The Volokh Conspiracy - Pending OLC Opinion Request On Geithner's Power To Supervise The TARP IG:

The Judiciary Act of 1789 authorizes the Attorney General to advise the President and executive agencies on questions of law. The Attorney General has delegated that responsibility to the Office of Legal Counsel. It is unusual, but not unprecedented, for people outside the government to learn of an OLC opinion request before advice is provided and a decision is made whether to publish the resulting opinion, a process that can take a year or more. But thanks to an outspoken Inspector General (there are just enough exceptions to the stereotype to save that phrase from utter redundancy), the public has a ringside seat to a pending OLC opinion request by the Department of the Treasury involving the Secretary's authority to supervise the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), Neil Barofsky.

According to a letter from Senator Grassley to Secretary Geithner (itself apparently based on reports from a source in the SIGTARP office) with a CC to Barofsky, Barofsky's response to Senator Grassley and Representative Darrell Issa, and a memo from Barofsky to Treasury Acting General Counsel Bernard J. Knight, Jr., that has become public, in probably late March or early April 2009, Treasury officials balked at providing certain documents SIGTARP had requested based on concerns that giving them to the IG would constitute a waiver of attorney-client privilege. The issue came to head in connection with SIGTARP's planned interview of a Treasury official regarding payments to AIG's Financial Products unit. As a result, on April 2, Acting GC Knight emailed Barofsky that he sought to obtain an opinion from OLC on three subjects:

Whether SIGTARP is within the Department of the Treasury;

Whether the Secretary of the Treasury has supervisory authority over SIGTARP;

If SIGTARP is not part of Treasury, whether providing Treasury's attorney-client privileged materials to SIGTARP effectively waives the privilege.

While Knight quickly addressed Barofsky's request for the documents (and Barofsky recently has stated that he has received all the documents he needs from Treasury), Treasury proceeded with its opinion request. While Barofsky turned over the email traffic involving Knight and OLC to Senator Grassley and Representative Issa, he redacted certain portions at OLC's "insistence" "to avoid interfering with its ongoing consideration of the questions that have been presented to it." (OLC's request to redact is consistent with long practice, which is not to release information that can affect the Executive Branch's deliberative process.)

Based on representations in SIGTARP's April 7 memo, Treasury apparently takes the position that SIGTARP is within the Executive Branch, but may question whether SIGTARP is actually within Treasury. In its April 7 memo, SIGTARP argued that the office is an independent entity within Treasury that is not subject to supervision by the Secretary of the Treasury; that privileges do not excuse compliance with an IG's request for materials; and that response to an IG's request is not voluntary and thus is not a waiver.

SIGTARP was created by section 121 of the Emergency Economic Stabilization Act of 2008 (EESA), as amended by Pub. L. 111-15, enacted earlier this year. Before broadband, you were asking for trouble to run an allfeds Westlaw search of "act" or "law" w/5 "not a model of clarity," and that already bloated search result will only grow as EESA works its way through the courts. Section 121 of the EESA does not explicitly state what Department the SIGTARP is in, or, for that matter, whether it is even in the Executive Branch.

It seems likely that if OLC writes an opinion (more on that later), it will conclude that SIGTARP is within Treasury and thus within the Executive Branch. SIGTARP performs the traditional functions of an IG, and section 101 of EESA vests Treasury with the job of administering TARP; thus, absent a statement to the contrary, one would expect SIGTARP to be created within the agency it monitors following the usual model of the IG Act. (The opposite argument, of course, is that an inference should be drawn from the fact that Congress omitted from EESA the usual language creating the IG Office within a particular "establishment" of the Executive Branch.) There is other evidence SIGTARP is within Treasury, although you have to cull bits and pieces from EESA, none of it particularly compelling in isolation: Treasury's budget is the source of SIGTARP's funding; the EESA incorporates the removal provisions of the IG Act of 1978, which speaks of transferring the IG to "another position within an establishment," suggesting the IG position is within the establishment; by incorporating provisions of the original IG Act of 1978, EESA requires the SIGTARP to keep the Treasury (as well as Congress) informed about its findings; the SIGTARP has offices at Treasury (and the original IG Act specifies that the head of an establishment is to provide the IG office space). SIGTARP and Treasury have been operating on the understanding that the office is part of Treasury, and there is precedent that agency practice is relevant in construing an ambiguous statute, but that consideration would be given less weight given that EESA is not even a year old and practice therefore is not longstanding.

The conclusion that SIGTARP is part of the Executive Branch (and, indeed, is part of Treasury) would ordinarily answer for OLC the question that appears to have precipitated the opinion request: whether turning over documents will result in a waiver of attorney-client privilege. The questions, as framed in the April 7 memo, implicitly recognize that conclusion. Both the attorneys and the SIGTARP ultimately are agents of the same client, and so provision of the documents would not result in a waiver of the privilege.

The hardest question is whether SIGTARP is subject to supervision by the Secretary of the Treasury. Congress was not terribly clear in incorporating elements from the IG Act of 1978. Congress incorporated some provisions by specific reference or by duplicating the language of the original IG Act (e.g., the removal provisions of IG Act section 3(b); rates of pay; application of a particular Hatch Act exception for policymakers; powers and authorities; compliance with Comptroller General audit procedures). So far so good. EESA does not, however, explicitly incorporate the most relevant provision of the original IG Act, section 3(a), which states in relevant part that "[e]ach Inspector General shall report to and be under the general supervision of the head of the establishment involved or, to the extent such authority is delegated, the officer next in rank below such head, but shall not report to, or be subject to supervision by, any other officer of such establishment."

While the EESA does state that "the Inspector General shall also have the duties and responsibilities of inspectors general under the Inspector General Act of 1978," it is not self-evident that the IG Act's provision for (and limitations on) secretarial supervision establishes a "duty or responsibility" of inspectors general. Although SIGTARP seems to be quite adamant that that sentence of 3(a) does not apply to the office, if it does not, presumably, neither would the last sentence of the provision: "Neither the head of the establishment nor the officer next in rank below such head shall prevent or prohibit the Inspector General from initiating, carrying out, or completing any audit or investigation, or from issuing any subpena during the course of any audit or investigation." I am aware of no comparable noninterference provision in EESA, but it is a big statute.

Although there are question marks over the applicability of the IG Act's supervision provisions, it strikes me as unlikely that OLC would conclude that the SIGTARP is completely "independent" of secretarial supervision. The ordinary presumption is that an agency head supervises those in the agency, and there are various provisions of law that embody that background presumption. The explicit provisions of section 3(a) of the IG Act were designed to define the limits of supervision within an agency. While SIGTARP notes that the EESA does not make explicit provision for "supervision," its text is similarly silent about "independence." In the Executive Branch, it seems likely that such silence will be construed in favor of supervision rather than a lack of supervision; if Congress wants to exempt an official from supervision by the head of an agency, it is easy enough, given the separation of powers implications of interfering with another branch's traditional supervision structure, for it to say so explicitly. I understand that there is some legislative history from Senator Baucus indicating that he intended for the office to be "truly independent," and that is something OLC will have to consider. (There may be more, but I haven't been able to exhaustively search the legislative history.) I don't imagine that OLC will give the statement tremendous weight, because individual floor statements rank relatively low in terms of persuasiveness for legislative history, which is itself disfavored in an age when plain language is ascendant.

The actual phrasing of the Treasury request is critical, because if it is quite general (as in the SIGTARP letter: "Whether the Secretary of the Treasury has supervisory authority over SIGTARP"), OLC may not be forced to confront far thornier specific applications of that supervisory authority, such as whether agency head may, for example, order SIGTARP to redact privileged communications from the version of the report that is finalized and delivered to Congress. If Treasury was (as Sen. Grassley's letter suggests) concerned about waiver of attorney-client privilege, it may not be particularly enthusiastic about such communications winding up in the final report.

The thorny and politically explosive issue of IG supervision will give both Treasury and DOJ an incentive to try to resolve the matter short of a formal opinion. So if the parties have reached an accommodation that allows Barofsky to move forward with his immediate duties (as Barofsky's letter suggests), I would not be surprised if a decision is made not to finalize an OLC opinion on the subjects outlined above.

	[John Elwood, June 25, 2009 at 7:54am] Trackbacks Pending OLC Opinion Request On Geithner's Power To Supervise The TARP IG: The Judiciary Act of 1789 authorizes the Attorney General to advise the President and executive agencies on questions of law. The Attorney General has delegated that responsibility to the Office of Legal Counsel. It is unusual, but not unprecedented, for people outside the government to learn of an OLC opinion request before advice is provided and a decision is made whether to publish the resulting opinion, a process that can take a year or more. But thanks to an outspoken Inspector General (there are just enough exceptions to the stereotype to save that phrase from utter redundancy), the public has a ringside seat to a pending OLC opinion request by the Department of the Treasury involving the Secretary's authority to supervise the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), Neil Barofsky. According to a letter from Senator Grassley to Secretary Geithner (itself apparently based on reports from a source in the SIGTARP office) with a CC to Barofsky, Barofsky's response to Senator Grassley and Representative Darrell Issa, and a memo from Barofsky to Treasury Acting General Counsel Bernard J. Knight, Jr., that has become public, in probably late March or early April 2009, Treasury officials balked at providing certain documents SIGTARP had requested based on concerns that giving them to the IG would constitute a waiver of attorney-client privilege. The issue came to head in connection with SIGTARP's planned interview of a Treasury official regarding payments to AIG's Financial Products unit. As a result, on April 2, Acting GC Knight emailed Barofsky that he sought to obtain an opinion from OLC on three subjects: Whether SIGTARP is within the Department of the Treasury; Whether the Secretary of the Treasury has supervisory authority over SIGTARP; If SIGTARP is not part of Treasury, whether providing Treasury's attorney-client privileged materials to SIGTARP effectively waives the privilege. While Knight quickly addressed Barofsky's request for the documents (and Barofsky recently has stated that he has received all the documents he needs from Treasury), Treasury proceeded with its opinion request. While Barofsky turned over the email traffic involving Knight and OLC to Senator Grassley and Representative Issa, he redacted certain portions at OLC's "insistence" "to avoid interfering with its ongoing consideration of the questions that have been presented to it." (OLC's request to redact is consistent with long practice, which is not to release information that can affect the Executive Branch's deliberative process.) Based on representations in SIGTARP's April 7 memo, Treasury apparently takes the position that SIGTARP is within the Executive Branch, but may question whether SIGTARP is actually within Treasury. In its April 7 memo, SIGTARP argued that the office is an independent entity within Treasury that is not subject to supervision by the Secretary of the Treasury; that privileges do not excuse compliance with an IG's request for materials; and that response to an IG's request is not voluntary and thus is not a waiver. SIGTARP was created by section 121 of the Emergency Economic Stabilization Act of 2008 (EESA), as amended by Pub. L. 111-15, enacted earlier this year. Before broadband, you were asking for trouble to run an allfeds Westlaw search of "act" or "law" w/5 "not a model of clarity," and that already bloated search result will only grow as EESA works its way through the courts. Section 121 of the EESA does not explicitly state what Department the SIGTARP is in, or, for that matter, whether it is even in the Executive Branch. It seems likely that if OLC writes an opinion (more on that later), it will conclude that SIGTARP is within Treasury and thus within the Executive Branch. SIGTARP performs the traditional functions of an IG, and section 101 of EESA vests Treasury with the job of administering TARP; thus, absent a statement to the contrary, one would expect SIGTARP to be created within the agency it monitors following the usual model of the IG Act. (The opposite argument, of course, is that an inference should be drawn from the fact that Congress omitted from EESA the usual language creating the IG Office within a particular "establishment" of the Executive Branch.) There is other evidence SIGTARP is within Treasury, although you have to cull bits and pieces from EESA, none of it particularly compelling in isolation: Treasury's budget is the source of SIGTARP's funding; the EESA incorporates the removal provisions of the IG Act of 1978, which speaks of transferring the IG to "another position within an establishment," suggesting the IG position is within the establishment; by incorporating provisions of the original IG Act of 1978, EESA requires the SIGTARP to keep the Treasury (as well as Congress) informed about its findings; the SIGTARP has offices at Treasury (and the original IG Act specifies that the head of an establishment is to provide the IG office space). SIGTARP and Treasury have been operating on the understanding that the office is part of Treasury, and there is precedent that agency practice is relevant in construing an ambiguous statute, but that consideration would be given less weight given that EESA is not even a year old and practice therefore is not longstanding. The conclusion that SIGTARP is part of the Executive Branch (and, indeed, is part of Treasury) would ordinarily answer for OLC the question that appears to have precipitated the opinion request: whether turning over documents will result in a waiver of attorney-client privilege. The questions, as framed in the April 7 memo, implicitly recognize that conclusion. Both the attorneys and the SIGTARP ultimately are agents of the same client, and so provision of the documents would not result in a waiver of the privilege. The hardest question is whether SIGTARP is subject to supervision by the Secretary of the Treasury. Congress was not terribly clear in incorporating elements from the IG Act of 1978. Congress incorporated some provisions by specific reference or by duplicating the language of the original IG Act (e.g., the removal provisions of IG Act section 3(b); rates of pay; application of a particular Hatch Act exception for policymakers; powers and authorities; compliance with Comptroller General audit procedures). So far so good. EESA does not, however, explicitly incorporate the most relevant provision of the original IG Act, section 3(a), which states in relevant part that "[e]ach Inspector General shall report to and be under the general supervision of the head of the establishment involved or, to the extent such authority is delegated, the officer next in rank below such head, but shall not report to, or be subject to supervision by, any other officer of such establishment." While the EESA does state that "the Inspector General shall also have the duties and responsibilities of inspectors general under the Inspector General Act of 1978," it is not self-evident that the IG Act's provision for (and limitations on) secretarial supervision establishes a "duty or responsibility" of inspectors general. Although SIGTARP seems to be quite adamant that that sentence of 3(a) does not apply to the office, if it does not, presumably, neither would the last sentence of the provision: "Neither the head of the establishment nor the officer next in rank below such head shall prevent or prohibit the Inspector General from initiating, carrying out, or completing any audit or investigation, or from issuing any subpena during the course of any audit or investigation." I am aware of no comparable noninterference provision in EESA, but it is a big statute. Although there are question marks over the applicability of the IG Act's supervision provisions, it strikes me as unlikely that OLC would conclude that the SIGTARP is completely "independent" of secretarial supervision. The ordinary presumption is that an agency head supervises those in the agency, and there are various provisions of law that embody that background presumption. The explicit provisions of section 3(a) of the IG Act were designed to define the limits of supervision within an agency. While SIGTARP notes that the EESA does not make explicit provision for "supervision," its text is similarly silent about "independence." In the Executive Branch, it seems likely that such silence will be construed in favor of supervision rather than a lack of supervision; if Congress wants to exempt an official from supervision by the head of an agency, it is easy enough, given the separation of powers implications of interfering with another branch's traditional supervision structure, for it to say so explicitly. I understand that there is some legislative history from Senator Baucus indicating that he intended for the office to be "truly independent," and that is something OLC will have to consider. (There may be more, but I haven't been able to exhaustively search the legislative history.) I don't imagine that OLC will give the statement tremendous weight, because individual floor statements rank relatively low in terms of persuasiveness for legislative history, which is itself disfavored in an age when plain language is ascendant. The actual phrasing of the Treasury request is critical, because if it is quite general (as in the SIGTARP letter: "Whether the Secretary of the Treasury has supervisory authority over SIGTARP"), OLC may not be forced to confront far thornier specific applications of that supervisory authority, such as whether agency head may, for example, order SIGTARP to redact privileged communications from the version of the report that is finalized and delivered to Congress. If Treasury was (as Sen. Grassley's letter suggests) concerned about waiver of attorney-client privilege, it may not be particularly enthusiastic about such communications winding up in the final report. The thorny and politically explosive issue of IG supervision will give both Treasury and DOJ an incentive to try to resolve the matter short of a formal opinion. So if the parties have reached an accommodation that allows Barofsky to move forward with his immediate duties (as Barofsky's letter suggests), I would not be surprised if a decision is made not to finalize an OLC opinion on the subjects outlined above.