Correction from support: Skidmore v. Swift &co. Is the case I misspelled in the instructions. Follow these instruction very carefully please. To help with the analysis of the issues refer to and use the analysis that is used in the chevron u.s.a. Inc v. Natural resources with respect to the (step 1/ step 2 and step zero approach. Also refer to the skid ore v. Swift &co. Case when trying to argue which approach you would use in interpreting the statutes construction. I will email pictures as well Refer only to what I send. Instructions: 1. Please type your answer. You must answer the question within a maximum of eight typed pages. Please double-space all text and use one-inch margins, twelve point font, and no footnotes. 4. Make sure the course name and your exam number appear on your first typed answer sheet. Your name should not appear anywhere. 5. Please think and organize carefully before you write. Cogent, well-structured answers should be the objective. I. [For purposes of the exam, the statutory references and other legislative material mentioned below are artificial.] It is now the year 2022. After graduating from law school and spending some years in other legal positions, you are now a law clerk to a Justice of the United States Supreme Court. To assist the Justice in preparation for oral argument on the following case, she has asked you to draft a memorandum whose requirements will be presented below, following presentation of the case. In 1959 Congress passed the Internal Revenue Reform Act of 1959 (IRRA). For present purposes, three sections of the IRRA are particularly relevant; their statutory language has not changed to the present. As detailed further in the Legislative Materials that follow: 1. Section 301(b)(1) grants tax-exempt status to organizations “organized exclusively for religious, charitable, scientific, or educational purposes.” These organizations cannot attempt to influence legislation and must not participate or intervene in any campaign on behalf of or in opposition to any candidate running for public office. [Please henceforth assume that individual references in this exam to “participate” or “intervene” (or variants thereof) are intended to cover a broader category that includes both. Please also assume that references to “political campaigns” means campaigns of any candidate for public office.] 2. Section 301(b)(2) grants tax-exempt status to “organizations not organized for profit but operated exclusively for the promotion of social welfare.” These organizations can attempt to influence legislation. Their ability to participate in or intervene in any candidate’s political campaign is the present question before the Court. 3. Section 501 governs “political organizations.” They are taxed on income used to maintain the organization, but contributions received for or making expenditures to political campaigns is not taxed. (Separate penalties are imposed if contributions received for political campaigns are not used for that purpose.) The differential legal treatment of various activities of these three types of organization is summarized in the following chart. Aside from the part listed with question marks (“???”) – which is the subject of the present case – there is no debate about the elements of this summary. § 301(b)(1) § 301(b)(2) § 501 May receive tax deductible charitable contribution Yes No No May engage in political campaign intervention No ??? Yes Publicly disclose donor identity No No Yes May engage in lobbying Limited Yes No May engage in general advocacy not related to legislation or candidate election Yes Yes No Contributions Unlimited Unlimited Limited For many years after passage of the IRRA, §301(b)(2) received little attention. Most individuals or entities wanting to engage in campaign participation or campaign contributions did so 3 of 9 individually or funneled their contribution through a § 501 organization. The common understanding of acceptable “social welfare” organizations included the following: a) A private organization operating an airport that serves the general public and is on land owned by a local government; b) A community association working to improve public services and residential housing; c) A community association seeking to preserve the community’s architectural quality by appearing before the local legislature and administrative agencies in zoning, traffic and parking matters. By 2010, however, the use of § 301(b)(2) organizations for political campaign activity rapidly started to increase. In 2010, § 301(b)(2) organizations expended $122 million on political campaign activity, and that figure leaped to nearly $300 million by the calendar year 2012. It appeared that the use of § 301(b)(2) organizations increased dramatically in part because, in contrast to § 501, donor identity did not need to be disclosed, there were no limits on contributions, and the range of political activity permitted appeared to be broader. The IRRA is administered by the Internal Revenue Service (IRS or Agency). In response to the rise in political expenditures by § 301(b)(2) organizations during the 2012 election cycle, the IRS started to engage in closer scrutiny of specific groups applying for tax-exempt status under § 301(b)(2). The IRS expressed concern that “social welfare” organizations were improperly engaged in campaign activity. In the view of the IRS, some organizations that had sought § 301(b)(2) tax-exempt status were operating more like “political organizations” that should have come under the requirements of § 501. Whatever the legitimacy of the IRS concern, a number of members of Congress criticized the IRS for selective enforcement of § 301(b)(2) criteria and insisted that the IRS had a duty to treat similarly situated organizations consistently. An internal audit of IRS procedure indeed revealed that the IRS was targeting groups with names such as “Tea Party” in their title. In response, the IRS declared that this targeting was undertaken by members of an IRS branch office responsible for § 301(b)(2) applications, that the targeting was not official IRS policy, and that henceforth the targeting would cease. In 2017, a new Presidential Administration (“2017 Presidential Administration”) came into office. Under the new Administration, the IRS undertook notice and comment review and promulgated new regulations governing the Agency’s interpretation of § 301(b)(2). The new regulations forbade any § 301(b)(2) organization from engaging in any form of political campaign intervention. The regulations served to extricate the IRS from concerns over selective enforcement and to require organizations engaged in political campaign activity to be governed by § 501. In 2021, another Presidential Administration (“2021 Presidential Administration”) came into office. Under this Administration, the IRS engaged in new notice and comment review and revised the regulations governing § 301(b)(2) by returning them to their original language in 1959. The current regulations, therefore, now permit § 301(b)(2) social welfare organizations to engage in political campaign intervention. A public interest group, People for Fair Elections (PFE), has presented a legal challenge to the new IRS regulations as being contrary to the statutory requirements of § 301(b)(2). The case has moved forward swiftly and has now reached the Supreme Court. Assume that any lower court holding is irrelevant to the resolution of the case, as the Court does not defer to a lower court holding in this context. Assume also it is unquestioned that PFE has standing to argue the case, so the Court will evaluate the case on its merits. To assist your analysis of the case, some of the parties’ arguments are summarized below. You should be able to develop additional arguments on the basis of the legislative and other materials, including the statutory language, which are included below following the case presentation. (Assume you do not need to be concerned about whether any argument you develop was presented to a court below or is present in the parties’ briefs.) The Government (“U.S.”) defends the IRS’s current interpretation of § 301(b)(2) and argues: 1. The language of § 301(b)(2) permits a “social welfare” organization to participate in political campaigns. Social welfare organizations will want to participate in political campaigns either to support candidates who will advance the organization’s goals or to defeat candidates who will hinder the organization’s goals. Nothing in the text of § 301(b)(2) indicates a restriction on social welfare organizations’ participation in political campaigns. 2. This conclusion is reinforced by comparing the language of § 301(b)(2) with the language of § 301(b)(1). The latter language includes an explicit prohibition on organizations coming under its language from participating in or intervening in any candidate’s political campaign. 3. If there is any tension between the requirements of § 301(b)(2) and the requirements of § 501, that is a tension that Congress should resolve. The Court’s obligation is to interpret the commands of § 301(b)(2). 4. It is unquestioned that shortly after passage of the IRRA, the IRS promulgated regulations interpreting § 301(b)(2) that permitted social welfare organizations to participate or intervene in candidates’ political campaigns. The IRS did not deviate from this interpretation except in the regulations promulgated under the 2017 Presidential Administration. The current IRS regulations return to the interpretation consistently followed by the IRS previously. 5. Congress has acquiesced to the traditional IRS regulations interpreting § 301(b)(2) to which the new IRS regulations return. Over the life of the IRRA and IRS regulations interpreting § 301(b)(2), Congress never manifested objections to the traditional IRS regulations. In this way, Congress has reinforced its will about the meaning of § 301(b)(2). The Court must defer to the will of Congress. The victory of the new Presidential Administration may be accounted in part to objections – including those presented by members of Congress – to the intrusive regulations promulgated in a variety of areas by the prior Administration, including the IRS. 6. If any language in the legislative history of the IRRA does not support the present IRS regulations interpreting § 301(b)(2), the Court should give priority to the statutory language, not the legislative history. 7. The current IRS regulations interpreting § 301(b)(2) encourage robust participation in the political process, including by social welfare organizations. Democracies function most effectively when political debate is generally unrestricted and issues are decided by the political market – by voters – rather than by restrictions upon political participation. 8. If the Court holds that the implications of § 301(b)(2) are ambiguous in the present case, the Court should defer to the current IRS regulatory interpretation of § 301(b)(2) as reasonable. 9. If there are objections to the current IRS regulations interpreting § 301(b)(2), the remedy should be to seek congressional change to the language of § 301(b)(2) rather than for an unelected judiciary to impose change on the language. PFE challenges the IRS’s current interpretation of § 301(b)(2) and argues: 1. The language of § 301(b)(2) prohibits a “social welfare” organization from participation in political campaigns. The language of this section requires organizations governed by its terms to operate “exclusively for the promotion of social welfare.” The promotion of social welfare is different from engagement in partisan political campaigns. The requirements of § 301(b)(2) so clearly prohibit governed organizations from participation in political campaigns that there was no need for Congress to spell out these implications, as it did in § 301(b)(1). 2. The conclusion that § 301(b)(2) prohibits governed organizations from participation in political campaigns is reinforced by comparison with the requirements of § 501. The latter section governs the requirements of organizations engaged in political campaign activity. That section requires disclosure of contributors and imposes limits on the amount of contributions. Those requirements promote transparency in the political campaign process and seek to ensure that certain voices in the political process are not drowned out by other voices with disproportionately more money to spend on political advertising. The present IRS regulations render § 501 meaningless surplusage. Under the present regulations, all organizations seeking to participate in political campaign activity will want to become § 301(b)(2) organizations rather than § 501 organizations. 3. The legislative history behind the IRRA supports PFE’s position and properly informs the interpretation of § 301(b)(2). 4. Congress did not acquiesce to the IRS’s initial regulations interpreting § 301(b)(2). For most of its history, this section did not draw any congressional attention because its use was uncontroversially sought by social welfare organizations that did not engage in political campaign activity. The IRS regulations interpreting § 301(b)(2) were not a matter to which Congress gave much if any thought. 5. The IRS regulations of § 301(b)(2) promulgated by the 2017 Presidential Administration reflected a proper interpretation of this statutory section. Further, these regulations were also attuned to the newer political reality that organizations were seeking to circumvent the restrictions of § 501 by improperly applying for § 301(b)(2) status. By contrast, the IRS regulations of § 301(b)(2) promulgated by the 2021 Presidential Administration do not comply with the requirements of this section. They are not even permissible interpretations of the section. You may assume in the present context of the case that neither side is raising – and so you should set aside – any possible constitutional issues, including whether IRS regulations, past or present, intrude on the rights of free speech or association under the First Amendment. What follows are the relevant legislative and other materials and then more details of your assignment. * * * * LEGISLATIVE AND OTHER MATERIALS Internal Revenue Reform Act of 1959 (IRRA): § 101: Commissioner of Internal Revenue [revised from prior legislation] (a) Appointment: There shall be in the Department of the Treasury a Commissioner of Internal Revenue who shall be appointed by the President, by and with the advice and consent of the Senate. The term of the Commissioner of Internal Revenue shall be a 5-year term. The Commissioner may be appointed to serve more than one term. (b) Duties: The Commissioner shall have such duties and powers as the Secretary may provide, including the power to administer, manage, conduct, direct, and supervise the execution and application of the internal revenue laws or related statutes and tax conventions to which the United States is a party. [You may assume that it is uncontested that the Commissioner’s authority listed here – and hence the authority of the IRS – includes promulgation of regulations that apply the internal revenue laws.] § 301: Exemption from Taxation: (a) Exemption from taxation: An organization described in subsection (b) shall be exempt from taxation. (b) Exempt organizations. – The following organizations are referred to in subsection (a): (1) Corporations organized and operated exclusively for religious, charitable, scientific, or educational purposes, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation, and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office. (2) Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare, no part of the net earnings of which inures to the benefit of any private shareholder or individual. § 501: Political Organizations (a) Tax imposed. – A tax is hereby imposed for each taxable year on the political organization taxable income of every political organization. [As defined elsewhere, the “political organization taxable income” means the income spent on developing and maintaining the organization. Its income spent on accepting contributions or making expenditures for a tax “exempt function,” defined below, is not taxed. The amount of tax is also calculated according to specifications elsewhere.] (b) Other definitions. – For purposes of this section – (1) Political organization. – The term “political organization” means a party, committee, association, fund, or other organization organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures, or both, for an exempt function. (2) Exempt function. – The term “exempt function” means the function of influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any Federal, State, or local public office or office in a political organization, or the election of Presidential or Vice-Presidential electors, whether or not such individual or electors are selected, nominated, elected, or appointed. (c) Required disclosure of expenditures and contributions. – (1) Required disclosures and contributions. – A political organization which accepts a contribution, or makes an expenditure, for an exempt function during any calendar year shall file with the Secretary [of the Treasury] quarterly reports that shall contain: (a) The amount, date, and purpose of each expenditure made to an individual or entity if the aggregate amount to such individual or entity during the calendar year equals or exceeds $500 and the name and address of the individual or entity; (b) The name and address of all contributors, whether individual or entity, who contributed an aggregate amount of $200 or more to the organization during the calendar year and the amount and date of the contribution. (c) The Secretary shall make all reports required under subsection (1) available for public inspection on the Internet. Such reports shall be downloadable. IRRA: Senate Floor Statement by Primary Sponsor, Senator Cochran (1959): It is the intent of Congress that § 301(b)(2) requires organizations granted tax-exempt status under this section to operate exclusively for the promotion of social welfare. These organizations are permitted to lobby legislatures to the extent that the lobbying promotes issues consistent with the organization’s tax-exempt purpose. These organizations must refrain, however, from participation or intervention in political campaigns of candidates seeking election to public office. Organizations that want to affect political campaigns of candidates must apply to the Internal Revenue Service for status under § 501 and must be governed by the restrictions that section imposes on those organizations. IRRA: House Floor Statement by Primary Sponsor, Representative Smith (1959): [Representative Smith gave the same floor statement on § 301(b)(2) as Senator Cochran. It is uncontested that both statements were issued in full on the floor of Congress prior to the passage of the IRRA. It is also not contested that Senator Cochran and Representative Smith worked together to promote passage of the IRRA.] IRS Regulations Interpreting § 301(b)(2) (1959): A civic league or organization may be exempt as an organization described in section § 301(b)(2) if – (1)(i) It is not organized or operated for profit; and (ii) It is operated exclusively for the promotion of social welfare. (2) Promotion of social welfare – (i) In general. An organization is operated exclusively for the promotion of social welfare if it is engaged in promoting in some way the common good and general welfare of the people of the community. An organization embraced within this section is one that is operated for the purpose of bringing about civic betterments and social improvements. (ii) Political activities. Under section 301(b)(2), a social welfare organization may engage in direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office, so long as that activity does not become the social welfare organization’s primary activity. IRS Regulations Interpreting § 301(b)(2) (2017 Presidential Administration): [The regulations stayed the same, except that (2)(ii) was changed as follows:] (ii) Political activities. Under section 301(b)(2), the promotion of social welfare excludes and prohibits direct or indirect candidate-related political activity. IRS Regulations Interpreting § 301(b)(2) (2021 Presidential Administration): [The regulations returned to their original formulation in 1959.] * * * * Your Justice has asked that your memorandum be written with the following points in mind: 1. Your memorandum should decide whether § 301(b)(2) social welfare organizations are permitted to “engage in direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office,” and you should develop the reasoning by which you reach this conclusion. 2. All parties agree that the legislative and other materials presented above contain the major evidence relevant for decision of this case. Please undertake no outside research. 3. If certain relevant facts in the instant case or in the development of the legislative record are not presented above, identify them and indicate how they might affect your interpretation of the statute. 4. Prior precedent – either as to method or as to substantive conclusion – is not necessarily binding but, if warranted, may be revised or overridden in deciding the case. Please consider yourself bound, however, by the Supreme Court’s decisions in Chevron, Mead, and Skidmore. 5. Your Justice has placed no limitations on the type of statutory interpretation approach(es) you should take, so long as your reasoning employing the approach(es) is persuasive. A considerable part of the persuasiveness of your answer will lie in its anticipation of and response to the possible objections that can be raised against it. 6. Whatever approach(es) to statutory interpretation you choose, you should address all the arguments made by each side and all the legislative materials provided. If, for example, you decide a particular reference has no legitimate bearing on your analysis, you should explain how you reached this conclusion. 7. You should integrate into your decision and rationale some brief reflections on the nature of the legislative process. Is the legislative process rational, purposive? If not, why not? How does your evaluation of the legislative process affect your approach to statutory interpretation in this case? 8. Finally, you should incorporate into your answer some brief examination of what you think the judicial role should be in deciding questions of statutory interpretation. Is the Court’s role in the present case to act simply as a passive interpreter of statutory meaning or intent, or does/should it play a more active role?