United States v. Mead Corp.
533 U.S. 218 (2001)

  • The US Customs Service has the authority to set import duties and tariffs based on regulations set by the Secretary of the Treasury.
  • The Secretary issued a regulation that said that any port-of-entry Customs’ office can issue a “ruling letter” to set the tariff for a particular category of imports.
  • Mead was a company that made calendars and day-planners. These were initially considered to be duty-free items until Customs Headquarters issued a “ruling letter” that reclassified them as diaries, which made them subject to a 4% tariff. Mead sued in the Court of International Trade.
    • Mead argued that Customs should not be allowed to change their tariff classifications without public notice and input, like they would have to for changing a regulation.
    • “Ruling letters” are very informal. There was no notice and comment period. This was a decision that Customs made directly to Mead. Other companies might get their day-planners categorized differently. It depended on the whim of the specific customs’ examiner that day.
      • There was no due process, and no explanation or reasoning given in the ruling letter.
  • The Court of International Trade found for Customs in summary judgment. Mead appealed.
    • The Court found that based on Chevron U.S.A. Inc. v. Natural Resources Defense Council (467 U.S. 837 (1984)), they were to give deference to Agency actions, as long as the actions were reasonable. In this case, Custom’s decision was reasonable, so the Court had no authority to overturn it, even if they disagreed with it.
  • The Appellate Court reversed. Customs appealed.
    • The Appellate Court found that “ruling letters” should not be treated like regulations because they are not preceded by notice and comment as under the Administrative Procedure Act, do not carry the force of law, and are not intended to clarify importers’ rights and obligations beyond the specific case. Therefore, the Court is not required to give them Chevron deference, like they are required to give to regulations.
  • The US Supreme Court affirmed.
    • The US Supreme Court found that the courts do not have to give judicial deference to Customs tariff classification rulings.
    • The Court looked to Chevron, and found that the courts are to give deference to Administrative Agencies, “when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority.”
      • “Chevron should apply only where Congress would want Chevron to apply.”
      • The Agency wasn’t doing anything that would appear to be a rulemaking, therefore they aren’t entitled to the deference that a normal rulemaking decision would have.
    • The Court found that in this case there was no indication that Congress intended Custom’s tariff classification decision to carry the rule of law, therefore deference is not required.
      • However, the Court noted that based on Skidmore v. Swift (323 U.S. 134 (1944)), “the ruling is eligible to claim respect according to its persuasiveness.”
        • Basically, the courts should consider the Agency’s position as the advice of an expert. Not controlling, but helpful.
    • In a dissent, it was argued that the regulation game from the head of the US Customs Service when he issues the regulation saying that individual Customs Offices could issue “ruling letters.” The majority would have the Agencies issued official rulemakings for everything, and that’s a waste of time and paper. It would be impossible for an Agency to have defined everything in a formal rulemaking process.
      • In addition, the dissent suggested that Chevron deference should be a simple yes-no question. The majority blurs the line into a ‘totality of the circumstances’ approach which makes it a much more complicated legal question.
  • Basically, this case said that only things that go through the rulemaking process or are signed by the head of the Agency are entitled to full (Chevron) deference, while lower decisions are only entitled to partial (Skidmore) deference.
    • But, it doesn’t matter if it is a legislative rule or just an interpretive rule. The important thing is whether the ruling was meant to have ‘the force of law’.