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unlawful procedure, or an arbitrary, capricious or otherwise clearly unreasonable practice or procedure. The Subcommittee may wish to consider the possibility of providing legislative guidance for such an eventuality. A reviewing court might simply enter an affirmative determination of injury. (See, opinion of Judge Kaufman in SCM v. U.S. International Trade Commission, 549 F. 2d 812, at 821.) Another possibility is that the reviewing court could remand the determination. There are practical difficulties in remanding such determinations. As the Commission is exempt, by law, from any requirement to make on-the-record determinations of an evidentiary nature, the information obtained in its investigations—which is in the nature of market research analyses-does not lend itself to reconsideration as the data relied upon becomes stale. Finally, the reviewing court could direct that the Commission conduct a new investigation. A new investigation could take the form of either (1) new Commission investigation of injury, based upon the Treasury Department's outstanding “less than fair value” or “bounty or grant" determination, or (2) a new bifurcated proceeding with the matter remanded to the Treasury Department in the first instance for its new determination.
Section 601(g) of the bill would add a new subsection (i) to section 1516 of title 19. If enacted, this subsection would establish new rights for "any person adversely affected” for challenging negative Commission determinations under proposed new sections 1516(c) (4) (b) and 1516(d) (c)(2) of title 19. The new provisions would encourage such persons as importers of products competing with those sold at “less than fair value” or subject to "bounties or grants" or unions with memberships in domestic firms manufacturing products competitive with such imports to challenge Commission determinations in cases where a domestic manufacturer, producer or wholesaler either fails to challenge the determination or abandons a challenge. The provision establishes, with respect to the challenges under this section, that the Commission's findings of fact are conclusive and that the Customs Court is only to remand challenged determinations to the Commission for reconsideration where the court finds the determination to have been arbitrary, capricious or contrary to the applicable statute. For the reasons stated above, the Commission is aware of practical difficulties in the reconsideration of information which was not of an evidentiary nature and which, most probably, has become stale with the passage of time. On the other hand, the Commission does not object to the expansion of the classes of persons with the right to seek judicial review of its determinations. We suggest that the Subcommittee may wish to consider redrafting section 601 (g) to authorize the Commission to institute a new injury investigation or to refer the matter to the Treasury Department for a fresh determination (or a confirmation) of sales at "less than fair value” or of a “bounty or grant,” where appropriate, in addition to providing for the mere reconsideration by the Commission of its administrative record.
Mr. STEIN. First would be the current state of the law in the areas relating to judicial review of international trade matters, which is confusing. We believe they should be cleared up.
Second, the Commission welcomes appropriate judicial review of its actions. We would hope that legislation will help to achieve prompt judicial resolution of challenges to Government actions in the international trade area.
Finally, it is of paramount importance to the Commission that such legislation preserve the nonrecord character of Commission proceedings.
The Commission is a fact finding agency. Most of its responsibilities focus on the task of assessing the competitive impact of imported products in the domestic markets of U.S. producers.
To do so, the Commission conducts product-oriented investigations which are, in essence, market research studies. Challenges to the Commission's investigative proceedings have been brought to the customs court and the U.S. district courts. Expanding the jurisdiction of the customs court to review all such challenges could result in the development of a uniform body of case law.
With regard to the judicial review of Commission proceedings conducted under the Antidumping Act, 1921, which accounts for a substantial amount of the litigation which involves the Commission, it has been our experience that the judicial resolution of challenges to Commission determinations has taken years. Protests taken against antidumping duties of collaterally attacked Commission determinations years after the complaint determinations were reached and judicial resolution of the protests has not been expeditious.
In this area where conditions change rapidly, unless review is expeditious, it will be taken on a stale record. In addition to providing for judicial review where none was authorized explicitly, enacting the proposed legislation may expedite judicial review.
Finally, it is important to the Commission that the nonrecord character of its investigations be preserved. Much of the information collected by the Commission is in the form of confidential questionnaires sent to competitors. In investigations conducted under the Antidumping Act and the countervailing duty statute, some of the information relied upon by the Commission is prepared by the Department of the Treasury and returned to that Department at the conclusion of the Commission's investigation. All of these investigations are subject to specified time limits, either by statute or by direction of the President or the special trade representative. These proceedings are not of an evidentiary character but are legislative in nature. Requiring a record could well result in judicial review being sought by parties to gain access to materials to which they had no access at the agency level. Thus, judicial review proceedings could be used to gain access to information not otherwise available to frame new arguments in the reviewing court. Such a result would transform judicial review into a complete relitigation, which destroys the rationale for time limits on Commission investigations and could, by allowing counsel access to confidential information, inhibit prompt compliance with Commission questionnaires and prevent the agency from making informed decisions in these areas.
We have raised issues of a more technical nature in the prepared statement.
Thank you again for the opportunity to express our views on this legislation. Senator DECONCINI. Thank you very much. Mr. Altier ?
Mr. ALTIER. One of the objectives of the bill is to eliminate the problem that occurs when a plaintiff chooses the inappropriate court while challenging government actions in national trade. In the Commission's experience, have there been any instances where litigation of foreign trade issues in the Federal district courts has caused confusion?
Mr. STEIN. Yes. There have been instances where it has caused confusion. We have heard a couple of them this morning. It is the SCM case and the Sneaker Circus litigation. Both involved Commission determinations. In both cases, we find ourselves defending actions in differing forums.
It has been a problem to us. In the SCM case, for example, where the plaintiffs went first to the district court and then--and presently--the customs court, a dumping determination was taken in 1972. I'm sorry,
that was 1975. That has yet to really be reviewed on the merits. Really, conditions in these markets change rapidly. If, after another year or so of litigation, there is a finding-although I doubt it-and if the finding is not favorable to the United States, it is not clear what will happen then. Will we go back and have dumping duties assessed on the record that would be, at the point, 5 years old? Would we just simply reinvestigate? That could be done now. Unless we have prompt review, and unless there is a mechanism whereby people can challenge commission decisions expeditiously, without having to wait for entrance into the country and then undergoing this process situation, we think meaningful judicial review is precluded.
Senator DECONCINI. I have no further questions.
Our next witness will be Robert Herzstein, Chairman, Standing Committee on Customs Law of the American Bar Association.
He is accompanied by Mr. Joseph S. Kaplan, a member of the International Trade Committee.
Gentlemen, we are pleased to have you here.
STATEMENT OF ROBERT E. HERZSTEIN, CHAIRMAN, STANDING COM
MITTEE ON CUSTOMS LAW, AMERICAN BAR ASSOCIATION, ACCOMPANIED BY JOSEPH S KAPLAN, CHAIRMAN, SUBCOMMITTEE ON CUSTOMS COURTS AND PROCEDURES, SECTION OF INTERNATIONAL LAW
Mr. HERZSTEIN. Thank you, Senator. We will highlight our statement, and we would like it inserted into the record.
Senator DECONCINI. Without objection, your entire statement will be inserted into the record at this point.
[Material follows:] STATEMENT OF ROBERT E. HERZSTEIN, CHAIRMAN, STANDING COM
MITTEE ON CUSTOMS LAW, AND JOSEPH S. KAPLAN, MEMBER, INTERNATIONAL TRADE COMMITTEE, SECTION OF INTERNATIONAL LAW, AMERICAN BAR ASSOCIATION
Mr. Chairman, I am Robert E. Herzstein, Chairman of the American Bar Association's Standing Committee on Customs Law. With me today is Joseph S. Kap tan, a member of the International Trade Committee of the International Law Section. We appreciate this opportunity to appear before you today to present the views of the American Bar Association on S. 2857.
By way of introduction, the following issues dealt with in the bill have gained the support of the ABA:
1. expansion and clarification of the subject matter jursidiction of the Customs Court;
2. plenary judicial powers for the judges of the Customs Court;
3. appointment and tenure of Customs Court judges without reference to political affiliation;
4. greater access to the Customs Court for parties affected ;
5. resolution of apparent jurisdictional conflicts between the Customs Court and the district court which have the effect of barring access to judicial review.
Because S. 2857 does not achieve these goals, the ABA recommends that S. 2857 not be enacted in its present form.
In this presentation we will concentrate upon the major issues raised by the bill which prevent our endorsement. Although we will not now dwell on this aspect, it is also undeserving of enactment because it is flawed by faulty draftsmanship. Indeed, we consider the technical defects in the bill so substantial that they would probably engender years of litigation over 'who may sue and about what.
POSITION OF THE AMERICAN BAR ASSOCIATION
The American Bar Association, through its Standing Committee on Customs Law and the Sections of Administrative and International Law, have for the last several years been increasingly interested in the operations of the various executive agencies concerned with international trade and the apparatus for administrative and judicial review of the decisions of these agencies. By resolution, the ABA has developed policies dealing with the most important subjects of S. 2857 which we would like to briefly summarize. The resolutions are set forth in their entirety in the appendix attached to this statement. (The footnotes correspond to the Resolutions appearing in the appendix.)
RESOLUTIONS OF THE ABA
1. The status of Customs Court judges should be the same as judges of the district courts and other Article III courts.
2. The powers of the customs courts should be the same as the powers of the district courts, including the power to grant preliminary relief in appropriate
3. There should be increased access to judical review of Federal actions relating to imports.
4. The subject matter jurisdiction of the Customs Court should be clarified.
5. A comprehensive system of judicial review of federal actions based on the customs laws, and, when appropriate, other laws regulating the importation of merchandise should be established.
6. Jurisdictional conflicts between the Customs Court and the district courts should be avoided,
There is no doubt that the importance of the work of the customs courts is growing. The volume of United States international trade and its importance to the economy increase significantly each year. The impact of imports on all levels of the domestic economy is greater, and so is the need for a resolution of disputes between the government and parties affected by its decisions under the various laws governing international trade.
Congress has increasingly recognized the need for access to impartial judicial review of governmental decisions affecting imports in order that justice may be done for all persons affected by such decisions, including domestic producers as well as importers. The present system is defective because there are many such decisions which at present are not reviewable or are reviewable in circumstances which provide little or no relief. One example of this is the refusal to permit entry of goods allegedly subject to quota, which the government contends are not accompanied by a correct visa.
Another existing defect is that the Court is hamstrung in exercising its responsibilities because, as a matter of settled law, it lacks critical equitable powers; it may only entertain cases and controversies which have often reached a degree of ripeness that could make equitable relief too late to be useful, and it cannot fashion equitable remedies when they are appropriate.
Since its creation 50 years ago the Customs Court, building upon the precedent of other judicial or quasi-judicial bodies, has developed considerable expertise in understanding the problems of intertional business as it effects valuation for duty, and in interpreting merchandise classification systems. As a single court which sits throughout the United States, it has also assured that a constitutional requirement of uniformity of treatment of exports will be maintained.
These similar qualities of the Customs Court make it desirable that the expansion of access to judicial review of certain decisions of federal agencies relating to imports would most appropriately be carried out in the Customs Court. In other cases, not calling upon their particular expertise, exclusive jurisdiction in the customs courts is neither necessary nor deirable.
We expect that the testimony presented to this committee during these hearings will show a broad consensus for expanding the jurisdiction and responsibilities of the Customs Court to meet the challenges presented. Unfortunately, S. 2857 is not now drafted to meet these needs.
S. 2857 is critically deficient in several respects:
1. Subject matter jurisdiction.--This is obfuscated rather than clarified. Article III of the bill begins with a broad grant of subject matter jurisdiction. In succeeding sections language is employed of such particularity as to cast significant doubt on,
if not actually to contradict, the scope of the broad jurisdictional grant. If the jurisdictional grant is intended to be broad, the justification for vesting such broad jurisdiction exclusively in the Customs Court is not apparent and should be explained. If the grant is intended to be limited, the limitations should be clear and the reasons for the limitations should be made known so that this committee and the public may properly evaluate them.
2. Scope of review.-S. 2857 contains several provisions governing the scope of review, some set out in a section titled "Scope and standard of review” and others scattered throughout the bill. The effect is to make the scope of review uncertain. Clear standards consistently applied are necessary. These should provide for trial de novo in all matters except those which have been decided pursuant to the Administrative Procedure Act or procedures equivalent thereto. Those decisions should be reviewable as to the substantiality of the evidence and on questions of law.
3. Causes of action.—The bill appears to create new subject matter jurisdiction but does not create causes of action to coincide with the jurisdictional grants. The absence of such parallel causes of action makes the expansion of subject matter jurisdiction useless and illusory. The solution is to provide the necessary causes of action.
4. Exclusivity of subject matter jurisdiction.—The apparent broadening of subject matter jurisdiction to the Customs Court on an exclusive basis along with the granting of equity powers is unwise. The Customs Court should have exclusive jurisdiction over matters within its special competence-for example, the classification and valuation of imported products. But there is no reason why jurisdiction over issues not calling for such expertise should be so limited. The district courts are equally able to determine, for example, whether an imported product is in compliance with the food and drug laws or other safety and regulatory requirements.
5. Parity of access and relief.-Congress has for some time sought to assure that domestic producers and importers would have equal access to judicial review of decisions within the reviewing jurisdiction of the Customs Court. Under S. 2857 there is considerable reason to believe that the terms of access, scope of review and relief available to domestic producers as presently provided by section 516 of the Tariff act will actually be less than under existing law. Even if not, expansion of subject matter jurisdiction should be undertaken in a way which preserves parity between importers and domestic producers.
6. Exhaustion of remedies, equity powers and declaratory judgment. The customs courts interpret the law as not permitting them to grant preliminary equitable relief. S. 2857 would authorize such relief, but not if the claim of irreparable injury which motivates the demand for preliminary injunctive relief involves “financial loss”. The Customs Court only adjudicates commercial cases which involve "financial loss”. The conclusion which must be drawn is that the bill's provisions of preliminary injunctive relief is illusory.
7. Right of transfer.-A major purpose of S. 2857 is to provide the Customs Court and its judges with status equal to that of the district courts. It is inevitable that persons not well acquainted with the lines of demarcation between Customs Court jurisdiction and district court jurisdiction will file suits in the wrong court. Subject to timeliness, cases filed in the wrong court should be transferrable to the right court. This power is not adequately provided in S. 2857.
8. Setoff, demand and counterclaim.-S. 2857 would permit the United States to assert a set-off, demand or counterclaim arising out of any import or exportrelated transaction. The only apparent reason for such a special grant of subject mater jurisdiction for the sole benefit of the government is to make litigants think twice before seeking to exercise their rights against the government in the Customs Court. This provision would, for example, in a suit brought by a private party to compel the collection of an antidumping duty, permit the government to counterclaim for additional taxes under Section 482 of the Internal Revenue Code or for a civil penalty on account of an alleged violation of the Arms Control Act, even though the subject of the counterclaim is totally unrelated. This authority is not needed since the government has adequate access to the courts for resolution of disputes. Furthermore, such a grant would only confuse the issues and present questions which are well beyond the special expertise of the Customs Court.
The summary presented above does not even touch upon the problems of drafting and various other technical deficiencies, many of which are quite serious. In our judgment, these many problems cannot be solved through a simple marking-up of S. 2857, but require a complete revision based upon adequate consideration with due regard for the comments received at these hearings.