The September 16, 2010, decision in U.S. v Pressman-Gutman, et al. (CIT 9-16-10) Slip Op. 10-105, has triggered rounds of applause among traders. This case once again confirmed the regulations mean what they say. In summary, CBP requested samples from Pressman-Gutman that triggered a conditional release period. 19 C.F.R. 113.62(d) states, if CBP wishes goods redelivered, it must do so within thirty (30) days of when the conditional release period ends. Instead, CBP took several months before demanding redelivery. When the importer demurred, CBP eventually sued both the importer and its surety. The jubilation came when the judge took CBP to task, calling its theory of the case "bankrupt," and its position contrary to 20 years of rulings and having no "colorable claim." The court also stated the action should never have been brought.

To say that CBP was taken to the woodshed on this case is to put it mildly. Instead of celebrating the fact CBP got put in its place for flouting the law, what we really should do is acknowledge that, because so much of the decision-making by CBP is disbursed to the ports, the fact this case got filed is not all that surprising. CBP officers seem free to make whatever decisions they want with little effort to ensure compliance with the same rules and regulations that govern the trade. How often is CBP able to succeed with questionable or improper actions simply because the amount involved is small or the company cannot afford to pursue the litigation process? Pressman is a reminder that CBP needs to do two things. First, its people need much more training and the oversight of qualified supervisors and attorneys so that bad decisions like the one leading to this case are minimized. Second, CBP needs to do more sensitivity training of its staff. Just because an individual CBP employee does not like the outcome of a matter does not mean he or she can invent a law or regulation to suit his/her desires and rely on "I’m from the government" to compel enforcement by intimidation. What will it take for CBP to finally penalize its staff when these sorts of actions occur?

Border Searches Lead To Another Suit Against U.S.

There is no question about the right of CBP and ICE to conduct warrantless searches at the border. However, the extent of those searches when it comes to electronic devices continues to be controversial. In August 2009, both agencies issued policy updates (CBP Directive No. 3340-049 (August 20, 2009) and ICE Directive No. 7-6.1 (August 18, 2009)) that sought to allay travelers’ concerns and outline the relevant procedures that each would apply when searching electronic devices. Those agency efforts have been far from effective.

Perhaps part of the reason is that, when the issue of evidence found on a laptop is used at trial, the context in the reported cases involves child pornography, and the courts have routinely backed up the agencies saying no Fourth Amendment right to probable cause is required in order to trigger the search. At the same time, anecdotal reports receiving widespread coverage do not reflect well on CBP and ICE. For example, there is the typical story of the laptop or other electronic device being taken by authorities, held for several months, and then returned without any explanation. In another typical anecdote, the device is taken while the owner waits several months and still cannot find out when his or her device will be returned or why it is being held. Against this backdrop, DHS, CBP and ICE have again been sued, this time in the context of a constitutional challenge mounted by the National Association of Criminal Defense Lawyers, the National Press Photographers Association, and an individual who had his laptop, external hard drive, and cell phones searched. See Case No. CV10-4059, EDNY, September 7, 2010.

The recent case claims that between October 1, 2008, and June 2, 2010, 6,500 people (about 3,000 of whom are stated to have been U.S. citizens) had their electronic devices searched at our borders. Many would say the number is small, and when measured against the millions of travelers who come into and leave the U.S., it is indeed a small number. However, the real issue is not the number of searches, but rather how the data on these devices is being copied and used. It is understandable that enforcement personnel want as much intelligence as possible with which to make their decisions, and it is easy to plug a USB device into the port of a laptop or other electronic device and quickly copy the hard drive. The fear is this will be done with no notice given to the person whose data is copied. It is all too common to hear that a device was taken into a back room for 30 minutes and then returned to the traveler with no explanation, while a subsequent examination of the device reveals new scratches and/or a "last opened date/time" on its files coinciding with when the device was in the hands of authorities.

Unless CBP and ICE put in place a requirement to let individuals know when their data is copied, the issue will not end, and perhaps not even then. For example, those August 2009 procedures that CBP and ICE publicized contained special handling requirements if the traveler is an attorney, presumably because of attorney work-product and attorney-client confidentiality privileges. However, there is no similar special handling required if a business traveler has communications on his or her device that are also covered by the attorney-client privilege. What about doctor-patient or clergyperson-penitent communications? What is to stop authorities from planting software that allows them to track someone’s location and Internet activity? What about planting malware or a Trojan horse? Frankly, what about a plain old-fashioned reasonable expectation of privacy? Back in October 2009, we commented on U.S. v. Arnold, 533 F.3d 1003, 2008 U.S. App. LEXIS 14690 (April 21, 2008). In that case, the defendant argued that inspecting computer contents is akin to inspecting the human mind due to the computer’s ability to record ideas, emails, internet chats, and web-surfing habits. The trial court agreed, but the Ninth Circuit overturned that decision. Will this latest case be any more successful?

Iran Sanctions Take Effect

The sanctions imposed by the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, H.R. 2194, will take effect on September 29, 2010, 90 days after enactment. As such, the general license that existed under 31 C.F.R. § 560.534 and permitted the importation of Iranian carpets and foodstuff will no longer apply after that date. While humanitarian aid is still allowed, the new legislation effectively stops all trade with Iran, although the President is permitted certain latitude, including regarding personal communications and information and informational materials as defined at 50 U.S.C. 1702(b). At the same time, exports of agricultural commodities, food, medicine, and medical devices are still permitted. Similarly, social networking connections are encouraged, whether involving hardware, software, or technology.