Amazon Case Previews Regulatory Enforcement After Loper Bright

Daniel Ahn, writing on the ReedSmith site, says that regulatory enforcement after Loper Bright is evolving after the DC Circuit’s ruling in Amazon Services v. U.S. Department of Agriculture, No. 22-1052.

 Federal statutes authorize the Department of Agriculture to penalize companies that “aid, abet, cause, or induce” the unlawful import of certain products. Amazon’s fulfillment centers received some of those products from overseas sellers for further distribution. 

The Department fined Amazon $1 million after determining that its provision of fulfillment services aided, abetted, caused, or induced the sellers’ unlawful imports.

Amazon asked the DC Circuit to hear its appeal of the decision. It argued that “aid, abet, cause, or induce” requires conscious, culpable participation in unlawful conduct.

The Department countered that aiding and abetting liability can be found on a strict-liability basis, consistent with prior agency action in which the Department had “liberally interpreted” the statutory phrase such “that neither bad intent nor any mens rea at all were required to find liability.”

The DC Circuit ruled for Amazon, stating the statutory text requires “conscious, voluntary, and culpable participation in another’s wrongdoing.”  The Department appealed for deference “under the Chevron framework.”

The “Chevron framework” refers to the principle of deference to regulatory enforcement established in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. (1984), which directed courts to defer to an agency’s reasonable interpretation of an ambiguity in a law that the agency enforces.

The US Supreme Court recently overruled the principle of deference to regulatory enforcement in Loper Bright Enterprises v. Raimondo. The appeals court noted this, saying “that holding governs here and precludes us from deferring to the Department’s interpretation under the now-overruled Chevron framework.”

Ahn concludes by saying that parties facing agency enforcement action should take heed.