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Archives for June 2018

06/29/2018

Congress Should Let the EB-5 Cash-for-Visa Program Expire

Can the EB-5 Immigrant Investor Program be fixed? It’s been over a year since we called for an end to the program that is now set to expire unless renewed by September 30. As we previously wrote: 

Simply stated, the EB-5 Program operates as a cash-for-visa scheme. Whatever economic advantage it might offer is outweighed by the corruption it engenders and negative influence it has on national security and good government.  Congress should end the program or work to reform its governing rules to prevent continued abuse by the political class. 

There wasn’t much congressional interest in ending the program when we wrote that in May 2017, but the tide appears to be turning. The Senate Judiciary Committee recently held a hearing to discuss the EB-5 program with Lee Francis Cissna, Director of the U.S. Citizenship and Immigration Services (“USCIS”), which is the agency responsible for the program. At the hearing, members of both parties and Director Cissna agreed that, barring legislative reform or publication of long-pending modernization rules, the EB-5 program should be allowed to expire. 

Below are the key quotes and exchanges from the hearing:

Chairman Grassley’s opening statement laid out the significant issues associated with the Regional Center Program:  

As interest in the EB-5 Regional Center Program has grown, so have cases of fraud, corruption and threats to national security. There are many, many well-documented examples of the inherent problems in this program. In fact, over the last five years, I along with several of my colleagues, have written over thirty oversight letters highlighting the various vulnerabilities of this visa program. 

USCIS Director Cissna agreed that the program is rife with fraud and should be eliminated. In his opening statement, he said, “In the absence of legislative reforms, I believe Congress should indeed consider allowing the program to expire.”  

Senator Feinstein then prodded Cissna, “That’s the reason I’m concerned with this program, I think its rife with fraud.” In response, Cissna carried Feinstein’s concern even further, stating, “I think a lot of the cases . . .  involve full on criminal activity too. Fraud with our agency is one thing, but then it often gets magnified into full on criminal activity.”  

Senator Feinstein stated, “It’s no secret that I oppose this program. I believe it should be eliminated entirely.” She continued, lamenting that “under the EB-5 system, the wealthy can cut to the front of the line. This on its face is fundamentally unamerican.” These are the same cronyism concerns that we’ve been worried about throughout our time investigating the program. 

Finally, Senator Durbin said, “I am proud to be the only cosponsor of the Grassley-Feinstein bill to eliminate this program, I hope others will join us.” He then claimed that the EB-5 program is “outrageous and embarrassing to this nation.”  

Come September 30, Congress should allow the EB-5 program to expire with or without modernization rules. While the modernization rules would be better than the current system, they will not fix the endemic problems of fraud and corruption with the cash-for-visa program. It’s time to end it.  

Max Menkes is a Research Fellow at Cause of Action Institute.

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06/28/2018

SEC Adopts CoA Institute’s Recommendations in Updated FOIA Regulations

The Securities and Exchange Commission (“SEC”) finalized new Freedom of Information Act (“FOIA”) regulations today, adopting two revisions from a comment that Cause of Action Institute (“CoA Institute”) proposed in January 2018.  The FOIA allows for the disclosure of records of federal agencies, including documents, emails, and reports, and is an essential tool for promoting government transparency.

CoA Institute made three recommendations in response to the SEC’s proposed rulemaking.  First, we urged the agency to remove outdated “organized and operated” language from its definition of “representative of the news media.”  Such language has been used in the past to deny FOIA fee waivers to organizations like CoA Institute that investigate agency waste, fraudulent activity, cronyism, and wrongdoing.  In 2015, we argued Cause of Action v. Federal Trade Commission before the D.C. Circuit, which resulted in a landmark ruling that invalidated the “organized and operated” requirement.

In Cause of Action, the D.C. Circuit clarified proper fee category definitions and the application of fees for FOIA requests.  CoA Institute cited this case in its comment to the SEC and the agency concurred with our proposal to remove the outdated “organized and operated” language from its definition of a news media requester.  The FTC also acknowledged the D.C. Circuit’s landmark decision in its final rule.

Second, CoA Institute recommended eliminating “case-by-case” fee category determinations.  Under the original rule proposed by the SEC, FOIA offices would “determine whether to grant a requester news media status on a case-by-case basis based upon the requester’s intended use of the requested material.”  CoA Institute again cited Cause of Action to argue that the focus of the fee waiver inquiry should be on “requesters, rather than [their] requests.”  The SEC agreed and removed the restrictive language.

Finally, CoA Institute recommended that the SEC recognize that a news media requester may use “editorial skills” to turn “raw materials into a distinct work” when writing documents such as press releases and editorial comments.  This understanding broadens the potential pool of news media requesters and our recommendation tracks language from the D.C. Circuit’s decision in Cause of Action.  Although, in this respect, we did not recommend any specific changes to the final rule the SEC nevertheless acknowledged our comments by stating that it “will consider Cause of Action and any other relevant precedents in applying the fee provisions in its regulations.”

Americans have an interest in living free and prosperous lives without the interference of arbitrary and abusive executive power.  One of the ways CoA Institute monitors government overreach is by fighting for access to information on the federal government’s activities.  Our successful comment is a small but important victory in our work to ensure a transparent government that works for the benefit of all Americans.

Chris Klein is a Research Fellow at Cause of Action Institute

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06/26/2018

CoA Institute Files FOIA Lawsuit for Internet Browsing Records of OMB’s Mulvaney and USDA’s Perdue

WASHINGTON, D.C. – JUNE 26, 2018– Cause of Action Institute (“CoA Institute”) sued the White House Office of Management and Budget (“OMB”) and the Department of Agriculture (“USDA”) today for failure to disclose records reflecting top officials’ Internet browsing history.  The records at issue—which were the subject of two July 2017 Freedom of Information Act (“FOIA”) requests (here and here)—include the web browsing histories of OMB Director John Mulvaney and USDA Secretary Sonny Perdue, as well as their communications directors, on any government-issued electronic devices.

Cause of Action Institute Counsel Ryan Mulvey said, “The taxpayer foots the bill for the government’s Internet usage; the taxpayer deserves to know whether bureaucrats are behaving as proper stewards of their online resources.  Agencies must be held accountable for their refusal to disclose vital information about the operations of the administrative state.  The public has a right to know what websites are being accessed in the course of official agency business.  Not only would such records reveal the sorts of resources that have influenced decision-making, but they also could expose questionable or inappropriate online activity by government employees.”

To date, OMB has failed to respond to CoA Institute’s 2017 FOIA request.  USDA has responded but refuses to release the requested records because it believes they are not under agency “control” and would entail the “creation” of a new record.  CoA Institute disputes both claims.

The operation of an Internet browser typically creates an electronic record of the user’s online activity.  This record is stored locally and is accessible through the browser’s “History” function.  In this case, the requested records were created on government computers, integrated into their file systems, and can be used by agency officials as they see fit, subject to any applicable record retention laws.  This means that such records fall under “agency” control and should be available to the public, particularly given past scandals involving the abuse and misuse of Internet-based programs.

The full complaint, filed in the U.S. District Court for the District of Columbia, can be found here.

For more information, please contact Mary Beth Gombita, mbgcomms@gmail.com.

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06/26/2018

GAO Report Highlights Agencies Failing to Implement the FOIA

A report released yesterday by the Government Accountability Office (“GAO”) provides alarming details about the dearth of agency efforts to fully implement the Freedom of Information Act (“FOIA”).  GAO previewed a draft of its report in March 2018 when its Director of Information Technology Management Issues, David Powner, testified at a hearing on FOIA compliance before the Senate Committee on the Judiciary.  At the time, GAO published a concurrent report on how federal courts regularly fail to refer cases to the Office of Special Counsel (“OSC”) to determine whether disciplinary action is warranted in instances where officials have acted arbitrarily or capriciously in withholding records.  (Cause of Action Institute’s (“CoA Institute”) commentary on that issue can be found here.)  Yesterday’s report finalizes GAO’s findings and incorporates feedback from the eighteen agencies in the sample subject to the audit.

Many Agencies Have Failed to Update Regulations and Appoint Chief FOIA Officers

One aspect of GAO’s audit involved reviewing whether the eighteen agencies properly implemented various requirements introduced by the FOIA Improvement Act of 2016 and the OPEN Government Act of 2007.  Those amendments to the FOIA require agencies, inter alia, to designate chief FOIA officers, publish timely and comprehensive regulations, and update response letters to indicate things such as an extended, 90-day appeal period.  GAO also evaluated what efforts were underway by the Office of Management and Budget and the Office of Information Policy to develop a government-wide FOIA portal.

The chart above, which is taken from the GAO report, encapsulates some of the unfortunate findings.  Even though it is a statutory requirement, five of the eighteen agencies have not designated a chief FOIA officer in line with applicable requirements (e.g., appointing a senior official at the Assistant Secretary or equivalent level).  Chief FOIA officers are responsible for monitoring agency-wide compliance with the FOIA, making recommendations for improving FOIA processing, assessing the need for regulatory revisions each year, and serving as a liaison with the Department of Justice Office of Information Policy, the Office of Government Information Services, and the Chief FOIA Officers Council.  It remains unclear why some agencies are reticent to comply with this aspect of the FOIA.

Another disturbing finding is that few agencies in the sample timely updated and published regulations to implement the FOIA Improvement Act of 2016.  At least five agencies have deficient regulations—such as the Department of State—or have not bothered to issue a preliminary rulemaking—such as the White House Office of Management and Budget (“OMB”).  Agencies offered several reasons for why they have not complied with the law, with most citing a lengthy internal review process.  The State Department explained that it had just finished updating its regulations before passage of the FOIA Improvement Act.  The U.S. African Development Foundation, however, claimed that it did not even need “to disclose information regarding fees in their regulation” because it “has not charged a fee for unusual circumstances.”

OMB’s failure to satisfy GAO’s criteria for proper FOIA regulations is unsurprising and indicative of a general disregard for regulatory compliance with the FOIA at the agency.  For example, for the past few years, CoA Institute has carefully tracked whether agency FOIA regulations have been updated to include the current statutory definition of a “representative of the news media.”  Prior to the D.C. Circuit’s landmark 2015 decision in Cause of Action v. Federal Trade Commission, many agencies relied on OMB’s Uniform Freedom of Information Fee Schedule and Guidelines to impose an “organized and operated” standard that deprived nascent media groups of preferential fee treatment.  The OMB Guidelines, which were written in 1987, have never been updated, despite requests from the FOIA Advisory Committee and the Archivist of the United States.  CoA Institute thus filed its own petition for rulemaking on the issue in June 2016, followed by a lawsuit last November after OMB failed to respond.

Agencies Have Made Little Progress on FOIA Backlogs

Another aspect of GAO’s audit involved examining whether the eighteen agencies had made any headway in reducing their FOIA request backlog, as well as cataloging the statutes used in conjunction with Exemption 3 to withhold records from the public.  GAO found that few agencies had managed to reduce their outstanding backlog.  One major reason for the lack of progress on reducing backlogs was the failure of most agencies to implement “comprehensive plans” laying any sort of strategy.  As for GAO’s catalogue of statues used to withhold information exempt as a matter of law, the most commonly cited provisions were 8 U.S.C. § 1202(f), which concerns records about the issuance or refusal of a visa, and 26 U.S.C. § 6103, which protects the confidentiality of tax returns and return information.

GAO’s audit is an important indication of how far many agencies must go to comply fully with the FOIA.  This is particularly true insofar as GAO’s findings can be generalized across the entire administrative state.  Congress, the transparency community, and the American public must exert even greater pressure on Executive Branch agencies to meet their obligations under the law and to improve their commitment to open government.

Ryan P. Mulvey is Counsel at Cause of Action Institute

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06/22/2018

Department of Labor Denies FOIA Appeal After Nearly Four Years, and Unilaterally Narrows the Scope of the Request, Despite OGIS Intervention

The Department of Labor (“DOL”) recently denied CoA Institute’s long-pending Freedom of Information Act (“FOIA”) appeal concerning records of consultations between DOL and the Office of the White House Counsel (“OWHC”) on any documents containing “White House equities.”  CoA Institute filed its request on November 26, 2013 and its appeal on September 25, 2014.  After attempting to contact a responsible DOL official on over fifteen occasions, either through email or by voice message, CoA Institute finally asked the Office of Government Information Services (“OGIS”) to intervene in October 2017.  Despite DOL’s promise to try to issue a determination this past March, its appeal decision only arrived last week—forty-five months after CoA Institute’s appeal was submitted and long past the applicable FOIA deadlines.

“White House equities” review and FOIA politicization

In March 2014, CoA Institute published a report revealing the existence of a non-public memorandum from then-White House Counsel Gregory Craig that directed department and agency general counsels to send to the White House for consultation all records involving “White House equities” when collected in response to any sort of document request.  This secret memo stood in stark contrast to President Obama’s January 2009 directive on transparency, as well as Attorney General Holder’s March 2009 FOIA memo.  Although originally praised as setting the bar for open government, the Washington Post eventually described the Obama Administration as one of the most secretive governments in American history.

As part of the system of politicized FOIA review established under the “White House equities” policy, whenever a requester sought access to records deemed politically sensitive, potentially embarrassing, or otherwise newsworthy, the agency processing the request would forward copies of those records to a White House attorney for pre-production review.  Not only did the entire process represent an abdication of agency responsibility for the administration of the FOIA, but it severely delayed agency compliance with the FOIA’s deadlines.  As we have previously suggested, “White House equities” review likely continues under the Trump Administration.

DOL’s deficient processing of CoA Institute’s FOIA request

In this case, CoA Institute’s request sought all records reflecting “White House equities” consultations.  DOL released fifty-seven (57) pages of records with various pieces of information withheld under Exemptions 5 and 6, mostly personally identifying information—such as the names of lower-level DOL employees—or substantive portions of the agency’s conversations with White House attorneys.  Interestingly, DOL never indicated which privileges it sought to apply with Exemption 5.  (CoA Institute argued against the application of the attorney-client, attorney work product, and deliberative process privileges in its appeal.)

Most egregiously, DOL unilaterally limited the scope of its search to include only records reflecting White House review of FOIA requests, rather than the wide range of record requests covered by the Craig Memo:

DOL based its narrowing on stray language in CoA Institute’s request for a public interest fee waiver.  But there is no authority to support an agency limiting the subject-matter scope of a FOIA request based on a fee waiver argument.  A fee waiver request should only impact a requester’s obligations to pay any applicable fees.

DOL’s incorrect appeal decision . . . overdue by over three-and-an-half years

DOL’s appeal determination is troubling.  The agency again chose to ignore the plain language of the Craig Memo, which was cited by CoA Institute and establishes the clear scope of “White House equities” review.  Once more, DOL relied on CoA Institute’s fee waiver request.  But that language simply cannot justify limiting a search to White House consultations on “FOIA requests.”  As some type of consolation, DOL suggested that CoA Institute submit a new request.

After admitting that it had applied the deliberative process privilege, DOL summarily upheld its use of Exemption 5, describing the White House’s pre-production clearance of agency records to be part of DOL’s deliberative processes.  DOL also refused to release the names of the lower-level employees who were involved in “White House equities” consultations, arguing that there was no public interest in the disclosure of their identities.

Concluding thoughts on OGIS and its lack of enforcement power

Congress created OGIS to help mediate disputes between requesters and agencies.  OGIS is meant to provide an alternative to litigation.  Yet OGIS lacks any sort of enforcement authority, and it can only intervene if an agency and the requester voluntarily submit to the mediation process.  Thus, even if OGIS “resolves” a dispute, it has no power to hold the parties to their agreement.  Agencies suffer no consequences for disregarding the outcome of OGIS mediation.  This is a tremendous flaw in how OGIS is designed.

As this email chain demonstrates, CoA Institute asked OGIS to intervene in October 2017; OGIS closed its case in February 2018, following DOL’s commitment to trying to finish its adjudication of CoA Institute’s appeal by March 26, 2018.  That date came and went.

This is not the first time OGIS mediation has proven ineffectual and an agency has refused to honor the promises it made as part of the dispute resolution process.  CoA Institute is currently litigating another FOIA suit against the Department of Treasury over records reflecting the “sensitive review” process, which subjects certain FOIA requesters—such as representatives of the news media—to extra scrutiny.  Treasury and CoA Institute agreed to a series of scheduled interim productions; Treasury missed every one of those deadlines, and it only began to release records once CoA Institute filed a lawsuit.  This is an unacceptable practice, and Congress should look to reform the OGIS process.

Ryan Mulvey is Counsel at Cause of Action Institute

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06/21/2018

The VA’s Acting Secretary Claimed He Has Authority Over the Agency’s Independent Watchdog. He’s Wrong.

Department of Veterans Affairs (VA) acting secretary Peter O’Rourke incorrectly claimed authority over the VA Inspector General (IG) in a letter sent to the IG on June 11 and published by Stars and Stripes on June 20.  In the letter, O’Rourke wrote to VA IG Michael Missal:

“You also appear to misunderstand the independent nature of your role and operate as a completely unfettered, autonomous agency. You are reminded that OIG is loosely tethered to VA, and in your specific case as the VA Inspector General, I am your immediate supervisor. You are directed to act accordingly.”

The letter from O’Rourke was in response to IG Missal’s concerns outlined in a June 5 letter to the VA that claimed the agency was withholding information from the IG, including information about whistleblower complaints. By trying to strongarm the IG, not only is O’Rourke blatantly mistaken in his interpretation of federal law, but his threatening language in the letter is deeply troubling. While the relevant law, the Inspector General Act of 1978, does put IGs under “general supervision” of agency heads, it makes clear that they have their own independent authority:

“Establishment IGs [IG Act, § 3(a)]: The Act specifies that each IG ‘shall report to and be under the general supervision of the head of the establishment involved or, to the extent such authority is delegated, the officer next in rank below such head, but shall not report to, or be subject to supervision by, any other officer of such establishment.’ Except under narrow circumstances discussed below, even the head of the establishment may not prevent or prohibit the IG from initiating, carrying out, or completing any audit or investigation, or from issuing any subpoena during the course of any audit or investigation.” (Emphasis added)

The Council of the Inspectors General on Integrity and Efficiency (CIGIE) explains that “[w]hile by law, IG’s are under the general supervision of the agency head or deputy, neither the agency head nor the deputy can prevent or prohibit an IG from conducting an audit or investigation. The VA’s own Functional Organization Manual states that the VA IG is “an independent oversight entity” that “[h]as authority to inquire into all VA programs and activities.”

Simply put, an IG is an independent entity that operates separately from the oversight of any official within the agency it oversees. The independent authority of the IG ensures that investigators can conduct their work without fear of reprisal.

Cause of Action Institute has often written about the issues of having watchdogs without permanent leadership, but an uncooperative agency is a similar, if not greater, problem for accountability and oversight. The VA’s acting secretary should stop claiming authority he does not have and should not try to hinder accountability at a federal agency that desperately needs it.

Ethan Yang is a Research Fellow at Cause of Action Institute.

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