Still, a health department official said that during hearings, the agency often considers settlements that allow vendors to retain their permits under certain conditions, including the payment of outstanding fines, temporary suspensions and probation.
Saying there was "no basis for the report," Charles Miller, a Justice Department spokesman, said in the statement, "While the department is always willing to consider settlement in any case, the suggestion that the department is planning to drop this suit is simply untrue.
Trying to keep this issue from becoming a big issue in the campaign, Dr. Dean has said he would consider a settlement that maintained the principle of executive privilege while maintaining the privacy of those who corresponded with him.
Secretary of State John Kerry said Sunday's move was "to some degree expected", but stressed that Washington considered settlements "illegitimate".
The report also indirectly calls on Israel to consider the removal now of settlements that are focal points of substantial friction between the two sides.
While most of the world officially considers East Jerusalem to be occupied, there is no consensus that the occupation itself is illegal; it is the settlements that are considered illegal.
The topic of Palestinian statehood was never one of the five issues (Jerusalem's status, the fate of refugees, security arrangements, borders and settlements) that were considered "final status" issues in the 1993 Oslo accord.
Within the city of about 200,000 Palestinians, a few hundred Jews live in settlements that are considered illegal under international law, although Israel disputes this.
Yung clarified that no formal discussions have occurred since the ITC rulings this month, but merely that HTC was considering settlement negotiations.
