The real problem here is the overhang of litigation and the burden on Government employees of having to deal with lawyers, having to be worried about their own cases. And impleader alone certainly is not going to solve that problem. It really is just adding a complexity which we don't think is desirable. We think there's a clean-cut, straightforward way to deal with the problems, and that is to substitute the Government as the defendant. We believe that adequate deterrents to unlawful conduct will remain with the provisions of this bill. And so, we see no reason why it shouldn't be done in a simple, straightforward way. There's no need to make litigation more complex. We ought to be striving to make it simpler.

Senator GRASSLEY. Let's assume that this legislation is in place and that a judgment is found against a Federal employee and that Federal employee has changed positions to another Federal agency, as in a transfer. Can we still reach that employee for disciplinary action?

Mr. SCHMULTS. I think there would still be a way, yes. As long as the Federal employee is still an employee, there could still be disciplinary proceedings.

Your question is getting to the deterrents point. Does this legislation mean that individual Federal employees will not be deterred? I think the threat of disciplinary proceedings is a very important deterrent. But I would like to note that there are other deterrents as well. For example, the criminal laws remain fully applicable. For any conduct that is of a criminal nature, the employee would be subject to a criminal action. Also, you have the threat of injunctions on equitable relief which could be granted by a court after the enactment of S. 1775.

Of course, you have, and I don't think we should minimize the deterrent effect of public criticism and the injury to professional reputation, where an employee is found to have engaged in unconstitutional conduct. And, in a very severe case, the employee might be found to be acting outside the scope of his or her employment and would then be subject to a private civil damage action.

Senator GRASSLEY. As a followup on that, what about an employee that leaves that public sector and goes into private employment? Mr. SCHMULTS. Well, I think an important point to be kept in mind is that deterrence is probably not as important there. That employee is no longer a Federal official and therefore, cannot continue to take action under the authority of a Federal office. The points that I made earlier would still apply-to criminal laws would still be applicable, there would still be damage to the employee's reputation, and there could still be equitable relief. But when you look at the other benefits-I think it's important to keep those in mind-the plaintiff will have the U.S. Government as a solvent defendant able to pay damages. And so, when you weigh all of those points, it seems to me the balance comes out strongly in favor of enacting this legislation.

Senator GRASSLEY. What about an individual, who in this instance, had a judgment rendered against him or her and then has gone into private employment and then later on returns to Federal Government employment?

Mr. SCHMULTS. Well, in that case, there should be some finality to an action like this. I suppose, in your example, if the plaintiff sued the U. S. Government and recovered and at the time of a judgment the employee who caused or who engaged in the misconduct was in the private sector, and then later came into the Government, it might well be that those circumstances could be taken into account in deciding as to whether or not that employee should be hired again. I would have to check the personnel rules and regulations on that. But it seems to me that if you're considering three people for a Federal job and one has been, in effect, been found responsible for or has engaged in constitutional misconduct for which the Government has had to pay, I would think that would be an important factor in the hiring decision.

Senator GRASSLEY. Does the head of an agency or a department have complete discretion as to how he will react to the forwarding of the disciplinary proceedings by the Attorney General?

Mr. SCHMULTS. Yes. It would be mandatory in a case where the Government loses or the case is settled and the Government makes a payment in settlement for the Attorney General to advise the head of the employee's agency of those facts so that disciplinary proceedings could be considered. And presumably, where justified, the head of that agency would decide to bring a disciplinary proceeding and the employee would be disciplined.

Senator GRASSLEY. For the purposes of developing our record, why should the United States have access to the employee's good faith defense?

Mr. SCHMULTS. Well, the good faith defense is, we think, an extremely important part of this bill. As I said in my statement, it really goes to the merits of the plaintiff's claim by testing the action of an employee against the standard of reasonableness and good faith. We also think that taxpayers' funds, funds out of the U.S. Treasury, should not be paid out for actions taken in good faith. And when you bear in mind that any payment of a claim carries with it the threat, in effect, of a disciplinary action against the employee later, it would be self-defeating if you were going to make payments where the employee has acted in good faith because it seems clear that there should be no disciplinary proceedings under such circumstances.

And certainly no employee wants to be found "guilty", if you will, of unconstitutional acts and suffer the resulting stigma. So that, even where the United States and not the employee would be the defendant, our view is that employees would be discouraged from acting in uncertain areas where they might subject the Government to financial liability. We should not deter employees from acting in good conscience and in good faith and from being courageous, particularly in the law enforcement and other essential areas of Government activities. So, we see this good faith defense as being a very important part of the bill.

Senator GRASSLEY. In the next to last paragraph of your testimony on page 9, you suggest that this bill would raise the administrative adjustment figure from $25,000 to $50,000.

As the regulations currently exist, they provide for an oversight function by the Department of Justice. Are you saying that we do

not need this oversight function? And, I suppose that I might as well also ask: Does Justice always OK the settlement?

Mr. SCHMULTS. No; I think we would retain the oversight function. We're just suggesting that with the passage of time that it would make sense to raise that $25,000 figure to $50,000 simply as a result of inflation. The reason for it, basically, is the more of these claims that you can settle as an administrative matter, the less you will clog the courts and use valuable litigation resources; there would still be an oversight function in the Attorney General's hands.

Senator GRASSLEY. At this time, unless you have something more that you want to add, I would like to thank you very much for your testimony.

Mr. SCHMULTS. Thank you very much, Mr. Chairman. We are very pleased that you have introduced this very sound piece of legislation. All of us at the Department of Justice stand ready to work with you and your staff at any time to secure the enactment of this legislation which we regard as very important.

Senator GRASSLEY. We have at least 2 more days of hearings and at the end of those hearings we will see what sort of contact we'll have with you as we analyze the record.

Mr. SCHMULTS. Thank you very much.

Senator GRASSLEY. Thank you. We will enter your statement into the record at this time.

[The prepared statement of Mr. Schmults follows:]

PREPARED STATEMENT OF DEPUTY ATTORNEY GENERAL EDWARD C. SCHMULTS

MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE:

I am pleased to appear before this Subcommittee in support of S.1775, which would make the Government liable for constitutional torts and generally the exclusive defendant in all tort suits involving Government employees acting within the scope of their employment. The Administration's views reflect con

tinuity with the position of prior Administrations, which elicited broad bipartisan support. Case law eviscerating traditional doctrines of official immunity make congressional action imperative.

At present, the Federal Tort Claims Act makes the Government liable for tort claims based on the negligent or wrongful act or omission of any Government employee while acting within the scope of his office or employment, such liability to be determined "in the same manner and to the same extent as a private individual under like circumstances."1/ There are some specifically enumerated exceptions to this general grant of tort jurisdiction and liability, such as cases involving discretionary governmental functions, assault and battery, and claims arising in foreign countries. 2/

Although Congress has enacted several specific provisions that make the Government the exclusive defendant in certain situations, 3/ a plaintiff is generally permitted to sue both the federal employee allegedly responsible for misconduct as well as the United States. Suits against government employees in their personal capacities quickly dispel he widespread misconception that they are shielded from pe onal liability for their official acts.

In 1971, the Supreme Court, in Bivens v. Six Unknown Named Agents, 4/ declared that Congressional authorization was not required to expose individual federal officials to personal liability for violations of Fourth Amendment rights. Since

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that decision, there has been an exponential increase in the number of lawsuits seeking redress directly from the individual defendant's personal resources rather than from the Government. The United States can generally invoke sovereign immunity as a defense in Bivens suits, which are popularly labelled "constitutional" tort actions. The hallmark of a constitutional tort claim is a complaint against a public official seeking damages for an alleged violation of the Constitution, such as the Fourth or Fifth Amendment.

The Supreme Court has repeatedly widened the exposure of federal officials to damage liability for constitutional torts since Bivens. The Court has countenanced a damage suit against a Congressman under the Fifth Amendment, 5/ and suit against prison officials under the Eighth Amendment, even though an alternative remedy, the Federal Tort Claims Act, was available. 6/ The Court also recently affirmed, by a 4-4 vote, a decision by the United States Court of Appeals for the District of Columbia Circuit holding that the President of the United States could be held personally liable in tort damages for acts done in the course of his duties. 7/

Subordinate federal courts have extended the Bivens constitutional tort theory to claims bottomed on virtually any constitutional infraction. The Department estimates that there are at present in excess of 2,000 lawsuits pending against federal officials in their individual capacities. Several of these lawsuits involve multiple defendants, some as many as thirty to forty-five. Initially, Bivens suits were primarily filed as a result of incidents involving law enforcement activities; in recent years, however, such suits increasingly have arisen out of regulatory or personnel actions taken by federal officials. A United States District Court ruling in 1980 holding members of the former Civil Service Commission potentially liable under the Fifth Amendment for allegedly disclosing derogatory allegations against a job applicant to another agency without notice