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The Hill: Six recommendations to make Washington more transparent

January 16, 2015 by

January 16, 2015, 10:30 am

Six recommendations to make Washington more transparent

By Dan Epstein

The 114th Congress, which convened on January 6, faces a deeply uncomfortable reality: The American people simply don’t trust their government. Fully two-thirds of Americans believe that Washington is on the wrong track. Public approval of Congress currently hovers around 15 percent—only one point above its all-time low.

The incoming Congress must seek to address this crisis of confidence. Our elected officials can start by taking up transparency and accountability issues to make the government more accountable to taxpayers.

Cause of Action recommends that Congress act in six specific policy areas:

Require Inspectors General to Actually Investigate. Perhaps the most important pro-transparency initiative that Congress can implement is ensuring compliance with the Inspector General Act. Under the Act, Inspectors General are authorized to conduct full investigations when they receive tips that illegal activity is occurring at a federal agency.

This topic is particularly newsworthy given the recent report from the Treasury Inspector General for Tax Administration (TIGTA) confirming that the IRS targeted certain conservative nonprofits based on their political beliefs. However, TIGTA’s report was based only on an audit and not a full investigation. This limited inquiry into IRS’s clearly inappropriate behavior raised more questions than it answered.

In such situations, Inspectors General—whether at the IRS or any other federal agency—should conduct investigations, based upon compulsory interrogatories, subpoenas, and depositions. Audits, which are designed to review program effectiveness, are not the appropriate method of identifying and resolving allegations of illegality, remediable only through an investigative process.

Reintroduce the Grant Act. The Grant Act, originally introduced by then-Rep. James Lankford (R-Okla.) in 2011, is a straightforward bill that would make the federal grant process transparent. It requires federal agencies to establish uniform standards for how they notice, award, and disclose competitive grants. It would also require agencies to rank grant applicants according to those standards—and make them justify any deviation from those rankings. Ultimately, this would allow taxpayers to ensure that federal agencies are awarding grants using a merit-based—and not a politicized—process.

Police Fraud. In 2013, 3.5 percent of all federal payments were improperly awarded—a sum reaching $106 billion.  Congress should conduct oversight to ensure that agencies and the Department of Justice in particular are enforcing anti-fraud laws like the False Claims Act, the Improper Payments Information Act, and the Program Fraud Civil Remedies Act.

The U.S. Government Accountability Office reports that most Inspectors General fail to enforce the Program Fraud Civil Remedies Act.  Further, public reports by federal agencies that merely identify allegations of fraud (like an audit) have barred whistleblowers from pursuing claims under the False Claims Act even when the feds fail to remedy the abuses.

Congress must ensure that these laws designed to empower whistleblowers are not being misread to incentivize agency failures to prevent fraud.

Hold the White House Accountable. In 2009, the White House, secretly demanded that federal agencies keep it apprised of any document requests containing “White House equities”—a term undefined by statute or regulation. Notwithstanding this lack of clarity, the White House obstructs congressional oversight and violates the spirit of FOIA when its political staff chills public oversight for the benefit of the President’s political image.

Congress should increase its oversight over the FOIA process to prevent the White House’s political offices from meddling into records requests to agencies or otherwise amend FOIA to subject those political offices to greater transparency.

Ensure Agencies Follow the Law. The Federal Records Act requires that agencies notify the Archivist of the United States if there is a proposed removal or destruction of records. The Internal Revenue Services’ failure to properly notify the Archivist regarding the supposed destruction of Lois Lerner’s emails shows that this process must be reformed.

Congress can strengthen enforcement of the Federal Records Act by reviewing the reporting process. Congress should also require that agencies create multiple sets of electronic back-ups to preserve emails and other important data.

Encourage FOIA Compliance. The Freedom of Information Act has been updated numerous times to keep pace with changes in technology, yet federal agencies continue to find new ways to avoid transparency. For example, while text messages involving official government business are records subject to FOIA, some agencies simply do not know how to locate and search for these records, disenfranchising the public of information. Another problem, reflected by the 30,000 “lost” and then later “found” Lois Lerner e-mails, is that agencies routinely destroy records – a crime – without any liability.

In light of this, Congress should conduct aggressive oversight to deter agencies from destroying or improperly withholding relevant records.

Effective congressional oversight would demonstrate to the public that the 114th Congress is serious about wisely stewarding taxpayer money and protecting the public from arbitrary and abusive executive power. It’s time for our elected officials to prove that they’re serious about making government work for, rather than against, the American people.

Epstein is the executive director of Cause of Action, a non-partisan organization that uses public advocacy and legal reform tools to ensure greater transparency in government, protect taxpayer interests and promote economic freedom.

Filed Under: News Tagged With:

The Hill: Senate Judiciary approves FOIA reform

November 20, 2014 by

Read the full story:  The Hill

The bill would also make more documents available online and would expand a program that requires agencies to post records regularly used by the public. It would also clarify that individuals cannot be charged for information that was handed over late.

 

“The FOIA Improvement Act sets limits on the ability of agencies to stonewall requesters, which is why the Senate Judiciary’s approval is a move in the right direction for all who have an interest in a more transparent federal government,” said Dan Epstein, executive director of Cause of Action.

Filed Under: News Tagged With:

Congress Questions FTC’s Evidence Against LabMD

June 12, 2014 by

FOR IMMEDIATE RELEASE                                                                                                   

June 12, 2014

 

 Congress Questions FTC’s Evidence Against LabMD

WASHINGTON – On June 11, 2014 Congress’s chief watchdog, the House Committee on Oversight and Government Reform, advised the Federal Trade Commission (FTC) that the information the FTC obtained from Tiversa, Inc. is “false,” “incomplete” and “inaccurate.”   The Committee also said that it expected the FTC to “cooperate fully” with any subsequent document requests or transcribed interviews with FTC employees.

Cause of Action, a government accountability and transparency organization, has been defending LabMD, an Atlanta-based cancer-detection lab, in an ongoing Federal Trade Commission enforcement action alleging that LabMD’s data security, though not in violation of applicable HIPAA regulations, is unreasonable.

The FTC commenced its four and one-half year assault against LabMD based on information it obtained from Tiversa, Inc. Tiversa is a company claiming to specialize in peer-to-peer network security.

The FTC obtained confidential LabMD patient information from Tiversa in 2009 by way of a sham corporation located in the home of Tiversa’s CEO’s uncle.  Although Tiversa had a strong commercial interest in the FTC’s commencement of enforcement proceedings, there is no evidence that the FTC took any steps to authenticate Tiversa’s claim that LabMD patient files had been found in multiple places on a peer-to-peer network.  As the FTC and Tiversa were both aware, the unauthorized taking of patient files from a Georgia workstation, by peer-to-peer software or by any other means, is a crime under Georgia law.

To date, the FTC has refused to make public the full nature and extent of its relationship with Tiversa.

According to Dan Epstein, Cause of Action’s Executive Director, “the House Oversight Committee’s investigation should send a message to federal agencies, the President and the courts that the arbitrary abuse of administrative power will not go unchecked.  Cause of Action exists to hold accountable those who so choose to abuse their office.  This is why it has investigated and litigated for LabMD to stop the FTC from arbitrarily expanding and abusing its power by victimizing an entrepreneur who did nothing wrong.  The Committee’s action, and the record of testimony before the Administrative Law Judge and Judge Duffey in the U.S. District Court in Georgia, all lead to a single conclusion:  That the FTC – including its commissioners and staff attorneys – must be stopped.”

Excerpts from today’s hearing before the Chief Administrative Law Judge Michael Chappell of the FTC as well as statements from FTC Commissioner J. Thomas Rosch and U.S. District Court Judge William Duffey all point to the dangers or the FTC relying upon unauthenticated evidence as the basis for targeting LabMD:

Commissioner J. Thomas Rosch from his dissent on June 21, 2012 to the FTC’s denial of LabMD’s request to quash civil investigative demands against the company:

Specifically, I am concerned that Tiversa is more than an ordinary witness, informant, or “whistle-blower.” It is a commercial entity that has a financial interest in intentionally exposing and capturing sensitive files on computer networks, and a business model of offering its services to help organizations protect against similar infiltrations. Indeed, in the instant matter, an argument has been raised that Tiversa used its robust, patented peer-to-peer monitoring technology to retrieve the 1,718 File, and then repeatedly solicited LabMD, offering investigative and remediation services regarding the breach, long before Commission staff contacted LabMD. In my view, while there appears to be nothing per se unlawful about this evidence, the Commission should avoid even the appearance of bias or impropriety by not relying on such evidence or information in this investigation.

Judge William Duffey, from the May 7, 2014 United States District Court Northern District of Georgia hearing in LabMD v. FTC:

THE COURT: But the assistant director has just said that there will be evidence presented before a judicial officer, I guess an administrative law judge, in which somebody will state these nine thousand individuals — information about  individuals in a single record was accessed by an outside source through a file-sharing program that had been installed on LabMD’s computers. You are going to say that there is no evidence of that —that that ever happened, and you are going to believe that you are right, and the FTC, although sometimes I wonder if they are — just how compelling their evidence is, that they are going to claim that they are right, and somebody will make a determination of whether there has been a breach or not. Then the question is — and I do find this — and I think I know enough about this, and I learned a lot from the CID hearing — is that the FTC is going to go into the business of monitoring and investigating and regulating security breaches and that they have decided I think to do that within what they believe is their administrative authority, because I think they went to Congress and Congress wouldn’t authorize that for whatever reason, whether it’s politics or not. But I think there has been no amendment to Section 5 to specifically allow that. But they are taking the position that they have the authority to do that.

During that same hearing, Mr Schoshinski, an attorney representing the FTC, stated:

THE COURT: So sitting here today, you have no idea where the documents came from, whether they came from LabMD or some other source? Is that a fair thing to say?

MR. SCHOSHINSKI: No. We believe they were LabMD’s documents.

THE COURT: Well, they might have been LabMD’s documents, but you don’t know how they got into the possession of the two individuals that you tried to contact that pled guilty to this offense?

MR. SCHOSHINSKI: That’s correct, Your Honor.

THE COURT: So you have no information to establish how those documents were obtained; is that right?

MR. SCHOSHINSKI: That’s correct, Your Honor.

THE COURT: And you are still proceeding on this claim?

MR. SCHOSHINSKI: Yes, Your Honor, because the claim is not concerning that incident alone. It’s concerning —

THE COURT: All right. But are you still proceeding on that claim?

MR. SCHOSHINSKI: We are proceeding on that evidence, Your Honor.

THE COURT: And that evidence relates to other claims, because you have other documents that were found in other places?

MR. SCHOSHINSKI: That evidence relates to the potential injury suffered by consumers as a result of exposure of this information.

THE COURT: Are you serious about that last response?

MR. SCHOSHINSKI: Yes, Your Honor, I am.

THE COURT: So you don’t know where the documents came from, you don’t know how these people got the possession of it, you don’t know whether they originated from LabMD or some other place, but you are going to use that to show that, because they committed identity theft, that certain individuals were damaged by documents, the source of which you don’t even know?

MR. SCHOSHINSKI: Yes, Your Honor.

THE COURT: Holy cow.

From the June 12, 2014 proceedings before the Administrative Law Judge Chappell at the FTC. The “letter” referenced below is a June 11, 2014 letter from the House Oversight Committee to the FTC found here. Ms. VanDruff, counsel representing the FTC, stated:

JUDGE CHAPPELL:  Ms. VanDruff, what part of this letter do you think is not relevant to this proceeding? Stand up and address that question immediately.  I just read paragraph 2.  I want to hear from you.

MS. VANDRUFF:  Your Honor, I didn’t say it wasn’t relevant, Your Honor.  And Mr. Sherman is also copied on this letter and it is Mr. Sherman who raised the issue of Mr. Wallace this morning.  To the extent that Mr. Sherman believed that this letter was relevant to Your Honor’s —

JUDGE CHAPPELL:  You would agree this letter refers to the 1718 File.

MS. VANDRUFF:  Absolutely, Your Honor.

JUDGE CHAPPELL:  In black-and-white, it’s right there.  You would agree it refers to testimony being accurate or not regarding this case.

MS. VANDRUFF:  Yes, Your Honor.  I made no representation to the contrary.

JUDGE CHAPPELL:  Yet you didn’t talk about the letter until I asked you; is that correct?

MS. VANDRUFF:  Your Honor.

JUDGE CHAPPELL:  Until this lady brought it up.

MS. VANDRUFF:  The issue that Your Honor —

JUDGE CHAPPELL:  Were you going to sit there and not tell me about this letter?  Were you going to do that if I hadn’t asked you?  That’s what I want to know.

MS. VANDRUFF:  Your Honor, I was prepared address this letter today.  Mr. Wallace is not our witness, nor is Mr. Boback, and so if it was in the interest of — I don’t know.

JUDGE CHAPPELL:  You don’t think in the interest of truth this information should be disclosed to this court in this proceeding?

MS. VANDRUFF:  I was not withholding the information, Your Honor.

JUDGE CHAPPELL:  We’re trying to get to the truth here, aren’t we?

MS. VANDRUFF:  Of course we are.

JUDGE CHAPPELL:  You don’t think this letter touches on this matter in truth on this matter that we’re having a trial.  You were not going to bring up this letter; is that correct?

MS. VANDRUFF:  No, Your Honor, that is not what I said.  No.  That is not the position of the government, of course not.

JUDGE CHAPPELL:  Then you had plans to offer this letter because it’s relevant?  Is that what you’re doing?

MS. VANDRUFF:  Excuse me, Your Honor?

JUDGE CHAPPELL:  You had plans to offer this as an exhibit?

MS. VANDRUFF:  Your Honor, I don’t think that it is admissible for any purpose in this matter because it is hearsay.  Nonetheless, I think it’s appropriate in the context of Ms. Dickie’s representations to the court regarding Mr. Wallace and the conduct of the committee for Your Honor to have been advised about the current state of the committee’s investigation.

JUDGE CHAPPELL:  This is a letter to the head of the FTC.

MS. VANDRUFF:  Correct.

JUDGE CHAPPELL:  Talking about fundamental matters in this proceeding about truth or veracity, fundamental matters of a source that’s been very helpful to the government I might add in its case based on what I’ve heard.  I’m very disappointed this was not brought to my attention by the government.  Go ahead.

MS. VANDRUFF:  I apologize, Your Honor.  Thank you.

 

 

Filed Under: Press Release Tagged With: ,

Grading the Government: How the White House Targets Document Requesters

March 18, 2014 by

Grading the Government:

How the White House Targets Document Requesters

In 2010, The Associated Press (AP) uncovered how the Department of Homeland Security (DHS) blatantly politicized the Freedom of Information Act (FOIA) process by having senior political appointees review requests.  The story read:

For at least a year, the Homeland Security Department detoured requests for federal records to senior political advisers for highly unusual scrutiny, probing for information about the requesters and delaying disclosures deemed too politically sensitive, according to nearly 1,000 pages of internal e-mails obtained by The Associated Press.

 

The department abandoned the practice after AP investigated.  Inspectors from the department’s Office of Inspector General quietly conducted interviews last week to determine whether political advisers acted improperly.

E-mails obtained by AP through FOIA indicated that documents implicating “White House equities” were sent by DHS to the White House Counsel’s Office for review. But what, precisely, are White House equities?  And under what authority is that term defined or is White House review permitted?

In a subsequent hearing before the House Committee on Oversight and Government Reform, Rep. Jason Chaffetz questioned Mary Ellen Callahan, the Chief Privacy Officer of DHS, about the meaning of White House equities:

Mr. Chaffetz. Let me read another paragraph.  “Two exceptions required White House review, request to see documents about spending under the $862 billion stimulus law, and the calendars for cabinet members, those required White House review,” is that correct? 

 

Ms. Callahan. The calendars–anything that has White House equities would require White House review. That is—-

 

Mr. Chaffetz. What is a White House equity?  What does that mean?

 

Ms. Callahan. In the circumstances with the Secretary’s calendar to the extent that she was in the White House, or that was a–disclosing some sort of element.  This is a typical process of referring FOIA requests to different departments.  It may be their underlying records.  That is a standard process throughout the—

 

Mr. Chaffetz. The other part of that is under the $862 billion stimulus; is that correct?  Is that part of the White House equity?  It says “Two exceptions required White House review.  Request to see documents about spending under the $862 billion stimulus law,” is that correct?

 

Ms. Callahan. That is correct.

 

Mr. Chaffetz. Why?  Why does that require a special White House review?

 

Ms. Callahan. Sir, I’m the chief FOIA officer; I’m not a policy person in this area.

 

Mr. Chaffetz. So is that a directive that you got from the White House?

 

Ms. Callahan. I believe I was instructed by the Office of the Secretary to do that, and we processed it—-

Three years after the above testimony, Cause of Action confirmed that Congressman Chaffetz was right about the source of authority that required “special White House review.”  In an April 2009 memo that we obtained from the Department of Justice (DOJ) last year, the Counsel to the President reminds department and agency general counsels to send to the White House for consultation all records involving “White House equities” collected in response to any document request.  This unpublicized memo stands in stark contrast to President Obama’s January 2009 memo on FOIA and transparency, and Attorney General  Holder’s March 2009 FOIA memo, each of which were publicly lauded as models of transparency.

White House Equities

The White House Counsel’s Office is receiving, reviewing, and actually demanding access to information that it previously would not have been able to review under FOIA.

The practice of sending agency records to the White House for review is not entirely new.  In 1993, for example, DOJ instructed agencies to send “White-House-originated” records to the White House Counsel’s Office whenever they were located in response to FOIA requests.  However, the current White House consultation policy is substantially broader in scope.  First, it expands the types of documents subject to White House review to include “Congressional committee requests, GAO requests, [and] judicial subpoenas.”  Additionally, these documents need not “originate” from the White House, as the DOJ instructed in 1993, but need only involve “White House equities,” an undefined term that can be construed to include any records in which the White House might be interested.  Cause of Action continues to investigate the breadth of the term “White House equities” to determine where and when the White House is influencing FOIA and Congressional document requests.

In early April 2012, the media reported that GSA had squandered $822,000 taxpayer dollars on a posh conference in Las Vegas — a scandal that drew heavy criticism for the Administration.  Only a few weeks later, on May 1, 2012, Seth Greenfeld, a senior assistant general counsel at GSA, forwarded five FOIA requests related to the conference to Jonathan Su, a lawyer at the White House Counsel’s Office and Special Assistant to the President.  Greenfeld told Su, “Per your request, here are the five FOIA requests that in some manner ask for the 2010 Western Regions Conference website and its contents.”

GSA’s Office of Public Affairs also sends notification of sensitive FOIA requests to the White House Office of the Press Secretary.  On January 16, 2013, then-GSA Deputy Press Secretary Dan Cruz e-mailed White House Assistant Press Secretary Matt Lehrich to alert him of a request from Brad Heath at USA Today. The request asked for the job descriptions and responsibilities of employees working in communications for federal agencies.

Outside scrutiny of FOIA requests to GSA is not new, according to a report from the GSA Inspector General (IG).  A March 23, 2010 request from Cox Television was significantly delayed after GSA provided the responsive documents to both the House of Representatives and the White House Counsel’s Office for comment. The request sought e-mails “between the GSA and the staffs of U.S. Representatives Nancy Pelosi, Silvestre Reyes, and Zack Space.”  At the time of the IG report in September 2010, the request had been pending for 118 days.  The statutory response deadline for FOIA is 20 business days, or 30 business days in unusual circumstances.

The White House also requested to see FOIA requests related to renovations to the Secretary’s bathroom at the Department of the Interior (DOI), as discussed in an April 12, 2013 e-mail from Greenfeld to Su. The DOI bathroom renovation cost taxpayers $222,000 and was widely reported in January 2013.

The fact that the White House actively sought not merely proposed production but actual requests from media requesters provides some evidence that the Administration was sensitive to the media.  In fact, the Department of the Treasury, Department of Defense, and the Department of Housing and Urban Development have their own sensitive review process for media requesters.   All the more egregious is the fact that the President has used White House equities to reverse the FOIA process:  FOIA is designed to inform the public on government behavior; White House equities allow the government to withhold information from the media, and therefore the public, by having media requests forwarded for review.  This not only politicizes federal agencies, it impairs fundamental First Amendment liberties.

No established law, regulation or guidance defines “White House equities” yet the term is widely used by the Federal Government.

At the Department of the Interior (DOI), the meaning of “White House equities” is unclear even to FOIA specialists.  FOIA Specialist Richard Ha described the nature of documents prepared for White House review in a December 14, 2012 e-mail to DOI FOIA Officer Clarice Julka:

DOI OS FOIA office located and organized responsive electronic mail from 42 [individuals] into 42 pdf files, one pdf file for each individual. Six pdf files had joint DOl-White House records that could be interpreted as White House equities. These six pdf files either had electronic mail sent to, from, or cc’ed White House officials; or had some discussion of White House activities. (emphasis added)

The Department of the Treasury’s Inspector General described equities as “having an interest in the requested material,” and noted that “White House equities were involved when a member of the White House staff was a recipient or a commenter in an e-mail chain.”  Under DOJ’s 1993 guidance, it is unclear that e-mails sent to or carbon copied to White House officials would be considered documents “originated” from the White House and eligible for review in a document request.  Nevertheless, the Treasury IG found that of 13 requests that Treasury sent to the White House for review, “none of the document sets that [the IG] reviewed appeared to originate with the White House,” with the exception of some e-mail written by White House officials.

Congressional document requests have been significantly delayed by White House review.

Congressional requesters have also had their document productions slowed by White House review, as evidenced by  a FOIA request that Cause of Action sent to the Environmental Protection Agency (EPA) regarding White House review on July 2, 2013. The EPA responded to our request after 64 business days on September 30, 2013 with internal e-mails showing that White House review delayed an April 10, 2013 joint document request from the House Oversight and Government Reform Committee and the Senate Committee on Environment and Public Works.  In response to our findings, the House Oversight and Government Reform Committee, on  November 8, 2013, subpoenaed the EPA for communications with White House officials regarding the agency’s delay to a congressional document request.

Documents obtained from the DOI show that the National Park Service failed to respond to a Congressional document request after sending documents to the White House for review. The House Oversight and Government Reform Committee asked the National Park Service for documents on March 27, 2013 with a due date of April 10, 2013. The documents were sought in preparation for a hearing on April 16, 2013 regarding “The Federal Effort to Minimize the Sequester’s Impact on Access to Our Nation’s Capital and National Treasures.”  After failing to provide documents for the hearing, DOI’s Deputy Director in the Office of Congressional and Legislative Affairs Jason Buckner emailed DOI’s Associate Solicitor-General Edward Keable about a possible subpoena for the documents. The documents were collected and sent to White House Counsel Daniel Dominguez, Office of Management and Budget’s Thomas Hitter, and DOJ Office of Legal Counsel’s Paul Colborn for review on April 17, 2013. After more than six months, the documents still had not been delivered and the Committee issued a subpoena on October 30, 2013.

CoA Infographic CORRECTED

White House review delays the release of records and violates both the letter and spirit of FOIA.

The White House Counsel’s Office does not passively review or provide only “advice” on agency document requests, but instead is relied upon by the agencies as an authoritative decision-maker. The e-mails Cause of Action obtained from the EPA reveal that agency employees asked the White House Counsel’s Office if they “concur” on the release. One subject line read: “WHO documents to classify for FOIA response,” which suggests that the White House Counsel’s Office would take part in redacting or withholding documents.

The White House review process predictably delays the agency’s ability to timely respond to FOIA requests.  Cause of Action obtained first-hand evidence of this from GSA’s processing notes pertaining to one of our FOIA requests.  These notes indicate that the GSA Office of General Counsel was confused as to why it received the request so late.  Specifically, Senior Assistant General Counsel Seth Greenfeld asked General Counsel Kris Durmer why his office was receiving the request fifteen days after the agency received it, commenting that “our response time is ticking.” Durmer replied: “WH Counsel Justin Florence (202) [redacted].”

GSA Email

Delays caused by White House review often extend well beyond fifteen days.  For example, DOI’s Inspector General found a series of six-year-old FOIA requests from a Los Angeles Times reporter that had been held up in White House review for two years.  The requests dealt with “communications between the White House and high-ranking Interior officials on various politically sensitive topics.”  Despite a clear timeline of political meddling, but citing a lack of definitive proof, the IG concluded that “the considerable delays involved could [only] indicate political appointee involvement.” (emphasis added)

Because 5 U.S.C. § 552 legally mandates that agencies “promptly” produce documents, FOIA officers are not inclined to inform FOIA requesters that a request has been sent to languish at the White House.  Occasionally, however, this is not the case, as with a request to the Department of Health and Human Services (HHS) by CJ Ciaramella at the Washington Free Beacon, which spent 62 business days in White House review.  Ciaramella reported:

“Your request was completed and ready to go in October, but it had White House materials,” an HHS FOIA specialist said over the phone in November when asked for an update.  “It’s been sent up to them for review.”  More than three months later, the Free Beacon received 200 pages of e-mails, nearly every one redacted.

In 2013, Cause of Action sent 20 FOIA requests to various agencies regarding the review of agency records by the Office of White House Counsel. As of March 1, 2014, only 4 agencies have produced documents with a median response time of 57 days.

According to documents from GSA, DOI, and EPA, at least 18 FOIA or other document requests were sent to the White House for review between 2012 and 2013. USDA’s response to our request was so heavily redacted that even e-mail subject lines were blacked out; there was no way to tell how many or which FOIA requests were sent for White House review.

Cause of Action is still waiting for documents from 16 federal agencies, with the Department of Treasury having the longest pending request of 202 business days. The Department of Energy is a close second at 169 business days. The requests to the Department of Defense and Department of Health and Human Services have been pending for 138 business days.

Response TimeAgencies
Within 20 days
0
21-30 days
1
After 30 days
3
Not fulfilled after 73 days
16

AgencyRequest DateFinal ResponseResponse Time*Documents
NARA11/26/2013
12/9/20138No responsive docs
NASA11/26/2013
12/24/201319No responsive docs
SBA11/26/2013
2/21/2014 58No responsive docs
GSA11/26/2013
1/9/2014
30PDF
Education8/9/2013
9/3/201316
EPA7/2/2013
9/30/2013
62PDF
DOI**8/9/2013
11/8/2013
53PDF
USDA11/26/2013
2/27/2014
62PDF
DOL11/26/2013
6/27/2014147
Commerce11/26/2013
7/25/2014166PDF
Energy**6/26/2013
10/27/2014335
DHS11/26/2013
Response Pending238
DOJ11/26/2013
Response Pending238
DOT11/26/2013
Response Pending238
HUD11/26/2013
Response Pending238
State11/26/2013
Response Pending238
VA11/26/2013
Response Pending238
DOD**8/9/2013
Response Pending312
HHS**8/9/2013
Response Pending312
Treasury (IRS)**5/29/2013
Response Pending363

*As of April 11, 2014

** Government shutdown ran October 1 through October 16, 2013 (10 business days) which is subtracted from pending days.

Requests that Received White House Review 2012-2013:

Based upon the four FOIA productions that we have received thus far, these are the eighteen identifiable document requests were subjected to White House review from 2012-2013.

EPA

  1. Congressman Paul Broun, Chairman Subcommittee on Oversight, Committee on Science, Space, and Technology
  2. House Oversight and Government Reform, Majority Office
  3. James Goodwin, Center for Progressive Reform
  4. Unnamed requester for former EPA Administrator Jackson’s 2009-2010 schedule
  5. Jason Smathers, frequent requester at MuckRock.com
  6. Response to Issa/Vitter letter to EPA regarding FOIA practices at EPA
  7. Landmark Legal Foundation

DOI

  1. Connie Brooks, C.E. Brooks & Associates P.C.
  2. House Oversight and Government Reform, Majority Office
  3. Michael Kunzelman, The Associated Press
  4. Buster Johnson, Chairman of the Mohave County Board of Supervisors
  5. Earthjustice

GSA

  1. All FOIA requests related to GSA Las Vegas scandal
  2. Brad Heath, USA Today
  3. Scott MacFarlane, Cox Media
  4. Russ Ptacek, WUSA9
  5. Jennifer Peebles, Washington Examiner
  6. Kate Bailey, Judicial Watch

Why is “the most transparent administration in history” interfering in the FOIA process?

The Obama Administration cannot credibly claim to be transparent when it publicly issues memos about the presumption of openness in the FOIA process, but then instructs agencies in a non-public memo to forward records with “White House equities” to the White House for review.  Not only is the FOIA process significantly stalled by White House review—a fact that agencies zealously keep secret from requesters—but it permits the White House’s political interests to trump the correct application of the FOIA, a disclosure statute whose purpose is ensure an informed citizenry.

Federal agencies and the White House are failing to provide the promised transparency to the American people, but there are changes that would improve the process for FOIA requesters. First, White House review should be strictly limited to “White House-originated” records, as set forth in the 1993 DOJ guidance.  The Office of White House Counsel should not be able to review documents and requests just because they include politically sensitive information.

Second, agencies should be required to inform requesters in writing whenever records are forwarded to the White House for review. There is ample precedent for this notification. Guidance from DOJ’s Office of Information Policy suggests that “[w]hen providing updates to requesters on the status of their requests, [agencies should] include information concerning ongoing consultations.”  Further, agencies are required to notify requesters when they forward Exemption 4-related records to business submitters pursuant to Executive Order 12600.

Lastly, agencies should be required to identify in their annual FOIA reports the total number of requests involving White House review, including the median processing time. Again, there is precedent for this.  Currently, agencies are required to report the total number of consultations they receive from other agencies, including the number of consultations they processed and that remain pending.

 

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Cause of Action files opposing briefs in Department of Energy cronyism lawsuit

October 17, 2013 by

As we’ve seen over the past month the DOE is reviving its loan program, this time under new management.

Yet Cause of Action (CoA), a government accountability group, hasn’t forgotten how the DOE handled applications for the Loan Guarantee Program in the first go-round.

Today CoA took a step in a lawsuit we filed against the DOE for corrupting its lending programs to favor political insiders, and arbitrarily denying applications by failing to review applications with ‘established merit criteria’ as required by law.

CoA has been investigating the DOE’s loan guarantee program for  more than a year and has uncovered that the agency failed to give XP Vehicles and Limnia, Inc., two qualified applicants under the DOE’s loan guarantee program fair treatment and the honest opportunity to compete for Government loan funds to build advanced technology vehicles and components.

Click here to see the Opposition to Defendant’s Motion to Dismiss the Official Capacity Claims

Click here to see the Opposition to the Individual Capacity Defendants’ Motion to Dismiss

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REPORT: GreenTech Automotive: A Venture Capitalized by Cronyism

September 23, 2013 by

Executive Summary

“It seemed like a win for everyone involved when a startup car company, backed by political heavyweights, wooed investors with plans to build a massive auto plant in the Mississippi Delta, hire thousands of people and pump out a brand new line of fuel-efficient vehicles…But today, the company is under a federal investigation and about the only thing on its land in Tunica County is a temporary construction office.”

–          Associated Press, August 12, 2013

Less than half of all businesses started between 1977 and 2000 survived to five years.  Market competition is cruel but it’s not unfair.  Unfair is when political heavyweights use their influence to skew the market and force taxpayers to underwrite the risk of speculative new business ventures; taxpayers suffer while crony companies reap the profits.  Such is the case with GreenTech Automotive, Inc. (GreenTech), a startup automobile manufacturer that promised jobs and economic growth in Virginia and Mississippi but has failed to deliver.  The following report is the latest from Cause of Action’s (CoA) investigations into companies that rely upon the politically powerful, not the competitive marketplace, to determine economic winners and losers.

The story of GreenTech and its principals, Terry McAuliffe and Charles Wang, weaves a tale of promises to invest billions of dollars and create thousands of jobs as a result of alleged technological breakthroughs.  What is becoming increasingly likely, however, is that taxpayers will instead bear the costs of broken promises by subsidizing a failed business that used political connections and pressure to profit from taxpayer dollars.

Terry McAuliffe has made a career of using politics to profit.

As far back as 1997, Business Week declared that “[m]any of Terry McAuliffe’s business deals are intertwined with his political interests.” According to Leaders Magazine in 2007, McAuliffe “started over two dozen companies in the fields of banking, insurance, marketing, and real estate.  McAuliffe served as Chairman of Federal City National Bank and, most recently, was an owner and Chairman of American Heritage Homes.” These companies and his political fundraising career earned him millions in personal profit, but also brought Department of Justice investigations, accusations of conspiracy and illegal donation schemes, and Department of Labor penalties. What is clear is that political fundraiser and businessman McAuliffe has made a habit of using his connections and favors to rake in profits, and he has continued that pattern with GreenTech. After receiving campaign contributions from Charles Wang in 2008 for his first gubernatorial bid, Terry McAuliffe made his deep political Rolodex available for GreenTech’s benefit.  As Amy Gardner from The Washington Post has observed, many of McAuliffe’s biggest business deals “came in partnership with prominent donors and politicians, creating a portrait over the years of a Washington insider who got rich as he rose to power in the Democratic Party.” He continued that pattern with GreenTech, benefitting the company through his own political connections.

  • In 2008, Charles Wang made a $50,000 donation to Terry McAuliffe’s gubernatorial campaign.  Shortly thereafter, Wang’s company merged with what is now GreenTech and McAuliffe was named Chairman.
  • As GreenTech Chairman, in an email to then-Governor Haley Barbour, McAuliffe cited efforts by U.S. Senators Thad Cochran (R-MS) and Roger Wicker (R-MS) to pressure the United States Citizenship and Immigration Services (USCIS) Director Alejandro Mayorkas into fast-tracking EB-5 visa applications that would provide Chinese investments for GreenTech.
  • McAuliffe sent numerous emails to Director Mayorkas and Douglas Smith, Department of Homeland Security’s assistant secretary for the Office of the Private Sector, expressing frustration with USCIS’ slow visa approval process. Smith attended GreenTech’s groundbreaking at its temporary Horn Lake facility, where McAuliffe also privately met with President Bill Clinton and Chinese investors.
  • Anthony Rodham, brother of former Secretary of State Hillary Clinton, is President and CEO of Gulf Coast Funds Management (Gulf Coast) the country’s largest Regional Center for processing EB-5 investments, and the manager of EB-5 investments for GreenTech.

GreenTech utilized the EB-5 visa program as a catalyst for favors and a prop for business deals.

In 2008, Gulf Coast, a sister company of GreenTech, used political pressure to position itself as a powerful Regional Center for managing two states’ EB-5 investments, yielding large profits. GreenTech was financed by Chinese investors with a strong interest in securing visas in exchange for millions of dollars in capital through EB-5.

  • Then-Mississippi Governor Haley Barbour, one of Terry McAuliffe’s current business partners, contacted Barbara Velarde, the head of the USCIS office that oversees the Regional Center program, urging the agency to designate Gulf Coast as the Regional Center for the entire state of Mississippi.
  • Kathleen Blanco, who was Governor of Louisiana at the time that USCIS approved Gulf Coast’s application, is currently a member of Gulf Coast’s board.
  • Between 2009 and 2012, GreenTech raised $67 million from more than one hundred EB-5 investors. Gulf Coast has collected a total of approximately $7.4 million in profits from GreenTech investors.

GreenTech is abusing taxpayer funds.

Under the leadership of Charles Wang and Terry McAuliffe, GreenTech submitted exaggerated projections about its manufacturing output and job creation prospects, convincing Mississippi state officials to award millions of taxpayer dollars in loans and tax incentives to develop a GreenTech plant within the state.

  • In exchange for a promise to build a manufacturing facility in Tunica County, the Mississippi Development Authority (MDA) agreed to provide a $3 million loan to GreenTech from the Mississippi Industry Incentive Financing Revolving Fund to construct an access road to the facility.
  • A $2 million loan was given to the Tunica County Economic Development Foundation to purchase the site on which the facility would be built.  GreenTech received a host of tax breaks and incentives including reduced state income, franchise, property, sales and use taxes and income tax rebates for company employees.
  • GreenTech has claimed that it will create 25,000 direct jobs that will each create 11.86 indirect and induced jobs, or 296,500 jobs in total.  This is problematic both in expectation and legality given that current law provides for no more than 10,000 EB-5 visas per year.

While it is unknown whether GreenTech will meet its own estimate of 25,000 full-time jobs in Mississippi by 2014, according to NBC12 News in Richmond, Va., a former GreenTech employee claims that GreenTech’s “lofty goals were nowhere near reality.”

What follows in this report are these and additional findings from a six-month investigation of the relationships and political deals that allowed GreenTech to entice Mississippi into a misbegotten experiment in green automotive technology. As this report reveals, the real engine driving GreenTech’s business plan appears to be its management’s extraordinary talent for exploiting taxpayers to advance their own interests.

 

PDF: GreenTech Automotive: A Venture Capitalized by Cronyism

Exhibits:Exhibits 1-32

Wang Emails: 1 & 2

GTA Exhibit 6 (here) was the Document used in a Washington Post story

Filed Under: Investigation Tagged With: ,

USA Today: IRS assailed from all sides for lack of transparency

August 20, 2013 by

IRS assailed from all sides for lack of transparency

Allies and critics alike frustrated by the IRS’ lack of transparency in Tea Party affair

WASHINGTON — After admitting it targeted Tea Party groups for additional scrutiny in May, the Internal Revenue Service has been called on to explain its formerly obscure process for policing political activity by tax-exempt groups.

And, by almost all accounts, it’s not doing a very good job.

Last week, the non-profit publisher Tax Analysts filed suit against the IRS under the Freedom of Information Act, saying the agency failed to release training materials used by the agency’s Exempt Organizations staff in Cincinnati.

Congressional investigators have complained that the agency has turned over only a small fraction of the records they’ve sought. House Ways and Means Committee Chairman Dave Camp, R-Mich., said the IRS’ slow response to congressional inquiries “begins to look a lot like obstruction.”

Within the IRS, the Taxpayer Advocate Service has criticized the agency’s Exempt Organizations office for failing to reveal how agents review tax-exempt groups for political activity — in spite of laws requiring disclosure. “This lack of transparency reduced EO’s accountability to the public and made it easier to believe that EO was arbitrarily singling out applications for further review based on ideology,” Taxpayer Advocate Nina Olson said in a special report to Congress in June.

Even some of the agency’s biggest supporters say they’ve been frustrated by the IRS’ failure to respond to key questions.

“Steam has been coming out of my ears for the last three months, because the IRS hasn’t been able to defend itself. In a way, they’re their own worst enemy,” said Evelyn Brody, a law professor at the Illinois Institute of Technology’s Chicago-Kent College of Law. She said the IRS’ reticence is party justified by taxpayer privacy laws, but the agency could still do a better job explaining its processes.

The IRS itself would not comment on the transparency issues, except to say that it does not comment on pending litigation.

Tax Analysts filed its lawsuit in federal court in Washington last week after the IRS failed to meet legal deadlines to respond to its Freedom of Information Act request. Chris Bergin, the president and publisher of Tax Analysts, said it’s perplexing that the IRS won’t release records that might mitigate criticism over its handling of political groups.

“They’re going to keep shooting themselves in the foot until someone forces them not to,” he said. “What’s worse now, is they’ll go deeper into their bunker. They’ll dig down, and they won’t disclose.”

Tax Analysts has filed 15 FOIA lawsuits against the government since 1985, and has won almost all of them, court records show. “We’re not rookies at this,” Bergin said. “We recognize the pattern. And this is the pattern: They keep telling you, telling you, telling you that they’re going to release the records, and then they say, ‘Sue us.’ And we do, and it always ends badly for them.”

The Tax Analysts lawsuit is actually the second FOIA lawsuit to come out of the Tea Party controversy. The Cause of Action Institute, a non-profit organization aligned with conservative causes, filed suit last month to force the agency to disclose any requests for tax returns by the White House.

“We’ve had this fight with the IRS now for almost two years,” executive director Dan Epstein said. “They could simply say, the easiest response for the IRS to say is, no such record exists.”

Instead, the IRS has not explicitly denied that tax returns have been provided to the White House, but said that they would be covered by taxpayer privacy laws if they were.”

A White House spokesman did not return a call seeking comment.

The IRS won’t say how many FOIA requests it’s received about its handling of political groups. USA TODAY and The Cincinnati Enquirer, which are both owned by Gannett, have filed 16 FOIA requests with the agency in the last three months, and the agency has not released any of the requested records.

When USA TODAY requested public inspection files of tax exempt groups, the IRS claimed that they are not subject to the Freedom of Information Act. And on two successive days in May, USA TODAY reporters visited the IRS’ Freedom of Information Reading Room only to find it closed to the public during its posted hours.

In an Aug. 2 letter to the House Oversight Committee, acting IRS Commissioner Danny Werfel said it was “inaccurate and unfair” to allege the IRS has not fully cooperated with Congress.

He said the agency has devoted 100 employees to gathering documents and that it had facilitated the interviews of 19 IRS employees with congressional investigators.

The IRS is searching for electronic records containing 81 search terms, including “Tea Party,” “conservative,” “liberal,” and the names of White House senior adviser Valerie Jarrett and author Glenn Beck. As of Aug, 2, the IRS had produced 16,500 of a potential 1.6 million responsive documents to Congress, Werfel said.

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