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Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 7, 1997 Decided February 24, 1998 

No. 96-5150

INTERPORT INCORPORATED,

APPELLANT

v.

JOHN W. MAGAW,

DIRECTOR, BUREAU OF ALCOHOL, TOBACCO, AND FIREARMS, AND 

GEORGE WEISE, COMMISSIONER, U.S. CUSTOMS SERVICE,

APPELLEES

Appeal from the United States District Court 

for the District of Columbia 

(No. 95cv01175)

Richard E. Gardiner argued the cause and filed the briefs 

for appellant.

Rudolph Contreras, Assistant U.S. Attorney, argued the 

cause for appellees, with whom Mary Lou Leary, U.S. AttorUSCA Case #96-5150 Document #332572 Filed: 02/24/1998 Page 1 of 9
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ney, and R. Craig Lawrence, Assistant U.S. Attorney, were 

on the brief.

Before: WALD, GINSBURG, and HENDERSON, Circuit Judges.

Opinion for the Court filed by Circuit Judge GINSBURG.

GINSBURG, Circuit Judge: Interport, Inc. challenges a rule 

of the Bureau of Alcohol, Tobacco, and Firearms prohibiting 

the importation of machine guns without a government purchase order. Interport also challenges as unlawful, and 

alternatively as a denial of due process, the seizure of its 

firearms by the Customs Service. The district court upheld 

the BATF rule as a valid interpretive rule but failed to 

address the validity of the seizure. We affirm the district 

court's holding with regard to the rule but hold that the 

Customs Service acted unlawfully by seizing Interport's guns 

without adhering to the procedure provided by statute.

I. Background

The importation of a firearm into the United States is 

generally illegal unless the firearm is intended for government use (generally for law enforcement), is a sales sample, 

or meets other requirements not relevant here. See 26 

U.S.C. § 5844; 27 C.F.R. § 179.111. A would-be importer 

must file an application, including BATF "Form 6," which 

requires "a detailed explanation of why the importation of the 

firearm falls within" one of the permitted categories. 27 

C.F.R. § 179.111. The BATF has a long-standing practice 

that an application based upon government use of the firearm 

will not be approved unless the applicant submits a government purchase order along with Form 6.

An importer may bring a firearm (or any other good) into 

the territory of the United States without being deemed to 

have "imported" it if the importer stores the firearm in a 

Foreign Trade Zone (FTZ). See 19 U.S.C. §§ 81b-81c. Customs requires that any firearm in an FTZ be kept in a highsecurity area.

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The Customs Service itself may take and store "unentered 

merchandise" at the request of the carrier or consignee. See 

id. § 1490(b); 19 C.F.R. § 127.1(c). Any such merchandise 

that remains in storage "for 6 months from the date of 

importation thereof, without all estimated taxes, duties, fees, 

interest, storage, or other charges thereon having been paid, 

[is] considered unclaimed and abandoned." 19 U.S.C. 

§ 1491(a). The Customs Service may sell or destroy unclaimed or abandoned merchandise.

Customs may also take possession of any goods that do not 

have a proper import license; the agency must then call upon 

the U.S. Attorney "for the institution of the proper proceedings for the condemnation of such property." 19 U.S.C. 

§ 1610; see also 19 U.S.C. § 1595a. If after those proceedings the Government is awarded title to the unlicensed goods, 

then it may dispose of the goods; firearms may be destroyed 

or given to a government unit. See 26 U.S.C. § 5872(b).

In June 1994 Interport stored several hundred machine 

guns in the high-security storage area of FTZ No. 3 in San 

Francisco. That same month the Customs Service told the 

operator of FTZ No. 3 that its high-security area did not 

meet standards. Rather than upgrade the facility, the operator decided to close the high-security area.

In late September, after trying without success to find 

another FTZ in which to store the machine guns, Interport 

applied for a permit to import them. In January 1995 the 

BATF denied Interport's application on the ground that 

"stockpiling" of imported weapons was not permitted except 

in a Customs bonded warehouse or an FTZ. Interport 

reapplied and the BATF in May again denied the application, 

this time explaining that the BATF "requires that a purchase 

order from the purchaser be submitted with the Form 6 

application."

Meanwhile, Customs twice by letter notified Interport that 

any guns remaining in the FTZ after October 14, 1994 would 

be taken into the custody of the Government, and that after 

six months they would be transferred to Fort Benning, 

Georgia and destroyed. The first letter did not cite any 

authority for the proposed action; the second referred only to 

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19 U.S.C. § 1490 and 19 C.F.R. § 127.1, which describe the 

authority of the Customs Service to keep merchandise in 

storage at the request of the carrier or the consignee.

In October 1994 Customs moved the guns to its own 

storage facility in San Francisco. In June 1995, after again 

notifying Interport of its intent to do so, Customs sent the 

guns to Fort Benning and informed Interport that it considered the guns to have been abandoned by operation of law

presumably, § 1491(a)as of April 1995. Interport objected 

and Customs in a second letter confirmed its plan to proceed 

with immediate destruction of the guns. Interport then sued, 

arguing that (1) the purchase-order requirement of the BATF 

is (a) an invalid legislative rule because it was not promulgated pursuant to notice-and-comment procedures or, (b) if an 

interpretive rule, invalid because it is (i) unreasonable and (ii) 

violates the Tenth Amendment to the Constitution of the 

United States; and (2) the procedures by which the Customs 

Service took possession of its guns (a) were without statutory 

authority and (b) denied Interport due process of law in 

violation of the Fifth Amendment to the Constitution of the 

United States.

On cross motions for summary judgment the district court 

ruled in favor of the Government. See Interport, Inc. v. 

Magaw, 923 F. Supp. 242 (D.D.C. 1996). The court held that 

the purchase order requirement is an interpretive rule, valid 

because it is a "reasonable way to implement the statute." 

Id. at 245. The court also held that the Government's order 

to destroy the guns was "too severe a remedy" because the 

"plaintiff had been put in a difficult position by virtue of the 

fact that Customs' determination that FTZ # 3 did not meet 

standards for secure storage came after plaintiff already had 

shipped its weapons to FTZ # 3." Consequently, the court 

ordered the Government not to destroy the machine guns and 

helped the parties reach an agreement about storing them 

"pending appropriate disposition." Interport appealed.

II. Analysis

We hold that the purchase-order requirement is an interpretive rule and that as such the rule is reasonable and 

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therefore entitled to our deference. We also hold that the 

Customs Service acted unlawfully when it took possession of 

the machine guns under the purported authority of an inapplicable statute. We reject without need of further comment 

Interport's argument that the purchase-order rule violates 

the tenth amendment in that it interferes with the ability of 

the States to purchase imported machine guns; the tenth 

amendment protects the States from the federal Government 

acting in derogation of their rights as States, not from 

interference with their rights as consumers like any others. 

See Hodel v. Virginia Surface Min. & Reclam. Ass'n, 452 

U.S. 264, 287-88 (1981).

A. Is the purchase-order requirement an interpretive 

rule?

The Government argues that the requirement of a government purchase order for the importation of a firearm for 

government use is an interpretive rule and hence exempt 

from the notice-and-comment requirements applicable to legislative rules under the Administrative Procedure Act. See 5 

U.S.C. § 553(b)(A), (d)(2). The distinction between an interpretive rule and a legislative rule is fuzzy at best. See 

American Hospital Assoc. v. Bowen, 834 F.2d 1037, 1045-46 

(D.C. Cir. 1987). In one familiar formulation, the distinction 

is that an interpretive rule "simply states what the administrative agency thinks the statute means, and only reminds 

affected parties of existing duties," whereas a legislative rule 

"intends to create new law, rights or duties." General Motors Corp. v. Ruckelshaus, 742 F.2d 1561, 1565 (D.C. Cir. 

1984) (en banc). As a moment's reflection will show, this 

formulation of the distinction is much more easily stated than 

applied. See Robert A. Anthony, "Interpretive" Rules, "Legislative" Rules and "Spurious" Rules: Lifting the Smog, 8 

ADMIN. L.J. AM. U. 1, n.10 & nn.13-14 (1994) (citing cases 

bemoaning difficulty of applying distinction).

In this case, however, it is fairly clear that the purchase 

order requirement is an interpretive rule under the standards 

of General Motors. The statute provides in relevant part 

that an importer must

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establish[ ] ... under regulations as may be prescribed 

by the Secretary [of the Treasury] ... that the firearm 

to be imported or brought in is (1) being imported ... 

for the use of [a government].

26 U.S.C. § 5844. The implementing regulation, which was 

promulgated by the BATF after notice and comment, provides in turn that the importer has the burden of "establish[ing] to the satisfaction of the Director" that the firearm 

will be used in accordance with the statute. 27 C.F.R. 

§ 179.111(a). Finally, the challenged rulestating that a 

government purchase order is the only way to "satisf[y] the 

Director" on that scoreinterprets the government-use restriction as a requirement that the importer have a present 

government purchaser rather than merely an intent to sell 

only to a government user.

The purchase-order rule neither imposes a new requirement upon nor determines the rights and obligations of the 

importer; rather, it explains more specifically what is meant 

in the general rule which, as we said, was the subject of 

notice-and-comment rulemaking. The purchase order requirement is therefore an interpretive rule and not invalid for 

want of notice-and-comment pursuant to the APA.

B. Is the purchase-order rule reasonable?

We defer to an agency's reasonable interpretation of the 

laws and regulations it administers none the less because that 

interpretation appears in an interpretive rather than a legislative rule. See, e.g., Wagner Seed Co. v. Bush, 946 F.2d 918, 

922 (D.C. Cir. 1991).1 Because the purchase-order requirement is an eminently reasonable interpretation of the regulation interpreting 26 U.S.C. § 5844, we uphold the rule.

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1 But cf. Health Insurance Ass'n of America v. Shalala, 23 

F.3d 412, 424 n.8 (D.C. Cir. 1994), which in a dictum suggests an 

inconsistency between Wagner Seed and National Latino Media 

Coalition v. FCC, 816 F.2d 785, 788 (D.C. Cir. 1987). NLMC itself 

repeats in a dictum the statement of a pre-Chevron case that courts 

"are always free to choose" not to defer to an interpretive rule.

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The statutory scheme is clearly designed narrowly to restrict the importation of machine guns to authorized users, 

including governments. The purchase-order requirement 

makes clear to the importer that it must be importing for the 

use of a specific government buyer, not merely in the expectation of later being able to find a government buyer. This 

requirement is certainly consistent with the statute. Indeed, 

why would the Congress have separately allowed for the 

importation of sales samples if it had believed that the 

statutory scheme would permit an importer to import guns 

without a buyer already lined up and thus to use one or more 

of the guns as samples in its sale effort? See 26 U.S.C. 

§ 5844(3). In addition, the rule is designed to minimize the 

burden placed upon both importers and buyers; in particular, 

we are told that a "purchase order" is defined broadly enough 

to cover any written expression of present intent on the part 

of a government to purchase a firearm including, for example, 

a letter.

Nonetheless, Interport argues that by preventing it from 

importing guns into the United States until it has found a 

government purchaser, the requirement of a purchase order 

increases both the delay and the cost facing a government 

agency that wants to buy machine guns, without providing 

any offsetting increase in safety. Because the gun may 

lawfully be brought into an FTZ within the territory of the 

United States, Interport argues, it would be no more of a 

danger to the public if Interport could store the gun in its 

own high-security storage facility. Even if Interport is correct on that score, however, it matters not for the resolution 

of the present issue. The measure of an interpretive rule is 

its fidelity to the congressional intent expressed in the statute 

it interprets, not whether the underlying statutory scheme is 

economically efficient.

C. Did Customs act pursuant to lawful authority in 

seizing the machine guns?

Interport argues that Customs acted unlawfully when it 

seized Interport's machine guns. We agree. The statute 

upon which Customs relied, 19 U.S.C. § 1490, does not in fact 

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provide it with the authority claimed. That section permits 

Customs to take possession of merchandise only at the request of the carrier or the consignee thereof. See § 1490(b). 

Customs acknowledges that no such request was made in this 

case. The statute also provides a process under which merchandise that cannot enter the United States is to be transferred to a bonded warehouse, after notification of the warehouse by the carrier. See § 1490(a). But here there is no 

evidence that the facility at which the machine guns were 

stored, if it was a bonded warehouse, received notification of 

any kind. Customs argues nonetheless that either § 1490(a) 

or § 1490(b) somehow permitted it to take custody of the 

guns because "the machineguns could not remain where they 

were without endangering the public" and the prior version of 

the statute had authorized Customs to "take custody" of 

items without prior notification by the carrier. Under § 1490 

as amended, however, Customs clearly does not have the 

authority to take custody of the guns.2It follows that 

Customs did not succeed to ownership of the goods under 

§ 1491.

Another provision of title 19, section 1595a, does provide 

Customs with the authority to seize merchandise "attempted 

to be introduced into the United States" without a required 

import license. As Interport points out, however, a seizure 

under § 1595a must be accomplished pursuant to the procedures set forth in §§ 1600-1619, including notice to the U.S. 

Attorney to initiate condemnation proceedings. In taking 

possession of Interport's machine guns, Customs neither in-

__________

2 Under the former version of § 1490 if merchandise could not 

enter the United States a Customs official could "take [it] into his 

custody and send it to a bonded warehouse or public store." When 

the Congress amended § 1490 in 1993 the requirement that Customs officials take merchandise into "custody" had become a "legal 

fiction" inasmuch as third parties generally effected the transfer 

without the intervention of the Customs Service. H.R. REP. NO. 

103-361(I), at 148 (1993), reprinted in 1993 U.S.C.C.A.N. 2552, 

2698. In the course of eliminating the fiction, the Congress also 

eliminated whatever authority the Customs Service had under 

§ 1490 to move goods on its own initiative.

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voked this provision nor complied with its requirements. 

Indeed, Customs continues to assert that § 1595a does not 

even apply to the current situation because Interport did not 

attempt to introduce the guns without the required permit; 

rather, it was Customs that initiated the controversy by 

removing them from the FTZ and thereby subjecting them to 

the import laws.

We do not decide now whether the Customs Service would 

have had authority to seize the machine guns under § 1595a 

(or indeed whether some other statute would have permitted 

Customs to take custody of the weapons). The Service has 

relied solely upon § 1490 as authority for taking custody of 

the guns, and we hold that statute inapplicable in this case. 

Customs must now either move immediately to perfect its 

present possession of the guns by some other means or do its 

best to restore the status quo ante by returning the guns to 

Interport in an appropriately secure FTZ or bonded warehouse.

Because we conclude that Customs did not have statutory 

authority for its actions, we need not reach Interport's due 

process claim.

III. Conclusion

The requirement that an importer of firearms have a 

government purchase order is a valid and reasonable interpretive rule. Therefore the BATF properly denied Interport 

permission to import its machine guns. The Customs Service 

overstepped its authority, however, when it purported to take 

possession of the machine guns pursuant to 19 U.S.C. § 1490. 

The Customs Service must therefore either initiate at once 

lawful proceedings to perfect its custody of the machine guns 

or return them forthwith to the custody of Interport.

So ordered.

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