Expect More Trade Litigation Post-Chevron, ArentFox Attorneys Say

The Supreme Court's recent decision eliminating the standard of deferring to federal agencies' interpretation of ambiguous statutes (see 2406280051) "will likely result in more litigation in the already heavily litigated world of international trade," two ArentFox Schiff partners said in a client alert.

Diana Quaia and Jessica Dipietro said that while the Commerce Department's or CBP's fact-based determinations "may still be accorded the same level of deference they traditionally enjoyed," other questions regarding the agencies' legal interpretations of their powers may become subject to stricter review. For instance, Commerce's new regulations, which allow for the imposition of countervailing duties on transnational subsidies, among other things (see 2403210070), will likely be subject to legal challenge, the pair said.

However, courts may embrace other frameworks with which to view the decisions of federal agencies, Quaia and Dipietro said. For instance, the U.S. Court of Appeals for the Federal Circuit in a 2023 decision weighed in on the meaning of the words "substantially dependent" in U.S. CVD law laying out the conditions under which Commerce can treat a subsidy on a raw agricultural product as a subsidy for the finished good (see 2405200045).

In that decision, the Federal Circuit said Congress implicitly delegated the task of defining "substantially dependent" to Commerce due to the general nature of the words. The court invoked the Supreme Court's 2019 decision in Gundy v. U.S. to say that Congress can "confer substantial discretion on executive agencies to implement and enforce the laws," the alert said.

Lastly, Quaia and Dipietro said the high court's decision in Loper Bright will impact challenges to Commerce and International Trade Commission decisions brought before USMCA binational panels. The panels of old followed Chevron's two-step process for reviewing agencies' legal interpretations, but now they "will need to employ the traditional tools of statutory construction to interpret the relevant trade laws," the alert said.