Opinion ID: 77171
Heading Depth: 2
Heading Rank: 3

Heading: Statutory Authority for Bond Requirement

Text: 16 GAIC next makes three arguments challenging the statutory authority for a Customs bond requirement in these circumstances. First, GAIC contends that 19 U.S.C. § 1584(a)(2), the statute under which the penalty was assessed, does not contemplate that the penalty be paid by an international carrier bond but by an outbound vessel clearance bond. In any question of statutory interpretation, [w]e do not look at one word or term in isolation, but instead we look to the entire statutory context. United States v. DBB, Inc., 180 F.3d 1277, 1281 (11th Cir.1999). Through 19 U.S.C. § 1584, Congress imposes penalties for false or incomplete manifests. This statute further provides that the penalty imposed when merchandise found not included on a manifest consists of cocaine or other controlled substances constitutes a lien on the vessel and that clearance of any vessel to leave may be withheld until such penalties are paid or until a bond . . . is given for the payment thereof. 19 U.S.C. § 1584(a)(2). 17 The argument, that this provision for an outbound clearance bond forestalls the payment of penalties by an international carrier bond, lacks merit. If a clearance bond were the only bond Customs could require with respect to payment of a § 1584(a)(2) penalty, and Customs seized a drug-carrying vessel the value of which was insufficient to cover the penalty imposed, then the vessel owner could simply choose not to seek the return of the vessel and avoid paying a substantial portion of that penalty. By requiring an international carrier bond for a vessel's lading and unlading upon entry, and thereby placing liability on the obligors for a penalty provided by law, Customs assures compliance with, among other laws, 19 U.S.C. §§ 1431(a), 1433(d) and 1584, and guarantees that at least the bond amount will be paid in the event a penalty is incurred. 18 Further, the language of § 1584 states only that Customs may withhold clearance until the penalty is paid or a bond is given, it does not make the bond mandatory. 19 U.S.C. § 1584(a)(2). Thus, the requirement of an international carrier bond does not run afoul of the portion of 19 U.S.C. § 1623 authorizing the imposition of a bond requirement only where no bond is otherwise required by law. See 19 U.S.C. § 1623(a). Considering the entire regulatory scheme, it is clear that Customs intended the international carrier bond to ensure payment of penalties imposed, among other things, for failure to manifest cargo under § 1584(a)(2). 5
19 GAIC next argues that the international carrier bond requirement for entry offends the Non-Delegation Doctrine. GAIC specifically asserts that Customs has improperly construed 19 U.S.C. § 1623, arguing that Congress did not intend to permit the requirement of an international carrier bond to secure payment of prospective penalties. This argument fails because § 1623(b)(1) expressly states that Congress may require a bond for the payment of. . . a penal sum. Therefore, Customs is authorized to require posting of a bond and to collect on those bonds when, as in this case, the violation of a statute has given rise to the imposition of a penalty. 20 Further, Congress has specified the purposes for which Customs may impose such a requirement: for the protection of the revenue or to assure compliance with any provisions of law, regulation, or instruction which the Secretary of the Treasury or the Customs Service may be authorized to enforce. 19 U.S.C. § 1623(a). The United States Court of International Trade has recognized that [t]he grant of authority for requiring bonds and setting their amount is strongly stated and comprehensive. Hera Shipping, Inc. v. Carnes, 10 Ct. Int'l Trade 493, 496, 640 F.Supp. 266, 269 (1986). Although Congress cannot delegate essential legislative functions, the Supreme Court has reaffirmed that: 21 [T]he Constitution has never been regarded as denying to Congress the necessary resources of flexibility and practicality, which will enable it to perform its function in laying down policies and establishing standards, while leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determination of facts to which the policy as declared by the Legislature is to apply. 22 A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 530, 55 S.Ct. 837, 843, 79 L.Ed. 1570 (1935). Because Congress has prescribed the general standards to which the Secretary must adhere and has clearly determined that bonds may be required to enforce laws and Customs regulations, GAIC's non-delegation argument is meritless.
23 Finally, GAIC contends that the bond requirement offends due process and equal protection under the Constitution because it results in deprivation of life, liberty or property without due process of law and because it discriminates against small businesses. A party raising a due process challenge is required to show that the challenged legislation is rationally related to a lawful government purpose and is not unlawfully arbitrary or discriminatory. United States v. Plummer, 221 F.3d 1298, 1308-09 (11th Cir.2000). We have explained that this test is generally easily met by asking if any set of facts may be reasonably conceived to justify [the regulation]. Id. at 1309. 24 Through 19 U.S.C. § 1623, Congress authorizes the Secretary of the Treasury to use bonds to ensure compliance with Customs laws pertaining to the flow of goods into the United States. The Supreme Court has explained the propriety of allowing the government, under certain circumstances, to place controls on private businesses to protect the public welfare. Nebbia v. New York, 291 U.S. 502, 521-24, 537, 54 S.Ct. 505, 509-11, 516, 78 L.Ed. 940 (1934) (price controls on milk did not violate due process where imposed for public good). 25 Government control over the flow of goods, including the flow of illegal drugs, into the country is vital to the public welfare. Imposing civil penalties for failure to manifest, especially of illegal drugs, and requiring vessel owners to post bonds to ensure such penalties are paid is a reasonable method of addressing this concern. The requirement that an international carrier bond be posted upon entry is neither arbitrary nor capricious and is rationally related to stemming the flow of illegal drugs into United States ports. Finally, this bond requirement applies to all vessels and, thus, is not discriminatory. Accordingly, it does not offend due process requirements. 26 With respect to GAIC's equal protection argument, the bond requirement is imposed on all vessel owners who ship cargo to the United States, regardless of the size of their business or their country of origin. Although a bond of at least $100 will be required, the actual amount of the bond required in each case is determined by, among other factors, the value and nature of the merchandise shipped as well as by a vessel's prior record in meeting payment obligations. 19 C.F.R. § 113.13(a), (b)(3), (5). Thus, a vessel owner moving a less valuable cargo would likely not be required to post the same bond amount as a larger business regularly moving very valuable cargo. Because all vessel owners must fulfill the bond requirement, equal protection principles are not violated. 27