Norfolk and Western Ry. Co. v. US

• Decision Date: 01 February 1994
• Docket Number: Slip Op. 94-16. Court No. 92-10-00653.
• Citation: 843 F. Supp. 728
• Parties: NORFOLK AND WESTERN RAILWAY CO., Plaintiff, v. UNITED STATES et al., Defendants.
• Court: U.S. Court of International Trade

843 F. Supp. 728

NORFOLK AND WESTERN RAILWAY CO., Plaintiff, v.UNITED STATES et al., Defendants.

Slip Op. 94-16. Court No. 92-10-00653.

United States Court of International Trade.

February 1, 1994.

Bodman, Longley & Dahling, Carson C. Grunewald and Dennis J. Levasseur, Detroit, MI, for plaintiff.

Frank W. Hunger, Asst. Atty. Gen. of the U.S., David M. Cohen, Director, Commercial Litigation Branch, Civ.Div., U.S. Dept. of Justice, Marc E. Montalbine(Lars E. Hjelm, Attorney-Advisor, Office of Chief Counsel, U.S. Customs Service, of Counsel), Washington, DC, for defendants.

OPINION

CARMAN, Judge:

Plaintiff and defendant cross move for summary judgment pursuant to USCIT R. 56.Plaintiff brought this action seeking judicial review of a decision by the Chief of the Carrier Ruling Branch, United States Customs Service (Customs), denying plaintiff's protest on the grounds that plaintiff did not file its protest with the proper Customs officer in accordance with 19 U.S.C. § 1514(c)(1988)and19 C.F.R. § 174.12(d)(1991).Plaintiff filed its protest to contest the assessment of user fees on railroad cars plaintiff enters into the United States from Canada.Plaintiff bases jurisdiction on 28 U.S.C. § 1581(i)(2), (4)(1988) and, in the alternative, on 28 U.S.C. § 1581(a)(1988).

I.BACKGROUND

A.User Fee Statutory Scheme

In 1985, Congress authorized Customs to collect certain user fees on, among other things, vehicles and vessels entering the United States.SeeConsolidated Omnibus Budget Reconciliation Act of 1985, Pub.L. No. 99-272, § 13031, 100 Stat. 82, 308-10(codified as amended at 19 U.S.C. § 58c(1988 & Supp. II 1990))(1985 Act).The 1985 Act established a $5.00 fee for each railroad car entered into the United States and a $397.00 fee for commercial vessels weighing at least 100 tons.Id.§ 13031(a)(1), (a)(3),100 Stat. at 308.The Act also limited to $100.00 the amount of total user fees that Customs could collect in a calendar year for an individual railroad car.Id.§ 13031(b)(3)(codified as amended at 19 U.S.C. § 58c(b)(3)).In addition, the Act excluded ferries from the $397.00 commercial vessel user fee by providing "the term `vessel' does not include any ferry."Id.§ 13031(c)(1), 100 Stat. at 309.

In 1986, Congress amended the user fee provisions.SeeTax Reform Act of 1986, Pub.L. No. 99-514, § 1893,100 Stat. 2085, 2927-28(codified as amended at 19 U.S.C. § 58c(1988 & Supp. II 1990))(1986 Act).The 1986 Act increased the railroad car user fee from $5.00 to $7.50 and modified the $397.00 commercial vessel fee by establishing a $100.00 fee for "barges or other bulk carriers from Canada or Mexico."Id.§ 1893(a)(1)(B), (a)(3),100 Stat. at 2927 (codified at 19 U.S.C. § 58c(a)(3), (a)(8)).The 1986 Act also limited to $1500.00 the total amount of user fees that Customs could collect in a calendar year for an individual barge or other bulk carrier.Id.§ 1893(b)(1)(codified at 19 U.S.C. § 58c(b)(6)).

The most significant aspect of the 1986 Act for purposes of this action is its treatment of railroad cars.Specifically, the Act prohibited user fees for ferries and for railroad cars "that are being transported, at the time of arrival, by any vessel that is not a ferry."Id.§ 1893(b)(1), (b)(3),100 Stat. at 2927 (codified at 19 U.S.C. § 58c(b)(1)(C), (b)(7)).The Act's legislative history, however, expressly indicates railroad cars transported by ferries that are exempt from fees would nevertheless be subject to user fees.H.R.CONF.REP. No. 841, 99th Cong., 2d Sess. II-855(1986), reprinted in1986 U.S.C.C.A.N. 4075, 4943.

The 1986 Act also expanded the definition of the term "ferry" and provided a separate definition for the terms "barge or other bulk carrier."The 1986 Act defined these terms as follows:

(1) The term "ferry" means any vessel which is being used —

(A) to provide transportation only between places that are no more than 300 miles apart, and

(B) to transport only —

(i) passengers, or

(ii) vehicles, or railroad cars, which are being used, or have been used, in transporting passengers or goods.

....

(5) The term "barge or other bulk carrier" means any vessel which —

(A) is not self-propelled, or

(B) transports fungible goods that not packaged in any form.

Id.§ 1893(b)(4)(A), (B), 100 Stat. at 2928(codified at 19 U.S.C. § 58c(c)(1), (5)).

B.The Protest

At the time Congress enacted the foregoing statutes, plaintiff was transporting railroad cars on barges into the United States from Canada.As a result, in 1986, plaintiff paid a $7.50 user fee for each railroad car that plaintiff transported into the United States across the Detroit River from Canada to Detroit, Michigan.

Prompted by the 1986 Act's revised treatment of railroad cars transported into the United States by vessels other than ferries,¹plaintiff filed a user fee refund request with the Secretary of the Treasury on November 20, 1986.Pl's Ex. C.In its request, plaintiff indicated each of its barges was not a ferry that would be exempt from user fees.Id. at 1.Plaintiff also claimed each barge was subject to user fees up to the $1500.00 limit per calendar year under 19 U.S.C. § 58c(b)(6).Id.Because the barges were not ferries and were subject to user fees, plaintiff sought a refund of user fees it had paid on the railroad cars to the extent such fees exceeded the $1500.00 maximum owed on each barge.²Id.As plaintiff operated four barges, it claimed a refund for amounts paid in excess of $6000.00.Id. at 2.Pursuant to its request, plaintiff received a refund amounting to $16,825.00.Pl's Ex. E.After plaintiff sought its refund and until August 1991, plaintiff paid a $1500.00 user fee for each of its barges and no fees on railroad cars.

On August 28, 1991, the Director of Customs' Office of Regulatory Audit, William F. Inch, informed plaintiff it was required to pay the user fee of $7.50 for each of the railroad cars, but no fees for its barges.Pl's Ex. F.The rationale that Customs provided for its decision was that plaintiff's barges were "`ferries' for purposes of the user fee statute notwithstanding their apparent qualifications as `barges' under 19 U.S.C. § 58c(c)(5)."Id.Because Customs considered the barges to be ferries under 19 U.S.C. § 58c(c)(1), Customs determined plaintiff was not entitled to the user fee exemption contained in 19 U.S.C. § 58c(b)(7) for railroad cars "transported ... by any vessel that is not a ferry."Id. at 1-2.

On November 15, 1991, plaintiff filed a protest against Customs' decision to assess the $7.50 railroad car user fee.Pl's Ex. H. Plaintiff addressed its protest to Mr. Inch in his capacity as the Director of Customs Office of Regulatory Audit and filed the protest with Mr. Inch at Customs Headquarters in Washington, D.C. Id.In its protest, plaintiff indicated the user fees were a "charge or exaction" under 19 U.S.C. § 1514(a)(3)(1988) and, therefore, Mr. Inch's decision to assess such fees was subject to protest.Id. at 4.The essence of plaintiff's protest was that Customs incorrectly concluded plaintiff's barges were "ferries" under 19 U.S.C. § 58c(c)(1).Id. at 5.Plaintiff argued its vessels were "barges" within the meaning of 19 U.S.C. § 58c(c)(5) because the vessels were pulled by tug boats and are thus not self-propelled.Id. at 9.In addition, plaintiff asserted Customs' interpretation of the terms "ferry" and "barge" improperly "read the term `barge' out of section 58c when those barges carry railroad cars" and thereby contravened Congress' purpose in establishing the user fees.Id. at 10.In sum, plaintiff urged it was only liable for a $1500.00 annual user fee for each barge rather than a $7.50 fee for each railroad car.Id. at 5.

On April 17, 1992, Customs denied plaintiff's protest in a letter written by the Chief of Customs' Carrier Rulings Branch, Mr. B. James Fritz.Pl's Ex. I.Mr. Fritz characterized the issue upon which Customs based its protest denial as follows: "Whether a protest filed directly with Customs Headquarters is properly filed pursuant to 19 U.S.C. § 1514 and regulations promulgated pursuant thereto."Id. at 2.Mr. Fritz indicated Customs' regulations require parties to file protests with "the district director whose decision is being protested unless the protest is being filed at a port other than the district headquarters," in which case parties should file with the port director.Id.(citing19 C.F.R. § 174.12(d)).The letter concluded plaintiff's protest was "invalid" and "need not be considered on its merits" because plaintiff filed it "with the Office of Regulatory Audit in Customs Headquarters" rather than with "the district director whose decision is being protested."Id.The letter also stated the protest "is denied for failure to file with the proper Customs officer."Id.

On May 19, 1992, plaintiff wrote Mr. Fritz in order to ask Customs to reconsider its denial of plaintiff's protest.Pl.'s Ex. J.In its request for reconsideration, plaintiff reiterated the substantive arguments it had made in its original protest on November 15, 1991.Id. at 2-5.With respect to Mr. Fritz's reasons for denying plaintiff's protest, plaintiff maintained "there was no `district director' with whom to file a protest" and, therefore, filing with "the Customs official who issued a decision or whose decision is being protested" was proper.Id. at 6.Before Customs responded to plaintiff's request for reconsideration, plaintiff filed this action in the Court of International Trade (CIT) on October 2, 1992.

II.CONTENTIONS OF THE PARTIES

A.Plaintiff

In its papers before this Court, plaintiff renews the arguments it made to Customs in its protest and request for reconsideration.Specifically, plaintiff claims Customs' interpretation of the statutory definitions of the terms "barge" and "ferry" is erroneous.Pl's Br.at 12-17.In sum, because Congress separately defined each term, plaintiff urges Congress intended the two...