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02/9/2018

Rettig Nomination Gives Congress Chance to Hold IRS Accountable

Last month, Cause of Action Institute (“CoA Institute”) released an investigative report detailing a pernicious practice at the Internal Revenue Service (“IRS”).  The agency claims that none of the economic impact caused by its rules is attributable to its regulatory choices. Instead it says the impact flows from the underlying statute.  The IRS uses this claim to evade three important oversight mechanisms.  When we released the report, we called on Congress to press whomever President Trump nominated to be the next IRS commissioner to promise to reform this practice.  Well, Trump just nominated Chuck Rettig to head the agency.  So it’s time for Congress to stand up and hold the IRS accountable for its decades-long practice of playing by its own rules.

CoA Institute just sent a letter to Senate Finance Committee Chairman Orrin Hatch and Ranking Member Ron Wyden urging them to press Mr. Rettig on this issue during their face-to-face meetings and at a public hearing.

View the Letter Concerning Mr. Rettig’s Nomination Below

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James Valvo is Counsel and Senior Policy Advisor at Cause of Action Institute.  He is the principal author of Evading Oversight.  You can follow him on Twitter @JamesValvo.

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01/30/2018

Commercial Speech Doctrine Needs an Overhaul

Cause of Action Institute joined with the Cato Institute and Competitive Enterprise Institute in filing an amicus brief urging the U.S. Supreme Court to grant the petition for certiorari in CTIA v. City of Berkeley.  The commercial speech case involves an ordinance in Berkeley, California requiring cell phone retailers to make the following statement to their customers:

The City of Berkeley requires that you be provided the following notice:

To assure safety, the Federal Government requires that cell phones meet radio frequency (RF) exposure guidelines.  If you carry or use your phone in a pants or shirt pocket or tucked into a bra when the phone is ON and connected to a wireless network, you may exceed the federal guidelines for exposure to RF radiation.  Refer to the instructions in your phone or user manual for information about how to use your phone safely.[1]

The problem is that it is not entirely clear whether the harm described in this statement is actually true.  The current First Amendment commercial speech doctrine allows governments to compel commercial speech that is both “purely factual” and “uncontroversial.”[2]

The standard of review by which courts determine whether a particular compelled commercial statement meets this requirement can be the deciding factor in a case.  Take Berkeley, for example.  In this case, the record in the district court did “not offer[] any evidence that carrying a cell phone in a pocket is in fact unsafe.”[3]  That is, there is “no evidence in the record that the message conveyed by the ordinance is true.”[4]

Under any serious review of a governmental action impinging on a constitutional right—which compelled speech does—the absence of evidence to show that the government was indeed advancing a legitimate interest would be enough to strike down the ordinance.  But not in Berkeley.  The Ninth Circuit held that any “more than trivial” interest will suffice.[5]  No attention was paid to whether that interest, however trivial, is actually a legitimate one or if the compelled speech is advancing it.

The Supreme Court must step in

The commercial-speech doctrine is notoriously muddy.  Both Justice Thomas and Justice Ginsburg have recognized that the lower courts are in need of “guidance” on the “oft-recurring” and “important” subject of “state-mandated disclaimers.”[6]  And this guidance is necessary, the Justices wrote, because the Court has not “sufficiently clarified the nature and the quality of the evidence a State must present to show that the challenged legislation directly advances the governmental interest.”[7]

This lack of clarity has given rise to governments at various levels forcing commercial speakers to communicate disputed and politically charged statements, sometimes where the underlying factual issues are not resolved.  And lower courts are expanding government’s ability to commandeer commercial speaker’s message.  This contravenes the Constitution’s command that “Congress shall make no law” against free speech (incorporated against the states by the 14th Amendment).  This is precisely the type of behavior one would expect in a legal environment where the lines are not clear.

Commercial Speech Doctrine Must be Clear

The Supreme Court should grant the cert petition in Berkeley and ensure that moving forward when a government tries to compel commercial speech to carry the government’s message, the government must be able to, at a minimum, adduce evidence that (1) the purported harm actually exists, (2) mitigating that harm is a compelling government interest, (3) that the infringement on the speaker’s rights is narrowly tailored to advance that interest, and (4) that the compelled commercial speech actually does advance the interest.  We will continue to see doctrinal confusion and unnecessary compelled commercial speech absent that clarity, which should be avoided.

James Valvo is Counsel and Senior Policy Advisor at Cause of Action Institute.  You can follow him on Twitter @JamesValvo.

[1] Berkeley Municipal Code § 9.96.030(A).

[2] Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626, 651 (1985).

[3] CTIA–The Wireless Ass’n v. City of Berkeley, California, 854 F.3d 1105, 1125 (9th Cir. 2017) (Friedland, J., dissenting in part).

[4] Id.

[5] Id. at 1117.

[6] Borgner v. Florida Bd. of Dentistry, 537 U.S. 1080 (2002) (Thomas, J., joined by Ginsburg, J., dissenting from denial of certiorari).

[7] Id.

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01/10/2018

IRS Dodges Oversight, Refuses to Measure Economic Impact of its Rules: Investigative Report

Washington D.C. – Cause of Action Institute (“CoA Institute”) today released a groundbreaking investigative report, Evading Oversight: The Origins and Implications of the IRS Claim that its Rules Do Not Have an Economic Impact, that reveals how the IRS has developed a series of self-bestowed exemptions allowing the agency to evade several legally required oversight mechanisms. The report outlines in detail how the IRS created this exemption to exempt itself from three critical reviews intended to provide our elected branches and the public an opportunity to assess the economic impact of rules before they are finalized.

Read about the report in today’s Wall Street Journal, including suggestions for how the White House and Congress can work together to end this harmful practice.

CoA Institute Counsel and Senior Policy Advisor James Valvo: “The IRS for too long has evaded its responsibilities to conduct and publish analysis of its rules. Rules issued by the IRS can change the economic landscape for Americans in many ways, including how the agency calculates deductions, exemptions, reporting, and recordkeeping. By creating bureaucratic loopholes, the IRS deliberately sidesteps several oversight mechanisms designed to provide a check on overly burdensome rules. The IRS should be held to the same standard as other regulatory agencies and stop avoiding its responsibilities.”

For years, the IRS has evaded several laws directing agencies to create economic impact statements for rules. These analyses are part of three oversight mechanisms: The Regulatory Flexibility Act, the Congressional Review Act, and review by the White House Office of Information and Regulatory Affairs.  All three are good-government measures designed to provide a check on abuse by the administrative state.

CoA Institute’s investigative report reveals the origins and implications of the unprecedented IRS position that its rules have no economic impact and do not require such analysis because, it claims, any impact emerges from the underlying law that authorized the rule, and not the agency’s decision to issue or alter it.

The full report, including executive summary and key findings, can be accessed HERE.

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: zachary.kurz@causeofaction.org.

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11/2/2017

CoA Institute Sues OMB, Compelling it to Take Transparency Policy Seriously

Cause of Action Institute (“CoA Institute”) has sued the White House Office of Management and Budget (“OMB”) for failing to respond to two petitions for rulemaking that CoA Institute submitted to the agency.  These two petitions—both aimed at increasing government transparency—were filed during the Obama Administration but were ignored. One petition for rulemaking focused on the OMB’s outdated Freedom of Information Act fee guidelines while the other focused on an executive order related to earmarking. We hope these lawsuits will spur the Trump Administration to action to increase the public’s ability to know what its government is up to.

Petition for Rulemaking on OMB’s Outdated FOIA Fee Guidelines

The Freedom of Information Act requires agencies to produce records on a reduced fee schedule if the requester qualifies as a “representative of the news media” or other favored category.  The FOIA requires agencies to issue records free of charge if the information is in the public interest and the requester has a means to distribute it.  Unfortunately, agencies often use these fee provisions as a mechanism to block requesters that are doing rigorous oversight of the agency.

As information technology advanced over the past two decades, Congress recognized that journalism was changing in fundamental ways and that citizen journalists and nonprofit organizations were just as vital to conducting government oversight as the traditional news media.  That’s why, in the Open Government Act of 2007, Congress provided a statutory definition of a “representative of the news media” that expressly noted that “as methods of news delivery evolve (for example, the adoption of the electronic dissemination of newspapers through telecommunications services), such alternative media shall be considered to be news-media entities.”[1]

But the FOIA also requires OMB to develop and maintain guidelines on FOIA fee issues and it requires agencies to conform their regulations to OMB’s guidelines.  In 1987, OMB issued its one and only guidance document on FOIA fees and in that document it requires “representatives of the news media” to work for organizations that are “organized and operated to publish or broadcast news to the public.”  The Federal Trade Commission (“FTC”) attempted to use this outdated standard against CoA Institute to deny us a preferable fee status and thus drive up the cost of our oversight of that agency.  We took the FTC to the D.C. Circuit and won.  The opinion in that case explained that the “organized and operated” standard was no longer proper.[2]

Yet ten years after Congress changed the statutory standard and two years after the D.C. Circuit directed that the “organized and operated” standard was no longer viable, dozens of agencies still employ it and OMB still has not updated its 1987 FOIA fee guidance.

In an effort to spur OMB to reform its outmoded guidance and to move all agencies toward compliance with the statute, CoA Institute filed a petition for rulemaking with OMB in June 2016.  The agency has not responded to that petition and we were forced to sue to bring the issue to resolution.

Petition for Rulemaking on Executive Order 13457

In 2008, President George W. Bush issued Executive Order 13457 to pressure Congress to reform its profligate earmarking practices.  The order required, inter alia, that executive-branch agencies proactively disclose any attempts by members of Congress or their staff to influence discretionary spending decisions the agencies were making.  President Bush directed OMB to ensure that agencies complied with the order.

Through an investigation, CoA Institute was able to establish that OMB understood Executive Order 13457 to apply to both legislative earmarks (i.e., spending directives in statute and committee reports) and executive branch earmarks (i.e., efforts by outside forces to pressure agencies to make certain spending decisions).  CoA Institute’s investigation also revealed that very few agencies were complying with the order; the Department of Energy was a notable exception.

In an effort to spur the Obama Administration to implement Executive Order 13457, CoA Institute joined with Demand Progress and filed a petition for rulemaking at OMB asking it “to issue a rule ensuring the continuing force and effect of Executive Order 13457, Protecting American Taxpayers From Government Spending on Wasteful Earmarks[.]”  More than two years have passed since we filed the petition and OMB has not responded.

Conclusion

The White House Office of Management and Budget sits at a unique place in the federal administrative state.  It has the opportunity to put in place and require adherence to cross-agency rules that can increase or decrease government transparency.  Ensuring that FOIA fees are not improperly used to block agency oversight and requiring proactive disclosure of congressional attempts to influence agency discretionary spending decisions are two ways OMB can make a difference.  CoA Institute has filed suit today to compel them to take these responsibilities seriously.

James Valvo is counsel and senior policy advisor at Cause of Action Institute.  He was instrumental in crafting both petitions for rulemaking and the lawsuit discussed in this post.  You can follow him on Twitter @JamesValvo.

[1] 5 U.S.C. § 552(a)(4)(A)(ii)

[2] Cause of Action v. Fed. Trade Comm’n, 799 F.3d 1108 (D.C. Cir. 2015).

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11/2/2017

Cause of Action Institute Sues White House OMB Over Failure to Act on Transparency Rules

Washington, DC – Cause of Action Institute (“CoA Institute”) today filed a lawsuit against the White House Office of Management and Budget (“OMB”) for failing to act on two petitions for rulemaking submitted well over a year ago. Both petitions ask OMB to take its transparency obligations seriously and enact rules that would promote public disclosure of agency records.

The first petition requests that the Office of Management and Budget update its fee guidance for Freedom of Information Act (“FOIA”) requests. OMB’s fee guidance is outdated and now conflicts with both statutory and judicial authorities. The FOIA law requires OMB to establish these guidelines and requires every agencies’ fee rules to conform to OMB’s guidance. The FOIA Advisory Committee and the Archivist of the United States have also recommended that Office of Management and Budget update this guidance.

The second petition relates to protecting taxpayers against wasteful executive branch earmarks. Previous administrations have required agencies to disclose congressional efforts to meddle in agency spending decisions, an effort first started under President George W. Bush’s Executive Order 13457. The Trump administration has yet to address this issue.

CoA Institute Counsel and Senior Policy Advisor James Valvo: “It does not appear the Trump administration has any plans to finalize these rules, which would go a long way to promoting government transparency. FOIA requesters are often deterred due to high costs agencies charge to produce records. In recent years, the courts have clarified that many groups beyond traditional journalists are now eligible for news media fee waivers. Updating OMB’s FOIA guidance to reflect this broad definition is critical. This lawsuit is a great opportunity for the Trump administration to show its leadership on transparency issues.”

The lawsuit can be found here

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: zachary.kurz@causeofaction.org

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10/31/2017

Transparency Groups: Finalize Release to One, Release to All FOIA Policy

Cause of Action Institute and Sunlight Foundation file petition to advance rule that would promote broad disclosure of agency records

Washington, DC – Cause of Action Institute (“CoA Institute”) today joined the Sunlight Foundation in filing a petition for rulemaking demanding the Trump administration move forward with a rule to promote government transparency and broad public disclosure of agency records. The Release to One, Release to All rule, first proposed by the Obama administration, mandates that agencies make records produced in response to Freedom of Information Act (“FOIA”) requests also publicly available on the agencies’ websites, with certain limited exceptions. CoA Institute also led a broad coalition of government transparency organizations in sending a letter to the White House Office of Management and Budget (“OMB”) and Department of Justice Office of Information Policy urging action to finalize the rule.

CoA Institute Counsel and Senior Policy Advisor James Valvo: “‘Release to One, Release to All’ is a great way to increase the amount of government information in the public sphere. When agencies release information under FOIA, with limited exceptions, it is prepared for release to the public. The Obama administration has already run the pilot program and the Department of Justice has already accepted public comment on the policy. It’s time to finalize it.”

Sunlight Foundation Deputy Director Alex Howard: “Despite multiple requests for updates from the Justice Department over the past year, it does not appear the Trump administration has any plans to finalize and promulgate this policy, or even answer basic questions about why it has stalled. Our petition compels the Trump administration to either move forward with disclosure and implementation, or explain why they don’t believe the policy is workable. The ‘Release to One, Release to All’ policy for the Freedom of Information Act has broad support within the transparency community, and we deserve an explanation as to why progress has ground to a halt after months of analysis, planning and responsive feedback to a request for public comment.”

On June 30, 2016, President Obama directed a review of the feasibility of such a FOIA policy. More than ten months have passed since the January 1, 2017 completion deadline for that review. Despite this analysis and gathering public comments, progress on the rule has now halted completely without explanation.

For these reasons, CoA Institute led a group of 22 organizations in sending a letter to the White House and Justice Department urging them to take the next step in finalizing the policy.

The letter states:

“Release to One, Release to All” is sound public policy that would increase government transparency and leverage the existing investment in FOIA disclosures… Placing this information in the public domain would allow the public to know what type of information is being requested, to search these prior productions for information relevant to their own purposes, and, perhaps, decrease the number for future requests or facilitate future requesters making more informed and targeted requests. What’s more, placing these information resources into the public domain has the potential to create unknown benefits, such as analyses of patterns in FOIA requests and harnessing of the information for other uses… We urge you to take the next step and finalize the policy.

The petition for rulemaking can be found here.
The letter can be found here.

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: zachary.kurz@causeofaction.org

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08/9/2017

Lawsuit Seeks Records on White House’s Failure to Update FOIA Fee Guidance

Washington, D.C. – Cause of Action Institute (“CoA Institute”) today filed a lawsuit against the White House Office of Management and Budget (“OMB”) for records that would show the agency’s action, or lack thereof, to review two pending petitions for rulemaking, one of which is seeking an update to its official guidance concerning Freedom of Information Act (“FOIA”) processing fees. OMB’s FOIA fee guidance on this issue is critical to government transparency because federal agencies are required by law to conform to OMB’s guidance and routinely deny fee waiver requests that should be granted, based on recent judicial precedent.

CoA Institute Counsel and Senior Policy Advisor James Valvo: “Steep FOIA processing fees are a substantial roadblock for many organizations and individuals attempting to reveal how their government makes decisions. It is critical that OMB take action to update its outdated guidance document, which conflicts with binding statutory and judicial authorities.”

On June 2, 2016, CoA Institute submitted a petition for rulemaking to OMB asking it “to issue updated guidance to agencies on how to make [FOIA] fee determinations in compliance with binding statutory and judicial authorities.” This update is necessary because, “[d]espite Congress amending the FOIA several times during the last twenty-nine years and courts interpreting those changes, OMB has not updated its fee guidance since 1987. Federal agencies, however, continue to rely on OMB for guidance when issuing FOIA fee regulations.”

CoA Institute received no communication from OMB regarding this petition. On March 10, 2017, CoA Institute sent a FOIA request to OMB seeking all records that relate to the petition for rulemaking. OMB acknowledged receipt of the FOIA request, but two subsequent requests for updates on the processing of the request have gone unanswered.

The Archivist of the United States has also forwarded a recommendation from the FOIA Advisory Committee to OMB asking it to update this FOIA fee guidance document.

The full lawsuit is available here

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