November 12, 2024
Fund

Federal agencies should not have unbridled access to the Judgment Fund


There is a law that is quietly giving power to the administrative state and its ideologically aligned special interest groups.

The Judgment Fund was created by Congress in 1956 to pay out judgments against the federal government. The idea was to streamline the payout of judgments so that Congress did not have to make an individual appropriation for each judgment.

However, like many examples in government, the Judgment Fund has become bloated, lacks transparency and accountability, and is being used to benefit plaintiffs whose interests align with an administration’s policy goals.

The Judgment Fund is limitless and is approved indefinitely. It pays judgments, including settlements, of many different types of lawsuits.

Meanwhile, the government has increasingly allowed for ever more avenues for plaintiffs to sue and obtain recovery from the Judgment Fund. The result is a massive payout by taxpayers for the misdeeds of their government.

Remarkably, not even the government can easily state how much is paid out through this fund. According to the Treasury Department’s own website, “the amounts paid by the Judgment Fund can vary significantly from year to year, so it is difficult to state what annual amount is ‘typical.’” However, a 2018 Government Accountability Office audit indicated that, while the number changes annually, each year, the Judgment Fund disburses billions of dollars.

This is an extraordinary amount of money. Taxpayers should at least be able to determine where it is going. But even that is difficult. The database maintained by the Treasury Department requires detailed knowledge of the information one is seeking. No total expenditures are provided, the payouts are not categorized by party or legal counsel, the payouts also do not state whether they result from a settlement, and highly technical search terms are required and often do not work.

This lack of transparency in the Judgment Fund provides perfect cover for the government to support special interest groups in so-called “sue and settle” litigation. Sue and settle occurs when a special interest group sues an ideologically aligned government agency. The agency, in turn, agrees to “settle” the case. The plaintiff receives money and its desired policy outcome, while the agency can claim the suit “forced” it to take corrective action.

In reality, both sides desire the same outcome. This type of litigation is anything but an adversarial negotiation where the taxpayer is genuinely represented.

To make matters worse, attorney fees and costs are available from the Judgment Fund. So, when cases are settled, the Judgment Fund pays the bills. It is a way for agencies to fund their ideological friends and limit a future administration’s discretion by binding the agencies with a court order. It has become both big business and a policymaking vehicle.

Because agencies usually do not have to pay back the Judgement Fund, they have little deterrent to creating liability. In the case of sue and settle, they are actually incentivized to do so. No person in the government is held accountable for the payments, and the bill is passed on to the public. Perversely, agencies can impose and collect fines from people, but when plaintiffs find fault with the agencies, those agencies simply draw from the blank check paid for by taxpayers.

Reform is overdue. The Judgment Fund database is a natural place to start. Lawmakers should require it to be more user-friendly and accessible to determine aggregates, to understand the types of plaintiffs drawing from the fund, and to describe whether a judgment was reached via settlement.

Agencies must also have more skin in the game, either through cost-sharing for certain liabilities they clearly contributed to or more transparent reports to Congress that provide a full explanation of the fund’s expenditures and identify the corresponding agency officials signing off.

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Additionally, settlements that appear to affect policy outcomes should require accountability to Congress or some independent arbiter.

Transparency and accountability are simple goals. Reform ideas that address both would be a fantastic first step to changing what has become a secret piggy bank for the administrative state and its special interest friends who prefer the back door when it comes to spending taxpayer dollars.

Curtis Schube is the executive director for Council to Modernize Governance, a think tank committed to making the administration of government more efficient, representative, and restrained. He is formerly a constitutional and administrative law attorney.



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