US Supreme Court Briefs

No. 99-1434


In the Supreme Court of the United States



UNITED STATES OF AMERICA, PETITIONER

v.

THE MEAD CORPORATION



ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT



REPLY BRIEF FOR THE UNITED STATES



SETH P. WAXMAN
Solicitor General
Counsel of Record
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217








In the Supreme Court of the United States


No. 99-1434

UNITED STATES OF AMERICA, PETITIONER

v.

THE MEAD CORPORATION



ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT



REPLY BRIEF FOR THE UNITED STATES











1. In 19 U.S.C. 1502(a), Congress expressly authorized the Customs Serviceto adopt and issue "binding rulings" to address and resolve tariffclassification issues. Pursuant to that statute, the agency has specifiedthat a (19 C.F.R. 177.9(a))
ruling letter [thus] issued by the Customs Service * * * represents theofficial position of the Customs Service with respect to the particulartransaction or issue described therein and is binding on all Customs Servicepersonnel * * * until modified or revoked. In the absence of a change ofpractice or other modification or revocation which affects the principleof the ruling set forth in the ruling letter, that principle may be citedas authority in the disposition of transactions involving the same circumstances.
The court of appeals held in this case that these official, "binding"interpretations of the Tariff Act that have been formally adopted by theCustoms Service in the precise manner that Congress has specified are entitledto "no deference" (Pet. App. 7a).1 For the reasons stated in thepetition, and especially in view of this Court's recent decision in Christensenv. Harris County, No. 98-1167 (May 1, 2000), that holding warrants thisCourt's plenary review.
This Court has long held that interpretive rulings that set forth the Treasury'sformal interpretations of revenue laws such as the Tariff Act are to besustained if they reflect a "sufficiently reasonable" elaborationof the statutory scheme. Zenith Radio Corp. v. United States, 437 U.S. 443,450 (1978). In Skidmore v. Swift & Co., 323 U.S. 134 (1944), on whichthis Court recently relied in the Christensen case, the Court emphasizedthat it "has long given considerable and in some cases decisive weightto Treasury Decisions and to interpretative regulations of the Treasuryand of other bodies that were not of adversary origin." 323 U.S. at140. As we explain in the petition in this case (Pet. 14-17), because Congresstasked the agency with the responsibility of formally developing and announcingthese "binding rulings," the reasoning of this Court's decisionin Chevron applies directly here: courts are to defer to the agency's reasonableinterpretation of the statute because of the "presumption that Congress,when it left ambiguity in a statute meant for implementation by an agency,understood that the ambiguity would be resolved, first and foremost, bythe agency, and desired the agency (rather than the courts) to possess whateverdegree of discretion the ambiguity allows." Smiley v. Citibank (SouthDakota), N.A., 517 U.S. 735, 740-741 (1996).
This is not a case like Christensen, in which the Court recently concludedthat a lesser standard of deference applies to an agency opinion issuedin a format (such as correspondence) that "Congress has not authorizedfor that purpose" (1 Kenneth C. Davis & Richard J. Pierce, AdministrativeLaw Treatise § 3.5, at 120 (3d ed. 1994), cited with approval at Christensenv. Harris County, supra, slip op. 11). In the present case, the format selectedby the agency-the formal adoption and issuance of binding interpretive rulings-isprecisely the format "authorized [by Congress] for this purpose."Ibid. And, in this context, this Court has long held that the rulings formallyadopted by the Treasury to interpret the revenue laws of the United Statesin the manner (and format) that Congress has specified are entitled to substantialdeference and are to be upheld if they "implement the congressionalmandate in some reasonable manner." United States v. Correll, 389 U.S.299, 307 (1967). See also Zenith Radio v. United States, 437 U.S. at 450;Pet. 13-19. The contrary ruling of the Federal Circuit in this case conflictswith this established precedent and therefore warrants this Court's review.
Indeed, the decision of the court of appeals in this case conflicts evenwith the lesser standard of deference described by this Court in Christensenfor agency opinions that are adopted in a format that Congress has not specificallyauthorized. The holding of the court below that "no deference"would be accorded to the agency's "binding rulings," and the court'srefusal to consider or address the reasoning set forth in those rulings,cannot be reconciled with the holding in Christensen that even informallystated agency opinions are entitled to "some deference" (slipop. 10, quoting Reno v. Koray, 515 U.S. 50, 61 (1995)), are "entitledto respect" from the courts, and should therefore, at a bare minimum,be reviewed to determine if they have the "power to persuade"(slip op. 11, quoting Skidmore v. Swift & Co., 323 U.S. at 140). Inthe present case, the Federal Circuit held that no consideration whatevershould be given to the content or reasoning of the agency's binding rulings.See Pet. App. 7a; Pet. 11. Because the holding of the Federal Circuit inthis case thus conflicts with all of the possible standards of deferencethat could apply under Christensen or under this Court's pertinent priordecisions, the Court may wish to consider summary reversal in this case.

2. a. Respondent suggests (Br. in Opp. 13-15) that the question whetherdeference is owed to the agency's binding rulings is not properly presentedin this case because that question was raised by the court of appeals onits own motion following this Court's decision in United States v. HaggarApparel Co., 526 U.S. 380 (1999), and was not initially raised or addressedby the parties. Since the question was in fact litigated by the partiesand was in fact decided by the court of appeals in this case, it is unquestionablyproperly presented in the petition in this case. And, since the court ofappeals has selected this case as its vehicle for resolving the questionof the deference owed to the agency's classification rulings, and has infact resolved that question in this case, this case is also the most suitablecase for review of this issue by this Court.2
Respondent errs in stating that any claim of deference has been "waived"(Br. in Opp. 13) because, before the Federal Circuit's decision in Haggarwas reversed by this Court, the government had not pressed for deferenceto the agency's rulings in this case. The United States plainly did notacquiesce in the no-deference standard applied in the Federal Circuit duringthe period that the government was challenging that standard in the Haggarcase. And, following the issuance of this Court's decision upholding thegovernment's position in Haggar, the question of deference as applied inthe specific context of this case was briefed by the parties and decidedby the court of appeals. The court of appeals did not regard the government'sorderly presentation of the deference issue first to this Court in Haggarto represent a "waiver" of the deference question in the presentcase. To the contrary, the court of appeals understood that the questionof deference relates to its judicial responsibility correctly to interpretand apply the laws and therefore understood that it was necessary for thatissue to be addressed and resolved based upon this Court's precedents, includingthe recent decision of this Court in Haggar. See Pet. App. 7a-8a.

b. Respondent is incorrect in asserting (Br. in Opp. 13-16) that the recordin this case is inadequate for plenary review by this Court of the underlyingquestion of statutory interpretation. This case was submitted to the trialcourt on cross-motions for summary judgment. There are no facts in dispute.The ultimate question of law that governs this case-the proper tariff classificationthat applies to respondent's imported articles-requires application to thesefacts of the controlling provisions of the Tariff Act and the relevant interpretationsof those provisions in the binding rulings of the Customs Service. The recordof this case is plainly sufficient for this purpose.
Respondent nonetheless suggests (Br. in Opp. 15) that the rulings on whichthe United States relies are irrelevant in this case because respondenthas challenged duties imposed on its goods and has not brought a challengeto the rulings themselves. Respondent seemingly suggests that, because directjudicial review of the relevant agency rulings was not sought, those rulingshave been made irrelevant in determining the proper application of the tariffclassification provisions to respondent's goods. That proposition, for whichrespondent cites no authority, is obviously flawed.3 The determination ofthe correct meaning of federal statutes is often based upon deference tointerpretive rulings adopted in connection with, and applied first to, individualsother than the party who disputes that interpretation in subsequent litigation.See, e.g., United States v. Correll, 389 U.S. at 306 (applying an agencyruling adopted 27 years before the decision in that case). The failure ofthe court of appeals to follow that settled principle of deference in thiscase warrants review by this Court.




CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted.

SETH P. WAXMAN
Solicitor General





MAY 2000





1 Respondent attempts to create the impression (Br. in Opp. 9) that the"binding rulings" adopted under this statute are not really bindingbecause the regulations caution that they are "subject to modificationor revocation without notice" (19 C.F.R. 177.9(c)) and apply "onlywith respect to transactions involving articles identical" to thoseaddressed in the ruling request (19 C.F.R. 177.9(b)(2)). Respondent failsto cite the general regulatory provision which specifies that, unless modifiedor revoked, the classification rulings adopted by the agency under theseprocedures "may be cited as authority in the disposition of transactionsinvolving the same circumstances." 19 C.F.R. 177.9(a). In stating thatit would give no deference to such classification rulings (Pet. App. 7a),the court of appeals did not question that these rulings were properly adoptedas "binding rulings" under 19 U.S.C. 1502(a).

2 The Federal Circuit denied the government's petition for rehearing enbanc in this case, thus indicating that it will not reconsider this matterwithout the intervention of this Court.

3 Respondent asserts that one of the several agency classification rulingscited by the government in this case was not subject to direct attack whenit was entered because the agency applied that ruling only prospectivelyand allowed the particular merchandise then at issue to enter duty free(Br. in Opp. 16). The present case, however, involves the application ofsuch rulings to different shipments of goods to which the agency's bindingrulings have been applied. Respondent may challenge the application of thoserulings in this case regardless whether or not a direct challenge to eachof the prior rulings would have been possible at the time it was first entered.The regulations expressly state that the agency's rulings may be cited asauthority not only "with respect to the particular transaction"in connection with which they were issued but may also "be cited asauthority in the disposition of transactions involving the same circumstances."19 C.F.R. 177.9(a).

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