Supreme Court News
by William Funk^*

Chevron, USA, Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), figured prominently in several recent Supreme Court decisions. The first of these was National Federation of Federal Employees, Local 1309 v. Dept. of Interior, 119 S.Ct. 1003 (1999), in which the Federal Labor Relations Authority found that DOI had committed an unfair labor practice under the Federal Service Labor-Management Relations Statute. DOI had refused to bargain with a union over the inclusion of a provision in their labor contract that would obligate the agency to enter into bargaining at the request of the union during the course of the contract (as opposed to only at the conclusion of the contract with regard to future contracts). The agency relied on the fact that the Fourth Circuit had held that midterm bargaining was not required by the statute and not enforceable in contracts under the statute. The D.C. Circuit, however, had held otherwise, reading the statute to require midterm bargaining. And what was the opinion of the agency responsible for administering the act? The FLRA originally had also held the view that the statute did not require midterm bargaining, but after the D.C. Circuit overturned one of its rulings, it acceded to that court=s view that the statute required such bargaining.

In a 5-4 split along generally Aliberal@/Aconservative@ lines (with Justice Kennedy joining the Aliberals@), the Court in an opinion by Justice Breyer held that the statute=s language was ambiguous; it did not clearly prohibit midterm bargaining, as found by the Fourth Circuit, but it also did not clearly require it, as found by the D.C. Circuit. The Court read this ambiguity as consistent Awith the conclusion that Congress delegated to the Authority the power to determine B within appropriate bounds [citing Chevron] B whether, when, where, and what sort of midterm bargaining is required.@ The fact that the statute delegates rulemaking, adjudicatory, and policymaking powers to the NLRA supports this conclusion, the Court added, finally noting that precedent recognizing the similarity between the NLRA=s public sector role and the NLRB=s private sector role further supports the conclusion.

Despite the protestations of the NLRA that its opinion requiring midterm bargaining was Aa matter of its own judgment,@ the Court stated that the record led it to believe that the NLRA=s present position was Aoccasioned by the D.C. Circuit=s holding,@ rather than its own independently reasoned effort. Accordingly, rather than uphold the NLRA=s decision in the case, the Court remanded the case for the NLRA to consider the issue Aaware that the Statute permits, but does not compel, the conclusions it reached.@

The dissent, in an opinion by Justice O=Connor, found that the plain meaning of the statute clearly does not impose a duty to bargain midterm. Hence, the statute was not ambiguous, and the Fourth Circuit=s decision reversing the NLRA=s decision should be affirmed. In addition, in a portion of the opinion with which Justices Scalia and Thomas did not concur, Justice O=Connor went on to say that even if the statute were ambiguous, she would not defer to the FLRA=s interpretation under Chevron, because the FLRA had been inconsistent in its interpretations. Perhaps, Justices Scalia and Thomas did not concur in this argument because Chevron itself had involved an agency=s interpretation that had not been consistent, and the Court there had noted that fact and stated that this was not a basis Ato conclude that no deference should be accorded the agency=s interpretation.@ On the other hand, the Court has in post-Chevron decisions expressly stated that inconsistent interpretations may affect the amount of deference due, see, e.g., INS v. Cardoza-Fonseca, 480 U.S. 421, 446 n. 30 (1987).

In INS v. Aguirre-Aguirre, 119 S.Ct. 1439 (1999), a unanimous Court reversed the Ninth Circuit=s interpretation of a provision of the Immigration and Nationality Act contrary to the interpretation of the Board of Immigration Appeals. Under the Act a person is entitled to Awithholding of deportation@ if he demonstrates that it is more likely than not that he would be subject to persecution because of his race, religion, nationality, membership in a particular social group, or political opinion. There are, however, exceptions. One exception is that withholding does not apply if the Attorney General determines that there are serious reasons to believe the alien has committed Aa serious nonpolitical crime outside the United States prior to [his] arrival.@ Aguirre-Aguirre was politically active in Guatemala, and in the course of protesting high bus fares (which the Court accepted was an important political and social issue in Guatemala because of the necessary reliance on bus transportation by poor people in that country) he had participated in burning approximately 10 buses after ordering the passengers off the buses and dousing the buses with gasoline. The BIA refused withholding, finding these activites to be Aserious nonpolitical crimes@ under the test it had outlined in an earlier case. There, to distinguish Apolitical@ crimes from Anonpolitical@ crimes, the BIA had said to weigh the political aspect of the offense against its common-law character, so that if a crime is grossly out of proportion to the political objective or if it involves Aacts of an atrocious nature,@ the crime would be nonpolitical. The Ninth Circuit held that this was not sufficient; in addition, the BIA should consider as factors: the level of persecution the person would likely receive in his country if returned and the political necessity and the success of the acts committed to achieve the political end.

The Court found that the Ninth Circuit had ignored the principles of Chevron. It should have asked whether the statute was ambiguous as to meaning of the statutory term, and if so, whether the agency=s construction of the statute was permissible. Here, it was particularly appropriate to defer to the agency because the INA itself states that the Adetermination and ruling of the Attorney General [who had delegated her authority to the BIA] with respect to all questions of law shall be controlling.@ Moreover, the Court noted that it has indicated in the past that deference to the Executive Branch Ais especially appropriate in the immigration context.@ Having announced the appropriateness of applying the Chevron principles, the Court, however, failed to apply them. Rather than assessing whether the law was ambiguous and the agency=s interpretation permissible, the Court at some length analyzed the agency=s and the Ninth Circuit=s interpretations and found the agency=s interpretation Athe more appropriate one.@

In United States v. Haggar Apparel Co., 119 S.Ct. 1392 (1999), the Court of Appeals for the Federal Circuit had held that the principles of Chevron did not apply to cases brought in the Court of International Trade. The Customs Service had assessed a duty on men=s trousers shipped from a plant in Mexico owned by Haggar. Under the customs laws, there is an exemption from duties for articles that are assembled abroad from components made in the United States, so long as the articles Ahave not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating, and painting.@ The Customs Service adopted a regulation interpreting the statutory provision, which specifies that Achemical treatment of components or assembled articles to impart new characteristics, such as . . . permapressing@ are not considered Aincidental to assembly.@ Because Haggar=s pants, although assembled from U.S. components, had been permapressed in Mexico, Customs assessed a duty. Haggar sued for a refund in the Court of International Trade. That court declined to give effect to the Customs regulations. Instead, it relied on a pre-Chevron precedent from a predecessor of the Court of Appeals for the Federal Circuit that had analyzed the effect of the statute on garment fabrication and assembly, concluding that the trousers were entitled to the exemption. The Federal Circuit in turn held Chevron did not apply to CIT decisions in refund cases, because the CIT=s jurisdictional statute refers to it reaching Athe correct decision.@

The Court unanimously held in an opinion by Justice Kennedy that Chevron applied. First, the Court addressed whether there was something special about the Customs regulations that would take them outside of the Chevron framework. To the contrary, statutory provisions authorize the Secretary of Treasury (who has delegated his authority to the Commissioner of Customs) to adopt regulations fixing the classification of imported goods, securing uniform appraisement of imported merchandise, and governing the admission of articles under the tariff schedules. In addition, A[p]articularly in light of the fact that the agency utilized the notice-and-comment rulemaking process before issuing the regulations, the argument that they were not intended to be entitled to judicial deference implies a sufficient departure from conventional contemporary administrative practice that we ought not to adopt it absent a different statutory structure and more express language in the regulations themselves.@

Second, the Court addressed whether there was something special in the nature of the CIT=s reviewing authority should make Chevron inapplicable. The thrust of the argument was that actions in the CIT generally are de novo, such as the action in this case seeking a refund for a duty paid. They are not Ajudicial review@ actions, as under the APA. Under this argument, it would be inconsistent with de novo consideration to defer to an agency=s interpretation of the statute. The Court, however, pointed out the fallacy in this argument. An agency=s valid regulations establish legal norms. A de novo proceeding applies the extant law to the facts found in the proceeding. In this case, if the issue had been whether the trousers were in fact permapressed, the CIT should not have deferred to the Customs= determination that they were. Instead, however, the issue is the validity of the underlying regulation B a legal question. And the rule for how to decide that kind of legal question is Chevron. Moreover, there is nothing inconsistent with a requirement to reach the Acorrect decision@ and applying Chevron to determine whether a regulation is valid.

Third, the Court assessed whether, applying Chevron=s first step, the statute in question was ambiguous. The Court answered in the positive; AFor purposes of the Chevron analysis, the statute is ambiguous . . . in that the agency must use its discretion to determine how best to implement the policy in those cases not covered by the statute=s specific terms.@

Finally, the Court addressed whether under step two, the agency=s interpretation was a reasonable one. And this, of course, is where the deference actually comes in, but the Court did not defer. Noting that the Federal Circuit had not addressed this issue (finding Chevron wholly inapplicable) and that Haggar argues vociferously that the regulatory interpretation is not reasonable, the Court remanded the case to the Federal Circuit so that the Federal Circuit or the CIT can determine in the first instance whether the interpretation is reasonable.

On this last point, Justices Stevens and Ginsburg dissented, believing that the record was sufficient to determine that the Customs= interpretation was permissible.

The final Chevron case as the News goes to press is California Dental Ass=n v. Federal Trade Comm=in, 119 S.Ct. ----- (1999). Here the FTC had brought an administrative case against the Association, alleging that its ethical guidelines related to price advertising acted to restrict truthful, nondeceptive advertising in violation of Section 5 of the FTC Act. The first issue was the FTC=s jurisdiction over the Association. Under the Act, the FTC has jurisdiction over an association, whether incorporated or not, Awhich is organized to carry on business for its own profit or that of its members.@ The Association was a nonprofit corporation, but the FTC argued that the statutory language included nonprofit associations whose activities provide substantial economic benefits to their for-profit members= businesses. And the FTC urged deference under Chevron to its interpretation of its jurisdiction. In an opinion for a unanimous Court, Justice Souter began his discussion of this claim by stating: ABut we have no occasion to review the call for deference here, the interpretation urged in [the FTC=s] brief being clearly the better reading of the statute under ordinary principles of construction.@

The second issue in the case was whether the use of a Aquick look@ rule of reason analysis was the proper means of judicial review of the agency=s anticompetitive determination. The resolution of this issue was far from unanimous, splitting the court 5-4, with the majority finding the Aquick look@ analysis inappropriate when the Aanticompetitive effects of given restraints are far from intuitively obvious.@ Justice Breyer, writing for the dissent, believed that the FTC had made out a case of anticompetitive effect that met the traditional rule of reason analysis and that the Court of Appeals, in affirming, had concurred in that conclusion. In one sense, the majority and dissent were ships passing in the night, Justice Souter addressing the question as he saw it presented B whether an appellate court reviewing an FTC determination of anticompetitiveness could utilize a Aquick look@ in these circumstances -- and Justice Breyer maintaining that the FTC had provided sufficient evidence of anticompetitive effect to have its determination affirmed. According to Justice Souter, the latter could be true, but the Court could not affirm the Court of Appeals if it had used the wrong scope of review.