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09/13/2018

CoA Institute Defends U.S. Citizens’ Privilege and Immunity From Excessive Fines in Latest Amicus Brief

On Tuesday, September 11, 2018, Cause of Action Institute (“CoA Institute”) filed an amicus curiae brief in the Supreme Court case Tyson Timbs v. State of Indiana in support of the Petitioners, who asked the Court to determine whether the Eighth Amendment’s Excessive Fines Clause is incorporated against the States through the Fourteenth Amendment. The matter arises from a civil action against both Tyson Timbs and his vehicle, which the State sought to forfeit. The state trial court and intermediate appellate court ruled that forfeiture of the vehicle (worth about $40,000) would be “excessive” and “grossly disproportional to the gravity of”[i] crimes to which Timbs pleaded guilty in a separate case (the maximum fine for which was $10,000, and Timbs was actually fined much less). But the Indiana Supreme Court reversed because the U.S. Supreme Court has not yet held that the Excessive Fines Clause applies to the States.[ii] CoA Institute argues that the Indiana Supreme Court should be reversed because, as a citizen of the United States, Timbs is privileged and immune under the Fourteenth Amendment from the grossly disproportionate fine that Indiana seeks to impose through forfeiture of his vehicle.

Our brief calls attention to the fact that the Supreme Court has never ruled on whether the Excessive Fines Clause is applicable against the States. We argue that the Excessive Fines Clause is, in fact, enforceable against Indiana through the Privileges or Immunities Clause of the Fourteenth Amendment. That clause provides that “no State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States.” CoA Institute relies on recent jurisprudence, like Justice Thomas’s concurrence in McDonald v. City of Chicago, which notes that on its face, Section 1 of the Fourteenth Amendment grants U.S. citizens a “certain collection of rights – i.e., privileges or immunities – attributable to [their] status” as citizens of the country as well as an individual state.[iii]

Additionally, our brief demonstrates that Excessive Fines Clause includes the ancient principle of salvo contenemento, which prohibits fines that would deny any defendant the basic ability to earn a living. Forfeiture of Timbs’ vehicle in this case would violate this ancient principle.

Our amicus brief is available here

Libby Rudolf is a Research Assistant at Cause of Action Institute.

[i] State v. Timbs, 84 N.E.3d 1179, 1181 (Ind. 2017) (quoting trial court).

[ii] Id.

[iii] McDonald v. City of Chicago, 561 U.S. 742, 808 (2010) (Thomas, J., concurring in part and concurring in judgment).

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09/12/2018

Court to FTC: Effort to freeze assets goes too far

In the ongoing Cupo case (FTC v. Vylah Tec LLC), Court denies FTC’s motion to re-freeze CoA Institute’s clients’ assets, including a house and personal bank accounts

Washington, D.C. Cause of Action Institute (CoA) successfully defeated the Federal Trade Commission’s (FTC) efforts to re-freeze some personal assets of CoA client Dennis Cupo and marital assets of Robert Cupo. The assets were frozen at the outset of the case, but upon appeal, the 11th Circuit Court of Appeals unfroze the assets and remanded the case back to the District Court. Judge Sheri Polster Chappell’s order, published yesterday evening, is a major victory for the defendants, especially Dennis Cupo – the Court agreed with CoA’s argument that the Government failed to tie Dennis Cupo’s personal assets to any of the allegations. Much of the case, FTC v. Vylah Tec LLC, centers on the FTC’s aggressive action, including seizing the now-freed assets, securing a temporary restraining order in secret, and using aggressive policing tactics – such as raiding the defendant’s office with armed police officers.

“Yesterday’s ruling and this case are broader than a simple enforcement action by the FTC – it’s about an agency that routinely exceeds its authority to crack down on businesses with aggressive tactics that are meant to scare, intimidate, and bully companies and individual entrepreneurs,” said John Vecchione, president and CEO of Cause of Action Institute. “The Court’s opinion makes clear that the FTC cannot charge Americans with wrongdoing and seize assets, while failing to prove a defendant’s connection to the case or justify the asset seizure. This is a significant victory for the defendants and an important victory in our effort to curb the FTC’s abuse of power.”

Importantly, the Court found that the Government has failed to produce any evidence of wrongdoing about one of the named defendants, Dennis Cupo.  As the Court said, “For one thing, it only works if Dennis is a ‘wrongdoer.’ The evidence above clearly suggests otherwise.”

The case involves a small family-run tech support company, Vylah Tec, LLC (“V-Tec”). After obtaining a secret court order, the Federal Trade Commission targeted the company and conducted an hours-long raid of the company’s headquarters on suspicion of “deceptive” sales practices. The raid was initiated as part of a politically-hyped campaign known as Operation Tech Trap headed by the FTC in conjunction with the Florida Attorney General’s office. Despite the hostile raid and seizure of all computers and records, FTC investigators were unable to produce evidence tying any alleged improper conduct to the unfrozen assets, or wrongdoing of any kind to Dennis Cupo.

Not only did the FTC demand a freeze of assets of the defendants, but they also went so far as to demand a freeze of the jointly held marital assets of the wife of one of the defendants. After the 11th Circuit Court of Appeals reversed this freeze – the FTC filed a new motion to recapture the same personal assets without the evidence needed in equity. Judge Chappell strongly rebuked the motion.

“The FTC often lives in a world of its own reality and tries to summarily dictate the law to businesses,” Vecchione added. “In these cases, the FTC plays with a stacked deck as they are granted a much lower bar to proving wrongdoing or seizing assets. The Court found that the FTC did not meet even the lower standard. The Court’s order means a Florida couple can proceed with their lives without a Government threat to leave them homeless, and we hope will lead to Mr. Dennis Cupo being dismissed from the case. We are gratified by this ruling, denying the FTC’s lawless effort to seize assets without following the process every American is due.”

The case highlights much-needed reform in the FTC due to its aggressive, overbearing, and unfair enforcement process. Cause of Action Institute recently filed more than 15 pages of recommended changes that can read 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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08/23/2018

The FTC Suffers Another Loss in Federal Court

The Federal Trade Commission (“FTC”) has suffered another loss in the federal courts—this time in a case against DirecTV in California.  The FTC alleged that the satellite dish company’s advertisements did not properly alert consumers that their subscription prices would go up when promotional periods end.  To support this, the FTC hand-selected 116 out of over 40,000 advertisements DirecTV broadcast, using expert witness testimony to argue that these advertisements created a deceptive “net impression” in the minds of consumers.

When the FTC finished presenting its case at trial, DirecTV moved for judgment in its favor without presenting any evidence of its own.  DirecTV argued that the FTC had simply failed to meet its burden.  The judge agreed and dismissed most of the case.

The court found that the FTC failed on several fronts.  First, the FTC could not show, even in its hand-picked 116 examples, that DirecTV’s advertisements created any sort of “net impression” that deceived consumers.  Instead, DirecTV’s advertisements effectively communicated, usually in multiple places highlighted with all-caps lettering and bold font, that the promotional pricing applied to the promotional period only.  The FTC attempted to rely on the testimony of expert witnesses, but the judge dismissed those arguments, finding that the experts’ surveys and theories didn’t support the Government’s case.

Furthermore, the court held that the FTC failed to show its 116 samples were representative of a database of over 40,000 pieces of advertising.  While the court was not going to require the FTC to submit all 40,000 into evidence, the FTC had to at least try to argue why the samples were connected to the whole.  They didn’t.  Finally, after dismissing most of the FTC’s claims, the court questioned whether the FTC could even prove the monetary damages in this case, citing a lack of evidence.

For years, the FTC has dictated terms of trade to businesses without having to justify them either in rulemaking proceedings or litigation.  The result is that the FTC has taken legal positions that are weak and ill-considered.  The DirecTV case is an example of how unprepared the FTC is to defend those positions when challenged.

Cause of Action recently submitted a detailed comment to the FTC that suggests several reforms the agency can implement to stop these abuses and create a level playing field for litigants.  Simply put, the FTC has enormous power to unilaterally destroy businesses that cannot afford to face them down.  The ones that do litigate against them are winning, and this should send a signal to the Commissioners—it’s time to change.

Eric R. Bolinder is Counsel at Cause of Action Institute.  You can follow him on Twitter @EricBolinderLaw.

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08/22/2018

OMB Grants CoA Institute Petition for Rulemaking, Begins Work to Update Its FOIA Regulations

Today, the White House Office of Management and Budget (“OMB”) published a notice of proposed rulemaking in the Federal Register to begin the process of updating its Freedom of Information Act (“OMB”) regulations.  By doing so, OMB has effectively granted a 2016 Cause of Action Institute (“CoA Institute”) petition for rulemaking.

In the June 2016 petition, CoA Institute urged OMB to update its 30-year-old FOIA fee guidelines, which now conflict with the statute and numerous judicial decisions and to which agencies across the government are required to conform.  We also asked OMB to update its own FOIA regulations, which had not been revised since 1998.  Congress has made at least two important amendments to the FOIA since then that OMB has not incorporated into its regulations.[1]  The impetus for CoA Institute sending this petition was to urge OMB to remove the anachronistic “organized and operated” standard from both the guidance and its own regulations’ definition of a “representative of the news media.”[2]

After being ignored for two years, CoA Institute filed suit claiming OMB had violated the Administrative Procedure Act by failing to respond to the petition.  Spurred to action by that litigation, on June 29, 2018, OMB finally responded.  Although the agency denied the petition to update its 30-year-old FOIA fee guidelines, it stated that it was “in the process of updating its FOIA regulations, including fee regulations, to reflect statutory changes and recent judicial decisions.”

Today, the agency published those proposed updates.  OMB has removed the “organized and operated” standard from its regulations and adopted the statutory definition for a “representative of the news media.”  However, it failed to heed CoA Institute’s advice that “OMB should clarify that, while a fee waiver may focus on the substance of a particular request, the news media fee status analysis “focus[es] on requesters, rather than requests[.]”  CoA Institute also asked OMB to embrace the D.C. Circuit opinion clarifying that the so-called middleman standard, which allowed agencies to deny preferential fee status if they felt the requester was only a middleman between the agency and the ultimate publishing source, was inappropriate.  OMB did not include any mention about the validity of the middleman standard in its new regulations.

Although CoA Institute is gratified that OMB has finally begun the process of updating its own FOIA regulations, it will continue the fight in its ongoing lawsuit to challenge OMB’s refusal to bring its 30-year-old FOIA fee guidelines—to which agencies across the federal government are required to conform—into compliance with the statute.

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

[1] See generally FOIA Improvement Act of 2016 and OPEN Government Act of 2007.

[2] See Cause of Action v. Fed. Trade Comm’n, 799 F.3d 1108 (D.C. Cir. 2015).

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08/22/2018

U.S. Fish and Wildlife Service Attempts to Evade Judicial Review of an Unnecessary Critical Habitat Designation That Would Significantly Cost Landowners

On August 8, 2018, the U.S. Solicitor General sent a letter to the Supreme Court informing them of a proposed rule change published by the U.S. Fish and Wildlife Service (the “Service”) that would relate to a pending case: Weyerhaeuser Company v. U.S. Fish & Wildlife Service. While the proposed rule would only apply to future critical habitat designations and would not permit a reevaluation of the designation at issue in Weyerhaeuser, the proposed changes do relate to the underlying issues in the case and would support the argument Cause of Action Institute (“CoA Institute”) made in its amicus brief that the Service’s actions are subject to judicial review.

On April 30, 2018, CoA Institute filed an amicus curiae brief in Weyerhaeuser in support of Petitioner, Weyerhaeuser Company. The company asked the Supreme Court to review the Fifth Circuit’s decision upholding the Service’s questionable designation of 1,544 acres of private land in Louisiana, identified as “Unit 1,” as “unoccupied critical habitat” for the dusky gopher frog, an endangered species. As the Service has acknowledged, Unit 1 is not only currently uninhabitable by the dusky gopher frog, but the critical habitat designation could result in up to $34 million of lost revenue for the private landowners. Simply put, the designation of Unit 1 as critical habitat is not necessary for the conservation of the dusky gopher frog but would come at a significant cost to the landowners. Nevertheless, the Service included Unit 1 as critical habitat. Completely ignoring the landowners’ interests, the Service is forcing these individuals to forfeit a significant profit from their land for a frog that has not been able to survive on their land for over 50 years.

Weyerhaeuser Company, who leases the land at issue, along with other Unit 1 landowners, challenged this designation in 2013, alleging that because Unit 1 is uninhabitable by the dusky gopher frog, Unit 1 is not essential for the conservation of the frog as required by the Endangered Species Act (“ESA”), 16 U.S.C. § 1531 et seq., for unoccupied critical habitat. Additionally, Weyerhaeuser argues that the Service did not adequately weigh the costs of inclusion against the benefits of exclusion, failing to effectively consider the significant economic costs the landowners will have to endure from lost development opportunities.[i] The district court recognized that the agency action in this case is “odd,” but it nonetheless proceeded to grant summary judgment in the Service’s favor, deferring to the agency action and finding itself “without power” to overturn it.[ii]

On appeal, a divided Fifth Circuit panel affirmed the district court.[iii] The Fifth Circuit held that, under the Administrative Procedure Act (“APA”), the Service’s decision not to exclude Unit 1 was discretionary and not subject to judicial review, a decision that, if it remains unchecked, could give excessive and unregulated power to not only the Service but throughout the administrative state.[iv] After being denied a petition for rehearing en banc, Weyerhaeuser Company petitioned the Supreme Court to address the following two questions:

  1. Whether the ESA prohibits designation of private land as unoccupied critical habitat that is neither habitat nor essential to species conservation.
  1. Whether an agency decision not to exclude an area from critical habitat designation because of the economic impact of the decision is subject to judicial review.

While CoA Institute agrees with Petitioner on both issues, it chose to address the latter question in its brief because of the momentous consequences it perceives on the administrative state if the Service’s determinations are not subject to judicial review.

In her dissent from denial of rehearing en banc, Judge Jones expresses these same concerns by warning that the “ramifications” of the panel’s decision regarding judicial review of agency action “cannot be underestimated.”[v] Should the Fifth Circuit’s determination stand, agencies throughout the administrative state could be permitted to make unconstrained decisions.

In its brief, CoA Institute argues that the Fifth Circuit’s determination that judicial review is precluded under the APA’s § 701(a)(2) exception, which states that judicial review will not apply when “agency action is committed to agency discretion by law,” is erroneous. The court failed to perform the necessary analysis required to make this determination, and had the court done so, it would have been clear that the Service’s actions in this instance are subject to judicial review. The Supreme Court has recognized that there is a “‘strong presumption’ favoring judicial review of administrative action” because “Congress rarely intends to prevent courts from enforcing its directives to federal agencies.”[vi] The Fifth Circuit’s conclusory determination in this case, however, contradicts this “strong presumption” of reviewability, because the court instead seems to have wrongly relied on a strong presumption of “unreviewability.”[vii]

CoA Institute argues that, in failing to apply the “strong presumption” of judicial review of agency action, the lower courts did not perform the “careful examination” that the exception requires. The only way for judicial review to be barred in this case, under the § 701(a)(2) exception, is if the language in the ESA that describes how the Secretary makes critical habitat determinations  is drawn in such a way that it precludes a reviewing court from having a “meaningful standard against which to judge the agency’s exercise of discretion.”[viii] To determine this, the court would have needed to conduct a more-adequate examination of the language of the ESA.

Instead of conducting this essential examination of the statutory language, the Fifth Circuit relied on caselaw from the Ninth Circuit and several district courts that suffer from similar analytical ailments. In its brief, CoA Institute performs that careful examination of the ESA’s statutory language, showing that the language of 16 U.S.C § 1533(b)(2) and the overall structure of the ESA do not preclude judicial review. We depend on our courts to conduct the analyses necessary to ensure that government agencies are acting justly and not needlessly impeding individuals lives, a step which the Fifth Circuit failed to do in this case. Had the Fifth Circuit applied the “strong presumption” of judicial reviewability of agency actions, conducted the “careful examination” that is required to establish that judicial review is precluded under § 701(a)(2), and not simply relied on previous erroneous findings in other courts, it would have been evident that the Service’s decision is subject to judicial review.

In its recent notice of proposed rulemaking, the Service offers revisions to portions of the regulations implementing Section 4 of the ESA that would create an even more “meaningful standard” that reviewing courts could use to judge the agency’s use of discretion. Specifically, the proposed rule “provides additional predictability to the process of determining when designating unoccupied habitat may be appropriate”[ix] by clarifying when the Secretary may determine that unoccupied areas are essential for the conservation of a species.

The current rule only provides two ambiguous situations when unoccupied areas would be considered essential to species conservation, while the proposed rule will include additional situations that would clarify the meaning of “essential.” For example, the proposed rule would require that the Secretary determine “that there is a reasonable likelihood that the area will contribute to the conservation of the species.”[x] Additionally, the Service would consider the “current state of the area and the extent to which extensive restoration would be needed for the area to become usable,” and how willing a non-federal landowner is to undertake such restoration.[xi] This language articulates an even stronger and “meaningful” standard that the Service uses in determining whether to exclude an area in a critical habitat designation, making the §701(a)(2) exception to judicial review even more inapplicable to this type of agency action. Even more, should this rule become final, this more-clearly articulated standard will ensure that the essential steps are being taken to conserve endangered species without unnecessarily hindering landowners’ use of their land – a win-win situation.

Comments regarding the proposed rule are due September 24, 2018. The Supreme Court will hear oral argument in Weyerhaeuser on October 1, 2018.

Libby Rudolf is a litigation support analyst at Cause of Action Institute.

 

[i] Markle Interests, LLC v. U.S. Fish & Wildlife Serv., 40 F. Supp. 3d. 744, 759–760 (E.D. La 2014).

[ii] Id. at 758–59.

[iii] Markle Interests, LLC v. U.S. Fish & Wildlife Serv., 827 F.3d 458 (5th Cir. 2016).

[iv] Id. at 473–75.

[v] Markle Interests, LLC v. U.S. Fish & Wildlife Serv., 848 F.3d 635 (5th Cir. 2017).

[vi] Mach Mining, LLC v. Equal Emp’t Opportunity Comm’n, 135 S. Ct. 1651 (2015).

[vii] Brief for Petitioner at 48, Weyerhaeuser Co. v. U.S. Fish & Wildlife Serv., No. 17-71 (U.S. Apr. 23, 2018), available at http://bit.ly/2PrkGjz.

[viii] Heckler v. Chaney, 470 U.S. 830 (1985).

[ix] Endangered and Threatened Wildlife and Plants; Revision of the Regulations for Listing Species and Designating Critical Habitat, 83 Fed. Reg. 35193 (proposed July 25, 2018) (to be codified at 50 C.F.R. pt. 424).

[x] Id. at 35198

[xi] Id.

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08/20/2018

CoA Institute Submits Comment to FTC, Recommends Multiple Reforms to Curb Agency Overreach and Abuse

Cause of Action Institute (“CoA Institute”) today submitted a public comment to the Federal Trade Commission (“FTC” or “Commission”) in advance of a series of hearings concerning the agency’s efforts to evaluate its law enforcement and policy agenda, improve investigative processes, and otherwise reform its implementation of the FTC Act.

CoA Institute’s recommendations are based on considerable experience dealing with the FTC.  Our attorneys regularly practice before the Commission.  At present, CoA Institute represents D-Link Systems, a networking equipment manufacturer, which is fighting vague and unsubstantiated allegations that it placed consumers “at risk,” despite any evidence of actual or likely substantial injury.  CoA Institute also represents Vylah Tec, LLC, a family-run technical support company that has been targeted on suspicion of “deceptive” sales practices.  The FTC has failed to uncover any concrete evidence of wrongdoing, yet the company remains subject to a punitive injunctive order.  In the past, CoA Institute represented LabMD, Inc., a small cancer-detection company, against claims that it had unreasonable data-security practices.  And CoA Institute has directly litigated against the FTC over matters related to the Freedom of Information Act.

As explained in the comment, CoA Institute’s track-record with the FTC gives it unique insight into how the agency can be improved in four general areas:

Reforming the FTC’s Enforcement Processes

When FTC staff believes there has been a violation of the law, the agency typically threatens a regulated entity with an enforcement proceeding and attempts to settle the matter by consent order.  This is the outcome in most cases.  But these consent orders tend to be vague; they provide little guidance about the standards with which other regulated companies are expected to comply.  This opens the door to regulatory overreach.  The FTC should provide specificity in its consent orders.

The FTC also should refine its use of ex parte injunctions, which are an extraordinary remedy.  Without clearer guidance limiting the use of temporary restraining orders and asset freezes, the FTC may continue to raise due process concerns and impose unjustifiable hardships on regulated entities defending themselves in enforcement proceedings.

Concerns about due process likewise arise with respect to the FTC’s own rules of procedure, which differ in material ways from well-accepted rules of procedure and evidence in federal courts.  The Commission’s rules provide its staff a decided advantage, particularly given the relatively boundless resources available to the agency.  This is unfair and flouts the rule of law.

Finally, the FTC should eliminate its practice of seeking legal damages in excess of what the agency is statutorily authorized to pursue.  Although the FTC may request equitable monetary damages, including restitution or disgorgement of ill-gotten gains, in practice the damages sought by the Commission are pecuniary and ultra vires.  In short, they amount to the imposition of personal liability on defendants.  This approach cannot be countenanced by the FTC Act.

Increasing FTC Transparency

Related to the reforms of the FTC’s enforcement regime are the changes that should be made to its disclosure practices.  As mentioned, the FTC regularly relies on consent orders to settle matters before an actual enforcement proceeding is opened.  The use of these negotiated orders, which are party-specific and, again, vague, fails to provide the requisite notice of legal standards to which regulated parties are expected to conform.  The FTC should abandon efforts to treat consent orders as a “common law” body of precedent that shapes future obligations for regulated parties.

To the extent the FTC continues to use consent orders in this problematic way, however, it should aim to make the orders specific, with detailed analysis about the application of generally applicable standards.  The Commission also should proactively disclose the closing letters and closing memoranda from matters where enforcement is not pursued.  In these cases, the FTC has determined that a potential respondent is operating within legal bounds.  The Commission itself admits that these documents are useful, but they are not uniformly disclosed to the public.

Developing a Proper Understanding of “Substantial Injury”

At the heart of Section 5 of the FTC Act is the concept of “substantial injury.”  Without actual, or the threat of “likely,” substantial injury, the FTC can do nothing.  But the exact scope of what is “likely” and “substantial” harm is unclear.  The FTC does not define the terms precisely, and the body of consent orders that reflect settled matters provide little further detail.  What is clear, however, is that the FTC prefers to maintain ambiguity to facilitate its overreach.

The Commission should do a better job considering the countervailing benefits to consumers or competition provided by allegedly unfair acts or practices, too.  This can be done with rigorous cost-benefit analysis.  The FTC often focus on amorphous concepts of harm while ignoring how regulated entities’ practices benefit the consumer or, more broadly, competition in the marketplace.

How Congress Should Amend the FTC Act

Although CoA Institute’s recommendations are principally directed to the FTC, Congress should play a key role in reforming the Commission’s enforcement processes.  We propose that legislators amend the FTC Act to allow direct appeals to a U.S. Court of Appeals following an administrative law judge decision.  This would replace the current process by which an appeal is first made to the full Commission.  It would be better to permit respondents to seek appellate relief in an Article III venue, and bypass the full Commission, because the FTC has a remarkable track record of never losing its own administrative appeals.  Regulatory agencies should not be allowed to wear the dual hats of prosecutor and judge.

Ryan P. Mulvey is Counsel at Cause of Action Institute

Click here to access the full comment or read below.


 

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08/16/2018

Department of Veterans Affairs Discloses 2014 Guidance on Intra-Agency Consultations for FOIA Requests of “Substantial Interest” to Agency Leadership

The Department of Veterans Affairs (“VA”) has released a February 2014 memorandum reiterating the need for “consultations” on certain Freedom of Information Act (“FOIA”) requests, including those of “substantial interest” to the agency’s political leadership.  Cause of Action Institute (“CoA Institute”) obtained the record after submitting a disclosure request in the wake of Senate Democrats expressing concern over possible politicization of VA FOIA processes.

The memorandum, which is addressed to “Under Secretaries, Assistant Secretaries, and Other Key Officials,” indicates that VA regulations require intra-agency consultation or referral whenever incoming FOIA requests implicate records that originate with another component or prove to contain “information” of “substantial interest” to another VA office.  While “referral” entails the effective transfer of responsibility for responding to a request, “consultation” refers to discussing the release of particular records.

Consultation within an agency or with other entities can be a positive practice that ensures records are processed in accordance with the law.  Indeed, in some cases, “consultation” is required.  Executive Order 12600, for example, requires an agency to contact a company whenever a requester seeks confidential commercial information potentially exempt under Exemption 4.  Yet consultations occur in less-easily defined situations, too.

The FOIA only mentions “consultation” in the context of defining the “unusual circumstances” that permit an agency to extend its response deadline by ten working days.

[“Unusual circumstances” include] the need for consultation, which shall be conducted with all practicable speed, with another agency having a substantial interest in the determination of the request or among two or more components of the agency having substantial subject-matter interest therein.

Unfortunately, the phrase “substantial interest” is not itself defined.  This is where problems begin.  The Department of Justice’s (“DOJ”) guidance on consultation suggests that a “substantial interest” only exists when records either “originate[] with another agency” or contain “information that is of interest to another agency or component.”  The DOJ’s FOIA regulations, and the Office of Information Policy’s model FOIA regulation, while not dispositive, do provide a little more context.  They suggest “consultation” should be limited to cases when another agency (or agency component) originated a record or is “better able to determine whether the record is exempt from disclosure.”

CoA Institute has long sought clarification on the exact nature of a “substantial interest.”  In November 2014, we submitted a public comment to the Department of Defense (“DOD”) arguing that consultation should be restricted to situations where another entity has created a responsive record or is “better positioned to judge the proper application of the FOIA exemptions, given the circumstances of the request or its familiarity with the facts necessary to judge the proper withholding of exempt material.”  Although our proposed definition was admittedly non-ideal—DOD did not accept that portion of our comment—it hinted at the troubling abuse, politicization, and unjustifiable delay that can occur with consultation.

The best example of such abuse and politicization is found with “White House equities” review, which is carried-out as a form of “consultation.”  As CoA Institute has repeatedly documented, however, this form of “consultation” extends far beyond “White House-originated” records or records containing information privileged by White House-controlled privileges.  Instead, pre-production White House review has been extended to almost anything that is potentially embarrassing or politically damaging to the President.  In May 2016, CoA Institute sued eleven agencies and the Office of the White House Counsel in an effort to enjoin the Obama Administration from continuing “White House equities” review, but that lawsuit was dismissed.  It is unclear to what extent President Trump has continued the practice, although at least one other oversight group has uncovered evidence of recent White House review of politically sensitive records from the Department of Housing and Urban Development.

As for the VA, the recently disclosed memorandum is silent about the precise meaning of a “substantial interest.”  But, at least for the “substantial interest” of the agency’s political leadership, the memorandum indicated that “[f]ollow-up guidance will be forthcoming.”

This is especially troubling.  Last week, I discussed how DOD failed to address Inspector General recommendations concerning the agency’s so-called “situational awareness” process for notifying political leadership about “significant” FOIA requests that may “generate media interest” or be of “potential interest” to DOD leadership.  I noted that agencies hide behind technical phrases—like “substantial interest” or “situational awareness”—while allowing non-career officials to inappropriately interfere with FOIA processes.  This could be what is happening with the VA.  Why is special “guidance” needed to identify the “substantial interest” that the VA Secretary may have in a specific request?  Does this not hint of the same sort of inappropriate “sensitive” review implemented at countless other agencies?

CoA Institute has appealed the VA Office of the Secretary’s response.  The 2014 memorandum was the only record produced in response to our FOIA request.  The “follow-up guidance” should also have been located and disclosed.  It must be made public.  Other VA offices are still processing portions of our request; the Office of Inspector General, for its part, was unable to locate records about recent investigations into FOIA politicization.  As further information becomes available, we will post additional updates.

Ryan P. Mulvey is Counsel at Cause of Action Institute

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