Issue 265, August 1, 2000
If you want to challenge a Customs classification ruling in court, how difficult should it be for you to prove that the ruling is incorrect? The U.S. Supreme Court is considering this question now, in a debate between the government and an importer over the level of "deference" that courts should give to such rulings. The higher the level of deference, the more difficult it is for an importer to persuade the court that the ruling should be overturned. Under the current legal standard, classification rulings are given no deference. The importer still has the burden of proof in a court case, but the fact that Customs issued a ruling to the importer on the matter at issue carries no weight with the court when it is considering the matter.

In the case before the Court, United States v. Mead Corporation, the government is asking the Supreme Court to give so-called Chevron deference to Customs' tariff classification rulings. Chevron deference, named for an earlier court case, is the highest level of deference a court can give to agency actions, and prevents the court from overturning the agency action unless it finds that the action was unreasonable. As one Supreme Court Justice opined, Chevron establishes the principle that "a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of the agency." In a case last year (United States v. Haggar Apparel Co.), the Supreme Court ruled that Customs regulations, which like other agency regulations are created with public input through "notice and comment" proceedings, are entitled to Chevron deference. The government now argues that this standard should also apply to tariff classification rulings, which are issued to individual importers on a case-by-case basis without the benefit of notice and comment proceedings.

In weighing this issue, the Court could also decide that the rulings are entitled to some deference, but not necessarily Chevron deference. An intermediate standard, known as Skidmore deference (named after another court case), for example, would require courts to respect Customs' rulings, but only to the extent they are found to be persuasive. This would strike a balance between the current no-deference standard and the Chevron deference standard advocated by the government.

However, importers would be best off if the Court preserves the status quo. If the Court rules that either Chevron or Skidmore deference applies to Classification rulings, it will be harder to win a court challenge against Customs in the future.

Our contributing writers, Richard H. Abbey and Sarah M. Nappi, are Partners in the Customs and international trade firm of Ablondi, Foster, Sobin & Davidow, p.c. in Washington D.C., and can be reached at (202) 296- 3355 or email: Richard. H. Abbey, Sarah M. Nappi.

Please note that due to the complex nature of the subject matter, Danzas AEI cannot be responsible for actions taken by the reader in reliance on the information contained herein without prior consultation with Danzas AEI.