Grassley Presses for Additional Information on Conference Expenditures Review

WASHINGTON - Senator Chuck Grassley today asked Jacob Lew, the Director of the Office of Management and Budget, to provide further information about his review of conference expenditures throughout the federal government.

The government-wide review comes on the heels of an audit report released by the Department of Justice's Inspector General that revealed the department paid $600,000 for event planners, in addition to paying an average of $32 for snack packs and $16 for muffins at conferences held at venues across the country.  The report also showed a 53 percent increase in conference expenditures at the Justice Department from 2008 to 2009.

The audit included information about conferences held at four-star hotels.  When questioned about the high-priced hotel by the Inspector General, the response from the Justice Department was that a four-star hotel was chosen because, "Only a four or five star hotel was capable of providing the level and quality of services expected by senior executives and other political appointees."

"No economy can rationalize a 53 percent increase in conference expenditures between 2008 and 2009, let alone an economy that is facing 9 percent unemployment and stagnant job growth," Grassley said.  "Whether it's $16 for muffins or $600,000 for event planners, these are expenditures that can and should be looked at for cost savings measures.

The Inspector General's office has stated publicly that it stands by the report.

Here is a copy of the text of Grassley's letter to Lew.  A signed copy can be found here.

 

September 26, 2011

 

VIA ELECTRONIC TRANSMISSION

 

The Honorable Jacob J. Lew

Director

Office of Management and Budget

Eisenhower Executive Office Building

1650 Pennsylvania Avenue, NW

Washington, DC 20503

 

Dear Mr. Lew:

 

I am pleased to hear that you are directing a government-wide review of how taxpayer dollars are spent on conferences in response to a report that the Department of Justice (DOJ) paid $16.00 per muffin at a recent conference.  The Office of the Inspector General (OIG) is standing by its report despite arguments by some that it may have miscalculated the figure in its investigation of conference expenditures.

 

If the OIG made errors in its report, I hope that it will step forward and correct the record.  Nevertheless, I would note that even by Hilton's own accounting, DOJ spent $4,200 on 250 muffins, 200 pieces of fruit, 15 gallons of coffee, and 30 gallons of iced tea.  That amounts to $16 for only one muffin, less than one piece of fruit, 8 ounces of coffee, and 15 ounces of iced tea.   By anyone's account, that's excessive spending.  Additionally, while a DOJ spokesperson has suggested that the package included the cost of meeting space, the OIG report itself made clear that DOJ had negotiated with the hotel to provide that particular meeting space without charge as part of a larger agreement on other conference expenses.

 

The more important story from the OIG's report is that DOJ increased total conference expenditures by 53% from $47.8 million in 2008 to $73.3 million in 2009.  That's a $25.5 million increase in the first year of the Obama administration.   As I have been saying, this kind of spending is unacceptable given the economic realities most Americans are facing right now.

 

Please explain why the cost of conference expenditures increased so dramatically at DOJ in 2009.  I also have additional questions about your September 21 memorandum to executive department and agency heads.   Is it intended that each agency's OIG be involved?  Will the findings of these inquiries be made public, in addition to being compiled for the Vice President?  I understand that each agency is to respond back to you by November 1, and I look forward to hearing their reports.

 

Thank you in advance for ensuring that your response arrives no later than October 3.  Should you have any questions regarding this letter, please contact Tristan Leavitt of my staff at (202) 224-5225.

 

Sincerely,

 

Charles E. Grassley

Ranking Member

 

cc:        The Honorable Eric H. Holder, Jr.

Attorney General

U.S. Department of Justice

 

Ms. Cynthia A. Schnedar

Acting Inspector General

U.S. Department of Justice

Establishes new penalties for drug traffickers

 

Washington–U.S. Senators Dianne Feinstein (D-Calif.) and Chuck Grassley (R-Iowa), co-chairs of the Senate Caucus on International Narcotics Control, have introduced legislation to help combat the international drug trade.  The Transnational Drug Trafficking Act of 2011 would provide the Justice Department with new tools to prosecute drug traffickers from foreign countries.

"We cannot sit idly by as transnational criminal organizations find new ways to circumvent our laws," said Senator Feinstein.  "This bill will allow U.S. prosecutors to stay one step ahead of drug trafficking organizations."

"Drug cartels are continually evolving, and this legislation ensures that our criminal laws keep pace," said Senator Grassley.  "This legislation closes a loophole abused by drug traffickers that intend for drugs to end up in the United States but supply them through an intermediary."

The Transnational Drug Trafficking Act of 2011, S. 1612, has three main components:

• Establishes penalties for drug trafficking activity when individuals have reasonable cause to believe that illegal drugs will be trafficked into the United States;

• Ensures current penalties apply to chemical producers from other countries (including producers of pseudoephedrine used for methamphetamine) that illegally ship precursor chemicals into the U.S. knowing these chemicals will be used to make illegal drugs.

• Ensures that members of any conspiracy to distribute controlled substances will be subject to U.S. jurisdiction when at least one member of the conspiracy intends or knows that illegal drugs will be unlawfully imported into the U.S.

This bill supports the Obama Administration`s recently released Strategy to Combat Transnational Organized Crime.

The legislation is co-sponsored by Senators Charles Schumer (D-N.Y.), Richard Blumenthal (D-Conn.), Tom Udall (D-N.M.), Robert Casey (D-Pa.) and Ron Wyden (D-Ore.).

 

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Q&A on the Securities and Exchange Commission

with U.S. Senator Chuck Grassley

Q:        What's the role of the Securities and Exchange Commission?

A:        The SEC was created during the Great Depression, in the wake of the stock market crash of 1929, when the public's faith in capital markets needed to be restored.  The agency is supposed to strengthen investor confidence by providing transparent, reliable information and rules for fair, orderly and efficient markets.  This should help facilitate the capital formation necessary for economic growth and job creation.  When the agency fails to meet its mission, the negative repercussions can impact anyone with investments monitored by the SEC, including investments in pension and other retirement funds.

Q:        How did you get involved in oversight of the SEC?

A:        I'm committed to the work of congressional oversight, and there's a great need for it with the SEC.  Four years ago, based on information from a whistleblower and the work of my investigative staff, I spelled out in a comprehensive report (with then-Senator Arlen Specter) how the SEC Inspector General failed to investigate credible allegations by a former SEC attorney that his supervisor pulled punches in an investigation because of one Wall Street witness' political clout.  The report hit a nerve and, ultimately, the SEC attorney who blew the whistle was vindicated.  Last year, the SEC finally obtained a $28 million settlement from the capital management company in question and paid the attorney years of back pay in a settlement related to his termination.

Adding to that, last March, a new Inspector General of the SEC issued a stinging rebuke of an agency program created more than 20 years ago to help target insider trading and securities fraud by rewarding agency employees who spoke up and shared valuable information.  Last summer, knowing that the SEC missed the biggest Ponzi scheme in U.S. history in the Bernard Madoff case, a colossal mishap that might have been avoided if the SEC had paid attention to whistleblower information, Congress passed legislation I authored to dramatically beef up a whistleblower office inside the SEC.  I'm still working to make sure that office is strengthened as the law calls for, and not weakened by institutional ego.  Every source of information is needed to combat financial fraud.  Both investors and taxpayers are exposed by wrongdoing.  I want to see the SEC embrace whistleblowers because they can help with the mission.  Whistleblowers could help stop another Madoff.

Q:        How can the public have confidence that the SEC isn't too close to the industry it oversees, especially the big players?

A:        A revolving door between agency staff and the investment firms and banks they oversee has led to concerns of coziness and the soft-pedaling of potential criminal cases.  Last year, the SEC Inspector General identified cases where the revolving door appeared to be a factor in staving off enforcement actions and other types of oversight, including cases involving Bear Stearns and the Stanford Ponzi scheme.  I offered an amendment to the 2010 Dodd-Frank financial services reform bill to extend the cooling-off period at financial agencies to two years and to require a list of former agency employees who are representing clients before their former agencies.  Unfortunately, my amendment was blocked by the bill sponsors.  These reforms plus better record-keeping by the SEC are needed to help maintain the regulator's integrity and preserve the public trust in a balanced playing field.

This year, I'm working to make sure the SEC is held accountable for what it does with referrals of suspicious trading activity from one of the biggest and most powerful hedge funds.  How the SEC handled specific referrals will shed light on how the enforcement system works.

I also highlighted the big divide between the stated policy of the SEC and its actual practice of providing information to the securities industry about the criminal law enforcement intentions of the Department of Justice.  The SEC enforcement manual, which was revised after the 2007 Grassley-Specter report, is undermined if the SEC relays to potential targets of investigation exactly what the Justice Department has in store for them.

Separately, I've helped to shed light on the actions of the SEC's former General Counsel David Becker.  After missing the Madoff scam, the top leadership of the SEC let one of its own who profited from a Madoff account craft the commission's position on how to treat Madoff victims.  The agency let this major conflict of interest slide and then tried to cover it up.  After a comprehensive report, the Inspector General has referred Mr. Becker's case to the Justice Department, but the SEC's ethical standards need to be stronger, consistent and uniformly applied from the executive suite to the rank-and-file employees.

 

Q:        Where else have you scrutinized what's going on inside the SEC?

A:        This year, an enforcement lawyer at the agency wrote to me and outlined what he said was the agency's destruction of least 9,000 files between 1993 and 2010, all related to initial inquiries into possible wrongdoing on Wall Street.  The lawyer said these files were destroyed as a routine matter of internal SEC policy, but that the shredding might have compromised enforcement cases against Madoff, Goldman Sachs, Wells Fargo, Bank of America, Deutsche Bank, Lehman Brothers, and the SAC Capital hedge fund.  I pressed for a full accounting.  In response, the National Archives said the SEC "did not have the authority to dispose of" the records in question under federal law.  And, the SEC directed staff to stop destroying preliminary investigative documents until further notice.  Keeping records is common sense in law enforcement.  You never know what might be valuable information.  Complete records also may help keep the agency honest and inoculate against compromised ethics and biases.

The promises of financial system reform will be empty if the top enforcement agency for free and fair markets is ineffective.  I will continue to work for accountability and necessary reforms of the SEC.

 

Friday, September 23, 2011

During his weekly video address, Senator Chuck Grassley discusses the Senate hearing this week on whether Google's search engine is being used to unfairly reduce competition in the marketplace.

Here is the text of the address:

This week I participated in a subcommittee hearing of the Senate Judiciary Subcommittee about Google, and whether its search engine is shutting out competitors.

Iowa businesses - both big and small - depend on open and fair access to the internet to reach potential customers and to expand their businesses.

I've heard from Iowans who are concerned that Google is unfairly using its market power to manipulate internet searches, and drive web traffic to its own sites to the detriment of small businesses and consumers.  They're frustrated by the lack of transparency.  They're concerned that Google is engaging in anti-competitive behavior.

I've also heard from Iowans who support Google products and services.  These people rely on the products and services to access customers and grow their businesses.  They're concerned that the federal government is being overly aggressive, and will place burdensome rules and regulations on a company that is creating good jobs and innovative consumer tools for Iowans.

The federal government's job isn't to pick winners and losers.  And, we shouldn't be penalizing successful companies that are innovating, providing cost-effective and productive services, and creating the jobs of the future.  At the same time, companies should not take unfair advantage of their market power, use their dominance to quash worthy competitors, and engage in deceptive business practices that negatively impact the marketplace, small businesses and consumers.

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Feinstein, Grassley Release Senate Caucus on International Narcotics Control

Report on Central America Violence

Outlines strategies for Congress, administration to help reduce violence, improve security in Central America

Washington?U.S. Senators Dianne Feinstein (D-Calif.) and Chuck Grassley (R-Iowa), co-chairs of the Senate Caucus on International Narcotics Control, today released Responding to Violence in Central America, a new report outlining key steps that the United States can take to support Central America to help reduce escalating drug-related violence.

The murder rates in Central America last year were significantly higher than Mexico. In 2010, there were 18 homicides per 100,000 people in Mexico. In comparison, there were 50 murders per 100,000 people in Guatemala, 66 in El Salvador and 77 in Honduras.

"Violence in Central America has reached crisis levels as drug trafficking organizations, youth gangs and other illegal criminal groups take advantage of weak governance and underperforming justice systems," said Senator Feinstein. "Like Mexico, Central America's location between the world's largest producers of illicit drugs in South America and the world's largest drug consuming nation in the United States makes it particularly vulnerable to drug traffickers. It will only escalate if we do not take action."

"The violence in Central America is beyond what anyone can imagine," said Senator Grassley. "This report recognizes the proliferation of the Mexican drug cartels seeking to expand into Central America and the impact that has on the citizens in Central America, Mexico and the United States. In addition, the report discusses steps that the United States can take to help the Central American nations stand on their feet to combat the drug cartels that are seeking to expand into areas where the governments are unable to respond. It's also important to recognize the economic situation facing our own country, so we pay special attention to focus on ways where we can have great influence with as little fiscal effect as possible."

The report recommends:

Expand Vetted Units

·           Expansion of vetted law enforcement units which work with the Drug Enforcement Administration?known as Sensitive Investigative Units?to all seven countries in Central America.

·           Vetted units provide a trusted partner to U.S. law enforcement in countries where corruption is often rampant.

Speed up Security Assistance

·           Speed up the arrival of security assistance by the State Department to Central America by changing it from being managed remotely by the U.S. Embassy in Mexico to allowing it to be managed directly by each of the U.S. embassies in Central America.

Increase Drug Traffickers' Extraditions

·           Increase the extradition to the United States of Central America nationals who are involved in international drug trafficking.

·           Currently, Panama, Honduras and Costa Rica will not extradite their nationals to the United States.

·           Extradition from Mexico to the United States has been a critical tool in combating Mexican drug trafficking organizations. Bringing these fugitives to the United States for prosecution ensures that they cannot evade justice through bribes or threats of violence in their home countries.

Support Witness, Judge and Prosecutor Protection Programs

·           Use existing State Department and USAID funds to provide support for witness, judge and prosecutor protection programs in Central America.

·           Far too often, witnesses in Central America are afraid to testify at hearings because of corruption in the judicial system and fear of retaliation. Judges and prosecutors are equally afraid to pursue cases against high-profile criminals.

Map Sources of Violence

·           Map the causes and sources of violence in the region. Without a clear understanding of the causes and sources of violence, it will be difficult to provide relevant solutions to the security situation in Central America.

Reduce the U.S. Demand for Drugs

·           Senators Feinstein and Grassley and have asked the Government Accountability Office to conduct a study to evaluate the successes and shortcomings of drug prevention and treatment programs in the United States.

·           Drug consumption in the United States fuels violence in Central America. The United States continues to be the world's largest consumer of illegal drugs. The 2010 National Survey on Drug Use and Health found that 22.6 million Americans aged 12 or older were current illegal drug users.

The report is endorsed by all seven members of the Senate Caucus on International Narcotics Control and makes several recommendations based on information gathered through visits to Guatemala and Honduras, briefings, interviews and a review of documents from government and non-government experts.

The entire report can be found by clicking here.

Prepared Statement of Senator Chuck Grassley

Senate Committee on the Judiciary

Subcommittee on Antitrust, Competition Policy and Consumer Rights

"The Power of Google: Serving Consumers or Threatening Competition?"

Wednesday, September 21, 2011

Chairman Kohl and Senator Lee, I appreciate you holding this antitrust oversight hearing this afternoon.  I know that people back in my home state of Iowa are following what is going on in this committee room with interest.  That's because in rural Iowa, many companies - both big and small - depend on open and fair access to the internet to reach potential customers and to expand their businesses.

I've heard from Iowans who are concerned that Google is unfairly using its market power to manipulate internet search and drive web traffic to its own sites to the detriment of small businesses and consumers.  They are frustrated by business practices that are not transparent or fair.  They are concerned that Google is engaging in anti-competitive behavior that is thwarting a competitive marketplace.

However, I've also heard from Iowans who are extremely supportive of Google's products and services.  These people rely on those products and services to access customers and grow their businesses.  They are concerned that the federal government is being overly aggressive, and will place burdensome rules and regulations on a company that is creating good jobs and innovative consumer tools for Iowans.

I agree that we should not be penalizing successful companies that are innovating, providing cost-effective and productive services, and creating the jobs of the future.  I agree with those constituents that tell me that "it is important to let the free market continue to work, and for consumers to be able to freely choose which online services they use" because "this is a better way to provide additional entrepreneurship and job growth."

However, I also believe that companies should not take unfair advantage of their market power, use their dominance to quash worthy competitors, and engage in deceptive business practices that negatively impact the marketplace, small businesses and consumers.  The government should not be imposing burdensome regulations or "picking winners and losers."  Yet, the antitrust laws have a role to play in ensuring that there is a level playing field for all.  I don't have a problem with companies being fierce competitors - however, all companies must play by the rules.  Companies should employ open, fair and transparent business practices that do not harm competition or impede consumer choice.

So I come to this hearing to ask questions from both sides.  I'm here to listen and ask questions raised by my constituents.  I'm here to make sure that the voices of Iowans are heard in this discussion.  Thank you.

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WASHINGTON --- September 20, 2011 - Legislation authored by Senator Chuck Grassley today won unanimous approval of the Finance Committee as part of a larger proposal to extend federal child and family services programs.

Grassley's initiative involves regional partnership grants which are competitively distributed by the Administration on Children, Youth, and Families in the U.S. Department of Health and Human Services.  The grants are used to improve the safety, permanency and well-being of children who are not in their homes or are likely to be removed from their homes because of substance abuse by their parents.  The proposal advanced today by the Finance Committee reauthorizes the grant program for five years along with Grassley's provision that would allow current grant recipients to pursue a two-year grant extension.  He said this would help to prevent any lapse where the program is making a positive difference.

"In the many years that I've been working on child welfare issues, especially for children in the foster care system, so many young people have told me what they want most of all is a mom and dad and a permanent, loving home," Grassley said.  "These grants help to keep families together, when possible, so that children are not subjected to the many difficulties that they face in the foster care system."

Since the regional partnership grant program was last reauthorized in 2007, 53 grants have been awarded to partnerships covering 29 states and six tribes.  More than 8,000 adults and 12,000 children have been served by the grants.  The grants support family treatment drug courts, better system-wide collaboration, family-centered treatment, evidence-based practice approaches, parent advocates, and drug treatment monitoring.

The Commissioner of the Administration on Children, Youth, and Families has said that the grants help to discharge children from the foster care system at a faster rate because families are more likely to be reunified within 12 months and are more likely to stay that way after 12 months.

Grassley said his legislation this year also includes a five percent cap on administrative expenses for the grants.

"These grants have helped to bring back together families torn apart by substance abuse," Grassley said.  "Substance abuse is one of the leading reasons why children are forced into the foster care system.  Long term, those kids benefit tremendously if foster care can be avoided or, at the very least, be a short-term detour, with family reunification and, when necessary, adoption."

The legislation included in the overall package passed in the Finance Committee today was part of a bill that Grassley introduced in June, the Partners for Stable Families and Foster Youth Affected by Methamphetamine or Other Substance Abuse Act (S.1234).  The regional partnership grants were created by legislation Grassley authored and moved through the Finance Committee as Chairman in 2006, the Promoting Safe and Stable Families Act.

"Passage of the law in 2006 was a big step forward in efforts to help the young people in the foster care system," Grassley said.

 

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Tuesday, Sept. 20, 2011

Sen. Chuck Grassley of Iowa today made the following comment on the report from the Securities and Exchange Commission inspector general on the agency's former general counsel's actions in the Bernard Madoff fraud case.  Grassley, a long-time watchdog of making sure the agency does its job, earlier this year urged the agency to account for its actions in this matter.

"First, the SEC missed the Madoff scam.  Then, the SEC was tone-deaf to Madoff victims.  It let a top SEC employee who profited from a Madoff account craft the commission's position on how to treat Madoff victims.  It's hard to see how the agency could have let such a major conflict of interest slide.  The SEC needs to reform its ethics polices top to bottom.  The consequences of a haphazard approach are clear.  Public confidence in the agency's ability to do its job of protecting investors is undermined by slipshod work.  The SEC needs to make sure nothing like this happens again."

Monday, September 19, 2011

WASHINGTON – Senator Chuck Grassley said today that internships in his Washington, D.C., and Iowa offices are available for college-age Iowans.

Grassley said he encourages all young Iowans who are interested in learning more about government to apply.  The next internship session begins in January.  Applications should be submitted by October 15.

"Spending a semester working in a congressional office is a good way for college students and new graduates to learn more about the legislative branch of the federal government while gaining valuable work experience," Grassley said.  "Exposure to the work of a Senate office can enhance a college education and make students more competitive job applicants when they graduate.  These internships are available to students in all areas of study."

Full- and part-time internships are available for Iowans in Grassley's offices in Washington, D.C., Cedar Rapids, Council Bluffs, Davenport, Des Moines, Sioux City and Waterloo.  The next session of internships runs from January through May.  Interns assist staff members with administrative, legislative and communications work, including that of Grassley's staff on the Senate Committee on the Judiciary, where he serves as Ranking Member.

This summer, Grassley interns in the Washington office produced a video describing their experience.  Click here to watch.

Application forms are available on Grassley's Senate website, in the placement offices of many Iowa colleges and universities, and in Grassley's offices in Iowa. Due to security-related delays in postal mail delivery to U.S. Senate office buildings, internship applications should be faxed to 202-224-5136 or emailed to intern_applications@grassley.senate.gov.  For more information, send messages to intern_applications@grassley.senate.gov or call 202-224-3744.

 

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Friday, September 16, 2011

Grassley, Franken Win Passage of Common SenseAmendment to Curb Over-Criminalization

WASHINGTON - Senators Chuck Grassley and Al Franken won approval of a common sense amendment that would clarify that the definition of "exceeds authorized access" in the Computer Fraud and Abuse Act does not include violations of internet terms of service agreements or non-government employment agreements restricting computer access.

The amendment was accepted by voice vote to the Personal Data Privacy and Security Act that is being considered by the Senate Judiciary Committee.

"When we sit down at home or at work, we check our email, read the news and generally go about our routine.  What we don't know is that we may be in violation of federal criminal law based upon a violation of internet terms of service agreements or employment agreements for misusing computers," Grassley said.  "This is a common sense solution that helps clean up some of the expansive provisions of our criminal code and ensures that innocent computer users are not federal criminals."

"Our laws should protect people?not turn them into criminals for doing something as basic as checking Facebook or their Fantasy Football scores," said Franken. "The amendment I introduced with Sen. Grassley does something very simple: it makes sure that if the only thing you've done wrong is violate a website's Terms of Service or your employer's computer use policy, you can't be charged with a crime or sued in federal court."

Under a reading of current law argued in federal court by the Department of Justice, something as simple as checking your personal email account at work may be against the law.  By extension, this reading could also make it a federal felony for a father to use his son's Facebook password to log into the son's Facebook account and check messages and photos; for a 17 year-old to claim she is 18 in order to sell goods in certain online marketplaces; or even for using instant messenger on a computer at work.

Two recent criminal prosecutions brought by the Justice Department in California that have argued breaching terms of service on websites is a violation of federal law.  Legal commentators have criticized these prosecutions as an overreach of the Computer Fraud and Abuse Act.  They point out that this expansion of the law could lead to criminalizing any misuse of an internet website terms of service agreement.

 

 

Q&A:  Federal Regulations

Q:        What specific steps can Congress take to reduce federal regulations that undermine job creation?

A:        I've co-sponsored several bills aimed at the growing regulatory burden and its negative impact on job creation. One would require Congress to give final approval to major, new federal regulations before those regulations could take effect.  It's called the REINS Act, or Regulations from the Executive In Need of Scrutiny Act (S.299).  The Constitution vests all legislative power in the Congress yet, year after year, Congress passes legislation that delegates more power to the executive branch without really assessing the full impact of those laws and how that power is used.  As a result, federal agencies are increasingly bypassing Congress by imposing new regulations that Congress never intended.  The REINS Act would establish greater accountability for major regulations handed down from the executive branch and restore checks and balances in our system of government that have been eroded.

I've co-sponsored another bill - the Regulation Moratorium and Jobs Preservation Act of 2011 (S.1438) - that would prohibit federal agencies from taking any significant regulatory action until the unemployment rate falls below 7.8 percent.  The unemployment rate was 7.8 percent the day the President took office.  Today, it's 9.1 percent.  The moratorium in this proposal would apply to any federal rule or guidance with an effect of $1 million or more on the economy.  There were 144 rules with this sort of significant impact proposed in the first six months of 2011.

I've also sponsored a bill to prevent the Environmental Protection Agency from regulating dust in rural America while maintaining the protections to public health under the Clean Air Act.  I've brought the EPA Administrator to Iowa and argued for years now about the ridiculousness of the EPA's trying to regulate the dust kicked up by a tractor in the field or a car on a gravel road, but the EPA hasn't given up its effort to regulate rural dust.  The Farm Dust Regulation Prevention Act (S.1528) says that the EPA can't lower the level of dust allowed under what it calls a particulate standard without showing there is a substantial health risk caused by farm dust, and that the lowering of the level allowed has a benefit that's greater than the economic harm it would cause.  The Clean Air Act does not currently differentiate between urban and rural dust, so the bill provides the EPA with a distinction between the two for implementation of air quality standards.  It's unfair and excessive for the EPA to put the kind of expensive, stringent standards it's been pursuing on rural America.

Q:        Why is there so much frustration at the grass roots right now regarding federal regulations?

A:        A tidal wave of new regulations is hitting the private sector, especially in health care, energy and the financial areas.  In 2010 alone, 3,573 new federal rules were finalized.  Unlike taxes and spending, the costs that the private sector pays to comply with federal regulations are not accounted for in the federal budget process.  For employers, the uncertainty about what the real impact and cost of these regulations will be - on top of uncertainty about how taxes could go up -- makes it much harder to move forward with investments and the kind of economic activity that retains and creates jobs.  In January, the President announced a comprehensive review of government regulations that are outdated or just don't work.  There was hope that concrete action by the administration could make a difference.  Unfortunately, the regulatory rollback based on the review, announced in August, might be too weak to make a dent, especially in the face of emerging regulations, such as those stemming from the 2010 health care law.  Congress needs to stay on top of the regulatory process in the executive branch, meeting its responsibilities for congressional oversight, and take legislative action to make the regulatory system less burdensome on America's economy.

Friday, September 16, 2011

 

 

Prepared Statement of Ranking Member Chuck Grassley

Senate Committee on the Judiciary Committee

Executive Business Meeting, Thursday, September 15, 2011

Mr. Chairman,

Both S.1151, the Personal Data Privacy and Security Act and S.1408, the Data Breach Notification Act will have a major impact on the way private sector businesses operate.  I'm concerned that given over 9 percent unemployment and a renewed focus in Washington on creating jobs, this legislation may have the opposite effect.

While we've focused on protecting information, we've not focused on protecting jobs.  This bill will likely drive up costs through even more burdensome regulations.  A company that hasn't even suffered a breach may find itself unable to afford compliance with this bill's new requirements.  Small businesses, which create most of the jobs in this country, may end up closing, or at least not hiring, when they've done nothing wrong.  We need to be smart with new regulatory burdens to ensure that consumers are truly protected, while fostering economic growth and not stifling it

To address these concerns, there are a number of amendments filed to both bills, including several that I have filed.  My amendments to S.1151 impact both the criminal and data breach portions of the bill.

Before discussing the bills, I want to reiterate a concern I raised last week regarding the Committee's approach to Cybersecurity legislation.  Specifically, both Majority Leader Reid and Minority Leader McConnell have committed to a working group approach to deal with cybersecurity legislation.  The approach is designed to allow the various committees with overlapping or concurrent jurisdiction to work together and develop bi-partisan cybersecurity legislation.

So far, the working group approach has worked, with various committees agreeing to meet and discuss issues.  However, in staff discussions with other committees, like Commerce, there was some surprise that the Judiciary Committee was already marking up cybersecurity and data breach legislation, since we've all agreed to take part in the working groups.

I just want to say that while I respect this committee's jurisdiction to discuss these matters, I?like Majority Leader Reid and Minority Leader McConnell?want a comprehensive bipartisan cybersecurity bill.  I'm concerned that by marking-up this bill that touches on areas that may overlap with other committees, we could hinder the working group approach.

That said, on the criminal side of this bill, I have two amendments I intend to offer.  The first was circulated last week and involves the mandatory minimum sentence for violations of aggravated damage to a critical infrastructure computer.  This 3-year mandatory minimum penalty was requested by the White House as part of President Obama's cybersecurity proposal.

Second, I circulated a new amendment this week and am pleased to have Senator Franken as a cosponsor.  This amendment would modify the Computer Fraud and Abuse Act to address concerns raised by two recent criminal prosecutions brought by the Justice Department.

I think many Americans would be shocked to hear that every day, they may be violating federal criminal law without knowing it, simply by violating website service agreements or employee computer access agreements.

The Grassley-Franken amendment we'll be offering today simply clarifies that the definition of "exceeds authorized access" in the Computer Fraud and Abuse Act does not include violations of internet terms of service agreements or non-government employment agreements restricting computer access.    It's a common sense amendment that helps clean up some of the expansive provisions of our criminal code.

I also have amendments to the data breach portions of S.1151.  We must protect the personal and financial information of individuals collected in company databases.  I stated last week that solving this problem is something everyone supports.  However, determining how to do this in a way that balances the interests of both consumers and businesses makes for a difficult task.

We must work to not overburden small and large businesses with new, costly regulations.  Notice requirements must be constructive.  Notice should not include burdensome requirements where there is little or no risk of identity theft.

The enforcement and liability provisions shouldn't create the potential for abuse from overzealous prosecution.  The provisions in this bill run the risk of abuse and inconsistent enforcement.  These and other issues need to be resolved.

Today, the bill we consider has in some ways improved over previous versions.  However, it has expanded in other areas and this gives me concern.

I am pleased to see that the manager's amendment has removed the Federal Trade Commission's authority to modify the definition of sensitive personal information.  However, problems still remain.

A broad definition will impact small businesses, which are subject to the same strict liability requirements and high penalties as large businesses, but without the same large resources.  At a time when we're working to create jobs, these burdensome requirements will be a step in the wrong direction.

This bill requires notice when there's a significant risk that a breach may or has resulted in "identity theft, economic loss or harm, or physical harm."  There's enough vagueness and breadth to cover situations that may not encompass what the drafters intended.  Given the penalties at stake, the incentive will be to err on the side of over-notification.

Thus, it is not unreasonable for me and others to be alarmed at the possibility of consumer over-notification that becomes counterproductive to what we seek to accomplish.

I'm also concerned that the safe harbor is in name only.  An over-worked Federal Trade Commission may find the easiest thing for a company to do in most instances is issue notice.

Further, I think it is troubling that this bill takes a "one size fits all" approach in requiring businesses to implement data security programs.  What works for one large company will not necessarily work for a small company.

I also have amendments to S.1408, the Data Breach Notification Act and many of my concerns with that bill are similar to those with S.1151.  I hope we can come together on these amendments and ensure that we aren't unduly burdening American businesses with further unnecessary regulations that will hinder job growth by stifling innovation.

We have a lot of work to do.  Thank you.

 

Johanns, Grassley Seek EPA Support of Farm Dust Bill

WASHINGTON - U.S. Sens. Mike Johanns (R-Neb.) and Chuck Grassley (R-Iowa) today asked Environmental Protection Agency (EPA) Administrator Lisa Jackson to provide certainty and put action behind her words of support for farmers and ranchers concerned about the potential regulation of farm dust. Johanns has introduced, and Grassley has co-sponsored, a bill that would prohibit EPA farm dust regulation. In a letter to Jackson, the senators outlined conflicting statements made by EPA and requested her support for the bill as a way to provide clarity to the agency's position.

"EPA won't hesitate to tell farmers not to worry about farm dust regulations, but when pressed further, all we hear are intentionally vague statements and mixed signals," Johanns said. "Their claims that they have no plans to regulate farm dust conflict with their statements that they're not able to distinguish farm dust from other regulated dust. If regulation of farm dust truly is a myth, as Administrator Jackson has suggested, she should debunk that myth once and for all by supporting my bill. Farmers and ranchers would applaud her for providing this certainty."

"The EPA has been giving conflicting answers and having it both ways on the dust issue for long enough. It's time for Administrator Jackson to set the record straight and put the word out to the employees of the EPA that agriculture dust is off the table," Grassley said. "When soybeans are at the right moisture level, they need to be combined, and if God determined that the wind is going to blow that day, there's absolutely nothing a farmer can do. Dust happens."

The letter to Administrator Jackson can be found here.

EPA's April 2011 Policy Assessment for the Review of the Particulate Matter National Ambient Air Quality Standards recommends doubling the severity of dust regulation. Despite this, Administrator Jackson has been reported as telling farmers any contention that EPA plans to regulate farm dust is a "myth."

However, EPA Assistant Administrator Gina McCarthy stated in an April letter that EPA's air quality standards are "not focused on any specific category of sources or any particular activity (including activities related to agriculture or rural roads)."

The Johanns-Grassley bill would thus enable EPA to consider the source of particulate matter and prohibit the agency from regulating farm dust.

 

Grassley Presses the IRS on Whistleblower Program After Report Outlines Challenges

WASHINGTON -- Sen. Chuck Grassley of Iowa today wrote to the IRS commissioner, asking a series of questions designed to help the agency improve its whistleblower operation to encourage people with information about big-dollar tax cheating to come forward and lead to the substantial recovery of tax dollars for the U.S. treasury.  Grassley's letter came after the Government Accountability Office released a report describing the barriers to complete success for the whistleblower program.

"The GAO has done a good service by providing a road map for how the IRS can improve the IRS whistleblower program and go after big-dollar tax cheating," Grassley wrote in his letter to IRS Commissioner Douglas Shulman. "Now the challenge is for the IRS and Treasury to make the changes needed to provide assurance to existing and future whistleblowers so they're not discouraged by the time needed to process their claims or by the issuance of rules that contradict well-established rules for compensation of non-tax whistleblowers.  The vast majority of taxpayers are honest.  They're the ones who benefit from a successful whistleblower program.  More tax compliance means more fairness for hardworking families who pay what they owe."

Grassley wrote the 2006 law improving the IRS whistleblower office.  He modeled the whistleblower improvements after the successful 1986 whistleblower amendments to the federal False Claims Act, which have brought back more than $27 billion to the federal treasury and deterred even more fraudulent activity.

The text of Grassley's letter is available here.  The text of Grassley's comment on the GAO report is available here.

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