Ammex, Inc. v. Wenk

326 F. Supp. 3d 472
CourtDistrict Court, E.D. Michigan
DecidedJune 1, 2018
DocketCase No. 2:18-cv-10751
StatusPublished
Cited by1 cases

This text of 326 F. Supp. 3d 472 (Ammex, Inc. v. Wenk) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ammex, Inc. v. Wenk, 326 F. Supp. 3d 472 (E.D. Mich. 2018).

Opinion

LAURIE J. MICHELSON, U.S. DISTRICT JUDGE

After the United States Environmental Protection Agency designated southeast Michigan as not in attainment of national air-quality standards, Michigan came up with a plan to improve air quality in the region. This included enacting Michigan Compiled Laws § 290.650d. That statutory provision requires dispensing facilities in southeast Michigan to sell gasoline with a Reid Vapor Pressure of no more than 7.0 pounds per square inch during the summer. As Ammex, Inc.'s gas station is located in southeast Michigan, the Michigan Department of Agriculture & Rural Development intends to enforce § 290.650d against Ammex this summer.

While Ammex's gas station is located in southeast Michigan, the station is more precisely located right before the Ambassador Bridge connecting the United States and Canada. In fact, the station is located beyond what United States Customs and Border Protection considers the "exit point" from the United States. Moreover, the station is part of a duty-free store and for a duty-free store to sell gasoline tax free, the gasoline must come from a foreign country (or foreign trade zone), stay beyond the exit point, and be sold to people leaving the United States. Indeed, the physical design of Ammex's gas station ensures that those who refuel there must immediately head into Canada. For these and related reasons, Ammex believes that MDARD would violate the Federal Constitution if it enforced Michigan Compiled Laws § 290.650d against it.

The parties' disagreement, coupled with Ammex's present inability to find a foreign source of 7.0 RVP gasoline, led to this lawsuit. Ammex asks this Court to enjoin MDARD from enforcing § 290.650d (and associated laws) against it and to declare that § 290.650d cannot be lawfully applied to it. Moreover, with summer imminent, Ammex has sought a preliminary injunction. (R. 8.)

As will be explained in detail below, the Court finds that Ammex is not likely to show that either the Supremacy Clause or the Foreign Commerce Clause bars MDARD from enforcing a 7.0 RVP standard against Ammex. As such, the Court will deny Ammex's motion for preliminary relief.

I.

A.

Customs bonded warehouses have existed in America for over 170 years. See Xerox Corp. v. Harris Cty., Tex. , 459 U.S. 145, 150-51 & n.7, 103 S.Ct. 523, 74 L.Ed.2d 323 (1982) (discussing Warehousing Act of 1846). They come in different varieties, but, speaking generally, they help ease the burden of federal import *476duties. In particular, a merchant engaged in international trade can store his goods in a customs bonded warehouse and either defer the import duty until he puts the goods into the stream of United States commerce or avoid the import duty entirely by taking his goods from the warehouse to another country. See 19 U.S.C. § 1557(a)(1) ; Xerox , 459 U.S. at 150-51 & n.7, 103 S.Ct. 523. And, depending on the type of customs bonded warehouse, the merchant may organize, repackage, and even transform his goods into new ones while they are warehoused. See 19 C.F.R. § 19.1. Thus, the purpose of customs bonded warehouses, or a key one at least, is "to encourage merchants here and abroad to make use of American ports." Xerox , 459 U.S. at 151, 103 S.Ct. 523.

A duty-free store, while still considered a customs bonded warehouse, see 19 U.S.C. § 1555(b) ; 19 C.F.R. § 19.1(a)(9), operates somewhat differently: the store's owner sells merchandise to those leaving the United States, see 19 C.F.R. § 19.35(a). Like proprietors of other customs bonded warehouses, the owner of a duty-free store does not pay an import duty on the goods he brings into his store from a foreign country (or foreign trade zone). Moreover, he can sell his goods free of federal, and at least in some instances, state taxes. See 19 U.S.C. § 1555(b)(8)(D), (E) ; Ammex, Inc. v. Dep't of Treasury , 272 Mich.App. 486, 726 N.W.2d 755, 766-69 (2006). That makes items that are heavily taxed, such as liquor and cigarettes, popular at duty-free stores. And, in Congress' view, lower-cost goods not only "play a significant role in attracting international passengers to the United States," Pub. Law 100-418 (1988), they "induce foreign visitors to increase their expenditures for goods in the United States," S. Rep. 100-71 (1987).

Plaintiff Ammex, Inc. operates a duty-free store near the Ambassador Bridge that connects Detroit, Michigan to Windsor, Canada. While Ammex's store is in Wayne County, Michigan, it is "beyond the exit point" established by the United States Customs and Border Protection. (R. 20, PID 732). "Exit point," for CBP purposes, is not the "actual exit" from the United States but near the actual exit, see 19 C.F.R. §§ 19.1

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
326 F. Supp. 3d 472, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ammex-inc-v-wenk-mied-2018.