Details of CBP's "Confession" to CIT That It Will Not Deactivate Broker's Entry Filer Code
In an October 4, 2010 decision, Lizarraga Customs Broker v. U.S. et al., the Court of International Trade entered into record U.S. Customs and Border Protection’s “Confession of Judgment” in favor of Lizarraga Customs Broker, in which CBP conceded to not suspend or deactivate Mr. Lizarraga entry filer code for any past fact or event.
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In 2008 CBP Had Acted to Deactivate Broker’s Filer Code Due to Alleged Misuse
In October 2008, CBP had alleged that Lizarraga Customs Broker had been creating entry numbers under its filer code and selling those numbers to unlicensed entities in Mexico. Utilizing a procedure that did not offer any opportunity for appeal, CBP notified Lizarraga that effective November 14, 2008, it would immediately and indefinitely suspend Lizarraga’s entry filer code for such misuse. In its notification, Customs stated that the suspension was intended to prevent Mr. Lizarraga from using his individual filer code to facilitate smuggling of narcotics and to ensure that the filer code was not used by unauthorized users.
Broker Said if Charged with Misuse, He Should Have Opportunity to Respond
Besides being given only a few days notification of the action to be taken, Mr. Lizarraga was not afforded the benefit of a hearing or an opportunity to make a written submission prior to notification of his filer code deactivation due to the alleged misuse.
Said Suspension of Filer Code Would Make it Impossible to Conduct Business
Mr. Lizarraga contended that suspension of his broker’s entry filer code would effectively put him out of business. His arguments were echoed by an amicus curiae brief submitted by the National Customs Brokers and Forwarders Association of America, Inc., which stated that a broker’s “inability to use its entry filer code is nothing less than crippling to a customs broker’s business.”
CBP Agreed to Take No Action Until Preliminary Injunction Decided
On November 13, 2008, Lizarraga filed a motion for a temporary restraining order and preliminary injunction to prevent Customs from suspending or deactivating his entry filer code. Thereafter, CBP agreed to take no action until the Court ruled on the preliminary injunction.
CIT Remanded Issue of Deactivation of Filer Code to CBP
During the next year, various motions and briefings were provided to the Court, and finally on March 26, 2010, the CIT issued an order remanding the matter to CBP solely for the purpose of making a record with respect to Mr. Lizarraga’s claim that the deactivation/suspension of entry filer code would be tantamount to a revocation of his broker’s license.
28 Days After Remand Order, CBP Filed Confession of Judgment
On April 23, 2010, twenty-eight days after the remand order was issued, CBP filed the Confession of Judgment and agreed not to suspend or deactivate Mr. Lizarraga’s entry filer code for any past fact or event. The CIT stated that the Confession of Judgment eliminated the actual or threatened harm facing Mr. Lizarraga.
The Court also stated that Customs’ concession that it will not suspend or deactivate Mr. Lizarraga entry filer code for any past fact or event would remove the threat that his business would be harmed as a result of the findings of an internal investigation.
CIT Satisfied CBP’s Wrongful Behavior Will Not Occur Again
The CIT stated that it had been sufficiently satisfied that CBP’s’ wrongful behavior in attempting to summarily suspend/deactivate a broker’s entry filer code would not recur. The Court stated CBP was well aware that brokers are entitled to the Administrative Procedure Act if their entry filer code is being considered for deactivation. Further, CBP, itself stated to the Court that the any suspension or deactivation of a broker’s entry filer code must be in accordance with 5 USC 558.
(5 USC 558 states in part “Except in cases of willfulness or those in which public health, interest, or safety requires otherwise, the withdrawal, suspension, revocation, or annulment of a license is lawful only if, before the institution of agency proceedings therefor, the licensee has been given (1) notice by the agency in writing of the facts or conduct which may warrant the action, and (2) opportunity to demonstrate or achieve compliance with the lawful requirements.”)
(See ITT’s Online Archives or 10/05/10 news, 10100529, for ITT’s initial announcement of this CIT ruling. See ITT’s Online Archives or 05/06/09 news, 09050620, for BP summary of CBP motion opposing the application for a preliminary injunction, and ITT’s Online Archives or 05/18/09 news, 09051820, for BP summary of NCBFAA brief opposing CBP’s deactivation of broker’s filer code due to misuse.)
Slip Op 10-113(dated 10//04/10)