WASHINGTON — Sen. Chuck Grassley today said the administration has done the right thing by changing its interpretation of the protections established for corporate whistleblowers in the Sarbanes-Oxley Act enacted last summer.

In a letter delivered on Friday, the Acting Solicitor for the Department of Labor said the department agreed with Grassley that protections applied to whistleblowers who had contact with "any member of Congress or any committee of Congress," not just those already conducting official investigations.

"I congratulate the administration for recognizing the need to make it easier for corporate whistleblowers to be protected when they speak out on wrongdoing in the boardroom," Grassley said.

The problem solved by Friday's statement came to Grassley's attention last fall. In a brief filed on September 14, 2002, the Labor Department stated that Congress has said the only disclosures protected by the new corporate whistleblower statute are those made to duly authorized congressional committees with ongoing investigations and that protections would not extend to disclosures made to individual members of Congress. The brief filed concerned whistleblower protections for U.S. attorneys under analogous federal statutes.

"The brief raised a big red flag for me," Grassley said. "The Labor Department is in charge of enforcing these new whistleblower protections. So the fact that department officials didn't know what the law provided and what, in fact, the White House Counsel's office had said about the law, was a big problem."

Grassley said the Labor Department brief would have extended whistleblower protections only to corporate employees "who are lucky enough to find the one member of Congress out of 535 who happens to be the chairman of the appropriate committee who also just happens to already be conducting an investigation, even though the problem identified may not have come to light yet. That was just nonsense."

Grassley and Sen. Patrick Leahy together sponsored the corporate whistleblower protections included in the Corporate and Auditing Accountability, Responsibility and Transparency Act of 2002. Their provisions made federal whistleblower protections available to employees of publicly traded companies for the first time ever. No such protections previously existed.

Immediately following enactment of the corporate responsibility legislation, public comments by administration officials about the terms of these whistleblower protections alarmed Grassley. He and Leahy began a dialogue with the White House Counsel's office to ensure the administration fully understood Congressional intent. The administration responded to their first letter dated July 31, 2002.

An August 1, 2002, letter from Alberto Gonzales says, "In your letter, you raised a number of concerns, including the possibility that the Act would be read to require ongoing investigations or that the disclosure relate to matters within the jurisdiction of a particular Congressional committee. However, the President's statement did not address those issues. Rather, the President's statement provides guidance to the executive branch in construing the provision only on a single, very narrow point: to the extent that Section 1514A(a)(1)(B) of Title 18 protects disclosures in an "investigation", that term will be construed solely by reference to the rules of the Congress. In other words, it is up to Congress to determine through its rules whether and how it will conduct investigations and obtain information. See U.S. Const. Art. I, Sec. 5. The new provision neither expands nor contracts Congressional investigative authority." The Counsel's office has not responded to a Grassley-Leahy follow-up letter also dated Aug. 1, 2002.

"The Labor Department needed to go back to the drawing board, and it did," Grassley said.

The Iowa senator has long championed whistleblower protections. He co-authored the 1986 update of the False Claims Act with qui tam provisions. He also co-wrote the 1989 Whistleblower Protection Act. Over the last two decades, Grassley has protected numerous whistleblowers from various federal government agencies and government contractors.

The Department of Labor's letter follows here:

Dear Senators Grassley and Leahy:

It was a pleasure meeting with your staff on January 7, 2003, to discuss issues relating to the implementation of the whistleblower provisions of the Sarbanes-Oxley Act of 2002. The President and Secretary Chao, who has responsibility to investigate and adjudicate allegations of retaliation under this law, share your view that these provisions are crucial to the federal government's efforts to combat corporate corruption.

In connection with the Department of Labor's implementation of the whistleblower protections of the Sarbanes-Oxley Act, I have reviewed a series of letters you exchanged with the Counsel to the President concerning the President's signing statement. In his December 20, 2002 letter, the Counsel to the President explained that "the President's statement took no position on whether there is whistleblower protection for employees who lawfully report wrong doing to individual members of Congress, nor did it address whether whistleblower protection would be limited to those instances where there was an ongoing investigation or the disclosure related to a matter within the jurisdiction of a particular Congressional committee." The letter also indicated that representatives of the Department would be discussing the issues with your staff.

It is the Department's view that under Sarbanes-Oxley, complaints to individual Members of Congress are protected, even if such Member is not conducting an ongoing Committee investigation within the jurisdiction of a particular Congressional committee, provided that the complaint relates to conduct that the employee reasonably believes to be a violation of one of the enumerated laws or regulations. The Department currently is finalizing the draft of an Interim Final Rule and accompanying Preamble implementing the whistleblower provisions of the Sarbanes-Oxley Act. Although it would be inappropriate for me to provide you our draft text at this time, the Department's current intention is to clarify in the published document our view that complaints to "any Member of Congress or any committee of Congress" are covered by the whistleblower provisions of the Sarbanes-Oxley Act.

Thank you for your interest in this important matter.

Sincerely,