SEC FOIA exemption not uncommon, but still poorly done

The FOIA world has been at arms over the past few days over a newly “discovered” Federal FOIA exemption found within the freshly signed Financial Reform Bill. The exemption explicitly exempts the Securities and Exchange Commission from FOIA requests for information relating to “surveillance, risk assessments or other regulatory and oversight activities” and is designed to protected increased surveillance and investigatory powers granted to the SEC in an attempt to guard against future economic problems and recessions. John Nester, an SEC spokesman, summarized this intention, telling the press:

“The new provision applies to information obtained through examinations or derived from that information. We are expanding our examination program’s surveillance and risk assessment efforts in order to provide more sophisticated and effective Wall Street oversight. The success of these efforts depends on our ability to obtain documents and other information from brokers, investment advisers and other registrants. The new legislation makes certain that we can obtain documents from registrants for risk assessment and surveillance under similar conditions that already exist by law for our examinations. Because registrants insist on confidential treatment of their documents, this new provision also removes an opportunity for brokers, investment advisers and other registrants to refuse to cooperate with our examination document requests.”

I personally do not feel comfortable weighing in on the impact of this exemption on the federal FOIA, a topic with which I am less experienced. In addition, I don’t care to weigh in on any of the partisan debate surrounding the exemption, as I believe neutrality is key, especially within open records policies. I will however state that, despite popular opinion, the exemption or at least its intention is not that outrageous or even uncommon amongst state open records laws.

While almost all states exempt information like trade secrets and information which if released might result in unfair trade practices, both exemptions which could in fact cover some of the material the SEC is seeking to protect, many states expand on this by exempting financial investigatory materials. At least the following seven states have exemptions similar to the SEC’s new exemption:

State:	Citation:	Exemption:
Alaska	Alaska Stat. 40.25.120.10B	Guidlines for investigations, the release of which could result in avoidance of the law.
Connecticut	Conn. Gen. Stat. Chapter 14 Sec. 1-210.5B	Freely given financial information, not required to be collected by statute.
Kentucky	Kentucky ORA 68.878(e)	“Public records which are developed by an agency in conjunction with the regulation or supervision of financial institutions, including but not limited to, banks, savings and loan associations, and credit unions, which disclose the agency’s internal examining or audit criteria and related analytical methods;”
Maryland	Maryland Statute 10-616.u	Surveillance information.
Oregon	Or. Rev. Stat. Chapter 192, 501(9)	Records, reports and other information received or compiled by the Director of the Department of Consumer and Business Services under ORS 697.732.(Examinations section)
Virginia	VA Code § 2.2-3705.6.	Broad reaching trade secrets exemptions targeting numerous specific industries.
West Virginia	West Virginia Code 29B-1-4(a)(7)	“Information contained in or related to examination, operating or condition reports prepared by, or on behalf of, or for the use of any agency responsible for the regulation or supervision of financial institutions, except those reports which are by law required to be published in newspapers;”

However, while this exemption is not terribly uncommon and is generally granted with a good intention, namely protecting the financial and proprietary information collected from private agencies during regulatory investigations, the current Federal exemption has a few problems.

First and foremost the exemption as written is somewhat broad and poorly constructed. The first exemption found in the law merely applies old FOIA laws to new information gathered by the SEC. The exemption in the law found in Sec 112 (5)(C) states that “(C) FREEDOM OF INFORMATION ACT- Section 552 of title 5, United States Code, including the exceptions thereunder, shall apply to any data or information submitted under this subsection and subtitle B.” Essentially, this exemption is only applying the original exemptions set forth in the FOIA to the newly collected information by the SEC. This is not a broad reaching exemption, but merely a restatement of old exemptions.

However, the addition of Section 919I states,

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.

This exemption is slightly broader and more poorly written. While the exemption does seem to intend to only include investigatory information, the insertion of the phrase “other regulatory and oversight activities” broadens the scope and leaves a great deal of ambiguity. Therein lies the real problem with the bill. While the intention may be good, exemptions, like most laws originating in the legislature, should be arbitrary and clear, leaving little work for the courts to expand or clarify the legislation and consequentially little opportunity for government agencies to abuse the exemption.

In addition to poor wording, the fact that this exemption slid into such an enormous bill presents a serious problem for our legislature. Suggesting problems more with the legislative process rather than the bill itself, the inclusion of a hidden FOIA exemption poses a direct assault on American democratic values and the legislative process. The minute a bill becomes too large for a legislator to read entirely, let alone an average citizen, is the minute that the American government moves from a democracy by and for the people to a democracy by and for the bureaucracy. Citizens should vocally criticize their legislators on both sides of the isle for failing to bring to light such an important FOIA exemption prior to passage.

Thus, while the intention of the law is not outrageous or unheard of, the wording and the secrecy of the implementation will pose serious issues for the laws implementation and retention. The law should be modified so as to increase the specificity of the exemption, and the American public should become more vocally critical about the ability of legislators to slide in hidden legislation.

~Joshua Meyer
Editor of WikiFOIA
joshualmeyer@wikifoia.org

To read the original news article announcing the broad exemption, please see: SEC Says New Financial Regulation Law Exempts it From Public Disclosure

To read other articles on the bill, see: Obama signs broad reform of financial regulation into law and Fox News invents a rule exempting SEC from FOIA compliance

Another reason to keep your own records

The use of private firms and agencies to manage public records has been a hassle and a problem for not only records seekers but the government agencies who employ the services as well. Problems inevitably arise with the storage, retrieval or general access to records and the public bodies are usually held accountable for this failure. Miami, Florida is currently feeling this strain as tens of thousands of boxes of public records are being held hostage over a dispute arising from Miami’s supposed failure to pay the records management firm. The firm argues that Miami $340,000 while the city argues that they only owe $22,000. However, the only person who loses in this arrangement is the public who are unable to get to records that rightfully belong to them. Hopefully this issue sends up another warning signal as other governmental bodies consider privatizing such a core function as providing the public with the records which are rightfully theirs.
~Joshua Meyer
Editor of WikiFOIA
joshualmeyer@wikifoia.org

To read the original article, please see: Miami Herald, “Miami’s files held `hostage’”, 7/25/2010.

I’d like a refund please!

Apparently charging exorbitant fees for open records is not just a problem for Wyoming County, PA . However, at least North Miami Beach if freely moving away from their illegal fees practices. This past week the North Miami Beach city council voted to eliminate a Building Department policy of charging a $100 flat start up fee for all records requests. Currently, the Florida Sunshine law allows for the charging of only reasonable fees for duplication and the cost of searches in special cases when the search is overly broad or time consuming. While this is a move in the right direction, the illegal fee has been charged by the department for three years, without being challenged by citizens and the media. Hopefully other municipalities in Florida and across the country realize that these records belong to the citizens and remove illegal flat rate fees and begin charging for the actual cost of duplication. Best of luck to all the residents of North Miami Beach in obtaining their refunds, though I doubt they will have any luck.

Joshua Meyer
Editor of WikiFOIA
joshualmeyer@gmail.com

To read the original article, please see: iStock Analyst, “Records request flat fee no longer will be charged by North Miami Beach: North Miami Beach officials removed a $100 flat fee for public records requests from the city’s building department.”, 7/23/2010

Mother always said to not roll your eyes

Apparently Elmhurst IL city officials share the same disdain for eye rolling as mothers and teachers across the nation. Darlene Helsop was ejected from a June 14 meeting for sighing and rolling her eyes, which the city officials argued constituted a “disturbance and disorderly conduct”. Helsop, who opposed the councils attempt to hire a lobbyist for state government, was accused of sighing and rolling her eyes during the open meeting discussion of the matter. The council then proceeded to eject her from the meeting, apparently considering a more expansive definition of disturbance that includes backtalk. The city is currently investigating their decision, having their lawyer go over state law and other municipalities to develop an exact definition for future use. We at WikiFOIA are fairly confident that the IL law does not include eye rolling in its definition of disorderly conduct and any decision to include it in future definitions should be protested by council meeting sit ins with a great deal of eye rolling and sighing to boot.

~Joshua Meyer
Editor of WikiFOIA
joshualmeyer@wikifoia.org

To read the original article, please see:
Chicago Tribune, “Suburb;Don’t roll your eyes at me”, 7/20/2010

The economic nature of transparency

FOIA advocates across the country have noted a growing trend amongst state and local governments to abuse FOIA by turning it into an income source through charging exorbitant fees for the release of records. However, while this behavior is often justified by claims of high copy costs and the loss of staff time, it is rare that a governmental body admit that the fees charged for records are being used to bring in additional funding, as is the case with the Wyoming County Recorder of Deeds Office in Pennsylvania.

This past week, the Recorder of Deeds rejected a request from the newspaper, The Citizen’s Voice, for records relating to natural gas leases in the state. The Voice sought the records as a part of a comprehensive online database of gas leases in the state. When the newspaper requested the documents in question as a digital file, either emailed or copied on to a flash drive, in order to better facilitate the transition to the database, the office claimed “My office staff, including myself, are not trained or familiar with loading information on a ‘flash drive’ as suggested by the requester” (Gas lease records at center of right-to-know controversy).

Clearly, in this modern day and age, the inability of an entire government office to use either flash drives or email accounts to transfer files displays either a complete oversight in training or a blatant lie. This lie became more apparent when the newspaper pushed for the records release, even sending someone to the office to retrieve the records. The newspaper employee saw the files on a computer and requested that they be transferred to a flash drive and the office employee stated that it was against the offices policy. In addition, the office claimed that they “had to protect their records” clearly hinting at need to maintain the income from the records being produced (Gas lease records at center of right-to-know controversy).

The notion of protecting records which are not exempt under the law from the public which pays for their creation through tax dollars is as undemocratic as it is absurd. While it is easy to understand the need for cash strapped government agencies to recover copying fees in order to maintain their budget, the use of copying fees to augment income runs counter to the very principles of the public records act. Currently, the Pennsylvania law allows for the charging of reasonable fees for copying established by the Pennsylvania Office of Open Records and extended fees, based on market value, for data sets issued to private citizens. However, a 2008 directive from the Governor went against the Office of Open Records and stated that agencies may charge reasonable fees for staff time and searches. However, if files and government documents can be transferred easily through the use of technology, without cost to either the government office or the citizen, it should be advocated, encouraged and used. The original goal of the open records act is the free flow of information from government to citizens and anything that better enables the government to achieve that goal should be employed.

The Citizen’s Voice is currently filing an appeal at the state office of open records. We wish them the best of luck in overturning this absurd policy. If the courts rule in their favor, and order that government agencies must release documents in digital form, without charging for the transfer, it would be a big win for open records advocates in Pennsylvania and set another example of a state which truly supports the meaning and intention of transparency and openness in government.

~Joshua Meyer
Editor of WikiFOIA
joshualmeyer@gmail.com

To read the original article from the Citizens Voice, please see Gas lease records at center of right-to-know controversy.