AAEI Urges Supreme Court to Decide Deference Owed to CBP in 'Slip-ons' Classification Case
The American Association of Exporters and Importers urged the Supreme Court take up an appeal on the tariff classification of Ugg boots, in an amicus brief filed April 9. The high court needs to decide once and for all the level of deference owed to internal agency decisions at CBP, said AAEI. Confusion over the issue led to the Court of Appeals for the Federal Circuit finding Deckers Outdoor Corporation’s boots to be “slip-on footwear” because of an internal CBP “footwear definitions” document that wasn’t subject to notice-and-comment, it said (see 13050901). If allowed to stand, the decision would effectively usurp the courts’ duty to interpret the law, said AAEI.
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“If the Federal Circuit’s decision in this case is allowed to stand, administrative agencies could effectively foreclose judicial review into whether their actions and decisions are consistent with law, simply by adopting “definitions” of statutory terms, with no public participation or comment, and demanding the same level of judicial respect for those definitions that are accorded to the products of formal [Administrative Procedure Act] rulemaking,” said John Peterson of Neville Peterson in the AAEI brief. “Agency positions in litigation could thereby be transformed into ‘sources’ of statutory meaning, or objects of judicial deference.”
In CBP’s case, the deference issue is especially unsettled, said AAEI. Since the Supreme Court last ruled on the issue in 2001, finding in Mead v. U.S. that courts should defer to CBP rulings in accordance with their “power to persuade,” CBP has asked the courts to give deference to “a dizzying array of agency pronouncements, including oral communications with CBP laboratories, CBP guidelines, antidumping duty liquidation instructions, and protest decisions given without reasoning. “Application of deference by the trade courts is all over the map,” said AAEI. “The erroneous decision in Deckers is not uncommon, and lower courts are exhibiting confusion over the role of" deference to CBP in litigation.
If the Supreme Court doesn’t step in and reverse, CAFC’s decision would take the trade courts’ traditional power to interpret the tariff schedule and hand it to CBP, said AAEI. Normally, agencies can only interpret ambiguous laws through regulations, which allows for notice and public comment before the agency interpretations are finalized. Otherwise, courts interpret a given law through the plain meaning of its language, it said. “If agencies can displace or supplement the traditional judicial tools of statutory interpretation by adopting definitions without the rigors of notice-and-comment rulemaking, and then pressing these in litigation as sources of legal authority, they will encroach on the role of the courts, AAEI said.
Giving such authority to CBP would be especially problematic, said AAEI. First, giving an agency that is responsible for administration and enforcement of laws on revenue collection is “questionable,” said AAEI. And given the complexity of the modern system of import laws and regulations, the “multitude of laws being applied are too numerous for Customs to administer without independent judicial oversight,” it said. According to an emailed statement from AAEI, the Deckers case, as well as another ongoing case on the liability of corporate officers for customs violations (see 14030601), goes “to the heart of what we do” as importers, and “losing these cases will destroy our industry and profession."
Government Says CAFC Reliance on CBP Document Overstated
Meanwhile, in its April 9 reply to Deckers’ request for Supreme Court hearing (see 14011415), the government downplayed the role of the “footwear definitions” document in CAFC’s decision (here). The main reason the court found the Uggs to be “slip-on footwear” was because of its interpretation of the relevant tariff subheadings, said the government. The “footwear definitions” document only played a supporting role, it said. But even so, deference to the CBP footwear definition was justified, said the government. One factor the court considers is the consistency of an agency interpretation over time. In this case, the “footwear definitions” document has been consistently applied by CBP for over twenty years, it said.