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10/5/2017

Litigation Update: Ensuring Access to Records of the Executive Branch’s Interaction with Congress

In December 2016, Cause of Action Institute (“CoA Institute”) sued the Internal Revenue Service (“IRS”) after it refused to produce a variety of records concerning its dealings with the Joint Committee on Taxation .  The IRS claimed that all such records, which CoA Institute requested under the Freedom of Information Act (“FOIA”), would be “congressional records” exempt from disclosure.  Yet the IRS never conducted a search.  Instead, it based its determination on questionable guidance from its Office of Chief Counsel, which contradicts long-standing legal precedents for when agency records must be provided to the public.

The IRS moved to dismiss CoA Institute’s lawsuit for lack of subject-matter jurisdiction, arguing that because any and all responsive records were presumptively “congressional,” the court lacked the authority even to hear CoA Institute’s arguments.  Once again, the IRS founded its position on the Chief Counsel’s guidance, as well as generalized descriptions of a consistent course of “confidentiality” in IRS’s communications with the Joint Committee on Taxation.  CoA Institute opposed the IRS’s motion and explained that the agency’s position relied on a serious misunderstanding and misapplication of the law, prescribed an overbroad and unjustified approach to distinguishing “agency” and “congressional records,” and would sweep a broad range of records, which should otherwise be subject to the FOIA, into an “exempt” category.  As I have argued elsewhere, “[t]he mere fact that a record controlled by an agency relates to Congress, was created by Congress, or was transmitted to Congress, does not, by itself, render it a congressional record.”  Its availability instead depends on whether Congress manifested clear intent to maintain its control over it.  Here, the IRS had failed to meet its burden in demonstrating that intent.  How could the agency do so when it refused to conduct a search for the very records at issue?

During oral argument at the end of August, the Court expressed its reservation about the novelty of the IRS’s argument and its presumptive application of the relevant legal standards to exclude categorically all of the requested records as being “congressional” records.  The Court also questioned whether the IRS had properly moved to dismiss for lack of subject-matter jurisdiction, rather than moving to dismiss for failure to state a claim upon which relief can be granted.  Although the distinction may seem like mere “legalese,” it is an important one that affects what sort of evidence outside the pleadings the Court may examine and whether the Court lacks authority to adjudicate a claim arising under federal law (i.e., subject-matter jurisdiction), or simply has no basis to provide the relief sought by a plaintiff, (i.e., an order to disclose non-exempt agency records).

Yesterday, CoA Institute filed a supplemental brief, arguing that the Court was correct to question whether the IRS had properly moved to dismiss for lack of subject-matter jurisdiction.  It is important that the Court reach the right answer to this procedural question.  It will have important implications for FOIA litigation.  The government, here and in other recent FOIA cases, seeks to collapse merits determinations—e.g., whether a requester has sought “agency records”—into jurisdictional questions.  The courts should not allow that to happen.  There is already an asymmetry of knowledge between requesters and agencies.  Forcing a requester to fight an agency on jurisdictional grounds, without the benefit of a search having been conducted and relevant records identified, is not only unfair but would provide the government yet another tool to evade its transparency obligations under the FOIA.

Ryan P. Mulvey is Counsel at Cause of Action Institute.

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09/28/2017

Cause of Action Institute Signs Second Coalition Letter Warning of Continued Congressional Interference with the FOIA

Cause of Action Institute signed a letter yesterday, joining a broad coalition of government transparency advocates, warning members of the Bipartisan Legal Advisory Group of the U.S. House of Representatives about the dangers of mounting congressional interference with the Freedom of Information Act (“FOIA”) and, specifically, continued efforts to expand the definition of “congressional records” not subject to disclosure. The letter comes in the wake of the House Committee on Ways and Means’ motion to intervene in a lawsuit filed by American Oversight, a left-leaning government transparency group.

The letter reiterates much of the argument found in a May 2017 coalition letter from government transparency advocates urging Jeb Hensarling, the Chairman of the House Financial Services Committee, to rescind his directive that federal agencies treat any and all records exchanged with the Committee as exempt from the FOIA. As I have previously discussed, the mere fact that an agency possesses a record that relates to Congress, was created by Congress, or was transmitted to Congress, does not by itself render it a “congressional record.” The law instead requires that Congress manifest clear intent to maintain control over specific records to keep them out of reach of the FOIA.  Chairman Hensarling and the leadership of the Ways and Means Committee are pushing the boundaries of this legal requirement.

Cause of Action Institute continues to investigate Chairman Hensarling’s controversial, and legally dubious, attempt to frustrate public access to records of the Executive Branch’s dealings with Congress, as well as similar efforts undertaken at the Internal Revenue Service. The transparency community and the general public must remain united in protecting the spirit of disclosure and open government promised by the FOIA.

Ryan Mulvey is Counsel at Cause of Action Institute.

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09/7/2017

CoA Institute Urges Removal of Anti-Transparency Provisions in Senate Bill

On August 16, 2017, Cause of Action Institute (“CoA Institute”) joined other government transparency advocates in sending a letter to Senator John Cornyn objecting to the inclusion of provisions that exempt the implementation of the Building America’s Trust Act [1] (“the Act”) from the requirements of the Administrative Procedure Act (“APA”) and the Paperwork Reduction Act.

In particular, Section 702 of the Building America’s Trust Act specifically exempts any agency actions implementing the Act from “publication in the Federal Register[.]” This exclusion will deprive the American people from learning when provisions of the Act are implemented by federal agencies.  This unfortunate provision runs directly counter to the APA’s publication requirement which serves as an essential hallmark of administrative law and promotes transparent and accountable government.  Americans’ input into the rulemaking process should not be so easily cast aside.  Section 702 relies on the need to ease “the expeditious implementation of this Act” as the justification for the APA exemption.  But the APA already allows agencies to exempt rules from publication if good cause is shown.[2]  To ensure a transparent and accountable government, agencies implementing the Act should have to demonstrate their good cause for avoiding the APA’s requirements instead of receiving a rubberstamp on binding regulations.

CoA Institute believes that Section 702 should be removed from the Building America’s Trust Act because the APA already contains a good cause exemption that should satisfy the Act’s policy goals without adding new exemptions from the APA’s procedures.

Travis Millsaps is counsel at Cause of Action Institute.

[1] Building America’s Trust Act, S. 1757, 115th Cong. (2017).

[2] 5 U.S.C. § 553.

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08/30/2017

Group Tied to Progressive PAC Solicits Donations in Misleading Call for Hurricane Harvey Relief

On Wednesday, Linda Sarsour, a controversial political activist, tweeted an appeal to her followers asking that they donate to an ostensibly noble cause—the Hurricane Harvey Community Relief Fund. Unfortunately, this seemingly benevolent appeal is anything but.  Ms. Sarsour actually linked to a page that accepts donations for a fund called the Texas Organizing Project Education Fund (“TOP ED”).  TOP ED is a 501(c)(3) non-profit group that is wholly affiliated with a self-described progressive Political Action Committee, the Texas Organizing Project (“TOP”). Cause of Action Institute previously looked into TOP and TOP ED for their affiliation with the now-defunct ACORN group.

Ms. Sarsour’s disingenuous call to action through the Hurricane Harvey Community Relief Fund is in fact a call for donations to TOP which received roughly 93% (or $1.5 million) of TOP ED’s gross receipts in 2015 through its cost-sharing agreement. In its Form 990 IRS filings, TOP ED notes that it shares “employees, facilities, and goods and services” with TOP, and does not pay its employees any salary.

At a time when Americans are pulling together to assist the victims of Hurricane Harvey, it is appalling to see opportunists taking advantage of their generosity.  At this time of national tragedy, it is unconscionable that groups like TOP and activists like Ms. Sarsour would mislead Americans into thinking they are donating money to save hurricane victims when in fact the funds would go to an organization that promotes a political agenda.

Travis Millsaps is Counsel at Cause of Action Institute.

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08/9/2017

Appeals Court Rebuffs EPA Attempt to Expand Its Regulatory Power

In a clear win for separation of powers and limited agency discretion, the D.C. Court of Appeals today ruled in favor of a company that challenged an EPA regulatory action issued in 2015 to require industry to replace its use of hydrofluorocarbons (“HFCs”). The Court found that “the fundamental problem for EPA is that HFCs are not ozone-depleting substances, and thus Section 612 would not seem to grant EPA authority to require replacement of HFCs.” This logic was supported by the EPA itself prior to 2015 when the agency openly deemed hydrofluorocarbons acceptable. But EPA reversed course in 2015 and concluded that some HFCs “could no longer be used by manufacturers in certain products, even if the manufacturers had long since replaced ozone-depleting substances with HFCs in accordance with the law.” EPA attempted to justify its position by classifying hydrofluorocarbons as a contributor to climate change.

The Majority opinion stated:

“Supreme Court cases that have dealt with EPA’s efforts to address climate change have taught us two lessons that are worth repeating here. First, EPA’s well-intentioned policy objectives with respect to climate change do not on their own authorize the agency to regulate. The agency must have statutory authority for the regulations it wants to issue. Second, Congress’s failure to enact general climate change legislation does not authorize EPA to act. Under the Constitution, congressional inaction does not license an agency to take matters into its own hands, even to solve a pressing policy issue such as climate change.”

The Court found that EPA’s legal interpretation to be “inconsistent with the statute as written,” and therefore vacated the 2015 Rule. The Court’s opinion speaks to the need for federal agencies to respect the separation of powers required by the U.S. Constitution and highlights the Judiciary’s important role to intervene when an agency oversteps its statutory authority.

Cause of Action Institute (“CoA Institute”) has repeatedly stressed this point in matters involving other rogue federal agencies.  For example, in a recent amicus curiae brief filed in support of a business facing a lawsuit filed by the Federal Trade Commission (“FTC”) that we do not believe the FTC has statutory authority to bring, we argued:

“CoA is concerned that this case is part of an emerging pattern of ultra vires, unconstitutional FTC enforcement actions grounded in a fundamental error of statutory interpretation—specifically, the FTC’s apparent belief that it need not wait for Congress to pass legislation giving it permission to regulate broad swaths of the economy, so long as the FTC’s actions reflect its subjective vision of enlightened public policy—that not only flips basic administrative law on its head, but threatens the separation of powers vital to liberty.”

No agency can arrogate to itself legislative powers Article I of the Constitution reserves for Congress, no matter how important an agency thinks its policy aims might be.

Patrick Massari is Assistant Vice President at Cause of Action Institute

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08/9/2017

Wednesday Waste: Federal Subsidies Prop Up Corporate Executives at Taxpayers’ Expense

The federal government doesn’t just provide welfare to struggling families. On the contrary, it also gives huge sums of money to some of the biggest and wealthiest businesses in the world, amounting to about $100 billion per year through federal subsidies.

Corporate subsidies, or “corporate welfare” to its opponents, are supposedly designed to lower prices and employ Americans. But such well-intentioned justifications fail to materialize and the subsidies end up lining the pockets of corporate executives at no benefit to the consumers, or propping up unsuccessful businesses that aren’t meeting market demand.

The biggest recipients of corporate welfare are not struggling businesses, but rather very successful companies. The country’s top corporate welfare recipient is Boeing, one of the largest defense contractors in the world. Boeing receives a whopping $13.4 billion from taxpayers each year. Other household names at the top include Intel, General Motors, Ford, Fiat, Nike and Shell. Each rakes in between two and six billion dollars annually. Unfortunately, when businesses solicit money from taxpayers, rather than customers, incentives change.

In a free and open economy, consumer spending, not government rewards, signals businesses to act, and businesses are incentivized to listen to consumers. When the government intervenes, it creates artificial signals that are not based on market demand. Rather, they’re incentivized to make political friends and ask for favors. This does nothing for consumers and fuels cronyism and inefficiency.

Instead of focusing resources on customer satisfaction, companies now spend incredible amounts on lobbying. In the last eight years, American businesses have spent more than $3 billion per year on lobbying, more than doubling what was spent annually in the late ‘90s. On top of traditional lobbying, companies also spend millions of dollars funding the campaigns of candidates like Donald Trump and Hillary Clinton to get a friend in the White House. Companies make generous campaign donations sometimes to maintain federal subsidies.

Despite ethics laws, favors are granted to the companies and lobbyists who have the most connections. Such corporate subsidies rarely add value to the economy, nor do they benefit consumers.

If the United States ended federal subsidies today, these problems would largely go away. Corporations would go back to making money by pleasing customers instead of pleasing politicians. If the money spent on subsidies was left in the hands of taxpayers, they would spend it wherever they think is most valuable for themselves instead of having it spent wherever the politicians think is most valuable to their personal careers. Removing federal subsidies would result in better market efficiency and more valuable goods in society. Eliminating these subsidies would also take away more than 20 percent of our current deficit spending.

Some of the inefficiencies are not visible, because we’ve never had a truly free economy. However, some of the inefficiencies are very apparent.

One of the clearest examples is the Obama-connected Solyndra scandal. The company received guaranteed loans, and an investigative report showed that the company was constantly playing politics, instead of producing services, until it went bankrupt in 2011. Even as they were going bankrupt, top CEO’s were still receiving tens of thousands in  bonuses, on top of their already high salaries.

Another lesser-known example is the government’s attempt to subsidize broadband in rural areas, which led to much poorer results than promised. Forty percent of the projects were not even started by the time they were supposed to be completed. Analyses found that the subsidies did not have an effect on rural penetration and “that about 60 percent of subsidies went to rural providers’ overhead rather than to investment.”

Regardless of the business model, the free market will always be a better solution for people overall.

Tyler Arnold is a communications associate at Cause of Action Institute

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08/8/2017

Consumer Product Safety Commission Revises FOIA Rule in Response to CoA Institute Comments

The Consumer Product Safety Commission (“CPSC”) finalized a rule today implementing new Freedom of Information Act (“FOIA”) regulations. The agency incorporated important revisions proposed by Cause of Action Institute (“CoA Institute”) in a comment submitted to the agency in in January 2017.

CoA Institute urged the CPSC to remove outdated “organized and operated” language 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.  For example, CoA Institute took the Federal Trade Commission to the D.C. Circuit just to get the agency to acknowledge that its FOIA fee regulations were outdated and that it was improperly denying 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 CPSC and the agency took heed of the current case law, removing the outdated “organized and operated” language from its regulations.

The Consumer Product Safety Commission indicated that its revisions, which incorporated model language developed by the Department of Justice, focused on the nature of a news media requester, as opposed to the content of any given request. The agency further agreed that press releases could qualify as distinct work product.  Finally the CPSC added language clarifying that the examples of news media entities used in its fee category definition were “not all-inclusive.”

CoA Institute’s successful comment is just 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 Mulvey is Counsel at Cause of Action Institute

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