Ford Motor Co. v. United States

• Citation: 978 F.Supp.2d 1350
• Decision Date: 09 May 2014
• Docket Number: Slip Op. 14–53.,Court No. 03–00115.
• Parties: FORD MOTOR COMPANY, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

978 F.Supp.2d 1350

FORD MOTOR COMPANY, Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 14–53.

Court No. 03–00115.

United States Court of

International Trade.

May 9, 2014.

Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP (Robert B. Silverman, Ned H. Marshak, Frances P. Hadfield), New York, NY; Ford Motor Company, Paulsen K. Vandevert, of Counsel, for Plaintiff.

Stuart F. Delery, Assistant Attorney General; Jeanne E. Davidson, Director, Amy M. Rubin, Assistant Director, International Trade Field Office, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Edward F. Kenny), New York, NY; and Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection (Beth Brotman), of counsel for Defendant.

OPINION

BARZILAY, Senior Judge:

This case returns to the court following a remand to U.S. Customs and Border Protection (“Customs”) for further proceedings in accordance with the Federal Circuit's decision in Ford Motor Co. v. United States, 715 F.3d 906 (Fed.Cir.2013) (“Ford ”).¹ The Federal Circuit concluded that Customs failed to adequately explain why it treats North American Free Trade Agreement (“NAFTA”) post-importation refund claims under 19 U.S.C. § 1520(d) differently for purposes of waiver depending on whether they were submitted traditionally or through the Reconciliation Program. The Federal Circuit instructed Customs to explain whether it “applies different interpretations to the statute depending on the manner in which claims for refunds are submitted.” Id. at 917. On remand, Customs explained that the difference in treatment “is the result of the reasonable application of two different statutory schemes, one controlling the reconciliation process and the other controlling post-entry NAFTA claims only.” Customs' Remand Results, Docket Entry No. 107 at 1 (Nov. 8, 2013) (“ Remand Results ”). Plaintiff Ford Motor Company (“Ford”) maintains that Customs' explanation for treating the two classes of claims differently for purposes of waiver under § 1520(d) is an unreasonable interpretation of the statute. Ford, therefore, contends that Customs must approve all of Ford's disputed NAFTA post-importation claims and refund the duties paid by Ford with interest. The court has jurisdiction pursuant to 19 U.S.C. § 1581(a). For the reasons set forth below, Customs' Remand Results are sustained.

I. BACKGROUND

Ford imported automotive parts into the United States and sought duty free entry under NAFTA. Ford did not seek preferential treatment at the time of entry and instead sought preferential treatment after entering the merchandise by filing a (traditional) NAFTA post-importation refund claim pursuant to 19 C.F.R. § 181.32. One of the requirements of a post-importation refund claim is that the importer must present certificates of origin (“COs”) to Customs to demonstrate that the goods qualify for duty free treatment under NAFTA. Id. Ford, though, did not present the relevant COs covering the subject merchandise. Customs did not waive this requirement as it could have under 19 C.F.R. § 181.22(d)(1). Customs, therefore, denied Ford's claim because of this deficiency. Ford protested the denial of its claim. Customs denied Ford's protest.

II. STANDARD OF REVIEW

When Congress has “explicitly left a gap for an agency to fill, there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation, and any ensuing regulation is binding in the courts unless procedurally defective, arbitrary or capricious in substance, or manifestly contrary to the statute.” United States v. Mead Corp., 533 U.S. 218, 227, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001) (citing Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843–44, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984); United States v. Morton, 467 U.S. 822, 834, 104 S.Ct. 2769, 81 L.Ed.2d 680 (1984); APA, 5 U.S.C. §§ 706(2)(A), (D)). Moreover, “we have long recognized that considerable weight should be accorded to an executive department's construction of a statutory scheme it is entrusted to administer....” Id. at 227–28, 121 S.Ct. 2164 (citing Chevron, 467 U.S. at 844, 104 S.Ct. 2778 (footnote omitted); Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 565, 100 S.Ct. 790, 63 L.Ed.2d 22 (1980); Zenith Radio Corp. v. United States, 437 U.S. 443, 450, 98 S.Ct. 2441, 57 L.Ed.2d 337 (1978)). Accordingly, the court applies the two-step framework provided in Chevron to review Customs' interpretation of the statutory scheme it is entrusted to administer.

III. DISCUSSION

In Ford, the Federal Circuit concluded that

[t]he NAFTA and § 1520(d) require that COs be presented within one year of the date of importation. Customs has the power to waive this requirement, but did not do so in this case. Yet at the same time, Customs has waived the requirement to present COs for all participants in the reconciliation program. Absent a reasonable explanation, Customs may not exercise its waiver power in a manner that effectively interprets the statute in different ways for different types of post-entry refund claims.

Ford, 715 F.3d at 917. The Federal Circuit provided the following remand instructions:

The record in this case so far is inadequate to decide whether there is a reasonable explanation for treating traditional § 1520(d) claims differently than § 1520(d) claims made under the reconciliation program. It is clear that importers who participate in the reconciliation program are treated differently for purposes of waiver under § 1520(d) than those who do not. Indeed, Customs has treated Ford's traditional claims different from Ford's reconciliation program claims. The Trade Court has yet to consider whether this different treatment is simply a valid exercise of Customs' waiver authority—similar to § 181.22(d)(1)(i)-(iii)—or whether it shows that Customs applies different interpretations to the statute depending on the manner in which claims for refunds are submitted. Nor has the court considered whether Customs has a reasonable explanation for treating these classes of claimants differently. Accordingly, we remand for the Trade Court to consider these issues in the first instance. As was the case in Dongbu [ Steel Co. v. United States ], if Customs cannot provide a reasonable explanation for the different standards, it is “free to choose a single consistent interpretation of the statutory language.” 635 F.3d [1363] at 1373 [ (Fed.Cir.2011) ].

Id.

In the Remand Results, Customs provided the following explanation: ²

The CAFC's remand inquiry appears to be based upon the incorrect assumption that Customs' authority to waive presentation of the CO with regard to NAFTA reconciliation claims stems solely from the NAFTA and 19 U.S.C. § 1520(d). As discussed in greater detail below, the basis for this waiver stems from a wholly different set of statutes, namely, 19 U.S.C. §§ 1401(s), 1484, 1508 and 1509, which govern the reconciliation process. Thus, the fact that Customs waives the presentation of all COs in the reconciliation context, but did not grant a CO waiver to Ford in the § 1520(d) claim at issue, is not the result of two different interpretations of § 1520(d); rather, it is the result of the reasonable application of two different statutory schemes, one controlling the reconciliation process and the other controlling post-entry NAFTA claims only. As further demonstrated below, Customs' exercise of its waiver authority in the context of reconciliation and its exercise of its waiver authority in the context of § 1520(d), as set forth in the Customs regulations, are both amply justified by their respective underlying statutes. Finally, the availability of these two avenues for claiming NAFTA has the desirable effect of maximizing importers' opportunities to claim NAFTA in the manner best suited to them, while providing Customs with the mechanisms for ensuring the accuracy of those claims, to the general benefit of all involved parties.

....

In order to understand the significant differences between these two procedural vehicles for filing such claims, it is important to consider the legislative framework for the reconciliation program. In this regard, it is noted that Title VI, Subtitle B, of the North American Free Trade Agreement Implementation Act, Pub.L. 103–182 (December 8, 1993) established the National Customs Automation Program (“NCAP”), an automated and electronic system for the processing of commercial importations. “Reconciliation,” a component of NCAP, was codified into law under new subsection (b) of section 484 of the Tariff Act of 1930, 19 U.S.C. § 1484(b), and defined in 19 U.S.C. § 1401(s) as “... an electronic process, initiated at the request of an importer, under which the elements of an entry ... that are undetermined at the time the importer files or transmits the documentation or information required by section 1484(a)(1)(B) of this title ... are provided to the Customs Service at a later time....”

Reconciliation is designed to reduce the administrative burden of making adjustments to entries by establishing an electronic process whereby an importer may identify an entry, and later provide information that was indeterminable at the time the identified entry was filed. The information which may be provided later, once it is determined, includes valuation, classification, HTSUS heading 9802 eligibility, and NAFTA. See “Modification of National Customs Automation Program Test Regarding Reconciliation,” published in 62 FR 51181 (September 30, 1997) and “Revised National Customs Automation Program Test Regarding Reconciliation,” published in 63 FR 6257 (February 6, 1998). See also, 1993 U.S.C.C.A.N. 2686, House Rpt. (Ways and Means Committee) No. 103–361(I), H.R. 3450, P.L. 103–182 (North American Free Trade Agreement Implementation Act), Sec. 637, indicating that “[t]he introduction into the law of two new provisions, the import...