China Diesel Imports, Inc. v. US, Court No. 92-10-00696. Slip Op. 94-90.

• Decision Date: 02 June 1994
• Docket Number: Court No. 92-10-00696. Slip Op. 94-90.
• Citation: 855 F. Supp. 380
• Parties: CHINA DIESEL IMPORTS, INC., a California Corporation, Plaintiff, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

855 F. Supp. 380

CHINA DIESEL IMPORTS, INC., a California Corporation, Plaintiff, v. The UNITED STATES, Defendant.

Court No. 92-10-00696 Slip Op. 94-90.

United States Court of International Trade.

June 2, 1994.

James M. Zimmerman, La Jolla, CA, for plaintiff.

Frank W. Hunger, Asst. Atty. Gen., Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Carla Garcia-Benitez, Mark G. Nackman, Office of Asst. Chief Counsel, Intern. Trade Litigation, U.S. Customs Serv., of counsel, Washington, DC, for defendant.

OPINION

RESTANI, Judge:

Plaintiff China Diesel Imports, Inc. ("CDI") challenges the decision of the United States Customs Service excluding certain JINMA model 1100 diesel engines from entry on the ground that the engines are the product of prohibited labor as defined in § 307 of the Tariff Act of 1930. See 19 U.S.C. § 1307 (1988). Both CDI and Customs move for summary judgment on the issue of whether Customs correctly determined that the class of diesel engines in question was the product of forced or convict labor and therefore properly prohibited entry into the United States.

BACKGROUND

Plaintiff is an American importer of small diesel engines from various manufacturers in the People's Republic of China ("PRC"). A shipment of 50 diesel engines, JINMA model 1100 ("subject engines"), arrived at the port of Los Angeles on October 19, 1991 and was entered into the United States on or about November 5, 1991. The invoice identified the subject engines as "DIESEL ENGINES (JINMA BRAND) MODEL 1100" manufactured by "Yunnan Machinery Imp. & Exp., 10th Fl. Beijing Rd, Kunming, CN." Protest No. 2501-92-100030, Ex. B, at 10.

At the time of entry, certain products from China were suspected of being manufactured by prison labor camps. On October 9, 1991, Customs had published a notice in the Federal Register, 56 Fed.Reg. 50,972 (Dep't Treas. 1991), that a public hearing would take place on November 1, 1991 "to obtain any relevant information concerning recent allegations that merchandise was being imported into the United States which was produced in the People's Republic of China by means of convict, forced or indentured labor." Id. at 50,972.

The Commissioner of Customs issued a detention order on November 14, 1991 advising all district directors to withhold the release of the subject engines. Def.'s Ex. H; Pl.'s Ex. 14. Customs issued a demand to CDI for redelivery of the fifty JINMA model 1100 diesel engines on the following day. Def.'s Ex. J. CDI was able to redeliver forty-nine of the fifty engines, although one engine sold prior to this notice was irretrievable. Pl.'s Ex. 1, Decl. of Hardy Day, ¶ 14.

CDI has made a number of attempts to establish that JINMA model 1100 diesel engines were not produced with prohibited labor.¹ In particular, on January 14, 1992, CDI submitted a "Verification of Labor employed by Yunnan JINMA Diesel Engine Works," dated December 27, 1991, which claims that the subject engines were produced by "employees who work voluntarily and receive wages for their labor" and that "no prison, forced, or slave labor is employed ... in its production process of export products." Def.'s Ex. N, at 32. CDI offered this verification as "proof of admissibility" pursuant to 19 C.F.R. § 12.43(a) (1993).²

On January 27, 1992, Customs determined that diesel engines manufactured in China by the Golden Horse (JINMA) Diesel Engine Factory are produced with convict and/or forced and/or indentured labor and therefore should be denied entry pursuant to 19 U.S.C. § 1307. This determination was published on March 18, 1992 in the Federal Register with an effective date of March 23. Merchandise Imported from the People's Republic of China Produced by Convict, Forced or Indentured Labor, 57 Fed.Reg. 9469 (Dep't Treas.1992). Accordingly, plaintiff's engines were excluded from entry and plaintiff was so advised on April 14, 1992.

CDI filed a protest of the determination on May 21, 1992. CDI argued that its engines were not made with convict labor, and that no comparable engine is made domestically and therefore the "consumptive demand exception" of 19 U.S.C. § 1307 applies.³ Pl.'s Ex. 20, Attachment A, ¶¶ 11 and 12(D). A memorandum written by Stuart Seidel, the director of International Trade Compliance Division, Office of Regulations and Rulings, on March 2, 1993, revealed that "a thorough examination of the evidentiary record in this case leads us to conclude that the information compiled during the investigation that produced the January 27, 1992, order was not sufficiently conclusive to justify the exclusion of the diesel engines from entry. However, ... in June 1992, Customs received confirmation⁴ that the diesel engines were, in fact, convict-made." Pl.'s Ex. 22, at 3-4. On October 29, 1992 Customs inspected the JINMA Diesel Engine Factory and reported "no direct evidence of prison labor involving assembly of diesel engines." Pl.'s Ex. 25, at 1; see also Def.'s Ex. R. However, a discussion with Reform Through Labor Deputy Director Wang Migdi suggested that "some of the buildings in the JINMA Diesel Engine factory compound are in fact part of the Yunnan No. 1 Prison.... The two entities share a compound and are not completely separate facilities as the Yunnan authorities claimed." Pl.'s Ex. 25, at 3. A follow up visit was requested but as of October 1993 this visit had not been granted by the Chinese government.⁵

Customs did not formally deny plaintiff's protest until March 1993, almost a year after the protest was filed. The parties failed to advise the court of the actual denial of protest, but the court deemed the denial to have occurred because of the passage of time. China Diesel Imports, Inc. v. United States, Slip Op. 93-91, 1993 WL 190925 (June 2, 1993) (denying defendant's motion to dismiss for lack of subject matter jurisdiction).⁶ Plaintiff's action, filed on October 16, 1992, challenges the protest denial and asserts that the subject diesel engines should be allowed entry into the United States.

DISCUSSION

A. Standard of Review

The court's jurisdiction in this case is predicated on 28 U.S.C. § 1581(a) (1988) because China Diesel commenced this action to contest the denial of its May 21, 1992 protest. In a civil action contesting the denial of a protest, the court must make its determinations on the basis of the record before the court. 28 U.S.C. § 2640(a) (1988). The question here is whether the court will limit its review to the record before the agency on some or all issues, will refrain from reviewing certain issues at all, or will conduct a trial de novo as is generally appropriate for protest denial cases. Plaintiff does not appear to request a trial de novo but seeks review of the record on an ordinary Administrative Procedure Act ("APA") basis.

Defendant, on the other hand, contends that the notice published in the Federal Register, the public hearing and the subsequent investigation constituted a rulemaking procedure and that this portion of the decision, at least, is non-reviewable. See Florsheim Shoe Co. v. United States, 744 F.2d 787, 796 (Fed. Cir.1984). Defendant argues that an agency's actions promulgating a rule that implements a statute are entitled to substantial deference. See Central Soya Co. v. United States, 761 F.Supp. 133, 137 (Ct. Int'l Trade 1991) (citing Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984)).

The APA defines a rule as

the whole or part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy.

5 U.S.C. § 551(4) (1988). A rule is legislative in nature and is intended to have prospective effect only, while an adjudication is judicial, has an accusatory flavor and relates to past or current events. American Express Co. v. United States, 472 F.2d 1050, 1055 (C.C.P.A. 1973).

In this case Customs gathered evidence to determine whether the importation of particular diesel engines by CDI would violate 19 U.S.C. § 1307. Customs' determination charged CDI with importation of convict-made goods, demanded redelivery of the engines previously imported and excluded the goods from entry. 57 Fed.Reg. at 9470; Def's Ex. J. The determination by Customs to exclude particular diesel engines made in a specific factory was not a rulemaking, but rather an adjudication pursuant to 19 U.S.C. § 1307 and therefore not entitled to rulemaking deference.

For similar reasons Florsheim Shoe Co., 744 F.2d 787, does not apply. There is no room for broad executive discretionary decisionmaking here. See 19 U.S.C. § 2464 (1988) (granting executive authority to implement Generalized System of Preferences). As the discussion of the statute and its legislative history reveal, there are very specific requirements for exclusion of goods under 19 U.S.C. § 1307 — requirements that are suitable for adjudication.

Section 307 of the Tariff Act of 1930, as amended, provides that

all goods, wares, articles, and merchandise ... manufactured wholly or in part in any foreign country by convict labor or/and forced labor or/and indentured labor under penal sanctions shall not be entitled to entry at any of the ports of the United States, and the importation thereof is hereby prohibited....; but in no case shall such provisions be applicable to goods, wares, articles, or merchandise so mined, produced, or manufactured which are not mined, produced, or manufactured in such quantities in the United States as to meet the consumptive demands of the United States.

19 U.S.C. § 1307. Section 1307 was enacted by Congress to protect domestic producers and workers from the unfair competition that would result from the importation of foreign goods produced by forced labor, only allowing access to such goods when they are in short supply domestically. McKinney v. United...