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Case number 16 at 5350, Gulf Coast Maritime Supply Inc.

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Appellant versus United States of America at L. Mr. Peterson for the appellant, Ms.

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Rubin for the appellees.

[00:00:55] Speaker 01:
The Anti-Injunction Act seeks to prevent a litigant from throwing a wrench into the gears of the tax assessment and collection system.

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What it does not do, however, is prevent a person who may be facing a tax assessment from gathering or assembling his or her defenses to that assessment.

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As long as they do that without throwing a wrench into the gears of tax collection, the Anti-Injunction Act does not bar the lawsuit.

[00:01:23] Speaker 01:
This court has recognized that distinction in other cases, such as Z Street versus Koskinen, and we're asking the court to recognize it here.

[00:01:32] Speaker 04:
Z Street was quite different from this case because Z Street, the concern that the plaintiffs were seeking to litigate

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was their claim that the government was treating them differently and slowing down the process because of their views about the Middle East.

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There's nothing that the court would decide in that case that could affect their tax liability.

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It only related to the timing of the grant of the tax exemption.

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Whereas here, if you prevail on your argument about your permit,

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that means that you don't have to pay your tax, right?

[00:02:13] Speaker 01:
Not necessarily, Your Honor.

[00:02:14] Speaker 01:
This case is not that different from Z Street.

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In Z Street, they brought an action under the APA to compel action which was unreasonably delayed, the processing of a license application.

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What we're doing here is proceeding under the APA to compel action unlawfully with help.

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Now, I don't know whether we're going to have to pay tax or not at the end of this.

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If the government's tax assessment is based solely on the notion that we did not have a valid warehouse license or valid alcohol permits, then we very well may face an assessment.

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Is there anything in the record that indicates it isn't?

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There's nothing in the record.

[00:02:55] Speaker 04:
In fact, as I read the record, they not only said that the permit had automatically expired, but they gave your client a completed tax return, right?

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Just to pay the tax.

[00:03:13] Speaker 04:
They're directly related to each other.

[00:03:15] Speaker 01:
Well, we don't agree that the permit automatically expired.

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The regulation in question

[00:03:22] Speaker 04:
Well, let's assume you won, if you won on that, that it didn't automatically expire.

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The consequence of that would be you wouldn't know the tax.

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That's just like all the cases, Americans United and all the rest of them, which is, you know, if they're right that they're entitled to their tax exemption, then they don't have to pay the tax.

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But there's a difference between trying to enjoin the collection of the tax and trying to assemble what you need to defend yourself from an assessment.

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Let's suppose a taxpayer

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was told by a tax auditor, we're going to deny you business deductions for carrying on a business because you don't have your federally issued license to carry on that business display, or that license has lapsed.

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So that taxpayer is facing an assessment down the road.

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Now, if that taxpayer turned around and filed a Freedom of Information Act request to get a copy of their license, or filed an action with the licensing agency to have the license reinstated,

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That would not violate the Anti-Injunction Act at all.

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At the end of the day, the federal tax gathering machinery operates as it is doing in this case.

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And at some point, Gulf Marine will have an opportunity to defend itself.

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And if one of the claims in that proceeding is that you did not have a valid permit, and we are able to vindicate that, yes, we did have a valid permit,

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then we wouldn't pay tax.

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But we're not enjoining the assessment or collection of a tax.

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We're simply trying to establish our defense to an assessment that may be coming down the line.

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And there's a very big difference.

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We do not seek to enjoin any sort of tax collection.

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What action do you think was unlawfully withheld here?

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Well, Section 558 of the Administrative Procedure Act gives an important statutory right to all federal license holders.

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It says that before the agency can start actions to revoke or suspend a license, they've got to give you advance notice of the charges, which wasn't done here.

[00:05:26] Speaker 02:
Well, that's true, but here we don't have revocation or suspension.

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At least, it's not clear to me that we do.

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Because my understanding is that this was automatically terminated.

[00:05:38] Speaker 01:
Well, no.

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We have revocation or suspension.

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Nothing automatic.

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We have revocation or suspension because the agency charges that we did not meet an information supplying requirement in section 44.107 of its regulations.

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What they are saying is that

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that they believe we were required to report a change in ownership.

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Now, we contend there was no change in ownership.

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One of the owners died.

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His shares went to his wife.

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They were family members of an S corporation, which the Internal Revenue Code treats as a single shareholder.

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But what they came and said is, no, you were required to report and file a new permit application.

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You didn't do it.

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OK.

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Under the APA, before they could revoke our permit for not giving them the information, under Section 550HC, they were required to give us an opportunity to demonstrate compliance, which means we go in, and TTB has a regulation, 71.35.

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This is the hearing where you get to demonstrate compliance with the requirements.

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Now, maybe we would have convinced them, and maybe we wouldn't.

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I don't know.

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But the other part of 553 is just as important.

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They have to give us the opportunity to achieve compliance.

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So if when we have the 71.35 hearing, they listen to our arguments about why we weren't required to file a new permit application and sit back and say, well, we disagree, well, then the statute says we have the right to achieve compliance.

[00:07:13] Speaker 01:
presumably by filing an application for new personal.

[00:07:16] Speaker 05:
It seems an awfully complicated way to get to where you want to be.

[00:07:20] Speaker 05:
Why isn't this the case that the TTB letter was a final determination that an automatic termination had occurred and you go to district court to contest final agency actions?

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What's wrong with that thinking?

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It's simpler, but simpler isn't always right.

[00:07:40] Speaker 01:
If we said we're not going to insist on our pre-termination rights, treat it as a termination and said we're just going to file a straight APA action to reinstate the license.

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You'd get to district court that way, right?

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We would have gotten to district court, and I believe there'd be two problems.

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First, I suspect the government would say that that action too violates the Anti-Injunction Act.

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And secondly... I'm talking about the alcohol permit more.

[00:08:04] Speaker 01:
Well, the alcohol permit, I think the answer there is really simple.

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This court has direct jurisdiction over an appeal to revoke an alcohol permit.

[00:08:14] Speaker 05:
Yeah, but this isn't a revocation.

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No one has said this is revocation.

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Drop the revocation argument, but where are you?

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If you disagree with your revocation.

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This court has jurisdiction over a case where the Secretary of the Treasury or its delegate has conducted a hearing, has issued an order on TTB Form 5000.3.

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And then we would petition to this court, and this court would decide on the basis of the record for the Secretary of the Treasury.

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If it had been revoked by the Secretary.

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Oh, sorry.

[00:08:45] Speaker 04:
If it had been revoked by the Secretary.

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Right.

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And it hasn't been revoked by the secretariat.

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We don't have a Form 5000.3 here.

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That's the point of Judge Griffith's question.

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This was an automatic termination.

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So the provisions of H. I mean, for the alcohol permits, it wouldn't matter.

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You said there was a simple answer to this.

[00:09:05] Speaker 04:
I thought there was a simple answer to this, too.

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I'm talking about the alcohol side.

[00:09:10] Speaker 04:
Why don't you just apply for a new permit?

[00:09:14] Speaker 04:
There's no tax consequences to this, right?

[00:09:18] Speaker 04:
Why didn't your client just apply for a new permit instead of all this litigation?

[00:09:23] Speaker 01:
I suspect they would be denied.

[00:09:25] Speaker 01:
I suspect they would be denied on the ground.

[00:09:27] Speaker 04:
Then you would have something to appeal.

[00:09:30] Speaker 04:
Well, we could still... And why do you suspect they would be denied?

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How do you know unless... I mean, it just seems that they said it had been revoked, it had expired, and it had been automatically terminated.

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So, since there's no tax question, right, with respect to the alcohol side of it, right?

[00:09:47] Speaker 04:
Just apply for a new one.

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If it's turned down,

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then you have something to appeal.

[00:09:52] Speaker 01:
Well, that's possible, but bear in mind that both the alcohol and the tobacco permits are subject to 5 USC 558, which gives pre-importation opportunity for correction or compliance before things are revoked.

[00:10:07] Speaker 04:
I understand that.

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I just don't understand why you fight a battle you may not need to fight in order.

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I mean, you may well have a right.

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In fact, I'm going to ask the government this.

[00:10:15] Speaker 04:
It does seem to me that

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under the APA in district court with respect to the alcohol permit, because you were told by the agency that it had expired.

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The appeal provision to this court doesn't apply.

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So it looks to me like maybe the government has an explanation for this, that you should have litigated this in the district court.

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But my antecedent question is, why spend all the effort and money to file an APA case when you could have just applied for a new permit?

[00:10:49] Speaker 01:
Because the revocation of the old permits was not based on automatic termination, it was based on a claim change in ownership, which we think did not happen.

[00:11:00] Speaker 04:
Wait, the statute says if the ownership changes, then it's automatically terminated.

[00:11:05] Speaker 01:
That's what this... Well, again, the lower court dismissed this case for lack of jurisdiction.

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You know, while the government argued in the lower court that the permit's terminated automatically, we think if you look at the triggering regulation, 44.107, it's not that simple.

[00:11:21] Speaker 01:
There has to be a change in share ownership, which didn't occur here.

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It has to change the ownership of control.

[00:11:27] Speaker 05:
Again, that's what I'm getting at.

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TTB made that determination.

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You challenge that in APA action.

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You say that's final agency action.

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You challenge that in district court.

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You go to district court and you say, no, they're wrong.

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There wasn't, in fact, a change in control of ownership.

[00:11:43] Speaker 01:
I'm puzzled as well by this.

[00:11:47] Speaker 01:
They have a regulatory mechanism, section 71.35 of their regulations.

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When they come forward to us and say, yeah, we think it was revoked, well, then if they say, we're going to revoke your license, they have to give us notice to 71.35 hearing.

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And that's all we're asking for here today.

[00:12:04] Speaker 01:
We want this remanded to the lower court with instructions to accept your restriction and send it to TTV for the 71.35 hearing we deserve.

[00:12:16] Speaker 04:
Okay, thanks.

[00:12:18] Speaker 04:
We'll hear from the government.

[00:12:23] Speaker 03:
Good morning, Your Honors.

[00:12:26] Speaker 04:
So if Gulf Coast does what you think they should do and pays a tax and files a refund suit and

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gets their permit restored in that suit, will they automatically not have to pay the tax?

[00:12:43] Speaker 03:
For the majority of the taxes, yes.

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There's a portion of the taxes that we have two grounds for taxation.

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But for the vast majority of the taxes, the determination that there was no automatic termination would resolve the taxes.

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And in fact,

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Gulf Coast agreed with this analysis in its reply brief.

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If you look at page 22 where they say, hey, the only way the Anti-Injunction Act can apply here is if there was an automatic termination and retroactive taxation, which I'm not sure that I agree with their Anti-Injunction Act analysis there, but that point goes to very much the fact that as Rio Machine said in the Sixth Circuit case,

[00:13:22] Speaker 03:
The permit scheme and the tax scheme are intertwined.

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And what you have here is a situation where deciding the question, was there an automatic termination or was there a revocation?

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Which, as Arka points out, tells you whether you needed to do all this additional procedure that they say that they want.

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That actually determines a lot of the tax liability here.

[00:13:47] Speaker 05:
Did the government ever characterize this as a revocation?

[00:13:50] Speaker 03:
We do not.

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We have never characterized this as a revocation.

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We do not believe this is a revocation.

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We did not give a notice of proposed revocation or a notice of final revocation.

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We gave a notice that we believe that by the terms of the permits and under the laws, that there was an automatic termination in October.

[00:14:06] Speaker 04:
Well, if that's the case with respect to the alcohol permit, this is not the right court for that to be in, right?

[00:14:11] Speaker 03:
I don't think there's any court presently that has jurisdiction.

[00:14:14] Speaker 04:
Why not a district court?

[00:14:15] Speaker 04:
Why not just a straight APA court?

[00:14:17] Speaker 03:
If you look at United Distillers, it makes clear that because this is an exclusive

[00:14:22] Speaker 03:
means of judicial review is in section 204.

[00:14:26] Speaker 04:
Exclusive review for revocation, but there's no revocation here.

[00:14:31] Speaker 03:
If you look at the entirety of section 204, it sets out the different ways that you can have a permit not be operative anymore, one of which is automatic termination, another of which is a suspension, revocation, withdrawal, or annulment.

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It then provides a judicial remedy only for denials of permits,

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or orders suspending, revoking, or withdrawing.

[00:14:55] Speaker 05:
What about the final agency action?

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There's a final agency action here in which the TTB determined that there was an automatic termination.

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They come to district court to challenge that determination.

[00:15:08] Speaker 05:
Why is it more complicated than that?

[00:15:12] Speaker 03:
Under United Solar, as well as under Section 702-2 of the APA, when you have

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scheme of judicial review that is an exclusive scheme.

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That's what we submit we have here.

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And that's what United Distillers acted under.

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You can't use the APA to get around that exclusive means.

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And here, it clearly set out the parameters for judicial review.

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There has to be an order doing either a denial of a permit

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or a revocation.

[00:15:48] Speaker 05:
What's your authority for that?

[00:15:50] Speaker 03:
That's United Distellers versus Hennibarry.

[00:15:52] Speaker 05:
And give me the citation to that case, please.

[00:15:55] Speaker 05:
Sure.

[00:15:56] Speaker 05:
Isn't that a 70-year-old district court case in Massachusetts?

[00:15:58] Speaker 03:
That is a district court case.

[00:15:59] Speaker 05:
With all due respect to the district court in Massachusetts.

[00:16:03] Speaker 03:
Right.

[00:16:03] Speaker 03:
And then after they applied for a new permit, or after they finally got an order that was of the sort that there could be judicial review, they then did a proper petition to the DC Circuit, which then appealed everything that had happened in that case.

[00:16:19] Speaker 03:
And we said that that's what should happen here.

[00:16:25] Speaker 03:
As the court suggested, maybe the answer here is just apply for a new permit.

[00:16:30] Speaker 03:
If it is granted, then you can say, I think this should be retroactive.

[00:16:35] Speaker 03:
This should cover everything that's happened to date.

[00:16:38] Speaker 03:
But if it's denied, petition the court pursuant to 204H.

[00:16:44] Speaker 03:
That's the answer.

[00:16:45] Speaker 03:
And on the tobacco permit, similarly, there's a route that they can get the question of whether there was an automatic termination or revocation decided through a refund lawsuit.

[00:16:56] Speaker 03:
And there's a suggestion in the reply brief that we have somehow said that, oh, well, that wouldn't mean you get your permit back as their tobacco permit back.

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That is simply not true.

[00:17:08] Speaker 03:
We have never said that.

[00:17:10] Speaker 03:
pages cited address the alcohol permit and in fact our trial attorney below during the oral argument this is document 21 at 42 to 43 conceded that under principles of race judicata if in a refund suit they won the point that there was no automatic termination that would be binding on the agency including for the whether the

[00:17:35] Speaker 03:
permit continue to exist past the date that we say that it automatically termed.

[00:17:45] Speaker 04:
So your view is that an automatic termination is unreviewable?

[00:17:51] Speaker 04:
I'm talking about the alcohol permit.

[00:17:53] Speaker 03:
We submit not directly reviewable.

[00:17:56] Speaker 03:
What does that mean?

[00:17:59] Speaker 03:
Well, essentially, what happens, let's say that this had been done normally.

[00:18:04] Speaker 03:
So you'd had a change in ownership.

[00:18:06] Speaker 03:
Wait, this wasn't normal?

[00:18:07] Speaker 03:
It was not normal, because the normal thing, if you want to maintain your permit and you... Oh, I'm sorry.

[00:18:13] Speaker 04:
When I asked about normal, I thought I was referring to what the agency did.

[00:18:16] Speaker 03:
Is that normal to the agency?

[00:18:18] Speaker 03:
No, I'm talking about for the permit holder.

[00:18:21] Speaker 03:
Oh, sorry.

[00:18:21] Speaker 03:
Your permit holder.

[00:18:22] Speaker 04:
Yeah, right.

[00:18:23] Speaker 04:
They notify the agency.

[00:18:25] Speaker 03:
And you notify the agency.

[00:18:26] Speaker 03:
You apply for a new permit.

[00:18:28] Speaker 04:
OK, gotcha.

[00:18:28] Speaker 03:
And your old permit... Right.

[00:18:30] Speaker 03:
stays alive until there's a decision on your permit application.

[00:18:36] Speaker 03:
If that application is granted, then you continue to have a permit.

[00:18:40] Speaker 03:
If it's denied, then you appeal.

[00:18:41] Speaker 05:
How did TTP determine that there was an automatic termination here?

[00:18:46] Speaker 05:
What was the basis for that?

[00:18:48] Speaker 03:
They learned that Sam Geller, who owned 45% of the stock and was the active manager of Gulf Coast, as Gulf Coast had conceded in his complaint, had actual and legal control exercise that over Gulf Coast passed away.

[00:19:05] Speaker 03:
The record does not indicate how they learned that they had passed away.

[00:19:09] Speaker 03:
And then they sent some of their letters saying, we have learned that Sam Geller passed away.

[00:19:13] Speaker 05:
So what's wrong with my formulation that when they made that decision,

[00:19:18] Speaker 05:
They were making final determination, final agency action, that automatic termination occurred.

[00:19:26] Speaker 05:
What's wrong with that assessment?

[00:19:28] Speaker 03:
The assessment is that there's no mechanism by which the automatic termination

[00:19:35] Speaker 03:
of a permit is reviewable.

[00:19:38] Speaker 05:
No, that's not my question.

[00:19:39] Speaker 05:
But this was final agency action.

[00:19:42] Speaker 05:
It was a final decision made by the agency to say, automatic termination occurred here.

[00:19:47] Speaker 05:
Do you dispute that that's what took place?

[00:19:49] Speaker 03:
We would say it wasn't really an agency action.

[00:19:52] Speaker 03:
It was a notice that, hey, we've learned that your permit terminated by its own terms.

[00:19:57] Speaker 05:
And we have lots of case law that says those sorts of decisions are final agency actions.

[00:20:00] Speaker 03:
We have learned that your license expired by its own terms.

[00:20:06] Speaker 03:
That's not a final agency action.

[00:20:08] Speaker 03:
That's a notice we've learned of this.

[00:20:09] Speaker 03:
We're going to be taking some actions based on that.

[00:20:11] Speaker 05:
That certainly is a final agency action.

[00:20:13] Speaker 05:
There are a lot of cases that look at decisions just like that and say it's a final agency action.

[00:20:19] Speaker 05:
It's a final decision made after gathering facts has legal consequences.

[00:20:24] Speaker 05:
It's a final agency action, I think.

[00:20:27] Speaker 03:
But even if it's considered to be a final agency action, the question as to whether a court has jurisdiction to hear it is going to have to be decided by a basis of looking at the law.

[00:20:40] Speaker 03:
And we submit that Section 204, 27 USC 204,

[00:20:46] Speaker 03:
Provides an exclusive judicial remedy that is not revocations and denials, right?

[00:20:52] Speaker 05:
I thought we'd already established this isn't a revocation.

[00:20:55] Speaker 03:
That's right, but by excluding automatic terminations from that Group of orders that can be reviewed.

[00:21:06] Speaker 04:
It just excludes it from review in this court.

[00:21:08] Speaker 04:
That's all it does.

[00:21:10] Speaker 04:
Let me ask you this.

[00:21:11] Speaker 04:
Suppose, we were talking about what's normal, what should have happened.

[00:21:16] Speaker 04:
If Gulf Coast had, and I'm only talking here about the alcohol permit.

[00:21:23] Speaker 04:
If Gulf Coast had simply reapplied, what would it have had to do to get its permit back?

[00:21:32] Speaker 03:
It would have, if it had reapplied, it would have been, there would have been two different possible routes depending on what the agency did.

[00:21:38] Speaker 03:
Okay.

[00:21:39] Speaker 03:
The first route would have been that the new permit was granted and they could argue to the, first of all, then that would mean that going forward they have this permit.

[00:21:48] Speaker 03:
They can legally purchase and import alcohol for reset.

[00:21:53] Speaker 03:
which we think would resolve the issue, period, because there's no tax consequences to what happened during that.

[00:22:01] Speaker 03:
If it was denied, then they would have the right to petition this court on a timely basis for review of the denial of the alcohol permit.

[00:22:10] Speaker 03:
That's the structure that the statute sets up.

[00:22:13] Speaker 03:
And that's the structure presumed that a permit holder is going to try to use, because under the automatic termination,

[00:22:21] Speaker 03:
The way that you prevent an automatic termination is you file an application for a new permit.

[00:22:28] Speaker 03:
The only reason why this is even a question is because you have somebody who tried to evade the statutory process by not filing a new permit application.

[00:22:37] Speaker 03:
And it's clear that there is a process set up by the statute.

[00:22:42] Speaker 03:
If there's a change in ownership, would we submit that there was?

[00:22:48] Speaker 03:
you file a new application, and it's through that new application that you either preserve your old application or you attain the right to petition a court for review.

[00:22:59] Speaker 03:
This is not a situation where the statute has somehow ignored the situation.

[00:23:03] Speaker 03:
It created a judicial review process that Gulf Coast is trying to evade.

[00:23:11] Speaker 03:
Are there any further questions?

[00:23:11] Speaker 03:
Anything else?

[00:23:12] Speaker 04:
No, thank you.

[00:23:13] Speaker 04:
Did Mr. Peterson

[00:23:16] Speaker 04:
You can take two minutes, Mr. Peterson.

[00:23:18] Speaker 04:
And I'm going to start your two minutes with a question.

[00:23:22] Speaker 04:
So what's the matter with what Ms.

[00:23:25] Speaker 04:
Rubin just said with respect to the alcohol permit, which is the right procedure here is to reapply.

[00:23:32] Speaker 04:
And if it's denied, then you can appeal to this court.

[00:23:38] Speaker 01:
Because it has to do with the dates that the alcohol permits were in effect.

[00:23:43] Speaker 04:
Now, you agree there's no tax consequences here, right?

[00:23:46] Speaker 04:
Nothing.

[00:23:47] Speaker 01:
Well, basically, Your Honor, what they're going to say is if I say, OK, now I'm going to get a new alcohol permit in 2017, fine.

[00:23:54] Speaker 01:
If they issue a permit, I've got a permit starting in 2017.

[00:23:57] Speaker 01:
OK, right.

[00:23:58] Speaker 01:
They're going to go back, though, and they're going to say, but you didn't have a permit from 2013 to 2017, and there's legal consequences for that.

[00:24:05] Speaker 04:
And what are those?

[00:24:07] Speaker 01:
Presumably some form of tax assessment.

[00:24:10] Speaker 01:
Wait.

[00:24:11] Speaker 04:
On the alcohol?

[00:24:13] Speaker 01:
Well, we pay, we pay.

[00:24:14] Speaker 01:
There wouldn't be any additional payments.

[00:24:16] Speaker 01:
But on the question of automatic... Wait a minute.

[00:24:18] Speaker 04:
Wait a minute.

[00:24:18] Speaker 04:
First of all, you told me there would be tax liability, and then you just said there wouldn't be.

[00:24:23] Speaker 04:
You need to explain to me.

[00:24:25] Speaker 04:
I need to understand very clearly if you reapply and don't get it, if you reapply and get it,

[00:24:37] Speaker 04:
What is the harm to you other than the fact that it operated for two years without a permit?

[00:24:48] Speaker 04:
I mean, the ruling's not going to say, well, go ahead.

[00:24:50] Speaker 04:
What's the answer to my question?

[00:24:52] Speaker 01:
Well, potentially penalty.

[00:24:55] Speaker 01:
They may say you operated.

[00:24:56] Speaker 01:
What penalty?

[00:24:57] Speaker 04:
Is there a penalty in the statute?

[00:24:59] Speaker 01:
A penalty would be treated as a tax under the statute.

[00:25:02] Speaker 01:
And there are penalties for dealing in alcohol without a license.

[00:25:05] Speaker 01:
I see.

[00:25:06] Speaker 01:
If I could just say one thing, on the question of automatic termination, this was a funny automatic termination.

[00:25:12] Speaker 01:
From 2003 to 2016, TTP accepted our occupational taxes, they accepted our bonds, they accepted our monthly returns, they accepted whatever tax payments were sent to them.

[00:25:24] Speaker 01:
Now, they did that for three years, and in 2016, they turn around and say, oh, bang, you were dead three years ago.

[00:25:32] Speaker 01:
You were dead three years ago when you didn't report something in 2013.

[00:25:36] Speaker 01:
And they're saying, oh, that's an automatic termination.

[00:25:39] Speaker 01:
But under the facts of this case, I don't think you have an automatic termination.

[00:25:43] Speaker 01:
All right.

[00:25:43] Speaker 01:
Because you have the agency.

[00:25:45] Speaker 05:
I'm still confused about your answer to Judge Table's question.

[00:25:50] Speaker 05:
So maybe if you could repeat it.

[00:25:51] Speaker 05:
So let's imagine that you did apply now for the alcohol permit and got it.

[00:25:58] Speaker 05:
Okay.

[00:25:58] Speaker 05:
What liability, what exposure do you have for having operated the facility without a permit for two years or whatever?

[00:26:07] Speaker 05:
What's the harm?

[00:26:09] Speaker 05:
What exposure do you have?

[00:26:10] Speaker 01:
If we were just acting to sell alcohol

[00:26:15] Speaker 01:
tax paid, it would simply be, I think, a penalty exposure.

[00:26:19] Speaker 01:
If we were selling, well, I don't think you can sell tax free alcohol to a vessel, I'm not sure.

[00:26:24] Speaker 01:
But we would face penalty exposure.

[00:26:27] Speaker 01:
But I think our major exposure here is on the tobacco warehouse.

[00:26:31] Speaker 05:
Okay.

[00:26:31] Speaker 05:
I'm just asking about the alcohol.

[00:26:33] Speaker 04:
Okay.

[00:26:33] Speaker 04:
Thank you.

[00:26:34] Speaker 04:
Ms.

[00:26:35] Speaker 04:
Rubin, would you, Mr. Peace, I'll give you a chance to respond to what I'm going to ask Ms.

[00:26:39] Speaker 04:
Rubin.

[00:26:40] Speaker 04:
Could you come on back up?

[00:26:42] Speaker 04:
So if

[00:26:44] Speaker 04:
If they were to have applied, reapplied, I'm only talking about the alcohol.

[00:26:49] Speaker 04:
This is pursuing what both Judge Griffith and I were asking.

[00:26:52] Speaker 04:
Yes.

[00:26:52] Speaker 04:
Let's assume they reapplied and they got a new permit.

[00:26:56] Speaker 03:
Right.

[00:26:57] Speaker 04:
OK.

[00:26:58] Speaker 04:
Would there be any consequences for having functioned without a permit for those two years?

[00:27:05] Speaker 03:
No one has identified any

[00:27:08] Speaker 03:
any action that the TTP is considering taking based on them not having a valid alcohol.

[00:27:14] Speaker 04:
You represent the agency, right?

[00:27:16] Speaker 04:
Could the agency take any action against them?

[00:27:19] Speaker 04:
Is there anything in the statute which would?

[00:27:23] Speaker 03:
I have not identified anything, but if you would like for me to consult with the agency and provide supplemental

[00:27:30] Speaker 03:
letter of brief on that?

[00:27:31] Speaker 03:
That might be.

[00:27:33] Speaker 03:
But to my knowledge, I don't know of any tax consequences.

[00:27:36] Speaker 03:
Otherwise, we would have made the Anti-Injunction Act argument regarding the alcohol permits.

[00:27:41] Speaker 04:
Well, then, unless it's a penalty, right?

[00:27:43] Speaker 03:
Even if it's a penalty, though, because a penalty that's treated as a tax, as this court held in Florida Bankers Association, it's still covered by the Anti-Injunction Act.

[00:27:51] Speaker 04:
OK, so your point is, as far as you know now, there's no liability or penalty

[00:27:57] Speaker 04:
on Gulf Coast for having operated for two years without a permit, except I suppose the agency could say, well, we're not going to give you a new permit, right?

[00:28:06] Speaker 04:
Could they do that?

[00:28:09] Speaker 03:
I suppose the fact that they failed to

[00:28:12] Speaker 03:
alert the Bureau.

[00:28:15] Speaker 03:
Wasn't that what happened here?

[00:28:16] Speaker 03:
Yes, but that could be, I suppose, being relevant by the agency, but that would be up to the agency to decide if that's relevant.

[00:28:23] Speaker 03:
I certainly think it could be something that could be held irrelevant but failure to.

[00:28:27] Speaker 05:
My memory is, and don't trust my memory, is that in the letter that TTV wrote to Gulf Coast, it warned them

[00:28:35] Speaker 05:
that operating without a permit exposes you to civil and potential criminal penalties.

[00:28:42] Speaker 05:
And so that's the hypothetical.

[00:28:44] Speaker 05:
That's the case we're talking about.

[00:28:45] Speaker 05:
If they were to apply now and get the permit, there'd still be a period of time in which they operated without a permit.

[00:28:52] Speaker 05:
And the government has already put them on notice that operating without a permit

[00:28:57] Speaker 05:
I guess what I would say is a couple things.

[00:29:00] Speaker 03:
First of all, I don't know of any agency actions being taken presently to go after Gulf Coast on the alcohol permit.

[00:29:07] Speaker 04:
That's not the question.

[00:29:08] Speaker 03:
But if they were to be penalized, I'm sure that at that point they'd be able to get judicial review.

[00:29:13] Speaker 03:
The question as to whether they should have been considered to have had a valid permit from 2013 to 2016.

[00:29:21] Speaker 03:
You know, if either they were penalized or a new permit request was denied, they could get judicial review.

[00:29:29] Speaker ?:
Okay.

[00:29:30] Speaker 04:
Did you have any other questions?

[00:29:31] Speaker 04:
Mr. Peterson, did you have anything you wanted to say in response, just in response to what Ms.

[00:29:35] Speaker 04:
Rubin just said?

[00:29:38] Speaker 04:
Nothing new, just that.

[00:29:39] Speaker 01:
I believe she clarified our liability as to potential civil and criminal penalties on the alcohol permit.

[00:29:45] Speaker 01:
One of my colleagues reminded me we did sell some alcohol on tax pay through the warehouse.

[00:29:50] Speaker 01:
And again, regardless of the status of the warehouse permit, if we didn't have a basic alcohol permit, there'd probably be a tax liability for that.

[00:29:57] Speaker 01:
So the answer is yes, there would have been consequences.

[00:30:00] Speaker 04:
Thank you.

[00:30:01] Speaker 04:
Thank you both.

[00:30:01] Speaker 04:
The case is submitted.