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01/6/2017

DOD revises FOIA policies incorporating CoA Institute recommendations

The Department of Defense (“DOD”) yesterday published an interim rule proposing new regulations to implement the Freedom of Information Act (“FOIA”). The proposed changes are necessary to bring DOD regulations into compliance with the OPEN Government Act of 2007 and the FOIA Improvement Act of 2016, but they also build upon two previous attempts by the agency to revise its FOIA procedures and policies.

Cause of Action Institute (“CoA Institute”) submitted comments to DOD about these proposed changes in November 2014 and September 2015. We commended the agency for removing outdated “organized and operated” language from its definition of a representative of the news media—especially in light of the D.C. Circuit’s landmark decision in Cause of Action v. Federal Trade Commission—but also suggested clarification and guidance to ensure the proper application of fees in FOIA cases.

We further recommended that DOD revise procedures for conducting consultations, which take place whenever an agency locates records that originated with or may implicate the equities of another government entity. The process is supposed to ensure that exempt information is properly redacted from records prior to disclosure.  We expressed concern that DOD had failed to establish adequate parameters for determining when consultation would be appropriate.

Finally, we asked DOD to remove or revise a number of problematic provisions dealing with the handling of White House information, the use of the deliberative process and attorney-client privileges, and the preservation and management of records subject to the FOIA.

Although DOD did not chose to adopt additional guidance on fee issues, or to limit consultation along the lines we suggested, DOD’s interim rule does reflect CoA Institute’s influence. For example, the agency chose to reformulate its regulations along the lines of a model regulation produced by the Department of Justice. Guidance of this sort is consistent with CoA Institute’s proposals and was referenced by CoA Institute in its comments. Moreover, DOD completely eliminated or adequately revised the problematic, byzantine provisions to which CoA Institute objected.

CoA Institute’s comment is another small step in our efforts to provide effective and transparent oversight of the administrative state.

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01/5/2017

IRS Watchdog shields records on breach of confidential taxpayer information

The Treasury Inspector General for Tax Administration (TIGTA) has concluded its review of allegations brought by Cause of Action Institute (CoA Institute) concerning the unlawful disclosure and inspection of more than one million pages of confidential taxpayer information. The agency opened its investigation in July 2016 but now claims it cannot provide any further information about of the outcome of its review because such information is itself protected by confidentiality laws originally intended to protect taxpayers.

In June 2016, CoA Institute called on TIGTA and the Department of Justice Office of Inspector General (DOJ-OIG) to examine potential legal violations arising from the October 2010 disclosure of more than one million pages of tax returns and return information to the FBI and DOJ Public Integrity Section by Lois Lerner and the IRS.  CoA Institute first alerted TIGTA about the possible violation of Section 6103 of the Internal Revenue Code with respect to these records in July 2015. [For more information, see pages 11–15 of CoA Institute’s recent investigative report.]

Just months prior to TIGTA’s response, DOJ-OIG confirmed the unlawful disclosure of taxpayer information but dismissed a request to investigate the wrongdoing.  The IG concluded that CoA Institute was correct that “protected taxpayer information was included” on CDs provided by the IRS to the FBI and DOJ, yet it determined inexplicably that the matter “does not warrant further investigation[.]”

CoA Institute Assistant Vice President Lee A. Steven: “Although it appears that TIGTA has investigated our now-proven allegations of wrongdoing, we are concerned by the lack of transparency surrounding whether the responsible IRS officials will be held accountable for the unlawful disclosure of over one million pages of confidential taxpayer information. Congress never intended taxpayer confidentiality laws to be a shield against the disclosure of information concerning the conduct of officials who have abused their positions and acted in contravention of their duty to protect American taxpayers’ most private information.  This incident involves one of the largest and most significant breaches of taxpayer confidentiality laws by the federal government in U.S. history.  The DOJ-OIG seems to have washed its hands of the matter and it is disappointing to see TIGTA do the same.”

The DOJ Public Integrity Section and the FBI originally sought the records at issue in an attempt to identify non-profit organizations who may have engaged in prohibited political activity.  As part of its public oversight efforts, CoA Institute obtained records demonstrating that, between 2009 and 2012, neither agency ever submitted the statutorily-required requests for disclosure of this information to the IRS.

Section 6103 of the Internal Revenue Code provides a strict rule of confidentiality for tax returns and return information.  Unless a statutory exception applies, government agencies and their employees may not disclose such information.  Violations can include fines, termination from employment, and imprisonment.

To access CoA Institute’s June 29, 2016 Letter to TIGTA and DOJ-OIG, click here.
To access DOJ-OIG’s October 12, 2016 response, click here.
To access TIGTA’s December 19, 2016 response, click here.
To access CoA Institute’s October 2016 Investigative Report, click here.

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12/15/2016

Is Sec. Perez Campaigning on the Taxpayer’s Dime?

Washington D.C. – Cause of Action Institute (“CoA Institute”) today sent a Freedom of Information Act (“FOIA”) request to the U.S. Department of Labor investigating whether recent outreach by Secretary Tom Perez to voting members of the Democratic National Committee (“DNC”) regarding his political future could be in violation of the Hatch Act. The Hatch Act explicitly prohibits federal employees from using their official authority for the purpose of affecting the results of an election.

Secretary Perez reportedly emailed DNC party chairs Wednesday morning and asked them to join him on a conference call this afternoon. During that call Sec. Perez announced his candidacy for DNC Chairman. Such outreach raises the possibility that Perez may be attempting to advance his political campaign while serving in his current government role.

Following the conference call, CoA Institute requested all communications surrounding this outreach to better understand whether Sec. Perez has used taxpayer resources, such as government issued computers, office space, mobile devices, staff, or email systems to promote his campaign.

CoA Institute Assistant Vice President Henry Kerner: “The law is clear: public officials paid by taxpayers cannot use their position to engage in political activities. The Obama administration’s unprecedented history of Hatch Act violations threatens to undermine this important protection. Americans have a right to know if Sec. Perez used taxpayer-funded resources to further his own political campaign.”

There have been three previous high-profile Hatch Act violations during the Obama administration. Just a few months ago in July of this year, Department of Housing and Urban Development Secretary Julian Castro was found to have violated the Hatch Act when he openly endorsed Hillary Clinton’s candidacy for president during a Yahoo News interview. Before that, in 2012, Secretary of Health and Human Services Kathleen Sebelius was also found to have violated the Hatch Act when she delivered the keynote speech at a gala calling on attendees to reelect President Obama. And prior to that, Secretary Perez’s predecessor at the Labor Department, Hilda Solis, resigned after word came out that she had solicited campaign contributions from a subordinate employee.

These were historic violations, as no Cabinet secretary in any prior administration had been found in violation of the Hatch Act since its enactment under Franklin Delano Roosevelt. Yet, neither Ms. Sebelius nor Mr. Castro suffered any consequences for these violations.

The full FOIA can be found here

 

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12/13/2016

CoA Institute Sues CFPB for Refusing to Release Records Underpinning Anti-Arbitration Rule

Washington D.C. – Cause of Action Institute (“CoA Institute”) today filed a lawsuit in the U.S. District Court for the District of Columbia to compel the Consumer Financial Protection Bureau (“CFPB”) to provide records the agency used in formulating its rule to prohibit the use of mandatory binding arbitration clauses in financial services contracts.

Cause of Action Institute Vice President John Vecchione: “To issue a regulation affecting such a vast swath of the economy, and then attempt to conceal the bulk of the documents reflecting how that decision was made from public view, violates the law and the American people’s right to know.”

Prohibiting the use of third-party arbitration in financial contracts would subject numerous financial institutions to a flood of class action lawsuits, further burdening the courts and ultimately injuring consumers by increasing the costs associated with bank loans and other financial services. The CFPB’s proposed rule was largely based on a study commissioned by the agency in 2015. 

In April 2016, CoA Institute filed a Freedom of Information Act (“FOIA”) request for records that would show how the agency conducted its study. Although CFPB produced some documents, the agency withheld a large number of responsive records and information. 

In September, 2016, CFPB issued a final determination, indicating the agency would withhold 1,877 pages of responsive records. CoA Institute appealed the CFPB’s determination and challenged each FOIA exemption the agency applied to the production. Last month, CFPB denied the appeal.

In its lawsuit, CoA Institute argues that CFPB is required to produce all responsive records not covered by a valid exemption.  The burden is on the agency to justify the use of any exemption to withhold or redact information, which CFPB has failed to do. The lawsuit compels the agency to produce all records improperly withheld within twenty business days of the court’s order.

The full lawsuit can be found here

 

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12/1/2016

CoA Institute Sues IRS for Improperly Shielding Records

Washington D.C. – Cause of Action Institute (CoA Institute) today filed a lawsuit against the IRS after the agency refused to produce records under the Freedom of Information Act (FOIA) relating to its dealings with Congress’s Joint Committee on Taxation (JCT).

In December 2015, the IRS Office of Chief Counsel issued new guidance claiming that nearly all IRS records relating to the JCT should be treated as “congressional records” and therefore shielded from public disclosure under FOIA. This revised guidance contradicts long-standing precedent for what records government agencies must provide in response to FOIA requests.

CoA Institute Vice President John Vecchione: “The IRS continues to withhold agency records that the American people have a right to see. Agency records, including communications with Congress, are subject to FOIA. But the IRS is now attempting to change the rules and withhold all of its communications with, and other records relating to, the JCT. Our lawsuit challenges what appears to be a ploy by the IRS to avoid transparency.”

For months, CoA Institute has sought IRS communications with JCT and other JCT-related records, including those that reflect internal deliberations concerning the agency’s dealings with the JCT.  By definition, these are agency records, as they would necessarily have been received or created by the IRS and are currently in the possession of the agency.  Such records would have been used by IRS employees and uploaded or stored into IRS recordkeeping systems, including e-mail or correspondence tracking databases.

On November 22, 2016, in response to CoA Institute’s administrative appeal, the IRS re-affirmed its conclusion that the requested records were not subject to FOIA and went a step further to describe CoA Institute’s FOIA requests as “too broad and too nebulous.” The Department of Justice has explained, however, that “[t]he sheer size or burdensomeness of a FOIA request, in and of itself, does not entitle an agency to deny that request on the ground that it does not ‘reasonably describe’ records.” The IRS never indicated that it was unable to locate records responsive to CoA Institute’s FOIA requests, nor did it suggest it required a narrowed scope or clarification as to the records sought.

CoA Institute’s lawsuit seeks to prevent the IRS from improperly shielding agency records from disclosure under FOIA.

The lawsuit can be found here
Exhibits can be found here

 

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11/22/2016

CoA Institute Investigates Employee Telework Fraud at U.S. Patent Office

Washington D.C. – Cause of Action Institute (CoA Institute) today sent a Freedom of Information Act (FOIA) request seeking records from the U.S. Patent and Trademark Office (USPTO) after details emerged about extensive attendance and telework abuse by agency employees. The FOIA request seeks records to clarify whether disciplinary action has been taken against those who claimed hours they did not work.

The Department of Commerce Office of Inspector General (OIG) released a report in August 2016 that found USPTO telework employees were paid for nearly 300,000 unsupported hours of work over a 15-month period. These hours equate to more than $18 million in wages and benefits fraudulently paid to employees.  

CoA Institute Assistant Vice President Henry Kerner: “Such rampant abuse is particularly concerning given the USPTO’s policies to promote more telework for its employees. Over the last decade, the agency has doubled its number of patent examiners largely through teleworking. The American people deserve to understand whether disciplinary action has been taken to hold employees accountable for telework fraud.”

Teleworking is common in many industries and allows employees to work from home, but requires close oversight to prevent abuse by employees.  The USPTO is particularly susceptible to telework abuse because approximately half of its 12,600 employees work from home full-time without ever reporting to a physical office. The OIG report also found that 415 patent examiners who fraudulently reported hours racked up nearly $8 million in bonuses in less than two years.

CoA Institute today requested all records related to time and attendance abuse at USPTO in order to understand the full extent of the abuse and to identify potential policy changes that could address the problem.

The full FOIA request can be found here.

 

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11/22/2016

CoA Institute Influences New DHS FOIA Regulations

 

The Department of Homeland Security (“DHS”) just finalized new Freedom of Information Act (“FOIA”) regulations.

Last year, Cause of Action Institute (“CoA Institute”) submitted comments to DHS in response to its proposed rule.  We urged the agency to remove the outdated “organized and operated” language from its definition of a representative of the news media.  This language has been used in the past to deny fee waivers to organizations like CoA Institute that are conducting investigations of potential agency wrongdoing.  For example, we had to take the Federal Trade Commission all the way to the D.C. Circuit just to get it to acknowledge that its FOIA fee regulations were outdated and that it was improperly denying us a fee reduction.

In deciding our case, the D.C. Circuit issued a landmark decision clarifying the proper definitions and application of fees in FOIA cases.  CoA Institute cited this case to DHS in its regulatory comments and DHS took heed of the current case law and removed outdated language from its regulations.

This is just another small step in our efforts to provide effective and transparent oversight of the administrative state.

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