The Stop Settlement Slush Funds Act of 2026 restricts how the federal government can use settlement agreements in civil cases. Under this bill, government officials cannot require defendants to make payments to third parties as part of settlement deals, except when those payments directly compensate victims for actual harm or cover legitimate legal services. The law applies to all federal agencies and creates penalties for officials who violate these rules, with violations subject to the same penalties as violations of federal anti-corruption laws. To monitor compliance, the bill requires each federal agency to submit annual reports to Congress listing all settlement agreements that include payments to outside parties, and agency Inspectors General must audit compliance and publicly report any violations. The reporting requirements expire after seven years, though the restrictions on settlement donations remain permanent.
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