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Federal Court Limits Agency Abuse of News Media Requesters: Cause of Action Changes Legal Landscape for Government Accountability

August 25, 2015 by

WASHINGTON – Today, in a watershed victory for government transparency and accountability, the D.C. Circuit Court rejected a lower court’s limited reading of the Freedom of Information Act (FOIA). The Court’s opinion is one of the most important transparency decisions in decades.

CLICK HERE TO READ THE COURT’S OPINION

Marking a victory for Cause of Action, a government oversight group committed to limiting the abuse of federal power, the Court rejected the Federal Trade Commission’s (FTC) attempt to block Cause of Action from obtaining access to documents by improperly charging fees. Instead, the Court remanded for reconsideration of Cause of Action’s status as a representative of the news media and its request as being one in the public interest.

Cause of Action Executive Director Dan Epstein issued the following statement:

“Today’s decision is the most significant court ruling for the news media in over a quarter-century and represents a major victory in the fight to make the federal government more transparent. As a result of this ruling, the ability of federal agencies to deny fee waivers in order to stifle the release of information has been significantly limited. We, together with our partners from the Reporters Committee, are hopeful that this decision spurs a new era of greater public access to information.”

FOIA fees have been notoriously abused by agencies to prevent startup – and even well-established – nonprofit news media organizations from obtaining government documents under fair treatment and without prohibitive fees. Notably, the Court pointed out today that fee waiver determinations are subject to judicial review, establishing that the law treats nonprofit and new media organizations equally with traditional news organizations, like newspapers and broadcast media.

Background:

In 2011, Cause of Action sought records under the FOIA from the FTC, stating we were interested in the requested documents to “inform the public about a threat to the First Amendment rights.” Cause of Action said that because we are “a nonprofit educational organization with no commercial purpose,” we are entitled to a public-interest fee waiver.

The FTC denied our request for waiver of fees in the public interest. We responded to FTC’s denial, stating FTC was incorrect and demonstrated why our request was in the public interest. Cause of Action argued that alternatively, we should be granted a fee waiver as a member of the news media.

The FTC refused, saying Cause of Action was not a news media organization entitled to a fee waiver because we had not proven we could disseminate information. The FTC gave us 100 pages without charge, pursuant to agency policy, and withheld the rest of the production pending Cause of Action’s payment of fees. Our organization refused to pay the fee and made two subsequent FOIA requests to the FTC, and received the same response each time. During that process, the FTC released 300 pages of information without charge, but withheld the rest until we paid.

Cause of Action sought review of the FTC’s decision in the United States District Court for the District of Columbia in 2012, challenging both the FTC’s decision to withhold some of the responsive records as exempt from disclosure and its denial of Cause of Action’s applications for fee waivers. The District Court ruled in favor of the FTC, and Cause of Action, joined with amici the Daily Caller News Foundation and the Reporter’s Committee for Freedom of the Press, appealed to the United States Court of Appeals for the District of Columbia, which issued today’s opinion.

Filed Under: Press Release, Media

Weekly Rundown 8-21-2015

August 21, 2015 by

In the News:

CNN – Clinton aides’ BlackBerry phones likely destroyed

According to the State Department it is their procedure to destroy outdated BlackBerry phones, but State Department spokesman John Kirby said they were probably reset to factory settings after being returned.  The State Department claims to have no idea where the phones could have ended up if they weren’t destroyed.

Washington Post – Hillary Clinton won’t say if her server was wiped

Former Secretary of State Hillary Clinton continues to claim that she is doing everything in her power to cooperate with the FBI and that she has no idea if her server was wiped or not.  None of the now discovered classified emails were written by Mrs. Clinton, according to the State Department.

Politico – Judge says Hillary Clinton’s private emails violated policy

Federal Judge Emmet Sullivan was in a Freedom of Information Act lawsuit hearing when he stated “We wouldn’t be here today if this employee had followed government policy.”  He was referring to Hillary Clinton and her lack of regard for the rules when she used a private server when sending and receiving work emails.

Daily Caller – Inhofe: EPA’s Trying To Regulate Sewers

The Environmental Protection Agency is looking to increase its regulatory reach by claiming they can regulate places that USED TO BE streams and wetlands.  It used to be standard to build sewers in existing streams.  In order to figure out the impact the Clean Water Act will have on city sewer systems Sen. Jim Inhofe has contacted the EPA for clarification.

Nextgov – SHADOW BYOD RUNS RAMPANT AT FEDERAL AGENCIES

The practice of bringing your own device (BYOD) to use for work purposes has been banned in many federal agencies. You may be wondering what nefarious means federal employees have used to bypass the ban.  It’s actually very simple.  Federal employees just use their own devices anyway.

Fox News – IRS targeting scheme is a scandal with no end in sight

“Evil” and “dishonest” were the words Lois Learner used to describe the Republicans who had her testify about the IRS targeting scandal.  Lois Learner also didn’t like the pictures taken of her in the courtroom saying, “I looked like crap. I don’t look like that anymore, but it serves their purposes of hate mongering to continue to use those images.”  These statements do not help Ms. Learner’s case that she was unbiased in her role as Director of Exempt Organizations.

Filed Under: News, Media

Weekly Rundown 8-14-2015

August 14, 2015 by

Cause of Action in the News:

Wall Street Journal – Opinion Journal: Hillary Email Scandal: What’s Next?

Watch Cause of Action’s executive director Dan Epstein talk about the Hillary Clinton email scandal with Mary Kissel on Opinion Journal.

National Law Journal – Clinton Email Saga Means Work for Big Law

Clinton has defended her use of a private email server to conduct official business. Several judges are overseeing lawsuits in U.S. District Court for the District of Columbia over access to those emails as well as emails and other records from former Clinton staffers at the State Department. They’ve expressed frustration with the department’s speed in making documents public. Government watchdog groups Judicial Watch and Cause of Action filed a lawsuit earlier this year accusing the State Department of violating federal recordkeeping laws.

The Hill – Turmoil mounts surrounding Clinton emails

According to Cause of Action’s Dan Epstein Hillary Clinton is setting herself up to be a “cooperating witness for a potentially larger criminal investigation beyond Ms. Clinton herself.” Hillary Clinton is attempting to shrug off the fact that classified emails have been found that were held on her private server.

Washington Free Beacon – Cronyism Lawsuit Against Energy Department’s $25 Billion Green Energy Program Advances (Federal judge rules ‘political favoritism’ lawsuit against DOE can proceed)

“For the first time, a federal district court has confirmed there is a legal remedy when cronyism influences federal administrative discretionary spending. This groundbreaking opinion establishes that the government owes everyone—not just presidential campaign donors—a fair shake when awarding government funds.” Dan Epstein, executive director of Cause of Action sums up the court’s decision to allow our lawsuit against the Department of Energy to continue.

In other news:

Washington Post – Hillary Clinton’s e-mail server turned over to FBI

The e-mail server used by Hillary Rodham Clinton when she served as secretary of state was turned over to the FBI late Wednesday afternoon from a private data center in New Jersey, according to an attorney familiar with the transfer.

Fast Company – TECH GIANTS: HERE’S WHAT THE FTC MEANS BY “COMPETITION”

THE FEDERAL TRADE COMMISSION (SORT OF) EXPLAINS HOW EXACTLY IT DEFINES ANTI-TRUST BEHAVIOR. This may be good news for leading tech firms: For the first time in more than a century, the Federal Trade Commission (FTC) has defined what “competition” means and what constitutes “anti-competitive behavior.” The decision is significant for companies like Google, Facebook, Intel, and Apple, which have all received unwanted scrutiny from the FTC—though it may not clear things up as much as they would like.

Fox News – Watchdog accuses OPM of hindering hack investigation

The Office of Personnel Management has intentionally slowed the investigation looking into the data breach of millions of federal employees claims the OPM inspector general.  Inspector General Patrick McFarland has said that he is no longer sure that the OPM chief information officer is “acting in good faith”.

Filed Under: News, Media

Federal Judge Issues Landmark Ruling on Cronyism in Energy Loan Guarantee Program

July 15, 2015 by

Ruling marks the first time a court has allowed a claim under the Administrative Procedure Act on the basis of cronyism or political favoritism in federal discretionary spending.

In response to a legal complaint filed by Cause of Action (CoA), a federal judge has declared that U.S. Department of Energy discretionary spending tainted by alleged cronyism and political favoritism is subject to legal challenge.

Read the Opinion Here

Read the Order Here

Cause of Action represents XP Vehicles (XPV) and Limnia, two green energy companies that were denied loans and a loan guarantee in favor of politically-connected corporations.

XPV is a now-dissolved company that had applied for a loan under the DOE’s Advanced Technology Vehicle Manufacturing (ATVM) Loan Program in order to manufacture a lightweight, energy-efficient sport utility vehicle. XPV partnered with Limnia, a company that developed an energy storage system to power XPV’s proposed vehicle. Limnia had applied for an ATVM loan, as well as a loan under DOE’s Section 1703 Loan Guarantee Program (LGP).

The ATVM Loan Program is designed to provide direct loans to manufacturers of energy-efficient vehicles, while the LGP allows the agency to guarantee loans for advanced technology projects that result in the avoidance or reduction of air pollutants. This is the same program that awarded Solyndra $535 million in taxpayer funds.

During and after the loan application process, XPV and Limnia learned that these loan programs were being run for the benefit of politically-connected insiders.  For example, DOE provided application assistance to Tesla and Fisker that it refused to provide to XPV and Limnia (and others), and then large taxpayer-funded loans. A member of Tesla’s board, who was also a bundler during President Obama’s campaigns, was on a key DOE advisory board, and another bundler who was a Tesla investor and advisor had a primary role in the DOE’s Loan Program Office. In addition, individuals tied to Fisker had made large donations to the Obama campaign and other Democratic causes.  Also, there were emails suggesting that the DOE’s review of a loan applicant was sped up as a result of pressure from then-House Majority Leader Steny Hoyer; that the White House made an effort to encourage DOE to hasten review of another loan application; and that DOE bent its own rules to play favorites. CoA also relied upon two Government Accountability Office reports about these programs that highlighted the potential for abuse.

Judge Ketanji Brown Jackson on the United States District Court for the District of Columbia agreed with CoA, ruling that Limnia has adequately alleged that the DOE’s denials of Limnia’s ATVM Loan Program and LG Program applications were the result of arbitrary and capricious agency action in violation of the APA.

Judge Jackson has thereby allowed Limnia’s claims to proceed. This is significant because prior to this ruling, no court had ever held that cronyism or political favoritism could result in a grant or loan program being administered in an arbitrary and capricious manner.

Cause of Action Executive Director Dan Epstein issued the following statement on the ruling:

“When politicians and agencies allow companies to purchase government access, the basic foundation of our free market economy is compromised. For the first time, a federal district court has confirmed there is a legal remedy when cronyism influences federal administrative discretionary spending. This groundbreaking opinion establishes that the government owes everyone – not just Presidential campaign donors – a fair shake when awarding government funds. Judge Ketanji Brown Jackson’s common-sense judgment that government decisions tainted by cronyism and political favoritism are ‘arbitrary and capricious’ is a victory for individuals and businesses everywhere.”

Filed Under: Press Release Tagged With: ,

Cause of Action Lawsuit Challenges Legality of Hillary Clinton’s Email Practices

July 8, 2015 by

Cause of Action sues Secretary of State John Kerry and the National Archivist

for failing to preserve former Secretary Clinton’s electronic records

In the first federal action filed to mandate retrieval of former Secretary of State Hillary Clinton’s records and declare her actions unlawful, Cause of Action filed a lawsuit today to compel Secretary of State John Kerry and U. S. Archivist David Ferriero to comply with their statutory duty to initiate legal action through the Attorney General for the recovery of federal records former Secretary of State Hillary Clinton unlawfully removed from the State Department and stored on her personal server. Federal law requires these agency heads to notify Congress when such action has been taken.

This suit was brought in the in United States District Court for the District of Columbia under the Federal Records Act and Administrative Procedure Act.

[Click HERE to view the complaint]

Cause of Action Executive Director Dan Epstein issued the following statement:

“This case is about no government official being above the law and the duty of Secretary Kerry and Archivist Ferriero to fulfill their statutory obligations to hold former Secretary of State Hillary Clinton accountable for misusing taxpayer funded federal property. Mrs. Clinton’s emails relate to the official business of the United States, thereby requiring treatment as federal records. Even if we were to set aside the catastrophic failure of these agencies to implement and oversee proper record keeping protocols during the former Secretary’s tenure, the refusal to recover the documents now constitutes brazen neglect at best and cover-up of illegal activity at worst.”

Filed Under: Press Release Tagged With: ,

Top Export-Import Bank Official Deleted His Text Messages After We Asked For Them

June 24, 2015 by

WASHINGTON — As the Export-Import Bank fights to renew its charter this week, it will also have to contend with a new lawsuit we filed today after learning that a senior bank official destroyed federal records.

Through the Freedom of Information Act, our organization discovered that Ex-Im’s Chief of Staff, Scott Schloegel, deleted text messages he sent and received during the week of last year’s election.

CLICK HERE TO READ OUR COMPLAINT

On November 14, 2014, Cause of Action submitted a Freedom of Information Act request to Ex-Im. The request sought text messages, Blackberry messenger chats and SMS messages sent or received by top officials during the period of days between November 2, 2014 and November 8, 2014.

Ex-Im received our FOIA request on November 20, 2014, yet it did not respond to us until May 12, 2015, nearly six months later.

In its response, Ex-Im said, “the messages for Scott P. Schloegel were accidentally deleted on approximately January 1, 2015.” In one of the documents produced to us, Schloegel states in a signed declaration that he “deleted, by mistake, the messages on . . . [his] phone for the period in question.”

The date of Schloegel’s signed statement was March 27, 2015 — over four months after the Bank received our request for his records.

Due to Schloegel’s destruction of records, we have filed a legal complaint against the Bank. The complaint calls on Ex-Im, and the National Archives and Records Administration, to ask the Justice Department and/or Congress to initiate action to recover the deleted messages.

Cause of Action Executive Director Dan Epstein issued the following statement:

“The fact that a top official at the Export-Import Bank deleted his text messages several weeks after our organization asked to see them raises serious questions. Furthermore, it’s puzzling that it took the Bank another four months to let us know that this happened. The public deserves to know what their government is up to, and we will work tirelessly to continue to hold these federal agencies accountable.”

The full list of officials whose records we sought includes:

  • President and Chairman Fred Hochberg
  • Senior Vice President and Chief of Staff Scott Schloegel
  • Deputy Chief of Staff Gaurab Bansal
  • Senior Vice President of Communications Bradley Carroll
  • Senior Vice President of Congressional Affairs Erin Gulick
Filed Under: Press Release Tagged With:

Cause of Action Launches Investigation Into The Justice Department’s Settlements With Large Financial Firms

June 17, 2015 by

WASHINGTON – Cause of Action (CoA), a nonpartisan strategic oversight group committed to ensuring that discretionary decision-making is accountable, transparent and fair, has filed a Freedom of Information Act request seeking clarity from the Justice Department on its legal authority to enter into financial settlements and arbitrarily allocate settlement funds.

Additionally, CoA is petitioning the Treasury and Justice Departments to show how the bank settlements comply with the Miscellaneous Receipts Act and the Government Corporation Control Act.

Click here to view the FOIA and the petition for rule making

Last August, the Department of Justice entered into a record $16.65 billion settlement with Bank of America, marking the agency’s largest victory against major banks that sold residential mortgage-backed securities (RMBS) prior to the 2008 financial crisis. Related settlements reached with Citigroup and JP Morgan brought the total DOJ victory against these three banks to a whopping $36.65 billion.

Typically, settlement funds are directed to the Treasury for appropriation by Congress. Of that nearly $37 billion dollars in settlement funds, the Justice Department has directed $13.5 billion to consumer relief efforts and third-party consumer groups – that’s more than the entire IRS budget in FY2014.

For example, provisions of the BofA settlement require the bank to pay at least $20 million to housing counseling agencies approved by the Department of Housing and Urban Development and at least $50 million to Community Development Financial Institutions certified by the Treasury Department.

The payouts raise the question of whether the Justice Department has the legal authority to enter into these colossal settlements, and distribute funds to unrelated third parties instead of victims aggrieved by the Banks’ actions.

Cause of Action Executive Director Dan Epstein issued the following statement:

“Lacking accountability and proven effectiveness, when the government forces economic redistributions through discretionary grants, it not only hinders long-term social change, it encourages waste fraud and abuse by grant recipients who are not held accountable for protecting the poor versus protecting themselves.”

Policy experts have written and testified before Congress expressing their concern that the settlements impermissibly settle claims of DOJ and other agencies, improperly distribute funds to unrelated third parties, and do not ensure that the funds DOJ and third parties receive are used to redress the harms identified in the settlements.

To date, the Justice Department has failed to identify any legal authority allowing itself to arbitrarily mandate these measures. Absent regulatory guidance, federal agencies are required to go through the rulemaking process, which the Justice Department has not done.

During a recent House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law hearing, Epstein testified that the “Bank of America settlements were not subject to notice and comment. These were unelected officials engaging in decision-making that the public had no stake in.”

Responding to inquiry from Rep. Hank Johnson (D-GA), Epstein noted, “in the case of Bank of America, that settlement agreement was never approved by a court. As you pointed out in your arguments about arbitration, you actually believe in a very robust court system. Yet that robust court system has nothing to do with the programs and policies that have been discussed here today.”

To ensure that government decision-making is transparent and fair in order to protect against the misuse of tax dollars and arbitrary abuses of discretion by the unelected, Cause of Action has requested access to the following documents pursuant to the Freedom of Information Act:

  • All records referring or relating to DOJ’s authority to agree to the Consumer Relief Donation Provisions of the RMBS Settlements.
  • All records referring or relating to DOJ’s authority to assume the contractual claims/settlement terms of the FDIC and SEC.
  • All records referring or relating to DOJ’s authority to enter into and/or reasons to execute the RMBS Settlements without notice and comment rulemaking.
  • All communications within DOJ, and/or between DOJ and any of the following: a) Bank of America; b) Citigroup; c) JP Morgan; d) FDIC; e) SEC; f) HUD; g) Treasury; h) the White House; i) the RMBS Working Group; and j) the states of California, Delaware, Illinois, Kentucky, Maryland, Massachusetts, and New York, regarding the RMBS Settlements.  You may limit the scope of this search to communications referring or relating to “Operation ChokePoint”, “CDFI”, HUD-approved housing counsel*”, “Neighborworks”, “Home Affordable Mortgage Program” and “HAMP”.
  • All records referring or relating to DOJ’s authority to bind private parties to comply with HAMP by entering into the RMBS Settlements.
  • All records referring or relating to (a) Huduser.org; (b) OMB Circular A-25; (c) the Chief Financial Officers Act; (d) the Anti-Deficiency Act; (e) “publicity or propaganda”; (f) the Colorado Division of Housing; (g) Empire Justice Center; (h) Center for New York City Neighborhoods.  You may limit the scope of this search to records concerning the Consumer Relief Donation Provisions.
Filed Under: Press Release Tagged With: ,