Skf USA Inc. v. United States

Slip Op. 06- 139

UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
________________________________________
:
SKF USA INC., :
:
Plaintiff, :
:
v. :
:
UNITED STATES OF AMERICA, :
UNITED STATES CUSTOMS AND BORDER :
PROTECTION, ROBERT C. BONNER :
(COMMISSIONER, UNITED STATES CUSTOMS : Court No. 05-00542
AND BORDER PROTECTION), UNITED STATES :
INTERNATIONAL TRADE COMMISSION, and :
STEPHEN KOPLAN (CHAIRMAN, UNITED :
STATES INTERNATIONAL TRADE COMMISSION), :
:
Defendants, :
:
and :
:
TIMKEN US CORPORATION, :
:
Defendant-Intervenor. :
________________________________________:

[Held: Plaintiff’s USCIT R. 56.1 Motion for Judgment Upon the
Agency Record is granted in part and denied in part. Case
remanded.]

Steptoe & Johnson LLP (Herbert C. Shelley, Alice A. Kipel,
Susan R. Gihring and William G. Isasi) for SKF USA Inc., Plaintiff.

Peter D. Keisler, Assistant Attorney General, David M. Cohen,
Director, Jeanne E. Davidson, Deputy Director, Commercial
Litigation Branch, Civil Division, United States Department of
Justice (David S. Silverbrand); of counsel: Charles Steuart, United
States Bureau of Customs and Border Protection, for the United
States, Defendant.

James M. Lyons, General Counsel, Neal J. Reynolds, Assistant
General Counsel, Office of the General Counsel, Unites States
International Trade Commission (David A.J. Goldfine) for the United
States International Trade Commission and Stephen Koplan, Chairman,
Defendant.
Court No. 05-00542 Page 2

Stewart and Stewart (Terence P. Stewart, Amy S. Dwyer and J.
Daniel Stirk), for Timken US Corporation, Defendant-Intervenor.

Dated : September 12, 2006

OPINION

TSOUCALAS, Senior Judge: Plaintiff, SKF USA Inc. (“SKF”),

moves pursuant to USCIT R. 56.1 for summary judgment on the agency

record challenging Defendants, the Bureau of Customs and Border

Protection’s (“Customs’”) and the International Trade Commission’s

(“ITC’s”) (collectively, the “Government’s”) determination that SKF

is not an “affected domestic producer” under the Continued Dumping

and Subsidy Offset Act of 2000 (“CDSOA”) and thus not eligible to

receive CDSOA distributions. SKF specifically challenges the

constitutionality of the CDSOA on First Amendment, Due Process and

Equal Protection grounds. The Government responds that the CDSOA

is constitutional and that it correctly denied SKF “affected

domestic producer” status. Defendant-Intervenor, Timken US

Corporation (“Timken”) also responds that the CDSOA is

constitutional and that SKF is not entitled to any relief.

JURISDICTION

The Court has jurisdiction over this matter pursuant to 28

U.S.C. § 1581(i) (2000).
Court No. 05-00542 Page 3

STANDARD OF REVIEW

In matters arising under 28 U.S.C. § 1581(i), the Court will

review the matter as provided in 5 U.S.C. § 706. See 28 U.S.C. §

2640(e). Under the Administrative Procedures Act, i.e. Title 5 of

the United States Code, the Court “shall . . . interpret

constitutional and statutory provisions . . .”. 5 U.S.C. § 706.

The Court reviews the constitutionality of a statute de novo. See

Princess Cruises, Inc. v. United States, 201 F.3d 1352, 1357 (Fed.

Cir. 2000).

Under a R. 56.1 motion for judgment upon the agency record,

the Court is reviewing an agency’s decision based on the facts in

the administrative record. See USCIT R. 56.1. In addition, an

agency’s determination must be “in accordance with law.” 5 U.S.C.

§ 706(2)(A). Finally, while persuasive and informative, the Court

is not bound by decisions of parallel courts. See e.g., Corus

Group PLC v. Bush, 26 CIT 937, 939 n.4, 217 F. Supp. 2d 1347, 1350

n.4 (2002).

STATUTORY BACKGROUND

In 2000, Congress amended Title VII of the Tariff Act of 1930

by adding section 754, the CDSOA, commonly known as the Byrd

Amendment. See Pub. L. No. 106-387, § 1001 et. seq., 114 Stat.

1549A-72 to 75 (2000), codified as 19 U.S.C. § 1675c (2000). Under
Court No. 05-00542 Page 4

the CDSOA, Customs collects duties pursuant to antidumping duty

orders and places the monies in special accounts within the United

States Treasury. See 19 U.S.C. § 1675c(e). Each antidumping duty

order is given its own special account. See id. Customs then

disburses the money to certain “affected domestic producers” who

have submitted a certification attesting that they have incurred

enumerated qualifying expenditures. See 19 U.S.C. § 1675c(b) &

(d). The ITC determines which entities qualify as “affected

domestic producers,” as defined by the CDSOA, and forwards the list

of eligible entities to Customs. See 19 U.S.C. § 1675c(d). An

“affected domestic producer” is defined as

any manufacturer, producer, farmer, rancher, or worker
representative . . . that -

(A) was a petitioner or interested party in support
of the petition with respect to which an antidumping
duty order, a finding under the Antidumping Act of
1921, or a countervailing duty order has been
entered, and

(B) remains in operation.

19 U.S.C. § 1675c(b)(1). Disbursements are made on a yearly basis

and the initial disbursements were made in 2001 based on all

existing antidumping duty orders at that time. See 19 U.S.C. §

1675c(d)(3); 114 Stat. 1549A-75.

In 2006, Congress repealed the CDSOA, however, the repeal is

not effective until October 1, 2007. See Deficit Reduction Act of

2005, Pub. L. No. 109-171, § 7601(b), 120 Stat. 4, 154 (2006). SKF
Court No. 05-00542 Page 5

is challenging the 2005 fiscal year CDSOA disbursements, thus,

justiciable issues remain here.

FACTUAL BACKGROUND

The facts are undisputed and briefly included here. In 1988,

Commerce initiated an antidumping investigation of antifriction

bearings, other than tapered roller bearings and parts thereof,

(“AFBs”) from Germany, France, Italy, Japan, Romania, Singapore,

Sweden, Thailand and the United Kingdom. See Br. Supp. Pl. SKF USA

Inc.’s R. 56.1 Mot. J. Upon Agency R. (“SKF’s Br.”) at 4; Def.’s

Resp. Pl.’s Mot. J. Upon Agency R. (“Customs’ Resp.”) at 6. The

ITC also launched material injury investigations. See id.;

Customs’ Resp. at 6. SKF was an interested party and a participant

in both the original Commerce and ITC investigations and indicated

that it opposed the petition in its questionnaire responses. See

id. at 5; Customs’ Resp. at 6. The ITC found material injury to

the domestic industry, which SKF was a part of, by reason of

imports from Japan. See Antifriction Bearings (Other Than Tapered

Roller Bearings) and Parts Thereof From the Federal Republic of

Germany, France, Italy, Japan, Romania, Singapore, Sweden,

Thailand, and the United Kingdom (“USITC Pub. No. 2185”), USITC

Pub. No. 2185, Inv. Nos. 303-TA-19 & 20, 731-TA-391-399 (Final)(May
Court No. 05-00542 Page 6

1989).1 Commerce then determined that there were sales at less-

than-fair value resulting in an antidumping duty order, which in

relevant part remains in effect. See Antidumping Duty Orders for

Ball Bearings, Cylindrical Roller Bearings, and Spherical Plain

Bearings, and Parts Thereof From Japan, Inv. No. A-588-804, 54 Fed.

Reg. 20,904 (Dep’t Commerce May 15,1989). Following the enactment

of the CDSOA, the ITC provided Customs with a list of entities

(i.e. manufacturer, producer, farmer, rancher, or worker

representative) eligible as “affected domestic producers,” on which

SKF was not included. See Customs’ Resp. at 7.

On April 20, 2005, the ITC denied SKF’s request to amend its

list of eligible domestic producers to obtain CDSOA distributions

with respect to duties collected pursuant to the antidumping duty

order covering USITC Pub. No. 2185. See SKF’s Br. at Ex. 1 & 2.

The ITC stated that it denied SKF’s request because SKF had opposed

the petition in its questionnaire response in the original

investigation. See SKF’s Br. at Ex. 2. On July 13, 2005, SKF then

submitted a certification to Customs requesting CDSOA disbursements

in the amount of $115,033,000 for qualifying expenditures incurred.

See SKF’s Br. at Ex. 3. Customs denied SKF’s claim on July 15,

2005, stating that SKF was not on the ITC list of affected domestic

1
USITC Pub. No. 2185 is located at SKF’s Br. at Ex. 5 and
the ITC’s final determination is published under the same name at
54 Fed. Reg. 21,488 (ITC May 18, 1989).
Court No. 05-00542 Page 7

producers. See SKF’s Br. at Ex. 4. This action followed.

DISCUSSION

I. As Applied Here, the CDSOA Violates the Equal Protection
Clause

A. Parties’ Contentions

SKF argues that the CDSOA is unconstitutional because it

violates the Equal Protection doctrine by discriminating between

similarly situated domestic producers. See SKF’s Br. at 12.

Specifically, SKF states that the CDSOA creates separate

classifications for domestic producers between those that expressed

support for an antidumping petition and those that did not support

or took no position. See id. at 12-13. Only domestic producers

that supported a petition are then eligible for CDSOA

disbursements. See id. SKF advances that there is no rational

basis between the classification of eligible and ineligible

domestic producers and a legitimate government objective. See id.

at 13. Furthermore, the separate classifications are unreasonable

and conflict with the purpose of the antidumping law. See id. at

13-15. In enacting the CDSOA, SKF argues that Congress amended the

antidumping law, not to alter the overall purpose of the law, but

to strengthen its remedial effect. See Reply Br. Supp. Pl. SKF USA

Inc.’s R. 56.1 Mot. J. Upon Agency R. (“SKF’s Reply”) at 9. SKF

states that the purpose of the antidumping law is to equalize trade
Court No. 05-00542 Page 8

and prevent injury to domestic industries. See SKF’s Br. at 14.

The antidumping law, however, is not intended to aid any individual

company. See id. Therefore, SKF reasons that because the CDSOA

benefits certain individual companies and not domestic industries

as a whole, it is contrary to the overall statutory purpose. See

id. at 15. The CDSOA also furthers no legitimate purpose in

benefitting a mere subsection of a domestic industry, when the

entire domestic industry is found to be injured by the ITC. See

id. SKF argues that neither the plain language of the CDSOA nor

the legislative history connects “injured domestic industries” with

“petition supporting domestic companies.” Id. at 17. Thus, SKF

concludes that the CDSOA definition for “affected domestic

producer” is discriminatory with no rational basis in support. See

id. at 17-19. SKF also points out that petition-supporting

producers are not the only companies that are injured domestic

producers and that there is no basis in differentiating between

injured domestic companies as being “more deserving” or incurring

more injury than another. See id. at 19. Moreover, SKF states

“whether a producer believes itself to be injured by reason of

imports and therefore supports a petition has nothing to do with

whether the ITC actually determines injury to exist for an

industry.” Id. at 21. Finally, SKF also argues that the purported

purpose of the CDSOA is inconsistent with the actual results of

CDSOA disbursements. See SKF’s Reply at 10-11. SKF also argues
Court No. 05-00542 Page 9

that whereas Defendants contend that the CDSOA is a thorough and

deliberated piece of legislation, in reality, the CDSOA was passed

quickly without significant debate or committee review. See id. at

11-12. SKF reasons that such a hasty enactment hardly merits the

substantial weight argued by Defendants in reviewing it. See id.

The Government responds that the classifications established

in the CDSOA do not violate the Equal Protection Clause. See

Customs’ Resp. at 18.2 As an economic policy decision, the

Government argues that the CDSOA is rationally related to a

legitimate government purpose and thus must be affirmed. See id.

at 19. The Government also argues that SKF’s argument that the

CDSOA conflicts with the antidumping law is unsupported. See id.

at 19-20. Rather, the Government asserts that the CDSOA enhances

the antidumping statute’s remedial nature. See id. at 20. The

Government contends that the requirement in the CDSOA that a

producer support an antidumping petition to then be eligible for

funds is rational. See id. at 21. Since the method in the CDSOA

is a “rough accommodation” for achieving the purpose of helping the

domestic industry, the Government asserts it must stand. See id.

at 22. The Government argues that the “affected domestic producer”

2
The International Trade Commission’s response brief
states its “full support for the arguments made by” Customs. See
Def. United States Int’l Trade Comm’n’s Resp. Pl.’s Mot. J. Upon
Agency R. at 1.
Court No. 05-00542 Page 10

requirements are a “logical, objective, and efficient method for

Congress to further its rational policy of strengthening remedies

for unfair trade conditions by compensating those who are being

most harmed by injurious dumping.” Id. at 23. Moreover, the

Government maintains that the CDSOA meets the overall goals of

“restoring free trade and remedying the ill-affects of foreign

dumping and subsidization . . ..” Id. at 24. Thus, under the

broad rational basis review of statutes in the areas of social and

economic policy, the Government contends the CDSOA is

constitutional. See id. at 24.

Timken also responds that under a rational basis review, the

CDSOA does not violate the Equal Protection Clause. See Resp. Br.

Timken US Corp. SKF USA’s Br. Supp. Its Mot. J. Agency R.

(“Timken’s Resp.”) at 7. Timken argues that SKF, not the

Government, has the burden to illustrate that there is no rational

basis for the CDSOA, which SKF failed to demonstrate. See id. at

8-9. Moreover, since the CDSOA is a statute involving economic

policy scrutinized under the rational basis standard, it is

reviewed with judicial restraint. See id. at 9. Thus, Timken

argues that it is at least debatable “whether collected antidumping

and countervailing duties ought to be distributed to some producers

and not others . . ..” Id. at 10. Timken states that the cases

cited by SKF to support a heightened scrutiny to be applied here
Court No. 05-00542 Page 11

are cases involving classifications based on sexual orientation,

disability and legitimacy, all inapposite to matters of economic

policy. See id. Timken further argues that the CDSOA’s

eligibility requirement is reasonable and rationally related to a

legitimate government purpose. See id. at 13-16. Timken advances

that Congress has rationally provided for a separate definition of

“affected domestic producers,” which is distinct from the injured

industry protected by the antidumping statute. See id. at 15-16.

Timken reasons that Congress could rationally conclude that

producers who supported a petition are affected by continued

dumping in a way that other producers are not. See id. at 16.

Thus, the classification in the CDSOA is rationally based and the

statute should be affirmed. See id.

B. Analysis

Congress has the authority to enact the CDSOA under the broad

authority granted by either the Spending Clause or the Commerce

Clause of the Constitution. It is the constitutional limits to

that authority and the scope of those limits where the CDSOA fails

constitutional muster. The Fourteenth Amendment to the

Constitution of the United States provides, inter alia, that no

state shall deny any person the “equal protection of the laws.”

CONSTITUTION Amend. XIV. Known as the Equal Protection Clause, the

Supreme Court has held that it applies to the federal government
Court No. 05-00542 Page 12

pursuant to the Fifth Amendment’s Due Process Clause. See Bolling

v. Sharpe, 347 U.S. 497, 499 (1954).

1. Standard of Review Under the Equal Protection Clause

In the CDSOA, Congress has drawn a distinction between

entities who may be “affected domestic producers” based on whether

the entity supported the original antidumping petition or either

did not support or took no position in the petition. See 19 U.S.C.

§ 1675c(b)(1) (“a petitioner or interested party in support of the

petition”). As the CDSOA is applied here, similarly situated

entities, i.e. SKF and Timken, are treated differently and thus, do

not stand equal before the law. In areas of social and economic

policy, however, a “statutory classification that neither proceeds

along suspect lines nor infringes fundamental constitutional rights

must be upheld” against an Equal Protection challenge if there is

any reasonably conceivable state of facts that could provide a

rational basis for the classification. See FCC v. Beach

Communications, Inc., 508 U.S. 307, 313 (1993) (citations omitted).

As such, the Court must review the CDSOA under this rational basis

standard. Even under a rational basis review, however, the

government “may not rely on a classification whose relationship to

an asserted goal is so attenuated as to render the distinction

arbitrary or irrational.” City of Cleburne v. Cleburne Living

Ctr., Inc., 473 U.S. 432, 446 (1985). “By requiring that the
Court No. 05-00542 Page 13

classification bear a rational relationship to an independent and

legitimate legislative end, [the court] ensure[s] that

classifications are not drawn for the purpose of disadvantaging the

group burdened by the law. Romer v. Evans, 517 U.S. 620, 633

(1996). “If the adverse impact on the disfavored class is an

apparent aim of the legislature, its impartiality would be

suspect.” R.R. Ret. Bd. v. Fritz, 449 U.S. 166, 181 (1980)

(Stevens, J., concurring). In addition, it is “fundamental that a

section of a statute should not be read in isolation from the

context of the whole [antidumping] Act.” NTN Bearing Corp. of Am.

v. United States, 26 CIT 53, 102-03, 186 F. Supp. 2d 1257, 1303

(2002) (citations omitted). Rather, “each part or section of a

statute should be construed in connection with every other part or

section so as to produce a harmonious whole . . ..” Id. (citing In

re Nantucket, Inc., 677 F.2d 95, 98 (C.C.P.A. 1982)).

2. No Rational Basis for Classification in CDSOA

The Trade Agreements Act of 1979 added the countervailing and

antidumping duty provisions to the Tariff Act of 1930. See Pub. L.

No. 96-39, § 101, 93 Stat. 150 (1979). In enacting the Trade

Agreements Act of 1979, Congress stated that the purposes were to,

inter alia, “foster the growth and maintenance of an open world

trading system” and “to expand opportunities for the commerce of

the United States in international trade.” Pub. L. No. 96-39, § 1,
Court No. 05-00542 Page 14

93 Stat. 146, codified as 19 U.S.C. § 2502. In 2000, Congress

again amended the Tariff Act of 1930 adding the CDSOA. See Pub. L.

No. 106-387, § 1003, 114 Stat. 1549A-73 (2000). In enacting the

CDSOA, Congress made the following findings:

(1) . . . injurious dumping . . . which cause[s] injury
to domestic industries must be effectively neutralized.

. . .

(4) Where dumping or subsidization continues, domestic
producers will be reluctant to reinvest or rehire . . .

(5) United States trade laws should be strengthened to
see that the remedial purpose of those laws is achieved.

114 Stat. 1549A-72 to 73 (emphasis added). The purpose of the

antidumping law, as a whole, has always been to “equalize

competitive conditions between foreign exporters and domestic

industries affected by dumping.” Huaiyin Foreign Trade Corp. v.

United States, 322 F.3d 1369, 1379 (Fed. Cir. 2003) (emphasis

added); see, e.g., Or. Steel Mills Inc. v. United States, 862 F.2d

1541, 1545 (Fed. Cir. 1988)(“the purpose of an antidumping duty

order is to aid an industry, not an individual company . . .”).

The Court based on the record before it, the statutory

language and the legislative history, cannot find a rational basis

nor is able to find any conceivable basis for the classification –

distinguishing between those entities who supported a petition and

those who either took no position or opposed the petition – and the

purpose of the CDSOA. The antidumping statute is designed to
Court No. 05-00542 Page 15

ensure that domestic industries, not any individual company can

compete in the marketplace. See Or. Steel Mills, 862 F.2d at 1545.

Congress itself has defined the term “industry” as “producers as a

whole of a domestic like product . . .” in charging the ITC to

determine whether a domestic industry is injured by reason of

imports. 19 U.S.C. § 1677(4)(A). To make a distinction between

individual producers within an industry is incongruous with the

fundamental purpose of the antidumping statute, that is to remedy

the injurious affects of dumping to the domestic industry as a

whole. Furthermore, Congress stated that the CDSOA was enacted to

counter the continued dumping and subsidies affecting competition

in the marketplace and to further effectively neutralize the injury

to the domestic industries. See 114 Stat. 1549A-72 to 73.

The Government and Timken argue that Congress has made a

policy choice in determining that entities who supported an

antidumping petition are those most harmed by injurious dumping.

See Customs’ Resp. at 23; Timken’s Resp. at 15-16. The Court finds

this argument unpersuasive. The plain language of the CDSOA fails

to rationally indicate why entities who supported a petition are

worthy of greater assistance than entities who took no position or

opposed the petition when all the domestic entities are members of

the injured domestic industry. Even if, however, in passing the

CDSOA Congress intended to help entities that suffered more injury
Court No. 05-00542 Page 16

than others, the Court cannot find a connection between that

purpose and then to identify the gravely injured as only the ones

who supported an antidumping petition. Importantly, there are

three options an entity can take in an antidumping investigation:

1) support the petition, 2) oppose the petition, and 3) take no

position. See PS Chez Sidney, L.L.C. v. United States, 30 CIT ___,

___, Slip Op. 06-103, *6-7 (Wallach, J. July 13, 2006). The Court

cannot discern a reasonable correlation between an entity’s

decision to support a petition and the gravity of the entity’s

injury. The classification is simply too broad because there are

a multitude of reasons why an entity might decide to support,

oppose, or take no position in an antidumping investigation. While

the Court acknowledges that an overbroad statute may survive

rational basis scrutiny, the breadth cannot brush upon reasons that

can conceivably infringe upon other constitutional protections, for

example an expression of political belief on an antidumping

petition. Cf. City of Chicago v. Morales, 527 U.S. 41, 52 (1999).

Again, the focus of an antidumping investigation is whether the

domestic industry, as a whole, is being injured, not just the

petition supporters. See 19 U.S.C. § 1677(4)(A); Or. Steel Mills,

862 F.2d at 1545.

Furthermore, the legislative history of both the Trade

Agreements Act of 1979 and the CDSOA emphasize the purpose of
Court No. 05-00542 Page 17

remediation of injury caused by dumping and subsidies to the entire

domestic industry. See e.g., H. Rep. No. 96-317 at 44 (1979)

(“antidumping duties may be imposed . . . when an industry in the

importing country producing a like product is materially injured”);

S. Rep. No. 96-249 at 16 (1979)(“ITC determines that an industry in

the United States is materially injured”). Most relevantly,

Congress states as part of its Congressional findings preceding the

CDSOA that “injurious dumping . . . which cause[s] injury to

domestic industries must be effectively neutralized” and that

“[w]here dumping or subsidization continues, domestic producers

will be reluctant to reinvest or rehire . . .” so therefore, the

“United States trade laws should be strengthened to see that the

remedial purpose of those laws is achieved.” 114 Stat. 1549A-72 to

73 (emphasis added). Congress refers to the domestic industry and

domestic producers in the CDSOA, as Congress has done consistently

throughout the antidumping law, without preference or bias to only

those entities that supported an antidumping petition. The CDSOA

is an amendment to the Tariff Act of 1930 and should be read in

congruity with the other provisions therein. See NTN Bearing

Corp., 26 CIT at 102-03, 186 F. Supp. 2d at 1303. Inclusive in the

purpose of the entire antidumping statute, i.e. Tariff Act of 1930

with the amendments of the Trade Agreements Act of 1979 and the

CDSOA, is the remedy of injury to the domestic industry. See e.g.,

Or. Steel Mills, 862 F.2d at 1545.
Court No. 05-00542 Page 18

Here, SKF and Timken are both members of the domestic AFB

industry. See USITC Pub. No. 2185 at 42. Both entities

participated in the original antidumping investigation in 1988,

with SKF opposing the petition and Torrington supporting it. See

Corrected Admin. R. at Ex. 1 & 2. In the investigation, the ITC

concluded that the entire domestic AFB industry was materially

injured by reason of imports from multiple countries, including

Japan. See Antifriction Bearings (Other Than Tapered Roller

Bearings) and Parts Thereof From the Federal Republic of Germany,

France, Italy, Japan, Romania, Singapore, Sweden, Thailand, and the

United Kingdom, 54 Fed. Reg. at 21,488-89. Timken is classified as

an “affected domestic producer” and received CDSOA disbursements

only because it acquired Torrington in 2003. See SKF’s Reply at

25. SKF submitted a request to the ITC to be included on the

“affected domestic producer” list for the 2005 CDSOA disbursements.

See SKF’s Br. at Ex. 1. SKF also submitted a claim listing its

qualifying expenditures for CDSOA disbursements to Customs. See

SKF’s Br. at Ex. 3. Both agencies denied SKF’s request stating

only that SKF was not an “affected domestic producer” because it

did not support the original 1988 antidumping petition. See SKF’s

Br. at Ex. 2 & 4. As the CDSOA is applied here, SKF is not

receiving Equal Protection under the laws because it is treated

differently than a similarly situated party, i.e. Timken, on the

sole basis of expressing opposition to an antidumping petition.
Court No. 05-00542 Page 19

For the aforementioned reasons, such a classification is arbitrary

and is not rationally connected to any legitimate objective.

Therefore, the CDSOA, specifically the provision which defines

“affected domestic producer,” is unconstitutional as applied here.

Having found that the CDSOA is unconstitutional, the Court finds it

unnecessary to address SKF’s other constitutional challenges and

proceeds to remedies.

II. Remedies

A. Parties’ Contentions

SKF requests that the Court issue a permanent injunction

enjoining the Government from making any present or future

disbursements pursuant to the CDSOA with respect to duties

collected from all antidumping orders covering AFBs, or in the

alternative, just ball bearings from Japan. See SKF’s Br. at 40.

SKF also requests that the Court order Customs to require repayment

of all CDSOA funds disbursed with respect to all antidumping orders

covering AFBs, or in the alternative, just ball bearings from Japan

and deposited in the general treasury. See id. SKF argues that a

balancing of the four factors required for a permanent injunction

support its issuance. See SKF’s Reply at 13. SKF asserts that it

has suffered irreparable economic harm to its competitive position

as a result of being denied CDSOA disbursements while its

competition received the funds. See id. at 14. SKF also asserts
Court No. 05-00542 Page 20

that the balancing of hardships weigh in its favor and that the

public interest would be served by a permanent injunction. See id.

at 16-18. SKF further argues that the Court has the authority to

order Customs to recollect disbursed CDSOA monies under 19 C.F.R.

§ 159.64(b)(3). See SKF’s Reply at 18. SKF points out that the

Government’s current position is contrary to its assurances to the

Court when it argued against SKF’s preliminary injunction motion.

See id. at 18-19. Furthermore, inapposite to the Government’s

arguments, SKF argues that there is no discretionary agency action

at issue here. See id. at 19. Rather, SKF is asking the Court to

order Customs to seek repayment of unconstitutional disbursements.

See id. Moreover, Customs’ regulations indicate that it

anticipates that it is required to seek repayment if an overpayment

has been made as determined by court action. See id. at 20. SKF

also asserts that severing the statute as suggested by Timken will

not remedy SKF’s injury. See id. at 21. Rather, SKF advances that

its constitutional harms could be remedied if the CDSOA read so

that all domestic producers were eligible for disbursements as

“affected domestic producers,” i.e., severing both 19 U.S.C. §

1675c(b)(1)(A) & (d)(1). See id. at 22-23. Finally, SKF argues

that Timken’s doctrine of laches defense is without merit and does

not bar its claim. See id. at 23-25.

The Government responds that SKF has not met the burden
Court No. 05-00542 Page 21

necessary for a permanent injunction and also inappropriately

requests an order compelling agency enforcement. See Customs’

Resp. at 45. Of the four factors enumerated by the Supreme Court

for a permanent injunction, the Government argues that SKF has not

demonstrated that it will be irreparably injured and that the

public interest would be served. See id. at 45-47. The Government

states that it has the authority to redistribute CDSOA funds that

are found to be improperly distributed, which removes SKF’s

irreparable injury claim. See id. at 46. Therefore, a permanent

injunction would be inappropriate. See id. at 47. The Government

also argues that the Court is not empowered to order Customs to

initiate collection of disbursed CDSOA monies. See id. Such an

order, the Government asserts, is an intrusion upon agency

discretion and an attempt by Customs to recoup CDSOA distributions

“would require Customs to enforce its overpayment regulation and,

thus, be an enforcement action.” Id. (emphasis retained). Since

the APA governs this matter, the Government states that only action

legally required can be compelled of the agency. See id. at 47-48

(citing 5 U.S.C. § 706(1)). The Government states that Customs’

enforcement regulation, 19 C.F.R. § 159.64(b), is a discretionary

regulation. See id. at 50-52. Therefore, the Government argues

that it is premature for the Court to order it to compel

disgorgement because it has not yet made a decision as to whether

or not to enforce 19 C.F.R. § 159.64(b), thus there is no agency
Court No. 05-00542 Page 22

decision for judicial review. See id. Furthermore, the Government

argues that the CDSOA does not place an affirmative obligation upon

it to initiate an enforcement action, thus the Court has no basis

upon which to order Customs to do so. See id. at 52. Finally, the

Government argues that even if the Court were empowered to order

Customs to take an enforcement action, there is no final agency

action to enforce here. See id. at 52-53.

Timken also responds that SKF has failed to establish that it

is entitled to any relief. See Timken’s Resp. at 38. Timken

argues that SKF has failed to rebut the presumption that any

unconstitutional language can be severed from the CDSOA rather than

automatically invalidating the entire statute. See id. at 39.

Timken states that assuming the Court finds that the supporting the

petition requirement is unconstitutional, that portion can be

severed from the definition of “affected domestic producer.” See

id. at 40-41. In doing so, the Congressional intent behind the

CDSOA is still preserved and the CDSOA is still operable. See id.

Timken also argues that the doctrine of laches bars SKF to any

forms of equitable relief. See id. at 42. Timken states that SKF

did not challenge the constitutionality of the CDSOA in 2001, but

rather unreasonably waited until after four annual CDSOA

distributions had been made before filing this action. See id.

Thus, Timken asserts that repayment of CDSOA disbursements here
Court No. 05-00542 Page 23

would prejudice the CDSOA recipients by imposing a sizeable

unexpected financial burden on those entities who reasonably relied

on CDSOA disbursements. See id. at 43. Finally, Timken argues

that SKF has not demonstrated that it is entitled to restitution or

repayment, which is an equitable remedy premised in contract and

inapplicable to a legislative policy choice. See id. at 43-44.

B. Analysis

1. The Constitutionally Offensive Language Can Be Stricken
From the CDSOA

Since the definition of an “affected domestic producer” in the

CDSOA is unconstitutional as applied here, the Court must determine

whether the offending portions of the statute are severable or

whether the entire statute is invalidated. See Regan v. Time,

Inc., 468 U.S. 641, 652 (1984)(plurality opinion)(“a court should

refrain from invalidating more of the statute than is necessary.”);

Buckley v. Valeo, 424 U.S. 1, 108 (1976). The Supreme Court has

reiterated that “whenever an act of Congress contains

unobjectionable provisions separable from those found to be

unconstitutional, it is the duty of this court to so declare, and

to maintain the act in so far as it is valid.” El Paso & Ne. Ry.

Co. v. Gutierrez, 215 U.S. 87, 96 (1909). Also material in

“evaluating severability is whether the statute will function in a

manner consistent with the intent of Congress. Alaska Airlines,
Court No. 05-00542 Page 24

Inc. v. Brock, 480 U.S. 678, 685 (1987)(emphasis retained). “[T]he

unconstitutional provision must be severed unless the statute

created in its absence is legislation that Congress would not have

enacted.” Id.

Here, the Court finds that the offending portion of the

statute is easily severable from the rest of the CDSOA and will not

render the statute useless. The CDSOA defines an “affected

domestic producer” as “a petitioner or interested party in support

of the petition with respect to which an antidumping duty order, a

finding under the Antidumping Act of 1921, or a countervailing duty

order has been entered.” 19 U.S.C. § 1675c(b)(1)(A) (emphasis

added). The Court has found that the classifying language, i.e.

“support of,” creates an unconstitutional distinction among

similarly situated domestic producers. Therefore, the words

“support of” should be stricken from the definition of an “affected

domestic producer.” In doing so, the Court recommends that an

acceptable definition of an “affected domestic producer” should

read

(A) was a petitioner or interested party in a petition
with respect to which an antidumping duty order, a
finding under the Antidumping Act of 1921, or a
countervailing duty order has been entered . . .

19 U.S.C. § 1675c(b)(1)(A)(as modified). The CDSOA would then

include all domestic producers as eligible entities to receive

CDSOA funds so long as they participated in an antidumping
Court No. 05-00542 Page 25

investigation resulting in an order. The CDSOA also refers to the

“in support of” requirement in a separate subsection, 19 U.S.C. §

1675c(d)(1), when outlining the ITC’s duties to forward the list of

eligible “affected domestic producers” to Customs. See 19 U.S.C.

§ 1675c(d)(1). In accordance with the aforementioned permissible

definition of “affected domestic producer,” the words “indicate

support of” should be stricken from 19 U.S.C. § 1675c(d)(1) and

replaced with “participated in” so that 19 U.S.C. § 1675c(d)(1)

should read:

The Commission shall forward to the Commissioner . . . a
list of petitioners and persons with respect to each
order and finding and a list of persons that participated
in the petition by letter or through questionnaire
response. In those cases in which a determination of
injury was not required or the Commission’s records do
not permit an identification of those who participated in
a petition, the Commission shall consult with the
administrating authority to determine the identity of the
petitioner and those domestic parties . . ..

19 U.S.C. § 1675c(d)(1)(underlined portions indicating changes).

The constitutionally acceptable definition of “affected

domestic producer” allows the CDSOA to function in a manner more

consistent with Congress’ intent to provide relief for the entire

domestic industry, as expressed in its Congressional findings and

with the intent and purpose behind the overall antidumping law.

See 114 Stat. 1549A-72 to 73; Alaska Airlines, 480 U.S. at 685.

Congress charges the ITC to determine in an antidumping

investigation whether a domestic industry is materially injured or
Court No. 05-00542 Page 26

threatened to be injured by reason of imports of the subject

merchandise. See 19 U.S.C. § 1673. An affirmative determination

by the ITC indicates that it has determined as such. See id.

Under the constitutionally acceptable definition of “affected

domestic producer,” CDSOA disbursements are now available to the

entire injured domestic industry. In doing so, the CDSOA can be

administered in the same way, merely without the unconstitutional

classification of eligible recipients.

2. Customs and the ITC Are to Reexamine Their Negative
Decision and Determine SKF’s Eligibility for CDSOA
Disbursements

Customs and the ITC denied SKF CDSOA disbursements for the

2005 fiscal year stating that SKF was not an “affected domestic

producer,” as defined in the CDSOA. See SKF’s Br. at Ex. 2 & 4.

For the foregoing reasons, the Court finds that Customs’ and the

ITC’s determination was made under an impermissible classification.

With the petition support requirement removed from the definition

of “affected domestic producer,” Customs’ and the ITC’s reason for

denying SKF CDSOA disbursement would no longer exist. SKF is an

eligible entity to be included on the ITC’s list of “affected

domestic producers” because it participated in the relevant

antidumping investigation that resulted in an affirmative

determination. See USITC Pub. No. 2185. As such, SKF’s request

for a permanent injunction is moot. Since the ITC and Customs
Court No. 05-00542 Page 27

denied SKF’s requests solely based on the fact that SKF was not an

“affected domestic producer,” the Court remands this matter back

to the agencies for the ITC to first determine if SKF qualifies as

an eligible “affected domestic producer” for the 2005 fiscal year

CDSOA disbursements in accordance with this decision. If the ITC

so determines, then Customs is to determine whether SKF’s claim

submitted for CDSOA disbursements is sufficient and if so, to then

include SKF among the 2005 CDSOA recipients to receive its pro rata

share. The Court determines that because Customs has yet to

determine the sufficiency of SKF’s claim, the issue of whether the

Court is empowered to order Customs to disgorge CDSOA monies

already paid is not yet ripe for review. Based on the

administrative posture of this case, the Court hesitates to preempt

any agency action here. Rather if SKF qualifies, the Court

entrusts Customs to determine how to ensure SKF receives its pro

rata share of the 2005 CDSOA disbursements as it deems fit,

understanding that Customs has regulatory authority at its disposal

to redistribute the disbursed funds, such as 19 C.F.R. §

159.64(b)(3).

CONCLUSION

The Court holds that the requirement that an entity had to

“support” an antidumping petition to be included as an “affected

domestic producer” as defined in the CDSOA, 19 U.S.C. §
Court No. 05-00542 Page 28

1675c(b)(1)(A), is a violation of the Equal Protection guarantees

under the Fifth Amendment to the Constitution. The classification

treats similarly situated domestic producers differently and is not

rationally related to a legitimate government objective. The Court

further finds that the classifying language “support of” is

severable from the CDSOA. Therefore, the definition of “affected

domestic producer” should read as “a petitioner or interested party

in a petition with respect to which an antidumping duty order, a

finding under the Antidumping Act of 1921, or a countervailing duty

order has been entered.” The Court finds all other arguments

unpersuasive. Since SKF was denied “affected domestic producer”

eligibility under the unconstitutional definition, the Court

remands this matter to the ITC and Customs to review their

decisions denying SKF CDSOA disbursements in accordance with this

opinion. An order will be entered accordingly.

/s/ Nicholas Tsoucalas
NICHOLAS TSOUCALAS
SENIOR JUDGE

Dated: September 12, 2006
New York, New York