Former AAG Tax Justice Robert H. Jackson's Contribution in Dobson to the Deference Discussion Currently in the News and Before the Supreme Court (12/20/23)

I recently completed an article that features prominently Justice Robert H. Jackson who served on the Supreme Court in the 1940s. Jackson’s role in the article is based on the unanimous decision he authored in Dobson v. Commissioner, 320 U.S. 489 (1943), reh. den. 321 U.S. 231 (1944). Dobson was a tax case. The issue was whether the Tax Court’s statutory interpretation of tax law was entitled to deference in the appellate courts. While, as DOJ Tax Alumni certainly know, Congress legislatively did away with deference to Tax Court interpretations of law in 1948 in what is now § 7482(a) (requiring review the same as appellate review of district court opinions), Justice Jackson’s Dobson decision in 1943 was rock solid for two reasons: (i) agency interpretations of law were entitled to deference as Dobson amply laws out, and the Tax Court was statutorily an agency; and (ii) the statutory standard for review of agency decisions permitted review only if the Tax Court interpretation was “not in accordance with law” (1939 Code § 1141(c)), a standard which Dobson held required deference. Indeed, the form of deference Dobson lays out is basically what we call Chevron deference today.

Dobson ties into the subject of my article, titled The Tax Contribution to Deference and APA § 706 [linked at end of this blog). Many readers also probably know that the Supreme Court has accepted cert to decide whether Chevron deference to agency interpretations of law should be overruled or clarified. A major issue is whether § 706 precludes, permits, or requires deference to agency interpretations. In this regard, recall that Dobson emphasized that the Tax Court was statutorily an agency, making prior court precedents and the holding in Dobson to require deference to the Tax Court interpretations relevant to a discussion of deference to agency interpretations. More importantly, the statutorily prescribed standard for review of Tax Court  interpretations was “not in accordance with law” which Dobson held required deference. The APA incorporated that same standard in § 706: “(2)hold unlawful and set aside agency action, findings, and conclusions found to be (A)arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” My argument is that the use of the same standard for agency interpretations of law certainly permits (perhaps even requires) deference to agency interpretations.

Preparing the article required that I give renewed attention to Justice Jackson and his background in the tax law, some of which was with DOJ Tax. The Wikipedia discussion of Justice Jackson is here. I provide the following excerpt from the article surveying his tax litigation background (in which I think DOJ Tax Alumni may have interest):

2. Dobson Nuance.

a. Dobson’s author - Justice Robert Jackson

Dobson was authored by Justice Robert Jackson, who, although not a substantive tax expert, had been a trial lawyer in private practice and in the Government in the following capacities after coming to Washington in the New Deal revolution:

• Chief Counsel of the IRS where he advised on tax law and managed the IRS’s trial lawyers in the Board of Tax Appeals (“BTA” with the name changed to Tax Court in 1942; for the critical part of this article, in 1942, the BTA’s name had been changed to Tax Court). As Chief Counsel, Jackson tried at least one prominent tax case.43

 • Assistant Attorney General for the Tax Division, overseeing the Government’s tax trials in all courts except the Tax Court.

 • Solicitor General (“SG”) of the U.S. managing and sometimes arguing Government cases in the Supreme Court. In addition, the SG had to approve Government petitions for certiorari and all Government appeals to courts of appeals in tax cases from trial courts (including the Tax Court).

He was also Attorney General (“SG”) of the U.S. before ascending to the Tax Court. (All of these positions he occupied in less than 10 years prior to coming to the Supreme Court.)

 He was also a member of the select AG Committee on Administrative Procedure formed in 1939 which produced the Final Report on Administrative Procedure (1941) that he did not sign because the Report was issued to him as Attorney General. That Final Report that he approved is the starting point for “legislative history” for the APA and amply describes the state of deference to agency interpretations, in much the way Justice Jackson described agency deference in Dobson in 1943. The point is that Justice Jackson had extensive background in both tax litigation and administrative law. Hence, he spoke authoritatively as to the need for agency deference and “not in accordance with law” as requiring a standard requiring deference.

That story about Dobson and Justice Jackson’s contributions to the proper interpretation of § 706 has not been a key feature of the discussion of the issue currently before the Supreme Court. I try to tell it in my article.

The article is available for review and downloaded on SSRN Townsend, John A. The Tax Contribution to Deference and APA § 706 (December 14, 2023). Available at SSRN: https://ssrn.com/abstract= here.

 I do suggest in the article that the current Chevron fury is more political and ideological than something that should divide the country or the Court (but then the Court is not above such distractions).