A Federal circuit court recently told the Department of Commerce in no uncertain terms to mind its own business. And that decision may cut the heart out of government programs meant to funnel some business to U.S. makers of scientific equipment, and lose those companies millions of dollars a year in sales.
On May 2, the Court of Appeals for the Federal Circuit refused to take a second look at the ruling handed down in March by a panel of three of its judges. That probably makes the holding final, because the court--which came into existence only last October--is supposed to be the authority on customs matters, and it is unlikely that the U.S. Supreme Court will review the case.
The dispute involves the University of North Carolina at Chapel Hill, but the outcome effects hundred of purchases each year of major pieces of research and diagnostic apparatus.
Under a 1966 law--the U.S. codification of an international agreement--nonprofit educational and research institutions can bring in foreign-made scientific instruments duty free if there is no domestic product "of equivalent scientific value." It is up to the secretary of Commerce to rule on whether in fact any U.S. company turns out comparable equipment.
In some years, Commerce fielded as many as 800 requests to bring in such purchases without paying the import tax; the level of requests is now about half that. Perhaps one request in five is turned down.
A 1977 rule seems to be the first that goes beyond the question of whether there is comparable U.S. equipment. It at least gets near the question of whether the university or hospital researchers should be doing what they want to do. "Any time you raise the specter of nonscientific judgments replacing what should be a scientific judgment, you get academics just truly upset," says Susan Ehringhaus, counsel to the chancellor at Chapel Hill.
What the UNC researchers wanted were extremely accurate measurements in using a new mass spectrometer--accuracy they say they can get with a $240,000 model made by VG-Micromass of Great Britain. That spectrometer is said to be 25 times as precise as the nearest U.S. offering, produced by the Nuclide Corp. But the director of the office of import programs (delegated by the Commerce Secretary the responsibility to make the decisions) ruled that the university would have to pay more than $15,000 in duties on the import. After consulting with the Bureau of Standards, he found that the extra accuracy of the British equipment is "pointless."
Not only academics were upset at that conclusion. "Neither the Secretary nor his delegates have authority to render value judgments regarding the necessity of performing a particular kind of research," Judge Oscar H. Davis said. "The Secretary is not to decide whether that research itself is necessary or valuable."
That may be opening up a whopping loophole. "If the applicants are going to be willing to manipulate the process, it will be virtually impossible for us to deny any applicant," says one Commerce insider connected to the program. The reason: the researchers who for some reason prefer a piece of foreign equipment can always fasten on some feature it contains that its U.S. rivals lack and insist that feature is central to the research. "In other words," the government brief asking for a rehearing of the case said, "the requirements of the statute can successfully be evaded."
The universities insist that they really want to buy domestic equipment, and that they do not go abroad for minor or meaningless differences. But nonetheless, "there are occasions when it is necessary to go outside the United States to get needed equipment," argues Donald L. Reidhaar, the lawyer for the University of California at Berkeley. The Lawrence Berkeley Laboratory, for instance, not long ago turned to Japan for a major new electron microscope.
Commerce pinned its hopes on getting the full appellate to figure out what to do next. A probable strategy: asking Congress to amend the 1966 law to make clear that in deciding on whether to grant duty-free entry to such equipment, the department can look behind the specifications laid down by the university researchers to see if domestic equipment will do the job.
But such a legislative request is not likely to stand on its own. The issue is sure to get tied in with the question of whether other countries are being as hospitable to imports of U.S. equipment. The Scientific Apparatus Manufacturers Association complains that its makers have trouble getting European governments to grant duty-free entry for their sales to Continental research centers. Predicts Philip M. Grier, executive director of the National Association of College and University Attorneys: "the interest in the issue is going to increase in the next couple of years, as we get more concerned about exports and imports of technology."