Mr. JARVIS. As we explained in our report-first of all, there is a question in my mind as to when under existing law and regulations an importer is truly delinquent. Importers are actually not required to pay liquidated duties until they file a summons with the Customs Court at the present time. But, upon liquidation, the Customs Service will issue a bill to the importer of record. Then they will issue two subsequent bills at 30-day intervals.

On the 90th day if the importer has not paid the liquidated duties, a computer printout will issue to the surety company. Now, this printout will not be received by the surety company until the end of the month affixed at the top. Consequently, 4 months from liquidation may have elapsed by the time the surety receives its printout. This is the reason why the surety has to be allowed to file a protest more than 90 days beyond liquidation.

Mr. ALTIER. Section 602 (a) does not permit the protest to be filed by any authorized agent of the surety. Do you have any comments on that?

Mr. JARVIS. As we have pointed out in our report, I think this is another example of the surety's second-class status in the customs administrative process being perpetuated. I think that if all other protesting parties have the ability to have protests filed by their duly authorized agents, then certainly the surety should also.

Mr. ALTIER. Thank you.

Senator DECONCINI. We want to thank you, gentlemen, for your testimony.

Our next witness is Mr. Donald W. Paley, New York County Lawyers Association, accompanied by Norman Schwartz.

Gentlemen, we welcome you to the committee.

STATEMENT OF DONALD W. PALEY, ESQ., NEW YORK COUNTY LAWYERS ASSOCIATION, ACCOMPANIED BY NORMAN SCHWARTZ, ESQ.

Mr. PALEY. Thank you, Mr. Chairman.

Senator DECONCINI. Your prepared statement will be printed in the record in full and we would like for you to highlight it, if you would. [Material follows:]

STATEMENT OF COMMITTEE ON CUSTOMS LAW, NEW YORK COUNTY

LAWYERS' ASSOCIATION

SUMMARY OF TESTIMONY

The Committee on Customs Law of the New York County Lawyers' Association, opposes passage of S. 2857 in its present form, although we endorse the general purposes of the bill. We find the following provisions particularly objectionable for the reasons set forth in our statement:

(1) Page 4, line 3: § 302 of the bill would add a new § 1581 to 28 USC attempting to vest exclusive jurisdiction in the Customs Court over "all civil actions against the United States * * * directly affecting imports." The third paragraph of proposed new 28 USC § 1581 states (pages 4, line 17): "Nothing in this section shall be construed to create a cause of action, or to permit the maintenance of a suit not otherwise authorized by law."

(2) § 302 of the bill would further add a new § 1583 (a) to 28 USC (page 5, line 15). We oppose the language used to create this "residual cause of action," although we support the concept.

(3) Also in § 302 of the bill, proposed new 28 USC 1583 (page 7, line 17) would exclude from judicial review certain rulings of the Secretary of the Treasury.

(4) Also in § 302 of the bill, proposed new 28 USC 1592 would allow the government a too-broad right of counter-claim in Customs Court litigation, thus chilling a citizen's right to try his or her case.

(5) The last sentence of proposed new 28 USC 2636 as covered in § 402 of the bill (page 19, line 17) would arbitrarily and without reason exclude financial loss from the concept of "irreparable injury." We oppose this.

(6) § 402 of the bill would in proposed new 28 USC 2632 (a) (page 17, line 2) arbitrarily and without reason substitute a complaint for the present summons procedure to institute Customs Court litigation. We oppose this.

(7) § 402 of the bill would, in proposed new 28 USC 2639(2)(A) (page 20, line 14) add unwarranted limitations upon the present right of Customs Court litigants to introduce affidavit evidence in certain matters. We oppose this limitation, which unfairly advantages the government.

(8) § 402 of the bill, in subsection (b) & (c) of proposed new 28 USC 2640 (pages 22, line 23, and 23, line 3), would unduly narrow the scope of judicial review in certain matters before the Customs Court. We oppose this.

(9) § 601 of the bill (page 27, line 17) would substantially revise present 19 USC 1516, granting a limited right to judicial review to American manufacturers, against decisions by the Treasury Department or the Customs Service pertaining to competing imported goods. We agree that 19 USC 1516 should be amended but since we have been able to suggest an approach to redrafting § 601 which we believe will make it so much more clear, workable and useful, we are recommending that such an effort be undertaken.

We have other objections to other provisions of S. 2857 and we endorse certain of its purposes and much of its language, as set forth in our statement attached hereto.

Respectfully submitted.

DONALD W. PALEY, Esq.

(For the Committee on Customs Law, New York County Lawyers' Association).

This report is issued by the Committee pursuant to the By-laws of the Association which permit such dissemination. It has not been submitted to the Board of Directors for approval and therefore does not necessarily represent the views of the Board.

NEW YORK COUNTY LAWYERS' ASSOCIATION,

New York, N.Y., June 5, 1978.

Report by Donald W. Paley, Esquire, Chairman, Committee on Customs Law, New York County Lawyers' Association, on S. 2857, 95th Congress, Second Session, introduced by Senator DeConcini ("Customs Court Act of 1978"), which seeks to clarify and revise various provisions of Title 28 of the United States Code relating to the jurisdiction and procedures of the U.S. Customs Court and U.S. Court of Customs & Patent Appeals, regarding judicial review of actions of the U.S. Customs Service.

RECOMMENDATION

It is recommended that the bill be disapproved, but with recommendations as noted below. The Committee urges that further intensive study be given to a complete revision of S. 2857, to introduce a clean bill at the next session of the Congress.

Title I: Purpose

REMARKS AND RECOMMENDATIONS

The purposes of the bill are stated to be (§ 101, page 1, line 7) :

"§ 101. The Congress declares that the purposes of this Act are (1) to provide for a comprehensive system of judicial review of matters directly affecting imports, utilizing, wherever possible, the specialized expertise of the United States Customs Court and Court of Customs and Patent Appeals, and the opportunity for ensuring uniformity afforded by the national jurisdiction of these courts; (2) to prevent jurisdictional conflicts in civil actions directly affecting imports due to the present ill-defined division of jurisdicton between the district courts and the customs courts; (3) to provide expanded opportunities for judicial review of actions directly affecting imports; and (4) to grant to customs courts plenary powers possessed by other courts created under article III of the Constitution." These purposes appear to be worthwhile. As is noted in the analysis of the bill prepared by the Justice Department, the case law has developed a “patchwork" system in peripheral areas involving imported merchandise, under which the district court sometimes exercises jurisdiction and sometimes refuses it. See, for

example, Consumers' Union v. Kissinger, 506 F 2d. 136 (C.A.D.C. 1974); Consumers' Union v. Committee For The Implementation of Textile Agreements, 561 F 2d., 872 (C.A.D.C. 1977), certiorari denied, March 20, 1978 (Supreme Court No. 77-785); Timken Co. v. Simon, 539 F. 2d 221 (C.A.D.C 1976); J. C. Penney Co., Inc. v. United States Department of the Treasury, 439 F 2d. 63 (C.A. 2) certiorari denied, 404 U.S. 869 (1971); SCM Corp. v. United States International Trade Commission, 549 F 2d. 812 (C.A.D.C. 1977).

In the SCM case, the Court of Appeals ordered the District Court to withhold further action in the matter until the Customs Court determined whether it possessed jurisdiction. The Customs Court has in a recent opinion taken jurisdiction (C.R.D. 78-2 decided May 11, 1978) and has certified the jurisdictional question for a interlocutory appeal. On the basis of discussions with counsel, it is not anticipated that an interlocutory appeal will be taken by either party. This peculiar situation is an excellent example of the jurisdictional contusion, and has resulted in a lengthy delay in SCM's application for judicial review of a so-called "negative injury determination" by the International Trade Commission under the Antidumping Act of 1921.

The bill's other main purpose, "to provide expanded opportunities for judicial review of actions directly affecting imports", is also valid, since it would grant parties with grievances against the Customs Service a specialized expert forum in situations where they presently have no standing. The functional interplay between the Tariff Act of 1930, as amended, and the relevant provisions of Title 28, presently serves to confer standing (with very limited exceptions) only upon the importer (owner) of imported merchandise or his agent, or to an American manufacturer, producer or wholesaler of U.S.-produced merchandise of the "same class or kind".

Title II: Composition of the Customs Court and assignment of judges to other courts

§ 201 of the bill (page 2, line 13) would revise § 251 of 28 USC, to delete the present requirement that not more than five of the nine active Customs Court Judges shall be appointed from the same political party, and to delete the presentexisting authority of the President to designate a Chief Judge "from time to time". Instead, an appointed Chief Judge would hold tenure until attaining the age of seventy (70) years.

These provisions are designed to conform the organizational structure of the Customs Court to other Article III Courts of national jurisdiction, and they are approved by the Committee.

§ 202 (page 3, line 1) would permit an active Judge of the Customs Court to serve as a Judge of the Court of Claims and of a Court of Appeals, under the same circumstances under which a District Judge may presently serve. This provision would remove an anomaly from the present law, whereby an active Customs Court Judge may not serve as a Judge of a Court of Appeals or as a Judge of the Court of Claims but a Senior Customs Court Judge may so serve. The Committee recommends approval, with the addition of a proviso to the effect that a Judge of the Customs Court may not serve as a Judge of the Court of Customs and Patent Appeals in a Customs appeal involving a case in the Customs Court where the Judge has participated.

Title III: Jurisdiction of the Customs Court

§ 301 of the bill (page 3, line 19) would repeal 28 USC § 1581 and § 1582 which presently define the jurisdiction of the Customs Court and generally, limit standing to (a) those with a direct connection with the import in question whose administrative protest has been denied, and to (b) American manufacturers, producers, or wholesalers of domestic merchandise of the same class or kind whose administrative protest pursuant to 19 USC 1516 has been denied.

§ 302 (page 3, line 21) would replace present 28 USC §1581 and § 1582 with a much more elaborate and comprehensive jurisdictional scheme, namely, new § 1581 thru new § 1593 of 28 USC. These proposed new sections are discussed, section-by-section, as follows:

Proposed new § 1581, "Questions Involving Imports", (page 4, line 3) would grant to the Customs Court "exclusive jurisdiction, except as otherwise provided by law, over all civil actions against the United States or against any officer or agency thereof directly affecting imports", which civil actions arise under the U.S. Constitution, laws, or treaties, or under a Presidential Executive Agreement, or under a Presidential Executive Order.

New 1581 must be read in conjunction with proposed new § 1583, “Final Agency Action", (page 5, line 15) in which the "directly affecting imports" test is again repeated, this time in the context of a jurisdictional grant to the Customs Courts "to review final agency action of any agency of the United States which directly affects imports into the United States."

The term "directly affecting imports" is, according to the Justice Department's analysis, "not susceptible of a general definition". The analysis continues : "However, the use of the term is intended to prevent assumption of jurisdiction by the court over cases which are alleged to affect imports but which do so only in a peripheral or tangential manner". The analysis then cites a general program of wage and price controls which could be said to "affect imports", but which would not be within the "directly affecting imports" test set forth in the bill. It is therefore the intention of the drafters to allow the Customs Court to work out the limits of its jurisdiction under the "directly affecting imports" test on a case-by-case basis.

The Committee disapproves proposed § 1581 for the following reasons: First, the section, if it be considered a grant of “residual” jurisdiction to the Customs Court, is self-nullifying by virtue of the language of the third paragraph (page 4, line 17):

"Nothing in this section shall be construed to create a cause of action, or to permit the maintenance of a suit otherwise authorized by law."

Second, the Committee believes that the "directly affecting imports" exclusive jurisdictional concept (page 4, line 7) is ambiguous and potentially would create more jurisdictional questions than it would resolve. For instance, a low which operates equally on imported and domestically-produced merchandise "directly affects imports" when it is applied to imported merchandise at the Customs barrier. In this connection, further study should be given to distinguishing controversies arising under those laws which regulate international trade as such (and thus "directly affect imports"), as compared to those controversies arising under the application of a general regulatory statute to a specific import shipment. In the latter case, no sound reason exists to attempt to vest exclusive jurisdiction in the Customs Court.

The Committee submits that the "directly affecting imports" jurisdiction concept should be reviewed carefully and clarified. Possibly the solution might lie in the nature of the governing law, i.e. is it a Customs law? Does it operate only on imports and not upon domestic merchandise (or unequally as to both classes)? As we suggest below in this report in our discussion of exclusion-fromentry jurisdiction, the foregoing analysis might logically serve to distribute jurisdiction.

Proposed new § 1582, "Powers generally", (page 5, line 6) states as follows: "The Customs Court shall possess all the powers in law and equity of, or as conferred by statute upon, a district court of the United States. The court, and each judge thereof, shall possess all the powers of a district court for preserving order, compelling the attendance of witnesses, and the production of evidence."

The Justice Department's analysis of this section states as follows:

"§ 1582. It is generally stated, as a general proposition, that the Customs Court does not possess the authority to exercise equitable powers. Moreover, some doubt has been cast upon the question of whether the court possesses powers under the All Writs Act, 28 USC § 1651. Cf. Matsushita Electric Industrial Co. v. Treasury Department, 67 Cust. Ct. 328 (1971), aff'd 60 CCPA 85 (1972).”

This provision of the bill is designed to eliminate any doubt as to the powers of the court in cases within its jurisdiction.

This section is approved, with the recommendation that it be redrafted to avoid redundancy and to avoid creating the inference that the second sentence of the first paragraph thereof in any way restricts the generality of the first sentence immediately preceding it. The following language is suggested in place of the first paragraph of proposed new § 1582: "The Customs Court and each judge thereof shall possess all the powers in law and equity of, or as conferred by statute upon a district court of the United States, including, but not limited to, all the powers of a district court for preserving order, compelling the attendance of witnesses, and the production of evidence”.

The second paragraph of proposed new § 1582, (page 5, line 12) denying the Customs Court the power to convene a jury is approved. For the most part, and even under the expanded jurisdiction of the bill, the cases before the Customs Court are exempt from the Constitutional Seventh Amendment jury-trial require

ment. The Committee believes that those matters in which either pary would be legitimately entitled to a jury trial would be quite rare. Additionally, there would be severe administrative problems inherent in the Customs Court convening a jury in connection with trials outside the port of New York in the exercise of its nationwide jurisdiction (even if it is assumed that the Customs Court could conveniently use the present jury system in the Southern and Eastern Districts of New York). Therefore, the Committee approves this language.

New § 1583 is entitled "Final agency action" (page 5, line 15) and consists of a general grant of power, in subsection (a), "to review final agency action of any agency of the United States which directly affect imports into the United States". This provision, described by the Justice Department as "residual" is a companion provision to the slightly more general language of § 1581. This provision is disapproved, for the reasons set forth in the Committee's analysis of proposed new § 1581 of 28 USC (page 4, line 4).

Paragraphs (b), (c), and (d) of proposed new § 1583 page 6, lines 5, 10, & 17) specifically vest in the Customs Court exclusive jurisdiction to review certain decisions, advice, findings, recommendations, determinations, or actions of the International Trade Commission and the Office of the Special Trade Representative, pursuant to various functions vested in these two bodies under § 201 of the Antidumping Act of 1921 (19 USC § 160-§ 173), under § 303 of the Tariff Act of 1930, as amended (countervailing duties, 19 USC § 1303), under various sections of the Trade Act of 1974, and under § 22 of the Agricultural Adjustment Act, as amended (7 USC § 624). The review jurisdiction over actions of the Office of the Special Trade Representative pursuant to § 301 of the Trade Act of 1974 would be "solely for the purposes of determining the procedural regularity of these actions" (page 6, line 21); no such limitation is contained elsewhere in subsections (b), (c) and (d).

The Committee approves this language with the recommendation that the proposed language pertaining to review "after the decision of the President has become final" appearing in subparagraphs (c) and (d) be amended to read: "after the decision of the President has heen published in the Federal Register". Subsection (e) of proposed new § 1583 (page 6, line 23) excludes from the jurisdiction of the Customs Court the following matters:

(i) any civil or criminal action arising under the antitrust laws of the United States;

(ii) any civil or criminal action arising under the Shipping Act of 1916, as amended;

(iii) Any action relating solely to labor-management relations, actions affecting personnel, or actions alleged to be in violation of any statute forbidding discrimination in employment;

(1) [sic] arising solely under the Freedom of Information Act or the Privacy Act;

(v) any action arising under § 305 of the Tariff Act of 1930, as amended, or [232 of the Trade Expansion Act of 1962, as amended]; or

(vi) any action involving a function vested by law in the Department of Energy, including but not limited to the Emergency Petroleum Allocation Act.

The Committee approves this language, which would have the effect of leaving review of such matters in the district court, under other statutory provisions. The fourth clause quoted above pertaining to the Freedom of Information Act or the Privacy Act should be renumbered (iv) and the words "any action" should be inserted before the word "arising".

The Committee strongly objects to subsection (f) (i) of proposed new § 1583, (page 7, line 19) which would deny to the Customs Court and any other court jurisdiction to review “a discretionary decision of the President or his delegate pursuant to the authority granted to him by law relating to international trade". It is believed that this section is much too broadly worded and ignores the fact that the President, in much of his actions "relating to international trade" imposes Customs duties (or fees, charges or exactions judcially determined to be types of Customs duties) under constitutionally delegated authority (Constitution, Article 1, § 8, Clause 1). The Customs Court has hitherto exercised jurisdiction to review actions of the President in laying duties pursuant to the delegated power, to ensure that the actions of the President follow the statutory language defining and limiting the particular delegation. See, e.g., United States v. Schmidt Pritchard & Co., et al, 47 CCPA 152, C.A.D. 750 (1960);

Best Foods, Inc. v. United States, 50 Cust. Ct. 94, C.D. 2396, modified and remanded upon compromise settleemnt, United States v. Best Foods, Inc., 51 CCPA 1, C.A.D. 827 (1963).