Tribune Media Says Loper Bright Applies to Antiabuse Rule Validity

July 3, 2024

Christopher G. Conway
Clerk of Court
United States Court of Appeals for the Seventh Circuit
Everett McKinley Dirksen United States Courthouse
219 S. Dearborn Street
Chicago, IL 60604

Re: Tribune Media Company v. CIR, Nos. 23-1135, -1136, -1242, & -1243

Dear Mr. Conway:

I write to advise the Court of the decision in Loper Bright Enterprises v. Raimondo, Nos. 22-451 & 22-1219 (U.S. June 28, 2024). That decision is relevant to the arguments about the validity of the general anti-abuse rule, 26 C.F.R. §1.701-2. See Pet'rs Opening-Response Br. 58-62.

Petitioners have argued that the general anti-abuse rule is invalid because it exceeds the Treasury Department's authority. Petr's Opening-Response Br. 60 (citing Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984)). In Loper Bright, the Supreme Court overruled Chevron, holding that courts should not defer to an agency's interpretation of an ambiguous statute that the agency administers. Slip Op. 35. The Court made clear that courts should “exercise independent judgment” to ensure that agencies do not act outside of their delegated authority. Id. at 17-18.

Here, the government does not make an express claim of Chevron deference. See Gov't Response-Reply Br. 22-27. But it argues that the Treasury Department had the authority to promulgate the general anti-abuse rule, because Congress in 26 U.S.C. §7805(a) gave the agency the general authority to “prescribe all needful rules and regulations for the enforcement of [the Internal Revenue Code].” Id. (quoting 26 U.S.C. §7805(a)).

The general anti-abuse rule is an extraordinarily broad assertion of agency authority; the agency even contends that it can invalidate a transaction that follows “the literal words” of a statute that Congress enacted. Pet'rs Opening-Response Br. 59 (quoting 26 C.F.R. §1.701-2(b)). Loper Bright confirms that this Court should scrutinize that assertion of authority carefully to ensure that the agency stayed within permissible statutory bounds. Slip Op. 17-18, 26.

Thank you for your consideration of this additional information.

Respectfully submitted,

Joel V. Williamson
Counsel for Tribune Media Company and Northside Entertainment Holdings, LLC, tax matters partner for Chicago Baseball Holdings, LLC
Mayer Brown LLP
Chicago, IL

Enclosure

cc:
Counsel of Record (via ECF)