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Two other provisions are likely to make importers more cautious in making use of their right to judicial review. At present when an importer brings a case, he knows what the ceiling will be on his liability if he loses and, within a rough estimate, the costs of bringing the case. If, however, he may be faced with unknown and unrelated counterclaims or setoffs, he will not know the extent of his liability. If adversely affected parties may intervene, he may be faced with greatly increased costs to answer new arguments.

We are concerned over another provision that takes away a right granted to the 1970 Customs Court Act. Customs must now issue a notice to the importer or the broker when a protest is denied. Under this bill, protests would be deemed denied after 2 years and no notice would have to be sent. Even if customs voluntarily sent notices in cases denied prior to the end of the 2-year period, it will have little incentive to send them for protests denied by the running of the time limitation and importers and their brokers would be forced to keep a tickler file of all protests filed over a 2-year period. Present practice demonstrates that this burden is unnecessary.

I would like to discuss briefly the idea of creating a small claims division within the Customs Court which we believe the subcommittee should seriously consider.

This concept has been casually discussed for years and needs to be aired on a serious level. Members of AIA have cited many examples of cases which are not worth pursuing in a full scale court proceeding because of the time and expense required. While the attorneys who practice before the court have expressed a willingness to take cases which do not fully pay their way, as a practical matter few of these cases are actually litigated.

Because it is a matter of proving what has not been done, we cannot accurately estimate what use would be made of this division, except to say that such cases do exist. The division would hear cases with an amount at issue somewhere between $1,000 and $5,000.

Its jurisdiction probably should be limited to classification and valun cases. Decisions could be issued from the bench or after deliberation. The decisions would not carry precedential value and would not be appealable. A similar division already exists in the U.S. Tax Court and would provide a ready model.

One objection, which has been debated, is whether a judge would find it possible to objectively decide issues in a full proceeding which he had previously decided in the small claims division. Whether this is a real problem is arguable, certainly.

One possible solution is to have a magistrate hear small claims cases under the supervision of a judge as it is done in the Tax Court. This would also enable the Customs Service to more readily prevent the potential "grapevine” effects of small claims decisions. The point to remember is that a small claims division would allow importers, both large and small, to obtain access to the court to correct erroneous agency actions without confronting legal expenses greater than the amount of the claim.

Mr. Chairman, I refer you to our written statement for our comments on specific provisions in S. 2857.

I thank you for listening to this general discussion. It has been our intent to try to explain the broader context from which this bill arises. I have only skimmed the surface in doing so.

As you can see, we feel that the bill needs much work. Not merely redrafting, but a critical examination of its conceptual bases. In 1969 and 1970, the Government and the trade community conducted a lengthy and detailed dialog, and give-and-take over the format of what eventually was enacted as the Customs Court Act of 1970. That act, in retrospect, may not seem to have solved all our problems, but it was a solid and workable enactment. We expect no less from any statutory change.

At this time, however, the input from the trade community has been minimal--only a morning meeting on a predrafting memorandum and the submission of comments on the first draft of the bill. This lack of consultation leaves much work for this subcommittee. We commend you for your willingness to devote the time to make any bill a solid one that truly represents the interests of all members of the trade community insofar as that is possible. We stand ready to assist you

in any way we can.

Lastly, I would ask you again, to keep the importer and the importing business clearly in mind as you work with this bill. Consult with the attorneys—it is their business. But don't forget the importerultimately it is his business, also.

Mr. Chairman, we will try to answer any questions the subcommittee may have.

Thank you very much.

Senator DECONCINI. Mr. Katz, I want to thank you for your testimony. We will pay particular attention, certainly, to the creation of a division of small claims in Customs Court. We had not gone into that in great detail. We will take a very close look at that. We thank you and your association for being with us this morning and for your fine testimony.

We have no questions at this time.
Mr. Katz. Thank you very much.

Senator DECONCINI. Our next witness will be Leonard Meeker, Consumers Union of the United States.

Mr. Meeker, we are pleased to have you. I am sorry for having to make things brief now. We will have to cut

cut you off shortly, but please proceed.

STATEMENT OF LEONARD C. MEEKER, CONSUMERS UNION OF

UNITED STATES, INC. Mr. MEEKER. The Consumers Union appreciates the opportunity to present our views to the subcommittee.

Senator DECONCINI. Without objection, your entire statement will be inserted into the record at this point.

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[Material follows:]

STATEMENT OF LEONARD C. MEEKER ON BEHALF OF CONSUMERS UNION OF

UNITED STATES, INC. Mr. Chairman, members of the committee, Consumers Union of United States, Inc.,* appreciates this opportunity to present testimony concerning S. 2857 dealing with the jurisdiction of the Customs Court and the Court of Customs and Patent Appeals.

INTER-COURT TRANSFER OF CASES

Consumers Union has a special interest in this legislation. In recent years Consumers Union has sought to obtain a judicial determination on the legality of quotas that were imposed by the federal government on textile imports without disclosing any disclosed standards of decision and without following any procedures to allow public participation. The economic consequence of these restrictions for consumers in the United States has been an additional cost of textile products in excess of several billion dollars per year. Consumers Union was unable to obtain a court decision on the merits because of jurisdictional problems in the federal courts. To illustrate the impasse encountered by Consumers Union, I should like to outline what happened in the litigation that was frustrated.

Acting under Section 204 of the Agricultural Act of 1956, the Executive Branch Committee for the Implementation of Textile Agreements (“CITA”) imposed restraints on the importation of textiles without first making a reasoned determination that the restraints were necessary because of actual or potential domestic market disruption, and without following the basic procedural requirements of the Administrative Procedure Act ("APA").

Consumers Union commenced an action in federal district court to secure a declaratory judgment that the restraints in question were invalid because CITA had not followed substantive standards in imposing them and had not observed the procedural requirements of the APA. The District Court determined that the issues in the case were justiciable, that the Court had jurisdiction, and that Consumers Union had standing to maintain the action.

The Court then decided against Consumers Union on the merits. That decision was appealed. The Court of Appeals did not reach the merits, but ordered that the case be dismissed on the ground that exclusive jurisdiction in the matter lay with the Customs Court. 561 F. 2d 872 (D.C. Cir. 1977). The Supreme Court denied Consumers Union's petition for certiorari. 98 S. Ct. 1509 (1978). Under existing law, invocation of jurisdiction of the Customs Court requires either (1) denial of the protest of an importer, consignee, or agent, or (2) request for Court review by an American manufacturer, producer, or wholesaler. 28 U.S.C § 1582. Consumers Union did not qualify in either category : It was not an American manufacturer, producer, or wholesaler. It was not an importer, consignee, or agent; it had made no protest to the Customs Service concerning the exclusion of merchandise ; and indeed no merchandise had arrived at a United States port since the restraints operated to prevent the restrained textiles from being exported from the country of manufacture. Moreover, the Customs Court could not in any event have granted appropriate relief in the form of a declaratory judgment and an injunction, since those remedies do not lie within that Court's power.

The history I have just recounted points up the need for legislation to clarify jurisdiction in such cases. Thus, it is with great interest that Consumers Union has studied the provisions of S. 2857. This bill is a complex and highly technical measure. It contains some provisions that are quite salutary. For example, Sec

*Consumers Union is a nonprofit membership organization chartered in 1936 in New York to provide information, education and counsel regarding consumer goods and services and the management of family income. Its income is derived primarily from the sale of its publications, including its monthly magazine, Consumer Reports, which has a paid circulation in excess of 2.2 million readers. Consumers Union conducts regular product tests on textiles and textile products, purchasing approximately $15,000 worth of such products, which are or may be subject to quantitative import limitations, each year. Consumers Union brought the suit on its behalf and on behalf of its members, who are purchasers and consumers of textiles and textile products which are or may be subject to quantitative import limitations. Consumers Union has challenged the administration of trade laws several times in the past. See, e.g., Consumers Union of U.S., Inc. v. Rogers, 352 F. Supp. 1319 (D.D.C. 1973), modified sub nom. Consumers Union of U.S., Inc. v. Kissinger. 506 F. 20 136 (D.C. Cir. 1974), cert. denied 421 U.S. 1004 (1975); Consumers Union of U.S., Inc. v. Butz, No. 2142–72 (D.D.C. September 6, 1973)

tion 1953 provides for the transfer of a case from a district court to the Customs Court, or vice versa, if the case has been brought initially in the wrong forum.

This type of provision would obviate the frustrations encountered by Consumers Union after it sued in federal district court and received a decision for the first time on appeal that it had chosen the wrong forum.

Similarly, the provisions of Section 2635, allowing generally a two-year period within which to institute civil actions in the Customs Court, appear soundly based.

APPROPRIATE JURISDICTION OF THE CUSTOMS COURT There are a series of provisions in S. 2857 that would confer exclusive jurisdiction on the Customs Court in situations where such jurisdiction seems altogether appropriate. Section 1584 would give the Customs Court

“exclusive jurisdiction of civil actions which involve the appraised value or the classification and rate and amount of duties chargeable upon imports."

Section 1587 would give the Customs Court

“exclusive jurisdiction of civil actions involving a refusal to pay a claim for drawback."

Section 1588 would do so with respect to

“civil actions involving the liquidation on reliquidation any entry or a modification thereof."

Section 1589 would cover

"all civil actions involving the refusal to reliquidate an entry under Section 520(c) of the Tariff Act of 1930, as amended.”

And, Section 1590 would give the Customs Court

"exclusive jurisdiction over all civil actions instituted pursuant to Section 516 of the Tariff Act of 1930, as amended.”

Exclusive Customs Court jurisdiction over these matters seems appropriate in view of the specialized nature of the Court and the expertise of its members, who traditionally have been selected because of their specialized experience in customs law questions arising in connection with specific importations of merchandise from abroad.

QUESTIONS APPROPRIATE FOR GENERAL JURISDICTION OF FEDERAL DISTRICT COURTS

However, Consumers Union would like to raise a basic question about the appropriate scope of Customs Courts jurisdiction. The provisions of S. 2857 appear to enlarge very substantially the jurisdiction of the Customs Court. For example, Section 1581 would give the Customs Court exclusive jurisdiction

“over all civil actions against the United States or against any officer or agency thereof directly affecting imports which arise under the Constitution, laws, treaties of the United States or executive agreements executed by the President of the United States or under an executive order of the President."

Similarly, Section 1583(a) would confer on the Customs Court exclusive jurisdiction

"to review final agency action of any agency of the United States which directly affects imports into the United States."

Section 1585 would give the Customs Court

“exclusive jurisdiction of civil actions which involve the exclusion of imports from entry or delivery under any provision of the customs laws or the exclusion or required delivery of imports pursuant to the terms of an entry bond.”

Sections 1583 (b), (c) and (d) would give the Customs Court exclusive jurisdiction to review a number of actions of the International Trade Commission and the Office of the Special Trade Representative. Despite the possible ambiguity of the phrases “directly affecting imports” and “which directly affects imports”, the grants of exclusive jurisdiction to the Customs Court are so broad as to raise the question whether the federal district courts retain any jurisdiction over civil actions dealing with imports in international trade.

Here it should be noted that Section 1583(e) would exclude the Customs Court from jurisdiction over a series of enumerated matters. The question arises, under this provision when taken together with the grants of exclusive jurisdiction to the Customs Court, whether any United States court has jurisdiction over the actions enumerated in Section 1583(e). We recommend clarification to assure that the federal district courts have jurisdiction in these cases. ·

The language of Sections 1581, 1583 (a), (b), (c), and (d), and 1585 would give the Customs Court exclusive jurisdiction over many broad questions of law that are not specific to the process of importation and clearance through customs. I refer to such questions as: whether the head of an executive department has acted within his authority under an act of Congress in promulgating regulations having general application; whether an executive branch agency has proceeded in conformity with the APA in adopting rules; whether documents are required to be made available pursuant to the Freedom of Information Act.

Questions falling into the first two of these categories were raised by the litigation that Consumers Union brought against CITA. In our view, such questions are not appropriate for a court specializing in technical customs matters, but should instead be heard and determined by a federal court of general jurisdiction, since the questions are of a general nature and arise in many different contextual situations. There is a need for consistency of decision among the numerous and potentially widely disparate cases involving the scope of statutory authority, procedural requirements of the APA, or the proper application of the Freedom of Information Act. To promote consistency, questions of this nature ought to be considered and decided by courts exercising general jurisdiction and confronting such questions in a wide variety of circumstances. In the view of Consumers Union, any new legislation should make clear that general questions of this nature lie within the jurisdiction of the federal district courts.

Consumers Union would favor those portions of the proposed legislation confirming the exclusive jurisdiction of the Customs Court to review denial of a protest under Section 514 of the Tariff Act of 1930 and to review a decision under Section 516 of that Act. But we urge that the legislation make clear at the same. time that federal district courts have jurisdiction over other actions, including the type brought by Consumers Union against CITA.

OTHER PROVISIONS

As I mentioned earlier, S. 2857 is a technical and complex measure. I should like to raise a few specific questions about some of its provisions. For example, Section 601(d) of the bill gives to a person “adversely affected or aggrieved by a decision of the Secretary” under Section 516(b) or (c) of the Tariff Act of 1930 a right of judicial review when “an American manufacturer, producer, or wholesaler" has filed a petition with the Secretary under Section 516. Apparently, this right of review is available only if a petition has been filed by the domestic industry and not where the person "adversely affected or aggrieved" wishes tochallenge a decision of the Secretary in the absence of any domestic industry petition. The same problem arises under Section 601 (e) of the bill, which deals with judicial review of decisions by the Secretary or the International Trade Commission under Section 516(d) of the Tariff Act of 1930. We recommend a legislative provision assuring to an adversely affected or aggrieved person theright to obtain judicial review of such decisions whether or not there has been any petition by a domestic manufacturer, producer, or wholesaler.

Section 602(a) of the bill amends Section 514 of the Tariff Act of 1930. The amendment would authorize protests by “(a) the importers or consignees shown on the entry papers; (b) any person paying any charge or exaction; (c) any person seeking entry or delivery; (d) any person filing a claim for drawback; or (e) any authorized agents of any of the persons specified in (a)-(d).”

The amendment clarifies and makes more specific the provisions of the existing Section 514 on who may file a protest. But it fails entirely to provide for the case of an adversely affected or aggrieved person who might wish to file a protest and who does not come within one of the enumerated categories. In otherwords, Consumers Union under this amendment would have no greater possibility of maintaining a suit than it does under existing law.

We are not suggesting here that the language of Section 514 be broadened so · as to permit a consumer or consumer organization to file a protest and then obtain judicial review in the Customs Court if the protest is denied. Instead, for the reasons given earlier, we think the federal district courts should have jurisdiction over civil actions by a litigant such as Consumers Union which wishes to contest an administrative action of a general nature taken by an agency of the Executive Branch and affecting imports. We urge that such jurisdiction: be expressly affirmed in new legislation dealing with judicial review of decisions on imports in international trade.

In conclusion, Mr. Chairman, Consumers Union recommends that revisions of S. 2857 be undertaken along the lines of the views now expressed in this testimony. Consumers Union would be glad to work with the Committee and! Committee staff to this end.

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