CAFC Rules 2007 Proclamation Change for Chapter 95 Festive Articles is Not Reviewable

In Michael Simon Design, Inc., Tru 8 d/b/a Arriviste, Inc., and Target Stores (a division of Target Corporation), v. U.S., the Court of Appeals for the Federal Circuit affirmed the Court of International Trade’s refusal to review a new Chapter 95 note added to the U.S. Harmonized Tariff Schedule by Presidential Proclamation.

Based on the advice of the International Trade Commission, Proclamation 8097 amended the HTS for a number of World Customs Organization-recommended changes, effective February 3, 2007.

One of the amendments added a new Note 1(v) to HTS Chapter 95, to exclude tableware, kitchenware, toilet articles, carpets, and other textile floor coverings, apparel, bed linen, table linen, toilet linen, kitchen linen and similar articles having a utilitarian function from classification in Chapter 95 as festive articles.

Michael Simon Design et. al., invoking the Administrative Procedure Act, allege that they have been adversely affected by the ITC’s recommendation that the President implement Note 1(v). They asserted the Court had jurisdiction to entertain their action pursuant to 28 USC 1581(i), and that the ITC’s recommended amendments to HTS Chapter 95 violated 19 USC 3005.

However, the CAFC ruled that under Section 3005, the ITC plays only an advisory role by preparing recommendations that the President is free under Section 3006 to accept or reject. The Court added that because the ITC’s recommendations were not “final”, they were not subject to judicial review under the APA.

The CAFC also ruled that there is nothing in 19 USC 3006(a) that makes the President’s authority to act contingent on the ITC’s compliance with Section 3005’s substantial rate neutrality requirement. Further Section 3006(a) does not make rate neutrality a condition of the President’s action.

Lastly, the CAFC cited United States v. George S. Bush & Co., a case decided by the Supreme Court in 1940, in which the Supreme Court held that Congress’ delegation of power to the President to modify tariff rates pursuant to a recommendation of the Tariff Commission ¹ had the effect of barring judicial review, not withstanding a claim that the Commission’s recommendation was legally flawed.

The CAFC found the process in the 1940 case to be strikingly similar to the Proclamation process utilized in current law, and held that the Presidential Proclamation was not reviewable based on alleged legal flaws in the underlying recommendations, thus further confirming that the CIT’s decision was correct.

¹ Later the International Trade Commission

(See ITT’s Online Archives or 01/03/07 news 07010300, for BP summary announcing the signing of the proclamation. See ITT’s Online Archives or 07/24/09 news 09072410, for BP summary of CIT Dismissal of Challenge by Michael Simon Design, Inc., and Target Stores et al. Slip Op 09-75.)

CAFC decision 09-1571 (dated 06/18/10)