Friday, May 16, 2003

FTC news: Continuing to dodge responsibility

After filing a number of comment letters with the FTC, I became curious about just how much the Commission was spending on these various settlements. In January, I filed a Freedom of Information Act (FOIA) request with the FTC asking for some budget information. Specifically, I wanted to know how much of the FTC’s annual budget (about $140 million) goes directly to the Bureau of Competition, the Commission’s antitrust enforcement arm. In addition, I asked how much the Bureau spent on seven specific cases that I filed comments in. I thought this was a fairly routine request, given that budget information is considered a legitimate public record.

Apparently that’s just too much accountability for the FTC. While the Commission did give me budget information for the Bureau of Competition (about $31.7 million annually) and five of the cases I requested, FTC staff decided to withhold disclosing the spending on two cases, those involving the National Academy of Arbitrators (NAA) and MSC Software Corporation. The FTC said both figures were exempt from FOIA disclosure because it constituted “information compiled for law enforcement purposes the release of which could reasonably be expected to interfere with enforcement proceedings.”

This explanation, known as FOIA exemption 7(A), is intended to prevent individuals from using FOIA to get around normal discovery rules in contested proceedings. For example, a company under investigation by a federal agency cannot use FOIA to obtain records related to their investigation. Such requests could reasonably interfere with the agency. But that has nothing to do with my FOIA request, which simply asked for an aggregate spending level on two cases that have already been deemed closed by the commission. Even if the cases are still pending, releasing budget information for previous fiscal years would not prejudice any current activities.

On these grounds, I appealed the denial of the NAA and MSC budget figures to the FTC general counsel, William Kovacic. Earlier this week, Kovacic partially granted my appeal:

Dear Mr. Oliva:

This responds to your recent Freedom of Information Act ("FOIA") appeal, which was received in this office on April 14, 2003. By letter dated January 31, 2003, you had requested access to: 1) line-item budgets for the Bureau of Competition for fiscal years 2000, 2001, and 2002; and 2) records detailing the Bureau of Competition's expenditures in relation to seven specific matters during this same time frame. By letter dated March 27, 2003, Ms. Joan Fina granted your request in part, providing you with a one-page table reflecting the "dollars used" in FY 2000, FY 2001, and FY 2002, on five of the seven matters you specified. Citing FOIA Exemption 7(A), 5 U.S.C. § 552(b)(7)(A), she redacted from this chart the figures reflecting dollars spent on the other two specified matters. You have appealed this determination. Because I agree that the material that Ms. Fina withheld was protected by Exemption 7(A), I am denying your appeal.

The information that you requested about the MSC Software Corporation matter, Docket No. 9299, was, and continues to be, protected by FOIA Exemption 7(A), which protects information compiled for law enforcement purposes the release of which could reasonably be expected to interfere with enforcement proceedings. See Robbins Tire & Rubber Co. v. NLRB, 437 U.S. 214 (1978). With respect to the National Academy of Arbitrators matter, File No. 0110242, however, I am exercising my discretion to release the redacted figures because, according to the attorneys assigned to that matter, very recent developments have made it less likely that releasing this information could reasonably be expected to interfere with the case. Thus, while it is clear that this material was exempt at the time of Ms. Fina's determination on your FOIA request, it appears to no longer be exempt.


It’s not clear what the “very recent developments” were in the NAA case, though I heard that FTC staff was looking into prosecuting a sister group of NAA’s. As for MSC, it’s completely unclear to me why this is still considered a pending matter. That aside, the Kovacic’s letter denying my access to MSC’s budget figure has no basis in law, at least none that Kovacic provided in his letter. The FTC cites one case, Robbins Tire v. NLRB, but this decision has nothing to do with my request. Robbins Tire involved the subject of a National Labor Relations Board investigation trying to obtain witness statements in a pending case. The NLRB had a justifiable interest in withholding information that could be used to undermine their case—they were probably concerned that Robbins Tire would try and intimidate or interfere with witnesses.

Budget figures are a completely different animal. The cornerstone of government power is the ability to tax the people and spend their money on public affairs. Congress is granted the exclusive power of appropriations for this very reason. Every agency of the Executive Branch has an obligation to maintain open, honest books, and to make financial records available for public inspection. Even in national security matters, the people are aware of the aggregate amount being spent, even if specific line-items are classified. But nothing the FTC touches even remotely deals with national security. Indeed, the FTC acts a civil law enforcement agency most of the time, as they were in the NAA and MSC cases. Thus, the FTC has no excuse for not turning over the numbers I requested.

(Incidentally, the NAA case—which involved forcing a group to delete three sentences from their ethics code—cost the FTC (and the taxpayers) $24,319. And that was one of the cheaper settlements.)

On Monday, I will send Mr. Kovacic a letter giving him one last chance to release the MSC budget figures. If he fails to do so, I will file a lawsuit to compel the FTC to turn this information over. The FTC’s days of evading public scrutiny are over.

And by the way, lawsuits aren't free, so if any of you want to help me stick it to the FTC, consider becoming a CAC contributor.

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