IBTBlog

On June 28, 2024, the U.S. Supreme Court fundamentally altered the landscape of administrative law with its decision in Loper Bright Enterprises v. Raimondo. This 6-3 ruling overruled the nearly four-decade-old precedent set by Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., which had required courts to defer to executive branch agencies when interpreting ambiguous statutes. The Chevron doctrine, established in 1984, dictated a two-step process: first, courts would determine if the statute was clear; if not, they would defer to the agency’s interpretation if it was “reasonable.” This principle was based on the specialized expertise of the agencies, which is used to interpret and implement complex statutory schemes, often dealing with technical scientific or economic matters (the Chevron decision itself dealt with the EPA’s air quality regulations). “Judges,” in contrast, “are not experts in the field . . . .”

In Loper Bright Enterprises, the Supreme Court reversed this approach. The case involved the National Marine Fisheries Service (NMFS), which had interpreted the Magnuson-Stevens Act to mandate that commercial fishing vessels fund at-sea monitors. Loper Bright challenged this interpretation, arguing it exceeded the agency’s authority. The Supreme Court agreed, ruling that courts should no longer automatically defer to agency interpretations of statutes they are charged by Congress with administering. Instead, courts must independently evaluate these interpretations using their expertise in science, engineering, economics, and other technical subjects. The decision significant shifts the balance of power from the Executive Branch to the judiciary.

Chief Justice John Roberts, in his 35-page opinion, called the Chevron doctrine “fundamentally misguided.” Roberts stated that Chevron deference contradicts the Administrative Procedure Act, which mandates in general terms that courts decide legal questions independently. He asserted that even technical or scientific ambiguities within a statute should be resolved by courts, not agencies, although agency interpretations may still be considered under the less deferential Skidmore standard.

The Supreme Court’s decision will have profound implications for agency regulation of international trade and investment. In the past, federal agencies frequently made decisions effectively insulated from judicial review, resulting in great and potentially arbitrary power over industry actors. However, most federal agencies, such as the International Trade Commission (ITC) and the Department of Commerce, make decisions based on extensive research and analyses conducted by experts. They will now face increased judicial scrutiny when interpreting statutes related to international trade. This change could lead to more frequent and varied judicial challenges to agency actions, introducing regulatory uncertainty. Without the assurance of judicial deference, agencies may find it more difficult to implement and enforce regulations, resulting in less predictable regulatory outcomes for businesses involved in international trade and investment. Companies involved in trade remedy proceedings before the Department of Commerce (DOC) or the International Trade Commission (ITC) may find new avenues for challenging adverse agency actions.

Similarly, interpretations of the import and export legislation by Customs and Border Protection, the Bureau of Industry and Security, the Committee on Foreign Investment in the United States, and other federal agencies may face an increasing number of challenges, with more frequent changes in the authoritative interpretation of federal statutes.