Archives for February 2014

Daily Caller: COMPLAINT: IRS ‘improperly withheld’ documents on new nonprofit rules

Read the full story: Daily Caller

The group Cause of Action requested four sets of communications between the IRS and administration officials to ensure that political bias did not factor into the design of the new rules. But the IRS delayed the release of the documents until after the period to make public comments on the new rules closes Thursday, according to an amendment to Cause of Action’s existing lawsuit against the IRS.


“By letter dated January 30, 2014, the IRS informed Cause of Action that its FOIA request had been received… However, the IRS advised that it would be unable to complete the processing of the request even by February 13, 2014. Instead, the IRS estimated that its final response would not be forthcoming until May 16, 2014,” according to the complaint.

Reason: The Feds vs. Craig Zucker

Read the full story: Reason 

In November 2013, with the pro bono backing of the nonprofit government accountability group Cause of Action, Zucker sued the CPSC for what he calls its “unprecedented regulatory overreach.” The suit alleges that the CPSC’s actions are aimed at punishing him for speaking out against the agency. In an emailed statement, CPSC spokesperson Scott Wolfson says “CPSC staff filed this case in order to prevent young children, tweens, and teens from suffering serious injuries,” adding that the agency “is using enforcement, education, and rulemaking to address a serious and hidden hazard with an entire product line.”


Neither case will be resolved anytime soon. In the meantime, Zucker has launched a new line of larger, less ingestible magnets called Liberty Balls, which he is selling to help cover his personal legal fees.

The Fight for Truth, Transparency, and Accountability at the National Archives

For more than two years, Cause of Action has been fighting to gain public access to the Financial Crisis Inquiry Commission (FCIC) documents transferred without restriction in March 2011 by the National Archives and Records Administration (NARA) to the House Committee on Oversight and Government Reform (OGR). The FCIC was a temporary commission created in the legislative branch to investigate the causes of the financial crisis.  Today, Cause of Action advanced oral arguments in the United States Court of Appeals for the District of Columbia Circuit explaining NARA’s wrongful withholding of FCIC records.  NARA’s unsupported position is that these records are not subject to the Freedom of Information Act (FOIA), a position belied by both the facts and law of the case.

We submitted a FOIA to NARA in October 2011 for “all documents, including email communications, memoranda, draft reports and other relevant information and/or data contained in the records transfer of Financial Crisis Inquiry Commission documents stored at NARA to the Committee on Oversight and Government Reform at the U.S. House of Representatives.” A month later, NARA denied our request claiming that the records are not “agency records” and that the FCIC established a five-year restriction on public access to the records.

After our appeal of the FOIA response was denied, Cause of Action filed a lawsuit in August 2012 against NARA for wrongfully withholding records pertaining to the FCIC and claiming these records are not subject to FOIA. NARA filed a request for a dismissal of the case in the District Court for the District of Columbia, which was granted in March 2013. CoA filed a timely appeal In the United States Court of Appeals for the District of Columbia Circuit.

Congress did not address what would happen to FCIC records

We argue that because NARA has possession and complete control of the documents that contributed to the FCIC’s report on the 2008 financial crisis, those documents are subject to FOIA. NARA’s claim is that since the FCIC was a commission created by Congress, FCIC records are per se legislative branch records, which are not subject to FOIA. However, Section 5 of the 2009 Fraud Enforcement Recovery Act (FERA), which established the FCIC, did not address records preservation or dissemination at termination of the commission. Further, no other federal statute suggests that Congress intended to restrict access to these records under FOIA.  And the presumptive disclosure of documents and broad public access under FOIA is further support for the release to the American people of the FCIC records.

 Executive branch agency records are contained within the FCIC records

Cause of Action submitted a March 2, 2011 letter from NARA to OGR to further explain our arguments in an opposition we filed January 24, 2014 in the United States Court of Appeals for the D.C. Circuit. NARA’s letter to OGR is a response to a February 18, 2011 letter from Chairman Darrell Issa requesting records from the Financial Crisis Inquiry Commission (FCIC).

  • The letter reveals that:
  1. NARA knowingly possessed executive agency records as a releasable subset of the FCIC records, and these records were disclosed to OGR by NARA without restrictions of any kind.
  2. NARA specifically contemplated that the records were subject to FOIA.

An FCIC staffer crossed out FOIA language in a transfer form given to NARA

The transfer of the FCIC records to NARA included a transfer letter and Standard Form 258 (SF-258), where the FOIA language was crossed out by hand by a staffer for FCIC Chairman Phil Angelides.  From our opening brief:

“Rather than enumerate a specific FOIA exemption or other legal basis for his desire to restrict public access to the FCIC records, Mr. Angelides, by proxy, crossed out by hand the mandatory FOIA language from the Standard Agreement, and authored an aspirational letter that carries no legal effect. Specifically, his letter “recommended” that NARA restrict access to the records, and “encouraged” the Archivist to carry out these recommendations. Despite Mr. Angelides’s best laid hopes, he cited no legal authority for restricting access.”

Normal NARA transfer letter

Normal transfer letter which states in first paragraph: “The transferring agency certifies that any restrictions on the use of these records are in conformance with the requirements of 5 U.S.C. 552 [FOIA].”

 Transfer Letter Normal

NARA Transfer letter with FOIA crossed out by FCIC staffer

The transfer letter from FCIC to NARA with the section related to FOIA crossed out by a proxy for FCIC Chairman Phil Angelides (highlight added by author).

Doctored Transfer Letter

Legislative Branch files amicus brief against transparency

The Executive and Judicial branches have made it clear that they want to keep the public in the dark on the financial crisis, but in November the legislative branch joined them in opposing transparency. The Bipartisan Legal  Advisory Group (BLAG) made a highly unusual move by filing an amicus brief in support of NARA’s effort to shield the American public from knowing the truth about the financial crisis.  BLAG consists of the five members of House leadership, and was last deployed to defend the Defense of Marriage Act (DOMA) by a 3-2 vote in March 2011.


It is our firm belief that American taxpayers deserve to know what information contributed to the FCIC’s findings on the financial crisis. The “most transparent administration in history” should live up to its promise and release the FCIC records.  After all, the American people paid for the FCIC documents and should be granted full access.

Find all of the court filings for this case here.

Roll Call: FTC’s Data Security Grab Is Adjudication without Authority

Cause of Action’s Dan Epstein writes in Roll Call:

What happens when a government agency adjudicates without authority, assuming Congress will simply provide forgiveness, rather than ask for permission? That is the question that is being asked this week after the Federal Trade Commission petitioned Congress for powers it does not currently have regarding data breaches and cybersecurity while already exercising the very powers they seek.

During a Senate Judiciary Committee hearing on combatting cybercrime, the FTC asked for the authority to regulate data security. By stating, “Under current laws, the FTC only has the authority to seek civil penalties for data security violations involving companies that fail to protect children’s information provided online,” the FTC is admitting it does not currently have the authority to regulate data security.

This wasn’t the first time the FTC asked Congress for such authority. Since 2000, the FTC has sought authority from Congress to regulate data security, admitting it “lacks the authority to require firms to adopt information practice policies.” Despite the FTC’s repeated requests that Congress confer upon it the authority to regulate data security, Congress has refused to grant it.

The FTC is walking a fine, and troubling, line. While using big names like Target and Wyndham to pressure Congress to grant them greater power, the FTC has aggressively gone after small companies that have fallen victim to data thieves, all the while claiming it has such authority.

One such victim is a small medical laboratory in Georgia called LabMD that provides doctors with cancer-detection services. In 2008, a company backed by a federally funded researcher took a patient-information file without LabMD’s knowledge or consent. The company then contacted LabMD, advised the company that it had taken its property, and offered a contract for Internet security services. LabMD declined the services and the company turned the information over to the FTC. After a three-year-long invasive and expensive investigation, the FTC filed a complaint last year alleging that LabMD’s data-security practices violated rules it refused to specify.

Despite the fact that Congress specifically gave the Department of Health and Human Services the sole authority to regulate patient-information data security, which has never accused LabMD of any violation, the FTC has decided to step in and pretend it has the authority it told Congress this week it does not have.

The commission has attempted to get around its lack of authority by claiming in court filings that it has the authority to create “common law” which basically means it can make it up as it goes. However in its statements this week to Congress, it contradicts this very position.

Additionally, while waging aggressive efforts against LabMD, the FTC declined to look into the concerning and well-documented data breaches that have occurred related to Obamacare. In December, Cause of Action filed a Freedom of Information Act request seeking records about FTC investigations into consumer breaches by navigators and health exchanges.

Last week, the FTC informed us, by being unable to produce any relevant documents, that it did not investigate such data security issues including the recent breach by MNSure where the state’s Office of the Legislative Auditor said “slack internal procedures at the new health insurance exchange agency ‘contributed directly’ to the disclosure.”

The FTC is trying to have it both ways — on one hand using Target and Wyndham as opportunities to pressure Congress for authority while on the other hand going after small businesses without that authority because they have too few resources to fight back.

Operating outside the bounds of law should never be tolerated — whether it is snooping data thieves or large government agencies. Until the FTC backs away from its battle against LabMD or until Congress grants it the authority to launch such investigations, the truth is simple — it is operating outside the law.

CBS News: Republicans ratchet up scrutiny of the IRS

Read the full story: CBS News

While congressional Republicans pull out all the stops to oppose the rule changes, activist groups are weighing in as well. The conservative watchdog group Cause of Action filed a lawsuit to delay the rules.


The group’s executive director Dan Epstein called the proposed regulation “simply a back door attempt to stifle political opponents, to protect Administration policies, and to restrict and hamper grassroots education regarding the Constitution, limited-government, and economic freedom.”

Transparency and Good-Government Groups Encourage Legislative Efforts to Bring Transparency and Accountability to Federal Grant-Making

Cause of Action and the following groups submitted a letter to Congress concerning discretionary grant spending and the GRANT Act:

Cause of Action
Center for Effective Government
Citizens for Responsibility and Ethics in Washington – CREW
Defending Dissent Foundation
Project on Government Oversight – POGO
Taxpayers for Common Sense

Read the letter here.

GRANT Act Coalition Letter

Washington Post: Unions, trade associations worried about possible IRS rule changes

Read the full story: Washington Post

Several of the groups from across the political and ideological spectrum have also filed comments themselves. On Tuesday, the American Civil Liberties Union said that it agreed with the effort to define political activity more clearly but that it has “serious concerns . . . both from a First Amendment perspective and as a simple matter of workability.”


The Heritage Foundation, worried about the impact on its advocacy arm, Heritage Action for America, argued that the Treasury Department doesn’t have the authority to impose the rules. And on Wednesday, Cause of Action, a conservative watchdog group, filed suit to delay the rules, calling them “a back door attempt to stifle political opponents” and arguing that they would impose “voluminous recordkeeping requirements on small non-profits.”