Trans-Pacific Policing Agreement v. U.S. Customs Service

• Decision Date: 01 June 1999
• Docket Number: TRANS-PACIFIC,No. 98-5253,98-5253
• Citation: 336 U.S.App. D.C. 189,177 F.3d 1022
• Parties: POLICING AGREEMENT, et al., Appellants, v. UNITED STATES CUSTOMS SERVICE, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

177 F.3d 1022

TRANS-PACIFIC POLICING AGREEMENT, et al., Appellants, v. UNITED STATES CUSTOMS SERVICE, Appellee.

No. 98-5253.

United States Court of Appeals District of Columbia Circuit.

Argued April 29, 1999.

Decided June 1, 1999.

Appeal from the United States District Court for the District of Columbia (No. 97cv02188).

Paul M. Tschirhart argued the cause for appellants. With him on the briefs were Jeffrey F. Lawrence, Heather Spring and R. Frederic Fisher. Cindy G. Buys entered an appearance.

Kimberly Nelson Brown, Assistant U.S. Attorney, argued the cause for appellee. With her on the brief were Wilma A. Lewis, U.S. Attorney, and R. Craig Lawrence, Assistant U.S. Attorney.

Before: EDWARDS, Chief Judge, WALD and ROGERS, Circuit Judges.

Opinion for the Court filed by Chief Judge HARRY T. EDWARDS.

HARRY T. EDWARDS, Chief Judge:

Trans-Pacific Policing Agreement ("TPPA" or "appellants"), an association of registered ocean common carriers, is charged by federal statute with policing exporters who send shipments into the United States. One principal function of TPPA is to investigate and take action to prevent the mischaracterization of cargo in sealed marine containers. Pursuant to the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552, TPPA sought shipping code numbers from the United States Customs Service ("Customs") in order to facilitate investigations of exporters' shipments. Customs rejected TPPA's request, claiming that release of the code numbers would result in serious competitive injury to importers in the United States and, thus, that the information sought was exempt from disclosure under FOIA Exemption 4, id. § 552(b)(4). TPPA filed suit in District Court, and the court granted summary judgment in favor of Customs, finding that Customs had met its burden under Exemption 4.

On appeal, TPPA claims that Customs could have disclosed redacted portions of the code numbers without causing competitive harm to United States importers, and that the District Court erred in not making a segregability finding. Customs responds that, because TPPA made no request for redaction before the District Court, the claims on appeal should not be considered by this court and the judgment of the District Court should be affirmed. Because the District Court never considered the possibility of redaction, we believe that a remand is warranted in this case.

There is no doubt that appellants could have helped to save judicial resources by presenting the full theory of their case as effectively before the trial court as it was presented during the arguments before this panel. Nonetheless, we see no point in dismissing this lawsuit. Both sides agree that appellants could and would simply file a new lawsuit if the case were dismissed. And counsel for Customs concedes that there is really nothing of substance to be gained by requiring appellants to file a new FOIA request at the administrative level; it is also clear that a new lawsuit will be costly in terms of additional time, expense, and wasted judicial resources. In these circumstances, we believe that a remand is warranted.

I. BACKGROUND

A. Factual Background

TPPA is an association of registered ocean common carriers. Appellant Nippon Yusen Kaisha is an individual ocean carrier, as well as a member of the association. The association was formed pursuant to the Shipping Act of 1984, 46 U.S.C. app. §§ 1701-1720, and is authorized under the Act to investigate and take action to correct certain trade "malpractices" prohibited by the Act. See id. § 1709(a)(1), (b)(1)-(4). Among the prohibited malpractices, as relevant here, is the mischaracterization of cargo in sealed marine containers, which allows unscrupulous exporters to obtain freight rates below the lawful filed tariff rate applicable to a particular commodity. On some occasions the ocean carrier is an accomplice in violating the law and on other occasions the carrier has been defrauded.

Many foreign exporters shipping goods into the United States do so via ocean carrier. Using information provided by the exporter, the carrier prepares an Inward Vessel Manifest ("IVM"), which provides a general description of the goods contained in each shipment. See 19 C.F.R. § 103.31(e)(3) (1998). Customs requires the carrier to file the IVM upon entry into the United States, but it is usually filed before the vessel arrives in port. The information contained in the IVM is regularly released for public distribution under Customs regulations. See id. § 103.31(a)(3), (e). When the carrier provides Customs with the IVM, Customs assigns the shipped goods one or more entry numbers. Each individual import transaction receives a unique entry number, which Customs then uses for all official purposes.

When the importer is notified that its goods have arrived, Customs requires that the importer--not the carrier--complete an Import Declaration. On this document, the importer must provide detailed information about the shipment, in order to enable Customs to, inter alia, assess properly the duties that may be due on that shipment. As part of the Import Declaration, the importer must include a Harmonized Tariff Number ("HTS number") applicable to the goods. The HTS number corresponds to a specific legal description within the universe of imported merchandise. The complete list of HTS numbers is set forth in the Harmonized Tariff Schedule that the Government publishes each year. This published Schedule is akin to a dictionary, in that it assigns a precise definition to each ten-digit HTS number. The definitions are highly specific, and may even include the value of the goods. For example, Customs has over 1900 different HTS numbers for goods that could generally be described as "ready made garments." See, e.g., Appendix ("App.") 246-57. In general, each digit in an HTS number adds an additional layer of specificity to the description of the goods, in the same way that biologists' use of phylum, order, genus, and species identifies living organisms to increasing degrees of specificity. Although the Schedule is published annually, Customs normally does not release information from Import Declarations, which apply HTS numbers to specific shipments of goods.

The IVMs and the Import Declarations each contain similar information--a description of the goods being shipped--but, as the District Court noted, and as the parties agree, "they are very different documents, prepared by different persons, and prepared under different circumstances." Trans-Pacific Policing Agreement v. United States Customs Serv., Civ. No. 97-2188, at 3 (D.D.C. May 14, 1998) (Memorandum Opinion) ("Memorandum"), reprinted in App. 273. The IVM is prepared by the carrier, generally with details supplied by the exporting shipper. As noted above, the description of the goods contained in the IVM need only be of a general nature. By contrast, it is the importer who must file the Import Declaration, using the far more precise HTS numbers, which provide a description of the shipment that is significantly more detailed than the one found on the IVM. Moreover, an importer completes the Import Declaration under penalty of law and under the watchful eye of Customs. Therefore, it is undisputed that Import Declarations generally contain a more accurate description of the shipped goods than do IVMs--not only because the HTS numbers are more precise, but also because the importers filling out the Import Declarations have less incentive and ability to mischaracterize the shipment than do those filling out the IVMs.

TPPA enforces the Shipping Act by ensuring that exporters do not mischaracterize their cargoes in order to receive lower tariff rates. It is indisputable that access to the HTS numbers would greatly facilitate the work of TPPA officials. According to appellants, use of those numbers is the easiest and cheapest method of checking the accuracy of the descriptions contained in the IVMs, and is therefore the most efficient method of enforcing federal law and reducing commercial fraud in the shipping industry. The alternative--physically inspecting each shipment--is, according to appellants, expensive, time-consuming, and unduly intrusive of honest shippers and importers. See Appellants' Opening Brief at 6-7.

B. Procedural Background

On September 25, 1996, appellants wrote to Customs, requesting disclosure of "Customs['s] harmonized numbers for actual commodity description[s]" of 68 shipments, which appellants identified by their entry numbers. See Letter from Jay Tolentino, NYK Line, Inc., to Audrey Adams, Customs (Sept. 25, 1996), reprinted in App. 15-16. On October 8, 1996, Customs responded by refusing to release the requested HTS numbers, claiming in only one sentence that such information fell within FOIA Exemption 4, which exempts from disclosure "trade secrets and commercial or financial information obtained from a person and privileged or confidential." 5 U.S.C. § 552(b)(4); see Letter from Adams to Tolentino (Oct. 8, 1996), reprinted in App. 17.

On November 12, 1996, appellants appealed Customs's initial refusal to the Customs FOIA Appeals Officer. See Letter from R. Frederic Fisher et al., Counsel for Appellants, to FOIA Appeals Officer, Customs (Nov. 12, 1996), reprinted in App. 20-26. They explained that the purpose of their FOIA request is "to compare the commodity declaration made ... to the ocean carrier (as subsequently filed with Customs on the [IVM] ) with the commodity declaration made ... directly to Customs [on the Import Declaration]." Id. at 2, reprinted in App. 21. They argued that the requested information is no different in kind than the information released to the public on the IVMs, but it is more likely to be accurate. According to appellants, then, "[i]f the two commodity declarations for the same shipment differ, the only ... reason for according confidential treatment of the commodity declaration to Customs would be concealment of...