269 F.3d 1064 (D.C. Cir. 2001)
John J. Flynn and J. H. Thomas, Appellantsv.Commissioner of Internal Revenue Service, Appellee
No. 00-1457
United States Court of Appeals  FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 28, 2001Decided October 30, 2001

Appeal from the United States Tax Court (No. IRS-18090-99R)
Michael S. Gordon argued the cause and filed the briefs for  appellants.
Steven W. Parks, Attorney, United States Department of  Justice, argued the cause for appellee.  With him on the brief  was Kenneth L. Greene, Attorney.  Ann W. Muoio, Attorney,  entered an appearance.
Before:  Edwards, Rogers, and Tatel, Circuit Judges
Opinion for the Court filed by Circuit Judge Edwards.
Edwards, Circuit Judge:


1
Section 7476 of the Internal  Revenue Code ("I.R.C.") allows certain qualified employees to  bring an action in the Tax Court for a declaratory judgment  to challenge a determination that their employers' retirement  plan qualifies for favorable tax treatment.  I.R.C.  7476  (1994).  Pursuant to the statute's express delegation of authority, the Secretary of the Treasury promulgated regulations determining which employees would be permitted to  utilize the declaratory judgment remedy.  See Treas. Reg.   1.7476-1(b) (as amended in 1988).  Appellants sought to use   7476 to challenge the Internal Revenue Service's ("IRS")  determination that the amended retirement plan of their  former employer continued to qualify for favorable tax treatment.  The regulations, however, grant standing to use the  declaratory judgment remedy only to current employees, not  former employees like appellants.  See id.  The United  States Tax Court therefore dismissed appellants' action for a  declaratory judgment and upheld the regulations denying  standing to former employees.  See Flynn v. Comm'r, 80  T.C.M. (CCH) 91 (2000).


2
On appeal, appellants make three arguments.  First, they  argue that  7476 impermissibly delegates authority to the  Secretary to determine which employees may use the declaratory judgment remedy, without giving the Secretary guidelines for making that determination, in violation of the constitutional nondelegation doctrine.  Because appellants did not  raise this argument at the Tax Court, we decline to address it  now.  Second, appellants renewtheir challenge to the validity  of Treas. Reg.  1.7476-1(b).  We find that the Tax Court  correctly upheld the regulation as a reasonable construction  of the statutory language.  Finally, appellants argue that  their employer somehow conferred standing on them by  mailing them a "notice to interested parties" informing them  that it was seeking a determination that the amended plan  would continue to receive favorable tax treatment.  It is  clear, however, that the rules governing the content of notices to interested parties do not operate to confer standing on  appellants.  We accordingly affirm the judgment of the Tax  Court.

I. Background

3
A. The  7476 Declaratory Judgment Provision and the Applicable Regulations


4
In 1974, Congress enacted the Employee Retirement Income Security Act ("ERISA"), sections of which were codified  as part of the I.R.C.  Pub. L. No. 93-406, 88 Stat. 829  (codified as amended at 29 U.S.C.  1001-1461 and scattered  sections of the I.R.C., 26 U.S.C. (1994 & Supp. 1999)).  Many  of its provisions set forth requirements to which retirement  and other benefit plans must conform.  Among these requirements are the so-called "backloading rules," mathematical  formulae designed to prevent employers from providing rates  of benefit accrual for older or more experienced workers that  are excessive in relation to the rates of accrual for younger  workers.  See I.R.C.  401(a)(7) (providing that to qualify  under ERISA, a trust must satisfy the requirements of   411);  411(b)(1) (setting forth various mathematical formulae that plans may use) (1994).  When retirement plans  comply with ERISA's requirements, they enjoy favorable tax  treatment.  ERISA is a remedial statute, whose express  purpose is to protect, inter alia, "the interests of participants  in private pension plans and their beneficiaries."  29 U.S.C.   1001(c) (1994);  Rettig v. Pension Benefit Guar. Corp., 744  F.2d 133, 155 n.54 (D.C. Cir. 1984) (discussing Congress'  remedial purpose in enacting ERISA).


5
Internal Revenue Code  7476 gives the Tax Court jurisdiction to issue a declaration about a retirement plan's qualification for favorable tax treatment when there is a controversy involving the Secretary of the Treasury's determination  that a plan qualifies or continues to qualify for such treatment.  I.R.C.  7476(a).  Any employee who qualifies as an  "interested party" under regulations prescribed by the Secretary may petition the Tax Court for such a declaration.  Id. The effect of the provision is to allow certain employees and other interested parties to act as watchdogs:  when a plan or  an amendment to a plan hurts those employees' interests by  failing to conform to ERISA's requirements, those employees  can seek a declaration preventing the plan from receiving a  determination that will ensure favorable tax status.  Employers and plan administrators are also interested parties who  can use the declaratory judgment remedy provided in  7476. Id.


6
The regulations authorized by  7476(b)(1) define several  categories of present employees as "interested parties" who  can challenge plan determinations in most situations, including cases involving certain amendments to plans.  Treas. Reg.   1.7476-1(b)(1)(i), (ii), (2)(ii), (3)(ii), (4), (5).  The only instance in which former employees are included as interest ed parties is in the case of plan terminations.  Id.   1.7476-1(b)(5).  When an employer wishes to terminate a  retirement plan that covers former employees with vested  benefits under the plan, those former employees and all  beneficiaries of deceased former employees currently receiving benefitsunder that plan have standing to seek a declaratory judgment.  Id.


7
Additional regulations require the party applying for qualified status to notify the interested parties referred to in   7476(b)(1) of the application for a determination of qualified  status.  Treas. Reg.  1.7476-1(a)(1), 1.7476-2.  The rules  governing the content and timing of notice to interested  parties are set forth at 26 C.F.R.  601.201 (2001).  Part 601  of 26 C.F.R., entitled "Statement of Procedural Rules," consists of rules issued by the Commissioner, rather than by the  Secretary, pursuant to his power to promulgate rules "for the  government of his department, the conduct of its employees,  the distribution and performance of its business, and the  custody, use, and preservation of its records, papers, and  property."  5 U.S.C.  301 (1994).  Section 601.201(o)(3)(xiv)  requires, in cases in which plans apply for determinations of  their qualification for special tax status, that notice of the  application be given to all interested parties "in the manner  set forth in the regulations under section 7476."  26 C.F.R.   601.201(o)(3)(xiv).  Section 601.201(o)(3)(xvi) requires the notice to contain, inter alia, a statement that "any person to  whom the notice is addressed is entitled to submit ... a  comment on the question of whether the plan meets the  requirements for qualification."  Id.  601.201(o)(3)(xvi)(g).


8
B. Appellants' Challenge to the IRS's Favorable Determination


9
Appellants are former employees of the International Union of Operating Engineers ("the Union"), which established  the International Headquarters Pension and Beneficiaries  Plan of the International Union of Operating Engineers ("the  plan") in 1947.  Flynn, 80 T.C.M. (CCH) at 92. Around  January 6, 1999, the Union filed an application with the IRS,  seeking a determination that the pension plan would continue  to qualify for favorable tax treatment after the adoption of  certain amendments.  See Application for Determination for  Employee Benefit Plan, reprinted in Deferred Appendix  ("App.") 35.  The Union also sent appellants a notice on  Union letterhead, entitled "Notice to Interested Parties.  Notice to all participants of application for determination of the  International Headquarters Pension and Beneficiaries Plan of  the International Union of Operating Engineers."  Notice to  Interested Parties, reprinted in App. 13.  The notice explained that the Union was applying to the IRS for a determination that its amended pension plan was eligible for taxqualified status.  Id.  It also stated that the recipient had the  right to submit comments to the IRS as to whether the plan  met the qualification requirements under the I.R.C.  Id.


10
Appellants responded to the notice by submitting critical  comments to the IRS.  They argued that while the amended  plan complied with ERISA's backloading requirements, the  old version of the plan -which governed appellants' benefits -did not.  The plan was supposed to satisfy one of the  statutorily available mathematical formulae, known as the "3percent method."  See I.R.C.  411(b)(1)(A).  That method  requires that the accrued benefit to which each worker is  entitled on leaving the employer is not less than 3% of the  normal retirement benefit to which that worker would be  entitled if he or she began participation in the plan at the earliest possible entry age and served continuously until the  earlier of age 65 or normal retirement age, multiplied by the  number of years of that worker's participation in the plan. Id. According to appellants, the amended plan satisfied the  3% rule, because it allowed vested employees with less than  20 years of service to accrue benefits at the rate of 4% of final  pay for each year of service.  Preliminary WrittenComments  of John J. Flynn ... and James H. Thomas p 6, reprinted in  App. 15-19.  Appellants alleged that the version governing  their benefits, however, had only allowed them to accrue  benefits at a rate of 2.25% of final pay, in violation of the  backloading requirement.  Even worse, according to appellants, the amended plan apparently did not go back and  correct the alleged violation with respect to former employees.  Id.  As a result, appellants argued that they were  "vitally affected by the potential ... violations committed by  the Plan."  Id.


11
The IRS issued a favorable determination to the Union  regarding the amended plan, apparently without addressing  appellants' comments.  Letter from IRS to Int'l Union of  Operating Eng'rs (Oct. 8, 1999), reprinted in App. 37-38. Appellants responded by filing a petition in the Tax Court  seeking a declaration, under I.R.C.  7476, that the plan was  not entitled to continuing qualification because it violated the  I.R.C.  Petition (T.C. Dec. 2, 1999), reprinted in App. 3-8. The IRS moved to dismiss the petition, arguing, inter alia,  that appellants lacked standing because they were former  employees and therefore not interested parties.  Motion to  Dismiss for Lack of Jurisdiction, Docket No. 18090-99R (T.C.  Feb. 4, 2000), reprinted in App. 23-32.  Appellants, in opposing the motion to dismiss, argued that they qualified as  interested parties by virtue of the fact that the Union had  sent them a notice addressed to interested parties or, alternatively, because the regulations excluding former employees  were arbitrary and capricious.  Notice of Petitioners' Opposition to Respondent's Motion to Dismiss, Docket No. 1809099R (T.C. Feb. 29, 2000), reprinted in App. 39-57.


12
The Tax Court dismissed the petition and held that appellants lacked standing and were not interested parties.  Order of Dismissal for Lack of Jurisdiction, Docket No. 18090-99R  (T.C. July 31, 2000), reprinted in App. 67;  Flynn, 80 T.C.M.  (CCH) at 93-94.  The court held that under Treas. Reg.   1.7476-1(b), only present employees qualified as interested  parties.  Flynn, 80 T.C.M. (CCH) at 93.  Contrary to appellants' argument, the Union could not confer jurisdiction on  the Tax Court by sending appellants a notice.  Id.  The Tax  Court also upheld the regulations under  7476 as valid  legislative regulations.  Id. at 93-94.  Appellants appealed  the decision of the Tax Court.

II.  Discussion

13
Our jurisdiction to review the decision of the Tax Court  derives from I.R.C.  7482(a)(1) (1994).  We review the legal  determinations of the Tax Court de novo.  ASA Investerings  P'ship v. Comm'r, 201 F.3d 505, 511 (D.C. Cir.), cert. denied,  531 U.S. 871 (2000).

A. The Nondelegation Argument

14
On appeal, appellants raise the argument, not raised at the  Tax Court, that  7476 violates the Constitution's nondelegation doctrine.  Having failed even to mention any constitutional claim below, appellants now argue that  7476 impermissibly delegates to the Secretary of the Treasury the  authority to determine which employees are interested parties, without providing sufficient guidance to the Secretary as  to how to make that determination.  Appellee argues in  response that because appellants failed to raise the issue at  the Tax Court, this court should not now consider it.  Appellee also argues that appellants' nondelegation argument lacks  merit.  We agree with appellee on the former point and  therefore decline to address the latter.


15
Generally, an argument not made in the lower tribunal is  deemed forfeitedand will not be entertained absent "exceptional circumstances."  Marymount Hosp., Inc. v. Shalala, 19  F.3d 658, 663 (D.C. Cir. 1994) (citing Roosevelt v. E.I. Du  Pont de Nemours & Co., 958 F.2d 416, 419 n.5 (D.C. Cir.  1992)).  This rule promotes efficiency and finality in the  administration of justice.  See Johnston v. Reily, 160 F.2d 249, 250 (D.C. Cir. 1947).  The rule is not absolute, and courts  of appeals have discretion to address issues raised for the  first time on appeal.  Roosevelt v. E.I. Du Pont de Nemours  & Co., 958 F.2d 416, 419 n.5 (D.C. Cir. 1992) (citing Hormel v.  Helvering, 312 U.S. 552, 555-59 (1941)).  We generally exercise that discretion, however, only in exceptional circumstances, as, for example, in cases involving uncertainty in the  law;  novel, important, and recurring questions of federal law; intervening change in the law;  and extraordinary situations  with the potential for miscarriages of justice.  Id. (citations  omitted).


16
There are no exceptional circumstances in this case.  Appellants argue that this court should consider its nondelegation argument because it is vital to the proper functioning of   7476 as a mechanism for channeling the grievances of plan  participants regarding tax qualification decisions that affect  their benefits.  Reply Br. for Appellants at 9.  This argument  is not the least bit compelling.  Under the existing regulatory  regime, employees may challenge all plan determinations and  former employees and other beneficiaries may challenge determinations in cases involving plan terminations.  This  scheme makes sense, in part because it is undisputed that  former employees rarely have reason to challenge determinations regarding plan amendments, since amendments usually  affect only current and future employees.  See id. at 16. Furthermore, former employees are not without a remedy in  circumstances when they seek to challenge plan amendments,  for they may assert their claims through a civil action under  ERISA  502(a), 29 U.S.C.  1132(a) (1994 & Supp. V 1999). We are unconvinced, therefore, that the issue now raised by  appellants is either sufficiently important or fraught with  sufficient risk of a miscarriage of justice to warrant deviation  from our general refusal to address issues raised for the first  time on appeal.

B. The "Interested Parties" Regulations

17
In I.R.C.  7476, Congress expressly delegated authority to  the Secretary of the Treasury "to elucidate a specific provision of the statute by regulation."  Chevron USA Inc. v.  Natural Res. Def. Council, Inc., 467 U.S. 837, 844 (1984).


18
The legislative regulation promulgated pursuant to that explicit grant of authority is accorded controlling weight.  As  the Supreme Court recently noted in United States v. Mead  Corp., 121 S. Ct. 2164, 2171 (2001):


19
When Congress has "explicitly left a gap for an agency to fill, there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation," Chevron, 467 U.S., at 843-844, 104 S. Ct. 2278, and any ensuing regulation is binding in the courts unless procedurally defective, arbitrary or capricious in substance, or manifestly contrary to the statute.


20
See also Arent v. Shalala, 70 F.3d 610, 616 (D.C. Cir. 1995)  (where there is no question that an agency had authority to  issue regulations under a statute, the only issue is whether  the agency's discharge of its authority is reasonable).  There  is no doubt here that the Secretary promulgated a legislative  regulation pursuant to an express delegation of authority  from Congress.  There are no procedural, substantive, or  statutory infirmities denigrating the regulation. Therefore,  under Mead, the regulation is binding.


21
By its plain language, the statute limits standing to "an  employee who has qualified under regulations prescribed by  the Secretary as an interested party."  I.R.C.  7476(b)(1). As evidenced by this wording, the statute contemplates that  some employees will qualify under the regulations, while  others will not.  Otherwise, there would be no need for the  Secretary to prescribe regulations setting forth the categories  of qualified employees.


22
In their briefs, the parties quibble over the significance of  the legislative history underlying the statute.  Appellants cite  a report of a committee of the House of Representatives  suggesting that plan "participants" will be able to bring an  action, see H.R. Rep. No. 93-779, at 106 (1974) (Report of the  Committee on Ways and Means), while appellee counters that  the final Conference Report speaks only of "employees,"  see  H.R. Conf. Rep. No. 93-1280, at 331 (1974).  This debate is  much ado about nothing.  The statute's plain language clearly  shows that Congress did not intend for every participant to have standing under  7476.  The only remaining question is  whether it was reasonable for the Secretary to exclude vested  former employees from qualification in situations involving  plan amendments.


23
Appellants do not deny that the statute authorizes the  Secretary to bar some employees from access to the declaratory judgment remedy, but they argue that it was unreasonable to exclude all former employees automatically.  They  suggest that the regulations should be revised to grant standing to any plan participant who can demonstrate that his  interests may be adversely affected by the grant or denial to  the plan of a favorable qualification determination.  Br. for  Appellants at 27.  Appellants may have a point in suggesting  that the regulations would have been better written to grant  standing to any participant with an interest at stake, rather  than granting standing based on a categorical distinction  between current and former employees.  This does not mean,  however, that the existing regulations are arbitrary and unreasonable.


24
Appellants argue that the regulatory scheme is irrational,  because some former employees with no real stake in the  termination of a plan are nonetheless allowed to challenge it,  while all former employees are barred from challenging plan  amendments even when approval could adversely affect their  benefits.  This example of alleged regulatory irrationality is  hardly convincing, for it focuses solely on the treatment of  different categories of former employees, not on the treatment of former versus current employees.  The example  therefore has little relevance to the instant case.  Furthermore, the fact that some former employees may be able to  challenge determinations relating to plan terminations in  which they no longer have a stake does not mean that it is  irrational to exclude former employees where plan amendments are concerned.  Put another way, the fact that the rule  for plan terminations may be overinclusive does not necessarily show that the rule for plan amendments is unreasonably  underinclusive.


25
In any event, the fact that the division between current and  former employees does not map perfectly onto the categories  of plan amendments and plan terminations does not render  the regulatory scheme irrational.  First, appellants do not  dispute that former employees ordinarily are not affected by  amendments made to a plan after they terminate their employment.  See Reply Br. for Appellants at 16.  They also  acknowledge that regulatory simplicity and ease of administration may have been among the Secretary's reasonable  objectives in drafting the regulations.  Br.for Appellants at  27.  We find nothing in the statute requiring the Secretary to  adopt an individualized, case-by-case approach to standing. Nor does the statute rule out a categorical approach to  standing that corresponds roughly to categories of employees  whose interests are affected by plan terminations and amendments respectively.  If former employees are only rarely  affected by plan amendments made after their employment is  over, it is eminently reasonable to limit standing to current  employees, whose benefits will almost always be affected by  amendments.


26
Second, the regulatory distinction between current and  former employees does not leave the latter group entirely  without recourse when a plan amendment arguably affects  their benefits.  As appellants recognize, they and other former employees in their position can seek redress by filing  civil actions under ERISA  502(a), 29 U.S.C.  1132(a). Indeed, plan participants have had some success bringing civil  actions in district court to challenge violations of the backloading rules.  See, e.g., Carollo v. Cement & Concrete Workers Dist. Council Pension Plan, 964 F. Supp. 677, 682-84  (E.D.N.Y. 1997).  In other words, it is not unreasonable for  the Secretary to issue regulations that leave former employees with one remedy, rather than two.


27
In sum, appellants' challenge to the regulations fails because they are unable to demonstrate that the basic division  between current and former employees in the plan amendment context is arbitrary and capricious.  The Secretary's  regulations need not perfectly accommodate all anomalous  situations in order to be reasonable under the statute, particularly when another remedy is available to those who are  excluded.  Because the regulations are plainly consistent with  the statutory delegation to the Secretary and are based on a  reasonable division between present and former employees,  they are valid.

C. The "Notice" Regulations

28
Appellants' final argument is that, although they are not  interested parties under the regulations promulgated pursuant to  7476, the Union conferred standing on them by  mailing them a notice to interested parties.  This argument is  premised on the requirement in 26 C.F.R.   601.201(o)(3)(xvi)(g) that the notice to interested parties  contain a statement that any person to whom the notice is  addressed is entitled to submit comments.  Appellants argue  that under this regulation, the fact that the Union chose to  send appellants notice conferred interested party status upon  them.  Br. for Appellants at 28-30.  In essence, appellants  argue that Part 601 incorporates a waiver principle into the   7476 regulatory scheme, thereby creating an additional  category of people -notice recipients -who may employ  the statutorily provided declaratory judgment remedy.  This  is a specious claim.


29
The regulation cited by appellants does not state that any  person to whom notice is addressed thereby becomes an  interested party entitled to institute a declaratory judgment  action.  Rather, the regulation merely requires the notice to  provide that its recipient is entitled to submit comments on  the plan.  Nowhere does the regulation suggest that notice  confers standing on recipients who are not interested parties  under Treas. Reg.  1.7476-1(b).  This construction of the  regulations accords with the overall regulatory structure: Treas. Reg.  1.7476 defines the interested parties under   7476, while Part 601 simply governs the content of the  notice that must be given to those interested parties when  plans seek determinations from the IRS.  Part 601 acknowledges that the notice must be given in accordance with the  regulations under  7476.  26 C.F.R.  601.201(o)(3)(xiv). Taken together,  601.201(o)(3)(xiv) and (xvi)(g) do not suggest that they add a new category of interested parties to  those enumerated in  1.7476.


30
Even if Part 601 did appear to contradict the regulations  under  7476 by adding a new category of interested parties,  it would not displace or override those regulations.  We have  previously explained the weight to be accorded the procedural  rules of Part 601:


31
Part 601 rules differ significantly from theregulations....  Issued by the Commissioner, without need for approval by the Secretary, they serve merely as guidelines for conducting the internal affairs of the agency.  The authority of the Commissioner to issue such rules derives from [5 U.S.C.  301].  As such, the Statement of Procedural Rules is held to be directory, not mandatory in nature.


32
Boulez v. Comm'r, 810 F.2d 209, 215 (D.C. Cir. 1987) (citations omitted).  By contrast, the Treasury regulations defining "interested parties" are promulgated by the Secretary  pursuant to his specific statutory delegation in  7476(b). And as noted above, under the Supreme Court's decision in  Mead, Treas. Reg.  1.7476 is binding as written.  Part 601,  however, does not have the same status under Mead, so it  surely does not override  1.7476.  Thus, appellants' arguments on this point are meritless.

III. Conclusion

33
As former employees, appellants are not interested parties  as defined by Treas. Reg.  1.7476-1(b).  As such, they lack  standing to bring a  7476 declaratory judgment action.  The  regulations defining interested parties are valid because they  are based on a reasonable construction of the statutory  language and because they are rooted in a rational distinction  between current and former employees in plan amendment  cases.  Moreover, the rules governing the content of notice to  interested parties do not operate to confer standing on appellants.  For these reasons, we affirm the judgment of the Tax  Court.

