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This provision, coupled with bill's revision of section 1340 of title 28, should eliminate the great confusion which the few cases I picked out illustrate.

We recognize that the term “directly affecting imports” is not defined in the bill. We believe that the term is not capable of a precise definition which would cover all conceivable circumstances. However, experience has shown that the circumstances under which people seek to challenge decisions affecting international trade are in a state of flux and have been changing dramatically over the past few years.

It is envisioned that a case will not come within the terms of this provision, however, unless the principal allegation in the complaint has a direct, substantial, and immediate impact upon imports.

In our view this expansion of the jurisdiction of the customs courts is supported, not only by the fact that it will eliminate the considerable jurisdictional confusion which now exists, but also by two other important considerations of judicial economy, and the need to increase the availability of judicial review in the field of international trade without sacrificing the need for the expeditious resolution of disputes in this area in a manner which results in a uniform national rule.

As to that latter point, let me say this. While our principles of review and challenge of agency actions are a fundamental part of our Government and an elementary principle to all of us, we have to recognize that these principles are not always understood by our Nation's trading partners who have different systems of government and different traditions.

As a consequence, we often find it difficult to explain to our trading partners why it is that a policy decision announced by the Executive or by Congress is at times invalidated by our courts.

The availability of judicial review often results in confusing our trading partners in that they may begin to take steps to adjust to a particular policy only to find that that policy is first reversed by a lower court, then perhaps reinstated on appeal, and, finally, possibly not finally established until review by the Supreme Court.

Of course, we will not eliminate those problems by our provisions, but, at least, we will somewhat alleviate them in that it will not further be confused by not knowing what court to go to and being thrown out of one court and having to go to another.

Also, because the customs court has superior resources and expertness at this time, these cases should be easier and faster in resolution.

For example, only 1 year, approximately 1 year, elapsed in the Zenith case, which was a major and complicated case with extremely important international implications. Only 1 year elapsed between the decision of the customs court and the argument and decision in that case in the Supreme Court.

That is a record that is not easily nor often matched in any of the other Federal courts.

Thus, in our view the transfer of jurisdiction to entertain suits in the field of international trade possesses substantial advantages in terms of our ability to conduct our trade policy. ·

In sum, Mr. Chairman, the Department of Justice strongly supports S. 2857. We believe that the bill will significantly expand the right to judical review in international trade matters, remedy the jurisdie

tional conflicts which now appear to exist, and reduce some of the uncertainty to which our trading partners are now subject. I would call it a mess, if you will.

I will not go through the rest of my statement, Mr. Chairman, since it has already been inserted in the record. I will attempt to answer any questions which you may have.

Senator DECONCINI. Thank you very much, Ms. Babcock. There is a concensus for change and there will be technical areas in the bill that will need to be ironed out. We hope you will provide someone to assist our staff in attempting to resolve these issues. Ms. BABCOCK. We will certainly not only be delighted, but eager, to

, do that.

Senator DECONCINI. The bill would make certain concepts of administrative law, such as standing and various standards of review, applicable to the new cases which will be added to the court's jurisdiction of the bill.

Why were these concepts not rendered applicable to the cases now within the customs court's jurisdiction?

Ms. BABCOCK. Made retrotractive? Senator DECONCINI. Right. Mr. COHEN. Senator, I think the prime reason was because the cases within the court's present jurisdiction are reviewed by means of trial de novo rather than on the basis of administrative record.

It was not our intention to change that principle at all. Under those circumstances, given the fact that trial de novo is the most sweeping form of judicial review available, we felt that it was appropriate to continue to maintain the types of prerequisites to jurisdiction which now exist with respect to the court's present jurisdiction.

Senator DECONCINI. Would the Department support a separation of the bill and separate enactment of the provisions dealing with the powers of the customs courts? Should we leave to the future the question of whether to expand the court's jurisdiction ? Have you given any thought to that!

Ms. BABCOCK. To do the housekeeping chores now?
Senator DECONCINI. Right.

Ms. BABCOCK. We have given that a good deal of thought. We really are very concerned that that not be done. The time is now.

Senator DECONCINI. To do the whole thing?
Ms. BABCOCK. Yes; to do the whole thing.

Mr. Chairman, you would be the first to recognize that when Congress does do the work on getting any bill through, that it is not going to return to that subject matter soon. These problems which are caused by the jurisdictional conflict are pressing. The need to truly develop an international trade court and use the customs court which we have now is a pressing problem.

Senator DECONCINI. Why does the bill limit the customs court jurisdiction in exclusions cases solely to cases involving the exclusion of the goods under the customs laws?

Mr. COHEN. We gave very serious consideration, Mr. Chairman, to the possibility of eliminating that limitation which now exists in the law. However, upon investigation, we discovered that many of the other exclusion cases involved matters which are only peripherally related to international trade. For example, if the Consumer Product Safety Commission decides that certain playground slides are unsafe for sale, or if the Food and Drug Administration decides that a certain drug such as laetrile should not be sold in domestic commerce in the United States, then the agency finds it necessary, in order to insure the enforcement of its rules with respect to domestic commerce, that the rule also be applied to imports.

If we removed the customs law restriction from the jurisdictional provisions of the customs court, what might happen is that the validity of the Food and Drug Administration's rule excluding laetrile from the United States, for example, might be reviewed in the customs court. But there is really no reason for that.

The principal intent of the rule is to eliminate the sale of the drug in domestic commerce. Therefore, the challenge to that type of rule, we felt, was appropriate for the district court resolution.

Senator DECONCINI. Is the term "custom laws" defined in the bill? Mr. COHEN. Mr. Chairman, it is not.

Again, we attempted to draft a definition of that provision, but it is very much like the term “directly affecting imports.” The definition generally ends up being a very complex or a very lengthy listing of a lot of statutes. The net result is this: The great possibility exists that, we would have eliminated something from a definition of a customs law that we very much wanted included.

The limitation has been in the statute for quite a number of years. There have been a number of decisions along this line. We think that it causes no great problem to continue to allow the term to be defined on a case-by-case basis.

Senator DECONCINI. Is pornographic material excluded under the customs laws?

Mr. COHEN. No, Senator, it is not.

Senator DECONCINI. When does the bill not grant jurisdiction to the customs courts in entertaining cases involving exports?

Mr. COHEN. Well, that is again something else that we considered at great length. That certainly is a possibility. However, I think there are a number of statutes dealing with exports which, at the current time, contain provisions which preclude judicial review. So, the number of cases that would arise in this area are relatively few. While that might be an area that could be given consideration some time in the future, we do not see the urgency in that area that exists in importrelated areas.

Senator DECONCINI. Where do export cases go now? To the district court?

Mr. COHEN. To the extent that judicial review is available, it would go to the district court.

Senator DECONCINI. When there is judicial review available, do you feel it should not be included in the jurisdiction of the customs courts?

Mr. COHEN. It would not be under this bill.
Senator DECONCINI. Would that offend you if it were ?
Mr. COHEN. No; it would not.

At the time we were working very intensely on this bill, I think the major export-related bill was under consideration by the Congress. I believe that it is correct that the law as it existed prior to Congress consideration of that provision was that there was no judicial review available.

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Subsequently, after the major work on this bill had been completed, the Congress completed its work on the export bill and did include provisions for judicial review of some aspects of export-related matters, such as whether on not companies have participated in or been solicited to participate in boycotts, trade boycotts.

În effect, what I am saying is that subsequent developments may have made our decision not to include these cases within the customs court's jurisdiction somewhat outdated.

Senator DECONCINI. It just would appear to me that it ought to be advantageous to try to attempt to channel those areas that permit judicial review in a specialized court into the customs court. That is why I ask you to pursue that.

The proposed section 1581 specifically states that the section shall not be construed as creating a cause of action. Is this direction necessary?

Mr. COHEN. We do not believe that it is, Mr. Chairman. In our opinion, that section was patterned after the general grant of Federal jurisdiction in section 1331 of title 28. We believe the case law shows that a similar sentence such as that is actually implied by the courts in section 1331.

In our opinion, all we have done in section 1581 of the bill, that is, what would become that section, is to make that explicit. But, I think the case law indicates that it need not be made explicit because it would be implied in any event.

Senator DECONCINI. The proposed section 1592 would permit the United States to assert counterclaims in the customs court. Will this provision necessarily deter individuals with possible meritorious claims from instituting suits in the customs courts?

Ms. BABCOCK. We do not believe so. I think this provision really brings—it is one of the ones that brings procedures in the customs courts into line with ordinary civil procedures and practices. Again, when anybody sues anybody normally in a Federal court, they are risking a counterclaim that might arise out of the dispute. It is a reasonable procedure to resolve all aspects of the dispute at one time.

Senator DECONCINI. I have no further questions.
Mr. Altier has a few questions.

Mr. Altier. Under current procedure, an action before the customs court is initiated by means of a summons. Under the bill S. 2857, there is a provision which requires that the civil action before the customs court be initiated by a complaint.

I understand that this is also in line with the common district court practice.

I was wondering what your response would be to changing the present language from "summons,” to “summons or complaint”? Would you comment on the use of "complaint” in the bill? Ms. BABCOCK. This provision has a long history. I will let Mr. Cohen

а. outline that for you.

Mr. COHEN. The reason why we included that provision in the bill is because, under the current procedures, the court is acting as a warehouse for a large amount of documents which are stored in the court only to be returned to their source after having been of no use to the court.

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The way it works under the current procedures is as follows. A summons is filed. Immediately upon the filing of the summons, the statutes relating to the customs court require customs officials to send certain enumerated documents to the court. The customs officers do that.

The summons, however, does not necessarily mean that the plaintiff is prepared to begin the case. The summons, that is, the case represented by the summons, is put into the courts so-called reserve file where it resides for up to 2 years.

Within those 2 years, if the plaintiff does not file a complaint or does not file a motion for extension of time within which the case may remain in the reserve file, the case is automatically dismissed for lack of prosecution. When that happens, all the documents that were sent to court upon the filing of the summons, are sent back to the customs officials.

The plaintiff can always abandon the case in the reserve file. I think the statistics are that we have about 1,600 cases abandoned every year.

What this means is that in 1,600 cases these documents were sent to the court, left there for up to 2 years, and then sent back to customs when the plaintiff abandoned the case.

The intent of the bill was to prevent this by saying that you would have to institute a suit by a complaint which would indicate that the plaintiff was serious in pursuing the case.

But we wanted to do it without eliminating this 2-year period that the plaintiffs now have, or which is now given to them by the reserve file procedures. So, therefore, we said, or rather the bill says, that they have 2 years within which to file the complaint, but during those 2 years, in effect, the papers will be stored by the customs officers rather than by the customs court.

In terms of compromising on the provision, I suppose that it is possible, but I think before consideration is given to abandoning that position, that we ought to very seriously consider whether we want to continue to allow the court, or to force the court, in effect, to operate as a warehouse.

Mr. ALTIER. We have received a number of comments that suggest there should be a provision in the bill which would permit individuals to bring small claims before the customs court. I understand the American Importers Association has some interest in pursuing that. Does the Justice Department have a similar interest?

Mr. COHEN. This matter has been under consideration for some time. I understand the Association of the Customs Bar did study the matter in detail. Ultimately, it is my understanding that they reached a conclusion that there was really no need for a small claims division.

However, I think that if it is felt that there is a need for special procedures for small claims, contrary to the conclusion of the Association of the Customs Bar, I think we might look to the procedure adopted in the tax court, which is also an article III court, and which does have eight special judges to handle small claims. This seems to have worked out fairly well.

Mr. ALTIER. If the bill passes, and if we have the same factual pattern that was found in the Sneaker Circus case, and if that fact pattern was again brought to the district court, would the district court

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