Archives for February 2018

NOAA FOIA Response Suggests Refusal to Search Council Member Email Accounts for Records on At-Sea Monitoring Amendment

Earlier this month, Cause of Action Institute (“CoA Institute”) filed an administrative appeal of a final response by the National Oceanic and Atmospheric Administration (“NOAA”) to CoA Institute’s Freedom of Information Act (“FOIA”) request concerning NOAA’s efforts to expand industry funded at-sea monitoring—specifically, to the herring and mackerel fisheries—and to lay the foundation for industry funding across all of New England and the Mid-Atlantic.  NOAA’s processing of the request suggests that the agency failed to search email accounts belonging to members of the fishery management councils even though they are subject to public disclosure.  Based on the limited records that were disclosed, NOAA’s search appears improperly limited to its own employees.

The Industry-Funded Monitoring Omnibus Amendment

Over the past five years, the New England and Mid-Atlantic Fishery Management Councils (“NEFMC” and “MAFMC,” respectively) have worked on a controversial omnibus amendment that would require more fisherman to pay for at-sea monitoring.  Industry-funded monitoring has already been imposed on the groundfish fleet, despite a long-fought legal challenge, devastating economic consequences, and historically-depressed fishery performance.  Industry funding in the herring and mackerel fisheries will cost fishermen between $710–$818 per day at sea.  That is more than the average daily revenue of many fishermen and will render fishing unprofitable for countless small-scale family businesses.

CoA Institute submitted a written comment in response to the poorly-designed and ill-timed omnibus amendment.  Although the MAFMC decided to table the project for at least a year, the New England Council elected to forge ahead with the herring fishery.  According to a recent presentation by NOAA staff, the agency is now reviewing a draft proposed rule.  The NEFMC’s official “timeline” indicates the rule will be published this month.  A final rule is expected to follow in June 2018.

The December 7, 2017 FOIA Request and Appeal

In an effort to investigate how the Councils and NOAA responded to our comment, we filed a FOIA request for “[a]ll records concerning” the comment, “including any correspondence between or amongst members of the New England and Mid-Atlantic Councils; officials, employees, or representatives of NOAA; or any other third party.”  When we received a response, we were surprised that the agency only found seven responsive records—five of which were part of a single e-mail chain with most substantive content redacted to protect NOAA’s “deliberative” processes.

The other two records were an email that we sent to then-Regional Administrator John Bullard with a courtesy copy of our comment, and an email from Dr. Christopher Moore, Executive Director of the MAFMC, forwarding our comment to members of the Council.

NOAA failed to disclose any records from the members of the regional councils.  Even the record from Dr. Moore was the version received by John Bullard, as highlighted here:

NOAA’s failure to locate, process, and disclose relevant records from Council members is a serious deficiency in its response.  Council records—including members’ email correspondence—are subject to the FOIA, even if those records are stored in private email accounts.  The regional councils conduct important business that has a serious impact on the livelihoods of Americans involved with the fishing industry.  The process by which fishery rules are designed and implemented can already be less-than-transparent; any attempt to hide records from public scrutiny cannot be allowed to stand.

Follow-Up Public Records Requests to Massachusetts and Maryland

CoA Institute also filed state-level FOIA requests with Massachusetts and Maryland this week in order to access some of the records that NOAA has refused to disclose.  These requests seek the same records sought from the federal government, but only to the extent they were created or received by John Quinn and Michael Luisi, the chairmen of the NEFMC and MAFMC, who used their state government email addresses to conduct council business.

Interestingly, sometime after CoA Institute submitted its comment, Dr. Quinn removed his University of Massachusetts email address from the NEFMC website, perhaps in order to dissuade the interested public from even attempting to file a state public records request.

CoA Institute is committed to fighting for the economic rights and liberties of everyday Americans, including those who face increasingly onerous regulation of their livelihoods.  We also will fight against agencies that flout federal records management laws in an attempt to keep their regulatory efforts secret.

Ryan Mulvey is Counsel at Cause of Action Institute

17 Groups Urge Trump Administration to End Unlawful IRS Practice of Dodging Oversight

Washington, D.C. – Cause of Action Institute (“CoA Institute”) today led a coalition of 17 organizations in sending a letter to President Trump and senior administration officials urging them to hold the IRS accountable by working to end the agency’s practice of dodging oversight of its rules.

CoA Institute recently issued an investigative report titled Evading Oversight: The Origins and Implications of the IRS Claim That Its Rules Do Not Have an Economic Impact, detailing how the IRS created and expanded a series of self-bestowed exemptions from three important regulatory oversight mechanisms.  The IRS created these exemptions by claiming that the economic effects of its rules flow from the underlying statute and not its regulatory choices.

The letter states:

This IRS practice denies Congress information about IRS major rules that should be reported to the Government Accountability Office under the Congressional Review Act.  It also hinders the White House’s ability to fulfill its constitutional obligation to supervise the Executive Branch by conducting oversight of IRS regulations pursuant to Executive Order 12,866.  And it impacts the public’s right to learn about and comment on the economic impact of the IRS rules that are subject to the Regulatory Flexibility Act… The IRS should live by the same rules of administrative law and agency oversight as the rest of the Executive Branch.

The letter was sent to President Trump, Secretary of the Treasury Steven Mnuchin, Office of Management and Budget (“OMB”) Director Mick Mulvaney, and Office of Information and Regulatory Affairs (“OIRA”) Administrator Neomi Rao.

The letter urges the Department of the Treasury and OMB to withdraw from a decades-old agreement allowing the IRS to avoid White House review of its rulemakings. Last week, two former heads of OIRA, Susan E. Dudley who served under President George W. Bush and Sally Katzen who served in the Clinton administration, wrote in The Wall Street Journal that this longstanding agreement has been abused and agreed it should be reconsidered.

Further, the coalition letter firmly holds that the IRS should not be permitted to claim that the economic impact of its rules is due to the underlying statute and not its regulatory choices.

The full letter can be found here.

The following groups signed:

American Business Defense Council
Dick Patten, President

American Commitment
Phil Kerpen, President

Americans for Prosperity
Brent Wm. Gardner, Chief Government Affairs Officer

Americans for Tax Reform
Grover Norquist, President

Association of Mature American Citizens
Dan Weber, President & CEO

Campaign for Liberty
Norm Singleton, President

The Carlstrom Group
Bob Carlstrom, President

Cause of Action Institute
John Vecchione, President & CEO

Center for Freedom and Prosperity
Andrew F. Quinlan, President

Council for Citizens Against Government Waste
Tom Schatz, President

Family Business Coalition
Palmer Schoening, Chairman

Freedom Partners Chamber of Commerce
Nathan Nascimento, Executive Vice President

Jason Pye, Vice President of Legislative Affairs

Hispanic Leadership Fund
Mario H. Lopez, President

National Taxpayers Union
Pete Sepp, President

Taxpayers Protection Alliance
David Williams, President

Tea Party Patriots
Jenny Beth Martin, President


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


CoA Institute Calls on HUD Watchdog to Pull Flawed FOIA Rule

Cause of Action Institute (“CoA Institute”) has sent a public letter to the Department of Housing and Urban Development (“HUD”) Office of Inspector General (“OIG”) to request that the agency watchdog recall and revise its recent direct final rule implementing changes to its Freedom of Information Act (“FOIA”) regulations.  Specifically, CoA Institute explained that the OIG’s flawed FOIA rule cross-references deficient fee provisions in HUD’s current department-wide regulations.

As an independent component of HUD, the OIG maintains its own rules regulating public access to its records.  In and of itself, this is not an unwelcome fact.  These component-specific FOIA regulations are important for maintaining the OIG’s independence and limiting the potential politicization of disclosure processes by HUD political staff.  Yet the OIG still relies on department-wide FOIA policy in certain important respects.  For example, the OIG cross-references many of HUD’s general regulatory provisions for charging fees to requesters.  The OIG’s new rule only slightly modified its existing cross-reference to reflect the changes introduced last year by HUD in response to the FOIA Improvement Act of 2016.

News Media Fee Category

Unfortunately, when revising its agency-wide regulations last year, HUD failed to eliminate the so-called “organized and operated” standard from its definition of a “representative of the news media.”  Such language has been used in the past to deny news media requester status to government watchdog organizations like CoA Institute.  Indeed, CoA Institute took the Federal Trade Commission to court, and argued its case all to the way to the D.C. Circuit, just to get the agency to acknowledge that its retention of the “organized and operated” standard was unlawful and led to improperly denying CoA Institute a fee reduction.  The D.C. Circuit eventually issued a landmark decision in CoA Institute’s favor to clarify proper fee category definitions and their application in FOIA cases.

Like the OIG earlier this week, HUD forwent a comment period and issued a direct final rule without any public feedback.  After CoA Institute nevertheless sent the agency a letter to explain the deficiency in HUD’s rulemaking, our comment went unanswered.  And, to date, HUD has not indicated any intention of again revising its own flawed FOIA rule to conform with statutory and judicial authorities.

CoA Institute has convinced a number of other agencies that solicited public comment to adopt a proper definition of “representative of the news media” in line with the FOIA statute and controlling case law.  Those agencies include, among others, the Consumer Product Safety Commission, Office of the Special Counsel, Department of Defense, U.S. Agency for International Development, and Department of Homeland Security.  We hope that the OIG will similarly acknowledge the need to revisit its flawed FOIA rule by eliminating the cross-reference to HUD’s improper fee provisions and adopting a proper definition of a news media requester.

Ryan Mulvey is Counsel at Cause of Action Institute

VA Travel Fraud Shows Even Reformers Can Misuse Government Power

There is little doubt that recent reforms at the Department of Veterans Affairs represent remarkable progress.  Last year saw the appointment of a new head for the agency, David Shulkin, and the passage of legislation giving him the power to start implementing badly-needed changes.  It was a lesson in how persistence can eventually lead to progress, and we recently highlighted it in the Washington Examiner as an overlooked bipartisan success.  Unfortunately, Shulkin is now reminding us of a different lesson: even those who champion reform may misuse government power once they have it.

A new inspector general report documents how Shulkin and his direct subordinates improperly turned a simple business trip in July of last year into a lengthy vacation.  Gifts were inappropriately accepted, government employees were used to plan private excursions, and an e-mail was even faked to justify flying Shulkin’s wife to Europe with him.

The saddest part is this occurred just after Shulkin visited the White House to celebrate the signing of legislation which allowed him to more easily fire VA employees for wrongdoing.  Yet instead of ending VA misconduct, Shulkin was on his way to becoming an example of it as he flew to England to attend a sold-out tennis match at Wimbledon with his wife at no cost to either of them.  She had officially been flown out to watch her husband receive “special recognition” at a dinner, a fiction created by Shulkin’s chief of staff to have $4,000 in airfare covered by taxpayers.  The Wimbledon tickets were from an acquaintance whose employer holds several government contracts.

In the days before the report was issued, Shulkin and his attorney had mounted an aggressive defense of his actions.  That tone changed significantly once the report became public, with Shulkin acknowledging how bad the behavior looked and White House officials saying off the record that Shulkin had been deceptive about the seriousness of the charges.  Yet his willingness to accept responsibility was only partial, as he blamed political appointees for targeting him and suggested that e-mails proving expense fraud by his chief of staff were the result of hacking.

The improbable hacking charge may never amount to much, as the chief of staff retired rather than face punishment.  And while e-mails have shown that Shulkin is indeed being pursued by political appointees in his agency, that does not excuse the fraudulent behavior of his staff.  If anything, the knowledge that rivals are looking to undermine you should be another reason to ensure your office behaves ethically.

The VA is not an easy place to lead, and Shulkin has been a consistent advocate for reform.  But that reform will only stick if he can make sure his own subordinates maintain the standards of behavior that he champions for the VA as a whole.  The agency has long suffered from low morale, as years of unaccountability and understaffing have led to dissatisfied veterans and endless frustration for competent employees.  It will be that much harder to change this environment if the top official is excusing ethical lapses instead of preventing them.

The latest reports indicate that Shulkin will remain in his position despite what happened.  He must now focus on using the powers given him by last year’s reform bill to ensure the VA is a place where this kind of behavior is no longer tolerated.

John McGlothlin is counsel at Cause of Action Institute

Investigation Update: OPM Provides Deficient FOIA Response on Congressional Oversight Policy

For the past year, Cause of Action Institute (“CoA Institute”) has been investigating rumors that the Trump Administration is directing federal agencies to ignore congressional oversight requests from Democratic legislators.  Various reports (here and here), which detail contentious interactions between congressional staffs and employees at the General Services Administration (“GSA”) and the Office of Personnel Management (“OPM”), allege that the directive “not to cooperate” with individual Members’ records requests was originally delivered by Uttam Dhillon, Special Assistant to the President.  The earlier issuance of an opinion letter by the Department of Justice’s Office of Legal Counsel seemed to corroborate these press reports.

As I discussed in a September 2017 op-ed in The Hill, the Administration’s actual congressional oversight policy remains ambiguous.  On July 20, 2017, the White House disavowed the OLC opinion letter as a statement of government-wide policy following severe criticism by Senator Chuck Grassley.  Yet records received by CoA Institute under the FOIA suggest that either the OLC opinion is still in force or the White House has yet to uniformly apply its actual policy.  For example, following our successful appeal of a GSA FOIA response, the agency disclosed GSA Order ADM 1040.3, dated July 24, 2017, which expressly states that the OLC opinion remains the agency’s—and, presumably, the Administration’s—official policy.  Our request for public clarification has gone unanswered.

Now, a recent FOIA response from OPM only confuses the matter further.  As part of our investigation, CoA Institute sent a FOIA request to OPM seeking access to various records concerning the agency’s policies or procedures for handling congressional oversight and records requests.  We also requested copies of records evidencing White House directives on pre-production consultation or review of requests from Congress or under the FOIA.  OPM was only able to locate a single email linking to the OLC memo, but without any further details concerning its implementation at the agency, let alone its continued relevance.

Like the GSA’s initial failure to locate responsive records, OPM’s response is curious because multiple media reports have established that Jason Simmons, OPM’s then-Chief of Staff, directed the agency’s congressional liaisons to process only those oversight requests co-signed by Republican committee chairmen.  Yet no such directive was located and disclosed.  Moreover, with respect to the records that were released, OPM withheld the names and email addresses of its employees.  It is therefore unclear who at the agency was reviewing the OLC opinion letter or for what purposes.  We have filed an appeal challenging the adequacy of OPM’s search efforts, as well as its withholdings under FOIA Exemption 6.  If the agency were to undertake a supplemental search, some much needed clarification could be forthcoming.

Ryan Mulvey is Counsel at Cause of Action Institute

Treasury and OMB are Reconsidering IRS Oversight Exemption

I’ve been writing about the series of self-created exemptions the Internal Revenue Service (“IRS”) has been using to evade oversight of its rulemakings.  One of those exemptions is tied to White House review pursuant to Executive Order 12,866 at the Office of Information and Regulatory Affairs.  Today, for the first time, the agency publicly revealed that it is in talks with the Office of Management and Budget (“OMB”) to review that exemption.

The Trump Administration’s Departments of Health and Human Services (“HHS”), Labor, and the Treasury just released a proposed rule that would allow Americans to buy short-term health insurance plans that would not be affected by the Patient Protection and Affordable Care Act’s mandates that are driving up premiums and limiting choice.  Housed within that proposed rule is a microcosm of the problem I’ve been highlighting.

On pages 17–28, HHS and Labor conduct a series of regulatory assessments, including an explanation of what the costs, benefits, advantages, and disadvantages of the proposed rule are.  They even include an analysis of the number of enrollees likely to take advantage of the proposal and the impact on the individual market exchanges.  IRS?  Not so much.  As has been its practice, the IRS simply claims that “[c]ertain IRS regulations, including this one, are exempt from the requirements of Executive Order 12866 . . .  Therefore, a regulatory impact assessment is not required.”

However, the IRS also reveals that CoA Institute’s efforts to urge the Trump Administration to review the exemption is starting to bear fruit.  The IRS states that “[p]ursuant to Executive Order 13789, the Treasury Department and OMB are currently reviewing the scope and implementation of the existing exemption.”

IRS Section from Proposed Rule on Short-Term Insurance

Here’s hoping they go further than simply review the scope and implementation, and resolve to end the practice that allows the IRS to give short shrift to the impacts of its rules, while other agencies, like HHS and Labor here, do their homework.

James Valvo is Counsel and Senior Policy Advisor at Cause of Action Institute.  He is the principal author of Evading Oversight.  You can follow him on Twitter @JamesValvo.

CoA Institute Files Opening Brief in Appeal of Decision that Imperils Low Cost Children’s Clothing to Families

Washington, D.C. – Cause of Action Institute (“CoA Institute”) today filed its opening brief in the Court of Appeals for the D.C. Circuit challenging a district court ruling issued last September that wrongly found that consignors who also volunteer at children’s clothing consignment events must be considered employees under the Fair Labor Standards Act (“FLSA”).

In 2013, the U.S. Department of Labor (“DOL”) sent our client, Rhea Lana Riner, a letter claiming that her company was in violation of the FLSA regarding minimum wages and overtime pay.  The government threatened steep fines if Rhea Lana did not comply.

CoA Institute Counsel Josh Schopf: “The FLSA is a decades-old law intended to protect vulnerable workers from exploitation. That is clearly not happening at Rhea Lana’s events, and the district court acknowledged that fact. Yet the court sided with the government anyway, attacking a business model that provides hardworking families and communities with affordable children’s clothing and goods. We prevailed once on appeal, and we hope to do so again.”

The brief states:

These are not unprotected workers lacking in bargaining power or workers toiling away for long hours in sub-standard conditions.  Common sense dictates that this activity does not require remediation of the type contemplated by the FLSA…

The District Court even acknowledged that Rhea Lana’s did not exploit any of the consignor/volunteers, yet somehow the court still accepted the DOL’s claims that the agency’s determination was consistent with the purposes of the FLSA.

The brief urges the Court to reverse the judgment of the lower court and declare that consignor/volunteers at these events are not Rhea Lana’s employees.

Case background:

Rhea Lana founded her clothing consignment business in her living room more than two decades ago. Since the company’s humble beginnings, Rhea Lana, Inc. has expanded as a franchise with dozens of locations across 21 states.

Rhea Lana’s semi-annual, consignment events allow families to consign their used children’s items and receive 70% of the proceeds. The events also allow families to save money by giving them the opportunity to purchase discounted goods. At the end of the event, consignors can collect their unsold goods or elect to donate them to charity. This model allows Rhea Lana’s customers to provide high quality items for their children at a price they can afford.

Yet in 2013, the U.S. Department of Labor conducted an audit, and sent Rhea Lana an enforcement letter claiming that her company was in violation of the FLSA regarding minimum wages and overtime pay.

With the help of CoA Institute, Rhea Lana fought back. Her company’s complaint was initially dismissed in 2014 for lack of a reviewable agency action.  On appeal, however, the Court of Appeals held that the government’s letter to Rhea Lana was subject to judicial review.  In September 2017, the district court ruled in favor of the government on the merits. CoA Institute continues to represent Rhea Lana in appealing the district court’s decision to the D.C. Circuit.

Watch a video about Rhea Lana’s story here.

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