Marathon Oil Co. v. U.S., Slip Op. 00-35.

• Decision Date: 05 April 2000
• Docket Number: Court No. 95-09-01207.,Slip Op. 00-35.
• Parties: MARATHON OIL COMPANY, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

Page 1277

93 F.Supp.2d 1277

MARATHON OIL COMPANY, Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 00-35.

Court No. 95-09-01207.

United States Court of International Trade.

April 5, 2000.

Phelan & Mitri (Michael F. Mitri), Stamford, CT, for Plaintiff.

David W. Ogden, Acting Assistant Attorney General; Joseph I. Liebman, Attorney in Charge, International Trade Field Office; (Amy M. Rubin), Trial Attorney, Civil Division, Department of Justice, Commercial Litigation Branch; Chi S. Choy, Office of Assistant Chief Counsel, International Trade Litigation, U.S. Customs Service, of counsel, Washington, DC, for Defendant.

OPINION

BARZILAY, Judge.

I. INTRODUCTION

Marathon Oil Company ("Marathon") brought this action challenging denials by the U.S. Customs Service ("Customs") of fifteen duty drawback claims filed by Marathon pursuant to the substitution manufacturing provisions of the drawback law, contained in 19 U.S.C. § 1313(b)(1994). This Court has jurisdiction pursuant to 28 U.S.C. § 1581(a)(1994).

For the reasons set forth in the following opinion, the Court holds there is no legal impediment for Marathon to claim drawback on its importations of crude petroleum. As explained in the following opinion, however, this case is remanded to Customs to determine whether the entries at issue contained properly designated eligible, duty-paid merchandise qualifying under the substitution provision of the drawback law. Therefore, Plaintiff's motion for summary judgment is granted in part.

II. BACKGROUND

Marathon is a United States petroleum company that owns and operates refineries in several towns throughout the country. It imports crude oil, manufactures a variety of petroleum products, and then exports those products. Marathon maintains a duty drawback program under which it recovers duties that it has paid on imported crude oil through its export of refined petroleum products manufactured from the imported crude oil. This case concerns a series of drawback claims, filed between May 1987 and November 1991, under 19 U.S.C. § 1313(b), the provision on substitution for drawback purposes, which provides in relevant part:

If imported duty-paid merchandise and any other merchandise (whether imported or domestic) of the same kind and quality are used in the manufacture or production of articles within a period not to exceed three years from the receipt of such imported merchandise by the manufacturer or producer of such articles, there shall be allowed upon the exportation, or destruction under customs supervision, of any such articles, notwithstanding the fact that none of the imported merchandise may actually have been used in the manufacture or production of the exported or destroyed articles, an amount of drawback equal to that which would have been allowable had the merchandise used therein been imported....

Marathon imports a major portion of its foreign-sourced crude oil through the Louisiana Offshore Oil Port, referred to as "LOOP." Pl.'s Mem. of Law in Supp. of Pl.'s Mot. for Summ. J. at 6 ("Pl.'s Mem."). The LOOP facilities receive approximately 30% of all crude oil imported into the United States. The facilities receive up to 1.2 million barrels of crude oil per day from ocean vessels, and the oil is stored in caverns dedicated to a single "type" or "grade" of crude oil as determined by its American Petroleum Institute ("API") gravity and sulfur content. Id. Several shippers store their oil at the LOOP at any given time, and imports from different oil manufacturers of the same type of crude oil are commingled in the caverns. Id. Plaintiff states that the oil must be stored in commingled caverns because segregated storage by shipper is not economically feasible. Id. at 25. "As such, it generally cannot be said that Marathon receives and uses at its refineries the actual, physical molecules of crude oil that it imported and discharged at the LOOP platform." Id. From LOOP storage, crude oil is removed from the caverns and delivered to Marathon's refineries.

Customs initiated an administrative audit of one of Marathon's claims in June 1988 and recommended denial of the claim based on procedural deficiencies. Thereafter, Customs requested internal advice from Customs Headquarters in connection with its review of Marathon's subject drawback claims. The issue to be determined was whether the oil imported through the LOOP could be considered "received" as required by the substitution manufacturing drawback provision in light of the fact that it was commingled with other importers' crude oil prior to delivery to Marathon's refineries.

Customs Headquarters issued two rulings in response to the request.¹ The rulings stated that under subsection 1313(b),

(1) a manufacturer must ultimately receive the actual merchandise it imports even if the merchandise is initially received by some other entity; and (2) the commingling of imported designated crude oil with other importations of crude oil, whether of the same kind and quality or whether of different classes, prior to receipt at the claimant's facility precludes drawback eligibility.

Def.'s Mem. in Support of its Cross-Mot. For Summ. J. and in Opp. to Pl.'s Mot. for Summ. J. at 2 ("Def.'s Mem."). After the Headquarters documents were issued, Marathon submitted to Customs proposed amendments of the subject drawback claims to designate non-LOOP duty paid, imported crude oil that presented no question of pre-refinery receipt commingling. These proposed amendments were denied, as were the subsequently filed administrative protests.

Plaintiff thereafter brought this suit, asserting that Customs was incorrect in denying the subject drawback claims. Plaintiff advances two arguments in support of its motion for summary judgment. First, the imported duty-paid crude oil initially designated by Marathon under the subject drawback claims was eligible for designation under the substitution manufacturing provisions of the drawback law, because "receipt" within the meaning of subsection 1313(b) does not require that the actual molecules of imported oil be received in Marathon's refineries. Second, should the Court find Plaintiff's first contention to be erroneous, Plaintiff validly and correctly amended the subject drawback claims to designate eligible imported, duty paid oil. Defendant filed an opposition to Plaintiffs motion and a cross-motion for summary judgment in its favor. Because the Court finds Plaintiff to be correct on its first point, it grants Plaintiff's motion and declines to reach the issue of the amended claim.

III. STANDARD OF REVIEW

Plaintiff brings this action within the Court's jurisdiction pursuant to 28 U.S.C. § 1581(a), alleging that Customs erred in denying Marathon's substitution drawback claims. The issue before the Court, whether the term "receive" as it is used in the drawback statute, favors the meaning attributed to it by Customs or that by Marathon, is one of statutory construction. Such claims are reviewed de novo, and in this instance the Court owes no deference to Defendant's interpretation.² Although there is a statutory presumption of correctness for Customs decisions, 28 U.S.C. § 2639(a)(1), when the Court is presented with a question of law in a proper motion for summary judgment, that presumption is not relevant. Blakley Corp. v. United States, 22 CIT ___, 15 F.Supp.2d 865, 869 (1998), (citing Universal Electronics, Inc. v. United States, 112 F.3d 488, 492 (Fed.Cir.1997); see also Goodman Manufacturing L.P. v. United States, 69 F.3d 505, 508 (Fed.Cir.1995) ("Because there was no factual dispute between the parties, the presumption of correctness is not relevant.")).

This case is before the Court on cross-motions for summary judgment. "When deciding cross-motions for summary judgment, the Court considers each motion separately, and on each views the facts in the light most favorable to the non-moving party." United States v. So's USA Co., Inc., 23 CIT ___ (1999), 1999 WL 675408. USCIT R. 56(d) provides that summary judgment may be granted if

the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show 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.

It is the Court's duty to determine whether there are any factual disputes material to the resolution of the action. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-8, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The basic disputed issue in this case is legal: whether Customs was correct in determining that the drawback statute requires proof that Marathon received the actual molecules of imported crude oil in order for it to be eligible for drawback of duties. Therefore, summary judgment is proper on this issue.

IV. DISCUSSION

This case centers on the meaning of the term "receipt" within the substitution drawback statute. If Plaintiff can show that it received the merchandise within that meaning, it may be eligible for the statutory privilege of drawback.³ As "receipt" is not defined in the statute, the Court uses traditional tools of statutory construction. See Timex V.I., Inc. v. United States, 157 F.3d 879, 881 (Fed.Cir.1998). "Beyond the statute's text, these `tools' include the statute's structure, canons of statutory construction, and legislative history." Id. at 881 (citing Dunn v. Commodity Futures Trading Com'n, 519 U.S. 465, 470-79, 117 S.Ct. 913, 137 L.Ed.2d 93 (1997)).

A. Textual Meaning

Both parties advocate mutually distinct interpretations of the term "receipt." Plaintiff submits that the standard dictionary definition of the term is "to take into possession or delivery," and the legal definition is "to take possession and control." Pl.'s Mem. at 12 (quoting WEBSTER's THIRD NEW INTERNATIONAL DICTIONARY 1894 (1986); BLACK'S LAW DICTIONARY 1433 (4th ed.1968)). Marathon claims that its relationship with the LOOP-imported crude oil...