Chrysler Corp. v. U.S., Slip Op. 09-9. Court No. 07-00041.

• Citation: 601 F.Supp.2d 1347
• Decision Date: 29 January 2009
• Docket Number: Slip Op. 09-9. Court No. 07-00041.
• Parties: CHRYSLER CORPORATION, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

601 F.Supp.2d 1347

CHRYSLER CORPORATION, Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 09-9. Court No. 07-00041.

United States Court of International Trade.

January 29, 2009.

Barnes, Richardson & Colburn (Alan Goggins, New York City, Lawrence M. Friedman, Carolyn D. Amadon, Chicago, IL, Eric W. Lander, New York City), for Plaintiff Chrysler Corporation.

Michael F. Hertz, Deputy Assistant Attorney General, Jeanne E. Davidson, Director, Todd M. Hughes, Deputy Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, (Tara K. Hogan, Trial Attorney and Richard McManus, Attorney, Office of Chief Counsel for U.S. Customs and Border Protection, U.S. Department of Homeland Security), for Defendant United States.

OPINION

GORDON, Judge.

This case is before the court on crossmotions for summary judgment. Plaintiff Chrysler Corporation, challenges the decision of the United States Customs and Border Protection ("Customs") denying Plaintiffs protest of Customs' refusal to refund harbor maintenance taxes Plaintiff allegedly paid on exports prior to July 1, 1990. The court has jurisdiction pursuant to 28 U.S.C. § 1581(a). For the reasons set forth below, the court denies Plaintiffs motion for summary judgment and grants Defendant's motion for summary judgment.

I. Background

In 1986 Congress enacted the Harbor Maintenance Tax ("HMT"), 26 U.S.C. § 4461(a). As originally enacted the HMT obligated exporters, importers, and domestic shippers to pay a percentage of the value of their commercial cargo shipped through the nation's ports. The HMT is collected by Customs and deposited in the Harbor Maintenance Trust Fund ("Trust Fund") from which Congress may appropriate funds to pay for harbor maintenance and development projects. See 26 U.S.C. § 9505 (2000).

In March 1998 the Supreme Court held that the HMT collected on exports was unconstitutional because it violated the Export Clause of the Constitution, U.S. CONST., ART. I, § 9, cl. 5. United States v. U.S. Shoe Corp., 523 U.S. 360, 370, 118 S.Ct. 1290, 140 L.Ed.2d 453 (1998). After U.S. Shoe the U.S. Court of Appeals for the Federal Circuit held that Customs' denial of a request for refund of HMT collections is a "protestable decision" actionable in the U.S. Court of International Trade under 28 U.S.C. § 1581(a). Swisher Int'l, Inc. v. United States, 205 F.3d 1358, 1369 (Fed.Cir.2000).

After Swisher Customs received thousands of HMT administrative refund requests. At the time, Customs' refund regulation required claimants to present proof of payment documentation (usually Customs Form 349). 19 C.F.R. § 24.24(e)(4) (2000). Claimants who had not retained this documentation began submitting requests for copies pursuant to the Freedom of Information Act ("FOIA."). After receiving copies of their payment documentation from Customs, exporters would return them to Customs and request a refund.

To minimize the burden of responding to FOIA requests and streamline the refund process, Customs issued interim regulations, Amended Procedure for Refunds of Harbor Maintenance Fees Paid on Exports of Merchandise, 66 Fed.Reg. 16,854 (Mar. 28, 2001) (interim rule). Customs then received comments, and issued a final rule amending the refund regulation, Amended Procedure for Refunds of Harbor Maintenance Fees Paid on Exports of Merchandise, 67 Fed.Reg. 31,948, 31,949 (May 13, 2002) (final rule).

For refunds of unconstitutional HMT collections made after July 1, 1990, Customs eliminated the requirement to submit supporting documentation because Customs verifies those refund amounts using the documentation already in its possession. 67 Fed.Reg. at 31,949 (19 C.F.R. § 24.24(e)(4)(iv)(A) & (C)).¹ For refunds of unconstitutional HMT collections made prior to July 1, 1990, however, Customs retained the proof of payment requirement. Id. Customs no longer possessed documentation for pre-July 1, 1990 payments, and could not independently verify those payments. Id. Verification was important for Customs in promulgating the rule because "experience with older payments recorded in the [HMT] database has shown that the database is unreliable." 67 Fed.Reg. at 31,950.

For refunds of pre-July 1, 1990 payments, exporters must submit "supporting documentation" to verify proof of payment. 19 C.F.R. § 24.24(e)(4)(iv)(A) & (C). Generally, the supporting documentation demonstrating entitlement to a refund is the same documentation submitted to Customs at the time of payment:

a copy of the Export Vessel Movement Summary Sheet; where an Automated Summary Monthly Shipper's Export Declaration was filed, a copy of a letter containing the exporter's identification, its employer identification number (EIN), the Census Bureau reporting symbol, and, the quarter for which the payment was made; or a copy of a Harbor Maintenance Fee Quarterly Summary Report, Customs Form 349, for the quarter covering the refund request.

19 C.F.R. § 24.24(e)(4)(iv)(C). These documents, however, are not the sole means of establishing proof of payment:

Customs also will consider other documentation offered as proof of payment of the fee, such as cancelled checks and/or affidavits from exporters attesting to the fact that all quarterly [HMT] payments made by the exporter were made exclusively for exports, and will accept that other documentation as establishing entitlement for a refund only if it clearly proves the payments were made for export harbor maintenance fees in amounts sought to be refunded and were made by the party requesting the refund or the party on whose behalf the refund was requested.

Id.

To assist exporters in identifying pre-July 1, 1990 payments and locating supporting documentation, Customs took on the obligation to search its records (both its electronic database and paper document sources) while processing a refund request, and to issue a report to the exporter (entitled the "HMT Payment Report") listing all export payments reflected in Customs' records for the entire period the HMT was in effect. 19 C.F.R. § 24.24(e)(4)(iv)(B)(2).

II. Uncontested Facts

The following facts relevant to Plaintiff's claim are not in dispute. On February 10, 2003, Plaintiff requested a refund of HMT export payments made from 1987 to July 1, 1990 amounting to $782,407.45 and recorded in Customs' HMT database. Plaintiff did not produce any of the "supporting documentation" identified in 19 C.F.R. § 24.24(e)(4)(iv)(C). Customs denied Plaintiffs claim for a refund of the disputed HMT payments, stating that Plaintiff had not provided supporting documentation. Plaintiff timely protested the denial, and Customs denied the protest because Plaintiff provided no supporting documentation for pre-July 1, 1990 payments, as required by regulation.

III. Standard of Review

The Court of International Trade reviews Customs' protest decisions de novo. 28 U.S.C. § 2640(a)(1). Rule 56 of this Court permits summary judgment when "there is no genuine issue as to any material fact...." USCIT R. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

IV. Discussion

The HMT refund regulation requires "supporting documentation" for pre-July 1, 1990 payments. 19 C.F.R § 24.24(e)(4)(iv)(C). Plaintiff did not provide this documentation with either its refund request or protest. Customs, therefore, denied Plaintiff's protest. For Plaintiff to prevail, Plaintiff must overcome the HMT refund regulation.

The starting point for review of the regulation is determining which framework applies to the court's analysis, Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), or Skidmore v. Swift & Co., 323 U.S. 134, 65 S.Ct. 161, 89 L.Ed. 124 (1944). See United States v. Mead Corp., 533 U.S. 218, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001) (explaining applicability of Chevron treatment or Skidmore treatment to Customs' statutory interpretation). The two-step framework of Chevron applies "when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority." Id. at 226-27, 121 S.Ct. 2164.

Within the HMT statute Congress expressly delegated authority to Customs to:

prescribe such additional regulations as may be necessary to carry out the purposes of this subchapter, including but not limited to regulations (1) providing for the manner and method of payment and collection of the tax imposed by this subchapter ... [and] (4) providing for the remittance or mitigation of penalties and the settlement or compromise of claims.

26 U.S.C. § 4462(i) (2000). When promulgating the current version of the HMT refund regulation, Customs used informal rulemaking under 5 U.S.C. § 553 by issuing an interim rule with an accompanying explanation of the rule's rationale. 66 Fed.Reg. at 16,854. Customs then received comments and issued a final rule addressing the comments. 67 Fed.Reg. at 31,948. For the final rule under review in this case, Customs used "a relatively formal administrative procedure tending to foster the fairness and deliberation that should underlie a pronouncement" having the force of law. Mead, 533 U.S. at 230, 121 S.Ct. 2164. The court will therefore apply the Chevron framework in reviewing the Customs' refund regulation.

In United States v. Haggar Apparel Co., 526 U.S. 380, 119 S.Ct. 1392, 143 L.Ed.2d 480 (1999), the Supreme Court explained a court's consideration of an agency regulation within the Chevron framework:

Under Chevron, if a court determines that "Congress has directly spoken to the precise question at issue," then "that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." 467 U.S. at 842-843, 104 S.Ct. 2778. If, however, the agency's statutory interpretation "fills a gap or defines a...