Best Foods, Inc. v. United States

• Decision Date: 06 May 1963
• Docket Number: Protest 305961-K.,C.D. 2396
• Citation: 218 F. Supp. 576
• Parties: The BEST FOODS, INC. v. UNITED STATES.
• Court: U.S. Court of Customs and Patent Appeals (CCPA)

218 F. Supp. 576

The BEST FOODS, INC. v. UNITED STATES.

C.D. 2396; Protest 305961-K.

United States Customs Court, Third Division.

May 6, 1963.

Sullivan & Cromwell, New York City (William Piel, Jr., New York City, of counsel), Barnes, Richardson & Colburn, New York City, Associate Counsel (Joseph Schwartz, New York City, of counsel), for plaintiff.

John W. Douglas, Asst. Atty. Gen. (Richard E. FitzGibbon and Sheila N. Ziff, New York City, trial attorneys), for defendant.

Before JOHNSON, DONLON, and RICHARDSON, JJ.

DONLON, Judge.

This litigation challenges the legality of a fee, at the rate of 2 cents per pound, exacted on imported peanuts pursuant to a Presidential proclamation, issued under the Agricultural Adjustment Act, namely, proclamation 3095, of May 16, 1955 (T.D. 53808). This proclamation purports to modify earlier Presidential proclamations 3019 and 3084.

The peanuts of this suit were imported on May 25, 1955, and May 26, 1955, after the effective date of proclamation 3095.

In an earlier litigation, this plaintiff challenged the legality of a fee, likewise at the rate of 2 cents per pound, which had been exacted on imported peanuts pursuant to Presidential proclamation 3084 of March 9, 1955 (T.D. 53755). Plaintiff's claim in that litigation was sustained. The Best Foods, Inc. v. United States, 39 Cust.Ct. 305, C.D.1945; affirmed on rehearing, 42 Cust.Ct. 310, Abstract 62865; affirmed on appeal, United States v. Best Foods, Inc., 47 CCPA 163, C.A.D. 751. Neither here, nor in the earlier case, was there any question as to the regular duty on imported peanuts, at the rate of 7 cents per pound, imposed under paragraph 759 of the Tariff Act of 1930. Controversy, there and here, solely relates to what is called a "fee" at the rate of 2 cents per pound, imposed by Presidential proclamation under the Agricultural Adjustment Act, in addition to the regular duty.

Section 22 of the Agricultural Adjustment Act, as amended (7 U.S.C., section 624), authorizes the President to impose either fees or quantitative restrictions (quotas) on the importation of foreign articles when he finds that such articles are or are likely to be imported under such conditions and in such quantities as to render, or tend to render, ineffective the Government price support program for so-called basic agricultural commodities, or reduce substantially the amount of any product processed in the United States from such an agricultural commodity. One such commodity is peanuts.

Peanuts had been for some time prior to proclamation 3095 subject to quantitative restrictions under section 22. As recited in our opinion in Best Foods, Inc., supra, the President, in peanut proclamation 3019, of June 8, 1953, restricted importation of peanuts to a quantity not in excess of 1,709,000 pounds in a crop year. This quota was prescribed for peanuts in all forms, save only peanut butter. First made effective for the year beginning July 1, 1953 (T.D. 53289), that quota was continued without change until the 1955 crop year.

In early 1955, it became known in Washington that frost had seriously damaged the domestic peanut crop. Presumably, peanut imports in excess of the quota of 1,709,000 pounds per year were thought of as not threatening the price support program. Moreover, in view of the frost-induced domestic crop curtailment, peanuts for processing were in short supply. On March 9, 1955, following a Tariff Commission investigation and report, the President issued proclamation 3084 (T.D. 53755). In proclamation 3084, which became effective March 9, 1955, the President modified his earlier proclamation 3019 (as previously amended by proclamation 3025, T.D. 53289, in respects that are not material to this litigation) so as to increase the quota of certain sizes of shelled peanuts that might be imported during the remainder of the year ending June 30, 1955. The proclamation made peanuts of the quota increase subject to a fee of 2 cents per pound, in addition to the regular tariff of 7 cents per pound.

Plaintiff, in Best Foods, Inc., supra, contended that proclamation 3084 was invalid on the ground, inter alia, that the President had failed to follow the procedure prescribed by Congress in section 22. Such statutory procedure, so plaintiff argued, is a basic condition to which the executive is subject in exercising the congressional grant of authority. Plaintiff also contended that Congress had not granted authority to the President to impose both a fee and a quota on peanuts. A majority of this division held that the fee, newly proclaimed in proclamation 3084, did not constitute mere modification of the prior proclamation 3019, which had established only a quota restriction, but imposed a new and different burden. We, therefore, held proclamation 3084 invalid, because the procedures prescribed by Congress in section 22(a), as requisite to the imposition of a fee under section 22(b), had not been followed. We also held proclamation 3084 invalid, as to the fee, because of an infirmity in the Tariff Commission notice of supplemental investigation, which failed to specify or otherwise give notice that the inquiry would inquire into the need for a fee.

Defendant appealed from our decision. The court of appeals affirmed our judgment, but not on the grounds of our decision. We had deemed it unnecessary, because of our decision as to procedural noncompliance, to decide the substantive issue, namely, whether the President had power to impose both a fee and a quota. The majority of this division indicated as their view that such authority had not been conferred. That was the decision of the court of appeals. The appeals court refrained from expressing an opinion on the procedural issue. It, therefore, arises again in this litigation.

There is no dispute as to what proclamation 3095 was, or as to the proceedings which triggered the proclamation. The official papers are in evidence. Counsel have signed a stipulation of facts, with documentary exhibits annexed, which plaintiff has offered in evidence. Defendant reserved the right to object to the offer, but conceded truth and authentication. Defendant has offered no objection of record and, in its brief, tacitly accepts the stipulation of facts and appended exhibits as part of the record in this proceeding. We deem that defendant has abandoned the reserved right to object. The stipulation of facts and appended exhibits are received in evidence as plaintiff's exhibit 1, with appended documents designated, for reference, by lettered sub-headings 1-A, 1-B, and 1-C.

As earlier observed, in proclamation 3019, the President fixed an annual quota on importation of peanuts in every form, except only as peanut butter. There was no fee imposed. In proclamation 3084, the President modified the quota of proclamation 3019, increasing the quantity of stated sizes of shelled peanuts that could be imported, but not the quantity of in-shell peanuts or of other sizes of shelled peanuts. Peanuts of the new quota were made subject to a fee of 2 cents per pound. There was no fee as to other quota peanuts. Our appeals court held that proclamation 3084 was "invalid, insofar as it imposes a fee * * *." (United States v. Best Foods, Inc., 47 CCPA 163, at page 172.)

The United States Tariff Commission gave public notice on April 1, 1955, that a new supplemental investigation had been instituted, under the provisions of section 22(d) of the Agricultural Adjustment Act, to determine —

"* * * whether the deficit in the domestic supply of peanuts is such as to require an increase in the quantity of peanuts, shelled, unshelled, blanched, salted, prepared, or preserved which may be permitted to be entered, or withdrawn from warehouse, for consumption during the quota year ending June 30, 1955, and during the quota year beginning July 1, 1955, to meet essential requirements of domestic peanut users, and, if so, what additional quantity or quantities of peanuts may be permitted to be so entered or withdrawn without materially interfering with or rendering ineffective the peanut program of the Department of Agriculture."

The notice further recited the substance of proclamations 3019 and 3084 (the latter having since been found invalid as to imposition of a fee) and noted that the new investigation was prompted by a letter from the Secretary of Agriculture to the Chairman of the Tariff Commission, dated March 31, 1955, indicating that the quantity of peanuts on hand was less than the quantity needed to meet domestic requirements. This notice was published, and a public hearing was held on April 19, 1955. (Exhibit 1-A.) Transcript of the hearing record shows that Mr. A. S. Yohalem, vice president of The Best Foods, Inc., plaintiff here, was one of several industry representatives who appeared at the hearing and testified. (Exhibit 1-B.) On May 5, 1955, the Tariff Commission transmitted its report to the President. (Exhibit 1-C.)

The President issued proclamation 3095 under date of May 16, 1955. After reciting the substance of prior proclamations 3019 and 3084, including the invalid fee, the new proclamation 3095 recites that the United States Tariff Commission has made a second supplemental investigation pursuant to section 22(d) of the Agricultural Adjustment Act, as amended —

"* * * to determine whether the deficit in the domestic supply of peanuts is such as to require an increase in the quantity of peanuts, whether shelled, not shelled, blanched, salted, prepared, or preserved, which may be permitted to be entered, or withdrawn from warehouse, for consumption during the quota year ending June 30, 1955, and during the quota year beginning July 1, 1955, to meet essential requirements of domestic peanut users, and, if so, what additional quantity or quantities of such peanuts may be permitted to be so entered or withdrawn without materially interfering with or rendering ineffective the peanut program of the Department of Agriculture;"

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