Conoco, Inc. v. U.S. Foreign-Trade Zones Bd., FOREIGN-TRADE

• Citation: 18 F.3d 1581
• Decision Date: 15 March 1994
• Docket Number: FOREIGN-TRADE,No. 92-1396,92-1396
• Parties: CONOCO, INC., Citgo Petroleum Corporation and Lake Charles Harbor and Terminal District, Plaintiffs-Appellants, v. The UNITED STATESZONES BOARD; Barbara H. Franklin, Secretary of Commerce, as Chairman and Executive Officer of the Foreign-Trade Zones Board; Nicholas F. Brady, Secretary of the Department of the Treasury, as Member of the Foreign-Trade Zones Board; Michael P.W. Stone, Secretary of the Army, as a Member of the Foreign-Trade Zones Board and John J. Da Ponte, Jr., Executive Secretary of the Foreign-Trade Zones Board, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 1581

18 F.3d 1581

CONOCO, INC., Citgo Petroleum Corporation and Lake Charles

Harbor and Terminal District, Plaintiffs-Appellants, v. The UNITED STATES FOREIGN-TRADE ZONES BOARD; Barbara H.

Franklin, Secretary of Commerce, as Chairman and Executive

Officer of the Foreign-Trade Zones Board; Nicholas F.

Brady, Secretary of the Department of the Treasury, as

Member of the Foreign-Trade Zones Board; Michael P.W.

Stone, Secretary of the Army, as a Member of the

Foreign-Trade Zones Board and John J. Da Ponte, Jr.,

Executive Secretary of the Foreign-Trade Zones Board,

Defendants-Appellees.

No. 92-1396.

United States Court of Appeals, Federal Circuit.

March 15, 1994.

William F. DeMarest, Jr., Holland & Hart, Washington, DC, argued for plaintiffs-appellants. With him on the brief was Adelia S. Borrasea. Also on the brief was Charles M. Floren, CITGO Petroleum Corp., of Tulsa, OK.

Mark S. Sochaczewsky, Attorney, Commercial Litigation Branch, Dept. of Justice, New York City, argued for defendants-appellees. With him on the brief were Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director and Joseph I. Liebman, Attorney in Charge, International Trade Field Office.

John G. Kester and David D. Aufhauser, Williams & Connolly, of Washington, DC, were on the brief for amicus curiae, Phibro Energy, Inc. and Phibro Energy USA, Inc.

Before RICH and PLAGER, Circuit Judges, and COHN, District Judge. ^*

PLAGER, Circuit Judge.

In this case we are called upon to determine what court, if any, has jurisdiction to review certain orders of the Foreign Trade Zones Board (Board or FTZB), an agency of the federal government. ¹ Appellants appeal the April 7, 1992 judgment of the Court of International Trade, Court No. 90-06-00289, dismissing for lack of jurisdiction this action--a challenge to the Board's imposition of conditions on the grant of foreign subzone status to refineries operated by the two private appellants, Conoco, Inc. (Conoco) and CITGO Petroleum Corp. (Citgo). Conoco, Inc. v. United States Foreign Trade-Zones Bd., 790 F.Supp. 279 (Ct.Int'l Trade 1992). We reverse and remand.

I. BACKGROUND

There are three appellants in this action--two private and one public. The two private appellants are Conoco and Citgo. The one public appellant is the Lake Charles Harbor and Terminal District (District). The Board has authorized the District to establish, operate and maintain a foreign trade zone ² adjacent to or in Lake Charles Harbor, a port of entry into United States customs territory. Conoco and Citgo are the owners of oil refineries located outside the zone. During 1986-87, the District filed applications on their behalf with the Board asking that these refineries be granted subzone status. ³ The Board granted these applications subject to the following conditions:

(1) that duties be paid on foreign crude oil used as fuel (or refined into products used as fuel) in the refineries; and

(2) that Conoco and Citgo elect "privileged foreign status" for foreign crude oil brought into their respective subzones, i.e., elect to pay duties on the value of that crude oil as opposed to the value of refined products produced therefrom. ⁴

It is the imposition of these conditions on the grant of subzone status that lies at the heart of this case. Pursuant to the Administrative Procedure Act (APA), 5 U.S.C. Sec. 701 et seq. (1988), two of the appellants, Conoco and the District, challenged in the United States District Court for the Western District of Louisiana, Lake Charles Division, the Board's imposition of these conditions. ⁵ The government responded that, under the law, exclusive jurisdiction lay in the Court of International Trade, and moved to dismiss the action for lack of subject matter jurisdiction in the district court. In a judgment dated June 25, 1990, Civil Action No. 89-1717-LC, the district court, pursuant to the government's motion, dismissed the action.

All three appellants then filed their action in the Court of International Trade in New York. When they subsequently filed a motion for judgment upon the agency record ⁶, the government filed a cross-motion to dismiss for lack of subject matter jurisdiction. In support of its motion, the government argued that no court had jurisdiction to review the action of the Board. The government pointed to the fact that Congress, in the Foreign Trade Zones Act of 1934 (FTZA) (codified as amended at 19 U.S.C. Sec. 81a et seq. (1988)), made specific provision for the review of zone or subzone grant revocations ⁷, but failed to provide for review of other Board actions, such as those involved here. This, according to the government, evidenced Congress' intent that there not be judicial review of these other actions.

In the alternative, the government argued that neither of the possible jurisdictional paths otherwise applicable for Court of International Trade review, subsections (a) and (i) of 28 U.S.C. Sec. 1581 (1988), were available. These two subsections read:

(a) The Court of International Trade shall have exclusive jurisdiction of any civil action commenced to contest the denial of a protest, in whole or in part, under section 515 of the Tariff Act of 1930 [codified as amended at 19 U.S.C. Sec. 1515 (1988) ].

* * * * * *

(i) In addition to the jurisdiction conferred upon the Court of International Trade by subsections (a)-(h) of this section ..., the Court of International Trade shall have exclusive jurisdiction of any civil action commenced against the United States, its agencies, or its officers, that arises out of any law of the United States providing for--

(1) revenue from imports or tonnage;

(2) tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other than the raising of revenue;

(3) embargoes or other quantitative restrictions on the importation of merchandise for reasons other than the protection of the public health or safety; or

(4) administration and enforcement with respect to the matters referred to in paragraphs (1)-(3) of this subsection and subsections (a)-(h) of this section....

Under subsection (a), according to the government, the action was premature because Conoco and Citgo had not pursued the protest procedure through Customs. This procedure would require Conoco and Citgo to activate their respective subzones, import foreign crude oil therein, have Customs assess duties on that oil, pay those duties, file a protest with Customs, and then await the decision of Customs to deny the protest--all before filing suit to challenge the conditions the Board imposed on the grant of the subzone. Under subsection (i), according to the government, the action was barred because appellants had not met the threshold requirement of showing that the protest procedure and subsequent review provided by subsection (a) would be "manifestly inadequate." ⁸

In a judgment dated April 7, 1992, the court denied appellants' motion and granted the government's motion. The court castigated the government for playing "jurisdictional ping-pong" but concluded nonetheless that the action was premature under subsection (a) and barred under subsection (i). It did not reach the alternative argument--that no court had jurisdiction to review the action. This appeal followed.

II. DISCUSSION

A.

We first address the question of whether any court has jurisdiction to review these actions of the Board. Before the Court of International Trade, the government maintained that no provision of the Foreign-Trade Zones Act (FTZA), 19 U.S.C. Sec. 81a-u (1988), makes Board determinations to either grant foreign-trade zones or attach conditions to such grants subject to judicial review. According to the government, judicial review is available only in cases involving the revocation of foreign-trade zone grants pursuant to subsection 81r of the statute. ⁹

On appeal to this court, the government argues that, since the Court of International Trade did not make any express determination on this issue, we need not reach it. But the court's decision was premised on the conclusion that invocation of its jurisdiction was premature, not that it was nonexistent. Further, and more to the point, the government's effort to avoid the issue might have some force if we agreed with the court's interpretation of the statutory provisions which, according to the court, require appellants to engage in certain additional administrative activity before they can invoke the court's jurisdiction. Since we do not agree, and believe that, if appellants' claims are reviewable at all, they are ripe for decision, we must determine if the agency actions objected to by appellants are subject to that review.

At oral argument, the question of whether there was judicial review of the matter at issue was the subject of discussion between court and counsel. Eventually the following colloquy ensued between counsel for the government and members of the court:

Government Counsel (GC): Well, the original determination of the district court was that you go to the CIT [Court of International Trade]. The CIT implicitly assumed that that was correct.

The Court: Do you think that's correct?

GC: It's a very confusing area, as you can understand.

Court: Yes, all right. What's the government's position? What is the correct answer?

You're the government. What is the correct answer.

GC: The government's position as stated in this case is that, the trial court's determination that, the underlying purposes and the underlying determination which is reviewed by the Customs Service can be reviewed by the CIT, can in fact be reviewed by the CIT.

Although counsel's response was somewhat confusing--it referred to determinations reviewed by the Customs Service, when the question here is a determination of the FTZB--it could be read as a concession that jurisdiction in this class of case properly lies in the Court of International Trade. ¹⁰ We are not prepared to rest on that, however, particularly since counsel...