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Virgin Islands Port Authority v. United States

United States Court of Appeals, Federal Circuit

April 26, 2019

UNITED STATES, Defendant-Appellee

          Appeal from the United States Court of Federal Claims in No. 1:13-cv-00390-EGB, Senior Judge Eric G. Bruggink.

          Geoffrey P. Eaton, Winston & Strawn LLP, Washington, DC, argued for plaintiff-appellant.

          Elizabeth Anne Speck, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by Joseph H. Hunt, Claudia Burke, Robert Edward Kirschman, Jr.

          Before Dyk, Mayer, and Clevenger, Circuit Judges.


         The Virgin Islands Port Authority ("VIPA") appeals from the grant of the United States' motion for summary judgment in the U.S. Court of Federal Claims ("Claims Court"). The Claims Court rejected VIPA's claim that the collection of wharfage and tonnage fees by the U.S. Customs and Border Protection ("Customs") constituted an illegal exaction. We affirm.


         The dispute between VIPA and the United States centers on the question of whether certain fees were lawfully collected by Customs from users of ports in the U.S. Virgin Islands ("Virgin Islands"). The particular fees at issue are wharfage fees, "the charge assessed for the service or use of the wharf," and tonnage fees, "the fee charged a vessel for entering and using a port of the U.S. Virgin Islands." J.A. 11 & n.1. While Customs is required under statute to collect customs duties, see 48 U.S.C. §§ 1406h, 1406i, and 1642a, the government abandoned reliance on those statutes below as authorizing collection of the disputed fees.

         The parties agree that the statutory source, if any, of Customs' authorization to collect the disputed fees is 48 U.S.C. § 1469c, which provides in pertinent part:

To the extent practicable, services, facilities, and equipment of agencies and instrumentalities of the United States Government may be made available, on a reimbursable basis, to the governments of the territories and possessions of the United States . . . .

         The Claims Court has detailed the history between Customs and the Virgin Islands, so we focus only on the particularly salient portions. The Virgin Islands is a territory of the United States that can set and receive proceeds from duties, and VIPA is "a public corporation and autonomous governmental instrumentality" of the Virgin Islands' government. V.I. Code Ann. tit. 29, § 541(a). VIPA is authorized to, inter alia, "determine, fix, alter, charge, and collect reasonable rates, fees, rentals, ship's dues and other charges." Id. § 543(12). Since its creation in 1968, VIPA has set wharfage and tonnage fees in its Marine Tariff Schedule.

         Customs collected the wharfage and tonnage fees from 1969 to 2011, deducted the costs it incurred from providing its services, and remitted any remaining funds to the Virgin Islands Deposit Fund, which the Virgin Islands controls. The funds were then transferred to VIPA. The source of authority for Customs' collection of the fees before 1994 is unclear.

         In 1994, the Virgin Islands and Customs entered into a memorandum of agreement ("1994 MOA"), whereby the parties agreed to "the methodology for determining the costs chargeable to [the Virgin Islands] . . . for operating various [Customs] activities in and for the U.S. Virgin Islands." J.A. 345. The 1994 MOA "identif[ied] those activities that are reimbursable," which included Customs' collection of tonnage and wharfage fees from cargo being imported and exported. J.A. 345, 347. Customs further agreed to report on the collection of these fees to the Virgin Islands. The 1994 MOA also included provisions for amending or revoking the agreement. See J.A. 353 ("Any change . . . shall be initiated by the requesting party in a written statement setting forth the exact nature and reason for the change."); J.A. 354 ("This MOA may be revoked by either party upon providing written notice to the other party 180 days prior to the proposed revocation date."). One of the statutes cited in the agreement for Customs' authority to enter into the 1994 MOA was 48 U.S.C. § 1469c.

         The current dispute arose from Customs' increasing collection costs, which outpaced the collection of the disputed fees starting in 2004. This left VIPA without any proceeds from the disputed fees. In 2006, VIPA removed the instruction in its Marine Tariff Schedule that users should pay the disputed fees to Customs.[1] But Customs continued to collect the fees. In 2007, VIPA sent a letter, approved by the Virgin Islands' governor, "appealing to [Customs] so that [VIPA] can start to collect" the disputed fees. J.A. 371. Customs "respectfully denie[d] VIPA's request" based on Customs' position that 48 U.S.C. ยงยง 1406h, 1406i, and 1642a, required it to collect the disputed fees as customs duties-a position the government abandoned below. J.A. 375-77. Following a series of letters and meetings between VIPA, the Virgin Islands, and Customs, VIPA sent ...

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