On February 5, 2026, the U.S. House of Representatives saw the introduction of a significant piece of legislation—the Stop Settlement Slush Funds Act—aimed at curbing the misuse of federal settlement agreements. Authored by Rep. Lance Gooden (R-TX), this bill aims to stop federal officials from enforcing agreements that include payments to parties who have not directly suffered harm or rendered services pertinent to the case at hand.
The essence of the SSSF Act is straightforward: payments from settlement agreements must go toward restitution for actual damages or compensation for specific services related to the litigation. “We cannot allow judicial settlements to become a funding stream for left-wing activist groups waging war against the America First agenda,” Gooden emphasized during an interview. His comments highlight a broader concern among proponents of the bill regarding transparency and fiscal responsibility within the federal settlement process.
This legislation resurrects a prohibition initially enforced by former Attorney General Pam Bondi during the Trump administration and introduces stricter controls on how settlement funds are allocated. A notable provision bars any government official from entering into or upholding settlement agreements that entail payments to third parties unless they meet the specified criteria. Violations of these rules could result in penalties akin to those under section 3302 of Title 31 of the United States Code.
In addition to enhancing restrictions, the bill imposes new accountability measures. If enacted, federal agencies would be required to file annual reports to the Congressional Budget Office for seven years. These reports must detail settlement agreements that qualify under the narrow exceptions permitted by the act, including information on the settlement parties, funding sources, and the purpose behind the financial distributions. Such transparency mechanisms are critical for ensuring that taxpayer money is not misappropriated through dubious settlements.
The implementation of yearly audits by agency inspectors general further emphasizes the bill’s focus on oversight. These audits will provide a public record of compliance with the new regulations and will be submitted to key congressional committees. The emphasis on oversight aims to restore public trust in the settlement process, as past practices have raised eyebrows regarding the allocation of funds.
Supporting the SSSF Act are a number of Republican lawmakers, including Reps. Claudia Tenney, David Rouzer, and Barry Moore, among others. This coalition reflects a growing concern within the GOP regarding the abuse of executive authority, particularly in light of previous settlements that appear to have favored certain activist groups.
An illustrative example presented in support of the bill details events following the 2008 financial crisis. Former Attorney General Eric Holder’s agreement with major banks allowed them to receive “double credit” toward their settlement obligations for donations to left-leaning organizations like La Raza and the National Community Reinvestment Coalition. Such agreements have fueled accusations of political favoritism and misallocation of resources. Another case involved Gibson Guitar Corp., which was compelled to contribute to the National Fish and Wildlife Foundation as part of settling a criminal investigation.
Alexander Ciccone, a spokesperson for the organization advocating for the bill, aptly noted: “Settlement agreements should compensate harmed parties or return funds to the U.S. Treasury, not serve as a workaround to Congress’s constitutional power of the purse.” This perspective encapsulates the central argument of the SSSF Act—settlements should not be utilized to circumvent legislative approval or enrich entities that did not contribute to the harm being addressed.
As lawmakers consider the implications of this bill, the focus remains on addressing potential abuses of the settlement system while reinforcing the principles of accountability and integrity within government processes. The Stop Settlement Slush Funds Act could serve as a pivotal step in ensuring that taxpayer resources are utilized appropriately, preserving the sanctity of the democratic process and the rule of law.
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