Alex O. Canizares, Is Charming Betsy Losing Her Charm? Interpreting U.s. Statutes Consistently With International Trade Agreements and the Chevron Doctrine

• Citation: Vol. 20 No. 2
• Publication year: 2006

IS CHARMING BETSY LOSING HER CHARM? INTERPRETING U.S. STATUTES CONSISTENTLY WITH INTERNATIONAL TRADE AGREEMENTS AND THE CHEVRON DOCTRINE

Alex O. Canizares^*

INTRODUCTION

More than two hundred years ago, Chief Justice John Marshall announced the principle that "an act of [C]ongress ought never be construed to violate the law of nations, if any other possible construction remains."¹The canon of statutory construction, named after an 1804 case involving a schooner called

Charming Betsy, requires courts to interpret statutes consistently with international law absent a clear statement of congressional intent. Yet, U.S. courts and international dispute settlement panels recently diverged over the proper role of the Charming Betsy canon in cases in which a federal agency's construction of an ambiguous statute is allegedly inconsistent with U.S. obligations under the World Trade Organization (WTO).²A series of cases challenging federal agency actions under international trade laws has illuminated a broader doctrinal conflict between the Charming Betsy principle and the Chevron doctrine, under which courts must defer to an agency's reasonable construction of an ambiguous statute.³Whether and how courts should apply the Charming Betsy canon in conjunction with Chevron-an issue which the U.S. Supreme Court recently refused to resolve⁴-is critical to determining how courts should review agency decisions that implicate international law.

This Article analyzes the tension between the Chevron doctrine and the Charming Betsy principle, focusing specifically on the interpretive role of international trade agreements under the WTO⁵and the General Agreement on Tariffs and Trade (WTO/GATT).⁶The question of how to reconcile Charming Betsy with Chevron is inextricably linked to the longstanding debate among commentators about the extent to which WTO Dispute Settlement Body (DSB) decisions are binding under international law,⁷and whether the United States is obligated to implement DSB rulings into U.S. law.⁸In a series of cases decided in 2005 and 2006, the United States Court of Appeals for the Federal Circuit ("Federal Circuit"), the Court of International Trade (CIT), and dispute settlement panels under the WTO and the North American Free Trade Agreement (NAFTA) have taken vastly different stances on whether the Charming Betsy principle requires U.S. courts to give interpretive effect to

DSB reports. The entities disagree as to whether such reports are binding, persuasive, or entirely irrelevant to the inquiry into the lawfulness of agency decision-making.

This Article begins in Part I by outlining the history and purposes of Chevron and Charming Betsy and their application in the U.S. Supreme Court and lower courts. The tension between the doctrines exists in part because Chevron is based on the premise that agencies, not courts, are best equipped to make decisions in the face of ambiguity.⁹In contrast, Charming Betsy, a principle related to the clear-statement rules in the areas of federalism and state sovereign immunity,¹⁰is based on a seemingly contrary assumption: that Congress intends to comply with international law and that only Congress should decide when not to comply.¹¹

Recent decisions involving the U.S. government's practice known as "zeroing," which is used to calculate the liability of foreign exporters under the antidumping and countervailing duty (AD/CVD) laws,¹²provide a useful opportunity to reexamine the tension between Charming Betsy and Chevron. In the 2005 Corus Staal v. Department of Commerce (Corus Staal II) case,¹³the Federal Circuit deferred to the Department of Commerce's ("Commerce") reading of an antidumping provision, refusing to overturn the Department's

"zeroing" practice "based on any ruling of the WTO or other international body unless and until such ruling has been adopted" by the political branches.¹⁴

The court held that DSB reports "have no binding effect" in U.S. courts, rejecting the argument that they should have an effect, and therefore are governed by Charming Betsy.¹⁵The Federal Circuit's opinion exposed lingering uncertainty about the viability and scope of Charming Betsy, particularly in cases involving DSB reports.¹⁶For its part, the U.S. government argued against Charming Betsy, taking the position that it is not an "absolute rule that the 'law of nations' trumps inconsistent domestic laws or governmental acts."¹⁷Rather, the government argued, "[i]n the face of a 'clear expression' of congressional intent, the Charming Betsy doctrine is inapplicable."¹⁸In contrast, the CIT, which reviews challenges of U.S. trade practices,¹⁹has invoked Charming Betsy and attempted to reconcile antidumping statutes with the WTO/GATT.²⁰The United States Court of Appeals for the Fifth Circuit held that agencies are due Chevron deference "even if [doing so] is virtually certain to create a violation of the GATT."²¹

Conversely, the United States Court of Appeals for the District of Columbia has suggested that Charming Betsy is a limitation on the deference normally owed agencies under Chevron.²²In 2005, a NAFTA Binational Panel²³took a similar view, finding that an agency interpretation of an ambiguous statute "is limited to reasonable interpretations by operation of Chevron and limited further to interpretations consistent with the international legal obligations of the United States by Charming Betsy."²⁴The NAFTA Panel also argued²⁵that

DSB reports should be consulted because they serve "to clarify the existing provisions of those [WTO] agreements . . . ."²⁶

Part II examines how Chevron and Charming Betsy might be reconciled as a doctrinal matter and offers two possible options: the application of Charming Betsy under either the first or second step of the two-step Chevron inquiry.²⁷

Part III focuses on unique problems posed by the Uruguay Round Agreements Act (URAA),²⁸which implemented the Uruguay Round Agreements, the non- self-executing treaty which created the WTO in 1994.²⁹Part IV offers recommendations as to how courts should treat agency constructions of statutes that conflict with the WTO/GATT. Part IV argues that while there are no simple solutions, Charming Betsy is best viewed as a limitation on Chevron deference, and criticizes the argument that courts are statutorily precluded from interpreting U.S. antidumping laws consistently with the WTO/GATT under the Charming Betsy canon. It also takes issue with the Federal Circuit's holding that DSB reports are due "no deference"³⁰when construing U.S. statutes, and suggests that courts can and should rely on DSB reports for interpretive guidance, giving such reports greater or less weight depending on factors such as whether the United States is a party to the dispute. Part IV also examines the implications of a July 2006 U.S. Supreme Court opinion which refused to give binding effect to the International Court of Justice's (ICJ) interpretations of the Vienna Convention on Consular Relations; that opinion,

Sanchez-Llamas v. Oregon,³¹which did not mention the Charming Betsy principle, appears to strengthen the view that international tribunal decisions are entitled to persuasive weight but nothing more.

Although some commentators³²have addressed the correct application of Chevron and Charming Betsy doctrines under U.S. trade laws,³³little scholarly effort has been made to analyze the two principles in light of their purposes and to attempt to reconcile them as a doctrinal matter. A comprehensive examination of Charming Betsy in cases of agency action is especially timely given that in January 2006 the U.S. Supreme Court declined to decide the matter for the second time in two years,³⁴while lower courts and international panels continue to issue divergent opinions. Addressing the role of DSB reports in U.S. litigation is increasingly important, as the U.S. government has faced pressure to amend its laws in the face of several WTO panel opinions which have found that the U.S. zeroing policy violates the WTO/GATT. In a report released on April 18, 2006, the WTO Appellate Body concluded that zeroing, as used to compute an exporter's "dumping margin"³⁵in administrative reviews and antidumping investigations, violates specific provisions of the Antidumping Agreement ("AD Agreement")³⁶of the WTO/GATT.³⁷The Appellate Body's decision was the second time in the last two years that the DSBs declared the U.S. zeroing policy to be WTO- inconsistent.³⁸However, despite the new DSB report, the CIT has refused to revisit the issue and has reaffirmed the practice of zeroing as reasonable.³⁹

The interplay between Charming Betsy and Chevron in the international trade context has implications in other areas beyond international trade, such as pollution control and immigration, where U.S. agencies are tasked with interpreting statutes intended to conform U.S. law to international agreements.⁴⁰Moreover, articulating the proper role of Charming Betsy in the administrative law context is helpful to addressing other difficult questions, such as the extent to which Charming Betsy applies to non-self-executing treaties⁴¹and the proper balance between preserving sovereignty and promoting the resolution of international disputes.⁴²

I. CHEVRON AND CHARMING BETSY: AN OVERVIEW

A. Chevron and the Principle of Deference to the Executive Branch

Chevron has been subject to much scholarly discussion, most of which is beyond the scope of this Article.⁴³Yet understanding how to properly reconcile Chevron with the Charming Betsy canon requires an appreciation for the values and justifications behind both doctrines.

In Chevron v. Natural Resources Defense Council, the respondents, an environmental group, challenged a U.S. Environmental Protection Agency (EPA) rule interpreting the Clean Air Act.⁴⁴The EPA construed the term "stationary source" in the Act to mean a collection of smokestacks within a facility rather than a single pollution-emitting source.⁴⁵The agency adopted a "bubble" rule...