State Groups Lobby Senate Against Slush Fund Bill

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By Stephen Lee

Sept. 14 — A coalition of state agencies is lobbying Senate leaders to exempt them from a bill that forbids the government from requiring a donation to a third party as part of a legal settlement.

The Stop Settlement Slush Funds Act (H.R. 5063) could have the unintended consequences of cutting off funding to state environmental, law enforcement and coastal restoration agencies, the groups wrote in a Sept. 14 letter to lawmakers. The House passed the measure last week.

Supplemental environmental projects and natural resource damages projects have long relied on funding from state agencies, according to the letter, sent by the Environmental Council of the States, along with four state environmental enforcement associations.

“Fines and penalties go to the U.S. Treasury,” Alexandra Dunn, ECOS executive director, told Bloomberg BNA. “So under this bill, there is not necessarily a direct way for the community that’s been harmed by the environmental violation to receive a benefit back, or to be made more whole.”

Dunn said supplemental environmental projects are “very tangible to the community that is injured by the environmental violation.” For example, a Clean Water Act violation might trigger a supplemental environmental project that involves providing public access to a particular river or stream, she said.

“In what appears to be the Judiciary Committee’s desire to restrain payments to third parties, with an expressed concern by Congress that these payments appear to be preferential payments to groups that are favored by the current administration, we are concerned that states are being swept up in that debate, unintentionally,” Dunn said.

Focus on Senate

Because the House passed H.R. 5063 by a 241-174 margin on Sept. 7, the agencies are focusing primarily on the Senate, as well as a conference committee should the bill pass the upper chamber, Dunn said.

The Senate version (S. 3050) has been referred to the Judiciary Committee. So far it has attracted only six co-sponsors, all Republicans.

In explaining the need for the bill, Rep. Bob Goodlatte (R-Va.), the House version’s sponsor, has pointed to settlements resulting from the 2008 financial crisis that funded “left-leaning activist groups” like National Council of La Raza, a Latino-advocacy group, and NeighborWorks America, a group focused on affordable housing and community development.

Dunn said she believes the bill’s Republican backers are also worried about environmental activist groups, but that they may not have been fully aware of the unintended consequences explored in the letter.

“I don’t believe it was their intent to exclude states and these unique state environmental training groups,” Dunn said. “So my thought would be that there might be a more careful way to draft the prohibition to get directly at the concerns of the Congress, and perhaps not indirectly prevent states from continuing good environmental work.”

White House Deems Bill Unnecessary

The White House has said it “strongly opposes” the bill, saying it’s “unnecessary and would harm the public interest” in a statement of administration policy issued the day before the measure passed the House.

“When the federal government settles a case with those who violate the law, it seeks to hold the defendants accountable and appropriately remedy the harms they have caused and to prevent the occurrence of those harms,” the White House wrote.

The ECOS letter’s signatories included the Northeast Environmental Enforcement Partnership, Southern Environmental Enforcement Network, Midwest Environmental Enforcement Association and Western States Project.

The letter was sent to Senate Majority and Minority Leaders Mitch McConnell (R-Ky.) and Harry Reid (D-Nev.), House Speaker Paul Ryan (R-Wis.) and Minority Leader Nancy Pelosi (D-Calif.). It was also directed to the leaders of the Senate and House Judiciary Committees, Sens. Chuck Grassley (R-Iowa), Patrick Leahy (D-Vt.), John Conyers (D-Mich.) and Goodlatte.

To contact the reporter on this story: Stephen Lee in Washington at stephenlee@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

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