                                            Slip Op 07 - 41

 UNITED STATES COURT OF INTERNATIONAL TRADE

                                               :
AVECIA, INC.                                   :
                                               :
                               Plaintiff,      :
                                               :
                          v.                   :               Before: MUSGRAVE, Judge
                                               :               Consol. Court No. 05-00183 and
UNITED STATES OF AMERICA,                      :               Court No. 06-00140
                                               :
                               Defendant.      :
                                               :


                                              OPINION

[Defendant’s motion for “rehearing, modification, clarification, and/or reconsideration” granted as
to severance of three entries, otherwise denied.]

                                                                            Decided: March 19, 2007

       Buchanan Ingersoll PC (Steven E. Bizar, Jill W. Rogers); Crowell & Moring LLP (Alexander
Schaefer), for the plaintiff.

        Peter D. Keisler, Assistant Attorney General, Barbara S. Williams, Attorney in Charge,
International Trade Field Office, Commercial Litigation Branch, Civil Division, United States
Department of Justice (Saul Davis); Office of Assistant Chief Counsel, International Trade
Litigation, U.S. Customs and Border Protection (Beth C. Brotman), of counsel, for the defendant.


       As discussed in Slip Opinion 06-184, a certain protest sent to the director for the Port of

Philadelphia challenged three entry classifications for products imported through the ports of Newark

and Baltimore, in addition to the classification of several other entries through that port. See Avecia,

Inc. v. United States, 30 CIT ___, Slip Op. 06-184 at 23-25 (Dec. 19, 2006).1 After the protest’s


       1
          Available at http://www.cit.uscourts.gov/slip_op/Slip_op06/06-184.pdf (last visited the
date of this decision).
Consol. Court No. 05-00183 and Court No. 06-00140                                                Page 2


denial, Avecia included it in this suit. 28 U.S.C. § 1581(a) provides that this Court has “exclusive

jurisdiction of any civil action commenced to contest the denial of a protest, in whole or in part,

under section 515 of the Tariff Act of 1930.” The referenced section is codified at 19 U.S.C. § 1514.

Subsection (c)(1) requires that “[a] protest of a decision under subsection (a) of this section shall be

filed . . . in accordance with regulations prescribed by the Secretary.” 19 U.S.C. § 1514(c)(1). One

of those regulations, 19 C.F.R. § 174.12(d), provides that “[p]rotests shall be filed with the port

director whose decision is protested.” The government thus challenged the Court’s subject matter

jurisdiction over the three entries. After examining the law of this area, the court concluded that no

statute or regulation precluded the director for the Port of Philadelphia from rendering a substantive

decision with respect to entries from another port, that the director denied the protest “in full” per

the rationale of HQ 967005 (May 18, 2004), and since the decision of Customs had apparently been

to relax the place-of-filing regulation with respect to those three entries, the court concluded that it

possessed jurisdiction over the subject matter. Slip Op. 06-184 at 25.

        The government now moves for “rehearing, modification, clarification, and/or

reconsideration” of that finding. Disposition of such a motion is within the Court’s discretion.

See USCIT Rule 59(a). See, e.g., Kerr-McGee Chem. Corp. v. United States, 14 CIT 582, 583

(1990); Union Camp Corp. v. United States, 21 CIT 371, 372, 963 F. Supp. 1212, 1213 (1997). The

purpose of reconsideration is to rectify “a significant flaw in the conduct of the original proceeding.”

W.J. Byrnes & Co. v. United States, 68 Cust. Ct. 358, 358 (1972) (footnote omitted). However, a

court should not disturb its prior decision unless it is “manifestly erroneous.” See, e.g., Starkey Labs,

Inc. v. United States, 24 CIT 504, 505, 110 F. Supp. 2d 945, 946-47 (2000); Volkswagen of Am., Inc.
Consol. Court No. 05-00183 and Court No. 06-00140                                               Page 3


v. United States, 22 CIT 280, 282, 4 F. Supp. 2d 1259, 1261 (1998). To the extent the government’s

motion raises a colorable “significant flaw” or “manifest error” in Slip Opinion 06-184, the matter

merits further discussion. See Starkey Labs.

          Substantively, the government interprets Slip Opinion 06-184 as apparently agreeing “that

the combination of the statute and the pertinent regulations mandated, as a jurisdictional prerequisite,

the filing of the protest at the port at which the decision was made,” Def.’s Reply at 3, and it argues

that in addition to the requirements governing form and content under 19 U.S.C. § 1514(c), the place

of filing a protest is clearly apparent from 19 U.S.C. § 1515(a), which requires a protest’s review

within two years by “the appropriate customs officer.” The government argues that this “can only

be the officer designated for such review pursuant to § 1514(c) and the regulations” and that

therefore compliance with 19 C.F.R. § 174.12(d) is a mandatory condition of jurisdiction which the

director for the Port of Philadelphia had no authority to waive. Def.’s Mot. at 5-9 (referencing

Grover Piston Ring Co. v. United States, 752 F.2d 626 (Fed. Cir. 1985), Noury Chem. Corp. v.

United States, 4 CIT 68 (1982), Po Chien, Inc. v. United States, 3 CIT 17 (1982), and United States

v. Reliable Chem. Co., 66 CCPA 123, 605 F.2d 1179 (1979)); Def.’s Reply at 7-8 (referencing inter

alia DaimlerChrysler Corp. v. United States, 442 F.3d, 1313, 1319 (Fed. Cir. 2006), Autoalliance

Int’l, Inc. v. United States, 357 F.3d 1290, 1293-94 (Fed. Cir. 2004), and Ford Motor Co. v. United

States, 425 F. Supp. 2d 1324, 1332, n.12 (2006), reh’g den. 30 CIT __, Slip Op. 06-145 (Sep. 29,

2006)).

          Avecia apparently disputes whether Slip Opinion 06-184 even addressed whether compliance

with 19 C.F.R. § 174.12(d) amounts to an unwaivable condition of subject matter jurisdiction. See
Consol. Court No. 05-00183 and Court No. 06-00140                                               Page 4


Pl.’s Resp. at 2 & n.1 (referencing Arbaugh v. Y&H Corp., 546 U.S. 500, ___, 126 S.Ct. 1235, 1237

(2006) (“when Congress does not rank a statutory limitation on coverage as jurisdictional, courts

should treat the restriction as nonjurisdictional in character”)). See also Def.’s Br. passim; Def.’s

Reply passim (distinguishing Arbaugh on the authority of Federal Nat’l Mortg. Ass’n v. United

States, 469 F.3d 968 (2006)). Avecia is correct, but whether it arguably did, the conclusion must

again be that compliance with the regulation is not such as may not be waived by Customs.

       The government elaborates in its motion that the proper interpretation of “the appropriate

customs officer” in 19 U.S.C. § 1515(a) mandates that protests only be decided by the port director

who made the original decisions affecting the entry or entries, and yet subsection 1515(a) simply

mandates that review of a protest be completed within two years from the date of filing by “the

appropriate customs officer.” It is a deadline for Customs. It also provides for further review by

“another appropriate customs officer.” Cf. 19 U.S.C. § 1515(a) (italics added). To the extent the

provision imposes a filing condition directed to the protestant, the phrase “the appropriate customs

officer” is vague. As implied by Slip Opinion 06-184, one cannot definitely conclude that the port

director of Philadelphia was an “inappropriate” customs officer to act with respect to entries

incorrectly included on an otherwise properly-filed protest at that port. Even if “appropriate customs

officer” may be clarified by reference to the place-of-filing regulation, 19 C.F.R. § 174.12(d), section

1515 does not control the Court’s jurisdiction, which is delimited in 28 U.S.C. § 1581(a) by

reference to the parameters of 19 U.S.C. § 1514. See, e.g., Volkswagen of Am., Inc. v. United States,

31 CIT __, Slip Op. 07-26 at 6 (Feb. 21, 2007) (“Section 1514 is not a jurisdiction-granting statute;

it defines the types of actions that are potentially reviewable under § 1581(a)” (citation omitted)).
Consol. Court No. 05-00183 and Court No. 06-00140                                                 Page 5


        There, in contrast to the statutory particulars for the content of a protest, Congress did not

specify in section 1514 that a protest had to be in a particular form, or that it had to be filed in a

particular place. See Slip Op. 06-184 at 25. Cf. 28 U.S.C. § 1581(a) & 19 U.S.C. § 1514(c)(1) with

19 U.S.C. § 1515(a). Rather, Congress merely required that protests need to be “filed in writing . . .

in accordance with regulations prescribed by the Secretary.” 19 U.S.C. § 1514(c)(1). Since the place

of filing is not a plain and specific statutory condition of invoking the jurisdiction of this Court,

compliance with 19 C.F.R. § 174.12(d) is not a condition of subject matter jurisdiction but rather is

an element of a putative plaintiff’s claim. See, e.g., Arbaugh. It is also noteworthy that in section

1514 Congress specifically deleted all references to “the appropriate customs officer” or substituted

“the Customs Service” therefor when enacting the North American Free Trade Agreement

Implementation Act, see Pub. L. 103-182 § 645(1)(A), (E), (2) (Dec. 8, 1993).

        Fundamentally, the government’s argument, that subject matter jurisdiction at this Court is

lacking because no port director other than the port director who rendered the decision on the

original classification has the authority to render a decision on a protest, depends for its validity upon

the government’s interpretation of the place-of-filing regulation, which is to say that the argument

grafts a meaning onto that regulation that the regulation does not currently possess. Cf. 19 C.F.R.

§ 174.12(d) (“[p]rotests shall be filed with the port director whose decision is protested”). Even if

the regulation possessed such meaning, the condition that a protest be filed at a particular place is

beyond the metes and bounds of the subject matter jurisdiction established for this Court by statute

by Congress. See 28 U.S.C. § 1581(a) & 19 U.S.C. 1514. The government argues that “the

requirements of the regulations promulgated pursuant to the delegation authority in § 1514(c) are
Consol. Court No. 05-00183 and Court No. 06-00140                                              Page 6


jurisdictional[,]” Def.’s Reply at 4 (referencing Grover Piston Ring, Noury Chemical, and Po Chien),

but that is not a proper interpretation of residual delegation. Congress may delegate certain

legislative policy determinations to the executive branch, see, e.g., Marshall Field & Co. v. Clark,

143 U.S. 649, 693-94 (1892), Star-Kist Foods, Inc. v. United States, 47 CCPA 52, 60, 275 F.2d 472,

480 (1959), but only Congress may delimit federal court subject matter jurisdiction. See U.S. Const.,

Art. III, § 1. See, e.g., Kontrick v. Ryan, 540 U.S. 443, 453 (2004); Cary v. Curtis, 44 U.S. 236, 244

(1845). Cf. 19 U.S.C. § 1514(c)(1)(D) (a protest must be “filed . . . in accordance with regulations

prescribed by the Secretary”). And for this court to construe 19 C.F.R. § 174.12(d) with the meaning

the government here advocates would effectively amount to legislating the Court’s own subject

matter jurisdiction. Plainly, it is inappropriate for the court, or Customs, to do so. Moreover, to

construe the regulation in the manner advocated by the government would theoretically preclude

subject matter jurisdiction over any protest not perfectly “filed . . . in accordance with regulations

prescribed by the Secretary,” even if only slightly flawed, and thus would contradict the inherent

authority of agencies to interpret their own regulatory requirements as appropriate and necessary.

See, e.g., PAM S.p.A. v. United States, 463 F.3d 1345, 1349 (Fed. Cir. 2006) (agency has discretion

to relax compliance with notice regulation where no substantial prejudice results); National Customs

Brokers and Forwarders Ass’n of Am., Inc. v. United States, 18 CIT 754, 762, 861 F. Supp. 121, 130

(1994) (defendant argued in favor of “Customs’ longstanding practice” to allow certain duty-free

shipments entry “under relaxed entry procedures without the requirement of a broker”); Lee Yuen

Fund Trading Co., Inc. v. Dep’t of Treasury, 18 CIT 139, 141 (1994) (Customs recognizing that non-

complying submission was timely and informing plaintiff to file preferred Protest Form 19); Sachs
Consol. Court No. 05-00183 and Court No. 06-00140                                                  Page 7


Auto. Prods. Co. v. United States, 17 CIT 290, 294 n.3 (1993) (compliance with regulation waived

by agency); accord, American Farm Lines v. Black Ball Freight Serv., 397 U.S. 532, 539 (1970).

And it should go without saying that the Court’s subject matter jurisdiction must encompass hearing

whether there has been compliance with a relevant rule or regulation, if jurisdiction is otherwise

satisfied. See, e.g., Kyocera Indus. Ceramics Corp. v. United States, 30 CIT __, Slip Op. 06-187

(Dec. 21, 2006); Carolina Tobacco Co. v. U.S. Customs Serv., 28 CIT __, Slip Op. 04-20 (Mar. 4,

2004); see also Indianapolis Mach. & Exp. Co., Inc. v. United States, 42 Cust. Ct. 137 (1959).

        Since the function of the Court is to find the narrowest resolution, Slip Opinion 06-184

sought to avoid a specific finding on whether the place of filing a protest amounts to a

“jurisdictional” prerequisite, because whether it is, or is not, it is solely a regulatory requirement, and

as such may be waived. The government attempts to force the issue again, but the primary support

for its motion is United States v. Reliable Chemical Co., 66 CCPA 123, 605 F.2d 1179 (1979), a case

that considered Customs’s attempted waiver of an explicit statutory jurisdictional requirement. See

Def.’s Br. at 9; Def.’s Reply at 11. The circumstances of this matter are not analogous to that

situation but are rather akin to those of Angelus Milling Co. v. Commissioner of Internal Revenue,

325 U.S. 293 (1946), which involved the Commissioner’s waiver of compliance with regulatory

filing requirements promulgated by its agency pursuant to the same type of authority granted by

Congress that this action presently confronts vis à vis 19 U.S.C. § 1514(c)(1) and subsection

(c)(1)(D) (“any other matter required by the Secretary by regulation”). Cf. 325 U.S. at 295 n.1

(“Section 903 of Title VII of the 1936 Revenue Act, 49 Stat. 1648, 1747 . . . requires that no refund

be made or allowed ‘unless . . . a claim for refund has been filed . . . in accordance with regulations
Consol. Court No. 05-00183 and Court No. 06-00140                                                 Page 8


prescribed by the Commissioner with the approval of the Secretary’”) with 19 U.S.C. § 1514(c)(1).

The Supreme Court’s observation in that case appears equally apt to the circumstances at bar:

                Congress has given the Treasury this rule-making power for self-protection
                and not for self-imprisonment. If the Commissioner chooses not to stand on
                his own formal or detailed requirements, it would be making an empty
                abstraction, and not a practical safeguard, of a regulation to allow the
                Commissioner to invoke technical objections after he has investigated the
                merits of a claim and taken action upon it. Even tax administration does not
                as a matter of principle preclude considerations of fairness.

325 U.S. at 397.

        To summarize, neither 19 U.S.C. § 1514(c)(1), § 1515(a), nor 19 C.F.R. § 174.12(d)

precludes a port director from ruling on entries from a different port. Cf. also 19 C.F.R. 174.13(b)

(regarding “multiple entries”: “[a] single protest may be filed with respect to more than one entry

at any port if all such entries involve the same category of merchandise and a decision or decisions

common to all entries [is/]are the subject of the protest”) (italics added). The court has considered

the government’s other propositions, from DaimlerChrysler, Autoalliance, Ford, etc., and finds them

unavailing in the circumstances of this matter. The court therefore remains unpersuaded that there

is manifest error in its prior conclusion that it possesses jurisdiction over the disputed subject matter.

See Slip Op. 06-184 at 25 (quoting American Farm Lines, 397 U.S. at 539). As an aside, although

all three entries were encompassed by the protest originally summonsed to this action, two of the

entries have since been encompassed by Court No. 06-00140. The Judgment on 06-184 could only

encompass the remaining entry, of course, but the government represents that it would prefer to

separate the jurisdictional issue from the other entries covered by this action, and the parties have

conferred and agree that a preferable procedural posture is to sever those entries and make them the
Consol. Court No. 05-00183 and Court No. 06-00140                                          Page 9


res of a new, separate civil action which shall then abide the Judgment of this action. The court

concludes that the motions to sever and amend must be granted and will enter orders to that effect

after any necessary consultations with the parties.




                                                      /s/ R. Kenton Musgrave
                                                        R. KENTON MUSGRAVE, JUDGE

Dated: March 19, 2007
       New York, New York
