World Duty Free Americas, Inc. v. Summers, No. Civ.A.00-00404RCL.

CourtUnited States District Courts. United States District Court (Columbia)
Writing for the CourtLamberth
Citation94 F.Supp.2d 61
PartiesWORLD DUTY FREE AMERICAS, INC., Ammex Tax & Duty Free Shops, Inc., Ammex Tax & Duty Free Shops West, Inc., and Ammex Warehouse Company, Inc., Plaintiffs, v. Lawrence H. SUMMERS, Secretary of the Treasury, and Bradley A. Buckles, Director, Bureau of Alcohol, Tobacco and Firearms, Defendants.
Decision Date18 April 2000
Docket NumberNo. Civ.A.00-00404RCL.
94 F.Supp.2d 61
WORLD DUTY FREE AMERICAS, INC., Ammex Tax & Duty Free Shops, Inc., Ammex Tax & Duty Free Shops West, Inc., and Ammex Warehouse Company, Inc., Plaintiffs,
v.
Lawrence H. SUMMERS, Secretary of the Treasury, and Bradley A. Buckles, Director, Bureau of Alcohol, Tobacco and Firearms, Defendants.
No. Civ.A.00-00404RCL.
United States District Court, District of Columbia.
April 18, 2000.

Page 62

Tom M, Schaumberg, Harvey B. Fox, Allan J. Stevenson, Michael L. Doane, Adduci, Mastriani & Schaumberg, LLP, Washington, DC, for plaintiffs.

Wilma A. Lewis, Mark E. Nagle, Paul S. Padda, United States Attorney's Office, Washington, DC (Imelda M. Koett, Office of Chief Counsel, Bureau of Alcohol, Tobacco & Firearms, Department of the Treasury, Washington, DC, of counsel), for defendants.

MEMORANDUM OPINION

LAMBERTH, District Judge.


Plaintiffs, owners and operators of duty-free shops located along the United States-Canadian border, seek a preliminary injunction enjoining the implementation and enforcement of certain temporary regulations ("Temporary Rules") promulgated by the Department of the Treasury's ("Treasury") Bureau of Alcohol, Tobacco and Firearms ("ATF"), which prohibit the

Page 63

"relanding" into the United States "previously exported" tobacco products, including the limited amount of cigarettes allowed for the personal use of returning United States residents. 27 C.F.R. §§ 275.11; 275.83. Plaintiffs contend that the Temporary Rules are invalid because they were promulgated without notice-and-comment as required by the Administrative Procedure Act, 5 U.S.C. § 553(b), and because they illegally abolish the so-called "personal use" exemption that shields from duty, as "incidents of the journey", "article[s] acquired abroad" by U.S. residents. 19 U.S.C. § 1555(b)(6)(B). Upon consideration of plaintiffs' motion for a preliminary injunction, the opposition thereto, the applicable law, oral argument and for the reasons set forth below, plaintiffs' motion is GRANTED and defendants are hereby ENJOINED from enforcing the Temporary Rules, 27 C.F.R. § 275.11 and 27 C.F.R. § 275.83, to the extent that they prohibit the importation of cigarettes purchased in duty-free stores up to the limit allowed for personal use under 19 U.S.C. § 1555(b)(6)(B).

I. BACKGROUND

On December 22, 1999, the ATF promulgated Temporary Rules 27 C.F.R. § 275.11 and § 275.83, without notice to the public, for the stated purpose of implementing certain provisions of Section 9302 of the Balanced Budget Act of 1997. Pub.L. No. 105-33, 111 Stat. 673 (1997). Section 9302 of the Balanced Budget Act amended 26 U.S.C. § 5761 to provide, in relevant part, that

every person who sells, relands, or receives within the jurisdiction of the United States any tobacco products or cigarette papers or tubes which have been labeled or shipped for exportation under this chapter....

shall, in addition to the tax and other penalty provided in this title, be liable for a penalty equal to the greater of $1,000 or 5 times the amount of the tax imports imposed by this chapter.

To that end, the Temporary Rules prohibit the "relanding" into the United States of previously exported U.S. manufactured cigarettes, except under limited circumstances. 27 C.F.R. § 275.11. The Temporary Rules define the term "relanding" as

Any tobacco products ... which have been labeled or shipped for exportation ... as prescribed in this chapter, previously exported and returned within the jurisdiction of the United States. This term does not apply to any tobacco products that are placed in appropriately marked receptacles by travelers or passengers prior to making their declaration to a U.S. Customs officer upon arrival in the United States.

27 C.F.R. § 275.11. By its terms, this definition indicates that cigarettes brought back into the United States by a returning U.S. resident under the personal use exemption, 19 U.S.C. § 1555(b)(6)(B), would be considered "relanded," and thus, their importation would violate 26 U.S.C. § 5761.

As noted above, prior to the implementation and enforcement of the Temporary Rules, returning residents of the United States were eligible for a personal use exemption from the payment of any Customs duty or tax on articles acquired abroad as incidents of their journey. 19 U.S.C. § 1555(b)(6)(B). Specifically, sub-headings 9804.00.65, 9804.00.70, and 9804.00.72 ("subheadings") of the Harmonized Tariff Schedule of the United States ("Tariff Schedule") expressly authorize U.S. residents to bring back into the United States a limited number of cigarettes upon their return. 19 U.S.C. § 1202. The relevant statutory text provides that

Except in the case of travel involving transit to, from, or through an insular possession of the United States, merchandise described in subparagraph (A) that is purchased by a United States resident shall be eligible for exemption from duty under subheadings 9804.00.65, 9804.00.70, and 9804.00.72 of the Harmonized Tariff Schedule of the United States upon the United States resident's return to the customs territory of the

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United States, if the resident meets the eligibility requirements for the exemption claimed. Notwithstanding any other provision of law, such merchandise shall be considered to be an article acquired abroad as an incident of the journey from which the resident is returning, for purposes of determining eligibility for any such exemption.

19 U.S.C. § 1555(b)(6)(B) (emphasis added). The relevant Tariff Schedule subheading exempts for personal use "not more than 200 cigarettes." Tariff Schedule, subheading 9804.00.72.

Plaintiffs operate duty-free stores along the United States-Canadian border that sell, among other things, tax-free U.S. manufactured cigarettes. As a result of the implementation of the Temporary Rules, persons who purchase tax-free U.S. cigarettes at plaintiffs' stores before departing the United States are prohibited from bringing any of these cigarettes back into the United States, even under the so-called "personal use" exemption. Now, rather than permit travelers to return with the limited number of cigarettes allowed under for personal use, Customs requires persons to discard all U.S. manufactured cigarettes prior to reentry into the United States, or face potential penalties. 27 C.F.R. § 275.11.

II. DISCUSSION

To obtain a preliminary injunction, a litigant must show "1) a substantial likelihood of success on the merits, 2) that it would suffer irreparable injury if the injunction is not granted, 3) that an injunction would not substantially injure other interested parties, and 4) that the public interest would be furthered by the injunction." Mova Pharm. Corp. v. Shalala, 140 F.3d 1060, 1066 (D.C.Cir.1998) (citing City-Fed Financial Corp. v. Office of Thrift Supervision, 58 F.3d 738, 746 (D.C.Cir. 1995)). The court weighs plaintiffs' showings on these four factors to decide whether to grant the injunction. CityFed Financial, 58 F.3d at 747.

A. Likelihood of Success on the Merits

Plaintiffs contend they have demonstrated likely success on the merits. First, plaintiffs maintain that the Temporary Rules are invalid because defendants failed to promulgate them in accordance with the notice and publication requirements of the Administrative Procedure Act, 5 U.S.C. § 553(b) & (d) ("APA"). Specifically, plaintiffs dispute defendants' assertion that the regulations fall within the so-called "good cause" exception to the APA's notice and publication requirement. 5 U.S.C. § 553(b) and (d)(3) (stating that notice and publication may be dispensed with for "good cause" based upon a finding that notice and/or publication "are impracticable, unnecessary or contrary to the public interest"). They note that the ATF promulgated the Rules nearly two years after the statute they purport to implement was enacted. Second, plaintiffs contend that the promulgated regulations unlawfully abolish the "personal use" exemption, which allows returning United States residents to return to the United States with a limited amount of cigarettes for personal consumption. 19 U.S.C. § 1555(b)(6)(B) (exempting from duty certain merchandise listed under subheadings 9804.00.65, 9804.00.70 and 9804.00.72 of the Harmonized Tariff Schedule of the United States). Plaintiffs assert that defendants implicitly acknowledge that enforcement of the Rules against returning residents is problematic by virtue of the fact that persons are given the opportunity to discard the cigarettes, even after they would technically be subject to the...

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43 practice notes
  • American Feder. of Government Employees v. U.S., No. CIV.A.2000-936 RMU.
    • United States
    • United States District Courts. United States District Court (Columbia)
    • June 30, 2000
    ...1999); see also Mova Pharmaceutical Corp. v. Shalala, 140 F.3d 1060, 1066 (D.C.Cir.1998); World Duty Free Americas, Inc. v. Summers, 94 F.Supp.2d 61, 64 (D.D.C.2000); ANADAC, Inc. v. INS, 44 F.Supp.2d 306, 308 (D.D.C.1999). These four factors are not considered in isolation from one another......
  • Pharmaceutical Research & Mfrs. of America v. U.S., Civil Action No. 2000-2990(RMU).
    • United States
    • United States District Courts. United States District Court (Columbia)
    • January 18, 2001
    ...v. International Brotherhood of Teamsters, 166 F.3d 356, 361 (D.C.Cir. 1999); see also World Duty Free Americas, Inc. v. Summers, 94 F.Supp.2d 61, 64 (D.D.C.2000). These four factors are not considered in isolation from one another, and no one factor is necessarily dispositive as to whether......
  • Nat'l Venture Capital Ass'n v. Duke, Civil Action No. 17–1912 (JEB)
    • United States
    • United States District Courts. United States District Court (Columbia)
    • December 1, 2017
    ...rule because "the time pressure ... was due in large part to the Secretary's own delays"); World Duty Free Americas, Inc. v. Summers, 94 F.Supp.2d 61, 65 (D.D.C. 2000) (agency's "considerable delay [of two years] in promulgating the Rules substantially undercuts defendants' present position......
  • Tanner v. Federal Bureau of Prisons, Civil Action No. 06-0529 (RMU).
    • United States
    • U.S. District Court — District of Columbia
    • May 17, 2006
    ...Fin. Corp. v. Office of Thrift Supervision, 58 F.3d 738, 746 (D.C.Cir.1995)); see also World Duty Free Americas, Inc. v. Summers, 94 F.Supp.2d 61; 64 (D.D.C.2000). It is particularly important for the movant to demonstrate a substantial likelihood of success on the merits. Cf. Benten v. Kes......
  • Request a trial to view additional results
43 cases
  • American Feder. of Government Employees v. U.S., No. CIV.A.2000-936 RMU.
    • United States
    • United States District Courts. United States District Court (Columbia)
    • June 30, 2000
    ...1999); see also Mova Pharmaceutical Corp. v. Shalala, 140 F.3d 1060, 1066 (D.C.Cir.1998); World Duty Free Americas, Inc. v. Summers, 94 F.Supp.2d 61, 64 (D.D.C.2000); ANADAC, Inc. v. INS, 44 F.Supp.2d 306, 308 (D.D.C.1999). These four factors are not considered in isolation from one another......
  • Pharmaceutical Research & Mfrs. of America v. U.S., Civil Action No. 2000-2990(RMU).
    • United States
    • United States District Courts. United States District Court (Columbia)
    • January 18, 2001
    ...v. International Brotherhood of Teamsters, 166 F.3d 356, 361 (D.C.Cir. 1999); see also World Duty Free Americas, Inc. v. Summers, 94 F.Supp.2d 61, 64 (D.D.C.2000). These four factors are not considered in isolation from one another, and no one factor is necessarily dispositive as to whether......
  • Nat'l Venture Capital Ass'n v. Duke, Civil Action No. 17–1912 (JEB)
    • United States
    • United States District Courts. United States District Court (Columbia)
    • December 1, 2017
    ...rule because "the time pressure ... was due in large part to the Secretary's own delays"); World Duty Free Americas, Inc. v. Summers, 94 F.Supp.2d 61, 65 (D.D.C. 2000) (agency's "considerable delay [of two years] in promulgating the Rules substantially undercuts defendants' present position......
  • Tanner v. Federal Bureau of Prisons, Civil Action No. 06-0529 (RMU).
    • United States
    • U.S. District Court — District of Columbia
    • May 17, 2006
    ...Fin. Corp. v. Office of Thrift Supervision, 58 F.3d 738, 746 (D.C.Cir.1995)); see also World Duty Free Americas, Inc. v. Summers, 94 F.Supp.2d 61; 64 (D.D.C.2000). It is particularly important for the movant to demonstrate a substantial likelihood of success on the merits. Cf. Benten v. Kes......
  • Request a trial to view additional results

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