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LEGAL SERVICES CORPORATION

IMPROVEMENT ACT

TUESDAY, SEPTEMBER 26, 2006

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON COMMERCIAL
AND ADMINISTRATIVE LAW,
COMMITTEE ON THE JUDICIARY,
Washington, DC.

The Subcommittee met, pursuant to notice, at 2 p.m., in Room 2141, Rayburn House Office Building, the Honorable Chris Cannon (Chairman of the Subcommittee) presiding.

Mr. CANNON. The Subcommittee on Commercial and Administrative Law will please come to order.

The Subcommittee on Commercial and Administrative Law is meeting this afternoon to consider H.R. 6101, the "Legal Services Corporation Improvement Act," a bill I introduced in response to a disturbing pattern of events that have come to the Subcommittee's attention. I will keep my opening remarks brief as I believe the testimony and the opportunity to ask questions of our witnesses will prove to be valuable.

Congress created the Inspector General system in 1978. The purpose of this system is to ensure that the Federal agencies follow proper Government procedures and policies. There are two types of IGs, those appointed by the President and those appointed by individual agencies. The presidential appointees can only be dismissed by the President. In contrast, agency appointees, such as the LSC IG, can be fired directly by the agency. As a result, agency-appointed IGs stand a greater risk of retaliation from agency heads. The only restraint on agency heads firing their IGs is they are required to provide notice to Congress of the removal along with reasons for their decision.

H.R. 6101 would simply amend the Legal Service Corporation Act to provide that the IG may at any time be removed, but only upon the written concurrence of at least nine members of the 11member Board. The current law only requires a simple majority of the Board to remove the IG; namely, six members.

The purpose of today's hearing is to examine whether LSC's Inspector General needs increased protection from retaliation by the Board of Directors as provided in H.R. 6101.

The Legal Services Corporation's Board of Directors hired Kirt West as the LSC IG in 2004. One of his first reports was issued in response to an inquiry from this Subcommittee regarding the lease arrangement for LSC's headquarters. Rather than accept the IG's report on the lease and cooperate in implementing his conclu

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sions, the LSC Board of Directors instead rejected the report and contemplated removing the IG.

Whereas the most important characteristic of an inspector general is independence, there would appear to be an obvious and inherent conflict between any IG and the agency for which he or she serves. The IG is charged with oversight of the functioning of the agency and must as a matter of course conduct investigations of those who control the agency, the same people to whom he or she reports and with whom a working relationship must be maintained.

It is quite clear, based on comments made by LSC board members, that they either don't understand the concept of an IG or have no respect for the IG.

I drafted H.R. 6101, the "Legal Services Corporation Improvement Act," to provide some greater degree of independence for LSC's IG. I must stress that the measure was not drafted in response to problems limited to the current Board and IG, but in response to a pattern of problems that predate both the present IG and LSC administration. I cite a letter of support for this administration from former LSC's former Inspector General, Ed Quatrevaux, which underscores the need for Ĥ.R. 6101. I ask unanimous consent that a copy of this letter be included in the hearing record and hearing no objection, so ordered.

[The information referred to is available in the Appendix.]

Mr. CANNON. Mr. Quatrevaux states, "I fought numerous challenges to IG independence with the LSC Board of Directors and headquarters' management. My understanding that the current IG is facing many of the same problems with a different Board and management leads me to believe that LSC's propensity to challenge the authorities and dependence of the IG is an institutional problem."

Other agencies have experienced similar issues with their IGs. To remedy the conflict in two agencies, Congress created a bar for dismissal of the Inspector General for the United States Postal Service and a bar for the United States Capitol Police which is higher than that proposed in H.R. 6101.

I expect David Williams, our witness from the Postal Service, will explain why such protections for Inspector General are nec

essary.

Indeed, I look forward to receiving the testimony from each of our witnesses, and I anticipate this hearing will be very informative and constructive endeavor.

I now turn to my colleague, Mr. Watt, and the distinguished Member of my Subcommittee, and ask him if he has any opening remarks.

[The prepared statement of Mr. Cannon follows:]

PREPARED STATEMENT OF THE HONORABLE CHRIS CANNON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF UTAH, AND CHAIRMAN, SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW

The Subcommittee will please come to order.

The Subcommittee on Commercial and Administrative Law is meeting this afternoon to consider H.R. 6101, the "Legal Services Corporation Improvement Act," a bill I introduced in response to a disturbing pattern of events that have come to our attention. I will keep my opening remarks brief, as I believe that the testimony and the opportunity to ask questions of our witnesses will prove to be more valuable.

Also, I want to leave as much time as possible for Members of the Subcommittee to utilize this opportunity.

Congress created the inspector general system in 1978. The purpose of this system is to insure that federal agencies follow proper government procedures and policies. There are two types of IGs: those appointed by the President, and those appointed by individual agencies. The Presidential appointees can only be dismissed by the President. In contrast, agency appointees, such as the LSC IG, can be fired directly by the agency. As a result, agency-appointed IGs stand a greater risk of retaliation from agency heads. The only restraint on agency heads firing their IGs is that they are required to provide notice to Congress of the removal along with reasons for their decision.

H.R. 6101 would simply amend the Legal Services Corporation Act to provide that the Inspector General may at any time be removed, but only upon the written concurrence of at least nine members of the 11-member Board. The current law only requires a simple majority of the Board to remove the IG, namely, six members. Today's hearing will examine whether LSC's Inspector General needs increased protection from retaliation by the Board of Directors, as provided by H.R. 6101. The Legal Services Corporation's Board of Directors hired Kirt West as the LSC IG in 2004. One of his first reports was issued in response to an inquiry from this Subcommittee regarding the lease arrangement for LSC's headquarters. Rather than accept the IG's report on the lease and cooperate in implementing his conclusions, the LSC Board of Directors instead rejected the report and contemplated removing the IG.

Whereas the most important characteristic of an Inspector General is independence, there would appear to be an obvious and inherent conflict between any IG and the agency for which he or she serves. The IG is charged with oversight of the functioning of the agency and must, as a matter of course, conduct investigations of those who control the agency-the same people to whom he or she reports and with whom a working relationship must be maintained.

It is quite clear, based on comments made by LSC Board members, that they either don't understand the concept of an IG or have no respect for an IG.

I drafted H.R. 6101, the "Legal Services Corporation Improvement Act," to provide some greater degree of independence for LSC's IG. I must stress that this measure was not drafted in response to problems limited to the current Board and IG, but in response to a pattern of problems that predate both the present IG and LSC administration. I cite a letter of support for this legislation from LSC's former Inspector General, Ed Quatrevaux, which underscores the need for H.R. 6101. On unanimous consent, I ask that a copy of this letter be included in the hearing record. Hearing no objection, it is so ordered. He states, "I fought numerous challenges to IG independence with the LSC Board of Directors and headquarters' management. My understanding that the current IG is facing many of the same problems with a different Board and management leads me to believe that LSC's propensity to challenge the authorities and independence of the IG is an institutional problem." Other agencies have experienced similar issues with their IGs. To remedy the conflict in two agencies, Congress created a bar for dismissal of the inspector general for the United States Postal Service and a bar for the United States Capitol Police, which is higher than that proposed in H.R. 6101 for the IG at LSC. I expect David Williams, our witness from the Postal Service, will explain why such protections for inspectors general are necessary.

Mr. WATT. Thank you, Mr. Chairman, and thank you for convening the hearing, I guess. For over 3 decades the Legal Services Corporation has provided legal services to the poor. Today there are currently more than 45 million Americans who qualify for assistance from one of the Legal Services' 143 grantees nationwide. Legal Services clients are as diverse as our Nation, consisting of individuals of all races, ethnic groups and ages. They include the poor, working poor, veterans, family, farmers, people with disabilities and victims of natural disasters. More than two-thirds of the Legal Services Corporation's clients are women, most of them mothers.

Because the Legal Services Corporation receives Federal funds, it is certainly appropriate that Congress provide oversight. The hearing on H.R. 6101 is the product of perceived threats to the

independence of the Inspector General. I would suggest to you that a bill introduced on September 19th, I guess having a hearing this soon shows the power that a Chairman in our institution has and perhaps indicates some institutional problems, too.

But that aside, Congressional oversight is certainly a valuable tool and one which enables us to ensure that Federal agencies and entities within our jurisdictions are operating effectively and within the mandates of the law. But Congressional oversight is a very powerful tool and must not be misused or abused.

In the past 2 months, newspapers and television accounts have vilified the leadership of the Legal Services Corporation based upon leaks apparently from Hill staff or from the IG's office itself. These leaks from a then ongoing investigation were inappropriate and unprofessional and, as it turns out, mostly inaccurate.

The IG's report provided to us yesterday has found some criminal violations, no deliberate malfeasance and in most instances no disregard for LSC policy. At most, the Inspector General has found that perhaps there should be a policy where there is none and LSC, according to his cover letter, has agreed to comply.

However difficult this investigation was for all involved, I simply do not believe that Congress is in the position to referee every discovery dispute or police every personality conflict that understandably arises in the course of IG's investigations.

There are processes in place to resolve those disputes and congressional intervention in the midst of pending investigation has proven not to be all that constructive. The LSC board is a volunteer, presidentially appointed Board. And this Congress seems to be giving it more trouble since this President has been appointing it than when other Presidents were appointing.

If we are to continue to attract qualified, dedicated professionals to fill these positions, they must be assured that they will not be subject to abuse and harassment. These are troubling allegations, however. They are troubling allegations that former disgruntled employees of the LSC who now happen to be Congressional staff have been very heavy handed, biased and the source of many of the substantiated complaints by the IG. Indeed, the IG's letter transmitting his report on certain fiscal practices of the Legal Services Corporation concedes that Congressional staff were the source of certain allegations he chose to investigate. While I do not know whether former employees of LSC who are now Congressional staff have misused their positions to harass or retaliate against LSC, I do believe that we must be especially vigilant in ensuring that all inquiries from this Subcommittee and from the Senate Subcommittees are made in good faith.

The bill before us today in my estimation unreasonably raises the bar for removal of an Inspector General by the LSC board excessively high, higher in fact than that required to remove a Board member. While any IG must be permitted to do his or her job without interference, the normal give and take of internal orders and investigations does not rise to the level of obstruction presumed by this bill.

Moreover, the suggestion that a Board with the statutory power to hire and fire cannot exercise the power to dismiss an IG simply because he is investigating or has the authority to investigate the

Board would probably invite endless illegitimate investigations by an IG desperate to maintain a job. If we are to create such an incentive, at least we are to provide for attorney fees if somebody finds that these things get personal and bear no fruit.

Similar provisions were included in the Independent Counsel Act to provide balance to the otherwise extraordinary, unfettered, independent, conferred response upon the special counsels under that.

I look forward to hearing from the witnesses. And I would have to say, Mr. Chairman, that this is yet another one of those instances where it seems to me that we are proposing to legislate to get a result rather than legislating to have a policy and practice that makes sense in the whole context of what we are doing.

We can't pick and choose results here. Sometimes we like the result, sometimes we don't like the result. But there ought to be processes in place that are consistent and not just based on personal animosities. With that, I will yield back the balance of my time.

Mr. CANNON. Without objection, the gentleman's entire statement will be placed in the record. Hearing no objection, it will be so ordered.

[The information referred to was not available at the time of the printing of this hearing.]

Mr. ČANNON. Now will the gentleman be agreeable to inserting his legal fees in the bill and getting his co-sponsorship?

Mr. WATT. No, because I haven't looked at the bill. I mean, you introduced the bill September 19. Today is September 25. If you had any

The CHAIRMAN. It is a very short bill.

Mr. WATT. If you had any interest in getting my support for this bill, I am sure I would have known about it before it got introduced.

Mr. CANNON. I am certain, sufficiently certain that staff has been talking about it on both sides. But if you would like to negotiate about attorney fees, I would love to include that into the system.

Without objection, all Members may place their statements in the record. Without objection, the Chair will be authorized to declare a recess at any point. Hearing no objection, so ordered. I ask unanimous consent that Members have 5 legislative days to submit written statements for inclusion in today's hearing record. Hearing no objection, so ordered.

I am now pleased to introduce the witnesses for today's hearing. Our first witness is Kirt West, the Inspector General for the Legal Services Corporation. As I previously noted, he has served in this capacity since September 2004. Prior thereto, he served in very executive positions at the U.S. Postal Service Office of Inspector General from 1998 to 2004.

His Government service also includes a stint as assistant counsel to the Inspector General in the Central Intelligence Agency. In addition, he has spent more than 10 years at the United States Department of Labor as assistant counsel to the Inspector General.

Mr. West received his undergraduate degree from Lawrence University in 1969 and earned his Juris Doctor from the Northwestern University School of Law in 1984.

Our next witness is the Inspector General for the U.S. Postal Service, David Williams. His office has oversight responsibility of

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