ABOLISHING THE SHELTER OF AMBIGUITY: A NEW FRAMEWORK FOR TREASURY REGULATION DEFERENCE CLARIFYING CHEVRON AND BRAND X
Sebastian Watt
ABSTRACT
In the Supreme Court’s 2011 decision in Mayo Foundation for Medical Education and Research v. United States the Court held that Treasury Regulations (“TRs”) interpreting the Internal Revenue Code (“I.R.C.”) are entitled to the same administrative deference accorded to other agency regulations, as set out in Chevron, USA., Inc. v. Natural Resource Defense Counsel. In the immediate wake of the Court’s clarification as to the proper standard for TRs, the circuit courts of appeals divided over a regulation interpreting a statute of limitations provision, I.R.C. § 6501(e)(1)(A) (“Section 6501”). The Supreme Court granted certiorari in 2012 in Home Concrete & Supply v. United States to resolve the split. The question before the Court was whether a prior Supreme Court decision, Colony v. Commissioner, (1) conclusively decided that its interpretation of section 6501 was the only reasonable one, thus foreclosing alternative agency regulation, or (2) represented one possible interpretation, thus allowing future alternative agency regulation. The Court concluded that the Colony found section 6501 unambiguous, and thus invalidated the agency regulation.
The Section 6501 circuit court and Supreme Court opinions provide insight into a question that the Supreme Court attempted to answer in National Cable & Telecommunications Association v. Brand X Internet Services: the extent to which “a court’s prior judicial construction trumps an agency construction otherwise entitled to Chevron deference.” This article uses the section 6501 circuit split to address the failure of Brand X to create a workable regulatory deference framework. This article argues that courts should consistently construe prior judicial interpretations of statutory ambiguity narrowly when faced with a contradictory agency regulation, and defer to new agency interpretation when possible.
