Chae v. Yellen

1

BYUNGMIN CHAE, Plaintiff-Appellant v. JANET YELLEN, SECRETARY OF THE TREASURY, ALEJANDRO MAYORKAS, SECRETARY OF HOMELAND SECURITY, DEPARTMENT OF THE TREASURY, DEPARTMENT OF HOMELAND SECURITY, UNITED STATES, Defendants-Appellees

No. 2022-2017

United States Court of Appeals, Federal Circuit

April 25, 2023

This disposition is nonprecedential.

Appeal from the United States Court of International Trade in No 1:20-cv-00316-TMR, Judge Timothy M. Reif.

BYUNGMIN CHAE, Elkhorn, NE, pro se.

MARCELLA POWELL, Commercial Litigation Branch, Civil Division, United States Department of Justice, New York, NY for defendants-appellees. Also represented by BRIAN M. BOYNTON, AIMEE LEE, PATRICIA M. MCCARTHY, JUSTIN REINHART MILLER; MATHIAS RABINOVITCH, Office of Assistant Chief Counsel, International Trade Litigation, United States Bureau of Customs and Border Protection, New York, NY.

Before NEWMAN, PROST, and HUGHES, Circuit Judges.

NEWMAN, Circuit Judge.

Appellant Byungmin Chae appeals the decision of the United States Court of International Trade ("CIT"), which sustained the denial of Mr. Chae's application for a customs broker license. ^[1] The CIT affirmed the ruling of United States Customs and Border Protection ("Customs" or "CBP") that Mr. Chae did not achieve the required passing grade of at least 75 percent on the Customs Broker License Examination ("CBLE"), which Mr. Chae sat for in April 2018. See 19 U.S.C. § 1641(b)(2) (stating that the Secretary of the Treasury "may conduct an examination to determine the applicant's knowledge of customs and related laws, regulations and procedures, bookkeeping, accounting, and all other appropriate matters"); 19 C.F.R. § 111.11(a)(4) (establishing "75 percent or higher" as the passing grade on the CBLE). On appellate review, we affirm the decision of the CIT denying Mr. Chae's customs broker license appli-cation.^[2]

BACKGROUND

The CBLE is an 80-question, multiple-choice examination administered by Customs. The directions for the exam state that "[e]ach question has a single best answer." J.A. 413 (Apr. 25, 2018 CBLE, Directions) (emphasis in original). It is an open book examination, and applicants are "responsible for having the following references:"

Harmonized Tariff Schedule of the United States . . .

Title 19, Code of Federal Regulations . . .

Instructions for Preparation of CBP Form 7501 . . .

Right to Make Entry Directive 3530-002A

Id.

The examination is initially scored by Customs. After this initial scoring, 19 C.F.R. § 111.13(f) and 19 U.S.C. § 1641(e) provide a multitiered system of administrative and judicial review. If the passing grade of 75% is not attained, the applicant may request an initial administrative review by the Broker Management Branch of CBP's Office of Trade. See 19 C.F.R. § 111.13(f). If the applicant's score remains below 75% after this initial review, the applicant may request a second round of administrative review by the "appropriate Executive Director" of CBP's Office of Trade. Id. If an applicant's score remains below 75% after exhausting these two levels of administrative review, the decision to deny a customs broker license may be judicially appealed to the CIT. See 19 U.S.C. § 1641(e)(1). If the applicant's requested relief is still not granted, another level of judicial review is available, by appeal to the Court of Appeals for the Federal Circuit. See 28 U.S.C. § 1295(a)(5).

Mr. Chae initially received a score of 65% on the April 2018 CBLE. J.A. 330. After being notified of this result, he appealed to CBP's Office of Trade's Broker Management Branch, requesting review of thirteen questions. J.A. 333.

The Broker Management Branch awarded Mr. Chae credit for two additional answers, raising his score to 67.5%. J.A. 351.

Mr. Chae then appealed the Broker Management Branch's decision to the Executive Assistant Commissioner of CBP's Office of Trade, requesting review of the remaining eleven questions for which Mr. Chae was denied credit in his initial administrative appeal. J.A. 354. The Executive Assistant Commissioner awarded Mr. Chae credit for three more of his answers, raising his score to 71.25%. J.A. 398.

Mr. Chae then judicially appealed to the CIT, seeking review of five of the remaining questions for which he had not received credit.^[3] CIT Op. at 1348. The CIT granted Mr. Chae credit for one question, raising his score to 72.5%. CIT Op. at 1353. However, his score remained below 75%.

Mr. Chae appeals to our court. He focuses on three of the remaining questions for which he was denied credit, pointing out that a decision in his favor on two of these questions will raise his score to the passing grade 75%. Chae Br. 3. At issue are Questions 5, 27, and 33 of the April 2018 CBLE.

STANDARD OF REVIEW

In assessing CBP's ultimate licensing decision, "[c]on-sistent with the broad powers vested in the Secretary [of the Treasury] for licensing customs brokers under 19 U.S.C. § 1641, the denial of a license can be overturned only if the decision was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." Kenny v. Snow, 401 F.3d 1359, 1361 (Fed. Cir. 2005) (citing 5 U.S.C. § 706).

Within that framework, decisions as to individual CBLE questions are reviewed for support by substantial evidence, as detailed in Kenny:

Underpinning a decision to deny a license arising from an applicant's failure to pass the licensing examination are factual determinations grounded in examination administration issues-[including] the allowance of credit for answers other than the official answer-which are subject to limited judicial review because "[t]he findings of the Secretary [of the Treasury] as to the facts, if supported by substantial evidence, shall be conclusive."

401 F.3d at 1361 (quoting 19 U.S.C § 1641(e)(3)). In Kenny, we also wrote that "[o]n questions of substantial evidence, we review the decisions of the Court of International Trade 'by stepping into [its] shoes . . . and duplicating its review.'" Id. (quoting Taiwan Semiconductor Indus. Ass'n v. Micron Tech., Inc., 266 F.3d 1339, 1343 (Fed. Cir. 2001)).

The CIT has granted examinees credit on appeal when:

(1) the omission of relevant statutory or regulatory language would result in the question falsely characterizing the applicable provision, (2) the inclusion or omission of language would result in "the question's incorrect use of" a relevant term, or (3) the inclusion or omission of language would result in the question "not contain[ing] sufficient information [for an applicant] to choose an answer."

CIT Op. at 1353 (first citing Harak v. United States, 30 Ct. Int'l Trade 908, 928 (2006); and then quoting O'Quinn v. United States, 24 Ct. Int'l Trade 324, 328, 100 F.Supp.2d 1136, 1140 (2000)).

DISCUSSION

To achieve a passing score of at least 75%, Mr. Chae must obtain credit for at least two of the three questions discussed in this appeal. Mr. Chae argues that there is more than one correct answer among the multiple choices for Question 5 that Question 27 was not sufficiently clear, and that Question 33 does not provide sufficient information to reach the answer selected by Customs. See Chae Br. 1-2. Conversely, the appellees maintain that there is a single "best answer" to each question. Sec'y Br. 13, 15, 19.

I. Question 5

Question 5 of the April 2018 CBLE asks:

5. Which of the following customs transactions is NOT required to be performed by a licensed customs broker?

A. Temporary Importation under Bond

B. Transportation in bond

C. Permanent Exhibition Bond

D. Trade Fair Entry

E. Foreign Trade Zone Entry

J.A. 417 (emphasis in original).

1. Parties' Arguments

Mr. Chae selected choice E. Customs designated choice B as the correct answer.

Mr. Chae does not dispute that choice B is a correct answer; he argues that choice E is also correct. He argues that "E. Foreign Trade Zone Entry" is correct because "there is no 'foreign trade zone entry' term itself in the regulation," and therefore "there is no reason to believe the entry here is the type of port of entry as claimed by CBP." Chae Br. 1. Mr. Chae asserts that, because the term does not exist within Title 19 of the C.F.R., examinees who are new to the industry will interpret the term to mean "the act of bringing [goods] to the U.S. territory," also noting that "some shipments can be cleared if you claim your own goods" under 19 C.F.R. § 111.2(a)(2)(i). Chae Br. 1.

At the CIT, Mr. Chae argued that the "common understanding" of the term "entry" could reasonably refer to the process of "admission" set forth in 19 C.F.R. § 146.32(a)(1). See CIT Op. at 1354-55.

The appellees argue that 19 C.F.R. § 111.2(a) supports their position. See Sec'y Br. 13-14. Section 111.2(a)(1) recites a general requirement for a person to obtain a customs broker license to transact customs business:

General. Except as otherwise provided in paragraph (a)(2) of this section, a person must obtain the license provided for in this part in order to transact customs business as a broker.

19 C.F.R. § 111.2(a)(1). To support CBP's selected answer, appellees point to § 111.2(a)(2), which lists "[t]ransactions for which license is not required" as follows:

(i) For one's own account....

(ii) As [an] employee of [a] broker ....

(iii) Marine transactions....

(iv) Transportation in bond....

(v) Noncommercial shipments....

(vi) Foreign trade zone activities....

19 C.F.R. § 111.2(a)(2).

To rebut Mr. Chae's contentions, the appellees point to 19 C.F.R. § 146.62, titled "Entry" within Part 146 of Title 19 governing "Foreign-Trade Zones," and argue that a "question or answer choice need not reflect the precise wording of the regulation in order to be valid." Sec'y Br. 13- 14 (quoting Harak, 30 Ct. Int'l...