Eteros Technologies USA, Inc. v. United States

• Decision Date: 21 September 2022
• Docket Number: Slip Op. 22-111,Court No. 21-00287
• Parties: ETEROS TECHNOLOGIES USA, INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

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ETEROS TECHNOLOGIES USA, INC., Plaintiff,
v.
UNITED STATES, Defendant.

Slip Op. 22-111
Court No. 21-00287

United States Court of International Trade.

September 21, 2022

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Richard F. O'Neill, Neville Peterson LLP, of Seattle, WA, argued for Plaintiff Eteros Technologies USA, Inc. With him on the briefs were John M. Peterson, of New York, N.Y., and Patrick B. Klein.

Guy R. Eddon, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, N.Y., argued for Defendant United States. With him on the brief were Brian M. Boynton, Acting Assistant Attorney General, Patricia M. McCarthy, Director, Justin R. Miller, Attorney in Charge, International Trade Field Office, Aimee Lee, Assistant Director. Of Counsel on the briefs were Mathias Rabinovitch and Alexandra Khrebtukova, Office of the Assistant Chief Counsel for International Trade Litigation, U.S. Customs and Border Protection, of New York, N.Y.

OPINION

Katzmann, Judge:

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This case concerns the interplay between the federal and state systems, specifically the Washington State system, governing marijuana-related drug paraphernalia. It arises from Customs and Border Protection ("CBP")’s exclusion from entry at the Port of Blaine, Washington of Plaintiff's motor frame assemblies -- component parts of an agricultural machine designed to separate the leaf from the flower of cannabis or other plant material -- on the grounds that the machine constituted drug paraphernalia prohibited by the federal Controlled Substances Act ("CSA"). The resultant dispute presents a matter of first impression: whether Washington State's repeal of certain prohibitions attending marijuana-related drug paraphernalia "authorize[s]" Plaintiff such that Plaintiff's importation through the Port of Blaine is exempted by the CSA from the federal prohibition on importing drug paraphernalia. The court finds that Plaintiff is so authorized.

BACKGROUND

I. Legal Background

Under section 1595a of 19 U.S.C., "[m]erchandise which is introduced or attempted to be introduced into the United States" "may be seized and forfeited if," inter alia, "its importation or entry is subject to any restriction or prohibition which is imposed by law relating to health, safety, or conservation and the merchandise is not in compliance with the applicable rule, regulation, or statute." 19 U.S.C. § 1595a(c)(2)(A).¹ Where "merchandise may be seized and forfeited," Customs may instead "deny entry and permit the merchandise to be [re]exported." 19 C.F.R. § 151.16(j).² One "law relating to health"

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for the purposes of 19 U.S.C. § 1595a is the Controlled Substances Act ("CSA"), see 21 U.S.C. §§ 801 – 904, a federal statute with the "long title"³ "An Act to amend the Public Health Service Act and other laws to provide increased research, into, and prevention of, drug abuse and drug dependence; to provide for treatment and rehabilitation of drug abusers and drug dependent persons; and to strengthen existing law enforcement authority in the field of drug abuse." Pub. L. No. 91-513, 84 Stat. 1236, 1236 (1970).

A. The Federal System on Drug Paraphernalia

Under the CSA, Congress made it unlawful for any person:

(1) to sell or offer for sale drug paraphernalia;

(2) to use the mails or any other facility of interstate commerce to transport drug paraphernalia; or

(3) to import or export drug paraphernalia.

21 U.S.C. § 863(a)(1)–(3).⁴ "Any drug paraphernalia involved in any violation of subsection (a)" "shall be subject to seizure and forfeiture upon the conviction of a person for such violation." Id. § 863(c). However, the CSA specifies that "[t]his section shall not apply to" "any person authorized by local, State, or Federal law to manufacture, possess, or distribute such items." Id. § 863(f)(1). What constitutes "authoriz[ation]" by local, state, or federal law for the purposes of the (f)(1) exemption is otherwise undefined.

B. The Washington State System on Drug Paraphernalia

In November 2012, Washington State legalized adult recreational use of marijuana. See Initiative 502 to the Legislature, 2013 Wash. Sess. Laws ch. 3 (codified as amended at Wash. Rev. Code §§ 69.50.101–710) ("Initiative 502").⁵ As part of Initiative 502, the Washington legislature amended its prohibitions on drug paraphernalia to read:

(1) It is unlawful for any person to use drug paraphernalia to plant, propagate, cultivate, grow, harvest, manufacture, compound, convert, produce, process, prepare, test, analyze, pack, repack, store, contain, conceal, inject, ingest, inhale, or otherwise introduce into the human

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body a controlled substance other than marijuana. Any person who violates this subsection is guilty of a misdemeanor.

(2) It is unlawful for any person to deliver, possess with intent to deliver, or manufacture with intent to deliver drug paraphernalia, knowing, or under circumstances where one reasonably should know, that it will be used to plant, propagate, cultivate, grow, harvest, manufacture, compound, convert, produce, process, prepare, test, analyze, pack, repack, store, contain, conceal, inject, ingest, inhale, or otherwise introduce into the human body a controlled substance other than marijuana. Any person who violates this subsection is guilty of a misdemeanor.

Wash. Rev. Code § 69.50.412 (2013) (emphasis added). Moreover:

(1) Every person who sells or gives, or permits to be sold or given to any person any drug paraphernalia in any form commits a class I civil infraction under chapter 7.80 RCW. For purposes of this subsection, "drug paraphernalia" means all equipment, products, and materials of any kind which are used, intended for use, or designed for use in planting, propagating, cultivating, growing, harvesting, manufacturing, compounding, converting, producing, processing, preparing, testing, analyzing, packaging, repackaging, storing, containing, concealing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance other than marijuana.

Id. § 69.50.4121 (emphasis added).⁶

II. Factual Background

The parties assert that the material facts of this case are not in dispute.⁷ At issue is the Plaintiff corporation Eteros Technologies USA, Inc. ("Eteros")’s attempted importation into the United States of the Subject Merchandise -- certain motor frame assemblies for an agricultural machine, dubbed the "Mobius M108S Trimmer," designed to separate the leaf from the flower of cannabis and/or other plant material -- through the Port of Blaine, Washington on or around April 10, 2021. Compl. at 1–2, June 11, 2021, ECF No. 4; Answer to Compl. at 2, July 16, 2021, ECF No. 10 ("Answer"). After the Subject Merchandise was presented to Customs and Border Protection ("CBP") for examination, CBP issued a Notice of Detention to Eteros. Compl. at 2; Answer at 2.

On April 16, 2021, CBP sent Eteros a CF 28 Request for Information inquiring

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about the Subject Merchandise, particularly its intended end-use, to which Eteros timely responded on April 19, 2021. See Compl. at 6; Answer at 2. On April 27, 2021, CBP sent Eteros a second CF 28 Request for Information, this time asking whether the Subject Merchandise would "be used at any point, in any way, to manufacture, produce, or process a product that has a [THC]⁸ concentration over 0.3 percent." Compl. at 7, Ex. E (footnote not in original); Answer at 3. Eteros responded that although it lacked access to end-user records necessary to know the THC content of cannabis products used with the Subject Merchandise, the machine is capable of use with marijuana. Compl. at 7, Ex. E; Answer at 3.

Anticipating that CBP was seeking to discern whether the Subject Merchandise meets the federal definition of "drug paraphernalia" under 21 U.S.C. § 863(d) -- and thereby, whether the Subject Merchandise contravened the import prohibition of § 863(a)(3) -- Eteros further submitted that:

(i) the Subject Merchandise does not qualify as "drug paraphernalia" because the primary intended use of the Mobius M108S is with hemp, not marijuana; and

(ii) even if the Mobius M108S qualifies as "drug paraphernalia" under § 863(d), the exemption established in § 863(f)(1) renders § 863(a)(3) ’s import prohibition inapplicable in light of Washington State's legalization of marijuana and marijuana-related paraphernalia.

Compl. at 7–9, Ex. E; Answer at 3 (admitting the allegations to the extent supported by Plaintiff's Protest Memorandum and Exhibits, but otherwise denying).

On May 10, 2021, CBP informed Eteros by email that it was excluding the Subject Merchandise under the authority of 19 C.F.R. § 151.16(j).⁹ Compl. at 9–10, Ex. F; Answer at 3. In the Notice of Exclusion, CBP explained that Eteros’ Subject Merchandise constitutes "drug paraphernalia" under 21 U.S.C. § 863(d) and that " § 863(f)(1) does not provide an importer a means to enter drug paraphernalia." Compl. at 10, Ex. F; Answer at 3 (admitting the allegations to the extent supported by Plaintiff's Protest Exhibits, but otherwise denying).

Eteros timely protested CBP's exclusion of the Subject Merchandise on or around May 11, 2021, see Compl. at 10; Answer at 3, which was denied by operation of law, pursuant to 19 U.S.C. § 1499(c)(5)(B),¹⁰ on June 11, 2021, see Compl. at 10; Answer at 3.

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III. Procedural Background

On June 11, 2021, Eteros timely filed this action against the United States to challenge CBP's denial of its protest. Compl. at 11; Answer at 3. On September 10, 2021, Eteros moved for judgment on the pleadings pursuant to USCIT Rule 12(c). See Pl.’s Mot. for J. on Pleadings, Sept. 10, 2021, ECF No. 15 ("Pl.’s Br."). In said motion, Eteros stipulated for the purpose of the litigation that the Subject Merchandise satisfies the federal statutory definition of "drug paraphernalia" under 21 U.S.C. § 863(d). Id. at 1. Defendant the United States ("the Government") responded with a cross-motion for judgment on...