[00:00:00] Speaker 02:
This is number 18-1698, Virgin Islands Port Authority versus United States.

[00:00:33] Speaker 02:
Mr. Eaton.

[00:00:36] Speaker 03:
Good morning, Your Honors.

[00:00:37] Speaker 03:
Before I get into the 1994 memorandum of agreement that I think is the crux of the trial court's error here, I'd like to put a little bit of context briefly around that issue that I think will help clarify how we think about the error.

[00:00:50] Speaker 03:
Your Honor, the trial court found that the roughly $10 million in fees at issue here was the poor authority's money, belonged to us.

[00:00:58] Speaker 03:
It also found that the CBP collected and retained that money over our objection

[00:01:03] Speaker 03:
and has that money in its pocket to this day.

[00:01:06] Speaker 03:
Finally, it's undisputed that from 2007 through 2010, CBP collected and kept that money under color of federal law that it subsequently conceded was inapplicable.

[00:01:17] Speaker 03:
Now, Your Honors, if we leave the MOA out of it for a moment.

[00:01:19] Speaker 02:
Okay, but I'm not sure what that has to do with it.

[00:01:22] Speaker 02:
I mean, it looks to me as though Section 1469C

[00:01:29] Speaker 02:
authorizes customs to collect fees if someone requests them.

[00:01:36] Speaker 02:
Correct.

[00:01:36] Speaker 02:
Right?

[00:01:37] Speaker 02:
And it seems to me that what we really have here is an agency problem, that for some period of time the Virgin Islands government requested the U.S.

[00:01:49] Speaker 02:
government to collect these fees and then at some point it suggested that they didn't want that anymore.

[00:01:56] Speaker 02:
And I guess if the Virgin Islands had simply said to the U.S.

[00:02:03] Speaker 02:
government, stop collecting these fees, and the United States had continued to collect these fees, you might have an illegal exaction.

[00:02:13] Speaker 02:
Your Honor, I believe that is what we have.

[00:02:15] Speaker 02:
Well, let me finish.

[00:02:17] Speaker 02:
But your problem, it seems to me, is that you didn't say stop.

[00:02:22] Speaker 02:
You knew that they continued to collect the fees, and you didn't tell them to stop.

[00:02:27] Speaker 02:
You kept trying to negotiate with them to make a change to the memorandum of agreement.

[00:02:33] Speaker 02:
So why should it be that they lacked authority to continue to collect these fees when you were not clear that you wanted them to stop immediately?

[00:02:42] Speaker 03:
Your Honor, I disagree with the premise that we were not clear.

[00:02:45] Speaker 03:
I think we were crystal clear.

[00:02:46] Speaker 03:
You did two things to revoke the authorization that they purportedly had.

[00:02:50] Speaker 03:
One, we took the instructions out of our marine tariff that ordered mariners to pay these fees to customs.

[00:02:56] Speaker 03:
That had been in place since 1969, and we would submit was the original authorization.

[00:03:01] Speaker 03:
Second, we went to them.

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They sent them a letter in 2007 stating two things explicitly.

[00:03:08] Speaker 03:
One, the MOA doesn't have anything to do with the Port Authority.

[00:03:11] Speaker 03:
We're not a party to it.

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And two, you are wrong that you are required to collect these things.

[00:03:16] Speaker 02:
Under the law of agency, it doesn't make any difference if a revocation is contrary to an agreement.

[00:03:20] Speaker 02:
But Your Honor, forgive me.

[00:03:21] Speaker 02:
Let me finish.

[00:03:23] Speaker 02:
Forgive me.

[00:03:25] Speaker 02:
Under the law of agency, you can revoke authority even if it's in violation of an agreement.

[00:03:29] Speaker 02:
That would give the agent the authority to sue for damages, perhaps.

[00:03:35] Speaker 02:
But that's not what's involved here.

[00:03:37] Speaker 02:
But you still, it seems to me, need to be clear.

[00:03:40] Speaker 02:
that you want them to stop.

[00:03:42] Speaker 02:
And for years, they continued to collect, and you continued to negotiate with them, and you didn't tell them to stop.

[00:03:49] Speaker 03:
Your Honor, our 2007 letter expressly requested that they stop.

[00:03:54] Speaker 03:
They expressly considered it a request to stop and refused it flatly.

[00:04:00] Speaker 03:
I'm not sure what else we could have done in those circumstances other than start a war with the Customs Service, which would not have been beneficial to anyone.

[00:04:07] Speaker 03:
Of course, we continued to negotiate.

[00:04:09] Speaker 03:
But we never conceded that the power they were asserting was correct.

[00:04:12] Speaker 03:
And indeed, they subsequently admitted that it was not.

[00:04:15] Speaker 01:
If there was an agency relationship here, which I'm not sure of, who's the principal?

[00:04:21] Speaker 03:
I think the assertion under the theory that Judge Dyke was positing, it would be that VIPA, which owns the fees, must be the principal, because it's our property, and that the government of the Virgin Islands was the agent negotiating on our behalf.

[00:04:36] Speaker 03:
Is that?

[00:04:37] Speaker 02:
No, no, no, no.

[00:04:39] Speaker 02:
Virgin Islands government is the principle, and perhaps the authority is acting with their authority.

[00:04:51] Speaker 02:
But the Virgin Islands government is the principle, and the United States Customs Service is the reason.

[00:04:56] Speaker 03:
Oh, I see what you're saying.

[00:04:57] Speaker 01:
I see what you're saying.

[00:04:58] Speaker 01:
Your Honor, so if you're talking about terminating the relationship

[00:05:03] Speaker 01:
the third party of beneficial interest, which would be VIPA, isn't the one that would be signaling the intent to terminate.

[00:05:12] Speaker 01:
It's going to be Virgin Islands.

[00:05:14] Speaker 03:
Well, two points, Your Honor.

[00:05:16] Speaker 01:
And that's what Judge Dyke was pointing out, is that Virgin Islands seems to continue to think that the only way to terminate is by amending the moat.

[00:05:27] Speaker 03:
Your Honor, that's... You will note, Your Honor, that in

[00:05:31] Speaker 03:
Vipa's request to CBP in 2007.

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It was expressly endorsed by the governor of the Virgin Islands on behalf of the United States Virgin Islands.

[00:05:40] Speaker 01:
I saw that.

[00:05:40] Speaker 01:
But well after that, the governor talks about, and we're continuing to do this, pending the negotiations to amend the model.

[00:05:48] Speaker 03:
Your Honor, that's, I mean, we are in a bit of a trick box here.

[00:05:51] Speaker 03:
Because that's because they were insisting, sort of, CBP was kind of talking out of two sides of its mouth at this point.

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They had two theories for why they could keep collecting.

[00:05:58] Speaker 01:
This argument we're having is not one that happened below.

[00:06:02] Speaker 01:
We looked at the briefing below on the question of whether or not the agency was terminated and wasn't litigated.

[00:06:08] Speaker 03:
Your Honor, I don't believe your Honor.

[00:06:12] Speaker 03:
The underlying premise of this entire line of argument, I'm sorry.

[00:06:15] Speaker 01:
That's correct.

[00:06:16] Speaker 01:
The agency, you did not argue below that there was an agency relationship here that was terminated in 07.

[00:06:24] Speaker 03:
No, Your Honor, and I don't think we needed to because... I just want to clarify... No, that's correct.

[00:06:29] Speaker 03:
This line of argument has never really been pursued by either side.

[00:06:33] Speaker 03:
Your Honor, all of that, the agency relationship argument assumes that the 1994 MOA is in fact an authorization for CBP to collect these fees.

[00:06:42] Speaker 03:
If it's not, then the relationship between... then the government of the... excuse me, forgive me, the government of the Virgin Islands involvement is not even really relevant to the question.

[00:06:51] Speaker 03:
We own the fees.

[00:06:52] Speaker 03:
The district court, excuse me, the trial court found as much.

[00:06:54] Speaker 03:
We put in a substantial amount of evidence and argument suggesting that the MOA is simply the writing that deals with reimbursement questions, not with the authorization of the underlying activity.

[00:07:07] Speaker 03:
Remember, the trial court's decision is dependent entirely on the finding that CBP's conduct was authorized by this agreement.

[00:07:15] Speaker 03:
If that's not true,

[00:07:17] Speaker 03:
than our instructions to them in the 2006 marine tariff and the 2007 letter.

[00:07:24] Speaker 02:
For years, they were collecting the fees, and there was no objection to that until 2007.

[00:07:30] Speaker 02:
How could it be that there wasn't any authority to collect the fees?

[00:07:33] Speaker 02:
Your Honor, I want to be very clear.

[00:07:35] Speaker 02:
Do not interrupt me, please.

[00:07:37] Speaker 02:
How can it be that there was no authority to collect those fees during that period of time before 2007?

[00:07:46] Speaker 03:
Your Honor, I want to be very clear about this.

[00:07:48] Speaker 03:
We are not arguing and have never argued that there was no authority prior to 2007.

[00:07:53] Speaker 03:
We freely concede that they did this with our permission for the better part of 40 years.

[00:07:58] Speaker 03:
The question is whether could they keep doing it once we ask them to stop.

[00:08:02] Speaker 03:
The answer to that, Your Honor, is no.

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And the reason that it's no is that there's no basis for them to continue doing it lawfully once we've requested that they cease doing it.

[00:08:11] Speaker 03:
There has to be a statutory basis for them to take our money lawfully.

[00:08:16] Speaker 03:
and not have to give it back.

[00:08:18] Speaker 03:
They asserted for three years that it was 1406HNI.

[00:08:20] Speaker 03:
It's not.

[00:08:22] Speaker 03:
They've conceded that.

[00:08:24] Speaker 03:
They subsequently asserted that it's 1469C and the MOA, and that the authorization theory applies.

[00:08:30] Speaker 03:
But, Your Honor, I think, and we've explained, tried to explain, I think, with some success why it is that the MOA, as you pointed out, can't possibly be the authorization.

[00:08:40] Speaker 03:
And if it's not the authorization, then the trial court had to be wrong

[00:08:44] Speaker 03:
that we couldn't revoke the authorization without an amendment.

[00:08:46] Speaker 02:
That doesn't make any sense to me.

[00:08:49] Speaker 02:
I mean, whether the authorization came from the MOA or someplace else, there was an authorization.

[00:08:58] Speaker 02:
Now, the claim here is for fees for 2008 to 2011, correct?

[00:09:03] Speaker 03:
I believe that's correct.

[00:09:06] Speaker 02:
So is it because of the statute of limitations that there's no claim for 2007, or what's the reason for that?

[00:09:13] Speaker 03:
Your Honor, I believe, I'm actually not sure in my own mind whether the claim is for 2007, or it starts in 2007 or 2008.

[00:09:22] Speaker 03:
I think if it's 2008, it would be because they only responded to us denying our request toward the end of 2007.

[00:09:32] Speaker 03:
So we couldn't claim, I think, maybe, I'll be honest, I don't know the answer, Your Honor.

[00:09:37] Speaker 03:
I think our position is that at least from the moment they declined our request to collect our own fees, they were collecting them unlawfully.

[00:09:46] Speaker 03:
That happened in the end of 2007.

[00:09:47] Speaker 02:
Where is it that the governor of the Virgin Islands revokes the authority of customs to collect the fees?

[00:09:56] Speaker 03:
Your Honor, the governor of the Virgin Islands never gave authority.

[00:10:01] Speaker 03:
The port authority, which owned the fees, had to give them that authority.

[00:10:05] Speaker 03:
We gave them that.

[00:10:06] Speaker 03:
at a minimum in 1969 when we added to our marine tariff that those fees should be paid to customs.

[00:10:13] Speaker 03:
We removed that authority in 2006 when we published our new tariff.

[00:10:17] Speaker 01:
Well, under whose law will we decide all that?

[00:10:21] Speaker 01:
Isn't that Virgin Islands law?

[00:10:23] Speaker 01:
I mean, did VI have any authority to speak on behalf of the Port Authority?

[00:10:28] Speaker 01:
Yes or no?

[00:10:28] Speaker 01:
How do we know that?

[00:10:30] Speaker 03:
Your Honor, that was

[00:10:31] Speaker 03:
some to to an extent the subject of a dispute.

[00:10:33] Speaker 01:
That part of the lower court's rationale is the problem here is not a violation of U.S.

[00:10:39] Speaker 01:
law.

[00:10:39] Speaker 01:
There may have been a violation of Virgin Islands law.

[00:10:44] Speaker 03:
I don't unless you assume that the MOA which was signed only by the government of the Virgin Islands was the source of authorization then you don't need to get into that question.

[00:10:53] Speaker 03:
We don't we have no

[00:10:56] Speaker 03:
There is no dispute between the Port Authority and the government on this issue.

[00:10:59] Speaker 03:
There simply isn't.

[00:11:00] Speaker 02:
There's no dispute that there was authority before 2007 to collect these fees.

[00:11:05] Speaker 02:
Correct.

[00:11:06] Speaker 02:
Whatever the source of that authority might be.

[00:11:08] Speaker 03:
Correct.

[00:11:09] Speaker 02:
If the authority has to come from the governor of the Virgin Islands, at some point he has to have revoked the authority of Customs to collect the fees.

[00:11:19] Speaker 02:
Where did he do that?

[00:11:21] Speaker 03:
Two answers to that.

[00:11:22] Speaker 03:
First of all, Your Honor, the premise of your question is incorrect.

[00:11:25] Speaker 03:
The government of the Virgin Islands did not have to give this authority because the fees didn't belong to the government of the Virgin Islands.

[00:11:30] Speaker 03:
It belonged to the Port Authority.

[00:11:32] Speaker 03:
The government of the Virgin Islands had nothing to do with it.

[00:11:35] Speaker 03:
And secondly, to the extent the governor, the government, had to revoke the authority, it did so by approving, expressly in writing, by the chief executive, VIPA's request to collect its own fees.

[00:11:48] Speaker 01:
Could I ask a question on the exaction point?

[00:11:52] Speaker 01:
All the cases that I read were in an illegal exaction was found.

[00:11:57] Speaker 01:
The party who was claiming it was exacted actually paid money out of its own pocket directly to someone, either to the US government or to someone else the government owed some money to.

[00:12:08] Speaker 03:
True, Your Honor.

[00:12:09] Speaker 01:
As far as a direct, the money has to come right out of the pocket.

[00:12:13] Speaker 01:
Now, the money didn't come right out of the pocket here.

[00:12:16] Speaker 01:
No, but Your Honor, as the trial court... So I'm just saying the whole notion that

[00:12:21] Speaker 01:
Judge Brook, you seem to think that there has been some relaxation, some easing of the requirements to show an exemption.

[00:12:30] Speaker 01:
Why do we need to go there?

[00:12:32] Speaker 01:
I mean, there was nothing that came out of the pocket of VIPA here.

[00:12:36] Speaker 01:
From my perspective, they haven't satisfied the test of exemption.

[00:12:40] Speaker 03:
Your Honor, as Judge Brook-Ink, I think, quite capably explained, the test under Eastport and Aerolinius is a direct payment or an ineffective payment?

[00:12:50] Speaker 03:
In effect, payment is clearly not a direct payment, right?

[00:12:52] Speaker 03:
It has meaning other than that.

[00:12:53] Speaker 01:
The question is, the only case law you have for an in-effect payment is where an aerialiness where a party paid some money to someone the government owed the money to.

[00:13:04] Speaker 01:
But they actually paid money out of their own wallet.

[00:13:07] Speaker 01:
And there's no money coming out of the wallet here.

[00:13:11] Speaker 01:
So I'm not inclined to, there's a waiver of sovereign immunity issues underlying this issue.

[00:13:18] Speaker 01:
Well, why should I extend for the facts of this case to say that there was an exaction in the first place?

[00:13:24] Speaker 03:
Well, Your Honor, I think the case here is actually stronger than it was in Erlenius, which is also an ineffective case.

[00:13:29] Speaker 01:
You think so, but there's no money coming out of the pocket.

[00:13:30] Speaker 01:
There's no money, but... So you're saying that case law, the only, can you cite me a case

[00:13:36] Speaker 01:
where an exaction was found where money did not come directly out of the pocket of the party executive.

[00:13:42] Speaker 03:
No, Your Honor.

[00:13:43] Speaker 01:
So this would be the first case.

[00:13:45] Speaker 03:
This would be the first case.

[00:13:46] Speaker 03:
But Your Honor, I submit to you, it is wholly consistent with a theory of illegal exaction.

[00:13:51] Speaker 03:
If the government could avoid illegal exactions simply by stepping in between someone's money and their own receipt of it, you're just licensing convergence.

[00:13:59] Speaker 03:
I mean, if there's a better case for an in-effect payment.

[00:14:02] Speaker 01:
Well, the question is, if we're ruling your favor on the exact issue in this case, we are opening a door.

[00:14:08] Speaker 01:
And the question is, is the door more favorable to the government?

[00:14:13] Speaker 01:
Or if we close the door, is it more favorable to the government?

[00:14:16] Speaker 03:
I don't believe you are opening a door.

[00:14:17] Speaker 03:
I mean, if you look at Erlenius there, I mean, you could make a very similar, probably a better argument there, that in fact, there was no payment to the government.

[00:14:24] Speaker 03:
No money entered the government's coffers, right?

[00:14:27] Speaker 03:
The court had no problem there saying that a payment to a third party.

[00:14:31] Speaker 01:
His action doesn't deal with money coming out of the government.

[00:14:35] Speaker 01:
It deals with money going to the government.

[00:14:36] Speaker 03:
It requires a showing that the government has the plaintiff's money in its pocket.

[00:14:40] Speaker 03:
There the governor only had it in a very virtual sense.

[00:14:43] Speaker 01:
I just wanted to clarify that this would be the first case.

[00:14:45] Speaker 03:
Yes, I agree with you, Ron, on these exact facts.

[00:14:48] Speaker 03:
Ron, I'm well into my rebuttal time.

[00:14:49] Speaker 03:
We'll give you a few minutes for rebuttal.

[00:14:51] Speaker 03:
Thank you.

[00:14:52] Speaker 03:
Ms.

[00:14:52] Speaker 03:
Speck.

[00:15:12] Speaker 00:
Your Honor, Elizabeth Speck for the United States.

[00:15:14] Speaker 00:
May it please the court.

[00:15:16] Speaker 02:
Okay, so why, what remedy would they have if this doesn't fall under the illegal exaction heading?

[00:15:26] Speaker 00:
Your Honor, we submit that their remedy is with the government of the Virgin Islands.

[00:15:29] Speaker 02:
This agreement... No, no.

[00:15:31] Speaker 02:
What remedy would they have against the United States?

[00:15:35] Speaker 02:
They say that you have kept money which belongs to them, that the customs authority was revoked,

[00:15:42] Speaker 02:
And we have to assume that for purposes of determining the illegal exacting theory.

[00:15:48] Speaker 02:
Why isn't that a legitimate illegal exacting theory?

[00:15:53] Speaker 02:
One.

[00:15:53] Speaker 02:
And two, if it isn't, what is their remedy?

[00:15:58] Speaker 00:
We submit it's not a legitimate illegal-exaction theory because, one, the government's conduct was authorized by federal statute.

[00:16:07] Speaker 02:
No, no, no, no.

[00:16:07] Speaker 02:
You can't go there.

[00:16:08] Speaker 02:
That's the merits.

[00:16:10] Speaker 02:
We have to assume that at this stage in determining jurisdiction, we have to assume that they have a good claim.

[00:16:17] Speaker 02:
Their claim is you once had the authority, Customs once had the authority to collect that authority, it was revoked.

[00:16:25] Speaker 02:
Customs continue to collect, that's an illegal exaction.

[00:16:28] Speaker 02:
So why is that not an illegal exaction theory if their proof is forthcoming on the merits?

[00:16:37] Speaker 00:
It's not an illegal exaction because there's no violation of federal law.

[00:16:40] Speaker 00:
To the extent they disagree that the government of the Virgin Islands was incapable of executing this agreement with the United States, that's a claim based on Virgin Islands law.

[00:16:51] Speaker 02:
and the court, the circuit's law is clear, Ariel and he's... Please, accept my theory of what their merits argument is.

[00:17:00] Speaker 02:
Their merits argument is the United States under 1469 C has the authority to collect fees if it's authorized by the Virgin Islands.

[00:17:10] Speaker 02:
Their theory is that authority was revoked, that customs no longer had the authority to collect these fees,

[00:17:19] Speaker 02:
and that by keeping the money and continuing to collect, the government engaged in illegal exactions.

[00:17:28] Speaker 02:
That's their theory, okay?

[00:17:32] Speaker 02:
I know you dispute whether the facts support that theory, but let's put that to one side for the moment.

[00:17:39] Speaker 02:
Why is that not a legitimate illegal exactions theory, that the government, without legal authority, collected money that belonged to the Virgin Islands?

[00:17:49] Speaker 00:
Your Honor, you're stating an illegal exaction claim, but we would dispute here that there's a violation of federal law.

[00:17:54] Speaker 00:
I'm not sure how else to answer your Honor's question.

[00:17:58] Speaker 00:
There's an illegal exaction when you can establish an exaction and that the government acted in contravention of the Constitution, statute, or regulation.

[00:18:06] Speaker 02:
What remedy do they have against the government if it's not an illegal exaction?

[00:18:10] Speaker 00:
Your Honor, we've maintained for a long time they're not the proper party in interest.

[00:18:14] Speaker 02:
We've maintained that here... I understand that, but under the hypothetical, what remedy do they have against the U.S.

[00:18:21] Speaker 02:
government?

[00:18:21] Speaker 00:
We would maintain they don't have a remedy against the United States.

[00:18:24] Speaker 00:
Well, no, because the conduct, I believe you have to say... Under a taking, you would say that the government's conduct... They would have to agree that the government's conduct was authorized, and that was...

[00:18:37] Speaker 00:
Litigated below and and also in the government's will the the main claim they've they pursue to taking and an illegal exaction claim Here we submit that there's the not the proper party to be bringing this came claim.

[00:18:49] Speaker 02:
They tried to But let's assume that they are for the moment.

[00:18:52] Speaker 02:
What is the remedy if it's not an illegal exaction?

[00:18:57] Speaker 00:
Your honor they given that they dropped their illegal their implied contract claim and they dropped their third party beneficiary claim and

[00:19:04] Speaker 00:
An illegal exaction would be the only thing left, but here we would submit they're not the proper party to be bringing that claim.

[00:19:11] Speaker 02:
We've argued all along the government... It's a different issue.

[00:19:14] Speaker 02:
It's a different issue.

[00:19:16] Speaker 02:
Maybe they aren't the proper party.

[00:19:18] Speaker 02:
That might be a ground on which you win, but it's not a ground for saying it's not an illegal exaction.

[00:19:23] Speaker 00:
Your Honor, the agreement is... I'm not sure where the court wants me to go.

[00:19:28] Speaker 00:
We believe there's not an exaction.

[00:19:31] Speaker 00:
We've also submitted that the government didn't act in contravention of federal law.

[00:19:34] Speaker 02:
Okay, let's talk about the revocation of authority.

[00:19:37] Speaker 02:
So why is it that the 2007 letter wasn't effective to revoke Customs Authority to collect?

[00:19:44] Speaker 00:
Your Honor, first of all, I think that assumes that the government has ever had a direct relationship with the Port Authority, that there's no merit to that claim.

[00:19:52] Speaker 00:
Through the memorandum of agreement, the Port Authority never received any money

[00:19:57] Speaker 00:
directly from the U.S.

[00:19:58] Speaker 00:
government.

[00:19:59] Speaker 00:
It all was worked through this memorandum of agreement.

[00:20:02] Speaker 00:
Money was deposited into the Virgin Islands Deposit Fund once it was collected, the government's fees were subtracted, and then it was remitted to the Treasury of the Government of the Virgin Islands.

[00:20:13] Speaker 00:
The only way they ever got the warfage and tonnage fees was through a separate agreement with the Government of the Virgin Islands that they have never produced.

[00:20:22] Speaker 00:
This claim is only an effort to revive their withdrawn implied contract claim.

[00:20:27] Speaker 02:
Suppose the governor of the Virgin Islands had said to Customs, to the United States, stop collecting these fees.

[00:20:34] Speaker 02:
I revoke your authority to collect these fees on behalf of the Virgin Islands.

[00:20:38] Speaker 02:
I want you to stop.

[00:20:40] Speaker 02:
And that's all that happened.

[00:20:42] Speaker 02:
Could Customs have continued to collect?

[00:20:44] Speaker 00:
That's not the way the procedures work through the memorandum of agreement.

[00:20:47] Speaker 02:
No, answer my question.

[00:20:49] Speaker 00:
No, Your Honor, not under the memorandum of agreement.

[00:20:53] Speaker 02:
Let's assume that there was a different memorandum of agreement in which the governor himself authorized the collection of the fees.

[00:21:00] Speaker 02:
And then comes a point in 2007, he says, stop collecting the fees.

[00:21:05] Speaker 02:
Can customs continue to collect the fees under those circumstances?

[00:21:09] Speaker 00:
I think it depends on what the language of the agreement says.

[00:21:12] Speaker 02:
I just gave you the language of the agreement.

[00:21:14] Speaker 02:
It's a hypothetical.

[00:21:15] Speaker 00:
Well, if the agreement specifically said that oral notification to stop collecting the fees would be sufficient, then that would be a different case.

[00:21:24] Speaker 02:
But here we have... The restatement of agency doesn't make a revocation of authority depend on whether it's in compliance with an agreement or contrary to an agreement.

[00:21:34] Speaker 02:
The restatement says you can revoke authority even it's in violation of an agreement.

[00:21:39] Speaker 02:
So let's just accept that for the moment.

[00:21:41] Speaker 02:
If the governor said stop collecting the fees,

[00:21:44] Speaker 02:
wouldn't customs have to stop collecting the fees?

[00:21:48] Speaker 00:
Again, Your Honor, if you had an agreement that provided for that, I think here we have a statute that says... You're not answering my question.

[00:21:55] Speaker 02:
I'm assuming that you had the authority, customs had the authority, and the governor says stop.

[00:22:02] Speaker 00:
You're assuming a case that is not the facts of this case.

[00:22:05] Speaker 02:
Well, that's correct.

[00:22:05] Speaker 02:
And when you come to oral argument, and this may be a surprise to you, you're supposed to answer hypothetical questions.

[00:22:12] Speaker 02:
It happens.

[00:22:13] Speaker 02:
I'm asking a hypothetical question.

[00:22:14] Speaker 02:
What's the answer to it?

[00:22:16] Speaker 00:
If that's the hypothetical, then yes.

[00:22:18] Speaker 00:
But I would maintain that the facts of that hypothetical are distinguishable from the facts of this case in which you have a memorandum of agreement which states, in pertinent part, it appendix at Article 14.

[00:22:28] Speaker 02:
Yes, they'd have to stop collecting under the hypothetical.

[00:22:30] Speaker 00:
Yes, Your Honor.

[00:22:31] Speaker 02:
OK.

[00:22:31] Speaker 02:
Go ahead.

[00:22:34] Speaker 00:
But Your Honor, again, I would submit that this is a different circumstance.

[00:22:37] Speaker 00:
Here we had a memorandum of agreement.

[00:22:39] Speaker 00:
We have a statute that says,

[00:22:41] Speaker 00:
The government can provide services on a reimbursable basis.

[00:22:45] Speaker 00:
That is 48 USC 1469 C. You also have a stat that appendix 45, article 5 says, customs will seek and is entitled to reimbursement for the cost of line activities in the USVI district, which explicitly included warfage and tonnage.

[00:23:02] Speaker 00:
You have Article 11 at Appendix 50 that states that customs will be paid for the full cost of operating in the Virgin Islands.

[00:23:08] Speaker 02:
So they can violate the agreement and revoke the authority, doesn't it?

[00:23:11] Speaker 02:
They're not bound to follow the agreement.

[00:23:13] Speaker 02:
Well, yes they are, Your Honor.

[00:23:15] Speaker 02:
Wait, please do not interrupt.

[00:23:17] Speaker 02:
Under the restatement of agency, a principal can revoke an agent's authority even if it's contrary to an agreement.

[00:23:24] Speaker 00:
Your Honor, these issues have never... I mean, again, looking at the federal statute, which requires the court to look at the reimbursable services agreement, which is what we have, which says... The federal statute doesn't require looking to an agreement?

[00:23:37] Speaker 00:
Yeah, it says, to the extent practicable, services, facilities, and equipment of agencies and instrumentalities in the United States may be made available on a reimbursable basis.

[00:23:45] Speaker 00:
I mean, here we explicitly have an agreement.

[00:23:48] Speaker 00:
And the record supports that this agreement is the only thing that ever

[00:23:52] Speaker 00:
facilitated the government's collections in the Virgin Islands.

[00:23:55] Speaker 00:
They were, as the court can see at Appendix 212, they withdrew their implied contract claim.

[00:24:01] Speaker 00:
They claimed repeatedly there was some other source that governed this arrangement and there's been absolutely nothing to support that.

[00:24:09] Speaker 00:
The tariff said only where port users are to pay money and they relied extensively on Ms.

[00:24:15] Speaker 00:
Penn's deposition testimony

[00:24:17] Speaker 00:
But she couldn't provide any particulars about any agreement between the United States and the Virgin Islands, other than to say the process was the process was the process.

[00:24:27] Speaker 00:
So all anyone's been operating under since 1994, and before that, 1992, was this memorandum of agreement.

[00:24:36] Speaker 00:
And there's simply nothing in the record that would support, and indeed they dropped their summary judgment claim, that there was any separate

[00:24:43] Speaker 00:
authorization or arrangement between the United States government and the port authority.

[00:24:49] Speaker 00:
The only arrangement here has been between the United States government and the government of the Virgin Islands.

[00:24:55] Speaker 00:
And to the extent there's a dispute as to whether the United States could negotiate with the government of the Virgin Islands, that's an issue of Virgin Islands law, which is not, as the court correctly concluded, is not cognizable under an illegal exaction theory, which has never been expanded to include sources of foreign law.

[00:25:14] Speaker 02:
Anything more?

[00:25:16] Speaker 00:
The court has no further questions.

[00:25:18] Speaker 00:
We respectfully request that the court affirm judgment in favor.

[00:25:21] Speaker 01:
You take the position that you disagree with the lower court when he said there was an indirect payment here.

[00:25:30] Speaker 00:
Yes, Your Honor.

[00:25:31] Speaker 01:
We would say that... You heard my discussion with Mr. Eaton.

[00:25:35] Speaker 01:
Are you of the view that this should not be the first case in which we say there is an exaction where there was no actual money coming out of the pocket of the parties supposedly exacted?

[00:25:46] Speaker 00:
Yes, Your Honor.

[00:25:47] Speaker 00:
Our position is it would be an unwarranted expansion of the illegal exaction doctrine.

[00:25:52] Speaker 01:
Whenever the court has talked about Erolinian... Well, I mean, the doctrine, in essence, you've got a little two pieces because we're talking... The court concludes there was no illegal exemption because the problem, if any, was a violation of Virgin Island law as opposed to U.S.

[00:26:08] Speaker 01:
law because the U.S.

[00:26:09] Speaker 01:
was authorized... Its authority to do this wasn't terminated.

[00:26:15] Speaker 01:
Now on the question of exaction, you contend that there was not an exaction because there was no actual money coming out of Vypa's pocket and going either to the government or to somebody else, right?

[00:26:25] Speaker 00:
Yes, Your Honor.

[00:26:26] Speaker 02:
Okay.

[00:26:28] Speaker 02:
Okay.

[00:26:28] Speaker 02:
Thank you.

[00:26:29] Speaker 02:
Mr. Eaton, you have two minutes.

[00:26:33] Speaker 03:
Your Honor, I'll be very brief.

[00:26:35] Speaker 03:
To return to the issue of revocation of authority, Your Honor,

[00:26:41] Speaker 03:
If you look at the letter that we provided to CBP in 2007, it does two things.

[00:26:48] Speaker 03:
It says about the MOA, which rewind one moment.

[00:26:52] Speaker 03:
In 2006, CBP initially told us, yes, you can start collecting your own fees, but we have to amend the MOA.

[00:27:00] Speaker 03:
We then submitted this letter to CBP saying two things.

[00:27:03] Speaker 03:
Look, one, the MOA has nothing to do with us.

[00:27:06] Speaker 03:
These fees belong to us.

[00:27:08] Speaker 03:
The government made that agreement.

[00:27:09] Speaker 03:
It's not about whether you collect these fees or not.

[00:27:12] Speaker 03:
It's just about the methodologies of reimbursement.

[00:27:14] Speaker 03:
We also said, you are incorrect that you are required by Federal law to collect these fees, a position which turned out to be correct.

[00:27:22] Speaker 03:
It then specifically requests that we start collecting our port fees.

[00:27:26] Speaker 03:
When they responded, they interpreted that letter as a direct request for them to stop doing what they were doing.

[00:27:33] Speaker 03:
And they rejected it.

[00:27:34] Speaker 03:
And they rejected it on the basis that they were required by law to reject it.

[00:27:39] Speaker 03:
Remember, their position here is not, you failed to deauthorize us.

[00:27:43] Speaker 03:
It's that you can't deauthorize us because we're required by federal law to do what we're doing.

[00:27:48] Speaker 03:
They maintained that position until at least August of 2010.

[00:27:51] Speaker 03:
During that period, there was nothing we could have done to deauthorize their conduct.

[00:27:58] Speaker 03:
That was their position.

[00:27:59] Speaker 03:
They're the federal government.

[00:28:01] Speaker 03:
We couldn't simply

[00:28:02] Speaker 03:
stamp our feet and stop doing what they wanted us to do, we have a very important relationship with CBP that had to be maintained.

[00:28:08] Speaker 03:
They do a lot of things that they're required to do and that they do on a reimbursable basis for us.

[00:28:13] Speaker 03:
So we continue to engage with them.

[00:28:15] Speaker 03:
The important fact here is that there was absolutely nothing we could have done on their theory to deauthorize their conduct until November of August of 2010 when they switched to this reimbursable services rationale and dropped their mandate rationale.

[00:28:30] Speaker 02:
Your Honours, that's all that I have.