Convictions vacated because violation of 19 C.F.R. § 141.113(c) border entry documentation adopted in 2007 is civil in nature – not criminal.
U.S. v. Izurieta, 2013 WL 673918 (U.S. Court of Appeals for the 11th Circuit, February 22, 2013). Free copy available here.
Three layers of federal import safety requirements for food products
“… As part of the U.S. importation regime for food products, all imports are screened upon entry at three distinct stages. First the goods are examined by officials from Customs and Border Protection (“Customs”) for compliance with entry documentation regulations. See 19 C.F.R. § 141.86(a). The goods are then approved for entry by the Department of Agriculture. See 19 C.F.R. § 12.8. Finally, food products are subject to inspection by the Food and Drug Administration (“FDA”) under the Federal Food, Drug, and Cosmetic Act, ch. 675, 52 Stat. 1040 (1938) (codified as amended at 21 U.S.C. §§ 301-399f). To facilitate the importation and storage of covered goods, the FDA and Customs permit importers to take possession of their goods under a conditional release, pending test results or further inspection, provided the goods are securely stored in the importer’s warehouse pursuant to “such bond or other security as may be prescribed by [the Secretary of the Treasury] . . . .” 19 U.S.C. § 1499(a)(1). The goods are considered to be on “hold” and may not be distributed until formal authorization for entry into the commerce of the United States is provided by the FDA. 21 U.S.C. § 381. Under the regulations, an importer may be required to make the held goods available for inspection. See 19 C.F.R. § 141.113(c); 21 C.F.R. § 1.90. Ultimately, if the goods are found to be adulterated, the FDA may demand under the applicable regulation that the goods be “redelivered” to Customs for exportation or supervised destruction. See 21 U.S.C. § 381(a); 19 C.F.R. § 141.113(c).”
Legal violations here civil not criminal
“Although reference to a criminal statute is made in 21 U.S.C. § 381(q)(6) in connection with falsification of entry documents, no reference is made to the conduct or the criminal statute, 18 U.S.C. § 545, actually charged here. Similarly, although 21 U.S.C. § 331 lays out dozens of prohibited acts in violation of the Federal Food, Drug, and Cosmetics Act subject to criminal penalties, this statute does not specify as a crime the simple failure to hold, redeliver, export, and/or destroy. 19 C.F.R. § 141.113(c) itself, which specifically addresses such a failure, specifies only liquidated damages, not criminal punishment, for failure to comply with the regulation.
“The regulation at issue, 19 C.F.R. § 141.113(c), is clearly a substantive regulation establishing obligations for importers. It primarily acts to establish the general contractual terms between Customs and the importer regarding temporary release and storage of the imported goods, along with agreed-upon liquidated damages for non-compliance. See 19 C.F.R. § 141.113(c); see also 19 C.F.R. § 113.62 (laying out the basic entry bond conditions used by Customs, including a requirement to hold the goods for inspection). The regulation fails to qualify as a “law” for purposes of criminal liability under 18 U.S.C. § 545 not because it has no effect as a law but because that law is civil only, and in particular reflects contractual requirements.
“While some regulations may fall under the criminal prohibitions of 18 U.S.C. § 545, the text of 19 C.F.R. § 141.113(c) along with the comments issued during its promulgation certainly indicate to the average person that liability is strictly civil and monetary, capped at most at three times the value of the merchandise secured by bond, and is not aimed at punishment. See 19 C.F.R. § 141.113(c)(3); see also Assessment of Liquidated Damages Regarding Imported Merchandise That Is Not Admissible Under the Food, Drug and Cosmetic Act, 66 Fed. Reg. 16,850, 16,852-53 (Mar. 28, 2001) (noting that the liquidated damages claimed for failure to redeliver is not intended to be punitive). In reality, the text of 19 C.F.R. § 141.113(c) sets forth the terms of the contract between the importer and Customs by delineating the obligations of the importer upon conditional release and the damages for a breach of those contractual obligations. In this case, the statutory and regulatory structure and the history of the regulation demonstrate the vagueness and ambiguity of both the statute and regulation in terms of defining criminal liability. We disagree with the conclusion of our sister circuit in Mitchell that 18 U.S.C. § 545 is not grievously ambiguous, at least with respect to its effect of criminalizing conduct in violation of 19 C.F.R. § 141.113(c). See Mitchell, 39 F.3d at 470 (discussing a different regulation having the effect of law). Rather there is, at a minimum, great doubt as to whether violation of this regulation per se gives rise to criminal liability. Under principles of lenity, charges of violations of this regulation under 18 U.S.C. § 545 do not charge a crime, and the protections intended by Grand Jury indictment were not afforded the Izurietas. Accordingly, the convictions of both of the Izurietas on Counts 2-7 are vacated.”