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03/3/2017

Transparent Procedures about the President’s Tax Returns

As we explained earlier this week, post-Watergate reforms to the Internal Revenue Code declared taxpayer’s tax returns and related information confidential.  Disclosure of confidential taxpayer information is the exception and is prohibited except for enumerated, limited purposes and situations that are “authorized by statute.”  Even when disclosure is statutorily authorized, the Internal Revenue Code imposes additional procedures so that, absent prior consent, disclosure of confidential taxpayer information to the government for purposes other than administering or enforcing tax law becomes a matter of public record.

Recent debate about President Trump’s tax returns has provided a case study about how the confidentiality rule and limited disclosure exceptions operate, both legally and politically. Under 26 U.S.C. § 6103(f), the House Ways and Means Committee and the Senate Finance Committee can request access to examine any taxpayer’s information (including the president’s) without the taxpayer’s consent, but only subject to procedural safeguards designed to make the fact of Congress’s request publicly transparent.  Last week, the Ways and Means Committee considered but decided against invoking that authority to obtain the president’s returns.  On February 27, 2017, the Democrats forced the entire House to take a floor vote on whether the Committee should invoke the statute.  Again, along party lines, the decision was made not to seek the President’s returns (although two Republicans voted “present” rather than nay).

Thereafter, in a March 1, 2017 letter, Democratic members of the Senate Finance Committee requested that their Chairman, Orrin Hatch (R-UT), use the same statutory authority to obtain President Trump’s tax returns for the Committee’s review.  The Democrats argued that the information would help investigate suspicions about the President’s business and political relationships.  Senator Hatch, in a joint letter with House Ways and Means Committee Chairman Brady, rejected the Democratic members’ request.  The Senate and House Chairmen argued that their Committees’ authority to obtain taxpayer information should only be invoked when tax improprieties or abuse of taxpayer rights were suspected, and that broader uses to investigate business and political relationships would be an “abusive” and “dangerous precedent.”

The press has widely reported these events and arguments, as it should. As we wrote earlier this week, “by requiring that every congressional request for an American taxpayer’s confidential information is transparent, the Tax Reform Act of 1976 implicitly relies on the press and third-party watchdog groups to make that information known to the broader public, hopefully, in an accurate and user-friendly form.”  The public is indeed paying attention and some constituents are vigorously inquiring about their representatives’ and senators’ position about the President’s tax returns.  Engagement like that indicates that the statutory protections promoting transparency for congressional requests to see confidential taxpayer information are operating as they should.  Lawmakers must weigh the value of confidentiality whenever they consider seeking access to a taxpayer’s protected information and, when they choose disclosure over confidentiality (or when, as in this instance, they vote against disclosure), constituents will know and be able to use that information in evaluating the work of their representatives.

Mike Geske is counsel at Cause of Action Institute

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03/3/2017

DOJ IG Agrees to Review Conflict of Interest in FBI Hillary Clinton Investigation

Yesterday, Attorney General Jeff Sessions announced that he would recuse himself from any investigation into President Donald Trump’s election campaign.  That was the right decision to make.  The Department of Justice (“DOJ”) and Federal Bureau of Investigation (“FBI”) must remain clear of all appearances of impropriety.  All DOJ investigations should be, and be seen to be, fair and impartial.

Unfortunately, in the waning days of the Obama Administration, certain Justice officials refused to recuse themselves when facing circumstances similar to Mr. Sessions.  On October 25, 2016, we wrote to the DOJ Office of the Inspector General (“OIG”) requesting an investigation into the failure of FBI Deputy Director Andrew McCabe to recuse himself from investigations of Virginia Governor Terry McAuliffe and former Secretary of State Hillary Clinton, even though Mr. McCabe’s wife, Dr. Jill McCabe, received over $675,000 in money and in-kind contributions from Governor McAuliffe’s political action committee and the Democratic Party of Virginia.  Equally noteworthy, Governor McAuliffe met with Dr. McCabe to urge her to run for office as a Democrat on March 7, 2015, just five days after The New York Times broke the story on former Secretary Clinton’s use of a private email system.

Just this week, on February 23, the DOJ OIG wrote back, informing us that it has opened an investigation into Mr. McCabe’s failure to recuse himself.  This letter came on the heels of a public notice in late January announcing a broader investigation in response to inquiries from Congress and other outside groups.  We are pleased to hear that the DOJ OIG took our allegations seriously and look forward to the result of the investigation.

 

 

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02/27/2017

The Press and the President’s Tax Returns

All this month The Atlantic, along with many other publications, reported that the House Ways and Means Committee took up a request by one of its Democratic members to obtain President Trump’s tax returns by invoking a venerable provision of the federal Tax Code. In the time since Congressman Bill Pascrell, Jr. (D-NJ) made his request on February 1, 2017, a broad variety of publications have followed, reported, explained, and opined upon the Committee’s consideration of the matter.

On February 14, 2017, along strict party lines, the Ways and Means Committee voted not to invoke its statutory authority to examine President Trump’s tax returns. The Committee’s action received considerable news coverage.  The most common theme among the reports, regardless of the correspondent’s view about what should happen with President Trump’s tax returns, was that the statute at issue is “obscure” or “little known.”  However that view of the statute got started, one need only read a handful of the reports to see how easily the media can fall victim to its own echo chamber.

The statute considered by the Committee, 26 U.S.C. § 6103, is anything but obscure. It is, in fact, one of the foremost reforms arising out of the Watergate scandal.  The investigation and hearings into the burglary led to the discovery that President Nixon had routinely abused the IRS’s audit and investigatory powers, particularly against his political opponents.  The Articles of Impeachment against President Nixon charged that he had “endeavored to obtain from the Internal Revenue Service … income tax returns for purposes not authorized by law.”  In the wake of those events, Congress added privacy protections to taxpayer information held by the IRS and rearranged existing protections (the subsection the Committee considered was one of the latter).  In particular, the Tax Reform Act of 1976 reformed tax privacy to emphasize that tax returns and related information “shall be confidential.” To guard against abuse by future presidents and other government officials, Congress prohibited disclosure of tax returns and related information “except as authorized” by statute. Under this reform, confidentiality became the rule and disclosure, the exception.

The newly strengthened privacy protections, backed up by criminal and civil penalties for unlawful mischief, are designed to ensure that IRS information is used only to administer taxes and related programs, such as social security, and that any disclosure is strictly limited by tailored safeguards and procedures designed to prevent improper violation of taxpayer confidentiality. Over time, politicians have found ways around the statute’s safeguards.  A number of well-documented, egregious, and large scale violations during the Obama administration, which were directed against President Obama’s political opponents, are described in our Investigative Report: Presidential Access to Taxpayer Information (which also provides more detail about the statute). By and large, however, government actors — especially those not administering taxes — are legally and procedurally barred from publishing or using confidential information about any taxpayer absent prior consent.

Congress, like the Executive Branch, is not immune from the temptation to use confidential taxpayer information held by the government. To limit the risk of abuse by legislators, the applicable statute strictly limits congressional access to particular circumstances and subject to specifically tailored safeguards.  Under 26 U.S.C. § 6103(f), the section of the statute that Rep. Pascrell invoked, three congressional committees, including the Ways and Means Committee, can request access to examine any taxpayer’s information (which would include the President’s) but only subject to procedural safeguards designed to make the fact of their request publicly transparent.

First, the Chair of the Ways and Means Committee must send a written request to the Secretary of the Treasury (that is, a third party from a separate, co-equal branch of government) that describes the information sought (like returns from named taxpayers for specific periods). The Secretary of the Treasury, in turn, must record and then regularly and publicly report the number and types of these requests.  Even then, the Secretary may furnish confidential tax information that can be associated with or identify a specific taxpayer only when the Committee members are meeting alone in executive session, unless the specific taxpayer provides written consent prior to any broader disclosure.  Those safeguards ensure that congressional access to any taxpayer’s confidential information becomes a matter of public record.

But how many taxpayers have the time, ability, or inclination to read any part of the Congressional Record, let alone all of it every day, or even a portion of their own representative’s report and reaction about a committee’s work? Indeed, by requiring that every congressional request for an American taxpayer’s confidential information is transparent, the Tax Reform Act of 1976 implicitly relies on the press and third-party watchdog groups to make that information known to the broader public, hopefully, in an accurate and user-friendly form.  In the present case, however, the press missed their own boat by failing to understand the purpose and context of the statute at issue.  If the press intends to improve its reputation for reporting the facts accurately, it needs to take the time, at the very least, to understand the laws and government procedures it’s trying to report.

Mike Geske is counsel at Cause of Action Institute

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02/24/2017

Bob Bauer Agrees With Us About Commissioner Weintraub, But Doesn’t Want to Do Anything About It

Does the rule of law matter and should government officials abide by the ethical obligations that govern them?  Robert Bauer, former White House Counsel for President Obama, answers: “Not so much.”

On Tuesday, in furtherance of its mission to hold our government accountable, Cause of Action Institute (“CoA Institute”) sent a letter to the Federal Election Commission (“FEC”) Inspector General (“IG”) and Designated Agency Ethics Officer asking them to investigate whether Commissioner Ellen Weintraub violated government ethics standards when she acted outside her authority as a commissioner while using FEC resources.  Ms. Weintraub issued a statement on FEC letterhead, posted to the FEC website, urging President Trump to provide evidence of his claims about voter fraud during the 2016 elections, and then went on national media outlets to promote that statement.  In our letter, we explained that alleged voter fraud and New Hampshire criminal violations, the two subjects of Ms. Weintraub’s statement, are outside the FEC’s jurisdiction and therefore her advocacy on this matter was an improper use of government property and official time.  We also pointed out that, during the Obama administration, Ms. Weintraub herself had expressly rejected any involvement in questions of voter fraud because such matters were outside the FEC’s jurisdiction.

Commissioner Weintraub responded to our letter by providing a post hoc rationalization that her statement was in some manner geared to determine whether “the expense of these buses [alleged to have been used in the voter fraud] has not been accounted for on any campaign-finance filing.”  Without addressing her prior statement about voter fraud being outside of FEC jurisdiction, she also alleged, without citation to any authority, that her statement about the investigation of voter fraud was proper because it was within her “official duties as a federal election official to comment publicly on any aspect of the integrity of federal elections in the United States.”

Yesterday, former White House Counsel Bauer rode to Ms. Weintraub’s defense with a post on his campaign-finance blog, More Soft Money Hard Law.  Nearly lost among Mr. Bauer’s various defenses of Ms. Weintraub’s behavior is a key concession that vindicates CoA Institute’s letter to the FEC.  As he wrote: “Are Weintraub’s comments directly and squarely within the jurisdiction of the Commission, such that she can take some action in response to the President’s failure to produce the requested evidence?  No[.]”  To anyone who believes in the rule of law—that old-fashioned notion that laws, standards, and rules are to be applied regardless of one’s rank or standing in society—that should have ended the matter.  Ms. Weintraub, in her role as FEC Commissioner, acted outside her authority; applicable ethics rules prohibit officials from using official time and government property in unauthorized conduct; Ms. Weintraub continued her unauthorized conduct; she should accordingly be the subject of an ethics investigation.

But Mr. Bauer demurs.  Instead of describing the governing ethical standards and their application to Ms. Weintraub’s behavior, he claims that, “as a 13-year Commissioner, [Ms. Weintraub] should be free to take notice of any claims that bear on the integrity of elections.”  Of course she is free to “take notice” of such claims; no one has argued otherwise.  The issue, however, is whether she can expend government time and resources in promoting the notice she takes.

The length of an official’s tenure at an agency has no bearing on whether she is permitted to operate outside the statutory authority creating the agency’s jurisdiction.  If Ms. Weintraub felt moved by these issues, she was free to opine in her personal capacity.  But using government property and official time to advance personal views that are—as Mr. Bauer himself admits—outside the FEC’s jurisdiction was improper.

Unable to find a valid basis to defend Ms. Weintraub’s behavior, Mr. Bauer’s only remaining move is to impugn CoA Institute’s motives and methods.

First, the motives.  Apparently unconcerned with Ms. Weintraub’s unethical use of government property and time, Mr. Bauer writes that “Budgets are not balanced on the savings achieved by stopping this level of activity.  There is very little of a principle to be upheld here.”  Although the volume of money used improperly may not be enough to balance a budget, the principle at issue is vital and one that CoA Institute works every day to uphold.  Congress creates federal agencies to accomplish statutory objectives and funds them with the taxpayers’ money.  Public officials are hired and paid solely to accomplish those objectives.  Unfortunately, agencies are notorious for straying beyond their authority, wasting taxpayer resources, interfering with the free market, and undermining the liberties that are Americans’ birthrights.  Mr. Bauer may not care that Ms. Weintraub exceeded her authority, but we do.  Mr. Bauer may not be upset with the unchecked growth of power in the administrative state, but we are.

Mr. Bauer also repeats Ms. Weintraub’s claim that our letter was an effort to silence the commissioner, stating that our aim is to “suppress[] unwanted speech” and our “purpose is clearly to strike back at the Weintraub [sic] for the substance of her comments and have her think twice about repeating them while ‘under investigation.’”  What does Mr. Bauer know about our motives?  Did he interview those who drafted the letter?  Did he even go to our website to look at our mission statement or review the kinds of cases we take on?  Since its inception over five years ago, CoA Institute has existed to provide oversight of federal agencies and hold accountable the officials who exercise so much control over the lives of everyday Americans.  We are firm defenders of the First Amendment, and if Ms. Weintraub had made the same statement in her personal capacity, we would have applauded her right to do so.  But that is not what happened.  In acting in this matter in her official capacity, she exceeded her statutory authority, and for that, she should be held accountable.  We do that for apparent violations of all kinds by government officials, regardless of their political affiliation, including former Secretary of Agriculture Tom Vilsack and former Secretary of State Colin Powell.

As for methods, Mr. Bauer suggests that CoA Institute’s request for an investigation will cost more money than it will save and thus, if we were really concerned about preserving government resources, we should have remained silent.  As he stated: “But it cannot escape attention that to make its point, the organization urges a remedy that requires throwing real government money away, on an ‘investigation.’  Ms. Weintraub’s statement-and-tweets communication on voter fraud is a bargain compared to the paper and staff time that may be burned in an IG inquiry.”  Here, Mr. Bauer appears unaware of the economic concept of a sunk cost.  Federal tax dollars already are being spent to employ both an IG and Designated Agency Ethics Officer at the FEC, and the precise purpose for which these officials and their offices exist is to administer government ethics rules and oversee investigations into wrongdoing.  Our request that they allocate a portion of their time to determine whether Ms. Weintraub violated her ethical obligations in this matter is thus entirely proper.  These officials exist to investigate misconduct and we are merely bringing to their attention a matter that they should be investigating of their own accord.  And if we’re wrong, which Mr. Bauer does not believe, we’ll post a follow-up, just as we did for former Secretary Vilsack.

Finally, Mr. Bauer’s attempts to justify Ms. Weintraub’s unethical behavior by pointing to President Trump’s use of “Twitter to visit hell on a department store chain that discontinued his daughter’s line of clothing,” is a logical fallacy.  If President Trump’s action is wrong, how does that exonerate Ms. Weintraub?  Far from proving that CoA Institute acted from a partisan agenda rather than from principle, Mr. Bauer’s insinuation is a case of projection.

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

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02/21/2017

Did FEC Commissioner Misuse Her Position When She Demanded Proof of Trump’s N.H. Voter Fraud Claim?

Washington D.C. – Cause of Action Institute (“CoA Institute”) today called for an investigation into whether Federal Election Commission (“FEC”) Commissioner Ellen Weintraub violated federal ethics laws when she demanded President Trump provide evidence of his voter fraud claims in New Hampshire. Commissioner Weintraub used government property and official time to make these statements, and then promoted her statement on the FEC website, social media, and national media outlets.

In its letter, CoA Institute asks the FEC’s Office of Inspector General and Designated Agency Ethics Officer to open an investigation into whether Commissioner Weintraub violated her ethical obligations and to determine whether it is appropriate for the FEC website to continue to host the statement related to voter fraud and New Hampshire criminal violations, both of which concern matters outside the agency’s jurisdiction. Despite its name, the FEC has no authority over voter fraud claims.

CoA Institute Assistant Vice President Lee Steven: “The public must have confidence that federal agency employees are acting within their ethical requirements and that taxpayer dollars are being used for authorized purposes.  Commissioner Weintraub’s behavior threatens the public’s faith in both of these important principals.”

On February 9, 2017, President Trump was reported to have stated that voter fraud in New Hampshire cost him and former Senator Kelly Ayotte electoral victories in that state in November 2016.   In response to that report, Commissioner Weintraub issued a statement calling “upon President Trump to immediately share his evidence with the public and with the appropriate law-enforcement authorities so that his allegations may be investigated promptly and thoroughly.”   Her statement also claimed that the “scheme the President of the United States alleges would constitute thousands of felony criminal offenses under New Hampshire law.” Commissioner Weintraub subsequently appeared on CNN and public radio to discuss her statement.

When asked about her position, Commissioner Weintraub stated that “[a]s a commissioner on the Federal Election Commission, I fight every day to build the faith of the American people in our elections. . . .  It’s absolutely my right to raise public questions about another public official’s statements about the integrity of our elections.”   In October 2016, however, Commissioner Weintraub took the exact opposite stance, stating through her Twitter account that voter fraud was beyond FEC jurisdiction. In response to the question “What is the FEC doing abt [sic] recent reports of voter fraud?” she replied, “That’s outside the @FEC’s jurisdiction.  We do campaign finance *only*.  The elections themselves are handled by the states.”

FEC regulations provide that FEC members and employees are covered by the Office of Government Ethics (“OGE”) rules governing the proper use of government property and official time. Under OGE regulations, Commissioner Weintraub may only use FEC property and act in her official capacity for purposes that advance the FEC mission as authorized in law or regulation.

The full letter is available here.

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02/17/2017

Doing the Time Without Doing the Crime

Imagine that you are the CEO of large food producer, and you are notified out of the blue that your company is responsible for a salmonella outbreak possibly affecting thousands of people around the country.  If I were that CEO, I would be worried for those who were affected and disappointed that my leadership hadn’t prevented such an outbreak.  Most importantly, I would immediately act to remedy the situation.

In August, 2010, this hypothetical became a reality for Austin (“Jack”) DeCoster and his son, Peter DeCoster, the CEO and COO, respectively, of a large Iowa egg producer, Quality Egg, LLC.  Around this time, the Food and Drug Administration traced a salmonella outbreak back to the company’s eggs after it received reports of roughly 1,900 illnesses.  Jack and Peter DeCoster were unaware of the contamination in their facilities and had no knowledge that their company was sending out such eggs, but they immediately took steps to remedy the outbreak.  They voluntarily recalled millions of dozens of eggs and complied with all of the Food and Drug Administration’s investigations into their facilities.

When the United States prosecuted Quality Egg under the Food, Drug, and Cosmetic Act (“FDCA”), which prohibits the introduction of any adulterated food into interstate commerce, the company plead guilty and agreed to pay a $6.8 million dollar fine.  Jack and Peter DeCoster also plead guilty to being “responsible corporate officers” of Quality Egg under a doctrine created by the Supreme Court in United States v. Park, 421 U.S. 658 (1975).

Under the Park doctrine, a corporate officer can be found guilty of committing a misdemeanor when his or her corporate position affords them “the power to prevent” violations of the FDCA, even absent “knowledge of, or personal participation in” the violation.  Park, 421 U.S. at 6670, 676.  Because of this low burden for proving criminal culpability, and the lack of any “guilty mind” requirement, no corporate officer had ever received a jail sentence under the Park doctrine.  In the plea agreement, both the government and the DeCosters agreed that the DeCosters had no knowledge that the eggs contained salmonella and that the DeCosters had taken no action to contribute to the release of the adulterated eggs into the marketplace.  In other words, the DeCosters had neither a “guilty mind” nor had they taken any “guilty act” to commit this crime, as is required to receive a prison sentence under the Fifth Amendment Due Process Clause of the United States Constitution.

Nonetheless, at sentencing, the Judge found the DeCosters had run the company in a negligent manner, and sentenced them each to pay a $100,000 fine and serve three months in prison.

After a split panel of the United States Court of Appeals for the Eighth Circuit affirmed, the DeCosters filed a petition for a writ of certiorari, asking the Supreme Court to review the legality of their prison sentence.  The DeCosters’ petition highlights Due Process concerns that could affect anyone being charged criminally for the conduct of others.  On February 10, 2017, Cause of Action joined a “friend of the court” brief in support of the DeCosters’ petition, along with the National Association of Manufacturers and the National Association of Criminal Defense Lawyers, arguing that liability for “responsible corporate officers” has never and should never result in prison time, due to a lack of any mens rea requirement for conviction.

In our system, the government must prove in a criminal prosecution that the defendant committed a criminal act and did so with criminal intent.  As the Supreme Court has stated, “we must construe [an imprisonment] statute in light of the background rules of the common law in which the requirement of some mens rea for a crime is firmly embedded.”  Staples v. United States, 511 U.S. 600, 605 (1994).

The DOJ wants to make an example of the DeCosters.  The U.S. Attorney who filed the case stated: “Corporate officials are on notice….[c]laims of ignorance or ‘I delegated the responsibility to someone else’ will not shield them from criminal responsibility.”  But to do so at the expense of a hallmark principle of our justice system is a mistake, and marks a dangerous departure from the safeguards of American criminal jurisprudence.

The brief can be found here.

Erica Marshall is counsel at Cause of Action Institute.

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02/9/2017

Kellyanne Conway’s “buy Ivanka’s stuff” comment: wrong, but probably not illegal

Appearing on Fox News this week, Counselor to the President Kellyanne Conway encouraged people to “Go buy Ivanka’s stuff, is what I would tell you . . . I’m going to give it a free commercial here, go buy it today.”  Many government watchdogs, including us here at the Cause of Action Institute, perked up upon hearing this.  There are, of course, very strict rules prohibiting the endorsement of products by government employees.  In light of those rules, Ms. Conway’s comments seem like a clear violation.  Indeed, many attorneys and ethics experts on social media have chimed in.  Chris Lu, former Deputy Secretary of Labor under Obama, tweeted “This is the federal ethics law that @KellyannePolls just violated” and linked 5 C.F.R. § 2635.702. Norm Eisen, a fellow at Brookings, retweeted with the comment, “Exactly right!” Most importantly, Don W. Fox, former OGE general counsel and former acting director, claimed in the Washington Post that “Conway’s encouragement to buy Ivanka’s stuff would seem to be a clear violation of rules prohibiting misuse of public office for anyone’s private gain.” Citizens for Responsibility and Ethics in Washington (“CREW”) just filed a formal complaint about Conway’s conduct, citing § 2635.702.

I too reacted in the same way.  I’m familiar with those OGE rules, and it clearly seemed like Ms. Conway broke the law.  But, upon a closer look, I’m not so sure she was in violation of the regulation cited by Mr. Lu and CREW’s ethics complaint. Here’s why.  The relevant regulation, § 2635.702, bars an “employee” from engaging in product promotion.  5 C.F.R. § 2635.102 defines employee as “any officer or employee of an agency, including a special Government employee.”  So, the next question is: “what’s an agency? Is the White House an agency?”  For that, let’s look at 5 U.S.C. § 105, which reads “For the purposes of this title, “Executive Agency” means an Executive Department, a Government corporation, and an independent establishment.”  Right off the bat, we can cross off “Government Corporation.”  “Executive Department” is defined by an exhaustive list in 5 U.S.C. § 101.  The White House isn’t on there.  That leaves only “independent establishment” as the last potential category.

Unfortunately, whoever wrote the regulation defining independent establishment didn’t do a very good job.  It basically reads that “an independent establishment is an establishment which is not part of an independent establishment.” It’s a horribly unclear and ambiguous definition.  Thankfully, the D.C. Circuit tackled this in Haddon v. Walters, 43 F.3d 1488 (D.C. Cir. 1995).  In that case, the court was trying to decide whether or not the Executive Residence qualifies as an independent establishment.  Here’s the key language:

First, we note that elsewhere Congress has used the term “independent establishment” in distinction to the Executive Residence. Specifically, Congress has authorized “[t]he head of any department, agency, or independent establishment of the executive branch of the Government [to] detail, from time to time, employees of such department, agency, or establishment to the White House Office, the Executive Residence at the White House, the Office of the Vice President, the Domestic Policy Staff, and the Office of Administration.” 3 U.S.C. § 112 (1988) (emphasis added). That Congress distinguished the Executive Residence from the independent establishments, whatever they may be, suggests that Congress does not regard the Executive Residence to be an independent establishment, as it uses that term.

Haddon v. Walters, 43 F.3d 1488, 1490 (D.C. Cir. 1995)

Basically, the court is saying that Congress clearly referred to “independent establishment” and the “Executive Residence” as two separate things.  Right next to it on that same, distinguished list is the “White House Office.” Thus, according to the D.C. Circuit’s reasoning, the White House Office also is not an independent establishment.  Because the White House clearly does not fall into the other 2 covered categories, Government Corporations and Executive Departments, it appears that the regulation cited by many of these commenters, including the former general counsel of OGE, does not cover Kellyanne Conway as Counselor to the President.

Now, this doesn’t excuse what Ms. Conway said.  Her conduct clearly falls short of the standards expected of White House employees working on the taxpayer dime.  It is wholly inappropriate to endorse a product in the fashion she did, especially since she has a relationship with the beneficiary.  But against OGE’s ethics regulations?  Unclear, leaning towards no.

UPDATE, 3.2.2017

Shortly after the above post, we sent a letter to OGE inquiring about what legal authority the agency was asserting over Kellyanne Conway.  After combing both OGE’s letter to Congress and its letter to the White House, we didn’t see any citations that got them around the “independent establishment” problem we discussed in our blog post.

Much to his credit, OGE Director Walter Shaub replied promptly to our letter.  He directed us to 3 C.F.R. § 100.1, which reads “Employees of the Executive Office of the President are subject to the executive branch-wide standards of ethical conduct at 5 CFR part 2635, and the executive branch-wide financial disclosure regulations at 5 CFR part 2634.”

At first glance, one might think this is a problem, as the issue we flagged was statutory and, certainly, a regulation cannot amend a statute.  However, the statute matters because it is incorporated by the regulation to serve as a definition.  That very same agency, therefore, could promulgate another regulation expanding the definition for certain covered actions.

This is the first time OGE, or any authority, for that matter, has cited this part of the regulation, extending coverage to Kellyanne Conway.  While this does not cure the issue of many OGE regulations not applying to White House personnel, as the White House itself notes, it does seem to resolve the matter at hand.

 

Have any questions or criticisms?  Think I might have missed something?  Please give me an e-mail at eric.bolinder@causeofaction.org. I’d love to hear from you.  I’ll try to share and address any appropriate comments in a future blog post.

Eric Bolinder is counsel at Cause of Action Institute

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