Issue 305, June 22, 2001
Importers may breathe a little easier following a crucial decision by the U.S. Supreme Court this week. In United States v. Mead Corp., the high court ruled that tariff classification rulings are not entitled to so-called "Chevron Deference" when those rulings are challenged in a court of law. Chevron Deference, which is the highest level of deference a court can give to an administrative agency's actions, requires a court to sustain the action as long as it is reasonable. This is the level of deference typically given to agency regulations that are promulgated through notice-and-comment rulemaking procedures, for example. However, in the Mead case, the court noted that classification rulings are issued from 46 different ports of entry as well as from Customs headquarters, and that they are churned out at the rate of approximately 10,000 per year. The court concluded that such rulings could not have been intended by Congress to have the force of law, and therefore they do not deserve Chevron Deference.

At the same time, the court left open the possibility that classification rulings could be subject to a lesser degree of deference. While the appellate court in Mead had found that such rulings are entitled to no deference at all, the Supreme Court vacated that decision and sent the case back to the lower courts with instructions to determine what level of deference to apply. The courts are to use the standard set out in an earlier case, Skidmore v. Swift, which calls for deference to agency actions based on their degree of persuasiveness. "A classification ruling in this situation may - at least seek a respect proportional to its power to persuade," the court wrote in Mead.

This court decision is good news for importers, because the application of Chevron deference would have made it very difficult to challenge a classification ruling in court; the court would have been required to sustain any ruling as long as it was reasonable. Under the Mead standard, an importer will have a better opportunity to convince a court that a particular ruling is not persuasive and that the court should give it little or no weight in reviewing a classification dispute.

Our contributing writers, Richard H. Abbey and Sarah M. Nappi, are international trade attorneys at Ablondi, Foster, Sobin & Davidow, P.C. in Washington DC and can be reached at 202-296-3355 or rabbey@ablondifoster.com or snappi@ablondifoster.com respectively.

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.