Archives for July 2018

Millennium Challenge Corporation Adopts CoA Institute’s Recommendations for FOIA Regulations

The Millennium Challenge Corporation (“MCC”) finalized a rule at the end of last week implementing new Freedom of Information Act (“FOIA”) regulations and incorporated important revisions proposed by Cause of Action Institute (“CoA Institute”) in a comment submitted to the agency in March 2018.  The MCC is a small agency tasked with delivering foreign aid to combat global poverty.

CoA Institute made several recommendations in response to the MCC’s proposed rulemaking.  Most importantly, we urged the agency to remove outdated “organized and operated” language from its proposed definition of a “representative of the news media.”  Such language has been used in the past to deny news media requester status—and favorable fee treatment—to government watchdog organizations, including CoA Institute.  For example, CoA Institute sued the Federal Trade Commission, and took its case all the way to the D.C. Circuit, just to get the agency to acknowledged that its FOIA fee regulations were outdated and that it had improperly denied CoA Institute a fee reduction.

In deciding that case, the D.C. Circuit issued a landmark decision clarifying proper fee category definitions and the application of fees in FOIA cases.  CoA Institute cited this case to the MCC and the agency took heed of the current case law, removing the outdated “organized and operated” standard from its final rule.

CoA Institute also asked the MCC to remove language directing FOIA officials to read agency regulations “in conjunction with” fee guidelines published by the White House Office of Management and Budget (“OMB”) in 1987.  Portions of the OMB guidance, which are actually the source of the “organized and operated” standard, are simply no longer authoritative—they conflict with the statutory text, as amended by Congress, and judicial authorities, including Cause of Action v. Federal Trade Commission.

Continued reliance on the OMB guidelines threatens to cause confusion.  In 2016, the FOIA Advisory Committee and the Archivist of the United States both called on OMB to update its fee guidelines.  CoA Institute also filed a petition for rulemaking on the issue, and is currently litigating the matter in federal court.  Although the MCC has decided not to alter its reference to the OMB guidelines (and did not provide an explanation for rejecting that portion of CoA Institute’s comment), the fact remains that no agency can rely on OMB’s superseded directives.

Since the passage of the FOIA Improvement Act of 2016, CoA Institute has commented on twenty-six separate rulemakings.  Of the twelve that have been finalized, CoA Institute has succeeded in convincing seven agencies to abandon the outdated “organized and operated” standard in favor of a proper definition of “representative of the news media,” including the following:

Some agencies, including the National Credit Union Administration and the Federal Reserve, choose to defer on CoA Institute’s recommendations and have promised to propose further rulemakings in the near future to address outstanding fee issues.

CoA Institute’s successful comment to MCC is another small step in our efforts to provide effective and transparent oversight of the administrative state and, more specifically, to ensure agency compliance with the FOIA.

Ryan P. Mulvey is Counsel at Cause of Action Institute

EPA Jobs Loss Evaluations Update

Late last year, CoA submitted an amicus brief in the case of Murray Energy v. EPA.  The brief supported Murray Energy’s cert. petition seeking review of its case before the Supreme Court.  The Murray Energy case centered on employment evaluations required under Section 321(a) of the Clean Air Act.

A federal court in West Virginia ordered the EPA to comply with the statutory mandates of Congress, requiring the EPA to conduct “continuing employment evaluations” related to Clean Air Act implementation or enforcement.  The Fourth Circuit, however, sided with the EPA and ruled that, despite the plain language of the statute, Section 321(a) was discretionary and not an agency obligation.

Our brief made the following point: Congress specifically stated that the EPA shall conduct these continuing employment evaluations.  Not may, or if something happens, or if the EPA deems it expedient, but shall.  Unfortunately, earlier this year, the Supreme Court denied Murray Energy’s petition and will not review the matter.  However, the EPA has admitted its failure to conduct job loss evaluations and committed to doing so in the future: “the Agency historically has not conducted these assessments. EPA acknowledges the importance of considering the cumulative effects of its regulations on the American public. Accordingly, EPA intends to conduct these evaluations consistent with the statutes.”  CoA will continue to monitor these developments and help ensure that the EPA follows through on its promises.

Meanwhile, nearly two years ago, CoA petitioned the EPA to initiate a rulemaking to implement procedures and hearings under Section 321(b) of the Clean Air Act.  This section allows any employee who is discharged or laid off, threatened with discharge or layoff, or whose employment is adversely affected by Clean Air Act requirements to request an investigation and a hearing from the EPA.  The EPA has failed to promulgate any regulations regarding the process and standards by which it should conduct investigations and hearings under Section 321(b) and has not responded to our petition, other than to acknowledge it.  As the agency is now under the new leadership of Acting Administrator Andrew Wheeler, the opportunity again presents itself for the EPA to finally address our petition and give the public the necessary tools to seek relief from its regulatory activities.

Josh Schopf is Counsel at Cause of Action Institute

Now is the Time for VA to Change its Culture

Yesterday, the Senate confirmed Pentagon official Robert Wilkie as the new Secretary for the Department of Veterans Affairs (“Department” or “VA”). Wilkie takes over a federal agency plagued with a culture of toxicity, politicization, and misconduct. Although recent news reports and investigations of VA leadership have been a public relations nightmare for the agency, the prescription for success for the Secretary is rather simple: implement a culture change from the top-down to develop a VA that both performs its duty to veterans and operates in an ethical and productive manner.

A recent Washington Post report found that acting VA secretary Peter O’Rourke removed or reassigned VA staff members perceived to be disloyal to President Trump and his agenda for veterans. The report said that none of the staffers were given reasons for their reassignments. O’Rourke also incorrectly claimed authority over the VA Inspector General in a letter to the Inspector General. Although it would be easy to blame O’Rourke for the Department’s toxic climate, he only took office in May 2018; the systemic issues within the VA long precede the acting secretary.

Following the Washington Post report, the U.S. Government Accountability Office (“GAO”)  identified several issues within the Department regarding employee misconduct, retaliation against whistleblowers, and impunity for senior officials. Perhaps the most troubling finding was that senior officials, who perpetuate the agency’s climate, are held to a lower standard than their subordinates. The following figure shows the outcomes of seventeen misconduct cases against senior officials where disciplinary or adverse action was proposed over a 53-month period. Although twelve of the officials faced proposed actions calling for their removal based on the specific charges, only three officials were actually removed from their position. In total, 71% of senior officials who were guilty of misconduct served lesser or no disciplinary action compared to the original proposed action.

Other issues the GAO identified include:

  • Poor record-keeping – the current information system for recording adverse disciplinary actions does not track employee misconduct across the Department, despite the system having the capability to include and incorporate such models.
  • Poor communication within the Department – VA employee files investigated by GAO did not always contain documentation indicating that employees were informed of the reason disciplinary action was brought against them. The lack of oversight in the VA’s human resource policies increases the risk that employees will not be adequately informed of their rights during adjudication.
  • Lack of Transparency – VA facilities and program offices did not always provide the supporting documentation that they used to reach their conclusions about case referrals. This calls into question whether enough evidence was gathered to make sound conclusions about disciplinary or adverse actions.
  • A clear disregard for procedure – the report found that facility and program offices did not consistently follow policies and procedures for investigating allegations against senior officials. Similarly, senior officials may not have always been held accountable for misconduct, whether disciplinary action was not taken or recommended, or previous disciplinary failures were not considered in repeated offenses.

Whistleblowers provide a public service by exposing illegal or unethical activity within an organization. But whistleblowers in the VA allege that managers in their chain of command took actions against them after they reported misconduct. These alleged actions included reassignment to other locations, reduced access to computer equipment necessary to complete assignments, and social isolation from peers. Whistleblowers also were not provided adequate information by VA on how to document or file a claim of misconduct or retaliation.

The GAO report included sixteen recommendations to the VA, of which the VA concurred with nine and partially concurred with five. According to their comments to GAO, the VA plans to, among other things, have the Secretary direct the Office of Accountability and Whistleblower Protection (“OAWP”) review and issue guidance on how OAWP will discipline senior officials, and develop a functional process to ensure the implementation of whistleblower protections.

Wilkie is now the face of the VA. It is up to him to make sure that the agency implements the recommendations to protect whistleblowers and hold managers that retaliate against them accountable. Cause of Action Institute will continue to conduct oversight to make sure the VA follows through with adopting GAO’s recommendations. We have documented what happens when agencies provide lip-service instead of fixing problems. Our veterans deserve a functional and ethically-operated VA, and that can only start by repairing the climate of the agency from the top.

Chris Klein is a Research Fellow at Cause of Action Institute

Federal Judge Confirms Agencies’ FRA Record Recovery Efforts Must Include Reaching Out to Third-Party Email Providers

Last Friday, Judge Trevor McFadden of the U.S. District Court for the District of Columbia granted the federal government’s second motion to dismiss a lawsuit to compel Secretary of State Mike Pompeo and U.S. Archivist David Ferriero to fulfill their statutory obligations under the Federal Records Act (“FRA”) to recover former Secretary of State Colin Powell’s work-related email records from a personal account hosted by AOL, Inc.  Cause of Action Institute (“CoA Institute”) filed the lawsuit in October 2016 after then-Secretary John Kerry and Archivist Ferriero failed to act on CoA Institute’s FRA notice and Freedom of Information Act (“FOIA”) request.

Although Judge McFadden’s dismissal is a technical defeat, albeit on procedural grounds, CoA Institute’s work in this case, and in another FRA case involving Hillary Clinton, is still a success.  Taken together, these cases have the raised the bar for what federal agencies must do when records go missing.  In future cases, agencies will be required, at the least, to reach out directly to third-party email providers in an attempt to recover work-related email records and may not rely on self-serving statements from agency officials that such records no longer exist.

In the recent motion, the government again sought dismissal on mootness grounds, arguing that Secretary Powell no longer had access to the account he used during his tenure at the State Department and, moreover, it would be “technologically impossible” for AOL to recover any records from its servers.  Correspondence from Secretary Powell and various AOL employees was used to support the government’s claims.  But the agency reached out to Secretary Powell and AOL only after Judge McFadden rejected a similar motion to dismiss in January 2018, holding that there was still a “substantial likelihood,” based on the record, that Secretary Powell’s work-related email could be recovered if the State Department were to leverage the full law enforcement authority of the federal government.  Judge McFadden looked to the Department of Justice’s successful recovery of former Secretary Hillary Clinton’s email from computer hard drives and mobile devices as a guide.

In opposition to the government’s second motion, and in support of its own motion for summary judgment, CoA Institute argued that the government had failed to provide enough evidence to establish fatal loss of the email records at issue, particularly since Secretary Pompeo and Archivist Ferriero continued to refuse to involve the Attorney General in compulsory or forensic recovery efforts.

This time around, however, the judge was convinced that the government had done enough and additional efforts would be “pointless.”  Nevertheless, in future cases, agencies will need to undertake substantial efforts to prove fatal loss, even if that means contacting third-party commercial communications providers to determine the recoverability of records on their servers or networks.

The alienation of federal records will likely continue with the fast-paced development of technology and alternative means of communication within the federal bureaucracy.  CoA Institute is committed to ensuring that the law follows these developments and holds government employees accountable.

Ryan Mulvey is Counsel at Cause of Action Institute.

CFPB’S Arbitration Rule Under Scrutiny in Report from Cause of Action Institute

Washington, DC – July 19, 2018 – Cause of Action Institute (CoA Institute) today released a report on the failure of the Consumer Financial Protection Bureau (CFPB) to conduct a proper study on its arbitration rule, which banned certain corporations from using pre-dispute arbitration clauses in their consumer credit contracts. CoA Institute Case Study on the CFPB’s Arbitration Rule: How the Bureau Evaded Scientific Guidelines and Bypassed Peer Review—And How to Fix It examines the failings of the arbitration study and offers solutions to ensure future policy is informed by sound science.

The rule was overturned by Congress and President Trump in February of 2018, but lasting change is needed to CFPB’s analytical approach to prevent future rules from being based on weak science. President Trump nominated Kathy Kraninger as the new potential CFPB director and, just today, July 19, she had her nomination hearing. If confirmed, she needs to immediately take steps to ensure that the CFPB follows the law when conduct future studies and promulgating rules.

CoA Institute attorney Eric R. Bolinder said, “The CFPB not only had to adhere to the orders of Congress in Dodd-Frank to do the study, it was also required to follow the Information Quality Act and Office of Management and Budget guidelines on peer review. The Bureau ignored both. Accountability is needed to keep this too-powerful agency in check.”

As CoA Institute’s report explains:

In the Dodd-Frank Act, Congress delegated to the CFPB the power to study and regulate, if necessary, mandatory-binding arbitration clauses in consumer financial contracts. This power came with an important caveat: the CFPB must first conduct a study on the effect arbitration clauses have on consumers, and any regulation promulgated by the agency must be based on that study. The CFPB already had the goal in mind to regulate and ban these arbitration clauses, driven largely by internal bias and promoted by third-party interests. Instead of conducting an objective study backed by peer-reviewed data, the agency sought a pre-determined result, abusing junk science and methodology to get there.

See the report and more about this issue here.

For any media inquiries, contact

CoA Institute Case Study on the CFPB’s Arbitration Rule: How the Bureau Evaded Scientific Guidelines and Bypassed Peer Review—And How to Fix It


Executive Summary

The Consumer Financial Protection Bureau (“CFPB” or “Bureau”) is an agency unlike most any other in the history of the United States.  It possesses untold power over the American people and businesses, and the heft of this power is in a single agency director accountable to no one.  As Judge Kavanaugh of the U.S. Court of Appeals for the D.C. Circuit held in a since-vacated decision, “the Director enjoys more unilateral authority than any other officer in any of the three branches of the U.S. Government, other than the President.”[1]

In the Dodd-Frank Act of 2010, Congress delegated to the CFPB the power to regulate, if necessary, mandatory-binding arbitration clauses in consumer financial contracts.  This power came with an important caveat: the CFPB must first conduct a study on the effect arbitration clauses have on consumers, and any regulation promulgated by the agency must be based on that study.  Yet the CFPB already had the goal in mind to regulate and ban these arbitration clauses, driven largely by internal bias and promoted by third-party interests.  Instead of conducting an objective study backed by peer review, the agency sought a pre-determined result, abusing junk science and methodology to get there.  In doing so, it ignored the requirements of the Information Quality Act (“IQA”) and the ensuing Office of Management and Budget (“OMB”) bulletin requiring agency peer review.  This paper examines the failings of the arbitration study and offers solutions to the potential new agency head to ensure future policy is informed by sound science.


The best way to curtail the CFPB’s abuse of junk science is to force the agency to follow the standards contained within the IQA and the OMB peer review bulletin.  If the CFPB were to strictly adhere to the IQA’s standards of data quality—objectivity, integrity, and utility—and conduct rigorous, academic peer review, outcomes like the one detailed in this paper would be avoided.

Cause of Action Institute (“CoA Institute”) recommends that the new CFPB Director, once confirmed, immediately institute rulemaking actions to codify these already-mandatory requirements of the IQA and peer review.  This should apply to all studies or scientific findings released by the agency, whether they undergird a rule or not.[2]  Although the Director could just order agency personnel to follow these directives through a memorandum, that would only be a temporary solution.  Rulemaking under the Administrative Procedure Act (“APA”) would ensure that these science-based requirements have more permanence and apply regardless of who is running the agency five years from now.[3]  Furthermore, the new Director should require, whether through rulemaking or otherwise, that all published scientific findings be accompanied by full disclosure of outside datasets, sources, and lobbying.

Eric Bolinder is Counsel at Cause of Action Institute

[1] PHH Corp. v. Consumer Fin. Prot. Bureau, 839 F.3d 1, 7 (D.C. Cir. 2016), vacated on reh’g en banc, 881 F.3d 75 (D.C. Cir. 2018); see Consumer Fin. Prot. Bureau v. RD Legal Funding, LLC, No. 17-890, 2018 WL 3094916, at *35 (S.D.N.Y. June 21, 2018) (“Respectfully, the Court disagrees with the holding of the en banc court and instead adopts Sections I-IV of Judge Brett Kavanaugh’s dissent[.]”).
[2] This, of course, would extend to any scientific findings that are part of a proposed rule.
[3] A future Director could institute rulemaking to reverse the requirements, but that is a cumbersome process subject to judicial review.


CoA Institute Joins Amicus Brief Challenging Qualified Immunity

Washington, DC – July 19, 2018 – Cause of Action Institute (“CoA Institute”) has joined a Supreme Court amicus brief in support of the petitioner seeking a writ of certiorari in Allah v. Milling. The brief argues that qualified immunity denies justice to victims of government misconduct, imposes prohibitive and unjustified costs on civil-rights litigants, and harms law enforcement officials by eroding public trust.

“Preserving the fundamental liberties afforded by our Constitution remains a critical priority in today’s policing environment. The notion of qualified immunity has grown from the bench and is not rooted in our founding charter. Some form of meaningful redress for those admittedly injured by police errors must be available,” noted John Vecchione, President and CEO of Cause of Action Institute.

From the amicus brief:

[Q]ualified immunity often bars even those plaintiffs who can prove their case from remedying a wrong: harm, but no foul. Qualified immunity thus enables public officials who violate federal law to sidestep their legal obligations to the victims of their misconduct. In so doing, the doctrine undermines the public’s trust in those officials—law enforcement in particular—making on-the-ground policing more difficult and dangerous for all officers, including that vast majority who endeavor to uphold their constitutional obligations.

The amicus brief is available here.

About Cause of Action Institute

Cause of Action Institute is a 501(c)(3) non-profit working to enhance individual and economic liberty by limiting the power of the administrative state to make decisions that are contrary to freedom and prosperity by advocating for a transparent and accountable government free from abuse.

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