Suwannee SS Co. v. United States

• Decision Date: 18 July 1977
• Docket Number: C.D. 4708,Court No. 70-2603-1277.
• Citation: 435 F. Supp. 389,79 Cust. Ct. 19
• Court: U.S. Court of Customs and Patent Appeals (CCPA)
• Parties: SUWANNEE STEAMSHIP COMPANY v. UNITED STATES.

435 F. Supp. 389

79 Cust. Ct. 19

SUWANNEE STEAMSHIP COMPANY v. UNITED STATES.

C.D. 4708; Court No. 70-2603-1277.

United States Customs Court.

July 18, 1977.

Toole, Taylor, Moseley & Milton, Jacksonville, Fla. (James F. Moseley, Jacksonville, Fla., of counsel), for plaintiff.

Barbara Allen Babcock, Asst. Atty. Gen., Washington, D. C. (Edmund F. Schmidt, New York City, trial atty.), for defendant.

RE, Chief Judge:

Plaintiff steamship company brought this action to recover customs duties paid on certain repairs made in foreign ports to the "S.S. Volusia." It maintains that the duties should have been remitted by the Secretary of the Treasury because the foreign repairs were the result of a casualty.

Contending that there is no genuine issue of fact which requires a trial, the defendant has moved for summary judgment pursuant to Rule 8.2 of the rules of this court. Since plaintiff did not controvert the facts stated in the defendant's motion for summary judgment, those facts are deemed admitted under Rule 8.2(b). See Mobilite, Inc. v. United States, 70 Cust.Ct. 359, C.R.D. 73-11 (1973).

In 1968, the plaintiff was the operator of the "S.S. Volusia." In January and March of that year, on a voyage from Morocco to Norfolk, Virginia, the Volusia encountered heavy seas, requiring the use of salt water for ballast in the vessel's fresh water tanks. While in Norfolk, the failure of the vessel's chief engineer to flush the salt water from the tanks, as he had been instructed, caused the contamination of the fresh water taken on board while the vessel was in port. On the vessel's subsequent voyage, from Norfolk to South Africa, this contaminated water salted both boilers and necessitated repairs. The repairs were made in Port of Spain, Trinidad in April 1968, and in Capetown, South Africa in June 1968.

Pursuant to the provisions of section 466 of the Tariff Act of 1930, 19 U.S.C. § 257, duties of 50 per centum ad valorem were assessed on the cost of these foreign repairs. Plaintiff sought remission of these duties under section 466 of the Tariff Act of 1930, 19 U.S.C. § 258, from the regional commissioner of customs in Miami, Florida. The application for remission was denied on the ground that the ultimate cause of the repairs, i. e., the taking on of salt water, and the failure to flush the tanks while in port, did not occur on the same voyage as the repairs. Plaintiff paid the assessed duties, and thereafter brought this action for their recovery.

The relevant statutory provisions are sections 257 and 258 of Title 19 of the United States Code, as written prior to January 5, 1971.¹ Duties on the Volusia's repairs were assessed pursuant to section 257, which provides in pertinent part:

"§ 257. Duty on equipments or repair parts for Vessels.

The equipments, or any part thereof, including boats, purchased for, or the repair parts or materials to be used, or the expenses of repairs made in a foreign country upon a vessel documented under the laws of the United States to engage in the foreign or coasting trade, or a vessel intended to be employed in such trade, shall, on the first arrival of such vessel in any port of the United States, be liable to entry and the payment of an ad valorem duty of 50 per centum on the cost thereof in such foreign country; * * *."

The plaintiff's application for remission of the duties paid was made under section 258, providing in pertinent part:

"§ 258. Remission for necessary repairs.

If the owner or master of such vessel furnishes good and sufficient evidence—

(1) That such vessel, while in the regular course of her voyage, was compelled, by stress of weather or other casualty, to put into such foreign port and purchase such equipments, or make such repairs, to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination; * * *

* * * * * *

then the Secretary of the Treasury is authorized to remit or refund such duties, * * *."

The defendant previously moved to dismiss this action asserting that the court lacked jurisdiction. It contended that the statutory authority conferred upon the Secretary of the Treasury to remit repair duties was entirely discretionary, and that the exercise of that discretion was final and not subject to judicial review. In part, the contention was based upon section 701(a)(2) of the Administrative Procedure Act, 5 U.S.C. § 701(a)(2), which provides:

"Chapter 7—Judicial Review

§ 701. Application; definitions.

(a) This chapter applies, according to the provisions thereof, except to the extent that—

* * * * * *

(2) agency action is committed to agency discretion by law."

This court held that the contention was without merit. Suwannee Steamship Company v. United States, 354 F.Supp. 1361, 70 Cust.Ct. 327, C.R.D. 73-3 (1973). Clearly, defendant overlooked the strong presumption in favor of judicial review of administrative action. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971); Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967). Cf. Califano v. Sanders, 430 U.S. 99, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977). The Supreme Court has left no doubt that "indeed, judicial review of such administrative action is the rule, and nonreviewability an exception which must be demonstrated." Barlow v. Collins, 397 U.S. 159, 166, 90 S.Ct. 832, 838, 25 L.Ed.2d 192 (1970). See also Dunlop v. Bachowski, 421 U.S. 560, 95 S.Ct. 1851, 44 L.Ed.2d 377 (1975); K. Davis, Administrative Law of the Seventies §§ 28.16—28.16-1 at pp. 638-41 (1976) and Saferstein, Nonreviewability: A Functional Analysis of "Committed to Agency Discretion." 82 Harv.L.Rev. 367 (1968).

Furthermore, since statutes are to be read pari materia, the defendant's assertion, that the Secretary's exercise of discretion was judicially unreviewable, ignored the mandate of section 706(2)(A) of the A.P.A., 5 U.S.C. § 706(2)(A), which provides:

"§ 706. Scope of Review.

To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall—

* * * * * *

(2) hold unlawful and set aside agency action, findings, and conclusions found to be—

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; * * *." (Emphasis added.)

If all agency action dependent upon the exercise of delegated discretionary authority were immune from judicial review, section 706(2)(A) of the A.P.A. would be useless and meaningless.

In the effort to give effect to both provisions of the A.P.A., an increasing number of federal courts have granted a limited scope of judicial review to assure that administrators act reasonably, and do not abuse the discretion delegated by the Congress. See, e. g., Krueger v. Morton, 176 U.S.App.D.C. 233, 539 F.2d 235 (1976); Ortega v. Weinberger, 516 F.2d 1005 (5th Cir. 1975); Reece v. United States, 455 F.2d 240 (9th Cir. 1972); Littell v. Morton, 445 F.2d 1207 (4th Cir. 1971); Cappadora v. Celebrezze, 356 F.2d 1 (2d Cir. 1966). These courts have determined that—

"the reviewing court * * * has the power to ensure that the administrative decision is not wholly dependent upon the personal will of the administrator." B. Schwartz, Administrative Law § 216 at p. 608 (1976).

This court denied the defendant's prior motion to dismiss and held that the Secretary's discretionary authority to remit the foreign repair duties was judicially reviewable, and was bounded by the court's power to prevent action which was arbitrary, capricious or an abuse of discretion. Suwannee Steamship Company v. United States, 354 F.Supp. 1361, 70 Cust.Ct. 327, C.R.D. 73-3 (1973). That decision, therefore, held that judicial review was available. The present motion for summary judgment presents the question of the scope of that review.

Under section 706 of the A.P.A., which sets forth the scope of judicial review, the reviewing court is required to "hold unlawful and set aside agency action, findings, and conclusions found to be—* * * arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A).

In cases of express delegation of discretionary authority, the courts have held the scope of judicial review to be limited and narrow. Under this standard of review, it has been held that if the administrative decision is not contrary to law, and has a rational basis in fact, the courts will not substitute their discretion for that of the administrator. Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974); Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971).

In situations in which the agency action is not based upon a formal record of the administrative proceedings, the reviewing court must be presented with an explanation of the reasons given by the administrator for his decision.²Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., supra; Camp v. Pitts, 411 U.S. 138, 93 S.Ct. 1241, 36 L.Ed.2d 106 (1973); DeVito v. Shultz, 300 F.Supp. 381 (D.D.C. 1969). In cases where the administrator's stated explanation is sufficient to enable the court to determine the reasonableness of his actions, only those reasons need be considered, and the court will not speculate on potentially reasonable alternative justifications which were not raised.³Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., supra; Camp v. Pitts, supra.

The Secretary of the Treasury's explanation for his refusal to remit the repair duties to the plaintiff was contained in a letter from the deputy assistant regional commissioner of customs in Miami. This letter to the plaintiff, dated December 16, 1969, gave the following explanation for the action of the customs officials:

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