Court Opinion

ID: 2713659
Source: CourtListenerOpinion
Date Created: 2014-08-05 20:52:09.911811+00
Date Added: 2024-06-11T13:24:48.257637
License: Public Domain

Slip Op. 14-

                 UNITED STATES COURT OF INTERNATIONAL TRADE

FORD MOTOR COMPANY,

                  Plaintiff,
                                                     Before: Judith M. Barzilay, Senior Judge
                  v.
                                                      Court No. 03-00115
UNITED STATES,

                  Defendant.

                                           OPINION

[Customs’ Remand Results are sustained.]

                                                                   Dated:         , 2014

Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP (Robert B. Silverman, Ned H.
Marshak, Frances P. Hadfield); Ford Motor Company, Paulsen K. Vandevert, of Counsel, for
Plaintiff.

Stuart F. Delery, Assistant Attorney General; Jeanne E. Davidson, Director, Amy M. Rubin,
Assistant Director, International Trade Field Office, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice (Edward F. Kenny); and Office of the Assistant Chief
Counsel, International Trade Litigation, U.S. Customs and Border Protection (Beth Brotman), of
counsel for Defendant.

       BARZILAY, Senior Judge: This case returns to the court following a remand to U.S.

Customs and Border Protection (“Customs”) for further proceedings in accordance with the

Federal Circuit’s decision in Ford Motor Co. v. United States, 715 F.3d 906 (Fed. Cir. 2013)

(“Ford”). 1 The Federal Circuit concluded that Customs failed to adequately explain why it treats

1
 Familiarity with the factual and procedural history of this case is presumed. See Ford Motor
Co. v. United States, 35 CIT __, 800 F. Supp. 2d 1349 (2011); Ford, 715 F.3d 906.
Court No. 03-00115                                                                             Page 2

North American Free Trade Agreement (“NAFTA”) post-importation refund claims under 19

U.S.C. § 1520(d) differently for purposes of waiver depending on whether they were submitted

traditionally or through the Reconciliation Program. The Federal Circuit instructed Customs to

explain whether it “applies different interpretations to the statute depending on the manner in

which claims for refunds are submitted.” Id. at 917. On remand, Customs explained that the

difference in treatment “is the result of the reasonable application of two different statutory

schemes, one controlling the reconciliation process and the other controlling post-entry NAFTA

claims only.” Customs’ Remand Results, Docket Entry No. 107 at 1 (Nov. 8, 2013) (“Remand

Results”). Plaintiff Ford Motor Company (“Ford”) maintains that Customs’ explanation for

treating the two classes of claims differently for purposes of waiver under § 1520(d) is an

unreasonable interpretation of the statute. Ford, therefore, contends that Customs must approve

all of Ford’s disputed NAFTA post-importation claims and refund the duties paid by Ford with

interest. The court has jurisdiction pursuant to 19 U.S.C. § 1581(a). For the reasons set forth

below, Customs’ Remand Results are sustained.

                                        I. BACKGROUND

       Ford imported automotive parts into the United States and sought duty free entry under

NAFTA. Ford did not seek preferential treatment at the time of entry and instead sought

preferential treatment after entering the merchandise by filing a (traditional) NAFTA post-

importation refund claim pursuant to 19 C.F.R. § 181.32. One of the requirements of a post-

importation refund claim is that the importer must present certificates of origin (“COs”) to

Customs to demonstrate that the goods qualify for duty free treatment under NAFTA. Id. Ford,

though, did not present the relevant COs covering the subject merchandise. Customs did not
Court No. 03-00115                                                                              Page 3

waive this requirement as it could have under 19 C.F.R. § 181.22(d)(1). Customs, therefore,

denied Ford’s claim because of this deficiency. Ford protested the denial of its claim. Customs

denied Ford’s protest.

                                 II. STANDARD OF REVIEW

       When Congress has "explicitly left a gap for an agency to fill, there is an express

delegation of authority to the agency to elucidate a specific provision of the statute by regulation,

and any ensuing regulation is binding in the courts unless procedurally defective, arbitrary or

capricious in substance, or manifestly contrary to the statute.” United States v. Mead Corp., 533

U.S. 218, 227 (2001) (citing Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.,

467 U.S. 837, 843-44 (1984); United States v. Morton, 467 U.S. 822, 834 (1984); APA, 5 U.S.C.

§§ 706(2)(A), (D)). Moreover, “we have long recognized that considerable weight should be

accorded to an executive department’s construction of a statutory scheme it is entrusted to

administer . . . .” Id. at 227-28 (citing Chevron, 467 U.S. at 844 (footnote omitted); Ford Motor

Credit Co. v. Milhollin, 444 U.S. 555, 565 (1980); Zenith Radio Corp. v. United States, 437 U.S.

443, 450 (1978)). Accordingly, the court applies the two-step framework provided in Chevron to

review Customs’ interpretation of the statutory scheme it is entrusted to administer.

                                        III. DISCUSSION

       In Ford, the Federal Circuit concluded that

       [t]he NAFTA and § 1520(d) require that COs be presented within one year of the
       date of importation. Customs has the power to waive this requirement, but did not
       do so in this case. Yet at the same time, Customs has waived the requirement to
       present COs for all participants in the reconciliation program. Absent a reasonable
       explanation, Customs may not exercise its waiver power in a manner that
       effectively interprets the statute in different ways for different types of post-entry
       refund claims.
Court No. 03-00115                                                                               Page 4

Ford, 715 F.3d at 917. The Federal Circuit provided the following remand instructions:

               The record in this case so far is inadequate to decide whether there is a
       reasonable explanation for treating traditional § 1520(d) claims differently than §
       1520(d) claims made under the reconciliation program. It is clear that importers
       who participate in the reconciliation program are treated differently for purposes
       of waiver under § 1520(d) than those who do not. Indeed, Customs has treated
       Ford's traditional claims different from Ford's reconciliation program claims. The
       Trade Court has yet to consider whether this different treatment is simply a valid
       exercise of Customs’ waiver authority—similar to § 181.22(d)(1)(i)-(iii)—or
       whether it shows that Customs applies different interpretations to the statute
       depending on the manner in which claims for refunds are submitted. Nor has the
       court considered whether Customs has a reasonable explanation for treating these
       classes of claimants differently. Accordingly, we remand for the Trade Court to
       consider these issues in the first instance. As was the case in Dongbu, if Customs
       cannot provide a reasonable explanation for the different standards, it is “free to
       choose a single consistent interpretation of the statutory language.” 635 F.3d at
       1373.

Id.

       In the Remand Results, Customs provided the following explanation: 2

               The CAFC’s remand inquiry appears to be based upon the incorrect
       assumption that Customs’ authority to waive presentation of the CO with regard
       to NAFTA reconciliation claims stems solely from the NAFTA and 19 U.S.C. §
       1520(d). As discussed in greater detail below, the basis for this waiver stems from
       a wholly different set of statutes, namely, 19 U.S.C. §§ 1401(s), 1484, 1508 and
       1509, which govern the reconciliation process. Thus, the fact that Customs waives
       the presentation of all COs in the reconciliation context, but did not grant a CO
       waiver to Ford in the § 1520(d) claim at issue, is not the result of two different
       interpretations of § 1520(d); rather, it is the result of the reasonable application of
       two different statutory schemes, one controlling the reconciliation process and the
       other controlling post-entry NAFTA claims only. As further demonstrated below,
       Customs’ exercise of its waiver authority in the context of reconciliation and its
       exercise of its waiver authority in the context of § 1520(d), as set forth in the
       Customs regulations, are both amply justified by their respective underlying
       statutes. Finally, the availability of these two avenues for claiming NAFTA has
       the desirable effect of maximizing importers’ opportunities to claim NAFTA in

2
  As this explanation contains detailed descriptions of many critical components of the
Reconciliation Program which serve to differentiate it from the traditional post-importation claim
filing process, the court believes a summary would not be particularly helpful and cites a
significant portion of the remand results in this opinion.
Court No. 03-00115                                                                              Page 5

      the manner best suited to them, while providing Customs with the mechanisms for
      ensuring the accuracy of those claims, to the general benefit of all involved
      parties.
               ....
             In order to understand the significant differences between these two
      procedural vehicles for filing such claims, it is important to consider the
      legislative framework for the reconciliation program. In this regard, it is noted
      that Title VI, Subtitle B, of the North American Free Trade Agreement
      Implementation Act, Pub. L. 103-182 (December 8, 1993) established the
      National Customs Automation Program (“NCAP”), an automated and electronic
      system for the processing of commercial importations. “Reconciliation,” a
      component of NCAP, was codified into law under new subsection (b) of section
      484 of the Tariff Act of 1930, 19 U.S.C. § 1484(b), and defined in 19 U.S.C. §
      1401(s) as “. . . an electronic process, initiated at the request of an importer, under
      which the elements of an entry . . . that are undetermined at the time the importer
      files or transmits the documentation or information required by section
      1484(a)(1)(B) of this title . . . are provided to the Customs Service at a later time .
      . . .”
             Reconciliation is designed to reduce the administrative burden of making
      adjustments to entries by establishing an electronic process whereby an importer
      may identify an entry, and later provide information that was indeterminable at
      the time the identified entry was filed. The information which may be provided
      later, once it is determined, includes valuation, classification, HTSUS heading
      9802 eligibility, and NAFTA. See “Modification of National Customs
      Automation Program Test Regarding Reconciliation,” published in 62 FR 51181
      (September 30, 1997) and “Revised National Customs Automation Program Test
      Regarding Reconciliation,” published in 63 FR 6257 (February 6, 1998). See also,
      1993 U.S.C.C.A.N. 2686, House Rpt. (Ways and Means Committee) No. 103-
      361(I), H.R. 3450, P.L. 103-182 (North American Free Trade Agreement
      Implementation Act), Sec. 637, indicating that “[t]he introduction into the law of
      two new provisions, the import activity summary statement and the reconciliation,
      will permit importers and customs brokers which are capable of interacting with
      Customs in an electronic mode to handle Customs transactions in a more
      business-like way, reducing paperwork and many of the administrative costs.”
      One reconciliation entry may provide the missing information for up to 9,999
      previously identified original entries, thus providing great efficiencies in the
      submission and processing of the newly determined information.
               In the context of NAFTA eligibility, the undetermined entry information is
      whether the merchandise qualifies for a preferential tariff rate under NAFTA. If
      the importer believes that its goods may be NAFTA eligible, it flags the entry
      summary to indicate that it may make a NAFTA claim via reconciliation. Once
      determining whether the goods in the original entry qualify for NAFTA, the
      importer then files a reconciliation entry indicating whether or not the goods in
      the identified entry are NAFTA eligible.
Court No. 03-00115                                                                            Page 6

              19 U.S.C. § 1401(s) indicates that “. . . [a] reconciliation is treated as an
      entry for purposes of liquidation, reliquidation, recordkeeping, and protest.” Thus,
      the reconciliation is liquidated by CBP pursuant to 19 U.S.C. § 1500(d). If
      NAFTA eligibility is claimed and CBP agrees, CBP liquidates the reconciliation
      entry with benefit of NAFTA and issues a refund. If CBP does not agree, it
      liquidates the reconciliation entry without benefit of NAFTA. The liquidation of
      the reconciliation entry may then be protested pursuant to 19 U.S.C. § 1514(a)(5),
      and, if necessary, reliquidated by CBP.
              In addition, reconciliation-related forms and documents, such as the
      NAFTA CO, are considered "entry records" under the recordkeeping laws and
      their presentation may be waived at the time of filing the reconciliation entry.
      Specifically, the recordkeeping requirements of 19 U.S.C. § 1508(a), requiring
      importers and certain other parties to “. . . make, keep, and render for examination
      and inspection records (which for purposes of this section include but are not
      limited to, statements, declarations, documents and electronically generated or
      machine readable data) . . .” apply to reconciliation entries and their supporting
      records and documentation. Moreover, pursuant to 19 U.S.C. § 1484 and 19
      U.S.C. § 1509(a)(1)(A), Customs has the authority to waive presentation of entry
      records otherwise required at the time of filing an entry. This waiver authority
      applies to both regular and reconciliation entries. (See description of
      “reconciliation” in 19 U.S.C. § 1401(s), discussed supra, as an entry for
      recordkeeping and liquidation purposes.). In accordance with the statute, see 19
      U.S.C. § 1509(e), CBP has listed the required “entry records,” the presentation of
      which may be waived, in the Appendix to Part 163 of the Customs regulations,
      headed “Interim (a)(1)(A) List.” The NAFTA CO is included in this list. Thus, a
      NAFTA CO is considered an entry document and its submission at the time of
      filing the reconciliation entry may be waived. However, as an entry record, the
      NAFTA CO can later be demanded by CBP; furthermore, if CBP wishes to
      review the CO and the importer does not produce it, the importer is subject to
      penalties and the reconciliation entry is subject to reliquidation. See 19 U.S.C. §
      1509(a)(1)(B) and § 1509(g).
              Likewise, CBP's Federal Register Notice establishing the reconciliation
      program clearly states that a NAFTA CO is an entry record the presentation of
      which may be waived by CBP at the time of filing a reconciliation entry. See 63
      FR 6257, 6259 (“The Certificate of Origin is part of the a1A list . . . and covered
      by the record-keeping provisions of the Customs laws . . .”). Accordingly, CBP
      waives the presentation of the paper NAFTA CO at the time of the filing of a
      reconciliation entry. This ensures the reconciliation process is fully electronic, as
      required by 19 U.S.C. 1401(s), relieving an importer from the burden of
      submitting thousands of paper COs with a single reconciliation entry, while
      allowing CBP to process the reconciliation entry much more efficiently in a fully
      automated environment.
              In light of the above, we maintain that the waiver of the submission of the
      CO in the context of reconciliation - which itself is recognized as an “entry” - is
Court No. 03-00115                                                                            Page 7

      based upon the authority given to CBP in the National Customs Automation
      Program, as well as the entry filing and recordkeeping statutes cited above. These
      statutes authorize the agency to excuse the presentation of COs (as well as other
      entry-related documents) at the time of entry (or reconciliation), with the caveat
      that Customs may later demand these documents which are required to be retained
      by the importer. In addition, this waiver of the presentation of documents is
      subject to the safeguards that failure to present the documents when demanded by
      Customs at a later date may result in the imposition of recordkeeping penalties
      and/ or the liquidation or reliquidation of the involved entries without benefit of
      NAFTA irrespective of the usual time frames for taking such action provided by
      other statutes. The waiver of the presentation of the CO in connection with
      NAFTA reconciliation is not based on Customs' determination regarding the
      NAFTA eligibility of the particular goods in issue, but on a general policy
      determination, as reflected in the aforementioned statutes, that the entry process
      should be automated and streamlined.
               By contrast and as recognized by the CAFC, Ford Motor Co., 715 F.3d at
      909-910 (cited supra), Customs’ authority to waive possession (and thus also
      presentation) of COs in the context of § 1520(d) claims, as exercised in 19 C.F.R.
      § 181.22(d), is based solely on the waiver authority provided by the Agreement.
      The above-cited statutes pertaining to entry and/or entry recordkeeping
      requirements provide no basis for, nor are otherwise relevant to, waivers provided
      in connection with such § 1520(d) claims. It thus follows that Customs'
      determinations regarding the waiver of possession of COs in connection with §
      1520(d) claims, of the kind at issue in the instant case, represent Customs' only
      interpretation of that statute. Such determinations are independent and separate
      from its waiver of only the presentation of COs in the context of NAFTA claims
      made at the time of filing a reconciliation entry, which are based on the entry and
      recordkeeping statutes underlying the reconciliation program.
               In addition, Customs [sic] broad exercise of its waiver authority in the
      context of reconciliation is reasonable in light of the statutory safeguards in place
      allowing the agency to later audit the importer and, if warranted, deny NAFTA
      eligibility, reliquidate the entries without favorable duty treatment, and/ or
      otherwise penalize the importer for failure to provide CO certificates upon request
      by Customs. See discussion of 19 U.S.C. § 1509, supra. Because Customs has the
      ability to reverse its initial acceptance of an importer's reconciliation NAFTA
      claim pursuant to 19 U.S.C. § 1509, it is willing to waive presentation of the CO
      at the time of the filing of the NAFTA reconciliation claim. In short, Customs'
      ability to reliquidate entries and penalize importers whose goods are not NAFTA
      eligible in the context of reconciliation reasonably explains Customs willingness
      to grant an across the board waiver of the presentation of the CO for NAFTA
      reconciliation claims. However, all of these same safeguards are not available to
      Customs once it issues a CO waiver pursuant to section 181.22(d) of the Customs
      regulations (e.g., the agency cannot assess a penalty for failure to provide the CO
      if it has previously waived the requirement that the CO be in the importer's
Court No. 03-00115                                                                               Page 8

       possession). It is thus understandable that such waivers are not as readily granted
       in the context of § 1520(d) claims.
               Finally, we note that the above-described statutes, as implemented by
       Customs, currently provide three opportunities for an importer to assert a NAFTA
       claim: 1) at the time of filing the original entry, 2) at reconciliation, provided that
       the original entry was flagged for reconciliation, or 3) via a § 1520(d) claim. The
       availability of all three methods undoubtedly inures to the benefit of importers.
       Likewise, each vehicle provides Customs with an opportunity to ensure that
       NAFTA is properly applied to the claimed goods, either by requiring that a CO be
       presented, by requiring that the CO be retained by the importer for subsequent
       review, or by requiring that a port director be otherwise satisfied that the goods
       that are the subject of the claim are NAFTA eligible. All of these claim
       mechanisms fairly and properly implement the Agreement, and should not be
       negated.

Remand Results at 1-6 (footnotes omitted).

       Accordingly, Customs maintains that its interpretation of § 1520(d) represents a

permissible construction of the statute. More specifically, Customs explains that waiver under §

1520(d) is separate and distinct from waiver under the Reconciliation Program. Customs states

that waiver under § 1520(d) applies to traditional post-importation claims under NAFTA.

According to Customs, these types of claims are not treated as entries and therefore do not have

certain statutory safeguards to remedy mistakes and misconduct in awarding duty free treatment

under NAFTA. Customs explains that a claim for waiver under the Reconciliation Program

implicates a different statutory scheme. According to Customs, claims made pursuant to the

Reconciliation Program are treated as entries and therefore have a set of statutory safeguards that

permit Customs to remedy mistakes and misconduct in awarding duty free treatment under

NAFTA. Therefore, Customs contends that its waiver authority under § 1520(d) must be viewed

within the context of these two separate mechanisms for filing post-importation claims under

NAFTA.
Court No. 03-00115                                                                             Page 9

       Ford, however, claims that Customs is “clearly wrong in its belief that its CO filing

waiver authority under the Reconciliation Program stems from a wholly different set of statutes

than the NAFTA and 19 U.S.C. §1520(d).” Ford Comments on Custom’s Remand Report,

Docket Entry No. 110 at 3 (Dec. 18, 2013) (quotation marks omitted) (“Ford Comments”). Ford

disputes Customs’ account of the safeguards available solely in the reconciliation context. Id. at

14-16. Ford maintains that the safeguards available to Customs are the same regardless of

whether the claim was made pursuant to the Reconciliation Program or through the traditional

process. Ford argues that the Remand Report fails to articulate a reasonable explanation for

treating the two classes of NAFTA post-importation claims differently under § 1520(d). The

court disagrees.

       Customs has provided a reasonable explanation for treating claims under § 1520(d)

differently for purposes of “waiver”. Article 503(c) of NAFTA establishes Customs’ waiver

authority and provides that “[e]ach Party shall provide that a Certificate of Origin shall not be

required for ... an importation of a good for which the Party into whose territory the good is

imported has waived the requirement for a Certificate of Origin.” Ford Motor Co. v. United

States, 635 F.3d 550, 555 (Fed. Cir. 2011). Although Congress did not reference “waiver” in §

1520(d), it is “obvious that § 1520(d) was designed in part to permit the implementation of

Article 503(c)’s waiver authority via Customs’ regulations.” Id. Customs, in turn, has

promulgated a regulation implementing its waiver authority. See 19 C.F.R. § 181.22(d)(1). The

regulation permits Customs to waive “possession” of a CO when an importer files a traditional

post-importation claim, provided that the “port director has in writing waived the requirement for

a Certificate of Origin because the port director is otherwise satisfied that the good qualifies for
Court No. 03-00115                                                                         Page 10

preferential tariff treatment under the NAFTA.” Id. The language of the regulation talks about

“possession,” not presentment or other language suggesting that the importer retain the document

for future inspection. Waiving possession is different from waiving presentment. Customs

explains, and the court agrees, that waiving possession is irreversible. See Remand Results at 6.

Customs cannot ask an importer to later produce a CO if it has already excused the importer

from “possessing” that very document. Therefore, the port director is given discretion to grant or

deny an importer’s request for a waiver of the CO requirement.

       Under the Reconciliation Program, however, Customs has waived the requirement that

importers “present” COs at the time of filing a post-importation claim. See Automated

Commercial System (ACS) Reconciliation Prototype: A Guide to Compliance, Version 4.0,

Docket Entry No. 110 Exhibit No. 11 at 12 (Dec. 18, 2013) (“Guide”). This permits importers to

bypass the step of presenting hard copies to the port director and allows the program to be

administered electronically. Importers who file post-importation claims through the

Reconciliation Program are required to retain the COs in the event that Customs decides to verify

the correctness of their entry records. See 19 U.S.C. § 1508(a). The procedures that guide

Customs if it does need to verify such information are specifically provided for under 19 U.S.C.

§ 1509. These statutes control Customs’ administration of reconciliation-based post-importation

claims because a claim itself under the program is treated as an “entry” under 19 U.S.C. §

1401(s). As Customs explained, this implicates a specific set of statutory safeguards for ensuring

the correctness of those entries and remedying any potential misconduct by importers. The

record keeping requirements and auditing procedures give Customs well-defined procedures for

ensuring the correctness of entries made through the fully automated Reconciliation Program.
Court No. 03-00115                                                                           Page 11

       Ford, for its part, suggests that the safeguards available to Customs are the same for

traditional and reconciliation-based claims. It relies on 19 C.F.R. § 181.81, which states

       Except as otherwise provided in § 181.82 of this part, all criminal, civil or
       administrative penalties which may be imposed on U.S. importers, exporters and
       producers for violations of the Customs and related laws and regulations shall also
       apply to U.S. importers, exporters and producers for violations of the laws and
       regulations relating to the NAFTA.

The court, though, cannot adopt Ford’s formulation of the safeguards regime that applies to

traditional claims. Although the regulation does provide Customs with certain remedies related

to NAFTA, those potential remedies are associated with assigning penalties and do not establish

a clear set of guidelines for ensuring the correctness of documents that were initially waived.

Ford argues that the regulation gives Customs the “full panoply of claim validation, audit,

investigation and sanction authority that it has for all other Customs violations.” Ford Comments

at 15. But 19 C.F.R. § 181.81 refers to “penalties” and does not reference the full set of record

keeping and auditing procedures set forth under §§ 1508(a) and 1509. The court cannot assume

that those procedures are also covered by the regulation. This becomes even more problematic

when considering that the port director waives “possession” of the CO, not just presentment. An

importer would have a valid defense to any request by Customs to produce a CO if the port

director had already waived possession of that document beforehand.

       Ultimately, Customs’ waiver authority under § 1520(d) must be viewed within the

context of two distinct programs for processing post-importation refund claims under NAFTA.

The court notes that Customs has not always provided importers the clearest guidance on this

issue and has referenced § 1520(d) when discussing the Reconciliation Program, which implies

that “waiver” is the same whether the claim was made through reconciliation or not. See, e.g.,
Court No. 03-00115                                                                          Page 12

Guide at 20. On remand, though, Customs has explained that there are two separate statutory

schemes that cover post-importation claims under NAFTA. Remand Results at 3-6. More

specifically, Customs has explained that its waiver authority under the traditional method of

filing post-importation claims is controlled by § 1520(d). It has also explained that its waiver

authority under the Reconciliation Program is controlled by 19 U.S.C. §§ 1484(d)(1) and

1509(a)(1)(A). Therefore, Customs takes exception to the entire premise of the remand and

takes the stance that waiver under § 1520(d) is limited to traditional claims only.

       Although § 1520(d) may establish Customs’ waiver authority in general, it does not

control the actual process of waiver with respect to reconciliation-based claims. It is clear that

reconciliation claims operate under a different framework that is specifically tailored for the

electronic processing of the post-importation claims. 3 The same cannot be said for traditional

claims. They operate under the procedures set forth in 19 C.F.R. § 181.22. There are legitimate

reasons for applying waiver differently depending on the type of claim. Under these

circumstances it is reasonable for Customs to treat the two types of post-importation claim filing

3
  The Reconciliation Program itself was the result of years of discussions among the various
international trade actors responding to a long recognized need for procedures to acknowledge
the manner in which world trade had changed. The number of suppliers and countries of origin
made it difficult, if not impossible, for importers to provide complete information to Customs
within the time frames provided by the original trade statutes and regulations. Importers and the
government were bent on changing these to the benefit of both. The entry process needed to
encompass certain flexibilities to allow for information to be provided when it was available
pursuant to reasonable commercial practices. This, in turn, required an automated procedure to
accomplish these goals. The Reconciliation Program is the automated system created to reach
this end and even address problems caused by numerous “special arrangements” to make
previously indeterminable final adjustments to import prices. Guide at 4. ”[T]hese local,
informal versions of ‘reconciliation’ were problematic because they varied a great deal from
place to place, often had no legal basis, and lacked adequate financial controls.” Id. (quotation
marks in original). The Reconciliation Program represents a method of filing a NAFTA post-
importation refund claim which is “separate from, but coexists with, the procedures described
above for obtaining refunds under § 1520(d).” Ford, 715 F.3d at 910 (emphasis added).
Court No. 03-00115                                                                          Page 13

processes differently with regard to waiving the CO presentment requirement and the court has

no hesitation in affirming the disparate treatment here.

         Moreover, the interpretation advanced by Ford would effectively remove discretion

expressly provided to the port director to grant or deny waiver under the traditional process for

filing NAFTA post-importation claims. The court cannot endorse this interpretation. The statute

gives Customs a good deal of discretion to define the scope of its waiver authority. Customs has

exercised that discretion by promulgating a regulation that gives the port director authority to

waive possession of the CO. See 19 C.F.R. § 181.22(d)(1). At some point, Customs may

abandon this policy in favor of a fully centralized program that eliminates the inconsistencies

associated with relying on the port director to make determinations about waiver. Under the

current regime, however, there are legitimate reasons for treating claims differently for purposes

of waiver. Therefore, Customs’ explanation for treating claims under § 1520(d) differently for

purposes of waiver constitutes a permissible construction of the statute.

                                       IV. CONCLUSION

         For the foregoing reasons, Customs’ Remand Results are sustained. Judgment will be

entered accordingly.

Dated:         , 2014                                            /s/ Judith M. Barzilay
         New York, NY                                        Judith M. Barzilay, Senior Judge