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NATIONAL MILK PRODUCERS FEDN. v. SHULTZ

March 13, 1974

NATIONAL MILK PRODUCERS FEDERATION et al., Plaintiffs,
v.
George P. SHULTZ, Defendant


John Lewis Smith, Jr., District Judge.


The opinion of the court was delivered by: SMITH, JR.

JOHN LEWIS SMITH, Jr., District Judge.

This is an action brought by milk producers against the Secretary of the Treasury to force his compliance with the requirements of the Countervailing Duties section of the Tariff Act of 1930, 19 U.S.C. § 1303, as it applies to dairy products imported into the United States. The case is before the Court on defendant's motion to dismiss for lack of subject matter jurisdiction and standing. For reasons set forth below, the Court finds that jurisdiction and standing have been established and accordingly, defendant's motion to dismiss is denied.

 Section 303 of the 1930 Tariff Act provides in pertinent part:

 
"Whenever any country . . . shall pay or bestow . . . any bounty or grant upon the . . . export of any . . . merchandise manufactured or produced in such country . . . and such . . . merchandise is dutiable under the provisions of this chapter, then upon importation of any such . . . merchandise into the United States . . . there shall be levied and paid . . . in addition to the duties otherwise imposed by this chapter, an additional duty equal to the net amount of such bounty or grant. . . . The Secretary of the Treasury shall from time to time ascertain and determine, or estimate, the net amount of each such bounty or grant, and shall declare the net amount so determined or estimated."

 The complaint alleges that the Secretary has refused since 1968, to honor plaintiffs' repeated requests to enforce this statute with respect to dairy products imported from nations comprising the European Economic Community which pay their exporters direct export subsidies to offset American import duties. As a result, plaintiffs claim they are subjected to unfair competition and injury when foreign exporters are granted subsidies for the express purpose of disposing of dairy products in the United States market.

 Although jurisdiction has been claimed under 28 U.S.C. §§ 1331, 1332 and 1361, original jurisdiction in the district courts involving customs matters must first be established under 28 U.S.C. § 1340. That section provides:

 
"The district courts shall have original jurisdiction of any civil action arising under any Act of Congress providing for . . . revenue from imports or tonnage except matters within the jurisdiction of the Customs Court. (Emphasis added.)

 Since § 1340 divests this Court of its jurisdiction if jurisdiction exists in the Customs Court, it is readily apparent that in order to avoid a statutory anomaly, § 1340 must be construed as the controlling jurisdictional grant regardless of whether jurisdiction appears appropriate under §§ 1331, 1332 or 1361.

 Jurisdiction in the Customs Court is governed by 28 U.S.C. § 1582 which gives that court "exclusive jurisdiction of civil actions instituted by any person whose protest pursuant to the Tariff Act of 1930, as amended, has been denied, in whole or part. . . ."

 Protests by American manufacturers pursuant to the Tariff Act of 1930, are governed by 19 U.S.C. § 1516 which permits the filing of protests by American manufacturers who are dissatisfied with the Secretary's determination of an appraised value, classification, or rate of duty for a particular article of merchandise so long as the subject merchandise is of a class or kind manufactured, produced, or sold at wholesale by the protesting manufacturer. 19 U.S.C. § 1516(a).

 In United States v. Hammond Lead Products, Inc., 440 F.2d 1024, 58 CCPA 129 (1971), the Court of Customs and Patent Appeals (hereinafter CCPA) ruled that § 1516 did not authorize protests by American manufacturers respecting countervailing import duties.

 
"All considered, it appears that countervailing duty is a penal exaction that the Congress did not intend the courts to impose, should the Treasury be recalcitrant, in a [§ 1516(b)] proceeding, and is not a 'duty' within the meaning of that section." Id. at 1030.

 The plain effect of Hammond Lead is to foreclose protests regarding countervailing import duties by American manufacturers pursuant to administrative procedures set forth in the 1930 Tariff Act. As a consequence, the statutory grant of exclusive jurisdiction conferred upon the Customs Court by 28 U.S.C. § 1582 is inoperative as its activation requires a "protest pursuant to the Tariff Act of 1930" which is unavailable to plaintiffs. Since § 1582 is the only statutory grant of jurisdiction to the Customs Court respecting review of import charges, its unavailability acts to confer original jurisdiction upon this court under 28 U.S.C. § 1340. *fn1"


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