ADMINISTRATIVE PROCEDURES ACT

CIC Services, LLC v. Internal Revenue Service

Issues

Does the Anti-Injunction Act bar pre-enforcement challenges under the Administrative Procedure Act to newly promulgated agency guidelines that include discretionary tax-penalty enforcement provisions, or is the act narrowly confined to direct tax assessments and collections?

This case asks the Supreme Court to interpret the Anti-Injunction Act and to determine whether it bars pre-enforcement legal challenges to agency guidelines and regulations that incorporate a tax-penalty enforcement mechanism into the framework. CIC Services argues that the Supreme Court should construe the Administrative Procedure Act’s review provisions broadly enough and the Anti-Injunction Act’s prohibitory provisions narrowly enough to provide material tax advisors relief from the Internal Revenue Service’s new interpretative guidelines concerning reportable transactions. The Internal Revenue Service counters that the Anti-Injunction Act applies to CIC’s challenge so the lawsuit is barred and that none of the available exceptions to the Anti-Injunction Act’s provisions apply to CIC’s sought injunction. This case has important implications for corporations whose business involves reporting earnings to the Internal Revenue Service, as well as for federal agencies’ abilities to avoid lawsuits by tying in certain tax-penalty provisions.

Questions as Framed for the Court by the Parties

Whether the Anti-Injunction Act’s bar on lawsuits for the purpose of restraining the assessment or collection of taxes also bars challenges to unlawful regulatory mandates issued by administrative agencies that are not taxes.

The Internal Revenue Service has the authority to require taxpayers and some third parties to submit certain records about “reportable transactions.” CIC Services, LLC v. Internal Revenue Serv. at 249. The Internal Revenue Service also defines what constitutes a reportable transaction.

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Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvania

Issues

(1) When a party has intervened to defend an administrative rule that protects their interests, does that party lack standing to appeal a decision invalidating the rule if the party is already protected by an injunction issued by another court?

(2) Are the administrative rules exempting religious objectors from covering contraceptive care for their employees procedurally and substantively valid?

The Supreme Court consolidated Trump v. Pennsylvania and Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvania, two cases challenging the Trump Administration rules allowing employers to opt out of contraceptive-care coverage for their employees. Petitioners Donald J. Trump, President of the United States, et al. (“Government”) and Little Sisters of the Poor Saints Peter and Paul Home (“Little Sisters”) assert that the final rules are procedurally and substantively valid because the Departments of Health and Human Services, Labor, and the Treasury (“the Agencies”) can circumvent the notice-and-comment requirements under the Administrative Procedure Act (“APA”) when, as in here, they have “good cause.” Furthermore, the Government and Little Sisters assert that the Agencies were authorized to make such exemptions under the Patient Protection and Affordable Care Act (“ACA”) and the Religious Freedom Restoration Act (“RFRA”). Respondents, the States of Pennsylvania and New Jersey (“Pennsylvania”), counter that the final rules are procedurally and substantively invalid because the Agencies violated the APA’s notice-and-comment requirement.  Furthermore, Pennsylvania argues that the power to make such exemptions lies solely with Congress and the Court, and that the Agencies had no authority under the ACA or RFRA. On the second issue in front of the Court, Little Sisters asserts that it has standing in this appeal because it is at risk of harm under the preliminary injunction in question, irrespective of an injunction from the District Court of Colorado. Pennsylvania counters that Little Sisters does not have standing in this appeal because the Colorado District Court’s injunction protects Little Sisters from any harm caused by the preliminary injunction in question. The outcome of this case has heavy implications for the separation of powers, religious freedom, and individual rights.

Questions as Framed for the Court by the Parties

(1) Whether a litigant who is directly protected by an administrative rule and has been allowed to intervene to defend it lacks standing to appeal a decision invalidating the rule if the litigant is also protected by an injunction from a different court; and (2) whether the federal government lawfully exempted religious objectors from the regulatory requirement to provide health plans that include contraceptive coverage.

In 2010, Congress passed the Patient Protection and Affordable Care Act (“ACA”), which included the Women’s Health Amendment mandating that insurance issuers cover women’s preventive health care. Pennsylvania v.

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Acknowledgments

The authors would like to thank Professor Joshua C. Macey for his guidance on this case.

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