No. 99-1434 

In the Supreme Court of the United States 

UNITED STATES OF AMERICA, PETITIONER 

v. 

THE MEAD CORPORATION 

ON WRIT OF CERTIORARI 
TO THE UNITED STATES COURT OF APPEALS 
FOR THE FEDERAL CIRCUIT 

REPLY BRIEF FOR THE UNITED STATES 

SETH P. WAXMAN 

Solicitor General 

Counsel of Record 
Department of Justice 
Washington, D.C. 20530-0001 
(202) 514-2217 

TABLE OF CONTENTS 

Page 

I. Reasonable interpretations of the customs laws 
contained in rulings issued by the Customs Service 
are entitled to deference in determining the proper 

tariff classification of imported goods ............................. 
1 

II. The Customs Service has reasonably interpreted 
the statutory phrase “diaries * * * bound” to 

include the day planners imported by respondent ....... 

13 

TABLE OF AUTHORITIES 

Cases: 

Adams Fruit Co. v. Barrett, 494 U.S. 638 (1990) ............. 

7, 8 

Aero Mayflower Transit Co. v. ICC, 711 F.2d 224 
(D.C. Cir. 1983) ....................................................................... 
19 

Auer v. Robbins, 519 U.S. 452 (1997) ................................. 
7 

Batterton v. Francis, 432 U.S. 416 (1977) ......................... 
1-2 

Biddle v. Commissioner, 302 U.S. 573 (1938) .................. 
5 

Chevron U.S.A. Inc. v. Natural Resources Defense 

Council, Inc., 467 U.S. 837 (1984) ............ 
1, 2, 3, 5, 13, 17, 18 

Christensen v. Harris County, 120 S. Ct. 1655 
(2000) ........................................................................................ 3 

Chrysler Corp. v. Brown, 441 U.S. 281 (1979) .................. 

2 

Federal Election Comm’n v. Democratic Senatorial 

Campaign Comm., 454 U.S. 27 (1981) .............................. 

17 

Ford Motor Credit Co. v. Milhollin, 444 U.S. 555 
(1980) .................................................................................... 
3, 4, 9 

Generra Sportswear Co. v. United States, 905 

F.2d 377 (Fed. Cir. 1990) ...................................................... 

10 

Martin v. Occupational Safety and Health Review 

Commission, 499 U.S. 144 (1991) ...................................... 

2 

Mitsui Foods, Inc. v. United States, 867 F.2d 1401 
(Fed. Cir. 1989) ....................................................................... 
10 

NEC Electronics, Inc. v. United States, 144 F.3d 
788 (Fed. Cir. 1998) ............................................................... 17 

(I) 

II 

Cases—Continued: Page 

NLRB v. Local Union No. 103, Int’l Assoc. of Bridge 

Workers, 434 U.S. 335 (1978) .............................................. 
8, 19 

National Muffler Dealers Ass’n v. United States, 
440 U.S. 472 (1979) ................................................................ 
5 

Nationsbank of N.C., N.A. v. Variable Annuity Life 

Ins. Co., 513 U.S. 251 (1995) ............................................... 

4, 13 

Norman G. Jensen, Inc. v. United States, 490 

F. Supp. 497 (Cust. Ct. 1980) ............................................... 

15 

Pension Benefit Guaranty Corp. v. LTV Corp., 496 

U.S. 633 (1990) ........................................................................ 

4 

Pima Western, Inc. v. United States, 915 F. Supp. 
399 (1996) ................................................................................. 
16 

Reno v. Koray, 515 U.S. 50 (1995) ...................................... 
12 

Schweiker v. Gray Panthers, 453 U.S. 34 (1981) ............. 
2 

Simod Am. Corp. v. United States, 872 F.2d 1572 
(Fed. Cir. 1989) ....................................................................... 
15 

Skidmore v. Swift & Co., 323 U.S. 134 (1944) ................... 
19 

Smiley v. Citibank (South Dakota), N.A., 517 U.S. 
735 (1996) ........................................................................... 
3, 7, 19 

Smith v. United States, 508 U.S. 223 (1993) ..................... 
12 

Train v. Natural Resources Defense Council, 421 

U.S. 60 (1975) .......................................................................... 

14 

Udall v. Tallman, 380 U.S. 1 (1965) ................................... 
8 

United States v. Correll, 389 U.S. 299 (1967) ................... 
4, 9 

United States v. Haggar Apparel Co., 526 U.S. 
380 (1999) .................................................................. 
7, 8, 9, 10, 12 

United States v. Moore, 95 U.S. 760 (1878) ....................... 
5 

United States v. Morton, 467 U.S. 822 (1984) ................... 
2 

United States v. O’Hagan, 521 U.S. 642 (1997) ................ 
7 

White v. United States, 305 U.S. 281 (1938) ...................... 
12 

Zenith Radio Corp. v. United States, 437 U.S. 443 
(1978) ...................................................... 

3, 6, 8, 10, 11, 12, 14, 17 

Statutes and regulations: 

Administrative Procedure Act, 5 U.S.C. 553(b)(A) ............ 3-4 

III 

Statutes and regulations—Continued: 
Page 

Tariff Act of 1930, 19 U.S.C. 1202 et seq.: 
19 U.S.C. 1500(a) .................................................................. 
9 

19 U.S.C. 1500(b) .................................................................. 
9 

19 U.S.C. 1502(a) .................................................................. 
3, 5, 9 

19 U.S.C. 1624 ....................................................................... 
9 

26 U.S.C. 7805(a) ....................................................................... 
5 

28 U.S.C. 2639(a)(1) .................................................................. 
6 

28 U.S.C. 2640(a)(1) ................................................................. 
6 

19 C.F.R.: 

Section 177.1(a)(1) ................................................................ 

13 

Section 177.8(b) .................................................................... 
13 

Section 177.9(a) ..................................................................... 
11, 13 

Section 177.9(c) ..................................................................... 
11 

Section 177.9(d)(1) ................................................................ 
11 

Section 177.10(a) ................................................................... 
11 

Section 177.11 ....................................................................... 
19 

Section 177.11(a) ................................................................... 
13 

Section 177.11(b)(1) .............................................................. 
18 

Section 177.11(b)(6) ...................................................... 
13, 18, 19 

Section 177.12 ....................................................................... 
19 

Section 177.12(a) ................................................................... 
18 

26 C.F.R. 301.7805-1 ................................................................. 
4 

Treas. Order 111-2, 1981-1 C.B. 698 ...................................... 
4 

Miscellaneous: 

J. Coverdale, Court Review of Tax Regulations and 

Revenue Rulings in the Chevron Era, 64 Geo. Wash. 
L. Rev. 35 (1995) .................................................................... 

4 
L. Galler, Judicial Deference to Revenue Rulings: 

Reconciling Divergent Standards, 56 Ohio St. L.J. 
1037 (1995) ............................................................................... 

4 
H.Q. 085086, 1989 WL 381276 (Sept. 13, 1989) .................... 
18 

H.Q. 085515 (Dec. 14, 1989) ..................................................... 
18 

H.Q. 950984, 1992 WL 313509 (Jan. 27, 1992) ...................... 
18 

H.R. Conf. Rep. No. 576, 100th Cong., 2d Sess. 
(1988) ........................................................................................ 9, 17 

IV 

Miscellaneous—Continued: Page 

H.R. Rep. No. 1235, 96th Cong., 2d Sess. (1980) ................. 
6 

U.S. Customs Service, Tariff Classification Under the 

Harmonized Tariff Schedule (Nov. 1997) ......................... 16 

In the Supreme Court of the United States 

No. 99-1434 

UNITED STATES OF AMERICA, PETITIONER 

v. 

THE MEAD CORPORATION 

ON WRIT OF CERTIORARI 
TO THE UNITED STATES COURT OF APPEALS 
FOR THE FEDERAL CIRCUIT 

REPLY BRIEF FOR THE UNITED STATES 

I. Reasonable interpretations of the customs laws 
contained in rulings issued by the Customs Serv- 
ice are entitled to deference in determining the 
proper tariff classification of imported goods. 

1. This Court has developed and applied several distinct 
standards of deference for administrative actions that inter- 
pret and apply statutory provisions. The highest standard of 
deference applies when an agency promulgates “legislative 
regulations” pursuant to “an express delegation of authority 

* * * to elucidate a specific provision of the statute by 
regulation.” Chevron U.S.A. Inc. v. Natural Resources De- 
fense Council, Inc., 467 U.S. 837, 843-844 (1984). A regula- 
tion issued under an express authority to “prescribe stan- 
dards” has “legislative effect” (Batterton v. Francis, 432 

(1) 

2 

U.S. 416, 425 (1977)), for it represents an exercise of “dele- 
gated lawmaking powers.” Martin v. Occupational Safety 
and Health Review Comm’n, 499 U.S. 144, 157 (1991). When 
Congress has made an “explicit delegation of substantive 
authority” to the agency, the agency’s legislative regulation 
is entitled “to more than mere deference or weight.” 
Schweiker v. Gray Panthers, 453 U.S. 34, 44 (1981) (cited in 
Chevron, 467 U.S. at 844 n.12). This Court has stated that, 
while it “do[es] not abdicate review in these circumstances, 
our task is the limited one of ensuring that the Secretary did 
not ‘excee[d] his statutory authority’ and that the regulation 
is not arbitrary or capricious.” Schweiker v. Gray Panthers, 
453 U.S. at 44 (quoting Batterton v. Francis, 432 U.S. at 
426). See also Chevron, 467 U.S. at 844; United States v. 
Morton, 467 U.S. 822, 834 (1984) (“legislative” regulations 
have “controlling weight unless they are arbitrary, 
capricious, or plainly contrary to the statute”). 

This case, however, (like Chevron itself) does not involve a 
legislative rule. Instead, it involves an interpretive rule 
adopted pursuant to a general delegation of authority from 
Congress to the agency that has been “entrusted to ad- 
minister” the statute. 467 U.S. at 844.1 

Unlike a legislative 
rule, which has the force of law and is therefore entitled “to 
more than mere deference or weight” (Schweiker v. Gray 
Panthers, 453 U.S. at 44), an “interpretative” rule is not it- 
self a part of the positive law that courts apply; instead, an 
interpretative rule is accepted by the courts only when it 
“represents a reasonable interpretation” of the statute. 
Chevron, 467 U.S. at 844. See also Chrysler Corp. v. Brown, 
441 U.S. 281, 315 (1979) (distinguishing between “substan- 
tive rules” that have “the binding effect of law” and “inter- 

1 The present case, like Chevron, involves a “definitional issue [that] 
was not squarely addressed in either the statute or its legislative history.” 
Chevron, 467 U.S. at 858. 

3 

pretative rules” to which “deference [is] accorded”). Under 
this standard, the Court has long upheld “reasonable” inter- 
pretations adopted by agencies to resolve “ambiguity in a 
statute meant for implementation by [the] agency.” Smiley 

v. Citibank (S.D.), N.A., 517 U.S. 735, 740-741 (1996). See, 

e.g., Chevron, 467 U.S. at 844; Zenith Radio Corp. v. United 
States, 437 U.S. 443, 450 (1978). 

When the agency has issued an interpretation by some 
informal method (such as correspondence) that Congress has 
not authorized for that purpose, however, the Court has 
stated that the agency’s pronouncement is “entitled to re- 
spect” only to the extent that it has the “power to persuade.” 
Christensen v. Harris County, 120 S. Ct. 1655, 1663 (2000). 
See Pet. Br. 27-32. This latter standard is inapplicable to 
this case. In formally adopting “binding rulings” pursuant to 
19 U.S.C. 1502(a), the Customs Service has employed the 
very format that Congress directed the agency to use in 
issuing such interpretations. When Congress has authorized 
the agency to adopt rules to implement and enforce the pro- 
visions of the statute, affording deference to the “reasonable 
interpretations” adopted by the agency in the precise man- 
ner that Congress has prescribed is necessary to “honor that 
congressional choice.” Ford Motor Credit Co. v. Milhollin, 
444 U.S. 555, 568 (1980). 

Respondent errs in asserting (Resp. Br. 30-31) that only 
regulations that are adopted after notice and comment 
procedures are entitled to deference. In Christensen, this 
Court described notice-and-comment regulations merely as 
an “example” of agency actions for which deference is ap- 
propriate. 120 S. Ct. at 1662. Numerous decisions also 
afford deference to agency interpretative rulings, for which 
notice and comment procedures are expressly not required 
under the Administrative Procedure Act, 5 U.S.C. 

4 

553(b)(3)(A).2 Two important examples of decisions up- 
holding “reasonable” agency interpretative rulings are Ford 
Motor Credit Co. v. Milhollin, 444 U.S. at 565, and United 
States v. Correll, 389 U.S. 299, 306-307 (1967). Although we 
discuss these decisions at length in our opening brief (Pet. 
Br. 23-27, 31-32 & n.18), respondent has made no effort to 
address their reasoning or holding.3 Indeed, these cases are 

2 See also Nationsbank of N.C., N.A. v. Variable Annuity Life Ins. 
Co., 513 U.S. 251, 254-255, 256-257 (1995), and Pension Benefit Guaranty 
Corp. v. LTV Corp., 496 U.S. 633, 643-644, 647-648 (1990), both according 
deference to statutory interpretations embodied in informal agency ad- 
judications. 

3 Amicus Tax Executives Institute, Inc., is wrong in contending (Am. 
Br. 18 & 19 n.10) that United States v. Correll, 389 U.S. at 307, upheld an 
interpretative regulation rather than an interpretive ruling. This Court’s 
opinion in Correll cited and upheld, as “reasonable,” the “Commissioner’s 
interpretation, first expressed in a 1940 ruling, I.T. 3395, 1940-2 Cum. 
Bull. 64, * * * originally known as the overnight rule.” 389 U.S. at 302 

n.10. In deferring to the interpretation established in the Commissioner’s 
ruling, the Court did not cite or discuss any regulation. Instead, the Court 
treated rulings and regulations without differentiation, noting that “Con- 
gress has delegated to the Commissioner, not to the courts, the task of 
prescribing ‘all needful rules and regulations for the enforcement’ of the 
Internal Revenue Code.” 389 U.S. at 307 (citing 26 U.S.C. 7805(a)). The 
Court concluded in Correll that the “the Commissioner’s sleep or rest 
rule” should be upheld because it “implement[s] the congressional man- 
date in [a] reasonable manner.” 389 U.S. at 306-307. Following that 
holding, the “circuit courts have uniformly held that Revenue Rulings 
receive significant deference * * * .” J. Coverdale, Court Review of Tax 
Regulations and Revenue Rulings in the Chevron Era, 64 Geo. Wash. L. 
Rev. 35, 82 (1995). See also L. Galler, Judicial Deference to Revenue 
Rulings: Reconciling Divergent Standards, 56 Ohio St. L.J. 1037, 1094 
(1995) (“non-deference is now a relic of the past”). 

The suggestion of Amicus Tax Executives Institute, Inc., that revenue 
rulings are nothing more than the “litigating positions” of the agency (Am. 
Br. 18) is plainly incorrect. Revenue rulings are formally adopted by the 
Commissioner of Internal Revenue and are issued only with the “approval 
of the Secretary [of the Treasury].” 26 C.F.R. 301.7805-1. See also Treas. 

5 

not even cited in respondent’s brief. Under the standard 
applied in cases such as Chevron, Milhollin, Correll and 
Zenith Radio, the “binding rulings” formally adopted by the 
Customs Service pursuant to the authority expressly 
conferred on that agency should be upheld so long as they 
reflect a “reasonable interpretation” of the statute. 
Chevron, 467 U.S. at 844. 

2. Respondent and its amici suggest that the govern- 
ment’s position in this case proves too much, for it would 
require deference to every routine “classification decision” 
or “classification ruling” issued by the agency. Resp. Br. 27; 
Am. Customs and International Trade Bar Ass’n Br. 5-6. It 
is not the ultimate classification determination itself, how- 
ever, to which deference is given. Instead, in reviewing the 
agency’s classification determinations, courts are to defer to 

Order 111-2, 1981-1 C.B. 698, 699 (delegating authority “to make the final 
determination” on “regulations” and “Revenue Rulings” to the Assistant 
Secretary of the Treasury (Tax Policy)). Revenue rulings that are 
promulgated by the Commissioner and approved by the Secretary under 
the express authority provided by 26 U.S.C. 7805(a) are a paradigmatic 
example of a formal interpretive rule, issued in the format prescribed by 
Congress, to which deference is due. See Pet. Br. 24-25 & n.11. It is only 
informal “rulings not promulgated by the Secretary” that this Court has 
stated are to be given little deference. Biddle v. Commissioner, 302 U.S. 
573, 582 (1938) (emphasis added). The amicus further errs in suggesting 
(Am. Br. 5) that Revenue Rulings are not officially published. Revenue 
Rulings have been formally published for decades in the Cumulative 
Bulletin—which is widely used as the official citation for such rulings. 

Under both the Tariff Act and the Internal Revenue Code, Congress 
has directed the Treasury to adopt not only “regulations,” but also “rules” 
to implement the statutory schemes. 19 U.S.C. 1502(a); 26 U.S.C. 7805(a). 
As this Court has emphasized, deference to the rules adopted by the 
agency to implement these complex provisions “helps guarantee that the 
rules will be written by ‘masters of the subject,’ United States v. Moore, 
95 U.S. 760, 763 (1878), who will be responsible for putting the rules into 
effect.” National Muffler Dealers Ass’n v. United States, 440 U.S. 472, 
477 (1979). 

6 

the reasonable interpretations of law established and set 
forth in the agency’s rulings. 

Respondent’s statement that 10,000 to 15,000 classification 
rulings are issued each year (Resp. Br. 5) drastically over- 
states the number of rulings that contain or set forth inter- 
pretations of law to which courts would defer. The vast 
number of such rulings resolve merely the application, to 
particular facts, of legal standards that are not in dispute.4 
Routine rulings issued at ports that apply Headquarters 
Rulings or other precedent without elaboration of the 
agency’s reasoning neither contain nor purport to establish 
the agency’s interpretation of issues of law. By contrast, the 
detailed and thorough Headquarters Ruling involved in this 
case does contain and establish the agency’s interpretation of 
issues of law. See Pet. App. 28a-47a. Deference is not 
required for the agency’s application of settled law to facts; it 
is instead given to “reasonable” legal interpretations of 
the statute set forth in the formal rulings that Congress 
authorized the agency to adopt. See, e.g, Zenith Radio, 437 
U.S. at 450. 

The agency’s classification determinations are subject to 
review in the Court of International Trade. In such pro- 
ceedings, although the agency’s ultimate determination “is 
presumed to be correct” (28 U.S.C. 2639(a)(1)), its factual 
determinations are reviewed de novo, on a “record made 
before the court” (28 U.S.C. 2640(a).5 As we noted in our 

4 As Amicus Customs and International Trade Bar Ass’n has noted 
(Am. Br. 2), the classification decisions issued routinely at ports of the 
United States upon the entry of goods ordinarily contain no discussion of 
legal issues. 

5 As the amici have acknowledged, 28 U.S.C. 2640(a)(1) permits “inde- 
pendent fact gathering” upon judicial review of customs determinations by 
authorizing “a trial de novo in the Court of International Trade.” Amici 
Cargill, Inc., et al., Br. 12 (quoting H.R. Rep. No. 1235, 96th Cong., 2d 
Sess. 59 (1980)). 

7 

brief in the Haggar case (U.S. Reply Br. No. 97-2044 Br. 3-4 
& n.2) the procedure for judicial review of customs deter- 
minations thus parallels the procedure for judicial review of 
tax determinations generally: in determining the proper 
amount of taxes or duties owed, the reviewing court makes 
de novo findings of fact upon a record assembled in that 
court; and, in applying the applicable law to those findings, 
the reviewing court makes an independent determination of 
the law. See United States v. Haggar Apparel Co., 526 U.S. 
380, 391 (1999). 

Respondent and its amici are wrong in claiming (Resp. Br. 
32; Am. United States Ass’n of Importers of Textiles and 
Apparel, et. al., Br. 3-4), that the availability of a de novo 
judicial review of facts and an independent judicial 
determination of the law means that the agency’s legal 
interpretations of the statute are entitled to “no deference.” 
This Court rejected that very contention in the Haggar case. 
The Court explained that respondent’s “conclusion does not 
follow from the premise,” for a court may give an agency’s 
legal interpretation “proper effect even while applying the 
law to newfound facts, just as any court conducting a trial in 
the first instance must conform its rulings to controlling stat- 
utes, rules, and judicial precedents.” 526 U.S. at 391.6 The 

6 Chevron deference routinely applies in cases in which the court is to 
determine the facts de novo and is to make an independent determination 
of the applicable law. See, e.g., Smiley v. Citibank (South Dakota), N.A., 
517 U.S. at 739-741 (damages suit in state court claiming that late pay- 
ment charges were prohibited interest); Auer v. Robbins, 519 U.S. 452, 
456-458 (1997) (suit for overtime pay); United States v. O’Hagan, 521 U.S. 
642, 674 (1997) (criminal case). 

Amici United States Ass’n of Importers of Textiles and Apparel, et al., 
err in contending (Am. Br. 6) that the decision in Adams Fruit Co. v. 
Barrett, 494 U.S. 638 (1990), requires a different conclusion. In Adams 
Fruit, the Court declined to afford Chevron deference to a regulation that 
interpreted the scope of the jurisdiction of courts in direct private actions 

8 

Court concluded in Haggar that “[d]eference to an agency’s 
expertise in construing a statutory command is not incon- 
sistent with” the court’s ultimate responsibility to “reach[] a 
correct decision” as to the proper meaning of the statute. Id. 
at 392. 

The fact that some classification rulings involve mixed 
questions of fact and law does not mean that the legal inter- 
pretations contained in such rulings are entitled to no 
deference. For example, in the present case, the agency 
adopted a reasonable interpretation of the statutory terms 
“bound” and “diary” and applied that interpretation to the 
facts of this case. Pet. App. 28a-47a. The fact that the 
agency’s legal interpretation was adopted in a concrete 
factual context, rather than in a vacuum, does not deprive it 
of the “great deference” that is due “to the interpretation 
given the statute by the officers or agency charged with its 
administration.” Zenith Radio, 437 U.S. at 450 (quoting 
Udall v. Tallman, 380 U.S. 1, 16 (1965)). See also NLRB v. 
Local Union No. 103, Int’l Assoc. of Bridge Workers, 434 
U.S. 335, 350 (1978). In the application of the complex tariff 
laws to the infinite variety of commercial activities, “a court 
that tries to chart a true course to the Act’s purpose em- 
barks upon a voyage without a compass when it disregards 

because “[a] precondition to deference under Chevron is a congressional 
delegation of administrative authority” and “[n]o such delegation” of 
authority to interpret the “enforcement” authority of the courts had been 
made to the agency in that case. Id. at 649, 650. The Court emphasized in 
Adams Fruit, however, that the agency’s power to interpret the 
substantive provisions of the statute remained fully in place and that the 
statute “clearly envisioned, indeed expressly mandated, a role for the 
[agency] in administering the statute.” Id. at 650. Even though the sole 
enforcement authority had been vested in the courts under that statute, 
the Court held that “determinations [made by the agency] within the 
scope of [its] delegated authority are entitled to deference.” Ibid. That 
same conclusion applies directly here. 

9 

the agency’s views.” Ford Motor Credit Co. v. Milhollin, 
444 U.S. at 568. 

3. The suggestion of respondent that Congress did not 
intend to confer interpretive authority on the agency (Resp. 
Br. 35) is plainly incorrect. In specifically authorizing the 
agency to adopt “binding rulings” in advance of importation, 
Congress manifestly directed the agency to provide prospec- 
tive, precedential guidance. The overlapping delegations of 
authority that Congress made under the Tariff Act are set 
forth in detail in our opening brief. Pet. Br. 19-20. In 
addition to authorizing the adoption of “binding rulings” (19 
U.S.C. 1502(a)), Congress authorized the agency to adopt 
rules and regulations for “the final appraisement of 
merchandise” and to “fix the final classification and rate of 
duty applicable to such merchandise” (19 U.S.C. 1500(a), (b)). 
“In addition to the specific powers” conferred on the agency 
under these provisions, Congress further broadly em- 
powered the agency “to make such rules and regulations as 
may be necessary to carry out the provisions” of the Tariff 
Act. 19 U.S.C. 1624. 

By enacting these broad delegations of authority, Con- 
gress made clear that “[t]he Customs Service will be respon- 
sible for interpreting and applying” this statute. H.R. Conf. 
Rep. No. 576, 100th Cong., 2d Sess. 549 (1988). Respondent’s 
contrary contention simply ignores the broad scope of the 
statutory authority conferred on the agency and the clear 
statement of congressional intent in the legislative history. 
In Haggar, this Court concluded that the delegation 
provisions of the Tariff Act reflect that “Congress has 
authorized the agency to issue rules so that the tariff 
statutes may be applied to unforeseen situations and chang- 
ing circumstances in a manner consistent with Congress’ 
general intent.” 526 U.S. at 392-393. By empowering the 
agency to promulgate “binding rulings” under the Tariff Act, 
Congress directed the agency to apply the customs laws to 

10 

the “limitless factual variations” (United States v. Correll, 
389 U.S. at 307) that arise in modern commerce. As this 
Court noted in Haggar, this power to adopt interpretive 
rules was given to the agency because “Congress need not, 
and likely cannot, anticipate all circumstances in which [its] 
general policy must be given specific effect.” 526 U.S. at 392. 

Prior to the recent series of Federal Circuit decisions that 
culminated in this case, the Court of International Trade and 
the Federal Circuit had historically afforded deference to 
“reasonable” legal interpretations contained in Customs 
Service rulings. See Pet. Br. 21-22. In both classification 
and valuation cases, the Federal Circuit historically held that 
“Customs’ interpretation” of the statute is to be accepted if 
it is “sufficiently reasonable” and “does not contravene any 
clearly discernible legislative intent.” Mitsui Foods, Inc. v. 
United States, 867 F.2d 1401, 1403 (Fed. Cir. 1989) (classifi- 
cation dispute); Generra Sportswear Co. v. United States, 
905 F.2d 377, 379 (Fed. Cir. 1990) (valuation dispute).7 

The 
contrary holding of the Federal Circuit in the present case is 
“inconsistent with the historical practice in customs cases” 
and “would thwart congressional intent.” United States v. 
Haggar Apparel Co., 526 U.S. at 393. 

7 Respondent acknowledges (Resp. Br. 28 n.28) that the Federal 
Circuit has traditionally deferred to the agency’s legal interpretations in 
valuation disputes. Respondent erroneously claims (ibid.), however, that 
the Federal Circuit has not historically afforded any deference to the 
agency’s classification rulings. In Mitsui Foods, Inc. v. United States, 867 
F.2d at 1402-1403, the court expressly held that it would defer to the 
agency’s “reasonable” interpretation in a “classification case” that pre- 
sented the question whether the tariff classification of “United States 
pack of canned tuna” included “tuna packed in American Samoa.” In that 
“classification case,” the court of appeals quoted the standard applied by 
this Court in Zenith Radio, 437 U.S. at 450, to uphold the agency’s 
“reasonable” interpretation of the statute. See 867 F.2d at 1403 & n.3. 

11 

4. Respondent and its amici are incorrect in stating that 
deference is inappropriate for the agency’s “binding rulings” 
because they are “binding only on Customs itself and the 
specific importer and merchandise involved in the particular 
transaction.” Resp. Br. 34 n.33; see also Am. Cargill, Inc., et 
al., Br. 9. In making that contention, respondent relies on 
the portion of the regulations that cautions that, because the 
agency’s rulings are “subject to modification or revocation,” 
other importers should not “rely on the ruling letter or 
assume that the principles of that ruling will be applied” to 
other transactions. 19 C.F.R. 177.9(c).8 What respondent 
and its amici have failed to cite, however, is the very next 
sentence of the same regulation, which specifies that any 
person who wishes to rely on these rulings “may request 
information as to whether a previously-issued ruling letter 
has been modified or revoked.” Ibid. These regulations 
further expressly specify that the agency’s binding rulings 
are “precedential decisions” (19 C.F.R. 177.10(a)) and that, if 
the rulings have not been modified or revoked, they “may be 
cited as authority in the disposition of transactions involving 
the same circumstances” (19 C.F.R. 177.9(a)). 

5. Respondent also errs in contending (Resp. Br. 35 n.35) 
that deference to the Treasury’s interpretations of the cus- 
toms provisions is inappropriate because any doubt as to the 
meaning of revenue laws should be resolved in the tax- 
payers’ favor under the rule of lenity. That contention— 
based on a doctrine that has little, if any, application outside 
the criminal law context—overlooks numerous decisions, 
including in particular this Court’s decision in Zenith Radio, 

8 The agency’s regulations specify that a ruling may be modified or 
revoked if it is “found to be in error or not in accordance with the current 
views of the Customs Service” and that notice of such action will be given 
“to the person to whom the ruling letter was addressed” and by “publi- 
cation of a notice or other statement in the Customs Bulletin.” 19 C.F.R. 
177.9(d)(1). 

12 

437 U.S. at 450, which upheld the agency’s “reasonable” 
interpretation of an ambiguous provision in the statute. See 
also Haggar Apparel Co., 526 U.S. at 393 (noting that “judi- 
cial deference” to the agency’s interpretation of ambiguous 
customs provisions is not “inconsistent with the historical 
practice in customs cases”).9 

This Court has, in fact, ex- 
pressly rejected the contention that the rule of lenity applies 
in such cases. In disposing of this contention in White v. 
United States, 305 U.S. 281, 292 (1938), the Court empha- 
sized that “[w]e are not impressed by the argument that, as 
the question here decided is doubtful, all doubts should be 
resolved in favor of the taxpayer.”10 

6. Binding rulings are issued by the Customs Service in 
advance of importation because “[i]t is in the interest of the 
sound administration of the Customs and related laws that 

9 Contrary to respondent’s suggestion (Resp. Br. 11), the United 
States did not acquiesce in the no-deference standard applied in the 
Federal Circuit during the period when the government was challenging 
that standard in the Haggar case. Following the issuance of this Court’s 
decision upholding the government’s position in Haggar, the question of 
deference as applied in the specific context of this case was briefed by the 
parties and decided by the court of appeals. The courts below did not 
regard the government’s orderly presentation of the deference issue first 
to this Court in Haggar to represent an abandonment or waiver of the 
deference question in this case. To the contrary, the court of appeals 
understood that the question of deference relates to the judicial respon- 
sibility correctly to interpret and apply the laws. 

10 Moreover, here, as in Reno v. Koray, 515 U.S. 50, 64-65 (1995), re- 
spondent “misconstrues the doctrine” of lenity: “The rule of lenity applies 
only if, ‘after seizing everything from which aid can be derived,’ Smith v. 
United States, 508 U.S. 223, 239 (1993) (internal quotation marks and 
brackets omitted), we can make ‘no more than a guess as to what Con- 
gress intended.’ Ladner v. United States, 358 U.S. 169, 178 (1958).” One 
of the principles “from which aid can be derived” in the interpretation of 
statutes is the principle that deference is to be given to the reasonable 
interpretations of statutes by the agency that Congress has charged with 
enforcement responsibility. See Zenith Radio, 437 U.S. at 450. 

13 

persons engaging in any transaction affected by those laws 
fully understand the consequences of that transaction prior 
to its consummation.” 19 C.F.R. 177.1(a)(1). As respondent 
acknowledges, “prudent importers” (Resp. Br. 5) will seek 
customs rulings in order to reduce uncertainty in their busi- 
ness planning. Even when importers have not themselves 
made such a request, binding rulings may be issued by the 
Customs Service on its own initiative. 19 C.F.R. 177.8(b), 
177.11(a). Whether issued in response to the request of an 
importer or on the agency’s own initiative, the rulings issued 
by the Headquarters Office “represent[] the official position 
of the Customs Service” on that issue. 19 C.F.R. 177.9(a), 
177.11(b)(6). 

If deference were not afforded to the agency’s inter- 
pretation of these voluminous and intricate statutory pro- 
visions, both importers and the Customs Service would be 
left without effective guidance for a wide range of transac- 
tions. The result of the ad hoc approach adopted by the 
court of appeals would be expensive customs litigation and 
unpredictable outcomes. It is in part to avoid such wasteful 
and unduly expensive litigation that this Court has long 
concluded that when, as here, “the administrator’s reading 
fills a gap or defines a term in a way that is reasonable in 
light of the legislature’s revealed design,” the administrative 
interpretation should be given “controlling weight.” Na- 
tionsbank of N.C., N.A. v. Variable Annuity Life Ins. Co., 
513 U.S. at 257 (quoting Chevron, 467 U.S. at 844). 

II. The Customs Service has reasonably interpreted 
the statutory phrase “diaries * * * bound” to 

include the day planners imported by respon- 
dent. 

1. For the reasons detailed in our opening brief, the 
Customs Service has reasonably interpreted the statutory 
phrase “diaries * * * bound” to include the ring-bound 

14 

day planners imported by respondent: (i) terms employed in 
tariff provisions are to be interpreted in light of their 
ordinary commercial usage, and the ordinary commercial 
usage of the term “diary” encompasses business diaries such 
as respondent’s day planner; and (ii) the term “bound” was 
defined by the Explanatory Notes of the international draft- 
ing authority to encompass materials held together with 
“reinforcements or fittings of metal” and thus includes the 
“ring-bound” diaries imported by respondent. Pet. Br. 34-36. 
The agency’s interpretation of these statutory terms has 
ample support and is “‘sufficiently reasonable’ to be accepted 
by a reviewing court.” Zenith Radio, 437 U.S. at 450 
(quoting Train v. Natural Resources Defense Council, 421 
U.S. 60, 75 (1975)). 

2. Respondent claims, however, that, in the context in 
which these provisions were enacted, the statutory terms 
“diaries” and “bound” are so clear and unambiguous that no 
reasonable disagreement can arise as to their meaning. Re- 
spondent asserts that deference therefore need not be given 
to the agency’s interpretation. Resp. Br. 16-22. 
Respondent’s theory is that, because the classification 
provision distinguishes between articles that are “diaries” 
(to which the tariff applies) and articles that are “similar” to 
diaries (to which the tariff does not apply), anything that is 
not within the particular, “narrower” dictionary definition of 
“diary” on which respondent relies must necessarily be 
something only “similar” to a “diary” and therefore not 
encompassed within the statutory phrase. Resp. Br. 17-19. 
The central premise of that contention is manifestly flawed. 

In determining what a “diary” is in the tariff classification, 
one need not look only to the particular definition of the 
term that respondent favors. As the Customs Service ex- 
plained, the statutory term “diary” has “several definitions,” 
and one of those definitions encompasses the established 
commercial product known as a business “diary.” The 

15 

agency concluded that this “broader concept of diary * * * 
reflects the common and commercial identity of these items 
in the marketplace.” Pet. App. 34a. Since tariff provisions 
are properly to be interpreted in light of the commercial 
usage of the classification terms, the agency’s interpretation 
reflects a reasonable elaboration of the provision. 

11 

Indeed, respondent acknowledges that the term “diary” 
has more than one definition in common and commercial 
usage. Respondent claims, however, that unless its “nar- 
rower definition” of “diary” is applied, the statutory pro- 
vision for articles “similar” to diaries would be rendered 
irrelevant. That contention was not adopted by the court of 
appeals and was correctly rejected by the Court of Inter- 
national Trade. As that court explained, “there exists a 
category of merchandise more remote from ‘pure’ diaries 
than the importations but still sufficiently close to be called 
‘similar.’ ” Pet. App. 24a. The court noted that several of the 
agency’s prior rulings had involved items that “were not 
actually diaries” but were “similar” to diaries within the 
meaning of the statutory classification. Ibid. (referring, for 
example, to rulings involving “a small diary-like book en- 
titled ‘Special Occasion Book,’ ” used for recording names, 
dates and “gift ideas for special dates,” and a “Car Care 
Planner” that contained “information related to the main- 
tenance of a car”). As the court concluded, the term “diary” 

11 The court of appeals correctly acknowledged that tariff terms are to 
be construed “according to [their] common and commercial meanings.” 
Pet. App. 8a (citing Simod Am. Corp. v. United States, 872 F.2d 1572, 1576 
(Fed. Cir. 1989)). Amicus Filofax, Inc., also acknowledges that the terms 
employed in tariff classifications are to be understood “in the commercial 
sense” (Am. Br. 19 (quoting Norman G. Jensen, Inc. v. United States, 490 
F. Supp. 497, 501 (Cust. Ct. 1980)), that some dictionaries define the term 
“diary” to include “dated book[s] for noting future engagements” (Am. Br. 

4), and that Filofax has itself labeled its business engagement books a 
“diary” (Am. Br. 19). 

16 

need not be interpreted in the narrow fashion proposed by 
respondent “out of concern that otherwise” the term 
“similar” to diaries “would cover nothing at all.” Ibid. 

Respondent is similarly in error in asserting that the term 
“bound” is so clear that it requires no interpretation. Resp. 
Br. 20-22. It is evident that items such as diaries may be 
“bound” by various methods with varying degrees of per- 
manence. Even respondent ultimately acknowledges that 
the minimal requirement for being “bound” is simply that 
the item not be “loose sheets.” Id. at 21. Respondent also 
acknowledges that the definition of the term “bound” con- 
tained in the Explanatory Notes of the international author- 
ity that drafted the Harmonized Commodity system ex- 
pressly states that this term includes any item held together 
with reinforcements or fittings of metal—a description that 
applies directly to respondent’s business diaries in this case. 
Id. at 20-21 n.23. See Pet. App. 45a. 

12 While we agree with 

12 Respondent misquotes a Customs Service publication in contending 
that the Explanatory Notes of the Harmonized Commodity Description 
and Coding System apply only at 4-digit or 6-digit classification levels and 
are not applicable “at the eight-digit level” of tariff classifications. Resp. 
Br. 20-21 n.23. The Customs Service publication cited by respondent 
actually advises the public that the Harmonized System Explanatory 
Notes may be “persuasive authority” and “provide guidance at the na- 
tional numerical code level (i.e., beyond the 6-digit numerical code level) in 
a contracting party’s tariff system.” U.S. Customs Service, Tariff 
Classification Under the Harmonized Tariff Schedule 17 (Nov. 1997) 
(emphasis added). As the Court of International Trade explained in 
rejecting respondent’s contention in Pima Western, Inc. v. United States, 
915 F. Supp. 399, 402 n.2 (1996): 

The eight-digit level of classification is subsidiary to, not an expansion 
of, the six- and four-digit levels. If the Explanatory Notes offer 
guidance that a product should be excluded from a four-digit heading 
or six-digit subheading, one can properly infer that the product is 
excluded from the eight-digit subheading. 

17 

respondent that these Explanatory Notes are not “binding” 
on the Customs Service or on the courts, the agency’s re- 
liance on the explanations contained in the official defini- 
tional notes of the drafting authority cannot be regarded as 
unreasonable. While the Explanatory Notes are not “legally 
binding” on the United States, they are “generally indicative 
of proper interpretation of the various provisions of the 
[HTSUS].” H.R. Conf. Rep. No. 576, 100th Cong., 2d Sess. 
549 (1987). See Pet. Br. 36 n.24. 

The statutory terms are thus not so clear and unambig- 
uous that the agency’s interpretation is precluded on the 
theory that “Congress has directly spoken to the precise 
question at issue.” Chevron, 467 U.S. at 842. Indeed, the 
court of appeals did not purport to reject the agency’s inter- 
pretation on that theory. Instead, the court simply displaced 
the agency’s reasonable interpretation of the statutory 
terms with another perhaps plausible interpretation of its 
own. By doing so, the court of appeals erred. When, as here, 
“the statute is silent or ambiguous with respect to the 
specific issue, the question for the court is whether the 
agency’s answer is based on a permissible construction of the 
statute.” Id. at 843. “[T]he task for the Court of Appeals 
was not to interpret the statute as it thought best but rather 
the narrower inquiry into whether the [agency’s] 
construction was ‘sufficiently reasonable’ to be accepted by a 
reviewing court.” Federal Election Comm’n v. Democratic 
Senatorial Campaign Comm., 454 U.S. 27, 31-32, 39 (1981) 
(citing, e.g., Zenith Radio, 437 U.S. at 450). 

See also NEC Electronics, Inc. v. United States, 144 F.3d 788, 791 (Fed. 
Cir. 1998) (“[w]e cannot accept [the] argument that this Explanatory Note 
is only pertinent to the meaning of the six-digit subheading * * * but not 
the eight-digit subheading”); Pet. App. 45a (the value of the Explanatory 
Notes at the eight-digit level is that “they provide guidance and insight 
into the intent of the Harmonized System Committee when drafting the 
Nomenclature” used in these provisions). 

18 

3. Respondent also errs in claiming that the agency’s rul- 
ing should be given no weight “because it is inconsistent 
with earlier agency positions.” Resp. Br. 40. As respondent 
notes, the agency’s New York field office had initially con- 
cluded in 1991 that the term “diary” did not encompass 
respondent’s day planners. Resp. Br. 9, 41. Under the 
agency’s regulations, however, the Headquarters Office may 
review field classification rulings. 19 C.F.R. 177.11(b)(1), 
177.12(a). A ruling of the Headquarters Office upon review 
of a field classification determination is “the official position 
of the Customs Service.” 19 C.F.R. 177.11(b)(6). 

The issue 

involved in the present case was first submitted for 
determination by the Headquarters Office in 1992. From 
that date forward, that Office has “consistently determined 
that articles similar in design and/or function to the instant 
merchandise are classifiable as diaries.” Pet. App. 31a. 

13 

13 Respondent incorrectly attempts to rely on three rulings of the 
Headquarters Office that were issued in years prior to 1992. As re- 
spondent ultimately acknowledges (Resp. Br. 9), those rulings involved 
articles such as “student agendas” and “teacher multi-purpose blank 
books” (ibid., citing HQ 085086 (Sept. 13, 1989), 1989 WL 381276; HQ 
085515 (Dec. 14, 1989); HQ 950984 (Jan. 27, 1992), 1992 WL 313509) that 
were not “identical” (Resp. Br. 9) to the articles involved here. Because 
those rulings did not involve the same articles involved here, respondent 
acknowledges that they do not govern the classification of the day plan- 
ners involved in this case. Resp. Br. 9 (citing 19 C.F.R. 177.9(c)). For 
example, one of the cited rulings involved an article that consisted of a 
blank note pad, an address book, and a ball point pen. C.A. App. 35 (HQ 
950984). The fact that the items involved in the earlier rulings are 
“similar” to (but meaningfully different from) the items involved in this 
case reflects the unavoidably close application of the statutory distinction 
between “diaries” and articles that are “similar” to diaries. See page 15, 
supra. The fact that such distinctions under the intricate and complex 
provisions of the tariff statute may at times be close does not make the 
agency’s reasonable legal interpretations ineligible for judicial deference. 
See Chevron, 467 U.S. at 864 (noting that an agency may properly “adopt[] 
different definitions in different contexts”). 

19 

The fact that the agency’s “official position” (19 C.F.R. 
177.11(b)(6)) was obtained following review of a contrary, 
initial field determination does not mean that the agency’s 
thorough, considered views are not entitled to deference. 
When an agency’s official position is altered upon mature 
reflection of the interpretive issues, such “change is not 
invalidating, since the whole point of Chevron is to leave the 
discretion provided by the ambiguities of a statute with the 
implementing agency.” Smiley v. Citibank (S.D.), N.A., 517 
U.S. at 742. 

14 Moreover, the process that led to the formal 
adoption of the agency’s official position does not represent 
an “inconsistency”; it represents the proper functioning of 
the “binding ruling” program through the levels of review 
established in the agency’s regulations. See 19 C.F.R. 
177.11, 177.12. The agency’s official position, as set forth in 
the binding rulings adopted pursuant to the authority 
expressly conferred on the agency by Congress, should be 
upheld when, as here, they establish a reasonable 
interpretation of the statutory text. 

* * * * * 

14 Respondent is wrong in contending (Resp. Br. 41) that, under the 
formulation of Skidmore v. Swift & Co., 323 U.S. 134 (1944), an incon- 
sistency between the initial views of the field office and the official view of 
the Headquarters Office would deprive the latter of all deference. Even if 
the agency’s final interpretation were “inconsistent with prior agency pro- 
mulgations, the thoroughness and validity of the agency’s reasoning” 
would entitle it to deference under Skidmore. 

Aero Mayflower Transit 

Co. v. ICC, 711 F.2d 224, 228 n.30 (D.C. Cir. 1983). “An administrative 
agency is not disqualified from changing its mind; and when it does, the 
courts still sit in review of the administrative decision and should not 
approach the statutory construction issue de novo and without regard to 
the administrative understanding of the statutes.” NLRB v. Local Union 
No. 103, 434 U.S. at 351. 

20 

For the foregoing reasons and those stated in our opening 
brief, the judgment of the court of appeals should be 
reversed. 

Respectfully submitted. 

SETH P. WAXMAN 

Solicitor General 

SEPTEMBER 2000