A new piece of legislation was introduced on February 5, 2026, in the U.S. House of Representatives that would prohibit federal officials from enforcing settlement agreements that require payments to third parties, unless those payments directly relieve harm or pay for services utilized in the case. The bill was introduced by Rep. Lance Gooden (R-TX) and is being called the Stop Settlement Slush Funds Act.
According to the bill, it will forbid federal officials from directing payments from legal settlements to entities that were not directly harmed in a particular case or not providing specified services involving the litigation. The SSSF Act states that these payments must either be restitution for actual harm caused by the defendant or be compensation for any services that are directly tied to the case.
“We cannot allow judicial settlements to become a funding stream for left-wing activist groups waging war against the America First agenda,” Gooden stated during an interview with Breitbart News. “The Stop Settlement Slush Funds Act closes this loophole once and for all, restoring transparency, accountability, and integrity to the federal settlement process.”
The bill codifies a prohibition that was first enforced by Attorney General Pam Bondi following her confirmation in the Trump administration. The act’s supporters say it will target an abuse of executive authority. One of the key provisions in the bill prevents any official within the government from entering into or enforcing settlement agreements that require a payment to be made to a third party, unless it resolves harm or pays for services rendered in the case.
If there are violations of this provision, officials could be subjected to the same penalties included under section 3302 of Title 31 in the United States Code. The legislation also includes new requirements for reporting and oversight. If the bill passes, it would require every federal agency to turn in yearly reports to the Congressional Budget Office for a timeframe of seven years.
The reports must include details for settlement agreements that meet the narrow exceptions allowed under the law, specifically those that involve restitution or service payments. Agencies would be required to reveal the settlement parties, along with the sources of the funds, and the method and purpose of distribution.
The SSSF Act also requires yearly audits by agency inspectors general. The results of the audits are to be made accessible to the public and then submitted to the Judiciary, Budget, and Appropriations Committees of both chambers of Congress, and also include any agreements that violate the statute. The bill is being backed by a group of GOP lawmakers which includes Reps. Claudia Tenney (NY-22), David Rouzer (NC-07), Barry Moore (AL-01), Tom Tiffany (WI-07), Chip Roy (TX-21), Andy Ogles (TN-05), Gary Palmer (AL-06), Russell Fry (SC-07), and Addison McDowell (NC-06).
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A one-page document in support of the legislation provides an example of how settlement agreements have been used in the past. After the financial crisis that rocked the U.S. in 2008, former Attorney General Eric Holder entered into an agreement with several major banks that enabled them to receive double credit toward their settlement obligations for donations made to such groups as La Raza, the National Community Reinvestment Coalition, and the Neighborhood Assistance Corporation.
The document reveals that these organizations are all leftist activist groups. Another example involves an agreement that required Gibson Guitar Corp. to provide contributions to the National Fish and Wildlife Foundation in order to resolve a criminal investigation.
“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,” Alexander Ciccone, the organization’s Policy and Government Affairs Manager, went on to say. “The Stop Settlement Slush Funds Act ends a longstanding abuse of settlement authority that allows the Department of Justice to direct payments to third-party entities without proper congressional oversight.”