Quick Thoughts

On the eve of the Labor Day weekend, I post these odds and ends:

1. Fox News laughs off the North American Union (as it should).

2. This is one peeved Customs and Border Protection employee.

3. What the heck is this? It looks like something Dr. Evil would dream up. "I shall call it: Aqua-Lung." I understand the theoretical benefits of smuggling with a submarine. I also understand that a fast boat would be useful for this endeavor. But why would someone want a semi-submarine? The thing is still visible and must be slow. Maybe the thinking was that it would be literally below the radar. I hope CBP publishes a picture of this thing out of the water.

Have a good long weekend.

Cue the Fat Lady

You can keep your religious images on underpasses and tortillas. This is a picture of salvation.

The power is on.

The phone works.

We have a DSL connection.

Life is good.

We finished cutting back the drywall and pulling out insulation this morning. In the middle of that, one sump pump gave up the ghost and had to be replaced. The required two trips to the hardware store. We made a third trip to buy a dehumidifier, which is now happily sucking moisture from the air.

The A/C is running. I consider that a blessing although I am worried about whether the pump that moves the water from the condenser is still working. The last thing I want in the basement now is another puddle.

It looks like the sofa is shot. Professional and amateur opinion is that it is irredeemable.

What Next?

Today was day five without power. But, things are progressing. When wer arrived home this morning, the electrician was there to re-connect the power lines to the back of the house. Granted, there is no electricity running through those lines, but at least they are connected. We also have phone service. I'm not sure about data. The plumber/HVAC guy came by to bleed the water out of the gas line and restart the water heater. He also inspected the furnaces. Luckily, they can be repaired. One needs a new set of electronics plus a motor. The other, just needs the electronics.

The big issue continues to be moisture in the basement. All of the carpeting and padding is out and we scrubbed the floor down with diluted bleach. The real question is what might be lurking behind the walls. We have had a diversity of opinion on how to deal with that issue. Some have suggested just using heating fans and dehumidifiers. While that might be a reasonable approach, it is a non-starter (literally) until we have power. The most common suggestion has been to remove the drywall up to a point well above the waterline. We talked to a professional handyman about that today who looked at us like we were crazy. His suggestion was just to pop a few holes here and there for ventilation. After listening to water damage professionals and a few phone calls, we opted to cut back the drywall and take a look inside.

Of course, we still can't get a professional to give us the time of day. That means the clock is running on the bloom of mold spores I expect to burst forth at any moment. The end result is that I engaged in yet another round of physical labor I had not anticipated ever doing in my life. I have the utmost respect for men and women in the trades and I firmly believe in the power of the trained specialist. That is one of the reasons I do what I do in a boutique firm. But, when there is no one to call, you call on yourself.

Actually, first we called a carpenter we know for tips before we started bashing random holes in walls. We learned that the right thing to do is to score the wall with a box knife and then start bashing it in. After a few efforts, I figured out that a couple hammer blows in a verticle line make a nice handle with which to pull on the drywall. I also learned that the area close to the scoring is more easily pushed into the wall than pulled out. It makes for a cleaner break.

It turns out that this seems to have been the right course of action. With the wall open, I used the box knife to cut away the insulation. When I pulled it out, the insulation was dripping wet. I am sure we have removed gallons of additional water from the basement and that this water would never have dried up on its own or with fans and dehumidifiers.

Tomorrow, we will finish this job and, I am hopeful, clean up the mess it is creating. After that, I think I will sit in my comfortable chair upstairs and enjoy one or more long, slow shots of an appropriate beverage that is quite possibly originating under preference criterion A of the North American Free Trade Agreement. See, I told you I would get back on track.

Here are a few more pictures just for context. On the left is the basement. Below, is the neighbor's uprooted tree.

Here's to You

Here's to the lumber jacks who tote logs all day. Here's to the butcher who manhandles sides of beef. And, here's to the mob capo who has to move the deadest of dead weight. You are my heroes.

I spent today cutting and pulling up soaked carpet. It was, I am certain, the hardest manual labor I have ever done. My muscles ache. I feel like I have the flu. I have more to do tomorrow.

The paint is bubbling and literally falling down the wall. The doors are already warping. I need to figure out how to disinfect and prevent mold. I am told we need to cut down the dry wall at least part way up the wall.

Usually, I keep references to family to a minimum. But, I need to say my wife toted wet dead weight today as well as I did. Also thanks to all four grandparents for entertaining Jr. My brother is coming to help tomorrow.

This is going to sound studip, but I am half comatose, so what the hell. Usually, I am not shy about spending money to solve a problem. I have tried to hire someone, but almost no one is available. Those that are available say they can't do anything until we have power. I am thinking about New Orleans and the people who lost everything and could least afford to rebuild. I feel stupid saying so, but I have a better feel for what they experienced and the inconceivable magnitude of their tragic loss.

Update

The problem with blogs like this one is that it crosses back and forth between personal and professional. That means my family is bored to tears reading about the finer points of HS classification. Customs compliance professionals, on the other hand are left wondering "who is this guy and why do I care about the spider in his basement or his theories on Clifford the Big Red Dog?" It's a risk I take and I hope the professionals will continue to indulge me with the promise that I will get back on topic soon.

The Great Chicago Hurricane of 2007 brought 70 MPH winds through my neighborhood. More than four inches of rain fell in only an hour or so. This follows a solid month of rain, so the ground was saturated the water had nowhere to run, except into my basement.

For those of you not familiar with the midwest, it is flat here. Water accumaltes under foundations. To avoid basements that resemble turtle habitats, we have sump pumps. These pumps are great so long as you have power. In my case, that was right up until the neighbor's tree fell over and toppled a utility pole. The power line was literally yanked from my house. Water filled the basement quickly to a depth of about 8 inches. Enough to float paint cans and action figures. We spent the day moving wet junk to the curb and using a borrowed generator to run our pumps. It is late, I wrenched my back, and now I am going to sleep.

Water Logged

Today was a crazy weather day. At three o'clock it was black as midnight with rain pouring down in buckets. In the suburbs, tornado sirens sounded and people headed to shelter.

My train home was delayed. Think about that. How much rain does it take to delay a train--by 50 minutes? There was high water on the road home. I was only confident I would make it when I followed a Civic through the water.

When I got home, I found the power and phone out and toys, carpet, and the botton six inches of a not inexpensive sofa floating in my basement. I am at a loss. I don't know where to start. I put on sailing foul-weather boots and moved dry stuff to higher ground. Now I am waiting for a plumber at close to midnight. It is going to be a long weekend.

Ford Wins Another Round

This almost qualifies as breaking news: Yesterday, the CAFC reversed most of the CIT's decision in one of the Ford penalty cases. This one involved Ford's mishandled application of a foreign trade zone to parts for cars and trucks. Ford mistakenly treated all the parts as if they were for cars and paid duties on the merchandise in its condition as withdrawn from the zone for entry. Unfortunately, Ford only applied the rate for cars (2.6% at the time) not the rate for trucks, which was 25%. Consequently, Ford allegedly underpaid duties to the tune of $5.3 million.

Ford told the Customs Service about the error but was, nevertheless, the subject of a fraud investigation that lasted almost four years. During that time, apparently very little investigating actually happened. Customs extended liquidation of the relevant entries and finally liquidated them almost four years after the date of the last entry. Ford protested the liquidations arguing that the entries had liquidated by operation of law. Not surprisingly, CBP denied the protests. In a prior decision, the Federal Circuit held that Customs delay was unreasonable, that the entries had liquidated by operation of law, and that Ford was entitled to a refund of the $5.3 million.

While all this was going on, Ford executed a series of waivers of the statute of limitations. Each waiver but the last included a notation from Customs that is was "acknowledged and accepted." The last, however, only said "acknowledged."

Showing terrific creativity, the government turned around and tried to get its $5.3 million back through a penalty action. The reasoning appears to be that even though Ford did not owe the money because the entries were liquidated as entered, the entries were still negligently made and the U.S. was denied revenue as a result. That makes some sense under the facts.

The U.S. appealed from the Court of International Trade decision to dismiss the case on the grounds that (1) the U.S. never "accepted" the statute of limitations waiver and (2) the penalty case was precluded by the earlier CAFC decision that liquidations had been unreasonably delayed.

In what was likely a gut wrenching moment for Ford, the CAFC reversed on both those points. First, regarding the waiver, the CAFC held that a waiver of the statute of limitations is a unilateral act by the potential defendant. It does not require any "acceptance" from the government. In other words, a waiver is not a contract; carbolic smoke balls notwithstanding. [Note to readers: that gratuitous comments was for the lawyers out there. They are rolling on the floor laughing at this moment.]

Regarding whether the prior CAFC decision precluded the government pursuing a penalty case, the Court was equally to the point. The Court held that nothing in the prior Ford case had anything to do with whether a penalty could be brought under 19 USC 1592. It dealt only with whether Customs could collect the duties four years after entry when liquidation had been unreasonably delayed by an investigation that did not get very much attention from Customs. Thus, the Federal Circuit reversed the CIT's "issue preclusion" decision.

Alone, these holdings by the CAFC would have been worse for Ford that the re-issuance of the Edsel. But, the CAFC had one additional point to make. Simply put, you can only violate sec. 1592 if your negligence, gross negligence, or fraud results in some injury to the U.S. even if there is no revenue loss. In this case, the U.S. could have collected the $5.3 million had it liquidated the entries in a timely manner and denied Ford's protest. Instead, the U.S. let everything get stale, which ultimately cost it the opportunity to recover the money. In other words, because Ford's negligence did not prevent the U.S. from collecting the money, there is no way for the U.S. to try and recover it in a penalty case.

Thanks

A quick note of thanks to those of you who sent me the CBP ruling I requested. Several of you were nice enough to help out.

Thanks also to those who publicly and privately expressed concern for either my physical or mental condition following my car vs. bike altercation. I'm fine.

Lastly, in lieu of a new post, I point you to a new column in the online journal of the NCBFAA Educational Institute called CCSContact. Scroll down to page 3 to find the article.

I'll blog that NAFTA ruling shortly.

NAFTA Superhighway Deconstruction

The alleged plot to merge the U.S., Canada, and Mexico into an EU-style union is a worrisome sideshow in the real discussion of trade policy. The mythical so-called NAFTA Superhighway is a critical step in the plot. The latest issue of The Nation includes a terrific story on the popular pull of this urban legend. It is worth a read.

The larger conspiracy to be investigated is why the author, Christopher Hayes, did not bother to cite my own groundbreaking work on this topic.

Rulings Review

Customs and Border Protection issued a few interesting rulings recently. Here is a quick summary of two.

H007168 (Aug. 2, 2007)

When a sale occurs before importation, when does the seller retain enough of an interest to act as importer of record? Good question. The statute requires that the importer of record be the owner or purchaser of the merchandise (we're not talking about brokers and agents here). 19 USC 1484. Customs, in a suprisingly business-friendly exercise of discretion, has defined "owner" as including someone who retains a "financial interest" in the merchandise. In this case, the seller retained a security interest in the merchandise inteneded to make sure it eventually gets paid. According to this ruling, that was sufficient to make it an "owner" with the right to make entry.

W563475 (Nov. 3, 2006)

Calling Tom Cruise! The Church of Scientology imported some electrical devices known as "E-meters" used to "audit" COS members. Unlike CBP auditors, Scientology auditors use the e-meter to locate spiritual travail and, one assumes, eliminate it. The question presented was how to classify the gizmos.

The Church had classified the e-meters as "other instruments for measuring or checking voltage, current, resistance or power, without a recording device: other" in 9030.39.00. The applicable rate is 1.7%. The Church argued for classification as religious articles in various provisions of heading 9810. Customs, however, found that the e-meters are not "an appurtenance or adjunct of an alter or pulpit."

Generally, I don't refer to the lawyers involved in an issue. However, I note that the COS was represented by my friends at Grunfled, Desiderio, Lebowitz, Silverman & Klestadt. That may provide context to their next argument, which was that the e-meter is analogous to "prayer shawls, bags for the keeping of prayer shawls and headwear of a kind used for public or private religious observances . . . . " The thinking was simply that tallit and yarmulkes have no non-religious function and neither does the e-meter. Consequently, they should be classified the same way. Customs found the language to be clear and skipped counsel's reliance on legislative history.

The last traditional customs argument was for classification as a religious scroll or tablet of wood or paper, commonly called a Gohonzon, which the e-meter clearly is not.

After CBP rejected that argument, the COS pulled out the big guns: the Religious Freedom Restoration Act, 42 USC 2000bb et. seq. This law makes it illegal for a federal agency to substantially burden the exercise of religion through a generally applicable rule without a compelling governmental interest. Customs, however, distinguished a case in which a banned hallucinogen was needed for religious sacrament from a simple duty on the imported equipment. Doing so, it found no substantial burden. Thus, the classification stays as an electrical meter.

This, of course, is teed right up for very interesting litigation. I'm not sure I'd go with RFRA as my main point though. I'd be looking at why a yarmulke or Gohonzon gets to be duty free but not an e-meter. Assuming the importer has standing to assert the claim, this sounds like another equal protection case to me.

I also wanted to review W563043 (Oct. 18, 2006), which seems to involve a pretty contentious NAFTA issue, at least according to the blurb I read. It is not up on CROSS. If anyone has a copy, please pass it on to me.

New Service, No Charge

One of my other side gigs is as a technology writer for the Chicago Bar Association. This month, I reviewed a couple web tools including the cool Rollyo search site. This service lets you create custom search engines based on up to 25 sites you think are authoritative. Using it, I created the Customs Law "searchroll." You can see the search box below on the right. Give it a try. You can also link to the searchroll here (http://rollyo.com/lfriedman/customs_law/).

Update: It's Bad Karma

Remember that I had a flat on the way into work today? It got worse. On the way home, the back tire went flat again. I rode the bike standing with my weight forward from North Avenue to Addison where there is a little repair shop on the bike path. We confirmed that my tire has a hole in it big enough to see the tube when inflated. This meant that there was a decent chance I would flat again before I made it home. So, I bought an another tube and another CO2 cartridge and went on my way.

So far, so good.

Then I was hit by a car.

Obviously, I am OK. I think that makes me some sort of official member of the urban biking club.

What happened was simple and all too common. I was on Lawndale in Evanston where almost all of the intersections are 4-way stops. Almost all. As I approached an intersection, I saw a silver Toyota approaching and did what I always do at 4-way stops: I looked at the driver, slowed, and proceeded through the intersection confident he would stop. He didn't. Next thing I knew, I was swerving and braking trying to avoid the bumper. The bike hit the front passenger side and I went forward and to my right. I landed hard on my right palm and right knee then the back of my helmeted head.

The first thing I heard was two women who were on the sidewalk screaming. I took off my helmet and banged it on the ground in frustration. The helmet, by the way, probably kept me from needing a lot of stitches in my head. I got up and saw that my knee was bleeding.

The driver came around and we had a brief discussion to determine that I was not seriously hurt and he was OK too. He seemed pretty shaken up. My lawyer-brain had immediate thoughts about excited utterances and state of mind exclamations. Nevertheless, I apologized and pointed to the stop sign on my side of the street. We parted without exchanging any information.

My bike is fine. I rode the last mile and half home. I'm sore and suspect I am going to hurt in the morning. I'm glad I wear a helmet and I am going to have a new respect for stop signs.

Post Hoc Ergo Propter Hoc

Yesterday, I did some shopping at the bike shop. I needed new tubes because I got a flat last week and was down to one backup. I also needed new tire levers, additional CO2 cartridges for my inflater, and new water bottles. My favorite clear 24 oz bottles seem to have a science experiment growing on their insides. I also picked up a new pair of Lake MX85 shoes while I was there. Yes, I know riding on streets in mountain bike shoes violates some cosmic rule of cycling fashion, but I can walk in them easily and I did not need to change my pedals to match a new roadie cleat.

This morning on the ride in to work, I got a flat at Granville and Broadway. Lucky for me, I have new tire levers, a fresh tube, and CO2 cartridge. It took me 10 minutes to change the tire, re-inflate and be on my way; dirty hands and all.

This, of course, raises a question. Is it good karma that I went to the store the night before I needed the very supplies I was buying? Or, did I curse myself be being prepared? B y the way, there is a big gash in my tire, so it looks like I need new tires as well.

Larry in the News

Yesterday, I was interviewed by the Daily Herald about the inter-agency working group on product safety. The impetus for this was a visit to Chicago's O'Hare international mail facility by HHS Secretary Michael Leavitt. You can read the story here.

By the way, how is it that I can only generate a single comment to the last post? I know (generally) who reads this blog. I know that there are lots of customs lawyers, business people, and government folks visiting. Throw me a bone people! It takes some effort on my part to inform and entertain you. Only one of you was inspired enough by the stuffed animal/radio image to know I was thinking that the Whirlpool case should have discussed composite goods. Thanks to that anonymous comment poster for covering for me.

Keep it up and the rest of you will get nothing but links to You Tube videos of this guy.

Back Next Week

For those of you who check regularly, I'll be gone at least until Wednesday. Drop a comment if you see anything of customs-related interest. If anyone want to comment on the decision in the Whirlpool case, have at it. Here's a hint. Discuss amongst yourselves.

Wow, I think I just outsourced my blog.

ICE Raids for Wii, PS2, and XBox Mods

According to press reports, Immigration and Customs Enforcement agents today conducted raids in 16 states looking for mod chips for video game consoles. These chips let users play pirated video games and violate the Digital Millennium Copyright Act of 1998. This is a serious issue that costs industry lots of money from pirated software. Often, the pirates are part of larger criminal enterprises. So, efforts to enforce these laws are important. But, just imagine the poor awkward teenager in the basement with his pizza and Jolt cola trying to explain to his angry parents why ICE agents just knocked down the door. He is so grounded.