Category: Ethics

An article this morning in The Hill is entitled “Some question whether lawmaker trying Waters can be impartial.”  The premise of the story is that Representative Ben Chandler (D-Ky.), one of the Democratic members of the adjudicatory panel that will be hearing the ethics case against Representative Maxine Waters (D-Ca.), may be compromised in some way because he won re-election by a “razor-thin margin in an increasingly red district.”  There is also a possibility (though likely remote) that Chandler’s victory could be overturned on a recount or through an election contest. 

            So how do these facts bring Chandler’s “impartiality” into question?   The article makes three suggestions.  First, it quotes unnamed sources as suggesting that, after a “hard-fought election in a majority-Republican state,” Chandler might want to prove that “he is capable of taking a hard stance against a member of his own party.”  If anything, however, this suggests that Chandler is likely to be more impartial than the average member of the panel.  If he appears unduly harsh toward Waters, he will alienate his Democratic base, not to mention his colleagues in the Democratic Caucus.  On the other hand, he will also want to avoid the appearance of being overly favorable to Waters so as to avoid alienating the more moderate or conservative swing voters in his district.  Chandler’s incentives, therefore, would seem to push him toward impartiality. 

            Second, the article quotes Charles Tiefer, a former counsel to the House and Senate, as suggesting that Chandler will more likely to be influenced by political considerations during the lame-duck session.  This makes no sense at all.  Since he will not face the voters for another two years, Chandler would seem to be as insulated from their views as he is ever likely to be.  To the extent that he is vulnerable to political influence, it would seem to come from his Democratic colleagues, who may play a role in determining his committee assignments and other congressional perks.  This would tend to push him in the direction of favoring Waters, not opposing her. 

            Finally, there is a suggestion that Chandler’s impartiality is compromised by the possibility that he could ultimately be declared to have lost his re-election race, or that he could wind up in an election contest before the Committee on House Administration.  These are remote and speculative possibilities, but even if they should occur, it is not apparent why they should adversely impact Chandler’s impartiality.  A defeated member would seem to have little reason to be partial to either side, while a member facing a possible election contest would seem to have more to lose than gain through injudicious behavior in conducting his obligations as a member of the Ethics Committee. 

              In short, the real charge against Chandler seems to be that he will not be partial enough in judging Waters’ case.  Perhaps this is why Waters’ counsel have not filed a recusal motion against Chandler, but prefer to try the issue in the newspapers.

This article in the Hill raises the question of whether there will be an ethics investigation of Representative Eddie Bernice Johnson, who has “been accused of awarding thousands of dollars in college scholarships to four relatives as well as the child of a top aide over the past 5 years.”  Johnson, a member of the Congressional Black Caucus (CBC), awarded the scholarships funds through a program funded and administered by the Congressional Black Caucus Foundation (CBCF), a private, nonprofit organization.  Johnson’s actions allegedly violated CBCF rules in various respects, including an explicit prohibition against nepotism. 

            Somewhat surprisingly, none of the individuals quoted in the article allude to the most obvious reason that there will be an investigation, namely the existence of the Office of Congressional Ethics (OCE).  Prior to OCE’s establishment in 2008, it is entirely possible, even likely, that the House Ethics Committee would have regarded this as an internal matter for the CBCF and taken no action. 

            The OCE changes the dynamics considerably.  H. Res. 895, which established OCE, charges it with conducting a preliminary review of “any alleged violation by a Member, officer, or employee of the House of any law, rule, regulation or other standard of conduct applicable to the conduct of such Member, officer, or employee in the performance of his duties or the discharge of his responsibilities.”  If the OCE concludes, after conducting a preliminary and second phase review, that further review is warranted, it refers the matter, along with limited findings, to the House Ethics Committee. 

            As determined by the OCE in its rules, a preliminary investigation is opened when there is a “reasonable basis” to believe that the alleged violation has occurred.  The “reasonable basis” standard, defined as a “reasonable and articulable basis for believing the allegation,” appears to be a pretty low threshold.  A second phase review is initiated when there is “probable cause” to believe that the alleged violation has occurred.  “Probable cause” exists when the “evidence is sufficient to lead a person of ordinary caution and prudence to believe or entertain a strong suspicion that a Member, officer or employee committed a violation.”  

            Finally, OCE will refer a matter to the House Ethics Committee if there is “substantial reason” to believe the allegations.  “Substantial reason” exists if “there is such relevant evidence a reasonable mind might accept as adequate to support a conclusion.”  In other words, it is not necessary that the OCE believe that a violation occurred, only that there be enough evidence that a reasonable person could draw this conclusion.  Moreover, if OCE cannot obtain the information needed to make the “substantial reason” determination, it may nonetheless refer the matter based on the lower standard of probable cause.   

            The application of these standards to the Johnson case would seem to make a referral nearly a fait accompli.   It appears to be undisputed that Johnson distributed CBCF scholarship funds to relatives, including her own grandchildren, in clear contravention of a CBCF rule against nepotism.  (It also appears that some of the awardees may have ineligible under CBCF rules because they did not reside in Johnson’s district).  Johnson may offer various reasons in defense or mitigation, such as her ignorance of the rules, but it is hard to see how a “reasonable mind” would be required to accept them. 

            It might be argued that CBCF rules, being those of a private organization, are not the type of rules which OCE is supposed to enforce.  Johnson’s distribution of scholarship funds, it might be contended, was not part of her official duties or responsibilities, and therefore falls outside of OCE’s jurisdiction. 

            I think it is very unlikely that such a defense would work.  CBCF is a private organization, but CBC is a congressional member organization authorized by the Committee on House Administration.  The links between CBCF and CBC go well beyond the ceremonial.  The CBCF is chaired by a member of the CBC and many CBC members serve on its board.  The scholarship program in question is designed specifically to be awarded by each CBC member to residents of his or her district.  Moreover, Representative Donald Payne, the current chair of CBCF, recognized the applicability of congressional ethics standards when he announced that “the CBCF will usher in the creation of an Ethics Advisory Committee” to “ensure that all CBCF initiatives are in compliance with the ethical standards of Congress.”  

            Finally, even if Johnson’s conduct was not “official” in the purest sense, she would remain subject to general congressional ethics standards such as that a Member “shall behave at all times in a manner that shall reflect creditably on the House.”  (House Rule XXIII, cl. 1).  While these rules are not normally applied to purely personal conduct, there can be little doubt that they would apply to Johnson’s quasi-official conduct here. 

            For these reasons it seems nearly inevitable that there will be an OCE investigation and referral of this matter (unless the House Ethics Committee pre-empts OCE by taking action first).

Before leaving the subject of the ethics case against Representative Waters, a final comment with regard to her attempt to have the charges dismissed.  Her defense team based its motion to dismiss almost entirely on the claim that Waters’ conduct was “nearly identical to” that of Representative Sam Graves.  I have blogged about the ethics charges against Graves, which were dismissed last year. 

            The attempt to equate the two cases is frankly ridiculous.  True, they both involve a Member’s spouse who had an ownership interest in a company that was part of an industry that the Member dealt with in the course of performing official activities.  The similarity ends there, however.   

In Graves’ case, he invited a witness to testify at a committee hearing as a representative of the biofuels industry.  The witness, whom Graves knew, owned stock in two biofuels companies in which Graves’ wife was also invested.  However, there was no indication, either objective or subjective, that this co-investor relationship had any bearing on the invitation to testify.  Any conceivable benefit that Graves might have received from the hearing was (a) remote and speculative, since no legislative or executive action was pending or expected; (b) entirely derivative of the interests of the biofuels industry as a whole, since there was no specific interest of the two companies at stake; and (c) completely unrelated to the fact of this particular witness testifying. 

In Waters’ case, the company in question, OneUnited, was seeking immediate action, both legislative and executive, for its own benefit.  Because OneUnited stated that the action was necessary to save it from insolvency, there was also an imminent and direct connection between the action sought and a financial benefit to Waters (because her husband’s stock would have been worthless if OneUnited had become insolvent).  Under these circumstances, a reasonable person might suspect that Waters’ actions were motivated by a desire to protect her financial interests.  In Graves’ case, such a suspicion would have been entirely unreasonable. 

As the investigative subcommittee points out in rejecting the motion to dismiss, the Waters’ case would have been similar to Graves’ if she had simply invited a OneUnited executive to testify, as the representative of the minority-owned banking industry, at a committee hearing discussing the overall interests of the industry as a whole.  In fact, this did happen—at a 2007 hearing of a House Financial Services subcommittee—and no one has suggested that it violated any ethics rules. 

The case against Waters is a borderline one, and there are strong arguments that she can make in her defense.  Comparing her case to that against Graves is not one of them.

As discussed in my prior posts (see here and here), the ethics investigative subcommittee does not allege that Representative Waters violated any rules simply by arranging the initial meeting with Treasury officials to discuss the a bailout of OneUnited and other minority-owned banks.  Instead, the subcommittee alleges that Waters violated the rules by her actions—or, more precisely, her inaction—following the meeting.  Specifically, the subcommittee states that Waters should have, but failed to, instruct her chief of staff to refrain from assisting OneUnited following the meeting.  (see Statement of Violation ¶ 47).

This claim appears to be based on two premises.  The first is that “all other actions [taken by Waters’ office], other than the initial request for a meeting with Treasury, were on behalf of OneUnited, not the NBA.”  (Subcommittee Memorandum of 7-15-10, at n. 51).  Exactly how the subcommittee determined who the actions were “on behalf of” is not clear.  Is this based on OneUnited’s motives (i.e., that its requests to Waters’ office were for its own benefit, not for the benefit of minority-owned banks generally), or on the motives of Waters and her staff, or on an objective assessment that OneUnited was the primary or sole beneficiary of the legislative efforts that were made to obtain a bailout?

The second premise is that Waters herself came to the conclusion, sometime after the Treasury meeting, that she “should not be involved” with OneUnited’s requests for assistance.  This is based on Representative Frank’s recollection of a conversation he had with Waters sometime after the Treasury meeting.  The subcommittee interprets Waters’ statement as a “determin[ation] that it would be ethically improper for her to advocate on behalf of OneUnited.”

Based on these premises, the subcommittee concludes that it was improper for Waters’ staff to continue to assist OneUnited in its efforts to obtain legislation that would allow it to receive a bailout from the government.  Although the subcommittee does not contend that Waters herself did anything further for OneUnited, or that she was even aware of what her staff was doing in this regard, it holds her responsible for failing to prevent these efforts from occurring.  Specifically, in its Memorandum of 7-15-10 at pp. 3-4, it states:  “Despite previously instructing her Chief of Staff to work with the OneUnited executives, [Waters] failed to instruct her Chief of Staff that he should not advocate on behalf of the bank.”

The subcommittee’s theory is not as cut and dried as it appears to believe.  In the first place, it fails to draw a distinction between efforts to assist OneUnited in dealing with the Treasury Department or other executive agencies, which is casework, and efforts to assist OneUnited with obtaining legislation.  For the reasons discussed in my last post, it would have been inappropriate for Waters’ chief of staff to “advocate” on behalf of OneUnited with respect to executive agencies.  It is less clear, however, that Waters or her staff were required to recuse themselves entirely from involvement with OneUnited’s proposed legislative solution.

Under House rules and precedents, the circumstances under which a Member is supposed to refrain from voting on a legislative matter because of a personal financial interest are extremely limited, and it is largely up to the Member to determine when it is appropriate to do so.  If Waters was permitted to vote on matters related to OneUnited’s legislative solution (and the subcommittee has not suggested she was not), it would seem that her staff could properly monitor and discuss the status of the legislation with other congressional staff.

Moreover, the Ethics Manual suggests that a Member who faces a conflict of interest with regard to a legislative matter may be advised to refrain from taking an active role in the legislation, such as sponsoring a bill, even though she is ethically permitted to vote on questions regarding the particular matter.  It might be argued, therefore, that Waters’ statement to Frank that she “should not be involved” in the OneUnited matter was merely a recognition that she should not personally play a lead role in sponsoring or pushing the legislation, rather than an acknowledgment that her staff should have no involvement either.

No doubt it would have been preferable, from the standpoint of avoiding the appearance of impropriety, had Waters instructed her staff to avoid or at least limit any involvement in matters relating to OneUnited.  If the investigative subcommittee had merely admonished Waters for failing to take this course (or, alternatively, for failing to seek specific guidance from the Ethics Committee), it would be hard to quibble with its findings.  One could make a similar (indeed, perhaps stronger) argument that Waters ought to have done greater due diligence regarding OneUnited’s interest before agreeing to set up the initial meeting with Treasury.

Whether these are the types of ethical mistakes that merit formal charges, however, is another question.  For example, the subcommittee cites the Caribe News case, in which Representative Charles Rangel was held responsible for the actions of his chief of staff.  In that case, Rangel had authorized his chief of staff to sign travel forms on his behalf, and the chief of staff had submitted forms containing information that he knew, and Rangel knew or should have known, was false.  The Ethics Committee found under those circumstances that Rangel could not escape responsibility for the clear ethics violation committed by his chief of staff.

Rangel’s case is distinguishable from Waters’ situation.  Rangel had delegated a personal ethical responsibility to his staff; Waters did not.  Moreover, Rangel’s case involved a clear cut ethical duty, ie, to disclose any corporate sponsors of the event which he was attending, and there was strong evidence to suggest that Rangel knew or should have known both that there were corporate sponsors of the event and that it could not be approved if there were corporate sponsors.  On the sparse record before the Waters subcommittee, there is little comparable evidence of “deliberate ignorance” with respect to her staff’s activities.  It is not clear that Waters expected her staff to remain involved in the OneUnited matter, much less that she knew or should have known that they would be active advocates for OneUnited (or, for that matter, that they in fact were).

Finally, in Rangel’s case the investigative subcommittee did not press formal charges, but merely recommended that the Ethics Committee admonish him in its final report.  I have to assume that Waters was offered a similar deal by the investigative subcommittee, but declined to take it.  This may explain why the subcommittee felt obligated to proceed with formal charges.  Nevertheless, this strikes me as a borderline case at best.

To evaluate the charges against Representative Waters, discussed in my last post, we should begin with the meeting that she arranged in her September 2008 telephone call to then-Treasury Secretary Paulson.  Although the ethics investigative subcommittee did not find that this meeting itself violated any House rules, the Statement of Alleged Violation devotes its first section to this meeting, and it seems that the meeting is somehow integral to the charges against Waters.

In arranging the meeting, Waters was engaged in what is commonly described as “casework.”  The House Ethics Manual describes casework generally as “act[ing] as a ‘go-between’ or conduit between the Member’s constituents and administrative agencies of the federal government.”  Quoting the late Senator Paul Douglas, it states that “there is a ‘sound ethical basis for legislators to represent the interests of constituents and other citizens in their dealings with administrative officials and bodies.’”

The Ethics Manual provides broad guidance on performing casework, but it sets forth few hard and fast rules.  As Dennis Thompson notes, referring to the seminal House advisory opinion which forms the basis for both the House and Senate’s guidance on casework, it “advises against very little and prohibits even less.”  (see Ethics in Congress p. 91).

Nevertheless, there are a few basic principles.  As the Ethics Manual states, “a Member’s obligations are to all constituents equally, and considerations such as political support, party affiliation, or one’s status as a campaign contributor should not affect either the decision of a Member to provide assistance or the quality of help that is given to a constituent.”  Thus, Members can perform casework for campaign contributors, so long as they would perform the same services for non-contributors, but must “take care not to show favoritism to them over other constituents.”

There is also no absolute prohibition against performing casework on matters where a Member has a personal financial interest.  While the rules explicitly prohibit a senior House employee from contacting a federal agency regarding “nonlegislative matters . . . in which the employee has a significant financial interest” (absent written permission from the Member or other employing authority for whom the employee works), no such prohibition applies to the Member.  The Ethics Manual cautions, however, that Members should “refrain” from performing casework that “would serve their own narrow, financial interests as distinct from those of their constituents.”

These principles would have made it problematic for Waters to have arranged a meeting with Treasury officials for the purpose of discussing a bailout of OneUnited.  Exactly where one draws the line between a merely incidental financial interest shared in common with many others (as, in the example given by the Ethics Manual, where a Member who happens to be a farmer represents constituents in discussions of farm policy with the Department of Agriculture), on the one hand, and a “narrow, financial interest,” on the other, is not clear, but Waters’ significant stock ownership in a small financial institution seems to fall closer to the latter.

In this case, however, the impropriety of intervening on behalf of OneUnited is apparent for a different reason.  OneUnited was not a constituent of Waters.  Generally speaking, the Ethics Manual states that Members are not supposed to perform casework for non-constituents. This is not an absolute rule, but, combined with Waters’ personal financial interest in OneUnited, it would seem to justify a finding that performing casework for OneUnited constituted at least a prima facie violation of the ethics rules.

The investigative subcommittee did not allege such a violation, however, because it found that Waters had arranged the meeting not on behalf of OneUnited, but on behalf of the National Bankers Association (NBA), a trade association of minority-owned financial institutions. Moreover, the subcommittee was probably correct that performing casework for NBA did not violate the rules, even if Waters knew that the casework would advance OneUnited’s interests along with those of other NBA members.  As the chair of the Subcommittee on Housing and Community Opportunity of the House Financial Services Committee, Waters had a legitimate interest in ensuring that the NBA’s concerns were addressed.  Had it not been for her ties to OneUnited, it certainly would not have been considered unusual or improper for her to set up a meeting on behalf of NBA.

There are a number of facts about the meeting which remain unknown.  For example, what did Waters understand about the relative interests of OneUnited and other members of the NBA with respect to the meeting?  Clearly, Waters must have understood that OneUnited had a significant interest in getting a bailout from the Treasury Department, but the record does not reflect what she knew or was told about the interests of other NBA members.  If she understood that OneUnited’s interests were the primary motivation for the meeting, it would make her actions more problematic under the ethics rules.

Another question is whether Waters’ response to the meeting request suggests favoritism on her part.  Certainly it cannot be common for her to telephone a cabinet secretary to set up a meeting.  The memorandum of her interview with OCE states:  “When asked about other conversations with Sec. Paulson, Rep. Waters stated that ‘you don’t use your chits for nothing, you call when there is an important issue.’”  On the other hand, as Waters’ counsel points out, there is no evidence that she took other actions, such as importuning Treasury officials, beyond setting up the meeting.  This would cut against a finding of favoritism.

In the absence of any additional evidence on these issues, which the subcommittee decided not to explore, I would say that Waters’ action in setting up the meeting with Treasury, though it may come close to the ethical line, did not cross it.  The subcommittee was therefore justified in concluding that this meeting did not violate the rules.

In my next post I will consider the subcommittee’s conclusion that Waters’ conduct after the meeting violated the rules.

An investigative subcommittee of the House Ethics Committee has charged Representative Maxine Waters (D-Ca.) with three counts of ethics violations stemming from efforts that she and her staff made to assist OneUnited Bank, a Boston-based, minority-owned financial institution which sought and obtained a TARP bailout in the fall of 2008.  These efforts were improper, according to the subcommittee because of Waters’ close personal, political and financial ties to OneUnited.  To wit, the bank’s chairman and CEO had contributed to and raised funds for Waters, Waters’ husband had served on the bank’s board of directors from 2004 to the spring of 2008, and, most significantly, Waters’ husband owned stock in OneUnited that was valued, prior to the financial crisis, at about $350,000.

 

The relevant events began in late summer 2008, when the value of Fannie Mae and Freddie Mac fell sharply, threatening the viability of OneUnited, which had invested heavily in these companies.  According to Representative Barney Frank, who turns out to be a key witness in this case, “OneUnited had overbought preferred shares in Fannie Mae and Freddie Mac and was therefore at a greater risk of collapse than any other bank” from the insolvency of these companies.

 

On or about September 7, 2008, the day that the federal government placed Fannie Mae and Freddie Mac into conservatorship, executives from OneUnited approached Waters and asked her to set up a meeting with the Treasury Department to discuss a proposal under which Treasury would bail out minority-owned banks by purchasing from them, at above market prices, Fannie Mae and Freddie Mac shares that they owned.  Although the request was ostensibly on behalf of the National Bankers Association (NBA), a trade association of minority-owned banks, it appears that the OneUnited executives were the driving force behind the request and that the bank’s need for a bail out was the primary, if not exclusive, reason for it.

 

Waters then telephoned Treasury Secretary Hank Paulson and asked for the meeting, and he agreed to her request.  The meeting was attended by Waters’s chief of staff (who also happens to be her grandson), some other congressional staffers, and senior Treasury officials.  Attending for the NBA were OneUnited’s counsel who was also the chair-elect of the NBA, the chairman and CEO of OneUnited, and another senior official of the bank.  No other NBA members were represented at the meeting.  During the meeting, the OneUnited officials specifically discussed their bank’s financial situation and asked Treasury to provide them with $50 million to protect the bank against collapse.  The Treasury officials demurred, saying they lacked legal authority to grant this request.

 

Following the meeting, OneUnited realized that it was unlikely to get relief directly from Treasury.  Accordingly, it began working with allies in Congress, including Representative Waters’ office, to obtain legislative language that would require the federal government to repurchase Fannie Mae and Freddie Mac shares owned by any “Community Development Financial Institution,” i.e., banks such as OneUnited.

 

At around this time, Waters approached Barney Frank to discuss OneUnited’s problem.  According to Frank’s interview with the Office of Congressional Ethics, Waters told him “that she was in a predicament because [her husband] had been involved in the bank, but OneUnited people were coming to her for help.  She knew that she should say no, but it bothered her.”  Although Waters did not tell Frank about her husband’s stock ownership, it was still clear to Frank that “this was a conflict of interest problem.”

 

Frank told Waters that she should “stay out of it.”  He indicated that he would handle OneUnited’s concerns since he had representational interests (OneUnited was a Boston bank) and was sympathetic to OneUnited’s situation (he had a “commitment to minority banks”).  As the chairman of the Financial Services Committee (a committee on which Waters also served), it made sense for Frank to be involved in the issue.  He instructed his staff to take over the OneUnited matter from Waters’ staff.

 

Following her discussion(s) with Frank, Waters told her chief of staff words to the effect that Frank would be handling the minority bank issue so he should “not worry about it.”  However, according to the Ethics subcommittee, Waters never instructed her staff to stop assisting OneUnited.  Although Waters herself apparently had no further involvement in the OneUnited issue, her chief of staff continued to be involved in the OneUnited matter, primarily by monitoring and to some extent assisting OneUnited efforts to obtain a legislative fix.  OneUnited was successful in obtaining a provision in the TARP legislation that authorized and encouraged the Secretary of the Treasury to bail out banks in OneUnited’s specific situation, a provision that Frank indicated was crafted with OneUnited in mind.  Ultimately, OneUnited received more than $12 million in TARP funding in December 2008 and was also able to raise significant amounts of private capital to keep itself afloat.

 

Based on these facts, the Ethics subcommittee has charged Waters with several violations.  It is important, however, to first note what Waters is not charged with.   The subcommittee does not allege that Waters’ actions in arranging the meeting with the Treasury Department or speaking to Frank regarding OneUnited themselves violated the ethics rules.  The subcommittee does not allege that Waters or her staff used improper means to advance OneUnited’s interests (e.g., by threatening or pressuring executive agencies).  Finally, the subcommittee does not allege that the actions by Waters or her staff on behalf of OneUnited were motivated by Waters’ financial interest in the bank (claims, by the always understated CREW, that Waters “abused her office for personal financial gain” notwithstanding).

 

So what is the basis for the ethics charges against Waters?  The lynchpin is the personal financial interest that Waters had in OneUnited.  Because the failure of OneUnited would have resulted in Waters, through her husband, losing a very substantial investment, the subcommittee alleges that Waters had an obligation to avoid actions that would create the appearance of acting for her own personal benefit, or of receiving a personal benefit (the preservation of her husband’s investment) from the exercise of her official influence, or of dispensing special favors to OneUnited.  Waters allegedly violated this obligation by failing to instruct her chief of staff not to assist OneUnited, even after she acknowledged to Frank that she should not be involved in the OneUnited matter.

 

It seems undeniable that OneUnited’s requests to Waters and her office created a conflict of interest situation.  But the ethics rules do not require Members of Congress to avoid taking official actions merely because a conflict of interest is presented.  The ethics subcommittee purported to derive, from rather vague and general ethics rules, a specific line which Waters impermissibly crossed.  In my next post I will consider whether this line makes sense under the circumstances presented to the subcommittee.

 

 

 

 

          Today Roll Call Columnist Simon Davidson discusses the risks that a private party faces in turning over information to the Office of Congressional Ethics.  He mentions my post last week questioning whether OCE has the authority to refer evidence to the Justice Department as it did with regard to the PMA investigation.   

            Roll Call has also editorialized about this issue, noting that OCE’s decision to turn over evidence to the Justice Department could chill cooperation by future witnesses needed in its investigations.  The editorial warns that this action could play into the hands of “OCE’s enemies,” who are looking for reasons to eliminate the office.

On May 27, 2010, the Office of Congressional Ethics (OCE) announced that its Board had voted unanimously to refer to the Justice Department “certain evidence collected in the course of its investigation concerning appropriations earmarks and the now defunct PMA lobbying firm.”   The announcement contends the referral to the Justice Department was authorized “pursuant to Section 1(f)(B) of House Resolution 895 of the 110^thCongress and Rule 13 of the OCE Rules for the Conduct of Investigations.”   However, for the reasons described below, I think the Board exceeded its authority in making this referral.

House Resolution 895 is the resolution which established OCE and provides it with its authorities.  Nowhere in that resolution is there any explicit authorization for OCE to make referrals or provide information to the Justice Department or any law enforcement authorities. Section 1(f)(B), on which OCE relies, provides as follows: “No testimony received or any other information obtained as a member of the board or staff of the Office shall be publicly disclosed by any such individual to any such person or entity outside the Office.  Any communication to any person or entity outside the Office may occur only as authorized by the board as necessary to conduct official business or pursuant to its rules.”

This section is evidently designed to sharply limit disclosures by OCE to any outside individual or entity.  Such an interpretation is consistent with the intent of the House task force that recommended the establishment of OCE.  The task force made clear that OCE’s work in conducting preliminary investigations and review of ethics matters would be conducted confidentially.   Report of the Democratic Members of the Special Task Force on Ethics Enforcement 10 (Dec. 2007) (“To ensure confidentiality and responsibility in the opening steps of the ethics process, the OCE will conduct all of its proceedings and deliberations in executive session.”)

Section 1(f)(B) does recognize that there will be circumstances under which OCE will need to have communications with outside persons or entities.  The House did not try to anticipate all of the circumstances in which such communications might be necessary, and it provided the OCE Board with the power either to authorize a particular communication or to adopt rules that would authorize a particular category of communication.  This rulemaking authority, however, can reasonably be read only to allow the Board to authorize narrow categories of disclosure necessary to conduct OCE’s business or achieve its objectives; otherwise, it would grant the Board the authority to eviscerate the entire confidentiality scheme.

The Board itself initially seems to have interpreted its authority in this limited fashion.  The draft rules that it distributed for public comment would have authorized OCE to provide information to state or federal law enforcement only in cases of “imminent harm or threat to public safety.”   This rule would have limited OCE to providing information to law enforcement only where there was a true necessity. However, the draft rule was criticized by groups like Citizens for Ethics and Responsibility in Washington as “unjustified and unwise.”  They wanted OCE to be able to refer evidence of legal violations, regardless of whether there was any imminent harm. Apparently in response to this criticism, the Board substantially broadened the rule (I do not know whether the House or the general public was given an opportunity to comment on the revised rule).

As ultimately promulgated, Rule 13 (D) of the OCE Rules of Investigation provides that “[t]he Staff, in consultation with the Chairman and Co-Chairman, may refer information to state and federal authorities in the event that information indicates a crime has occurred or is about to occur.”  This is the authority relied upon by OCE in making its PMA referral.

As interpreted by OCE, therefore, Rule 13 permits OCE to refer any evidence of criminal violations to federal or state authorities, regardless of the nature of the violations, the strength of the evidence, or the urgency of the matter.  Even more importantly, it permits OCE to refer evidence even after the same evidence has been submitted to the House Ethics Committee.  In the case of the PMA referrals, the House Ethics Committee received and reviewed the evidence, and concluded that no violations had occurred.  Whatever one thinks of this decision, it seems clear, under the ethics enforcement regime established by the House, that the decision was one for the Ethics Committee to make.

Moreover, House Rules explicitly provide for the circumstances in which the Ethics Committee can make referrals to law enforcement authorities.  House Rule XI, cl. 3(a)(3) provides that “[t]he committee may report to the appropriate Federal or State authorities, either with the approval of the House or by an affirmative vote of two-thirds of the members of the committee, any substantial evidence of a violation by a Member, Delegate, Resident Commissioner, officer, or employee of the House, of a law applicable to the discharge of his responsibilities that may have been disclosed in a committee investigation.”

In other words, even if a majority of the Committee believes that there is evidence warranting referral to the Justice Department, they may not be permitted to make such a referral.  But under OCE Rule 13 as interpreted by the Board, OCE’s staff could refer evidence even after (as here) the Committee unanimously determined that it warranted neither referral nor further investigation.  This makes no sense, and strongly suggests that OCE has acted beyond its authority in this case.

Finally, it should be noted that OCE’s interpretation of Rule 13 could have negative consequences for its future investigations.  It will give attorneys for Members under investigation a handy excuse, and perhaps a legitimate reason, for refusing to cooperate with OCE investigations.  After all, if OCE can make referrals of evidence to the Department of Justice or other law enforcement authorities, their clients may be relinquishing Speech or Debate or other privileges when they provide information to OCE.  Far better to wait until the matter reaches the Ethics Committee, where both formal rules and actual practice make referral much less likely.