Aircraft Operator Opposes US's Time Extension Bid in Row Over Customs User Fees

The Court of International Trade should not grant the U.S.'s motion seeking an extension of time to file a reply brief in a case over whether commercial airline operator NetJets Aviation failed to collect customs user fees for airline ticket purchases, NetJets argued in a June 24 brief. The plaintiff said that the U.S.'s motion seeking the extension is improperly based on the U.S. District Court for the Southern District of Ohio's stay rules during mediation since NetJets and CBP also have a case in that court that would resolve the CIT case. The plaintiff said a mediation did not result in a stay in the district court and that no stay had been granted there. NetJets did, though, consent to a shorter extension of time so that the U.S. could file its reply (NetJets Aviation, Inc. v. United States, CIT #21-00142).

NetJets is a company that provides services to people who wish to fly in a corporate jet but do not need full-time access to it. A customer may purchase the right to a certain amount of flight time per year in one of the corporate jets that they operate. The law requires that each passenger of a commercial aircraft be assessed customs user fees. However, CBP does not collect these fees directly from the passengers, rather they collect from the entity that issues a ticket for entrance into the United States. The U.S. Court of Appeals for the Federal Circuit held, though, that airlines aren't required to pay uncollected fees since they are primarily the passenger's responsibility.

CBP conducted an audit of NetJet's flights from 2016 and found that the company was indeed a commercial airline and should be collecting the customs user fees. However, since the airline was not collecting them, the customs agency found that NetJets owed zero dollars. NetJets filed its complaint March 26 contesting CBP's determination that it operates commercial aircraft and that it issued tickets to passengers, making it responsible for the fee collection.

The U.S. then filed for an extension "under the auspices" of the Ohio district court since NetJets and CBP are negotiating to potentially end the CIT case as well. Since CIT typically enters a 90-day stay when a case enters mediation, the U.S. said that a 90-day extension is warranted in the present case to "conserve governmental and judicial resources." NetJets disagreed.

"The analogy to this Court’s mediation procedure is inapt," the brief said, citing the district court's supplemental procedures for alternative dispute resolution. "In the Ohio district court where the mediation is actually taking place, a mediation does not result in a stay, and '[a]ll other case activities, including discovery and motion practice, shall go forward during the mediation process.'" Further, the district court has not granted a stay in that matter.

NetJets also said that it would consent to a weeks-shorter extension period. "If the government needs to dedicate its resources solely to the settlement discussions, a short extension would enable it to do so," the brief said. "The parties have negotiated in good faith on both sides, but at this point they have not reached an agreement and it is impossible to predict whether they will reach an agreement. The conduct of NJA and the government in the Ohio district court shows that the parties expect to understand far sooner than 90 days whether a settlement is likely and what acceptable terms would be."