Opinion ID: 4404666
Heading Depth: 4
Heading Rank: 4

Heading: provides “good reasons” for the new

Text: policy, which, if the “new policy rests upon factual findings that contradict those which underlay its prior policy,” must include “a reasoned explanation . . . for disregarding facts and circumstances that underlay or were engendered by the prior policy.” Organized Vill. of Kake v. U.S. Dep’t of Agric., 795 F.3d 956, 966 (9th Cir. 2015) (en banc) (format altered) (quoting Fox, 556 U.S. at 515–16). At its core, this argument is not meaningfully different from Altera’s general APA argument. If the arm’s length standard allows the Commissioner to allocate costs between related parties without a comparability analysis, there is no policy change, merely a clarification of the same policy. Further, as we have discussed, the policy change was occasioned by the congressional addition of the “commensurate with income” sentence in the Tax Reform Act of 1984 and the 1994 and 1995 implementing regulations. Those changes occurred well before 2003. The 2003 regulations clarified, rather than altered, prior policy. And the enactment of a statutory amendment obviously makes a concomitant regulatory amendment appropriate. ALTERA CORP. V. CIR 47 5 Thus, the 2003 regulations are not arbitrary and capricious under the standard of review imposed by the APA. Treasury’s regulatory path may be reasonably discerned. Treasury understood § 482 to authorize it to employ a purely internal, commensurate with income approach in dealing with related companies. It provided adequate notice of its intent and adequately considered the objections. Its conclusion that stock based compensation should be treated as a cost was adequately supported in the record, and its position did not represent a policy change under Fox.