Opinion ID: 767452
Heading Depth: 2
Heading Rank: 2

Heading: Application of the HMT to Stopovers or Layovers

Text: 14 Princess argues in the alternative, even if the HMT is constitutional, it cannot be assessed on stopovers or layovers by cruise ships in HMT-covered ports if the cruise originates or terminates in an HMT-exempt port. Despite the failure of the trial judge to address this issue in his opinion, Princess argues that this court may affirm the judgment concerning the HMT on the basis of the findings of fact and conclusions of law announced from the bench following the parties' oral arguments before the Court of International Trade. 15 A party may defend a judgment on any ground properly raised below. Consolidated Aluminum Corp. v. Foseco Int'l, Ltd., 910 F.2d 804, 814 (Fed. Cir. 1990) (quoting Washington v. Yakima Indian Nation, 439 U.S. 463, 476 n.20 (1979)). The proper interpretation of the HMT statute was fully briefed and argued by Princess and the government before both this court and the Court of International Trade. Thus, having found that the application of the HMT to passenger transport is not contrary to the Constitution, in the interest of efficiency we now address the question of the proper interpretation of the HMT statutory language and the accompanying regulations. 16 Princess argues that the HMT should only be applied to cruises beginning or terminating in HMT-covered ports, while a stopover or layover in an HMT-covered port should not trigger liability. 8 In support of its position, Princess alleges that the Customs regulations dictate that it should only be applied at the beginning and end of a cruise voyage. The specific regulations at issue provide that the tax is due when a passenger boards or disembarks a commercial vessel at a port within the definition of this section. 19 C.F.R. § 24.24(e)(4) (1999). Princess argues that since the definitions of board and disembark are not provided in the statute or the regulation, the court must turn to unrelated Customs regulations for the definition of those words. 17 Although board is not defined anywhere in the Customs regulations, the terms embark and disembark are defined in a Customs Service regulation as follows: [e]mbark means a passenger boarding a vessel for the duration of a specific voyage and disembark means a passenger leaving a vessel at a conclusion of a specific voyage. The terms embark and disembark are not applicable to a passenger going ashore temporarily at a coastwise port who reboards the vessel and departs with it on sailing from the port. 18 19 C.F.R. § 4.80a(a)(4) (1999) (emphasis added). This regulation governs the transportation of passengers between U.S. ports on vessels that are not American-built, owned and documented. See 46 U.S.C app. § 289 (1994). It is addressing a different question, and while it may be instructive, it is not binding on Customs with respect to the HMT. Thus this court must look to the language of the statute, the intent of Congress as indicated by the legislative history, and the interpretation given by Customs to its own regulation in determining whether the HMT applies to stopovers and layovers. 19 Where the intent of Congress on a particular question is clear, the courts and the agency must give effect to the unambiguously expressed intent of Congress. Chevron, 467 U.S. at 843. In determining what was the intent of Congress, the court may look to the legislative history of the statute. See id. at 845. 20 In this case the language of the statute is not clear and unambiguous about whether the HMT is to be imposed on stopovers or layovers at HMT-covered ports. Nevertheless, the intent of Congress is illuminated by the legislative history of the HMT and subsequent taxes. Reports from the various congressional committees developing the HMT reveal that Congress was particularly concerned with enacting an equitable tax that applied to all port users. For example, the House Ways and Means Committee described the HMT as a uniform excise tax paid by the principal beneficiaries of Federal port development and maintenance costs. H.R. Rep. No. 99-251, pt. III at 9 (1985). Furthermore, in 1989 in considering an international departure tax on ship passengers as part of the Budget Reconciliation Act, Pub. L. No. 101-239, Congress found that 21 [u]nder special rules, no harbor maintenance tax applies to cruise ships loading or unloading with respect to cruises to or from Alaska, Hawaii, or a U.S. Possession, unless the Alaska, Hawaii, or U.S. Possession port is only a stopover to a foreign destination. 22 H.R. Conf. Rep. No. 101-386, at 602 (1989) (emphasis added), reprinted in 1989 U.S.C.C.A.N. 3018, 3205; see also Senate Fin. Comm. Explanation of Revenue Reconciliation Act of 1989, 135 Cong. Rec. 24,236, 24,359 (1989) (containing the same language). While the above language deals specifically with stopovers as an exception to the special HMT rules for Alaska and Hawaii 9 it implies that in considering subsequent taxes Congress believed that the HMT applied to stopovers. While this legislative history provides some indication that Congress intended for the HMT to apply when a cruise ship made a stopover or layover in an HMT-covered port, it is not sufficient evidence to indicate an unambiguous intent as required by Chevron. Thus we must now analyze the Customs interpretation under the second prong of the Chevron test. 23 Although this court and the Court of International Trade traditionally did not accord Chevron deference to Customs Service regulations interpreting statutes, the Supreme Court recently held that the courts must apply Chevron deference to Customs interpretations in a published regulation. See Haggar, 119 S. Ct. at 1400 (Like other courts, the Court of International Trade must, when appropriate, give regulations Chevron deference.). Thus, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute. Chevron, 467 U.S. at 843. 24 Here, unfortunately, the regulation itself is ambiguous, so the court is forced to rely on Customs's interpretation of its own regulation. If the court must now accord Chevron deference to Customs regulations interpreting statutes, we must accord at least as much deference to that agency's interpretation of its own regulations. Accordingly, we will defer to the Customs interpretation unless it is unreasonable. 25 The government argues that Customs's interpretation of its own regulations to define board and disembark to include stopovers or layovers is not unreasonable and comports with the intent of Congress to impose a fee based on port usage and the language of the statute, which does not explicitly exclude stopovers or layovers but does exclude other port uses, such as ferries. We agree. 26 In light of the clear intent of Congress to impose a fee on all port use as revealed in the legislative history, the Customs interpretation including stopovers and layovers in the port use covered by the HMT is not unreasonable. The HMT is intended to charge those using the ports for the expense of maintaining the ports. It is not apparent to us that the use of the port to discharge passengers for shopping and sight-seeing in a port and then reboard those same passengers is any less of a use or has any less impact on the port than boarding or discharging passengers at the beginning or end of a cruise. 27 In addition to its argument that the Customs regulation is contrary to the statutory language, Princess also argues that Customs initially informed the company that the HMT would not apply to the layovers or stopovers and thus could not later decide to apply the tax to those port uses. According to Princess, the Regional Director of the Regulatory Audit Division advised the company in a fax that the Office of Regulations and Rulings had determined that the HMT did not apply to stopovers and layovers. The fax stated that 19 C.F.R. § 4.80a(a)(4) (discussed above) applied to Princess and no HMT was due for the stopovers. The government points out, however, that this was not a formal letter ruling or adjudication by Customs because such a letter must issue from Headquarters or the appropriate office of Customs. In this case the appropriate office was the International Trade Compliance Division or the Office of Regulations and Rulings, not the Pacific Regional Office. 28 It is well settled that a party cannot claim estoppel against the government based on the actions of an agency employee. Since the fax that Princess relies on could not have been a formal letter ruling or adjudication upon which it was entitled to rely, we reject Princess's estoppel arguments. 29 Consequently, we hold: 1) the application of the HMT to passenger transport is constitutional; and 2) Customs Service's interpretation of the statute to apply the HMT to layovers or stopovers in HMT-covered ports, even when the beginning and ending points of the cruise are in foreign countries or HMT-exempt ports, is reasonable. Therefore, we reverse the decision of the Court of International Trade and remand for a determination of Princess's HMT liability that is consistent with this decision.