Murky legal questions fuel fight between EPA IG, chemical board

Having triggered what one expert called the "nuclear option," a dispute between U.S. EPA's inspector general and the Chemical Safety Board over a records release could escalate into something even larger.

The issue appears minor and wonky: As part of an investigation related to possible wrongdoing at CSB, which his office oversees, Inspector General Arthur Elkins sought records of email communications between CSB officials and outside counsel. CSB refused to comply, saying that handing over the records would waive attorney-client privilege.

But a tangle of legal questions about IG authority, concerns over the leaked identity of a whistle-blower and now the rare involvement of Congress has blown up the dispute.

Elkins' office last week released a "seven-day letter" to CSB Chairman Rafael Moure-Eraso, giving the board one week to comply with the records request. The letter, dated Sept. 5, details multiple previous attempts to get the documents, first requested July 22 (E&ENews PM, Oct. 22).

With the seven-day window having expired Sept. 12, four congressional committees were notified of CSB's refusal to produce the records and that further action may be taken.


But CSB -- an independent agency charged with investigating chemical disasters and issuing recommendations -- has claimed that the request oversteps the bounds of Elkins' office. The issue, CSB said in a statement, "relates to an internal CSB personnel matter in which the IG's office has sought to insert itself."

Former Department of the Interior Inspector General Earl Devaney said the issuance of a seven-day letter shows that the dispute could end up being far more than an internal matter.

"Those seven-day notices are kind of a nuclear option, and I never exercised one," said Devaney, who served at Interior from 1999 until 2012. "If people rose up and said 'no,' we always won those battles."

A 2011 Government Accountability Office report that surveyed 62 inspectors general described the notices as a "last resort" and reported the offices "rarely using 7-day letters ... because such issues were resolved without the need for such a letter."

In the three-year period covered in the report, the inspectors general sent just one such letter, and a previous GAO survey found no such instances between January 1990 and April 1998.

Sending the letter alerted the House Oversight and Government Reform Committee; the House Science, Space and Technology Committee; the Senate Homeland Security and Governmental Affairs Committee; and the Senate Environment and Public Works Committee. Spokesmen for the committees said they were notified of the matter and were assisting in the investigation but did not elaborate on what the next steps could entail.

Privilege questions arise

The escalation of the dispute is also bringing more attention to a murky question about how much authority an inspector general has and whether the release of documents to the office could waive an agency's attorney-client privilege. That's a question that lawyers say has not been fully resolved, but it's possible this incident could spur judicial or legislative action to settle it.

According to Elkins' office, the underlying investigation involves possible wrongdoing by senior CSB officials and relates to the potential leaked identity of a whistle-blower at the Office of Special Counsel. The OIG lacks authority to investigate the OSC, but the possible wrongdoing by CSB officials may have involved obtaining information from someone at that office. The OIG says it believes the requested documents will clarify that matter.

CSB is covered by EPA's inspector general and does not have its own inspector general's office.

According to the seven-day letter, the records in question involve email communications between "certain high-level CSB officials and CSB outside counsel, all pertaining to certain official CSB matters."

CSB, however, has declined to provide the documents, saying in a response that their release would "waive the agency's attorney-client privilege vis-a-vis third parties adverse to the agency and the executive branch."

Complicating the issue, according to sources familiar with the case, is a complaint from multiple employees against CSB with the Equal Employment Opportunity Commission and the OSC. CSB could face litigation related to those employee complaints and thus is trying to protect those communications with outside counsel on that matter.

Attorney-client privilege is a highly respected concept and protects discussions between a plaintiff and his or her lawyer from being released, designed to allow frank disclosures and legal advice. But the right can be waived if an unauthorized third party is present for the discussions or if communications are given over to a third party, in which case lawyers on the other side could request -- and be granted -- the same access.

Richard Painter, a former White House associate counsel who consulted with CSB on this issue, said his interpretation was that turning over the communication would waive CSB's rights.

"There are all kinds of circumstances where you're required to give up documents, like a subpoena or an investigation like this. And in each of those instances, I'd cite attorney-client privilege," said Painter, now a professor of corporate law at the University of Minnesota. "Even though the IG is paid by the agency and is technically in the agency, it's not part of the circle of persons to be consulted for the purpose of obtaining legal advice."

He added, "It's not that I don't want them to turn this over to the IG, but when there's open litigation against CSB and the IG gets privileged communication, the other plaintiffs could demand the same, and based on the case law, I think the judge would have to give it to them."

Typically, the privilege is protected even in light of subpoenas or congressional requests.

But that runs counter to the traditional powers and mission of an inspector general. The Inspector General Act of 1978 states that inspectors have "access to all records, reports, audits, reviews, documents, papers, recommendations or other material available to the applicable establishment which relate to programs and operations with respect to which that Inspector General has responsibilities."

In short, said Devaney, "the IG is entitled by law to anything he or she wants in their own agency."

"This is supposed to be for us to continue our investigation, not for public disclosure," Devaney said. "We're not interested in violating attorney-client privilege on a regular basis. I can remember instances where we had discussions with people about certain documents and we'd work it out on a case-by-case basis."

In the seven-day letter, Elkins wrote that previous interpretations of the IG Act give offices a "broad mandate" and that withholding information based on a claim of privilege "could effectively preclude OIGs from fulfilling the very watchdog mission that Congress provided for with this authority."

Most federal departments require that employees comply with ongoing investigations. An April memo from Interior Secretary Sally Jewell instructs Interior employees to cooperate, even with regards to information "that may be privileged, confidential or otherwise exempt from disclosure."

"In providing privileged or confidential information to the Inspector General's office, Department employees should identify and clearly mark such information," Jewell wrote. "The OIG will treat such information in accordance with applicable statutes and regulations."

According to several lawyers and experts, the issue of whether an OIG can obtain a waiver for attorney-client privilege has rarely been dealt with. In fact, a recent Illinois Supreme Court decision with its roots in the question -- former Chicago Mayor Richard Daley (D) had cited attorney-client privilege in a request for documents in a probe -- did not touch on that question, instead focusing on whether the city's IG could go to court to enforce a subpoena order.

In a testy February 2011 letter to then-American Bar Association President Stephen Zack, Department of Housing and Urban Development IG Michael Stephens says concerns about the IG requesting a waiver of attorney-client privilege are "misguided." The OIG, he said, has "no ability" to do so and has "no means to retaliate against a subject or auditee if they decline a request for waiver."

"We are very mindful of the rights of those we investigate and audit and fully respect and protect those rights. We are also acutely aware of and strive to protect the rights of the American taxpayer to have the expenditure of their tax dollars closely and jealously monitored," Stephens wrote. "If asking an auditee or subject to waive their attorney-client privilege furthers that effort, we have in the past and will continue in the future to do so."

Sorting this out, said Painter, could require congressional action to clear up whether an IG can obtain an attorney-client privilege waiver. A selective waiver -- like ones granted to third parties such as an expert witness or a translator -- could allow the OIG to get the documents without waiving the plaintiff's privilege.

The Council of the Inspectors General on Integrity and Efficiency (CIGIE) -- a board representing the 73 statutory IGs -- is also working on a data call of access issues to potentially examine questions like this one, another possible avenue to address the questions.

Staking out turf

Also likely at play here, said Devaney, is CSB's status as an independent agency. The board answers to EPA's IG but is not part of the agency by design, since it often has to comment on the agency's policies and responses to chemical incidents.

Former CSB Chairman John Bresland, who left the board in 2012, said that relationship could sometimes cause friction with EPA's inspector general.

"They would look at things in a very concrete way, and it was frustrating to go back and tell them that practically we can't do certain things," said Bresland, now a research fellow at the Mary Kay O'Connor Process Safety Center at Texas A&M University. "You'd have people coming in who didn't necessarily understand the chemical industry and would take a relatively simplistic approach by only looking at what the law says."

For example, Bresland said, the IG would criticize the board for not investigating every accidental release, as required under law. But to do so, he said, would be nearly impossible with a 50-person team, so agency leaders instead focused on eight to 12 incidents a year.

Generally, he said, the relationship was good and never escalated beyond some back-and-forth letters during his tenure.

But an August audit of CSB also revealed some tension with the inspector general's office, with Chairman Moure-Eraso criticizing the IG for not taking into account staffing and budget issues in rapping the agency for an investigative backlog. The report also focused on "peripheral issues," Moure-Eraso said in his response (E&ENews PM, Aug. 1).

Devaney said he had similar relationships with bodies like the National Indian Gaming Commission, which is independent but housed in Interior. Devaney said that there was always some "rancor" with those independent agencies and that he often tried to let them maintain their independence barring a serious issue that needed to be addressed.

"If they think of themselves as independent, they probably don't like to be under the thumb of the inspector general for another agency," Devaney said.

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