MICHAEL SIMON DESIGN, INC., Tru 8, Inс. (Doing Business as Arriviste), and Target Stores, a Division of Target Corporation, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.
No. 2009-1571.
United States Court of Appeals, Federal Circuit.
June 18, 2010.
609 F.3d 1335
Patricia M. McCarthy, Assistant Director, International Trade Field Office, United States Department of Justice, оf Washington, DC, argued for defendant-appellee. With her on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director. Of counsel on the brief were James M. Lyons, Andrea C. Casson, and Karl S. Von Shriltz, Office of the General Counsel, United States International Trade Commission of Washington, DC; and Yelena Slepak, Office of the Assistant Chief Counsel, United States Customs and Border Protection, Department of Homeland Security, of New York, NY.
Before BRYSON, GAJARSA, and MOORE, Circuit Judges.
BRYSON, Circuit Judge.
The appellants, three importers of foreign-made goods, filed actions in the Court of International Trade challenging certain modifications to the U.S. tariff schedule made by Prеsidential proclamation. The Court of International Trade denied the appellants’ request for judicial review of the modifications. We affirm.
I
The Harmonized Tariff Schedule of the United States (“HTSUS“) is the United States’ implementation of the 1983 International Convention on the Harmonized Commodity Description and Coding System (“the Convention“), which created a single international system of nomenclature to classify goods for customs purposes. As periodic changes are made to the international harmonized tariff system, the HTSUS is correspondingly modified pursuant to a statutory scheme established by the Omnibus Trade and Competitiveness Act of 1988. Under that system, the President may modify the HTSUS by proclamation, based on recommendations made by the International Trade Commission. Specifically,
The President may proclaim modifications, based on the recommendations by the Commission under
section 3005 of this title, to the Harmonized Tariff Schedule if the President determines that the modifications—(1) are in conformity with United States obligations under the Convention; and
(2) do not run counter to the national economic interest of the United States.
The Commission assists the President by keeping the HTSUS under “continuous review” and by recommending to the President such changes as thе Commission considers “necessary or appropriate” to comport with the United States’ obligations under the Convention.
In June 2004, the World Customs Organization proposed several amendments to the international harmonized system, including changes to Chapter 95, which covers “[t]oys, games and sports equipment; parts and accessories thereof.” Of particular relevance here, the addition of Note 1(v) to Chapter 95 excluded apparel and other similar “articles having a utilitarian function” from duty-free classification under Chapter 95. In September 2004, the Commission instituted Investigation No. 1205-6 and invited public comment on its recommended corresponding amendments to the HTSUS.
Although the appellants did not submit any comments to the Commission in conjunction with Investigation No. 1205-6, two entities provided commentary regarding Note 1(v) to Chapter 95. Those comments argued that Note 1(v) conflicted with recent decisions of this court holding that certain utilitarian articles are entitled to duty-free classification as “festive articles.” In response, the Commission proposed the creation of two subheadings to maintain substantial rate neutrality for two categories of festive articles: (1) “utilitarian articles of a kind used in the home in the performance оf specific religious or cultural ritual celebrations for religious or cultural holidays” and (2) “utilitarian articles in the form of a three-dimensional representation of a symbol or motif clearly associated with a specific holiday in the United States.” Those duty-free carve-outs did not encompass festive apparel of the type imported by the appellants.
In April 2006, the Commission issued its final report to the President. Among its recommendations, the report included the addition of Note 1(v) and the subheadings for festive articles. Following the required 60-day legislative “lay-over period,” the President issued Proclamation 8097 adopting all of the Commission‘s recommended modifications to the HTSUS. Proclamation No. 8097, 72 Fed.Reg. 453 (Jan. 4, 2007). Those modifications became effective on February 3, 2007.
The appellants filed separate but substantially identical complaints in the Court of International Trade challenging the modifications to the HTSUS. Invoking the Administrative Procedure Act (“APA“), the appellants alleged that they had been “adversely affected or aggrieved by the ITC‘s decision to implement” the 2007 HTSUS modifications, and that the modifications were implemented in violation of law. They asserted that the trial court had jurisdiction to еntertain the action pursuant to
The court consolidated the cases and then dismissed the consolidated action. The court noted that when a party invokes the general-review provisions of the APA, and no other statute provides a cause of action, the contested agency action must be “final” in order to be subject to judicial review. The final action in this case, the court concluded, was the President‘s proclamation adopting the proposеd HTSUS
II
The appellants argue that the Court of International Trade erred by dismissing their actions. Although their January 2009 complaints do not mention the President, and instead challenge only what the appellants characterize as “the ITC‘s decision to implement” the 2007 HTSUS modifications, the appellants’ contentions on appeal focus on the President‘s role under
The APA, which the appellants invoked as the basis for their claim, authorizes suit by a party who is “adversely affected or aggrieved by agency action within the meaning of a relevant statute.”
A
To the extent the appellants challenge the Commission‘s act of recommending modifications to the HTSUS, judicial review is unavаilable because the Commission‘s actions are not “final” for purposes of the APA. See Dalton v. Specter, 511 U.S. 462, 469-70, 114 S.Ct. 1719, 128 L.Ed.2d 497 (1994); Franklin v. Massachusetts, 505 U.S. 788, 798, 112 S.Ct. 2767, 120 L.Ed.2d 636 (1992). In Dalton, the plaintiffs sought to prevent the closing of the Philadelphia Naval Shipyard by challenging recommendations presented to the President by the Secretary of Defense and
Similarly, under the Omnibus Trade and Competitiveness Act оf 1988, it is the President‘s proclamation—not the Commission‘s recommendations—that effects the amendments to the HTSUS. Under
The appellants contend that the Commission‘s recommendations arе “final” under the Supreme Court‘s decision in Bennett v. Spear, 520 U.S. 154, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997), because the proposed modifications have the legal effect of overturning this court‘s precedents regarding classification of festive articles. That argument, however, misconstrues Bennett and ignores the critical role of the President in effecting modifications to the HTSUS.
In Bennett, the issue was whether the APA authorized a district court to review a Biological Opinion of the Fish and Wildlife Service advising the Bureau of Reclamation about how a proposed action would affect endangered species or habitats. Because the Bureau was authorized to tаke action only if it complied with the terms and conditions of the Biological Opinion, the Opinion “alter[ed] the legal regime to which the [Bureau] [wa]s subject.” Id. at 178. The Court therefore held that the Biological Opinion was “final” and reviewable under the APA, explaining that: “Unlike the reports in Franklin and Dalton, which were purely advisory and in no way affected the legal rights of the relevant actors, the Biological Opinion at issue here has direct and appreciable legal consequences.” Id.
In this case, the Commission‘s recommendations did not alter the legal regime to which the decisionmaker was subject, nor did they have any binding legal effect on the relevant actors. Unlike the Biological Opinion in Bennett, the Commission‘s report under
B
To the extent the appellants challenge the President‘s act of proclaiming modifications to the HTSUS, judicial review of that act is also unavailable. As the Supreme Court has held, “the President‘s actions [are] not reviewable under the APA, because the President is not an ‘agency’ within the meaning of the APA.” Dalton, 511 U.S. at 469-70; see also Franklin, 505 U.S. at 801 (“As the APA does not expressly allow review of the President‘s actions, we must presume that his actions are not subject to its requirements.“). The appellants do not contend that the President qualifies as an “agency” for purposes of APA review; in fact, they appear to concede that APA review of the President‘s actions is barred in the present case. The appellants argue, however, that judicial review is appropriate outside the APA because the President‘s actions in adopting the 2007 HTSUS modifications exceeded his statutorily defined authority.1 We disagree.
The Supreme Court in Dalton assumed, for the sake of argument, that “some claims that the President has violated a statutory mandate are judicially reviewable outside the framework of the APA.” 511 U.S. at 474. As the Court in Dalton further explained, however, “longstanding authority holds that such review is not available when the statute in question commits the decision to the discretion of the President.” Id. In the present case, the decision whether to accept or reject the Commission‘s recommended HTSUS modifications is committed to the discretion of the President under
In Dalton, the statute at issue required the President, within two weeks of receiving a repоrt from the Base Closure Commission, to decide whether to approve the Commission‘s recommendations in their entirety. If the President approved the recommendations, he was to submit a report to Congress reflecting his decision; if the President disapproved, the recommendations were to be returned to the Commission for revision. 511 U.S. at 465. Because the 1990 Act did not limit the President‘s discretion to approve or disapprove the recommendations, the Supreme Court held that the President‘s
The appellants contend that the present case is distinguishable from Dalton because the statute at issue in Dalton did not limit the President‘s discretion in any way. In contrast, thе appellants assert, the language of section 3006 providing that “[t]he President may proclaim modifications, based on the recommendations by the Commission under section 3005 of this title” limits the President‘s discretion. Their argument is that the President is free to act only if the Commission‘s recommendations are made “under” section 3005, and that the term “under” must be interpreted to mean “in accordance with.” Therefore, they argue, the President has no discretion to implement a Commission recommendation if the recommendation does not comply with section 3005, such as by violating the “substantial rate neutrality” requirement of
That аrgument reads far too much into the word “under.” A recommendation does not cease to be made “under” section 3005 simply because the recommendation is assertedly contrary to the substantive requirements of that provision. Congress frequently provides for review of a decision made “under” a statute; in such cases, it would be nonsensical to say that the jurisdiction of the reviewing body is limited to instances in which the underlying decision construes and applies the statute correctly. See, e.g.,
Moreover, the appellants’ argument fails under Dalton, which rejected the Third Circuit‘s view that the President‘s authority to close bases was contingent on the Secretary‘s and the Commission‘s compliance with various statutory procedures. Dalton, 511 U.S. at 476. The statutory provision that defined the President‘s duties in Dalton directed the President to approve or disapprove the Commission‘s recommendations, which were made “under” another provision of the statute. See Pub.L. No. 101-510, § 2903(e), 104 Stat. 1485, 1812 (1990). Notwithstanding that language, the Supreme Court сoncluded that “[n]othing in § 2903(e) requires the President to determine whether the Secretary or Commission committed any procedural violations in making their recommendations, nor does § 2903(e) prohibit the President from approving recommendations that are procedurally flawed.” 511 U.S. at 476. As such, the statute‘s delineation of the agency‘s duties in preparing recommendations did not limit the President‘s discretion to approve or disapprove the recommendations. Id.
The appellants’ argument in this case similarly “conflate[s] the duties of the ... Commission with the authority of the President,” in contravention of Dalton. 511 U.S. at 476. As was true of the statute in Dalton, nothing in
We also reject the appellants’ distinction of Dalton on the basis of narrow factual differences, such as the fact that the 1990 Act in Dalton provided that in the event of Presidential disapproval, the Base Closure Commission would be required to revise its report. The Supreme Court attached no significance to that fact or to the requirement in the 1990 Act that the President either approve or disapprove the agency‘s recommendations in their entirety, holding that even under those circumstances the President‘s discretion was sufficiently broad to foreclose judicial review. See 511 U.S. at 465, 476. Under section 3006(a), the President‘s authority is not constrained in any way by the Commission‘s recommendations. The statement in section 3006 that the President “may proclaim modifications, based on the recommendations by the Commission under section 3005 of this title, to the Harmonized Tariff Schedule” therefore does nоt restrict the President‘s discretion or render the President‘s actions judicially reviewable.
The only language in section 3006 that limits the President‘s discretion to proclaim HTSUS modifications is the requirement that the President “determine[] that the modifications—(1) are in conformity with United States obligations under the Convention; and (2) do not run counter to the national economic interest of the United States.”
In this case, as in Motions Systems, the appellants do not claim that the President failed to fulfill his statutory mandate under section 3006 to determine whether the Commission‘s proрosed modifications conformed with the Convention and did not run counter to the national economic interest. Rather, the appellants argue that it was improper for the President to adopt modifications that were not rate neutral. As we concluded above, section 3006(a) does not make rate neutrality a condition of the President‘s decision. Therefore, any claim that the Presidential proclamation does not produce rate neutrality is not
The appellants argue that our decision in Corus Group PLC v. International Trade Commission, 352 F.3d 1351 (Fed.Cir.2003), removes the present claims from the realm of Presidential discretion under Dalton and Motions Systems. Corus, however, is inapplicable here. Corus concerned the President‘s authority to impose duties on foreign imports pursuant to the “escape clause” provision of the Trade Act of 1974. Under the express terms of that statute, if the Commission‘s report “contain[s] an affirmative finding regarding serious injury, or the threat thereof, to a domestic industry, the President shall take all appropriate and feasible action” to make a corrective adjustment. Corus, 352 F.3d at 1353-54;
Here, by contrast, the statute contains no language that expressly mandates substantial rate neutrality as a prerequisite to the President‘s authority to proclaim HTSUS modifications. Nor does the statute require any independent predicate to Presidential action. The President‘s authority under section 3006 turns solely on his assessment of whether the Commission‘s recommendations are in conformity with the United States’ obligations under the Convention and do not run counter to the nation‘s economic interests.
Citing Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 72 S.Ct. 863, 96 L.Ed. 1153 (1952), the appellants contend that judicial review is available because the President has “defie[d] a Congressional mandate” and has thereby “run afoul of the Separation of Powers Doctrine.” This case and Youngstown Sheet & Tube, however, are antipodes. Youngstown Sheet & Tube involved an action against the Secretary of Commerce alleging that his action in seizing the petitioners’ steel mills was unauthorized by statute and constitutionally impermissible. This case, by contrast, involves an express legislative grant of discretionary authority to the President and does not implicate any constitutional right оf the appellants. Youngstown Sheet & Tube therefore provides no support for a right to judicial review in this case.
Although the appellants invoke Justice Jackson‘s concurring opinion in Youngstown Sheet & Tube, we think that another of Justice Jackson‘s opinions, his opinion for the Court in Chicago & Southern Air Lines, Inc., v. Waterman Steamship Co., 333 U.S. 103, 68 S.Ct. 431, 92 L.Ed. 568 (1948), is more instructive. That case raised the question whether an agency rec-
An even closer precedent is United States v. George S. Bush & Co., 310 U.S. 371, 60 S.Ct. 944, 84 L.Ed. 1259 (1940). In that case, the Supreme Court held that Congress‘s delegatiоn of power to the President to modify tariff rates pursuant to a recommendation of the Tariff Commission had the effect of barring judicial review, notwithstanding a claim that the Commission‘s recommendation was legally flawed. The dispute in George S. Bush arose after the Tariff Commission recommended an increase in the duty on certain imported products. By statute, the President was given the authority to approve the Commission‘s recommendations by proclamation if in his judgment the recommended changes were necessary to equalize differences in the cost of production for the domestic and imported products. After the President issued such a proclamation, the Court of Customs and Patent Appeals held the proclamation unlawful based on the court‘s conclusion that the Commission‘s recommendation was contrary to the substantive requirements of the governing statute. 310 U.S. at 376-78. The Supreme Court reversed, holding that the Tariff Act “does not permit judicial examination of the judgment of the President that the rates of duty recommended by the Commission are necessary to equalize the differences in the domestic and foreign rates of production.” Id. at 379. The Court observed that the Tariff Commission, like its successor the International Trade Commission, served the President
as an adviser.... It does not increase or decrease the rates of duty; it is but the expert body which investigates and submits its facts and its recommendations to the President. It is the judgment of the President on those facts which is determinative of whether or not the recommended rates will be promulgated. In substance and to a great extent in form the action of the Commission and the President is but one stage in the legislative process.... And the judgment of the President that on the facts, adduced in pursuance of the procedure prescribed by Congress, a change of rate is necessary is no more subjеct to judicial review under this statutory scheme than if Congress itself had exercised that judgment.
Id. at 379-80 (citations omitted); see also Norwegian Nitrogen Prods. Co. v. United States, 288 U.S. 294, 305, 53 S.Ct. 350, 77 L.Ed. 796 (1933) (“What is done by the Tariff Commission and the President in changing the tariff rates to conform to new conditions is in substance a delegation, though a permissible one, of the legislative process.“).
The parallelism between the “recommendation and proclamation” process in the George S. Bush case and in this one is striking. In George S. Bush, the Supreme Court held that the President‘s exercise of discretion was not subject to judicial re-
AFFIRMED
WILLIAM C. BRYSON
UNITED STATES CIRCUIT JUDGE