Duty Free Intern., Inc. v. U.S., N-G

Decision Date09 July 1996
Docket NumberNo. 95-1443,N-G,95-1443
Citation88 F.3d 1046
PartiesDUTY FREE INTERNATIONAL, INC., Ammex Warehouse Company, Inc., and Ammex Tax & Duty Free Shops, Inc., Plaintiffs-Appellants, v. The UNITED STATES, Defendant-Appellee, and Git-o, Defendant-Appellee.
CourtU.S. Court of Appeals — Federal Circuit

Laurence M. Friedman and Brian S. Goldstein, Tompkins & Davidson, New York City, argued for plaintiffs-appellants. With them on the brief was Harvey A. Isaacs.

Susan Burnett Mansfield, Civil Division, Department of Justice, International Trade Field Office, New York City, argued for defendant-appellee United States. With her on the brief were Frank W. Hunger, Assistant Attorney General, and David M. Cohen, Director, Washington, D.C., and Joseph I. Liebman, Attorney in Charge, International Trade Field Office. Of counsel was Christopher Doherty, Assistant Chief Counsel, U.S. Customs Service, Boston, Massachusetts.

Martin J. Ward, Leahy & Ward, Boston, Massachusetts, argued for defendant-appellee Git-N-Go.

Before PLAGER, LOURIE, and BRYSON, Circuit Judges.

BRYSON, Circuit Judge.

The appellants, which we refer to collectively as "Duty Free," operate a duty-free store in upstate New York near the Canadian border. They are prosecuting this action in an effort to prevent a competing duty-free store from operating in the same area. The Customs Service decided that the second duty-free store, run by appellee Git-N-Go (GNG), was operating consistently with the governing statutes and regulations, and the Court of International Trade agreed. We affirm.

I

Both Duty Free and GNG operate duty-free stores on the East Service Road of Interstate 87 in Champlain, New York. The stores are located opposite the last on-off ramp south of the Canadian border. Customers who make purchases at the duty-free stores are expected to drive onto the Interstate and proceed into Canada, approximately one mile north of the on-off ramp.

The Customs Service approved Duty Free's operation of its duty-free store on August 17, 1988, and Duty Free began operating the store in June 1990. Later that year, GNG applied for permission to operate its duty-free store in the same area. In May 1991, Customs approved GNG's application. Duty Free subsequently brought an action in the Court of International Trade seeking to force Customs to revoke the permission granted to GNG to operate its duty-free store. Duty Free argued that the authorization granted to GNG was contrary to the applicable statute in several respects. Although Duty Free's operation is generally similar to GNG's, Duty Free has maintained throughout this litigation that it is not subject to the same restrictions as GNG, because its operation was approved prior to the August 23, 1988, effective date of the duty-free store statute and GNG's operation was not. See 19 U.S.C. § 1555(b)(3)(F)(ii)(II). Duty Free thus claims that it enjoys "grandfather" status under the statute, while GNG does not.

The Court of International Trade first denied Customs' motion to dismiss Duty Free's action for lack of standing. Duty Free Int'l, Inc. v. United States, 16 Ct. Int'l Trade 163, 1992 WL 63001 (1992). The court then remanded the case to the Customs Service to compile the full administrative record and provide the court with a more complete explanation for its decision to approve GNG's operation. Duty Free Int'l, Inc. v. United States, 17 Ct. Int'l Trade 1425, 1993 WL 541682 (1993). On remand, Customs explained that GNG's duty-free operation had been approved after GNG agreed to have a bonded cartman deliver the duty-free merchandise to customers near the northbound on-ramp to the Interstate highway. That procedure, Customs explained, provided substantial assurance that the merchandise would be exported to Canada and therefore satisfied the statutory and regulatory requirements for a duty-free store. Following the remand proceedings, the Court of International Trade upheld Customs' action and granted the government's motion for judgment on the agency record. Duty Free Int'l, Inc. v. United States, No. 91-07-00534, 1995 WL 283836 (Ct. Int'l Trade May 12, 1995).

II

Before this court, Duty Free raises the same arguments it raised before the Court of International Trade. For essentially the same reasons given by that court in its thorough opinion, we reject Duty Free's challenge to Customs' decision not to revoke GNG's permission to operate its Champlain duty-free store.

At the outset, we note that it is open to question whether Duty Free is entitled to challenge Customs' action in granting GNG's application to operate a duty-free store. The issue is not one of constitutional standing, since Duty Free, as a direct competitor, can claim a financial injury from the approval of GNG's operation, an injury that would be resolved by the revocation of that approval. Duty Free's complaint therefore satisfies the "case or controversy" requirement of Article III. See United Food & Commercial Workers Union Local 751 v. Brown Group, Inc., --- U.S. ----, ---- - ----, 116 S.Ct. 1529, 1533-34, 134 L.Ed.2d 758 (1996); Allen v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315, 3324-25, 82 L.Ed.2d 556 (1984). The issue, instead, is whether Duty Free has standing to sue under the Administrative Procedure Act, i.e., whether Duty Free has suffered a legal wrong because of the challenged agency action, or is adversely affected or "aggrieved by agency action within the meaning of a relevant statute." 5 U.S.C. § 702. See Air Courier Conference v. American Postal Workers Union, 498 U.S. 517, 523-24, 111 S.Ct. 913, 917, 112 L.Ed.2d 1125 (1991); Clarke v. Securities Indus. Ass'n, 479 U.S. 388, 394, 107 S.Ct. 750, 754, 93 L.Ed.2d 757 (1987). The answer to that question turns on whether the injury Duty Free complains of falls within the " 'zone of interests' sought to be protected by the statutory provision whose violation forms the legal basis for [Duty Free's] complaint." Lujan v. National Wildlife Fed'n, 497 U.S. 871, 883, 110 S.Ct. 3177, 3186, 111 L.Ed.2d 695 (1990).

Because the "APA standing" issue is not jurisdictional, it can be waived by the parties. See Air Courier Conference, 498 U.S. at 523 n. 3, 111 S.Ct. at 917 n. 3. The government has not raised the issue on appeal, even though it litigated the question before the Court of International Trade. In light of the government's express waiver of the issue, we decline to reach the standing question and thus proceed to the merits.

III

The statute governing the establishment of duty-free stores, 19 U.S.C. § 1555, provides that each duty-free sales enterprise "shall establish procedures to provide reasonable assurance that duty-free merchandise sold by the enterprise will be exported from the customs territory." 19 U.S.C. § 1555(b)(3)(A). In the case of a duty-free store that is a "border store" approved for operation after August 23, 1988, duty-free merchandise must be delivered "at a merchandise storage location at or beyond the exit point." 19 U.S.C. § 1555(b)(3)(F)(ii)(I).

Duty Free makes essentially two arguments, both based on that provision of the duty-free store statute. GNG's application to operate a duty-free store should have been denied, Duty Free argues, (1) because its merchandise is not delivered "at or beyond the exit point"; and (2) because the merchandise is not delivered "at a merchandise storage location."

A

With respect to the first issue, the statute defines the term "exit point" broadly. "Exit point" means "the area in close proximity to an actual exit for departing from the customs territory." 19 U.S.C. § 1555(b)(8)(F). The pertinent Customs regulation further defines the term "exit point" as it applies to border stores: "The exit point in the case of a land border or seaport duty-free store is the point at which a departing individual has no practical alternative to continuing on to a foreign country or to returning to Customs territory by passing through a U.S. Customs inspection facility." 19 C.F.R. § 19.35(d).

In the remand proceedings, Customs explained that it construes its regulation requiring that there be "no practical alternative" to exportation for a duty-free store customer to be consistent with the statutory requirement that there be a "reasonable assurance" that goods sold in a duty-free store will be exported, 19 U.S.C. § 1555(b)(3)(A). Reading the two provisions together, Customs concluded that GNG's application was properly granted because GNG's delivery procedures ensure that there is no more than a "low probability" that duty-free merchandise will not be exported. The Court of International Trade held that Customs' interpretation of the statutory and regulatory language was permissible, and so do we.

The statutory phrase "close proximity to an actual exit," which defines the term "exit point," is not language of precision, but instead suggests a congressional intention to accord substantial discretion to Customs to determine what areas within the United States are "at or beyond the exit...

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  • Gilda Industries, Inc. v. U.S.
    • United States
    • U.S. Court of Appeals — Federal Circuit
    • 1 Mayo 2006
    ...complaint should be barred by the zone of interests test. The government has thus waived that argument. See Duty Free Int'l, Inc. v. United States, 88 F.3d 1046, 1048 (Fed.Cir.1996) (concluding that the zone of interests test is not jurisdictional, and therefore that the government waived t......
  • McHenry v. U.S., 03-5040.
    • United States
    • U.S. Court of Appeals — Federal Circuit
    • 13 Mayo 2004
    ...of Am. v. Am. Postal Workers Union, 498 U.S. 517, 523 n. 3, 111 S.Ct. 913, 112 L.Ed.2d 1125 (1991); Duty Free Int'l, Inc. v. United States, 88 F.3d 1046, 1048 (Fed.Cir.1996). 7. Section 1155 The Secretary shall adopt and apply a schedule of ratings of reductions in earning capacity from spe......
  • Ammex, Inc. v. U.S., Slip Op. 00-108.
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    • U.S. Court of International Trade
    • 25 Agosto 2000
    ...has jurisdiction under 28 U.S.C. § 1581(i) (1994). See Duty Free Int'l, Inc. v. United States, 17 CIT 1425, 1425 (1993), aff'd 88 F.3d 1046 (Fed.Cir. 1996).4 III THE COURT SHALL HOLD UNLAWFUL AGENCY ACTION THAT IS ARBITRARY, CAPRICIOUS, AN ABUSE OF DISCRETION, OR NOT IN ACCORDANCE WITH 28 U......
1 books & journal articles
  • Distinct Sources of Law and Distinct Doctrines: Federal Jurisdiction and Prudential Standing
    • United States
    • University of Whashington School of Law University of Washington Law Review No. 88-3, March 2019
    • Invalid date
    ...in regard to whether prudential standing is jurisdictional. See infra Part II.A.3. 133. See Duty Free Int'l, Inc. v. United States, 88 F.3d 1046, 1048 (Fed. Cir. 1996) (relying on Air Courier Conference of Am. v. Am. Postal Workers Union, AFL-CIO, 498 U.S. 517, 523 n.3 (1991)). 134. Air Cou......

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