Green Rock LLC v. Internal Revenue Service, 654 F.Supp.3d 1249

The IRS issued Notice 2017-10, declaring certain "syndicated conservation easement transactions" to be listed transactions that must be disclosed by material advisors because of high potential for tax avoidance.
Green Rock, a material advisor, sued under the Administrative Procedure Act (APA) seeking to set aside Notice 2017-10 as issued without required notice-and-comment and as arbitrary and capricious; both parties moved for summary judgment.
The statutory framework at issue includes 26 U.S.C. §§ 6011 and 6707A (defining reportable and listed transactions) and Treasury Regulation § 1.6011-4 (which permits identifying listed transactions “by notice, regulation, or other form of published guidance”).
The IRS argued that § 6707A (and the preexisting regulation) authorized issuance of listing notices without APA notice-and-comment and that subsequent tax provisions evidenced congressional ratification of that practice.
The court found it has jurisdiction and that Green Rock has standing, and concluded issuance of Notice 2017-10 without APA notice-and-comment violated the APA.
Remedy: the court granted Green Rock’s summary judgment, denied the IRS’s motion, and set aside Notice 2017-10 for failure to observe APA procedures; it declined additional briefing on remedy and explained vacatur is distinct from a nationwide injunction.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether issuance of Notice 2017-10 required APA notice-and-comment rulemaking	APA notice-and-comment applies; notice was required	Statutory scheme (§§ 6011, 6707A) and existing Treasury regulation permit listing notices without APA procedures	Court: APA notice-and-comment was required; Notice 2017-10 violated APA
Whether cross-reference to § 6011 and Treasury Reg. § 1.6011-4 exempted IRS from APA procedures	Cross-reference does not demonstrate Congress expressly superseded APA	§ 6011 and the preexisting regulation (1.6011-4) show Congress accepted IRS practice of listing by notice	Court: cross-reference insufficient to show an express APA exemption; rejected IRS position
Whether later statutory provisions (e.g., §§ 6501(c)(10), 6404(g)(2)(E)) ratified IRS practice	Subsequent statutes do not ratify an APA-exempt procedure absent clear congressional statement	Those provisions presuppose existing listing practice and would be undermined if listings were invalidated	Court: those statutes do not demonstrate express congressional override of APA; rejected ratification argument
Appropriate remedy for procedural APA violation	Vacatur of the notice as requested by Green Rock	IRS sought additional briefing on remedy and cautioned against a nationwide injunction	Court: set aside (vacate) Notice 2017-10 for lack of required procedure; denied extra briefing; emphasized vacatur is not necessarily a nationwide injunction

CIC Servs., LLC v. Internal Revenue Serv., 141 S. Ct. 1582 (2021) (holding Anti-Injunction Act does not bar lawsuits challenging information-reporting requirements backed by civil and criminal penalties)
Perez v. Mortgage Bankers Ass'n, 575 U.S. 92 (2015) (describing APA notice-and-comment rulemaking requirements)
Marcello v. Bonds, 349 U.S. 302 (1955) (explaining that courts will not lightly presume exemptions from APA requirements; statutory intent required)
Lockhart v. United States, 546 U.S. 142 (2005) (discussing repeal by implication and analysis of statutory conflict)
Mann Constr., Inc. v. United States, 27 F.4th 1138 (6th Cir. 2022) (holding a listing notice invalid for failure to comply with APA notice-and-comment and rejecting IRS’s statutory-exemption arguments)
Green Valley Ranch Invs., LLC v. Comm'r of Internal Revenue, 159 T.C. 5 (2022) (Tax Court analysis aligning with Mann Construction that Treasury Reg. § 1.6011-4 does not obviate APA procedures)
Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139 (2010) (distinguishing vacatur from injunction and discussing scope of equitable relief)