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Obstruction of the Tax Code: Supreme Court Limits Gov’t Power to Criminalize Sloppy Tax Filers

March 28, 2018 by

Did you commit a felony when you made those cash payments to your babysitter?  Last week, the United States Supreme Court issued an opinion answering the question as decisively, no. “Please,” you are probably thinking, “that could never have been the case.” But according to the federal government’s arguments in a recent criminal tax case at our nation’s highest court, such conduct could have constituted felony obstruction of the tax code if you knew your babysitter was likely not going to report the income to the IRS.

Under the government’s requested interpretation of 26 U.S.C. § 7212(a), which punishes anyone who corruptly obstructs or impedes the due administration of the tax code, such a payment to the babysitter would be “corrupt” because it would help another obtain an unlawful benefit (not paying taxes) and impede the IRS’s ability to collect those taxes.  In Marinello v. United States, however, Justice Breyer delivered a 7-2 decision that decisively narrowed the scope of conduct that constitutes felony obstruction of the tax code.  The decision should leave every taxpayer relieved that they cannot unwittingly become subject to criminal prosecution.

Cause of Action Institute filed one of only two “friend of the court” briefs at the certiorari stage, in partnership with the National Association of Criminal Defense Lawyers.  The two organizations partnered again at the merits stage to file a second “friend of the court” brief in support of Mr. Marinello’s position.

Carlo Marinello, II owned a small courier service in New York.  In 2012, the United States obtained an indictment against him for failure to file tax returns and for obstruction under 26 U.S.C. § 7212(a)’s “omnibus clause” of the criminal tax code, which makes it a felony to “in any other way corruptly…obstruct [] or impede [] or endeavor to obstruct or impede, the due administration” of the tax code.  The government argued that Mr. Marinello obstructed the administration of the tax code when he failed to maintain books and records for his small business, failed to provide his accountant with complete information, and discarded business records and receipts.  The government argued that these otherwise innocuous (and perfectly legal) acts were criminal because they impeded the IRS’s administration of the tax code and were done “corruptly” because they helped him obtain an unlawful benefit—evading taxes.  However, the tax code separately criminalizes tax evasion and failure to file tax returns and requires that the government prove that the defendant acted “willfully,” a heighted criminal intent, in committing these crimes.

Disagreeing with the government, the Supreme Court held that the “due administration of the tax code” as referenced in section 7212(a) did not cover any and all governmental efforts to collect taxes.  Rather, the clause refers to the specific interference with targeted governmental tax-related proceedings, such as a particular investigation or audit.  Specifically, the Supreme Court held that to secure a conviction under the “omnibus clause,” the government must show (among other things) that there is a “nexus” between the defendant’s conduct and a particular administrative proceeding, such as an investigation, an audit, or other targeted administrative action.  The government must also prove that the investigation or audit was pending at the time the defendant engaged in in the obstructive conduct or was at least reasonably foreseeable by the defendant.  Marinello v. United States, 584 U.S. __, __ (2018) (slip op., at 11).   In other words, the defendant’s actions must obstruct a currently pending proceeding or specific IRS audit.  This reasoning was based on a similarly worded criminal statute pertaining to the obstruction of “justice” as interpreted by the Supreme Court.  See United States v. Aguilar, 515 U.S. 593 (1993) (requiring proof that the defendant obstructed a specific pending proceeding, not just the government’s broad administration of justice).

With regard to a taxpayer’s payment to a babysitter, and citing an IRS regulation, Justice Breyer remarked the government’s interpretation of the statute could result in felony prosecution for a person who pays a babysitter $41 per week in cash without withholding taxes, leaves a large cash tip in a restaurant, fails to keep charity donation receipts, or fails to provide every record to an accountant.  As Justice Breyer stated, “[a] taxpayer may know with a fair degree of certainty that her babysitter will not declare a cash payment as income—and, if so, a jury could readily find that the taxpayer acted to obtain an unlawful benefit for another.”  The Supreme Court stated that if Congress had intended this result, it would have spoken with more clarity.

Justice Breyer further emphasized that criminal statutes must be narrowly interpreted and that courts cannot rely on promises of prosecutorial discretion to narrow the scope of a statute.  The Supreme Court has “traditionally exercised restraint in assessing the reach of a federal criminal statute, both out of deference to the prerogatives of Congress and out of concern that a fair warning should be given to the world in language that the common world will understand of what the law intends to do if a certain line is passed.”  Marinello, 584 U.S. at __ (slip op., at 4).  Moreover, the Court’s review of the broader statutory context of the entire Internal Revenue Code further counseled against adopting the government’s broad reading.  The Court noted that the tax code “creates numerous misdemeanors, ranging from willful failure to furnish a required statement to employees, section 7204, to failure to keep required records, 7203, to misrepresenting the number of exemptions, 7205, to failure to pay any tax owed, however small the amount, 7203.”  The Court stated that to interpret the statute as applying to any administration of the tax code would potentially transform many, if not all, of these misdemeanor provisions into felony obstruction, making the specific provisions redundant, or perhaps the subject matter of plea bargaining.  Id.  According to Justice Breyer, the government’s preferred interpretation would render superfluous many of the provisions of the same enactment, something that Congress could not have intended when it codified section 7212(a).

The Court further noted that it could not trust that prosecutorial discretion would limit the government’s use of the clause.  At oral argument, the government attorney conceded that under the Attorney General’s Charging and Sentencing Policy, where a more-punitive and less-punitive criminal statute may apply to a case, the prosecutor must charge a violation of the most punitive statutory provision that it can readily prove at trial.  Office of the Attorney General, Department Charging and Sentencing Policy (May 10, 2017).  To rely upon prosecutorial discretion to narrow the otherwise wide-ranging scope of a criminal statute’s highly abstract general statutory language places great power in the hands of the prosecutor. Marinello, 584 U.S. at __ (slip op., at 9).  The Court refused to construe the criminal statute on the assumption that the government will use it responsibly. According to Justice Breyer, doing so risks allowing “policemen, prosecutors, and juries to pursue their personal predilections,” id. (citing Smith v. Goguen, 415 U.S. 566, 575 (1974), which could result in the nonuniform execution of that power across time and geographic location.” Marinello, 584 U.S. at __ (slip op., at 9).

The Supreme Court’s holding is an important one for the rule of law, limiting the scope of overly broad criminal statutes, and protecting average taxpayers.

Erica Marshall is counsel at Cause of Action Institute

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Congress Throws Fishermen a Lifeline

March 27, 2018 by

Congress gave groundfishermen in New England a new lease on life when it appropriated funds last week to cover the cost of the At-Sea Monitoring program for 2018.  The National Oceanic and Atmospheric Administration (“NOAA”) requires groundfishermen—who target bottom-dwelling fish like cod or flounder—to carry at-sea monitors on their boats and, as of 2015, requires the fishermen to pay the costs associated with these monitors, which can exceed $700 per day.  By NOAA’s own estimates, this could put nearly 60% of the groundfishing fleet out of business.  Small, family-run businesses would be hit hardest.  CoA Institute released a short video with its client, David Goethel, that describes the destructive impact industry-funded monitoring will have on fishermen’s lives.

Judicial Review

CoA Institute filed suit on behalf of the fishermen in 2015. In 2017, the First Circuit Court of Appeals ruled that the fishermen filed their lawsuit too late because the underlying regulation was promulgated in 2010.[1]  The statute governing the fishing industry—the Magnuson-Stevens Act—has a review period of only thirty days after the finalization or implementation of a regulation for a legal challenge.  Although CoA Institute argued that imposing costs on industry for the first time in November 2015 should have restarted the clock for a legal challenge, the Court disagreed.  But the First Circuit did note that:

[G]iven NOAA’s own study which indicated that the groundfish sector could face serious difficulties as a result of the industry funding requirement, we note that this may be a situation where further clarification from Congress would be helpful for the regulated fisheries and the agency itself as it balances the competing goals of conservation and the economic vitality of the fishery.

Congress Steps Up

Congress appears to have taken notice by appropriating the funds necessary to cover at-sea monitoring costs for Fiscal Year 2018.  Congress also gave specific instructions to NOAA in order to avoid any ambiguity and ensure that the agency uses these funds for their intended purpose.

This is not a permanent solution but, for now, it will allow fishermen to stay afloat.  In the future, if regulators want to continue to impose constitutionally suspect monitors on an already-beleaguered American fishing industry, they must justify the cost to the American taxpayer.  The enormous public debt associated with the Omnibus Funding bill is reckless and unsustainable.  Eliminating at-sea monitoring would be a good start to curtailing spending.  But in the meantime, a federal agency like NOAA cannot be allowed to create a regulatory structure and then destroy an entire industry in order to fund it.  If the government cannot afford to fund its programs, those programs must end.  For 2018, at least, the government has chosen to cover the costs of monitoring, and our fishermen will get to keep on fishing.  The better solution, however, would be to eliminate at-sea monitoring altogether.

Eric Bolinder is counsel at Cause of Action Institute

[1] CoA Institute also filed a petition with the Supreme Court, which declined to take the case.

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Senators call for more transparency, support FOIA “Release to One, Release to All”

March 26, 2018 by

During a recent hearing on the Freedom of Information Act (“FOIA”), several senators complained about how federal agencies fail to respond to FOIA requests within the statutorily required time-frame. Senate Judiciary Committee Chairman Chuck Grassley complained that, in some cases, agencies may go more than a decade without producing documents that Americans have a legal right to access. “No one can say with a straight face that FOIA always works as intended,” he said. One step that Sen. Grassley suggested could enhance open government is the finalization of a policy known as Release to One, Release to All. This policy, which Cause of Action Institute supports, would expand access to government records by requiring agencies to post publicly online all records they’ve disclosed in response to FOIA requests. Currently, FOIA documents are only released to the individual or group who filed the request, and agencies are only required to post the records for the public if the record has been requested at least three times.

These records have already been vetted and deemed to be acceptable for public release, so there is little risk of personal or classified information becoming public knowledge though broader release. When documents are only provided to the requester, it is possible that other individuals may submit duplicate requests, which can amplify the problem of backlogs and make it harder for agencies to get information to the public. If these documents were to be released to everyone, however, journalists and watchdog groups could easily access them. Journalists could report on information while watchdog groups and think tanks could access records helpful for their work. A free flow of knowledge would help facilitate ideas to make government more efficient, which is why transparency is an essential aspect for a free and open society. Additionally, there may be unseen and unpredictable benefits that could arise from a massive increase in the amount of government information made public; last year there were more than 800,000 FOIA requests processed.

Cause of Action Institute submitted written testimony for the hearing supporting finalization of the “Release to One, Release to All” policy. CoA Institute President John Vecchione wrote:

Congress has long recognized that frequently requested records should be proactively disclosed by agencies. In the FOIA Improvement Act of 2016, Congress directed that once a record has been requested and released three times, the agency must post the record in its electronic reading room. Release to One, Release to All simply takes this idea one step further and would have agencies release information to the public after the first FOIA request and production.

When questioned by Senator Grassley on why “Release to One, Release to All” has stalled under the Trump Administration, Melanie Ann Pustay, the director of the Justice Department’s Office of Information Policy, cited compliance with Section 508 of the Rehabilitation Act of 1973. Section 508 requires that all federal agencies make public information accessible to people with disabilities, which includes people who are blind. Pustay argued this would require that these documents be accessible through audio, which would require additional time and resources. Senator Grassley was skeptical, stating, “It doesn’t meet the common-sense test.”

Expanded access to government records under “Release to One, Release to All” is an important policy. Rather than forcing every American to jump through hoops and pay substantial FOIA fees to obtain public records and duplicating work for FOIA officers, finalizing this policy would enhance the flow of information and allow Americans to use this information to benefit the public.

Tyler Arnold is a communications associate at Cause of Action Institute.

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White House Directive on Congressional Oversight Requests Classified as “Presidential Record,” Not Subject to Disclosure under the FOIA

March 22, 2018 by

A report published earlier this month by the General Services Administration (“GSA”) Inspector General (“IG”) provides new and illuminating, as well as concerning, details about the White House’s directives to agencies for responding to congressional oversight requests from Democratic legislators and other individual members of Congress.  The IG report confirms that during the first seven months of the Trump Administration, the GSA implemented “a series of . . . unpublished policies that effectively amended” its procedures for handling congressional communications, just as the press and transparency community alleged.  The report also concludes that the GSA’s latest published guidance, which was released in July 2017, is ambiguous because it does not reflect oral policies still in force and cites to a controversial May 2017 Department of Justice Office of Legal Counsel (“OLC”) opinion that the White House has publicly rejected.  Most alarmingly, the IG report identified the underlying written basis for the GSA’s “oral” policy as a White House-created document, which is marked “presidential record” and is therefore “excluded from public disclosure under the Presidential Records Act.”

Cause of Action’s Investigation into the GSA Nondisclosure Policy

For the past year, Cause of Action Institute (“CoA Institute’) has been investigating rumors—now confirmed by the GSA IG—that the White House is directing federal agencies to ignore congressional oversight requests from Democratic legislators and individual Members who are not committee chairmen.  Various reports in the media (here and here, for example) have detailed contentious interactions between congressional staffs and employees at the GSA and the Office of Personnel Management (“OPM”).  According to some sources, White House attorney Uttam Dhillon is responsible for instructing agencies “not to cooperate” with record requests from the minority.

CoA Institute filed a Freedom of Information Act (“FOIA”) request with the GSA in an effort to verify what the Trump Administration’s actual policy might be.  We asked for records concerning the “new policy” cited by the GSA’s Acting Administrator in testimony before Congress.  We also asked the GSA for records reflecting directives or guidance originating with the White House.  When the GSA finally provided its response, it left much to be desired.  The GSA only released two documents: a February 20, 2015 order on congressional and intergovernmental inquiries, which is now obsolete, and an April 15, 2009 White House memo that CoA Institute already had made publicly known in June 2013.

We appealed that final determination, which prompted the GSA to release two additional records created during the Trump Administration.  One of those records, a copy of the agency’s “updated Agency policy,” also known as GSA Order ADM 1040.3, was remarkable.  As I discussed in a September 2017 op-ed in The Hill, although the White House had by then disavowed the OLC opinion letter as a statement of government-wide policy following harsh criticism by Senator Chuck Grassley, GSA Order ADM 1040.3, which is dated July 24, 2017, expressly cites to the OLC opinion as the GSA’s—and, presumably, the White House’s—official policy.

We then wrote to the GSA seeking public clarification, but that request went unanswered.

Our efforts to investigate OPM have been less fruitful.  Last month, the agency responded to our FOIA request by disclosing a single email linking to the OLC opinion, but without further details concerning the opinion’s implementation or continued relevance.  Our appeal challenging the adequacy of OPM’s search efforts, as well as its redaction of the responsive email, is pending.

The GSA’s Confusing Use of “Oral” Policies for Nondisclosure

The IG’s report goes into significant detail describing the evolution of the GSA’s nondisclosure policy under President Trump, but a few key findings stand out:

  • The GSA developed a series of “oral” policies that “effectively amended” the GSA’s published procedures for dealing with Congress. These policies were formulated by the agency’s Senior White House Advisor and Acting General Counsel and disseminated throughout different agency components through “small in-person meetings,” “telephone calls,” and “hallway conversations.”  This sort of official but unwritten policy development violated the GSA’s “internal policymaking directives.”
  • This “oral” policy was continually modified. In March 2017, for example, the GSA decided to permit the disclosure of publicly available information or records that would otherwise be available under the FOIA to a non-congressional requester.  At this point, the GSA’s FOIA office started to process certain requests before providing records to the congressional affairs office for final release.  These changes were based on “guidance”—presumably, written—from the White House.
  • In another instance, the GSA started to treat congressional requests under the “Seven Member Rule” as seven individual requests, thereby avoiding mandatory disclosure as required by 5 U.S.C. § 2954. This development was prompted by Ranking Member Elijah Cummings and other Democrats on the House Oversight Committee investigating the Trump Old Post Office lease.
  • Once the GSA’s FOIA office started processing congressional requests, agency employees were unsure whether the FOIA’s procedural safeguards—such as the right to file an administrative appeal—applied.
  • In one remarkable case, despite instructions from Chairman Jason Chaffetz of the House Oversight Committee to produce agency records to both the Majority and Minority staffs, the GSA intentionally neglected to do so. A senior agency advisor reported to the GSA White House Liaison and Senior White House Advisor that the “cc to [Ranking Member] Cummings” had been “take[n] off” the response to Chairman Chaffetz.
  • The IG concluded that GSA’s nondisclosure policies did not contain vital whistleblower protection language required under federal law. Although the GSA has contested the IG’s interpretation of the law and its application in this context, the agency nevertheless agreed to change its published policies to include explicit whistleblower protection language.

The “Presidential Record” Underlying the Ongoing Problem

On May 19, 2017, the White House Office of Legislative Affairs provided the GSA with some “written guidance” on congressional oversight requests.  This guidance apparently reflected the “oral” policy that had already developed at the GSA, which limited disclosures for non-chairmen to publicly available or publicly accessible records.  This policy, and the underlying White House guidance, were the basis for the GSA Acting Administrator’s testimony before Congress.  And it is this guidance that was marked as a “presidential record,” thereby removing it from access under the FOIA.

Continued Uncertainty about the GSA’s Actual Policy

According to the IG, GSA Order ADM 1040.3 is ambiguous because it does not reflect the unwritten policies that have remained in place at the GSA as late as December 2017, as reported by some officials.  Indeed, two weeks after the order’s publication, and after the White House rejected the OLC opinion, the GSA’s Acting Commissioner for Public Buildings, in testimony before Congress, reiterated the GSA’s practice of responding only to committee chairmen.  He intimated that this was “in line with the current Administration’s policy on responding to oversight questions.”

Ultimately, the lesson here is that unwritten policies, besides being bad from a transparency perspective, lead to confusion and inconsistency.  The GSA IG concluded that many high-ranking officials at the GSA never fully understood the actual policy was for responding to congressional requests.  Nor could they answer vital questions: What was the legal basis, if any, for the GSA’s policy?  What was an “oversight” request?  Were congressional members in their individual capacity really subject to the FOIA with all of the statute’s procedural safeguards?  What role did the White House have in formulating the policy?  Was it agency-specific, or indicative of a wider, government-wide policy change?

In response to the IG’s revelations, the GSA has agreed to remove any reference to the OLC opinion in Order ADM 1040.3.  But the agency still insists on qualifying its commitment to processing disclosure requests from individual members based on unidentified “longstanding agency and Executive Branch policies.”

CoA Institute will continue to investigate this matter and the extent to which “oral” policies have influenced the processing of congressional oversight requests at other agencies.  In the meantime, we have submitted a new FOIA request to the GSA, explicitly seeking the so-called “presidential records” that were the basis for the GSA’s unwritten policies.  It is not clear why the Presidential Records Act should even apply in this instance.

Ryan Mulvey is Counsel at Cause of Action Institute

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CoA Institute President John Vecchione Submits Written Testimony to Senate Judiciary Committee for Sunshine Week

March 13, 2018 by

Before The United States Senate Committee on the Judiciary

Hearing on The Freedom of Information Act: Examining the Administration’s Progress on Reforms and Looking Ahead

March 13, 2018

Written Testimony of John Vecchione

President & CEO, Cause of Action Institute

Chairman Grassley, Ranking Member Feinstein, and Members of the Committee, thank you for the opportunity to submit this written testimony about the Freedom of Information Act (“FOIA”), the implementation of the FOIA Improvement Act of 2016, and other issues related to government transparency.

My name is John Vecchione and I am the president and CEO of Cause of Action Institute (“CoA Institute”).  We are a nonpartisan, nonprofit government oversight organization committed to ensuring that government decision-making is open, honest, and fair.  We use various communication, investigatory, and legal tools to pursue that mission.  We believe deeply that in order for a government to be accountable to the people, it must be transparent.  To that end, we use the FOIA to gather information and educate the public.  But we also police agency behavior under the FOIA, submit regulatory comments on proposed FOIA regulations, and use strategic litigation to bring agencies into compliance with the FOIA and the Federal Records Act.[1]

Today, I would like to address two important topics: the proposed policy of Release to One, Release to All and agencies updating their regulations to reflect statutory changes in the FOIA.

Release to One, Release to All

In July 2016, the country celebrated the 50th anniversary of the FOIA.  Congress marked the occasion by passing the FOIA Improvement Act of 2016.[2]  In conjunction with signing the bill into law, President Obama announced a series of policies to implement the bill and build on the goal of increasing government transparency.[3]  One of those policy initiatives was to learn from the Department of Justice Office of Information Policy’s (“OIP”) Release to One, Release to All pilot program and to work toward all agencies posting their FOIA productions online.

President Obama wrote that this “concept would ensure that all citizens—not just those making a request—have access to information released under FOIA.”[4]

[The President then] direct[ed] the newly established Chief FOIA Officers Council to consider the lessons learned from the DOJ pilot program and work to develop a Federal Government policy establishing a “release to one is a release to all” presumptive standard for Federal agencies when releasing records under FOIA.  The Chief FOIA Officers Council [was directed to] examine issues critical to this policy’s implementation, including assessing the impact on investigative journalism efforts, as well as how best to address technological and resource challenges.[5]

President Obama established a “January 1, 2017 [deadline for] the Chief FOIA Officers Council [to] work with the Office of Management and Budget (‘OMB’) to provide further guidance” on this policy.[6]

On August 10, 2016, in a round of pre-publication comments, CoA Institute submitted comments to OMB and OIP that broadly supported the Release to One, Release to All policy and identified areas where explicit guidance language was necessary to prevent abuse of discretion or agency-avoidance behavior.[7]  We support the policy “because when an agency produces records under FOIA, it has reviewed those records for release to the public and not just the requester.  Proactive disclosure of records may reduce the need for use of FOIA to access information in the first place and thus lessen the burden on FOIA offices throughout the federal government.”[8]  Congress has long recognized that frequently requested records should be proactively disclosed by agencies.  In the FOIA Improvement Act of 2016, Congress directed that once a record has been requested and released three times, the agency must post the record in its electronic reading room.[9]  Release to One, Release to All simply takes this idea one step further and would have agencies release information to the public after the first FOIA request and production.

CoA Institute is concerned that too many exceptions to the Release to One, Release to All policy could undermine the policy’s goal.  Namely, in our comments, we highlighted that an exemption for content that is “inappropriate” could be abused “to protect the agency mission, agency head, administration generally, or the president from the political fallout of an embarrassing release.”[10]  CoA Institute has been investigating the role political interference plays in the release of information through FOIA,[11] and we urged OIP not to allow such considerations to taint a Release to One, Release to All policy.  As part of this project, we recently profiled the National Oceanic and Atmospheric Administration’s practice of applying so-called “sensitive review” procedures to “high visibility” FOIA requests.[12]

We also commented on several others issues as well, including: agency compliance the readability requirements of Section 508 of the Rehabilitation Act, the posting of auxiliary information along with produced documents (such as final determination letters), and recognizing the need for a short delay between releasing information to the requester and making information publicly available in order to safeguard incentives for requesters—particularly news organizations—to make requests in the first place.

In December 2016, OIP issued a request for comment in the Federal Register, seeking input on its draft guidance.[13]  The comment period closed on December 23, 2016.  President Obama’s January 1, 2017 deadline has come and gone; and, more than a year later, neither OMB nor OIP has finalized the guidance or implemented the policy.  OIP also has refused to respond to multiple requests for updates on its process of either finalizing or abandoning the policy.  Frustrated by this lack of action, in October 2017, CoA Institute joined with the Sunlight Foundation and filed a petition for rulemaking with OIP and OMB asking those agencies to finalize the Release to One, Release to All policy.[14]  We have not received a response.

Release to One, Release to All remains an important opportunity for the government to both increase the amount of government information in the public sphere and also potentially ease the burden on FOIA offices.  It is both ironic and unfortunate that the agencies tasked with implementing a transparency policy are being opaque about their plans with regard to the policy.  I urge this Committee to press OIP and OMB to finalize and implement Release to One, Release to All.

Agency FOIA Regulations

The FOIA Improvement Act of 2016 required agencies to update their FOIA regulations within 180 days of enactment to reflect the statutory changes.[15]  As often happens, most agencies missed this deadline but, as a whole, agencies have made moderate and steady progress in updating their regulations.

There are approximately 120 agencies subject to the FOIA.[16]  Although most agencies have their own regulations, some share regulations with another agency; and some entities within an agency, such as an office of inspector general, may have FOIA regulations separate from a parent agency.[17]  Therefore, there does not appear to be an exact count of how many FOIA regulations need to be updated with each statutory amendment.  According to FOIA Advisor, a website that tracks FOIA news and regulatory developments, since the passage of the FOIA Improvement Act of 2016, approximately sixty-three agencies, or about half, have either proposed or finalized updates to their FOIA regulations.

CoA Institute has been paying particular attention to this process because many agencies still maintain an anachronistic definition of a “representative of the news media,” a category of FOIA requester that is able to access records at a reduced cost.  Congress defined the term more than a decade ago in the Open Government Act of 2007.[18]  We were embroiled in litigation over this issue when the Federal Trade Commission used the outdated standard that an entity must be “organized and operated” to publish or broadcast news to deny CoA Institute access to records by claiming we did not qualify for reduced fees and demanding we pay a large sum in order to access records.  Unfortunately, agencies sometimes try to use fees and fee definitions to deny requesters access to records.  In 2015, CoA Institute secured an opinion from the U.S. Court of Appeals for the District of Columbia Circuit holding that the “organized and operated” standard has no place in FOIA administration and that agencies must use Congress’s statutory definition.[19]

Following that decision, CoA Institute has been submitting regulatory comments to agencies when they propose or finalize new FOIA regulations in an attempt to bring those agencies’ regulations in line with the 2007 Act and binding jurisprudence.  Over the past few years, we have submitted twenty-four regulatory comments, many focused on agencies’ improper fee definitions.

Relatedly, OMB maintains a three-decades-old guidance document—which the FOIA requires agencies to follow—directing agencies to use the “organized and operated” standard.[20]  CoA Institute is currently in litigation with OMB over a petition for rulemaking we submitted urging OMB to update its guidance and conform to the statute.[21]  When CoA Institute filed that petition, the improper “organized and operated” standard appeared in the Code of Federal Regulations more than seventy times, including in the FOIA regulations of eleven cabinet-level agencies.[22]  While we have been successful in convincing several agencies to conform to the statute,[23] the improper definition of a representative of the news media still appears in dozens of agency FOIA regulations and in OMB’s guidance.

CoA Institute will continue to monitor agency regulatory updates and urge them to bring their regulations into harmony with the FOIA statute.  I urge you to raise this issue with OMB and encourage them to update their guidance document.

Conclusion

I want to thank you again for the opportunity to submit this written statement for the record.  I look forward to continuing to work with you to secure the public’s right to access documents concerning the public’s business.

 

A PDF file of the testimony is available here.

[1] See, e.g., Judicial Watch, Inc. v. Kerry, 844 F.3d 952 (D.C. Cir. 2016) (securing decision as co-plaintiff that agency Federal Records Act obligations are not moot so long as agency can still recover records that have been unlawfully removed from the government); Cause of Action v. Fed. Trade Comm’n, 799 F.3d 1108 (D.C. Cir. 2015) (securing decision on proper definition of a “representative of the news media” under FOIA’s fee provisions).

[2] FOIA Improvement Act of 2016, Pub. L. No. 114-185, 130 Stat. 538 (2016).

[3] Press Release, The White House, Fact Sheet: New Steps Toward Ensuring Openness and Transparency in Government (June 30, 2016), available at http://bit.ly/2xSReOa.

[4] Id.

[5] Id.

[6] Id.

[7] Letter from James Valvo, Cause of Action Inst., to Hon. Shaun L. S. Donovan, Dir., Office of Mgmt. & Budget, White House, & Melanie Ann Pustay, Dir., Office of Info. Policy, Dep’t of Justice (Aug. 10, 2016) [hereinafter CoA Institute Release to One, Release to All Comment], available at http://coainst.org/2lej2GH.

[8] Id. at 2.

[9] FOIA Improvement Act of 2016 § 2(a); 5 U.S.C. § 552(a)(2)(D)(ii)(II).

[10] CoA Institute Release to One, Release to All Comment at 2.

[11] See Cause of Action Inst., Grading the Government: How the White House Targets Document Requesters (Mar. 18, 2014), available at http://coainst.org/2FpsnBr; Cause of Action Inst., White House FOIA Obstruction, http://bit.ly/2r0hBub (last visited Mar. 12, 2018).

[12] Ryan Mulvey, NOAA Records Demonstrate Expansion of Sensitive Review FOIA Procedures, Cause of Action Inst. (Mar. 12, 2018), http://coainst.org/2tFnLp5.

[13] Dep’t of Justice, Request for Public Comment on Draft “Release to One, Release to All” Presumption, 81 Fed. Reg. 89023 (Dec. 9, 2016); see Draft Mem. for the Heads of Departments & Agencies, “Release to One, Release to All” Presumption:  Achieving Greater Transparency by Making More Information Available Online, from Office of Info. Policy, Dep’t of Justice (undated).

[14] See Letter from Alex Howard, Deputy Dir., Sunlight Found. & James Valvo, CoA Inst., to Hon. Mick Mulvaney, Dir., Office of Mgmt. & Budget, White House, & Melanie Ann Pustay, Dir., Office of Info. Policy, Dep’t of Justice (Oct. 31, 2017), available at http://coainst.org/2I6Xkf6.

[15] FOIA Improvement Act of 2016 § 3(a).

[16] See FOIA.gov, Where to Make a FOIA Request, Full List of Agencies, https://www.foia.gov/report-makerequest.html (last visited Mar. 12, 2018) (listing agency FOIA contacts).

[17] See, e.g., 7 C.F.R. pt. 2620 (Department of Agriculture Office of Inspector General maintaining separate FOIA regulations).

[18] See Openness Promotes Effectiveness in our National Government Act of 2007 § 3, Pub. L. No. 110-175, 121 Stat. 2524, 2525 (2007).

[19] See Cause of Action, 799 F.3d at 1119.

[20] See Office of Mgmt. & Budget, Uniform Freedom of Information Act Fee Schedule and Guidelines, 52 Fed. Reg. 10012 (Mar. 27, 1987); 5 U.S.C. § 552(a)(4)(A)(i) (Agency fee schedules “shall conform to the guidelines which shall be promulgated . . . by the Director of [OMB] and which shall provide for a uniform schedule of fees for all agencies.”).

[21] See Cause of Action Inst. v. White House Office of Mgmt. & Budget, No. 17-2310 (D.D.C. filed Nov. 2, 2017).

[22] See Letter from James Valvo, CoA Inst. to, Hon. Shaun L.S. Donovan, Dir., Office of Mgmt. & Budget, at 4 (June 2, 2016) (listing agencies), available at http://coainst.org/2D64Raw.

[23] See Ryan Mulvey, CoA Institute Criticizes the Presido Trust on Flawed FOIA Rule, Cause of Action Inst., Mar. 6, 2018, http://coainst.org/2FolU9M (detailing successful regulatory comments to “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”).

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NOAA Records Demonstrate Expansion of Sensitive Review FOIA Procedures

March 12, 2018 by

The Freedom of Information Act (“FOIA”) ensures all citizens equal and open access to records of the administrative state.  It should come as no surprise, however, that the Executive Branch has never been thrilled about disclosing its records to the general public.  At various times, the White House has orchestrated efforts to frustrate prompt disclosure of records under the FOIA, and President Trump is no exception.  In its first year, the Trump Administration has expanded the so-called sensitive review process.  In doing so, agencies have denied FOIA requesters their statutory right of prompt access to government records.

Sensitive review refers to the practice of giving certain FOIA requests extra scrutiny, usually because the records they seek could solicit media attention once disclosed.  The sensitive review process may involve an agency’s public affairs team or other communications specialists, and often includes political appointees at the agencies involved.  The process delays and sometimes prevents disclosure of records that the public has a right to see.

Recently, Cause of Action Institute (“CoA Institute”) learned that at least one agency—the National Oceanic and Atmospheric Administration (“NOAA”)—has expanded the sensitive review process by putting FOIA requests from attorneys into a special class.  In some cases, the agency has done this out of fear it would release records that could be used against it in litigation.  These evasive tactics violate the spirit and purpose of the FOIA.  They cannot and should not be tolerated.  Sensitive review of requests based on the identity of a requester can only reflect the Administration’s efforts to limit the disclosure of records, or at least the segment of requester to whom such information is provided, rather than representing any legitimate concern.

Investigating NOAA’s “High Visibility” FOIA Process

For some time now, CoA Institute has been concerned that NOAA may be abusing the sensitive review process to avoid disclosing information it would rather keep hidden.  In one FOIA production from the agency, for example, NOAA used dubious grounds to redact an email and one of its attachments almost in their entirety, as shown below.

One of the two tracking tables attached to this email included a list of incoming requests at NOAA.  NOAA withheld the substantive information concerning those requests—such as the identities of the requesters, the tracking numbers of their requests, and their respective fee category (e.g., representative of the news media)—under attorney-client privilege.  But it is difficult to credit that such benign tracking information would be privileged, particularly when many agencies regularly release FOIA logs containing just this sort of information.

The second tracking table attached to the email reflected NOAA’s contributions to a Department of Commerce-wide effort to track requests pertaining to the Trump Administration’s transition period.  For example, in response to a request from ProPublica, NOAA was unable to locate any records of correspondence with former Trump nominee Todd Ricketts.  Unlike the NOAA-specific tacking table, however, the information about departmental requests was left unredacted in most instances.

Newly Released Records Provide Details about NOAA’s Enhanced Sensitive Review

In an attempt to understand NOAA’s sensitive review practice, on December 11, 2017, we submitted a FOIA request to NOAA seeking access to all records about the agency’s practice of identifying “high visibility” FOIA requests, as well as its tracking of requests concerning the Trump transition.  This week the agency provided an interim production of responsive records, and the records produced are helping us piece together just what the agency considers to be a high visibility request.

As noted, sensitive review refers to the practice of giving certain FOIA requests extra scrutiny, including by bringing political appointees into the review process.  At the Department of Treasury during the Obama Administration, for example, a whole committee of political appointees—along with representatives from the agency’s public affairs, legislative affairs, and general counsel offices—availed themselves of the opportunity to review responsive records and delay disclosures.  In the past, sensitive review has been used to target media requesters and frustrate the release of potentially embarrassing or politically-damaging agency records.  It even prompted an investigation by the House of Representatives Committee on Oversight and Government Reform.

NOAA’s current sensitive review policy, according to one of the recently-produced records, appears to have been formulated in May 2017.  FOIA staff are expected to “[p]rovide the Office of Public Affairs each Thursday afternoon” with “weekly reports listing incoming FOIA requests of interest.”  Weekly meetings are also anticipated to discuss these requests.  The types of requests that elicit agency “interest” include those from the media and those that seek records in the public interest.  But they also include any request “submitted by an attorney.”  Moreover, NOAA’s Office of Public Affairs has the authority to “identify requests of interest warranting OPA review of response determinations.”  Although NOAA’s policy doesn’t require political appointees to insert themselves into the FOIA process, it does appear to represent a worrisome subordination of career FOIA staff to the agency’s communications shop.  That flies in the face of good government.

In our estimation, one of the more troubling aspects of NOAA’s new policy is the agency’s decision to treat FOIA requests from “lawyers” as deserving special scrutiny.  What is the basis for such treatment?  According to one of NOAA’s weekly FOIA reports, CoA Institute—a non-profit organization that is routinely recognized as a news media requester under the FOIA—was subjected to this heightened sensitive review when we requested processing notes for several earlier requests concerning the Antiquities Act.

In the “Comments” column, NOAA FOIA staff noted some alarming details about what it considered important for the Office of Public Affairs to consider:

Regardless of the motivation behind CoA Institute’s, or anyone’s, request, it is illegitimate for an agency to treat a requester differently simply because the agency fears the requester may enforce his rights in a court of law.  FOIA litigation is unique in that there is a tremendous asymmetry in knowledge between the parties about the processing of a request.  That can make it difficult for a requester to challenge agency affidavits defending the adequacy of a search or the use of an exemption.  Courts already routinely defer to such affidavits.  It now seems NOAA wants to fight against anything that could result in the public learning more about the way a request is processed.  Subjecting requests for processing notes to sensitive review could also suggest that NOAA is strategically laying the groundwork for the future application of the attorney-client or attorney work product privileges, namely, by memorializing the agency’s expectation of future litigation—no matter how distant, unreasonable, or disconnected that “expectation” may be from reality.

NOAA’s fear of a “litigation risk” from CoA Institute even prompted the flagging of other requests from unrelated parties about similar topics.

The fear of possible litigation also underlies the agency’s reticence to produce FOIA logs—basically, a type of processing note—when those records implicate subject-matters that could receive media attention.

NOAA continues to process CoA Institute’s December 11, 2017 request, and we have yet to review all the records that have been disclosed thus far.  Many of these records are in Word or Excel format and contain detailed metrics on the performance of NOAA’s FOIA office, including efforts to eliminate the backlog of pending requests.  As we review the available data and begin to receive correspondence reflecting sensitive review deliberations, we will provide additional updates on our website.

Sensitive Review as a Form of FOIA Politicization

The enhanced sensitive review at NOAA is concerning.  But it also confirms a growing suspicion in the news media and the FOIA requester community that the Trump Administration is intentionally increasing the involvement of agency leadership and political appointees in the processing of FOIA requests.  Last December, the Washington Post reported that officials at the Environmental Protection Agency (“EPA”) and the Department of the Interior (“Interior”) had started to “keep closer tabs” on incoming requests for records that could be embarrassing or politically damaging to the Administration.  More recently, a senior career official at the Department of Housing and Urban Development (“HUD”) claimed to have been “barred from handling” requests submitted by the Democratic National Committee because she was perceived to be a “Democrat,” and therefore opposed to the Administration’s interests in limiting the disclosure of embarrassing of politically-damaging information.

As I have explained, the improper interference by political appointees in the administration of the FOIA is hardly new.  It has been ongoing for years regardless of which party controlled the White House and in a variety of federal agencies, including the Department of Treasury, the Department of Housing and Urban Development, the EPA, Interior, the State Department, the Department of Veteran Affairs, the Department of Defense, and the Department of Homeland Security (“DHS”).  (Admittedly, it does seem that DHS has made efforts to limit political appointees’ involvement in FOIA administration.)

To the extent President Trump has sought to avoid transparency and open government—to chip away at the “colossus” of FOIA, as Nate Jones has described—he is following in the unfortunate and inexcusable footsteps of his predecessors.  That action should not go uncontested.  CoA Institute remains committed to holding the White House and every federal agency accountable when they violate the spirit and letter of the FOIA.

Ryan Mulvey is Counsel at Cause of Action Institute

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DHS Fails to Locate Records Concerning Compliance with Federal Records Act over Private Web-based Email Accounts

March 8, 2018 by

Cause of Action Institute (“CoA Institute”) filed a Freedom of Information Act (“FOIA”) appeal with the Department of Homeland Security (“DHS”) yesterday, challenging the adequacy of the agency’s search for records concerning the use of private web-based email accounts by former DHS officials, as well as efforts to recover federal records from those officials’ accounts, as required by the Federal Records Act (“FRA”).  Although DHS disclosed two records in response to our request—namely, a letter from the National Archives and Records Administration (“NARA”), which expressed concern over the possible alienation of federal records, and DHS’s response to NARA—DHS’s repeated representations in federal court demonstrate the existence of countless other responsive records.

High-Ranking DHS Officials Received “Waivers” to Use Private Web-based Email Accounts

In July 2015, Bloomberg reported that then-Secretary Jeh Johnson and at least twenty-eight other senior officials at DHS were granted special permission to used private web-based email accounts—such as Google and Yahoo—to conduct official business.  These “waivers” were exceptions to an agency-wide ban on the use of private email that was imposed in April 2014.  Agency insiders admitted that the practice of issuing such waivers was a “national security risk.”  As reported by Politico, DHS ended its use of waivers, but the agency still faced numerous FOIA requests—and a lawsuit brought by Judicial Watch—from those seeking access to the work-related records created or received on the private web-based email accounts.

CoA Institute’s Initial Investigation into the DHS Webmail Waivers

On September 11, 2015, CoA Institute submitted a FOIA request to DHS for all agency records maintained on Secretary Johnson’s—or any other official’s—private web-based email account.  We also sought records concerning the DHS webmail waiver regime, including policies on how waivers were granted or guidance on record retention that may have been provided to waiver recipients.  In response to the request, DHS provided a substantial number of records concerning the actual processing of waivers, but it failed to produce any official correspondence from the private accounts.  Although we appealed that determination, DHS upheld the adequacy of its search, even though it had openly admitted in court to having control over actual responsive records.  A federal district court judge even issued a preservation order to ensure that former officials would continue to cooperate with recovery efforts under the Trump Administration.

Exploring DHS’s Compliance with the Federal Records Act

Armed with the knowledge that DHS was working to recover potential federal records from Secretary Johnson’s private web-based email account, as well as the accounts of three other former officials, CoA Institute filed two additional FOIA requests on June 1, 2017.  We asked both DHS and NARA to disclose records concerning NARA approval for the practice of issuing webmail waivers, as well as records reflecting the agencies’ compliance with their FRA obligations.  For example, we wanted to know whether DHS had involved the Attorney General in recovery efforts, or whether anything had been done to recover records from the other twenty-five webmail recipients that were not the subject of Judicial Watch’s ongoing FOIA litigation.

DHS could only locate two responsive records.  The first was a February 22, 2017 letter from NARA, which was prompted by the Judicial Watch lawsuit and raised concerns about the possible alienation of federal records.  NARA asked DHS to prepare a report on its recover efforts, along with a description of the “safeguards” that had been implemented to prevent the future alienation of records from private web-based email accounts.  The second responsive record was DHS’s Mary 19, 2017 response to NARA, in which the agency described its ongoing communications with Secretary Johnson and others to facilitate the return of potential federal records.  DHS claimed it was unable to locate any other responsive material.

This is an absurd determination.  DHS has repeatedly described its ongoing efforts to comply with the FRA and to ensure that work-related emails from the private web-based email accounts are returned to the agency, at least with respect to the four officials identified by Judicial Watch.  Whither the records of such communications?  CoA Institute’s request to DHS was intentionally broad and sought to capture, among other things, “any correspondence from a webmail recipient indicating that he or she no longer ha[s] possession of DHS records in a personal email account, or that he or she ha[s] forwarded them to a DHS-hosted email account, and any records evidencing agency efforts to confirm the truth of such representations.”

As for our request to NARA, that agency has failed to provide any sort of interim response, let alone a final determination, despite the fact it had granted CoA Institute’s FOIA request expedited processing.

The Lack of Transparency in Agency Compliance with the Federal Records Act is Troubling

The Obama Administration established a pattern of high-ranking officials using personal email accounts to conduct agency affairs, thereby potentially ignoring federal laws that require the preservation of records for future disclosure to Congress and the American public.  The lack of transparency with respect to the use of private email is concerning enough; the lack of transparency over efforts to remedy abusive and unauthorized use of personal email, and to return records to agency custody, is even more worrisome.  Government-oversight organizations such as CoA Institute have increasingly been forced to seek judicial relief to ensure agency compliance with the FRA, and this tendency is only likely to increase given the pace of technological development.

DHS seems to be working extra hard to keep secret whether it has fully met its FRA obligations.  It was certainly embarrassing for the agency when its practice of issuing waivers that allowed agency leadership to use private web-based email accounts came to light.  It will be even more embarrassing if evidence surfaces to show that DHS is still dragging its feet to recover those records, as required by law.

Ryan Mulvey is Counsel at Cause of Action Institute

 

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