In my prior post, I mused on the potential severability analysis for tax regulations that a court declared invalid. I noted that courts do not perform severability analysis when (for example) invalidating subsection (d) of a particular tax regulation and instead set aside only the particular regulatory language relevant to the taxpayer’s tax liability.
My industrious co-bloggers, Daniel Deacon and Aaron Nielson, brought my attention to a recently published Yale Law Journal article, “Administrative Severability Clauses,” by Charles W. Tyler & E. Donald Elliott. In it, the authors consider the “under-theorized” issues relating to the deference that agencies should receive when they include severability clauses in their own regulations. They acknowledge that agencies use such clauses “infrequently and sporadically” and that such clauses have received little scholarly attention. Nonetheless, some recent controversial regulations on climate change could make severability a big-ticket issue.
The Tyler & Elliott article has me wondering why we don’t see severability analysis in cases involving tax regulations. My initial reaction was that, because of the Anti-Injunction Act, tax cases almost always arise in cases involving only a single taxpayer’s dispute over its tax liability and this prohibits severability analysis. That is, we rarely see cases where industry groups present pre-enforcement challenges to tax regulations, through which a court might broadly examine which parts of a regulation must stand and which must fall. Rather, a court’s review will be limited to examining how some isolated language in a larger regulation bears on the taxpayer’s liability. If it sets aside that language, there won’t be any occasion to go further and potentially invalidate the entire regulation project or consider severability. Once the taxpayer’s liability is determined, the case is over.
However, Tyler & Elliott note that the Supreme Court first addressed regulatory severability in a relatively recent case, K-Mart v. Cartier, 486 U.S. 281 (1988). This seems somewhat strange, given that agencies have promulgated rules for a very long time. Consequently, maybe we don’t see severability in tax cases because, as a general rule, we rarely see severability analysis anywhere.
I’ll have more thoughts after reading the Tyler & Elliott article in full, but I wanted to direct interested readers to it. The authors focus on regulations containing explicit severability clauses, and note that they reflect a “fairly nascent experiment” and the existing case law is “problematic.”
I suspect that the same may be said about agency severability analysis generally. K-Mart itself contained little analysis or no case citations for its approach to agency severability, which is generally patterned after the Court’s approach to statutory severability. However, as I mentioned in my prior post, there may be reasons to perform severability analysis differently for regulations than for statutes.