Copyright 1999 Federal Document Clearing House, Inc.
Federal Document Clearing House Congressional Testimony
July 27, 1999
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 3245 words
HEADLINE:
TESTIMONY July 27, 1999 KENNETH F. BOEHM HOUSE SMALL BUSINESS
GOVERNMENT PROGRAMS AND OVERSIGHT BURDEN OF REGULATIONS ON SMALL BUSINESS
BODY:
Testimony Before a Hearing of The
Subcommittee on Government Programs and Oversight of the U.S. House of
Representatives Committee on Small Business Presented By Kenneth F. Boehm
Chairman National Legal and Policy Center 1309 Vincent Place McLean, VA 22101
Tuesday, July 27, 1999 Ignoring Congress and Common Sense: How the Department of
Labor and Legal Services Corporation Regulations Harm Small
Business My name is Ken Boehm and I am the Chairman of the National Legal and
Policy Center. NLPC is a non-profit group that seeks to promote open, ethical
government through research, education and legal action. NLPC is one of three
groups which successfully sued in federal court to force the White House's
Health Care Task Force to publicly disclose its documents and the identities of
its members. Since 1994, NLPC has sponsored the Legal Services Accountability
Project to document and expose abuses within the federal legal services program.
Have Regulatory Agencies Lost Sight of the Need to be Fair and Use Common Sense?
All too often, the worst examples of regulatory abuse occur when government
programs ignore the Congressional intent regarding laws and promulgate
regulations which are both unfair and lacking in common sense. The small
business owner confronted with these regulations feels like he or she has been
transported to the other side of Alice in Wonderland's looking glass. Nothing is
as it should be. In this fantasyland, words are interpreted to mean the exact
opposite of their common sense meaning. Worse yet, the small business owner
risks losing huge sums of money, if not their small business livelihood, for not
complying with the distorted regulatory fiat. The regulatory abuses I cite
include: a Department of Labor regulation which makes farmers liable for
carpooling accidents of their employees despite a clearly stated Congressional
intent that farmers be exempt from liability involving voluntary carpools a
Legal Services Corporation regulation allowing legal services
lawyers to get attorneys fees from the poor and disabled despite a law just
passed by Congress disallowing legal services lawyers from charging attorney's
fees legal services lawyers interpreting a Congressional requirement that
otherwise eligible aliens can receive legal assistance when "the alien is
present in the United States" to mean when "the alien was present in the United
States" with the Legal Services Corporation failing to take any
action against activist lawyers who sue farmers using this blatant
misinterpretation of the word "is" Legal Services Corporation
allowing legal services lawyers to illegally lobby a state legislature even
thought they are representing no client, a violation of federal law and LSC
regulations Voluntary Carpooling By Farm Workers: Congress Exempts From the
Requirements of the Migrant and Seasonal Worker Protection Act But the
Department of Labor Ignores Congress Government agencies pass regulations in
order to carry out the intent of Congress as set forth in the laws authorizing
the regulations. At least that's what's supposed to happen. In the case of the
Migrant and Seasonal Agricultural Worker Protection Act (MSPA), the Department
of Labor used its regulatory power to directly reverse the intent of Congress on
the question as to whether voluntary carpooling by farm workers is covered by
MSPA's transportation and insurance requirements. The legislative history of
MSPA made clear that voluntary carpooling by farm workers to get to work was not
covered by the requirements of the Act: The Committee in tends, however, that
voluntary agreements between individual workers for the transportation to and
from their place of employment (carpooling ) for which they receive no fee or
other benefit from the employer is no t within the scope of this section. House
Report No. 97-885 (97th Cong., 2nd Sess.); 1982 U.S. Code Cong. & Ad. News
4547, 4565 Despite the clear intention by Congress that voluntary carpools in
which the employer does not contribute should be beyond the scope of MSPA, the
Department of Labor used its regulatory authority to extend liability for such
carpool arrangements. The Department of Labor's reasoning was set forth in its
Analysis of Comments: Transportation Under MSPA and Carpools: Under the
regulation, carpooling is a voluntary arrangement among workers for
transportation to and from work using a worker's own vehicle. The workers may
contribute to offset the costs of the transportation to reasonably reflect the
actual costs of transportation. An compensation or other valuable consideration
in excess of the actual costs means the transportation provider is considered a
farm labor contractor and there by subject to the registration and
transportation requirements of the Act. The Department of Labor based its Final
Rule on the analysis cited above. (Vol 61, Federal Register, p. 24861, May 16,
1996) Among the comments received by the Department of Labor on its Proposed
Rule urged, "that if the driver received no money from the farm labor
contractor, agricultural employer or agricultural association, the amount that
was received from the passengers should be of no legal consequence." Of course,
these comments were consistent with the House Report language, but they were
rejected by the Department of Labor regulators. This dubious "interpretation" of
the law by the Department of Labor can have horrendous consequences for the
farmer. A farm worker who charges fellow workers an amount in excess of the
actual operating costs of his car becomes a "farm labor contractor" in the eyes
of the law. As a result, this fairly innocent action can have a chain reaction
of legal consequences: the driver becomes an unregistered farm labor contractor
the driver is transporting workers in violation of the law it's likely that the
vehicle does not meet all applicable MSPA safety and insurance standards
including liability limits in the amount of $100,000 per seat The regulation
puts farm employers in the position of having to question each of their workers
as to how they commute to work, what they pay, and the actual operating costs of
each trip. Misrepresentations, intentional or innocent, which lead the farmer to
conclude that each commuting farm worker paid just the actual operating costs
are irrelevant as to the imposition of legal liability. As has been pointed out
in testimony by a leading California attorney, Carl Borden, before a hearing of
the Workforce Protection Subcommittee of the House Education and the Workforce
Committee on June 27, 1997: under the DOL's approach, a ride provider who
receives from his riders even slightly more than his actual costs is a farm
labor contractor who must be registered and authorized to perform transportation
activity. If, as likely, the ride provider is not registered as a farm labor
contract or and is not transportation- authorized, then the DOL can cite the
grower for having failed under 402 of the MSPA (29 USC 7 842) and the
corresponding regulation at 29 CFR 500. 77 to take reasonable steps to determine
the ride provider is so registered and authorized Making matters worse, the DOL
could assert under its joint- liability rule that the grower is jointly
responsible should farm workers be injured in a motor- vehicle accident while
riding with the ride provider. The net result of the Department of Labor's abuse
of its regulatory authority in this case is that the will of Congress that
voluntary carpooling be exempt from the strict provisions of MSPA was overturned
and farmers are exposed to potentially huge liability unless they undertake
impractical, burdensome surveys of all of their workers who carpool on a regular
basis. And even that will not exempt the farmer from liability if the workers
provide incorrect answers to the questions regarding operating costs. All in
all, this is a classic case of how a government department ignores Congress and
common sense in a way that harms small business. Congress Tells Legal
Services Corporation No Attorney's Fees Ignoring Congress, LSC Passes a
Regulation Charging Attorneys Fees For the Disabled Poor Congress has been
attempting to reform the Legal Services Corporation from the
very day it was started - 25 years ago today. All too often, the restrictions
and reforms passed by Congress are evaded by activist lawyers who find loopholes
in the law allowing them to continued whatever abuse Congress had sought to
eliminate. From time to time, the evasion of Congressional restrictions comes
not from the activist lawyers but from Legal Services
Corporation itself. The reforms passed by Congress in 1996 were meant
to eliminate a wide range of political activities, abusive practices and
controversies associated with the legal services programs. Congress banned
prisoner litigation, political redistricting cases, most political lobbying,
class actions and representation of drug dealers in public housing evictions.
Congress also banned the controversial practice of legal services lawyers
obtaining attorneys' fees for the cases they undertake with taxpayers' funds.
Among the reasons for this reform was the fact that legal services lawyers
salaries were already paid by the taxpayer so the usual rationale for such fees
did not exist. Also, Congress did not want legal services lawyers to abuse their
discretion in accepting cases which allowed attorney's fees and ignoring the
poor whose cases did not allow such fees. Finally, cases allowing for attorney's
fees are far more likely to be pursued by private counsel so using tax-funded
lawyers in such cases was considered a waste of public funds. Despite the
crystal clear intent of Congress that such attorney's fees be banned for the
reasons just cited, the Legal Services Corporation wrote a
regulation which ignored the ban and allowed attorney's fees in cases involving
the poor and disabled. Using tortured logic, the LSC board of directors crafted
a regulation which allowed attorney's fees to go to legal services programs in a
narrow range of cases involving the most helpless of its clients - the disabled
poor involved in Social Security cases. The intent of Congress that no such fees
be charged ended up being thwarted by a regulation which did just the opposite
and hurt those with the misfortune to be both poor and disabled. Fortunately,
Congress intervened. At a February 26, 1997 hearing before the House Commerce,
Justice, and State, the Judiciary and Relate Agencies Subcommittee, Chairman
Harold Rogers (R- Kentucky) blasted Legal Services Corporation
(LSC) for the attorney's fees regulation. When LSC Vice Chairman John Erlenborn
attempted to defend LSC's regulation allowing the attorney's fees, Chairman
Rogers responded with both common sense and bluntness: It's outrageous that your
interpretation would be that minute, considering all the hot water you're in.
The Recorder, March 5, - 1997, page 1 When Mr. Erlenborn insisted on defending
the controversial regulation, Chairman Rogers spoke for many when he stated:
"You can't seem to help yourself. You do not grasp reality. Some of us are
losing patience." New Jersey Lawyer, March 10, 1997, page 3 In the end, Congress
prevailed. LSC changed the regulation so that cases involving the poor and
disabled were no longer subject to the illegal attorney's fees being charged by
legal services lawyers. This case is yet another in which a regulator does the
exact opposite of what Congress instructs them to do, while hurting the very
poor people they are supposed to be helping. Congress Allows Legal Services to
Assist Otherwise Eligible Aliens Only in Cases Where "the Alien is Present in
the United States". Legal Services Lawyers Interpret This to Mean 'Was Present
in the United States" During the recent impeachment debate, a statement by
President Clinton ("it depends on what your definition of 'is' is.") became a
classic example of Washington double-speak. In a debate now raging over when
legal services lawyers may assist aliens in cases against farmers, the main
issue is the meaning of the word "is." The farm and business communities are
interpreting the appropriations law requirement that otherwise eligible aliens
may be assisted by legal services lawyers only in cases where "the alien in is
present in the United States" while legal services lawyers are interpreting that
phrase to mean "was present in the United States" or "is present in Mexico." The
controversy began last year when a candidly shot video showed legal services
lawyers from Farm Workers Legal Services of North Carolina on an illegal trip to
Mexico to recruit clients to sue North Carolina farmers. The trip was an issue
at the LSC appropriations hearing and was criticized in the Wall Street Journal
Following an investigation the program was fined $17,000 but the official LSC
rebuke of the trip carefully limited the criticism to assisting those in Mexico
who had never been to the United States. LSC subsequently refused to take action
on a complaint filed by the National Legal and Policy Center that a legal
services lawyer had filed lawsuits on behalf of aliens who were not in the U.S.
at the time the lawsuit had been filed but had worked in the U.S. several years
prior to the lawsuit. LSC instead appointed a special commission, with no
representation from the farm or small business community, to determine the
meaning of the phrase "is present in the United States. In the interim, no
action was being taken to stop the improper lawsuits. Even worse, LSC President
John McKay wrote a March 24, 1999 letter arbitrarily stating that LSC would take
no action whatsoever against any legal services program that had violated the
appropriations law requirement that assistance may only be rendered to an
otherwise eligible alien when the alien is present in the United States. In
short, any farmer being sued by legal services representing an alien in a
foreign country is out of luck because LSC will refuse, to enforce the federal
law and its own regulation. Never mind the clear language of the law. Never mind
the fact that neither the LSC president nor the LSC board has the legal
authority to change appropriations law. The relevant language is found in
Section 504(a)(11) of Public Law 104-134, which is incorporated by reference
into the current appropriations for LSC, Public Law 105-277: Sec. 504 (a)None of
the funds appropriated in this Act to the Legal Services
Corporation may be used to provide financial assistance to any person
or entity (which may be referred to in this section as a "recipient"). . . (11)
that provides legal assistance for or on behalf of any alien, unless that alien
is present in the United States and is (E)an alien to whom section 305 of the
Immigration Reform and Control Act of 1986 (8 U.S.C. 1101 note) applies, but
only to the extent that the legal assistance provided is the legal assistance
described in such section; As with the other examples provided, the current
controversy illustrates how a small business owner or farmer can be illegally
sued by an alien not present in the United States in direct violation of federal
appropriations law, LSC regulations and a common sense interpretation of the
legal requirement that the phrase "is present in the United States" means "is
present in the United States." This travesty of justice occurs because 1) legal
services lawyers want to be able to file lawsuits on behalf of aliens living
outside the United States and 2) Legal Services Corporation,
the only entity with the power to enforce LSC regulations, has officially
declared that it will not do so. The law and Congressional intent are ignored.
The small business owner and farmer are hurt with an illegal lawsuit - at
taxpayer expense. Congress Bans Legal Services Lobbying Without a Client, Legal
Services Lawyers Ignore the Ban, A Business Complains and LSC Dismisses the
Complaint But a Federal Judge Blasts LSC's Dismissal as Having "No Rational
Basis" Throughout its 25 year history, the Legal Services
Corporation and the hundreds of local programs it funds with tax
dollars have repeatedly incited controversy by using funds intended to help the
poor to promote a political agenda. One of the most controversial political
practices has been lobbying. Congress from the very beginning and up to the
reforms of 1996 has sought to limit lobbying. The problem has been that some of
the activist lawyers funded through LSC are determined to pursue lobbying
campaigns, especially to promote pro-tax and anti- business legislation. One
common sense reform initiated by Congress is that legal services lawyers may not
lobby a legislative body without a poor client. Recognizing that it's easy to
find a poor client to promote virtually any political lobbying effort, Congress
further required that the requested lobbying must also address the client's
specific and distinct legal problems. During consideration of legislation before
the South Carolina legislature, a legal services attorney lobbied in favor of
legislation which would have hurt a number of businesses. RIVIC, Inc., a
financial services business which would have been harmed by the pending
legislation, filed a complaint with the Legal Services
Corporation alleging that several legal services programs and their
lawyers had violated the restriction against lobbying. LSC dismissed the
complaint by RMC, Inc. In its reasoning explaining its dismissal, LSC stated
that the legal services lawyer had been properly retained by the client, that
the client was not solicited and that appropriate relief entailed contacting the
legislature. The problem with LSC's slipshod handling of the complaint was that
the legal services lawyers did not have a client at the time the lobbying was
being done. It was found out that the claimed client had not only not asked the
legal services lawyer for lobbying but that the claimed client had not even
spoken to the lawyer, was not a legal services client at that time and the
lobbying did not E)ven mention any specific legal problem of the claimed client.
In short, there was no way for either the legal services lawyer or LSC to claim
that the lobbying was legal. U.S. District Court Judge Henry M. Herlong, Jr.,
who heard the case, stated.- Legal services lawyers are severely restricted in
what they can do on behalf of their clients, especially when the activity
concerns the political arena. In the instant case these restrictions were
violated Berkowitzs lobbying of the South Carolina General Assembly transgressed
the clear language of federal law and LSC guidelines. There was no rational
basis to decide otherwise. " R MC., Inc, et al., v. Legal Services
Corporation, 10 F. Supp. 2d 565 (D.S.C. 1998) As with the restriction
against attorney's fees and the restriction against representing non-citizens
not in the United States, lawyers willing to evade Congressional restrictions
have gotten a helping hand from a regulatory body, LSC, which is willing to
ignore Congress. The common denominator in all the cases cited is that the
regulatory process has been used to thwart the will of Congress and, in the
process, innocent citizens have been hurt by these abuses. Thank you for this
opportunity to participate in this hearing on this important subject. America's
small business owners can be thankful for the leadership of this subcommittee in
exposing and eliminating regulatory abuses.
LOAD-DATE:
July 28, 1999 
