Consolidated Bearings Co. v. United States

Slip Op. 01-66

UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
___________________________________
:
CONSOLIDATED BEARINGS COMPANY, :
:
Plaintiff, :
: Court No. 98-09-02799
v. :
:
THE UNITED STATES, :
:
Defendant. :
___________________________________:

Plaintiff, Consolidated Bearings Company (“Consolidated
Bearings”), moves pursuant to USCIT R. 56.1 for judgment upon the
agency record challenging the liquidation instructions number
8216117 (“Liquidation Instructions”) issued by the United States
Department of Commerce, International Trade Administration
(“Commerce”), on August 4, 1998, following Commerce’s final
determination entitled Final Results of Antidumping Duty
Administrative Review of Antifriction Bearings (Other Than Tapered
Roller Bearings) and Parts Thereof From the Federal Republic of
Germany (“Final Results”), 56 Fed. Reg. 31,692 (July 11, 1991), as
amended by Amended Final Results of Antidumping Duty Administrative
Reviews of Antifriction Bearings (Other Than Tapered Roller
Bearings) and Parts Thereof From Germany (“Amended Final Results”),
62 Fed. Reg. 32,755 (June 17, 1997). In the Liquidation
Instructions, Commerce required the United States Customs Service
(“Customs”) to assess antidumping duties on Consolidated Bearings’
imports of the merchandise manufactured by FAG Kugelfischer Georg
Schaefer KGaA (“FAG Kugelfischer”) at the cash deposit rates in
effect at the time of entry instead of at the weighted-average
rates determined for FAG Kugelfischer in the Amended Final
Results, 62 Fed. Reg. 32,755. Consolidated Bearings alleges that
the Liquidation Instructions are arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law and requests
the liquidation of the merchandise produced by FAG Kugelfischer and
imported by Consolidated Bearings during the period of review
covered in the Final Results, 56 Fed. Reg. 31,692, and the Amended
Final Results, 62 Fed. Reg. 32,755, at the rates provided in the
liquidation instructions issued by Commerce on September 9, 1997.

Held: Consolidated Bearings’ USCIT R. 56.1 motion is granted.
This case is remanded to Commerce to: (a) annul the Liquidation
Instructions issued by Commerce on August 4, 1998; and (b) take
Court No. 98-09-02799 Page 2

further actions not inconsistent with this opinion.

[Consolidated Bearings’ motion is granted. Case remanded].

Dated: June 5, 2001

Winthrop, Stimson, Putnam & Roberts (Christopher R. Wall and
Mark A. Monborne) for plaintiff.

Stuart E. Schiffer, Acting Assistant Attorney General; David
M. Cohen, Director, Commercial Litigation Branch, Civil Division,
United States Department of Justice (Lucius B. Lau); of counsel:
Myles S. Getlan, Office of the Chief Counsel for Import
Administration, United States Department of Commerce, for the
United States.

OPINION

TSOUCALAS, Senior Judge: Plaintiff, Consolidated Bearings

Company (“Consolidated Bearings”), moves pursuant to USCIT R. 56.1

for judgment upon the agency record challenging the liquidation

instructions number 8216117 (“Liquidation Instructions”) issued by

the United States Department of Commerce, International Trade

Administration (“Commerce”), on August 4, 1998, following

Commerce’s final determination entitled Final Results of

Antidumping Duty Administrative Review of Antifriction Bearings

(Other Than Tapered Roller Bearings) and Parts Thereof From the

Federal Republic of Germany (“Final Results”), 56 Fed. Reg. 31,692

(July 11, 1991), as amended by Amended Final Results of Antidumping

Duty Administrative Reviews of Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts Thereof From Germany (“Amended
Court No. 98-09-02799 Page 3

Final Results”), 62 Fed. Reg. 32,755 (June 17, 1997). In the

Liquidation Instructions, Commerce required the United States

Customs Service (“Customs”) to assess antidumping duties on

Consolidated Bearings’ imports of the merchandise manufactured by

FAG Kugelfischer Georg Schaefer KGaA (“FAG Kugelfischer”) at the

cash deposit rates in effect at the time of entry instead of at the

weighted-average rates determined for FAG Kugelfischer in the

Amended Final Results, 62 Fed. Reg. 32,755. Consolidated Bearings

alleges that the Liquidation Instructions are arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance

with law and requests the liquidation of the merchandise produced

by FAG Kugelfischer and imported by Consolidated Bearings during

the period of review covered in the Final Results, 56 Fed. Reg.

31,692, and the Amended Final Results, 62 Fed. Reg. 32,755, at the

rates provided in the liquidation instructions issued by Commerce

on September 9, 1997.

BACKGROUND

On May 15, 1989, Commerce published antidumping duty orders on

certain antifriction bearings (“AFBs”) from Germany and eight other

countries. See Antidumping Duty Orders: Ball Bearings, Cylindrical

Roller Bearings, and Spherical Plain Bearings and Parts Thereof

From the Federal Republic of Germany, 54 Fed. Reg. 20,900.
Court No. 98-09-02799 Page 4

Commerce subsequently instructed Customs to require importers of

bearings subject to the order (including those manufactured in

Germany by FAG Kugelfischer) to post cash deposits equal to the

following final antidumping duty margin percentages determined for

FAG Kugelfischer in the original investigation. See Pl.’s Br. Supp.

Mot. J. Agency R. (“Pl.’s Br.”), Ex. 3 at 4-7.

Consolidated Bearings is a distributor of a range of

antifriction bearings manufactured in various countries. See id.,

Ex. 4. On November 16, 1989, Consolidated Bearings entered a

shipment of AFBs manufactured in Germany by FAG Kugelfischer. See

id. Customs required Consolidated Bearings to make a certain cash

deposit of estimated antidumping duties applicable to the

merchandise at issue, and such deposit was properly made. See id.

On December 12, 1989, Consolidated Bearings entered another

shipment of AFBs, part of which was manufactured by FAG

Kugelfischer, and made a cash deposit of estimated antidumping

duties applicable to this shipment of merchandise at the same rate

as that allocated to the entry of November 16, 1989. See id.

On June 1, 1990, Commerce published a notice that initiated an

administrative review of imports of different merchandise including

the merchandise that was: (1) entered between November 9, 1988, and

April 30, 1990; and (2) manufactured by FAG Kugelfischer. See id.,
Court No. 98-09-02799 Page 5

Ex. 5. Upon conclusion of the review, Commerce published the Final

Results providing certain assessment rates for all the merchandise

reviewed. See 56 Fed. Reg. 31,692.

Later on, Commerce amended the determinations made in the

Final Results, published a notice with regard to a pertinent court

decision that took place during the interim and established a

weighted-average antidumping duty rate for FAG Kugelfischer. See

Amended Final Results, 62 Fed. Reg. 32,755. Neither the notice nor

the Amended Final Results expressly provided whether or not this

antidumping duty rate would apply to the entries of Consolidated

Bearings.

On September 9, 1997, acting in accordance with the

determinations made in Final Results, 56 Fed. Reg. 31,692, and

Amended Final Results, 62 Fed. Reg. 32,755, Commerce instructed

Customs to liquidate entries of the merchandise produced by FAG

Kugelfischer and imported by certain designated importers, the list

of which did not include Consolidated Bearings, at certain rates.

See Pl.’s Br., Ex. 6.

Almost a year later, on August 4, 1998, Commerce sent the

Liquidation Instructions at issue to Customs with regard to any

merchandise that: (a) was produced in Germany; and (b) still

remained unliquidated after the application of prior liquidation
Court No. 98-09-02799 Page 6

instructions including that of September 9, 1997. See id., Ex. 7.

The Liquidation Instructions required Customs to liquidate the

merchandise “at the deposit rate[s] required at the time of entry

of the merchandise,” the rates much higher than those applicable

under the prior liquidation instructions of September 9, 1997. Id.

The merchandise of Consolidated Bearings fell subject to the

Liquidation Instructions at issue.

I. JURISDICTION

As a preliminary matter, there is a jurisdictional question.

Consolidated Bearings and Commerce agree that jurisdiction is

sought under 28 U.S.C. § 1581(i) (1994), the court’s residual

jurisdiction provision. See Pl.’s Br. Reply Def.’s Mem. Opp. Br.

Supp. Pl.’s Mot. J. Agency R. (“Pl.’s Reply”) at 4; Def.’s Mem.

Opp. Br. Supp. Pl.’s Mot. J. Agency R. (“Def.’s Mem.”) at 8-10.

It is incumbent upon the Court to independently assess the

jurisdictional basis for a case, see Ad Hoc Comm. of Fla. Producers

of Gray Portland Cement v. United States, 22 CIT ___, ___, 25 F.

Supp. 2d 352, 357 (1998), a principal that is especially true where

a party seeks to invoke the court’s residual jurisdiction

authority. And, “[i]t is well established that the residual

jurisdiction of the court under [sub]section 1581(i) ‘may not be

invoked when jurisdiction under another [sub]section of § 1581 is
Court No. 98-09-02799 Page 7

or could have been available, unless the relief provided under that

other subsection would be manifestly inadequate.’” Id. (citing

Norcal/Crosetti Foods, Inc. v. United States, 963 F.2d 356, 359

(Fed. Cir. 1992) (emphasis in original)).

In the given case, it is appropriate to exercise residual

jurisdiction because jurisdiction under other subsections of

section 1581 is not available. Commerce suggests that subsections

1581(a) and 1581(c) could have served as viable jurisdictional

alternatives for Consolidated Bearings. See Def.’s Mem. at 15-16.

Commerce’s liquidation instructions, however, are not subject to

review under subsection 1581(a) because Commerce, not Customs, is

the agency responsible for issuing the instructions and determining

the amount of antidumping duty to be assessed. Commerce’s

liquidation instructions also are not reviewable under subsection

1581(c) because they were not part of the Final Results or the

Amended Final Results. Rather, such instructions are issued after

relevant final determinations are published and, accordingly, it

was impossible for Consolidated Bearings to contest the

instructions as required under 19 U.S.C. § 1516a(a)(2)(B)(iii)

(1994). And finally, none of the other subsections of section 1581

of Title 19 provides a viable basis for jurisdiction. See

generally, Heveafil Sdn. Bhd. v. United States, 1998 Ct. Intl.

Trade LEXIS 111; Slip Op. 98-115 (Aug. 11, 1998). Accordingly, the
Court No. 98-09-02799 Page 8

issue of antidumping law presented in this case is appropriate for

review under subsection 1581(i).

II. AFFIRMATIVE DEFENSES

In addition to its jurisdictional challenge, Commerce raises

two affirmative defenses to Consolidated Bearings’ claim.

Specifically, Commerce asserts that: (1) the action was commenced

beyond the two-year limitation period contained in 28 U.S.C. §

2636(i)(1994); and (2) Consolidated Bearings has failed to exhaust

its administrative remedies. See Def.’s Mem. at 9-10, 22-26.

A. Statute of Limitations Contained in 28 U.S.C. § 2636(i)

1. Standard of Review

As a preliminary matter, this Court determines the appropriate

standard of review to be applied to Commerce’s interpretation of 28

U.S.C. § 2636(i).

A statute of limitations is not a matter within the particular

expertise of an agency. Rather, it presents “a clearly legal issue

that courts are better equipped to handle.” Bamidele v. INS, 99

F.3d 557, 561 (3rd Cir. 1996) (quoting Dion v. Secretary of Health

and Human Serv., 823 F.2d 669, 673 (1st Cir. 1987), and citing Lynch

v. Lyng, 872 F.2d 718, 724 (6th Cir. 1989), and In re Oliver M. Elam

Jr., Co., 771 F.2d 174, 181 (6th Cir. 1985)). Therefore, Commerce’s
Court No. 98-09-02799 Page 9

interpretation of 28 U.S.C. § 2636(i) is not subject to deference

under the two-step analysis prescribed by Chevron U.S.A. Inc. v.

Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), and

it is incumbent upon the Court to independently assess the

boundaries set by the language of section 2636(i).

2. Contentions of the Parties

Relying on Mitsubishi Elecs. Am., Inc. v. United States

(“Mitsubishi”), 44 F.3d 973 (Fed. Cir. 1994), Commerce argues that

this action is time-barred. See Def.’s Mem. at 22-24. Commerce

asserts that Consolidated Bearings’ cause of action accrued on the

last day upon which Consolidated Bearings had an opportunity to

request an administrative review under Commerce’s notice of such

opportunity, see Opportunity To Request Administrative Review of

Antidumping or Countervailing Duty Order, Finding, or Suspended

Investigation (“Notice”), 55 Fed. Reg. 19,093 (May 8, 1990),

because Commerce’s notice provided for an automatic assessment in

the absence of a request for review. See id.

Consolidated Bearings maintains that Commerce: (1) did not

resort to the automatic assessment regulation; and (2) under the

circumstances of the case at bar, Consolidated Bearings had no

reason to believe that Commerce would resort to such automatic

assessment regulation. See Pl.’s Reply at 15-18.
Court No. 98-09-02799 Page 10

3. Analysis

Section 2636(i) of Title 28 reads as follows:

A civil action of which the Court of International
Trade has jurisdiction under section 1581 of this title,
other than an action specified in subsections (a)-(h) of
this section, is barred unless commenced in accordance
with the rules of the court within two years after the
cause of action first accrues.

Indeed, both parties correctly note that “a claim accrues when

‘the aggrieved party reasonably should have known about the

existence of the claim.’” Mitsubishi, 44 F.3d at 978 (quoting St.

Paul Fire & Marine Ins. Co. v. United States, 959 F.2d 960, 964

(Fed. Cir. 1992)); accord Def.’s Mem. at 22, Pl.’s Reply at 17-18.

The Mitsubishi court held that the plaintiff’s cause of action

accrued on the day following the expiration of the deadline to

request an administrative review. See id. The Mitsubishi court

clarified that

[the plaintiff’s] claim arises from the automatic
assessment of antidumping duties under 19 C.F.R. §
353.53a(d)(1) (1987). This regulation applies once a
party's opportunity to request an administrative review
expires. Commerce's initial notice allowed [the
plaintiff] to request review through [a specified date].
Neither [the plaintiff] nor any other interested party
requested administrative review by that time. Section
353.53a(d)(1)'s automatic assessment procedure therefore
went into effect on [the specified date]. The regulation
and Commerce's notice informed [the plaintiff] that
Commerce would assess duties on the [merchandise]
beginning [the specified date]. [The plaintiff’s] cause
of action accrued, and the statute of limitations began
to run, on [the specified date] when all the events
necessary to state the claim had occurred.
Court No. 98-09-02799 Page 11

Mitsubishi, 44 F.3d at 978 (internal citation omitted).

Thus, the Mitsubishi court calculated the cut-off date based

on the particular fact that there was no request for an

administrative review. The circumstances of the case at bar are

exactly opposite.

Unlike the situation in Mitsubishi, Commerce’s reliance upon

19 C.F.R. § 353.53a(d)(1) is misplaced because it is uncontested

that Commerce has received requests to conduct administrative

reviews of antidumping duty orders concerning the entries covered

by the Notice, 55 Fed. Reg. 19,093, see Initiation of Antidumping

Administrative Reviews of 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, 55 Fed. Reg. 23,575 (June 11, 1990), and in

fact conducted an administrative review that covered, among others,

the merchandise produced by FAG Kugelfischer.1 See Final Results,

1
Consolidated Bearings contends that Consolidated Bearings
itself timely requested a review of its entries. See Pl.’s Reply
at 16 n.6. The point is contrary to the assertion made by Commerce
which maintains that Consolidated Bearings did not request a review
of its entries. See Def.’s Mem. at 23-24. In support of its
claim, Consolidated Bearings points to a letter from an attorney
for Torrington Company, a petitioner in the review at issue who is
unrelated to Consolidated Bearings. See Pl.’s Reply at 16 n.6.
Commerce alleges that this letter (a public document that “failed
to [be] include[d]” in the administrative record due to an omission
made by an attorney employed by Commerce, see Letter by Myles S.
Court No. 98-09-02799 Page 12

56 Fed. Reg. at 31,692. Therefore, neither the holding of

Mitsubishi nor 19 C.F.R. § 353.53a(d)(1) is applicable to the case

at bar. Accord Pl.’s Reply at 16-17.

Both parties correctly note that a claim accrues for purposes

of 28 U.S.C. § 2636(i) when “‘the aggrieved party reasonably should

have known about the existence of the claim.’” Pl.’s Reply at 17-

18, Def.’s Mem. at 22 (both quoting Mitsubishi, 44 F.3d at 978

(quoting, in turn, St. Paul Fire & Marine Ins. Co. v. United

States, 959 F.2d 960, 964 (Fed. Cir. 1992)). Granted that,

Consolidated Bearings could not have reasonably envisioned or known

about the existence of a claim arising from Commerce’s application

of an automatic assessment procedure until Commerce actually sought

the application of the rate ensuing from such procedure,

specifically until August 4, 1998, the date when Commerce

instructed Customs to liquidate entries of Consolidated Bearings at

the cash deposit rate.

Getlan (May 25, 1999)), should not be considered by the Court. See
Def.’s Mem. at 26. While noting that: (a) a request for a review
by an unrelated entity is not equal to a request for a review by
Consolidated Bearings; and (b) Commerce should not be allowed to
capitalize on the error Commerce itself made, the Court need not
reach the merits of this controversy. For the purposes of this
opinion it is sufficient to observe that neither party contests the
following: (a) a review was indeed undertaken, see Pl.’s Br. at 5;
Def.’s Mem. at 1; accord Final Results, 56 Fed. Reg. 31,692; and
(b) merchandise manufactured by FAG Kugelfischer was indeed subject
to the review. See Pl.’s Br. at 5; Def.’s Mem. at 4; accord Final
Results, 56 Fed. Reg. 31,692.
Court No. 98-09-02799 Page 13

Based on the foregoing, this Court concludes that the Statute

of Limitations contained in section 2636(i) of Title 28 was

properly tolled upon Consolidated Bearings’ filing of a summons and

complaint on September 11, 1998.

B. Exhaustion of Administrative Remedies

1. Background

The exhaustion doctrine requires a party to present its claims

to the relevant administrative agency for the agency’s

consideration before raising these claims to the Court. See

Unemployment Compensation Comm’n of Alaska v. Aragon, 329 U.S. 143,

155 (1946) (“A reviewing court usurps the agency’s function when it

sets aside the administrative determination upon a ground not

theretofore presented and deprives the [agency] of an opportunity

to consider the matter, make its ruling, and state the reasons for

its action”). There is, however, no absolute requirement of

exhaustion in the Court of International Trade in non-

classification cases. See Alhambra Foundry Co. v. United States,

12 CIT 343, 346-47, 685 F. Supp. 1252, 1255-56 (1988). Section

2637(d) of Title 28 directs that “the Court of International Trade

shall, where appropriate, require the exhaustion of administrative

remedies.” By its use of the phrase “where appropriate,” Congress

vested discretion in the Court to determine the circumstances under
Court No. 98-09-02799 Page 14

which it shall require the exhaustion of administrative remedies.

See Cemex, S.A. v. United States, 133 F.3d 897, 905 (Fed. Cir.

1998). Therefore, because “each exercise of judicial discretion in

not requiring litigants to exhaust administrative remedies,” the

Court is authorized to determine proper exceptions to the doctrine

of exhaustion. Alhambra Foundry, 12 CIT at 347, 685 F. Supp. at

1256 (citing Timken Co. v. United States, 10 CIT 86, 93, 630 F.

Supp. 1327, 1334 (1986) rev’d in part on other grounds Koyo Seiko

Co. v. United States, 20 F.3d 1156 (Fed. Cir. 1994)).

In the past, the Court has exercised its discretion to obviate

exhaustion where: (1) requiring it would be futile, see Rhone

Poulenc, S.A. v. United States, 7 CIT 133, 135, 583 F. Supp. 607,

610 (1984) (“it appears that it would have been futile for

plaintiffs to argue that the agency should not apply its own

regulation”), or would be “inequitable and an insistence of a

useless formality” as in the case where “there is no relief which

plaintiff may be granted at the administrative level,” United

States Cane Sugar Refiners’ Ass’n v. Block, 3 CIT 196, 201, 544 F.

Supp. 883, 887 (1982); (2) a subsequent court decision has

interpreted existing law after the administrative determination at

issue was published, and the new decision might have materially

affected the agency’s actions, see Timken, 10 CIT at 93, 630 F.

Supp. at 1334; (3) the question is one of law and does not require
Court No. 98-09-02799 Page 15

further factual development and, therefore, the court does not

invade the province of the agency by considering the question, see

id.; R.R. Yardmasters of Am. v. Harris, 721 F.2d 1332, 1337-39

(D.C. Cir. 1983); and (4) the plaintiff had no reason to suspect

that the agency would refuse to adhere to clearly applicable

precedent. See Philipp Bros., Inc. v. United States, 10 CIT 76,

79-80, 630 F. Supp. 1317, 1321 (1986).

2. Contentions of the Parties

Consolidated Bearings asserts that the exhaustion doctrine

does not apply to the case at bar because the circumstances of the

case qualify as an exception. Specifically, Consolidated Bearings

maintains that it had no reason to expect that Commerce would deny

application of 19 U.S.C. § 1675(a)(2) to its entries. See Pl.’s

Reply at 17. Alternatively, Consolidated Bearings contends that

the issue at hand is of purely legal nature that requires no

further agency involvement. See id. at 19-23.

Commerce alleges that the “purely legal” exception: (1) is a

“weak one,” Def.’s Mem. at 25-26 (citing Aramide Maatschappij

V.o.F. v. United States, 19 CIT 1095, 1098 n.4, 901 F. Supp. 353,

357 n.4 (1995)); (2) does not apply to the case at bar, see id. at

24-26; and (3) would allow Consolidated Bearings to introduce,

under the circumstances of the case, evidence that would be
Court No. 98-09-02799 Page 16

otherwise precluded from being considered by the court.2 See id.

at 26.

3. Analysis

The circumstances of the case at bar qualify for the “pure

question of law” exception.3 The requirements for the “pure

question of law” exception, initially ambiguous, see, e.g.,

Aramide Maatschappij, 19 CIT at 1098, 901 F. Supp. at 357, were

markedly delineated by a number of cases. See Saarstahl AG v.

United States, 20 CIT 1413, 1420, 949 F. Supp. 863, 869 (1996);

Timken Co. v. United States, 15 CIT 658, 659-60, 779 F. Supp. 1402,

1404-05 (1991); Budd Co., Wheel & Brake Div. v. United States, 15

CIT 446, 452, 773 F. Supp. 1549, 1555 (1991); Seattle Marine

Fishing Supply Co. v. United States, 12 CIT 60, 74, 679 F. Supp.

1119, 1130 (1988); Hercules, Inc. v. United States, 11 CIT 710,

735, 673 F. Supp. 454, 476 (1987); Rhone Poulenc, S.A., 7 CIT at

2
See note 1.
3
Consolidated Bearings’ argument that the case qualifies for
the “clearly applicable precedent” exception because Consolidated
Bearings did not expect Commerce to refuse the application of 19
U.S.C. § 1675(a)(2) lacks merit. Consolidated Bearings conflates
substantive and procedural hurdles. The question of whether
Commerce refused to apply 19 U.S.C. § 1675(a)(2) is a substantive,
not procedural issue. In essence, Consolidated Bearings asks this
Court to establish that the application of 19 U.S.C. § 1675(a)(2)
is the only alternative procedurally in order so the Court could
examine whether the very same section is not the only alternative
substantively.
Court No. 98-09-02799 Page 17

136, 583 F. Supp. at 611. Specifically, the following non-

exhaustive list of requirements is contemplated: (a) in order to

qualify for the exception, plaintiff shall raise a new argument;

(b) this argument shall be of purely legal nature; (c) the inquiry

shall require neither further agency involvement nor additional

fact finding or opening up the record; and (d) the inquiry shall

neither create undue delay nor cause expenditure of scarce party

time and resources. See id.

In view of these requirements, Consolidated Bearings is

correct in its conclusion that

[t]his case presents a pure legal issue that fits
squarely within this exception. . . . [The question
posed] requires only an examination of [19 U.S.C. §
1675(a)(2)] and employment of the traditional tools of
statutory construction. It does not . . . require the
application of any special . . . expertise [by Commerce]
or the development of a special factual record either
before or after the Court’s consideration of the issue.

Pl.’s Reply at 20, accord McKart v. United States, 395 U.S. 185,

197-99 (1969) (addressing the issue of the relative areas of

expertise of courts and agencies).

III. 19 U.S.C. § 1675(a)(2) AND DIFFERENT DUMPING MARGINS ASSIGNED
TO MANUFACTURER AND RESELLER

A. Standard of Review

Section 2640(e) of Title 28 provides that “[i]n any civil

action not specified in this section, the [court] shall review the
Court No. 98-09-02799 Page 18

matter as provided in [5 U.S.C. § 706 (1994)].” 28 U.S.C. §

2640(e) (1994). Because Section 2640 does not specifically address

civil actions filed under 28 U.S.C. § 1581(i), the court must

review the case at bar under the general standard and “hold

unlawful and set aside agency action, findings, and conclusions

found to be . . . arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law . . . .” 5 U.S.C. §

706(2)(A).

It is well-settled that the arbitrary and capricious standard

of review is not merely deferential to agency action, but the most

deferential standard of review. See In re Gartside, 203 F. 3d

1305, 1312 (Fed. Cir. 2000) (noting that “[b]ecause this [arbitrary

and capricious] standard is generally considered to be the most

deferential . . . standard[] of review, . . . the reviewing court

analyzes only whether a rational connection exists between the

agency’s factfindings and its ultimate action”) (citations

omitted). Therefore, the court must uphold the agency’s actions

unless Commerce’s conclusion was plainly unreasonable or

irrational. See Boltex Mfg. Co. v. United States, 2000 Ct. Intl.

Trade LEXIS 119 (Sep. 8, 2000).

B. Background

On September 9, 1997, Commerce instructed Customs to liquidate
Court No. 98-09-02799 Page 19

entries of the merchandise produced by FAG Kugelfischer and

imported by certain importers, the list of which did not include

Consolidated Bearings, at a certain “manufacturer’s” rate.4 See

Pl.’s Br., Ex. 6. Almost a year later, on August 4, 1998, Commerce

sent the Liquidation Instructions to Customs requiring Customs to

liquidate the merchandise that was: (1) produced in Germany; (2)

imported by any importer; and (3) still remained unliquidated after

the application of prior liquidation instructions including that of

September 9, 1997, “at the deposit rate required at the time of

entry of the merchandise.” Id., Ex. 7. Under the Liquidation

Instructions, Customs had to assess Consolidated Bearings’ entries

at the rate much higher than the “manufacturer’s” rate determined

by Commerce for FAG Kugelfischer.

C. Contentions of the Parties

Consolidated Bearings maintains that the Liquidation

Instructions are arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law. See Pl.’s Br. at 18-20.

Consolidated Bearings asserts that 19 U.S.C. § 1675(a)(2) requires

4
While there were two types of rates involved, that is, rates
applicable to cylindrical roller bearings and those applicable to
ball bearings, the argument and the discussion is analogous in both
cases. The Court, therefore, does not address the specific numbers
but rather treats the issue of general discrepancy in assessment of
“deposit” rates and their respective “manufacturer’s” rates, the
discrepancy applicable to the entries of each type of bearings.
Court No. 98-09-02799 Page 20

that antidumping duties be assessed on an importer’s entries at the

manufacturer’s rate if: (a) the importer purchased the merchandise

from a reseller that does not have its own cash deposit rate; (b)

Commerce conducted an administrative review involving the

merchandise; and (c) Commerce assigned a dumping margin for the

manufacturer but not the reseller. See Pl.’s Reply at 20.

Consolidated Bearings contends that acting otherwise would be

arbitrary and capricious in view of the fact that, according to

Consolidated Bearings, Commerce’s determinations in the Final

Results, 56 Fed. Reg. 31,692, and the Amended Final Results, 62

Fed. Reg. 32,755, did not address the issue of potential difference

in assessment of “manufacturer” and reseller’s margins. See id. at

24-25. In addition, Consolidated Bearings asserts that Commerce

unlawfully circumvented the notice and comment procedure by

adopting the rule reflected in the Liquidation Instructions, thus

defying Consolidated Bearings’ right to procedural due process.

See id. at 33-36.

Commerce argues that the Liquidation Instructions were in

accordance with law and that it employed a rational basis

reflecting a new Commerce policy that was properly implemented.

See Def.’s Mem. at 27-39. Commerce also maintains that the

Liquidation Instructions were not subject to the notice and comment

requirement. See id. at 40-46. Finally, Commerce states that its
Court No. 98-09-02799 Page 21

actions could not violate Consolidated Bearings’ right to

procedural due process because Consolidated Bearings has no right

to continued importation. See id. at 43-44.

D. Analysis

1. Procedural Due Process

Commerce asserts that Consolidated Bearings’ Fifth Amendment

Due Process rights could not have been violated because

Consolidated Bearings does not have a protected property interest

in its right to the continued importation of its merchandise. See

id. Commerce points out that “no one has a Congressionally

untouchable right to the continued importation of any product.”

Id. (quoting Arjay Assocs., Inc. v. Bush, 891 F.2d 894 (Fed. Cir.

1989)).

It is impossible to comprehend how an importer’s lack of

vested right to import merchandise in the future negates the

obligation to provide the importer with notice prior to imposing an

antidumping duty for the merchandise already imported. The Court

shares Consolidated Bearings’ bewilderment, see Pl.’s Reply at 34-

36, and shall not entertain Commerce’s argument since it fails to

differentiate between substantive and procedural Due Process claims
Court No. 98-09-02799 Page 22

and lacks any merit.5

2. Notice and Comment Requirement

Consolidated Bearings maintains that the Liquidation

Instructions were effectively a rule within the meaning of the

Administrative Procedure Act (“APA”) and, therefore, subject to

notice and comment procedure applicable to the rule making. See

Pl.’s Reply at 33-34.

The definition of a “rule” within the meaning of the APA

appears at 5 U.S.C. § 551(4) (1994) and reads as follows:

“[R]ule” means the whole or a part of an agency statement
of general or particular applicability and future effect
designed to implement, interpret, or prescribe law or
policy or describing the organization, procedure, or
practice requirements of an agency . . . .

Detailed requirements of the process of rule making are

provided in 5 U.S.C. § 553 (1994) and include notice and comment

procedural requirements. See 5 U.S.C. § 553(b),(c). The statute

sets very narrow parameters for an agency to properly dispense with

the requirements. See 5 U.S.C. § 553(b).

5
This Court has pointed out the very same mistake to Commerce
on previous occasions. See Transcom, Inc. v. United States, 24 CIT
___, ___, 121 F. Supp. 2d 690, 707 (2000); Transcom, Inc. v. United
States, 22 CIT ___, ___, 5 F. Supp. 2d 984, 990 (1998) rev’d on
other grounds, Transcom, Inc. v. United States, 182 F.3d 876 (Fed.
Cir. 1999). Obviously, to no avail.
Court No. 98-09-02799 Page 23

The Liquidation Instructions at issue read as follows:

If [Customs is] still suspending liquidation on [those]
entries of AFBs from Germany during the period 11/9/88
through 4/30/90 after applying all of the above
liquidation instructions [including that of September 9,
1997, Customs] should now liquidate such entries at the
deposit rate required at the time of entry of the
merchandise.

Pl.’s Br., Ex. 7.

Had Commerce intended for the language of the Liquidation

Instructions to set out Commerce’s new policy, Commerce’s action

would clearly qualify as a rule and be subject to the notice and

comment procedure detailed in 5 U.S.C. § 553. The Court, however,

agrees with Commerce that the extreme specificity of the language

employed, particularly: (a) the designation of AFBs among all other

types of merchandise; (b) the designation of German origin of the

merchandise; (c) the designation of the exact time of importation

of the merchandise; and (d) the statement narrowing the

applicability of the Liquidation Instructions to the merchandise

which liquidation was still suspended after application of all

prior instructions, evinced Commerce’s desire to “issue[] importer-

specific liquidation instructions for [specific] merchandise,” see

Def.’s Mem. at 41, rather than to set out a general rule providing

that, “under the antidumping law, when an importer purchases a

particular manufacturer’s merchandise from a reseller that does not

have its own cash deposit rate[,] . . . antidumping duties will be
Court No. 98-09-02799 Page 24

assessed on the importer’s entries at [the] cash deposit rate

instead of at the rate determined for the manufacturer . . . .”

Pl.’s Reply at 33-34.

Therefore, the notice and comment requirements contained in 5

U.S.C. § 553 are inapplicable to the issuance of the Liquidation

Instructions.

3. Statement of Basis and Arbitrary and Capricious Act

Both parties treat the questions of: (a) whether Commerce

properly explained the basis for the Liquidation Instructions; and

(b) whether Commerce’s action was arbitrary and capricious, as two

independent issues. See Pl.’s Reply at 24-25, 30–33, Def.’s Mem.

at 27-35, 38-40. The determination of one, however, is inseparable

from the other.

The court will uphold Commerce’s actions unless Commerce’s

conclusion is unreasonable or irrational. See Boltex Mfg., 2000

Ct. Intl. Trade LEXIS 119.

The reasoning process required for a rational course of
conduct requires more than an articulation of the factors
considered by [an] agency. When [undertaking certain
conduct], the agency must explain how those considered
factors justify the [conduct taken]. The gap between the
facts and the conclusion must be filled.

Madison Metro. Sch. Dist. v. School Dist. Boundary Appeal Bd., 1998
Court No. 98-09-02799 Page 25

Wisc. App. LEXIS 1200 (Wis. Ct. App. 1998) (quoting Kammes v.

Mining Inv. & Local Impact Fund Bd., 340 N.W. 2d 206, 213 (Wis. Ct.

App. 1983).

Therefore, Commerce’s action was arbitrary and capricious if

Commerce failed to explain the basis for the Liquidation

Instructions at issue.

a. Insufficiency of Explanations
Provided by Commerce

Commerce maintains that it properly provided the reasoning for

the Liquidation Instructions. See Def.’s Mem. 38-40.

Specifically, Commerce points to three documents made public during

the review.

The first document Commerce cites to is the Notice, 55 Fed.

Reg. 19,093, which language states that Commerce would “instruct

[Customs] to assess antidumping . . . duties . . . at a rate equal

to the cash deposit” if no request for a review is received. As

discussed supra, this statement cannot lend support to Commerce’s

position because: (a) requests for review were received; and (b)

this general default language cannot qualify as an explanatory

statement disclosing Commerce’s intent to specifically assess the

merchandise by FAG Kugelfischer and Consolidated Bearings’ entries

of merchandise by FAG Kugelfischer at different rates.
Court No. 98-09-02799 Page 26

The second document that Commerce relies upon is Preliminary

Results of Antidumping Duty Administrative Reviews and Partial

Termination of Administrative Reviews of Antifriction Bearings

(Other Than Tapered Roller Bearings) and Parts Thereof from the

Federal Republic of Germany (“Preliminary Results”), 56 Fed. Reg.

11,200 (Mar. 15, 1991). In this document Commerce stated the

following:

Torrington, the petitioner, has alleged that bearings
produced in Germany by SKF Sverige AB have been exported
to the United States through SKF's Austrian affiliates,
SKF Steyr GmbH and Steyr Walzlager GmbH, and that these
sales have not been reported to [Commerce] by SKF. SKF
claims that there have been no U.S. sales of merchandise
subject to these orders that were made by its Austrian
affiliates during the period of review. Because the
evidence submitted by Torrington in support of its
allegations is inadequate, we have no reason to believe
that SKF submitted an incomplete response.

Id. at 11,202.

Commerce chooses to read this language as: (a) an axiomatic

statement that an importer must submit evidence to Commerce to

support the importer’s allegations that merchandise sold to third

countries was sold with the knowledge that merchandise was destined

for the United States; and, moreover, (b) a statement disclosing

Commerce’s intent to specifically6 assess the merchandise by FAG

6
It shall be particularly stressed that this part of
discussion addresses solely Commerce’s desire to assess specific
rates for FAG Kugelfischer and Consolidated Bearings. Had Commerce
intended to create a general regime, Commerce’s action would be
Court No. 98-09-02799 Page 27

Kugelfischer and Consolidated Bearings’ entries of merchandise by

FAG Kugelfischer at different rates. See Def.’s Mem. at 38.

Trying to explain the logical gap between such Commerce’s intent

and the actual language used in the Preliminary Results, Commerce

points out that the Court should “uphold a decision of less than

ideal clarity if the agency’s path may reasonably be discerned.”

Id. at 39 (quoting Humane Soc. of United States v. Clinton, 23 CIT

___, ___, 44 F. Supp. 2d 260, 271 (1999) (quoting, in turn, Motor

Vehicle Mfr. Ass’n of United States, Inc. v. State Farm Mut. Auto.

Ins., Co., 463 U.S. 29, 43 (1983)).

While the Court agrees with the premise that each agency

statement cannot be expected to present an example of clarity, the

Court shares Consolidated Bearings’ anxiety over the path that

Commerce took to connect these two utterly unrelated propositions.

Compare Madison Metro. Sch. Dist., 1998 Wisc. App. LEXIS 1200.

Finally, Commerce relies on the language contained in the

Final Results, 56 Fed. Reg. 31,692. See Def.’s Mem. at 38-40. The

language Commerce cites addresses the following: (a) the assessment

of merchandise imported from Japan by Peer International, a

reseller unrelated to Consolidated Bearings; and (b) Commerce’s

invalid for failure to observe the notice and comment requirements
considered supra.
Court No. 98-09-02799 Page 28

methodology of calculating: (1) purchase price sales; (2)

exporter’s sales price sales; (3) sales for companies utilizing the

price list option of reporting information; and (4) entries that

passed through a foreign trade zone before entry into the United

States. Id. Commerce concludes that these statements should have

been read and understood as a statement disclosing Commerce’s

intent to specifically assess the merchandise by FAG Kugelfischer

and Consolidated Bearings’ entries of merchandise by FAG

Kugelfischer at different rates.

Commerce’s logic escapes this Court. A discussion of

merchandise imported by an unrelated reseller from an unrelated

country could hardly be interpreted as providing any clear default

criterion, much less a criterion specifying the circumstances under

which Commerce would assess at different rates the merchandise by

FAG Kugelfischer and Consolidated Bearings’ entries of merchandise

by FAG Kugelfischer. Similarly, a spelled out set of particular

calculations cannot be read as providing for another mode of

calculation in an unrelated scenario without delineating such other

calculation and scenario with reasonable clarity. Except in the

rarest circumstances, a failure to directly address an issue cannot

qualify or be interpreted as a statement. See generally, Mayers v.

INS, 175 F.3d 1289 (11th Cir. 1999); Henderson v. INS, 157 F.3d 106
Court No. 98-09-02799 Page 29

(2nd Cir. 1998); Maria v. McElroy, 68 F. Supp. 2d 206 (E.D.N.Y.

1999). Therefore, none of the three sources on which Commerce

relies specified the basis for Commerce’s decision to assess the

merchandise by FAG Kugelfischer and Consolidated Bearings’ entries

of merchandise by FAG Kugelfischer at different rates.

b. Other Deficiencies in Commerce’s Actions

The Liquidation Instructions issued by Commerce on August 4,

1998, read as follows:

If [Customs is] still suspending liquidation on [those]
entries of AFBs from Germany during the period 11/9/88
through 4/30/90 after applying all of the above
liquidation instructions [including that of September 9,
1997, Customs] should now liquidate such entries at the
deposit rate required at the time of entry of the
merchandise.

Pl.’s Br., Ex. 7.

The Court sees a few problems with Commerce’s action.

Considering that on September 9, 1997, Commerce already instructed

Customs to liquidate certain entries subject to the review at

certain rates, see Pl.’s Br., Ex. 6, it is entirely unclear to this

Court why, almost a year later, Commerce felt compelled to issue

the Liquidation Instructions at issue if, as Commerce now contends,

the conclusions contained in these Liquidation Instructions were

already self-evident from the very same record and from the

previously issued September 9, 1997, instructions.
Court No. 98-09-02799 Page 30

Furthermore, the examination of the particular language

employed in the Liquidation Instructions prompts the Court to

conclude that Commerce’s use of the subjunctive mood, specifically

Commerce’s choice to begin the directive with the word “if,”

demonstrates that Commerce indeed was doubtful whether the

conclusions contained in the Liquidation Instructions were either

reasonably discernible from the record that Commerce compiled or in

accord with its September 9, 1997, instructions.

Such action by Commerce shows that Commerce contemplated a

scenario under which certain entries of AFBs from Germany,

including the merchandise manufactured by FAG Kugelfischer, could

have been liquidated prior to or on August 3, 1998, (the day prior

to the date of issuance of the Liquidation Instructions) at one

rate (that is, the rate provided for in the September 9, 1997,

instructions) while other entries, identical to the previously-

described entries in every respect but yet unliquidated as of the

date of issuance of the Liquidation Instructions, became subject to

entirely different rate on September 4, 1998.

Subsection 1675(a)(2) of Title 19 governs the procedure for

determination of antidumping duties and provides guidelines for
Court No. 98-09-02799 Page 31

calculations, bond requirements and time frames.7 See 19 U.S.C. §

1675(a)(2) (1994). The subsection ends with the statement that

“[t]he determination [made in accordance with these guidelines]

shall be the basis for the assessment of . . . antidumping duties

on entries of merchandise covered by the determination . . . .”

See 19 U.S.C. § 1675(a)(2)(C). Nowhere does the statute provide

for Commerce’s right to reassessment or redetermination. An entity

dealing in merchandise that is covered by a properly conducted

determination and subject to the duties assessed accordingly,

should be able to rely on such assessment without apprehension that

the determining agency would change its mind nearly a year later

and reform the properly assessed rates. Indeed, such whimsical

agency conduct manifests lack of a rational connection between

Commerce’s initial fact findings and its ultimately inconsistent

course of actions. Compare In re Gartside, 203 F. 3d at 1312.

7
The Court does not reach the merits of Consolidated
Bearings’ claim that 19 U.S.C. § 1675(a)(2) requires that
antidumping duties be assessed on an importer’s entries at the
manufacturer’s rate if: (1) the importer purchased the merchandise
from a reseller that does not have its own cash deposit rate; and
(2) Commerce conducted an administrative review involving the
merchandise and assigned a dumping margin for the manufacturer but
not the reseller. See Pl.’s Reply at 20. Because it is
uncontested that acting under the mandate of 19 U.S.C. §
1675(a)(2), Commerce reached a determination, see Final Results, 56
Fed. Reg. 31,692, and Amended Final Results, 62 Fed. Reg. 32,755,
and, in accordance with such determination issued its September 9,
1997, liquidation instructions, the Court addresses solely the
issue of discrepancy in assessments under the September 9, 1997
liquidation instructions and the Liquidation Instructions at issue.
Court No. 98-09-02799 Page 32

Based on the foregoing, the Court finds the Liquidation

Instructions issued by Commerce on August 4, 1998, arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance

with law. See 5 U.S.C. § 706(2)(A).

CONCLUSION

This case is remanded to Commerce to: (a) annul the

Liquidation Instructions issued by Commerce on August 4, 1998; and

(b) take further actions not inconsistent with this opinion.

_________________________
NICHOLAS TSOUCALAS
SENIOR JUDGE

Dated: June 5, 2001
New York, New York