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GAO-09-660R: 

United States Government Accountability Office: 
Washington, DC 20548: 

May 8, 2009: 

The Honorable Diane E. Watson:
Chairwoman:
Subcommittee on Government Management, Organization, and Procurement: 
Committee on Oversight and Government Reform: 
House of Representatives: 

Subject: Statutory Authorities to Prohibit Inspector General 
Activities: 

This letter provides information you requested at the March 25, 2009, 
hearing entitled The Roles and Responsibilities of Inspectors General 
within Financial Regulatory Agencies. During the hearing, the former 
Inspector General (IG) of the Department of Homeland Security (DHS) 
testified that provisions of the Inspector General Act of 1978, as 
amended (IG Act), allow the Secretary of the Department of the Treasury 
to prevent the IG from pursuing an investigation or audit, including 
the issuance of subpoenas, under certain conditions.[Footnote 1] 

Due to concerns about the possible inappropriate use of such 
authorities, you asked us to identify federal agencies that possess the 
authority under the IG Act to prohibit audits and investigations by 
their offices of inspectors general (IG offices) and to determine the 
extent to which such provisions have been used to limit the IGs's 
activities. We reviewed the IG Act to identify those IG offices subject 
to such authority and contacted each office identified to obtain 
information about the extent to which the relevant authorities had been 
exercised. In addition, we included the IG office at the Central 
Intelligence Agency (CIA), which was not established under the IG Act, 
but is subject to provisions in its enabling legislation that are 
similar to those in the IG Act.[Footnote 2] 

The IG Act provides specific protections intended to help ensure the 
independence of IG audits and investigations. For example, the IG Act 
prohibits an agency head from preventing an IG from initiating, 
carrying out, or completing any audit or investigation, or from issuing 
any subpoena during the course of any audit or investigation. However, 
the IG Act authorizes the heads of six agencies to prohibit their 
respective IGs from carrying out or completing an audit or 
investigation, or from issuing any subpoena if the head determines that 
such prohibition is necessary to prevent either the disclosure of 
certain sensitive information or significant harm to certain national 
interests. In addition, the enabling legislation for the CIA IG 
contains a provision that authorizes the CIA Director to prohibit the 
audits and investigations by the IG if the Director determines such 
prohibition is necessary to protect vital national interests of the 
United States. Table 1 shows a summary of the restrictive statutory 
provisions applicable to these seven federal agencies. 

Table 1. Departments and Agencies with Statutory Authority to Prohibit 
IG Activities: 

Agencies and departments: 1. Department of Defense (DOD); 
Statutory authority: IG Act, as amended § 8(b)(2); 
Official who may exercise authority: Secretary; 
Permissible reasons for prohibiting IG activities: Necessary to 
preserve the national security interests of the United States. 

Agencies and departments: 2. Department of the Treasury; 
Statutory authority: IG Act, as amended § 8D(a)(2); 
Official who may exercise authority: Secretary; 
Permissible reasons for prohibiting IG activities: Necessary to prevent 
the disclosure of certain information or to prevent significant 
impairment to the national interests of the United States. 

Agencies and departments: 3. Department of Homeland Security (DHS); 
Statutory authority: IG Act, as amended § 8I(a)(2); 
Official who may exercise authority: Secretary; 
Permissible reasons for prohibiting IG activities: Necessary to prevent 
the disclosure of certain information or to prevent a significant 
impairment to the interests of the United States. 

Agencies and departments: 4. Department of Justice (DOJ); 
Statutory authority: IG Act, as amended §; 8E(a)(2); 
Official who may exercise authority: Attorney General; 
Permissible reasons for prohibiting IG activities: Necessary to prevent 
the disclosure of certain information or to prevent the significant 
impairment to the national interests of the United States. 

Agencies and departments: 5. U.S. Postal Service (USPS); 
Statutory authority: IG Act, as amended §; 8G(f)(3)(A)(ii); 
Official who may exercise authority: Board of Governors; 
Permissible reasons for prohibiting IG activities: Necessary to prevent 
the disclosure of certain information or to prevent the significant 
impairment of the national interests of the United States. 

Agencies and departments: 6. Federal Reserve Board (FRB); 
Statutory authority: IG Act, as amended §; 8G(g)(3); 
Official who may exercise authority: Chairperson of the Board of 
Governors; 
Permissible reasons for prohibiting IG activities: Necessary to prevent 
the disclosure of certain information or to prevent significant 
impairment to the national interests of the United States. 

Agencies and departments: 7. Central Intelligence Agency (CIA); 
Statutory authority: 50 U.S.C. § 403q(b)(3); 
Official who may exercise authority: Director; 
Permissible reasons for prohibiting IG activities: Necessary to protect 
vital national security interests of the United States. 

Source: GAO analysis. 

[End of table] 

In 1982, Congress amended the IG Act to establish the Department of 
Defense (DOD) IG and placed the IG under the authority, direction, and 
control of the Secretary of Defense with respect to audits or 
investigations or the issuance of subpoenas that require access to 
certain information.[Footnote 3] Specifically, the Secretary of Defense 
may prohibit the DOD IG from initiating, carrying out, or completing 
such audits or investigations or from issuing a subpoena if the 
Secretary determines that the prohibition is necessary to preserve the 
national security interests of the United States. However, Congress 
required that if the Secretary exercises this authority, the DOD IG 
shall notify certain congressional committees and the Secretary then 
shall state to those committees the reasons for exercising that 
authority. 

In 1988, Congress again amended the IG Act to apply a similar provision 
at the Department of the Treasury.[Footnote 4] Congress authorized the 
Secretary of the Treasury to prohibit the Treasury IG from carrying out 
or completing an audit or investigation or from issuing a subpoena if 
the Secretary determines that it is necessary to prevent significant 
impairment to the national interest or the disclosure of certain 
sensitive information. Such information includes (1) ongoing criminal 
investigations or proceedings, (2) sensitive undercover operations, (3) 
the identity of confidential sources, including protected witnesses, 
(4) deliberations and decisions on policy matters, including documented 
information used as a basis for making policy decisions, the disclosure 
of which could reasonably be expected to have a signification influence 
on the economy or market behavior, (5) intelligence or 
counterintelligence matters, or (6) other matters the disclosure of 
which would constitute a serious threat to national security or to the 
protection of any person authorized federal protection under certain 
laws. The Treasury IG and the Secretary of the Treasury must follow a 
congressional notification process similar to that applicable to DOD. 

Similar statutory authority was provided to the agency heads at DHS, 
the Department of Justice (DOJ), the United States Postal Service 
(USPS), and the Federal Reserve Board of Governors of the Federal 
Reserve System (FRB) through amendments to the IG Act.[Footnote 5] The 
heads of these agencies and the IGs must follow congressional 
notification requirements similar to those applicable to DOD and 
Treasury. At the CIA, the Director may prohibit the work of the IG if 
the Director determines such prohibition is necessary to protect vital 
national interests of the United States. If the CIA Director prohibits 
the CIA IG's activities for reasons authorized by statute, the Director 
must submit the reasons within 7 days to the intelligence committees 
and advise the IG that such a report was submitted as well as provide a 
copy of the report to the IG that is consistent with the protection of 
intelligence sources and methods. The CIA IG may also submit comments 
considered appropriate to the intelligence committees. 

Our work was based on our March 25, 2009, testimony conducted in 
accordance with generally accepted government auditing standards. In 
addition, we reviewed the IG Act and related legislation to identify 
statutes that authorize the head of the agency to prohibit IG 
activities, and contacted the relevant IG offices to discuss 
implementation of these authorities. Based on the information provided 
by each IG office, no head of an agency, except for that of DOJ, had 
exercised the authorities in these statutes. DOJ IG staff provided 
information to show that the provisions applicable to the DOJ IG had 
been exercised once in the late 1990s to defer the release of an IG 
report containing sensitive information, and that a notification letter 
was sent to Congress.[Footnote 6] 

We are sending copies of this letter to other interested congressional 
committees; the Deputy Director for Management of the Office of 
Management and Budget; the IGs at each of the seven agencies identified 
in this letter; and the Chairperson, Council of IGs on Integrity and 
Efficiency. Copies will be made available to others upon request. This 
letter will also be available at no charge on GAO's home page at 
[hyperlink, http://www.gao.gov]. 

If you or your staff have any questions regarding this letter, please 
contact me at (202) 512-9406 or at raglands@gao.gov. Major contributors 
to this letter include Jackson Hufnagle, Assistant Director; Clarence 
Whitt, Analyst-in-Charge; Francis Dymond, Assistant General Counsel; 
and Jacquelyn Hamilton, Deputy Assistant General Counsel. 

Sincerely, 

Signed by: 

Susan Ragland:
Director:
Financial Management and Assurance: 

[End of section] 

Footnotes: 

[1] Pub. L. No. 95-452, 92 Stat. 1101 (Oct. 12, 1978), codified as 
amended at 5 U.S.C. App. 

[2] 50 U.S.C. § 403q. 

[3] 5 U.S.C. App. § 8. 

[4] 5 U.S.C. App. § 8D. 

[5] 5 U.S.C. App. §§ 8I, 8E, 8G. 

[6] In a letter dated January 23, 1998, the Attorney General exercised 
her authority under section 8E(a)(2) to direct the DOJ IG to defer 
release of a report entitled The CIA-Contra-Crack Cocaine Controversy: 
A Review of the Justice Department's Investigations and Prosecutions. 
The Attorney General stated in her letter that because the report 
contained information related to an ongoing drug investigation, she had 
determined that the release of the report at that time would lead to 
the disclosure of one or more of the categories of sensitive 
information specified in section 8E(a)(1). The IG, by a letter also 
dated January 23, 1998, notified Congress of the Attorney General's 
action. When the drug investigation was concluded several months later, 
in a letter dated July 14, 1998, the Attorney General notified the IG 
that the law enforcement concerns that had halted the release of the IG 
report were no longer applicable. On July 22, 1998, the IG publicly 
released the report without any change to the original report. A fuller 
description of the events that resulted in the Attorney General's 
decision to delay the public release of the report can be found on the 
DOJ IG's website at [hyperlink, 
http://www.usdoj.gov/oig/special/9712/epilogue.htm]. 

[End of section] 

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