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Filer Code Safe for Now

Customs and Border Protection assigns licensed customhouse brokers unique filer codes. These codes allow the broker to have electronic access to Customs.  The filer code, therefore, effectively permits the broker do business in a modern commercial environment. Absent an active filer code, the broker may as well have to operate using carrier pigeons and smoke signals. Consequently, when CBP threatened to deactivate its filer code, Lizarraga Customs Broker went on the offensive.

The issue reached the Court of International Trade. The procedural status of the case is a little tangled. It appears that plaintiff wanted an injunction to prevent CBP from deactivating its filer code. While that request was pending, the parties submitted their complaint and answer. Eventually, the United States government filed a so-called "Confession of Judgment" in favor of Lizarraga. According to the government, this should have resolved the case because the US has agreed not to suspend the filer code and the plaintiff, therefore, has the relief it was seeking in Court. In other words, the case was mooted. Absent a controversy for which the Court can grant relief, the government argued, the CIT no longer had jurisdiction over the case.

"Not so fast," was Lizarraga's response. While, the immediate threat may have been resolved, the plaintiff maintained that the Court continued to have jurisdiction because it was likely that CBP would start the process over. If there is a likelihood that the allegedly wrongful behavior will be repeated, the mootness doctrine does not apply. Despite that clever argument, the Court dismissed the case.

Two facts supported the Court finding mootness. First, the Court found that it could not decide the issue without a fully developed factual record. Developing that record would require that the case continue. However, because there is no additional relief to be granted, continuing the case would produce nothing but a theoretical answer to a purely legal question. At least I think that is the reasoning. The second point is that counsel for the United States said in Court that brokers are entitled to some procedural protections when their filer code is threatened. Consequently, the Court accepted that as a statement that the US would not repeat its effort to summarily deactivate the filer code. Thus, the requested injunction was moot and the motion denied.

This case may seem technical and legal. The importance of it for brokers, though, is that it represents an on-the-record acknowledgement by Customs that it cannot simply yank a filer code. Rather, the broker is entitled to notice and an opportunity to be heard. Further, the Court was clear that it was not stating that the procedural protections afforded under the Administrative Procedure Act were necessarily sufficient in all cases. Thus, the decision appears to put everyone on notice that the threat of deactivating a filer code is important, subject to the APA, and will be given careful scrutiny by the Court. Brokers should take some solace in that conclusion.

Full post as published by Customs Law on October 14, 2010 (boomark / email).