POGUE, Senior Judge:
In this action, Plaintiff, American Fiber & Finishing, Inc. ("AFF"), challenges the denial of its protests made pursuant to § 514 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1514 (2012),
Defendant and Plaintiff now cross-move for partial summary judgment.
Plaintiff claims that it has, for some time, imported cotton gauze fabric under subheading 5803.00.10, Harmonized Tariff Schedule of the United States ("HTSUS"), a duty free provision.
As instructed by these notices of action, from October 2010 through January 2011, Plaintiff made sixteen entries of cotton gauze fabric under one of two HTSUS provisions — either subheading 5208.11.40, HTSUS,
Currently before the court is Defendant's motion for partial summary judgment, Def.'s Mot., ECF No. 36, and Plaintiff's cross-motion for partial summary judgment, Pl.'s Mot., ECF No. 39. In their motions, Defendant and Plaintiff raise two issues: First, they argue whether Plaintiff's claim fails as a matter of law because it cannot identify an "interpretive ruling or decision" through which Customs revoked or modified the alleged treatment, for the purposes of 19 U.S.C. § 1625(c).
Because the court has jurisdiction over this action pursuant to 28 U.S.C. § 1581(a), questions of both fact and law presented here are reviewed de novo. 28 U.S.C. § 2640(a)(1).
Under 19 U.S.C. § 1625(c)(2), Customs must follow notice and comment procedures before it issues an "interpretive ruling or decision which would ... have the effect of modifying [a] treatment previously accorded by [Customs] to substantially identical transactions."
While 19 U.S.C. § 1625 does not define an "interpretive ruling or decision", it does provide examples.
Accordingly, because a notice of action may be an interpretive ruling or decision, by offering the January 2010 notice of action as a possible interpretive ruling or decision, Plaintiff has "establish[ed] a genuine issue of material fact" through evidence, a document, in the record, sufficient to survive summary judgment on this issue. See USCIT Rule 56(c)(1)(A) ("A party asserting that a fact ... is genuinely disputed must support the assertion by... citing to particular parts of materials in the record, including ... documents[.]").
While 19 U.S.C. § 1625 leaves the term "treatment" ambiguous,
Defendant argues that, based on the dictionary definition of the word "claim," the phrase "claim of treatment" means a written application or mechanism through which Plaintiff "first asked or called for a finding that [a] treatment existed," and dated to the time of filing. Def.'s Br., ECF No. 36, at 8. According to the Defendant, Plaintiff's claim of treatment was its March 8, 2012 protest, making the relevant "two year [evidentiary] `look back' period... approximately March 8, 2010 — March 8, 2012." Id. at 8. Plaintiff argues that "claim of treatment" is not defined in regulation or statute, Pl.'s Reply, ECF No. 50, at 12, such that a "claim of treatment" should be considered the statement, made in whatever filing procedurally was available, and dated according to the facts contained therein, Pl.'s Br., ECF No. 39-1, at 15-16. According to the Plaintiff, its claim of treatment was properly made in its March 8, 2012 protest, but the effective date of its claim is "the date of the earliest entry [at issue]," Pl.'s Mot., ECF No. 39, at 1, making the two-year "look-back" period approximately October 2008 through October 2010. Pl.'s Br., ECF No. 39-1, at 15-16; see Summons, ECF No. 1 (dating earliest entry at issue here to October 24, 2010).
"When construing a regulation," the "same interpretative rules" apply as when "analyzing the language of a statute." Mass. Mut. Life Ins. Co. v. United States, 782 F.3d 1354, 1365 (Fed.Cir.2015) (citation omitted). This means that, under the de novo standard of review applicable here, our analysis begins with "the regulatory language itself," Roberto v. Dep't of Navy, 440 F.3d 1341, 1350 (Fed.Cir.2006) (citation omitted), to ascertain its "plain meaning," Lengerich v. Dep't of Interior, 454 F.3d 1367, 1370 (Fed.Cir.2006) (citations omitted).
19 C.F.R. § 177.12 does not provide a definition for the phrase "claim of treatment," or even of the term "claim." Where a term or phrase is not expressly defined in a regulation, it is presumed to have its ordinary meaning.
A "claim," then, may be either the assertion that a right exists or the means through which that assertion is made. Under the former meaning, Plaintiff's "claim" is the assertion made within its March 8, 2012 protest that the entries at issue here were "classifiable [under the duty-free provision, 5803, HTSUS,] due to an established treatment," absent appropriate notice and comment, pursuant to 19 U.S.C. § 1625(c). See Attach. to Protest, ECF No. 39-1 at Ex. D, at 1. Under the latter meaning, Plaintiff's "claim" is its March 8, 2012 protest itself. See Protest 1512-12-100039, ECF No. 39-1 at Ex. D.
Reading "claim of treatment" in the context of the regulation as a whole, "reconciling the section in question with sections related to it," Lengerich, 454 F.3d at 1370, clarifies which definition is appropriate here.
Accordingly, Plaintiff's claim of treatment was the assertion in its March 8, 2012 protest that its entries were "classifiable [under the duty-free provision, 5803, HTSUS,] due to an established treatment," absent appropriate notice and comment, pursuant to 19 U.S.C. § 1625(c). Attach. to Protest, ECF No. 39-1 at Ex. D, at 1.
Given that a "claim of treatment" is distinct from the filing in which it is made, the "2-year period immediately preceding [that] claim of treatment" is also, while not necessarily different, distinct. A claim is not the same as the filing in which it comes, and is dated by its facts not its filing. Cf. Bay Area Laundry & Dry Cleaning Pension Trust Fund v. Ferbar Corp. of Cal., 522 U.S. 192, 201, 118 S.Ct. 542, 139 L.Ed.2d 553 (1997) (dating a claim to when it arises, not to when the complaint is filed). Inasmuch as a "claim of treatment" is an assertion of a right, made up of its operative facts, so too is the 2-year period immediately preceding it defined by that assertion and those facts. Reading 19 C.F.R. § 177.12 in its statutory and regulatory context, "reconciling the section in question with sections related to it," Lengerich, 454 F.3d at 1370, with an eye to its object and policy, Warner-Lambert, 316 F.3d at 1355, confirms this understanding.
Regarding context, Customs can be presumed to be "knowledgeable about existing law pertinent to [regulations it promulgates]." See VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1581 (Fed.Cir.1990) (citing Goodyear Atomic Corp. v. Miller, 486 U.S. 174, 184-85, 108 S.Ct. 1704, 100 L.Ed.2d 158 (1988)). Treatment claims, lacking a specific administrative mechanism, are often made through protests.
Regarding object and policy, a regulation must be interpreted "in [a] manner which effectuates rather than frustrates [its] major purpose." Shapiro v. United States, 335 U.S. 1, 31, 68 S.Ct. 1375, 92 L.Ed. 1787 (1948). Customs chose the two years immediately "preceding the claim of treatment" as the requisite evidentiary period because the agency consider it the most relevant for "protecting the treatment rights of a person." See Customs Service: 19 C.F.R. Part 177, 67 Fed.Reg. at 53,494. This purpose evinces a context-based approach meant to ensure that "the interested public has notice of a proposed change in Customs' policy" and can "modify any current practices that were based in reliance on Customs' earlier policy." Sea-Land Serv., Inc. v. United States, 239 F.3d 1366, 1373 (Fed.Cir.2001) (summarizing the purpose of enabling statute 19 U.S.C. § 1625).
Here, Plaintiff's "claim of treatment" was the assertion, made in its March 8, 2012 protest, of its right to a treatment pursuant to 19 U.S.C. § 1625(c).
Therefore, upon consideration of Defendant's Partial Motion for Summary Judgment, and Plaintiff AFF's Cross-Motion
IT IS SO ORDERED.
Although Defendant advances an interpretation of 19 C.F.R. § 177.12(c)(1)(i)(C), see Def.'s Br., ECF No. 36, at 7-9; Def.'s Resp., ECF No. 47, at 12-17, deference is unwarranted here because the interpretation appears to be "nothing more than a convenient litigating position, or a post hoc rationalization advanced" by counsel in order "to defend past agency action against attack." See Christopher v. SmithKline Beecham Corp., ___ U.S. ___, 132 S.Ct. 2156, 2166-67, 183 L.Ed.2d 153 (2012) (internal citations, quotation marks, and alteration marks omitted). "To merit deference" an agency's interpretation "must have been actually applied in the present agency action." Lengerich, 454 F.3d at 1372. It was not so applied here. Rather, the interpretation appears in Defendant's briefings alone, without any reference to any decision or interpretation made by Customs at the administrative level, whether in this case or otherwise. See Def.'s Br., ECF No. 36, at 7-9; Def.'s Resp., ECF No. 47, at 12-17. This is likely because there was no agency interpretation or application of the regulation at the administrative level. See Protest 1512-12-100039 (Mar. 8, 2012) reproduced in Pl.'s Br., ECF No. 39-1 at Ex. D (denying protest in accordance with the disposition Protest, 1512-10-100149, without discussion of Plaintiff's 19 U.S.C. § 1625(c) claim); see HQ H158256 (Nov. 16, 2011), available at 2011 WL 8200988 (deciding Protest 1512-10-100149 without discussion of 19 U.S.C. § 1625(c) or 19 C.F.R. § 177.12). Moreover, outside of this action, Customs' understanding of the "2-year period immediately preceding the claim of treatment," 19 C.F.R. § 177.12(c)(1)(i)(C), has been inconsistent, being variously defined as "the two year period immediately preceding the [entry of the] merchandise subject to the claim of treatment," HQ H076723 (Nov. 24, 2010), available at 2010 WL 5810910 at *11, the "two years prior to the date of the last liquidated entry subject to the claim," HQ 966756 (Aug. 19, 2004), available at 2004 WL 2904423, at *4 (also asserting that this requirement is "codified at 19 C.F.R. § 177.12"), and the two years prior to the filing date of the document the claim comes in, see, e.g., HQ H025849 (Nov. 17, 2010), available at 2010 WL 5810900 (in context of a protest determination, finding that the claim of treatment was made in protestant's initial request for internal advice pursuant to 19 C.F.R. § 177.11 and the two years prior to that request were the relevant evidentiary period). It follows that, because there is no indication that Defendant's interpretation represents "the agency's considered position and not merely the views of litigating counsel," it is afforded no deference under Auer. See Mass. Mut. Life Ins., 782 F.3d at 1370 (quoting Abbott Labs. v. United States, 573 F.3d 1327, 1333 (Fed.Cir.2009)).
Further, this lack of deference is in better keeping with the plain language of the applicable, statutorily prescribed standard of review, as "civil actions [that] contest[] the denial of a protest" are reviewed "upon the basis of the record made before the court," 28 U.S.C. § 2640(a)(1), that is "de novo," Park B. Smith, 347 F.3d at 924. Cf. Perez v. Mortgage Bankers Ass'n, ___ U.S. ___, 135 S.Ct. 1199, 1211-13, 191 L.Ed.2d 186 (2015) (Scalia, J., concurring) (arguing that Auer deference is in direct conflict with the standards of review provided in the Administrative Procedure Act at 5 U.S.C. § 706).
While Defendant notes the peculiarity of Plaintiff's failure to protest the liquidation of the entry subject to the January 2010 notice of action, Def.'s Resp., ECF No. 47, at 15, it does not challenge Plaintiff's failure to do so as creating unreasonable or prejudicial delay in commencing this action. See USCIT Rule 8(d)(1) (providing laches as an available affirmative defense); Holmberg v. Armbrecht, 327 U.S. 392, 396, 66 S.Ct. 582, 90 L.Ed. 743 (1946) (discussing the laches defense: "There must be conscience, good faith, and reasonable diligence, to call into action the powers of the court [...]. [The] court may dismiss a suit where the plaintiffs' lack of diligence is wholly unexcused; and both the nature of the claim and the situation of the parties was such as to call for diligence.") (internal quotation marks and citations omitted).
