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06/14/2018

CoA Institute Responds to Opinion in FOIA Case Against IRS

On Tuesday, June 12, the District Court for the District of Columbia issued an opinion in CoA Institute’s long-standing FOIA suit against the IRS for failing to produce records regarding possible White House intrusion in to the agency’s FOIA practices. The opinion can be found here.

 

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06/11/2018

CoA Institute Calls on Department of Agriculture to Revise Problematic FOIA Rule

Cause of Action Institute (“CoA Institute”) submitted a comment today to the Department of Agriculture (“USDA”) concerning the agency’s publication of a deficient rule that proposes revisions to the agency’s Freedom of Information Act (“FOIA”) regulations.  CoA Institute explained that USDA’s FOIA rule fails to provide a definition of a “representative of the news media” that conforms with statutory and judicial authorities.  The proposed regulations also could cause confusion by directing agency staff to consult outdated fee guidance published by the White House Office of Management and Budget (“OMB”).

News Media Fee Category

USDA’s proposed regulations improperly retain the so-called “organized and operated” standard in the definition of a “representative of the news media.”  This is an important deficiency because the “organized and operated” standard has been used in the past to deny news media requester status to nascent media groups and government watchdog organizations like CoA Institute.  Indeed, CoA Institute took another agency—the Federal Trade Commission—to court, and argued its case all to the way to the D.C. Circuit, just to get the agency to acknowledge that its similar retention of the “organized and operated” standard was unlawful and led to improperly denying CoA Institute a fee reduction.  The D.C. Circuit eventually issued a landmark decision in CoA Institute’s favor to clarify proper fee category definitions and their application in FOIA cases.

Congress amended the FOIA to provide a straightforward and comprehensive definition of a “representative of the news media.”  USDA—and all other agencies—should not attempt to modify that definition or introduce additional hurdles for news media requesters.

OMB Fee Guidelines

USDA’s FOIA rule also proposes to retain references to the OMB’s 1987 FOIA fee guidelines, which are the genesis of the “organized and operated” standard.  Specifically, USDA would like its disclosure officials to estimate fees in accordance with the OMB fee guidelines.  But those guidelines are outdated and unreliable.  Over the past thirty years, Congress has amended the FOIA on numerous occasions, courts have developed overriding FOIA jurisprudence, and technology has evolved in significant ways.  Yet OMB has made no effort to revisit its fee guidance.  That guidance should not be used as a reference point for the proper administration of the FOIA.

In 2016, the FOIA Advisory Committee and the Archivist of the United States called on OMB to update the fee guidelines.  CoA Institute even filed a petition for rulemaking on this issue.  Last November, we filed a lawsuit to compel the agency to provide a response to that petition.  Until OMB acts to revise its fee guidelines, USDA should not direct its staff to consult them in any way as authoritative.

Other Agencies Have Followed CoA Institute’s Advice

CoA Institute has succeeded in convincing a number of other agencies to abandon the OMB’s “organized and operated” standard in favor of a proper definition of “representative of the news media” in line with the FOIA statute and controlling case law.  Those agencies include, among others, the Consumer Product Safety Commission, Office of the Special Counsel, Department of Defense, U.S. Agency for International Development, and Department of Homeland Security.  We hope that USDA similarly will revisit its FOIA rule and eliminate the “organized and operated” standard in lieu of a proper definition of a news media requester.

Ryan Mulvey is Counsel at Cause of Action Institute

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06/8/2018

Court of Appeals Rebukes Federal Trade Commission’s Data Security Overreach

FOR IMMEDIATE RELEASE

JUNE 8, 2018

WASHINGTON, D.C. – In a landmark ruling on June 6, 2018, the Eleventh Circuit Court of Appeals invalidated a Federal Trade Commission (FTC) order against cancer-screening facility LabMD.  The agency had hounded LabMD for years claiming the company violated an undefined data security rule known only to the FTC.  The opinion sends a clear message that the FTC’s enforcement of data security, without publishing any standards, disregards the rule of law, violates due process, and will not be tolerated by the Courts. Cause of Action Institute represented LabMD in the proceedings at the FTC and filed an amicus curiae brief in the Eleventh Circuit on behalf of nine medical doctors harmed by the FTC’s actions.

Cause of Action Institute’s President and CEO John Vecchione commented on the decision:

“The FTC’s lawless bullying of companies and actions that drove LabMD out of business and denied our physician clients’ access to its services have suffered a stern and public rebuke. Standardless regulatory overreach in this case forced the closure of a successful small business even though the FTC has never presented any evidence of consumer harm, nor published any data security standards with which it says the company should have complied.  Notably the 11th Circuit ruled the FTC-issued injunction was so vague and unintelligible that no court could intelligently enforce it.  The Court made no finding and affirmed no decision of the FTC that LabMD had done anything wrong.

“Scores of companies have knuckled under to the FTC’s insistence on ‘consent’ orders to buy peace.  This ruling is a signal that they don’t have to.  The Court signaled that vague, standardless dictates by unelected bureaucrats would not be enforced in Courts of law.  LabMD’s experience in this case is a stark reminder of the costs required to fight a federal agency that is willing to spend millions of taxpayer dollars over more than eight years of investigation and litigation, all in the pursuit of wrong.  We congratulate Ropes & Gray for its representation of this case before the Circuit and LabMD itself for daring to fight the good fight.  We are also proud of our attorneys and Cause of Action Institute’s contribution to that fight.”

In the opinion, the court explained the absurdity of the FTC’s position– namely that the agency requires data security standards without providing any specificity on those very standards.  From the opinion:

“[T]he Commission’s cease and desist order is nonetheless unenforceable. It does not enjoin a specific act or practice. Instead, it mandates a complete overhaul of LabMD’s data-security program and says precious little about how this is to be accomplished. Moreover, it effectually charges the district court with managing the overhaul. This is a scheme Congress could not have envisioned. We therefore grant LabMD’s petition for review and vacate the Commission’s order.”

While the decision may appear to be narrowly related to the cease and desist order at issue in LabMD, in practice, it will have broad ranging implications for how the agency investigates and enforces data security. The Court also recognized the constitutional injustice of the FTC’s enforcement action in this case: “Being held in contempt and sanctioned pursuant to an insufficiently specific injunction is therefore a denial of due process.”  This abuse of due process by going after a company for allegedly violating Section 5 of the FTC Act, but never telling the company what it is actually supposed to have been doing has been a central theme of the LabMD case from the start.

The FTC lost this case before its own FTC’s chief administrative law judge (ALJ) and now before the Eleventh Circuit. The FTC’s disregard of the ALJ’s opinion, when the Commission considered the case at the administrative level, illustrates the unfairness of the FTC enforcement process where the agency acts as its own detective, prosecutor, judge, and executioner. As former FTC Commissioner Joshua Wright explained: “[I]n 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.”

Read the full opinion here.

Read more about Cause of Action Institute’s efforts to hold the FTC accountable here and here.

About Cause of Action Institute

Cause of Action Institute is a 501(c)(3) non-profit working to enhance individual and economic liberty by limiting the power of the administrative state to make decisions that are contrary to freedom and prosperity by advocating for a transparent and accountable government free from abuse.

For more information, please contact Mary Beth Gombita, mbgcomms@gmail.com.

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05/31/2018

What Happens When Government Emails are Allegedly “Fatally Lost”?

President Trump’s phone and email behavior are coming under scrutiny for security reasons, but regardless of the device used, the type of email account being used could be a bigger concern.  Did you know that a government official’s use of private email to conduct government business is wrong?  If the Hillary Clinton email scandal didn’t showcase that, consider one of our recent and ongoing investigations into former Secretary of State Colin Powell’s work-related email records, which were hosted on a personal AOL account.

In September 2016, the House Oversight & Government Reform Committee held a hearing at which then-Under Secretary of State Patrick Kennedy testified that the State Department had undertaken minimal efforts to retrieve Powell’s work-related email.  In October 2016, Cause of Action Institute sought access to Secretary Powell’s work-related emails under the Freedom of Information Act (“FOIA”).  At the same time, we advised the Secretary of State and the Archivist of the United States of their obligations under the Federal Records Act (“FRA”) to recover those same email records.  Once it became apparent that the State Department would not respond to our FOIA request, and the obligation to initiate action through the Attorney General for the recovery of Secretary Powell’s work-related email would not be met, we filed suit in federal district court.  In January 2018, when the court denied the government’s first motion to dismiss, it described the State Department’s efforts at recovery as “anemic.”  As we’ve noted, U.S. District Court Judge Trevor McFadden explained that “[t]he Defendants’ refusal to turn to the law enforcement authority of the Attorney General is particularly striking in the context of a statute with explicitly mandatory language.”  “[T]here is a substantial likelihood that [CoA Institute’s] requested relief would yield access to at least some of the emails at issue.”

After being repeatedly asked by the National Archives and Records Administration (“NARA”) to contact AOL directly for Powell’s emails, the State Department never did so until CoA Institute filed its lawsuit.  But the State Department continues to use the line that the emails have been “fatally lost” and that our lawsuit should therefore be dismissed.  The Defendants argue that, even if they cannot prove fatal loss or completely recover unlawfully removed records, their obligation to initiate action through the Attorney General (and thus marshal the law enforcement authority of the federal government) can be excused if they have no “reason to believe” records are recoverable.

We’re currently pushing back on that argument, as it rests on a fundamental misapprehension of the FRA.  We have asked the court to order the Secretary of State and the U.S. Archivist to initiate action through the Attorney General for the recovery of Powell’s email, as required by law.  This would entail enlisting the law enforcement authority of the federal government to investigate the possibility of forensically recovering the records at issue, among other things.  Such techniques have been successful in previous cases of unlawfully removed federal records, as evidenced by Hillary Clinton’s email scandal and the FBI’s recovery of Peter Strzok and Lisa Page’s text messages.

The problem with the Defendants’ position is that it ignores the clear text of the FRA and thirty years of precedent, which recognizes a non-discretionary obligation for an agency head to go to the Attorney General whenever its own recovery efforts have failed.  In this last line of their closing brief, the Defendants sum up their argument: “We recognize that the Court has previously rejected the contention that the FRA requires referral only when an agency has reason to believe that records can be recovered but respectfully reserve the right to seek further review should the Solicitor General determine that such review is warranted.”

This case illustrates how careless the federal government can be with the protection of government work – the use of a personal account and the subsequent years-long legal battle to recover Secretary Powell’s work-related emails are a failure of our government to follow both the FRA and the FOIA.  Secretary Powell should never have used a personal email account, and the State Department should have acted quicker to recover and preserve vital records of government business that were stored on a third-party commercial server.  If it is this difficult to recover materials that ultimately belong to the American people, the work of the government becomes more and more opaque and the gap between the American people’s knowledge and the federal government’s behavior only widens.

Mary Beth Gombita, Cause of Action Institute.

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05/21/2018

Senate finally confirms President Trump’s nominee for Intelligence Community watchdog

Last week, the Senate finally approved the nomination of former Department of Justice attorney Michael Atkinson to be Inspector General of the Intelligence Community.  We commended President Trump on his decision to name Mr. Atkinson as a watchdog back in November 2017.  According to one source, part of the long delay in the confirmation process was due to Senate negotiations with the Director of National Intelligence over the firing of Dan Meyer, the Intelligence Community’s whistleblower ombudsman.  Yet it is still a sad reflection of the current political climate that Mr. Atkinson’s nomination was pending for roughly six months.

As I have argued previously, one of the most troubling aspects of President Obama’s legacy was his failure to nominate permanent Inspectors General (“IGs”) at many agencies across the federal government.  Without presidentially-appointed, Senate-confirmed leadership, there is always a real danger that IG offices will lack the necessary commitment to transparency and accountability in government.  Indeed, Senator Ron Johnson has argued that “acting” IGs—who are typically career civil servants—risk being “not truly independent [because] they can be removed by the agency at any time; they are only temporary and do not drive office policy; and they are at greater risk of compromising their work to appease the agency or the president.”

When President Obama left office, twelve agencies lacked an IG.  During his first year in office, President Trump steadily moved to remedy this dearth of leadership, but the pace of new nominations slowed at the end of last year, and much more now needs to be done.  According to the Project on Government Oversight, which has been tracking IG vacancies since the Obama Administration, there are currently nine agencies without a permanent watchdog, six of which must be appointed by the White House.  This includes vacancies at major Cabinet-level agencies, including the Department of Defense, the Department of Energy, and the Department of Housing and Urban Development.  The Department of the Interior, sadly, continues to lack a permanent IG since the previous watchdog left office 3,374 days ago.

Of course, not all the blame should be placed on the inaction or slow decision-making of President Trump.  Aside from Mr. Atkinson’s recent confirmation, another four presidential nominations have been pending in the Senate for an average of 236 days.  When the White House has moved to fill these watchdog vacancies, the Senate should prioritize its consideration and the confirmation process.  Many Executive Branch agencies have substantial budgets, and presidentially-appointed IGs provide a vital internal check on waste, fraud, and abuse.

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

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05/18/2018

Federal Court Upholds Cigar Labeling Requirements — Why and What This Means

Cause of Action Institute (“CoA Institute”) has been active as an amicus curiae (friend of the court) in an ongoing federal lawsuit regarding cigars and other tobacco products.  Meaning, while we don’t represent any of the parties, we have been submitting briefs to help the Court reach its final decision. The Food and Drug Administration (“FDA”) originally proposed a burdensome tobacco-safety regulation that would have effectively crippled the premium cigar market, putting countless American small businesses out on the street.  After the 2016 election, however, new FDA leadership delayed that rule with the intent to change it. This was a wonderful development for both cigar companies and hobbyists alike. However, the FDA kept pushing a scaled-back rule that would require large, intrusive warning labels on premium cigar products.  We submitted a brief opposing that rule.

CoA Institute did not take a position on the efficacy or utility of tobacco warning labels.  Our concern was, as it frequently is, that agencies must show their work when they enact a new regulation.  The governing statute here, the Family Smoking Prevention and Tobacco Control Act (“FTA”), required the FDA to show that any new regulations would be appropriate for the protection of the public health.  Plaintiffs, as well as CoA Institute, argued that the FDA had not done its work and, indeed, had conceded it had no real quantitative data or analysis for the efficacy of these new warning labels for cigar products.  Regulatory action for the sake of regulatory action is bad policy.

Unfortunately, the Judge disagreed, finding that the FDA had done its due diligence in determining that the warning labels would be effective.  He held that the FDA’s statements connecting the labels to public health, as well as their citation of certain data, such as the overall addictiveness of nicotine, was enough.  Furthermore, he found that the agency’s concession that it had no data available was merely an admission of the “agency’s inability to quantify the benefits of the Deeming Rule’s requirements prior to their implementation date.”  He held that a mere connection, quantifiable or not, between smoking prevention and the larger warning labels is enough.  He cited the agency’s prior work with other tobacco products, singling out cigarettes, as the foundation for the FDA’s contention that the new health warnings were appropriate and would affect cigar and pipe tobacco usage.

As any cigar aficionado knows, cigars and cigarettes are distinct products.  I regularly enjoy cigars, but I never touch cigarettes.  Why?  Because, in my opinion, the health risks are profoundly different for the two products.  More importantly, the addictive nature of the two is incomparable.  I regularly smoke cigars during the summer—which, for me, is 1-3 a week—and completely stop for the long winter months with no undesired effects or feelings of withdrawal.  That, to put it lightly, is not the usual experience with cigarettes.  Aficionados know: these are two different worlds.

Some might criticize me for relying on personal anecdotes to argue a federal regulation is unfounded.  I agree!  And that’s why the FDA should have conducted quantitative studies specific to premium cigars, rather than just relying on general science on nicotine addiction and the agency’s experience with a totally different product, cigarettes.  I suspect this is why Congress included language in the statute mandating that a “finding as to whether such regulation would be appropriate for the protection of the public health shall be determined[.]”  Of course, we live in the era of Chevron deference, where the Supreme Court has instructed the lower courts to defer to an agency’s interpretation of a statute and, sometimes by extension, the agency’s own science (or lack thereof).  Accordingly, the agency’s own statements in support of the rule were given enormous deference by the Court.

The Plaintiffs in the case argued that it was ridiculous for the FDA to claim to not have access to quantitative data, since they’ve had “sixteen years and an entire nation’s worth of data to examine the efficacy of the [prior-implemented] FTC warnings.”  After all, most of the cigars produced and sold in the United States are subject to an FTC consent decree that requires these companies to put warning labels on their products.  The FDA could have studied the efficacy of the FTC warnings on cigar use, but failed to do so.  In rejecting this argument, the Judge made an interesting comment: “Plaintiffs, however, have identified no requirement, statutory or otherwise, that compelled the FDA to undertake such studies to make the findings required by [the statute].”  CoA Institute, as amici, did just that though.  We contended that Chamber of Commerce of the United States v. Securities & Exchange Commission, which applied to similar statutory language in the financial sector, was controlling here.  The SEC made basically the same claim the FDA did, arguing “it was without a reliable basis” to determine costs associated with a regulation.  In Chamber, the D.C. Circuit recognized that limitations on data cannot “exclude the Commission from its statutory obligation to determine as best it can the economic implications of the rule it has proposed.” In its decision upholding the labeling rule, the District Court did not cite Chamber.

If this case were to be appealed—and, again, CoA Institute was just amici and did not represent any of the parties—we believe the D.C. Circuit would be faced with two interesting questions.  First, is the statutory language enforced by the Court in Chamber similar enough to the FTA that the case controls here?  And second, if Chamber does apply, can the FDA comply by simply reaching back and pointing to data based on cigarettes and other general science on tobacco?  We, of course, would argue no, given the distinct differences between premium cigars and cigarettes.

What does this all mean for cigar smokers?  Probably not that much, at least for now.  The original rule would have rocked the market, cutting off competition, reducing quality, and increasing prices exponentially.  The new, cutback rule might result in some increase in price, given the labeling costs cigar companies will now need to endure, but the same quality and quantity of cigars should be available for purchase.

But here’s the important point: there’s nothing preventing a future administration from bringing back the original rule.  And, given the Judge’s opinion in this case, the FDA would not have to reach a high bar to “deem” and regulate cigars the same way it does cigarettes.  This could be a death knell for the pastime.  The Courts and Congress must act to hold agencies accountable to good science and, most importantly, to doing their job.

*There were many other strong arguments made by the Plaintiffs, including Administrative Procedure Act and constitutional claims.  These were similarly rejected by the Court. For this blog post, I concentrated only on the arguments CoA Institute highlighted in our amicus brief.  The Court did vacate one part of the rule, which defined retailers who blend pipe tobacco in their stores as “manufacturers,” asking the agency to justify its reasoning.*

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05/17/2018

Justice Gorsuch Opines on Due Process and Civil Asset Forfeiture

In Sessions v. Dimaya,1 Justice Gorsuch concurred in the judgment of a fragmented Supreme Court but only in part of the plurality opinion by four other justices. Justice Gorsuch wrote a separate opinion to explain something he (but not the plurality) thinks is fundamental about due process. His concurring opinion highlights how civil cases, including forfeitures, now frequently impose harsher penalties than criminal prosecutions.

Dimaya involved federal statutes authorizing deportation of criminal aliens. The law designates specific crimes which, when an alien is convicted of them, allow nearly automatic deportation. It also has a “catch-all” provision that includes any felony that “by its nature” involves “substantial risk” of “physical force” against property or another person.2 The question in Dimaya was whether this catch-all provision was so vague that it did not provide fair notice about what crimes carry the risk of deportation, thereby violating the due process clause of the Fifth Amendment. The plurality (Justices Kagan, Ginsburg, Breyer, and Sotomayor) and Justice Gorsuch answered Yes, and together they held the statute void for vagueness. Dimaya, the convicted alien, won; Attorney General Sessions lost.

Justice Gorsuch’s opinion about why the winner won takes a different tack than the plurality took. Civil asset forfeiture is key to understanding why.

Deportation, like most forfeitures, is a civil matter, even after an alien is convicted and even though deportation is “a particularly severe penalty which may be of greater concern to a convicted alien than any potential jail sentence.”3 More than one commentator quickly noted that Justice Gorsuch did not join the plurality’s opinion that “the most exacting vagueness standard should apply to removal cases, because the penalty of deportation is so severe.”4

That’s where Justice Gorsuch draws the line. “My colleagues suggest the law before us should be assessed under the fair notice standard because of the special gravity of its civil deportation penalty. But, grave as that penalty may be, I cannot see why we would single it out for special treatment when (again) so many civil laws today impose so many similarly sever sanctions.”5

Enter forfeiture.

Ours is a world filled with more and more civil laws bearing more and more extravagant punishments. Today’s “civil” penalties include confiscatory rather than compensatory fines, forfeiture provisions that allow homes to be taken…. Some of these penalties are routinely imposed and are routinely graver than those associated with misdemeanor crimes—and often harsher than the punishment for felonies. And not only are punitive civil sanctions … rapidly expanding, they are sometimes more severely punitive than the parallel criminal sanctions for the same conduct. … Given all this, any suggestion that criminal cases warrant a heightened standard of review does more to persuade me that the criminal standard should be set above our precedent’s current threshold than to suggest the civil standard should be buried below it.

*             *             *

Why, for example, would due process require Congress to speak more clearly when it seeks to deport a lawfully resident alien than when it wishes to … confiscate [a citizen’s] home? I can think of no good answer.”6

Tyler Arnold and I have made similar points here about civil asset forfeiture. Justice Gorsuch’s point is both broader (also touching civil commitments and broad business licensing requirements) and narrower (not foreclosing the possibility that particular civil forfeitures can meet the requirements of the Due Process Clause) than ours. So be careful what you wish for. A constitutional due process challenge to civil asset forfeiture generally could still come out exactly wrong at this Supreme Court.

Mike Geske is counsel at Cause of Action Institute

1  Sessions v. Dimaya, 584 U.S.       , 138 S.Ct. 1204, 200 L. Ed. 549, 2018 U.S. LEXIS 2497 (April 17, 2018).

2 See 18 U.S.C. §16(b); see also 8 U.S.C. §1101(a)(43).

3 Dimaya, 138 S. Ct. at 1213, 200 L. Ed. at 558, 2018 LEXIS 2497 at * 15-16 (Kagan, J., plurality op.) (citations and quotations omitted).

4 Dimaya, 138 S. Ct. at 1213, 200 L. Ed. at 557-58, 2018 LEXIS 2497 at * 15 (Kagan, J., plurality op.) (citations and quotations omitted).

5 Dimaya, 138 S. Ct. at 1231, 200 L. Ed. at 578, 2018 LEXIS 2497 at * 56 (Gorsuch, J., concurring in part, concurring in judgment) (citations and quotations omitted).

6 Dimaya, 138 S. Ct. at 1229, 1231, 200 L. Ed. at 575-76, 578, 2018 LEXIS 2497 at *52-53, *56-57 (Gorsuch, J., concurring in part, concurring in judgment) (citations and quotations omitted; emphases by Justice Gorsuch).

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