-party payments; they also operate to 
``punish and deter future violations.'' May 2022 Memorandum at 1. As to 
their function in remedying harm, the May 2022 Memorandum states that 
some categories of harms, including in environmental cases, ``can be 
difficult to redress directly in particular cases.'' Id. at 1-2. Where 
a violation has attenuated or indirect effects (such as the example 
where excess air pollution accelerated weathering and increased lead 
exposure from deteriorating lead-based paint), it may not be feasible 
to identify the scope of those affected with precision. In settling a 
case, litigants are not subject to the same limitations that apply to 
judicial remedies and can agree to remedies that may go beyond those 
that a court would typically order. See, e.g., Frew v. Hawkins, 540 
U.S. 431 (2004); Local No. 93, Int'l Ass'n of Firefighters, AFL-CIO v. 
City of Cleveland, 478 U.S. 501 (1986); United States v. Charles George 
Trucking, 34 F.3d 1081 (1st Cir. 1994); United States v. BP Prods. N. 
Am., Inc., No. 2:23-CV-166, 2023 WL 5125148 (N.D. Ill. Aug. 9, 2023). 
In Firefighters, the Supreme Court stated that when considering a 
consent decree that would resolve a matter within its jurisdiction and 
within the general scope of the case pleadings and would ``further the 
objectives of the law upon which the complaint was based,'' ``a federal 
court is not necessarily barred from entering [that] consent decree 
merely because the decree provides broader relief than the court could 
have awarded after a trial.'' 478 U.S. at 525.
    The remedies that theoretically a court could order can require 
more precise accounting of effects and injuries than may be practicable 
in some instances. Further, to fully remedy the underlying harm caused 
by the violation(s) might require more remedial action than a court may 
order in a particular statutory scheme. The May 2022 Memorandum 
requires that any project funded by a defendant ``be consistent with 
the underlying statute being enforced and advance at least one of the 
objectives of that statute,'' ensuring that the project will be 
consistent with congressional intent in enacting the applicable 
statutory framework. May 2022 Memorandum at 3.
    Indeed, some of the other commenters provided examples of types of 
harms that cannot be adequately addressed without remedies of this 
type. See infra Part II.B.6.2. These harms can arise over long time 
scales, in circumstances in which there are multiple sources of 
exposure; in addition, it may be apparent that a particular area or 
community has experienced unusual environmental harms, but difficult to 
apportion causation from any individual source. For example, in 2015, 
the United States, the State of Michigan, and AK Steel Corporation 
agreed to a settlement to resolve claims for particulate matter 
violations of the Clean Air Act at AK Steel's Dearborn, Michigan steel 
plant, which is located in a mixed industrial area with multiple 
sources of pollution affecting neighboring communities. The settlement 
required AK Steel to pay a $1.35 million civil penalty and implement 
injunctive relief to address the violations. The settlement also 
required AK Steel to perform a SEP, consisting of the purchase and 
installation of dynamic air filters in the air conditioning systems at 
the Salina elementary and middle schools. The projects, which cost 
$337,000, reduced students' exposure to fine particulates--from the 
steel plant but commingled with pollution from other sources in the 
airshed--while in school. Examples like this illustrate why the 
Department concluded that ``[w]hen used appropriately, these agreements 
allow the government to more fully compensate victims, remedy harm, and 
punish and deter future violations.'' May 2022 Memorandum at 1.
6.2. SEPs as Public Policy
    Comments: A number of commenters express support for the IFR's 
restoration of the use of third-party payments in the form of SEPs in 
judicial environmental enforcement settlements. In the view of these 
commenters, SEPs serve to provide fuller mitigation for harm caused by 
violations and are a tailored approach to address challenges for 
communities who routinely face noncompliance from industries. As one 
commenter states, ``SEPs represent a unique opportunity in the 
environmental enforcement context to secure some form of restitution 
for communities harmed by violations given the difficulty of 
identifying and quantifying full individual harm from a violating 
pollution source to support adequate direct mitigation. It is often 
difficult, if not impossible, to fully trace all human ailments or 
natural problems to a particular pollution source, especially over long 
periods of time.'' Absent the availability of this settlement tool, 
another commenter notes, ``enforcement actions are less able to reduce 
or offset the detrimental effects that the unlawful behavior has 
already had on affected communities.'' Some commenters state that the 
Department's changes will support State efforts to address equity, 
public health, and welfare issues in communities adversely affected by 
environmental violations and at no additional cost to the taxpayer, and 
note that 37 States have SEP policies allowing such projects in 
settlements.
    The Department received multiple comments discussing the benefits 
of the changes in policy reflected in the Department's May 2022 
Memorandum for communities and others affected by violations of law. 
Commenters describe how third-party payments in the form of SEPs have 
been used to provide more complete relief for communities affected by 
environmental pollution, particularly overburdened communities. Some of 
these comments specifically note that environmental violations can 
cause harms that cannot be adequately addressed without this type of 
remedy.
    Some commenters, however, view third-party payments, including 
SEPs, as ``corrupt'' tools inadequate to remedy public rights or deter 
violators, arguing that SEPs and third-party payments undercut 
deterrence, do not prevent pollution in the case of environmental 
enforcement, and incentivize ``corrupt'' actions by officials to reward 
favored entities with payments. Similarly, another commenter questions 
the

[[Page 97536]]

deterrent effect of settlement agreements containing third-party 
payments in the form of SEPs and characterizes SEPs as ``ad hoc'' and 
as presenting ``likely inefficient ways to combat pollution.''
    Response: These comments discuss one particular type of settlement 
instrument, SEPs. As noted in DOJ's response to topic 6.1 above, see 
supra Part II.B.6.1, comments on the terms of the 2015 SEP Policy are 
outside the scope of the Department's request for public comment.
    That said, the Department agrees with commenters that SEPs can 
provide benefits. Federal environmental statutes seek to protect public 
health writ large but, as applied in the context of a violating 
facility, it is often the people who live near and downwind of that 
facility who bear more of the harm. These harms can arise over long 
time scales, in circumstances in which there are multiple sources of 
exposure; in addition, it may be apparent that a particular area or 
community has experienced unusual environmental harms, but difficult to 
show causation from any individual source, as discussed. Third-party 
payments may be crafted to ensure that the case resolution accounts for 
the reality on the ground.
    The Department disagrees that SEPs decrease the deterrent effect of 
Federal law and that they are inefficient ways to combat pollution. The 
commenter does not provide data to support these statements. In fact, 
the ability to include third-party payments in case resolution--in 
addition to a civil penalty and injunctive relief--increases the 
deterrent value of the Department's enforcement actions by expediting 
and facilitating settlement, enabling the Department to prosecute more 
violators and ensuring that violators are held accountable for all 
harms, including those harms that may be intangible or difficult to 
quantify, or where victims are no longer available to pursue individual 
claims. Certain third-party payments may also serve to deter and 
prevent violations, such as providing air-monitoring equipment to a 
surrounding community in a Clean Air Act enforcement case.
    In addition, the Department does not depend solely upon third-party 
payments to accomplish its litigation objectives. Resolving violations 
of environmental laws by settlement is a complicated task, involving 
the weighing of a variety of factors, which the Department undertakes 
in accordance with applicable law and Departmental policy. Key 
considerations for the Department include compensating victims, 
redressing harms, and punishing and deterring unlawful conduct without 
the costs and delay of trial. The Department assesses that third-party 
payments can support these goals, and the Department disagrees with 
some commenters' suggestion that limiting the Department's enforcement 
tools to civil penalties after judgment will maximize deterrence, much 
less optimally serve the many goals of the Department's enforcement 
activities.
    Whether a third-party payment is appropriate as part of case 
resolution is only one consideration for the Department when 
negotiating a settlement but including such a payment may contribute to 
a resolution. Such settlement agreements can be significantly more 
efficient than litigating every case to judgment because they save 
agencies and taxpayers significant time and expense. Those savings 
allow the Department to pursue more cases that will deter more 
violators from more future unlawful conduct. With respect to the 
commenters' claims of favoritism, see the discussion in topics 5.1 and 
5.2 above of such claims and of constraints on selection of third 
parties and projects. See supra Part II.B.5.1 and II.B.5.2.
    Finally, the Department notes that courts have entered Federal 
consent decrees containing SEPs for decades. As one court stated when 
approving a settlement with U.S. Steel involving SEPs at a value of 
$1.9 million and a $2.2 million civil penalty:

    Could the agreement be different? Of course. Could it demand 
more from U.S. Steel by way of a fine, for example? Again, of course 
it could. But making such a demand may have caused U.S. Steel to 
walk away from the bargaining table and set the parties on a course 
of protracted litigation. This is to say that there is no single 
fair and reasonable resolution, but rather a range of them. And, in 
my judgment, the Consent Decree proposed in this case is plainly 
within that range.

United States v. U.S. Steel Corp., No. 12-CV-304-PPS-APR, 2017 WL 
1190953, at *3 (N.D. Ind. Mar. 30, 2017).
7. Implementation of the May 2022 Memorandum
7.1. Publication of Future Memoranda
    Comment: One commenter requests that DOJ make publicly available 
all future memoranda addressing third-party payments in settlements 
because they have been ``highly controversial and problematic.''
    Response: DOJ recognizes the importance of and greatly values 
transparency and public participation in enforcement matters where it 
is possible given the sensitivity of bringing specific litigation. The 
Department published the May 2022 Memorandum (see response to topic 4 
above, supra Part II.B.4) and voluntarily sought public comment on it. 
The requirements of the May 2022 Memorandum are publicly available in 
Justice Manual section 1-17.000, as will be the Department's revisions 
to that section. The Department will provide in the new Justice Manual 
provision for a public process on certain civil settlements that 
incorporate third-party payments. See supra Part I.C. The Department is 
aware of the public interest in this topic and will seek to make future 
memoranda in this area public to the extent it is feasible to do so.
7.2. Including Affected Communities
    Comments: Multiple commenters address ways in which impacted 
communities and individuals should participate more fully in the 
settlement process and be better supported in doing so. Several 
commenters asked DOJ and EPA specifically to affirm the continued 
validity of EPA's 2015 SEP Policy and to update EPA's 2003 community 
engagement guidance with ``meaningful'' engagement practices or made 
similar suggestions on ways to increase engagement. See U.S. 
Environmental Protection Agency, Interim Guidance for Community 
Involvement in Supplemental Environmental Projects (2003). Several 
commenters also encourage continued implementation of the training and 
outreach practices in a recently issued Department memorandum.
    Response: Commenters suggest a variety of mechanisms to increase 
the role of communities in selecting and implementing SEPs. DOJ 
recognizes the importance of remedying the harms to the communities 
most directly impacted by violations of the Federal environmental laws. 
As noted above, comments that relate to the details of the 2015 SEP 
Policy or other EPA policies are outside the scope of this request for 
public comment.
    The Department recently addressed the need for meaningful 
engagement with at least a subset of impacted communities in a 
memorandum entitled Comprehensive Environmental Justice Enforcement 
Strategy. See Memorandum for Heads of Department Components, United 
States Attorneys from the Associate Attorney General, Comprehensive 
Environmental Justice Enforcement Strategy (May 5, 2022) 
(``Comprehensive Environmental Justice Enforcement Strategy 
Memorandum''), https://www.justice.gov/asg/file/1217741-0/dl?inline 
(last visited Oct. 31, 2024). Pursuant to the strategy, all

[[Page 97537]]

litigating components at DOJ shall consider appropriate outreach 
efforts to identify areas of environmental justice concern in relevant 
communities. Id. at 6-7. As the commenter suggested, designated 
environmental justice coordinators in each U.S. Attorney's Office have 
been trained to serve as point people for community outreach. Id. at 3 
and 6. And cases initiated under the strategy will include the 
development of case-specific community outreach plans to obtain input 
on community concerns or potential case remedies. Id. at 6-7.
    Regarding comments addressing consideration of community input in 
the development of SEPs in enforcement actions, comments on EPA's 
policy are outside the scope of the Department's request for comments. 
But DOJ notes that in December 2023 EPA began piloting the use of an 
email inbox to receive ideas from the public concerning potential 
projects for settlement negotiations. Further information is available 
at U.S. Environmental Protection Agency, Supplemental Environmental 
Projects (SEPs), https://www.epa.gov/enforcement/supplemental-environmental-projects-seps#sepidea (``USEPA SEPs website'') (last 
visited Oct. 31, 2024).
    The Department appreciates commenters' suggestions for potential 
assistance to impacted communities from the DOJ Environmental Crime 
Victim Assistance program, and for funding streams from DOJ and EPA to 
compensate community-based organizations for their expertise. However, 
these comments are outside the scope of the IFR.
7.3. Working With Tribal Governments
    Comment: One commenter expresses general support for SEPs, urges 
DOJ and EPA to address the aspects of SEPs that are relevant to 
Federally recognized Indian Tribes (``Tribes'') in Indian country, and 
offers recommendations to the Department based on previous experiences 
with SEPs. The commenter suggests working with Tribes early to avoid 
SEPs that are ``rigid'' or ``unworkable,'' and to achieve environmental 
justice.
    Response: The Department has a policy on Tribal Consultation (Nov. 
30, 2022), which can be found at https://www.justice.gov/d9/2022-12/doj-memorandum-tribal-consultation.pdf (last visited Oct. 31, 2024). 
Consistent with this policy, DOJ is committed to engaging in ongoing 
communication with Tribes. While settlement negotiations fall outside 
of our formal consultation policy, DOJ engages in communication with 
Tribes beyond consultation such as listening sessions, meetings with 
individual Tribes, and informal discussions with Tribal leaders.
    The Department is a co-plaintiff with Tribes in a number of 
environmental enforcement matters. In such cases, the co-plaintiff 
Tribe is an active participant in settlement negotiations and able to 
discuss SEPs as an element of relief for the claims the Tribe advances.
    As noted in DOJ's previous response, see supra Part II.B.7.2, the 
Department recently addressed the need for meaningful engagement with 
impacted communities in its Comprehensive Environmental Justice 
Enforcement Strategy Memorandum. Consistent with the strategy, all 
parts of the Department shall consider appropriate outreach efforts to 
identify areas of environmental justice concern, including each U.S. 
Attorney's Office in communities within its district. Designated 
environmental justice coordinators in each U.S. Attorney's Office have 
been trained to serve as point people for community outreach. And cases 
initiated under the strategy will include the development of case-
specific community outreach plan. In addition, the strategy requires 
certain Department components to consider how to: ``(1) facilitate 
consideration of these unique [Tribal environmental justice] issues in 
cases brought pursuant to this Strategy; (2) identify opportunities to 
work with the governments of Federally recognized Tribes, including 
consortia of such Tribes; (3) work with other Federal agencies to 
coordinate investigative resources and enforcement authorities; and (4) 
recommend ways to address and incorporate Tribal concerns into the 
Department's enforcement work.'' Comprehensive Environmental Justice 
Enforcement Strategy Memorandum at 3.
    The Department appreciates the commenter's suggestions for Tribal 
set-asides, whether in the context of mitigation or a third-party 
payment, depending on the particular case, and greater transparency 
regarding the impact of emissions on tribal communities. These comments 
are outside the scope of the IFR, and the Department does not address 
them further.
7.4. Effectiveness of the 2015 SEP Policy
    Comment: One commenter asks DOJ and EPA to affirm that EPA's 2015 
SEP Policy remains in effect or to readopt it if does not. The 
commenter indicates that even if it was never withdrawn or replaced, 
having administrative procedural clarity would be beneficial.
    Response: Where DOJ is working with EPA as a client agency, the 
Department certainly discusses case resolution with it by reference to 
relevant EPA policy documents. Whether EPA continues to apply a 
particular policy, including its 2015 SEP Policy, is within that 
agency's purview and beyond the scope of this action. DOJ understands 
the 2015 policy to be in effect as reflected in several responses to 
comments and points commenters to EPA's website, which itself cites the 
2015 SEP Policy. See USEPA SEPs website.

IV. Regulatory Certifications

A. Administrative Procedure Act

    This rule relates to a matter of agency management or personnel and 
is a rule of agency organization, procedure, or practice. As such, this 
rule is exempt from the usual requirements of prior notice and comment 
and a 30-day delay in effective date. See 5 U.S.C. 553(a)(2), (b), and 
(d). The rule is effective upon signature. In its discretion, the 
Department sought post-promulgation public comment on the IFR and is 
responding to public comment.

B. Regulatory Flexibility Act

    An analysis under the Regulatory Flexibility Act was not required 
for this rule because the Department was not required to publish a 
general notice of proposed rulemaking for this matter. See 5 U.S.C. 
601(2), 604(a).

C. Executive Orders 12866, 13563, and 14094--Regulatory Review

    This rule has been drafted and reviewed in accordance with section 
1(b) of Executive Order 12866, ``Regulatory Planning and Review,'' 
section 1(b) of Executive Order 13563, ``Improving Regulation and 
Regulatory Review,'' and Executive Order 14094, ``Modernizing 
Regulatory Review.''
    This rule is ``limited to agency organization, management, or 
personnel matters'' and thus is not a ``rule'' for purposes of review 
by the Office of Management and Budget under section 3(d)(3) of 
Executive Order 12866. Accordingly, this rule has not been reviewed by 
the Office of Management and Budget.

D. Executive Order 12988--Civil Justice Reform

    This regulation meets the applicable standards set forth in 
sections 3(a) and 3(b)(2) of Executive Order 12988, ``Civil Justice 
Reform.''

[[Page 97538]]

E. Executive Order 13132--Federalism

    This rule will not have substantial direct effects on the States, 
on the relationship between the National Government and the States, or 
on the distribution of power and responsibilities among the various 
levels of government. It is a rule of internal agency practice and 
procedure. Therefore, in accordance with Executive Order 13132, 
``Federalism,'' the Department has determined that this rule does not 
have sufficient federalism implications to warrant the preparation of a 
federalism summary impact statement.

F. Unfunded Mandates Reform Act of 1995

    This rule will not result in the expenditure by State, local, and 
Tribal governments, in the aggregate, or by the private sector, of $100 
million or more (adjusted annually for inflation) in any one year, and 
it will not significantly or uniquely affect small governments. 
Therefore, no actions are necessary under the provisions of the 
Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1501 et seq.

G. Congressional Review Act

    This rule is not a major rule as defined by the Congressional 
Review Act, 5 U.S.C. 804. This action pertains to agency management, 
personnel, and organization and does not substantially affect the 
rights or obligations of non-agency parties. Accordingly, it is not a 
``rule'' as that term is used in the Congressional Review Act, 5 U.S.C. 
804(3)(B), (C), and the reporting requirements of 5 U.S.C. 801 do not 
apply.

H. Paperwork Reduction Act of 1995

    This final rule does not impose any new reporting or recordkeeping 
requirements under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501-
3521.

List of Subjects in 28 CFR Part 50

    Administrative practice and procedure.

    Accordingly, for the reasons set forth in the preamble, the interim 
final rule amending 28 CFR part 50, which published at 87 FR 27936 on 
May 10, 2022, is adopted as final without change.

    Dated: December 3, 2024.
Merrick B. Garland,
Attorney General.
[FR Doc. 2024-28866 Filed 12-6-24; 8:45 am]
BILLING CODE 4410-BB-P