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A Brief History Primary Jurisdiction: Texas & Pacific Railway v. Abilene Cotton Oil Co.—a footnote.

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Presentation on theme: "A Brief History Primary Jurisdiction: Texas & Pacific Railway v. Abilene Cotton Oil Co.—a footnote."— Presentation transcript:

1 A Brief History Primary Jurisdiction: Texas & Pacific Railway v. Abilene Cotton Oil Co.—a footnote

2 Abilene 1907 case: case involved a dispute between a shipper of goods and a railroad Issue: whether the rr was charging reasonable rates to haul the shipper’s freight Shipper went to district court to challenge the reasonableness of the rates However, there was the ICC

3 Abilene ICC had: Guess what? Statutory authority to determine the reasonableness of interstate freight rates Prior to the ICC, the only place to challenge rates was a district court The shipper invoked the interstate commerce jurisdictional statute, 28 U.S.C. 1337

4 Abilene Supreme Court: conceded the shipper had right to be in district court BUT, the ICC had been given authority to handle rate disputes ICC was a federal agency with national jurisdiction over the nation’s transportation industry ICC’s decisions and policies ---big scope & national implications!

5 Abiline Supreme Court invokes the doctrine of primary jurisdiction Ordered the district court to dismiss the case Invited the parties to go see the ICC for resolution and then return to the courts

6 After Abilene There were other cases United States v. Western Pacific Railroad Co. (1956) case: pretty much like Abilene Shipper, the federal government, wanted to ship napalm bombs on the RR ICC Act: rrs set their prices by filing tariffs– schedules of prices—with the commodity to be shipped & distance traveled

7 After Abilene But this created a problem because the government and the rr disagreed over the classification of the goods RR said napalm = “incendiary bombs” and, guess what? A higher price Government called it “gasoline in drums” Who made more money? What kind of money was at stake?

8 After Abilene RR went to the Court of Claims which is now the US Court of Federal Claims and sought reimbursement Supreme Court said : Primary jurisdiction applied: RR should have gone first to the ICC

9 After Abilene: Agency Expertise Rules Court decided: federal courts were simply not expert on arcane matters as rr tariffs & computation of freight rates By contrast: ICC had acknowledged expertise Thus, expert agency, should look at the issue FIRST Make a pronouncement Then, if necessary, go to the courts

10 But THEN…..Blurriness Far East Conference v. United States, 342 U.S. 570 (1952) Antitrust action for violations of the Sherman Act Department of Justice brings action against ocean carriers Federal Maritime Commission: had authority to regulate rates charged by ocean carriers

11 But then…. Ocean carriers operating under FMC license enjoy an immunity from federal antitrust statutes The carriers can form groups to promulgate tariffs, e.g. “conferences” This shields them from “price-fixing” Rationale: FMC scrutiny is substitute for anti trust controls

12 Supreme Court says…. Cites the expertise and specialized knowledge of the FMC But, the FMC knows ocean carriers, it is not an expert on the Sherman Act But the Court invoked the doctrine of primary jurisdiction and ordered the parties to pursue at the agency level.

13 And it goes on and on…Primary Jurisdiction rules…..Until Ralph Nadar brings Nader v. Allegheny Airlines, Inc., 426 U.S. 290 (1976) Nadar got bumped from a flight on Allegheny Airlines, now U.S. Air Nadar did not take kindly to this Then the Civil Aeronautics Board existed Board had promulgated specific rules on airline bumping practices Rules called for, inter alia, compensation

14 Go Figure Nadar accused the airline of failing to warn that he might get bumped; did not seek compensation—accused the airline of FRAUD Did this go to the agency? No: Supreme Court refused to invoke the doctrine and permitted the court to keep and decide the lawsuit

15 Chevron Court must perform a two part analysis, or the Chevron two-step Step 1: court must consider whether the statute is ambiguous or silent on the point Step 2: But only if there is ambiguity or the agency is silent, and even then, the court must defer to the agency’s interpretation….so long as….

16 Chevron The agency’s interpretation is REASONABLE What did Justice Stevens have to say? When may federal judges defer to administrative interpretations of the law? Is this new, or just another way of stating that the Court was tired of reviewing D.C. Circuit judges implementing their views?

17 Chevron [T]he Court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute. p. 796

18 Chevron Whether an agency construction is permissible depends upon whether it is “arbitrary, capricious, or manifestly contrary to the statute.” p. 796 Any agency resolution of statutory ambiguity is ok…….if……. It rationally implements the statute’s purposes.

19 Chevron This is an emphatic deference to agency discretion Do courts have any independent authority to look at statutes and construe differently May courts disagree with the agency’s interpretation? Is this a cutback in the scope of judicial review?

20 Two-Step Again: Step One Has Congress spoken to the precise question at issue? If the answer is yes, neither the agency nor the courts can alter this pronouncement……Both the courts and the agency must DEFER to the Congressional position It does not matter what either thinks because Congress has spoken

21 Two Step: Step Two But what if Congress wasn’t clear? Or has not directly addressed the specific question raised? If Congress is silent or ambiguous, then the court examines the agency’s construction of its statutory mandate Court must still defer to the agency’s position but only if the Court deems it “reasonable.”

22 OR Is this revolutionary at all? Look at APA Section 706 Deference to expert determinations Deference to policy inferences Arbitrary and capricious standard Has the agency articulated a rational approach?

23 Reconciliation of Overton & Chevron? See Immigration & Naturalization Service v. Cardoza-Fonseca, p. 815, 819-20 Argument: Federal courts are free to discover statutory meaning outside the plain text of the statute There is no “perfect” statutory clarity that makes an agency’s interpretation “judge review proof.” Mead:

24 United States v. Mead Day-planner case What did the Court decide? Chevron applicability? Or not? Or, only in limited circumstances?

25 Mead (cont’d) What was the lower court’s mistake? Are agency interpretations still entitled to “some” deference Why? What does it mean to defer to an agency’s interpretation of its own statute….as long as the court finds the agency’s interpretation “persuasive?”

26 United States v. Mead Does the Court’s decision make everything crystal clear? What should a judge do?

27 Possibilities in Reviewing Judge forms conclusion that statute has only one legally plausible reading Judge can’t tell what the statute is stating Judge thinks the statute is susceptible to multiple readings, all of which are plausible or could be sustained. Then what results would follow?

28 Possibilities 1. Statute clear: Uphold: Statute unclear: Vacate and Remand 2. Defer to any reasonable agency reading: Reason: Agency not court is the primary institution charged with implementing the administrative program 3. Judge believes multiple readings: ???? Will an analysis under Chevron or Mead make a difference?

29 How About? Courts should defer to agencies unless they think the agency decision was wrong?

30 Chevron Aftermath Courts are affirming more agency determinations See the following—for info purposes only not for test purposes—will not be tested on these articles Schuck & Elliott, 1990 Duke L.J. 984 Patricia Wald, 99 Colum. L. Rev. 235 (1999) 32 Tulsa L.J. 221 (1996)

31 Chevron Aftermath (cont’d) FDA v. Brown & Williamson Tobacco Corp: S.Ct. held: FDA does not have jurisdiction to regulate tobacco products Court stopped at Chevron’s First Step to resolve the case against the interpretation which FDA proffered! Court examined FDA’s assertion that “drugs” & “devices” used in the FD & C Act permitted FDA power to regulate

32 Aftermath FDA tried to argue that nicotine is a “drug” and that cigarettes and smokeless tobacco are “devices” that deliver the drug But the Court looked at the express language of the Act and said: No way because Congress Denied the agency this power Four justices dissented


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