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






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

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

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON THE CONSTITUTION 
                           AND CIVIL JUSTICE

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 7, 2016

                               __________

                           Serial No. 114-92

                               __________

         Printed for the use of the Committee on the Judiciary



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      Available via the World Wide Web: http://judiciary.house.gov
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                       COMMITTEE ON THE JUDICIARY

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

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

           Subcommittee on the Constitution and Civil Justice

                    TRENT FRANKS, Arizona, Chairman

                  RON DeSANTIS, Florida, Vice-Chairman

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

                     Paul B. Taylor, Chief Counsel

                    James J. Park, Minority Counsel
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                            C O N T E N T S

                              ----------                              

                           SEPTEMBER 7, 2016

                                                                   Page

                           OPENING STATEMENTS

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

                               WITNESSES

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

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

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

                                APPENDIX
               Material Submitted for the Hearing Record

Response to Questions for the Record from Paul F. Figley, 
  Professor, Associate Director of Legal Rhetoric, Washington 
  College of Law--American University............................    54
 
OVERSIGHT OF THE JUDGEMENT FUND: IRAN, BIG SETTLEMENTS, AND THE LACK OF 
                              TRANSPARENCY

                              ----------                              


                      WEDNESDAY, SEPTEMBER 7, 2016

                        House of Representatives

                   Subcommittee on the Constitution 
                           and Civil Justice

                       Committee on the Judiciary

                            Washington, DC.

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

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

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

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

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

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

    Mr. Axelrad. Thank you for providing this opportunity to 
share my views on the Judgment Fund and on H.R. 1669. H.R. 1669 
proposes needed amendments to provisions the Judgment Fund 
statute. My testimony is based on the basic principles and 
legislative history of statutory provisions applicable to 
payment of judgments and settlements that are outlined in 
Professor Figley's statement.
    H.R. 1669 seeks to provide transparency when the Judgment 
Fund is the means of transferring funds from the public 
treasury to claimants and litigants with the exception of one 
provision, which I will discuss. Transparency of the bill is a 
sensible, modest requirement and furthers the public interest 
in learning who is receiving the payments.
    Moreover, it is appropriate that Congress reclaim its role 
in appropriating funds in each instance when the largest 
payments are made. I also suggest one provision of H.R. 1669 be 
deleted because the provisions value is less than the 
unintended consequences.
    The unintended consequences are predictable, significant 
confusion and diversion time and effort of government 
personnel. The Judgment Fund does have specific limits on its 
availability. An indispensable condition is the judgment or 
settlement be payable under certain sections of the United 
States Code. The Attorney General is charged with implementing 
the most significant of these statutory keys to the Judgment 
Fund.
    The usual key for payment of non-contractual disputes is 28 
U.S.C. section 2414, which gives the key to the Attorney 
General. This provision imposes a high and important 
responsibilities on the Attorney General. Most agencies do not 
have a direct fiscal incentive to guard against excessive 
payments from the Judgment Fund and that payments from the 
Judgment Fund do not reduce agency appropriations available for 
their programs.
    It is the Attorney General's special duty to guard against 
unauthorized or excessive payments. Incentive to yield to their 
perceived special need du jour is all too evident. It is to the 
Justice Department that the unpopular, hard task of guarding 
the Judgment Fund against abuse falls. Eternal vigilance and 
reason careful analysis must be the hallmark of the Justice 
Department's exercise of this responsibility.
    The revisions of H.R. 1669 and Professor Figley's proposed 
changes to H.R. 1669 further these vital functions and likely 
will enhance the ability of the Justice Department to stand 
firm against abuse of the Judgment Fund unless it is 
particularly clear that a payment is authorized.
    For the most part, the requirements of H.R. 1669 are 
straightforward. One proposed requirement should be removed. 
That requirement is the bill's provision to create and make 
public a brief description of the facts that gave rise to the 
claim. Many payments are made when the facts giving rise to the 
claim are disputed. The exercise of stating facts will slow 
down the process of seeking payment for all claims.
    The delay will be due not only to the additional burdens, 
but to efforts to avoid criticisms when the facts are 
debatable, as is often the situation of ordinary claims and 
litigation. Consideration of how to phrase the facts that gave 
rise to the claim would save a more than trivial amount of 
agency time and resources, which, in my view, can be devoted to 
more worthwhile activities.
    H.R. 1669 serves the goal of transparency in the 
expenditure of public funds by providing basic information on 
who receives the funds when the funds are paid pursuant to a 
settlement or a judgment. If the one subsection I have 
discussed is removed H.R. 1669 can achieve a salutatory outcome 
without significant cost. I would be happy to answer any 
questions.
    [The prepared statement of Mr. Axelrad follows:]
    
    
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    Mr. Franks. I now recognize the Chairman of the full 
Committee, Mr. Goodlatte, for a statement.
    Mr. Goodlatte. Thank you very much, Mr. Chairman. James 
Madison, in the Federalist No. 58 stated, ``The House of 
Representatives cannot only refuse, but they alone can propose 
the supplies requisite for the support of government. They, in 
a word, hold the purse, that powerful instrument by which we 
behold in the history of the British Constitution, an infant 
and humble representation of the people gradually enlarging the 
sphere of its activity and importance and finally reducing as 
far as it seems to have wished all of the overgrown 
prerogatives of the other branches of the government.
    This power of the purse may in fact be regarded as the most 
complete and effectual weapon with which any constitution can 
arm the immediate representatives of the people for obtaining a 
redress of every grievance and for carrying into effect every 
just and salutatory measure.''
    Today, we examine the effects that occur when this power is 
usurped by the executive branch. Indeed, in its current form, 
the Judgment Fund allows the executive branch to pilfer 
taxpayer dollars to fund its overgrown prerogatives, without 
requiring any Congressional action.
    Congress must check these abuses by conducting rigorous 
oversight and determining whether additional legislation is 
required to curb abuses of the Judgment Fund. In recent years, 
however, it has become apparent that little information is 
known about individual payments from the Judgment Fund, 
particularly with regard to the payment of settlements. 
Searches for individual payments from the Judgment Fund in a 
database maintained by the Treasury Department reveals little 
about the underlying facts, how the funds were uses, and even 
who received them. In a system of government in which Congress 
is accountable for the way in which taxpayer dollars are spent, 
this is unacceptable.
    I look forward to the witnesses' testimony today and to 
their recommendations regarding how Congress, the immediate 
representatives of people, can improve its oversight of this 
permanent, indefinite appropriation as well as improve 
transparency for the public. And I look forward to the 
questions, which will now ensue, with regard to that testimony. 
Thank you.
    Mr. Franks. And I thank the Chairman. And before I begin my 
question time here, I would like to first ask for unanimous 
consent to submit for the record a statement by Representative 
Chris Stewart of Utah, who is sponsor of H.R. 1669, the 
``Judgment Fund Transparency Act of 2015.''
    I want to thank Mr. Stewart for his leadership on this 
issue and for his submission to this Committee. And without 
objection, it will be entered into the record.
    [The prepared statement of Mr. Stewart follows:]
          Prepared Statement of the Honorable Chris Stewart, 
          a Representative in Congress from the State of Utah
    Thank you Mr. Chairman for allowing me to include this written 
statement for today's important oversight hearing of the Judgment Fund.
    The Judgment Fund is the mechanism that Congress established in 
1956 to pay settlements and judgments issued against the United States. 
It is a ``permanent, indefinite appropriation'' that is available to 
make payments without any review from Congress. By now we're all 
familiar with the Administration's decision to take $1.3 billion out of 
the fund, convert it to cash, and deliver it to Iran. Yet this isn't 
the only recent egregious use of the fund. Three years ago, the New 
York Times reported on what was likely an illegal billion dollar payout 
to thousands minority farmers who never even sued the government.
    The Treasury Department files a yearly report on the Judgment Fund 
with Congress and also maintains a webpage that can be searched. 
However, the cryptic and otherwise limited information related to each 
payout has made the database almost entirely useless. There is no 
information on what the government did wrong nor is there information 
on who benefited from a payout. Journalists and transparency groups 
revealed last month that between 2009-2015, the Federal Government paid 
over $25 million out of the Judgment Fund to ``unnamed'' or 
``redacted'' recipients. It is unacceptable to leave the American 
people in the dark about how so much of their money is being spent.
    To address the shortcomings of the current Fund, I've sponsored 
legislation, H.R. 1669. This legislation will require Treasury to make 
public any payment from the judgment fund and include: The name of the 
agency named in the judgment; the name of the plaintiff or claimant; 
the amount paid in principal liability and any ancillary liability such 
as attorney fees, and interest; and a brief description of the facts 
which led to the claim.
    This bill is especially urgent given the Administration's brazen 
dishonesty with the American people about the circumstances behind the 
payment of $400 million worth of foreign currency to the Iranian 
regime. Not only has the President emboldened our enemy and provided 
cash to them despite the fact that they are determined to kill 
Americans and attack our country and allies, but he hid his actions 
from the American people. It took months for the Administration to 
admit the payment was ``leverage'' for the release of Americans held 
hostage. And yet even now, the Judgement Fund's website does not list 
the payment of this ransom to Iran.
    The Judgment Fund Transparency Act may not prevent bad decisions, 
but it will help expose those decisions to the American people. I hope 
that though this hearing, the Committee will be informed on how to 
improve this process and make the Judgment Fund a tool for the American 
public to understand the decisions made by their government. I urge the 
committee to pass this bill and send it to the floor.
                               __________

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

                            A P P E N D I X

                              ----------                              


               Material Submitted for the Hearing Record

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


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