1 9-3920

U SA v. Kahn
1 U NITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 - - - - - - 4 August Term, 2020 5 (Argued: December 17, 2020 Decided: July 13, 2021) 6 Docket No. 19-3920 7

_ ________________________________________________________ 8 U NITED STATES OF AMERICA, 9 Plaintiff-Appellee, 10 - v. - 11 J EFFREY KAHN, as co-executor of th e es ta te of HAROLD KAHN, 12 a nd JOEL KAHN, as co-executor of the e state o f HAROLD KAHN,
13 Defendants-Appellants
. 14

_

________________________________________________________ 15 B efore: KEARSE, BIANCO, and MENASHI, C ircuit Judges
. 16 Appeal from a judgment of the U n ited States D istrict Court for the 17 E astern District of New York, Kiyo A. M atsumoto, Judge , in favor of the government1 a gainst defendants as co-executors of the estate of Harold Kahn ("Kahn"), in the 2 principal pena l ty a m o u nt of $4,264,728, plus statutory additions and interest, for 3 Kahn's undisputedly w illful failure, in violation of 31 U.S.C. § 5314, to file in 2009 a 4 R eport of Foreign Ban k a nd Financial Accounts ("FBAR") for his two foreign bank 5 a ccounts whose balances, a t th e ti me o f his failure to file, totaled $ 8,529,456. The 6 d istrict c ourt granted the g overnment's motion for summary judgment on the ground 7 that, under 3 1 U.S.C. § 5 32 1 as amended in 2 004, the maximum penalty for Kahn's 8 f ailure to file an FBAR is 50 percent of the aggregate balance in th e a c c o un ts a t the 9 t ime of that failure; the court rejected defendants' c ontention that a 1987 Treasury 10 D epartment regulation, 31 C.F.R. § 1010.820(g)(2), limits the government's authority 11 t o impose penalties for willful FBAR v i ol a t ions t o $100,000 per account. See United 12 St at e s v. Kahn , 17-cv-7258, 2019 WL 8587295 (E.D.N.Y. Sept. 2 3, 2019). On ap p ea l , 13 d efendants pursue their contenti o n that the r egulation trumps the later-amended 14 statute. We conclude that the district court correctly r uled that the penalty limitation 15 provided in the 1987 regulation, w hich had tracked the penalty provision enacted in 16 a prior version o f th e s ta tute, was superseded by the 2004 statutory amendment 17 i ncreasing the penalty maximum. 18 Affirmed. - 2 -1 Judge Menashi dissents in a separate opinion. 2 J U L I E C I A M P O R C E R O A V E T T A , T a x Di v i s i o n, 3 Department of J ustice, Washington, D.C. ( Richard E. 4 Zuc kerman, Principal Deputy A ssistant Attorney 5 General, Joshua W u, Deputy Assistant Attorney 6 General, Francesa U golini, Geo f frey J. Klimas, 7 Attorneys, Tax Division, Department o f Justice, 8 W a shi ng t o n, D . C . ; Seth D. DuCharme , A c t i ng U ni t e d 9 States Attorney for the Eastern District o f New York, 10 New York, New York, on the b rief), for Plaintiff11 Appellee
. 12 JAMES N. MASTRACCHIO, Washington, D .C. (Daniel G. 13 Strickland, Eversheds Sutherland (US), Washington, 14 D.C., on the brief), for Defendants-Appellants
. 15 KEARSE, Circuit Judge : 16 Defendants Jeffrey and Joel Kahn, as co-executors of the estate of Harold 17 Kahn ("Kahn"), appeal from a judgment of the United States District Court for the 18 E astern District of New York, Kiyo A. Matsumoto, J udge , in favor of the U nited States 19 a gainst defendants a s co-executors of the Kahn estate (the "Estate") in th e p rincipal 20 penalty a mo un t o f $4,264,728, plus statutory additions and interest, for Kahn's 21 u ndisputedly willful failure, in violation of 31 U.S.C. § 5314, to file in 2009 a Report 22 o f Foreign B ank and Financial Accounts ("FBAR") for his two foreign bank accounts 23 w hose balances, a t the time of the failure to file, totaled $8,529,456. The district court - 3 -1 g ranted the government's motion for summary judgment on the g round that, under 2 3 1 U.S.C. § 5321 as amended in 2004 (the "2004 S tatute"), the maximum permissible 3 penalty for Kahn's failure to file an FBAR is 50 percent of the aggregate balance in the 4 a ccounts at the time of the failure to file; the court r ejected the Estate's contention that 5 the government's authority to impose penalties f or willful FBAR violations is limited 6 b y a 1987 Treasury Department (or "Treasury") regulation, 31 C .F.R. § 1010.820(g)(2), 7 t o $100,000 per account (the "1987 Regulation"). On ap p e a l, the Estate pursues its 8 c ontention that the 1987 Regulation trumps the l ater-amended statute. We conclude 9 that the district court correctly ruled that the penalty limitation provided in the 1987 10 R egulation--which reflected the penalty provision in the 1986 version of the statute-- 11 w as superseded by the 2 004 amendment t o the statute i n c rea s i ng the penalty 12 maximum; and we aff irm the judgment.

13 I. BACKGROUND

14 As discussed in greater detail i n Part II below, a United S tates person 15 w ith an interest in foreign financial accounts having an aggregate value of more than

- 4 -1 $ 10,000 is r equired ea c h y ea r to file an FBAR. See 31 U .S.C. § 5 314; 31 C.F.R. 2 § 1010.350(a); 31 C.F.R. § 1010.306(c).

3 A . The Facts 4 The facts o f this case are not in dispute, a s the parties have stipulated as 5 f ollows: 6 1. Harold Kahn
. . . willfully fail ed to file Form 7 TD F 90- 2 2.1, R eport of F oreign Bank and F inancial Accounts 8 ("FBAR") f or the 2008 year as required by 31 U . S. C . § 5314 and 9 implementing regulations. 10 2. The filing due d ate for the 2008 F BAR w as J une 3 0, 2009. 11 3. The 2008 FBAR should have reported t wo bank accounts 12 held by Mr. Kahn at Credit Suisse, Switzerland. 13 4. Each account held over $100,000 and the a ggregate value 14 in the two Credit Suisse accounts was $ 8 , 5 2 9,456, as o f June 30, 15 2009. 16 5. The Internal Revenue Service assessed a willful penalty 17 for the failure to f i l e the 2008 FBAR i n the a mount of $4,264,728, 18 which represents 50% of the aggregate account balance as of June 19 30, 2009, pursuant to 31 U.S.C. § 5321(a)(5). 20 ( Stipulation of Fact dated September 14, 2018.)

- 5 -1 It w as also undisp uted that after the Internal Revenue Service ("IRS") 2 a ssessed the pen a lty, Kahn passed away without making payment and that the 3 a ssessment has not been paid by the Estate. ( See, e.g. , Complaint ¶ 36; Answer ¶ 36.) 4 T he government c ommenced the present action seeking judgment against the Estate 5 i n the amount of the as sessment, plus additional statutory penalties and interest. 6 Given the above stipulated facts, the dispute centered on the maximum 7 a mount the IRS was allowed to assess as a penalty. The government c ontended that 8 th e 2004 Statute, 31 U.S.C. § 5321(a)(5)(C), which provided that the m a xi m um 9 a ssessable penalty was the greater of $100,000 or 50 percent of the a ggregate account 10 b a lance at the time o f the violation--in th is c ase $4,264,728--is t o be applied. The 11 E state contended that the permissible penalty was l imited to $100,000 per account--or 12 a total of $200,000--under 31 C.F.R. § 1010.820(g)(2), the 1987 Regulation. Each side 13 moved for summary j udgment.

14 B . The District Court's Decision 15 In a well-reasoned opinion, the district court granted the government's 16 motion and denied that of the Estate. See United States v. Kahn , 17-cv-7258, 2019 WL 17 8 587295 (E.D.N.Y. S e pt. 23, 2019) ( "D.Ct. Op."). The court noted that the Bank Secrecy - 6 -1 A ct ("BSA"), a s ena cted in 1970, required United States persons to report their 2 r elationships with foreign financial institutions. See i d
. at *4. Congress authorized the 3 S ecretary of the Treasury (the "Secretary") to promulgate regulations for 4 im p l em entation and enforcement of the r eporting requirement; and the Secreta ry 5 a dopted the FBAR form. See id
. 6 In 1986, focusing on money-laundering-related violations of the BSA, 7 C o ng r e ss a d d e d a c i v i l mo n e y pe na l ty tha t c o uld be levied against private individuals 8 f or their willful failures to file F BARs. The maximum penalty was set a t "the greater 9 o f" $25,000 or " an amount ( not to e x ceed $100,000) equal to the balance in the account 10 a t the time of the violation." 31 U . S. C . § 5 321(a)(5)(B)(ii)(I)-(II) (1988) (the "1986 11 S tatute"). In 1987, the Secretary promulgated the 1987 Regulation on w hich the Estate 12 r elies, currently located at 31 C.F.R. § 1010.820(g), which reflected the 1986 Statute's 13 maximum penalty pro vision "almost verbatim," D.Ct. Op, 2019 WL 8587295, at *5. 14 The 2 00 4 Statute increased the civil penalty for willful behavior to its 15 present level, making the maximum penalty for failure to file an FBAR the greater o f 16 $ 100,000 or 50 percen t o f the aggregate b alance in the a ccounts at the time o f the 17 v iolatio n . S ee i d
. at *6; 31 U.S.C. § 5321(a)(5)(C)(i). The district court noted that 18 d espite that 2 004 statutory change, the Secretary did not amend the 1987 R egulation's - 7 -1 now- i n c o n sistent FBAR penalty provision. The IRS, which 2 enforced the penalty provision, took the position that revisions 3 were not necessary as th e statute was "self-executing." Internal 4 R evenue Manual, 4.26.16.4.5.1--FBAR Willfulness Penalty (Jul y 1, 5 2008). The IRS thus began t o impose penal ti es i n e x cess of the 6 regulatory c ap, which i t c onsidered to be superseded. See i d
. And 7 as of J u ne 30, 2009, the FBAR penalty regul a t ion, despite its 8 apparent obsolescence, remained codified in the Code of Federal 9 Regulations. 10 D .Ct. Op, 2019 WL 8587295, at *7. 11 Although the Estate argued that the regulation stating that the Secretary 12 " may assess . . . a civil penalty" on any person who w i l lful l y violates the FBAR 13 r equirement, 31 C.F.R. § 1010.820(g) (emphasis added), is not inconsistent with the 14 2 004 statutory language, the district court rejected that contention. The court noted 15 that while the regulation states that the Secretary may impose such a penalty only up 16 t o a maximum of $25,000, the statute provides that the m a xi m um "' shall be increased 17 t o the g reater of (I) $100,000, or (II) 50 percent'" of the unreported aggregate balance. 18 D .Ct. Op, 2019 WL 8587295, at * 8 (quoting 31 U.S.C. § 5 3 2 1 ( a ) ( 5)(C)(i) (emphasis in 19 D .Ct. Op) ) . Th e co urt reasoned that the use of the mandatory "shall be" phrase 20 " shows that Congress did not intend to delegate the determination of the maximum 21 penalty to the Secretary." D.Ct. Op, 2019 W L 8587295, at *9 (internal quotation marks 22 o mitted). The court stated that - 8 -1 [t]he Secretary may, on a case-by-case basis, impo se penalties 2 below the statu t o r y maximum. But he cannot e f fectively a brogate the 3 statute and t he maximum penal ty sp e c i fically set by Congress by 4 promulgating (or failing t o repeal) a regulation providing a d if f e rent 5 penalty ceiling
. 6 I d . (emphasis added). 7 Concluding that the regulation is i nc o n s istent with the plain language 8 o f the amended statute, the court granted summa ry judgment i n favor of the 9 g overnment on the ground that the 1987 Regulation is no longer valid, and that the 10 as s es sment against the Estate of $4,264,728, i.e. , 50 percent of the aggregate balance 11 i n Kahn's t wo foreign accounts at the time o f his willful violation--the statutory 12 maximum--was therefore permissible.

13 II. DISCUSSION

14 On appeal, the Estate contends that the district court erred in refusing t o 15 l i mit the per-willful

- v i o lation maximum penalty for failure to file an FBAR to the 16 $ 100,000-per-account maximum set by the 1987 Regulation, arguing principally that 17 the r e gulation is not inconsistent with the 2004 Statute, that the court misinterpreted 18 the statute's u se of the w ord "shall," and that in any event, the rule of lenity requires - 9 -1 that any ambiguity be resolved in the Estate's favor. Because the parties have 2 stipulated to the facts, the "only inq ui ry is which party is entitled to judgment as a 3 matter of law." Ace Auto Body & Towing, Ltd. v . City of New York , 1 71 F.3d 765, 771 (2d 4 C ir. 1999). Reviewing that question de novo , we conclude that, in g ranting summary 5 judgment to the government, the district court made no error.

6 A . The Statutory Provisions and the 1987 Regulation 7 The BSA, as enacted b y Congress in 1970, introduced a requirement that 8 U nited States persons report their relationships with forei g n f i nancial institutions. 9 S ee 31 U.S.C. § 1121(a) ( 1970). The BSA authorized the Secretary to promulgate 10 r egulations for the implementation and enforcement of that reporting requirement. 11 S ee 31 U .S.C. § 1053-54 (1970). But with r espect to willful failures to comply, Congress 12 a u t h o ri z e d i m p o s i t i o n o f c i v i l m o n e t a r y p e n a l ti e s on l y on " d o m e s t i c 13 f inancial institutions" and their agents--not o n individuals; and it gave the Secretary 14 d iscretion to determine, on a case-by-case basis, whether to impose such a penalty, 15 b u t on l y up to $ 1 , 0 0 0 . 31 U.S.C. § 1056(a) (1970). In 1972, the Secretary issued a 16 reg ulation--tracking the 1 970 statutory language nearly verbatim--permitting th e 17 S ecretary to a ssess a c ivil penalty of up to $1,000 on domestic financial institutions - 10 -1 a nd their agents that willfully violated BSA-related r egulations. S ee 31 C.F.R. § 103.47 2 ( 1972); 37 Fed. Reg. 6912, 6915 (April 5, 1972). 3 In the 1986 Statute, for willful failures to file an FBAR, Congress added 4 a uthorization for the Secretary to impose a civil monetary penalty on individuals. 5 T he 1986 Statute provided that "[t]he amount" of a "civil money penalty" for "a failure 6 t o report" a foreign account "shall not exceed" 7 the greater of

- - 8 (I) an a mount ( not to exceed $100,000 ) equal t o the b alance in 9 the account at the time of the violation; or 10 (II) $25,000
. 11 3 1 U.S.C. § 5321(a)(5)(B)(ii) (1988) (emphases added). In 1987, the Secretary issued the 12 1 987 R egulation stating that, "after October 27, 1986 "
- - the effective date of the 1986 13 S tatute--"[f]or any willful" "f a i lure to report" a foreign account, " the Secretary may 14 a ssess" 15 a civil penalty not to exceed the grea ter o f the a mount (not t o 16 exceed $100,000) equal to the balance in the account at the time o f 17 the violation, or $25,000. 18 3 1 C.F.R. § 1010.820(g)(2). Th us , th e 1 987 Regulation tracked the civil penalty 19 provision introduced by the 1986 Statute.

- 11 -1 In 1990, the Secretary established, within the Treasury Department, the 2 F inancial C rimes Enforcement Network ("FinCEN"), w hose mission inc ludes 3 c ollecting and maintaining information filed under the B SA. In 2 002, the Secretary 4 g ranted the Director of F inCEN the authority to "implement a nd a d mi ni ster the [BSA] 5 . . . including, but not limited to, the promulgation a nd amendment o f regulations and 6 the assessment of penalties," with the proviso that all regulations " in effect or i n use 7 o n the date of e nactment o f the U SA Pa tri o t Act of 2001, shall continue in effect
. . . 8 u ntil s uperseded or revised." Treasury Order 180-0 1 ; Financial Crimes Enforcement 9 Netw o rk, 67 Fed. Reg. 6 4697 (Oct. 21, 2002) ("Treasury Order 180-01") (emphasis 10 a dded). A year later, FinCEN delegated i ts authority for the enforcement of the FBAR 11 r equirements--including the authority to a s s ess and collect civil penalties under 31 12 U . S. C . § 5321 a nd 31 C.F.R. § 1010.820--to the IRS; but FinCEN did not delegate 13 a uthority to promulgate or amend FBAR regulations. 14 In 2002, the S ecretary reported to Congress that "the IRS estimate[d] that 15 there may be as many as 1 mill i o n U . S. taxpayers who have signature authority or 16 c ontrol over a foreign bank account and may be required to file FBARs," and that the 17 r ate o f compliance with that requirement may be "less than 20 percent." Secretary o f 18 the Treasury, A R eport to Congress in A ccordance with § 361(b) of the USA PATRIOT Act - 12 -1 ( April 26, 2002), at 6 ( "Secretary's 2002 Report to C on g ress"). Congress then 2 c onsidered amending the F BAR failure-to-file penalty provisions. B oth the House o f 3 R e pr e se nt a t i v es and the Senate proposed to add a civil penalty f o r no n- w i l l f u l f a i l u r e s 4 t o file; for those failures the House proposed a maximum penalty o f $5,000, and the 5 S enate proposed a maximum of $10,000. As to willful failures, the House proposed 6 t o retain the existing p en al ty provision, whereas the Senate proposed raising the 7 maximum penalty to level s th a t could substantially exceed the existing $100,000 8 maximum, pegged to the balances in the unreported ac c o un ts. See H.R. Conf. Rep. 9 1 08-775 at 615 (Oct. 7, 2004), reprinted in 2004 U.S.C.C . A.N. 1341, 1 647. The Senate 10 proposal was adopted, s ee i d ., and in the 2004 Statute Congress a mended the penalty 11 provisions to read--as of the date of enactment, and as they do today--as follows:

- 13 -1 (A) Penalty authorized.--The Secretary of the Treasury may 2 impos e a c i v il money penalty on any person who violates, or 3 causes any violation of, any provision of section 5314. 4 (B) Amount of penalty.-- 5 (i) In general.-- Except as p rovided in subparagraph (C) , 6 the amount of any civil penalty im posed under 7 subparagraph (A) shall not exceed $10,000. 8 . . . . 9 (C) Willful violations.--In th e case of any person willfully 10 violating, o r w illfully causing any v iolation of, any provision o f 11 section 5314-- 12 (i) the maximum p enalty under subparagraph (B)(i) 13 shall be increased to the greater of

-- 14 (I) $ 100,000, or 15 (II) 50 percent of the amount determined 16 under subparagraph (D)
. . . 17 . . . . 18 (D) Amount.--The amount determined under this 19 subparagraph is-- 20 . . . . 21 (ii) in the case of a v iolation i nvolving a failure to report 22 the existence of an account or any identifying information 23 required to be provided with respect to a n account, the 24 balance in the account at the time of the violation
. 25 3 1 U.S.C. § 5321(a)(5) (emphases added). - 14 -1 B . Estate Contentions 2 The Estate insists that the 1 987 Regulation's penalty maximum, set lower 3 than the maximum provided by the 2 004 S tatute, presents no inconsistency with the 4 2 004 Statute. In support, the Estate asserts that the Secretary has broad rulemaking 5 a uthority, c iti n g a series of BSA provisions (as currently codified) that say the 6 S ecretary " may . . . e x empt" "a reasonable c lassification of persons . . . from" the FBAR 7 r equirement, " may . . . decide[ to] apply[]" the regulation to a ccounts in fewer than all 8 f oreign countries, " may prescribe
. . . the magnitude of transactions" to be regulated, 9 " may . . . exempt" a "kind of transaction[] . . . from
. . . r eg[u]lation," and " may prescribe 10 . . . other matters the S e cretary considers necessary" (E sta te b rief on appeal at 10 11 ( internal quotation marks omitted) (emphases in brief)); and it quotes the 2004 Statute 12 provision a t 3 1 U.S.C. § 5321(a)(5)(A), which states that the Secretary " ' may impose a 13 c ivil money penalty on any person who v i o la tes , o r causes any violation of, any 14 provision o f'" the FBAR requirement (Estate brief on appeal at 11 (emphasis in b rief)). 15 Conspicuously absent f rom this litany, h o w ever, is any statutory 16 provision saying that the Secretary may set a maximum penalty l evel for f ailure to file 17 a n FBAR. Instead, in e very version of § 5321 that has authorized the imposition of a 18 c ivil penalty for failure t o file required financial reports, Congress i tself has specified - 15 -1 the maximum penalty that the Secretary was a uthori z ed to i m pose--whether on an 2 e nterprise or an individual, and w hether non-willful or w illful. And a statute's 3 g eneral provision that a n administrator may issue such other regulations as he 4 " considers necessary" d oes not constitute authorization t o issue a regulation that 5 c ontradicts an express provision of th e statute. See, e.g. , R agsdale v. Wolverine World 6 W

i de, Inc. , 535 U.S. 81, 86-88 (2002) (invalidating a r egulation promulgated pursuant 7 t o the Secretary of Labor's authority to issue "regulations necessary to carry out" the 8 F amily and Medical Leave Act where that regulation was "contrary to the Act's 9 r emedial design" (internal quotation marks omitted)). 10 The meaning o f the phrase " may impose a c i v i l penalty" in the 2004 11 S tatute, 3 1 U.S.C. § 5321(a)(5)(A), must b e read in l ight of the provisions that follow, 12 a s we "'give effect, if possible, to every clause and word of a statute,'" Panjiva, Inc. v. 13 United States Customs & B orde r P r o t e c tion , 975 F.3d 171, 1 78 (2d Cir. 2020) (quoting 14 W

i lliams v. Tay lor, 529 U.S. 362, 404 (2000)), avoiding interpretations that would 15 r ender one or more o f the statute's provisions superfluous. Th e wo rd " shall," in a 16 statute, indicates a comma nd; what follows the word "shall" is "mandatory, not 17 precatory." Mach Mining, LLC v. Equal Employment O pportunity Commission , 575 U.S. 18 4 80, 486 (2015). - 16 -1 Here, instead of permittin g th e Secretary to establish the maximum 2 permissible pen a l ty for failures to file FBARs, the 2004 Statute provided that the 3 " maximum" penalty for a willful failure "shall b e i ncreased" to the g reater of $100,000 4 o r 50 percent of the total relevant account balances, 31 U.S.C. § 5321(a)(5)(C)(i). The 5 E state contends that the distric t c o urt erred i n viewing "shall b e increased" as a 6 r eference to the maximum penalty set in the 1986 Statute, rather than as a comparison 7 t o the maximum set for non-willful failures; and indeed, subparagraph (C)(i) states 8 that the maximum penalty "under subparagraph ( B)(i)"--the subparagraph capping 9 the penalty at $10,000 for non-willful failures--"shall b e increased." But regardless o f 10 the starting point for the increase, the maximum pen alty was in fact increased, and 11 there is no ambiguity whatever as to the level to w h i ch it w as increased. The 2004 12 S t a tu t e ' s " sha l l b e increased" provision made i t mandatory that a person who w i l l f u l l y 13 f ails to file an FBAR be exposed to the possibility of a penalty that was increased to 14 $ 100,000 or 50 percent of the aggregate balance i n the unreport e d a c c o u nt s , w hi c h e v e r 15 i s "greater." 16 Plainly the Secretary has discretion in a given case to impose a penalty 17 that i s below the ceiling provided by the statute: such flexibility is reflected in the 18 v ery essence of a level denominated a "maximum." Indeed, the Estate acknowledges - 17 -1 that the "shall" in the 2004 Statute "d id n ot d ictate a r equirement t o impose the 2 maximum pen a l ty in a ll cases," and that "Congress . . . d id not make the maximum 3 penalty mandatory

- - it l eft to the Secretary discretion as to how much penalty could be 4 i mposed under the permissible statutory maximum." (Estate b rief on a ppeal at 24, 23 5 ( e mpha ses added).) But for the 1987 Regulation to forbid--as the E st a t e c o nt e nd s- - a ny 6 a ssessment of a p enalty as high as the c e i ling set b y the 2004 Statute is simply 7 i nconsistent with that statute. Adherence to the 19 8 7 Regulation would shrink the 8 d iscretion that was conferred on the Secretary b y the 2004 Statute--providing less 9 d iscretion than Congress believed was needed in order to deter w illful disregard o f 10 F BAR requirements. 11 Accordingly, con tra ry to the Estate's contention, we conclude that the 12 1 987 Regulation and the 2004 Statute are not "harmonious" (Estate brief on appeal 13 at 25 ) . Accord Norman v . United States , 942 F.3d 1111, 1117-18 (Fed. Cir. 20 1 9 ) 14 ( " Norman "); Un i t e d States v. Horowitz , 978 F.3d 80, 90-91 ( 4th Cir. 2020) (" Horowitz "); 15 United States v. Rum , 995 F.3d 882, 892 (11th Cir. 2021) (" Rum "). 16 Of course, the 1 987 Regulation--when it was a dopted--was not 17 in c o nsistent with the maximum penalty that Congress had then set; the 1 9 87 18 R egulation tracked the precise levels set out in the 1986 Statute. But the 1986 Statute's - 18 -1 penalty provisions were plainly amended by the 2004 Statute, and a regulation that 2 " contravenes the plain l anguage of the statute" is invalid, Lawrence + Memorial Hospital 3 v . Burwell , 812 F.3d 257, 2 59 ( 2d Cir. 2016). Even a regulation that is not "technically 4 i nconsistent with the statutory language" is invalid " wh en that regulation is 5 f undamentally at odds with the manifest congressional design." United S tates v. V ogel 6 F ertilizer Co. , 4 55 U .S. 16, 26 (1982) (internal quotation marks omitted). Thus, when 7 C ongress e nacted the 2004 Sta tute stating that the maximum penalty "shall be 8 i ncreased," any continued adherence to the 1 987 Regulation c ontravened both the 9 plain language of the statute and the "manifest congressional design," id ., embodied 10 i n the 2004 Statute. As the Court of Appeals for the Federal Circuit in Norman stated 11 i n r ejecting an attempt to have the 1987 Regulation's penalty l imitation applied 12 i nstead of the maximum provided by the 2004 Statute, 13 [i]t is well-settled that subsequently enacted or amended s t atutes 14 supersede prior inconsistent regulations
. . . . A regulation that 15 contravenes a statute is invalid.
. . . A regulation c a nnot override 16 a clearly stated statutory requirem en t. . . . I t is well-settled that 17 when a regulation conflicts with a subse q uently enacted statute, the 18 statute controls and voids t hat regulation
. . . . M s. Norman's position 19 to the contrary would inappropriately prevent a ll newly created 20 or amended statutes from taking e ffect until all i nconsistent 21 regulations are amended or repealed.

- 19 -1 N

orman , 942 F .3d at 1118 (internal quotation marks o mitted (emphases ours)); see , e.g. , 2 R um , 995 F.3d at 892 ("The plain text of § 5 3 2 1 ( a ) ( 5 )(C) makes it c lear that a willful 3 penalty may exceed $100,000 because it states that the maximum penalty 'shall be
. . . 4 the g reater of (I) $100,000, or (II) 50 percent of'
. . . the balance of th e a c c ount. The 5 r egulation was promulgated in 1987 and mirrored the language of the statute at that 6 t ime but was never updated. ' [T]he statute's l anguage is hardly consistent with a n intent 7 b y Congress to allow the Secretary to impose a lower maximum p enalty by regulation ; rather, 8 C ongress itself set a specific maximum penalty for a w illful v i o l ation.'" (quoting 9 Ho r o w itz , 9 78 F.3d at 91 (emphases o urs)); Horowitz , 978 F.3d at 91 ("[T]he 198 7 10 r egulation on which the Horowitzes rely was abrogated by Congress's 2 004 11 a mendment to the statute and therefore is no longer valid."). 12 Like our Sister Circuits, we d ec li n e to read the maximum penalty 13 provision i n the 2004 Statute as having been rendered superfluous a b initio by the 14 S ecretary's purported preexisting discretion to set a penal ty maximum. Given the 15 2 002 r eport of the Secretary himself t o C ongress as t o the meager level of compliance 16 w ith th e F B A R requirement-- i.e. , estimating that four of every f ive taxpayers who 17 w ere required to file FBARs, perhaps totaling as many as 800,000, were failing t o do 18 so ( see Secretary's 2002 Report to Congress at 6 )--it seems surprising that the Secretary - 20 -1 w ould insist on maintaining the modes t m a xi m um penalty level provided in the 2 superseded 1986 Statute and the 1987 R egulation, ra th er than the potentially much 3 higher penalties e nacted in the 2004 Statute. Or perhaps it should not be surprising, 4 g iven that 20 years ago, th e Supreme Court o bserved that "[t]he Treasury's relaxed 5 a pproach to a mending its regulat i o n s to track Code changes [wa]s well documented." 6 United Dominion Industries, Inc. v . United States , 532 U.S. 822, 836 (2001). We note that 7 the Secretary's 2002 delegation to FinCEN of BSA enforcement responsibility 8 e xpressly (a) instructed that F in C E N w a s to "implement a nd administer the 9 provisions of
. . . the [BSA], . . . codified at," inter alia , " 31 U.S.C. 5311 et seq. ," and ( b) 10 stated that "regulations
. . . i n effect o r in use o n the date of enactment of the USA 11 P atriot Act of 2001, shall continue in e f fect
. . . until superseded or revised." Treasury 12 Order 1 80
- 0 1 , 6 7 Fed. Reg. 64697 (emphases added). In any event, regardless o f 13 T reasury's failure to have the 1987 Reg ul a ti o n deleted from the post-2004 Code o f 14 F ederal Regulations, "[a] regulation w hich does not" implement "the will of Congress 15 a s expressed by th e s ta tute" and instead " operates to create a rule out of harmony 16 w ith the statute, i s a m ere n ullity." I glesias v. United S tates , 848 F.2d 362, 366-67 (2d 17 C ir. 1988) (internal quotation marks omitted).

- 21 -1 Our d issenting collea g ue a rgues that Treasury has "the obligation t o 2 f ollow its own regulations," dissenting opinion post at 2. In our view, this argument 3 r ests o n two erroneous assumptions: first, that because the Secretary has discretion 4 t o elect whether, and to w hat extent below the statuto ry ma xi mum, to impose a 5 pen al ty f o r failure to file an FBAR, the Secretary also has the authority to issue a 6 r egulation setting the maximum penalty below the statutory maximum; and second, 7 that the 1987 Regulation is a product of that discretion. Neither assumption i s valid. 8 First, in relying on 31 U.S.C. § 5 314(b)(5), which states that the Secretary 9 " may prescribe
. . . other matters the Secretary considers n ec es s a ry to c arry out this 10 section," the dissent perceives a freestanding grant of a uthority to s et a maximum 11 penalty that differs from that expressly set b y the statute. See d issenting opinion post 12 a t 5 & n.5. Nothing in such language authorizes the Sec retary to promulgate a rule 13 that w ould nullify a statutory provision that w as deemed necessary by Congress, see 14 g enerally Ragsdale , 535 U.S. at 86-88; generally, suc h a countermand could not be 15 thought to "carry out" the section. And here, "this section"--31 U.S.C. § 5314-- 16 e mphasizes the need to have United S tates persons keep records and "file reports" as 17 t o their foreign f i nancial transactions, id
. § 5314(a ) . G iven that, as discussed above, 18 C ongress in 2004 raised the maximum pen al ty for such v i olations after being - 22 -1 i nformed by the Secretary that perhaps as many as 800,000 persons r equired to file 2 F BARs were noncompliant, a regulation purporting to nullify the statutory increase 3 plainly does not "carry out" Congress's goal of encouraging compliance wi th th e 4 F BAR requi rem en t. For those persons who deem it worth an expense capped at 5 $ 100,000 p er account t o achieve their concealment and/or tax-avoidance goals, the 6 r egulation instead encourages them to flout the FBAR requirement. 7 Sec o nd, even assuming arguendo that the Secretary had been gi v en 8 a uthority to set a maximum penalty lower than the level specified in the statute, there 9 i s no basis for inferring that the 1987 Regulation was the product of either a desire t o 10 promulgate a regulation that would have the force of law independently of the B SA 11 o r a desire to reduce the Secretary's own discretion. Although Treasury engaged in 12 proposed rulemaking in August 1986, that notice-and-comment process involved a 13 r ule designed t o " c o r r ect[] a t echnical error in the [1985] regulations that i mplemented 14 [ an] increase in [the] civil penalty amount made by" an amendment to the statute in 15 1 984. A mendments t o Implementing Regulations; the Bank Secrecy A ct, 51 Fed. Reg. 16 3 0233, 30236 (Aug. 25, 1 986). The provision that became the 1987 Regulation--which 17 parrots the 1986 Statute--was not part o f the proposed rulemaking, b ecause the 1986 18 S tatute had not yet been enacted. Thereafter, the 1987 Regulation simply included the - 23 -1 penalty maximum provision enacted by the 1986 S tatute, "to keep the r egulations as 2 c urrent a s p o ssible." Amendments to Implementing Regulations Under the Bank 3 S ecrecy Act, 52 F ed. Reg. 11436, 11440 ( April 8, 1987). And i n s tating a maximum 4 penalty that parroted the 1986 Statute, the 1987 Regulation did not reduce th e 5 d iscretion accorded to the Secretary. 6 "[T]he existence of a parroting regulati o n," i.e. , one that "merely
. . . 7 p a r a phr a se [ s] the st a tutory language" rather than i ntroducing a provisi o n f o r mu l a t e d 8 i n reliance on agency "expertise and e x perience," "does not ch ange the fact that the 9 question here is not the meaning of the regulation but th e m e a n ing of the statute ." 10 G onzales v. Oregon , 546 U . S. 243, 257 (2006) (emphasis added). The d issent, in seeking 11 t o elevate the status of the 1987 Regulation, relies only on cases involving regulations 12 promul gated pursuant to a general grant of authority in a statutory scheme that 13 r equired agency interpreta ti o n; it cites no cases involving a regulation that either 14 t racked the statutory text or conflicted with the statutory text. 15 Finally, we note the Estate's argument that the penalty for Kahn's willful 16 f a i l ure to file an F BAR should be limited to a total o f $200,000 under "'the rule o f 17 l e ni ty, ' " w hi c h " ' a ppl i e s i f , a ft e r c o nsi d e r i ng text, structure, histo r y, a nd pu r po s e , the r e 18 r emains a grievous ambiguity or uncertainty in the statute , such that th e Court must - 24 -1 simply guess as to what Congress intended.'" ( Estate brief on appeal at 42 (quoting 2 B arber v. Thomas , 560 U.S. 4 74, 488 (2010) (emphasis ours).) Assuming that the r ule o f 3 l e nity is applicable to a civil rather than a criminal statute, w e s ee no basis for its 4 i nvocation here. There is no ambiguity or uncertainty as t o what Congress intended 5 i n the 2004 S tatute when it provided that the penalty f or a w illful failure to file an 6 F BAR would be "the greater of" $100,000, or 5 0 percent of the a ggregate balance of the 7 a ccounts. 8 In sum, w e conclude that the district court correctly r uled that when the 9 2 004 S tatute raised the maximum penalty that had been set i n the 1986 Statute, the 10 2 004 Statute superseded the 1987 Regulation's provision that had t racked the 1 986 11 S tatute.

12 CONCLUSION

13 We hav e c o nsi d e r e d a l l of the Estate's arguments on this appeal and have 14 f ound them to be without merit. The judgment of the district court is affirmed.

- 25 -19
- 3920 United States v. Kahn M ENASHI , Circuit Judge, dissenting : “It is a familiar rule of administrative law that an agency must abide by its own regulations.” Fort Stewart Sch s . v. Fed. Lab. Rels. Auth ., 495 U.S. 641, 654 (1990). 1 We call this rule “ the Accardi principle ” after the case most associated with it, United States ex rel. Accardi v. Shaughnessy, 347 U.S. 260 (1954). 2 In this case, the Accardi principle requires that we reverse the judgment of the district court. The Tre asury Department’s current regulations provide that the penalty for Harold Ka h n’s willful failure to file a Report of Foreign Bank and Financial Accounts (“FBAR”) may not exceed $100,000. See 31 C.F.R. § 1010.820(g) (2). This penalty falls within the statutorily authorized range. See 3 1 U.S.C. § 5321(a)(5) . W hile the governing statu t e also authorizes penalties greater than $100,000, it nowhere mandates that the Secretary impose a higher fine. See id. In fact, the statute gives the Secretary discretion to impose no fine at all. See id. § 5321(a)(5) (A). The current regulation therefore does not conflict with the governing statute and the Secretary must adhere to that regulation as long as it remains in effect
. T he court, however, excuses

1 See also Fed. Defs. of N.Y., Inc. v. Fed. Bureau of Prisons , 954 F.3d 118, 130 (2d Cir. 2020) ( “Under deeply rooted principles of administrative law, not to mention common sense, government agencies are generally required to follow their own regulations.” ); Mantena v. Johnson , 809 F.3d 721, 729 (2d Cir. 2015) (“It is an abecedarian principle of administrative law that agencies must comply with their own regulations.”) (quoting Manguriu v. Lynch , 794 F.3d 119, 122 (1st Cir. 2015)). 2 See Thomas W. Merrill, The Accardi Principle , 74 Geo. Wash. L. Rev. 569, 569 (2006).2 the Tr easury Department from the obligation to follow its own regulations
. I dissent. I The parties in this case do not question the Accardi principle.

“ [P]roperly promulgated, substantive a gency regulations have the force and effect of law.” Chrysler Corp. v. Brown , 441 U.S. 281, 295 (1979) (internal quotation marks omitted) ; see also Perez v. Mortg. Bankers Ass ’ n , 575 U.S. 92, 96 (2015) (“ Rules issued through the notice

and

- comment process are often referred to as ‘ legislative rules ’ because they have the ‘ force and effect of law. ’ ”). Therefore, s uch a
“ regulation bind s the government as much as the individuals subject to the regulation .” Hammond v. Lenfest, 398 F.2d 705, 715 (2d Cir. 1968) ; see also Service v. Dulles , 354 U.S. 363, 372 (1957) (“[R]egulations validly prescribed by a government administrator are binding upon him as well as the citizen
. ”) . “ [ T ] his principle holds even when the administrative action under review is discretionary in nature .” Service, 354 U.S. at 372; see also Hammond, 398 F.2d at 715 (“ [T] his is no less so because the governmental action is essentially discretionary in nature .”) . Accordingly, e ven when a governing statute does not

“ obligate []” an agency “ to impose upon ” itself “ substantive and procedural standards, ” if the agency cho o ses to “do[] so,” it may “ not, so long as the [r] egulations remain [] unchanged, proceed without regard to them .” Service, 354 U.S. at 388; see also Vitarelli v. Seaton , 359 U.S. 535, 540 (1959) (“[T] he Secretary ... was bound by the regulations which he himself had promulgated for dealing with such cases, even though without such regulations he could have discharged petitioner summarily .”) .3 T he Treasury Department has sometimes e vade d standard administrative law principles when enforc ing the tax laws, 3 but the Supreme Court has made clear that the Accardi principle applies in the t ax and non

- tax context alike
. S ee Ballard v. Comm'r , 544 U.S. 40, 59 (2005) (“However efficient the Tax Court ’ s current practice may be ... [t]he Tax Court, like all other decisionmaking tribunals, is obliged to follow its own Rules.”) (citing Service, 354 U.S. at 388 , and Vitarelli , 359 U.S. at 540 ); see also Mayo Found. for Med. Educ. & R e s ear ch v. United States , 562 U.S. 44, 55 (2011) (“[W] e are not inclined to carve out an approach to administrative review good for tax law only. To the contrary, we have expressly recognized the importance of maintaining a uniform approach to judicial rev iew of administrative action.” ) (internal quotation marks and alterations omitted). II The current Treasury Department regulation governing penalties for willful failure s to file a n FBAR provides that any penalty is “not to exceed the greater of the amount (not to exceed $100,000) equal to the balance in the account at the time of the violation, or $25,000.” 31 C.F.R. § 1010.820(g) (2) . T he regulation thereby limits FBAR penalties to a $100,000 maximum. The Treasury Department, however, imposed a penal ty over forty

- two times that maximum

— $4,264,728 to be exact

— for Kahn’s willful failure to file an FBAR
. Because th is penalty is inconsistent with the governing regulation, the Accardi principle requires us to reject the Department’s attempt to collect it .

3 See Kristin E. Hickman, Administering the Tax System We Have, 63 Duke L.J. 1717, 1718 (2014) (describing “tax departures from general administrative

- law norms”).4 Recognizing this straightforward argument, the government

— and the court

— insist that the relevant regulation is “invalid” because it “was superseded by the 2004 amendment to the statut e ” that “increase[ed ] the penalty maximum” the agency may collect to above $100,000. Ante at 4 , 19. Of course, if th e 2004 amendment d id in fact supersede the regulation, then the regulation would lack “the force and effect of law” and no longer bind the Treasury Department. Perez , 575 U.S. at 96. A statute overrides a preexisting regulation when the

“ regulation conflicts with [the] subsequently enacted statute.” Farrell v. United States , 313 F.3d 1214, 1219 (9th Cir. 2002); see also Decker v. Nw. Env’t Def. Ctr. , 568 U.S. 597, 609 (2013) (“It is a basic tenet that ‘regulations, in order to be valid, must be consistent with the statute under which they are promulgated.’”); Scofield v. Lewis , 251 F.2d 128, 132 (5th Cir. 1958) (“A Regulation, valid when promulgated, becomes invalid upon the enactment o f a statute in conflict with the Regulation.”)
. T he 2004 amendment, however, created no conflict with the governing regulation. The amended statute provides that “ [t] he Secretary of the Treasury may impose a civil money penalty on any person who ” fails to file an FBAR . 3 1 U.S.C. § 5321(a)(5) (A) (emphas i s added). For nonwillful violations the statute directs that “ the amount of any civil penalty imposed
... shall not exceed $10,000. ” Id. § 5321(a)(5) (B)( i ). F or willful violations , on the other hand, the statute specifies that “the maximum penalty under subparagraph (B)(i) shall be increased to the greater of

— $100,000, or 50 percent of
... the balance in the account at the time of the violation .” Id. § 5321(a)(5) (C)
- (D). While the court is correct that the statute allows the Secretary to impose a penalty in excess of the $100,000 regulatory cap, it errs in interpreting the statute to require that the Secretary subject violators5 to a n increased penalty

— or even a “potential ly” increased penalty
. Ante at 21 . T he statute does not require the Secretary to do anything
. It merely states th at the Secretary “may impose a civil money penalty ” subject to the limitations set out in that provision. Id. § 5321(a)(5) (A). B y the statute ’ s own terms, the Secretary may respond to violations by imposing any penalty up to the statutory maximum or even no penalty at all. 4 Because the statute grants the Secretary the discretion to impose any penalt y ranging from zero dollars to the statutory maximum , and because Congress has also grant ed the Secretary rulemaking authority to guide her exercise of that discretion, 5 the Secretary may promulgate and enforce a rule settin g the applicable fines at any point from zero to the statutory maximum . T he Accardi principle rests on the premise that agencies may constrain their statutorily granted discretion through regulation
. 6 In both Accardi

4 The government agrees that the statute confers such discretion and requires no particular penalty
. See Oral Argument Audio Recording at 11:07
- 20 (“The Secretary has, under the language of the amended statute, the discretion whether to impose the civil penalty and where in the range to situate it up to the statutory maximum.”). The government also agree s that the Secreta ry would not violate the statute if, through an exercise of her discretion, she never imposed a penalty greater than $100,000 (the limit under the current regulation) in any case. See id. at 15:18
- 50. 5 See 3 1 U.S.C. § 53 14(b )(5) ; see also id. § 53 18(a) . 6 The government

— unlike the court, apparently, see ante at 22
- 23

— recognize s that this general rule applies in the context of the FBAR penalty statute . At oral argument, the government conced ed that the Secretary could promulgate a r egulation identifying categories of willful FBAR violations and setting forth a schedule of fines

— including regulatory maximums

— that would apply to those categories. Oral Argument Audio Recording at 11:39

- 12:22; 13:04
- 27.6 and Service, the Supreme Court acknowledged that the governing statutes granted the agency administrator far broader discretion than the agency’s regulations allowed, but the Court nevertheless held the agency to regulations that limited its discretion beyond the sta tutory constraints . 7 In the same way , the regulation currently codified at 31 C.F.R. § 1010.820(g) (2), which limits the FBAR penalty to a maximum of $100,000 , represents a due exercise of the Secretary’s authority that limits her discretion beyond the sta tutory constraints . “ [H] aving ” so exercised th at authority , the Secretary may “ not, so long as the [r] egulations remained unchanged, proceed without regard to them ,” Service 354 U.S. at 388, “ even though without such regulations [ s ] he could ” impose a fine that exceeds $100,000, Vitarelli, 359 U.S. at 540 . The court respon d s to this argument by water ing down the Accardi principle
. While the court admits that the statute “plainly” gives “the Secr etary ... discretion in a given case to impose a penalty

7 “In ... Accardi ... regulations of the Attorney General delegated certain of his discretionary powers to the Board of Immigration Appeals and required that Board to exercise its own discretion on appeals in deportation cases. The Court held that so long as the Attorney General ’ s regulati ons remained operative, he denied himself the authority to exercise the discretion delegated to the Board even though the original authority was his and he could reassert it by amending the regulations.” United States v. Nixon , 418 U.S. 683, 695

- 96 (1974); see also Accardi, 347 U.S. at 262
- 63, 265
- 67. Similarly, i n Service , the governing statute provided that “ the Secretary of State may, in his absolute discretion, ... terminate the employment of any officer or employee of the Department of State or of the Foreign Service of the United States whenever he shall deem such termination necessary or advisable in the interests of the United States .” 354 U.S. at 370. Yet the Supreme Court reversed the Secretary ’s decision to discharge an employee pursuant to th at authority because the Secretary did not abide by applicable regulations that constrained the exercise of his discretion. See id . at 365
- 67, 385
- 89.7 that is below the ceiling provided by the statute,” the court concludes that the statute does no t “permit[] the Secretary to establish [a lower] maximum permissible penalty for failures to file FBARs
. ” A nte at 17 (emphasis added) . In other words

— even though the statute confers on the Secretary both discretion to choose penalties within the statutory range and to promulgate binding regulations

— the statute for some reason does not allow the Secretary to cabin her own discretion through those rules
. 8 The court offers two arguments to support its conclusion
. Neither is persuasive. First, the court seizes on the statut ory language providing that, for willful violations, “the maximum penalty ... shall be increased to the greater of

— $100,000, or 50 percent of
... the balance in the account at the time of the violation .” 31 U.S.C. § 5321(a)(5) (C)
- (D) (emphasis added) ; see ante at 16
- 18 . The court unde rstands this language to “mandat [ e ] that a person who willfully fails to file an FBAR be exposed to the possibility of a penalty that was increased to $100,000 or 50 percent of the aggregate balance in the unreported accounts, whichever is ‘ greater .’” Ante at 17 ; see also Norman v. United

8 T he court does not describe the contours of its new limitation on an agency’s authority to cabin its o wn discretion. Here, the agency apparently is not allowed to set a maximum penalty below the statutory maximum. Could it set maximum penalties that apply in specified circumstances, as the government believes, or is the prohibition on altering the statutor y maximum absolute , as the court seems to suggest ? See supra note 6. Could the Secretary set forth factors that the IRS must consider before imposing a penalty or

— because those factors are not specified by statute

— would that impermissibly restrict the “max imum permissible penalty” that applies to regulated parties? Ante at 17. From now on, when an agency wants to be excused from the burden of complying with or amending its regulations, it may argue that its regulations impermissibly restrict its discretion beyond the statutory maximum. The court does not set limits on this new doctrine.8 States , 942 F.3d 1111, 1117 (Fed. Cir. 2019) (adopting a similar interpretation ) . But when read in context, the language that the maximum penalty “shall be increased” does not mandate that the Secretary take or refrain fro m taking any action with respect to a violator’s exposure to a penalty
. Before setting out the penalty applicable to willful violations, the statute, in subparagraph (B)(i), provides that the penalties for FBAR violations generally “shall not exceed $10,000.” 31 U.S.C. § 5321(a)(5) (B)( i ). Subparagraphs (C) and (D) in turn prov ide that, in cases of willful violations, “ the maximum penalty under subparagraph (B)(i) shall be increased to the greater of

— $100,000, or 50 percent of ... the balance in the account at the time of the violation. ” (emphasis added). T he statute use s the ph rase “shall be increased” to indicate that the lower statutory maximum provide d

“ under subparagraph (B)(i)” will be modified for willful violations. That language is not directed either at the Secretary or at her exercise of the discretion the statute conf ers. T his provision simply does not “mandat [ e]” that the Secretary ensure that willful violators remain

“ exposed to the possibility of a penalty ” of up to 50 percent of the balance in the unreported accounts
. Ante at 17 . 9

9 The court cites Mach Mining, LLC v. E EOC for the proposition that “the word ‘shall’ is ‘ mandatory, not ‘precatory.’ ” Ante at 16 (quoting 575 U.S. 480, 486 (2015)). T hat is a non

- sequitur. Nobody disputes that § 5321(a)(5)(C)
- (D) raises the statutorily authorized maximum penalty from what it would have been in the absence of those subparagraphs
. T he current regulation does not purport to change the statutory maximum or otherwise “nullify [that] statutory provision
. ” A nte at 22 . The question is whether th e “shall be increased” language acts as a limit ation o n the Secretary’s exercise of her discretion under the statute. In this sense, the statute in Mach Mining provides a useful contrast to the FBAR penalty statute because it illustrat es t he kind of language Congress uses when it wants to impose a requirement on a n agency . In Mach Mining, the Court considered a provision directing9 Second , the c ourt invokes the notion that “ [e] ven a regulation that is not ‘ technically inconsistent with the statutory language ’ is invalid ‘ when that regulation is fundamentally at odds with the manifest congressional design. ’ ” Ante at 19 (quoting Un ited States v. Vogel Fertilizer Co. , 455 U.S. 16, 26 (1982) ). Yet the only applicable principle “manifest” from the “design” of the statute Congress enacted is that the Secretary has discretion to impose any penalty up to the statutory maximum . Nothing in the statute manifests a congressional purpose to suspend the regular rule that an agency may constrain its discretion through regulation. To the extent that the c ourt considers the legislative history it discusses to manifest a design inconsistent with th e current regulation, the Supreme Court has told us that “[l]egislative history, for those who take it into account, is meant to clear up ambiguity.” Milner v. Dep ’t of Navy, 562 U.S. 562, 574 (2011 ). When “[t]he text is clear
... we need not consider ... ex tra - textual evidence .” NLRB v. SW Gen., Inc. , 137 S. Ct. 929, 942 (2017). In fact, Vogel and the cases on which it relied

— Rowan Cos . v. United States , 452 U.S. 247 (1981) , and National Muffler Dealers Ass ’ n v. United States (1979), see Vogel , 455 U.S. at 24
- 26

— form a body of pre

- Chevron tax jurisprudence from which
that “ the Commission shall endeavor to el iminate any ... alleged unlawful employment practice by informal methods of conference, conciliation, and persuasion .” 42 U
. S . C . § 2000e
- 5 (b); see Mach Mining, 575 U.S. at 486. That language, the Court said , “imposes” a “duty” on the EEOC to “ tell the employer about [a] claim ” and “ provide the employer with an opportunity to discuss the matter in an effort to achieve voluntary compliance .” Mach Mining, 575 U.S. at 486, 488. The “shall be increased” language i n the FBAR statute, by contrast, is not addressed to the Secretary but only to “ the maximum penalty under subparagraph (B)(i) , ” 31 U.S.C. § 5321(a)(5) (C), and the court errs in reading it to impose a constraint on the Secretary.10 the Supreme Court has since distanced itself. “Since Rowan and Vogel were decided ... the administrative landscape has changed significantly , ” and the Court’s more recent precedents “rather than National Muffler and Rowan, provide the appropriate framework for evaluating” agency action. Mayo Found . , 562 U.S. at 56

- 57. In this case, the FBAR penalty statute clearly gives the Secretary discretion to impose any penalty beneath the statutory maximum and contains no language indicating that this discretion is constrained. Under the Supreme C ourt’s more recent precedents, t herefore , we may not read a constraint into the statute and disregard the general rule that an agency may constrain its discretion t hrough regulation . Nor m a y we decline to apply the Accardi principle by excusing the Treasury Department from following its own regulation s . 10

10 The court further support s its decision to allow the Treasury Department to disregard its regulation by asserting that the regulation was not “formulated in reliance on agency ‘ expertise and experience .’” Ante at 23
- 24 (quoting Gonzales v. Oregon , 546 U.S. 243, 257 (2006))
. Agency regulations, however, “ have the force and effect of law.” Chrysler Corp , 441 U.S. at 295. The notion that a regulation may be disregarded if a court determines the regulation did not sufficiently implicate the agency’s expertise is extraordinary, and the court’s reliance on Gonzales v. Oregon for that novel proposition is misplaced. That case addressed whether Chevron or Auer deference applied to an interpretive rule that “elaborat[ed]” on a regulation that did “ little more than restate the terms of [a] statute.” Id. at 255
- 57. The Court held that the Auer framework was “inapplicable” because
“ the existence of a parroting regulation does not change the fact that the question here is not the meaning of the regulati on but the meaning of the statute .” Id. at 256
- 57. The case before us does not concern whether we should defer to the Treasury Department’s interpretation of a regulation or a statute. The question is whether the FBAR penalty regulation is valid. Nothing i n Gonzales v. Oregon suggests that “parroting regulation[s]” have some lesser degree of legal force than other regulations.11 To be sure, t he Secretary may amend or repeal the regulation that caps the penalty be low the statutory maximum. But “[s] o long as this regulation is extant it has the force of law .” Nixon , 418 U.S. at 69 5.

“ Here, as in Accardi, it is theoretically possible for the [Secretary] to amend or revoke the regulation [cap p ing the FBAR penalty at $100,000]. But [s] h e has not done so. So long as this regulation remains in force the Executive Branch is bound by it .” Id. at 696.

* * *

“ [ I ] f troubled by the consequences” produced by standard administrative law principles , the Treasury Department may “amend its regulatio ns” if it desires a different outcome. Mayo Found . , 562 U.S. at 55. Yet b y affirming the district court’s judgment and allowing the Treasury Department to collect the $4,264,728 penalty it imposed on Harold Kahn

— a penalty that exceeds the Department’s stated regulatory maximum by over four

- thousand percent

— the court departs from basic administrative law and un justifiably accommodates “the Treasury ’ s relaxed approach to amending its regulations ,” ante at 21 (quoting United Dominion Indus . , Inc. v. United States , 532 U.S. 822, 836 (2001 ) ) . I therefore dissent.