The 2023 term continues a series of very eventful Supreme Court sessions. The 2021 Term ending in June 2022 saw the demise of Roe v. Wade and the emergence of the “major questions” doctrine. The 2022 term (ending last June) saw major cases involving election law and public accommodations. This year, three cases could dramatically affect the nature of international trade litigation.
The most far-reaching of these cases may be Loper Bright Enterprises. On its face, the case has nothing to do with international trade. But it squarely calls into question the application of a four-decades-old deferral of federal courts to agency legal interpretations known as the Chevron doctrine.
Congress possesses all federal legislative authority under the Constitution. It may pass laws that deal with any matter under federal jurisdiction that are otherwise consistent with the Constitution, as amended. Inevitably, questions arise regarding the interpretation of those statutes. When these questions are litigated, the federal courts will resolve them.
One of the most famous cases in US history, Marbury v. Madison, stated the general rule: “It is emphatically the duty of the Judicial Department to say what the law is.”
Chevron, an environmental case decided in 1984, holds that if a federal agency is charged with the administration of a statute by law, the courts must defer to the agency’s interpretation of that law, so long as the interpretation is “reasonable.” In the administration of most international trade statutes, the lower federal courts have deferred to agencies (the Commerce Department, International Trade Commission, USTR) and the President innumerable times.
What’s On The Table
In Loper Bright, the Supreme Court will decide by next June whether Chevron should be overruled. The outcome is, of course, uncertain. But there are straws in the wind:
First, the Supreme Court has not relied on Chevron to sustain an agency decision since 2014, based on my research, suggesting an erosion of the persuasive power of the case; but the lower federal courts cite the case repeatedly, including in international trade cases.
Second, at least three Justices (Thomas, Gorsuch, and Kavanagh) have raised serious questions about the validity of the Chevron doctrine as an exception to the Marbury rule that courts should decide “what the law is.”
Third, the Court agreed to hear the Loper Bright case limited to the Chevron question, indicating that the issue was “teed up” for decision by the Court.
Fourth, Justice Jackson, who formerly sat on the DC Circuit, has recused herself from hearing the case, due to her previous involvement with the case on the Circuit court.
Fifth, the legal community has bombarded the Court with nearly 100 amicus curiae (friend of the court) briefs on both sides of the issue.
While the Supreme Court has pushed aside Chevron as the basis for its decisions in recent years, as mentioned the lower courts have cited it endlessly as cover for deferring to agency decisions. But the record is not entirely one-sided.
What It Means
In a case just last week, the Court of International Trade set aside a Commerce finding in a countervailing duty case that an emissions trading system (ETS) in South Korea subsidized a Korean firm. You may not have time to digest the details, but I’ll try to summarize.
Commerce found that the government of Korea provided extra emission allowances to a company free of charge. Commerce ruled that was a subsidy because if the government had not given the allowances, the company would have had to buy them or potentially be liable for a penalty for excessive emissions.
The Court of International Trade held that Commerce’s decision was contrary to the statute because Congress had limited Commerce’s authority to impose duties only on payments that would currently, not just potentially, be “due.” Perhaps the statute was clearly contrary to Commerce’s decision. I’m a bit confused about that, but that was the court’s holding.
In reading the decision, I could not help recalling the column a couple of weeks ago about the EU hitting Chinese electric vehicles with a countervailing duty investigation. Do we want to curb carbon emissions or don’t we? At least one federal judge appears to give climate action something of a chance at success.
How Will It Shake Out?
The demise of the Chevron doctrine in Loper Bright could be a game changer for trade remedy cases. But it will take some time before the effect on lower courts becomes clear.
More than twenty years ago, in Mead Corp., the Supreme Court denied Chevron deference for administrative rulings by US Customs. Within three months, the US Court of Appeals for the Federal Circuit decided not to apply Mead to antidumping and countervailing duty decisions by Commerce, requiring the courts to continue to defer to Commerce decisions in trade remedy cases.
Moreover, overruling Chevron might not be applied retroactively to cases previously decided. If, as appears likely, Chevron is overruled or seriously weakened, the trade remedy landscape will change. Congress will no doubt be asked to amend the laws to permit or require greater judicial deference to agency decisions. It could make for interesting times ahead.
The other two cases (SEC v. Jarkesy and CFPB v. Community Financial Services Association) are likely to have a lesser immediate impact on international trade jurisprudence. But ultimately these cases could affect the type of congressional response that may ensue.
Jarkesy takes issue with non-judicial adjudications by “administrative law judges” in securities cases. The Court might decide that Congress cannot delegate certain types of cases to administrative agencies, but must allow courts to handle them.
The CFPB case, which was argued last week in the Supreme Court, deals with the ability of Congress to enact funding mechanisms for agencies that bypass the appropriations process.
All in all, this will be another big year for Supreme Court watchers.
Editor’s note: This is an opinion column. The views in this article are those of an experienced trade attorney on issues of relevance to the current steel market. They do not necessarily reflect those of SMU. We welcome you to share your thoughts as well at firstname.lastname@example.org.
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