ACE as Overlord
The issue here is whether Aspects properly protested multiple liquidations on a single protest filed in the Automated Commercial Environment. The protests relate to a rate advance to collect antidumping duties on wooden bedroom furniture.
There are nine entries at issue. Apsects protests [spoiler] all nine in the system that Customs and Border Protection designed and made available to the trade. The narrative section identified a single relevant entry number, which was used as the "lead entry." The government asserted that the remaining eight entries were not properly subject to the protest. However, the Court pointed out, when Apects filed the protest, it (or its representative) used the function of the system that allows the user to "Add Additional Entry Numbers." In other words, CBP built out a system that allows importers to make multiple protests in a single filing by adding "additional entry numbers." But, when an importer did so, CBP apparently convinced the Department of Justice that the right thing to do is to penalize the importer for using the system as it is designed. This is the kind of thing that can drive a computer to murder.
It is important to note that no one pointed to a regulation or even an instruction telling importers to list the additional entries in the narrative section. Nor is there a citation to authority telling protesting importers to notify CBP that the lead entry is representative of the additional entries.
Based on its theory that a Aspects failed to properly protest the eight additional entries, Customs moved to dismiss them for lack of subject matter jurisdiction. Without a valid protest, the argument goes, there can be no judicial review in the Court of International Trade.
The Court, rightly, saw through this on multiple grounds. First, Apsects complied with the regulatory requirement in 19 CFR 174.13(b) that allows for the identification of a lead entry and the "attachment" of additional entries because the protested entries all involve the same protestant, category of merchandise, and challenged CBP decision. Moreover, the general rule is that protests are to be liberally construed and will only be deemed to lack the required specificity when there is no indication as to the basis of the protest. On the facts presented, the Court found it clear that Aspects was making the same argument for each of the "additional entries." Given that, there was no need to reach the "severe" consequence of finding that the protests were invalid.
The Court could have stopped there, but it went further. It also invoked the Customs Modernization Act, which introduced "informed compliance" and "shared responsibility." Under these twin concepts, Customs must inform the public of the legal obligations imposed on importers and the public has the right to expect that CBP will not unilaterally change the rules without proper notice. Although the Court did not explicitly say so, I take from the invoking of these concepts that the Court viewed Customs as not having properly informed the public of the alleged requirement to reference additional entries in the protest narrative. By asserting that "rule" in this litigation, Customs appears to have unilaterally changed the requirements for a valid protest.
In that context, the Court found the government's argument to be unreasonable and "unreasonable" is a pretty strong term when used in a judicial decision. On top of that, the Court quoted a 2012 Supreme Court decision to describe the argument as “nothing more than a ‘convenient litigating position’ adopted by the U.S. Department of Justice in its reply." Quoting Christopher v. SmithKline Beecham Corp., 567 US 142, 155 (2012) which was further quoting Bowen v. Georgetown Univ. Hospital, 488 US 204, 213 (1988).
None of this gets to the real issue which is whether CBP properly liquidated entries of wooden bedroom furniture with 216% antidumping duties. The importer apparently believes is has both a scope argument and a procedural argument. Given the potentially dire impact of a presumably unexpected 216% rate advance, it is good that the Court of International Trade denied the partial motion to dismiss.
The larger point is that importers, brokers, lawyers, and the Court need to be certain that CBP does not use the important and welcome modernization of its systems as a means of creeping away from the legal requirements. Until a statute or regulation is changed, it is the law and everyone involved needs to follow it (including any recognized exceptions and limitations). We sometimes see situations where brokers or importers say that ACE or "the system" or "the software" require that something be done in a certain way. That just does not fly. Software is not a legally binding regulation. A Cargo Systems Messaging Service update is not a regulation and cannot take the place of formal public notice and comment. At best, it serves the policy of "informed compliance." If the policy announced in that CSMS is legally wrong, it is wrong.
This case may seem like a procedural one-off for customs nerds. It is not. It might be the first case in a future line of cases addressing how much flexibility administrative agencies have to migrate to new systems and the legal consequences of how those systems are engineered.
I, for one, do not welcome our new computer overlords.
Lastly, I leave you with this image (from IMDB) from the 1954 classic "Gog" staring Richard Egan and Constance Dowling. For reasons I do not know, this movie occupies a space in the deep recesses of my lizard brain. I must have seen it on as a Saturday afternoon Creature Feature at some point in the 1970's. Reading the synopsis here will make it clear why my brain churned it up now. ACE is the robot. Those are the heroic lawyers in their cool jumpsuits, one of whom is wielding the stick of justice. I will leave it to the meme generators among you to work out what the guy on the left is up to.