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

• 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

• 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

• 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!

• 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

• 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

• 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?

• 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

• 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

• 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

• 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

• 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.

• 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

• 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

• 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….

• 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?

• [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

• 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.

• 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?

• 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

• 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.”

• 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?

• 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:

• Day-planner case
• What did the Court decide? Chevron applicability? Or not?
• Or, only in limited circumstances?

• 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?”

• Does the Court’s decision make everything crystal clear?
• What should a judge do?

• 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?

•
• 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?

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

• 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)

• 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

• 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