Opinion ID: 3066229
Heading Depth: 1
Heading Rank: 2

Heading: analysis

Text: We hold that the purchase-order requirement is an interpretive rule and that as such the rule is reasonable and therefore entitled to our deference. We also hold that theCustoms Service acted unlawfully when it took possession ofthe machine guns under the purported authority of an inapplicable statute. We reject without need of further commentInterport's argument that the purchase-order rule violatesthe tenth amendment in that it interferes with the ability ofthe States to purchase imported machine guns; the tenthamendment protects the States from the federal Governmentacting in derogation of their rights as States, not frominterference with their rights as consumers like any others. See Hodel v. Virginia Surface Min. & Reclam. Ass'n, 452U.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 forgovernment use is an interpretive rule and hence exemptfrom the notice-and-comment requirements applicable to legislative rules under the Administrative Procedure Act. See 5U.S.C. s 553(b)(A), (d)(2). The distinction between an interpretive rule and a legislative rule is fuzzy at best. SeeAmerican Hospital Assoc. v. Bowen, 834 F.2d 1037, 1045-46(D.C. Cir. 1987). In one familiar formulation, the distinctionis that an interpretive rule simply states what the administrative agency thinks the statute means, and only remindsaffected parties of existing duties, whereas a legislative ruleintends 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, thisformulation of the distinction is much more easily stated thanapplied. See Robert A. Anthony, Interpretive Rules, Legislative Rules and Spurious Rules: Lifting the Smog, 8Admin. L.J. Am. U. 1, n.10 & nn.13-14 (1994) (citing casesbemoaning difficulty of applying distinction). In this case, however, it is fairly clear that the purchaseorder requirement is an interpretive rule under the standardsof General Motors. The statute provides in relevant partthat an importer must 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. s 5844. The implementing regulation, which waspromulgated 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 firearmwill be used in accordance with the statute. 27 C.F.R.s 179.111(a). Finally, the challenged rule--stating that agovernment purchase order is the only way to satisf[y] theDirector on that score--interprets the government-use restriction as a requirement that the importer have a presentgovernment purchaser rather than merely an intent to sellonly to a government user. The purchase-order rule neither imposes a new requirement upon nor determines the rights and obligations of theimporter; rather, it explains more specifically what is meantin the general rule which, as we said, was the subject ofnotice-and-comment rulemaking. The purchase order requirement is therefore an interpretive rule and not invalid forwant of notice-and-comment pursuant to the APA. B. Is the purchase-order rule reasonable? We defer to an agency's reasonable interpretation of thelaws and regulations it administers none the less because thatinterpretation 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. s 5844, we uphold the rule. __________ 1 But cf. Health Insurance Ass'n of America v. Shalala, 23F.3d 412, 424 n.8 (D.C. Cir. 1994), which in a dictum suggests aninconsistency between Wagner Seed and National Latino MediaCoalition v. FCC, 816 F.2d 785, 788 (D.C. Cir. 1987). NLMC itselfrepeats in a dictum the statement of a pre-Chevron case that courtsare always free to choose not to defer to an interpretive rule. The statutory scheme is clearly designed narrowly to restrict the importation of machine guns to authorized users,including governments. The purchase-order requirementmakes clear to the importer that it must be importing for theuse of a specific government buyer, not merely in the expectation of later being able to find a government buyer. Thisrequirement is certainly consistent with the statute. Indeed,why would the Congress have separately allowed for theimportation of sales samples if it had believed that thestatutory scheme would permit an importer to import gunswithout a buyer already lined up and thus to use one or moreof the guns as samples in its sale effort? See 26 U.S.C.s 5844(3). In addition, the rule is designed to minimize theburden placed upon both importers and buyers; in particular,we are told that a purchase order is defined broadly enoughto cover any written expression of present intent on the partof a government to purchase a firearm including, for example,a letter. Nonetheless, Interport argues that by preventing it fromimporting guns into the United States until it has found agovernment purchaser, the requirement of a purchase orderincreases both the delay and the cost facing a governmentagency that wants to buy machine guns, without providingany offsetting increase in safety. Because the gun maylawfully be brought into an FTZ within the territory of theUnited States, Interport argues, it would be no more of adanger to the public if Interport could store the gun in itsown high-security storage facility. Even if Interport is correct on that score, however, it matters not for the resolutionof the present issue. The measure of an interpretive rule isits fidelity to the congressional intent expressed in the statuteit interprets, not whether the underlying statutory scheme iseconomically efficient. C. Did Customs act pursuant to lawful authority in seizing the machine guns? Interport argues that Customs acted unlawfully when itseized Interport's machine guns. We agree. The statuteupon which Customs relied, 19 U.S.C. s 1490, does not in fact provide it with the authority claimed. That section permitsCustoms to take possession of merchandise only at the request of the carrier or the consignee thereof. See s 1490(b). Customs acknowledges that no such request was made in thiscase. 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 s 1490(a). But here there is noevidence that the facility at which the machine guns werestored, if it was a bonded warehouse, received notification ofany kind. Customs argues nonetheless that either s 1490(a)or s 1490(b) somehow permitted it to take custody of theguns because the machineguns could not remain where theywere without endangering the public and the prior version ofthe statute had authorized Customs to take custody ofitems without prior notification by the carrier. Under s 1490as amended, however, Customs clearly does not have theauthority to take custody of the guns.2 It follows thatCustoms did not succeed to ownership of the goods unders 1491. Another provision of title 19, section 1595a, does provideCustoms with the authority to seize merchandise attemptedto be introduced into the United States without a requiredimport license. As Interport points out, however, a seizureunder s 1595a must be accomplished pursuant to the procedures set forth in ss 1600-1619, including notice to the U.S.Attorney to initiate condemnation proceedings. In takingpossession of Interport's machine guns, Customs neither in__________ 2 Under the former version of s 1490 if merchandise could notenter the United States a Customs official could take [it] into hiscustody and send it to a bonded warehouse or public store. Whenthe Congress amended s 1490 in 1993 the requirement that Customs officials take merchandise into custody had become a legalfiction inasmuch as third parties generally effected the transferwithout 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 alsoeliminated whatever authority the Customs Service had unders 1490 to move goods on its own initiative. voked this provision nor complied with its requirements. Indeed, Customs continues to assert that s 1595a does noteven apply to the current situation because Interport did notattempt to introduce the guns without the required permit; rather, it was Customs that initiated the controversy byremoving them from the FTZ and thereby subjecting them tothe import laws. We do not decide now whether the Customs Service wouldhave had authority to seize the machine guns under s 1595a(or indeed whether some other statute would have permittedCustoms to take custody of the weapons). The Service hasrelied solely upon s 1490 as authority for taking custody ofthe guns, and we hold that statute inapplicable in this case. Customs must now either move immediately to perfect itspresent possession of the guns by some other means or do itsbest to restore the status quo ante by returning the guns toInterport in an appropriately secure FTZ or bonded warehouse. Because we conclude that Customs did not have statutoryauthority for its actions, we need not reach Interport's dueprocess claim.