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04/18/2017

Court of Appeals Upholds Decision on Reg That Will Put 60 Percent of New England Ground Fishermen Out of Business

Judges refuse to consider legal arguments, but implore Congress to clarify the law about who should pay for at-sea monitors 

Washington, D.C. – On Friday, the U.S. First Circuit Court of Appeals upheld the District Court’s ruling last summer that a lawsuit filed by Cause of Action Institute (CoA Institute) on behalf of Plaintiffs David Goethel and Northeast Fishery Sector 13 against the U.S. Department of Commerce should be dismissed.

In its opinion, the Court found that the fishermen’s suit was untimely and therefore did not consider the Plaintiff’s legal arguments that requiring fishermen to pay for monitors is against the law.  However, in a rare move, the judges highlighted the devastating economic impacts of the regulation in question, and urged Congress to clarify the law and who should pay for the at-sea monitors.

“I am disappointed by the decision,” Goethel said. “But I’m hopeful that Congress will heed the Court’s direction and clarify the law. It is the government’s obligation to pay for these at-sea monitors. I’ve made a living fishing in New England for more than 30 years and I have never exceeded a single fishing quota. But I can’t afford to fish if I am forced to pay for at-sea monitors.  I’m grateful to Cause of Action Institute for bringing this case forward, and I remain hopeful that Congress will clarify the law to ensure the New England groundfishing industry is not regulated out of existence.”

Northeast Fishery Sector 13 Manager John Haran said, “I’m disappointed that timeliness of the case was the Court’s deciding factor and not the merits of our arguments. The fishermen in my sector can’t sustain this industry funding requirement and many will be put out of business if this mandate remains in place.”

Cause of Action Vice President Julie Smith said, “We are disappointed that the First Circuit did not reach the merits of our case.  While we respect the opinion of the First Circuit, the federal government is clearly overextending its regulatory power and is destroying an industry.  We are considering all of our legal options for judicial review on the merits.  We also encourage Congress and the Administration to act swiftly to ensure that these unlawful regulatory costs do not put an end to the tradition of generations of proud fishermen in New England.”

Background:

In December 2015, the Department of Commerce ordered that fishermen who fish for cod, flounder and certain other fish in the Northeast United States not only must carry National Oceanic and Atmospheric Administration (“NOAA”) enforcement contractors known as “at-sea monitors” on their vessels during fishing trips, but must pay out-of-pocket for the cost of those monitors.  This “industry funding” requirement would devastate the Northeast fishing industry, at the price of many jobs and livelihoods.  The opinion by the First Circuit upholds the lower court’s decision and allows this job-killing mandate to remain in place.

To learn more, visit the Cause of Action Institute website.

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: zachary.kurz@causeofaction.org

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04/12/2017

Withdraw Unlawful Plan Forcing Fishermen to Pay for At-Sea Monitors

Washington, D.C. – Cause of Action Institute (“CoA Institute”)  has submitted a regulatory comment to the New England Fishery Management Council (“NEFMC”) questioning the Council’s legal authority to move forward a controversial amendment that would force more fishermen to pay for costly at-sea monitors, which are the government’s responsibility.  CoA Institute advised the NEFMC to abandon the Omnibus Amendment, which would imperil an already hard-hit fishing industry by requiring certain fishermen to pay for monitors to police their at-sea activity.  The plan would also open more regional Atlantic fisheries to industry-funded monitors. 

“The Omnibus Amendment is unlawful and will make it virtually impossible for countless small-business fishermen to pursue their livelihood,” said Julie Smith, CoA Institute Vice President. “Many of these fishermen come from families that have fished American coastal waters for generations.  The federal government should not regulate them out of business. Congress has not authorized it and the economic consequences are too dire. If an agency lacks statutory authority or appropriated funds, it has no power to act. The New England Council should withdraw the Omnibus Amendment.”

The cost for a monitor under the amendment is expected to range from $710 to $818 per day at sea.  That would exceed the revenue a fisherman typically lands from his daily catch. 

CoA Institute represents fishermen challenging another industry-funded monitoring program in the Northeast groundfish fishery.  In that case, a government study predicted that industry-funded monitoring would result in up to 60 percent of mostly small-scale vessels going out of business—a result that the government blithely characterized as a “restructuring” of the groundfish fleet.  Learn more about the case HERE

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: zachary.kurz@causeofaction.org

 

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04/4/2017

A Former IRS Official Chimes In – and Reminds Us Why Change is Necessary

In a letter published earlier this week by the EO Tax Journal, a former branch chief of the IRS Exempt Organizations Division, inadvertently confirmed just what our recent report argued – that the IRS is focused on its own reputation, not its duty to taxpayers.  Conrad Rosenberg, who retired from the agency 20 years ago, doesn’t seem to realize that government agencies have a purpose beyond avoiding criticism:

I find a certain irony in the complaints about the IRS’ use of Sensitive Case Reports to alert upper management about potentially controversial rulings. Imagine the cries of anger and incredulity if the Service issued some ruling that received notoriety in the media.  The very same complainants would be issuing furious pronouncements along these lines: “What!  How is it possible that this terrible mistake never received attention above the level of a GS-13 reviewer?  Surely you don’t expect us to believe that!  Sheer incompetence!  Why weren’t responsible managers rung in on this decision?!”

This letter is a failure of logic and of law. Your rights do not vary based on how “potentially controversial” you are in the eyes of the media, Congress, or the IRS itself.  An organization either satisfies the law’s requirements for tax-exempt status, or it does not.  By trying to concern itself with predicting controversy instead of determining tax status, the IRS risks becomingly overly focused on organizations opposed to a current administration – as was amply demonstrated by the number of “Tea Party” and “patriot” groups treated inappropriately merely because of their names.

The letter is also a prime example of how the government solution to bad government is always more government. Low level staffers were not the ones making “terrible mistakes” in the targeting scandal – in fact, because of the Internal Revenue Manual (IRM) rule discussed in our report, they weren’t making many decisions at all.  They were forced to look upward if an application “might receive media of Congressional attention,” a fact irrelevant to the application’s merit but very relevant to the job prospects of IRS management.

The targeting scandal is not a story of insufficient oversight by senior leaders but of suffocating micromanagement from them. The kind of “cries of anger and incredulity” that Mr. Rosenberg mocks were due to years-long delays and invasive questioning that improperly prevented concerned citizens – including more than one Occupy organization – from fully joining in the democratic process.  Those delays were not caused by junior staffers twiddling their thumbs but by IRS leaders who insisted on centralizing the decision-making.

In the free time taxpayers will inevitably have waiting for the IRS to process their applications, they may find it interesting that the GS-13 employees portrayed by Mr. Rosenberg as too junior to be publicly trusted with doing their job will be paid as much as $127,000 this year.  At what point do they become trustworthy?  $150,000?  $200,000?  Refusing to let these employees make decisions does not increase the quality of the process, only the length of it.

Lastly, our report explains that the other criteria specified by the IRM for issuing Sensitive Case Reports “fall comfortably within the agency’s area of expertise: whether an application affects a large number of taxpayers, presents unique tax issues, or involves $10 million or more.” We are not against the IRS being diligent; we are against it continuing to use internal rules that have nothing to do with the laws it is empowered to enforce.  Criticism of the IRS is not such a terrible outcome that all else must be sacrificed to prevent it, particularly when taxpayers are the ones suffering the brunt of the sacrifice.

John McGlothlin is counsel at Cause of Action Institute

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04/3/2017

WSJ’s James Taranto on FOX News discusses our IRS targeting report

Hits&Misses

James Taranto: A miss to the Internal Revenue Service which claims to have ended the ideological targeting of non-profit organizations. But as the Cause of Action Institute points out, the rule that enabled this targeting is still on the books. It tells agents to investigate any non-profit that might, and I quote, “attract media or congressional attention,” which suggests the IRS is more interested in protecting its image than the rights of Americans.

You can access our full report, “Sensitive Case Reports: A Hidden Cause of the IRS Targeting Scandal” HERE

 

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03/31/2017

The IRS Responds to Our Report on Targeting – but Misses the Point

As detailed in our recent report, the IRS targeting scandal has a hidden cause which remains unaddressed to this day – a rule in the agency’s own manual that directs employees to treat applications differently if they might “generate media or Congressional attention.”  This rule is what initially prompted low-level IRS tax specialists to hold up applications from Tea Party groups, ultimately resulting in both years of delays for taxpayers and widespread embarrassment for the agency.

The report was accompanied by an op-ed in the Wall Street Journal and was reported on by, among other outlets, Fox News and the EO Tax Journal.  Both of these news reports included quotes from an IRS statement responding to our findings – or at least the agency’s interpretation of them.  Although the aggressive tone of the IRS response surprised the editor of the EO Tax Journal, it serves as a classic example of the bureaucratic mindset that led to the targeting scandal happening in the first place.  Here is the IRS statement in full, as reported in the EO Tax Journal:

“The IRS strongly disputes the [Cause of Action] report and any suggestion or allegation that Exempt Organizations is targeting taxpayers. The IRS emphasizes that this point has been confirmed by independent third parties, including the Treasury Inspector General for Tax Administration. There should be absolutely no doubt on that point, and the continuing commitment by the IRS to be guided by the tax law and nothing else.”

“[Sensitive Case Reports] are used within the IRS to bring to upper management’s attention cases that may generate press or Congressional attention, present unique or novel issues, or affect large numbers of taxpayers. It’s important to note that IRS internal guidelines on sensitive case reports do not instruct the employees to stop working a case or direct employees on how to work a case.

It is head-spinning that the IRS can argue in one sentence that it should be guided by tax law “and nothing else” and then insist in the very next sentence that it is proper to consider “press or Congressional attention” as a criterion, delaying a final decision on tax-exempt applications as a result.  The only purpose of this rule is to avoid possible embarrassment.  Yet an application for tax exempt status is no more related to the notoriety of the applicant than a driver’s license is to the fame of the driver – if you pass the test, you should get the status

The problem with rules that mandate this kind of PR-minded defensiveness is that, as amply documented by the many investigations into the targeting scandal, it drags the application process through multiple echelons of bureaucracy and involves higher officials with strong political leanings. The IRS’s statement claims that it was absolved by the Treasury Inspector General for Tax Administration (TIGTA), but in reality, a report from that office repeatedly criticized the IRS for “using inappropriate criteria” to scrutinize applications – criteria which ended up focusing overwhelmingly on political opponents of the administration in power.  IRS officials insisted on seeing every application from Tea Party-affiliated groups because of the “media attention” they were attracting, and as shown in the same TIGTA report, the result was an endless array of delays and invasive questioning.

John McGlothlin is counsel at Cause of Action Institute

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03/31/2017

Hundreds of Regs Vulnerable to Repeal under Congressional Review Act

Washington D.C. – Cause of Action Institute (“CoA Institute”) today released a list of 835 economically significant rules and regulations that are susceptible to repeal under the Congressional Review Act (“CRA”). While there is a 60-day statutory limit for rules to be reviewed by Congress under the CRA, hundreds of rules have not been properly reported to Congress giving the Trump administration an unprecedented opportunity to repeal costly rules dating all the way back to 1996 when the CRA was first signed into law.

“While Congress is currently reviewing and disapproving numerous regulations from the last year of the Obama Administration, we believe the CRA provides a broader opportunity and Congress should begin examining the rules we’ve identified as well,” said John Vecchione, Cause of Action Institute President and CEO.

Read Cause of Action Institute’s column in The Hill for more information on the CRA and how the Trump administration can pursue an aggressive anti-regulatory agenda by coordinating with Congress.

The Hill

The Congressional Review Act and a Deregulatory Agenda for Trump’s Second Year

By John J. Vecchione

A cold front may have killed-off nearly half of D.C.’s famous cherry blossoms, but Washington gridlock has emerged in full bloom. With the defeat of the Republican “repeal and replace” bill in the House, and the Democrats’ united opposition to the president’s agenda, it’s looking increasingly difficult for Congress to get things done.  Fortunately, there exists a stimulatory, free market weapon in the hands of the Congress and the President to stay on the offensive on deregulating and freeing the economy.

By simple majority vote, the Congressional Review Act (“CRA”) can overturn any regulation that affects a third-party. This is a powerful and underutilized tool. The CRA is not subject to the filibuster and provides the majority with a vast deregulatory agenda with a high chance of success.  Read More

CoA Institute is partnering with Pacific Legal Foundation and several other organizations on the Red Tape Rollback project, an effort to identify rules that have not been properly reported to Congress under the CRA.

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: zachary.kurz@causeofaction.org

 

 

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03/31/2017

FOX News: IRS still allowed to target political groups, according to watchdog org

fox_news

IRS still allowed to target political groups, according to watchdog org

FoxNews.com

The IRS is still able to target certain political groups despite being publicly exposed for the unfair practice more than five years ago, according to a new report by a watchdog group.

A rule in place at the IRS allows the federal agency to delay the applications of non-profit groups looking for tax-exempt status, claims the Washington-based Cause of Action in its report, “A Hidden Cause of the IRS Targeting Scandal.” The IRS admitted in 2013 that leading up to the 2012 election the agency unfairly targeted right-leaning groups as well as those with “Tea Party” or “patriot” in their name. More than five years after the practice was exposed, Cause of Action says the IRS has not made changes to end the practice.

“The regulation that allows them to do this is still there,” John Vecchione, executive director of Cause of Action told Fox News. “It’s bureaucratic inertia until someone makes a change.” Read More

 

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