Friday, June 17, 2022

Reply to Professor Hickman's Response to My PT Article (6/17/22; 6/24/22)

Note that changes may be made. I will state when the change is made. The date of the latest update is indicated in the date parenthesis in the blog's title; the last date in the parenthesis is the date of the last change.

UPDATE as of 6/24/22 1:00 pm:  Readers interested in this issue should read Professor Bryan Camp's thoughtful trilogy of Procedurally Taxing Blogs joining of the issue:  

  • Bryan Camp, It's Time To Get Real: Treasury Regulations Can Certainly Be Interpretive Rules (Procedurally Taxing Blog 6/23/22), here.
  • Bryan Camp, The APA Is Not A Hammer (Procedurally Taxing Blog 6/24/22), here.
  • Bryan Camp, The More Things Change The More They Remain The Same (Procedurally Taxing Blog 6/27/22), here.

I have blogged here on the Administrative Procedure Act (APA) distinction between legislative and interpretive regulations. Recently, I posted a guest blog on the Procedurally Taxing Blog. Jack Townsend (Guest Blogger), More On The Confusion Surrounding The Difference Between Legislative And Interpretive Rules (Procedurally Taxing Blog 6/14/22), here. Professor Kristin Hickman posted an opposition response, strongly worded. Kristin E. Hickman, It's Time To Let Go:  Treasury Regulations Are Not Interpretative Rules (Procedurally Taxing Blog 6/16/22), here. The competing positions are academic differences of opinion between Professor Hickman and me as to the proper interpretation and application of the Administrative Procedure Act ("APA") distinction between legislative and interpretive rules. Further discussion of that difference of opinion will not be particularly enlightening to PT readers and perhaps not even to my Federal Tax Procedure Blog readers. Still, the FTPB blog is mine, and I have spent considerable blogs discussing the issue, so I decided to post my response to Professor Hickman's PT Blog on the FTP Blog rather than seeking to post on the PT Blog. I will be pleased to post verbatim as a guest blog any further comments or responses she or anyone else wishes to make that engage the discussion.

So, here is my response to Professor Hickman's PT Blog:

First, I respect Professor Hickman's scholarship and passion for the views she holds deeply. I just disagree with her.

Now to the merits of our disagreements.

I have already stated in detail in my article why I disagree with Professor Hickman's previously stated positions on this issue. The article is:  John A. Townsend. The Report of the Death of the Interpretive Regulation Is an Exaggeration (SSRN December 14, 2021), https://ssrn.com/abstract=3400489. I respond in this blog to her claims in the PT Blog entry without getting too much into the weeds. The weeds in the article required over 100 pages with copious footnotes. (A summary in 7 pages with no footnotes: is John A. Townsend, A Key Point Summary of The Report of the Death of the Interpretive Regulation Is an Exaggeration (SSRN May 11, 2022), https://ssrn.com/abstract=4089906.)

I start my article quoting Professor Hickman's claim that there are no interpretive Treasury regulations, despite the APA continuing to have that category. Her PT Blog makes the same claim. Since, as Professor Hickman has persuasively and correctly championed, there is no basis for tax exceptionalism, the same arguments she makes for Treasury Regulations have to apply to all agency regulations. That means that her argument is that the interpretive rule category for regulations has been eliminated from the APA without any legislative amendment of the APA. Thus, for example, the APA exempts interpretive rules from the requirement of notice and comment and application only prospectively, thus meaning that the interpretive regulation category still in the APA means nothing. I thought that an odd claim, particularly since the APA does not allow exceptions except by legislation expressly stating the exception.   That is the Hickman claim that I address in the article. (Clarification added 6/24/22 8:22 am:  The APA refers to "rules" rather than "regulations;" legislative rules must be notice and comment regulations; interpretive rules may be notice and comment regulations or subregulatory guidance; conventionally, discourse in this context uses the terms legislative regulations and interpretive regulations, with both categories authorized by the APA although not in those specific terms.)

I noted in the article (p. 5), in contrast to Professor Hickman's claim of the evaporation of the APA category of interpretive regulation, that, in oral argument in Kisor in 2019, Justice Breyer (an administrative law expert) said that "there are hundreds of thousands, possibly millions of interpretive regulations." That statement can be true only if interpretive regulations remain a viable APA category.

Does Professor Hickman know something that Justice Breyer does not know? Or vice-versa? At a minimum, there is confusion. I side with Justice Breyer.

I engage Professor Hickman and others on the details in my article. I therefore only address some points she specifically raised by her short PT post. Unfortunately, as we all know, responding to claims cryptically stated often requires more words than cryptic claims.

1. The original understanding of the APA's distinction between legislative and interpretive rules may be briefly stated:  

  • Legislative rules are the law rather than an interpretation of an ambiguous statute. Legislative rules require an explicit grant of authority to make the law rather than interpret the law. Hence, legislative regulations were (and are) said to have the force of law as statute substitutes. Legislative rules have to be promulgated with notice and comment regulations. And, as with legislation, legislative rules generally have to be prospective. The classic tax example is the consolidated return regulations authorized by § 1502.
  • Interpretive rules do not state the law but are interpretations of ambiguous statutory text; the ambiguous statutory text is the law; interpretative regulations may but are not required to undergo notice and comment rulemaking; and agency interpretations, like judicial interpretations, can generally be retroactive to the date of enactment of the interpreted statute (because the statute and not the interpretation is the law).

2. In her PT post, Professor Hickman admits that her claims are not consistent with that original understanding when the APA was enacted. So, if I understand that admission, Professor Hickman and I do agree on the original meaning of the APA. (In any event, I don't see how she or anyone else could possibly not agree with the original meaning as I state it in paragraph 1.)

3. The issue then is whether there has been something that changed the original meaning of the APA. Professor Hickman claims there has been a change; I disagree.

4. There has been no congressional elimination of the APA distinction between legislative and interpretive regulations. I noted above that the APA provides that exceptions must be express. (As interpreted, that means the legislative exception must be reasonably clear; but it is certain that exceptions can be created only by legislation and not by the agencies or the judiciary.)   There is no legislation making a change to the original meaning of the APA. That really should be the end of it, but there is more.

5. If this discussion occurred either before or shortly after the Chevron decision in 1984, I doubt that anyone could responsibly claim there had been a change in the original meaning. Chevron was not an APA case; the opinion does not even mention the APA or the APA distinction between legislative and interpretive regulations. As Chevron's author, Justice Stevens, said and then Justice Scalia said in 1989, Chevron was not a significant case given the past history of deference to reasonable agency interpretations, except for the two-step framework Chevron adopted to determine when to defer to a reasonable agency interpretation. Before Chevron, deference could apply to reasonable agency interpretations; after Chevron, deference can apply to reasonable agency interpretations (but with a more predictable framework for when deference applies). The point is that Chevron did not work any change to the APA's original meaning of the difference between legislative and interpretive regulations.

6. In her post and from my earlier discussions with Professor Hickman, I think she relies, at least in significant part, on § 7805 as Congress' grant of legislative authority displacing interpretive authority only for § 7805(a) regulations that only interpret the statute. She says "No one seriously questions that all Treasury regulations are legally binding, whether issued under an express grant of rulemaking power in a particular Internal Revenue Code provision or the general rulemaking grant of 26 U.S.C. § 7805(b)." For clarity, I believe she means to refer to § 7805(a), which is the operative authority for rules and regulations; § 7805(b) is just a limitation on the authority conferred by § 7805(a). I question Professor Hickman's quoted claim as to § 7805(a).

7. The actual operative language of § 7805(a) is called general authority because the authority is not the type of specific legislative authority or even specific interpretive authority in the substantive statute. The language of § 7805(a) has not changed in any material respect since the 1920s and never was deemed sufficient to authorize a legislative regulation under the original meaning of the APA. (See article pp. 54-64.)  Thought experiment: could Treasury have adopted the consolidated return regulations under the authority of § 7805(a) (without the express authority of § 1502)? As the estimable Stanley Surrey wrote back in 1940, the language "standard of 'needful... for the enforcement' of a revenue act would hardly seem adequate in this regard to support a delegation of legislative power." That was the law for years and, I submit, is still the law because there has been nothing that changed it.

  • Added 6/22/22 10:00am:  Consistent with § 7805(a) being interpretive authority, § 7805(b) prior to amendment in 1996 provided "The Secretary may prescribe the extent, if any, to which any ruling or regulation, relating to the internal revenue laws, shall be applied without retroactive effect." That assumes that § 7805(a) rules (including regulations) can be retroactive, an assumption which bespeaks interpretations which are generally retroactive, whether made by courts or agencies. So, if there has been any change to make § 7805(a) legislative authority rather than interpretive authority, it had to have happened either as a result of the 1996 amendment or judicial spinning of § 7805(a) after 1996. As I note below, Congress has not changed the meaning of § 7805(a).  

8. The original public meaning mode of statutory and constitutional interpretation so in vogue now demands that we look to the ordinary meaning that some mythical or imagined contemporaneous reader  (e.g., general public, general educated public, Joe the Ploughman, congressperson, etc.) at time of enactment would apply to the words of § 7805(a). The operative words in § 7805(a) never – NEVER – changed since authoritatively interpreted to confer only interpretive authority. I should address one of Professor Hickman's unsupported claims in this respect. She has claimed that her reading of § 7805(a) as a legislative grant (despite the historic interpretations of the language) is an inference from her belief that § 7805(b), as amended in 1996, is an exception to the prohibition on retroactivity for legislative rules, thus meaning (by her inference) that § 7805(a) must be legislative rulemaking authority.

 9. Of course, interpretive rules (just like court interpretations) can apply retroactively to the date of the interpreted statute, but legislative rules (regulations), just like statutes, generally must be prospective. I think Professor Hickman reads the time limits imposed by § 7805(b), enacted in 1996, to mean (apparently by her inference) that Congress meant to change § 7805(a) from interpretive only authority to legislative only authority. Congress certainly did not change the language of § 7805(a) – the key authority provision – to effect such a dramatic change in its meaning. Further, there is nothing in the legislative history in 1996, fairly read, suggesting that was Congress' intent. (See article pp. 61-63.)  The time limits in § 7805(b) are more properly addressed to Congress' real concern – retroactivity of agency interpretations; the politically charged concern in 1996 was not to give the IRS more power by permitting retroactivity otherwise prohibited for a legislative rule but to take away retroactivity otherwise permitted for an interpretive rule. (The practical effect of that limitation is that Treasury interpretive regulations outside the time limits are not valid; that does not mean that the interpretations are not valid and cannot be fully retroactive outside the § 7805(b) time limits; it just means that the interpretations will not qualify for Chevron deference requiring a validly promulgated regulation.)  

10. One has to wonder what Professor Hickman's claims about § 7805(a) do to other agency general authority statutes like § 7805(a)? They were always interpretive authority only. Do they continue to be interpretive authority only because they do not have a provision like § 7805(b) to permit inferences (proper or improper) about what the authority provision means? Does the APA interpretive category still exist for such other agency general authority regulations? Does that create the type of tax exceptionalism that Professor Hickman has spent much of her career refuting (and, I should say, quote properly so)?

11. The "legally binding" slogan Professor Hickman and others in her camp use is a red herring (as Kenneth Culp Davis long ago recognized in discussing the similar concept force of law). A Treasury Regulation under § 7805(a) doing no more than interpreting ambiguous statutory text is "legally binding" in the same way it always was under the APA original meaning – (i) if the interpretation is the best interpretation, the statute as interpreted binds (regardless of the fact that the agency adopted the best interpretation); and (ii) if the interpretation is not the best but "reasonable" (in itself an concept without clarity), the statute as interpreted binds if deference is conferred. That is how it has always worked, even before the APA was enacted with that original meaning. Legally binding is a meaningless concept in this discussion. Sometimes this "legally binding" notion appears as being an agency (here Treasury) "intent" to promulgate a legally binding rule. That too is a red herring. The agency adopting an interpretation of ambiguous statutory text "intends" to promulgate a notice and comment regulation with a statutory interpretation. Whether that interpretation is legally binding as the best interpretation or a reasonable interpretation in the Chevron space depends upon what a court does with it. Agency "intent" as to binding effect is not meaningful except to distract from the original meaning.

12. Professor Hickman cites Mayo FoundationMayo Foundation, like Chevron, was a deference case and was not an APA case. Mayo Foundation does not mention the APA or make any claims about the APA and certainly does not announce or approve or recognize or hint any change to the APA and its original meaning. So, however much lower courts and scholars may futz about Mayo Foundation and loose language in other cases, the fact is that nothing authoritative, Mayo Foundation or otherwise, has changed the original meaning of the legislative-interpretive distinction under the APA.

13. As to deference, treating interpretations as legislative in character makes no conceptual sense as the terms are used in the APA. Under the APA original meaning, legislative regulations are the law just as if they are statutes. Law is the law; not an interpretation of the law. The consolidated return regulations authorized by § 1502 are legislative regulations constituting law and are not interpretations of § 1502; a court does not defer to the consolidated return regulations, just as it does not defer to statutes. If Treasury regulations interpretations were truly the law, a court would (at least should if not confused) just apply the law without testing for reasonableness of interpretation. Yet, we all know that is not what they do. Courts apply the deference interpretive test for the interpretation's reasonableness (which, by the way, is what they did before and after the APA and before and after Chevron). It is true that, the interpretation in a notice and comment regulation could be subject to arbitrary and capricious testing for procedural regularity applicable to both legislative and interpretive notice and comment regulations, but that is a different test than reasonableness of the interpretation (which by definition can only apply to an interpretation and not to the law), despite the claims of those who misread the footnote in Judulang v. Holder, 565 U.S. 42, 52 n.7 (2011); I discuss this misreading and key authorities recognizing that the two tests are not the same at article pp. 94-99.

14. In sum, there is nothing that changes the original meaning of the APA. Like I say, so long as this curious notion that interpreting a statute is creating law is confined to deference, there is no harm in erroneously calling an interpretive regulation a legislative regulation tested under Chevron for reasonableness of the interpretation. For deference purposes, the same result is achieved as if the regulation were properly characterized as interpretive. But deploying that legislative regulation notion for APA purposes to distinguish between legislative and interpretive regulations is harmful because it is demonstrably wrong and it can lead to confusion and erroneous outcomes.

15. Indeed, in my view, Professor Hickman's erroneous claim has led her to err in one of the central claims in her scholastic career -- that Treasury Temporary Regulations doing no more than interpreting the statute are legislative and thus do not qualify for exemption from the APA requirement for either (i) notice and comment or (ii) good cause statement for immediate effect. Indeed, the Home Concrete litigation shows the error. In Home Concrete, the Treasury regulations adopted under § 7805(a) (initially temporary and then final) interpreting the statute were not only immediately effective but retroactively effective (a no-no for a legislative regulation). Retroactivity would have been a threshold nonstarter if the regulation interpreting the statute were legislative, but the Court gave no hint that retroactivity was a problem, instead, rejecting the interpretation as being outside the scope of any ambiguity left after its earlier opinion in Colony. Read Justice Kennedy's dissent on this point. In that dissent, Justice Kennedy simply found that Colony was not preclusive as to ambiguity, but he makes clear that Treasury properly could apply an interpretation of ambiguous statutory text retroactively, a status that cannot apply to a legislative regulation; the majority gave not even the slightest hint that Justice Kennedy was wrong on that proposition. And he was not wrong.

16. The error I discuss in paragraph 15 leads into another error in a central claim in Professor Hickman's scholarship. Based on the notion that Treasury Temporary Regulations are legislative, Professor Hickman claims that, because Treasury historically gave no "good cause" statement for immediate effect, Treasury has routinely in the past violated the APA. That would be true if Professor Hickman's claims of the demise of interpretive regulations (or the demise occurring before those regulations were promulgated) are correct. It is not true if Professor Hickman's claims are wrong. I think they are wrong, which, if I am correct, means that Treasury has not had a practice of violating the APA in its Temporary Regulations practice. I simply say that persons who complain about Treasury and the IRS ought to get it right. In this case, Professor Hickman is not right.

17. And the foregoing does not even address the retroactivity question presented (i) § 7805(a) regulations exempt from the § 7805(b) limits for pre-1996 law (e.g., the Regulations in Home Concrete) or (ii) similar general authority regulations for other agencies with no limitations of the type in § 7805(b). But I've got to stop somewhere, so I stop here.

Added 6/18/22 12:30 pm:

18  In Professor Hickman's reply posted as a comment below, Professor Hickman says:

Second, to answer one question you posed — yes, what I have written about 7805(a) is consistent with how the courts treat general authority rulemaking grants in a host of other statutes as well, as discussed in my recent George Washington Law Review article, Nondelegation as Constitutional Symbolism (linked in my original post above).

Professor Hickman's comment refers to my paragraph 10 above. I have not studied the article she cites for the proposition that courts treat all agency general authority provisions the same – specifically, as grants of legislative authority. Taking her proposition on its face, I infer that this claim means that § 7805(b) is not material to her overall claim that interpretive regulations no longer exist. (Thus, my discussion in paragraphs 8 and 9 of what I thought was her claim that § 7805(b) as enacted in 1996 made § 7805(a) legislative authority may not be relevant to her claim about the general authority in § 7805(a) and similar statutes for other agencies.)  This narrows the basis for her claim of the elimination of interpretive regulations. Since the relevant text of § 7805(a) has not changed (see paragraph 7), if there was a change of general authority statutes from being only interpretive authority to being legislative authority, that change came not from Congress in legislation but from courts through spinning. I don't think courts have the power to avoid the requirement that changes to the APA must come only from Congress simply through spinning to make a congressionally approved APA category meaningless. If the courts have definitively made that change, courts have exceeded the authority to make that change and may one day correct the error of that particular spin (see also paragraph 4 above).

Added 6/18/22 5:00pm  (This addition covers paragraphs 19-25 below):

19. I have now had the opportunity to review (not same as study) Professor Hickman's article:  Kristin E. Hickman, Nondelegation as Constitutional Symbolism, 89 Geo. Wash. L. Rev. 1079 (2021), GWLR here and SSRN here. On that review, I address the issues I perceive in the article relevant to the claim that general authority delegations (§ 7805(a) for Treasury and similar statutes for other agencies) are legislative authority delegations. The relevant part of her article seems to be in outline section II.B. titled "General Authority" at pp. 1104-1113 of the article.

20. By way of background, I state my understanding of the nondelegation doctrine: Congress cannot delegate to an agency the power to make law without a limitation on the authority. That limitation has been (from my article p. 9 n. 39):

"an intelligible principle" which "clearly delineates the general policy, the public agency which is to apply it, and the boundaries of this delegated authority." United States v. Henry, 888 F.3d 589, 596 (2d Cir. 2018); see also the plurality opinion in Gundy v. United States, 583 U.S. ___, ___, 139 S.Ct. 2116, 2123 & 2129 (2019).

20. As I understand the nondelegation doctrine, it applies rarely and then, as conceptualized, only to specific delegations of law-making authority in the APA original meaning (legislative regulations). Thus, in her article, Professor Hickman says (p. 1106):

Scholars acknowledged that specific authority regulations were legally binding, "similar to statutes"; that they carried the "force and effect of law";  and, thus, that the delegations under which they were promulgated were subject to the limitations of the nondelegation doctrine.

21. I think Professor Hickman's claim is that, contrary to the traditional understanding of the nondelegation doctrine, the nondelegation doctrine can apply to implicit delegations under general authority statutes (a la Chevron), statutes which traditionally have not conferred law-making authority in the APA meaning. In making this claim, she just raises the same issues she has raised and I address in my article as well as in the paragraphs above. 

22. I think there is some confusion, not dispelled by Professor Hickman's article, about the word "specific authority" involving interpretations. As noted, the traditional nondelegation doctrine only applied to specific authority to make law (tax example consolidated return regulations under § 1502). A statute can expressly grant an agency the authority to make law with the authority bounded only by an intelligible principle, that is then tested as to whether the law the agency makes is within the delegated authority. A statute may, however, specifically delegate only authority that, fairly read, is to interpret a term in the statute. Is that a legislative delegation or an interpretive delegation? When, fairly read, the substantive statute simply grants express authority to interpret so that the agency interpretation can be tested as such (within the reasonable linguistic scope of the text being interpreted), the grant seems to me to be interpretive and the exercise of the grant in an interpretive rule and can be tested, not as law (consider § 1502), but for the reasonableness of the interpretation (that's how interpretations have always been tested). My argument is that references to express authority often confuse these key differences. Thus, when courts say express and general authority delegations are tested the same way, I don't think they are talking about classic express law-making authority such as § 1502 which authorizes Treasury to create law rather than interpret law. I think they are talking about express statutory delegations of authority to interpret. Express authority to interpret and implicit authority to interpret via general authority statutes are the same powers and can be tested the same way. So when a court says that express authority and general authority are tested the same way for deference purposes, they are not saying that the consolidated regulations under § 1502 are tested the same way that a general authority interpretive regulation under § 7805(a) is tested; nor are they saying the authority in general authority statutes is like the authority in traditional legislative authority statutes such as § 1502. Note that this is just a variation of the issue in Judulang v. Holder, 565 U.S. 42, 52 n.7 (2011) which, properly read, confirms that the tests for such regulations are not the same. (The Judulang footnote is commonly misread, even by professionals, but I cover the correct interpretation, recognized by others, in my article at pp. 94-99.)  The key here, though, is to focus on whether the courts are talking about deference or about the APA. Getting it right (or at least almost right) for deference should not necessarily control the result for the APA.

23. Professor Hickman's key premise, I think, is the notion of "legally binding" rules. See her article p. 1110 ("agencies increasingly relied on general authority rulemaking grants as legal authority for adopting legally binding rules and regulations.”)  I have addressed the legally binding slogan in paragraph 11 above.

24. I should address only the claim Professor Hickman made in citing the article – that Treasury general authority under § 7805(a) and other agency similar general authorities are treated the same for purposes of her claim that the APA interpretive regulation category no longer exists. I agree that they should be treated the same for deference purposes; I do not agree that the APA interpretive regulation no longer exists.

25. Finally, although not directly related to Professor Hickman's article, I provide the following from my article for courts continuing reference to interpretive regulations as a viable category (p. 5, n 17):

   n17 E.g., Commissioner v. Estate of Hubert, 520 U.S. 93 (1997) (Scalia dissenting, joined by Breyer, then the Court’s other administrative law expert) (involving “interpretive Treasury Regulation, 26 C.F.R. § 20.2056(b)-4(a) (1996)”); Christensen v. Harris County, 529 U.S. 576, 589-90 (2000) (Scalia, concurring in part and concurring in the judgment.) (“Chevron in fact involved an interpretive regulation”); National Park Hospitality Assn. v. Dept. of Interior, 538 U.S. 803, 819-20 (2003) (Justice Breyer dissenting joined by Justice O’Connor) (“interpretive regulation issued after notice and public comment”); Global Crossing Telecomm. Inc. v. Metrophones Telecom, 550 U.S. 45, 69 (2007) (Scalia dissenting) (distinguishing between “interpretive regulations” meaning “regulations that reasonably and authoritatively construe the statute itself” and substantive (i.e., legislative) regulations “promulgated pursuant to an express delegation of authority to impose freestanding legal obligations beyond those created by the statute itself”); Estate of Gerson v. Commissioner, 507 F.3d 435, 438 (6th Cir. 2007) (“Treasury Regulation § 26.2601-1(b)(1)(i) described as interpretive regulation); and Hospital Corp. of Am. Subsidiaries v. Commissioner, 348 F.3d 136, 144-45 (6th Cir. 2003) (“The regulation was ‘interpretive’ in the same sense that the regulation in Chevron was interpretive — it gave content to ambiguous statutory terms. Congress clearly intended that the Treasury Department do so.”).

So, if the dramatic change in the APA meaning Professor Hickman claims occurred at all, either these esteemed judges missed the change or it came later, well into the 2000s. And, since such dramatic changes should not occur by stealth or inference or implication, what caused that change? It certainly was not in cases such as Mayo Foundation (see  above paragraph 12). So, when and how? 

Added 6/18/22 9:30 pm:

26. If Professor Hickman's claims are true, then she and the courts and scholars subscribing to the notion should proclaim boldly and without equivocation:  The judiciary has overruled Congress on the original meaning of the APA provisions for interpretive regulations and eliminated that category from the APA.

  • Added 6/19/22 4:20pm:  Professor Hickman's reply to this paragraph 26 below is in a comment but I cut and paste it here for easy reference:

    Jack, respectfully, I disagree with the premise of your Item 26. (1) Congress didn't define in the APA what it means to be an interpretative rule; (2) one could just as easily argue (as I have) that the courts haven't interpreted the APA differently over time, but rather the courts have interpreted the definitions of legislative power and executive power in the vesting clauses of Articles I and II of the Constitution differently, plus legislative and regulatory practices have changed, such that regulations that once would have been considered lacking the force of law now carry the force of law, which is why they no longer qualify as interpretative rules under the APA; (3) whatever courts and commentators may have meant when they used the term "interpretive regulation," that isn't a statutory term or category -- APA s. 553 refers to "interpretative rules," and the Internal Revenue Code and other regulatory statutes don't use the term "interpretive regulations," either; and (4) courts have not eliminated the APA's interpretative rule category at all because plenty of agency guidance documents, including some from the IRS, fall well within the definitional standards that courts have developed for identifying interpretative rules. In short, although I won't speak for other scholars on this question, I don't subscribe to the notion that the judiciary has overruled Congress on the original meaning of the APA's interpretative rule category (although I do think the judiciary arguably has disregarded the original intent of Congress regarding other aspects of the APA). Rather, the courts developed standards for defining a statutorily-undefined term/category of agency rules, and Supreme Court interpretations of the Constitution, combined with changes in tax legislative and regulatory practices over time, have caused a shift in the legal and practical characteristics of regulations issued under IRC 7805(a), moving those regulations from one APA statutory category to another.
  •  My only response is that, although Congress did not define the interpretive rule category, every commentator (whether judicial or scholarly) knew that interpretive rules could include notice and comment regulations interpreting statutory text and that, indeed, that was the original meaning of the APA. A legion of court authorities from the Supreme Court down recognized that Treasury regulations interpreting the statute were interpretive regulations before and after the APA under that original meaning. My argument is that that was the original meaning, informing the APA, at its enactment. Proessor Hickman's claim is that that meaning no longer applies. If that is true, it is not because Congress changed that original meaning. It is because, according to your claim, courts, perhaps encouraged by scholars, changed the meaning. I think that it would help discussion of this issue to state the original meaning has been changed by the judiciary (if indeed the change has even occurred).
  • Please understand Professor Hickman that I am not disputing the theoretical basis for why the change should occur. I simply think that is a change that should be made by Congress rather than judicial spinning and scholars spinning the judicial spinning. Indeed, the APA is quite explicit that changes to the APA must be must be made by Congress. I do think, however, the interpretive category for notice and comment regulations remains helpful for the retroactivity issues because there is no reason that an interpretation made by an agency not have retroactivity when an interpretation by a court should have retroactivity (as it usually does). Courts and agencies operate in the same interpretive space for ambiguous text. And there is the related issue of why an interpretation is legislative when an agency does it but is not legislative when a court does it.

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The foregoing may appear a bit dense. I offer for consideration Justice Scalia's famous claim: "administrative law is not for sissies." I do not believe either Professor Hickman or I are sissies in whatever sense Justice Scalia intended that sound-bite. We just disagree.

I note to readers that I also offer ongoing discussion of this and related issues in my Federal Tax Procedure Blog, here:  http://federaltaxprocedure.blogspot.com/

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