Archives for March 2017

The IRS Responds to Our Report on Targeting – but Misses the Point

As detailed in our recent report, the IRS targeting scandal has a hidden cause which remains unaddressed to this day – a rule in the agency’s own manual that directs employees to treat applications differently if they might “generate media or Congressional attention.”  This rule is what initially prompted low-level IRS tax specialists to hold up applications from Tea Party groups, ultimately resulting in both years of delays for taxpayers and widespread embarrassment for the agency.

The report was accompanied by an op-ed in the Wall Street Journal and was reported on by, among other outlets, Fox News and the EO Tax Journal.  Both of these news reports included quotes from an IRS statement responding to our findings – or at least the agency’s interpretation of them.  Although the aggressive tone of the IRS response surprised the editor of the EO Tax Journal, it serves as a classic example of the bureaucratic mindset that led to the targeting scandal happening in the first place.  Here is the IRS statement in full, as reported in the EO Tax Journal:

“The IRS strongly disputes the [Cause of Action] report and any suggestion or allegation that Exempt Organizations is targeting taxpayers. The IRS emphasizes that this point has been confirmed by independent third parties, including the Treasury Inspector General for Tax Administration. There should be absolutely no doubt on that point, and the continuing commitment by the IRS to be guided by the tax law and nothing else.”

“[Sensitive Case Reports] are used within the IRS to bring to upper management’s attention cases that may generate press or Congressional attention, present unique or novel issues, or affect large numbers of taxpayers. It’s important to note that IRS internal guidelines on sensitive case reports do not instruct the employees to stop working a case or direct employees on how to work a case.

It is head-spinning that the IRS can argue in one sentence that it should be guided by tax law “and nothing else” and then insist in the very next sentence that it is proper to consider “press or Congressional attention” as a criterion, delaying a final decision on tax-exempt applications as a result.  The only purpose of this rule is to avoid possible embarrassment.  Yet an application for tax exempt status is no more related to the notoriety of the applicant than a driver’s license is to the fame of the driver – if you pass the test, you should get the status

The problem with rules that mandate this kind of PR-minded defensiveness is that, as amply documented by the many investigations into the targeting scandal, it drags the application process through multiple echelons of bureaucracy and involves higher officials with strong political leanings. The IRS’s statement claims that it was absolved by the Treasury Inspector General for Tax Administration (TIGTA), but in reality, a report from that office repeatedly criticized the IRS for “using inappropriate criteria” to scrutinize applications – criteria which ended up focusing overwhelmingly on political opponents of the administration in power.  IRS officials insisted on seeing every application from Tea Party-affiliated groups because of the “media attention” they were attracting, and as shown in the same TIGTA report, the result was an endless array of delays and invasive questioning.

John McGlothlin is counsel at Cause of Action Institute

Hundreds of Regs Vulnerable to Repeal under Congressional Review Act

Washington D.C. – Cause of Action Institute (“CoA Institute”) today released a list of 835 economically significant rules and regulations that are susceptible to repeal under the Congressional Review Act (“CRA”). While there is a 60-day statutory limit for rules to be reviewed by Congress under the CRA, hundreds of rules have not been properly reported to Congress giving the Trump administration an unprecedented opportunity to repeal costly rules dating all the way back to 1996 when the CRA was first signed into law.

“While Congress is currently reviewing and disapproving numerous regulations from the last year of the Obama Administration, we believe the CRA provides a broader opportunity and Congress should begin examining the rules we’ve identified as well,” said John Vecchione, Cause of Action Institute President and CEO.

Read Cause of Action Institute’s column in The Hill for more information on the CRA and how the Trump administration can pursue an aggressive anti-regulatory agenda by coordinating with Congress.

The Hill

The Congressional Review Act and a Deregulatory Agenda for Trump’s Second Year

By John J. Vecchione

A cold front may have killed-off nearly half of D.C.’s famous cherry blossoms, but Washington gridlock has emerged in full bloom. With the defeat of the Republican “repeal and replace” bill in the House, and the Democrats’ united opposition to the president’s agenda, it’s looking increasingly difficult for Congress to get things done.  Fortunately, there exists a stimulatory, free market weapon in the hands of the Congress and the President to stay on the offensive on deregulating and freeing the economy.

By simple majority vote, the Congressional Review Act (“CRA”) can overturn any regulation that affects a third-party. This is a powerful and underutilized tool. The CRA is not subject to the filibuster and provides the majority with a vast deregulatory agenda with a high chance of success.  Read More

CoA Institute is partnering with Pacific Legal Foundation and several other organizations on the Red Tape Rollback project, an effort to identify rules that have not been properly reported to Congress under the CRA.

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute:



FOX News: IRS still allowed to target political groups, according to watchdog org


IRS still allowed to target political groups, according to watchdog org

The IRS is still able to target certain political groups despite being publicly exposed for the unfair practice more than five years ago, according to a new report by a watchdog group.

A rule in place at the IRS allows the federal agency to delay the applications of non-profit groups looking for tax-exempt status, claims the Washington-based Cause of Action in its report, “A Hidden Cause of the IRS Targeting Scandal.” The IRS admitted in 2013 that leading up to the 2012 election the agency unfairly targeted right-leaning groups as well as those with “Tea Party” or “patriot” in their name. More than five years after the practice was exposed, Cause of Action says the IRS has not made changes to end the practice.

“The regulation that allows them to do this is still there,” John Vecchione, executive director of Cause of Action told Fox News. “It’s bureaucratic inertia until someone makes a change.” Read More


Office of Special Counsel accepts CoA Institute’s FOIA regulation recommendations

The U.S. Office of Special Counsel (“OSC”) published a final rule yesterday to update its Freedom of Information Act (“FOIA”) regulations. In addition to implementing changes required by the FOIA Improvement Act of 2016, OSC adopted various changes recommended by Cause of Action Institute (“CoA Institute”).

Last summer, CoA Institute was one of two organizations to submit a comment to OSC on its proposed regulatory revisions. First, we asked the agency to revise its fee category definition for a “representative of the news media,” which still included outdated “organized and operated” language.  In 2015, the D.C. Circuit recognized this “organized and operated” standard as superseded by statutory amendment in its landmark decision in Cause of Action v. Federal Trade Commission.  Similarly, we suggested—and OSC agreed—that the fee category definition should include a non-exhaustive list of entities that, in light of alternative and evolving news formats, qualify as a news media requester.  Finally, we recommended that OSC add explicit language detailing its records retention obligations for FOIA-related federal records.  On all counts, OSC substantively agreed with CoA Institute’s proposals.

Our successful comment is yet another small step in our ongoing efforts to provide effective and transparent oversight of the administrative state.

Ryan Mulvey is counsel at Cause of Action Institute

Hundreds of Important Rules Vulnerable To Repeal Under the Congressional Review Act

The Congressional Review Act (“CRA”) provides expedited procedures for Congress to disapprove of an agency rule.  If both chambers of Congress pass a disapproval resolution and the president signs the resolution, the rule is invalidated and may not be re-promulgated in substantially the same form.  The CRA has long been viewed as a limited tool that can reach back and invalidate rules from approximately the last six months.  Todd Gaziano, of the Pacific Legal Foundation, has argued that if an agency failed to properly report a new rule to Congress as required under the CRA, the Act may be able to reach back all the way to 1996 when the CRA was enacted.  Using this theory, the current administration could trigger the CRA disapproval resolution process by submitting a report for an old rule to Congress and take advantage of the expedited congressional process.

This has set off something of a scrambledownload to identify all of the rules that were never properly submitted, and thus subject to invalidation.  We are partnering with the Pacific Legal Foundation’s Red Tape Rollback project to identify rules.

Argive, a regulatory analysis project of U.S. Common Sense, identified nearly 700 economically significant rules that were not reported to the Government Accountability Office (“GAO”) for analysis as required by the CRA.

Inspired by their work, we decided to build on it by comparing the same data against the Executive Communications database maintained by the Library of Congress.  This database includes all of the direct communications from federal agencies to the relevant congressional committees of jurisdiction.

We uncovered hundreds of important rules that appeared in the Federal Register but were not received by Congress, as required by the CRA.  Those rules are listed below:

Download our data here to view filtered by agency.


We started with the Mercatus Center’s QuantGov database for all documents published in the Federal Register from 1996 to March 14, 2017.  We filtered that dataset to “rules” that were identified as “economically significant.”

We then compared that data against the data we pulled from the Library of Congress’s list of Executive Communications.  We eliminated rules where the text in either the “document title” field or the “RIN” (regulation identifier number) field matched text in the congressional database.  The formula we used to run these comparisons was =COUNTIF(Cong.GovExCommData!A:A, “*” & [cell reference] & “*”)>0.  We also eliminated some EPA rules that were listed by that agency’s FRL numbers, as well as some duplicates.

Next, we reviewed each remaining document in the Federal Register and gave each a score from 0-3 to signify the item’s importance, with a 3 being the most important.  An item was scored as a 3 if it is a rule with national importance or interest; for example, a habitat designation under the Endangered Species Act.  An item was scored as a 2 if it was an interesting rule but that likely is of interest only to its regulated community; for example, the Farm Credit Administration’s risk-based capital requirements.  All remaining rules were given a score of 1, while notices and technical corrections were rated a 0.  This scoring system is of course subjective and is just a rough guide.  The list above it currently sorted with the most important rules at the top

We then clarified the data in the “issuing agency” and “sub agency” fields to enable researchers to filter the remaining data.


  • Our results include rules submitted to the Federal Register from 2015–2017. The Argive results are limited because the GAO database does not include reports about these recent rules.  We identified 74 unreported rules from this time period.
  • Most importantly, we compared data against the rule reports Congress actually received, not only rule reports sent to GAO. We believe this is the most relevant analysis because the 60-day time limit imposed by the CRA begins when Congress receives the report for a rule.
  • We compared our results against the Argive results and concluded we identified hundreds of important rules subject to the CRA. We also found numerous rules that were missing from both the GAO and congressional database (i.e., rules that were identified by both Argive and us).


  • The CRA covers more rules than those submitted by agencies to the Federal Register. For example, the CRA covers guidance documents and agency rules of procedure or practice, if those rules “substantially affect the rights or obligations of non-agency parties.”[1]  Our analysis does not include these rules because we started with a database that only included rules published in the Federal Register.
  • Similarly, we did not review each rule to ensure that it met the CRA’s definition of a rule, which excludes rules that set rates and prices.
  • The congressional Executive Communications database only includes rule reports sent to the Senate. To the best of our knowledge, there is no corresponding database of House communications.  This does not invalidate our results, however, because the CRA requires agencies to notify both chambers of new rules.  Therefore, even if the House received a communication identifying one of the rules on our list, the fact that the Senate did not receive a similar communication means the rule is still subject to the CRA.

We welcome feedback on these findings and methods.  You can contact me at

James Valvo is Counsel & Senior Policy Advisor at Cause of Action Institute. You can follow him on Twitter @JamesValvo.

Update: This post was updated on April 6, 2017 to include further revisions and analysis of the data.

[1] 5 U.S.C. § 804(3).


CoA Institute Presses CFPB on Agency Records Kept on Personal Mobile Device

No matter what messaging medium agencies use to conduct business, federal records must be preserved.  If government employees are allowed to evade the Federal Records Act and the Freedom of Information Act (“FOIA”) through use of messaging on their private mobile devices, it threatens government transparency and encumbers efforts to hold agencies accountable.

Just last week, CoA Institute received documents from the Consumer Financial Protection Bureau (“CFPB”) indicating that, in response to our FOIA request, it conducted a search of Director Richard Cordray’s personal mobile device for any text messages that may be agency records.  That action represents the minimum required of CFPB under the law, but the agency has not yet clarified whether it has adequate recordkeeping procedures in place to preserve all agency records created on such personal devices.  It also is unclear whether Director Cordray’s text messages represent the whole body of agency business done on the Director’s phone and if any records may have been destroyed before responding to our request.

In addition, CoA Institute discovered that the National Archives and Records Administration (“NARA”) sent a February 1, 2017 letter to CFPB, requesting information and reports regarding potential destruction of the above-mentioned records.  NARA demanded a reply from CFPB by March 1, 2017.  Today, we filed FOIA requests with both CFPB and NARA in an effort to uncover CFPB’s response and clarify what actions, if any, the agency has taken to fortify its recordkeeping practices.

CoA Institute Uncovers EPA Investigation into Employees’ Use of Encrypted Messaging App

Hours after filing a lawsuit demanding that the Environmental Protection Agency (“EPA”) disclose records about its employees’ use of an encrypted messaging application, Cause of Action Institute (“CoA Institute”) received a letter from the EPA’s Office of General Counsel acknowledging that there is an “open law enforcement” investigation looking into the matter.

The EPA indicated that records created or received by its employees on “Signal,” and records concerning efforts “to retrieve, recover, or retain” those messages, were “part of one or more open law enforcement file(s).” The agency claimed such records were exempt from disclosure under the Freedom of Information Act (“FOIA”) because they were compiled for “law enforcement purposes” and their disclosure “could reasonably be expected to interfere with ongoing enforcement proceedings.”  Further, the EPA stated that it could not find any records reflecting “permission, clearance, or approval” for the use of the encrypted messaging app.

Cause of Action Institute Assistant Vice President Henry Kerner: “The EPA’s response to our lawsuit is unsurprising, but still deeply disturbing.  The unauthorized use of an encrypted messaging app by a government employee is inappropriate, and the EPA appears to agree that its employees might have broken the law.  Although we are pleased to learn that the agency is examining potential wrongdoing, we will continue to fight for the disclosure of records responsive to our FOIA request because we do not agree that the law prohibits the disclosure of the Signal messages.  It will be up to the courts to decide.”

Even though the EPA purports to have provided a final response to CoA Institute’s FOIA request, the recently filed lawsuit will continue. CoA Institute disputes the sufficiency of the EPA’s determination, which suggests that a search for potentially responsive records was never carried out. In addition, we disagree with the agency’s reliance on FOIA Exemption 7(a).

The EPA’s letter can be found here