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06/16/2017

Can FTC Ignore the Law to Expand its Power to Regulate Internet Providers?

Cause of Action Institute (“CoA Institute”) has filed an amicus curiae (“friend of the Court”) brief in the U.S. Court of Appeals for the Ninth Circuit in FTC v. AT&T Mobility LLC (“AT&T”) in support of AT&T during the pendency of rehearing en banc of an appeal regarding whether the Federal Trade Commission (“FTC” or “Commission”) has statutory authority to regulate common carriers such as Internet Service Providers (“ISPs”) and telephone companies under Section 5 of the FTC Act.

In September 2016, a unanimous three-judge Panel on the U.S. Court of Appeals for the Ninth Circuit ruled that because the plain language of the FTC Act categorically exempts common carriers like AT&T from FTC regulation under Section 5, the FTC lacks statutory authority to regulate businesses like AT&T. (Instead, such businesses are regulated by a different federal agency, the Federal Communications Commission (“FCC”) under a different federal statute, the Communications Act.)  Consistent with the judicial role and respect for the separation of powers, the Panel explained that “[i]t is not for us to rewrite the statute so that it covers only what we think is necessary to achieve what we think Congress really intended.  That is a job for Congress, not the courts.”

The FTC subsequently filed a petition for rehearing en banc supported by a number of “friend of the Court” briefs arguing that the full Ninth Circuit should vacate the Panel decision and rehear the case because, among other things, the Panel decision was inconsistent with their views regarding sound public policy and left a supposed “regulatory gap” that the FTC should be allowed to “fill.” On May 9, 2017, the Ninth Circuit granted the FTC’s petition.

Concerned about this development, our brief argues that the Court should decide the case the same way the Panel did; that is, calling balls and strikes and deciding the case based on the statute’s plain text rather than a federal agency’s subjective views on what it thinks is enlightened public policy for the entire country. Our brief argues that such an approach respects Congress’s legislative role under Article I of the U.S. Constitution, as well as the separation of powers.  That is because under the U.S. Constitution only the People’s elected representatives in Congress—not a federal agency like the FTC or FCC and not a federal Court—are allowed to rewrite federal law in response to public policy arguments.

As our brief also notes at pages 3-4: “CoA’s interest in this case also stems from its view that, regardless of whether the FTC’s policy goals are sound, the FTC has now “spun out of the known legal universe and … [is] now orbiting alone in some cold, dark corner of a far-off galaxy, where no one can hear the scream ‘separation of powers.’”

These fitting words, describing FTC’s recent forays in Art. III Courts under Section 5, are not hyperbole, but instead reflect a very disturbing reality. FTC’s self-appointed mantle as perverse executive-agency posse comitatus, a poseur arrogant and lawless unto itself, whose overreach and overregulation do not serve the American people or the public interest.

The full brief can be found here.

Patrick Massari is assistant vice president at Cause of Action Institute

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06/14/2017

Northeast Canyons and Seamounts Designation: Some Stakeholders Are More Equal Than Others

We began our series of blog posts by examining the history, purpose, and limitations of the Antiquities Act of 1906, 54 U.S.C. §§ 320301 – 320303 (“Antiquities Act” or the “Act”) (here and here), followed by a discussion of how the Act fits within the variety of other frameworks for protecting and using public lands (here and here) and the variety of statutory frameworks and federal government programs that are used to manage the jurisdictional waters of the United States. (here and here). We also shared a copy of the comment we submitted to the Department of the Interior in which we outlined our investigative activity relative to the Bears’ Ears National Monument. This week we review the procedural history of the designation of the Northeast Canyons and Seamounts Marine National Monument, also referred to here as the Atlantic Monument, which was made by President Obama on September 15, 2016 (“Proclamation”), and show that certain, privileged, non-governmental entities were granted access to detailed information on the forthcoming monument and allowed input into the designation, while other stakeholders—notably those with specific legal authority, such as Regional Fishery Councils—were denied input and access.

The Atlantic Monument includes the Oceanographer, Gilbert, and Lydonia canyons, which are located at the edge of the geological continental shelf, and the Bear, Physalia, Retriever, and Mytilus sea mounts, which are located farther offshore at the start of the New England Seamount chain.

The Proclamation provided the following justifications for the designation: (1) the historical value of the maritime trades, especially fishing, to the cultural roots of New England; (2) the abundance of deep sea corals, fish, whales, and other marine mammals; and (3) long-time scientific study of the area using research vessels, submarines, and remotely operated underwater vehicles for deep-sea expeditions.

The Proclamation purported to prohibit the following activities, effective immediately:

  • Oil, gas, minerals, or other energy exploration, development, or production;
  • Poisons, electrical charges, or explosives to collect or harvest a “monument resource;”[1]
  • Releasing an “introduced species;”[2]
  • Removing a “monument resource” except as provided under “Regulated Activities;”
  • Construction or damaging submerged lands (except for scientific instruments or submarine cables);
  • Commercial Fishing; and
  • Possessing commercial fishing gear unless stowed during “passage without interruption” through the monument.

In addition, the following activities are to be regulated:

  • Research and scientific exploration;
  • Education, Conservation, and Management;
  • Anchoring scientific instruments;
  • Recreational fishing;
  • Commercial fishing for red crab and American lobster for up to 7 years;
  • Sailing, and bird or mammal watching; and
  • Submarine cables.

Note that these restrictions do not apply to any person who is not a citizen, national, or resident alien of the United States, unless in accordance with international law. As we explained in our May 22, 2017 blog post, within the EEZ, in which the Atlantic Monument is located, the United States has only limited sovereign rights, and thus international law still applies, limiting the ability of an American President to extend prohibitions to non-Americans.

In light of the stated justification for the Atlantic Monument, it is curious that certain traditional, culturally-significant, and highly-regulated activities, such as commercial fishing, were prohibited; while others, such as recreational fishing, were to be regulated; and some, such as commercial fishing for red crab and American lobster, were granted a seven-year stay of execution—bearing in mind that none of these classifications or limitations even apply to non-Americans.[3]  These discrepancies, as well as peculiarities in the procedural history of the Atlantic Monument, were among the bases for a series of FOIA requests that CoA Institute submitted in October 2016, in which we requested records from NOAA and the Council on Environmental Quality (“CEQ”) relating (among other things) to the designation of the Atlantic Monument and to the justification for the unequal treatment of stakeholders and the opaque process surrounding the designation of the Atlantic Monument.  The submitted FOIA requests include the following:

To-date NOAA and CEQ have released only a portion of the requested documents. However, even the initial interim releases show that, despite claims that the Atlantic Monument is the product of “an extensive year-long public process,” the designation of the Atlantic Monument was a predetermined decision that allowed for limited public input to appease public backlash.

The following history, derived from the partial responses to CoA Institute’s FOIA requests and other publicly available documents, is illustrative:

In March 2015, the Conservation Law Foundation (“CLF”) and Natural Resources Defense Council (“NRDC”) published an Issue Brief that advocated for “permanent protection” of New England’s canyons and seamounts. By July 2015, NOAA personnel in the Fisheries Service were already discussing the details of which activities should be prohibited post-Proclamation, such as whether the Proclamation should include an exception to the prohibition on fishing for highly migratory species (“HMS”), such as tuna, swordfish, marlin, and a variety of sharks. Although the discussion confirmed that neither commercial nor recreational fishermen of HMS anchor their boats ; and, in fact, most vessels do not carry enough anchor line for the depths in the area, ultimately HMS commercial fishing was prohibited.

In August 2015, the Conservation Law Foundation forwarded to NOAA an invitation to an event scheduled for September 2, 2015 at the New England Aquarium regarding deep sea canyons and seamounts located off the coast of Cape Cod and expressing commitment to “real and significant conservation in New England and . . . ensuring the timely completion of a good and effective ocean plan—the first in the U.S.”  The message made no mention of the New England Regional Fishery Management Plan that had long been in place under the Magnuson-Stevens Act.

The following day, September 3, 2015, NOAA issued a broad invitation to participate in a Town Hall meeting scheduled for September 15, 2015—just 12 days after the announcement—to discuss “permanent protections” for three deep sea canyons and four seamounts off the coast of New England. The invitation did not mention designation of a National Monument nor that the meeting would be the only event at which to present feedback. It provided a deadline for submitting written comments to a special NOAA e-mail address, which was set for the same day as the Town Hall meeting. No proposal or details were included with the invitation.

It appears that certain privileged, non-governmental entities that had the inside track on the proposal, including the Pew Research Center and the Conservation Law Foundation, had more information about the proposal before the Town Hall meeting than NOAA was able, or willing, to make available to stakeholders. The lack of information available to local stakeholders hindered their ability to provide meaningful commentary.

NOAA, however, had prepared a briefing document as early as July 2015 that included much relevant information and identified the conflict between the monument proposal and the fishery management councils’ activities. The briefing document also “red flagged” the anticipated objections of various fishermen on the basis that their fishing was not harmful to the area. As of July 2015, the proposal allowed commercial pelagic fishing (i.e., fishing in the water column)—an activity that was ultimately forbidden.

Before the Town Hall meeting, NOAA was advised of specific shortcomings in the notice process that further compromised the ability of local stakeholders to provide meaningful input and that buttressed the impression that the entire process was undemocratic and designed to bypass the extensive multi-year effort to protect marine resources. For example:

  • In contrast to NOAA’s standard practice of sending email messages from “@noaa.gov,” the e-mail message announcing the Town Hall meeting was sent from news@meltwaterpress.com, which led recipients to fail to recognize that the message included an important announcement and increased the potential for the message to be caught in a spam-blocker;

  • In response to a request for information before the Town Hall meeting, the requester was told that no information beyond the press release was available and no additional briefings or public meetings were scheduled, in contrast to the typical process of holding 15-20 public hearings and providing information electronically.

….


  • However, consistent with the experience of other stakeholders, on-line research of the proposal led to the Conservation Law Center and PEW websites, where electronic petitions were available along with inaccurate and misleading information.

  • As a result of the patent deficiencies (whether by design or omission) in the public comment process, the writer requested from NOAA an extended comment period, additional public hearings, and detailed information on the specific proposed measures. It appears that no such opportunity for meaningful feedback was ever provided.

 

The lack of proper notice for the town hall meeting was not just a sticking point for fishermen who were unable to attend, but even created an impediment to attendance for NOAA personnel.

The lack of notice was a contentious issue at the Town Hall meeting, as was the Providence, Rhode Island location, which appeared to have been chosen to keep fishermen away.

By contrast, representatives of academia, Brown University and the University of Connecticut, and special interest groups, Pew and NRDC, remarked that they had already submitted written comments on the proposal. They, apparently, knew enough about the proposal before the meeting to draft comments and submit them ahead of time.

Others—notably fishermen and local businesses—were not privy to specifics of the proposal until they arrived at the Town Hall meeting, and, even then, were provided inadequate details.

The exclusion of the Fishery Management Council from meaningful input apparently was consistent with a desire by some to bypass the “too long” democratic process.

Comments by stakeholders with intimate knowledge of how the area is managed told a different story—the Lydonia and Oceanographer canyons were already closed to fishing gear . . .

. . . the Fishery Management Council process is based on science and abundant data . . .

. . . the Council process is rigorous. . .

. . .and the “pristine” condition of the areas shows that the areas have been well-managed.

Stakeholders who must actually live with the effects of the Atlantic Monument also commented that there are public impacts from the proposed monument—to jobs and other fishing areas that must be, and have not been, considered. As one commenter stated—there are lives at stake.

The full text of the statement of the New England Council Chairman, explaining the history of the Council’s actions, and the design of coral management zones, can be found here.

These spoken comments were consistent with written comments submitted immediately before or shortly after the Town Hall meeting.

See full text


See full text

See full text

Written comments provided after the hearing highlighted certain factual inaccuracies in the presentation in support of the monument, such as:

  • The claim that there was increased fishing pressure in the designation areas when, in fact, the number of boats actually fishing had fallen dramatically (by 2/3 or more);
  • The Annual Catch Limit is well below the Overfishing Limit;
  • The fishing methods described at the September 2015 Town Hall meeting do not resemble the methods actually used;
  • Sword fish and squid fishing gear does not come anywhere close to the bottom;
  • Thousands of square miles of New England waters have already been closed to fishing via democratic process—in contrast to the undemocratic process used to designate the monuments.

See here, here, and here

Written comments also reiterated the complaint that the process of designating the monument lacked transparency, including:

  • The lack of notice for the town hall meeting;
  • The two-minute limit on oral comments;
  • The lack of parameters (time frame, review process, etc.) for written comments;
  • The lack of ability of NOAA staff to answer questions;
  • The pervasive misrepresentation of existing environmental protections and conditions; and
  • The lack of specifics on the proposal—no boundaries, no regulatory provisions, no depth contours, and no evidence of need or benefit to closing the area.

See here, here, and here

Meanwhile, as the fishermen were begging for due process and the Council was pleading to be allowed to do its job, it appears that the Administration was continuing to work with certain, privileged, non-governmental entities toward announcing the monument designation at the 2015 Our Oceans Conference, scheduled to take place in Valparaiso, Chile or October 5-6, 2015. Notably, this plan was known among the privileged entities before the Town Hall Meeting, a fact that they took care to keep quiet.

See full text

The “potential collusion” of these outside interests in the apparently pre-ordained monument designation was of concern to the U.S. House of Representatives Committee on Natural Resources, which held an oversight hearing on the potential designation of marine national monuments on September 29, 2015—only 6 days before the Our Oceans announcement was to take place.

See full text

Throughout 2016, objections to establishing a marine monument in the Atlantic were made by stakeholders who had intimate knowledge of the area as well as their life’s work at risk. Like the earlier commenters, they objected to the lack of transparency, democratic process, accurate data, and coordination with existing—and effective—management plans.

See full text

See full text

See full text

These calls went unheeded and the Atlantic Monument was proclaimed on September 15, 2016. Nevertheless, and notwithstanding the initial plan to announce its designation at the Our Oceans Conference in October 2015, throughout 2016, there remained considerable confusion within NOAA as to what the monument would entail, including very basic questions such as:

the types of fisheries that are in the monument area;

See full text

whether fishing permits are required, the term of fishing permits, and the effect of the designation on existing permits;

See full text


See full text

whether conditions could be placed on permits by NOAA, or whether a rule-making would be required

See full text

Ultimately, they concluded that a rulemaking would be required:


See full text

The need for a rulemaking also raises the critical question of whether the Administration ever had the legal authority to implement a monument in the Atlantic Ocean in the first place. But, more on that later . . . Our series will continue next week with an analysis of the legal issues arising from the imposition of a Marine National Monument in an area that is already subject to a comprehensive regulatory scheme.

Any questions, commentary, or criticisms? Please e-mail us at kara.mckenna@causeofaction.org and/or cynthia.crawford@causeofaction.org.

Cynthia F. Crawford is a Senior Counsel at Cause of Action Institute.
Kara E. McKenna is a Counsel at Cause of Action Institute. You can follow her on Twitter @Kara_McK

[1] This term is not defined in the Proclamation.

[2] This term is not defined in the Proclamation.

[3] Citizen, national, or resident alien of the United States.

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06/8/2017

Is President Trump Directing Agencies To Ignore Democrats’ Oversight Requests?

The transparency community was abuzz last week when Politico reported that the White House was directing federal agencies to ignore oversight requests from Democratic legislators. According to unnamed “Republican sources,” a White House lawyer “told agencies not to cooperate” with record requests from the minority. Politico described this as “amount[ing] to a new level of partisanship in Washington[.]”  But is that the case?

There is a dearth of publicly available evidence as to the Trump Administration’s actual policy. The White House has been cagey in providing clarification. Politico reported that a White House spokesman insisted that agencies should “accommodate the requests of chairmen, regardless of their political party.”  But Republicans control both the House and the Senate and all congressional committee chairmanships, so the official policy, if any, remains unclear.

Some Democrats have claimed that officials at the Office of Personnel Management and the General Services Administration refused to disclose information without a committee chairman co-signing an official request. Cause of Action Institute filed Freedom of Information Act (“FOIA”) requests with those agencies today (here and here) in an effort to verify what Democrats might have been told because—again—the relevant records are not publicly available and agency officials deny the Democrats’ allegations. Similar stories of agencies remaining silent when approached by Democrats have circulated over the past few months.

The Project on Government Oversight offered a measured response to Politico’s report, suggesting that the Administration’s course appears consistent with Reagan-era Department of Justice (“DOJ”) guidance that effectively directs agencies to process requests from individual Members under the FOIA. That difference in treatment, as compared to requests from committees or those with official oversight responsibility, is particularly relevant to an agency’s inability to withhold information under 5 U.S.C. § 552(d).

A recent opinion letter from DOJ’s Office of Legal Counsel (“OLC”), however, does appear to complicate matters. The letter suggests that the Trump Administration may be charting a course into newer and less transparent waters:

“The constitutional authority to conduct oversight—that is, the authority to make official inquiries into and to conduct investigations of executive branch programs and activities—may be exercised only by each house of Congress or, under existing delegations, by committees and subcommittees (or their chairmen). Individual members . . . do not have the authority to conduct oversight in the absence of a specific delegation . . . . Accordingly, the Executive Branch’s longstanding policy has been to . . . accomodat[e] congressional requests for information only when those requests come from a committee, subcommittee, or chairman authorized to conduct oversight.”

Unfortunately, the OLC opinion misframes the issue and, in doing so, provides a distorted view of the law. True: an individual Member’s request for information—regardless of political affiliation—“is not legally enforceable through a subpoena or contempt proceedings,” and, in that sense, the Member lacks “constitutional authority” to conduct formal oversight.  But nothing prohibits a legislator from requesting information for his own purposes, on behalf of a constituent, or to try to hold the Executive Branch accountable in a more colloquial sense of “oversight.”  As former White House attorneys Andy Wright and Justine Florence argue, Republicans often sought disclosure of records from the Obama Administration when they were not in control of Congress. In such instances, federal agencies should not, in theory, have ignored the requests, but instead followed DOJ guidance and processed them under the FOIA, just like a record request from any member of the general public.

The track record of the Obama Administration, in this respect, is hardly flattering. Indeed, Wright and Florence’s claim that the Trump “[A]dministration believes members of Congress asking for information about federal agencies are entitled to even less than members of the public,” is loaded with irony.  As attorneys in the Office of the White House Counsel, Wright and Florence personally helped President Obama lead one of the least transparent governments in American history. Cause of Action Institute was the first to expose the Obama Administration’s practice of “White House equities” review, which lead to the severe delay and occasional ignoring of both FOIA requests and congressional record requests, including those that had been issued under subpoena. Individual Members and committee chairmen alike were subject to this politicized review process.  If the Executive Branch has formally adopted a policy to obstruct Democrats, it would be a continuation of President Obama’s legacy of opacity and secrecy.

To summarize, the relevant legislative history and DOJ guidance states that a Member of Congress enjoys a statutory right of public access under the FOIA (and, similarly, the Privacy Act) to records of the administrative state. Minority oversight requests should be considered FOIA requests as a matter of course.  An individual Member would thus have the same right as anyone to “enforce” his request under the FOIA’s judicial review provision, 5 U.S.C. 552(a)(4)(B).  It is improper for OLC to suggest that agencies should only provide “discretionary responses,” say, “to correct misperceptions or inaccurate factual statements.”  An agency may exercise discretion to prioritize a Member’s request or to release exempt material from responsive records.  But an agency lacks the discretion to ignore a Member of Congress simply because of his or her political affiliation or position in leadership.

Ryan Mulvey is Counsel at Cause of Action Institute.

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06/8/2017

Criminal Forfeiture Protects Property Owners More Than Civil Forfeiture

In two months, the Supreme Court of the United States has issued two opinions about forfeiture, the set of legal rules by which ownership in seized property is transferred to the State. Civil asset forfeiture is currently much in the news and recent opinions may obliquely portend some broad changes to that area of law, although the rulings do not expressly say so.  What the rulings do show is the shocking lack of protections available to property owners whose property is divested through civil forfeiture proceedings compared to when property is divested through criminal forfeiture.  In civil forfeiture, owners frequently have lower protections against losing their rights and face higher thresholds to recover their property than convicts whose property is forfeited as part of sentencing for their criminal acts.  Injustices arising out of criminal forfeiture, at least, are now under repair.  The Supreme Court may now be in a position to address civil forfeiture.

In Honeycutt v. United States, 581 U.S. ___, No. 16-142, slip op. (June 5, 2017), the Court limited the ability of prosecutors to use conspiracy and joint and severable liability doctrines to extend the effects of criminal forfeiture, defined as the statutory power of the “Government to confiscate property derived from or used to facilitate criminal activity.” Honeycutt, slip op. at 3.  A hardware store owner sold $400,000 of a product used to make methamphetamine.  The owner and his brother were both indicted and the Government sought forfeiture of about $269,000 profit from those sales.  As an hourly employee of the store owner, the convicted brother “never obtained tainted property,” Honeycutt, slip op. at 11, but rather had only been paid his wages.  The owner pleaded guilty and agreed to forfeit $200,000 as part of the sentence; a jury acquitted the brother of some counts but convicted him on some conspiracy charges; and the government sought to hold him jointly liable for the remaining $69,000 of profit by seeking criminal forfeiture from him.  The question, therefore, was whether the applicable statute allows conspiracy-related or joint and several liability for forfeiture judgments against convicted defendants who did not acquire “tainted property.”

The Court answered No. Criminal forfeiture may only be applied in judgment against persons actually convicted of a crime, only to the convicted person’s (and no other person’s) interest in the forfeited property, and only as a judgment arising from the counts on which the defendant was actually convicted.  Moreover, the statute at issue limits forfeiture “to the person’s property obtained directly or indirectly as a result of the crime,” and to property “acquired … during the period of the violation” for which there “was no likely source for such property other than” the crime. Honeycutt, slip op. at 4—5, 8.  Given those limitations, the Court ruled that

“Congress did not authorize the Government to confiscate substitute property from other defendants or coconspirators; it authorized the Government to confiscate assets only from the defendant who initially acquired the property and who bears responsibility for its dissipation. Permitting the Government to force other co-conspirators to turn over untainted substitute property would allow the Government to circumvent Congress’ carefully constructed statutory scheme….”   Honeycutt, slip op. at 9.

The Court ruled that the text of the statute at issue showed Congress had imported some in personam (literally, against the person) aspects into criminal forfeiture sentencing, but had retained the focus on “tainted property” that is included in purely in rem (literally, against the thing) civil forfeiture proceedings. Honeycutt, slip op. at 10.

By requiring some nexus between personal irresponsibility of the owner and the penalty of transferring ownership to the State, criminal forfeiture is more protective of property rights than civil forfeiture. As civil forfeiture law now stands, prior to eliciting evidence in the record of the brother having earned only an hourly wage, the government could have seized property of that value from the brother based on probable cause that it was “related” to a crime (based on evidence from the owner’s guilty plea) and likely forfeited it successfully.  At the very least, in that scenario, the burden of proving that the brother had innocently earned the $69,000 would have shifted to the brother before the money was ordered to be returned.

Indeed, civil asset forfeiture requires no nexus between any person’s individual responsibility and a proven crime, but rather only a nexus between the property at issue and a suspected crime.   This difference arises out of the distinction between in personam and in rem jurisdiction.  In effect, that doctrinal distinction has been carried so far that civil asset forfeiture can divest even innocent owners of property on the basis of mere probable cause to believe property is connected with a suspected crime, even if no crime is ever proved, even if there is not enough evidence to charge anyone with a crime, and even if the property was involved only through a third-party unknown to the owner.  Some procedures allow an innocent owner to recover property, but they are expensive and require legal involvement and provide no assurance that the property will be returned.

The injustice that can be worked against criminal defendants by these latter kinds of hurdles were displayed in Nelson v. Colorado, 581 U.S. ___, No. 15-1256, slip op. (April 19, 2017). After conviction, the State of Colorado sets up inmate accounts for defendants, and money they earn in jail is allocated from those accounts to pay costs, fees, and restitution.  When convictions are reversed, some defendants can seek refunds under Colorado’s Exoneration Act.  But under the Exoneration Act, a defendant must “prove her innocence by clear and convincing evidence….” Nelson, slip op. at 12.   The Supreme Court held that the Exoneration Act refund scheme did not comport with procedural due process requirements.

According to the Court, a state “may not presume a person, adjudged guilty of no crime, nonetheless guilty enough for monetary exactions;” instead, “[t]o comport with due process, a State may not impose anything more than minimal procedures on the refund of exactions dependent upon a conviction subsequently invalidated.” Nelson, slip op. at 7, 10.  But to most outside observers, that is exactly what often happens in civil asset forfeiture.  In civil forfeiture, no crime need be proved or even charged against the owner or, indeed, anyone else.   In fact, the guilt or innocence of the owner whose property is forfeited is irrelevant to an underlying civil forfeiture action, and a separate action or affirmative defense of remission or other mitigation must be initiated by an innocent owner.

If the Court’s limitation to nothing “more than minimal procedures” for a wrongfully convicted defendant to recoup criminal exactions is correct, then why should anyone, particularly an innocent owner in a civil asset forfeiture matter where no crime need be proved, still be required to participate in any action, even civil, where they might have to show by a preponderance or higher burden that they were innocent or otherwise entitled to maintain their property? The situation is even more egregious where civilly forfeited property was used by someone else without the owner’s knowledge.  The Supreme Court’s work in reforming the law governing forfeiture is only half done, at best.

Mike Geske is counsel at Cause of Action Institute

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06/7/2017

Cause of Action Institute Applauds AG Sessions’ Termination of Settlement Fund Payouts to Third-Party Groups

Cause of Action Institute (“CoA Institute”) applauds Attorney General Jeff Sessions’ prohibition on settlement agreements that include a payment or loan to non-governmental entities that are not parties to the dispute. On June 5, 2017, AG Sessions issued a memorandum entitled “Prohibition on Settlement Payments to Third Parties” to senior Department of Justice (“DOJ”) officials.[1]  The memorandum prevents all DOJ attorneys from “enter[ing] into any agreement on behalf of the United States in settlement of federal claims or charges, including settling civil litigation[.]”[2]  AG Sessions has taken an important first step to reign in agency overreach that impels private companies to foot the bill for an administration’s otherwise unfunded policy objectives.

Cause of Action Institute President and CEO John Vecchione: “I applaud Sec. Sessions for his bold reversal of the previous administration’s unwise pattern of using settlements with private companies to fund favored political projects. These deals were negotiated behind closed doors and wound up funneling money to third party groups rather than to the victims of the Defendant’s alleged misconduct. The government should not abuse the settlement process to fund favored political causes, often in direct contravention of Congress’ appropriation authority. The Trump administration’s strong stance against these ill-conceived deals is a step in the right direction, but this policy should be codified in statute as well.”

For years, CoA Institute has raised concerns about these settlement practices. Two years prior to the DOJ memorandum, CoA Institute began investigating  DOJ’s multi-million dollar, closed-door settlements with banks over their alleged faulty mortgage practices.  The opaque settlement process provided no accountability and prevented congressional oversight of what should be taxpayer funds.[3]  We submitted a FOIA request and a petition for rulemaking to seek clarity from DOJ regarding its statutory authority to enter into these settlement agreements that require private companies to allocate significant settlement funds to third-party groups.[4]  We also raised concerns about how—and who—selected the third-party recipients of the payouts.  If DOJ required the payouts go to specific third-parties, then the administration could direct millions of dollars to any administration-favored organization.  The bank settlements also provided an incredible incentive for the banks to “donate” the money to such favored causes—a 2-to-1 penalty forgiveness provision.  In the bank settlement cases the settlement funds were being directed to liberal groups approved by the Department of Housing and Urban Development and the Department of the Treasury.

CoA Institute has continued to monitor this issue as other agencies, often in conjunction with DOJ, entered into settlement agreements providing money to third-party groups unrelated to the alleged violations.[5]  Recently, we wrote a letter to EPA Administrator Scott Pruitt regarding an Obama-era settlement with Harley-Davidson, Inc. that funneled $3 million to a project unrelated to the alleged violations.[6]  The Harley-Davidson consent decree follows the same pattern of abuse: an agency brings an enforcement action against a company that is settled quickly behind closed doors and provides for a payout to a politically aligned organization.  In the Harley-Davidson case, EPA required a $3 million “Emissions Mitigation Project” to remedy the alleged violations of the Clean Air Act.

While the DOJ memorandum provides a carve-out for payouts that “directly remed[y] the harm sought to be redressed,” the Harley-Davidson agreement fails to connect the alleged violation—excess gas and nitrogen oxides emissions—to the project—replacing wood-burning appliances in the northeast. Given the lack of the required nexus, EPA overstepped its authority by requiring Harley-Davidson to fund the changeout project and should look to replace that project with one that remedies the alleged violations.  Further, the project replaces these appliances by having a third-party group distribute funds to individuals that buy new appliances.

In 2009, Congress increased a tax credit to help fund wood-burning appliance changeouts, but in 2011, the following Congress slashed that tax credit. EPA’s requirement that Harley-Davidson fund the wood-burning appliance project essentially supplants the congressional appropriations process by providing funding for a program that Congress defunded.

Congress has also raised concerns about this usurpation of its authority to spend funds. In order to prevent these projects from reemerging under a new administration, Rep. Bob Goodlatte (R-Va.) has introduced the Stop Settlement Slush Funds Act of 2017 which has passed out of committee to be taken up by the full House.[7]  This legislation will prevent all agencies, not just DOJ, from entering into these slush-fund settlement agreements with non-governmental entities that are not parties to the litigation.  This bill will remove agencies’ ability to divert funds to politically-aligned third parties and allow them to be disbursed to actual victims of the alleged violations or deposited in the Treasury, as required by law.

[1] Memorandum from Jeff Sessions, Attorney Gen., U.S. Dep’t of Justice, to U.S. Attorneys et al. (June 5, 2017), available at https://www.justice.gov/opa/press-release/file/971826/download.

[2] Id.

[3] See Dan Epstein, Obama DOJ Channels Bank Shakedown Money to Private Groups, Investor’s Bus. Daily (July 7, 2015), http://www.investors.com/politics/perspective/justice-department-says-bank-shakedowns-public-service/.

[4] Press Release, Cause of Action Inst., Cause of Action Launches Investigation into the Justice Department’s Settlements with Large Financial Firms (June 17, 2015), https://causeofaction.org/cause-of-action-launches-investigation-into-the-justice-departments-settlements-with-large-financial-firms/.

[5] See generally Congress to Consider a Bill to Halt Government Slush Funds, Cause of Action Inst. (Sept. 7, 2016), https://causeofaction.org/growing-concern-over-controversial-mortgage-settlements/.

[6] Press Release, Cause of Action Inst., Pruitt Should Reconsider Obama-Era Settlement with Harley-Davidson that Funnels Millions to an Unrelated, Politically-Favored Project (June 1, 2017), https://causeofaction.org/pruitt-reconsider-obama-era-settlement-harley-davidson-funnels-millions-unrelated-politically-favored-project/.

[7] Stop Settlement Slush Funds Act of 2017, H.R. 732, 115th Cong. (2017).

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06/7/2017

Antiquities Act Review – Bears Ears and Beyond

We recently began our series of blog posts examining the history, purpose, limitations, and the Trump administration’s review of the Antiquities Act of 1906, 54 U.S.C. §§ 320301 – 320303 (“Antiquities Act” or the “Act”). This week we discuss the status of President Trump’s Executive Order on the Review of Designations Under the Antiquities Act.

As discussed in our previous posts, the Antiquities Act permits a president to proclaim “historic landmarks, historic and prehistoric structures, and other objects of historic or scientific interest” as national monuments. To protect these objects, the President also is permitted to “reserve parcels of land as part of the national monument” subject to the limitation that “the parcels are confined to the smallest area compatible with proper care and management of the objects to be protected.[1]

On April 26, 2017, President Trump signed the Executive Order on the Review of Designations Under the Antiquities Act (“Antiquactities Act E.O.”), which directs the Secretary of the Interior to review all national monuments created by the Antiquities Act since January 1, 1996 that measure more than 100,000 acres or lacked appropriate public input. In addition, review of some Marine National Monuments are the subject of section 4 of the April 28, 2017 Executive Order on Implementing an America-First Offshore Energy Strategy (“Offshore Energy E.O.”).

In conducting its review of these national monuments, the Department of Interior is seeking public comments related to the seven considerations set forth in the Antiquities Act E.O.: (1) whether the monument designations are limited to “the smallest area compatible with the proper care and management of the object to be protected”; (2) whether the designated lands are “historic landmarks, historic and prehistoric structures, [or] other objects of historic or scientific interest” within the meaning of the Act; (3) the impacts of designations on the use of Federal lands; (4) the impacts of designations on non-Federal inholdings or lands near the monument boundaries; (5) concerns of “State, tribal, and local governments affected by the designation”; (6) whether there are sufficient Federal resources to manage the designated lands; and (7) other factors deemed appropriate by the Secretary.

Comments related to the Bears Ears National Monument in Utah closed on May 26, 2017. Comments related to all other national monuments are open until July 10, 2017. Pursuant to the Antiquities Act E.O., the Secretary of the Interior must provide an interim report regarding Bears Ears by June 10, 2017 and a final report on all monuments under review by August 24, 2017. The Offshore Energy E.O. requires a final report from the Secretary of Commerce regarding certain Marine National Monuments by October 25, 2017.

Cause of Action Institute (“CoA Institute”) submitted comments regarding Bears Ear National Monument on May 26, 2107. Our comments, which can be read here focused on several key issues, such as the lack of transparency in the monument designation process and the lack of sufficient Federal resources to manage the designated lands.

Several days after submitting our comments, CoA Institute received the first installment, totaling some 1,300 records, in response to one of our two Freedom of Information Act (“FOIA”) requests seeking records related to Bears Ears National Monument. That FOIA request was based on conversations with local stakeholders and publicly available reports and sought, among other things, records relating to incidents of looting, vandalism, and damage to antiquities located on Bureau of Land Management-held (“BLM”) lands in San Juan County, Utah that ultimately were included as part of Bears Ears National Monument on December 28, 2016.

Several of the responsive records released to CoA Institute substantiate the concerns we raised in our May 26, 2017 comments. First, in regards to Federal resources to manage the designated lands, the records demonstrate that there are, at most, only two BLM rangers who patrol the entire million-plus acres of BLM-administered land in San Juan County. This is roughly the same number of BLM Rangers who patrol the approximately 2.5 million acres in Grand Staircase Escalante National Monument and the BLM Kanab Field Office.

Read the released emails here

Although Bears Ears also has a significant number of volunteers who act as site stewards, the released records show that patrolling these vast resources is complicated. For example, responding to incidents that occur at archaeological sites requires not just BLM Rangers, but also BLM archaeologists to assess damage and remediate as necessary. In some instances, Rangers and archaeologists can only access the damaged sites with the aid of climbing equipment. Because BLM does not have policies or certifications related to rock climbing or repelling and thus may not have qualified personnel on site, some of these investigations have been barred from proceeding. Resources to patrol and protect this area were and continue to be an issue, as stated by a BLM employee in response to a question assuming that monument designation would confer additional law enforcement resources: “Funding and resources are separate issues from land use designations. They don’t always go hand in hand.”

Read the released emails here

In our comments regarding Bears Ears, CoA Institute also highlighted the lack of transparency in the monument designation process and suggested several remedies for addressing transparency concerns moving forward, including releasing information regarding incidents of looting and vandalism of antiquities on the lands reserved as part of the monument. The documents released to us last week illustrate why this is necessary. In the months prior to the creation of the Bears Ears National Monument, there were conflicting reports regarding the number of incidents of looting and vandalism in the proposed monument area. Individuals on both sides of the monument advocacy efforts used these conflicting reports to their own ends, adding additional confusion to an already heated debate.

Read the released emails here

The confusion regarding incident reports was also apparent within the BLM itself—not because BLM did not have the data regarding the incidents, but rather because it did not have an efficient, timely reporting mechanism in place to make such information easily retrievable.

As the Secretary of the Interior continues his review of recent monument designations, CoA Institute will continue to examine and release records relevant to this effort as they are received.

Any questions, commentary, or criticisms? Please e-mail us at kara.mckenna@causeofaction.org and/or cynthia.crawford@causeofaction.org

Cynthia F. Crawford is a Senior Counsel at Cause of Action Institute.
Kara E. McKenna is a Counsel at Cause of Action Institute. You can follow her on Twitter @Kara_McK

[1] 54 U.S.C. § 320301 (2014)

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06/6/2017

CoA Institute Investigates EPA’s “Scientific Integrity” Officer

Cause of Action Institute (“CoA Institute”) today filed a Freedom of Information Act (“FOIA”) request with the Environmental Protection Agency (“EPA”) to investigate claims of politicization at the Office of Scientific Integrity. Dr. Francesca Grifo, the agency’s Scientific Integrity Officer, who previously worked at the Union of Concerned Scientists, is accused of cozying up with liberal interest groups while “actively working from within to thwart” the new policy agenda of President Trump and Administrator Pruitt.

Dr. Grifo was hired in 2013 under President Obama to be an internal watchdog for the quality of the science and technology used in agency decision-making. Yet her hiring caused a bit of a stir at the time, with Forbes calling it a case of the “blind leading the blind.” “If you needed to hire a person to head the financial integrity division of the Securities and Exchange Commission, how about someone who had held that position in Bernie Madoff’s investment firm?”

Four years later, it remains unclear how Dr. Grifo has worked to improve the situation at the EPA, which regularly creeps into the news for administrative overreach, out-of-touch regulatory proposals, political favoritism, and, most recently, the troubling resistance of a handful of its employees to the new Administration. Our FOIA request seeks information concerning whether and to what extent Dr. Grifo has engaged in partisan efforts in her position as Scientific Integrity Officer.

Ryan Mulvey is Counsel at Cause of Action Institute.

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