“A charitable religious organization’s use of a controlled substance such as DMT, the possession and distribution of which is generally illegal under the CSA . . . may obtain an exemption for such use in one of two ways—from the [DEA] or a federal court.”
How later courts described this case
- “A charitable religious organization’s use of a controlled substance such as DMT, the possession and distribution of which is generally illegal under the CSA . . . may obtain an exemption for such use in one of two ways—from the [DEA] or a federal court.”
- “A party forfeits an argument by mentioning it only in the most skeletal way . . . .”
Written by the judges who cited it.
The opinion
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 11, 2024 Decided June 21, 2024
No. 23-5122
IOWASKA CHURCH OF HEALING,
APPELLANT
v.
DANIEL I. WERFEL, IN HIS OFFICIAL CAPACITY AS
COMMISSIONER, INTERNAL REVENUE SERVICE AND UNITED
STATES OF AMERICA,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:21-cv-02475)
Simon A. Steel argued the cause for appellant. With him
on the briefs was William A. Boatwright.
Matthew C. Zorn and David J. Gutierrez were on the brief
for amici curiae the Chacruna Institute for Psychedelic Plant
Medicines and Sacred Plant Alliance in support of appellant.
Kathleen E. Lyon, Attorney, U.S. Department of Justice,
argued the cause for appellees. With her on the brief was Jacob
Earl Christensen, Attorney.
2
Before: HENDERSON and WILKINS, Circuit Judges, and
EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge WILKINS.
WILKINS, Circuit Judge: Appellant Iowaska Church of
Healing (the “Church”) is an organization whose members’
sincerely-held religious belief involves the consumption of
Ayahuasca—a tea that contains the hallucinogenic drug
dimethyltryptamine (“DMT”), which is a drug that is regulated
by the federal government under the Controlled Substances Act
(“CSA”). See 21 U.S.C. §§ 811(a), 812 Schedule I(c)(5). The
Church sued Appellees the Commissioner of the Internal
Revenue Service (“IRS”) and the United States (together, the
“Government”) in the District Court to challenge the IRS’s
denial of its application for tax-exempt status under 26 U.S.C.
§ 501(c)(3). On cross-motions for summary judgment, the
District Court denied the Church’s motion and granted the
Government’s motion. The Church now appeals the District
Court’s decision.
The Church argues, first, that the District Court erred in
affirming the IRS’s determination because it was based on an
incorrect assumption that the Church’s religious Ayahuasca
use was illegal. Second, the Church contends that the District
Court further erred in holding that the Church lacks Article III
standing to assert a Religious Freedom Restoration Act of 1993
(“RFRA”) claim against the Government for impermissibly
burdening the Church’s free exercise of religion by denying its
tax-exemption application. The District Court did not,
however, err on either front. As the District Court held, the
Church lacks standing to assert its RFRA claim. That lack of
standing, in turn, dooms its tax-exemption claim; without a
prima facie showing on its RFRA claim, we have no occasion
to question the IRS’s decisions to deny the Church’s
3
application for tax-exempt status and to refuse the Church’s
demand that the agency assess whether the Church’s proposed
Ayahuasca use warrants a religious exemption from the CSA—
an assessment that the IRS has no authority to entertain.
Accordingly, we affirm the District Court’s judgment as to the
Church’s tax-exemption claim and dismiss the Church’s RFRA
claim without prejudice for lack of standing.
I.
A.
Under Section 501(c)(3) of the Internal Revenue Code,
certain entities “organized and operated exclusively for
religious, charitable, . . . or educational purposes” may be
exempt from federal taxation, provided that “no part of the net
earnings of [the entity] inures to the benefit of any private
shareholder or individual,” “no substantial part” of the
organization’s “activities” involves the attempt “to influence
legislation,” and the organization “does not participate in” any
“political campaign[.]” 26 U.S.C. § 501(c)(3); see id. § 501(a).
“[A]n organization must be both organized and operated for
one or more of the purposes specified” in Section 501(c)(3) to
qualify for tax-exempt status under that section. 26 C.F.R.
§ 1.501(c)(3)-1(a)(1); see id. § 1.501(c)(3)-1(d)(1)(i). “If an
organization fails to meet either the organizational test or the
operational test,” however, “it is not exempt.” Id.
§ 1.501(c)(3)-1(a)(1).
IRS regulations clarify the requirements of the
organizational and operational tests. To survive the
“organizational” test, the organization’s articles of
organization must “limit” the organization’s purposes to
exempt purposes and may “not expressly empower the
organization to engage . . . in activities which in themselves
4
are not in furtherance of one or more exempt purposes.” Id.
§ 1.501(c)(3)-1(b)(1)(i)(a)–(b). More specifically, “[a]n
organization is not organized exclusively for one or more
exempt purposes if its articles expressly empower it to carry
on, otherwise than as an insubstantial part of its activities,
activities which are not in furtherance of one or more exempt
purposes.” Id. § 1.501(c)(3)-1(b)(1)(iii). To pass the
“operational” test, the organization must separately be
“engage[d] primarily in activities which accomplish one or
more . . . exempt purposes” and will fail that test “if more than
an insubstantial part of its activities is not in furtherance of an
exempt purpose.” Id. § 1.501(c)(3)-1(c)(1). Importantly, an
organization may be denied tax-exempt status if its purposes or
activities are illegal or otherwise contrary to public policy. Bob
Jones Univ. v. United States, 461 U.S. 574, 591 (1983);
Rev. Rul. 71-447, 1971-2 C.B. 230 (“All charitable trusts,
educational or otherwise, are subject to the requirement that the
purpose of the trust may not be illegal or contrary to public
policy”); see also IRS, PUB. NO. 1828, TAX GUIDE FOR
CHURCHES & RELIGIOUS ORGANIZATIONS 33 (2015)
(explaining that the IRS “makes no attempt to evaluate the
content of whatever doctrine a particular organization claims is
religious, provided the particular beliefs of the organization are
truly and sincerely held” and “the practices and rites associated
with the organization’s belief or creed are not illegal or
contrary to clearly defined public policy.”).
A charitable religious organization’s use of a controlled
substance such as DMT, the possession and distribution of
which is generally illegal under the CSA, see 21 U.S.C. §§ 812
Schedule I(c)(6), 841(a), 844(a), may obtain an exemption for
such use in one of two ways—from the Drug Enforcement
Agency (“DEA”) or a federal court. The CSA authorizes the
Attorney General to “waive the requirement for registration of
certain manufacturers, distributors, or dispensers if he finds it
5
consistent with the public health and safety.” 21 U.S.C.
§ 822(d). The Attorney General has delegated the authority to
grant CSA waivers or exemptions to the DEA. See 21 C.F.R.
§ 1307.03. Pursuant to that delegated authority, the DEA
issued guidance in 2009 (“2009 Guidance”) for “[p]arties
requesting religious exemptions from” the CSA. DEA,
NO. EO-DEA007, GUIDANCE REGARDING PETITIONS FOR
RELIGIOUS EXEMPTION FROM THE CONTROLLED SUBSTANCES
ACT PURSUANT TO THE RELIGIOUS FREEDOM RESTORATION
ACT 1 (Nov. 20, 2020). The 2009 Guidance directs applicants
to provide information detailing the applicant’s planned use of
a controlled substance, together with information showing that
barring of the applicant’s use of that substance would “(1) be a
substantial burden on (2) his/her sincere (3) religious exercise.”
Id. Further, the 2009 Guidance provides that “[n]o petitioner
may engage in any activity prohibited under the [CSA] or its
regulations unless the petition has been granted and the
petitioner has applied for and received a DEA Certificate of
Registration.” Id. at 2.
Separately, a federal court may issue a CSA exemption.
Under RFRA, the government “shall not substantially burden a
person’s exercise of religion even if the burden results from a
rule of general applicability” unless “it demonstrates that
application of the burden to the person (1) is in furtherance of
a compelling governmental interest; and (2) is the least
restrictive means of furthering that compelling governmental
interest.” 42 U.S.C. § 2000bb-1(a)-(b). The statute’s coverage
is expansive—RFRA explicitly protects “any exercise of
religion, whether or not compelled by, or central to, a system
of religious belief,” id. § 2000cc-5(7)(A); see id. § 2000bb-
2(4), “applies to all Federal law, and the implementation of that
law, whether statutory or otherwise,’” id. § 2000bb-3(a), and
defines the term “government” to include “a branch,
department, agency, instrumentality, and official (or other
6
person acting under color of law) of the United States, or of a
covered entity,” id. § 2000bb-2(1). To effectuate RFRA’s
protections, Congress has authorized federal courts to provide
relief where a person’s religious exercise has been burdened by
the government in violation of the statute. 42 U.S.C. § 2000bb-
1(c) (providing that “[a] person whose religious exercise has
been burdened in violation of [the Act] may assert that
violation as a claim or defense in a judicial proceeding and
obtain appropriate relief against a government”). Affirming
RFRA’s application in this context, the Supreme Court has held
that “it is the obligation of courts to consider whether [CSA]
exceptions are required under the [RFRA] test set forth by
Congress.” Gonzales v. O Centro Espirita Beneficente Uniao
do Vegetal, 546 U.S. 418, 434 (2006).
Pursuant to RFRA, a plaintiff must, as an initial matter,
“establish that its free exercise right has been substantially
burdened.” Branch Ministries v. Rossotti, 211 F.3d 137, 142
(D.C. Cir. 2000) (citing Jimmy Swaggart Ministries v. Bd. of
Equalization, 493 U.S. 378, 384–85 (1990)). Only if a litigant
can establish that their exercise of religion has been
substantially burdened does the burden shift to the government
to show that the burden is “in furtherance of a compelling
governmental interest” and is the “least restrictive means” of
doing so. 42 U.S.C. § 2000bb-1(b); see Singh v. Berger, 56
F.4th 88, 97 (D.C. Cir. 2022).
B.
The Church is an organization and religious corporation
whose members’ sincerely-held religious belief involves the
consumption of Ayahuasca, which contains DMT. In January
2019, the Church filed an application with the IRS for
designation as a federally tax-exempt organization under
7
Section 501(c)(3). 1 One month later, the Church also applied
to the DEA for a religious exemption from the CSA to
authorize its Ayahuasca use. In that application, the Church
acknowledged that DMT “is illegal absent the appropriate
registration with the DEA or pursuant to a judicial or other
registration exemption” from the CSA. J.A. 247. The Church
represents that the DEA, to date, has yet to issue a
determination.
The Church’s purpose and mission revolve primarily
around the consumption of Ayahuasca and embracing certain
spiritual benefits that the Church’s members believe follow
from Ayahuasca consumption. The Church’s articles of
incorporation define its mission as “inspir[ing] individuals to
seek and embrace authentic, self-realized healing of the mind,
body and spirit through the use of the sacred, indigenous plant-
medicine of Ayahuasca.” J.A. 236. The articles additionally
list several other purposes and activities, which notably include
“offer[ing] the public access to spiritual growth, development
and healing through the sacred Sacrament of Ayahuasca” and
“provid[ing] necessary information to all participants of sacred
1
The Church also applied for designation as a church under 26
U.S.C. § 170(b)(1)(A)(i), which would permit individuals to
categorize contributions to the Church as tax-deductible charitable
contributions. 26 U.S.C. §§ 170(a)(1), (b)(1)(A)(1). The IRS
determined that the Church did not qualify as a church for lack of an
“associational role,” given that the Church’s members “reside in
various states and countries,” often “do not come to
weekend . . . ceremonies on a regular basis,” and “do not return for
weeks, months, or . . . at all.” J.A. 331. Although the Church also
challenged the IRS’s rejection of its Section 170 application in its
complaint, the District Court declined to reach the issue and so the
Church does not raise it on appeal. See Iowaska Church of Healing
v. United States (“Iowaska I”), 2023 WL 2733774 at *5, n.6 (citing
26 U.S.C. § 509(a)).
8
healing ceremonies involving the consumption of Ayahuasca.”
J.A. 208. Pursuant to its primary mission, and despite a so-
called “savings clause” in the articles that promises the Church
“shall not carry on any other activities not permitted” by a
Section 501(c)(3) organization, J.A. 211, the Church
distributed Ayahuasca in multiple ceremonies between May
and July 2019—while its IRS and DEA applications were
pending—before voluntarily suspending its ceremonies.
Before issuing a determination, the IRS sent the Church
several follow-up questions regarding its application. In June
2019, the IRS sought information regarding “the status of [the
Church’s] religious exemption application with the DEA[.]”
J.A. 271. The Church timely responded that it had been
informed by the DEA that the CSA application was “still in
progress.” J.A. 281. In September 2019, the IRS asked the
Church for, inter alia, its plans for operation if the DEA were
to deny the Church’s application for a CSA exemption, an
explanation of how the Ayahuasca ceremonies in 2019 were
legal without a CSA exemption, and information on whether
any of the Church’s members do not regularly participate in the
Ayahuasca ceremonies. The Church replied that its Ayahuasca
ceremonies in 2019 were “protected under federal law”
because of the Supreme Court’s recognition in O Centro that
“sacramental use of Ayahuasca as a sincere exercise of religion
under the First Amendment.” Id. at 293–94. On the Church’s
read, O Centro made clear that “it is not necessary for a church
to first apply for and secure a religious exemption from the
[CSA] before enforcing its religious freedom rights in the
courts.” J.A. 294. The Church further related that, if the CSA
exemption were to be denied, it would seek judicial relief under
RFRA. Notably, the Church neither represented that any of its
members forgo Ayahuasca ceremonies nor described how it
would operate if it were denied CSA exemption by both the
DEA and a court.
9
In February 2020, the IRS again requested more
information, asking, as relevant here, whether the Church had
received guidance for applying for a CSA exemption from the
DEA or the Department of Justice (“DOJ”); how the Church
could be in compliance with the part of the 2009 Guidance that
directly prohibits petitioners with pending applications from
“engag[ing] in an activity prohibited under the [CSA] or its
regulations unless” the petition has been granted, id. at 315; and
whether the Church had sought relief in the courts to “enforc[e]
[the Church’s] religious freedom rights” since it had not
secured the exemption, id. at 312. The Church answered that
it had not received any DEA or DOJ guidance, that the 2009
Guidance “d[id] not carry the force of law,” id. at 317, that the
Supreme Court’s holding in O Centro trumps the 2009
Guidance, and that the Church had not sought relief in any
court because it did not believe that doing so was necessary
since its actions were already protected by the First
Amendment and RFRA, id. at 320.
Unpersuaded by the Church’s responses, the IRS issued a
proposed adverse determination in June 2020. The IRS
explained that the Church failed the organizational test, both
because it was formed in part for the illegal purpose of
distributing a substance containing DMT and because “[m]ore
than an insubstantial part of [the Church’s] activities” were
“not in furtherance of an exempt purpose,” but instead
“serve[d] a substantial nonexempt purpose” in that they
primarily involved “advocating and engaging in activities that
contravene federal law” and “enabling individuals to engage in
an activity illegal under federal law[.]” J.A. 331. The IRS also
rejected the Church’s defense that its activities are protected by
RFRA following O Centro. The agency concluded that, in O
Centro, the Supreme Court held only that “an organization does
not have to apply for . . . exemption [from the DEA] prior to
seeking relief in the courts,” not that applicants can “simply use
10
[Ayahuasca] without the exemption.” Id. at 333. The Church
quickly filed to protest the IRS’s proposed adverse
determination, but the IRS, unmoved by the Church’s
challenge, issued a final adverse determination (“IRS
Decision”) in June 2021 affirming its earlier proposed
determination.
The Church then sued the Government in District Court to
challenge the IRS Decision. The Church claimed, first, that the
IRS erred in denying the Church’s tax-exemption application
by failing to recognize that O Centro “recognized the use
of . . . Ayahuasca in religious ceremonies as a sincere exercise
of . . . religion under the First Amendment” and, second, that
the Government violated RFRA by “ruling [in the IRS
Decision] that [the Church’s] activities are illegal[.]” J.A. 26–
27. When the parties later filed cross-motions for summary
judgment, the Government challenged the Church’s standing
to raise its RFRA claim. Iowaska Church of Healing v. United
States (“Iowaska I”), 2023 WL 2733774, at *3 (D.D.C. Mar.
31, 2023). To defend its standing, the Church claimed that it
had sustained three injuries. First, the Church suffered from
the “chilling effect on its religious freedom” occasioned by the
IRS’s second information request, which it said “caused [the
Church] and its members to fear law enforcement intrusion into
their ceremonies and potential prosecution under the CSA,”
J.A. 139–40. Second, it endured “reputational damage” from
the IRS Decision’s “characterization [of] the Church’s
activities as ‘illegal,’” which the Church said prevented it from
conducting other “charitable activities.” Id. at 140, 141. And
finally, it suffered economic injury in the form of lost income
and profits, which caused the Church to have “no membership
income or contributions with which to carry on its programs for
nearly three years.” Id. at 142.
11
The District Court granted the Government’s motion for
summary judgment, concluding that the Church was not
eligible for tax-exempt status under Section 501(c)(3) and that
it lacked Article III standing to assert its RFRA claim. Iowaska
I, 2023 WL 2733774, at *3. Starting with the tax-exemption
claim, the District Court affirmed that the Church “falls short”
of Section 501(c)(3)’s “‘organized and operated exclusively’
for [an] enumerated public purpose[]” requirement. Id. On the
“organizational” prong, the District Court interpreted the
Church’s articles of incorporation to “make explicit the
organization’s purpose to distribute and facilitate the use of
Ayahuasca” and the District Court agreed that purpose was
impermissible because the Church “ha[d] not obtained a CSA
exemption that would render such ceremonial distribution and
use legal.” Id. at *4. On the “operational” prong, the District
Court found that “the bulk of the organization’s time is devoted
to conducting or preparing for weekend ceremonies in which
Ayahuasca is to be distributed to participating members,”
which, “[a]bsent a CSA exemption . . . amount[s] to the illegal
distribution and promotion of the use of a controlled
substance”—that is, “a non-exempt purpose.” Id. The District
Court further rejected the Church’s reading of O Centro. The
District Court reasoned that case had no bearing on whether the
Church is entitled to tax-exempt status because it “addressed
religious Ayahuasca use in an entirely different legal context.”
Id.
Turning next to the RFRA claim, the District Court held
that the none of the injuries the Church claimed could support
Article III standing. Id. at *6; id. at *6 n.7. Addressing the
Church’s claimed “chilling” injury primarily and most
extensively, the District Court determined that the fact that
“members cannot exercise their sincerely held religious beliefs
by consuming Ayahuasca” was “neither traceable to the IRS’s
denial of [the Church’s] application nor redressable with a
12
favorable ruling[.]” Id. at *6. The District Court reasoned that
the Church ceased its Ayahuasca ceremonies because it
“lack[ed] . . . a CSA exemption” that would permit use and
distribution of Ayahuasca, not because of any action by IRS;
the District Court additionally emphasized that the IRS “has no
authority to address [the Church’s] application for a CSA
exemption.” Id. Moreover, the District Court found the
Church’s claim that the IRS Decision would “likely put [the
Church’s] pending DEA religious exemption application at a
much higher risk of being denied” was, “at best, speculative”
and could not satisfy the traceability requirement. Id. at *7.
Finally, the District Court concluded that a favorable decision
on the Church’s RFRA claim would not redress its alleged
“chilling” injury “since granting [the Church] tax-exempt
status w[ould] not necessarily lead to DEA’s approval of [the
Church’s] CSA exemption application.” Id.
The District Court also briefly addressed the Church’s
claimed reputational and economic injuries, finding that neither
injury conferred standing. Id. at *6 n.7. The District Court
reasoned, first, that the Church’s alleged reputational injury is
not sufficiently concrete since the record contains no evidence
that the IRS Decision caused any stigmatic harm. Id. As to the
Church’s alleged economic injury, the District Court found that
the Church “flunk[ed] the traceability and redressability
requirements” because its economic injury depended “entirely
on the independent decisions of third-party donors.” Id.
The Church timely appealed.
II.
We review the question of whether the Church has Article
III standing to raise its RFRA claim de novo. Air Excursions
LLC v. Yellen, 66 F.4th 272, 277 (D.C. Cir. 2023); Defenders
of Wildlife v. Perciasepe, 714 F.3d 1317, 1323 (D.C. Cir.
13
2013). We review the District Court’s ruling that the Church
is neither organized nor operated exclusively for tax exempt
purposes, however, for clear error. Fund for the Study of
Economic Growth & Tax Reform (“FSEGTR”) v. IRS, 161 F.3d
755, 758 (D.C. Cir. 1998); see Family Trust of Mass., Inc. v.
United States, 722 F.3d 355, 359 (D.C. Cir. 2013). 2 We
conclude that the Church lacks standing to assert its RFRA
claim because the economic injury the Church asserts on
appeal is neither an injury-in-fact nor redressable and any other
standing theories asserted below have been forfeited. Without
the specter of a cognizable RFRA claim, the Church’s tax-
exemption claim also fails; the District Court’s affirmance of
the IRS Decision was not clearly erroneous given that the
Church could not proffer evidence of a CSA exemption to show
it passed the organizational and operational tests.
2
The Church argues that the appropriate standard of review for the
tax-exemption claim is de novo because the District Court ruled on
cross-motions for summary judgment. In support, the Church cites
two D.C. Circuit cases where this Court specifically gave summary
judgment decisions in tax cases de novo review—Byers v. Comm’r,
740 F.3d 668 (D.C. Cir. 2014), and Branch Ministries v. Rossotti,
211 F.3d 137 (D.C. Cir. 2000). Neither of these cases, however,
displaces FSEGTR as the most applicable case. In Byers and Branch
Ministries, we entertained only clear questions of law. Byers, 740
F.3d at 674; Branch Ministries, 211 F.3d at 140–41. Here, there is
precedent directly on point requiring us to treat “the determination of
whether an organization is organized and operated exclusively for
exempt purposes [as] a factual determination,” which demands
review “only for clear error.” FSEGTR, 161 F.3d at 758. That said,
we would be remiss if we failed to reiterate FSEGTR’s instruction
that “it would be more appropriate for future district courts to decide
501(c)(3) issues at bench trial, rather than on summary judgment.”
Id. at 759.
14
A.
On appeal, the Church relies on its economic injury to
support its argument that it has standing to assert the RFRA
claim, but that injury fails the injury-in-fact and redressability
requirements.
“Standing to assert a [RFRA] claim or defense . . . shall be
governed by the general rules of standing under [A]rticle III[.]”
42 U.S.C. § 2000bb-1(c). To establish Article III standing, a
plaintiff must show (1) an “injury in fact” that is “concrete and
particularized” and “actual or imminent, not conjectural or
hypothetical[;]” (2) “a causal connection between the injury
and the conduct complained of,” or traceability; and (3) that it
is “likely, as opposed to merely speculative, that the injury will
be redressed by a favorable decision.” Lujan v. Defs. of
Wildlife, 504 U.S. 555, 560 (1992); accord United States v.
Texas, 143 S. Ct. 1964, 1970 (2023). “[S]tanding is not
dispensed in gross[;]” plaintiffs “must demonstrate standing for
each claim [they] seek[] to press and for each form of relief that
is sought.” Town of Chester v. Laroe Estates, Inc., 581 U.S.
433, 439 (2017) (quoting Davis v. Federal Election Comm’n,
554 U.S. 724, 734 (1996)). Accordingly, the Church cannot
use the standing it has to assert its tax-exemption claim to
establish standing to assert its RFRA claim.
To allege an injury-in-fact, a plaintiff must have
“suffered . . . an invasion of a legally protected interest.” Nat’l
Taxpayers Union, Inc. v. United States (“NTU”), 68 F.3d 1428,
1433 (D.C. Cir. 1995) (quoting Lujan, 504 U.S. at 560–61).
Organizations, specifically, must show “[s]uch concrete and
demonstrable injury to the organization’s activities—with [a]
consequent drain on the organization’s resources—
constitut[ing] . . . more than simply a setback to the
organization’s abstract social interests.” Id. (quoting Havens
Realty Corp. v. Coleman, 455 U.S. 363, 378 (1982)). Indeed,
15
a demonstration that “discrete programmatic concerns are
being directly and adversely affected” is required. Id. (quoting
Am. Legal Found. v. FCC, 808 F.2d 84, 92 (D.C. Cir. 1987)).
The economic injury the Church claims—the loss of the
“inherently valuable statutory right” to Section 501(c)(3) tax
exemption—is unsupported by any clear assertions about how
the economic aspect of that injury has harmed “the
organization’s activities—with [a] consequent drain on the
organization’s resources” beyond a simple “setback to the
organization’s abstract social interests.” NTU, 68 F.3d at 1433
(quoting Havens Realty, 455 U.S. at 379). The Church did
clarify before the District Court that the IRS Decision caused
the Church “loss of income and profits” and to have “no
membership income or contributions with which to carry on its
programs for three years,” J.A. 142, but even if that is so, those
supposed impacts on the Church are too vague to show a
“direct[] and adverse[]” impact on any “discrete programmatic
concerns.” NTU, 68 F.3d at 1433 (quoting Am. Legal Found.,
808 F.2d at 92).
To the degree that the Church also claims the loss of
“charitable contributions and membership income” are part and
parcel of its claimed economic injury, Appellant’s Br. 44, the
Church still fails to show traceability and redressability.
Traceability requires “[t]he ‘causal connection between the
injury and the conduct complained of’” to be “fairly traceable
to the challenged action of the defendant, and not the result of
the independent action of some third party not before the
court.” Arpaio v. Obama, 797 F.3d 11, 19 (D.C. Cir. 2015)
(quoting Lujan, 504 U.S. at 561). “‘When considering any
chain of allegations for standing purposes, [this Court] may
reject as overly speculative those links which are predictions of
future events (especially future actions to be taken by third
parties),’ as well as predictions of future injury that are ‘not
normally susceptible of labelling as ‘true’ or ‘false.’” Id. at 21
(quoting United Transp. Union v. Interstate Com. Comm’n,
16
891 F.2d 908, 913 (D.C. Cir. 1989)). Injuries from any lost
“current and future . . . income and profits” are not traceable to
the IRS Decision, J.A. 142, but instead, as the District Court
explained, “depend[] entirely on the independent decisions of
third-party donors,” Iowaska I, 2023 WL 2733774, at *6 n.7
(citing Clapper v. Amnesty Int’l USA, 568 U.S. 398, 413
(2013)).
The Church relies upon Burwell v. Hobby Lobby, 573 U.S.
682 (2014), for its standing argument, but that case is
inapposite. There, the Supreme Court determined it was
“predictable” that companies that chose to exercise their
religious right to refuse insurance coverage for contraception
and incur an Affordable Care Act (“ACA”) penalty would
either have to pay the penalty in addition to paying for
employee insurance or “face a competitive disadvantage in
retaining and attracting skilled workers” by requiring
employees to seek insurance on the ACA exchanges. Id. at
722. The Court speculated about the potential third-party
actions of workers, however, to determine whether the
contraceptive coverage requirement imposed a substantial
burden under RFRA, not to assess whether the companies had
alleged an injury-in-fact traceable to a defendant’s conduct.
The Church also urges that it has standing to assert its
RFRA claim based on the chilling and reputational injuries it
raised below, but the Church has waived these alleged bases
for standing by referencing them only vaguely in a footnote.
“A party forfeits an argument by mentioning it only ‘in the
most skeletal way, leaving the court to do counsel’s work,
create the ossature for the argument, and put flesh on its
bones.’” Gov’t of Manitoba v. Bernhardt, 923 F.3d 173, 179
(D.C. Cir. 2019) (quoting Schneider v. Kissinger, 412 F.3d
190, 200 n.1 (D.C. Cir. 2005)). An argument left so naked “is
tantamount to failing to raise it.” Al-Tamimi v. Adelson, 916
F.3d 1, 6 (D.C. Cir. 2019). Here, the Church references the
17
chilling and reputational injuries introduced below in passing
but asserts in a footnote it “does not minimize or waive its
claim of standing” based on these injuries.
Appellant’s Br. 45 n.15. However, “[w]e need not consider
cursory arguments made only in a footnote.” Hutchins v.
District of Columbia, 188 F.3d 531, 539 n.3 (D.C. Cir. 1999)
(en banc).
B.
1.
Having held that the Church lacks standing to assert its
RFRA claim, we turn to the question of whether the District
Court erred in affirming the IRS Decision.
When a taxpayer challenges an IRS denial of tax-exempt
status, “the burden is on the taxpayer seeking exemption to
demonstrate that it is in fact entitled to tax-exempt status[.]”
FSEGTR, 161 F.3d at 759. “[E]ntitlement to tax exemption
[under Section 501(c)(3)] depends on meeting certain common
law standards of charity—namely, that an institution seeking
tax-exempt status must serve a public purpose and not be
contrary to established public policy.” Bob Jones, 461 U.S. at
586; see Rev. Rul. 71-447, 1971-2 C.B. 230 (same). While “a
declaration that a given institution is not ‘charitable’ should be
made only where there can be no doubt that the activity
involved is contrary to a fundamental public policy,” Bob
Jones, 461 U.S. at 592, “the presence of a single [non-exempt]
purpose, if substantial in nature, will destroy the exemption
regardless of the number or importance of truly [non-exempt]
purposes,” Better Bus. Bureau of Washington, D.C., Inc. v.
United States, 326 U.S. 279, 283 (1945).
The District Court did not clearly err in determining that
the Church did not meet its burden here. “[T]he public purpose
18
of a charitable [organization] may not be illegal or violate
established public policy[.]” Bob Jones, 461 U.S. at 591; see
also Ould v. Washington Hospital for Foundlings, 95 U.S. 303,
311 (1878) (“A charitable use, where neither law nor public
policy forbids, may be applied to almost any thing that tends to
promote the well-doing and well-being of social man.”). The
Church’s primary organizational and operational purpose—
Ayahuasca use and ceremony—is illegal on its face without a
CSA exemption and the Church did not prove otherwise to
either the IRS or the District Court. Indeed, in its initial tax-
exemption application, the Church acknowledged that DMT “is
illegal absent the appropriate registration with the DEA or
pursuant to a judicial or other registration exemption” from the
CSA. J.A. 247. The IRS was under the same impression,
which is why the IRS both asked the Church about the status
of its CSA exemption several times while considering the
Church’s application and, ultimately, denied the Church’s
application.
Even though the Church, at some point during the
pendency of its application to the IRS, changed its tune and
began defending its past and proposed Ayahuasca use as
protected under RFRA following O Centro, the IRS’s
interpretation of O Centro to mean that “an organization does
not have to apply for . . . exemption [from the DEA] prior to
seeking relief in the courts,” not that applicants can “simply use
[Ayahuasca] without the exemption,” is correct. Id. at 333. O
Centro established that “the [CSA] do[es] not preclude
exceptions [to the use of Schedule I drugs] altogether.” O
Centro, 546 U.S. at 434. The case did not, however, establish
the presumptive legality of Ayahuasca use by any purportedly
religious group. While “RFRA . . . plainly contemplates that
courts would recognize exceptions” to the CSA, the statute
does not explicitly empower administrative agencies outside of
the DEA to make those kinds of exceptions. Id. In the absence
19
of such a decree, a citation to O Centro cannot foist the
Church’s proposed Ayahuasca use into the realm of legality for
the IRS’s Section 501(c)(3) assessment purposes without a
grant, either directly or through delegation, by Congress. Thus,
the IRS was correct in concluding that the Church’s Ayahuasca
use foreclosed its eligibility for tax-exempt status.
2.
The Church counters the preceding reasoning on several
grounds, but none of the grounds it provides persuade us to
change our holding.
To start, the Church contends that its proposed Ayahuasca
use is “presumptively legal” and, thus, cannot serve as a basis
for failing the Church on the organizational or operational tests.
Appellant’s Br. 20. This argument is unconvincing, however,
because it conflates the burden the Church would face for an
actionable RFRA claim with its burden for the instant tax-
exemption claim to obscure the fact that the Church fails to
meet the latter. 3 For a RFRA claim, an “effective[]
demonstrat[ion] that . . . [a] sincere exercise of religion was
substantially burdened” is sufficient to make out a prima facie
case. O Centro, 546 U.S. at 428. Under that framework, a
showing that an organization’s Ayahuasca ceremonies are a
“sincere exercise of religion” could be sufficient to establish
the presumptive legality of those ceremonies and shift the
burden to the government. For a tax-exemption claim,
however, the burden is both different and higher: the taxpayer
must show entitlement to tax-exempt status, which, here, puts
the onus on the Church to demonstrate that its proposed
Ayahuasca use is not “illegal” or “contrary to established
3
In light of our conclusion that the Church lacks standing to assert
its RFRA claim, we will not opine on whether it meets its burden for
that claim on the merits.
20
public policy” in the first instance. Bob Jones, 461 U.S. at 586;
see FSEGTR, 161 F.3d at 759. This is why, contrary to what
the Church says, it was not the IRS’s responsibility to presume
the Church’s Ayahuasca ceremonies were legal. It was,
instead, the Church’s job to establish that it had a CSA
exemption and it failed to do so. 4
The Church also relies on O Centro to bolster its
presumptive legality argument, asserting that, since the
Government concedes that the plaintiff’s Ayahuasca use in O
Centro was protected by RFRA, the IRS should have, without
court intervention, conceded the same as to the Church’s
Ayahuasca use. But the Church’s conclusion falters because it
is premised on a misinterpretation of the precedent. The
Supreme Court ruled in favor of the plaintiff in O Centro, in
part, because the Court deemed the DEA’s justification for
withholding a CSA exemption for the plaintiff’s religious
Ayahuasca use—namely, the need for uniform application of
the CSA—an insufficiently “compelling government interest”
in that context. See O Centro, 546 U.S. at 437. Here, as even
O Centro notes, the IRS Decision and the attendant tax
regulatory scheme could be justified by a compelling
government interest that necessitates uniform application. See
id. at 435 (citing the tax exemption cases United States v. Lee,
455 U.S. 252, 258 (1982), and Hernandez v. Comm’r, 490 U.S.
680, 700 (1989), as examples of where the Court scrutinized an
exemption request and determined “the denied [religious]
exemptions could not be accommodated” in the face of a
4
The Church’s related argument that RFRA is both a “remedial
cause of action” and a “substantive restriction[] on the Government”
that “sets substantive standards about what conduct the Government
can and cannot deem illegal (or otherwise restrict)” fails for the same
reason—the Church cannot leapfrog its way to shifting the RFRA
burden to the Government when it has not, first, established that it
has standing to assert the claim. Appellant’s Br. 22.
21
“compelling interest in uniform application of a particular
program”). The difference between the IRS and CSA
regulatory schemes is significant enough to render O Centro
inapposite on this point and in this posture.
The Church’s final argument in support of presumptive
legality—that “RFRA effectively amended the CSA” to protect
Ayahuasca use as a sincere religious exercise—is also plainly
wrong. Appellant’s Reply Br. 8. “Where there is no clear
[congressional] intention otherwise, a specific statute will not
be controlled or nullified by a general one.” Morton v.
Mancari, 417 U.S. 535, 550–51 (1974). Here, there is no
indication that Congress intended RFRA to amend, control, or
nullify the CSA, which is the more specific statute of the two.
The IRS’s deference to the CSA was, thus, warranted.
The Church next argues that the District Court, in
declining to entertain whether the Church had made a sufficient
showing to the DEA that it qualified for a CSA exemption,
impermissibly introduced an “exhaustion of administrative
remedies” requirement. Appellant’s Br. 26. This contention
relies on a mischaracterization of the District Court’s
reasoning, however. The District Court merely held, as RFRA
provides, that the IRS properly concluded that the Church’s
Ayahuasca use “remains illegal under federal law” until “[the
Church] obtains a CSA exemption.” Iowaska I, 2023 WL
2733774, at *5. The District Court did not purport to require
the Church to pursue an exemption exclusively through the
DEA. Instead, it reasonably suggested that the Church had
sued the wrong agency, erecting no barrier to the Church
pursuing exemption through judicial action with the right party
on the other side of the “v.”
The precedent the Church cites to further support its
administrative exhaustion argument is neither on point nor
binding on this Circuit. Oklevueha Native American Church of
22
Hawaii, Inc. v. Holder, which the Church cites to say that
courts “have repeatedly rejected [the] argument” that RFRA
permits exhaustion requirements, Appellant’s Br. 24,
addressed whether a church could obtain a CSA exemption in
the courts without first seeking an exemption with the DEA.
676 F.3d 829, 833 (9th Cir. 2012). The Ninth Circuit
concluded courts can review “a RFRA-based challenge to the
CSA without requiring that the plaintiffs first seek a religious
use exemption from the DEA,” but did not deny that an
exemption in some form is necessary prior to engaging in
religious acts that would otherwise be illegal under the CSA.
Id. at 838.
The Church’s remaining arguments that it nevertheless
passes the organizational and operational tests are, likewise, in
vain. In its brief, the Church leans on the Supreme Court’s
decision in Bob Jones for its announcement that “a declaration
that a given institution is not ‘charitable’ should be made only
where there can be no doubt that the activity involved is
contrary to a fundamental public policy”—a passage the
Church refers to as the “no doubt” rule—to say that the IRS
could not have based its decision on the Church’s Ayahuasca
use because the legality of that use is “uncertain.” Bob Jones,
461 U.S. at 592. The Church is, again, wrong on this point;
while the “no doubt” rule may be sufficient to save an
organization committed to unpopular but not illegal activities,
it is insufficient to counter the explicitly illegal activity of using
and distributing a DMT-rich substance without a CSA
exemption. See Ould, 95 U.S. at 311.
The Church offers additional explanations for why it
passes the organizational and operational tests even if its
proposed Ayahuasca use were to be deemed fully illegal, but
those explanations, too, are unpersuasive. Addressing the
organizational test first, the Church argues its proposed
Ayahuasca use in its articles of incorporation is “aspiration[al]”
23
and does not specify how “‘access’ will be offered” or “commit
to doing so in an illegal manner.” Appellant’s Br. 39–40. But
in pointing this out, the Church ignores that the applicable
regulation itself requires the IRS to discern “the organization’s
purposes . . . by the terms of [the organization’s] articles.”
26 C.F.R. § 1.501(c)(3)-1(b)(1)(ii). Whether aspirational or
not, the Church plainly listed the provision of Ayahuasca in
religious ceremony as a purpose and the IRS reasonably
incorporated that purpose into its organizational test
assessment.
The Church finally contends that the savings clause in its
articles of incorporation proves that it does not “expressly
empower the organization to engage . . . in [non-exempt]
activities.” Id. § 1-501(c)(3)-1(b)(1)(i)(B). This contention is
lacking because the Church forfeited its savings clause
argument by failing to raise it before the District Court.
Bernhardt, 923 F.3d at 179 (“Absent exceptional
circumstances, a party forfeits an argument by failing to press
it in district court.”). 5
* * * * *
For the foregoing reasons, we affirm the judgment of the
District Court as to the Church’s tax-exemption claim. Given
that the District Court’s order granted the Government’s
motion for summary judgment but did not clearly articulate that
the Church’s RFRA claim was dismissed for lack of standing,
we affirmatively dismiss the Church’s RFRA claim here.
5
The Church further argues that it passes the operational test because
it has conducted, and continued to conduct, other religious and
charitable activities that are unrelated to Ayahuasca ceremonies. The
Church makes this claim for the first time on appeal, however, so we
cannot consider it. Bernhardt, 923 F.3d at 179.
24
So ordered.