American Stevedoring Inc. v. US Customs Service, 94-04-00213. Slip Op. 94-69.
| Decision Date | 02 May 1994 |
| Docket Number | No. 94-04-00213. Slip Op. 94-69.,94-04-00213. Slip Op. 94-69. |
| Citation | 18 CIT 331,852 F. Supp. 1067 |
| Parties | AMERICAN STEVEDORING INC. and Resources Warehousing & Consolidation Services, Inc., Plaintiffs, v. UNITED STATES CUSTOMS SERVICE, Anthony Liberta, Regional Commissioner of Customs (Region II), Kathleen M. Haage, Area Director of Customs, Newark, New Jersey, American President Lines, Ltd., East Coast Warehouse & Distribution Corp., Rail Head Transfer, Inc., Container Freight Services, Inc. and H & M International Transportation, Inc., Defendants. |
| Court | U.S. Court of International Trade |
Gibney, Anthony & Flaherty, Wm. Lee Kinnally, Jr. and Robert L. Follick, New York City, for plaintiffs.
Frank W. Hunger, Asst. Atty. Gen., Joseph I. Liebman, Attorney-in-Charge, Intern. Trade Field Office, Commercial Litigation Branch, U.S. Dept. of Justice, Civ. Div., James A. Curley, Office of Regional Counsel, U.S. Customs Service, Frank C. Sharp, Washington, DC, of counsel, for defendants U.S. Customs Service, Anthony Liberta and Kathleen M. Haage.
D'Amato & Lynch, Harvey Barrison and Mary Lee Cunningham, New York City, for defendant East Coast Warehouse & Distribution Corp.
Spadoro & Hilson, Arthur T. Hilson, Woodbridge, NJ, for defendant Rail Head Transfer, Inc.
Bathgate, Wegener, Dugan & Wolf, William J. Wolf and Michael M. DeCicco, Lakewood, NJ, for defendant H & M Intern. Transp., Inc.
This action commenced with the simultaneous filing of a summons and complaint and form of order, directing the U.S. Customs Service and its officials Anthony Liberta and Kathleen M. Haage to show cause (1) why they should not be immediately enjoined from permitting the other parties named as defendants to perform as centralized examination stations within the meaning of 19 C.F.R. Part 118 and (2) why Resources Warehousing & Consolidation Services, Inc. should not be reinstated as such a station. The court signed the order to show cause as filed with plaintiffs' application for a preliminary injunction and has held a hearing thereon.
The Customs defendants have filed what they claim to be the underlying administrative record, and they and the plaintiffs offered evidence and oral argument at the hearing in further support of their opposing written submissions.
According to plaintiffs' complaint, approximately five years ago Customs designated twelve CESes in and around the port of Newark, New Jersey1, one of which was operated by Resources Warehousing & Consolidation Services, Inc.2 Then, on January 22, 1993 the Service published a final rule amending the regulatory framework of 19 C.F.R. Part 118 and Parts 151 ("Examination, Sampling, and Testing of Merchandise") and 178 ("Approval of Information Collection Requirements") to "allow Customs to better use its inspectional resources and clear higher volumes of cargo." 58 Fed.Reg. 5,596. This final rule was followed by New York Region Informational Pipeline No. 2266 (April 16, 1993), which advised the importing community that the CES selection process was being reopened for the Newark Area and that all existing CESes therein had to reapply for selection by the Service, based upon the following stated considerations:
1. Due to the number of approved examination sites (i.e. Centralized Devanning Stations, CES's) currently in existence and their wide geographic dispersal, Customs has expended an excessive amount of time in traveling between facilities to perform examinations. This has negatively impacted Customs productivity, complicated efforts to match staffing with workload, and consequently, impeded Customs ability to provide a consistent level of service to the importing community. Responsive to the Trade community's service requirements, the Newark Area anticipates reducing the overall number of examination sites, recognizing that those sites which are eventually approved must be geographically convenient to existing CDS's and CFS's.3
2. Once the CES approval process is completed, the existing 3 day examination scheduling window will be eliminated. Examinations will normally be scheduled within 24 hours of a shipment's arrival at the CES. CES operators will be required to provide Customs with a daily list of shipments available at their facilities for examination on the following day. Staffing can then be allocated according to workload with a high degree of assurance that freight will be readily accessible.
3. Contraband Enforcement Team (CET) examinations will require expedited movement for examinations. Consequently, due to the sensitive, priority nature of these examinations, CES operators will be responsible for arranging the expeditious movement of CET examination shipments from unlading sites to their CES facilities. Since CET examinations are usually more thorough and time consuming than other inspections, the expeditious movement of these shipments will be critical in facilitating the release of those found to be non-violative.
4. As a consequence of the anticipated reduction in the number of CES's, those sites which are approved must be able to accommodate a substantially greater volume of examinations, and provide facilities and support for an increased number of Customs personnel....
That Pipeline established a calendar for submission of applications and public comments, listed the "minimum criteria to be considered as a CES", and specified the information an application had to contain. Finally, prospective applicants were advised that their responses to the following numbered specifications "shall constitute the criteria used to judge the application":
2. A description of the site's accessibility to major transportation arteries, rail lines, proximity to major ocean terminals, etc. and location within the port limits, and a floor plan of the facility actually dedicated to the CES operation showing bay doors, office space, exterior features, security features, and staging and work space;
3. A schedule of fees clearly showing what the applicant will charge for each type of service. Subject to any special costs incurred by the applicant such as facility modifications to meet specific cargo handling or storage requirements or to meet Customs security standards, the fees set forth in the schedule shall be comparable to fees charged for similar services in the area to be served by the CES. These charges will remain in effect unless the CES operator provides a 60 day notice to Customs of any proposed fee changes....
4. A detailed list of equipment, which shows that the operator can make a diverse variety of cargo available for examination in an efficient and timely manner for containers, cartons, bales, bags, coils, refrigerated (reefer) cargo, garments on hangers, palletized cargo, bulk cargo, loose freight, etc.
* * * * * *
7. Any information showing the applicant's experience in international cargo operations and knowledge of Customs procedures and regulations, or a commitment to acquire that knowledge;
8. A description of available hardware and communication capabilities.
On July 30, 1993, Customs issued New York Region Informational Pipeline No. 2288, advising the importing community of receipt of some 17 CES applications and soliciting written comments on them.
By letter dated February 4, 1994, the Service notified Resources that, although its "application, as presented, was found to satisfy the basic conditions set forth in ... Pipeline 2266, it was not selected to operate a CES."4 A similar statement is found in a letter of rejection dated February 8, 1994 and sent to American Stevedoring Inc.5 Those notifications were followed by New York Region Informational Pipeline No. 2315 (Feb. 9, 1994), publishing the names and addresses of the five firms selected to be the new CESes.
As a first cause of action, the complaint pleads, among other things, that Customs "acted arbitrarily and capriciously and disregarded the ... criteria set forth in 19 CFR § 118.11 and ... Pipeline No. 2266" para. 28; the "reasons cited ... in the February 4, 1994 letter denying Resources' CES application are unsubstantiated and unfounded" para. 30; the denial of the CES application "has caused Resources to suffer irreparable injury in terms of loss of present income and future business opportunity" para. 31; "none of the five selected CES sites were in conformity with the published requirements within the allotted 30 day period" para. 35; and "Customs has failed to implement its CES plan to date, in violation of its regulations" para. 36.
The second count of the complaint, pleaded essentially on behalf of American Stevedoring Inc., adds the following allegations, inter alia:
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