In the Weeds
Hello. Yes, it has been a while. All is good here. Hope you are doing well too.
The reality is that for the last 2 years, the thought of writing for my own pleasure (which is 80% of why this blog exists) has been swamped by actual client, firm, and other commitments. But, I am coming up for air (at least for the moment) and want to address an important decision from the Court of International Trade. The case is Eteros Technologies USA, Inc. v. United States, which addresses the interplay between federal drug paraphernalia laws and state laws permitting the commercial exploitation of cannabis. This is important partly because of the explosive growth of the cannabis industry and also as an illustration of the way in which the details matter in the application of laws.
|Photo by Avery Meeker on Unsplash|
We have discussed CBP's role in interdicting drug paraphernalia before. See, for example, here and here. A lot has changed since I wrote those posts in 2017.
Under the federal Controlled Substances Act, it is unlawful for any person to import drug paraphernalia. 21 USC 863(a)(3). Merchandise imported in violation of the law is subject to seizure and forfeiture. There is, however, a carve out. Subsection (f) states that the section does not apply to "any person authorized by local, State, or Federal law to manufacture, possess, or distribute such items."
That brings us to the State of Washington, which legalized recreations marijuana use in 2012. The Washington law includes a few relevant provisions including one permitting the delivery, possession or manufacture of drug paraphernalia to process marijuana. It is also lawful to deliver drug paraphernalia knowing that it will be used to process weed.
Eteros attempted to import motor frame assemblies for it "Mobius M108S Trimmer" machines, which separate cannabis leaf from flower. The buzzkills at the Port of Blaine, detained and eventually excluded the machinery. Eteros protested the exclusion and CBP denied the protest, setting the stage for a challenge in the Court of International Trade.
The main issue before the Court was whether the Washington State law counts as an "authorization" for purposes of the federal Controlled Substances Act carve out. The Court first parsed out the statute finding that authorization by state law alone is sufficient to trigger the exemption, which then applies to all the activities federally prohibited by § 863. That just leave the question of whether the Washington statute constitutes an authorization to import drug paraphernalia.
Interesting side note--The Court did not defer to Customs' interpretation of the federal or state laws. Deference often comes up in matters of administrative law where the Court reviews agency actions on the basis of the record considered by the agency and the agency's reasoning in stating its decision. In those cases, the Court must affirm the agency determination based on the relevant standard of review, which may be, for example "arbitrary and capricious" or "not in accordance with law."
That is not the case here. First, the parties seem to be in agreement that there is no agency interpretation to which the Court might defer. That seems to indicate that the protest was summarily denied without any detailed analysis. Moreover, this is a matter of statutory interpretation. As a general rule, Courts defer to the agency when the relevant statute is ambiguous or Congress has left a gap for agency rulemaking. When the statute is clear, Courts do not defer. That is the Chevron doctrine. On top of that, this is a customs law case brought under 28 USC 1581(a) to challenge the denial of a protest. The relevant standard of review to these cases is de novo, 28 USC 2640(a)(1). That means that the Court will decide the matter based upon the record developed before the Court. These cases are not subject to the Administrative Procedure Act. The Supreme Court stated in United States v. Mead Corp. that CBP classification rulings are not subject to Chevron deference because they are "far removed not only from notice-and-comment process, but from any other circumstances reasonably suggesting that Congress ever thought of classification rulings as deserving the deference claimed for them here." The decision to exclude this merchandise seems equally far from the sort of rulemaking that implicates Chevron, but that may be a matter for a later decision. In short, traditional customs cases arising out of denied protests are not what we usually think of as "administrative law" matters.
So, does the Washington law "authorize" the importation of these articles? The government's main argument was that the general language in the state law is not a specific authorization of Eteros by, for example, a license or permit. For its part, Eteros argued that the law authorized anyone (meaning "everyone") to engage in the previously prohibited and newly permitted activities.
The Court undertook a thorough analysis of Supreme Court precedent relating to a New Jersey effort to "authorize" sports betting as well as the common English-language meaning of the term. Although there was a surprising lack of legislative history, the Court was able to discern congressional intent from the statute itself. In sum, the Court found that the Washington law constitutes an "authorization" for Eteros to import drug paraphernalia and, therefore, the federal prohibition does not apply to it.