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Thomas Dissent Latest Sign in Battle Over Chevron Deference

Feb. 25, 2020, 8:32 PM

Justice Clarence Thomas offered the latest signal of his appetite to rein in the power of federal agencies, criticizing a long-standing legal principle that federal agencies commonly rely on to defend their regulatory decisions.

Thomas’s lone dissent in Baldwin v. United States didn’t hold back in his criticism of the Chevron doctrine, which calls for courts to show deference to agencies if there is ambiguity about what Congress authorized and if the agency regulation reflects a reasonable interpretation. Thomas argued that the doctrine unconstitutionally transfers the judicial power to interpret laws over to federal agencies.

“Perhaps worst of all, Chevron deference undermines the ability of the Judiciary to perform its checking function on the other branches,” he said in his dissent, issued Monday.

Thomas’s critique of Chevron wasn’t enough to convince his colleagues to take up the case of Howard and Karen Baldwin, petitioners in a tax refund case who wanted the court to revisit its 2005 opinion in National Cable & Telecommunications Ass’n v. Brand X Internet Services, which gave deference to agencies, rather than judges, in construction of statute.

But his criticism of Chevron continues a pattern of voiced skepticism from multiple justices toward aspects of executive rulemaking, said Kristin Hickman, a professor at the University of Minnesota Law School, who focuses on administrative law and tax issues.

“One of the things you’re seeing at the Supreme Court in general in the area of administrative law and separation of powers is some rethinking of longstanding doctrine in the face of contemporary administrative practices,” she said.

Charles J. Cooper, partner at Cooper & Kirk PLLC, suggested that the drumbeat from Chevron-skeptic justices may eventually force the court to address the doctrine directly.

“I think we will see Justice Thomas continuing to question Chevron, and other justices, until a consensus forms to reexamine it frontally. “

Timing Question

The Baldwins, who produced the 2004 movie “Ray” about the life of musician Ray Charles, argued that the Internal Revenue Service owed them a tax refund of about $168,000 because a regulation related to the timely mailing requirement under tax code Section 7502 supplemented, rather than replaced, the “mailbox rule,” a judge-made rule.

Thomas authored the 2005 Brand X opinion, stating that an agency’s reasonable construction of a statute is more important than a judge’s earlier construction unless the statute’s terms didn’t leave space for agency discretion. But Thomas reversed course and criticized his own opinion in the Baldwin dissent.

“My skepticism of Brand X begins at its foundation—Chevron deference,” Thomas wrote.

Daniel Hemel, a professor at the University of Chicago Law School, said that while he thinks Chevron and Brand X were correctly decided, even supporters “will feel a few qualms about their application here.”

He pointed to how the Baldwins losses were based on a Treasury regulation that was issued in its final form after they purportedly mailed their tax document.

“Whatever one thinks of Brand X, the backward-in-time application of a later regulation will strike many as rather harsh,” he said.

Future of Chevron

The fact that the justices turned down the case could signal that they aren’t prepared to take on Chevron at this time under any set of facts, according to William Yeatman, a research fellow at the Cato Institute’s Robert A. Levy Center for Constitutional Studies.

“If there was a critical mass of justices with an eye to revisiting Chevron, then this sure would have been a good case to do it,” he said.

While others expressed hesitancy about reading into the court’s decision not to take the case, they agreed the court may be interested in other avenues that cut back at Chevron.

“I don’t think Chevron is going anywhere,” said Corbin Barthold, litigation counsel at the Washington Legal Foundation.

But Barthold said judges may simply apply Chevron more vigorously, in a way that leaves less space for executive interpretation.

Thomas himself may have signaled that he doesn’t have the votes for overturning Chevron when he instead suggested an incremental step in the Baldwin dissent.

“Even if the Court is not willing to question Chevron itself, at the very least, we should consider taking a step away from the abyss by revisiting Brand X,” he said.

To contact the reporter on this story: Aysha Bagchi in Washington at abagchi@bloombergtax.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Colleen Murphy at cmurphy@bloombergtax.com

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