Who's Afraid of the APA?

14 Pages·2013·0.24 MB·English

by  David J. Shakow

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Faculty Scholarship at Penn Law
2-13-2012
WWhhoo’’ss AAffrraaiidd ooff tthhee AAPPAA??
David J. Shakow
University of Pennsylvania Carey Law School
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SPECIAL REPORT
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Who’s Afraid of the APA? Mayo1hasstirredconcernamongmembersofthe 20
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taxbar.BydaringtosaythattheIRSisjustlikeany 2
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By David J. Shakow otatxhebrafredsecrraalmabgleinncgy,ttoheacScuupmreumlaeteCothuertehxapselretfistethiet ll rig
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needs to navigate the rules of administrative law. ts
David J. Shakow is coun- res
sel at Chamberlain, The initial focus of attention has been the appli- erv
Hrdlicka,White,Williams& cation of Chevron,2 the immediate subject of Mayo. ed
Autrey’s Philadelphia office Tax practitioners quickly learned that Chevron re- . T
a
and professor emeritus at quiresatwo-stepanalysis:whetherthewordsofthe x A
theUniversityofPennsylva- n
statute are clear and, if not, whether the adminis- a
nia Law School. He would ly
like to thank his Penn col- trator’s action is reasonable. That test may seem sts
pretty simple. But it turns out that in the adminis- d
league, Matt Adler, for spe- o
e
cial efforts in helping him trative law community, the precise application of s n
admiDnaivsidtrJa.Sthivakeowlaw.HeuanlsdoetrhsatannkdshthiseCinhtarimcabceirelsaoinf CAhsesvorcoinatiiosnunAcdlmeairn.isStirnatcieve20L0a7w, thReevAiewmehriacsanpBuabr- ot cla
caonlleeaagrluieerDvuesrtsiinonCoovfeltlhoeforrephoirst.caArenfyulerrervoireswaoref laibshoeudt 4n3inaertaicrlteicslehsavweitchitCedheCvrhoenvrionntihneitrhatittltei,m3 ea.nd im cop
Shakow’sown.SpecialthankstoBillDraperofthe y
Pennlawlibraryforhelpingfindsomeofthemore ButbeyondChevron,thetaxbarrecognizesthatif righ
obscure documents needed for this report. IRS regulations are like any other agency’s regula- t in
a
The Supreme Court’s decision in Mayo means tions,thentheyaregovernedbythesamerulesthat ny
that tax practitioners must be more sensitive to governotheragencyregulationsandspecificallyare pu
b
administrativelawandjudicialdeferencetoadmin- subjecttotheAdministrativeProcedureAct(APA).4 lic
istrative rules. This report reviews some of the Tax practitioners also will presumably need to do
important doctrines that apply. m
a
in
Copyright 2012 David J. Shakow. o
All rights reserved. r th
1MayoFoundationforMedicalEducationandResearchv.United ird
States,131S.Ct.704(2011),Doc2011-609,2011TNT8-10. p
a
Table of Contents 4672CUh.Sev.r8o3n7U(1S9A84I)n.c. v. Natural Resources Defense Council Inc., rty c
o
3RandolphJ.May,‘‘DefiningDeferenceDown,Again:Inde- n
te
I. Operation of the APA . . . . . . . . . . . . . . . . 826 pendent Agencies, Chevron Deference, and Fox,’’ 62 Admin. L. n
II. The Deference Standards . . . . . . . . . . . . . 826 Rev. 433 (2010); William S. Jordan III, ‘‘Chevron and Hearing t.
Rights: An Unintended Combination,’’ 61 Admin. L. Rev. 249
III. Legislative vs. Interpretive Regulations . . . 827
(2009); John S. Kane, ‘‘Refining Chevron — Restoring Judicial
IV. Chevron’s Step 1: Statute Compliance . . . . 828 Review to Protect Religious Refugees,’’ 60 Admin. L. Rev. 513
V. Chevron’s Step 2: Approved (2008); Abigail R. Moncrieff, ‘‘Reincarnating the ‘Major Ques-
Interpretation? . . . . . . . . . . . . . . . . . . . . 829 tions’ Exception to Chevron Deference as a Doctrine of Nonin-
terference (or Why Massachusetts v. EPA Got It Wrong),’’ 60
VI. Interpretive Regulations — Skidmore . . . . 830
Admin.L.Rev.593(2008);AnnGraham,‘‘SearchingForChevron
VII. IRS Positions Other Than Regulations . . . 831 in Muddy Waters: The Roberts Court and Judicial Review of
VIII. Agency’s Interpretation of Its Own Rules . 832 AgencyRegulations,’’60Admin.L.Rev.229(2008);ElizabethV.
Foote,‘‘StatutoryInterpretationorPublicAdministration:How
IX. The Good Cause Exception . . . . . . . . . . . . 833
Chevron Misconceives the Function of Agencies and Why It
X. Retroactive Rules . . . . . . . . . . . . . . . . . . . 834 Matters,’’59Admin.L.Rev.673(2007);LindaJellum,‘‘Chevron’s
A. The Statutory Structure — Section 7805 . 834 Demise:ASurvey of Chevron From Infancy to Senescence,’’ 59
B. The Judicial Gloss . . . . . . . . . . . . . . . . . 834 Admin. L. Rev. 725 (2007); Daniel J. Gifford, ‘‘The Emerging
Outlines of a Revised Chevron Doctrine: Congressional Intent,
XI. One Last Look at Mayo . . . . . . . . . . . . . . 835
Judicial Judgment, andAdministrativeAutonomy,’’ 59 Admin.
XII. Conclusion . . . . . . . . . . . . . . . . . . . . . . . 837 L.Rev.783(2007);DavidS.Rubenstein,‘‘PuttingtheImmigra-
tion Rule of Lenity in Its Proper Place: A Tool of Last Resort
AfterChevron,’’59Admin.L.Rev.479(2007).Thetitlesofsome
ofthearticlessuggestthatallisnotwell(oratleastclear).
45U.S.C.section551ff.
TAXNOTES,February13,2012 825
COMMENTARY/SPECIALREPORT
become more expert in theAPA, although the act’s II. The Deference Standards
significance certainly has not been ignored by the The issue highlighted in Mayo is the deference (C
tax community.5 thatistobegiventoadministrativerules.Thereare ) T
two main standards of deference given to adminis- a
x
In this report, I hope to identify some of the trative pronouncements. Some pronouncements — A
n
majorissuesinthejudicialreviewofadministrative a
sometimes referred to as legislative regulations — ly
actions, particularly as they apply to tax rules. If I get Chevron deference. Lesser pronouncements — sts
am successful, the reader will have more questions sometimes called interpretive regulations — get 20
1
after reading the report than before. only Skidmore deference.14 2. A
I. Operation of the APA a tAwso-msteenptiaonnaeldysbise:fore,Chevrondeferenceinvolves ll rig
h
ts
Here is the barest outline of administrative prac- When a court reviews an agency’s construc- re
tice as it pertains to the promulgation of agency tion of the statute which it administers, it is se
rv
rules:TheAPArequiresagenciestopublishanotice confronted with two questions. First, always, e
d
ofproposedrulemakingintheFederalRegister.6The is the question whether Congress has directly . T
a
notice containing the proposed rule should include spoken to the precise question at issue. If the x
A
astatementofthelegalbasisoftherule.Thepublic intentofCongressisclear,thatistheendofthe n
a
mustthenbegiventheopportunitytocommenton matter; for the court, as well as the agency, lys
the proposed rule.7 After considering those com- must give effect to the unambiguously ex- ts d
ments, the agency can promulgate the final rules pressed intent of Congress. If, however, the oe
s
with a statement of their basis and purpose.8 court determines Congress has not directly no
addressed the precise question at issue, the t c
Those provisions mean that regulations pub- court does not simply impose its own con- laim
lished with notice and comment comply with the structiononthestatute,aswouldbenecessary c
o
APA.9 However, there are a number of important in the absence of an administrative interpreta- py
exceptions. The most important for our purposes is tion. Rather, if the statute is silent or ambigu- rig
h
that interpretive rules are not subject to the notice ous with respect to the specific issue, the t in
and comment requirement.10Also, notice and com- question for the court is whether the agency’s an
y
ment are not required when the agency ‘‘for good answer is based on a permissible construction p
u
cause finds’’ that they are ‘‘impracticable, unneces- of the statute.15 blic
sary, or contrary to the public interest.’’11 The Essentially, Congress has allowed an agency to d
o
m
agency must include its findings and the reasons make a rule that will bind the courts. The agency’s a
behind them when it publishes the rule. Finally, rule can be disregarded only if it is contrary to the in o
notice and comment are not required for ‘‘rules of statute on which it is purportedly based or is not a r th
agency organization, procedure, or practice.’’12 permissible construction of the statute. The court’s ird
view of whether the agency, in interpreting an pa
The rule’s effective date normally cannot be ambiguous statute, has taken the best approach to rty
soonerthan30daysafterpublicationunlesstherule the issue is of no consequence. con
grantsanexemption,theruleisaninterpretiverule, Skidmore deference is not as sweeping: ten
or there is good cause for a different effective date t.
We consider that the...interpretations...of
(which must be published with the rule).13
the Administrator...while not controlling
upon the courts by reason of their authority,
do constitute a body of experience and in-
formed judgments to which courts and liti-
5See,e.g.,PeterA.LowyandJuanF.Vasquez,‘‘HowRevenue
gants may properly resort for guidance. The
Rulings Are Made and the Implications of That Process for
Judicial Deference,’’ 101 J. Tax’n 230 (2004); Michael Asimow, weight of such a judgment...will depend
‘‘PublicParticipationintheAdoptionofTemporaryTaxRegu- upon the thoroughness evident in its consid-
lations,’’44TaxLaw.343(1991). eration,thevalidityofitsreasoning,itsconsis-
65U.S.C.section553(b).
tency with earlier and later pronouncements,
75U.S.C.section553(c).
8Id.
9See infra text accompanying notes 18-21 for the possibility
thatrulespromulgatedinotherwaysmaygetthesamedefer-
enceasthosepromulgatedundernoticeandcomment. 14323 U.S. 134 (1944).Aseparate aspect of deference is that
105U.S.C.section553(b)(A). theCourtgivesdeferencetoanagency’sinterpretationofitsown
115 U.S.C. section 553(b)(B). The good cause exceptions are regulations.Bowlesv.SeminoleRockCo.,325U.S.410(1945);Auer
discussedinPartIX,below. v. Robbins, 519 U.S. 452 (1997). This is discussed in Part VIII,
125U.S.C.section553(b)(A). below.
135U.S.C.section553(d). 15Chevron,467U.S.at842-843.
826 TAXNOTES,February13,2012
COMMENTARY/SPECIALREPORT
and all those factors which give power to at all.22 That helps explain the flood of academic
persuade, if lacking power to control.16 literature questioning the actual effects of Chevron
(C
When Skidmore applies, the issue is narrower. in the courts. ) Ta
x
Courts should defer to agency rules because the III. Legislative vs. Interpretive Regulations An
agency has expertise in the area and deals with the a
ly
full scope of the issues all the time. However, the Before Mayo, it was not clear that the Supreme sts
court can still conclude that it is unpersuaded by Court applied the normal Chevron rules of defer- 2
0
the agency’s reasoning and opt for a decision it ence in tax cases.As the Court recognized in Mayo, 12
prefers. its prior decisions sometimes allowed courts to use . A
The current state of the law is, as described a lesser form of deference based on the test in ll righ
above, to give the lesser Skidmore deference to nNeartsiondalisMtinugffuleirs.h23edAlsloe,gibselafotirveeMraeygou,ltaatxiopnrsacftritoimo- ts re
interpretiveregulationsundertheSupremeCourt’s s
decision in Christensen v. Harris County.17 iwnatesrsppreetciivfiecarlelgyualuattihoonrsizbeadsetodiossnuewthheethreegruthlaetioIRnSs erved
The Court in United States v. Mead Corp.18 indi- (for example, the consolidated return regulations . T
a
catedthatitispreparedtoextendChevrondeference authorized by section 1502).24 At the time, the x A
to some pronouncements that are not legislative significance of making the distinction seemed na
ly
regulations. The exact boundaries of the Mead rule limited.Apractitioner might have wanted to assert s
ts
areunclear.19NoSupremeCourtdecisionhasrelied that a regulation was legislative if the IRS had d
o
onMeadtogiveChevrondeferencetoarulethatwas failed to comply strictly with the rules of the APA e
s
not promulgated with notice and comment pro- in connection with legislative regulations.25 no
cedures. Any deviation from the notice and com- t c
TheSupremeCourtinMayorejectedtheapplica- la
ment requirement would be most important in the im
tax area if the IRS wanted the courts to grant tciaosneso.2f6NMatoiroenoavleMr,uoffnlerthraethqeuretshtiaonnCohfevwrohnictho ttaaxx cop
Chevron deference to revenue rulings. There has y
regulations should be viewed as legislative regula- rig
beenseriousdiscussionregardingwhetherIRSpro- h
nouncements other than regulations, such as rev- tions to which Chevron would apply, the opinion t in
states:‘‘Ourinquiryinthatregarddoesnotturnon a
enue rulings, might be subject to Chevron n
whether Congress’s delegation of authority was y
deference.20 However, the Justice Department has generalorspecific.’’27And,astheCourtrecognizes, pub
indicated that it will not argue for Chevron defer- the regulation in Mayo was issued ‘‘pursuant to the lic
ence for revenue rulings and revenue procedures.21 d
explicit authorization to ‘prescribe all needful rules o
m
The description above makes it seem that there andregulationsfortheenforcement’oftheInternal ain
arereasonablyclearlinesseparatingtypesofdefer- Revenue Code.’ 26 U.S.C. section 7805(a).’’28 In o
ence and the circumstances under which they are otherwords,theexplicitauthorizationoftheIRSin r th
ird
appropriately applied. Studies of Supreme Court p
a
decisions have raised serious questions about that rty
conclusion, pointing to many cases when justices c
o
applieddifferentrulesofdeference,ornoclearrule 22E.g.,CanoN.RasoandWilliamN.EskridgeJr.,‘‘Chevronas nte
a Canon, Not a Precedent:An Empirical Study of What Moti- n
vatesJusticesinAgencyDeferenceCases,’’110Columb.L.Rev. t.
1727(2010).
23440U.S.472(1979);seeMayo,131S.Ct.at712.
16Skidmore, 323 U.S. at 140; see the discussion of Skidmore 24SeeAmericanBarAssociationSectionofTaxation,‘‘Report
deference,below,PartVI. of the Task Force on Judicial Deference,’’ 57 Tax Law. 717, 728
17529U.S.576(2000). (2004);Coverdale,‘‘CourtReviewofTaxRegulationsandRev-
18533U.S.218(2001);seealsoBarnhartv.Walton,535U.S.212, enueRulingsintheChevronEra,’’64Geo.Wash.L.Rev.35,49-50
222 (2002) (dicta indicates that the Court would grant Chevron (1995)(criticizingthedistinction);Hickman,‘‘ColoringOutside
deference to a rule announced through ‘‘less formal’’ means the Lines: Examining Treasury’s (Lack of) Compliance With
thannoticeandcomment);Edelmanv.LynchburgCollege,535U.S. Administrative Procedure Act Rulemaking Requirements,’’ 82
106 (2002) (Chevron deference ‘‘does not necessarily require an NotreDameL.Rev.1727,1761(2007).Thatpurporteddistinction
agency’s exercise of express notice-and-comment rulemaking wasoccasionallyacceptedbythecourts.E.g.,AbbottLaboratories
power’’). v.UnitedStates,84Fed.Cl.96,110(Ct.Fed.Cl.2008).TheCourt
19See Lisa S. Bressman, ‘‘How Mead Has Muddled Judicial in Mayo admitted that it, too, had sometimes drawn that
ReviewofAgencyAction,’’58Vand.L.Rev.1443(2005). distinction.Mayo,131S.Ct.at713.
20See generally Kristin E. Hickman, ‘‘IRS Guidance: The No 25See,e.g.,Hickman,‘‘AProblemofRemedy:Respondingto
Man’sLandofTaxCodeInterpretation,’’2009Mich.St.L.Rev. Treasury’s(Lackof)CompliancewithAdministrativeProcedure
239(2009). Act Rulemaking Requirements,’’ 76 Geo. Wash. L. Rev. 1153
21MarieSapirie,‘‘DOJWon’tArgueforChevronDeferencefor (2008).
RevenueRulingsandProcedures,OfficialSays,’’TaxNotes,May 26Mayo,131S.Ct.at713.
16, 2011, p. 674, Doc 2011-9936, 2011 TNT 90-7. This issue is 27Id.at713-714.
discussedfurtherinPartVII,below. 28Id.at713.
TAXNOTES,February13,2012 827
COMMENTARY/SPECIALREPORT
this case was its general authority to promulgate IV. Chevron’s Step 1: Statute Compliance
regulations in section 7805. Thus, most IRS regula- Section706oftheAPAprovidesthat‘‘thereview- (C
tions will be subject to Chevron deference. ingcourtshalldecideallrelevantquestionsoflaw.’’ ) T
a
That reflects the rather basic pronouncement in x
There is an important caveat to the conclusion A
Marbury v. Madison34: ‘‘It is emphatically the prov- n
that IRS legislative regulations are worthy of Chev- a
rdoenfedreefnecree,nictei.sAimspreofrletacntetdthinatMthaeyIoR,tSoumseerniottCicheevarnodn iwnhceatatnhde dlauwtyiso.’f’ tThheusJu, daicrieagludlaetpioanrtmcaennntottopsaasys lysts 20
muster unless the court first finds that the regula- 1
comment procedures that the APAmandates29: 2
tionisconsistentwiththelanguageofthestatute.It . A
TheDepartmentissuedthefull-timeemployee is not necessary that the statute have only one ll rig
meaning, but the regulation must comport with a h
rule only after notice-and-comment pro- ts
cedures...again a consideration identified in possible meaning of the statute. re
s
e
our precedents as a ‘‘significant’’ sign that a A short discussion of the substance of Chevron’s rv
e
rule merits Chevron deference. Mead, supra at two-step analysis is impossible. The courts have d
230-231; see, e.g., Long Island Care at Home Ltd. appliedthedecisioninmyriadcases,andthereisno . Ta
x
v. Coke, 551 U.S. 158, 173-174 (2007). easy summary of how they approach its applica- A
n
tion. Accordingly, the Chevron approach does not a
ly
The classification of most IRS regulations as lead to uniform, predictable results. A careful em- sts
legislative for APApurposes may raise more prob- pirical study of post-Chevron cases concludes that d
o
lems for the IRS than it wishes to acknowledge. A even after Chevron, judges’ decisions are signifi- es
n
study of 232 IRS regulations projects for which cantly influenced by their own personal beliefs — o
Treasury published final regulations (T.D.s) or no- conservativejudgescontinuetoruleconservatively t cla
tices of proposed rulemaking (NPRMs) between and liberal judges continue to rule liberally.35 im
c
2003 and 2005 revealed that the IRS followed the An example of a step-one Chevron case is INS v. op
y
traditional APA process (NPRM followed by final Cardoza-Fonseca.36 Until 1980, an alien was eligible rig
h
regulations) less than 60 percent of the time.30 forasylumonlyif‘‘itismorelikelythannotthatthe t in
About 90 percent of the projects in which APA alien would be subject to persecution.’’ A 1980 a
n
procedures were not followed resulted from the amendment authorizes asylum if an alien has a y p
IRS’s issuance of temporary regulations without ‘‘well-founded fear of persecution.’’ The Immigra- ub
notice and comment.31 Indeed, in more than 90 tionandNaturalizationServicesaidthatwasessen- lic d
percent of the projects, whether APA procedures tiallythesametest,buttheCourtheldthatthatwas om
were followed or not, the IRS determined thatAPA not the case. The first test is objective; the second ain
has subjective elements. Moreover, the fact that o
section 553(b) did not apply to the regulation in Congresschangedthelanguageisanindicationthat r th
question.32 After Mayo, that is no longer the case.33 ird
the tests are not the same. p
a
In applying step one of Chevron, the Court has rty
c
indicated that it will use ‘‘traditional tools of statu- o
n
29Id.at714.Asnotedsupra,textaccompanyingnotes18-21, tory construction.’’37 What those tools are38 and ten
the Court in Mead left open the possibility that Chevron defer- whether their use is appropriate are subjects of t.
encewouldbegiventorulesnotpromulgatedwithanoticeand considerable controversy. Unfortunately, different
commentprocedure. judges may rely on the same tool and come to
30Hickman,supranote25.
31TheDOJwillcontinuetoarguethattemporaryregulations
deserve Chevron deference, apparently relying on the rule in 5
U.S.C. section 553(b)(B) that notice and comment procedures
need not be used if doing so would be ‘‘impracticable, unnec- 345U.S.(1Cranch.)137,177(1803).
essary, or contrary to the public interest,’’ but won’t argue for 35ThomasMilesandCassSunstein,‘‘DoJudgesMakeRegu-
Chevron deference for proposed regulations. See Sapirie, supra latoryPolicy?AnEmpiricalInvestigationofChevron,’’73U.Chi.
note 21. Section 7805(e)(1) now requires the IRS to issue L. Rev. 823 (2006). In the years immediately after Chevron was
proposedregulationswheneveritissuestemporaryregulations. decided,thatseemsnottohavebeenthecase,andhowChevron
However,itdoesnotfollowthatthetemporaryregulationswill would be applied was more predictable. See Peter H. Schuck
necessarily merit Chevron deference if accompanied by pro- and E. Donald Elliot, ‘‘To the Chevron Station: An Empirical
posedregulations. Study of Federal Administrative Law,’’ 1990 Duke L.J. 984;
32Hickman,supranote25,at1749.Apparently,thatfollowed Richard L. Revesz, ‘‘Environmental Regulation, Ideology, and
frominstructionsintheIRSManual.Id.at1749n.91.Hickman theD.C.Circuit,’’83Va.L.Rev.1717(1997).
assertsthatitshouldn’tmatteriftheIRSdisclaimstheneedfor 36480U.S.421(1987).
compliancewiththeAPAproceduresifitfollowsthemanyway. 37Chevron,467U.S.at843n.9.
33Whether the issuance of temporary and proposed regula- 38Possible tools include congressional purpose, canons of
tions is in compliance with theAPA’s good cause exception is construction, legislative history, and the plain meaning of the
discussedinPartIX,below. statute.
828 TAXNOTES,February13,2012
COMMENTARY/SPECIALREPORT
opposite conclusions.39 Prof. Richard Pierce, in the V. Chevron’s Step 2: Approved Interpretation?
leading administrative law textbook, argues that Many cases that require a Chevron analysis reach (C
allowing courts to use the full gamut of tools of steptwo.Butthetestappearstobeadifficultoneto ) T
statutoryconstructionwouldvirtuallyeliminatethe apply. Pierce says45: ax
A
deferencecourtsshouldbepayingtoadministrative It seems apparent that step two of Chevron is na
action.40 He advocates limiting the tools to plain ly
State Farm [Motor Vehicle Manufactures Ass’n v. s
meaning (limited to any definition in a reputable State Farm Mutual Automobile Ins. Co., 463 U.S. ts 2
0
dictionary) and the constitutional avoidance canon 29 (1983)]. The Court has never explicitly so 1
2
(strike down an administrative construction of am- held, but it has applied Chevron step two in . A
biguous language that raises a serious constitu- that manner in many cases, including Chevron ll rig
tionalquestion).Heisparticularlywaryofallowing and Smiley [v. Citibank, 517 U.S. 735 hts
the courts, rather than the administrative agencies, (1996)]....Thus, a court’s task in applying re
s
to use legislative history. Chevron step two is to determine: (1) whether e
rv
the agency adequately discussed plausible al- ed
Tax lawyers have experienced the problem of ternatives, (2) whether the agency adequately . T
decidingwhetherastatuteisclearonitsfaceinthe discussed the relationship between the inter- ax A
section 6501(e) controversy. The section 6501(a) pretation and pursuit of the goals of the stat- na
question that courts have confronted recently is ute, (3) whether the agency adequately lys
whether the statute of limitations governing a tax discussed the relationship between the inter- ts d
liability resulting from the disallowance of inflated pretation and the structure of the statute, in- oe
s
basis is six years because the inflation results in a cluding the context in which the language n
o
substantial understatement of income. The Seventh appears in the statute, and (4) whether the t c
la
Circuit in Beard v. Commissioner41 held that the agency adequately discussed the relationship im
taxpayer loses under the first Chevron step — the betweentheinterpretationandanydataavail- co
p
statute’s language clearly supports the govern- able with respect to the factual predicates for y
ment’s position. On the other hand, the Fourth the interpretation. righ
Circuit, in Home Concrete & Supply LLC v. United t in
That description clearly focuses on the reasons a
States,42 relying in part on a Supreme Court deci- given by the administrative agency in considering ny
sion,43 held that the statute unambiguously favors and finalizing its regulations. Without notice and pu
b
the taxpayer. That controversy will presumably be comment, it is not easy to satisfy those require- lic
d
settled by the Supreme Court, which accepted cer- ments. o
m
tiorariandhasheardargumentsinHomeConcrete.44 In a recent decision, the Supreme Court consid- ain
eredaBoardofImmigrationAppealspolicyforde- o
ciding when an alien can apply to the attorney r th
ird
generalforrelieffromdeportation.TheCourtevalu- p
a
39E.g.,K-MartCorp.v.CartierCorp.,486U.S.281(1988)(two atedthepolicybasedonwhetheritwasarbitraryor rty
opinions reach opposite conclusions relying on congressional capricious under APA section 706(2)(A). Although c
o
intent);Rustv.Sullivan,500U.S.173(1991)(majorityanddissent acknowledgingthatthescopeofitsreviewwasnar- nte
construe statute to avoid grave doubts about constitutionality, n
andreachoppositeconclusions).Inothercases,thejusticesrely row,inlightoftheexpertiseoftheagency,theCourt t.
asserted that its role was to ensure that the agency
ondifferentcanonsandreachoppositeconclusions.E.g.,Public
Citizen v. Department of Justice, 491 U.S. 440 (1989) (majority ‘‘engaged in reasoned decisionmaking.’’ The gov-
reliesonlegislativehistory;dissentreliesonplainmeaning).For ernment argued that the Court should apply Chev-
usefuldiscussionsofparticularcanons,seeStephenBreyer,‘‘On ron’s step two. The Court’s response was twofold.
the Uses of Legislative History in Interpreting Statutes,’’ 65
First,citingMayo,theCourtsaiditsanalysiswould
U.S.C. L. Rev. 845 (1992); Michael Herz, ‘‘Judicial Textualism
Meets Congressional Micromanagement; A Potential Collision bethesameasitssection706(2)(A)analysis,because
inCleanAirActInterpretation,’’16Harv.Env.L.Rev.175(1992). Mayo characterized Chevron’s step two as asking
40Richard J. Pierce Jr., Administrative Law Treatise 238-240 whethertheagencyinterpretationwas‘‘arbitraryor
(2010). For a general discussion, see Adrian Vermeule, ‘‘Inter-
capricious in substance.’’46 More interestingly, the
pretiveChoice,’’75N.Y.U.L.Rev.74(2000).Ontheuseofplain
meaning, see Frederick Schauer, ‘‘Statutory Construction and
theCoordinatingFunctionofPlainMeaning,’’1991Sup.Ct.Rev.
231.
41633F.3d616(2011),Doc2011-1764,2011TNT18-10. ments/argument_transcripts/11-139.pdf.Thejusticesintheoral
42634F.3d249(2011),Doc2011-2674,2011TNT26-7. argument seemed concerned with trying to determine when a
43ColonyInc.v.Commissioner,357U.S.28,37(1958). statuteis‘‘ambiguous.’’
44The order granting certiorari is available at http:// 45Pierce,supranote40,at219.
www.supremecourt.gov/orders/courtorders/092711zr.pdf. A 46Judulangv.Holder,181L.Ed.2d449(2011)(slipop.at9n.7),
transcriptoftheoralargument,whichwasheldonJanuary17, citingMayo,131S.Ct.at711(quotingHouseholdServicesInc.v.
can be found at http://www.supremecourt.gov/oral_argu Pfennig,541U.S.232,242(2004)).
(Footnotecontinuedinnextcolumn.)
TAXNOTES,February13,2012 829
COMMENTARY/SPECIALREPORT
CourtheldthatChevrondidnotapplybecausethere issued under the authority of a particular code
was no statute to interpret. The statute gave the provision or section 7805. I also note that the DOJ
(C
administratortheauthoritytoallowanalienintothe does not intend to argue that other IRS pronounce- ) T
country even if the alien had run afoul of enumer- ments, such as revenue rulings, warrant Chevron a
x
atedgroundsforexclusion.Theagency,asamatter deference.52Accordingly,theyshouldwarrantSkid- An
a
of equity, extended that discretion to cases of de- more deference — the courts should consider their ly
s
portation.47 Because the statute did not discuss de- persuasivepowerinlightoftheagency’sexpertise. ts
2
portation, the Court fell back on its usual standard 0
What factors are taken into account in applying 1
of whether the agency’s actions were arbitrary or Skidmore deference? One long-recognized factor is 2. A
capIfritchioatuhs,awsiatnhyoubtroreafdeerernscigentoifiCcahnevcreo,nitpmreacyedaellnotws. wstahteutthee;ratnhoetghueirdaisncwehisetchoenrteimt pisorlaonnegoustsawnditihngth.5e3 ll righ
courts more latitude in evaluating agency actions Certainly,ifthosetwofactorsarepresent,theguid- ts re
that are not clearly tied to particular statutory ance gains additional significance, although it does se
language. Take, for example, the controversy over not mean courts will necessarily accept an admin- rve
d
whetheraninnocentspouseissubjecttoatwo-year istrative position that has both factors.54 . T
deadline to ask for equitable relief under section ax
6015(f).48AstheThirdCircuitsaidinupholdingthe One example of a court applying Skidmore is An
General Electric Co. v. Gilbert.55 In that case, the a
IRS’s position imposing the two-year limit: ly
company’s disability plan excluded benefits for s
ts
Section 6015 tells us nothing about when pregnancy. An Equal Employment Opportunity d
o
claimsmaybebroughtundersubsection(f)as Commission (EEOC) guideline required disability es
the section does not address this point.49 benefits to be applied to disability related to preg- no
Thecourtthenwentontoanalyzethevalidityof nancy under the Civil Rights Act’s prohibition of t cla
theIRSpositionusingaChevronanalysis.Inlightof discrimination because of sex. The Court rejected im
Judulang, it is possible that a court would grant the the EEOC guideline using the Skidmore standard, cop
IRS’s position less deference if a similar case came arguing that it was not contemporaneous with the yrig
uadpdroenscsethietiscsounec.5lu0dBeadsedthoantJuthdeulasntga,tuatecondcildusnioont sEtEaOtuCte,,acnodntrwadenictteadgaainnsetartlhieerginenteerrparletteantioornooff tthhee ht in a
that the statute did not address the issue would legislative history. ny
p
mean that Chevron was not applicable. ExactlywhatconstitutestheSkidmorestandardis u
b
In any event, when Chevron step-two analysis is ultimately a subject of debate. A study of cases lic d
appropriateandthereisnoproceduralimpediment decided between 2001 and 2006 that purported to om
to the agency’s issuing its rule, courts likely will use Skidmore deference identified two forms of ain
uphold the agency rule in most cases. A study deference.56 In one, a court exercises independent o
published in 1998 found that courts upheld the judgmentinevaluatinganagencyrule,whichboils r th
ird
agency rule in 89 percent of cases in which a p
a
Chevron step-two analysis was conducted.51 rty
c
o
VI. Interpretive Regulations — Skidmore 5523SEe.ge.,SaNpoirrwiee,gsiuanprNaintrootgee2n1C. o. v. United States, 288 U.S. 294, nten
As explained above, it would seem to follow 315 (1933) (Cardozo, J.) (contemporaneous guidance left intact t.
from Mayo that substantive IRS regulations are —thisfactorwasrecognizedasearlyasEdwards’Lesseev.Darby,
25U.S.(12Wheat.)206,210(1827));UnitedStatesv.LeslieSaltCo.,
legislative in nature, because they generally are
350U.S.383,396(1956)(positionlongstanding).
54See, e.g., Mazer v. Stein, 347 U.S. 201, 213 (1954); Zuber v.
Allen, 396 U.S. 168 (1969) (presence of both factors does not
resultindeference).Congressionalreenactmentsthatoccurafter
47Judulang, 181 L. Ed. 2d 449, slip op. at 16-17 (and n.11): an administrative position has been promulgated may also be
‘‘Section 212(c) simply has nothing to do with deporta- treated as supporting the administrative position. The Court
tion....Rather, section 212(c) refers solely to exclusion deci- tookthatpositioninCornProductsRefiningCo.v.Commissioner,
sions;itsextensiontodeportationcasesarosefromtheagency’s 350U.S.46,53(1955).However,itisprobablywisenottoputtoo
extra-textualviewthatsomesimilarreliefshouldbeavailablein muchrelianceonthisfactor.Foramorebalancedstatementof
thatcontexttoavoidunreasonabledistinctions.’’ thesignificanceofreenactment,seeMass.TrusteesofEasterGas&
48This controversy was laid to rest administratively by FuelAssoc.v.UnitedStates,377U.S.235,241(1964).Theideaof
CC-2011-017,Doc2011-16174,2011TNT143-23. relying on reenactment is criticized in William N. Eskridge,
49Manellav.Commissioner,631F.3d115(3dCir.2011). ‘‘Overriding Supreme Court Statutory Interpretation Deci-
50Of course, once Judulang is on the books, a court might sions,’’ 101 Yale L.J. 331 (1991). Indeed, the Court itself has
consider the language of the statute more carefully before recognizedthatithastreatedreenactmentinconsistently.Helv-
assertingthatitdidnotaddresstheissue. eringv.Griffiths,318U.S.371,396n.47(1943).
51Orin S. Kerr, ‘‘Shedding Light on Chevron: An Empirical 55429U.S.125(1976).
StudyoftheChevronDoctrineintheU.S.CourtsofAppeal,’’15 56HickmanandKrueger,‘‘InSearchoftheModernSkidmore
YaleJ.onReg.1,30-31(1998). Standard,’’107Columb.L.Rev.1235(2007).
830 TAXNOTES,February13,2012
COMMENTARY/SPECIALREPORT
down to virtually no deference at all.57 The other It would be comforting to have clear Supreme
form has been termed ‘‘sliding scale deference,’’ in Court precedent distinguishing legislative from in-
(C
which the court uses a set of factors to determine terpretiverules,butwedonot:theprecedentcomes ) T
how much deference it will give the agency rule. from circuit courts. It is difficult to extract a single a
x
The factors considered are: ‘‘thoroughness of con- test from the case law. A
n
a
sideration, agency expertise, validity of the reason- The clearest explanation may be in American ly
s
ing, consistency of application, longevity of the Mining Congress v. Mine Safety & Health Administra- ts
2
interpretation, and formality of format — in evalu- tion.64Ifanagencyintendstoissuealegislativerule, 01
ating the administrative interpretation.’’58 The it can. And if it uses the notice and comment 2. A
sthtuedmyofroeunddefethreanttiinalasblioduintg75scpaelercwenatsoufstehde, cwahseilse, prurolece(dsuubreje,ctth,epnretshuemruablelyw, tioll btheeaCvhaelvirdonlegteissltas)t.ivIef ll righ
lessthan20percentusedtheindependentjudgment the agency says that it intends to issue an interpre- ts re
model.59 Not surprisingly, the courts using the tive rule, the court will be warier, since the agency se
sliding scale approach were more likely to approve may characterize a rule as interpretive in order to rve
oftheagencyrule(inabout60percentofthecases) avoid APA procedures. Despite the agency’s asser- d. T
than those using the independent judgment ap- tions, the rule will be treated as legislative if it has ax
proach (50 percent).60 the force of law, and then it will be subject to APA An
a
What seems clear is that Skidmore deference is procedures. ly
s
less influential in practice than Chevron deference, What factors determine that the rule is legisla- ts d
under which 89 percent of cases reaching step two tive? If the rule is essential to support agency oe
s
are decided for the agency.61 Skidmore’s exact con- enforcement, it is legislative. A simple example n
o
tours, however, are less clear than Chevron’s and would be the consolidated return regulations — t c
more subject to each court’s particular approach. without the regulations, there is no guidance about laim
howconsolidatedreturnsshouldbeprepared.Also, c
o
VII. IRS Positions Other Than Regulations a rule is legislative when the agency ‘‘explicitly py
invoke[s] its general legislative authority.’’65 And rig
The DOJ has indicated that it will not argue for h
Ctoheevxraonmdineeferaenpcoesfsoibrlreevbeansuiserfuolrintghsa.6t2dIteicsishieolnpfutol ftiivnealrlyu,leamruulesttihtasetlafmbeenledgsisolratcivoen.t6r6adicts a legisla- t in any
evaluate how likely it is to remain in effect. American Mining Congress adds an important pu
As indicated above, legislative regulations get gloss to the last criterion. If an agency issues a blic
vague and open-ended legislative rule, it cannot d
Chevron deference, while interpretive regulations o
clarify that rule with an interpretative rule — the m
get the lesser Skidmore deference. The other side of clarification itself will be legislative, and hence ain
the coin is that legislative regulations must satisfy o
APA requirements — generally, they must be pub- subjecttonoticeandcomment.Theopiniongivesas r th
lished with notice and comment procedures. That alengiselxaatimveplreulteh,ethaPtarskpeSciefricviccoe’nsdiitniodnicsawtioonu,ldinapa- ird pa
means that if a legislative regulation tries to mas- ply to a particular class of permits it issued.67 The rty
querade as an interpretive regulation, it won’t sim- c
o
plygetSkidmoredeference.Instead,itwillbetreated nte
as an invalid legislative regulation.63 nt.
binding force.’’ In a note, the concurring judges add: ‘‘If
respondenthadsuccessfullypromulgatedinterpretiverules,we
wouldreachthissamepoint.’’However,theopinionthencites,
57SeeColinS.Diver,‘‘StatutoryInterpretationintheAdmin- among other sources, Hickman, ‘‘A Problem of Remedy: Re-
istrativeState,’’133U.Pa.L.Rev.549,565(1985). spondingtoTreasury’s(Lackof)CompliancewithAdministra-
58HickmanandKrueger,supranote56,at1267-1268. tiveProcedureActRulemakingRequirements,’’76Geo.Wash.L.
59Id.at1271.Theremainingcaseswereindeterminate. Rev.1153,1197n.199(2008)(suggestinginvalidatedregulations
60Id.at1276. maybesimilarinforcetoproposedregulations,whichsetforth
61Kerr,supranote51. theagency’sviewsbutdonotbindcourts).HickmancitesButka
62SeeSapirie,supranote21. v.Commissioner,91T.C.110,130(1988),forthepropositionthat
63Pierce, supra note 40, at 447. Saltzman asserts that a aproposedregulationis‘‘notacompletenullity.’’However,itis
procedurallydefectivelegislativeregulationhastheforceofan notofthesamelegalstatusasaninterpretiveregulation,which
interpretive regulation. Michael I. Saltzman, IRS Practice and isgivenSkidmoredeference.
Procedure para. 3.02[3][c] (‘‘Interpretive, or more accurately, 64995F.2d1106(D.C.Cir.1993).
‘non-legislative’ rules include interpretive rules, policy state- 65The court in American Mining Congress also viewed as
ments, and procedurally defective legislative rules’’). Saltz- significant whether the rule was published in the Code of
man’s source for his assertion is the concurrence of Judges Federal Regulations. However, that criterion was later called
Halpern and Holmes in Intermountain Insurance Service of Vail justa‘‘snippetofevidence.’’SeeHealthIns.Ass’nofAm.Inc.v.
LLC v. Commissioner, 134 T.C. 211, 226 (2010), Doc 2010-10163, Shalala,23F.3d412,423(D.C.Cir.1994).
2010TNT88-12,whichstatesthatacourt‘‘shouldnotentirely 66995F.2dat1110-1111.
ignore invalidated regulations — but we cannot give them 67UnitedStatesv.Piccotto,875F.2d345(D.C.Cir.1989).
(Footnotecontinuedinnextcolumn.)
TAXNOTES,February13,2012 831
COMMENTARY/SPECIALREPORT
rule indicated that a permit could contain ‘‘addi- taken in one would be legislative. The result? The
tional reasonable conditions.’’ Later, in a purported revenue ruling would have to be issued under the
(C
interpretative rule, it added a specific ‘‘mandatory APA’s notice and comment procedures. ) T
condition.’’ The court said that would be treated as a
x
a legislative rule, requiring compliance with the VIII. Agency’s Interpretation of Its Own Rules An
a
APA. Essentially, courts view a vague legislative A different standard of deference, Auer75 defer- ly
s
rule followed by a detailed ‘‘interpretative’’ rule as ence, applies when an agency interprets its own ts
2
an end run around the APA, which they will not rules. In that situation, the interpretation will be 0
1
permit.68 The Supreme Court has expressed its controlling unless ‘‘plainly erroneous or inconsis- 2. A
cmoinnciestrrnataivbeouptloayspinecaifnic‘‘manatni-ipfeasrtraottioinng’o’fctahnaotna:dI-f tenTthweiathgetnhceyreingtuelraptiroenta.’t’i7o6n can come in a variety ll righ
the legislative regulation simply parrots the lan- of forms, even in a brief in the litigation. The court ts re
guageofthestatute,acourtwillnotgrantdeference simplymustbeconvincedthattheagencyinterpre- se
to an ‘‘interpretative’’ rule that interprets that leg- tation reflects its ‘‘fair and considered judgment on rve
islative rule.69 Pierce approves of the American the matter in question.’’77 What won’t pass muster d. T
MiningCongresstest,whichhasbeenfollowedinat is an agency’s ‘‘post-hoc rationalization’’ of action ax
least seven other circuits.70 that is under judicial review.78 An
a
As Pierce points out, however, there is another This strong deference to administrative action ly
s
standard,whichwasarticulatedbytheD.C.Circuit. has two important qualifications. First, in Gonzales ts d
In Paralyzed Veterans of America v. D.C. Arena,71 the v. Oregon,79 the Supreme Court refused to give oe
s
D.C. Circuit stated that a rule is legislative if it deference to an agency interpretation of a regula- n
o
amends a prior interpretation of a legislative rule. tion that simply parroted the statute. The logic of t c
In other words, the rule can be legislative if it that refusal is that deference is given to regulations laim
amends an interpretative rule. Later cases in the that have the benefit of notice and comment. If the c
o
D.C. Circuit have followed that view,72 as has the regulation simply parrots the statute, there is little py
Fifth Circuit.73 The Third Circuit has a case follow- gained from the regulation, and the agency is just rig
h
ingParalyzedVeteranstogowithitsdecisionfollow- interpreting the statute, not its own regulation. t in
ing American Mining Congress.74 Second, Auer deference is not given to an inter- an
y
If a court strictly followed Paralyzed Veterans, the pretation of a regulation that will lead to a penalty, pu
whether civil or criminal. Due process consid- b
IRS would be in a terrible bind.Assuming revenue lic
rulings are interpretative, any change in position erationslimittheabilityofanagencytoclarifyrules do
that can result in a penalty imposed on someone m
a
who acted before the clarification was available.80 in
o
Wecanaskwhetherthesamelogicshouldapply r th
68See, e.g., Mission Group Kansas v. Riley, 146 F.3d 775 (10th to limit Chevron deference in a penalty context. ird
Cir.1998). Moreover,ifthereisreasontogivelessthanChevron pa
69Gonzalesv.Oregon,546U.S.243(2006).Seeinfranote79.The deference when violation of a regulation leads to a rty
CourtgrantedSkidmoredeferencetotheruleinquestion.Id.at c
penalty, or less than Auer deference where an o
263-264. n
70Pierce,supranote40,at454,456,citingWarderv.Shalala,149 agency interprets its own regulation regarding a ten
F.3d 73 (1st Cir. 1998); New York City Employees’ Retirement penalty, should that lesser deference apply to IRS t.
System v. SEC, 45 F.3d 7 (2d Cir. 1995); Appalachian States regulations that affect a tax liability, not something
Low-Level Radioactive Waste Commission v. O’Leary, 93 F.3d 103
denominated a penalty? In other words, can in-
(3d Cir. 1996); Chen Zhou Chai v. Carroll, 48 F.3d 1331 (4th Cir.
creasedtaxesbeviewedasapenaltyinthatcontext?
1995); Hoctor v. Dep’t of Agriculture, 82 F.3d 165 (7th Cir. 1996);
Hemp Indus. Ass’n v. Drug Enforcement Admin., 333 F.3d 1082, This question is particularly pointed when the IRS
1087(9thCir.2003)(PiercementionstheNinthCircuitinhistext is simply running a nontax program through the
butdoesnotprovidecasesupport);MissionGroupKansas,supra code. An example to consider would be an IRS
note 68. Two D.C. Circuit cases that follow American Mining
determination that a pension plan is nonqualified
CongressareTruckersUnitedforSafetyv.FederalHighwayAdmin-
istration, 139 F.3d 156 (D.C. Cir. 1998) and Aulenback v. Federal
Highway Administration, 103 F.3d 156 (D.C. Cir. 1997). Also
following American Mining Congress is National Organization of
Veterans Advocates v. Secretary of Veterans Affairs, 260 F.3d 1365 75Auerv.Robbins,519U.S.452(1997).
(Fed. Cir. 2001). The concurrence by Judges Halpern and 76Bowlesv.SeminoleRock&SandCo.,325U.S.410,414(1945),
HolmesinIntermountain,supranote63,notedtheprimacyofthe quotedinAuer,519U.S.at461.
AmericanMiningCongressstandard. 77TalkAm.Inc.v.Mich.BellTelephoneCo.,131S.Ct.2254,2263
71117F.3d579(D.C.Cir.1997). (2011),citingAuer,supranote75,at462.
72E.g.,Projectv.EPA,425F.3d992(D.C.Cir.2005). 78TalkAm.,supranote77,citingBurlingtonTruckLinesInc.v.
73ShellOffshorev.Babbitt,238F.3d622(5thCir.2001). UnitedStates,371U.S.156,168-169(1962).
74SBCv.FCC,414F.3d486(3dCir.2005);compareAppalachian 79546U.S.243(2006).
States,supranote70. 80SeegenerallyPierce,supranote40,at543-553.
832 TAXNOTES,February13,2012
COMMENTARY/SPECIALREPORT
because it violated the nondiscrimination rules. area of conduct.’’ For example, in Jifry v. FAA,84 the
Failure to satisfy those rules results in a disallow- Federal Aviation Administration issued a new rule (C
ance of amounts paid into the plan, leading to an without notice and comment requiring automatic ) T
additional tax liability that could be viewed as a suspension of a foreign national’s pilot’s certificate ax
penaltybecauseitdoesnotstemfromanychangein if the Transportation Security Administration noti- An
a
the real income recognized by the taxpayer- fies the FAA that the pilot poses a security threat. ly
s
employer. There would seem to be an argument Thatrulewasissuedinthewakeofthe9/11attacks, ts 2
thattheresultingtaxisapenaltyforthepurposeof 0
and the court pointed to those attacks as a sign of 1
decidingwhatlevelofdeferenceshouldbegivento the emergency situation that justified issuing the 2. A
awhreagtucloantisotintupterosmnounlgdaitsecdrimbyinathtieonI.RS that defines rule without notice and comment. On the other ll rig
hand, when the Drug Enforcement Administration h
ts
JusticeAntonin Scalia has raised the specter of a wanted to accelerate the effective date of a rule re
further,drasticlimitationonAuerdeference.InTalk classifying a drug as having a high potential for se
rv
America Inc. v. Michigan Bell Telephone Co., he sug- abuse,thecourtsaidtherewasnogoodcauseinthe ed
gests that Auer deference is misguided because it absence of a showing of an ‘‘acute and immediate . T
a
encourages agencies to draft unclear regulations x
threat to public health.’’85 A
rather than having a clear regulation subject to the n
a
scrutinyofnoticeandcommentprocedures.Hesaid A more likely basis for the IRS arguing good ly
s
that deferring to an agency’s interpretation of its cause is the second reason identified by Pierce: An ts d
own rule ‘‘encourages an agency to draft vague agency believes that prior notice will distort a oe
s
rules which give it the power, in future adjudica- pattern of transactions.86 Pierce observes that this n
o
tions, to do what it pleases. This frustrates the reasonisofteninvokedineconomicregulation.For t c
notice and predictability purposes of rulemaking, example, giving notice of price freezing of season laim
and promotes arbitrary government.’’81 football tickets would lead to ‘‘a massive rush to c
o
p
raise prices.’’87 The IRS’s issuance of a rule to y
IX. The Good Cause Exception prevent use of a transaction it views as abusive righ
Section 553(b)(B) of theAPAallows an agency to wouldseemtobeanaturalbasisforignoringnotice t in
a
dispense with notice and comment if it finds that and comment. ny
those procedures are ‘‘impracticable, unnecessary, pu
Pierce observes that when agencies go that route b
orcontrarytothepublicinterest.’’Section553(d)(3) lic
allows an agency to have a rule with an effective theyoftencharacterizetheregulationastemporary, do
with the simultaneous issuance of matching pro- m
date less than 30 days after publication of the rule a
posed regulations. That has certainly been a com- in
‘‘for good cause found.’’ In both cases, the agency o
mustgiveitsreasonsfordeviatingfromthenormal mon practice for the IRS, and it is now required by r th
rule. statute.88AlthoughPierceurgescourtstoencourage ird
that practice,89 he cites no authority indicating that pa
As indicated before, the IRS often publishes courts have required the simultaneous issuance of rty
regulations, particularly temporary regulations, c
proposed regulations. Now that Mayo has put the o
wmietnhtouptroccoemduprlyesin,ganfdultlhyowseitthemthpeonraortyicereagnudlactioomns- IRS on notice that it is subject to the APA, courts ntent.
probablywillbeaskedtolookmorecarefullyatthe
often have effective dates less than 30 days from
IRS’s procedures.
publication.82 With the likelihood that more atten-
tion will now be paid to the IRS’s compliance with
the APA, can that practice hold up to scrutiny?
Piercegivestworeasonswhyagenciesinvokethe
good cause exception.83 One is ‘‘an urgent need to 84370F.3d1174(D.C.Cir.2004).
issue a rule to govern a particularly problematic 85United States v. Gavrilovic, 551 F.2d 1099, 1105 (8th Cir.
1977).
86Pierce,supranote40,section7.10,p.674.
87DeRieuxv.FiveSmithsInc.,499F.2d1321(Temp.Emerg.Ct.
App.),cert.denied,419U.S.896(1974).
81131S.Ct.2266.Herefersthereadertoafullerdiscussionin 88Section 7805(e)(1). It could be argued that the specific
JohnManning,‘‘ConstitutionalStructureandJudicialDeference referencetotemporaryregulationsinsection7805(e)(1)reflects
toAgencyInterpretationsofAgencyRules,’’96Columb.L.Rev. congressionalapprovaloftheIRSissuingtemporaryregulations
512(1996).ScaliadissentedforcefullyinGonzales,supranote69, without compliance with the APA. This argument has been
arguingthattherewasnobasisfortheCourt’s‘‘anti-parroting’’ considered and rejected in the literature. See MichaelAsimow,
position.ItisnotclearwhetherhisconcurrenceinTalkAmerica ‘‘PublicParticipationintheAdoptionofTemporaryTaxRegu-
reflectsaretreatfromthatposition. lations,’’44TaxLaw.,343,362,364(1991);Hickman,supranote
82Hickman,supranote24,andtextaccompanyingnote25. 25,at1739.
83Pierce,supranote40,at672. 89Pierce,supranote40,at676.
TAXNOTES,February13,2012 833