Ninth Circuit Rejects Midco Transaction Twice Blessed by Tax Court (7/29/18)

In Slone v. Commissioner, ___ F.3d ___, 2018 U.S. App. LEXIS 20602 (9th Cir. 2018), here, the Ninth Circuit rejected the Midco variant.  The Midco variant itself has subvariants but this example illustrates the basic idea:

A, an individual, owns Corporation X.  Corporation X has assets of $100 with a basis of $10.  There is a built in gain of $90, with a potential tax of $30.  Corporation X is worth, therefore, $70.  Corporation X sells its assets for $100.  Corporation X then has cash of $100, no liabilities except a tax of $30 that will be reported if nothing else happens.  Corporation X is still only worth $70.  So, Corporation Y purchases the Corporation X stock from A for $85 which it finances with the Corporation X cash (the cash moves around incident to the closing, but the $85 in essence comes from the Corporation X cash).  A and his advisors are not real sure why Corporation Y would offer more than the assets are worth.  Corporation Y hints that he has some technique (perhaps tax attributes) that would permit Corporation X to avoid the tax on the sale of the corporate assets.  Immediately after that closing, once the temporary financing for the Corporation X stock is paid off $85 of Corporation's X cash, Corporation X then has $15 cash.  Corporation X buys a bullshit tax shelter for $5 to avoid reporting the gain and the resulting $30 tax.  Corporation Y then takes the net $10 cash as its profits for structuring the transaction.  When Corporation X's bullshit tax shelter is rejected on audit two years later, the IRS assesses the $30 tax plus penalties and interest. Corporation X has no assets to pay the resulting tax, penalties and interest.  Corporation Y is not around to pay. 

Most of the Midco transactions are more complex than that, but when the veneer is peeled back, that is basically it.

The IRS in this situation wants the tax and will look to all involved to get it.  The IRS will look to A and assert transferee liability under § 6901.  A's defense is that he is not a transferee from Corporation X under the transferee liability provisions.  In furtherance of that argument, A will claim that he did not know the tax would not be paid.  He just thought that, magically, the buyer had some technique to avoid having to pay the tax.

Here is what the Court said (cleaned up):

Reasonable actors in Petitioners' position would have been on notice that Berlinetta intended to avoid paying Slone Broadcasting's tax obligation. Berlinetta communicated its intention to eliminate that tax obligation, and Slone's leaders and advisors, despite their suspicions surrounding the transaction, asked no pertinent questions. In Berlinetta's earliest solicitations to Slone Broadcasting, Berlinetta marketed its ability to pay the shareholders a premium on account of its ability to eliminate the company's tax liabilities. Berlinetta's affiliate company, Fortrend, wrote in a letter to Jack Roberts, Petitioners' longtime accountant, that Fortrend could pay a premium purchase price because of its ability to "resolve liabilities at the corporate level." This proposal raised justified suspicions in Slone Broadcasting's leadership. Mr. Slone, the company's president, testified that upon learning that an entity wanted to purchase Sloan Broadcasting, after it had already been effectively sold to Citadel, he asked Jack Roberts, "can that be done?" Unsure, Roberts replied, "well, I'm going to find out." 

That Berlinetta provided little information regarding how it would eliminate Slone Broadcasting's tax liability, coupled with the structuring of the transactions, provided indications that would have been hard to miss. Slone Broadcasting's advisors understood that the transaction made sense from Berlinetta's perspective only if Slone Broadcasting's tax liability were eliminated. This deal was, after all, an uneven cash-for-cash exchange in which Berlinetta paid Petitioners most of what Slone Broadcasting should have paid in taxes. Yet Petitioners' retained counsel testified that when he and Jack Roberts asked for details, Berlinetta told them "it was proprietary, it was a secret, and it was theirs, and we weren't going to be a party to it, and I said fine." And in a lengthy memo retained counsel prepared in November of 2001 analyzing the subject of potential transferee liability, counsel wrote that Berlinetta would distribute almost all of Slone Broadcasting's cash to repay the loan used to finance the deal. The memo never analyzed how Berlinetta could legally offset Slone Broadcasting's taxable gain from the asset sale. The memo merely concluded that Petitioners would not be liable as transferees of the proceeds of Slone Broascasting's asset sale if the Commissioner successfully challenged the entity's attempt to offset the tax liability. 

The Tax Court misinterpreted Petitioners' suspicions and Berlinetta's reassurances to mean Petitioners lacked actual or constructive knowledge of the tax avoidance purpose of the scheme. This record establishes that the Petitioners were, at the very least, on constructive notice of such a purpose. In reaching a contrary conclusion, the Tax Court confused actual and constructive notice, in effect allowing Petitioners to shield themselves through the willful blindness the constructive knowledge test was designed to root out. It is clear that Petitioners' stock sale to Berlinetta, in which Berlinetta assumed Slone Broadcasting's tax liability, and Berlinetta paid Petitioners an amount representing the net value of the company after the asset sale and most of the amount that should have been paid in taxes on that asset sale, operated in substance as a liquidating distribution by Slone Broadcasting to Petitioners, but in a form that was designed to avoid tax liability. Slone Broadcasting's distribution to Petitioners was thus a constructively fraudulent transfer under the Arizona UFTA. Petitioners are liable to the government for Slone Broadcasting's federal tax obligation as "transferees" under 26 U.S.C. § 6901.
REVERSED and REMANDED for entry of judgment in favor of the Commissioner.

D.C. Circuit Reverses the Tax Court on Chevron Application (7/28/18)

This week was not a good week for the Tax Court in the Courts of Appeals.  I have not attempted a complete survey of all Tax Court appeals in the Courts of Appeals or the percentage won/loss for this past week.  But here are three dramatic reversals.

• Altera Corp. et al. v. Commissioner, 145 T.C. 91 (2015), GS here, rev’d 926 F.3d 1061 (9th Cir. 2018), here.  Altera was a Government win on appeal.  I have written on the Ninth Circuit reversal:  Developments - Federal Tax Procedure Book 2018 Editions and Altera (7/25/18; 7/27/18), here. [Note the 9th Cir. denied rehearing en banc and the Supreme Court denied petition for writ of certiorari - reh. en banc den. 941 F.3d 1200 (9th Cir. 2019), cert. denied, 591 U.S. ___, 141 S.Ct. 131 (2020).]
• Good Fortune Shipping SA v. Commissioner, 148 T.C. 262  (2017), here, rev'd  897 F.3d 256  (D.C. Cir. 2018), GS here.  Good Fortune was a Government loss on appeal.  I write on this below.
• Slone v. Commissioner, T.C. Memo. 2016-115,  GS here, rev'd 896 F.3d 1083 (9th Cir. 2018), GS here.  Slone was a Government win on appeal.  I may write on Slone in a later blog.

I write in detail today on Good Fortune.  Good Fortune, like Altera, was a Chevron driven outcome.  Chevron and its ramifications (including deference generally) has occupied a good deal of my time having recently completed an article titled IRS Guidance – Rulemaking and Deference to IRS Statutory Interpretation (currently under submission to SSRN).

The issue in Good Fortune was whether Good Fortune's use of bearer shares -- a type of shares always suspect to parties (including Governments) wanting to know who owns foreign corporations -- precluded it from the tax benefit it sought.  The Code provision said that the benefit was not available if 50% or more of the owners of the stock of the foreign corporation is owned by residents of a country that did not provide reciprocal benefits.  The regulations provided that bearer shares could not be counted whether or not they were owned by otherwise qualifying shareholders.  The problem was that the Regulations provided a qualifier -- bearer shares not counted -- that the statute did not provide.

The Tax Court held under the Chevron Framework that (i) the statute was ambiguous on the issue of bearer shares for this test (Congress had not spoken), therefore getting past Step One, and (ii) that the IRS regulations' interpretation was "reasonable because it provided certainty and resolved the difficult problems of proof associated with establishing ownership of bearer shares." (quote cleaned up).

Applying the same Chevron Framework the Court of Appeals reached a different conclusion.  First, it did not resolve the issue of whether the statute was sufficiently ambiguous to permit the IRS to interpret the stock ownership requirement.  Finding of ambiguity is essential in Chevron Step One to permit Chevron space in which the agency can provide a reasonable interpretation. Rather, the Ninth Circuit assumed that the statute was ambiguous.  Second, moving to Step Two on that assumption, the Ninth Circuit said that, based on the reasons the IRS articulated (such as they were) for the exclusion of bearer shares, the Regulation was not reasonable and therefore failed Step Two.

The Court said (cleaned up) the following (blending Step One into Step Two):

Even if § 883 grants the IRS significant discretion to establish how to prove ownership, it hardly authorizes the agency to categorically deny consideration of a recognized form of ownership based on only a single, undeveloped statement that it is difficult to reliably track the location of a given owner. If the IRS found that the transferable nature of bearer shares made substantiation impossible, we might conclude that the 2003 Regulation reasonably implemented that finding. Indeed, a kind of stock that is entirely impossible to track might not constitute a form of ownership contemplated by § 883(c)(1). But the IRS has never made (much less adequately supported) such an absolute claim of impossibility with regard to bearer shares. The IRS's interpretation instead appears to rewrite § 883(c)(1) to require not only valid ownership, but ownership that is not difficult to track. Even if this regulatory amendment to § 883 is not unambiguously foreclosed by the statute's language, its unsubstantiated treatment of ownership comes close to violating the plain language of the statute—indicating that the 2003 Regulation is unreasonable at Chevron Step Two. 

District Court Holds that Santander's Arguments to Avoid Penalty for Bullshit Tax Shelter (No Substance) Lack Substance (7/24/18)

Here is an entry that I posted a few days ago on my Federal Tax Crimes Blog.  It is equally interesting to Federal Tax Procedure enthusiasts.

In Santander Holdings USA, Inc. v. United States (D. Mass. Dkt. 09-11043-GAO Dkt Entry 344 7/17/18), here, Santander previously lost the merits of its bullshit tax shelter on appeal, with the Court of Appeals holding that the shelter lacked economic substance.  Santander Holdings USA, Inc. v. United States, 844 F.3d 15 (1st Cir. 2016), here, cert. denied sub nom. Santander Holdings USA, Inc., & Subsidiaries v. United States, 137 S. Ct. 2295 (2017).  See my discussion of the Court of Appeals decision, First Circuit, Reversing the District Court, Rejects Santander's Bullshit Tax Shelter (Federal Tax Crimes Blog 12/17/16), here.

Santander argued that, although its tax shelter lacked economic substance -- i.e., was bullshit -- it should be able to avoid the accuracy related penalty.  Well, basically, the district court held that that argument too lacked substance -- was bullshit.  The opinion is short and, I think, predictable, so I forego addressing it further.

However, the district court did include a quote from the Court of Appeals' decision that I had included in my prior write up but was in a larger quote so that I had not focused on it.  The district court did focus on it as follows.  This is the quote (cleaned up):

When a transaction is one designed to produce tax gains not real gains—such as when the challenged transaction has no prospect for pre-tax profit—then it is an act of tax evasion that, even if technically compliant, lies outside of the intent of the Tax Code and so lacks economic substance.

The district corut did not quote the whole paragraph from the Court of Appeals which includes "tax evasion" twice, so I offer the whole paragraph (cleaned up):

The economic substance doctrine is centered on discerning whether the challenged transaction objectively lies outside the plain intent of the relevant statutory regime. A transaction fails the economic substance test if, though it actually occurred and technically complied with the tax code, it was merely a device to avoid tax liability. Courts may disregard the form of transactions that have no business purpose or economic substance beyond tax evasion. In other words, when a transaction is one designed to produce tax gains not real gains -- such as when the challenged transaction has no prospect for pre-tax profit -- then it is an act of tax evasion that, even if technically compliant, lies outside of the intent of the Tax Code and so lacks economic substance.

Readers of this blog will recognize the term "tax evasion."  At least in this blog and in other authorities on criminal tax matters, tax evasion is a term of art.  Narrowly, it means the specific tax evasion crime in § 7201, but is often used to cover the panoply of tax crimes where tax was evaded (e.g., the Sentencing Guidelines require that for a tax loss as the first step in the sentencing calculation).  But, the term usually does connote conduct that is criminal.  See e.g., the Wikipedia entry for Tax Evasion, here.

Developments - Federal Tax Procedure Book 2018 Editions and Altera (7/25/18; 7/27/18)

The 2018 editions of the Tax Procedure Book (Student Edition and Practitioner Edition) are available for download on SSRN as of 7/17/18.  The SSRN postings are linked on the page to the right titled "2018 Federal Tax Procedure Book & Supplements (7/17/18)."  

I am posting on this blog today a dramatic new development -- the Ninth Circuit's decision in Altera Corp. v. Commissioner, ___ F.3d ___ (9th Cir. 2018), here, sustaining the relevant § 482 regulations and reversing the Tax Court decision which struck them down.  I did not include this Ninth Circuit decision in my new editions of the book, so will include it in the new cumulative update that I provide from time to time to

In Altera, the Court decided 2-1 that the IRS's regulations requiring the inclusion of of employee stock-based compensation in cost-sharing arrangements which, if valid, avoid Section 482 adjustments.  The opinions (majority and dissenting) are quite good.

In high level summary, the majority concludes (i) from the APA procedural perspective, the regulations are valid (promulgated with the appropriate notice and comment and reasonable consideration as to the final contents of the regulations); and (ii) from the substantive perspective, the regulations are entitled to Chevron deference (Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984)), thus upholding the inclusion of employee-stock based compensation.

These types of issues are discussed in some detail in the new editions of the Federal Tax Procedure Book and in the article.  The genre of issue is fairly standard in administrative law.  Readers who are not familiar with the issues, should read the majority and dissenting opinions.

The two issues in a little more detail are:

1.  APA Procedure.

The majority opinion concludes that the notice and comment and regulations pre-amble discussion did fairly cover the final content of the regulations and thus the regulations were procedurally valid.  The dissenting opinion disagrees and, like the Tax Court, does not think that there was sufficient notice or reasoned explanation for the final regulation to be sustained procedurally under the APA.

2.  Substantive Interpretation.

The majority opinion concludes that the regulation is entitled to Chevron deference.  The dissenting opinion concludes that no Chevron deference at all is warranted because of the procedural defect the dissenting judge found (see paragraph 1 above).  This permits the dissenter to then reach a substantive interpretation unfettered by Chevron deference.  In Chevron parlance, the reviewing court unconstrained by Chevron deference can then reach its own most reasonable interpretation of the statute even if the IRS interpretation is reasonable, albeit less reasonable than the Court's most reasonable interpretation.  But, the dissenting judge goes one step farther -- she concludes that the IRS's interpretation was not even a reasonable interpretation and was inconsistent with the "plain language of the statute."  She then states:  "For at least this reason, I also disagree with the majority’s conclusion that Treasury’s reading of § 482 satisfies the second step of the Chevron test."  It is not clear whether the dissenting judge would stop the Chevron inquiry at Step One or would get to Step Two and hold the IRS interpretation unreasonable.  Either way, for the dissenting judge the IRS would lose on the substance because she interprets the substance differently than the IRS.  But, of course, the dissenting judge lost the battle of ideas on the panel.

Whistleblower Matters - Update (4/21/18)

I have made updates to the working draft of the Federal Tax Procedure book based, in part, on a recent posting on the Procedurally Taxing Blog -- Keith Fogg, Don’t Expect a Whistleblower Award for Giving the IRS Privileged Information and General Information from the Judicial Conference on this Issue (Procedurally Taxing Blog 4/16/18), here.  Also included in the updates are the recent statutory changes to the whistleblower awards program.  I link here a pdf of a red-line of the Whistleblower chapter -- Chapter 19.  Whistleblower Awards -- showing the changes in the working draft from the 2018 edition.  This is a footnoted edition of the draft of the chapter.  The principal new items covered are:]

• The change in the statute from "collected proceeds" to "proceeds" with a broadening of the base for whistleblower awards to clearly encompass non Title 26 collections (such as FBAR penalties and criminal fines related to tax crimes).
• The scope of review for Tax Court whistleblower cases.
• Appellate venue to the D.C. Circuit Court of Appeals for Tax Court whistleblower cases.
• The WBO's fye 2017 statistics for whistleblower cases.

Congress Amends Tax Whistleblower Section, § 7623, to Clarify Broad Reading of the Award Base (2/24/18)

Earlier this month, Congress amended the mandatory minimum tax Whistleblower award program to make clear that proceeds for purposes of the award base includes non Title 26 collections for fines, forfeitures and reporting violations (such as FBAR penalties).  See § 41108 of the Bipartisan Budget Act of 2018, P.L. 115-123, here.  The change is effected by using the term "proceeds" rather than "collected proceeds and adding § 7623(c) to provide as follows.

(c) Proceeds.—For purposes of this section, the term ‘proceeds’ includes—
   (1) penalties, interest, additions to tax, and additional amounts provided under the internal revenue laws, and
   (2) any proceeds arising from laws for which the Internal Revenue Service is authorized to administer, enforce, or investigate, including—
      (A) criminal fines and civil forfeitures, and
      (B) violations of reporting requirements.

The expanded definition is both for the award base and for the minimum proceeds for § 7623(b).


I have revised my discussion of the Whistleblower Chapter, Chapter 19, in my working draft of my Federal Tax Procedure Book (pending the next publication) to incorporate these changes and attach a red-lined version of it here. 

Good History Lesson on the Interface of Civil Procedure and Tax Refund Suits (2/2/18)

In United States v. Stein, 2018 U.S. App. LEXIS 2392 (11th Cir. 2018) (en banc), here, the Eleventh Circuit unanimously held that "an affidavit which satisfies Rule 56 of the Federal Rules of Civil Procedure may create an issue of material fact and preclude summary judgment even if it is self-serving and uncorroborated."  For civil trial lawyers, this seems an unexceptional holding, which is why it was a unanimous en banc opinion.  But there is some trial procedure intrigue behind the holding which explains why the panel opinion predicate to the en banc opinion held otherwise.  See United States v. Stein, 840 F.3d 1355 (11th Cir. 2016), here.

The background was Mays v. United States, 763 F.2d 1295 (11th Cir. 1985), here, which was the authority cited in the panel opinion.  In Mays, the court granted summary judgment on the following basis (emphasis supplied by JAT):

In a tax refund suit, the Commissioner's deficiency determinations are presumed correct, and the burden of proof is on the taxpayer to show that the Commissioner's findings were erroneous. Helvering v. Taylor, 293 U.S. 507, 514-15, 55 S.Ct. 287, 290-91, 79 L.Ed. 623 (1935); Anselmo v. Commissioner, 757 F.2d 1208, 1211 (11th Cir.1985). A taxpayer seeking a refund must show not only that the Commissioner erred, but must establish the correct amount of the refund due. King v. United States, 641 F.2d 253, 259 (5th Cir.1981)*; Crosby v. United States, 496 F.2d 1384, 1390 (5th Cir.1974). The claim must be substantiated by something other than tax returns, Lunsford v. Commissioner, 212 F.2d 878, 883 (5th Cir.1954), uncorroborated oral testimony, Griffin v. United States, 588 F.2d 521, 530 (5th Cir.1979), or self-serving statements. See Gibson v. United States, 360 F.2d 457, 462 (5th Cir.1966). 

Mays does not dispute that the computer printout he submitted with his response to the government's interrogatories was prepared after the tax audit; indeed, the "amount allowed by auditor" appeared on the face of the printout. His net worth statements did not refer to any original records, and he presented no contemporaneous documentation of his expenses or other evidence to establish that the Commissioner's tax assessment was wrong or to establish the correct amount due. In sum, Mays did not overcome the presumption of correctness due determinations of the Commissioner. Rather, he has submitted only self-serving documents which do not substantiate his claims. Accordingly, the government was entitled to summary judgment.

The Stein en banc opinion reverses Mays on straight-forward trial civil procedure grounds. Uncorroborated properly submitted affidavit testimony on a key factual issue can avoid summary judgment.  The effect of denying summary judgment is that the party opposing summary judgment can go to trial on that issue.  Trial can be either to a jury (if requested and the type of fact issue triable to a jury) or to a judge.

In tax cases, refund suits may be tried to a jury.  The majority en banc opinion does not get into the particular tax issue, other than to say that there is nothing unique about taxes that would require a different result than compelled by the ordinary civil procedure rules.  But, the tax setting is an entre for Judge William Pryor to talk in a concurring opinion about the unique historical role of taxes, procedure and jury trials.  I want to focus on Judge William's concurring opinion, but first I conclude the discussion of the majority opinion:

Distinguishing the Internal Revenue Code from Title 26 (11/27/17)

In my working draft for the 2018 edition of my Federal Tax Procedure book (scheduled for publication in August 2018), I have recently revised my discussion on Codified and Uncodified Laws in relation to the Internal Revenue Code of 1986 (IRC) and Title 26 (which is not the enacted revenue law).  For some, that may be confusing, as it was for me until recently.  So, I offer my understanding of what all that means by presenting a summary discussion below of the revised discussion and the full text of the revised discussion here.  (I also will include this revised discussion in my next current supplement to the Federal Tax Procedure Book. 2017 Editions)  Here is the summary discussion with supporting links at the end of the blog:

All statutes are enacted by Congress as Statutes at Large.  Statutes at Large are said to be "positive law."  The Statutes at Large are direct and conclusive evidence of the law.

Congress has authorized the House Office of Law Revision to compile common subjects in the various Statutes at Large into Titles which are not "positive law" -- i.e., the Titles have not been enacted -- they are simply compilations of underlying Statutes at Large and, by statute, are only prima facie evidence of the law -- the underlying Statutes at Large.  See 1 USC § 104(a), here.

Sometimes Congress will enact a Title as a Statute at Large.  Most importantly for tax procedure purposes, the IRC has been enacted as a Statute at Large and is positive law.  The IRC is thus the law.  This enactment occurred in 1939 and again in 1954.  The 1954 enactment was named the Internal Revenue Code of 1954.  In 1986, Congress renamed that enactment as the Internal Revenue Code of 1986, at the same time that substantial amendments to various provisions of that Code were enacted.  But -- and this is critical -- Congress did not enact the IRC as Title 26 of the U.S. Code.  The House Office of Law Revision has compiled -- actually mirror imaged -- the IRC into Title 26.

Therefore, the correct conclusive citation to any provision of the IRC is to the IRC (which is the law) and not to Title 26 (which is only prima facie evidence of the IRC).  Still, most courts and commentators usually cite to Title 26.

And, some statutes that affect the application of the revenue laws are not in the IRC, and therefore not in Title 26 (the IRC mirror image).  A good example of such “uncodified” tax law is § 530 of the Revenue Act of 1978, which is legislation giving taxpayers certain relief in the ongoing problem of characterizing service provides as employees or independent contractors; that uncodified provision is referred to in a note to 26 U.S.C. § 3401, here [scroll to bottom of the notes].

Helpful links for this subject may be found in the following (which are referenced in the footnotes to the excerpt from the current revision of the Tax Procedure Book referenced above.:

• Library of Congress web page on Statutes at Large, here.
• House Office of Law Revision Counsel Guide, here, 
• House Office of Law Revision Counsel Positive Law Codification, here.
• House Office of Law Revision Counsel list of codified (positive law) and uncodified (not positive law) Titles of the U.S. Code, here. [Note that the positive law titles are identified by an asterisk]  For a list of the codified titles only, see the note to 1 U.S.C. § 104(a), here.
• Yin, George K., Codification of the Tax Law and the Emergence of the Staff of the Joint Committee on Taxation, pp. 19 (August 1, 2017). Virginia Law and Economics Research Paper No. 2017-20; Virginia Public Law and Legal Theory Research Paper No. 2017-39. Available at SSRN: https://ssrn.com/abstract=3008878
• Will Baude, Reminder: The United States Code is not the law (The Volokh Conspiracy 5/15/17), here.  
• Tobias A. Dorsey, Some Reflections on Not Reading the Statutes, 10 Green Bag 282 (2007), here.

Excellent Article on the Necessity of Chevron or Something Like in the Administrative State (11/25/17)

A significant topic in my Federal Tax Procedure book and in many tax procedure books and classes is the subject of Chevron deference.  Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984).  Chevron deference has some influential critics -- including Justices Thomas and Gorsuch and a number of others, including legislators who rail against the administrative state. 

An excellent article arguing that Chevron or something like it is necessary for the administrative state -- Nicholas R. Bednar & Kristin E. Hickman, Chevron's Inevitability (2017). 85 Geo. Wash. L. Rev. 1392 (2017) (available on SSRN here). Kristin Hickman is a leading authority on Chevron.  The abstract is

For over thirty years, Chevron deference has been the target of criticism. Now, some judges and legislators are calling for an end to Chevron, and legal scholars are heralding the doctrine’s retreat. Chevron may be evolving, as common law often does. But claims that Chevron is in decline are overblown, and efforts to overturn Chevron in any meaningful sense are misdirected. Chevron-style deference is inevitable in the modern administrative state. The real “problem” — to the extent one sees it as such — is not Chevron but rather unhappiness with the natural consequences of congressional reliance on agencies to resolve major policy issues.

Although the whole article is worth reading, I found the following excerpt in the introduction helpful:

Finally, predictions of (or hopes for) Chevron’s pending demise fail to take into account that Chevron deference, or something much like it, is a necessary consequence of and corollary to Congress’s longstanding habit of relying on agencies to exercise substantial policy-making discretion to resolve statutory details. As administrative law’s best-known doctrine, Chevron has become a convenient scapegoat or bogeyman for those who are unhappy with the administrative state or judicial review of agency action. But unless Congress chooses to assume substantially more responsibility for making policy choices itself or the courts decide to seriously reinvigorate the nondelegation doctrine—neither of which seems remotely likely—at least some variant of Chevron deference will be essential to guide and assist courts from intruding too deeply into a policy sphere for which they are ill-suited.

And this excerpt from the conclusion:

CONCLUSION 

Reports of Chevron’s demise are greatly exaggerated, and efforts to overturn Chevron aim at the wrong target. Certainly, Chevron is a highly imperfect doctrine. The opinion itself is confusing. Courts are inconsistent when they apply it, adding to the confusion. Legitimate questions abound regarding Chevron’s proper scope and operation. Undoubtedly, there remains room for improvement and clarification. 

Yet, casting Chevron as administrative law’s bogeyman has always been a bit overwrought. Chevron undoubtedly is not what the Framers had in mind, but then again, neither is the modern regulatory state. So long as agency officials possess the authority to  make major policy decisions, Chevron—or something much like it—will survive. Congress will continue delegating, so courts will continue deferring in some number of cases. To the extent that courts and commentators want to curtail the administrative state, they should focus their efforts on rolling back congressional delegations of policymaking discretion to agency officials rather than overturning Chevron. 

In short, Chevron’s basic premises represent a reasonable judicial response to the government that we actually have and the world in which we actually live. To paraphrase Winston Churchill, Chevron is the worst standard of review, except for all the others.475 

For an excellent discussion of the Article, see Adrian Vermeule, Chevron as a Legal Framework, Jotwell (Oct. 24, 2017), here.  [Note that Vermeule lists Hickman first, but the article lists Bednar first; Hickman is the more recognized scholar]

Distinguishing Legislative History from Statutory History (11/15/17)

In my Federal Tax Procedure - (2017 Practitioners Ed. ), here, p. 7 n. 22, I state:

Legislative history is different from statutory history, which is “the formal changes in the [statute] made by the legislature when it enacts new laws and amends them over time.” William N. Eskridge, Jr., Interpreting Law: A Primer on How to Read Statutes and the Constitution 204 (Foundation Press 2016).

I think that many do not distinguish between the two and use the terms interchangeably.  But as noted, they are really two different concepts. 

I thought that fans of this subject might enjoy the following blog: Jonathan H. Adler, Justice Sotomayor looks at ‘statutory history,’ not ‘legislative history’ (The Volokh Conspiracy 11/14/17), here.

I do not discuss this distinction in the Student Edition but users of the Student Edition may also want to note the distinction.  I will likely lift the distinction from the footnote to the text in the next Editions so that it will appear in both Editions.