United States Shoe Corp. v. United States

Defendants Carnival ORDERED Summary Judg- Lines’ Motion

Cruise

ment is GRANTED. AND ORDERED.

DONE STATES SHOE

UNITED

CORP., Plaintiff, STATES, Defendant.

UNITED

Slip Op. 95-173. No. 94-11-00668.

Court

United States Court Trade.

International 25, 1995.

Oct.

Christopher Pey, E. Mark T. Wasden and Chan), Cindy Corporation H. for Polaroid Company, and Amoco Chemical amici curiae. Brothers, (Steven City Coudert New York Becker, H. Charles H. Critchlow Claire Kelly), Refining Marketing R. for Texaco Inc., Corp., American Natural Soda Ash Industries, Export Corp., United ABRO GSI America, S.A., Inc., Inc., Exim Vitol M-C Group International McLane Interna- D/B/A L.P., Inc., Bridgestone/Firestone tional Dor- Inc., Co., Management, Trading land FAI Inc., Co., Enterprises, Star Vista Chemical Champion Corp., Champion International Inc., Export Corp. Technologies, and ISP amici curiae. Moring, Washington, (Barry & DC

Crowell Tesone), E. and Mark for E.I. du Pont Cohen Co., de Nemours & amicus curiae. DeKieffer, Horgan, Washington, & Dibble (J. Horgan), Armstrong DC Kevin World Industries, Inc., amicus curiae. P.L.L.P., Whitney Washington, Dorsey & (John Hall, Page DC B. Rehm and Munford II) America, Inc., for New Holland North amicus curiae. Davidson, P.C., Siegel, New Mandell & Grunfeld, Desiderio, Lebowitz (Brian & Silver- Goldstein, City York S. Steven S. (Steven man, City, York P. Florsheim New Weiser, and Paul A. Laurence M. Friedman Smithweiss), and Erik D. for Boise Cascade Horowitz), plaintiff. Inc., Corporation, Etonic Germain-Webber Attorney Hunger, Frank Assistant W. Co., Inc., Co., Lumber International Veneer General, Cohen, Director, David M. Jeanne Corp. Mondial International and The Heil Davidson, Director, E. Assistant Commercial Co., amici curiae. Division, Branch, Litigation United Civil Katten, Zavis, (John Chicago, Muchin & IL Department Lapi- K. States Justice (Mark Zolno, Baker, Lynn Kirk S. T. ana), McManus, S. Richard of the Chief Office Roll), Hartley for Baxter Counsel, Service, and Michael E. United States Customs Cohen, Counsel, Corporation, The Nutrasweet Healthcare Martin Office General U.S.A., Inc., Company amici curi- and Nestlé Army Corps Engineers, United States counsel, DC, ae. Washington, for defendant. (Wil- LeBoeuf, Lamb, MacRae, McKenzie, & Washington, Greene

Baker & DC (Melvin L.L.P., Outman, II, Washington, DC S. liam D. Thomas P. Ondeck and O’Brien) Schwechter, Wendy Cleary and L. John C. Kevin M. for Brown-Forman Cor- Klunk), America, Co., Company for Aluminum poration, International Fisher Controls International, S.A., Alcoa Inter-Amer- Corporation, Alcoa Hewlett-Packard International Products, Inc., ica, Inc., Memory H-C Corporation, Alcoa Business Machines Minnesota Industries, Corporation, Inc. and The Stolle Mining Manufacturing Corporation & amici curiae. Seagate Technology Corporation, amici curi- ae. Beach, FL, Mandel, Irving Jef- A. Miami Colburn, Pfeffer, Plainview, NY,

Barnes, frey R. Chicago, Richardson H. Steven & (Robert Sosnov, Norristown, PA, Burke, McGrath, Ko- E. and Thomas J. IL E. Matthew 1993) (Internal (1988 counsel, Supp. Revenue

varcik, & V City, York for Allied New Code) “Tax”], imposed when Company, [hereinafter Internation- Sheftel Textiles Sales Inc., Sirex, Ltd., exported from the United Inc., merchandise Debois al Fab-Tech Textiles, Inc., prohibition. The court Textiles, Inc., Kope- violates Capital M. that it does. Export Corporation, concludes pel Company, Dumont Corpo- Corporation, Regent United Overseas I Universal, Inc., amici curi- Muran ration and ae. court on cross- This case comes before the summary judgment motions (Pe- Cuneo, Washington, & DC McKenna agree are parties Rule 56. The there USCIT Feller, Dennin, Joseph Buck F. Michael ter dispute. They agree in also no material facts Bogard Brian Tomenga, K. Lawrence J. and subject-matter jurisdiction has that the court International, O’Shea), Inc., ami- for Swisher constitutionality of the Tax. to determine the cus curiae. given of Interna- the Court Williams, Neville, New York Peterson & jurisdiction arising tional Trade over matters (John Peterson, George Thomp- City, M. W. purposes of determin- out of the Tax: “For Marino), son, A Peter J. Allen James any ing jurisdiction court of the United Industries, Aris-Isotoner, Inc., Inc., Berwick any agency of the United States Inc., Company, Chevron Chemical Chevron subchapter imposed tax shall be Inc., Sales, International Chevron Chemical duty.” if a customs treated as such were Company, Oil Chevron Over- International 4462(f)(2). language § This directs Petroleum, Inc., U.S.A., Inc., seas Chevron imposed upon imports both that taxes Clothes, Inc., General Glass Inter- Fieldston they if were cus- exports shall be treated as Corporation, Corporation, Microsoft national duties, words, import trans- toms other Inc., Pillsbury Company, The Rhone-Poulenc actions. Inc., Uniroyal Company Xerox Chemical Corporation, Americas Corporation, jurisdic- Xerox Congress’s purpose centralizing Division, Operations Corporation, Xerox import tion over transactions the Court Manufacturing Opera- juris- Southern California dispel the International Trade was to Part- tions Division and Xerox International existing as to the Court of dictional confusion ners, amici curiae. predecessor, Trade’s the Cus- International Court, scope of toms and to reflect the true Qualey, City, D. Rode & York Patrick New jurisdiction. H.R.Rep. No. the court’s Rode, counsel, Gill and John S. General (1980),reprint- Cong., 96th 2d Sess. 47 Corpora- Corporation, Sumitomo Chemical As ed in 1980 U.S.C.C.A.N. 3758-59. America, International, tion of Newell Sie- legislative history of the Customs Courts Automation, Inc., Energy mens & Siemens shows, Congress sought, by per- Act of 1980 Inc., Corp., Systems, Power Siemens Medical suits, mitting single court to hear these “to Inc., Systems, Transportation Sie- Siemens difficulty experienced eliminate much of the Unisys Corpora- mens Solar Industries and litigants who in the international trade tion, amici curiae. past commenced suits the district courts dismissed for want of to have those suits DiCARLO, Judge Before Chief subject jurisdiction.” H.R.Rep. matter No. MUSGRAVE, RESTANI and JJ. Ac- 1980 U.S.C.C.A.N. at 3759. cordingly, Congress granted the court exclu- OPINION jurisdiction any against sive over civil action DiCARLO, Judge: Chief arising out of laws the United States federal transactions, I, governing import because of the Article Section Clause 5 of the United (the Clause”) “already developed expertise in “Export court’s inter- States Constitution Conoco, Duty provides Tax or shall be laid on national trade and tariff matters.” “[n]o exported any Foreign-Trade The Inc. v. Zones Articles from State.” United States Bd., (T) -, -, question presented the Harbor Fed.Cir. 18 F.3d is whether Tax, authority §§ includes the in- Maintenance 26 U.S.C. 4461-62 This challenges open public naviga channel or harbor responsibility to review herent constitutionality waterway, within that area tion that not an inland of a law 26 U.S.C. 4462(a)(2)(A). §§ § applied against Tax expertise. See 28 U.S.C. (1988) all (providing imports exports, ship this court with domestic origi- including ments, powers passengers. of U.S. district courts as well as 26 U.S.C. 4462(a)(3)(A). arising jurisdiction 4461(c)(1), over actions under Presently, §§ nal 255(a)(1) Constitution); see, e.g., 28 U.S.C. imposed percent amount the Tax is 0.125 three-judge (permitting designation of cargo in the value of the commercial 4461(b) and determine constitu- panels CIT to hear (Supp. volved. 26 U.S.C. V issues). statutory tional addition regard This is without to the size of the history language, legislative vessel, of the Tax port the manner or extent of use of jurisdiction. S.Rep. supports facilities, this court’s No. particular or the condition of the (1986), 228, reprinted Cong., 1st 10 port. passengers, 99th Sess. For the statute calculates 6705, 1986 6715. charge paid in U.S.C.C.A.N. value based on the actual for the transportation. 26 See U.S.C. Finally, not the first case this is 4462(a)(5)(B). Further, § Congress not does jurisdiction has over where the court taken distinguish among port particular users or Tax; arising from the the court re matters ports expending funds for harbor mainte cently jurisdiction over claims for exercised operations, though ports nance or even some paid by passenger liners restitution of taxes majority or users contribute the of the the Tax in Carnival Cruise paid. fees States, -, Lines, v. 18 CIT Inc. United exempts cargo pas The Tax certain and sum, light F.Supp. 1437 866 sengers exemptions from its burden. legislative These plain language, its histo- the Tax’s aquatic include fish or other animals not ry International Trade’s and the Court of shore, previously ferry passengers, landed on proper forum for re- traditional role as the fuel, stores, ships’ equipment bunker nec governing import transac- view of actions vessel, essary operation for of a bonded com tions, jurisdiction possesses to hear the court cargo entering the mercial United States constitutionality and of the determine country, any transhipment foreign to a and Tax. cargo shipped between the continental Unit II Alaska, ed and Hawaii or U.S. States consumption at possession for ultimate part of Congress established the Tax as exception destination with the of crude oil Development Act of the Water Resources § transported from Alaska. 26 U.S.C. (codi 99-662,100 Pub.L. No. Stat. 4082 intraport exempts The Tax also movement of U.S.C.) fied as amended scattered titles of use, port cargo, recreational and de minimis While named the [hereinafter “Act”]. government, hu port use the U.S. and “tax,” charge imposed upon port 26 users development car manitarian and assistance A, ch. subch. this nomenclature is U.S.C. go. Congress’s purpose in enact Id. stated court, necessarily binding on the see ing shippers the Tax was to have commercial 283, 304, v. 181 Fairbank United U.S. harbors and (“we fund the maintenance 21 45 L.Ed. 862 ports. S.Rep. No. 1986 names”). things regard must rather than 6709; S.Rep. No. 99th U.S.C.C.A.N. Act, Tax, provisions including of the (1985), Cong., reprinted 1st in 1986 Sess. Develop are severable. Resources Water 6639, 6644. (1988). U.S.C.C.A.N. § § ment Act 33 U.S.C. Tax, imposes enacting Congress concurrent- The Tax an ad valorem tax on federally-maintained ly Maintenance Trust “any port use” of navi established the Harbor (1988 4461, Fund, Supp. §§ § & V gable waterways. 26 U.S.C. U.S.C. 1993) Fund”], 4462(a)(2). carry “port “Trust [hereinafter The statute defines use” as purposes the Act. Monies collect- loading unloading of commercial out the [and] “the pursuant to the Tax are transferred to the cargo a commercial vessel at a ed [on or] Jrom[ ] 4462(a)(1), appro- § Fund for further port,” “port” as Trust disbursal U.S.C. exported paid the Tax on articles by Congress in accordance with the Plaintiff priation 30,1994. period April through June for the provisions. 26 U.S.C. Trust Fund’s monies, recovery of (c). It now sues for those 9505(b), 1991, Congress § Since au- claiming imposition of the Tax violates Trust Fund appropriations thorized from the Export Clause. percent eligible up offset to 100 of the outlays har- operation and maintenance Ill Resources Devel- bors under the Act. Water § opment presumed Congress Act of 1990 An act of to be Fairbank, 285, 21 not limit ex- 181 U.S. at (Supp. V did constitutional. Any in the exercise of Army S.Ct. at 649. excess penditure of Tax revenues to the U.S. power legislative or conflict with the restric largest beneficiary Corps Engineers, imposed by the fundamental law should tions Rather, Depart- of the Trust Fund. court overturns an enact be clear before the Commerce, Treasury ments of the Yet, legislature. Id. as Chief ment Atmospheric National Ad- Oceanic Marburg expounded Justice Marshall potential recipients of ministration are also Madison, (1 Cranch) 137, 2 L.Ed. 60 9505(c); Tax revenues. 26 U.S.C. see Of- (1803), particular phraseology of the “the Management Budget, fice of Executive constitution of the United States confirms President, Budget of the FY1996: Office of strengthens principle, supposed the to be Government, 376, Appendix, the U.S. 802 constitutions, that a essential to all written void; repugnant law to the constitution is Despite agencies eligible the number of to courts, depart and that as well other funds, ments, receive the Trust Fund has been run- by that Id. are bound instrument.” ning yearly surplus inception. since its at 180. surplus burgeoned

This with the increase in (Br. 0.125%, A. the Tax from 0.04% to of Ami (Second Co., cus Amoco Chem. Ex. A Annu Defendant contends that the Tax is a valid Report Congress the al to the on Status the Congress’s of constitutional authori- exercise Harbor Maintenance Trust Fund For Fiscal ty regulate foreign to and interstate com- (1994))) [hereinafter Year 1993 5 “Second merce, implicate taxing pow- and does not its Rep.”], budget.” Annual and is “on The defendant, According although ers. to practice listing trust fund revenues on Export powers, Clause restrains those budget permits them to included in calcu- be Congress’s cannot circumscribe un- Clause Thus, budget capacity lations of the federal deficit. regulate limited to commerce. monies to contributed such funds power regulate The court concludes the budget Treasury’s decreases the need to bor- eclipse Export commerce does not in row order finance federal deficit. Although Congress adopt Clause. can III, H.R.Rep. pt. Cong., No. 251 99th 1st necessary accomplish methods it deems (1985) (“[t]he budget increase in net Sess. goals pursuant regulation of com- receipts [provided by the will reduce the Tax] merce, authority pro- is limited other potential budget Federal deficit a like visions of the Constitution. United States v. by providing a amount new source user- — U.S. -, -, Lopez, relying than related revenues rather com- (1995) (providing 131 L.Ed.2d 626 pletely general appropriations”). on fund As itself, power complete in commerce “is government had collected over extent, be exercised to its utmost and ac- (See exports 500 million dollars from alone. limitations, knowledges no other than are (First Corp., Br. of Amicus Polaroid Ex. A constitution”) prescribed (quoting in the Gib- Report (9 Wheat.) Annual on the Status Ogden, bons v. Trust (1824)); S.E.C., Harbor Maintenance Fund Fiscal L.Ed. 23 Am. North Co. (1993))) 686, 704-05, 785, 795-96, Years 1987-1992 4 [hereinafter Rep.”]; Rep. (noting Congress’s “First Annual Second Annual L.Ed. 945 com- powers by express provi- at 3. merce are limited Constitution); Rodg- Congress’s does not fall under parts in other Commerce sions powers. 138 F.2d 994-95 ers v. United Clause Defendant contends the Wa- Cir.1943). (6th if court Accordingly, even the Development ter Resources Act does not es- charge imposed upon exports to find the Tax to be a tax were tablish violation of the power, charge Clause, such a under the commerce Export because enhancement of the Export subject restrictions of the still general primary purpose, revenue is not its duty. if it in fact serves as a tax or Clause merely aspect comprehensive but is one of a charge exports imposed example, legislative For program providing for conserva- fee, Clause as a user or under the Commerce development tion and of the nation’s water commerce, regulate would not be immune According resources infrastructure. to de- if Export fendant, from the restrictions of the Clause provided by the value of the benefit charge actually court found the to be a program, maintenance of safe and effi- duty exports. harbors, on The court looks to ports reasonably cient relates accrues, substance over nomenclature. charges- imposed at least part, private beneficiary. to an identifiable origin The of the Clause indicates whole, considering the Act as a defendant it is to have broad effect. Two amendments Congress simply imposed contends a user fee rejected. seeking to limit it were The first purpose making “for the effective the con- by adding would have limited the Clause “for (Def.’s gressional enactment.” Mem. purpose prohibition of revenue” to the 54) Opp’n (quoting to Amici at Moon v. exports. II against taxes or duties on (9th Cir.1967)). Freeman, 379 F.2d Records the Federal Convention (Max ed., Farrand The second argu- For defendant to succeed on this permitted export amendment would have ment, regulation the court must find that approved by majority if taxes a two-thirds Tax, primary purpose see South Note, Congress. both Houses of Constitu Block, Carolina ex rel. Tindal v. 717 F.2d Controls, tionality Export 76 Yale L.J. (4th 874, Cir.1983), 887 cert. denied 465 U.S. of (1966). 200, 203 The Constitutional Conven 1080, 1444, (1984), 104 S.Ct. 79 L.Ed.2d 764 deliberately exports chose to leave un- tion alternatively, Congress sought that to burdened; and, doing, persuaded in so money recoup raise the costs of services join at 204. South to the new union. See id. provided payer pursuant regulato- to a States, Export For the Southern Clause scheme, 372, ry Burgess, see Pace v. 92 U.S. Congress concerns that a con- addressed 375-76, 23 L.Ed. 657 The Tax serves impose trolled would burden- the North purpose. neither exports. some levies on southern Interna- First, reg- discourages the Act nor neither Corp. tional Business Machs. v. United harbor; of a it so ulates use neither does (T) -, -, 13 Fed.Cir. 59 F.3d Moon, export upheld the court an intend. (1995) 1234, [hereinafter “IBM”]. 1236 program 379 for wheat farmers. certificate Export keep all The Clause serves to program’s mon- at 391-93. It found the F.2d any exportation free of tax burden. Fair etary imposition overproduction, essen- for bank, 290, 21 181 U.S. at S.Ct. at 651. As tially penalty non-compliance with the for explained, in “[i]f the Court Fairbank all Secretary Agriculture’s production con- of exports trols, must be free from national tax or Export Id. did not violate the Clause. duty, requires simply such freedom not an regulation pri- is the The court held where exported, of a tax omission the articles mary purpose of the statute as a whole and but also a freedom from tax which di incidentally through revenue also is obtained 293, rectly exportation.” sanctions, burdens the Id. at imposition will Constitution at S.Ct. 652. necessarily prohibit charge. Id. at not (quoting Rodgers, 138 F.2d at B. Here, regulation not have as its the Act does example, primary purpose. For it does not The court finds the Harbor Mainte port applies exports nance Tax as it constitutes seek to control the amount or manner Further, influ- prohibited by the Act does not seek to Export a tax Clause and use. challenge practices, charge to enforce to withstand constitutional ence commercial or seek Clause, defray legislative goal under the it must compliance with a as did 1938, Agricultural Adjustment as costs of services rendered Act of 1964, commerce, regulation col- Agriculture Act of and the taxes amended Moon, In the Head Agricultural in or the Act lected not be excessive. considered Robertson), 1949, amended, Money (Edye in Block. Cases v. U.S. considered 580, 595-96, sought funding for the ex- 28 L.Ed. 798 instead (1884), Supreme upheld per cap- projects envisioned un- Court tensive maintenance in S.Rep. charge arriving 126 at 1986 ita on non-U.S. citizens der the Act. No. by ship. (noting Congress at in- the United States The Court found U.S.C.C.A.N. question imposed tended Harbor Maintenance Tax as new tax the statute fee defray in- portion spending appropriated on har- costs in advance for to cover of Federal maintenance). landing, spection immigrants before bor provision for their care and afterward. Id. Second, there is little indication Con- Secretary at at S.Ct. gress Rath- intended to establish user fee. “distribuye] Treasury was to the fund er, Congress way found an alternative purpose accordance with the for which it was expenditures fund intended to make. raised, exceeding any port the sum Tax, Congress enacted the it intended When such, charges received from it.” Id. As pay developing, to use the Tax to the costs of imposed regulation were incidental to the operating, maintaining port projects. directly commerce and reimbursed the costs 19; H.R.Rep. S.Rep. No. No. at of services rendered to the individual. per- Act 1986 U.S.C.C.A.N. at 6709. The proceeds mitted disbursement of Tax Pace, Similarly, Supreme Court con- Army Corps Engineers recovery for stamps cluded that a fee for used to distin- percent up eligible operation to 40 of its guish export thus tobacco intended —and outlays. and maintenance Water Resources heavy it from alleviate exactions 210(a)(2), Development Act of 1986 domestically placed upon tobacco sold —was 2238(a)(2) (1988); see First Annual 375-76; exports. not a tax on See U.S. Rep. (noting expenditures at 1 “[f]ederal Turpin Burgess, see also [port maintenance] and harbor were deter- (sustaining, 29 L.Ed. 988 on synonymous expenditures mined to be with grounds, constitutionality charge similar Army Corps Engineers”). made the imposed identify packages tobacco intend- Development The Water Resources Act of Rather, export). ed for the character- Court 1990 increased the rate of the Tax and al- stamp “accruing ized the as a fee in the due Corps Engineers up lowed the to recover regulations,” administration of the laws and percent “eligible operations to 100 of its and serving simply “compensation given as 2238(a)(2) maintenance costs.” 33 U.S.C. Pace, properly services rendered.” 92 U.S. (Supp. inception, V Since its the payment at 375. The Court found the significant Trust Fund has accumulated sur- rendered, through the services identification pluses. Cong.Ree. (daily E519 ed. exported, of tobacco was no different than 1995) (statement Rep. Mar. McDer- clearing “the fee for the vessel in which [the mott). Accordingly, we take note of the transported, making tobacco] was or for out Moon, warning “[cjertainly if the record in certifying cargo.” and the manifest of the any way indicated that substantial amounts Id. The amount of the fee never exceeded generated by of revenue had been the sale of produce stamps the costs the and the cost certificates, export we would hesitate before necessary give exporter of services the the deeming program the an exercise of the com- taxation; exemption benefit from iden- power.” merce F.2d at provided export- tification of the tobacco exemp- er the direct of a tax benefit domestic primary purpose The court finds the tion. revenue, of the Tax is to raise contrast, imposed duty has pretext imposi- “a under the little nexus binds the Pace, fee,” fixing cargo a 92 U.S. at 376. For a tion of the ad tax valorem on tax regulation of the issue of whether the is discriminato- and port maintenance costs of ry. assuming, arguendo, Even that the Tax is tied to value shipping. As the exaction nondiscriminatory, is the court finds the Tax that the to ensure is no mechanism and there remaining prongs of the fails the two Massa- “only primarily used or will be fees collected chusetts test. maintenance associated port cost of’ for the taxed, shipping that is the Tax is not with the First, charge based some pow- imposed under the commerce a user fee approximation fair of the cost of the benefits collected, rather, yield funds The fees er. port users receive from harbor maintenance maintaining develop- and purpose of for the development projects. and Low value bulk uses, for all ports and harbors ing American cargo importers exporters port use facili- Further, and recreational. commercial high greater ties to a much extent than value commenced, yet projects to be Tax funds cargo importers exporters. non-bulk envisioned, already rather than services even Yet, greater cost to the latter is than that pro- Tax Application of the rendered. Further, large ports to the former. most surplus in of the excess duced a substantial paying majority of the costs receive no court therefore finds incurred. The costs expendi- than 30% back in maintenance more revenue, fee and is not user Tax raises (See, e.g., tures. Br. of Amicus Amoco regulation of com- imposed Co., (Army Corps Engineers, Ex. G Chem. merce. Receipts Harbor Maintenance Estimated Major Cargo Transiting Fee Ports from recently has used an Supreme Court The (1992))) (draft document) $78,711,- (noting of imper distinguish an between other test exports 000 estimated collected 1992 taxes on In Massachu tax and a user fee. missible Angeles, only imports from Port of Los 444, 98 435 U.S. S.Ct. setts United $162,000 operation port returned in (1978), the Court con 55 L.Ed.2d 403 expenditures). Additionally, al maintenance registration an aircraft fee sidered whether though only users must certain commercial police aircraft violated the levied on state tax, they pay the are not the sole users im intergovernmental judicially-implied of the main ports nor the beneficiaries munity set forth Collector v. doctrine first development projects. Based on tenance (11 Wall.) 113, Day, 20 L.Ed. 78 U.S. foregoing, not find the the court does (1871). not, concluding it did charge imposed Tax is on a under the based on three criteria derived from Court relied approximation of the costs of benefits fair Authority Evansville-Vanderburgh Airport by port users. received Inc., Airlines, District v. Delta Second, To charge 31 L.Ed.2d in relation is excessive fee, as contrasted with Tax government. constitute user to the cost to the tax, commenced, charge must not projects yet the Court held: to be used to fund constitutionally-pro envisioned, against repay discriminate than to or even rather (2) interest; implementing author government tected the The Tax for services rendered. charge upon approxi ity surplus, base the a fair that is produced must a substantial system; expanding, mation of the use of some of costs in- rapidly excess charge produce Rep. must be structured Annual at 5. curred. Second fairly apportioned the total cost to revenue sum, regulate In the Tax neither seeks to government of the conferred. benefits repay nor the costs services Commerce Massachusetts, 466-70, at 435 U.S. S.Ct. rendered; moreover, fails the alter- the Tax at 1166-68. provided by Massachusetts. Ac- native test subject cordingly, prohibi- to the the Tax is as a user fee The Tax fails classification Export Clause. tions of the presented in Massachusetts. under the test clearly Export is de- Although the Clause C. protect constitutionally valued ac- signed “to questions whether the Harbor that could result Defendant tivity from undue burden” measures, 462, upon “ex- Tax is a tax levied taxing see id. at Maintenance from certain meaning of the ported within the not decide articles” 98 S.Ct. at the court need tests, defendant, According Integral a to these defendant con- Export Clause. tends, only Export if court’s examination of whether tax or fee violates the Clause is the goods by expor charge imposing discriminates in its bur- it is levied on reason their defendant, tation, e.g., goods According if entered den. a nondiscrimi- such have natory charge for a service that facilitates export stream. Defendant contends export activity Export prohibition against of the earlier eases does not violate the broad having export the Tax upon goods a tax entered the Clause. Defendant maintains Corp. charge. disagrees. a The court was curtailed Michelin Tire such stream Wages, 423 96 S.Ct. examining whether the Tax burdens (1976), and further constrained L.Ed.2d 495 articles,” inqui- “exported the court limits its Department Revenue v. Association Clause, ry Export a dis- there is Cos., Washington Stevedoring language tinct difference in between the Im- 1388, 55 L.Ed.2d 682 port-Export Export Clause and the Clause. (T) IBM, at -, See Fed.Cir. defendant, Further, according imposi- at The decisions in Michelin F.3d 1238-39. upon loading freight tion of the Tax signif- Washington Stevedoring attached merely intended to ensure that those who “Imposts distinction icance to the between such, actually ports pay. use the would As Duties,” Export and the Clause’s broad- time Tax attaches has no other when the Michelin, prohibition. er 423 U.S. at significance purposes of assessment of 543; Washington S.Ct. Stevedor upon exports. motivation behind the fee The 759-60, ing, 435 U.S. at at 1404. As charge, imposing an ad valorem defendant noted, Supreme Court in Michelin insists, possible competitive was to minimize Import-Export “Imposts Clause bans or disadvantages among cargo types and U.S. prohibition Duties” and is not “a broad ports that would have arisen from a user ” every ‘tax.’ 423 U.S. at 96 S.Ct. at charge. Circuit, According to the Federal case, argues defendant the Miche- policy difference in intended the framers Washington Stevedoring lin and tests now of the Constitution underlies the difference in issue, examine the nature of the tax rather language: than the article. status Those cases Import-Export While the Clause was in- explored whether the taxes were “ex- prohibit imposing tended States from they ports as and whether offended the such” goods moving foreign ‘transit fee’ on policies protected by the framers of the Con- commerce, Export Clause served the policies, argues, stitution. Those defendant purpose ‘forbid[ding] broader federal promoting uniformity among include the for- Supreme exports.’ taxation of Court’s preventing mer North from colonies prohibition current narrower view of the crippling export-dependent Southern Import-Export Clause thus does not Import-Export States given dictate that the Clause be Const, (“No I, Clause. U.S. art. cl. similarly narrow construction. lay any ... Imposts States shall or Duties on IBM, (T) at -, 13 Fed.Cir. 59 F.3d at 1239 Imports Exports_”). Specifically, de- (citations omitted). Defendant’s citations of fendant contends Michelin that a established are, Washington Stevedoring Michelin and nondiscriminatory property ad valorem thus, inapplicable. Import-Export did not violate the Clause recently Moreover, simply applied import- because it if even this court were to as- goods there, ed Washington Stevedoring tires maintained at a whole- sume Michelin and — 286, Clause, apply Export sale distribution warehouse. 423 U.S. at the cases remain Similarly, distinguishable. import- 96 S.Ct. at 541. defendant con- Michelin concerned Washington Stevedoring already identity tends held that a ed tires that had lost their nondiscriminatory compensates import being local tax that a unit and as an after unloaded the state for services rendered also faded to and stored within a warehouse. See U.S. implicate 280, warehouse, Import-Export the concerns of the at 96 S.Ct. at 538. At the 755, Clause. U.S. at at 1401. S.Ct. workers unloaded the containers which the delineating an In a zone where article the tires size shipped, sorted tires were in the stream of commerce melds into the pal them on wooden style, and stacked stream, export the court looks to see whether lets, by place of manu segregation without process exporta article is in the actual of the required no farther The tires facture. Id. tion, begun voyage it “has its or and whether ready for sale and deliv them processing preparation voyage.” Cornell v. sense, for the In this Id. ery to franchised dealers. 383, 385, Coyne, 192 U.S. S.Ct. operated “no the warehouse the Court found (1904). instance, For where 48 L.Ed. 504 ... warehouse differently than a distribution exported were delivered to the carri articles dealing solely in by wholesaler utilized passed, Supreme Court found er and title 302, at 96 S.Ct. at 548. goods.” Id. domestic process had entered the of those articles holding in turned Accordingly, the Michelin Spalding exportation. & Bros. v. Ed A.G. longer in goods were no the fact that the on wards, 66, 68-70, 485, 43 S.Ct. 485- U.S. 286, at 541. import transit. Id. at 96 S.Ct. Thus, taxing such 67 L.Ed. 865 the unloaded and distinguished As from have been unconstitutional. articles would Michelin, cargo unpacked imports in Although actions have been neces other has entered the stream taxed in this case sary goods would have been in before the loaded on board cargo, as it is exports. transit, long as were [these actions] “so transit, vessel, Tax falls and the export regular steps” taken to such such, it itself. As upon the merchandise goods, sale was to start the the effect Export Clause. protected an article goods upon voyage abroad. See id. at their inapplicable. Michelin is 69-70, at 486. 43 S.Ct. from the taxation Constitutional freedom Supreme Stevedoring, the Washington In exemp- exports than mere involves more occupation tax upheld a business and Court directly upon laid the articles tion from taxes upon Washington imposed by the State of Fairbank, held that exported. the Court certain services rendered —the the value of imposed foreign on a bill of stamp tax cargo. Id. at loading unloading of lading equivalent upon to tax the arti- was dis- at 1403. The Court listed, contrary to the cles and therefore stevedoring services from tinguished the 312, 21 at Export Clause. 181 U.S. at S.Ct. policies covering such insurance maritime exports always noted almost 660. The Court n. at 1402 n. goods. Id. at 756 S.Ct. 294, 21 require lading. id. at bills of upon a tax placing 21. The Court found California, (citing Almy v. at 652 S.Ct. suspect, and policies insurance was more (1861)) (24 How.) 169, 174, 16 L.Ed. 644 likely unconstitutional as a violation foreign al- (noting commerce necessities Clause, “the value of Import-Export because lading ways require association with bill goods a much closer relation [bore] instrument). By placing a written similar policies goods] [those of insurance on value reasoned, lading, the Court tax on the bill of loading unloading than to the value of spirit Congress had violated the letter ships.” amount of the Tax ad Id. As the 290-291, 300, Export Clause. See id. directly of the is tied to the value valorem 651-652, 655, 312, 21 equally in- Washington Stevedoring is goods, applicable. Mersey Marine Similarly, in Thames &

Insurance Co. v. United (1915), L.Ed. 821 Su- from 35 S.Ct. Two distinct tests have evolved policies tax preme found a determining Court case law for whether exports prohibited on marine insurance immunize an article from taxa Clause will reaching its determina- First, im the Constitution. the court must examine the tion. tion, Second, inquired whether the tax mediacy the court the Court exportation. closely directly related imposed so imposed was proximity considers Here, exportation that the tax was process of exported. of the articles the value upon exports them- constitutionality a tax substance supports the neither test at 498. The Court Id. at selves. the Tax. (1988 1993). 1581(a) dynamics Supp. found its answer within the & V Subsection provides trade and commerce: where commerce re- for review of a denial the Cus- duties, protest quires exportation an as a toms Service of a of certain item for —such exactions, necessarily always charges, or written instrument drawbacks. 28 U.S.C. (1988 1581(a); § § export Supp. with of com- U.S.C. & V associated articles 1993). protest A party must a Customs deci- merce—taxation of that item serves taxa- days 26-27, sion of the date exported within 90 of the decision tion of the article. Id. at 1514(c)(3)(B) protested. § prohibition at 498-99. of the Ex- be 19 U.S.C. S.Ct. This 1993). hand, (Supp. port applied Clause also has to taxes V On other subsec- been 1581(i) gives tion the court broad upon parties, charter for car- residual contracts lots, authority arising over civil riage cargo of full actions out of United States 1, 16-17, Hvoslef, governing import federal statutes transac- S.Ct. (T) Conoco, and, at -, recently, tions. 59 L.Ed. 813 more Fed.Cir. 2636(i) premiums F.3d at 1586. Subsection of the same paid foreign excise taxes on insurers, IBM, (T) -, requires party title to commence an action 13 Fed.Cir. 59 F.3d 1581(i) years under subsection “within two after the of action cause first accrues.” 28 Here, Congress imposed the Tax di § (Supp. V The court’s 2636© rectly upon exports along well the stream appropriate jurisdictional decision as to the exportation. The Tax is assessed at the time plaintiffs basis relates to the amount of re- 4461(c)(2). loading cargo. 26 U.S.C. covery. imposed upon delivery cargo As a tax to a Clause, Export carrier violates the see A.G. A. 68-70, Spalding, 262 U.S. at 485- argues jurisdiction only prop- Defendant imposed a tax step on the further 1581(a). According er under subsection loading cargo such onto the vessel also falls defendant, challenges the court review prohibition within the of the Clause. constitutionality of the Tax where valorem, directly The Tax is assessed ad exporter properly protests payment, an its upon itself, cargo upon the value of the pro- and seeks review of the denial of that any cargo, upon services rendered for the or Although test. defendant concedes that “nei- any accompa- instruments commerce that jurisdictional provision may exactly,” ther fit valorem, Further, ny goods. an ad (Tr. (June 1995)) Argument of Oral at 24 levied in proportion direct to an article’s “Tr.”], per- [hereinafter defendant contends Congress imposed value. could not have the mitting upon any this case to rest other exportation, Tax closer to or more imme- jurisdictional ground greatly expand would exported. diate to the articles government’s liability and would disre- gard only congressionally-mandated ave- Accordingly, the court concludes the Tax is challenge nue to the Tax. prohibited by Clause and it need (claimants not address amici’s in other defendant, According intended cases) pertaining contentions to whether the this challenge only Court to entertain a tax Tax also violates the Due Process Clause exporter protested after an payment had the Port Preference Clause of the Constitu- garners of the tax. support Defendant tion. interpretation statutory this from the lan-

guage directing the court to treat the tax as duty purpose jurisdic- customs for the IV properly tion. If court is to treat the tax indicated, parties agree As duty, contends, as a customs defendant subject jurisdiction, court has matter see su- 1581(a) protest procedures under subsection pra p. disagree but specific as to the govern. must exporters may basis which make claims. jurisdictional Further, Two subsections of the court’s argues, defendant there is a Cus- may provide statute parties parties protest— route toms decision for the (i) judicial 1581(a), (Tr. review. See 28 U.S.C. accept payment. Customs’ decision to

419 25.) (noting are final of Customs decisions unless contends administration Defendant ministerial, protests protested and that such must “set merely because Tax is not distinctly specifically” 4462(i), forth and each decision title United States subsection Customs, through protested). the De- authorizes Code administering Treasury, with of the partment Acceptance payment of duties the Tax. Defendant assessment of protestable owed does not constitute deci delegated substantial claims Export Corp. sion. See Dart v. United Secretary Treasury authority of the States, 610, 1956 43 C.A.D. WL CCPA (1) payment to determine the method acceptance (holding 8339 Customs’ of esti (2) Tax; exempt to certain of the collection mated duties tendered did not constitute de Tax where collection transactions from the cision), denied, cert. (3) provide impracticable; and be would (1956); Foods, Best Inc. v. L.Ed.2d 48 settlement mitigation penalties for States, 9-10, United 37 Cust.Ct. grant Defendant claims of claims. F.Supp. (holding payment 756-57 Treasury Secretary of the power gives the entry of customs duties at time not deci authority ‘carry out the plenary “near purpose computing sion for time to file (Def.’s Opp’n in of the Act.” Mem. purposes’ protest). plays accept Customs little role 34.) Accordingly, con- at defendant to Amici rather, they ing payments; arrive at a tends, the Tax power to administer Customs’ by “postal rental box serviced a commercial a ministerial role. transcends processes [Harbor bank that Maintenance of authorities in cites a number Defendant payments deposits Fund] them to the position. & support of its West- Treasury.” United States United States Norfolk States, 18 CIT Railway Co. v. United Office, ern Accounting General U.S. Customs (1994), -, F.Supp. 728 defendant as- Collecting Limitations Harbor Service: court found the assessment of Fees, GAO/GGD-92-25, serts the at 5 Maintenance (Dec. 1991). Tax constituted a user fee similar to the recognized this court in As decision, period filing and the for protestable Carnival, impossible protest be would protest began when Customs decided the Tax as “there was no decision of Customs pay have had to the fee. plaintiff would protest.” [plaintiffs] which could 18 CIT Corp. Motors v. United -, General F.Supp. at 1441. (1986), F.Supp. 1139 defendant CIT Maintenance Tax stat- Neither the Harbor proce- contends the court held administrative ute, require a regulations, nor its decision available, dures, had to be exhausted where noted, previously As from Customs. Ac- Customs issued its decision. even before cargo imposes statute a Tax on commercial defendant, cording although the court unloading for im- loading exports for obligation pay charges was found the 4461(e)(2). Liability § ports. 26 U.S.C. statute, of the duties payment from derived cargo percentage an ad valorem value. to section and therefore was 4461(b) (Supp. § Value is V U.S.C. fact that Customs took no protestable. The commercial docu- determined standard the duties but affirmative action to collect 4462(a)(5)(A). § Thus mentation. 26 U.S.C. offers, only accepted rejected certain de- Customs, Congress, has set the time argues, did not alleviate the need fendant Tax. imposition and the amount of the protest. regulations require exporters pay quarterly and mail port fees” on a basis arguments unpersuasive. Sec- “use These are 1581(a) summary quarterly re- protest payment with a permits denials their tion review identifying exporter port final or cover letter certain decisions Customs 1514(a). Chicago. post office box § See 28 to Customs’ 19 U.S.C. enumerated 24.24(e) (1995). Exporters § re- 1581(a); § 1515. For a C.F.R. 19 U.S.C. U.S.C. quar- by mailing an amended juris- quest refunds protest and obtain party to be able copy 1581(a), terly summary report with a pursuant to Customs diction section quarter(s) summary report for the quarterly a decision. See 19 first must have made 1993) (1988 (c) they request a refund to the Chica- 1514(a), in which Supp. & V 420 box, id., alternatively

go post by tinguished from National office Corn Growers (T) Baker, 70, filing Headquarters through Ass’n v. 6 Fed.Cir. 840 F.2d with Customs (1988), policies 1547 where the and rates in general provisions for claims not otherwise Customs, question “pecu- were those of provided regulations, 19 the C.F.R. liarly within the ambit of the § Customs Ser- procedures 24.73 None of these correct,” (T) 82, vice to 6 Fed.Cir. at 840 requires judge Customs to the constitutional- powerless at Tax, F.2d Customs is to correct ity of the and cannot be considered by plain- the constitutional infirmities raised respect payment. decisions with to These Sanders, tiff. v. See merely actions are ministerial nature. Al- Califano 980, 986, 51 L.Ed.2d 192 though where there be circumstances (finding hearing procedures administrative might exercise in admin- Customs discretion issues). resolving to unsuited constitutional Tax, istering enforcing the this discre- short, simply Customs must follow the tion does not extend to a determination on path by Congress. enacted constitutionality of the Tax. Moreover, proffered neither defendant’s case, In this there are no issues classifi cases, Motors, supports nor General Norfolk part cation or similar issues which would be position. protestable its The decision protestable of a decision. In Mitsubishi assessment of a user fee—is America, Norfolk —an Electronics Inc. v. United distinguishable present from case. (T) -, -, 12 Fed.Cir. 44 F.3d Norfolk, protestable decision was Cus- (1994), the Federal Circuit held Customs particular application toms’ of a statute. 18 protestable does not make decisions concern- at -, F.Supp. CIT at 733. Customs’ ing antidumping duties under 19 U.S.C. decision was limited whether a vessel con- 1514(a). emphasized Appeals The Court of ferry barge, stituted or a not whether the only performed that a ministerial Customs application of the user fee was constitutional. collecting function such duties under the Commerce, Department direction of the equally inapposite. General Motors is investiga- did an Customs not conduct issue concerned car compo- whether radio tion, margins, determine rates and or issue imported nents into the United States as (T) at -, antidumping orders. 12 Fed.Cir. original equipment motor-vehicle were di- 44 F.3d at 977. Plaintiff and do not amici uses, subject verted for other and therefore argue they overpaid have the amount of penalty. F.Supp. 10 CIT at Tax; rather, challenge goes their argues 1139-40. Defendant the court found constitutionality heart of the of the statute “-payment equated protesta- [of duties] itself, authority. a matter outside of Customs’ event,” though duty pay ble even was generally McCarthy Madigan, statute, derived from and not a Customs 140, 147-48, 112 1081, 1087-88, 117 (Def.’s Opp’n decision. Br. in to Amici at (1992) (noting agency may L.Ed.2d be 32.) argument misplaced. This Plaintiff unable to consider whether relief should be only paid the diversion duties “[o]nce Cus- granted, because of lack of institutional com- plaintiff toms indicated to that it considered petence presented). to resolve issues Simi- the merchandise diverted.” 10 CIT at larly, Sugar in United States Cane added). F.Supp. (emphasis at 1143 Cus- Refiners’ Block, F.Supp. Ass’n v. 3 CIT finding toms made a decision in General Mo- 883, 887, aff'd, 69 CCPA 683 F.2d 399 Again, tors had diverted the radios. Cus- (1982), protest required, in which was not toms constitutionality did not consider the change scope Customs could not statutory scheme as a whole. over-quota Presidential Proclamation as to arguments support Defendant’s own Cus- sugar. Sug- Much like Mitsubishi and Cane inability toms’ to make a decision toas Refiners’, ar there is no decision Customs constitutionality of Tax. ini- Defendant as to whether will assess the Tax. tially argues, requiring “[t]he decision itself, applica- payment

Customs does not determine the compulsion is the law tion, policies, Tax, merely pay provided by or rates of but the statute itself. The implement provisions. serves to accept As dis- decision is payment the decision to 26.) (1) (3) (Tr. paragraph Defendant of this subsection and exporter.” from the — (a)-(h) statement, noting, of this qualifies this subsections section. subsequently accept a decision Customs isn’t “[i]t 1581(i). Congress directed the authority money, no it has and retain duty pur- Tax be treated as a customs proper procedures have it unless the return duties, poses jurisdiction. by of Such their followed, protest fifing which are of been nature, very provide for from im- revenue Id. at 59. Such protest.” of a and a denial ports, encompassed and within subsec- are plaintiffs file a reasoning circular. For is (i)(l). tion 1581 protest, must have made a valid Customs similarly intended the adminis- decision, protestable As a accord- decision. tration enforcement of the Tax to be defendant, ing can be made after to the treated the administration as and enforce- filed, protest protestable no decision is duty. of a customs ment U.S.C. exists. 4462(f)(1). Thus, jurisdiction § lies under Finally, certain amici contend the denial of 1581(i)(4) it subsection as relates subsec- request pursuant to 19 C.F.R. a refund 1581(i)(l). tion 24.24(e)(5) decision, protestable § is a sum, jurisdiction provided by is 1581(a) provide the that subsection would 1581(i). § jurisdiction. Although appropriate basis for whether it has discretion decide Customs y Tax, payments of the such is able to refund is limited and does not extend to discretion The court finds Harbor Maintenance constitutionality. As Cus- determinations Tax, applies exports as it unconstitutional. power not have the to decide the toms does summary judgment Plaintiffs motion is Tax, constitutionality the court finds granted; defendant’s cross-motion for sum- protestable pursuant decisions to the refund mary judgment is denied. Parties are 24.24(e)(5) provision are limited of subsection judgment conformity in proposed submit a pertaining to the administration to decisions opinion days. with the within 20 Tax, constitutionality. not its

MUSGRAVE, Judge, concurring. B. opinion I in concur the Harbor 1581(i) (the “Act”) Subsection embraces the issues Maintenance Revenue Act is un contested as to the Harbor Maintenance Tax. applies exports it constitutional as provides, pertinent part, It plaintiff that the U.S. Shoe is entitled to the remedy requests, namely it a refund of ex (i) jurisdiction In addition to the con- years port going two from the taxes back upon the Court of International ferred Nevertheless, complaint. I time it filed its (a)-(h) by this section Trade subsections addressing offer some additional comments subject exception to the set forth jurisdictional prayers issue and the section, (j) subsection of this the Court of certain amici for a full refund of all taxes International Trade shall have exclusive imple illegally collected from them since the

jurisdiction any civil action commenced view, my mentation of the Act.1 against agencies, or the United its manifestly inadequate protest administrative officers, that arises out of law of 1581(a) procedure § is a under 28 U.S.C. providing for— the United States 1581(i)juris that 28 U.S.C. further reason (1) imports tonnage; from or revenue arises; moreover, complainants diction are a restitution of all taxes hereto

entitled to of the administration with fore exacted under the Act violation and enforcement respect to in Clause of the United States Constitu- matters referred refunded, unlawfully E.g., respectfully join plaintiff’s payments collected be "Amici re HMT together and further relief as quest that this Court the HMT unconstitu with such other find tional, (Amici down, appropriate.” et al.'s be Texaco strike it and direct added). 2) Mem.Supp.Summ.J. (emphasis power granted it under 28 U.S.C. 1585 that all by presented The ultimate issue position compelled This latter is circumstances. tion.2 by arguments whether administrative such Due Process Clause the Fifth Amendment regulations set forth statute and “life, remedies liberty, enjoining deprivation or party appropriate are when a seeks refund process law.” property, without due payments Congress. an act of mandated by challenging act as unconstitutional. such I procedure remedial The administrative matter, opinions As an initial recent requests clearly applies to refund Appeals for the Federal Court of Circuit given meaningful adequate under the cir- unambiguously that a this Court have ruled generally McCarthy v. Ma cumstances. See (“Customs”) decision the Customs Service 140, 144-149, 1081, digan, S.Ct. 1581(a) precedent is a condition for section (1992) 1085-89, (explaining 117 L.Ed.2d 291 jurisdiction Electronics to arise. Mitsubishi in which administrative reme- circumstances (Fed. America, U.S., Inc. v. 44 F.3d 973 of Cir.1994); exhausted); not be and Conoco v. dies need U.S., Lines v. Carnival Cruise Board, Foreign Zones 18 F.3d 1581 Trade (1994). CIT -, F.Supp. 1437 As (Fed.Cir.1994) 1581(a) (holding juris- section clear, opinion abundantly Court’s makes inappropriate diction where it is futile or is no decision involved in Customs’ there manifestly inadequate). importantly, Most collection of these unconstitutional taxes be- clear, opinion as the Court’s makes Customs perfor- cause lacks discretion in the Customs authority pay- does not have to refund Tax delegated mance of its ministerial duties. grant for ments or otherwise effective relief reason, however, a addition to this there is constitutional claims. It is well settled that justification for the to invoke further Court agency authority an administrative lacks the 1581(i) jurisdiction in its section this case: an act to declare unconstitution- remedy requiring plaintiffs pursue a under Sanders, al. Califano procedures protest mandated section 51 L.Ed.2d 192 1581(a) oblige would them to follow a mani- (“Constitutional questions obviously un- are festly inadequate utterly proce- futile hearing suited to resolution in administrative dure. and, therefore, procedures access to the argue party courts is essential the decision of such Certain amici that a could Hence, questions.”). under the circum- presumably request a refund as set forth in 24.24(e)(5) compelled stances of this case 24.73, Customs §§ 19 C.F.R. or obtain a claim, deny any administrative refund mak- Customs, denial of refund from and then ing request for refund a futile act. deny protest that decision of Customs by way protest refund of the administrative Moreover, predetermined Customs has §§ process prescribed by 19 U.S.C. 1514 and out, plaintiff points issue before it. As Cus amici, According to these the Court protests challenging toms’ denial of con adjudication ripe could dismiss as not stitutionality of the Harbor Tax Maintenance prior those actions which were filed to Cus- (26 §§ 4461 and hereinafter U.S.C. denying request, toms a refund “Tax”) but instead (Pl.’s foregone is a conclusion. Mem. should waive exhaustion of administrative re- 15-16.) Supp.Summ.J. routinely Customs procedures jurisdiction medial and assert un- protests denies all of receives con 1581(i), procedures der section as such are payments. nection with Tax The denial is a (Br. inadequate type sought. for the of relief simply asserting form letter in one sentence al., Aris-Isotoner, 14- Amici Curiae et levy that the is not an unconstitutional tax 22.) nearly argue Plaintiff and all amici that statutorily but a mandated user fee.3 Such protest remedy the available administrative filing routine denial demonstrates that re §§ set forth in 19 requests grounds 1514 and 1515 is fund with on Customs manifestly inadequate clearly unconstitutionality futile and under the a futile act. Davies, jurists panel 2. The other on this are not in ac- 3. Declaration of Charles Director—User Force, addressing remedy Headquarters Inspec- cord with the comments Fee Task Office of issue. tion and Control at and attachments. Lastly, requiring party statutory language to file for refunds The of 26 U.S.C. 4462(f)(2) may unduly “[Pjreju- prejudice party. accompanying and its legislative result, example, from an unrea- history dice Congress’ clearly indicate in stated sonable or indefinite timeframe for adminis- jurisdiction tention that this Court have over McCarthy, “[Sjection 1581(i) trative action.” 503 U.S. at Furthermore, Tax. 112 S.Ct. at 1087. The administrative refund give was intended to the Court of Interna processes set forth under 19 C.F.R. authority tional Trade broad residual over 24.24(e)(5) §§ provide and 24.73 do not arising civil actions out of federal statutes time frame for the resolution of a claim for governing import transactions and to elimi recently refund. This deemed it Court jurisdiction nate the confusion over whether appropriate to waive exhaustion of adminis- lay in the Court of International Trade they trative remedies because not were clear- Conoco, district courts.” 18 F.3d at 1588 ly they up delineated and because set indefi- added). (emphasis Thus it was the intent Imports nite timetables. B-West v. United Congress jurisdic for this Court to exercise CIT -, F.Supp. Tax, just tion over the por entire those procedures The administrative refund are tions of the Tax that are covered under the similarly indefinite and are therefore inade- 1581(i)(1)-(4). specific subsections quate present under the circumstances of the 1581(i) The terms of section embrace the case. Tax. This Court has found that the Tax is a may jurisdiction Before this Court exercise provides which law for revenues from im- 1581(i), by way over this matter of section ports exports, and for the administration language must within there be terms respect and enforcement with to those reve- plaintiff that section which cover the issues including protest process. nues There- Conoco, brings before Court. 18 F.3d fore, 1581(i)(l) subsections provide argues 1588-89. Defendant section jurisdiction this Court with over Tax. 1581(i) by provide own terms its fails to jurisdictional basis for a constitutional chal- sum, Customs has not made a decision lenge plaintiffs to the Tax because claims are respect upon with Tax which a valid or upon payments based associated with ex- meaningful protest may predicated. be De- ports, express while the terms of subsections arguments simply ignore fendant’s that nec- 1581(i)(l) (2) apply only imports. to essary prerequisite protest process set (Defs.Mem. 24.) Supp. Summ. J. at §§ forth under 19 1514 and 1515. 1581(i) The terms of section clear make Moreover, under the circumstances of this jurisdiction any that the Court has over civil case, manifestly inadequate it is futile and to any action that arises out of United States by respect await a with decision Customs providing law the matters set forth request. an administrative refund As re- statute. reading Defendant’s of section 1581(i) quired, the terms of section cover the 1581(i) all-encompassing would eliminate that plaintiff brings issues that before the Court. grant jurisdic- term and in effect the Court jurisdiction properly The Court’s is therefore specific tion over the matters set forth by way asserted over this matter of section 1581(i)(l)-(4), in subsections but not the laws 1581(i). The Court is authorized statute dealing with those matters. an Such inter- requiring exercise discretion exhaustion pretation would mean that this Court would of administrative remedies. 28 U.S.C. jurisdiction have applies over the Tax as it 2637(d). jurisdiction § Having found under imports, juris- the district courts would have 1581(i), pursuant section to this Court’s dis- applies exports, diction over the Tax as it 2637(d), cretionary powers under 28 U.S.C. and it is uncertain as to which court would discussed, previously for the reasons jurisdiction to, have applies over the Tax as it inappropriate require any exhaustion of e.g., passenger services. when, case, remedy administrative as in this opinion out, points party requests by challenging

As the of the Court a refund Congress constitutionality pay- did not intend for the district of an act which under jurisdiction courts to exercise over the Tax. ment was made. illegally moneys exacted attempt to collect all

II ostensibly in 1987 incipience tax’s since the duty to exercise It is the Court two-year limita- statute of conflicts with the Congressional acts with- judicial over review brought generally to claims applicable tions “[sjhould Congress, in jurisdiction, 1581(i). pecu- Due to the under 28 U.S.C. adopt powers, measures of its the execution however, case, en- of this liar circumstances ... prohibited the Constitution which are im- of limitations would forcing the statute duty painful of this become the it would rights infringe permissibly constitutional say, act was not ... that such an tribunal Due Fifth Amendment guaranteed under the Mary land.” M’Culloch the law of the Clause. Process Wheat.) (4 316, 423, 4 land, L.Ed. 579 17 U.S. details, (1819). opinion of the Court As the Supreme Court The United States Act violates the question that the there is no claim can become constitutional “[a] held that Act therefore Insofar as the Clause. just claim can- as other time-barred land, ab initio: law of the it is void is not the requires other- Nothing in the Constitution power “an invalid exercise Dakota, North 461 U.S. wise.” Block v. if it never been inoperative ... as had [is] as 1811, 1822, 75 L.Ed.2d unconstitutional act is not a passed, for an (1983). un- claims based While valid law, immu- right confer a and can neither government acts the federal constitutional Hackett, nity....” Chicago, I. & L.R. Co. v. time become stale or deemed at some 559, 566, 33 57 L.Ed. waived, here, attempt, interposing an the invalid act is the fed When afoul of very statute of limitations runs short exaction government’s eral unconstitutional sovereign’s role process and flaunts the due taxes, rights the Due taxpayers’ under as, rights among things, protector of of other of the Fifth Amendment are Process Clause citizens, government, al- from whom this “Thus, plaintiff if a seeks the implicated. created, acquired uniquely when it was most money government in return of taken the here, legislative the powers. all of its And law, an unconstitutional tax the reliance on of the Act history that the drafters reflects law, taking of ignores tax finds the court the abundantly aware of the constitutional were pro- property wrongful, and the therefore Act; true, infirmity being enforc- of the this remedy.” Reynoldsville a Casket Co. vides of ing the foreshortened statute limitations — U.S. -, -, 115 Hyde, v. S.Ct. overtly un- perpetration of an to reward the (1995) (Scalia, J., con 131 L.Ed.2d 820 constitutional action. curring). Rights incorporates inde Bill of those only appropriate reme- A tax refund is the citizens to rights which the decline feasible illegal of dy government’s for the collection very sovereign, it this and is surrender the tax revenue under the Act. Because democracy of our constitutional feature Clause, “beyond the it was violates —that government empowered [government’s] power impose, to ... [and rights— their extent that citizens surrender government no choice but to undo has] distinguishes political which it from other deprivation by refunding the tax the unlawful people rights systems in which derive their duress, previously paid under because allow- Although only from the state. the federal ing [government] to collect these taxes enjoys immunity, im government broad means and not incur obli- coercive munity does not extend to unconstitutional gation pay ... would be in to them back behavior, and a statute of limitations that Clause].” of the Process [Due contravention of Due Process operates in violation Corp. v. Division Alcoholic McKesson Tobacco, Dept. an invalid exercise of the Beverages Fla. Busi Clause constitutes 18, 39, not immunize power 110 which does Regulation, ness 496 U.S. 2238, 2251, from government 17 Yet an suit.4 110 L.Ed.2d vires, Amar, by acting delegation powers] it Sovereignty ultra [of R. and Federal- See Akhil Of ("[W]henever ism, sovereign, 96 Yale L.J. 1427 in the name of the ceases to act transgresses government entity of its limits Constitution, by Congress control of its visions could indepen [T]he exercise it subject compliance jurisdiction is to dently taxpayers’ over bar refund claim.” — requirements of the Fifth at -, with at least the Hyde, 115 S.Ct. at 1750 say, added). That is to Con Amendment. while (emphasis In this the Court vein gress power give, to has the undoubted that “relatively indicated states enforce withhold, jurisdiction restrict applicable short statutes of limitation to such Court, Supreme courts than the other McKesson, actions.” 496 U.S. power exercise that as to must not so (citing three-year S.Ct. at 2254 Florida’s stat- life, deprive any liberty, prop person suits). ute of limitations for tax refund Al- erty process of to take without due law or though may promulgate states statutes of private just compensat property without limitations connection with tax refund stat- ion.5 utes, they are bound provide substantive Battaglia Corp., F.2d v. General Motors relief for revenue exacted in violation of the Cir.1948). (2d “[T]o hold otherwise A post-deprivation Constitution. state’s possibility would be to create the that Con- regime opportunity refund must afford “an gress unconstitutionally could act and then validity contest the and a the tax ‘clear attempt to its action from shield review remedy’ designed and certain to render the sovereign immunity.” virtue of Bartlett opportunity meaningful by preventing any Bowen, (D.C.Cir.1987). 816 F.2d permanent deprivation property.” unlawful Thus, it is no avail that the interlocutor McKesson, 496 U.S. at S.Ct. at points jurisdictional stat- nature of the Atchison, (quoting T. & Co. v. S.F.R. O’Con presently ute limitations under consider- nor, 216, 217, Moreover, ation. “The courts ... have rec- (1912)). Moreover, L.Ed. 436 when a state ognized principle the constitutional places judiciary guarantee independent limits of an a taxpayer promptly pay under duress legislature power the exercise of its him relegates post- tax when due and to a Bartlett, regulate jurisdiction.” court payment refund action in which he can judicial F.2d at 705. The branch must challenge the legality, tax’s Due Pro- countenance the disenfranchisement of demo- cess Clause Fourteenth Amendment rights cratic in to constitutional deference obligates provide meaningful the State to immunity. royal sovereign the of To cloak backward-looking rectify any to un- relief abrogate judiciary’s do so would to be the deprivation. constitutional proper protector role as and final arbiter in rights, implicit constitutional a role the added). 31, 110 (emphasis Id. at S.Ct. at 2247 separation powers con- established our refund tax cases the Fifth Amendment decisively stitutional and made ex- scheme Due Clause does the fed- Process not endow (1 Madison, Marburg plicit in v. flexibility government eral with the the Cranch) 137, 2 L.Ed. 60 enjoy when fashioning states schemes re- Supreme recognized Court has that dress unconstitutional exactions. The rele- procedural in requirements tax refund eases obligations vant state under the Fourteenth satisfy provisions must all the Consti- Amendment Due Process Clause owe their Discussing procedural tution. obstacles principles flexible nature to of federalism and might which a refund of taxes bar state comity: Constitution, in collected violation of the declared, long recognized principles of “Depending upon Court or We have that whether independent pro- comity generally not this rule and counsel other federalism satisfied immunity any “sovereign” power either to surrenders it derivative enact might possess.”). Ill, sovereign otherwise § 1 of the Art. Constitution or government.... immunity of the federal These Corp. 5. See v. also International Tel. & Tel. Alex however, power, respective cannot be sources of ander, (D.Del. F.Supp. 1163 n. 31 by Congress judicial re utilized to shield from 1975) remedy (discussing protest federal tax governmental of constitu view action violative noted, declaring, previously "As statutes and guarantees.”). tional jurisdictional both statutes are and are within the fact that at end adopt ap- dispelled a taxes is hands-off that courts should year generated by fund proach respect to state tax adminis- of fiscal with surplus,6 repeatedly] million [has ... Court Act contained a while [T]his tration. $453 incep an aversion to federal interference the Act’s shown the total sums collected since administration_ billion, The re- with state tion amounted to million $700 $2.7 to interfere state tax collection luctance from unconstitutional ex which was derived n continued McKesson, in which we con- (Def s.Mem.Supp.Summ.J. port taxes. great are afforded firmed that the States Furthermore, surplus fund’s cumulative satisfying the flexibility requirements nearly expected billion $1.7 is to balloon in the field of process taxation. due year 1999.7 Under the end of fiscal .the circumstances, of all unconstitu Truck v. Okla restitution Private Council National — ——, Comm’n, U.S. -, im 115 tional collected since Act’s exactions homa Tax (ci L.Ed.2d such plementation appropriate where relief 5.Ct. omitted). case, there tation the instant requested. “comity” question of

exists no between state, under government

federal progeny, two-year stat- and its

McKesson

ute in tax refund eases of limitations

well at the state level. be unconstitutional directly precedent no on

Although there is case,

point, that in this the more it is evident obligations process incumbent

stringent due government on entail that enforc- the federal SACILOR, Sollac USINOR ing two-year statute of limitations would Plaintiffs, GTS, rights by, infringe Fifth Amendment inter alia, failing provide meaningful- “to back- rectify

ward-looking relief unconstitu- Defendant, STATES, UNITED deprivation.” tional speculate There is no need on consti tutionally permissible term a statute of Inc., Industries, AK Inland Steel Steel type Having limitations case. Corp., Corp., Bethlehem Steel Geneva limitations inapplicable, statute of found the Steel, Alabama, Inc. of Gulf States Steel my opinion imperatives it is due Corp., Corp., Laclede Steel LTV Steel process full require a refund back to the date Inc., Corp., National Steel Sharon Steel (the ie., implementation, Act’s Corp., Group A Unit of U.S. Steel USX appear bulk exactions of unconstitutional Inc., Corp., Steel, and WCI Defendant- subsequent to increase of have occurred Intervenors. .125%, from .04% to Al Slip Op. No. 95-177. has a in though government legitimate orderly predictable terest in tax adminis Ct. No. 93-09-00592-AD. tration, explained O’Connor Justice United States Court plain that equitable makes con “McKesson International Trade. significance siderations are of limited once violation is found.” American constitutional Nov. 1995. Smith, 167, 184, Trucking Ass’ns 110 L.Ed.2d 148 Any hardship misplaced visiting concern for government requiring a com

plete unconstitutionally refund of the exacted Treasury, Army Corps Engineers Briefing Dept, Management 7. Internal Financial Branch, Service, (Feb. 2, 1995). Funds Account Mainte- Harbor Outline nance Trust Fund Income Statement and Bal- Sheet, ance 10/1/93-9/30/94.

Case Details

Case Name: United States Shoe Corp. v. United States

Court Name: United States Court of International Trade

Date Published: Oct 25, 1995

Citation: 907 F. Supp. 408

Docket Number: Slip Op. 95-173. Court No. 94-11-00668

Court Abbreviation: Ct. Intl. Trade