Treasury Regulations and Judicial Deference in the Post-Chevron Era

Georgia State University Law Review, Vol. 13, No. 2 (February 1997), pp. 387-430


1984 was a watershed year in administrative law jurisprudence in the United States. That year, the Supreme Court outlined the degree of deference courts must show to agency regulatory interpretations of statutes. The Court concluded in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc. that an administering agency's reasonable regulatory interpretation of a statute must prevail over a differing judicial interpretation in two instances: (1) when Congress fails to unambiguously address the issue involved or (2) when the agency's interpretation is consistent with Congress' intentions. In so doing, the Court broke new ground in administrative law by asserting that the judiciary must yield to the reasonable legal and policy determinations of an executive agency. Despite contrary assertions, the Chevron directive remains unchanged today after more than a decade of subsequent Supreme Court rulings.

Analysis of several post-Chevron cases indicates that every major Supreme Court case since 1984 involving the validity of a Treasury regulation is consistent with Chevron. Indeed, since 1984 every challenged Treasury regulation interpreting a statute in which Congress failed to address a specific tax issue has been upheld by the Court. In fact, no Supreme Court case since 1984 could be discovered in which the Court invalidated a Treasury regulation on the grounds that it was an unreasonable interpretation of a statute. Several post-Chevron Supreme Court decisions, however, rejected the Treasury's application of a tax regulation to a particular factual situation. Additionally, there have been times when the Court failed to defer to the Treasury's non-regulatory interpretations. However, at least with respect to Treasury regulatory interpretations, the Supreme Court's review of tax cases since 1984 has been consistent with Chevron.

Part I of this Article outlines the regulatory environment in which the Treasury Department operates. It discusses the authority of the Treasury to act as administrator of the tax laws, as well as the several ways that the Treasury fulfills its administrative obligation. Part II is an in-depth analysis of what this Article terms the “Chevron era.” It contains an overview of several of the major Supreme Court cases preceding Chevron that involved Treasury regulatory deference and an analysis of the Chevron opinion. Part III focuses on the post-Chevron cases involving Treasury regulatory deference. It shows how the Supreme Court has abided by Chevron in each of its post-1984 decisions involving the validity of a Treasury regulation. Finally, it concludes that, contrary to the assertions of others, Chevron deference is alive and well. However, courts, especially the Supreme Court, should be more consistent at referencing Chevron so as to ensure continued adherence.