SUPREME COURT REINS IN CUSTOMS RULINGS
The U.S. Supreme Court, in a victory for importers, has ruled that the U.S. Customs Service should receive a lesser degree of judicial deference for classification rulings that determine whether imported goods are subject to a tariff.
In an 8-to-1 decision, the high court said such rulings are importer-specific and do not carry the force of law.
The legal trail in this case began when Customs determined that three-ring notebooks known as day planners, imported from China by the Mead Corp., should be classified as bound diaries and subject to a 4 percent duty. Mead argued the day planners were not bound, were not diaries, and should not be subject to duty.
The U.S. Court of International Trade agreed with Customs’s original determination, but the U.S. Court of Appeals for the Federal Circuit reversed the CIT’s ruling.
The Supreme Court, which ruled in favor of Mead, had to determine the extent of judicial deference to which a federal agency was entitled for administrative rulings that aren’t part of a regulatory regime. Customs officials in 46 regional offices make as many as 10,000 classification rulings a year.
The government had argued that such rulings deserved a high degree of deference, called “Chevron deference,” after a Supreme Court decision in 1984 on Chevron v. Natural Resources Defense Council.
Justice David H. Souter, writing for the Supreme Court, said “any suggestion that rulings intended to have the force of law are being churned out at a rate of 10,000 a year at an agency’s 46 scattered'offices is simply self-refuting.”
Although the Supreme Court said that full “Chevron deference” does not apply to Customs’s rulings, the high court advised that federal courts should give such rulings a lesser degree of deference, called “Skidmore deference,”'after a Supreme Court decision in 1944 (Skidmore vs. Swift & Co.).
The Supreme Court sent the current case, U.S. vs. Mead Corp., No. 99-1434, back to the Federal Circuit to apply the lower degree of deference.
Justice Antonin Scalia, the Court’s sole dissenter, called the decision “one of the most significant opinions ever rendered by the court in dealing with the judicial review of administrative action,” predicting that “its consequences will be enormous, and almost uniformly bad.”
