From Moses to James Madison to David Letterman, important ideas come in lists of ten, as do these principles for opening up government information.^[1] The list isn’t new: my colleague John Wonderlich wrote about “themes for legislative information publication” in February 2007, and eight open government data principles emerged from a conference organized by internet oracle Carl Malamud and technology publisher Tim O’Reilly in December 2007.^[2] However, we have refreshed the principles, expanded upon them, and added details.

The government is increasingly making data available online, partly in response to congressional and presidential leadership and partly from public pressure. The newly released or updated data varies markedly in quality and usefulness; agencies are searching for guidance on how to do better.

These principles are intended to provide a starting point. They are: completeness, primacy, timeliness, ease of physical and electronic access, machine readability, non-discrimination, use of commonly owned standards, licensing, permanence and usage costs. Each one exists along a continuum of openness, and the list writ large is intended as a guidebook, not a rulebook.

We welcome additional ideas and corrections.^[3] The document is available here.

***

[1] Technically speaking, what we call the "Bill of Rights" was intended to have 12 constitutional amendments, although only 10 were enacted in the 1790s; noted commentator Melvin Kaminsky reports the number of commandments varied over time; and few items from Letterman’s list are actually funny.

[2] Sunlight provided a grant to the conference.

[3] More background materials are available here.

A librarian at the Law Library of Congress is asking for your ideas on improving THOMAS via that agency's fantastic new blog, In Custodia Legis, launched this past Monday. Today's blogpost describes ongoing efforts to improve THOMAS, including the creation of “tip of the week” that highlights THOMAS’ lesser-known features, and asks for ideas for future improvements.

I’m sure our friends at OpenCongress and GovTrack have some helpful ideas, and I have a lengthy list, too, but my top suggestion continues to be that the public be granted bulk access to THOMAS data. Congressman Honda explained this best in 2008: “Offering legislative information in a way that other websites can reuse could lead to revolutionary changes in the way our government functions, eventually allowing Congress to better tap into the knowledge and wisdom of the American people.” (I should add that we’re still awaiting the LOC/GPO report on making THOMAS data available in bulk, mandated by P.L. 111-8.)

My other main suggestion concerns what the Law Library has started to do-- bring the public in on the discussion of how to make THOMAS better. Some possible ways to continue in this direction would be to hold regular roundtable discussions, create a users advisory group, regular soliciting and responding to public feedback, and so on. Many people care about the information contained in THOMAS and how it is provided to the public. A partnership between the public and the Law Library can further its mission of providing “research assistance and reference services for United States federal and state legal issues to national and global constituents.”

More information about THOMAS, including some suggestions for improvements, are available here.

The Sunlight Foundation joined ten organizations today in expressing concern over a provision of the Wall Street Reform and Consumer Protection Act that may hinder the public’s access to SEC oversight information. The full text of the letter and list of signatories is below and on POGO's website. I wrote about Sunlight’s concerns on Sunday, which focus on FOIA exemptions and subpoena compliance carve-outs.

Thus far, two bills have been introduced in Congress to respond to the perceived lack of transparency in the FinReg bill.

First, Representative Paul introduced HR 5970,  which focuses specifically on undoing section 929I, which contains the provision in question.

Second, Reps. Issa, Towns, and Bachus introduced HR 6038, which establishes data standards for a wide variety of entities affected by the FinReg bill.

August 3, 2010

Senator Christopher Dodd Chairman Senate Committee on Banking, Housing and Urban Affairs 534 Dirksen Senate Office Building Washington, D.C. 20510

Representative Barney Frank Chairman House Committee on Financial Services 2129 Rayburn House Office Building Washington, D.C. 20515

Dear Chairmen Dodd and Frank:

We, the undersigned organizations concerned with government accountability and transparency, are writing to express our concerns about Section 929I of the recently passed Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). If interpreted broadly, this provision has the potential to severely hinder the public’s ability to access critical information related to the oversight activities of the Securities and Exchange Commission (SEC), thereby undermining the bill’s overarching goals of more transparency and accountability.

As you know, Section 929I states that the SEC cannot be compelled to disclose records or other information obtained from its registered entities—including entities such as hedge funds, private equity funds, and venture capital funds that will now be regulated by the SEC—if this information is used for “surveillance, risk assessments, or other regulatory and oversight activities” outlined in the Securities Exchange Act of 1934, the Investment Company Act of 1940, and the Investment Advisers Act of 1940.[1]

SEC Chairman Mary Schapiro wrote to you last week defending this provision. She argued that registered entities need to be able to provide the SEC with access to sensitive or proprietary information “without concern that the information will later be made public.” She further explained that, prior to the passage of the Dodd-Frank Act, “regulated entities not infrequently refused to provide Commission examiners with sensitive information due to their fears that it ultimately would be disclosed publicly.” She also claimed that investment advisers routinely refuse to turn over personal trading records of investment management personnel, “instead requiring staff to review hard copies of the records on the adviser’s premises,” which “materially impacts the staff’s ability to detect insider trading activity.”[2]

These arguments do not adequately describe the SEC’s existing regulatory authority, and they fail to acknowledge that the Freedom of Information Act (FOIA) already provides sufficient exemptions to protect against the release of sensitive and proprietary information. Furthermore, the SEC has a troubling history of being overly aggressive in withholding records from the public. For these reasons, we strongly urge you to repeal Section 929I, or to at least curtail the SEC’s broad authority to withhold critical information from the public.

First, we are not convinced by Chairman Schapiro’s claim that “existing FOIA exemptions were insufficient to allay concerns [about public disclosure] due in part to limitations in FOIA.” For instance, Exemption 8 protects matters that are “contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions.” Chairman Schapiro argues that this exemption may not apply to all registrants, but it’s worth noting that the courts have broadly construed the term “financial institutions,” holding that it is not limited to depository institutions and can also include investment advisers.[3] In addition, Exemption 4 protects “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.” The Department of Justice’s (DOJ) FOIA guide states that this exemption “encourages submitters to voluntarily furnish useful commercial or financial information to the government and it correspondingly provides the government with an assurance that such information will be reliable,”[4] calling into question Chairman Schapiro’s claim that additional exemptions are needed in order for the SEC to collect information from its registered entities.

Second, the SEC’s track record with FOIA raises additional concerns about giving the agency even more authority to withhold information from the public. Last year, an audit conducted by the SEC Office of Inspector General (OIG) uncovered a wide range of problems related to the SEC’s FOIA operations. We were particularly troubled by the OIG’s finding that the SEC Chief FOIA Officer was not operating in compliance with Executive Order 13392 or the OPEN Government Act; that few FOIA liaisons have written policies and procedures for processing FOIA requests, increasing the risk that the agency is unnecessarily withholding information from the public; and that there is an insufficient separation between the initial FOIA determination and the appeal process. The OIG concluded that the SEC’s FOIA release rate was “significantly lower when compared to all other federal agencies.”[5]

The OIG put forth a number of recommendations for correcting the glaring deficiencies in the SEC’s FOIA operations, such as ensuring that accurate searches are made for responsive information, providing guidelines or written policies for all FOIA-related staff that address the concerns raised by the OIG, and ensuring that all FOIA-related staff has access to sufficient legal expertise to process requests in compliance with FOIA. But according to the OIG’s most recent semiannual report to Congress, the SEC has not completed final action on any of these recommendations.[6] Rather than giving the SEC any more leeway to improperly withhold information from the public, we urge you to hold Chairman Schapiro accountable for the excessive delays in implementing the OIG’s recommendations.

Third, we notice that Chairman Schapiro is “asking the Commission to issue and publish on our website guidance to our staff that ensures [Section 929I] is used only as it was intended.” The solution for addressing the uncertainty surrounding this provision is not additional guidance. The solution is clarification in the law that public access is vital to accountability and that the existing FOIA exemptions can adequately protect confidential business information provided by regulated entities.

Fourth, Chairman Schapiro neglected to mention that the SEC already has the authority to compel registered entities to provide information and records. Under the Securities Exchange Act of 1934, the SEC has the authority to subpoena witnesses and require the production of any records from its registered entities. If these entities fail to comply, the SEC has the authority to suspend these entities, impose significant monetary penalties, and refer cases to DOJ for possible criminal proceedings.[7] But instead of using these existing authorities, Chairman Schapiro seems to think that Congress needs to provide blanket FOIA exemptions in order to convince the SEC’s registered entities to cooperate. We think such a blanket exemption fosters an environment that defers to the entities it regulates and is unadvisable.

Finally, it is unclear what Chairman Schapiro’s plans are for implementing other blanket FOIA exemptions in the Dodd-Frank Act, such as Section 404, which exempts the SEC from FOIA with respect to any “report, document, record, or information” received from investment advisers to private funds.

In the aftermath of the recent financial crisis, the need for greater transparency in our financial system is all too apparent. The SEC’s ongoing effort to withhold vital records from the public undermines the spirit of the transparency reforms in the Dodd-Frank Act, and flies in the face of President Obama’s guidance instructing agencies to adopt a “presumption in favor of disclosure, in order to renew their commitment to the principles embodied in FOIA, and to usher in a new era of open Government.”[8]

We call on you to repeal the unnecessary FOIA exemption in Section 929I, examine the SEC’s current record on withholding information, and take whatever steps are necessary to ensure that the SEC isn’t given any additional authority to keep its records under a veil of secrecy. We welcome an opportunity to discuss this issue with you further. To reach our groups, you or your staff may contact Angela Canterbury at the Project On Government Oversight at [redacted] or [redacted].

Sincerely,

American Library Association American Association of Law Libraries Citizens for Ethics and Responsibility in Washington (CREW) Essential Information Government Accountability Project (GAP) Liberty Coalition OMB Watch OpenTheGovernment.org Project On Government Oversight (POGO) Public Citizen Sunlight Foundation

cc: Senator Patrick Leahy

[1] “Dodd-Frank Wall Street Reform and Consumer Protection Act,” Pub. L. No. 111-203, Section 929I. http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h4173enr.txt.pdf (Downloaded August 2, 2010) [2] Letter from SEC Chairman Mary Schapiro to Representative Barney Frank and Senator Christopher Dodd, July 30, 2010. http://voices.washingtonpost.com/market-cop/frank.pdf and http://voices.washingtonpost.com/market-cop/dodd.pdf (Downloaded August 2, 2010) [3] Department of Justice, “Exemption 8,” Freedom of Information Act Guide, May 2004. http://www.justice.gov/oip/exemption8.htm (Downloaded August 2, 2010) [4] Department of Justice, “Exemption 4,” Freedom of Information Act Guide, May 2004. http://www.justice.gov/oip/exemption4.htm (Downloaded August 2, 2010) [5] Securities and Exchange Commission, Office of Inspector General, Review of the SEC’s Compliance with the Freedom of Information Act (Report No. 465), September 25, 2009. http://www.sec-oig.gov/Reports/AuditsInspections/2009/465.pdf (Downloaded August 2, 2010) [6] Securities and Exchange Commission, Office of Inspector General, Semiannual Report to Congress: October 1, 2009 – March 31, 2010, pp. 98-99. http://www.sec-oig.gov/Reports/Semiannual/2010/semiapr10.pdf (Downloaded August 2, 2010) [7] Securities Exchange Act of 1934, Section 21(b) - (d), Section 32. http://www.sec.gov/about/laws/sea34.pdf (Downloaded August 2, 2010). [8] “Memorandum of January 21, 2009 – Freedom of Information Act,” Federal Register, Vol. 74, No. 15, January 26, 2009. http://edocket.access.gpo.gov/2009/pdf/E9-1773.pdf (Downloaded August 2, 2010)

Our summer intern, Mike Liu, wrote this fantastic summary of a hearing on the declassification of historical congressional records that was held on Thursday, July 22, 2010, by the Public Interest Declassification Board. (Here's the agenda [PDF]).

On Thursday July 22, members of the Public Interest Declassification Board (PIDB), an advisory committee established in 2000, held a public meeting to discuss issues related to the declassification of historical congressional records. In particular, this meeting focused on Issue No. 15 of the PIDB’s 2008 report to the President titled “Improving Declassification.” In the report, the PIDB describes the “irregular and limited” process by which certain congressional records are declassified and offers a series of recommendations for reform. During the meeting, the PIDB held an open dialogue with experienced panelists on the history of declassification and the significant challenges towards a new system.

First Panel

Three speakers were featured in the first panel: Harold Reylea, former CRS specialist, Dr. David Barrett, professor of political science at Villanova, and Don Ritchie, Senate Historian. During their introductory statements and the Q&A segments, several key considerations were brought up.

The first is the question of what Reylea described as the “universe of records,” classified information pertaining to sectors ranging from national defense to atomic energy. The sheer quantity and range of these records span a “considerable number” of congressional committees and slow down the declassification process.

Second is the matter of significance. Over time, the demand for congressional records and other classified documents has increased, especially in academic fields. One example, cited by Mr. Ritchie, was a recently released volume of information on foreign policy during the Vietnam War that provided valuable insight into MoC thought and the origins of the War Powers Act. In order to determine what merits a declassification review, a formalized system must be put in place to determine “historically valuable contributions.” This system must also “not be case by case,” but rather bulk declassification by individual committees so as not to create extensive burdens for the researcher.

Finally, the privileges and prerogatives of Congress were discussed. In order to develop a statutory framework for declassification, the panelists and board agreed that there would have to be consistency between the House and the Senate. One possibility raised would be for each body to pass a resolution creating an arrangement with the National Declassification Center (NDC) and NARA to delegate processing of records. Although this framework would provide much-needed permanency and establish the role of the NDC, Congress is extremely wary of signing away its prerogatives, and thus, full support of congressional leaders must be obtained before proceeding.

Second Panel

The second panel, featuring former CIA director Porter Goss and former Representative Staff Director of the House Permanent Select Committee on Intelligence Mike Sheehy addressed many of the concerns of the first panel. Both Sheehy and Goss agreed with the major points in the PIDB’s 2007 report, stating that congressional documents are both crucial as research materials and conduits of legislative perspective. The House Records Office, for example, is filled with useful information on committee meetings that directly impacted executive decisions.

“Complete understanding [of executive decisions] must include consideration of the policy discussions in the legislative branch,” stated Mr. Sheehy. There is currently no uniform process for declassification of these documents, and there should be. Mr. Sheehy also explained that House Committees use old documents for two purposes: as foundations for questions at hearings and to establish a sense of previous sentiment. After these older records are archived they are “never used again by committee staff” unless subpoenaed. “A tremendous amount of material is lost to history,” Mr. Sheehy said.

In the case of the Senate Foreign Relations Committee’s recent declassification of Vietnam Era records, the documents were judged to be “worthwhile, much appreciated, and understood.” There was, however, no appropriated mechanism to bring about this result. Again, the issue of changing House and Senate rules was brought into discussion, and Sheehy suggested the PIDB recommend specific language and collaborate with the House Parliamentarian and the Rules Committee to come up with a more formal, concrete set of recommendations.

Mr. Goss brought to light the “bathtub problem,” which he described as “overclassification. “ “The historical value is the mission,” said Mr. Goss. “How do we define this with the public interest in mind.” According to Mr. Goss, much of the Hill and its information is misunderstood and thus misrepresented by the media (“History will report that this is what happened when there is a different side!” he exclaimed). A formalized declassification process will benefit the public understanding that all citizens of a representative republic are entitled to. “There’s no question that there’s a lot of politics in intel these days,” said Mr. Goss. There is however, a way to create a rich debate around policy without disclosing compromising information by means of selective declassification. One suggestion from the PIDB would be to make the process more topical, allowing for immediate declassification. A concern raised by the PIDB was whether testimony would be impacted by knowledge of expedited declassification.

Both Sheehy and Goss brought up the issue of convincing MoC’s to push for more efficient declassification rules. The distinguished panelists and the PIDB agreed that there must be an exemption carved out for material that can “cause embarrassment for a MoC.” Here, the discussion was more ambiguous, as Sheehy mentioned the senselessness in treating “records of no great importance,” and also mentioned that MoCs would not be concerned with declassification as long as they knew a process existed to maintain security.

Conclusion

The PIDB has dedicated itself to studying the declassification process and making substantive recommendations to Congress. Documents from congressional committees are crucial to policy decisions and no existing provisions for declassification exist. “At the present time, there is appreciation for a complete picture,” said Mr. Sheehy. The board is optimistic that through working with MoCs and the NDC, a formalized process for reviewing and declassifying congressional records will be established.

I’ve been reading about a brewing controversy over whether language in the new Financial Regulations Act -- officially the Dodd-Frank Wall Street Reform and Consumer Protection Act, aka HR 4173 -- weakens public oversight over banks and investment companies. The alarm was publicly raised by Fox Business News last week  over section 929I of the legislation.

Fox's complaint: SEC is guarding the henhouse

Fox is suing the SEC for information “related to the agency’s response to complaints, tips and inquiries” stemming from the Bernie Madoff scandal. The SEC denied the FOIA request, citing the new provision.

To explain why this is important, Fox Business’s Dunstan Prial quotes SEC “whistleblower” and former SEC attorney Gary Aguirre as saying the law “permits the SEC to promulgate its own rules and regulations regarding the disclosure of records without getting the approval of the Office of Management and Budget, which typically applies to all federal agencies.”

The Washington Post’s Zach Goldfarb noted on July 28th that the SEC complies with “substantially fewer” FOIA requests than other agencies. Fox’s lawyer said the law’s purpose was to “keep the SEC’s failures secret.” The media giant's concern, no pun intended, is that the fox is guarding the henhouse. Equally plausible is the argument that the agency has been "captured" by those it regulates -- or that it's doing the will of Congress.

It seems to me that there are two anti-transparency concerns: why were the new FOIA exemptions created?, and why should the SEC be able to shrug off court subpoenas for information stemming from private lawsuits?

Goldfarb provides additional context and a caveat:

While, as Fox notes, the law exempts the SEC from disclosing records derived from ‘surveillance, risk assessments, or other regulatory and oversight activities’ this only concerns documents obtained through examinations of broker-dealers and investment advisers -- periodic or targeted reviews of financial firms. People and organizations can still use FOIA to obtain a range of SEC information, such as inspector general reports; communications with Congress and the business community; and officials' calendar, salary and conflict-of-interest information.

SEC: These rules will improve enforcement

SEC Chairman Mary Schipiro reportedly responded to Fox’s allegations via letters to Senator Dodd and Representative Franks (which is not available on the SEC’s website, but is available from news outlets like the Washington Post.) She calls “false” the assertion that the legislation “'exempts’ the SEC from the Freedom of Information Act (FOIA).”

Out of fairness to Fox, the Chairman's characterization of its position is off base: the news conglomerate asserts that the SEC can set its own rules regarding how to comply with FOIA -- which means in practice that the SEC will only comply with FOIA requests to the extent it wants to -- but Fox does not claim the agency is exempted from FOIA entirely. Her characterization of Fox’s assertion seems to be a strawman.

The nub of Chairman Schapiro’s argument is that “[i]n order for our efforts [to protect investors, including those in hedge funds, private equity funds, and venture capital funds] to be successful, it is important that registered entities be able to provide us with access to confidential information without concern that the information will later be made public.”

She adds:

Prior to the Dodd-Frank Act, regulated entities not infrequently refused to provide Commission examiners with sensitive information due to their fears that it ultimately would be disclosed publicly. Existing FOIA exemptions were insufficient to allay concerns due in part to limitations in FOIA (including that certain existing exemptions may not apply to all registrants) (FN 1) and the fact that FOIA exemptions are not applicable when the SEC must respond to a subpoena (as either a party or non-party) (FN 2). The Commission's resulting inability to obtain this information hindered our capacity to enforce the securities laws and protect investors.

The first argument about “allaying concerns” is interesting because of the lack of a subject in the sentence. Whose concerns were not being allayed? Apparently the financial institutions the SEC oversees. Based upon the Commissioner’s letter, perhaps the problem from a regulatory point of view is that the SEC is relying (and perhaps must rely) on voluntary compliance from financial institutions for it to engage in regulatory oversight; FOIA (and public disclosure in general) is a side issue as to whether the SEC is empowered to do its job, and a fig leaf for financial institutions who do not wish to comply with a voluntary regulatory regime.

The second argument concerning subpoenas is not a FOIA argument, but one rather of regulated institution’s concerns that courts would be able to use information gathered by the SEC to help resolve litigation, potentially against a company’s interests. (Who knows -- they may be disclosing one set of books in court and another to the SEC.)

The good stuff is in the footnotes to her letter, which are not shown in the Washington Post’s reprint of the letter, but are available in the PDF the Post links to.

Footnote 1 explains that the FOIA exemptions do not apply to all registrants.

1 For example, FOIA exemption (b)(8) protects matters that are "contained in or related to examination, operating or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions (emphasis added).

Footnote 2 discusses the SEC’s response to subpoenas, which is unrelated to FOIA but does concern a person’s ability to have his or her day in court.

2 With respect to subpoenas, the staff is forced to contest them on grounds such as relevance and common law privileges. Depending on how a judge resolves the issues, the SEC may be ordered to produce sensitive records received from a registered entity to the firm's competitors. In some cases, the firms whose records could be disclosed have not even been parties to the proceeding in which the subpoena had been issued. Such disclosures obviously may cause significant harm to the businesses whose records and information are disclosed, and to the integrity of our examination program.

As a gesture towards the public, the Commissioner says that she is “asking the Commission to issue and publish on our website guidance to our staff that ensures the provision is used only as it was intended.” Congress didn't provide much guidance to aid the SEC, as the committee report that accompanied the legislation (House Report 111-517) does not provide any context as to legislative intent or explanation for this change in these provisions.

FOIA law prior to passage of the financial regulation bills (5 USC 552) seems to address the SEC’s concerns. FOIA exemption 4 excludes from disclosure “a trade secret or privileged or confidential commercial or financial information obtained from a person.” FOIA exemption 8 excludes information “contained in or related to examination, operating, or condition reports about financial institutions that the SEC regulates or supervises.”

Three Exemptions to FOIA and Court Subpoenas

Looking at the legislation itself, it appears that three exemptions have been inserted, all of which exempt the SEC from certain FOIA requests and court subpoenas arising from civil matters.

Exemption #1

First, a new provision was added to the rules regarding “public availability of information” for security exchanges, 15 USC 78x. Note that the SEC no longer needs to comply with court subpoenas or FOIA requests. Here's the language (with emphasis added in bold, and notes in square brackets):

‘‘(e) RECORDS OBTAINED FROM REGISTERED PERSONS.—

‘‘(1) IN GENERAL.—Except as provided in subsection (f), the Commission shall not be compelled to disclose records or information obtained pursuant to section 17(b), or records or information based upon or derived from such records or information, if such records or information have been obtained by the Commission for use in furtherance of the purposes of this title, including surveillance, risk assessments, or other regulatory and oversight activities.

‘‘(2) TREATMENT OF INFORMATION.—For purposes of section 552 of title 5 [FOIA laws, in other words], United States Code, this subsection shall be considered a statute described in subsection (b)(3)(B) of such section 552 [and thus be exempt from FOIA]. Collection of information pursuant to section 17 shall be an administrative action involving an agency against specific individuals or agencies pursuant to section 3518(c)(1) of title 44, United States Code [the section that establishes Office of Information and Regulatory Affairs within the Office of Management and Budget].’’.

I am not clear what provision 17(b) refers to, although I would guess that it is section 17(b) of the Securities and Exchange Commission Act of 1934 concerning “automated quotation systems for penny stocks,” codified at 15 USC 78-q2. If I'm right, this provision concerns the making publicly available of information regarding trading activity. (Note that subsection (f), not reproduced here, contains examples of when the agency must respond to subpoenas, e.g., in lawsuits brought by the government.)

Exemption #2

Second, a provision was modified that requires investment companies to maintain records, (15 U.S.C. 80a-30), which now allows the SEC to shrug off court subpoenas demanding information for the resolution of civil suits, as well as ignore FOIA requests. Inserted text is in caps; deleted text is struck through and in brackets; text I am emphasizing is in bold.

(b) Investment Company Act of 1940.—Section 31 of the Investment Company Act of 1940 (15 U.S.C. 80a-30) is amended—

(1) by striking subsection (c) and inserting the following:

‘‘(c) Limitations on Disclosure by the Commission.—Notwithstanding any other provision of law, the Commission shall not be compelled to disclose ANY RECORDS OR INFORMATION [internal compliance or audit records], or information contained therein provided to the Commission under this section, OR RECORDS OR INFORMATION BASED UPON OR DERIVED FROM SUCH RECORDS OR INFORMATION, IF SUCH RECORDS OR INFORMATION HAVE BEEN OBTAINED BY THE COMMISSION FOR USE IN FURTHERANCE OF THE PURPOSES OF THIS TITLE, INCLUDING SURVEILLANCE, RISK ASSESSMENTS, OR OTHER REGULATORY AND OVERSIGHT ACTIVITIES. Nothing in this subsection authorizes the Commission to withhold information from the Congress or prevent the Commission from complying with a request for information from any other Federal department or agency requesting the information for purposes within the scope of jurisdiction of that department or agency, or complying with an order of a court of the United States in an action brought by the United States or the Commission. For purposes of section 552 of title 5, United States Code, this section shall be considered a statute described in subsection (b)(3)(B) of such section 552. COLLECTION OF INFORMATION PURSUANT TO SECTION 31 SHALL BE AN ADMINISTRATIVE ACTION INVOLVING AN AGENCY AGAINST SPECIFIC INDIVIDUALS OR AGENCIES PURSUANT TO SECTION 3518(C)(1) OF TITLE 44, UNITED STATES CODE.’’;

(2) by striking subsection (d); and

(3) by redesignating subsections (e) and (f) as subsections(d) and (e), respectively.

As you can see, the pendulum has swung away from broader disclosure. Instead of excluding “internal compliance or audit records,” now no entity can compel the SEC to disclose any records or information, or anything derived from them, except for the reasons identified above. Again, this isn’t just a FOIA exemption, but also allows the SEC to decline to provide materials subpoenaed by a court by a lawsuit brought by anyone except the federal government.

I do not know what it meant here by an “administrative action.”

Exemption #3

A third provision was added, which provides FOIA and subpoena exemptions regarding disclosure of information by investment advisers (15 USC 80b-10). Here's the text, with my emphasis in bold.

c) INVESTMENT ADVISERS ACT OF 1940.—Section 210 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-10) is amended by adding at the end the following:

‘‘(d) LIMITATIONS ON DISCLOSURE BY THE COMMISSION.—Notwithstanding any other provision of law, the Commission shall not be compelled to disclose any records or information provided to the Commission under section 204, or records or information based upon or derived from such records or information, if such records or information have been obtained by the Commission for use in furtherance of the purposes of this title, including surveillance, risk assessments, or other regulatory and oversight activities. Nothing in this subsection authorizes the Commission to withhold information from the Congress or prevent the Commission from complying with a request for information from any other Federal department or agency requesting the information for purposes within the scope of jurisdiction of that department or agency, or complying with an order of a court of the United States in an action brought by the United States or the Commission. For purposes of section 552 of title 5, United States Code, this subsection shall be considered a statute described in subsection (b)(3)(B) of such section 552. Collection of information pursuant to section 204 shall be an administrative action involving an agency against specific individuals or agencies pursuant to section 3518(c)(1) of title 44, United States Code.’’.

I am conjecturing that section 204 is codified at 15 USC 80b-4, which requires investment advisers to keep records and make reports to the SEC. In addition to creating an exemption from FOIA, this is another get-out-of-court-free provision, where courts are prohibited from compelling the SEC from provide records from investment advisers. In other words, it’s again up to the SEC’s sole discretion.

What does this say about transparency?

What does this all mean? I don’t really know. It appears that less information will be available to the public or to resolve lawsuits. The SEC is granted a freer hand to help shield corporate information from public view, and apparently the agency is unafraid to wield that power. Based on the Commissioner’s letter, these provisions have shown up in legislation before -- thus demonstrating how omnibus legislation allows a pre-existing laundry list to be enacted into law.

This also shows how difficult it can be to figure out what’s going on. With the move into the regulatory implementation phrase -- and a request for public comments on the implementation of these regulations already issued by the SEC -- it is likely that those who are in the know will work very hard to keep the rest of us from figuring out what’s going  on ... until it’s too late.

• Disclosure: I was a law clerk for Fox Television Stations Incorporated and had no dealings with Fox News.

On Wednesday, the House of Representatives passed the “Lobbying Disclosure Enhancement Act,” introduced by Rep. Mary Jo Kilroy, which is notable for what it does and does not do -- and that is shows an enhanced sensitivity to the importance of lobbying disclosure and enforcement.

Contrary to this news report, the legislation passed by the House does not impose fines on lobbyists for late filings or institute annual filing fees, although the originally-introduced version did. (I wrote about the introduced version of the legislation, with a number of suggestions for improvement, here.)

What the House-passed legislation would do, if the Senate concurs and the legislation is signed by the President, is shift responsibility for prosecuting when lobbyists failure to file their activities from the United States Attorney for the District of Columbia to the U.S. Attorney General. Specifically, the bill would:

1. Require the Attorney General to establish a Lobbying Disclosure Act Enforcement Task Force that would be primarily responsible for investigating and prosecuting instances where lobbyists fail to file, upon referral to DOJ by the House and Senate
2. Collect and disseminate information regarding the DOJ’s enforcement of the Lobbying Disclosure Act
3. Empower the AG to make recommendations to congress about improving the LDA

It is a tricky matter to balance encouraging the DOJ to prosecute lobbyists for failing to register with the House and Senate and interfering with the Justice Department’s prosecutorial discretion. Raising the matter to a higher authority -- the Attorney General -- may spur action (and foster accountability) where there has been far too little.

The idea of imposing fines for late filing and the establishment of a dedicated source for funding enforcement and disclosure of lobbying reporting, dropped from the final version of the House bill and explored in my earlier blogpost, is a good idea and is worthy of further exploration.

• Disclosure: one of my former coworkers is now Communications Director for Rep. Kilroy’s campaign and congressional office.

I just finished putting together an earmark transparency timeline that traces disclosure developments over the last 4 years. Of particular interest is the forward momentum from obscure forms of disclosure to the more concrete. In order of occurrence:

• publishing a list of granted earmarks requests along with the appropriations bill to which they're tied, to
• requirements to post earmarks requests on members websites, to
• bans on considering certain earmarks unless they've been fully vetted, to
• a presidential call for and multiple instances of legislation introduced to place all earmarks request online in a searchable database, to
• markup of legislation implementing full earmark transparency.

The timeline is available here.

Last year I asked the internet gods for a URL shortener that created permanent links to legislation on THOMAS. Lo and behold, several months later TinyThom.as was revealed, and it is awesome. So once again I cast bread upon the water with three wishes for apps for THOMAS.

1. Compare bills

Bills often undergo a number of transformation before they become law. Understanding the legislative process requires seeing how bill language changes over time – that way you can see when legislators insert unobtrusive but important provisions. When the legislation is made available on THOMAS in XML, it is possible to download the two iterations, paste them into a word processor, and run a text comparison to see what has changed. That's what I did here.

What I would like is an online tool that allows me to avoid all the hard work. It should let me select any two bills on THOMAS and generate a redline document viewable online and available for download. Because some bills are only available in PDF and not XML (or are made available in XML long after the PDF version is online), extra credit would be awarded for anyone who makes it possible to redline PDFs and export the redlined version.

2. Identify related legislation

Sibling bills: In any given congress, multiple versions of identical (or nearly identical) bills are introduced. CRS identifies some of them, but inconsistently, and there is no systematic way to see all bills that contain 97% or 98% + identical language. What would be wonderful is an app that either identifies all related bills in a particular congress, or allows you (when you're looking at a particular bill) to press a button that then lists all other bills that have essentially the same text.

Generational bills: Bonus points would be awarded if you can identify similar bills (or amendments) introduced over multiple congresses.

Kissing Cousins: Mega bonus points would be awarded if you can identify when a section of a bill is identical to another bill (or section of a bill). The same holds true if you can identify when an amendment to a bill is really an existing bill in disguise.

3. Real time redline of U.S. code and legislation

More amendments are introduced for any particular bill than are adopted. What's not always clear is how the amendment will change the text of the bill. This is probably very hard, but what would be great is if there were a way to parse the legislative language to show how a particular amendment would change the language of the bill.

If this isn't hard enough, even more useful would be to see how a bill would modify the US code. (I think this may be impossible with the way bills currently are drafted, which is one reason why the Office of Law Revision Counsel exists, but I would enjoy being surprised.)

In the wake of an annual GAO report that some lobbyists have failed to register upon employment by a client, Representative Mary Jo Kilroy (D-Ohio) introduced legislation that would impose fines for late filings and require lobbying registration fees to fund enforcement of the filing provision. The bill aims for a higher level of accountability for lobbyists, who usually suffer no repercussions for failing to comply with registration requirements.

The “Fee on Lobbyists Act,” or HR 5751, would fine late-filings lobbyists $500 the first time they fail to register that they've taken on a client, and $1,000 for each subsequent infraction. It would also instantiate a public list of non-compliant lobbyists drawn from House and Senate records, whose names would be removed from the list once they file the report and pay the fine. Funds raised from these fines and the annual $50 per-client filing fee would be available to the appropriate House and Senate offices to pay for reviewing and auditing registrations. OMB Watch wrote about the bill last week; we noted its introduction in our daily roundup; and Rep. Kilroy issued this press release.

As things currently stand, the House Clerk's Office and Senate Office of Public Records do not always know when lobbyists fail to file, and when they do find out, they send reminder letters that give the non-compliant 60-days to file (as required under 2 USC 1605). Theoretically, ongoing non-compliance could trigger prosecution by the Attorney General's Office, after referral from the House or Senate. According to the GAO report, the AG often sends a letter demanding compliance; it notes the most recent enforcement actions were three settlements of civil actions in 2005. Theoretically, the maximum civil fine is $200,000 and the maximum criminal penalty for knowingly and corruptly failing to comply is 5 years imprisonment, although these provisions are largely unenforced.

The legislation cuts through much of the red tape to create an incentive to timely compliance, but there may be some room for additional improvements.

For example, although the legislation calls for the Secretary of the Senate and the Clerk of the House “to reconcile their databases … so that information … is compatible and easily comparable,” for this provision to have real bite it should mandate the publication of unique ID numbers for each lobbyist in every instance where that lobbyist is referenced. That way, it is easy to have confidence that the “John Smith” in the first quarter 2011 filing is the same “John Smith”in the fourth quarter 2010 filing; or to track his work for different employers over time. (Based on her press release, I think Rep. Kilroy intends for this provision to reconcile the list of non-compliant lobbyists made available by the House and Senate, but that is not clear from the text of the legislation)

Another possible improvement is to keep a public list (in a searachable, sortable, downloadable database) of all non-complying lobbyists and their employers, even when they pay their fine and file their forms. That way, the public can see whether the same lobbyists fail to file time and time again. Of course, the database should note the date when the lobbyist filed their updated forms and paid the fees. Except when a lobbyist is self-employed, it is employer (not the lobbyist or client) who files these registration forms, and it makes sense to fine the employer and not the lobbyist him/herself for each instance of noncompliance. Employers should be prohibited from passing through the late filing cost to clients or employees, and should be identified in this database.

In addition, to the extent the Senate and House lack the capacity to review these forms for timeliness and completion, one mechanism used to good effect in other circumstances is to let the public report instances of non-compliance. Timely and complete release of all filings will allow the public to contribute to this effort.

Additionally, there are likely to be instances where people have stopped lobbying and no longer need to file regular reports. Tracking these people is very difficult, as noted by the Center for Responsive Politics in their recent report “The Deregistration Dilemma.” They recommend:

Creating a separate form where a lobbyist can register and be assigned an ID…. A simple form in which a lobbyist discloses his or her employer and past government experience.... The form could also give the option for a lobbyist to deregister that is, terminate his or her status as a registered lobbyist, and thus forgo all the disclosure responsibilities entailed in that status.

“Forty percent of internet users went online for government data or information in the preceding twelve months," according to the Government Online report released in April by the Pew Internet & American Life Project. In other words, 92 million Americans (with 3/4s of Americans online) accessed data on the business of government.

Among the findings:

• 23% went online to see how federal stimulus money has been spent
• 22% downloaded or read the text of any legislation
• 16% visited a site that provides access to government data (such as data.gov)
• 14% looked for information on who contributed to elected officials

According to Pew, going online for data or information about the government “is not associated with greater or lesser levels of trust in government.” And although whites generally are more likely to visit government data sites, that distinction disappears for sites such as data.gov.

These findings may provide additional impetus for governmental efforts to improve the data offerings at recovery.gov, THOMAS.gov, data.gov, FEC.gov, and from the House Clerk and Senate Office of Public Records.