Appeals court reverses $1 million Amazon fine after Chevron doctrine overturned

A federal appeals court ruled in favor of Amazon by tossing out a $1 million civil penalty against the company, a decision based in part on a Supreme Court decision that overturned the Chevron doctrine, which gave broad deference to administrative agencies.

The U.S. Court of Appeals for the District of Columbia Circuit on Friday rejected the Department of Agriculture's interpretation of two federal laws. The agency had accused Amazon of supporting the unlawful importation of poultry and kaffir lime leaves and attempted to impose the maximum fine under its broad reading of the laws. The decision favoring Amazon is just one of several changes happening in federal courts as they grapple with the 6-3 Supreme Court decision that overturned the 1984 Chevron v. Natural Resources Defense Council precedent last month.

Chief Judge Sri Srinivasan relied on two recent Supreme Court decisions to vacate USDA's fine against Amazon, pointing to the Loper Bright Enterprises v. Raimondo decision overruling Chevron deference and the 2023 Twitter v. Taamneh case, which set the court's aiding and abetting liability standard.

The D.C. Circuit reviewed and rejected the USDA’s strict-liability interpretation because the Loper Bright decision "precludes us from deferring to the Department's interpretation under the now-overruled Chevron framework," according to the 19-page opinion.

By applying the reasoning from Loper Bright, Srinivasan emphasized that statutory interpretations should align with well-established legal principles and not merely rely on agency interpretations. Consequently, the court vacated the $1 million fine against Amazon.

The court also found no substantial evidence that the Seattle-based online retailer knowingly and substantially assisted in the illegal importations, which would have been required to find Amazon liable. The ruling underscored that the mere operation of a neutral service, without intent to support unlawful activities, does not meet the threshold for aiding and abetting liability.

In addition to setting aside the fine against Amazon, the case was remanded to the USDA for further proceedings.

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Lower courts are only beginning to grapple with a new precedent that drastically pares back the benefit agencies once had to assert their interpretation of vague statutes in court battles, which critics of Chevron argued made it difficult for businesses to challenge regulations. Earlier this month, the U.S. Court of Appeals for the 5th Circuit ordered a district court to reevaluate its decision to uphold a Department of Labor rule following the high court's decision in Loper Bright.

The Washington Examiner contacted the USDA for comment.

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