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07/31/2018

Millennium Challenge Corporation Adopts CoA Institute’s Recommendations for FOIA Regulations

The Millennium Challenge Corporation (“MCC”) finalized a rule at the end of last week implementing new Freedom of Information Act (“FOIA”) regulations and incorporated important revisions proposed by Cause of Action Institute (“CoA Institute”) in a comment submitted to the agency in March 2018.  The MCC is a small agency tasked with delivering foreign aid to combat global poverty.

CoA Institute made several recommendations in response to the MCC’s proposed rulemaking.  Most importantly, we urged the agency to remove outdated “organized and operated” language from its proposed definition of a “representative of the news media.”  Such language has been used in the past to deny news media requester status—and favorable fee treatment—to government watchdog organizations, including CoA Institute.  For example, CoA Institute sued the Federal Trade Commission, and took its case all the way to the D.C. Circuit, just to get the agency to acknowledged that its FOIA fee regulations were outdated and that it had improperly denied CoA Institute a fee reduction.

In deciding that case, the D.C. Circuit issued a landmark decision clarifying proper fee category definitions and the application of fees in FOIA cases.  CoA Institute cited this case to the MCC and the agency took heed of the current case law, removing the outdated “organized and operated” standard from its final rule.

CoA Institute also asked the MCC to remove language directing FOIA officials to read agency regulations “in conjunction with” fee guidelines published by the White House Office of Management and Budget (“OMB”) in 1987.  Portions of the OMB guidance, which are actually the source of the “organized and operated” standard, are simply no longer authoritative—they conflict with the statutory text, as amended by Congress, and judicial authorities, including Cause of Action v. Federal Trade Commission.

Continued reliance on the OMB guidelines threatens to cause confusion.  In 2016, the FOIA Advisory Committee and the Archivist of the United States both called on OMB to update its fee guidelines.  CoA Institute also filed a petition for rulemaking on the issue, and is currently litigating the matter in federal court.  Although the MCC has decided not to alter its reference to the OMB guidelines (and did not provide an explanation for rejecting that portion of CoA Institute’s comment), the fact remains that no agency can rely on OMB’s superseded directives.

Since the passage of the FOIA Improvement Act of 2016, CoA Institute has commented on twenty-six separate rulemakings.  Of the twelve that have been finalized, CoA Institute has succeeded in convincing seven agencies to abandon the outdated “organized and operated” standard in favor of a proper definition of “representative of the news media,” including the following:

Some agencies, including the National Credit Union Administration and the Federal Reserve, choose to defer on CoA Institute’s recommendations and have promised to propose further rulemakings in the near future to address outstanding fee issues.

CoA Institute’s successful comment to MCC is another small step in our efforts to provide effective and transparent oversight of the administrative state and, more specifically, to ensure agency compliance with the FOIA.

Ryan P. Mulvey is Counsel at Cause of Action Institute

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06/28/2018

SEC Adopts CoA Institute’s Recommendations in Updated FOIA Regulations

The Securities and Exchange Commission (“SEC”) finalized new Freedom of Information Act (“FOIA”) regulations today, adopting two revisions from a comment that Cause of Action Institute (“CoA Institute”) proposed in January 2018.  The FOIA allows for the disclosure of records of federal agencies, including documents, emails, and reports, and is an essential tool for promoting government transparency.

CoA Institute made three recommendations in response to the SEC’s proposed rulemaking.  First, we urged the agency to remove outdated “organized and operated” language from its definition of “representative of the news media.”  Such language has been used in the past to deny FOIA fee waivers to organizations like CoA Institute that investigate agency waste, fraudulent activity, cronyism, and wrongdoing.  In 2015, we argued Cause of Action v. Federal Trade Commission before the D.C. Circuit, which resulted in a landmark ruling that invalidated the “organized and operated” requirement.

In Cause of Action, the D.C. Circuit clarified proper fee category definitions and the application of fees for FOIA requests.  CoA Institute cited this case in its comment to the SEC and the agency concurred with our proposal to remove the outdated “organized and operated” language from its definition of a news media requester.  The FTC also acknowledged the D.C. Circuit’s landmark decision in its final rule.

Second, CoA Institute recommended eliminating “case-by-case” fee category determinations.  Under the original rule proposed by the SEC, FOIA offices would “determine whether to grant a requester news media status on a case-by-case basis based upon the requester’s intended use of the requested material.”  CoA Institute again cited Cause of Action to argue that the focus of the fee waiver inquiry should be on “requesters, rather than [their] requests.”  The SEC agreed and removed the restrictive language.

Finally, CoA Institute recommended that the SEC recognize that a news media requester may use “editorial skills” to turn “raw materials into a distinct work” when writing documents such as press releases and editorial comments.  This understanding broadens the potential pool of news media requesters and our recommendation tracks language from the D.C. Circuit’s decision in Cause of Action.  Although, in this respect, we did not recommend any specific changes to the final rule the SEC nevertheless acknowledged our comments by stating that it “will consider Cause of Action and any other relevant precedents in applying the fee provisions in its regulations.”

Americans have an interest in living free and prosperous lives without the interference of arbitrary and abusive executive power.  One of the ways CoA Institute monitors government overreach is by fighting for access to information on the federal government’s activities.  Our successful comment is a small but important victory in our work to ensure a transparent government that works for the benefit of all Americans.

Chris Klein is a Research Fellow at Cause of Action Institute

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12/12/2016

CoA Institute Challenges SEC’s Unlawful Expansion of Criminal Liability

Washington D.C. – Cause of Action Institute (CoA Institute) has filed an Amicus Curiae Brief in the First Circuit Court of Appeals challenging the District Court’s decision to defer to the U.S. Securities and Exchange Commission’s (SEC’s) interpretation of a law in a criminal case where that interpretation actually contradicts the text of the statute.

In May 2016, Richard Weed, a California-based attorney, was convicted on charges of conspiracy to commit securities fraud, which included a “pump-and-dump” scheme involving penny stocks. The government alleged that Mr. Weed performed legal work for two co-conspirators that enabled them to evade SEC stock registration requirements. Mr. Weed was sentenced to forty-eight months in prison.

The government’s case was premised on the fact that the co-conspirators were required to register the stock with the SEC. However, the stock at issue did not require registration under the Securities Act. The government conceded this point, but nevertheless argued that registration was required in accordance with the SEC’s interpretation of the law.

In its Amicus Brief, following a long line of judicial precedent, CoA Institute argued that Section 3(a)(9) of the Securities Act is unambiguous and should be construed as such, something the District Court of Massachusetts failed to do. More broadly, the Brief contends that federal agencies should not be able to administratively rewrite federal statutes to create new crimes that Congress never intended and then demand that the courts “defer” to the agency’s views on what the law prohibits or requires. Such a constitutionally dangerous practice violates the separation of powers and threatens individual liberty. The Amicus Brief argues that criminal statutes should be narrowly interpreted to protect citizens from arbitrary, overreaching prosecutions.

CoA Institute Counsel Patrick Massari: “The Constitution provides for the courts to have exclusive authority to interpret criminal laws passed by Congress. The SEC overstepped its authority by interpreting the law in a way that is directly contrary to the plain text of Section 3(a)(9). The unchecked power of the SEC and the administrative state harms individual liberty and threatens free market principles. CoA Institute is uniquely situated to assist the Court in reaching its decision because this case deals with the intersection of overcriminalization and administrative law.”

The full Amicus Brief can be found here.

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06/18/2014

Cause of Action Appeals SEC Failure to Adequately Search for Records related to White House Equities

Cause of Action previously sent 20 FOIA requests to federal agencies regarding the White House’s review of FOIA and other document requests. Produced documents were included in our report released for Sunshine Week 2014. We sent FOIA appealsto USDA and GSA regarding improper redactions under attorney-client communications. This appeal concerns the Securities and Exchange Commission’s response to our FOIA request stating the agency found no responsive records.

May 6, 2014 FOIA Request to SEC

June 12, 2014 SEC Response Stating No Responsive Records

June 18, 2014 SEC FOIA Appeal Re WH Equities by CauseOfAction

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12/12/2011

Securities and Exchange Commission

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