592 F.3d 1330 (Fed. Cir. 2010), 2009-1267, Chrysler Corp. v. United States

Docket Nº:2009-1267.
Citation:592 F.3d 1330
Opinion Judge:LOURIE, Circuit Judge.
Party Name:CHRYSLER CORPORATION, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.
Attorney:Alan Goggins, Barnes, Richardson & Colburn, of New York, NY, argued for plaintiff-appellant. With him on the brief were Eric W. Lander; and Lawrence M. Friedman, of Chicago, IL. Tara K. Hogan, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Wa...
Judge Panel:Before NEWMAN, LOURIE, and BRYSON, Circuit Judges. Opinion for the court filed by Circuit Judge LOURIE, in which Circuit Judge BRYSON joins. Dissenting opinion filed by Circuit Judge NEWMAN. NEWMAN, Circuit Judge, dissenting.
Case Date:January 19, 2010
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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592 F.3d 1330 (Fed. Cir. 2010)

CHRYSLER CORPORATION, Plaintiff-Appellant,

v.

UNITED STATES, Defendant-Appellee.

No. 2009-1267.

United States Court of Appeals, Federal Circuit.

January 19, 2010

Page 1331

Alan Goggins, Barnes, Richardson & Colburn, of New York, NY, argued for plaintiff-appellant. With him on the brief were Eric W. Lander; and Lawrence M. Friedman, of Chicago, IL.

Tara K. Hogan, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With her on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Todd M. Hughes, Deputy Director.

Before NEWMAN, LOURIE, and BRYSON, Circuit Judges.

Opinion for the court filed by Circuit Judge LOURIE, in which Circuit Judge BRYSON joins. Dissenting opinion filed by Circuit Judge NEWMAN.

LOURIE, Circuit Judge.

Chrysler Corporation (" Chrysler" ) appeals from the summary judgment ruling of the United States Court of International Trade (" the trade court" ) upholding the denial by United States Customs and Border Protection (" Customs" ) of a refund on the Harbor Maintenance Tax allegedly paid on exports before July 1, 1990.

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Chrysler Corp. v. United States, 601 F.Supp.2d 1347 (Ct. Int'l Trade 2009). Because the trade court correctly upheld Customs' refund regulation, 19 C.F.R. § 24.24(e)(4)(iv)(A), with which Chrysler failed to comply, we affirm.

BACKGROUND

I.

In 1986, Congress enacted the Harbor Maintenance Tax (" HMT" ), 26 U.S.C. § 4461, requiring exporters, importers, and domestic shippers to pay an ad valorem tax on commercial cargo shipped through the nation's ports. The HMT is collected by Customs and deposited into the Harbor Maintenance Trust Fund (" HMT Trust Fund" ) from which Congress may make appropriations to pay for harbor maintenance and development projects. 26 U.S.C. § 9505. To implement the HMT, Congress granted Customs broad authority to " prescribe such additional regulations as may be necessary to carry out the purposes of [the HMT]," including, but not limited to, regulations providing for " the manner and method of payment and collection of the tax" and " the settlement or compromise of claims." Id. § 4462(i).

Pursuant to its authority, Customs promulgated regulations governing the collection of HMT payments. See 19 C.F.R. § 24.24 (1987). First Chicago Bank was designated as depositary and financial agent, and in that role entered into the bank's system all original data related to HMT payments, including the remitter's name and address, the type and amount of payments, and the deposit date. The data were then transmitted nightly by electronic interface to Customs' Automated Commercial System database. The bank sent the original paper documents to Customs the following day, but Customs did not initially verify the electronic data.

Customs also issued rules governing refunds of HMT payments. Specifically, Customs provided that operators subject to the HMT could request refunds for overpayments by filing a Harbor Maintenance Fee Amended Quarterly Summary Report (Customs Form 350) accompanied by supporting documentation. 19 C.F.R. § 24.24(e)(5) (1992). Customs Form 350 lists four specific reasons for requesting a refund, including calculation/clerical errors, duplication of payments, misinterpretation of exemptions, or overvaluation of shipments, and a fifth, catch-all provision.

In 1998, after a decade of enforcement, the Supreme Court affirmed the decision of this court and held the HMT unconstitutional as applied to exports for violating the Export Clause of the U.S. Constitution. United States v. U.S. Shoe Corp., 523 U.S. 360, 363, 118 S.Ct. 1290, 140 L.Ed.2d 453 (1998). To provide refunds of export HMT after U.S. Shoe, Customs then began to compare and reconcile its electronic database with the original paper documentation still in its possession. See U.S. Shoe Corp. v. United States, 22 C.I.T. 880 (1998). In so doing, Customs discovered widespread inaccuracies in its electronic database. Those errors had been introduced into the database in a variety of ways: (1) bank personnel processing HMT payments did not separate payments into different categories (e.g., export versus import) between 1987 and 1994, resulting in class coding errors; (2) operators paying export HMT misidentified payments, consolidated payments for different categories, and/or failed to include supporting documentation with their payments; and (3) freight forwarders paid for multiple operators without identifying the individual exporters. Customs thus had to make thousands of corrections to its database. Altogether Customs corrected over $140 million worth of non-export payments incorrectly listed as export HMT payments and over $25 million in export payments incorrectly listed as non-export HMT.

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Two years later, this court expanded the pool of refund claimants by holding that Customs' denial of a refund request for export HMT is a " protestable decision," actionable under 28 U.S.C. § 1581(a), and thus not subject to the two-year statute of limitations of § 1581(i) applicable in U.S. Shoe. Swisher Int'l, Inc. v. United States, 205 F.3d 1358, 1369 (Fed.Cir.2000). To streamline the refund process after Swisher, Customs amended its refund regulation to eliminate the requirement that a claimant submit supporting payment documentation for a refund of certain export payments. 19 C.F.R. § 24.24(e)(4)(iv)(A); Amended Procedure for Refunds of Harbor Maintenance Fees Paid on Exports of Merchandise, 67 Fed.Reg. 31,948 (final rule May 13, 2002); 66 Fed.Reg. 16,854 (interim rule Mar. 28, 2001). Specifically, Customs eliminated the supporting documentation requirement for export payments made on or after July 1, 1990, because Customs still possessed copies of the original payment documents with which to verify the refund amounts contained in its electronic database. 67 Fed.Reg. at 31,949; 66 Fed.Reg. at 16,855. For payments made before July 1, 1990, however, Customs retained the documentation requirement because it no longer possessed the original documents and concluded that, because of the widespread inaccuracies in its electronic database, it could not rely on the database as the sole source of payment information. 67 Fed.Reg. at 31,949-50.

Also, to assist exporters in identifying payments, Customs agreed to search both its electronic and paper records and to provide that information to the requester. Thus, an exporter seeking a refund would receive from Customs (1) an HMT Payment Report listing all of that exporter's payments reflected in Customs' electronic database and paper documents and (2) an HMT Refund Report and Certification (" Report/Certification" or " Refund Report" ) listing all of the payments supported by paper documentation (and thus eligible for a refund). 19 C.F.R. § 24.24(e)(4)(iv)(B)(2). If dissatisfied, the exporter could, within 120 days, file a request for a revised HMT Report/Certification along with documentation to support any payments either not listed on the Report/Certification or incorrectly recorded. Id. § 24.24(e)(4)(iv)(B)(3). The exporter could then file a protest for any payments not approved for a refund in a Revised Report/Certification after expiration of the 120-day period. Id. § 24.24(e)(4)(iv)(B)(4). To assist exporters in verifying export payments made before July 1, 1990, Customs expanded the types of documents that an exporter could submit to support a refund. Id. § 24.24(e)(4)(iv)(A),(C). Based on its revised procedures, Customs has refunded over $77 million worth of pre-July 1, 1990, export HMT payments.

II.

On February 9, 2001, Chrysler filed an administrative claim with Customs for a refund of its export HMT payments. On October 15, 2002, Customs sent Chrysler an HMT Payment Report and a Report/Certification pursuant to 19 C.F.R. § 24.24(e)(4)(iv)(B)(2). The HMT Payment Report shows that between September 1987 and February 1998 Chrysler paid a total of $14,331,425.67 in unconstitutional export taxes. The Receipt/Certification, however, excluded $782,407.45 in pre-July 1, 1990, payments for which Chrysler had failed to provide supporting documentation, leaving Chrysler with an undisputed refund of $13,549,018.22. On February 10, 2003, Chrysler requested the disputed $782,407.45 in pre-July 1, 1990, monies but failed to submit any supporting documents as required by Customs' refund regulation, 19 C.F.R. § 24.24(e)(4)(iv)(A). Customs denied the request two days later. On March 5, 2003, Chrysler filed a protest, which Customs denied on January 29,

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2007, because Chrysler again had failed to submit any supporting documents. On February 12, 2007, Chrysler filed a complaint in the trade court.

On January 29, 2009, the trade court upheld on summary judgment the denial of Chrysler's export HMT refund request, concluding that Chrysler had failed to invalidate Customs' regulation requiring documentation for pre-July 1, 1990, export payments. Chrysler, 601 F.Supp.2d at 1349. The court first found that because Congress had expressly delegated rulemaking authority to Customs and Customs had used the relatively formal administrative procedure of notice and comment rulemaking in promulgating its regulation, the court would apply Chevron deference to the regulation. Id. at 1351 (citing Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)). Then, after noting that the HMT statute does not provide a specific method for refunding HMT collections, id. , the trade court afforded the regulation controlling weight as a reasonable gap-filling method to accomplish the HMT's statutory purpose, id. at 1353. Specifically, the court held that requiring verification for pre-July 1, 1990, export payments rather than relying solely on a database that the agency had...

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