With the IRS Scandal Ablaze, How Does that Special-Prosecutor Thing Work?

An explainer of how Eric Holder could appoint someone to pursue the case.

Attorney General Eric Holder said the FBI would investigate the IRS scandal at a press conference on Tuesday (AP Photo) (National Journal)

While the Justice Department has started an investigation into whether the Internal Revenue Service broke any laws by targeting conservative groups for heightened scrutiny, critics of the Obama administration will likely continue their call for a special counsel.

Already, Louisiana Gov. Bobby Jindal and Wisconsin Gov. Scott Walker have written a letter to President Obama calling for a special counsel. Senate Minority Leader Mitch McConnell, R-Ky., also said Tuesday that a special counsel might be needed.

"They overstepped in a way people can identify with," McConnell said. "Everybody knows the power of the IRS, and it's about time they, in effect, got caught in a way that the American public fully understands."

For those with hazy memories of Bill Clinton and Kenneth Starr, it's worth a reminder of how all this works.

So how does a special counsel get named?

If the attorney general suspects criminal wrongdoing within the federal government, he or she can assign a special counsel to lead the investigation. The appointment does not need congressional approval, just notification to the chairman and ranking member of the House and Senate Judiciary committees. The special counsel can be dismissed by the attorney general in extraordinary circumstances, however.

The attorney general can either pick a current U.S. attorney or a lawyer from outside the Justice Department; the person must have "a reputation for integrity and impartial decision making, and with appropriate experience to ensure both that the investigation will be conducted ably, expeditiously, and thoroughly, and that investigative and prosecutorial decisions will be supported by an informed understanding of the criminal law and Department of Justice policies," according to Justice Department guidelines.

When U.S. attorneys are selected to fulfill the functions of a special counsel, such as Patrick Fitzgerald during the Valerie Plame affair, he or she follows many of the same guidelines as outside counsel, with few exceptions with respect to his or her authority.

Once the special counsel is appointed by the attorney general, the person operates under the full authority of the Justice Department and follow its guidelines. Because this is an executive-branch function, Congress cannot appoint a special counsel. Instead, Congress can hold its own investigation through different committees.

"This is obviously a very challenging oversight environment," said Steve Ryan, who has defended several clients involved in congressional and Justice Department investigations. "I'd be surprised if a number of committees didn't jump all over this."

Congress will also be notified once the investigation is completed or if the special counsel is removed from his or her position.

How would Eric Holder pick the right person to be special counsel?

Because the special counsel is appointed by the attorney general, Holder has to be careful who he chooses to run the investigation, warned Joseph diGenova, a former U.S. attorney for the District of Columbia appointed by Ronald Reagan.

"The department has a political, personal, financial conflict," said diGenova, who was assigned to be a independent counsel in the 1990s to look into whether George H.W. Bush administration officials broke the law by speeding up a State Department search into the passport records of Democratic presidential opponent. He found that no laws were broken.

This sort of criticism, however, can be avoided by appointing someone with a storied career, a record of nonpartisanship, and with nothing to prove, said diGenova, who predicted the appointment of a U.S. attorney would be criticized.

Once appointed, the special counsel has all the powers of a U.S. attorney and is allotted a staff from within the Justice Department. The special counsel can also request further staff from outside the department.

In his case, Fitzgerald was selected in haste by the acting attorney general, who wanted the investigation to start immediately without Fitzgerald having to hire the staff that an outside counsel would need. He was also given broader powers, although final decisions regarding the investigation were still under the authority of the attorney general.

Why isn't an inspector-general report enough?

While the internal report provided further information about the scandal that has rocked the agency in the last week, an inspector general doesn't have the range of tools that are afforded a special counsel such as subpoena power and the ability to bring charges

"The question is whether people will be content to have the Inspector General Office conduct an investigation and report," Ryan said. "Obviously, this conduct was inept. But how inept is it? How widespread is it?" A special counsel, though, is not obligated to produce a final report, and Fitzgerald did not in the Plame investigation.

Is this the same thing as Kenneth Starr and independent counsels?

Nope. There was an independent counsel statute that ran from 1978 until 1999. Inspired by Watergate, it created a special prosecutor who would be appointed not by the attorney general but by a special panel of the U.S. Court of Appeals for the District of Columbia Circuit. The prosecutor had unlimited funds and no deadlines, and the statute was upheld by the Supreme Court in Morrison v. Olson in 1988 with only Justice Antonin Scalia dissenting that it represented a huge breach of the government's balance of powers.

This independent counsel's office was made most famous--some would say infamous--by Kenneth Starr for his pursuit of President Clinton. Tapped to look into a failed real-estate deal, Starr conducted an investigation that soon sprawled into many things and made Monica Lewinsky a household name. It also soured interest in both parties for renewing the independent-counsel statute, which expired in 1999. But the attorney general can always select a special counsel.

However, now it seems unlikely that Holder will choose to appoint one. He has handed the case over to the FBI. But if the furor over the IRS continues, Holder might find naming a well-regarded Republican to investigate an increasingly attractive option.