1-17.000 – Settlement Agreements Involving Payments to Non-Governmental Third Parties

Some settlement agreements that the Department enters into to resolve civil and criminal matters require payments to non-governmental third parties[1] as a means of addressing violations of federal law.  When used appropriately, these agreements allow the government to more fully compensate victims, remedy harm, and punish and deter future violations.  See generally Memorandum from the Attorney General, Guidelines and Limitations for Settlement Agreements Involving Payments to Non-Governmental Third Parties (May 5, 2022).

To ensure that settlements involving payments to non-governmental third parties have a strong connection to the violations at issue and further the goals of the underlying statutes, the following guidelines and limitations will govern the Department’s approach to agreements on behalf of the United States in settlement of federal claims or charges in all civil and criminal cases litigated under the direction of the Attorney General that direct or provide for a payment or loan, in cash or in kind, to any non-governmental person or entity that is not a party to the dispute: 

• Any such settlement agreement shall define with particularity the nature and scope of the specific project or projects that the defendant has agreed to fund.
• All such projects must have a strong connection to the underlying violation or violations of federal law at issue in the enforcement action.  In meeting this requirement, the project must be consistent with the underlying statute being enforced and advance at least one of the objectives of that statute.  The 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.
• The Department and its client agencies shall not propose the selection of any particular third party to receive payments to implement any project carried out under any such settlement.  Similarly, the Department and its client agencies shall not propose a specific entity to be the beneficiary of any projects carried out under any such settlement, although the Department and its client agencies may specify the type of entity.  The Department and its client agencies may also disapprove of any third-party implementer or beneficiary that the defendant proposes for consideration, provided that the disapproval is based upon objective criteria for assessing qualifications and fitness outlined in the settlement agreement.
• Any such settlement must be executed before an admission or finding of liability in favor of the United States, and the 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.  See 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).
• No such settlement shall be used to satisfy the statutory obligation of the Department or any other federal agency to perform a particular activity.  Nor shall any such settlement provide the Department or any other federal agency with additional resources to perform a particular activity for which the Department or any other federal agency, respectively, receives a specific appropriation.
• No 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.

Department components proposing a settlement involving a payment to a non-governmental third party must obtain the approval of the Deputy Attorney General or the Associate Attorney General, as appropriate, and explain how the proposed settlements complies with these guidelines and limitations.

No approval is required for the following types of settlements, which do not raise the concerns addressed by these guidelines: (1) Otherwise lawful payments or loans, in cash or in kind, that provide restitution or compensation to a victim or that otherwise directly remedy the harm sought to be redressed; (2) in cases of foreign official corruption, payments to a trusted third party when required to facilitate the repatriation and use of funds to directly benefit those harmed by the foreign corruption; (3) payments for legal or other professional services rendered in connection with the case; and (4) payments that are expressly authorized by statute or regulation, including restitution and forfeiture.

[Updated August 2022]