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B.

"Consultation with Congress" Is Not Warranted for the Board to Conduct Performance Evaluations of the Inspector General

Throughout the Coogan memorandum, the OIG claims that it is "not reasonable"

for the Board to evaluate the IG without "consulting Congress," but fails to articulate a valid basis for this assertion. As an initial matter, the Memorandum omits citation to any statutory or caselaw authority that would impose such a "consulting" requirement. Similarly, the Memorandum either does not cite any legal authority for many of the other various claims it asserts on this topic, or draws conclusions that are materially incomplete.

First, the Memorandum incorrectly asserts that "Inspectors General are creatures of Congress, not the executive...." (Coogan Mem. at 14, emphasis added). The OIG does not cite any legal authority for this proposition, which raises serious questions concerning the separation of powers under the Constitution. The OIG's proposition on this point flies in the

complying with audit standards established by the Comptroller General. (Coogan Mem. at 7-8.) A closer examination of this GAO publication reveals that it is a fact-specific accounting of a particular dispute involving the TVA. "Tennessee Valley Authority: Facts Surrounding Allegations Raised Against Chairman and the IG," GAO Report to the Chairman, Committee on Governmental Affairs, U.S. Senate, GAO/OSI-99-20 (Sept. 1999). The GAO report does not purport to carry the weight of Supreme Court precedent or even agency guidance concerning the Board's authority to provide general supervision over the IG. The Memorandum is correct in noting (at point (2) above) that the 1988 amendments to the IGA do set forth a particular provision regarding procedures for determining an IG's compliance with the Comptroller General's audit standards. However, this provision is narrow in scope, as it is focused solely on audit standards; in no way does this particular provision undercut the Board's general supervisory authority to conduct performance evaluations of the IG. Likewise, the GAO report contains statements to the effect that the TVA Chairman's conduct in this particular instance "could have been viewed as an attempt to undermine the independence of the IG." But these statements appear to have been directed to the specific facts at issue in the TVA dispute. This GAO report makes no reference to the OMB guidance regarding the scope of the Board's "general supervision" authority, nor does it hold in any way that other agency heads are somehow categorically prohibited from ever conducting performance reviews of their IGs. Indeed, it would not fall within GAO's authority to repudiate or invalidate the previously issued OMB guidance, i.e., Memorandum for Heads of Designated Federal Entities, M-93-01, dated November 13, 1992.

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face of clear Supreme Court authority to the contrary. See NASA, 527 U.S. at 240. Despite the extreme and unprecedented nature of this characterization, the Coogan memorandum offers no cites to caselaw, statutes, or regulations in support of its theory.

Second - although the Memorandum is correct in observing that, pursuant to the

terms of the IGA, IGs are expected to "report to Congress, not just the head of the agency" (Coogan Mem. at 14) – the OIG overlooks a crucial point regarding the sequence of events in this reporting process. The IGA provides that the IG shall prepare reports summarizing the activities of the OIG, and that those reports shall then be "furnished" to the head of the establishment involved. Within 30 days after receiving the report from the IG, the head of that establishment then transmits the report to the appropriate committees or subcommittees of Congress, "together with a report by the head of the establishment" containing, among other things, "any comments such head determines appropriate." 5 U.S.C. app. 3 § 5(b). Likewise, in the event that the IG "becomes aware of particularly serious or flagrant problems, abuses, or deficiencies relating to the administration of programs and operations of such establishment," the IGA provides that the IG "shall report [this] immediately to the head of the establishment involved." 5 U.S.C. app. 3 § 5(d). It is the head of the establishment who then "shall transmit any such report" to the appropriate Congressional committees, "together with a report by the head of the establishment containing any comments such head deems appropriate." 5 U.S.C. app. 3 § 5(d). In short, the IG's reporting function is, in effect, channeled through the head of the agency before reaching the relevant Congressional committees."

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This sequence of reporting events appears to be consistent with the scheme contemplated by Congress when it enacted the IGA legislation. Indeed, the court in the NRC case quoted language from the IGA legislative history regarding the goals of the statute, which explained that "the audit and investigative functions should be assigned to an individual whose independence is (continued...)

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The idea that agency heads would be required to "consult" Congress before making any decision that might adversely impact an IG is not only impracticable - it squarely contradicts the terms of the IGA statute. The IGA makes clear that advance "consultation with Congress" is not required for the removal of an IG. Pursuant to the provisions of the IGA, IGs of federal agencies are appointed "without regard to political affiliation," and "may be removed from office by the President." 5 U.S.C. app. 3 § 3(a)-(b)." The statute provides that the President must communicate the reasons for the removal of an IG to Congress, but does not require the President to consult or confer with the Congress before making this removal determination. Id. Likewise, the IGs of DFEs are appointed by the head of the DFE. 5 U.S.C. app. 3 § 8G(c). If the IG is removed from the office or transferred to another position, the head of the DFE must "promptly communicate in writing the reasons for any such removal or transfer" to Congress. 5 U.S.C. app. 3 § 8G(d). To be sure, the IGA requires the DFE head to communicate the reasons for the IG's removal to Congress - but only after the fact. The statute does not require the head of the DFE to consult or confer with Congress, or otherwise seek its approval in advance of making this determination.

clear and whose responsibility runs directly to the agency and ultimately to the Congress." NRC v. FLRA, 25 F.3d 229, 233 (4th Cir. 1994) (quoting Senate Report at 2682). In other words, Congress contemplated that the IG's responsibility would run "directly" to the agency, and then "ultimately" to Congress.

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See also Naughton, supra, at 23 (recognizing that agency heads may, in addition to "review[ing] and criticiz[ing]" an IG's performance, also "ask for an investigation of an IG's activities or even request the President to remove the Inspector General.")

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C.

The Board's Current Performance Evaluation System Properly Addresses
Potential Issues Concerning Conflict of Interest

1. The OIG Has Not Established That Impropriety Results from the Board's Consultation with LSC Management in Connection with the Inspector General's Performance Evaluation

The OIG complains that it is "not reasonable" for the Board to evaluate the IG in consultation with LSC management. (Coogan Mem. at 11.) The Memorandum does not cite any legal authority for the OIG's contention on this ground, however, and OIG's complaints appear

to lack merit as a practical matter.

A restriction on the Board's ability to consult LSC management in preparing the IG's performance evaluation would mean that the Board could only seek evaluative information from IG staffers who are directly accountable to the IG and who may have carried out or authorized the IG activities that are being evaluated. The objectivity of the IG staff inevitably would be colored by their affiliation with the IG and their OIG colleagues.

In addition, the reality is that a significant portion of the IG's work involves interacting with LSC management; accordingly those individuals have firsthand knowledge of how OIG is performing its functions. Those management staffers would know, for example, how IG interviews were being conducted, what documents management had made available for IG review, and whether the IG's report fairly and accurately reflected information that management had made available in the course of an OIG investigation or audit. It is no doubt conceivable that some management officials might harbor resentment toward the IG because of past or potentially unflattering audit or investigative findings, but the OIG cites no specific evidence to suggest that the Board would be unable to differentiate management's pique or ire from legitimate, verifiable complaints about deficiencies in the OIG's performance.

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In sum, the Board's consultation with LSC management officials provides the

Board with a more complete (albeit not dispositive) portrait of how the OIG has performed during the course of the year. Accordingly, such consultation with LSC management would be a reasonable measure for the Board to undertake in order to make the performance evaluations meaningful.

2.

The Memorandum Does Not Articulate a Valid Basis for the OIG's
Assertions Concerning “Actual” or “Apparent" Conflicts of Interest

In the Coogan memorandum, the OIG contends that agency head evaluations of

the IG "can create actual or apparent conflicts of interest." (Coogan Mem. at 8.) The Memorandum does not, however, articulate a relevant basis for these contentions. At one point, for example, the OIG suggests that there may be a risk of "apparent" conflicts of interest arising from the fact that the LSC Board consists of Presidentially-appointed directors, but this analysis does not appear to extend beyond pure speculation. (Coogan Mem. at 8.)12

D.

The Coogan Memorandum Offers No Substantiated Grounds for the OIG's
Proposal That the Performance Evaluation Process Should Be Suspended
During a Pending Inquiry Involving the Board

In the Coogan memorandum, the OIG proposes that the Board "establish a safety mechanism to avoid evaluating an Inspector General when the Board is being investigated.” (Coogan Mem. at 15.) As an initial matter, the OIG's reasoning is questionable because it automatically conflates any action the Board undertakes for purposes of conducting a proper

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Similarly, the OIG's discussion of circumstances in which IG performance evaluations bear some relationship to the IG's bonus compensation simply does not apply to the facts of the LSC OIG. The Board's proposed performance review of the IG is not linked to any bonus compensation scheme. The OIG's support for its theory on this point is largely based on opinions articulated in a single treatise, quotes from a newspaper article, and anecdotal information regarding the compensation structures of Presidentially-appointed IGs that do not appear to be corroborated by objective sources.