Submitted - Tax Deference Cases–the Rest of the Story in the Interpretation of APA § 706 (11/18/23)

Yesterday, I submitted my article for publication (hopefully). The article is titled Tax Deference Cases–the Rest of the Story in the Interpretation of APA § 706.

Here is the abstract I submitted with the article (always subject to change prior to publication).  I provide links to the key documents cited for blog readers' convenience through quick web connection.

Abstract

The Supreme Court granted two petitions for writ of certiorari to address in the October 2023 Term whether Chevron deference should be overruled or clarified. Chevron is shorthand for deference articulated in Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984). [The two Supreme Court cases are Loper Bright Enterprises v. Raimondo (SEC) (Sup. Ct. Dkt. 22-451), here, and Relentless, Inc. v. Department of Commerce (Sup. Ct. Dkt 22-1219), here.

The key features of Chevron deference are: (i) ambiguity (or silence sometimes treated as ambiguity) in the statute and (ii) agency reasonable interpretation within the scope of the statutory ambiguity. Deference with those features has been used in statutory interpretation judicial review since well before Chevron and the APA.

One of the issues on cert is whether the APA Scope of Review provision (5 U.S.C. § 706), here, precludes, requires, or permits deference. Some in the legal community (including judges, but none so far in opinions of their respective courts) argue that the APA, properly interpreted, precludes deference. The most prominent argument that § 706 precludes deference is by UVA Law Professor Aditya Bamzai in The Origins of Judicial Deference to Executive Interpretation, 126 Yale L.J. 908 (2017), here. Using some of Professor Bamzai’s claims, I address whether § 706 precludes deference. This article does not address other bases (such as constitutional) against deference.

This article asserts that § 706 permits deference. Since so much has already been written on that issue, this article focuses on new discussion of the tax background largely ignored in the competing claims on § 706 and deference. By tracing the relevant tax history prior to the APA’s enactment in 1946, the article shows the claim that § 706 precludes deference is a misreading of the history. The article argues that deference with the characteristics of Chevron deference preceded the APA. Further, contrary to Professor Bamzai’s claim, such deference in tax cases was featured prominently in the authoritative Final Report of the Attorney General's Committee on Administrative Procedure (1941), here, which led to the APA. The article also introduces into the discussion Dobson v. Commissioner, 320 U.S. 489 (1943), here, reh. den., 321 U.S. 231 (1944), here, a tax case applying deference to Tax Court statutory interpretations. Dobson adds to the discussion because: (i) the Court treated the Tax Court as an agency rather than a court because the statute said the Tax Court was an agency and (ii) the statutory standard for review of Tax Court interpretations permitted reversal only if “not in accordance of law.” The Court interpreted the statutory standard “not in accordance with law” to require deference. APA § 706 has verbatim the same scope of review–”not in accordance with law”– for agency interpretations. In explaining § 706 as the proposal moved through Congress to enactment, the refrain was repeated often that it did not change existing law (which included deference), neither adding to nor lessening the existing scope of review. And, the authoritative Attorney General’s Manual on the Administrative Procedure Act (1947), here, said that § 706 restated rather than changed the current scope of review.

Based on this analysis of this history and the text of the APA, the article concludes that the APA permits deference. If the Court rejects deference or wishes to revise or clarify deference (similar to the way it did for Chevron deference’s lesser cousin, Auer deference, in Kisor v. Willkie, 589 U.S. ___, 139 S. Ct. 2400 (2019)), the Court should do it on some basis other than § 706.