In October of 2017, the U.S. District Court for the Western District of Texas struck down a provision under temporary anti-inversion regulations for violating the required notice and comment period under the Administrative Procedures Act ("A.P.A.")4 on the grounds that the rule was a substantive or legislative rule and not an interpretive regulation.5
The court also held that the plaintiffs, (i) the U.S. Chamber of Commerce and (ii) the Texas Association of Business, had standing to bring the suit, as they suffered actual and concrete injury and that the plaintiffs could sue on behalf of members who would otherwise have standing in their own right. In addition, the court held that the plaintiffs' action was not barred by the Anti-Injunction Act pursuant to Code 7874, as the suit did not restrain the assessment nor collection of any tax.
In favor of the government, the court held that the Agency did not engage in arbitrary and capricious rulemaking in issuing the rule and that it did not exceed its statutory jurisdiction.
As expected, the government filed a notice of appeal to the Fifth Circuit on November 27, 2017.