No. 99-1434 

In the Supreme Court of the United States 

UNITED STATES OF AMERICA, PETITIONER 

v. 

THE MEAD CORPORATION 

ON PETITION FOR A 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 AUTHORITIES 

Cases: 

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

Council, Inc., 468 U.S. 1227 (1984) .................................... 

3 

Christensen v. Harris County, No. 98-1167 (May 1, 

2000) ......................................................................................... 

2, 3, 4 

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

4 

Skidmore v. Swift & Co., 343 U.S. 134 (1944) ................... 

2, 4 

Smiley v. Citibank (South Dakota), N.A., 517 U.S. 

735 (1996) ................................................................................. 

3 

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

4, 7 

United States v. Haggar Apparel Co., 526 U.S. 

380 (1999) ................................................................................. 

5, 6 

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

(1978) ........................................................................................ 

2, 4 

Statute and regulation: 

19 U.S.C. 1502(a) ....................................................................... 

1, 2 

19 C.F.R.: 

§ 177.9(a) .................................................................................. 

1, 2, 7 

§ 177.9(b)(2) ............................................................................. 

2 

§ 177.9(c) .................................................................................. 

2 

Miscellaneous: 

Kenneth C. Davis & Richard J. Pierce, Administrative 

Law Treatise § 2.5 (3d ed. 1994) .......................................... 3 

(I) 

In the Supreme Court of the United States 

No. 99-1434 

UNITED STATES OF AMERICA, PETITIONER 

v. 

THE MEAD CORPORATION 

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

REPLY BRIEF FOR THE UNITED STATES 

1. In 19 U.S.C. 1502(a), Congress expressly author- 
ized the Customs Service to adopt and issue “binding 
rulings” to address and resolve tariff classification 
issues. Pursuant to that statute, the agency has speci- 
fied that a (19 C.F.R. 177.9(a)) 

ruling letter [thus] issued by the Customs Service 

* * * represents the official position of the 
Customs Service with respect to the particular 
transaction or issue described therein and is binding 
on all Customs Service personnel * * * until 
modified or revoked. In the absence of a change of 
practice or other modification or revocation which 
affects the principle of the ruling set forth in the 
ruling letter, that principle may be cited as author- 

(1) 

2 

ity in the disposition of transactions involving the 
same circumstances. 

The court of appeals held in this case that these official, 
“binding” interpretations of the Tariff Act that have 
been formally adopted by the Customs Service in the 
precise manner that Congress has specified are entitled 
to “no deference” (Pet. App. 7a).1 For the reasons 
stated in the petition, and especially in view of 
this Court’s recent decision in Christensen v. Harris 
County, No. 98-1167 (May 1, 2000), that holding war- 
rants this Court’s plenary review. 

This Court has long held that interpretive rulings 
that set forth the Treasury’s formal interpretations of 
revenue laws such as the Tariff Act are to be sustained 
if they reflect a “sufficiently reasonable” elaboration of 
the statutory scheme. Zenith Radio Corp. v. United 
States, 437 U.S. 443, 450 (1978). In Skidmore v. Swift & 
Co., 323 U.S. 134 (1944), on which this Court recently 
relied in the Christensen case, the Court emphasized 
that it “has long given considerable and in some cases 

1 Respondent attempts to create the impression (Br. in Opp. 9) 
that the “binding rulings” adopted under this statute are not really 
binding because the regulations caution that they are “subject to 
modification or revocation without notice” (19 C.F.R. 177.9(c)) and 
apply “only with respect to transactions involving articles identi- 
cal” to those addressed in the ruling request (19 C.F.R. 
177.9(b)(2)). Respondent fails to cite the general regulatory 
provision which specifies that, unless modified or revoked, the 
classification rulings adopted by the agency under these pro- 
cedures “may be cited as authority in the disposition of trans- 
actions involving the same circumstances.” 19 C.F.R. 177.9(a). In 
stating that it would give no deference to such classification rulings 
(Pet. App. 7a), the court of appeals did not question that these 
rulings were properly adopted as “binding rulings” under 19 
U.S.C. 1502(a). 

3 

decisive weight to Treasury Decisions and to inter- 
pretative regulations of the Treasury and of other 
bodies that were not of adversary origin.” 323 U.S. at 
140. As we explain in the petition in this case (Pet. 14- 

17), because Congress tasked the agency with the re- 
sponsibility of formally developing and announcing 
these “binding rulings,” the reasoning of this Court’s 
decision in Chevron applies directly here: courts are to 
defer to the agency’s reasonable interpretation of the 
statute because of the “presumption that Congress, 
when it left ambiguity in a statute meant for imple- 
mentation by an agency, understood that the ambiguity 
would be resolved, first and foremost, by the agency, 
and desired the agency (rather than the courts) to 
possess whatever degree of discretion the ambiguity 
allows.” Smiley v. Citibank (South Dakota), N.A., 517 
U.S. 735, 740-741 (1996). 

This is not a case like Christensen, in which the Court 
recently concluded that a lesser standard of deference 
applies to an agency opinion issued in a format (such as 
correspondence) that “Congress has not authorized for 
that purpose” (1 Kenneth C. Davis & Richard J. Pierce, 
Administrative Law Treatise § 3.5, at 120 (3d ed. 1994), 
cited with approval at Christensen v. Harris County, 
supra, slip op. 11). In the present case, the format 
selected by the agency—the formal adoption and 
issuance of binding interpretive rulings—is precisely 
the format “authorized [by Congress] for this purpose.” 
Ibid. And, in this context, this Court has long held that 
the rulings formally adopted by the Treasury to 
interpret the revenue laws of the United States in the 
manner (and format) that Congress has specified are 
entitled to substantial deference and are to be upheld if 
they “implement the congressional mandate in some 
reasonable manner.” United States v. Correll, 389 U.S. 

4 

299, 307 (1967). See also Zenith Radio v. United States, 
437 U.S. at 450; Pet. 13-19. The contrary ruling of the 
Federal Circuit in this case conflicts with this estab- 
lished precedent and therefore warrants this Court’s 
review. 

Indeed, the decision of the court of appeals in this 
case conflicts even with the lesser standard of defer- 
ence described by this Court in Christensen for agency 
opinions that are adopted in a format that Congress 
has not specifically authorized. The holding of the 
court below that “no deference” would be accorded to 
the agency’s “binding rulings,” and the court’s refusal 
to consider or address the reasoning set forth in 
those rulings, cannot be reconciled with the holding in 
Christensen that even informally stated agency 
opinions are entitled to “some deference” (slip op. 10, 
quoting Reno v. Koray, 515 U.S. 50, 61 (1995)), are 
“entitled to respect” from the courts, and should there- 
fore, at a bare minimum, be reviewed to determine if 
they have the “power to persuade” (slip op. 11, quoting 
Skidmore v. Swift & Co., 323 U.S. at 140). In the 
present case, the Federal Circuit held that no con- 
sideration whatever should be given to the content or 
reasoning of the agency’s binding rulings. See Pet. 
App. 7a; Pet. 11. Because the holding of the Federal 
Circuit in this case thus conflicts with all of the possible 
standards of deference that could apply under Christen- 
sen or under this Court’s pertinent prior decisions, the 
Court may wish to consider summary reversal in this 
case. 

2. a. Respondent suggests (Br. in Opp. 13-15) that 
the question whether deference is owed to the agency’s 
binding rulings is not properly presented in this case 
because that question was raised by the court of 
appeals on its own motion following this Court’s de- 

5 

cision in United States v. Haggar Apparel Co., 526 U.S. 
380 (1999), and was not initially raised or addressed by 
the parties. Since the question was in fact litigated by 
the parties and was in fact decided by the court of 
appeals in this case, it is unquestionably properly 
presented in the petition in this case. And, since the 
court of appeals has selected this case as its vehicle for 
resolving the question of the deference owed to the 
agency’s classification rulings, and has in fact resolved 
that question in this case, this case is also the most 
suitable case for review of this issue by this Court.2 

Respondent errs in stating that any claim of de- 
ference has been “waived” (Br. in Opp. 13) because, 
before the Federal Circuit’s decision in Haggar was 
reversed by this Court, the government had not 
pressed for deference to the agency’s rulings in this 
case. The United States plainly did not acquiesce in the 
no-deference standard applied in the Federal Circuit 
during the period that the government was challenging 
that standard in the Haggar case. And, following the 
issuance of this Court’s decision upholding the gov- 
ernment’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 court of appeals did not regard the gov- 
ernment’s orderly presentation of the deference issue 
first to this Court in Haggar to represent a “waiver” of 
the deference question in the present case. To the 
contrary, the court of appeals understood that the 
question of deference relates to its judicial responsi- 
bility correctly to interpret and apply the laws and 

2 The Federal Circuit denied the government’s petition for re- 
hearing en banc in this case, thus indicating that it will not 
reconsider this matter without the intervention of this Court. 

6 

therefore understood that it was necessary for that 
issue to be addressed and resolved based upon this 
Court’s precedents, including the recent decision of this 
Court in Haggar. See Pet. App. 7a-8a. 

b. Respondent is incorrect in asserting (Br. in Opp. 
13-16) that the record in this case is inadequate for 
plenary review by this Court of the underlying question 
of statutory interpretation. This case was submitted 
to the trial court on cross-motions for summary judg- 
ment. There are no facts in dispute. The ultimate 
question of law that governs this case—the proper 
tariff classification that applies to respondent’s 
imported articles—requires application to these facts of 
the controlling provisions of the Tariff Act and the 
relevant interpretations of those provisions in the 
binding rulings of the Customs Service. The record of 
this case is plainly sufficient for this purpose. 
Respondent nonetheless suggests (Br. in Opp. 15) 
that the rulings on which the United States relies are 
irrelevant in this case because respondent has chal- 
lenged duties imposed on its goods and has not brought 
a challenge to the rulings themselves. Respondent 
seemingly suggests that, because direct judicial review 
of the relevant agency rulings was not sought, those 
rulings have been made irrelevant in determining the 
proper application of the tariff classification provisions 
to respondent’s goods. That proposition, for which 
respondent cites no authority, is obviously flawed.3 

3 Respondent asserts that one of the several agency classifi- 
cation rulings cited by the government in this case was not subject 
to direct attack when it was entered because the agency applied 
that ruling only prospectively and allowed the particular mer- 
chandise then at issue to enter duty free (Br. in Opp. 16). The pre- 
sent case, however, involves the application of such rulings to 
different shipments of goods to which the agency’s binding rulings 

7 

The determination of the correct meaning of federal 
statutes is often based upon deference to interpretive 
rulings adopted in connection with, and applied first to, 
individuals other than the party who disputes that 
interpretation in subsequent litigation. See, e.g., 
United States v. Correll, 389 U.S. at 306 (applying an 
agency ruling adopted 27 years before the decision in 
that case). The failure of the court of appeals to follow 
that settled principle of deference in this case warrants 
review by this Court. 

CONCLUSION 

The petition for a writ of certiorari should be 
granted. 

Respectfully submitted. 

SETH P. WAXMAN 

Solicitor General 

MAY 2000 

have been applied. Respondent may challenge the application of 
those rulings in this case regardless whether or not a direct 
challenge to each of the prior rulings would have been possible at 
the time it was first entered. The regulations expressly state that 
the agency’s rulings may be cited as authority not only “with 
respect to the particular transaction” in connection with which 
they were issued but may also “be cited as authority in the 
disposition of transactions involving the same circumstances.” 19 
C.F.R. 177.9(a).