International Trade Law News

Published by Jacobson Burton Kelley PLLC

The long-running legal battle between Heartland By-Products, Inc. (Heartland) and the Bureau of Customs and Border Protection (CBP) may finally be over. On July 1, 2004, the U.S. Court of International Trade (CIT) dismissed an action seeking relief brought by Heartland, a Canadian sugar refiner and importer, on grounds that it failed to establish subject matter jurisdiction over the most recent case that had been filed by Heartland. Heartland By-Prods. Inc. v. United States, Ct. Int'l Trade Slip Op. No. 04-78.

In the original case brought in 1999, Heartland sought a pre-importation ruling on the duty rate for its sugar syrup and CBP ruled that a Tariff Rate Quota (TRQ) of 0.35 cent/liter applied. After Heartland started to import syrup at this rate, CBP sent a Revocation of Ruling Letter stating that the TRQ would instead be approximately 10,000 times higher. Heartland challenged this letter, won in court and continued to import the product into the U.S.

CBP appealed the Court's ruling to the Court of Appeals for the Federal Circuit (CAFC) and the CAFC issued a decision in the Government's favor. Heartland immediately stopped importing sugar syrup and filed another action with the CIT (Heartland III) asking for proper disposition of the import entries. The problem was that in the time between the letter challenge and the ruling for the government, CBP had been liquidating Heartland’s
entries, some at the pre-revocation non-TRQ rate and some at the TRQ rate. After the CAFC's decision, CBP began re-liquidating earlier entries at the TRQ rate. Heartland, in
a motion for entry of judgment, challenged Customs’ liquidation of entries made after the CIT's Heartland I decision and before the CAFC’s reversal, arguing that because the CIT's decision was not stayed, the pre-revocation rate applied to merchandise entered during the interim period.

The question then became whether the CIT had jurisdiction over Heartland’s most recent action. Because no protests could be filed by Heartland, and because the government would not agree to suspend liquidation of Heartland’s other entries pending the outcome of Heartland’s challenge, there could be no jurisdiction under 28 U.S.C. § 1581(a). Heartland chose to file an entirely new action seeking relief consistent with the court’s opinion in Heartland III and claiming jurisdiction under section 1581(h), section 1581(i), or alternatively, under the supplemental jurisdiction statute for the federal district courts, 28 U.S.C. § 1367(a). Not surprisingly, the government argued that the CIT did not have jurisdiction to hear this case under any of Heartland’s pleaded bases, and that the only available avenue would be jurisdiction pursuant to section 1581(a).

While the CIT was somewhat sympathetic to Heartland's plight, the court rejected all of the jurisdictional bases claimed by Heartland and dismissed the case. Whether Heartland chooses to proceed on other jurisdictional grounds in the future remains to be seen.