Recently, Venable's Government Division offered its general thoughts on the fallout from the Supreme Court's reversal of the long-standing Chevron deference principle. Here, the International Trade and Logistics Group offers its own reactions.
On June 28, 2024 the Supreme Court published its 6-2 opinion in Loper Bright Enterprises v. Raimondo. In that case, the Court found that federal law requires courts, rather than federal agencies, to interpret agency rules. For the last 40 years, under a concept known as Chevron deference, the courts have been required to give deference to the interpretation of the agency regarding its own statutory authority whenever the statutory language at question was “ambiguous” and the agency’s interpretation was “permissible.”
The impacts of Loper Bright will likely be widespread, especially in the next few years as prospective litigants look to “test the waters” at the district courts and courts of appeals. For cases in the field of international trade law, however, the impact may be more muted, for several reasons.
Courts Have Historically Recognized their “Lack of Competence” in National Security-Related Cases
Seminal administrative law cases emphasizing the executive branch’s authority over agency action as it pertains to national security-related decisions remain good law. Notably, in Department of the Navy v. Egan, a 1987 case regarding the revocation of the national security clearance of an employee of the Department of the Navy, the Court described the clearance decision as an “inherently discretionary judgment call that is committed by law to the appropriate Executive Branch agency having the necessary expertise in protecting classified information.” The Court went so far as to state that it was not “reasonably possible for an outside, nonexpert body [i.e., the Supreme Court] to review the substance of [a national security clearance revocation judgment].” The Supreme Court has noted its “lack of competence” regarding national security matters more recently as well, such as in a 2010 case that considered the Patriot Act’s prohibition on providing material support to foreign terrorist organizations. See, e.g., Holder v. Humanitarian Law Project, 561 U.S. 1 (2010), citing Rostker v. Goldberg, 453 U.S. 57 (1981). It remains to be seen exactly how the overturning of Chevron deference may impact the legitimacy of Egan and other cases that underscore the federal courts’ deference to the executive branch on matters of national security.
These include the authorities of the Committee on Foreign Investment in the United States (CFIUS), which has broad powers to prevent or even unwind investments in the United States on national security grounds, as well as Section 232 of the Trade Expansion Act of 1962, which authorizes the president (and thus, the Department of Commerce) to limit importation of goods if the importation threatens national security.
Courts Are Unwilling to Make Determinations on Cases Related to Foreign Policy Under the “Political Questions Doctrine”
In addition, the Supreme Court seems to remain committed to the “political questions doctrine,” which is nearly as old as the Supreme Court itself. Inscribed on a plaque at the Supreme Court Building’s entrance is a quote from the seminal 1803 Supreme Court case Marbury v. Madison: “it is emphatically the province and duty of the Judicial Department to say what the law is.” In that case, the Court defined the idea of the “political question doctrine” under which the Court simply refuses to hear a case that presents a political question. This has routinely been used to defer to the executive with respect to issues of foreign policy, such as in the 1839 case Williams v. Suffolk Insurance Co., which concluded that the executive branch had the final word on foreign sovereignty issues. For this and other reasons, foreign policy decisions are likely to remain driven by the federal executive rather than the federal courts, notwithstanding the Loper Bright decision.
Courts Remain Beholden to Major Precedent Related to Separation of Powers for Foreign Policy Determinations Under the Principle of Stare Decisis
There is also a more specific separation-of-powers argument that the executive agencies are tasked with foreign policy. In United States v. Curtis-Wright Export Corporation and Youngstown Sheet & Tube Company v. Sawyer, the Supreme Court developed a three-tier framework for determining whether Congress’s or the executive branch’s foreign policy determinations were constitutional. The doctrine’s general proposition is that while the executive branch’s authority on matters of foreign policy is at its lowest when Congress and the president are in conflict, it is at its highest when Congress and the president act in concert. While there are reasonable and ongoing debates regarding the constitutional authority of Congress and the executive branch to make and enforce foreign policies, federal courts’ authority over foreign policy matters has generally been to adjudicate conflicts between the executive branch and Congress.
This hasn’t changed in the modern era of the Court. For example, in the 1979 case Goldwater v. Carter, the Supreme Court determined that courts could not hear a lawsuit by members of Congress regarding the then-president’s termination of a defense treaty with Taiwan. Other recent cases, though, have narrowed the doctrine: in Zivotofsky v. Clinton, for example, a 2012 case in which Americans born in Jerusalem requested to have “Israel” listed as their birthplace on their U.S. passports, the case was determined to be justiciable by the Court because the courts were “not being asked to supplant a foreign policy decision of the political branches with the courts’ own unmoored determination of what United States policy toward Jerusalem should be.”
Foreign policy determinations subject to this deference may include, for example, the actions taken by the U.S. Trade Representative (USTR) under Section 301 of the Trade Act of 1974, which allows USTR to investigate and take action to respond to trade practices of foreign nations, as well as dispute settlement cases before multilateral institutions, mainly the World Trade Organization.
Some Key, Broad Discretionary Powers of the Executive Branch Are Governed by Laws Unaffected by Chevron
While there are over a hundred statutory powers the president has in declaring a national emergency, the International Emergency Economic Powers Act, or IEEPA, has become a major tenet of U.S. foreign policy since the enactment of the National Emergencies Act (NEA) in 1976. IEEPA forms the structure under which most U.S. sanctions occur, such as those conducted under the statutory power of the Office of Foreign Assets Control (OFAC) in the Department of the Treasury.
The executive branch has also relied on IEEPA as a legal basis for instituting tariffs, such as when former President Trump declared a national emergency determination through IEEPA to prevent the “illegal migration crisis” and instituted a 5% tariff on all goods from Mexico. Similarly, in 2019, former President Trump used IEEPA to “order” U.S. companies to look for supply chain alternatives to China. IEEPA cases have run the gamut from economic threats to traditional military threats and foreign policy issues. It also gives the president—and the president’s delegation to executive agencies—significant discretion.
The Courts and Cases in Question May Make the Success of International Trade-Based Loper Bright Cases Less Likely
Courts most likely to hear cases brought against agencies in the international trade arena are those of specialized jurisdiction with long-standing case law and sometimes long-standing deference toward agencies’ determinations. The main courts in question are the U.S. Court of International Trade (CIT), which has jurisdiction over the vast majority of trade-related issues, and the U.S. Court of Appeals for the Federal Circuit (CAFC), which has jurisdiction over specialized cases involving the federal government, such as federal employees, veteran’s benefits, patents, and trademarks.
These courts are the ones most likely to hear cases regarding the activities of the U.S. International Trade Commission, Customs & Border Protection, USTR, and other trade-related agencies. While the Court of International Trade and Federal Circuit Court of Appeals have relied on Chevron deference to decide agency action is appropriate on multiple occasions, these courts have also relied on a deference standard used for Customs regulations that is closely related to Chevron. In United States v. Mead Corp., the 2001 Federal Circuit Court of Appeals determined that while a Customs ruling letter does not satisfy the Chevron deference test it does deserve so-called Skidmore deference. Skidmore, a precursor to Chevron that was explicitly reaffirmed in Loper Bright, states that judges “may…seek aid from interpretations of agencies because “[s]uch interpretations ‘constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance.’”
Skidmore deference is especially pronounced for agencies’ factual determinations, and agencies remain the de facto determiners for fact-finding issues under Section 706 of the APA. Under Section 332 of the Tariff Act of 1930, for example, the U.S. International Trade Commission conducts fact-finding related to tariffs or trade, such as recent fact-finding investigations into export competitiveness of textiles and the USMCA automotive rules of origin. This is also true for some agencies in the international logistics field: the Federal Maritime Commission (FMC), for example, regularly conducts fact-finding investigations, such as its recent finding regarding the challenges to ocean shipping related to COVID-19.
Conclusion
At this stage, reading the tea leaves to determine precisely how Loper Bright may impact U.S. trade, logistics, and national security law is difficult. Increasingly, economic security, trade security, and even supply chain security are becoming part of the national security and foreign policy parlance, with presidents from both parties abstracting the boundaries of “national security” to meet new global challenges. This reality will likely muddy the waters for Loper’s impact in these spaces. In recent weeks, there have been a few developments almost concurrent with Loper Bright relevant to agency authority. The Department of Commerce’s International Trade Administration has introduced new, more broad enforcement authorities for antidumping and countervailing duty investigations in March, which may now draw new Loper challenges from regulated parties. And in the realm of international transportation and logistics, the D.C. Circuit Court of Appeals in June already sharply rebuked the Federal Maritime Commission for its evaluation of the “incentive principle” as it impacted detention and demurrage charges. At the same time, Senate Democrats have already introduced new measures to codify Chevron deference into law. The impact of Loper Bright will ultimately depend on the actions of future administrations on trade issues and the courts’ consideration of these actions.
