Tabacos De Wilson, Inc. v. United States
| Decision Date | 12 October 2018 |
| Docket Number | Slip Op. 18-138,Court No. 18-00059 |
| Parties | TABACOS DE WILSON, INC., TOBACCO RAG PROCESSORS, INC., BROWN-USA, INC., NIPPON AMERICA GROUP/OKURA USA INC., SKATE ONE CORPORATION, ALLIANCE INTERNATIONAL, CHB, INC., C.J. HOLT & COMPANY, INC., and CUSTOMS ADVISORY SERVICES, INC., Plaintiffs, v. UNITED STATES, UNITED STATES CUSTOMS AND BORDER PROTECTION, STEVEN T. MNUCHIN, In his official capacity as Secretary of the Treasury, and ACTING COMMISSIONER KEVIN K. MCALEENAN, In his official capacity as Commissioner, U.S. Customs & Border Protection, Defendants. |
| Court | U.S. Court of International Trade |
Before: Jane A. Restani, Judge
OPINION[ a failure to issue statutorily required drawback regulations within the congressionally-mandated time frame; granting relief to expedite promulgation of final regulations.]
John Peterson, Richard O'Neill, and Russell Semmel, Neville Peterson, LLP, of New York, NY, for Plaintiffs Tabacos de Wilson, Inc., Tobacco Rag Processors, Inc., Brown-USA, Inc., Nippon America Group/Okura USA Inc., Skate One Corporation, Alliance International, CHB, Inc., C.J. Holt & Company, Inc., and Customs Advisory Services, Inc.
Claudia Burke, Assistant Director, Justin Miller, Senior Trial Counsel, and Jamie Shookman, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, argued for Defendants United States; United States Customs and Border Protection; Steven T. Mnuchin, Secretary of Treasury; and Kevin K. McAleenan, Acting Commissioner of U.S. Customs & Border Protection. Of counsel on the brief were Alexandra Khrebtukova, Attorney, International Trade Litigation, Office of Chief Counsel, U.S. Customs and Border Protection, and Daniel Paisley, Counsel for Tax, Trade & Tariff Policy, U.S. Department of the Treasury, of Washington, D.C.
Restani, Judge: In this action seeking to expedite promulgation of final regulations implementing Section 906 of the Trade Facilitation and Trade Enforcement Act of 2015 ("TFTEA"), Tabacos de Wilson, Inc., Tobacco Rag Processors, Inc., Brown-USA Inc., Nippon America, Inc., Skate One Corporation, Alliance International, CHB, Inc., C.J. Holt & Company, Inc., and Customs Advisory Services, Inc. (collectively, "Plaintiffs") request that the court direct United States Customs and Border Protection ("CBP") and the United States Department of the Treasury ("Treasury") to issue, as an interim final rule ("IFR"), certain regulations recently published as part of a notice of proposed rulemaking ("NPRM"). The court concludes an interim final rule is not an appropriate remedy, but concludes that expedited promulgation of a final rule is warranted to prevent continued harm to plaintiffs as members of the importing public. Thus, the court orders that the final rule be published in the Federal Register by December 17, 2018, as set forth specifically in the accompanying order.
The court assumes all parties are familiar with the facts of the case as discussed in Tabacos de Wilson, Inc. v. United States, Slip Op. 18-81, 2018 WL 3203389 (CIT June 29, 2018) ("Tabacos I"), in which the court dismissed some of the plaintiffs' claims but permitted the claim at issue to proceed. For the sake of convenience, the facts relevant to this opinion are summarized herein. Section 906 of the TFTEA, Pub. L. No. 114-125, 130 Stat. 122 (2016),amended the Tariff Act (as codified in 19 U.S.C. § 1313 (2016),1 the statute governing duty drawback claims and payments ("drawbacks").2 The changes mandated by the law were supposed to simplify drawback claims, making them less burdensome for both claimants and CBP. See Defendants' Memorandum in Support of its Motion to Dismiss and Opposition to Plaintiffs' Motion for Preliminary Injunction: Defendant's Exhibit 1, Doc. No. 23-2, 2-3(Apr. 13, 2018). Congress provided Treasury two years from the enactment of the TFTEA to promulgate regulations implementing the TFTEA's drawback amendments. TFTEA § 906(g)(l)(2)(A).3 Treasury did not meet the two-year deadline, which lapsed on February 24, 2018. This date also marked the beginning of a transition year, set to end on February 23, 2019, TFTEA § 906(q)(1)(B), during which drawback claimants could file drawback claims under 19 U.S.C. § 1313, as it was pre-TFTEA, or under that statutory provision as amended by the TFTEA. TFTEA § 906(q)(3). Had regulations been promulgated promptly, this transitionperiod would have allowed importers a chance to understand and adjust to the new regulations and its associated programmatic changes, as well as to obtain the regulatory benefits associated with the new statute.
In lieu of new regulations, CBP published an "interim guidance document." See generally U.S. CUSTOMS AND BORDER PROTECTION, DRAWBACK: INTERIM GUIDANCE FOR FILING TFTEA DRAWBACK CLAIMS, VERSION 3 (Mar. 26, 2018) ("IGD").4 The IGD indicates CBP will accept claims filed under the new TFTEA rules, but will not process these claims until Section 906 implementing regulations are developed by Treasury, published in a NPRM, subjected to notice and comment, edited as necessary, and issued as final rules. See IGD at 15. Of greatest concern to plaintiffs, because regulations implementing the new law were not in place, plaintiffs could not receive payment pre-liquidation, i.e. accelerated drawback. See Tabacos I, at *6. In Tabacos I, the court found the IGD did not fulfill the statutory mandate and concluded, "[i]n failing to promulgate the implementing regulations by February 24, 2018, Defendants have exceeded a legislative deadline imposed by Section 906(g)(l)(2)(A)." Tabacos I, at *8.
After a year of internal review, on April 6, 2018, Treasury transmitted an NPRM which included, inter alia, regulations implementing Section 906, to the Office of Management and Budget ("OMB") for interagency review. See Defendants' Memorandum in Support of its Motion to Dismiss and Opposition to Plaintiffs' Motion for Preliminary Injunction, Doc. No. 23-1, at 9-10. (Apr. 13, 2018). At the time of Tabacos I, the court found that "Treasury is proceeding through the notice-and-comment process as expeditiously as is now possible," butadmonished the government that "[i]f . . . [it] fails to promulgate the regulation within a reasonable timeframe, for example, if it is unable to produce the proposed regulation for notice-and-comment on or about July 5, 2018, approximately 90 days after April 6, 2018,5 the court will consider imposing its own deadline so that the Congressional requirement is not abrogated through excessive delay." Tabacos I, at *8.
Ultimately, however, the NPRM was not presented to the Office of the Federal Register for publication until July 25, 2018. Defendants' Response to Plaintiffs' Motion for the Entry of a Judgment Order, Doc. No. 44, at 3 (Aug. 10, 2018) ("Def. Br."). Plaintiffs received a copy when the NPRM was made electronically available on July 27, 2018, id., the same day Tabacos I had directed Plaintiffs to update the court as to the status of the matter, Tabacos I, at *9. The NPRM was published for notice and comment in the Federal Register on August 2, 2018. Modernized Drawback, 83 Fed. Reg. 37,886 (CBP & Treasury, Aug. 2, 2018). The Federal Register notice provided for a public comment period concluding on September 17, 2018. 83 Fed. Reg. at 37,886.
Def. Br. at 5. The parties were ultimately unable to reach an agreement,7 and Plaintiffs filed a motion for entry of judgment. Plaintiff's Motion for Entry of Judgment Order, Doc. No. 39 (July, 27, 2018).
The court then held two status conferences. In-Person Conference, Doc. No. 46 (Aug. 23, 2018) ("Conf. 1"); In-Person Conference, Doc. No. 52 (Oct. 2, 2018) ("Conf. 2"). After the first conference, parties each submitted briefs listing which provisions of the total rule package they believed concerned drawback calculations and would need to be implemented in order to satisfy Section 906. Government Response, Doc. No. 48 (Sept. 6, 2018) ("Gov. Resp."); Plaintiff's Response, Doc. No. 50 (Sept. 21, 2018) ("Pl. Resp."). During the second status conference, the Government stated that review of the comments received during the comment period was continuing apace, that there appeared to be no changes to the drawback provisions that were sosubstantial that republication would be necessary, and that any changes would be ready for submission to the OMB for its review by October 30th, and transmitted on October 31st, with an expectation that the final rules would be published and effective by the end of the transition period on February 23, 2018.8 Conf. 2. The Court expressed continued concern that the importing public would not have the benefits that should have been available during the transition period nor would it have any useful notice prior to...
To continue reading
Request your trial