War Story-Appellate: My Early Brush (1969) with Administrative Law Meaning of Legislative Regulations (3/16/24)

I am starting a new series of procedure-related appellate war stories, mostly from my time with DOJ Tax Appellate Section (1969-1974). The purpose of the series is to tell the war story because it is interesting to me but to do so only when the telling of the story offers some opportunity for students (including for this purpose, practitioners) to learn from the story. I have previously posted some such war stories; all such stories will be under the label “War Story-Appellate", here (the link can be clicked at any time to show all postings).

Today’s War Story-Appellate relates to one of the first cases I handled with DOJ Tax, Davis v. Commissioner, 422 F.2d 401 (6th Cir. 1970), here. I wrote the brief in late 1969; the case was decided in 1970. The substantive issue was whether the taxpayer had proved entitlement to more expenses than allowed by the Tax Court. That is not a tough issue to address and is factual with no precedential importance. The Sixth Circuit addressed it in a one-line per curiam opinion:

On consideration of the files and records in this case, the judgement of the Tax Court is affirmed for the reasons set forth in the Memorandum Opinion of the Tax Court, Tax Ct. Memo 1969-74.

As I have said before in War Story-Appellate, the DOJ Tax Appellate Section did not assign tough cases to relatively new attorneys. I had joined DOJ Tax Appellate in June 1969. I had not yet proved my self capable of handling more difficult cases.

My Davis assignment had a more significant threshold procedural issue that is not addressed in the Sixth Circuit’s one-line per curiam opinion. The issue was (presented in our brief as filed, here, p. 1):

1. Whether this Court has jurisdiction over the merits of this appeal when taxpayer failed to file a notice of appeal until ninety-two days after entry of the Tax Court decision.

Actually, that question was written by my reviewer, Tom Stapleton. In my draft (here), I stated the question as follows:

1, Whether the taxpayer's untimely filing of the notice of appeal from the Tax Court's decision denies this Court from deciding the merits of the appeal.

Tom’s version was better, but still not optimal. How would I improve the question today? Here is my current shot at the best statement of the issue.

1. Whether FRAP 13(a)'s requirement to file notice of appeal within 90 days from the Tax Court decision override the previously enacted statute's (§ 7483) three-month requirement.

This current statement of the issue does not suggest (or argue by question) the answer we wanted, but it does pack more information as to the conflict than my original proposal or Stapleton's amendment for the final brief.

Question to readers: Which statement of the issue is better? Why? Can you frame a better statement?

The issue of the timeliness of the appeal arose because of a conflict between (i) the statute, § 7483, here, as then written, required appeal from a Tax Court decision within “three months” and (ii) FRAP Rule 13(a), here requiring appeal from a Tax Court decision within 90 days. As a result of this case, in 1969, Congress amended the statute, see here, prospectively from the date of enactment December 30, 1969. See § 959, P.L. 91-172 (Tax Reform Act of 1969), 83 Stat. 734, here. The amendment requires appeal within 90 days, thus conforming the statute to FRAP Rule 13(a). The Act further provides § 962(f) (not codified) to fix the Davis problem:

(f) The amendments made by sections 959 and 960(h) shall take effect 30 days after the date of the enactment of this Act. In the case of any decision of the Tax Court entered before the 30th day after the date of the enactment of this Act, the United States Courts of Appeals shall have jurisdiction to hear an appeal from such decision, if such appeal was filed within the time prescribed by Rule 13(a) of the Federal Rules of Appellate Procedure or by section 7483 of the Internal Reveuue Code of 1954, as in effect at the time the decision of the Tax Court was entered. 

I don't recall now whether I was involved in the amendment but if so it was probably just to confirm the problem and the solution.

Lesson for students: The above subsection (f) is not in the Code provision but is in the Notes accompanying the Code provision. It is important to read those notes.

So, the conflict problem was resolved by statute before the oral argument, which is why the opinion does not address the issue. In our brief filed before the TRA 1969, we addressed the conflict and urged that the FRAP 13(a) 90-day requirement prevailed over the statute. Here is the summary of the argument (pp. 4-5):

     Section 2072 of 28 U.S.C. provides that the Supreme Court shall have the power to prescribe by general rules the practice and procedure in proceedings for the review by the Courts of Appeals of decisions of the Tax Court of the United States. Rule 13(a) of the Federal Rules of Appellate Procedure, promulgated pursuant to this grant of authority, establishes a ninety-day period for filing a notice of appeal. The time period for effecting an appeal relates to "practice and procedure" and is clearly within the rule-making authority delegated to the Supreme  Court under Section 2072. Taxpayer's notice of appeal was not filed until the ninety-second day after the decision of the Tax Court. It was therefore untimely, and hence taxpayer may not invoke the Jurisdiction of this Court in this case. The appeal should be dismissed.

This issue of whether Rules under the authority of 28 U.S.C. § 2072 supersede statutes is an interesting one invoking authority that has echoed into the present in the Chevron deference context. Readers may recall that I have engaged the issue of the distinction between interpretive rules and legislative rules (must be by notice and comment regulation, except for interim final rules, in tax called Temporary Regulations).  (I address the issue in many blogs, but most definitively in John A. Townsend. The Report of the Death of the Interpretive Regulation Is an Exaggeration (SSRN December 14, 2021), here; those wanting shorter explanations from my blogs should click on the following labels: Regulations-Interpretive, here, and Regulations-Legislative, here.)

 In our appellee brief (here) arguing that Rule 13(a) supersedes the statute, we presented the following (p. 6 n. 8):

   n8 A proper exercise of a delegated authority to establish rules which are legislative in character (i.e., rules which establish rather than interpret the law), results in rules which have the force and effect of law, superseding any inconsistent statute. I Davis, Administrative Law, Sec. 503, p. 299. Section 2072, applicable in this case, expressly provides that all laws in conflict with such rules shall be of no further force or effect after such rules have taken effect. See, for example, Sibbach v. Wilson & Co., 312 U.S. 1, 13 (1941).

My draft of the brief (here) (p. 6 n. 8) included:

   n8 A proper exercise of a delegated authority to establish rules which are legislative in character (i.e., rules which establish rather than  interpret the law), result in rules which have the force and effect of law, superseding any inconsistent statute. I Davis, Administrative Law, Sec. 503, p. 299. That this is so is further reinforced by language contained within the delegation of 28 U.S.C. Sec. 2072:

ALL laws in conflict with such rules shall be of no further force or effect after such rules have taken effect.

 See, for example, Sibbach v. Wilson & Co., 312 U.S. 1, 13 (1941).

Question to readers: Do you see why Stapleton revised the footnote? I think that the omission of the quote may have been unintended by Stapleton, but assuming he intended it, what do you think about the footnote 8 in the final brief?

In my draft here (but omitted from the final), I preceded that footnote with footnote 7 as follows:

   n7 Rules promulgated pursuant to a grant of authority to establish rules legislative in character (i.e., rules which establish rather than interpret the law) are invalid only if: (1) outside the authority delegated; (2) promulgated without observing proper procedure; or (3) unreasonable. I Davis, Administrative Law, Sec. 503, p. 299. Since the FRAP were clearly promulgated pursuant to the procedure anticipated by Congress and Rule 13(a) is reasonable (a mere change from three months to ninety days), the issue on this appeal resolves itself to whether the rule is within the authority delegated.

Stapleton omitted that footnote, presumably because its essence was in footnote 8. Did footnote 8 add anything important?

So far as I can now recall, Davis was my first foray into administrative law and was probably the last until I began focusing on Professor Kristin Hickman’s claims about Chevron deference for tax regulations starting in the early 2000s. I then focused on the Chevron issues because I wanted to discuss them in my annual Federal Tax Procedure editions.

Addendum on Tom Stapleton as reviewer. Tom was one of the best reviewers in the DOJ Tax Appellate Section. He reviewed 9 of my briefs while I was in the Appellate Section as follows (click on graphic for better view):