Interview transcript

Terry Gerton We’re talking about something that might be a little esoteric, but is certainly in the air these days, agency investigations that enforce various statutes. The Supreme Court has had some things to say about it recently, and you’ve recently written a paper. Before we dig into the details of your recommendations, just kind of give us an overview of how agencies are taking on administrative investigations.

Aram gavoor Fair, well, administrative investigations, which would be agency non-criminal information gathering procedures, are the bedrock of any forthcoming action that would be an enforcement action. And they’re actually one of the most unregulated spaces in federal government enforcement. There is no one statute that actually controls how those should be conducted. So it’s based on each agency having very general, broad authorities, then deciding how to apply those authorities on an individual basis. And then the target of those information collection processes, usually compulsory ones, doesn’t have a lot of leeway to indicate, oh, this is unfair, you’re going too far, etc.

Terry Gerton Your report says that these investigations often lack transparency and predictability, which is some of what you’ve just described. What are the biggest weaknesses, you mentioned variability as well, in how agencies handle these kinds of cases?

Aram gavoor So, the way that our federal government is set up, and the way Congress regulates the federal government as well as the courts, is that it’s premised on affirmative procedures, usually enunciated in statute or self-imposed by the agency, a level of transparency that’s reasonably high so that members of the regulated public know what’s happening and how their government is regulating upon them, and then a level of that transparency then flowing through to judicial review, usually in the federal court system, usually in the context of review under a statute called the Administrative Procedure Act, where the court determines whether the ultimate agency action is arbitrary and capricious. However, here, the challenge is that the federal government needs to be able to collect information, usually compulsorily, to be able to decide whether to enforce or in furtherance of an enforcement. And there’s very, very few guardrails to stop that. So agency investigations are necessary for our government to do all of the things that our Congress has charged our government to do and that our president, you know, through our election is enforcing and taking care that the laws are faithfully executed. So, that can be everything from an audit, a subpoena, a civil investigative demand, it can really range, it can range from a door knock of government investigators themselves, people with badges.

Terry Gerton Your report describes that these investigations are sometimes idiosyncratic. So without transparency, without predictability, without a standard approach, what does that mean for the people or the organizations that might be under investigation?

Aram gavoor So, what that means is that the target of an investigation has relatively few tools besides complying with the investigation or capitulation to participate in that compulsory information gathering process. There is a Supreme Court case recently that provided an ability of a target of agency investigation or action to be able to challenge it constitutionally. Let’s be pretty clear, 99.9% of targets of agency investigations do not have a direct constitutional challenge of the agency’s authority to be able to investigate or engage in the enforcement. So, what happens in practice is that there’s a lot of pressure on the investigated target. They typically need to hire a lawyer, depending on the size of the company and subject matter as well as the agency that’s doing the investigating, they may need some level of highly specialized legal services. So, for example, if it’s the SEC doing an investigation, that’s a totally different animal from the wage and hour division simply responding to a complaint made by a single employee.

Terry Gerton I’m speaking with Professor Aram Gavoor. He’s the Associate Dean for Academic Affairs and Associate Professor of Law at George Washington University. So your paper and the Administrative Conference of the United States have made some recommendations that agencies could take on that would improve this process. Walk us through what you suggest.

Aram gavoor So first, the Administrative Conference of the United States is this lovely agency, of which I’m actually now a public voting member, that exists to engage in meaningful, nonpartisan, rigorous studies of how to make your government and the executive branch function better. And the study that I was commissioned to deliver, which I did and resulted in a favorable recommendation was how to improve agency investigative procedures for the benefit of the government, but for all Americans as well. And the big themes that my report and the ultimate recommendation concluded was that there needs to be improvements in disclosure and transparency, better improvements with initial investigations, initiating them, how to decide and what process there is for that, the methods of those investigations, you know, the scope, the general nature of the investigation, the potential violations of statutes and regulations being investigated, etc., determining the appropriate course of action following an investigation and then lastly, the negotiation and settlement procedures in the event that an investigation leads the agency to conclude that there was a violation of law or statute within its authority.

Terry Gerton Could agencies just adopt these on their own, or do they require statutory direction to move forward?

Aram gavoor So the great news is that agencies have the ability to adopt these. And also, if we’re just looking at presidential actions, the Trump administration, certainly in the first term, you know, we don’t have a very large data set for the second term, was actually quite serious about providing more transparency for investigations, as well as compulsory information collections government-wide. And I would say that in this administration, with President Trump signing an executive order creating a greater degree of White House control over so-called independent agencies, the ability of the White House to cause behavioral change or agencies themselves to cause their own behavioral change through self-policing is 100% there. It does not require a statute for an agency to be more transparent, to restrain itself somewhat more, to have more rigor with its procedures, higher levels of approval before it reaches out.

Terry Gerton Would you have any concern that an increase in transparency might conflict with confidentiality or privacy protections?

Aram gavoor Well, I would say this. Transparency, as it is understood for the executive branch, has built-in protections for privacy and for confidentiality. Even if you look at the Freedom of Information Act, which is a sub-statute of the Administrative Procedure Act, there are a variety of ways in which, in the broader domain of transparency, there are distinct and significant and important protections to be able to restrain the disclosure of just those things, Terry. And what I would say with regard to all of this is there are going to be a number of sensitive investigations, maybe a civil investigation that could then turn into a criminal referral where it is not in the interest of public policy, it’s not in interest of the executive branch or the American people for even the existence of those and those compulsory information collections at a relatively early level to be publicly revealed. So, for example, if you’re a drug company, there’s a variety of circumstances under which it is strongly in the interest of the drug company for a FDA investigation not to be fully public, because just a hint that there could be something wrong can turn markets. And it’s really about a balance. At what point does public interest in knowing what the government is doing, you know, prevail? I think that’s the baseline that should exist and then what is the rights obviously of the investigated party because they have very important rights right? And it’s very easy if we’re talking about something, generally, but if the government is investigating you, Terry, you know, if you’re getting an IRS audit for tax year 2023, you probably want that to be private. The nature of that information contains large amounts of taxpayer secrecy information under 26 U.S. Code Section 60103. It’s a very good example of something that shouldn’t be public. At the same extent, let’s say that EPA is knocking on your door because you’re violating the lead paint rule, and there’s some kids getting sick because they’re eating paint chips, that might make more sense for it to be publicly known. And of course, Terry, I’m sure you comply with all laws all the time.

Terry Gerton I try my best. So let’s just imagine that all of the agencies have your paper and they’ve read it and they want to move forward on it. What would the first steps look like and how would you know that transparency is improving?

Aram gavoor So it’s a multi-step process. The good part is the report and the recommendation is essentially a recipe for how to bake the cake. And the agency has to decide how that recipe applies to their statute, their mission, their goals, because obviously the federal government’s very broad. So that exists. I’m also infrequently making myself available just for this public service, right? I’m happy to have any conversation with any agency, and I do frequently, on these types of questions. But the good evidence that you might be able to see is, for example, if there is all of a sudden a published enforcement manual, first one is created, second it is published, and third it is available to you so you can actually understand how the agency is doing what it does if it comes knocking on your door. That’s something that’s very simple. Or for you to understand based on public disclosures, how the agency decides how to investigate, what to investigate when to stop an investigation. So you can have some level of understanding besides a black box on the other side of what you’re dealing with.

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