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01/5/2017

IRS Watchdog shields records on breach of confidential taxpayer information

The Treasury Inspector General for Tax Administration (TIGTA) has concluded its review of allegations brought by Cause of Action Institute (CoA Institute) concerning the unlawful disclosure and inspection of more than one million pages of confidential taxpayer information. The agency opened its investigation in July 2016 but now claims it cannot provide any further information about of the outcome of its review because such information is itself protected by confidentiality laws originally intended to protect taxpayers.

In June 2016, CoA Institute called on TIGTA and the Department of Justice Office of Inspector General (DOJ-OIG) to examine potential legal violations arising from the October 2010 disclosure of more than one million pages of tax returns and return information to the FBI and DOJ Public Integrity Section by Lois Lerner and the IRS.  CoA Institute first alerted TIGTA about the possible violation of Section 6103 of the Internal Revenue Code with respect to these records in July 2015. [For more information, see pages 11–15 of CoA Institute’s recent investigative report.]

Just months prior to TIGTA’s response, DOJ-OIG confirmed the unlawful disclosure of taxpayer information but dismissed a request to investigate the wrongdoing.  The IG concluded that CoA Institute was correct that “protected taxpayer information was included” on CDs provided by the IRS to the FBI and DOJ, yet it determined inexplicably that the matter “does not warrant further investigation[.]”

CoA Institute Assistant Vice President Lee A. Steven: “Although it appears that TIGTA has investigated our now-proven allegations of wrongdoing, we are concerned by the lack of transparency surrounding whether the responsible IRS officials will be held accountable for the unlawful disclosure of over one million pages of confidential taxpayer information. Congress never intended taxpayer confidentiality laws to be a shield against the disclosure of information concerning the conduct of officials who have abused their positions and acted in contravention of their duty to protect American taxpayers’ most private information.  This incident involves one of the largest and most significant breaches of taxpayer confidentiality laws by the federal government in U.S. history.  The DOJ-OIG seems to have washed its hands of the matter and it is disappointing to see TIGTA do the same.”

The DOJ Public Integrity Section and the FBI originally sought the records at issue in an attempt to identify non-profit organizations who may have engaged in prohibited political activity.  As part of its public oversight efforts, CoA Institute obtained records demonstrating that, between 2009 and 2012, neither agency ever submitted the statutorily-required requests for disclosure of this information to the IRS.

Section 6103 of the Internal Revenue Code provides a strict rule of confidentiality for tax returns and return information.  Unless a statutory exception applies, government agencies and their employees may not disclose such information.  Violations can include fines, termination from employment, and imprisonment.

To access CoA Institute’s June 29, 2016 Letter to TIGTA and DOJ-OIG, click here.
To access DOJ-OIG’s October 12, 2016 response, click here.
To access TIGTA’s December 19, 2016 response, click here.
To access CoA Institute’s October 2016 Investigative Report, click here.

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12/28/2016

DC Circuit Holds Cause of Action Institute Federal Records Act Case on Clinton Emails Not Moot

Today, the DC Circuit held the Judicial Watch and CoA Institute cases against the Secretary of State and Archivist seeking to enforce their Federal Records Act duties as they relate to Hillary Clinton’s emails are not moot. 

The court held that because the statute requires the agencies to reach out to the Attorney General to seek record recovery, and because they have not done so, CoA Institute and Judicial Watch have not received everything to which they are entitled and, therefore, the cases are not moot.

CoA Institute Vice President John Vecchione -who argued the case before the circuit: “The DC circuit has reinforced the lesson that the government is bound to follow the law and that measures short of what the law requires to recover government documents can not be substituted as ‘good enough’.”

Read the opinion here.

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12/22/2016

USAID Adopts CoA Institute’s Proposals in New FOIA Regulations

The U.S. Agency for International Development (“USAID”) finalized new Freedom of Information Act (“FOIA”) regulations today, accepting two revisions proposed by Cause of Action Institute (“CoA Institute”) in a comment submitted in October 2016.

CoA Institute had made two recommendations in response to USAID’s proposed rulemaking.  First, we urged the agency to remove outdated “organized and operated” language from its definition of a “representative of the news media.”  Such language was used in the past to deny fee waivers to organizations like CoA Institute that investigate potential agency wrongdoing.  For example, we had to take the Federal Trade Commission all the way to the D.C. Circuit to get the agency to acknowledge that the agency’s FOIA fee regulations were outdated and that it was improperly denying us a fee reduction.

In deciding the 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 USAID in its comment and the agency took heed of the current case law, removing the outdated language from its regulations.

CoA Institute also recommended revising the procedures for conducting consultations.  Consultation takes place whenever USAID locates records that might have originated with or implicate the equities of another government entity.  The process is supposed to ensure that exempt material is properly redacted from records prior to disclosure.  We were concerned that USAID had failed to set parameters for determining when consultation were appropriate.  We also asked USAID to adopt a requirement to notify requesters whenever their requests are subject to consultation and to tell requesters which agency is being consulted.

USAID responded favorably to these recommendations.  It adopted our proposed limitation of consultation to instances where another agency or component has a “substantial interest” in responsive records.  Further, the agency accepted our proposed notification requirement.  The agency failed, however, to adopt our definition of “substantial interest.”  This failure leaves room for future improvement in USAID’s FOIA regulations, as it is unclear how USAID will interpret this term.

CoA Institute’s successful comment is just another small step in our efforts to provide effective and transparent oversight of the administrative state.

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12/19/2016

New Law Set to Clarify and Strengthen Authority of IGs to Access Agency Records

This month, the U.S. Senate voted by unanimous consent to pass the Inspector General Empowerment Act of 2016, which originated in the House of Representatives and was sponsored by Representative Jason Chaffetz (R-UT), Chairman of the Committee on Oversight and Government Reform, and Senator Chuck Grassley (R-IA).  The bill now heads to the President’s desk, where it should be signed into law.

The IG Empowerment Act is an important step in strengthening the power and independence of the official “watchdogs” of the administrative state.  The main thrust of the legislation is to reinforce the power of IGs to access any agency records necessary for their oversight efforts.  This is seen as necessary to bypass the roadblocks to accessing records set up by many agencies—including the Department of Justice, Peace Corps, Department of Commerce, Treasury, and EPA—over the past six years.  The Obama Administration’s efforts to prevent IGs from carrying out their statutory duty to combat waste and fraud found their apogee in a July 2015 memorandum circulated by DOJ’s Office of Legal Counsel, which was strongly condemned by the IG community.  That legal opinion is now superseded by statute.

The recently passed bill also modifies the operation and reporting obligations of the Council of the Inspectors General on Integrity and Efficiency—or CIGIE—the independent entity within the government composed of all the IGs.  Additionally, the IG Empowerment Act clarifies when agencies and whistleblowers are authorized to disclosure sensitive information to their IG.

According to a recent congressional report, the obstructions faced by IGs, and the more than 15,000 recommendations that have been unimplemented by their agencies, have cost taxpayers $87 billion in lost savings.  While the IG Empowerment Act will likely improve the effectiveness and integrity of the Executive Branch, and save taxpayers a great deal of money, there is still room for improvement.  For example, the new bill fails to address the lack of subpoena power needed to compel testimony from federal employees and contractors, especially in instances where an agency refuses to cooperate with an IG’s ongoing investigation.

Congress should also take further steps to resolve the perineal problem of IG vacancies.  While the new bill requires the Comptroller General, who leads the Government Accountability Office, to examine the effect of these long-vacant posts, additional pressure could be placed on the White House to nominate new IGs and the Senate to confirm them.  For example, the Department of Commerce just received a new IG, and President Obama also announced the nomination of the first-ever IG for the National Security Agency, but too many empty spots remain.  According to CIGIE, nine presidentially-appointed, Senate-confirmed IG positions are empty.  The Project on Government Oversight calculates that the Department of Interior IG position has been vacant for over 2,800 days.  This is unacceptable.

Organizations like Cause of Action Institute remain committed to public oversight, but their tools are limited.  IGs are in a unique position to work with non-governmental actors and Congress alike to hold the Executive Branch accountable.  Efforts to strengthen the position and authority of IGs should therefore be seen as bolstering open and transparent government.  The IG Empowerment Act is one such effort.  In the its new session under President Trump, Congress ought to consider additional ones.

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11/22/2016

CoA Institute Influences New DHS FOIA Regulations

 

The Department of Homeland Security (“DHS”) just finalized new Freedom of Information Act (“FOIA”) regulations.

Last year, Cause of Action Institute (“CoA Institute”) submitted comments to DHS in response to its proposed rule.  We urged the agency to remove the outdated “organized and operated” language from its definition of a representative of the news media.  This language has been used in the past to deny fee waivers to organizations like CoA Institute that are conducting investigations of potential agency wrongdoing.  For example, we had to take the Federal Trade Commission all the way to the D.C. Circuit just to get it to acknowledge that its FOIA fee regulations were outdated and that it was improperly denying us a fee reduction.

In deciding our case, the D.C. Circuit issued a landmark decision clarifying the proper definitions and application of fees in FOIA cases.  CoA Institute cited this case to DHS in its regulatory comments and DHS took heed of the current case law and removed outdated language from its regulations.

This is just another small step in our efforts to provide effective and transparent oversight of the administrative state.

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11/4/2016

Circuit Court Hears Oral Argument in Cause of Action Institute Federal Records Act Case on Clinton Emails

Today, the Court of Appeals for the D.C. Circuit heard oral arguments in Cause of Action Institute’s lawsuit against Secretary of State John Kerry and Archivist of the United States David Ferriero.  The case originally sought to enforce the officials’ Federal Records Act duties to initiate action through the Attorney General and notify Congress because they were unable to retrieve all of the federal records former Secretary of State Hillary Clinton unlawfully removed from the State Department by setting up a personal email server to conduct official government business.  The district court below dismissed the case as moot because that court believed the State Department had recovered enough of the records and taken enough action short of initiating action through the Attorney General.  The oral argument heard today was on the appeal of that decision.

CoA Institute Vice President John Vecchione argued the case, which was consolidated with a similar case filed by Judicial Watch.  The three-judge panel was engaged on the issues and asked probing questions of both sides.

The oral argument can be heard in its entirety here.

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10/5/2016

Cause of Action Institute Investigates Arizona Electrical Market

Cause of Action Institute is investigating the battle for retail market share in Arizona between electric power for consumers and businesses regulated and controlled by the Arizona Corporation Commission (“ACC”), and rooftop solar competition, including competition from SolarCity Corp., (“SolarCity”). The ACC is a quasi-executive regulatory agency in the Arizona state government. It is Arizona’s state regulatory body for non-municipal utility companies, including energy, heat, trash, water and communications firms. The ACC also oversees the incorporation of businesses, securities regulation and railroad/pipeline safety.

SolarCity provides technologies for mounting solar panels on rooftops developed by Zep Solar, which it acquired in 2013. Zep is best known for inventing a system that allows solar photovoltaic installers to join panels on the roof more quickly than other installation approaches to shorten installation time. SolarCity was co-founded in 2006 by brothers Lyndon Rive (CEO) and Peter Rive (CTO). Their cousin is Elon Musk, who serves as SolarCity’s Chairman. On August 1, 2016, SolarCity accepted Tesla Motors’ (Musk’s car company) offer to acquire the company for $2.6 billion. As of August 2016, Musk owned 22% of SolarCity stock.

Cause of Action Institute is seeking records and information regarding the FBI’s long-term, ongoing investigation of the financing of certain Arizona statewide electoral races in the 2014 election cycle, and the Arizona Public Service (“APS”), which spent unprecedented millions of dollars over the last three years to allegedly influence the regulators on the ACC. Additionally, CoA Institute is examining the relationship(s) between the Checks and Balances Project of Arizona (“CBP”), SolarCity, Save Our AZ Solar, Energy Choice for America, Renew American Progress, and Elon Musk, including but not limited to, the Bureau’s interactions with Scott Petersen of CBP, and former ACC Commissioner Gary Pierce, as well as any White House involvement in the FBI investigation’s genesis.

You can read the Cause of Action Institute FOIA request here.

Patrick Massari is Counsel at Cause of Action Institute

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