Pillsbury Co. v. United States

Slip Op. 05-51

United States Court of International Trade

THE PILLSBURY COMPANY,

Plaintiff,

v. Before: Pogue, Judge

Court No. 03-00096
UNITED STATES,

Defendant.

[Plaintiff’s Motion for Summary Judgment granted; Defendant’s
Cross-Motion for Summary Judgment denied.]

April 19, 2005

Neville Peterson LLP (John M. Peterson, Maria E. Celis, Margaret R.
Polito, and George W. Thompson) for The Pillsbury Company.

Peter D. Keisler, Assistant Attorney General, Barbara S. Williams,
Attorney in Charge, International Trade Field Office, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice
Chi S. Choy, Of Counsel, Office of Assistant Chief Counsel, U.S.
Customs and Border Protection, for Defendant.

Pogue, Judge: Plaintiff, The Pillsbury Company (“Pillsbury”),

challenges a decision by the United States Bureau of Customs and

Border Protection (“Customs” or “Defendant”) classifying certain

imports of ice cream. Customs classified Plaintiff’s imports under

subheading 2105.00.20 of the Harmonized Tariff Schedule of the

United States (1999) (“HTSUS”) dutiable at a rate of 51.7 cents per

kilogram plus 17.5% ad valorem. Pillsbury asserts that Customs
Court No. 03-00096 Page 2

should have classified these imports under subheading 2105.00.10,

HTSUS, and assessed a 20% ad valorem duty.

Before the Court are cross-motions for summary judgment. As

the parties have agreed to all the essential facts, the issue

presented is a pure question of law, rendering this case ripe for

summary judgment. Brother Int’l Corp. v. United States, 26 CIT

867, 869, 248 F. Supp. 2d 1224, 1226 (2002); USCIT R. 56©). The

Court has exclusive jurisdiction over this question pursuant to 19

U.S.C. § 1514 (2000) and 28 U.S.C. § 1581(a). For the reasons set

forth below, the Court finds that Customs should have classified

the imports in question under subheading 2105.00.10, HTSUS, and

therefore grants summary judgment for the Plaintiff.

I. BACKGROUND

A.

As part of the Uruguay Round of the General Agreement on

Tariffs and Trade (“GATT”), the member states of the World Trade

Organization (“WTO”)1 agreed to abolish quantitative limitations on

imports of agricultural products. WTO Agreement on Agriculture,

art. 4(2)2; see also 7 U.S.C. § 624(f), 7 C.F.R. § 6.20 (2005).

1
The World Trade Organization (WTO) was created as part of the
Uruguay Round and replaced the General Agreement of Tariffs and
Trade (“GATT”).
2
The Agreement can be found at:
http://www.wto.org/english/docs_e/legal_e/14-ag.pdf (last
accessed April 11, 2005).
Court No. 03-00096 Page 3

Nevertheless, the Uruguay Round did permit member states to adopt

tariff rates that are contingent on the volume of imports of a

certain product, often referred to as tariff rate quotas (“TRQs”).

Under the TRQ regime, the tariff rate is adjusted depending on the

volume of imports of a given product into the United States during

a certain year. TRQs are a departure from the absolute quota

restrictions under the GATT because nations are not allowed to set

specific limits on imports – rather, member states are only allowed

to increase tariff rates for imports after certain levels of

imports have been reached. To take a simplified version of the

facts in this case as an example of a TRQ, the United States may

agree to allow 5,191,031 liters of ice cream into the United

States, at a tariff rate of 20% ad valorem, and then, after that

quota level has been reached, assess a tariff rate of 51.7 cents

per kilogram plus 17.5% ad valorem for all subsequent entries.3

3
This is one example of a TRQ. The United States’ TRQs can
be classified into three general categories: (1) minimum access
provisions, (2) maximum access provisions, and (3) licensing
provisions. See Def.’s Mem. Supp. Cross-Mot. Sum. J. & Opp’n Pl.’s
Mot. Sum. J. (“Def.’s Mem.”) at 7. Minimum access provisions
establish that an aggregate quantity of a classified product "shall
not exceed" a certain quantity. See e.g., Chapter 20, Additional
Note 4, HTSUS; Chapter 18, Additional U.S. Note 2, HTSUS. Maximum
Access provisions provide that the aggregate quantity of a product
"shall not exceed" the quantities specified for each state or group
of states. See Chapter 24, Additional U.S. Note 5, HTSUS.
Licensing provisions require import licenses for specified
products. See Chapter 4, Additional Note U.S. 19, HTSUS; see also
David W. Skully, Economics of Tariff-Rate Quota Administration,
Technical Bulletin No. 1893, available at
http://www.ers.usda.gov/publications/tb1893/tb1893.pdf (April 2001)
(last accessed April 11, 2005) (setting out categories of
Court No. 03-00096 Page 4

The United States, a member state of the WTO, has adopted many

TRQs.

Before the Uruguay Round began, Congress expressed the

negotiating objectives of the United States: to develop “(1) more

open, equitable, and reciprocal market access; (2) the reduction or

elimination of barriers and other trade-distorting policies and

practices; and (3) a more effective system of international trading

disciplines and procedures.” 19 U.S.C. § 2901(a). To this end,

Congress granted the President the authority to “enter into trade

agreements with foreign countries; and [subject to certain

limitations proclaim[4]] -- (I) such modification or continuance of

any existing duty, (ii) such continuance of existing duty-free or

excise treatment, or (iii) such additional duties; as he determines

to be required or appropriate to carry out any such trade

agreement.” 19 U.S.C. § 2902 (emphasis added).

Specifically, with regard to the provisions at issue in this

case, during the Uruguay Round negotiations, the United States

agreed to certain commitments with regard to the importation of ice

cream. This agreement is recorded as “Schedule XX” (a schedule

listing the United States’ tariff concessions for numerous

administration methods of TRQs in the WTO as "applied tariffs,"
"first-come, first-served," "licenses on demand," "auctioning,"
"historical," "state trader producer group," "mixed" and "other or
not specified.").
4
The term “proclaim” means to amend the tariff laws of the
United States. See 19 U.S.C. § 3004©).
Court No. 03-00096 Page 5

products). See Schedule XX -- United States of America, annexed to

the Marrakesh Protocol to the General Agreement on Tariffs and

Trade 1994 ("Schedule XX"). Pursuant to his authority granted by

Congress, i.e., 19 U.S.C. § 2902, President Clinton proclaimed

portions of Schedule XX into United States law. See Presidential

Proclamation 6763 of Dec. 23, 1994, 60 Fed. Reg. 1007, 1131 & 1137

(Jan. 4, 1995). Nearly simultaneously, Congress expressed its

support for the United States’ commitments under Schedule XX by

providing the President specific authority to: (i) proclaim

Schedule XX into U.S. law;5 (ii) proclaim future agreements to

5
19 U.S.C. § 3521(a)(1)-(3). Title 19 Section 3521
provides:

(a) In general
In addition to the authority provided by [19 U.S.C. §
2902], the President shall have the authority to
proclaim--
(1) such other modification of any duty,
(2) such other staged rate reduction, or
(3) such additional duties,
as the President determines to be necessary or
appropriate to carry out Schedule XX.

(b) Other tariff modifications
Subject to the consultation and layover requirements of
[19 U.S.C. § 3524], the President may proclaim-
(1) the modification of any duty or staged rate
reduction of any duty set forth in
Schedule XX if--
(A) the United States agrees to such
modification or staged rate reduction in
a multilateral negotiation under the
auspices of the WTO, and
(B) such modification or staged rate
reduction applies to the rate of duty on
an article contained in a tariff category
Court No. 03-00096 Page 6

reduce duties under the “auspices of the WTO”;6 and (iii) to

correct “technical errors in Schedule XX or to make other

rectifications to the Schedule.”7 See H.R. Rep. No. 103-826, pt.

1, at 28-29 (1994); S. Rep. No. 103-412, at 18 (1994).8 As part of

these concerted actions of Congress and the President, the United

States adopted a TRQ for ice cream codifying Schedule XX as Note 5

to Chapter 21, HTSUS (“Note 5”).9

Note 5 provides:

that was the subject of reciprocal duty
elimination or harmonization negotiations
during the Uruguay Round of multilateral
trade negotiations, and
(2) such modifications as are necessary to
correct technical errors in Schedule XX
or to make other rectifications to the
Schedule.
6
19 U.S.C. § 3521(b)(1)(A).
7
19 U.S.C. § 3521(b)(2); see also Presidential Proclamation
7011 of June 30, 1997, 62 Fed. Reg. 35,909 at para. 3 (July 2,
1997). Although 19 U.S.C. § 3521 was passed after the President
proclaimed Note 5, 19 U.S.C. § 3521 would have required the
President to amend Note 5 to conform with Schedule XX if Note 5 had
not already conformed to Schedule XX.
8
Nevertheless, although Note 5 became part of United States
law, the exact language of Note 5 was never voted on by the House
and the Senate nor presented to the President for his signature.
Cf. U.S. Const. art 1 sec. 7.
9
Although Customs initially maintained that Schedule XX and
Note 5 conflicted, Customs now maintains that “there is no
substantive conflict” between Note 5 and Schedule XX. Def.’s Supp.
Mem. Resp. Chambers’ Letter Dated Jan. 25, 2005, (“Def.’s Supp.
Mem.”) at 3.
Court No. 03-00096 Page 7

The aggregate quantity of ice cream entered under
subheading 2105.00.10 in any calendar year shall
not exceed 5,191,031 liters (articles the product
of Mexico shall not be permitted or included in
the aforementioned quantitative limitation and no
such articles shall be classifiable therein).

Of the quantitative limitations provided for in
this note, the countries listed below shall have
access to not less than the quantities specified
below:
Quantity
(liters)
Belgium 922,315
Denmark 13,059
Jamaica 3,596
Netherlands 104,477
New Zealand 589,312

If ice cream imports fall within these limits (i.e., “in-quota”),

Customs classifies the entries under subheading 2105.00.10 and

assesses a 20% ad valorem duty rate. Subheading 2105.00.10, HTSUS.

Alternatively, if the quota level is exhausted (i.e., “over-

quota”), Customs classifies the entries under subheading

2105.00.20, HTSUS, and assesses a duty of 51.7 cents per kilogram

plus 17.5% ad valorem. Subheading 2105.00.20, HTSUS. As is

apparent in the language quoted above, Note 5 further provides that

enumerated nations, i.e., those specifically mentioned, shall have

access to a specified volume of imports regardless of how many

liters of ice cream are imported from other nations. Additionally,

because the amounts specifically allocated to the enumerated

nations total 1,632,759 liters, far less than aggregate level
Court No. 03-00096 Page 8

allowable of 5,191,031 liters, the language implies that there

exists a “common pool” which may be used by all WTO nations --

including the enumerated nations if they have exceeded their

minimum access quotas. For imports implicating the “common pool,”

Customs allocates the quota on a first-come-first-served basis.

See 19 C.F.R. § 130 et seq.

What is unclear from Note 5's language, and what is at issue

here, is whether ice cream imported from nations, other than those

specifically listed, may qualify under the unused portions of the

enumerated nations’ allotments at the expiration of the year. To

wit, whereas Note 5 is clear that the enumerated nations’ imports

may invade the “common pool” if the “common pool” has not been

exhausted, the parties in this case disagree as to whether all

other nations may invade the enumerated nations’ unused allotments.

B.

Plaintiff is an importer of ice cream products. On March 27,

1999, an ice cream factory exploded in Le Mars, Iowa. That factory

had been producing Haagen-Dazs ice cream for Pillsbury. Pl.’s Mem.

Points and Authorities R. 56 Supp. Mot. Summ. J. at 2 (“Pl.’s

Mem.”). As a result of the explosion, Pillsbury did not have

sufficient production in the United States to meet demand.

Consequently, in the spring of 1999, Pillsbury imported ice cream
Court No. 03-00096 Page 9

from its Haagen-Dazs factory in France in order to meet its

production needs. Id.

At first, Customs classified Pillsbury’s entries under

subheading 2105.00.10, HTSUS. However, commencing in July, 1999,

3,558,272 liters of the “common pool” had been imported and Customs

then assessed Pillsbury’s imports at the over-quota rate. When the

quota year ended on December 31, 1999, the enumerated nations had

not used their allotments. In fact, Belgium, Denmark, Jamaica, and

New Zealand had shipped no ice cream to the United States during

1999, and the Netherlands had shipped only 82 liters of ice cream.

See Pl.’s R. 56 Statement Material Facts Not in Dispute at paras.

13, 14; Def.’s Pl.s Stat. Mat. Facts at paras. 13, 14.

Consequently, Customs permitted only 3,558,354 liters of ice cream

to enter under the lower tariff rate. Given this short-fall,

Pillsbury made a timely request to have certain of its over-quota

imports reliquidated at the lower tariff rate. Customs did not

respond to Pillsbury’s request and, after 30 days, the protest was

deemed denied. See 19 C.F.R. § 174.22(d). Pillsbury timely

sought judicial review of Customs’ denied protest.

II. STANDARD OF REVIEW

Although the parties disagree over the proper standard of

review, this question is squarely addressed by the Supreme Court’s

decisions in United States v. Haggar Apparel Co., 526 U.S. 380
Court No. 03-00096 Page 10

(1999) and United States v. Mead, 533 U.S. 218 (2001). In Haggar

Apparel Co., 526 U.S. at 386-89, the Supreme Court held that when

Commerce adopts regulations pursuant to notice and comment rule

making, the Court should accord those regulations deference

pursuant to the Supreme Court’s decision in Chevron U.S.A., Inc. v.

National Resources Defense Council, Inc., 467 U.S. 837, 842-43

(1984) (“Chevron deference”). However, when Customs has not issued

a regulation adopted by notice and comment rule making, its

interpretation of an ambiguous statute is entitled to deference

only commensurate with its power to persuade (“Skidmore

deference”). See Mead, 533 U.S. 218, 235 (2001) (citing Skidmore

v. Swift & Co., 323 U.S. 134, 140 (1944)).

Customs argues three theories as bases for its claim of

entitlement to Chevron deference: (1) one of its regulations, 19

C.F.R. § 133.2(c), is at issue, (2) the absence of any regulations

supporting Pillbury’s position, and (3) the United States Trade

Representative’s (“USTR”) role in proclaiming modifications to the

HTSUS. The Court disagrees that any of these theories implicate

Chevron deference.

First, 19 C.F.R. § 132.2(c) states that the “terms of a

Presidential proclamation, Executive order, or legislative

enactment establishing a quota, and the regulations implementing

the quota, must be strictly complied with.” According to Customs,

this regulation requires that unless the statute clearly permits
Court No. 03-00096 Page 11

the reallocation of unused quotas, then reallocation is forbidden

under its regulations.10 Alternatively, Customs argues that this

regulation supports its interpretation of Note 5, and that

specifically its determination as to whether Note 5 is ambiguous or

unambiguous is entitled to deference. Customs’ analysis, however,

does not follow established administrative law.

The HTSUS is, of course, a statute. An agency’s

interpretation of a statute is entitled to deference only after the

Court, reviewing the statute de novo (commonly referred to as

Chevron Step I), finds that there is a statutory ambiguity or gap.

Gen. Dynamic Land Sys. v. Cline, 540 U.S. 581, 600 (2004) (“Even

for an agency able to claim all the authority possible under

Chevron, deference to its statutory interpretation is called for

only when the devices of judicial construction have been tried and

10
This argument entirely begs the question. Customs must
strictly comply with Note 5, but with what meaning applied to Note
5? Certainly regulations are the creatures of an agency’s own
creation, and agency interpretations of their regulations may be
entitled to deference. Auer v. Robbins, 519 U.S. 452, 461-62
(1997), Cathedral Candle Co. v. United States ITC, slip op. 04-1083
(Fed. Cir. March 9, 2005); but cf. Keys v. Barnhart, 347 F.3d 990,
993 (7th Cir. 2003) (Posner, J.) (“Probably there is little left of
Auer.”). But this is true only so long as the “interpretation” is
not wholly erroneous. Auer, 519 U.S. at 461. Here, the cited
regulation in no way leads to the interpretation Customs places on
it – it does not mention reallocation or in any way suggest the
resolution of this matter. Deferring to Customs’ interpretation
here would be tantamount to giving deference solely to an agency’s
litigation position. Moreover, the Court’s conclusion is bolstered
by the fact that it does not appear that Customs is even entitled
to promulgate regulations entitled to deference in this matter.
See infra at note 19.
Court No. 03-00096 Page 12

found to yield no clear sense of congressional intent.”), Barnhart

v. Sigmon Coal Co., 534 U.S. 438, 462 (2002) (“In the context of an

unambiguous statute, we need not contemplate deferring to the

agency's interpretation.”); see also EEOC v. Arabian Am. Oil Co.,

499 U.S. 244, 260 (Scalia, J. concurring) (rejecting the majority’s

characterization that the EEOC’s decision be viewed under Skidmore

rather than Chevron deference, but noting that the presumption

against extraterritoriality trumps Chevron deference).11 In

conducting this initial de novo review, the Court will look to the

plain language of the statute, grammatical, and substantive canons

of statutory interpretation, Barnhart, 534 U.S. at 452, DeBartolo

Corp. v. Florida Gulf Coast Bldg. & Constr. Trades Council, 485

U.S. 568, 575 (1988), the statute’s legislative history, Rust v.

Sullivan, 500 U.S. 173, 186 (1991), and all other relevant tools of

statutory construction, FDA v. Brown & Williamson Tobacco Corp.,

529 U.S. 120 (2000), to determine whether Congress has spoken on

the question. Whether an agency, by regulation or otherwise, deems

a statute to be ambiguous or unambiguous, or should be strictly

construed, is immaterial to this inquiry and Customs is not

entitled to deference on this question.

11
An agency’s authority to give meaning to a statute is also
only proper where Congress has so delegated that authority to an
agency by leaving a statutory gap or ambiguity. The Court must
first assure itself that Congress has delegated that task to an
agency before any deference to that agency is warranted.
Accordingly, this review is conducted de novo. See Chevron, 467
U.S. at 843-44.
Court No. 03-00096 Page 13

Second, Customs contends that the absence of regulations

supporting Plaintiff’s position substantiates its position, i.e.,

this absence demonstrates that Customs has not adopted Pillsbury’s

interpretation.12 Customs further argues that this “absence” of

regulations is entitled to Chevron deference.

Again, Customs’ analysis is does not follow established

jurisprudence. Non-existent regulations are not “promulgated”

through notice and comment rule making, Haggar Apparel Co., 526

U.S. at 388, nor are there “any other circumstances reasonably

suggesting that Congress ever thought [of Customs] as deserving the

deference claimed for them here.” Mead, 533 U.S. 218, 231. Nor

do non-existent regulations offer any explanations of the law or

reasoning for their legal conclusions, and consequently, non-

existent regulations could not have the “power to persuade,” Id.

at 233.13 Accordingly, this “absence” of regulations is entitled

to no deference.

Customs’ third argument has also been rejected by the United

States Supreme Court. Despite the fact that USTR and the

12
Customs contends that if Pillsbury were correct, Customs
would have a procedure for reallocation. The Court finds this
argument curious in the light of 19 C.F.R. § 132.13(a)(1)(i)
(establishing a procedure for refunding money paid at the over-
quota rate) which could be employed in this case.
13
Of course, had Customs promulgated regulations, which
occupied the interpretative field of this provision, the Court’s
analysis would be different. But when Customs has issued no
regulations directing the enforcement of this provision, Chevron
deference cannot be warranted.
Court No. 03-00096 Page 14

International Trade Commission (“ITC”) have extensive authority to

proclaim changes directly to the tariff schedule, Congress did not

entrust them with the authority for administering the adopted

tariff schedules. Haggar Apparel Co., 526 U.S. at 388-89.

Accordingly, it is for the “Customs Service, not for USTR or ITC,

to issue regulations entitled to judicial deference in the

interpretation of the tariff schedules.” Id. Customs may not ride

the coat-tails of USTR and ITC in claiming deference because of

other agencies’ authority.

Accordingly, Customs is not entitled to Chevron deference

here. Nor is Customs entitled to Skidmore deference. Customs did

not issue a Headquarters Letter Ruling and has provided no

justification, outside of its briefs, for its actions. Moreover,

Customs’ only related Letter Ruling contradicts its decision in

this case. Headquarter Ruling Letter 962316 (Nov. 5 1998)

(recognizing that “minimum access” guarantees do not establish

limits on importation). Therefore, no deference will be granted,

and the Court will consider the question presented de novo.

III. DISCUSSION

The question presented is whether Customs must reallocate

the enumerated nations’ unused allotments. Consequently, at

issue is the proper meaning of Note 5 to Chapter 21:
Court No. 03-00096 Page 15

The aggregate quantity of ice cream entered under
subheading 2105.00.10 in any calendar year shall
not exceed 5,191,031 liters (articles the product
of Mexico shall not be permitted or included in
the aforementioned quantitative limitation and no
such articles shall be classifiable therein).

Of the quantitative limitations provided for in
this note, the countries listed below shall have
access to not less than the quantities specified
below:

Quantity
(liters)
Belgium: 922,315
Denmark: 13,059
Jamaica: 3,596
Netherlands: 104,477
New Zealand: 589,312

The issue that gives rise to this dispute centers around the word

“access.” More specifically, the question centers on what type of

“access” is implicated. Customs essentially argues that there is

an implied term “exclusive” before the word “access,” i.e., that

“the countries listed below shall have [exclusive] access to the

quantities listed below.” Pillsbury disagrees essentially

asserting that the implied term is “the right of first” access,

i.e., that “the countries listed below shall have [the right of

first] access to the quantities listed below.” As discussed above,

Note 5 implements the United States’ international commitments

under Schedule XX. See discussion on the history of this provision

supra at 4-6. Read in light of Schedule XX, the meaning of Note 5

is unambiguous. Consequently, the Court answers this question by

reference to Schedule XX.
Court No. 03-00096 Page 16

A.

In this case, two interrelated bedrock principles of statutory

construction strongly counsel in favor of using Schedule XX as an

aid in construing Note 5: the canon of constitutional avoidance and

the Charming Betsy canon.

As Customs has conceded, the relevant statutory authorizations

permitted the President to proclaim modifications to the HTSUS to

bring the HTSUS in accord with the United States’ international

legal obligations stated under Schedule XX. See 19 U.S.C. §§ 2902

& 3521. If Note 5 differs from Schedule XX without good cause, the

President’s actions would have been ultra vires, i.e., exceeded his

authority, and therefore his actions would have been unlawful as

not in accordance with Congressional intent.

This proposition is, in part,14 driven by the fact that the

provisions of the HTSUS are “statutory provisions of law.” 19

U.S.C. § 3004(c). Accordingly, any amendments thereto must conform

14
The Court notes that even if the HTSUS were a regulation, the
President could still only proclaim that which he was instructed to
proclaim by Congress. The only difference is the degree of
discretion afforded to the President. If the HTSUS were only a
regulation, Congress need only enunciate an intelligible principle,
J.W. Hampton Jr., & Co. v. United States, 276 U.S. 394, 406-410
(1928); however, given that the HTSUS is statutory law,
constitutionally, the President may be accorded only limited
discretion. Accordingly, any attempt to read broad discretion into
Congress’ authorization would be improper. See sources cited infra
at note 15. This is especially true here where Customs may have
discretion, through the promulgation of regulations, in the
execution of the law proclaimed by the President, see Haggar
Apparel Co., 526 U.S. at 388, creating the possibility of two
layers of deference.
Court No. 03-00096 Page 17

with the strictures of Article I Section 7 of the Constitution so

long as the amendments can be considered “law-making”.15 As the

Supreme Court found in Field v. Clark, certain changes to a

statutory scheme are not considered “law-making” when Congress

delegates the President the authority to make changes to the law

such that: (1) those changes are necessary to accommodate to future

contingent (international) developments, and (2) where Congress has

specifically instructed the President on how, (3) and when, the law

is to be amended, leaving little to the President’s discretion.

Field v. Clark, 143 U.S. at 693-94; see also Clinton v. City of New

York, 524 U.S. 417, 442-45 (1998); but cf. Terran v. Secretary of

HHS, 195 F.3d 1302, 1313 (Fed. Cir. 1999) (suggesting in dicta that

this may extend to domestic issues as well). This principle was

reaffirmed in the Supreme Court’s decision in Clinton v. City of

New York, 524 U.S. 417 (1998) (invalidating an unconstitutional

delegation of lawmaking authority).

15
See, e.g., Clinton v. City of New York, 524 U.S. 417, 442
(1998) (invalidating an unlawful delegation of lawmaking power),
Field v. Clark, 143 U.S. 649, 693 (1898), Star-Kist Foods, Inc. v.
United States, 47 CCPA 52, 60, 275 F.2d 472, 380 (1959); see also
INS v. Chadha, 462 U.S. 919, 951 (1983); Youngstown Sheet & Tube
Co. v. Sawyer, 343 U.S. 579, 587 (1952); US Const. art. I sec. 7
(“Every Bill which shall have passed the House of Representatives
and the Senate, shall, before it becomes a Law, be presented to the
President.”).
The Court further notes that even at the apex of the
President’s inherent authority, the Court would only give effect to
an executive agreement by the terms stated in the agreement. See
Am. Ins. Ass’n v. Garamendi, 539 U.S. 396, 417 (2003) (refusing to
preempt state law on the basis of an executive agreement because
the agreement did not contain a preemption clause).
Court No. 03-00096 Page 18

The Court need not dwell on this issue because Schedule XX,

interpreted in light of the plain language of Note 5, contains no

ambiguity regarding the issue presented here. See infra at §

III.c. Therefore, as counseled by the canon of constitutional

avoidance, the Court will give effect to that reading of Note 5

which is implicated by Schedule XX. Clark v. Martinez, 125 S. Ct.

716, 724 (2005) (“It is a tool for choosing between competing

plausible interpretations of a statutory text, resting on the

reasonable presumption that Congress did not intend the alternative

which raises serious constitutional doubts.”), DeBartolo Corp. v.

Florida Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568,

575 (1988); Industrial Union Dep’t, AFL-CIO v. Am. Petroleum Inst.,

448 U.S. 607, 646 (1980) (overturning the Secretary of Labor’s

interpretation of a statute because a “construction of the statute

that avoids this kind of open-ended grant should certainly be

favored.”) (opinion of Justice Stevens).

This proposition is reinforced by the Charming Betsy canon of

statutory construction. “For two centuries [courts] have affirmed

that the domestic law of the United States recognizes the law of

nations.” Sosa v. Alvarez-Machain, 124 S. Ct. 2739, 2765 (2004).

One important way the courts have recognized this principle is

through the invocation of the Charming Betsy canon of statutory

construction. Appropriately named after the Supreme Court’s

decision in Murray v. The Schooner Charming Betsy, 6 U.S. (2
Court No. 03-00096 Page 19

Cranch) 64 (1804)), the Charming Betsy canon holds that “an act of

congress ought never be construed to violate the law of nations, if

any other possible construction remains.” Charming Betsy, 6 U.S.

(2 Cranch) at 118. In this case, the United States has accepted

obligations to permit specified levels of ice cream into the United

States at certain duty levels under Schedule XX. To suggest that

there is a conflict between Schedule XX and Note 5 would offend the

well settled principle that the abrogation of international

agreements by implication is strongly disfavored. See e.g.,

Weinberger v. Rossi, 456 U.S. 25, 35 (1982) ("affirmative

congressional expression [is] necessary to evidence an intent to

abrogate provisions in 13 international agreements"), United States

v. Lee Yen Tai, 185 U.S. 213, 221 (1902) (“the purpose by statute

to abrogate a treaty or any designated part of a treaty . . . must

not be lightly assumed, but must appear clearly and distinctly from

the words used in the statute"), Roeder v. Islamic Republic of

Iran, 333 F.3d 228, 237-38 (D.C. Cir. 2003) (neither a treaty nor

executive agreement will be deemed abrogated unless Congress

clearly expresses its intent). Pursuant to this principle, unless

Note 5 explicitly conflicts with the United States’ international

obligations, see e.g., McCulloch v. Sociedad Nacional de Marineros

de Honduras, 372 U.S. 10, 21 (1963), The Chinese Exclusion Case,

130 U.S. 581, 600 (1889), the Court should endeavor to read Note 5

in harmony with Schedule XX. This conclusion is rendered
Court No. 03-00096 Page 20

unavoidable by the fact that Congress specifically expressed its

intent that the United States comply with its international legal

obligation, rather than clearly expressing an intent to abrogate

the United States’ international commitment. See 19 U.S.C. §§ 2902

& 3521; see also 19 U.S.C. § 2901 (expressing the aspiration for

reciprocal and fair trade); cf. Intel Corp. v. Advanced Micro

Devices, Inc., 124 S. Ct. 2466, 2479 (2004) (employing

Congressional instructions as an interpretative aid).

B.

Schedule XX provides in relevant part:

There shall be permitted entry an aggregate quantity of
ice cream, entered under subheading 2105.00.10 during any
calendar year, of not less than the total quantity
specified below.

Quantity
(liters)
1995 3,283,772*
1996 3,760,587*
1997 4,237,402*
1998 4,714,216*
1999 5,191,031*
2000 5,667,846*
and thereafter

* Of the quantitative limitation provided for in
this note, an access level is reserved as follows:

Quantity
(liters)
Belgium 922,315
New Zealand 589,312
Denmark 13,059
Netherlands 104,477
Jamaica 3,596
Court No. 03-00096 Page 21

An additional aggregate quanitity of 366,000 liters
is reserved for Mexico under this note and
additional note 3 to chapter 4 combined.

The quantitative limitation established by this note
may be administered through regulations (including
licenses and reallocation of the unfilled quotas)
issued by the Secretary of Agriculture.

The Court construes international agreements in a manner similar to

its interpretation of statutes. “The analysis must begin . . .

with the text of the treaty and the context in which the written

words are used.” Air France v. Saks, 470 U.S. 392, 396-97 (1985).

Because “treaties are the subject of careful consideration before

they are entered into, and are drawn by persons competent to

express their meaning and to choose apt words,” Rocca v. Thompson,

223 U.S. 317, 332 (1912), the courts must “give the specific words

of the treaty a meaning consistent with the shared expectations of

the contracting parties,” Air France, 470 U.S. at 399. The plain

language of Schedule XX demonstrates why Customs’ argument must

fail.

Schedule XX explicitly provides that “[t]here shall be

permitted entry an aggregate quantity of ice cream, entered under

subheading 2105.00.10 during [1999], of not less than . . .

5,191,031 [liters].” The unavoidable conclusion that this language

requires reallocation is demonstrated by the facts of this case.

In 1999, the United States imported no ice cream from Belgium,

Denmark, Jamaica, and New Zealand and only imported 82 liters from
Court No. 03-00096 Page 22

the Netherlands. Accordingly, (and as Customs administered the

matter in this instance) only 3,448,354 liters entered under

subheading 2105.00.10, HTSUS. Therefore, Customs did not “permit[]

entry an aggregate quantity of ice cream . . . of not less than .

. . 5,191,031" liters; rather, Customs permitted entry of an

aggregate quantity far less than required by Schedule XX to be

entered under subheading 2105.00.10, HTSUS. This plain reading of

Schedule XX clearly dictates why Customs’ interpretation is

untenable.16 See, e.g., Soc’y for Propagation of the Gospel in

Foreign Parts v. Town of New Haven, 21 U.S. (8 Wheat.) 464, 490

(1823) (“Where the language of the parties is clear of all

ambiguity, there is no room for construction.”); cf. Koons Buick

Pontiac GMC, Inc. v. Nigh, 125 S. Ct. 460, 469 (2005) (“‘there is

16
When pressed at oral argument, Customs averred that this
language only requires the United States to permit a certain access
level and because the United States made available the opportunity
for importation of the requisite aggregate quantity of ice cream,
it fulfilled its duty under Schedule XX. However, this argument
betrays the plain language of the first clause. See Def.’s Mem.
Reply Pl.’s Opp. Def.’s Cross-Mot. Summ. J. at 10 (“Schedule XX, to
the contrary, indicates that the aggregate quantity of ice cream
must be ‘not less than the total quantity specified below’. . . .
Schedule XX affirmatively sets forth a minimum aggregate amount of
ice cream which may be imported from all countries.”). Moreover,
Customs’ argument creates tension with the word “entered.” In
order for products to be “entered under subheading 2105.00.10,”
HTSUS, something must occur (i.e., be “entered, or withdrawn from
[a] warehouse for consumption, in the customs territory of the
United States” pursuant to U.S. Additional Note 19, HTSUS) – not
the mere possibility of entry occurring. Even if the Court were to
have any doubt, the canon of liberal construction would apply
resolving the ambiguity in favor of the Court’s reading. See infra
at 29.
Court No. 03-00096 Page 23

no canon against using common sense in construing laws as saying

what they obviously mean.’”) (quoting Roschen v. Ward, 279 U.S.

337, 339 (1929)).

That Schedule XX employs the word “shall” demonstrates that

the United States agreed to provide not less than this minimum

access level. The word “shall,” generally speaking, imposes a

requirement. That this is a mandatory requirement is reinforced

when the word “shall” is viewed in contraposition to the Section’s

later use of the word “may,” i.e., “the Department of Agriculture

may regulate.” Cf. Jama v. Immigration and Customs Enforcement,

125 S. Ct. 694, 703 (2005). Therefore, the plain text of Schedule

XX requires that the United States allow 5,191,031 liters into the

United States at the reduced tariff rate regardless of whether the

enumerated nations have exhausted their reserved allotments.

Customs departs from this common sense reading even though,

in its initial briefs to the Court, it maintained that the plain

language of Schedule XX conflicted with its interpretation of Note

5, i.e., that Schedule XX required reallocation but Note 5 did not,

and therefore there was a conflict between the two.17 Customs now

17
In its initial brief Customs argued: “Pillsbury quotes a WTO
document referred to as ‘Schedule XX’ which indicates that the
aggregate quantity of ice cream would be ‘not less than the total
quantity specified below.’ If this language was in Additional U.S.
Note 5 to Chapter 21, HTSUS, there would be some merit to
Pillsbury’s claim. However, the language in Additional U.S. Note
5 is quite different.” Def.’s Mem. at 12 n.1; see also Def.’s Mem.
Reply Pl.’s Opp. Def.’s Cross-Mot. Summ. J. at 10 (“Schedule XX, to
the contrary, indicates that the aggregate quantity of ice cream
Court No. 03-00096 Page 24

advances three arguments as to why reallocation is not required.

First, Customs alleges that the term “reserved” signals that the

United States is not required to reallocate. Second, it argues

that the permission to regulate (including reallocation) suggests

that reallocation is not required. Third, it submits a

correspondence from the Embassy of New Zealand interpreting such

provisions. The Court will address each argument in turn.

1.

First, Customs points to the word “reserved,” i.e., “[o]f the

quantitative limitation provided for in this note, an access level

is reserved as follows,” claiming that the word “reserved” means

that Customs is not required to reallocate unused quotas. Citing

Webster’s Third New international Dictionary of the English

Language 1930 (1993), Customs argues that the word “reserved” means

“to keep in store for future or special use: hold or keep in

reserve . . . to set aside or apart – usu. with to or for . . . .”

must be ‘not less than the total quantity specified below’. . . .
Schedule XX affirmatively sets forth a minimum aggregate amount of
ice cream which may be imported from all countries.”).
Concerned by Customs’ representations in its initial brief,
the Court requested that the parties submit supplemental briefs on
the question of whether Note 5 and Schedule XX conflicted. The
Court permitted a month to submit a ten-page response. Customs
twice asked for extensions citing the need to conduct “a
significant” amount of research. The six page submission by
Customs cited a single authority: the Webster’s Third New
International Dictionary. Customs failed to even address the “not
less than” language of Schedule XX in its supplemental submission
to the Court.
Court No. 03-00096 Page 25

Def.’s Supp. Mem. at 5 n.2 (emphasis in original). As this

definition indicates, “reserved” means to keep for a “special use.”

However, when that “special use” has expired, i.e., the time that

the enumerated nations may use their allotments has elapsed, the

definition of “reserved” is not implicated.

Moreover, Customs’ interpretation departs from the cardinal

principle that international agreements should be read

holistically. Air France v. Saks, 470 U.S. 392, 396-97 (1985)

(“The analysis must begin . . . with the text of the treaty and the

context in which the written words are used”), cf. Koons Buick

Pontiac GMC, Inc. v. Nigh, 125 S. Ct. 460, 466-67 (2005).

According to this principle, any meaning ascribed to the word

“reserved” should, if possible, be read in harmony with the rest of

the Section’s scheme. As previously discussed, the plain language

requires that the overall aggregate level permitted into the United

States be not less than 5,191,031 liters. Customs’ reading of

“reserved” would needlessly set the two parts of the Section in

tension as it would suggest the aggregate level of actual imported

ice cream could be less than 5,191,031 liters. This reading of

“reserved” would also conflict with the word “aggregate,” i.e.,

“[t]here shall be an aggregate quantity” of ice cream admitted into

the United States. The word “aggregate” suggests that all actual

entries are considered in determining the TRQ rate – not that the

enumerated nations’ allotments are hermetically sealed from the
Court No. 03-00096 Page 26

unenumerated nations’ allocations. Customs’ interpretation ignores

this word in the Section.

Customs’ argument is further undercut by another claim it

makes: that Customs may reallocate unused quotas so long as it is

done by regulation. If the term “reserved” had the meaning Customs

ascribed to it, then it could not reallocate unused quotas. That

Customs agrees that it may reallocate unused quotas undermines the

import Customs places on the word “reserved.”18

2.

Next Customs argues that Schedule XX grants the Department

of Agriculture (“Agriculture”) the authority to “administer through

regulations (including licenses and reallocation of the unfilled

quotas)” the TRQ. Therefore, Defendant argues, Agriculture must

promulgate regulations for reallocation if reallocation is to be

allowed – because Agriculture has not promulgated regulations,

Defendant asserts, no reallocation is permitted.19

18
The Court further notes that when the drafters wanted to make
an access level separate from the aggregate level, it stated so
explicitly, as Mexico’s allotment illustrates. See Schedule XX
(“An additional aggregate quantity of 366,000 liters is reserved
for Mexico under this note and additional U.S. note 3 to chapter 4
combined.”) (emphasis added). Accordingly, where the drafters
intended that an enumerated allotment be insulated from access by
other nations it used language quite different from the “an access
level is reserved” language at issue here.
19
The Court notes that this language grants Agriculture the
authority to establish regulations, not Customs. Therefore, any
deference would flow to Agriculture, thereby further undermining
Customs’ claim for Chevron deference. See Haggar Apparel Co. v.
Court No. 03-00096 Page 27

First, the language on which Customs focuses in no way

detracts from, or qualifies, the absolute language of the first

clause, i.e., the “shall be permitted” clause. In essence, Customs

reads the “administered through regulations” language as stating

that the United States “may only” reallocate through regulation,

thereby defeating the mandate of the first clause if no regulation

is promulgated. However, the language admits of no such

restriction and the Court will not imply one.20

Moreover, contrary to Customs’ supposition, the “administered

through regulations” language detracts from, rather than supports,

its argument. This conclusion is best evidenced when considered in

the context of international trade law. See, e.g., Geofroy v.

Riggs, 133 U.S. 258, 271 (1890) (“words [of the treaty] are to be

taken in their ordinary meaning, as understood in the public law of

nations, and not in any artificial or special sense impressed upon

them by local law ”), The Pizarro, 15 U.S. (2 Wheat.) 227, 243

(1827)(Story, J.). Generally, under international trade law,

United States, 526 U.S. at 388.
20
The Court further notes that this language is standard
disclaimer language found in all of the United States’ TRQs which
allocate quotas to nations (or groups of nations), including
maximum access provisions. This broad usage reinforces the Court’s
reading that this language is not intended to derogate rights
created by the operative language used in the other portions of the
ice cream TRQ. Rather, this usage suggests that the United States
wanted the “administered through regulations” language to recognize
its use of regulations in adopting license and reallocation
provisions of in-quota imports.
Court No. 03-00096 Page 28

nations are always free to grant more liberal trade concessions

than those to which they have agreed. Cf. Schedule XX (“There

shall be permitted entry an aggregate quantity of ice cream . . .

of not less than the total specified below.”). If a nation so

desired, it could eradicate all of its tariffs without violating

international law. However, the reverse is not true – if the

United States has agreed to a certain tariff rate, it cannot raise

that rate without violating its international agreements. This

principle sheds light on the meaning of the clause upon which

Customs relies. If the United States did not have to reallocate,

stipulating that it could reallocate by regulation would be

senseless -- of course it could reallocate. Rather, the sensible

reading is that Schedule XX allows the United States to encumber

reallocation through regulations established by Agriculture.21 Such

regulations could, for example, permit Agriculture to provide a

procedure for reallocation.22

21
The Court further notes that the word “regulation” means
“[t]he act or process of controlling by rule or restriction.”
Black’s Law Dictionary 1311 (8th ed. 2004).
22
As the Supreme Court noted in Geofroy v. Riggs, “the treaty
power of the United States extends to all proper subjects of
negotiation between our government and the governments of other
nations[.]” 133 U.S. at 266. Under Customs’ proposed construction,
why the internal allocation of authority of regulatory power of the
United States is addressed when the United States already has the
full authority to regulate (and prohibit) is left unexplained. In
other words, under Customs’ reading, this provision would simply be
an attempt by USTR to enlarge Agriculture’s authority when the
rights of foreign nations were not implicated. Under such a
reading, it is hard to see how the language would have been the
proper subject of negotiations between our government and foreign
Court No. 03-00096 Page 29

Even if the Court were to have any doubt, the oft-quoted

maxim of liberal construction would counsel in favor of

reallocation: if “‘a treaty fairly admits two constructions, one

restricting, the other enlarging, rights which may be claimed under

it, the more liberal interpretation is to be preferred.’” United

States v. Stuart, 489 U.S. 353, 368 (1989) (quoting Bacardi Corp.

of Am. v. Domenech, 311 U.S. 150, 163 (1940)). Pursuant to this

maxim, the Court should, and does, prefer recognizing that Schedule

XX requires reallocation of unused allotments.

3.

Last, Customs points to a letter from the Embassy of New

Zealand to the United States International Trade Commission,

opposing the reallocation of unused in-quota allotments for beef

imports and expressing its opinion that the TRQ for beef “is a

minimum access opportunity, not an obligation; the United States is

not required to import 656,621 tonnes of beef each year.”23 Letter

from Ambassador John Wood, New Zealand, to Chairman, United States

International Trade Commission, Re: Cattle and Beef: Impact of the

governments.
23
The Court notes that the actual language of the Ambassador’s
letter appears to address a matter not at issue here, i.e., whether
the U.S. may reallocate, and thereby limit, New Zealand’s access
level if its allotment is not used. The Court’s conclusion here in
no way abridges New Zealand’s, or any of the enumerated nations’
rights, under Schedule XX. Customs must keep the enumerated
nations’ access levels open to those nations until the end of the
year, and then only reallocate any unused quota for that year.
Court No. 03-00096 Page 30

NAFTA and Uruguay Round Agreements on U.S. Trade (March 13, 1997),

Exhibit B to Def.’s Mem. In its original submissions Customs

erroneously cited this authority as bearing on the interpretation

of United States’ law while, at the same time, arguing that the

United States had appropriately departed from its international

legal obligations. When the United States has departed from

international norms, constructions of U.S. statutes by foreign

governments are wholly irrelevant. Accord Roper v. Simmons, 125 S.

Ct. 1183, 1199-1200 (2005) (looking to international sources to

interpret the Eighth Amendment because the Eighth Amendment

embraced, rather than conflicted with, international norms). This

is especially true given that courts grant only a modicum of

deference to Customs regarding its interpretation of U.S. law – why

the Court would be swayed by the position of foreign governments on

U.S. law is unclear.

Nonetheless, reframing of the issue as an interpretation of

Schedule XX does make this submission arguably probative. Courts

have long recognized that contract states’ post-ratification

understanding may be consulted in construing an international

agreement. Zicherman v. Korean Air Lines Co., 516 U.S. 217, 227-28

(1996). Nevertheless, unilateral actions taken by a single foreign

state are rarely persuasive especially when those actions violate

the letter and spirit of the international agreement. Cf. In re

Kaine, 55 U.S. (14 How.) 103, 113 (1853) (“What Great Britain has
Court No. 03-00096 Page 31

done by its legislation, cannot control our decision; we must abide

by our own laws. If theirs are inconvenient, or supposed to

violate the spirit of the treaty, it is the duty of our government

to complain, and ask that they be reformed.”); Sullivan v. Kidd,

254 U.S. 433, 442 (1921). Customs has failed to corroborate its

proffered interpretation with any minutes of the Uruguay Round

negotiations or any other authoritative source. Moreover, this

position appears contrary to the prior position of our own

government, which required reallocation.24 See Headquarter Ruling

24
In fact, in 2000, the United States proposed the following
before the WTO:

Reallocation: Many TRQ administrative practices,
particularly the use of import licenses, do not
permit sufficient reallocation to allow exporters
to fill TRQs. The United States proposes that
members develop new disciplines on license
reallocation, such as requirements that licensees
surrender unused licenses if they cannot arrange
shipments within specified time periods. Members
would reallocate, in a timely fashion, unused
licenses to provide sufficient commercially viable
opportunities for other importers, including new
entrants.

Proposal for Tariff Rate Quota Reform: Submission from the United
States, G/AG/NG/W/58 (Nov. 14, 2000) available at
http://docsonline.wto.org/DDFDocuments/t/G/AG/NGW58.doc (last
accessed April 15, 2005). Customs has not submitted any
interpretation of the ice cream TRQ, or any other TRQ, by the
United States Trade Representative (the Agency charged with
negotiating and enforcing other nations’ compliance with TRQ’s)
that may shed light on the TRQ’s meaning at issue here.
Court No. 03-00096 Page 32

Letter 962316 (Nov. 5 1998).25 Consequently, this submission is

unpersuasive.

C.

Given that Schedule XX unambiguously requires reallocation

of unused quotas, the Court now considers whether Note 5 is at odds

with this interpretation. The Court finds that it is not.

Note 5's most significant departure from Schedule XX is that

it frames the issue in the negative rather than the positive.

Whereas Schedule XX specifies that the United States “shall permit”

certain quota levels, Note 5 states that imports “shall not

exceed.” The Court does not consider this a meaningful divergence.

The only other significant variation is that Note 5 states that

enumerated nations shall have “access” to certain allotment whereas

Schedule XX says the allotments are “reserved” for the enumerated

nations. Again this variation is immaterial and, if anything,

supports the Court’s interpretation because “access” is more

permissive than the word “reserved.” Certainly, these departures,

when read in light of the plain language of Schedule XX, do not

render Note 5 ambiguous.

25
Customs attempts to discount this Ruling Letter by asserting
that there is a slight variance in the wording between Note 5 and
the provision at issue in the Ruling Letter. Assuming that Customs
is correct in noting that the variance in language does not
establish this Ruling Letter as clear precedent, then Customs’
citation to the New Zealand Letter must also fail as Customs has
failed to prove that the language that gave rise to the letter is
identical to the provision in question here.
Court No. 03-00096 Page 33

Therefore, upon application of the canon of constitutional

avoidance and the Charming Betsy canon, the Court incorporates the

unambiguous interpretation of Schedule XX into the meaning of Note

5. Consequently, the Court deems that Note 5 requires Customs to

reallocate the unused quotas of the enumerated nations.

IV. CONCLUSION

For the foregoing reasons, the Court deems that Note 5

requires Customs to reallocate unused quotas. Accordingly,

Plaintiff’s motion for summary judgment is granted and Defendant’s

motion for summary judgment is denied.

/s/
Donald C. Pogue
Judge

Dated: New York, New York
April 19, 2005
 ERRATUM

The Pillsbury Company v. United States, Slip Op. 05-51,
April 19, 2005, Court No. 03-00096:

Page 2: “USCIT R. 56©)” should be “USCIT R. 56(c)”

Page 4 footnote 4: “19 U.S.C. § 3004©)” should read “19
U.S.C. § 3004(c)”

April 20, 2005