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05/31/2016

Supreme Court Ruling Protects Property Rights

Today, the United States Supreme Court issued an 8-0 opinion in U.S. Army Corps of Engineers v. Hawkes Company protecting landowners’ right to meaningfully challenge government overreach and arbitrary deprivation of private property rights.  The Court rejected the Corps’ argument that a federal court was not allowed to weigh in on the agency’s assertion of jurisdiction to regulate the Hawkes Company’s use of its own land to mine peat unless the company first spent hundreds of thousands of dollars to complete a time-consuming, complicated government permitting process. Cause of Action (CoA) Institute filed an amicus brief in support of the Hawkes Company, which was represented by the Pacific Legal Foundation.   The Court held that an approved Jurisdictional Determination (approved JD)—a federal agency determination that private property contains “waters of the United States” subject to the Clean Water Act (CWA) and the Environmental Protection Agency (EPA) “Waters of the United States” (WOTUS) regulation— is judicially reviewable under the federal Administrative Procedure Act (APA).

In its amicus brief, CoA Institute argued that the Corps approved JD deprived Hawkes of a property interest protected by the Fifth Amendment to the federal Constitution because it reduced the value of its land by preventing Hawkes from mining peat on it without fear of an EPA enforcement action.  Coupled with substantial criminal and civil penalties for CWA violations, a due process violation would result if immediate APA review of the Corps-approved JD is unavailable.

Justices Kennedy, Thomas, and Alito appear to share CoA Institute’s due process concerns and agree that the Constitution requires immediate judicial review of the federal government’s assertion of jurisdiction to regulate private property under the CWA.  In a concurring opinion joined by Justices Thomas and Alito, Justice Kennedy said that “the Court is right to construe a JD as binding in light of the fact that in many instances it will have a significant bearing on whether the Clean Water Act comports with due process.”  Justice Kennedy wrote that the CWA, “especially without the JD procedure were the Government permitted to foreclose it, continues to raise troubling questions regarding the Government’s power to cast doubt on the full use and enjoyment of private property throughout the Nation.”  CoA Institute applauds this unanimous Supreme Court decision protecting landowner property and due process rights.

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05/20/2016

Press Call to Discuss Justice Department’s Mortgage Settlements

WASHINGTON – Cause of Action (CoA) Institute has led efforts to investigate the settlements between the Justice department and big banks over their allegedly faulty mortgage practices. Last year, CoA Institute issued multiple public records requests aimed at exploring whether DoJ has the legal authority to enter into these settlements in the first place.

Representative Sean Duffy (R-Wis), Chairman of the House Financial Services Subcommittee on Oversight, recently held a hearing to examine the Department of Justice’s settlements with big banks over these mortgage practices. CoA Institute is also probing whether DoJ has the legal right to encourage banks to steer settlement funds to preferred third-party groups that support various initiatives backed by the Obama administration. To date, the Justice Department has not answered any of these important questions.

Today, CoA Institute President and CEO Alfred J. Lechner, Jr. hosted a press call with Rep. Duffy to discuss the Justice Department’s mortgage settlements with banks. The administration should be held accountable to taxpayers who deserve to know why the money from these settlements is not being returned to the Treasury Department, as the law requires.

The audio file can be found HERE.

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02/26/2016

Florida Bankers Association: The Supreme Court Must Check IRS Abuse of Discretion

Today, Cause of Action Institute submitted an amicus brief to the U.S. Supreme Court urging it to grant a petition for certiorari to review the D.C. Circuit’s decision in Florida Bankers Association v. Department of the Treasury.  The Court should take the case to ensure that IRS rules are subject to the proper judicial review, a much-needed check on the agency’s rulemaking discretion.

In August 2015, the D.C. Circuit ruled that the Anti-Injunction Act shielded the IRS rule at issue from judicial review.  The Act requires taxpayers to pay taxes first and sue later for a refund if they believe a particular rule is infirm.  The rationale behind this rule is to protect government’s ability to generate a consistent stream of revenue without litigation slowing down that process.  However, the rule at issue in Florida Bankers was simply a reporting requirement and the penalty attached to it is designed to ensure compliance, not generate revenue.  Nonetheless, the IRS argued, and the majority of the divided D.C. Circuit panel agreed, that the Act applied to challenges to the reporting requirement as well.  This argument directly conflicts with a unanimous Supreme Court decision from last term, Direct Marketing Association v. Brohl.

Cause of Action Institute’s amicus brief brought a unique perspective to the question.  We revealed that although judicial review is an important part of constraining agency discretion, it comes at the end of a long rulemaking process and is especially important when an agency, such as the IRS, routinely defies established oversight procedures.  The IRS is notorious for skirting numerous rulemaking procedures that help ensure both accountable and higher-quality rulemaking.

The IRS, for example, evades Executive Order 12,866, which requires agencies to submit significant rules to the White House Office of Information and Regulatory Affairs for pre-publication review.  As Cause of Action Institute informed the Court in its brief, “Over the past ten years, the IRS has submitted only eight rules to OIRA for regulatory review and deemed only one of those rules significant.  Those eight rules are less than one percent of the final rules the IRS published in the Federal Register over the same period.”

In addition to evading pre-publication review, the IRS also flouts the Administrative Procedure Act’s rulemaking requirements.  Cause of Action Institute relied on University of Minnesota Law School Professor Kristin Hickman’s empirical research to show the Court that in “almost ninety-three percent of the cases she surveyed over a three-year period, ‘Treasury claimed explicitly that the rulemaking requirements of APA section 553(b) did not apply.’”

Effective and accountable agency rulemaking requires robust judicial review of agency authority, the process followed in promulgating rules, and the record upon which the rulemaking is based.  Overextension of the Anti-Injunction Act undermines these important principles, and the Supreme Court should grant certiorari and reverse the D.C. Circuit.

Click here to read the amicus brief in its entirely.

 

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12/21/2015

Cause of Action Joins Open Government Coalition in Urging President Obama to Increase Transparency at OMB

Today, Cause of Action Institute joined a broad coalition of 22 transparency and good-government organizations urging President Obama’s Office of Management and Budget to update its Open Government Plan.

An agency’s Open Government Plan provides a roadmap for both the agency and the public to understand the steps the agency will take to increase transparency.  OMB has failed to update its plan in either 2012 or 2014, and it appears to be on track to fail to do so again.  Transparency at OMB is particularly important given its role in the budget and regulatory process.

Read the full letter below:

http://www.scribd.com/doc/293803613/Coalition-Letter-to-Obama-OMB-Open-Government-Plan

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11/25/2015

The FTC Is Appealing Its Loss In The LabMD Case. Here’s What You Need To Know.

Yesterday, the FTC appealed the decision by its Chief Administrative Law Judge to dismiss the agency’s case against LabMD. 

The ALJ ruled “historically, liability for unfair conduct has been imposed only upon proof of actual consumer harm” and that the “record in this case contains no evidence that any consumer…has suffered any harm as a result of Respondent’s alleged failure to employ ‘reasonable’ data security for its computer networks.” Yet the agency continues on, notwithstanding the fact that it has destroyed LabMD, an innovative and effective cancer detection laboratory, apparently only to punish the company’s CEO, Michael Daugherty, for speaking out, and to intimidate anyone else who might dare stand up against the agency.

Every unbiased decision-maker who has reviewed this case, including the FTC’s own Chief Administrative Law Judge, the U.S. House of Representatives Oversight & Government Reform Committee, and a U.S. District Court Judge, has found FTC’s claims against LabMD to be baseless, and its conduct inexplicable and an “embarrassment” to the government.  

Complaint counsel’s appeal of the ALJ’s decision will not be to an independent court, but to the Commission – the very body that decided to sue LabMD in the first place. It is worth noting that one Commissioner has “voluntarily” recused herself because she prejudged the outcome of the case, and the facts suggest other Commissioners also may have conflicts of interest that prevent a fair and level hearing of the matter. This is not a fair fight. 

As former FTC Commissioner Joshua Wright said earlier this year, “in 100 percent of cases where the administrative law judge ruled in favor of the FTC staff, the Commission affirmed liability; and in 100 percent of the cases in which the administrative law judge ruled found no liability, the Commission reversed. This is a strong sign of an unhealthy and biased institutional process…Even bank robbery prosecutions have less predictable outcomes than administrative adjudication at the FTC.”

Nevertheless, Cause of Action looks forward to contesting the FTC’s appeal.  

Ultimately, there will be no vindication for FTC, no matter what the Commission might do, because the agency cannot run and hide from the facts of this case. Thanks to the ALJ, the truth is out. The FTC’s reputation has been severely stained by its cronyism with Tiversa, its abusive overreaching and out-of-control power grab, and its inexplicable decision to waste millions of taxpayer dollars to crush a good and innovative business providing critical, even life-saving, services to doctors and patients.  Based on the facts, Congress and the American people have ample reason to doubt the FTC’s judgment, competence and technical expertise to regulate data security, and there is nothing the Commission can do to make those facts disappear.

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11/18/2015

CoA Files Amicus Brief in ‘Moonlight Fire’ Case

On Friday, November 13, 2015 Cause of Action filed an amicus brief in United States v. Sierra Pacific Industries, Inc. (9th Cir. No. 15-15779), otherwise known as the “Moonlight Fire” case.  That case involves a joint state and federal investigation of a California forest fire, followed by civil litigation in state and federal court against the allegedly responsible parties.  Over the course of the litigation, the defendants uncovered evidence of extraordinary abuses by the investigators and prosecutors, including improper financial interests, concealment of exculpatory evidence, and misrepresentation of evidence.  Defendants argued that prosecutors of the United States government have a special duty to seek the truth and disclose the facts.  The district court disagreed, reasoning that the government only has such a duty in criminal cases, and never in civil cases — even ones where, like here, the government seeks over $1 billion in fines and threatens defendants with financial ruin.

Cause of Action’s brief discussed why the government has special obligations not just in criminal cases, but in all cases, and how those obligations include the duty to present exculpatory evidence, speak truthfully, and avoid financial bias.  The United States’s response brief is still to be filed.

Read full brief here

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