CIT Considers Motions in CBP's Deactivation of Broker's Filer Code Due to Misuse
The Court of International Trade is currently considering the case of Lizarraga Customs Broker v. Bureau of CBP et al. regarding U.S. Customs and Border Protection's deactivation of the entry filer code of a customs broker who, according to CBP, sold the use of his code to unauthorized third parties and repeatedly misused it in other ways.
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Lizarraga has a motion for a preliminary injunction pending. CBP has submitted a memorandum in opposition to this motion, and has filed motions asking the court to dismiss the broker's claim of procedural protections and to render judgment on the agency record.
According to its motions, CBP determined in October 2008 that Lizarraga, a licensed customs broker, had been creating entry numbers under its entry filer code and selling those numbers to unlicensed entities in Mexico. CBP found that these Mexican entities were then using the entry numbers to prepare and transmit cargo entries for exporters. The Mexican entities would then provide the entry files to Lizarraga for storage, and he would log the entries and bill the unauthorized users for each entry number they used.
On November 3, 2008, after a 6-level review process, CBP indefinitely deactivated Lizarraga's code. The broker, as plaintiff, argued that the deactivation amounted to an effective revocation of his license and that it was an arbitrary denial of due process.
CBP argued that the deactivation of the entry filer code does not prevent the broker from continuing to file entries manually and therefore does not amount to a suspension of his broker's license.
In its March 27, 2009 motion, CBP cited over 100 entries filed under the broker's code on behalf of a business which had been defunct for over 2 years, and reported that in one particular shipment made under the broker's code, it had discovered 2700 pounds of marijuana concealed within a shipment of cilantro. CBP noted that it was unable to determine the identity of the importers who were using Lizarraga's code, and that the broker himself appeared to not be aware of the ultimate user's identity, in many instances.
CBP further noted that the deactivation was not a disciplinary measure but was necessary to safeguard the entry process, since the codes inform the selection of entries for examination. Therefore, CBP argued, the procedural protections of 19 USC 1641(d), claimed by the plaintiff, do not apply.
Concerning due process, CBP stated since there was no legitimate claim of entitlement to the electronic filing privilege, and no protected property interest, the broker was not denied constitutional due process when CBP deactivated it. In any case, CBP argued, the agency had repeatedly and explicitly notified all brokers, including Lizarraga, that it could disallow the use of the electronic code if it were misused.
According to CBP, brokers filing entries electronically are required to ensure that the data are accurate, true and correct to the best of their knowledge, and entries may only be prepared by customs brokers, or authorized employees thereof under direct supervision and control. Lizarraga's misuse of his code resulted in false entry information being transmitted to CBP via the Automated Broker Interface (ABI), CBP argued, noting that the government's interest in maintaining the security and integrity of the entry process outweighs the plaintiff's interest in the convenience of electronic filing.
CBP motions available via e-mail by sending a request to documents@brokerpower.com .