High Court Weighs Ditching 'Chevron' Deference, Trade Bar Mulls Consequences

The Supreme Court heard oral argument on Jan. 17 in a pair of cases contesting the Chevron doctrine, under which deference is afforded to executive agencies in interpreting federal laws where there is ambiguity. Many of the justices appeared primed to strike down the doctrine, including Justices Neil Gorsuch, Brett Kavanaugh, Samuel Alito and John Roberts, who either criticized its use or questioned its current relevancy and impact (Loper Bright Enterprises v. Raimondo, Sup. Ct. # 22-451) (Relentless v. Dept. of Commerce, Sup. Ct. # 22-1219).

Chief Justice Roberts suggested that the impact of overturning the Chevron doctrine would be limited because the high court has not relied on the deferential standard in years. While even Roman Martinez, counsel for one group of fishing vessels challenging Chevron, admitted that the doctrine was oft cited at the lower court level, he claimed that prior decisions decided by Chevron deference would be sustained under standard stare decisis principles.

U.S. Solicitor General Elizabeth Prelogar disagreed, telling the Supreme Court that litigants would "come out of the woodwork" to challenge prior decisions decided on Chevron grounds.

Of particular interest is how the revocation of Chevron would impact the trade bar, given that the Court of International Trade and U.S. Court of Appeals for the Federal Circuit often cite the doctrine in sustaining federal agency action from CBP and the Commerce Department. However, trade lawyers are wary about the idea that overturning Chevron would lead to the relitigation of standard antidumping and countervailing duty and customs cases.

Nathan Rickard, partner at Picard Kentz, told Trade Law Daily in an email that most AD/CVD cases "are brought under statutes with strict deadlines for docketing appeals, so you wouldn't be re-litigating a prior case." But where a party previously lost a case due to Chevron deference, "then yes, I would guess that you'll see folks challenge that same issue in a different administrative proceeding arguing that in the absence of deference, the agency determination cannot be sustained."

Rickard added that it is "interesting" that the trade court has not had issues applying Chevron over years while "consistently overturning agency action." While it is "unclear at the moment whether" the doctrine will be overturned, "the loss of Chevron deference would seem to create a heightened risk that management of the trade and trade remedy laws would be shifted from federal agencies to the individual cit judges, with the Federal Circuit being asked to referee disputes on a much more frequent basis," he said.

Rickard, who represents AD/CVD petitioners, said he had a hard time imagining that respondents would enjoy the death of Chevron, given that it would mean greater congressional involvement in crafting trade law.

However, John Peterson, partner at Neville Peterson and counsel for exporters and importers, had a different take. On the fate of the doctrine, Peterson expects it to be limited to areas where agencies have "special technical expertise, like the FDA," and where the "expertise is central to the agency's interpretation of its regulation." At the trade bar, this could disrupt AD/CVD cases, "where the trade court seems to bend backwards to defer to all manner of nonsense coming out of the Commerce Department, in particular, which yields harsh and sometimes absurd results," he noted.

Other trade lawyers for AD/CVD respondents, who repeatedly clash heads with the Commerce Department and CBP, surprisingly expressed a desire to stick with Chevron, telling Trade Law Daily that they prefer "the devil we know." Ned Marshak of Grunfeld Desiderio said he doesn't love the idea of the Supreme Court overturning its precedent because "certain judges on the current court don't like the federal government."

Peterson noted that the high court seems "willing to" claw back Chevron, which would lead to judges making trade policy. Some judges already do, Peterson noted, citing the Meyer v. U.S. case, in which a CIT judge tried to deny "first sale" valuation treatment to goods from non-market economies. Peterson represented Meyer in the case.

Indeed, for the first 20 years of the court's existence, it didn't defer to federal regulations since it "claimed co-equal expertise with the agency," Peterson recounted. However, the Supreme Court's decision in U.S. v. Haggar Apparel put an end to this after it forced the court to adhere to Chevron defense in customs matters, which upset certain trade court judges.

The Supreme Court's three liberal justices -- Sonia Sotomayor, Elena Kagan and Ketanji Brown Jackson -- would like to see this deference maintained, claiming that in cases of ambiguity, the tie should go to the side with the most expertise. Kagan emphasized this point by highlighting the likelihood of Congress regulating artificial intelligence.

Noting that Congress "can hardly see a week in the future," the law should want people "who actually know about AI and are accountable to the political process to make decisions" about the key technology. On the other hand, courts "don't even know what the questions are about AI," Kagan said. Brown Jackson, meanwhile, said that striking down Chevron would usher chaos into the legal system, forcing courts to make policy decisions.