USA Trends and Developments Contributed by: Kim Marie Boylan, Kevin Spencer, Nicholas Wilkins and Sean Lyons, White & Case LLP
agency interpretations of the Constitution – are not entitled to deference” (Id) (quoting 5 USC Section 706) (internal citation omitted) (emphasis in original). Loper Bright describes the APA as “incorporat[ing] the traditional understanding of the judicial function, under which courts must exercise independent judgment in determining the meaning of statutory provisions” (Id at 394) and concludes that “[t]he deference that Chev- ron requires of courts reviewing agency action cannot be squared” with that aspect of the APA (Id at 396). While courts should “use every tool at their dis- posal to determine the best reading of the stat- ute” (Id at 400), Loper Bright acknowledges that “the statute’s meaning may well be that the agen- cy is authori[s]ed to exercise a degree of discre- tion” (Id at 394). Thus, agencies may continue to promulgate rules and regulations where author - ised by Congress, and the courts are tasked with “recogni[s]ing constitutional delegations, ‘fix[ing] the boundaries of [the] delegated authority’, and ensuring the agency has engaged in ‘reasoned decision[-]making’ within those boundaries” (Id at 395 (quoting Henry P Monaghan, Marbury and the Administrative State, 83 Colum L Rev 1, 27 (1983) and Michigan v EPA, 576 US 743, 750 (2015)) (internal citations omitted) (alterations in original)). A notable feature of Loper Bright is that, even though the decision overrules Chevron, it expressly does not overrule prior decisions that relied upon Chevron. “The holdings of those cases that specific agency actions are lawful… are still subject to statutory stare decisis despite our change in interpretive methodology. Mere reliance on Chevron cannot constitute a spe- cial justification for overruling such a holding, because to say a precedent relied on Chevron is, at best, just an argument that the precedent
was wrongly decided” (Id at 412 (internal quota - tions omitted)). Post-Loper Bright challenges to tax regulations At the time of writing (March 2025), Loper Bright is only about nine months old. All the same, fed - eral courts have already cited Loper Bright more than 600 times. Litigants, including taxpayers, have been quick to use Loper Bright to chal - lenge (or more effectively challenge) unfavour - able federal agency rules and regulations. Some cases involving tax regulations have already been decided and two significant appeals chal - lenging transfer pricing regulations are currently pending. Challenges to non-transfer pricing regulations Taxpayers have not uniformly succeeded in using Loper Bright to challenge Treasury Regu - lations. While at least one court has relied on Loper Bright to invalidate a Treasury Regulation, other courts have concluded that the regulations before them provided the best reading of the law. i) Regulation held to be invalid: FedEx Corp v United States In FedEx Corp v United States, 2025 US Dist LEXIS 48392 (WD Tenn 13 February 2025) ( “FedEx” ), the taxpayer challenged aspects of the Section 965 regulations providing guidance for the computation of foreign tax credits. The district court considered the Loper Bright deci - sion and found in favour of the taxpayer. At the time of writing (March 2025), the FedEx decision is still subject to appeal. Relying on Loper Bright’s holding that prior deci - sions based upon Chevron need not be revis - ited, the FedEx court first declined to revise an
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