Senator seeks secret memo used as ‘loophole’ for Obama regs

The Obama administration is facing pressure from Congress to release a secret Reagan-era memo allegedly used to this day to shield a slew of executive actions and regulations from congressional scrutiny.

At issue is a 1983 memorandum of understanding (MOU) that permits the Treasury Department to “escape” a review of economic costs and benefits when it comes to IRS rules.

Sen. Orrin Hatch, R-Utah, says this has helped the administration pursue a range of unilateral changes – and he wants the memo made public.

“This non-public MOU between the Treasury and White House further cloaks the regulatory process in secrecy and decreases regulatory transparency at a time when the Executive Branch is attempting to achieve a great deal of policy through regulatory measures generally and tax regulations specifically,” Hatch wrote to Treasury Secretary Jacob Lew.

In the letter, the chairman of the Senate Finance Committee argued the memo has been used by the Executive Branch to skirt congressional scrutiny for changes on everything from corporate taxes to ObamaCare. Committee sources told the memo is a “loophole” being abused in order to reduce transparency.

According to Hatch, the 1983 guidance generally allows IRS rules to get around what’s known as the Congressional Review Act (CRA).

Under that law, Congress typically has the authority to review and rescind “major” federal regulations -- those with an annual economic impact of $100 million or more. If a rule is listed as “non-major,” the cost-benefit analysis is not required.

Here’s the rub: The 1983 memo, according to Hatch, generally describes IRS rules as not “major.”

This may have helped smooth the way for major regulations. In fact, neither the Employee Individual Health Care Mandate nor the Employee Health Care Mandate was listed as major by the administration or agencies.

Hatch said, given the sheer number of regulations, more scrutiny is needed by Congress. In his letter, he cited as an example a rule that controls the type of font companies can use for the word “turkey” when marketing “turkey ham.”

But it is larger issues that are of real concern. Committee sources note the memo takes on new importance in light of a host of new regulations issued by the Treasury Department aimed at tackling corporate inversions.

Hatch said he recognized why the IRS would want to issue new rules without undue interference from the Office of Management and Budget (OMB), but those justifications do not allay his concerns.

The letter was first reported by The Washington Times.

Sam Batkins, director of regulatory policy with the conservative American Action Forum (run by former Congressional Budget Office head Doug Holtz-Eakin), said the memo may have been originally used to let the IRS make “ministerial” changes to tax law that occur annually.

“If you were to tell the average person that the Congress has not been able to vote on any major tax proposed by the administration, I think they would be very surprised,” Batkins said.

The office learned of the memo through correspondence between the committee and the administration.

The Treasury Department has until May 12 to respond. A representative with the department did not respond to a request for comment.

Fox News' Mike Emanuel contributed to this report.