George E. Warren Corp. v. U.S., 02-1467.

• Decision Date: 28 August 2003
• Docket Number: No. 02-1467.,02-1467.
• Citation: 341 F.3d 1348
• Parties: GEORGE E. WARREN CORPORATION, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1348

341 F.3d 1348

GEORGE E. WARREN CORPORATION, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.

No. 02-1467.

United States Court of Appeals, Federal Circuit.

August 28, 2003.

Steven H. Becker, Coudert Brothers LLP, of New York, New York, argued for plaintiff-appellant. With him on the brief were Paul A. Horowitz and Christopher E. Pey.

Henry R. Felix, Trial Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were David M. Cohen, Director; and Jeanne E. Davidson, Deputy Director.

John J. Galvin, Galvin & Mlawski, of New York, New York, for amicus curiae BP Oil Supply Company, Inc.

Before MICHEL, SCHALL, and PROST, Circuit Judges.

MICHEL, Circuit Judge.

Plaintiff-Appellant George E. Warren Corporation ("Warren") appeals the decision of the United States Court of International Trade granting summary judgment to the government in this civil action contesting the denial of Warren's protest. The court held that Harbor Maintenance Taxes ("HMTs") and Environmental Taxes ("ETs") paid by Warren on various imported petroleum products were ineligible for drawback refunds. George E. Warren Corp. v. United States, 201 F.Supp.2d 1366 (Ct. Int'l 2002). Despite the government's argument about prematurity and failure to exhaust administrative remedies, we hold the Court of International Trade did have jurisdiction, because the action contested denial of a protest concerning drawback for the two taxes. Further, the doctrine of futility excused further resort to administrative remedies. Because Texport Oil Co. v. United States, 185 F.3d 1291 (Fed.Cir.1999), held HMTs are not imposed "because of ... importation," as is required for drawback by 19 U.S.C. § 1313, we affirm as to that tax. Applying to the ETs the principle of Texport that to be eligible for drawback a tax must discriminate against imports as compared to exports or domestic shipments, we hold them also not based on importation because these taxes apply equally to both domestic and imported petroleum products. We therefore affirm as to them as well.

BACKGROUND

Warren imported petroleum products on three different occasions from December 1995 to January 1996, paying regular customs duties and HMT on each occasion, and also paying ET on two of the three occasions. Subsequently, Warren exported petroleum products that were "commercially interchangeable" with the imported merchandise, a statutory prerequisite for "drawback" refunds. Based on the exportation, on July 15, 1996, Warren submitted drawback claims to the United States Customs Service ("Customs") requesting refund of the charges paid. On October 4, 1996, Customs "liquidated" the drawback entries and allowed a 99% drawback refund of the "Column 1 customs duties" pursuant to 19 U.S.C. § 1313(p). On January 3, 1997, Warren protested Customs' decision "to refuse to grant drawback of the HMT and ET paid in connection with the imported merchandise" and on February 26, 1997, Customs denied Warren's protest on the merits.

Warren then filed an action with the Court of International Trade. The government argued that the Court of International Trade lacked jurisdiction because it only has jurisdiction under 28 U.S.C. § 1581(a) where a valid protest has been denied. The government maintained that Warren did not have grounds to file a protest since its original drawback request did not include HMTs or ETs and was granted as to regular duties, the only subject of the request. The government argued that, accordingly, there was no valid protest. The Court of International Trade, however, held that it did have jurisdiction because Customs' denial of the protest specifying the two taxes was made on the merits and it would thus have been futile for Warren to file a second drawback request specifying HMT and ET. Warren, at 1373. Although the two taxes were omitted from the original request for drawback, they were clearly raised in the protest and that was enough. Id. According to the court, Warren did not need to further exhaust administrative remedies and thus there was an actual controversy ripe for judicial review. Id., at 1373.

Warren moved for summary judgment. The Court of International Trade then treated the government's arguments about the lack of merit of Warren's refund action as a cross motion for summary judgment and granted it. Id. at 1369. The court held that Warren's claims for drawback of HMTs and ETs were precluded by Texport. Id. With respect to the HMT, the court rejected Warren's argument that liability for HMT has the required "substantial nexus" to the act of importation simply because it has a nexus to the act of exportation for purposes of the Export Clause of the United States Constitution, citing Texport's specific holding that HMTs were not eligible for drawback. Id. at 1372. Finally, the court also concluded that Warren's argument that the HMT should be deemed a duty instead of a tax for drawback purposes was irrelevant as the "because of ... importation" requirement of 19 U.S.C. § 1313(j) applies equally to taxes and duties and therefore whether HMTs are considered taxes or duties does not matter. Id. at 1372 n. 6.

For the ET, the trial court concluded that the ET is "a generalized charge assessed against all petroleum products, which is imposed on products prior to refinement and imported petroleum products regardless of their level of refinement at the time they are entered." Id. at 1374. Because of this conclusion, the trial court reasoned that ETs are "imposed in a nondiscriminatory manner on both imported and domestic petroleum products" and therefore do not have the necessary nexus to importation to qualify for drawback according to Texport. Id. at 1374.

Warren timely appealed the Court of International Trade's decision to this court. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5). Based on the sound reasoning of the trial court's careful opinion, we affirm.

DISCUSSION

It is not disputed by either party but we note that summary judgment is appropriate where the record shows "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Ct. of Int'l Trade R. 56(c). Statutory interpretation is a matter of law that we review de novo. Lynteq, Inc. v. United States, 976 F.2d 693, 696 (Fed.Cir.1992).

I. Jurisdiction

The government again argues that the Court of International Trade lacked jurisdiction because Warren did not contest the denial of a valid protest. The government asserts the protest was invalid because Warren did not request drawback of HMTs or ETs. The government argues that there was, therefore, no "refusal to pay" on the part of Customs. In effect, the government argues that drawback claims cannot first be raised in a protest. The government also maintains that it would not have been futile for Warren to submit its drawback request for the HMTs and ETs and that Warren could belatedly have submitted such claims much later because amendments to the pertinent drawback statute provided a window of six months in 1999 in which Warren could have submitted such a request for drawback. According to the government, Warren did not exhaust its administrative remedies, which the government asserts is a prerequisite to Court of International Trade jurisdiction. We disagree.

The jurisdictional provision relied on by the Court of International Trade and Warren reads:

§ 1581. Civil actions against the United States and agencies and officers thereof

(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 [19 U.S.C. § 1515].

28 U.S.C. § 1581(a) (2000). Because the provision as worded requires only the denial of a protest to establish Court of International Trade jurisdiction, Customs' denial of Warren's protest on the merits is sufficient. The government cites no precedent refuting the trial court's commonsense reading of § 1581(a) or the logical link between futility — Warren knew that Customs would not refund HMTs and ETs because Customs already clearly denied Warren's claims for such drawback, albeit in the context of a protest — and the sufficiency of a denial of a protest for purposes of jurisdiction. That Warren could have filed new, independent requests for drawback of HMTs and ETs because of an extended time-window does not mean that it had to do so despite Customs having already ruled on the merits. When the government argues that a new filing by Warren would not have been futile, it confuses administrative futility with time bars. Futility occurs where the filing party already knows that the agency would deny its claim because the agency has already done so. Parties are not required to perform useless acts to exhaust administrative remedies. See Thomson Consumer Elecs., Inc. v. United States, 247 F.3d 1210, 1212, 1214-15 (Fed.Cir.2001) (explaining generally the purpose of requiring exhaustion of administrative remedies and holding specifically that a protest is not required for the Court of International Trade to have jurisdiction over civil refund actions in which a protest to Customs would be futile because of Customs' lack of authority over the subject matter).

We, thus, hold that the Court of International Trade correctly concluded that under § 1581(a) it had jurisdiction over Warren's civil action contesting Customs' denial of Warren's protest.

II. Harbor Maintenance Tax

Without doubt the Court of International Trade correctly interpreted Texport as ruling HMTs ineligible for drawback under 19 U.S.C. § 1313(j)(2); indeed that is the decision's express holding. Warren argues, however, that Texport was incorrectly decided because it is inconsistent with certain legislative history. In the alternative, Warren maintains that under a...