Slip Op. 06-48
UNITED STATES COURT OF INTERNATIONAL TRADE
- - - - - - - - - - - - - - - - - x
CANADIAN LUMBER TRADE ALLIANCE; :
NORSK HYDRO CANADA, INC.; :
CANADIAN WHEAT BOARD; ONTARIO :
FOREST INDUS. ASS’N; ONTARIO :
LUMBER MFGS ASS’N; THE :
FREE TRADE LUMBER COUNCIL; :
:
and :
:
THE GOVERNMENT OF CANADA, :
:
Plaintiffs, :
:
:
v. : Before: Pogue, Judge
: Consol. Ct. No. 05-00324
THE UNITED STATES OF AMERICA; :
DEBORAH J. SPERO, ACTING :
COMMISSIONER, UNITED STATES :
CUSTOMS & BORDER PROTECTION; :
and UNITED STATES CUSTOMS & :
BORDER PROTECTION, :
:
Defendants, :
:
and :
:
COALITION FOR FAIR LUMBER :
IMPS. EXECUTIVE COMM.; U.S. :
MAGNESIUM, LLC; UNITED STATES :
STEEL CORP.; U.S. FOUNDRY & :
MFG. CO.; NEENAH FOUNDRY CO.; :
ALLEGHENY LUDLUM CORP; AK :
STEEL CORP.; EAST JORDAN IRON :
WORKS, INC.; LEBARON FOUNDRY :
CORP.; MUNICIPAL CASTINGS, :
INC.; and NORTH DAKOTA WHEAT :
COMM’N; :
:
Defendant-Intervenors. :
- - - - - - - - - - - - - - - - - x
Decided: April 7, 2006
[Plaintiffs’ motion granted in part; Defendant’s motion granted
in part]
Steptoe & Johnson, LLP (Mark A. Moran, Kaija Wadsworth, Matthew
S. Yeo, and Michael T. Gershberg) for Plaintiff Canadian Lumber Trade
Alliance;
Steptoe & Johnson, LLP (Gregory S. McCue) for Plaintiff Norsk
Hydro Canada, LLC;
Steptoe & Johnson, LLP (Edward J. Krauland, Joel D. Kaufman, and
Thomas R. Best)for Plaintiff Canadian Wheat Board;
Sidley Austin LLP (Neil R. Ellis, Andrew W. Shoyer, Carter G.
Phillips, Lawrence R. Walders, and Richard D. Bernstein) for Plaintiff
Government of Canada;
Baker & Hostetler, LLP (Elliot J. Feldman, John Burke, Michael S.
Snarr, and Bryan J. Brown) for Plaintiffs Ontario Forest Industries
Association, Ontario Lumber Manufacturers Association, and The Free
Trade Lumber Council;
Stuart E. Schiffer, Deputy Assistant Attorney General; David M.
Cohen, Director, Jean E. Davidson, Deputy Director, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice (Kenneth
M. Dintzer, Senior Trial Counsel, and David S. Silverbrand, Trial
Attorney) for Defendant United States;
Dewey Ballantine LLP (Bradford L. Ward, Harry L. Clark, Linda A.
Andros, Mayur R. Patel, and Rory F. Quirk) for Defendant-Intervenor
Coalition for Fair Lumber Imports Executive Committee;
King & Spalding, LLP (Joseph W. Dorn, Stephen A. Jones, and
Jeffrey M. Telep)for Defendant-Intervenor US Magnesium LLC;
Skadden Arps Slate Meagher & Flom, LLP (John J. Mangan, Jeffrey
D. Gerrish, and Robert E. Lighthizer) for Defendant-Intervenor United
States Steel Corporation;
Collier, Shannon, Scott, PLLC (Michael R. Kershow, Mary T.
Staley, Paul C. Rosenthal, and Robin H. Gilbert) for Defendant-
Intervenors Neenah Foundry Company, Municipal Castings, Incorporated,
LeBaron Foundry Incorporated, East Jordan Iron Works, Incorporated,
Allegheny Ludlum Corporation, and AK Steel Corporation;
Troutman Sanders LLP (Charles Alvin Hunnicutt, and G. Brent
Connor) for Defendant-Intervenor North Dakota Wheat Commission.
Pillsbury, Winthrop, Shaw, Pittman, LLP (Stephan E. Becker,
Sanjay J. Mullick, and Joshua D. Fitzhugh) for Amicus Curiae
Government of Mexico.
Consol. Ct. No. 05-00324 Page 3
OPINION
POGUE, Judge: This case presents two key questions: First,
whether domestic law authorizes the Government of Canada and/or
its exporters to challenge in this court the administration of
the United States’ trade laws, particularly the Continued Dumping
and Subsidy Offset Act of 2000, Pub. L. No. 106-387, § 1003, 114
Stat. 1549, 1623 (2000) codified at 19 U.S.C. § 1675c (the “Byrd
Amendment”). The United States Bureau of Customs and Border
Protection (“Customs” or “Defendant” or “Commissioner”),1 relying
on the Byrd Amendment, distributes to domestic producers who are
competitors of the Plaintiff Canadian exporters the duties
collected as a result of antidumping and countervailing orders on
Canadian goods. If Plaintiffs are authorized to challenge the
Defendant’s implementation of the Byrd Amendment by bringing this
action, the second issue is whether Customs is authorized to
distribute funds collected from duty orders on Canadian (and
Mexican) imports of goods where the Byrd Amendment does not
specifically so direct.
For the reasons stated below, the court finds that the
Plaintiff Canadian exporters, but not the Government of Canada,
1
In this opinion, the term Defendants refers to Defendant and
Defendant-Intervenors. The court has attempted, when possible,
to properly attribute arguments.
Consol. Ct. No. 05-00324 Page 4
are authorized to bring this action, and that Customs has
violated U.S. law, specifically a provision of the NAFTA
Implementation Act in applying the Byrd Amendment to antidumping
and countervailing duties on goods from Canada and Mexico, 19
U.S.C. § 3438.
BACKGROUND
A.
In the early 1990's, the United States, Canada and Mexico
negotiated, and signed, the North American Free Trade Agreement
(“NAFTA”). See North American Free Trade Agreement
Implementation Act Statement of Administrative Action (“SAA”),
reprinted in H. R. Doc. No. 103-159, p. 1 (1993); Xerox Corp. v.
United States, 423 F.3d 1356, 1358 (Fed. Cir. 2005); Made in the
USA Found. v. United States, 242 F.3d 1300, 1302-03 (11th Cir.
2001). NAFTA aims to achieve “the liberalization of trade in
goods and services, removal of barriers to investment, [and] the
protection and enforcement of intellectual property rights[.]”
SAA, reprinted in H. R. Doc. No. 103-159, p. 3 (1993).
As is relevant here, NAFTA allows the United States (and the
other NAFTA parties) to amend their antidumping and
countervailing duty laws “provided that . . . [any] amendment
shall apply to goods from another Party only if the amending
statute specifies that it applies to goods from that Party or
Consol. Ct. No. 05-00324 Page 5
from the Parties to this Agreement.” North American Free Trade
Agreement, art. 1902(2)(a) (1993) (entered into force Jan. 1,
1994) (reprinted in Jackson, et al, 2002 Documents Supplement to
Legal Problems of International Economic Relations at 512 (4th
ed. 2002)) (emphasis added).2 NAFTA further requires that, if
2
Article 1902 provides:
Retention of Domestic Antidumping Law and Countervailing Duty
Law
1. Each Party reserves the right to apply its antidumping law
and countervailing duty law to goods imported from the
territory of any other Party. Antidumping law and
countervailing duty law include, as appropriate for each
Party, relevant statutes, legislative history, regulations,
administrative practice and judicial precedents.
2. Each Party reserves the right to change or modify its
antidumping law or countervailing duty law, provided that in
the case of an amendment to a Party's antidumping or
countervailing duty statute:
(a) such amendment shall apply to goods from another
Party only if the amending statute specifies that it
applies to goods from that Party or from the Parties to
this Agreement;
(b) the amending Party notifies in writing the Parties to
which the amendment applies of the amending statute as
far in advance as possible of the date of enactment of
such statute;
(c) following notification, the amending Party, on
request of any Party to which the amendment applies,
consults with that Party prior to the enactment of the
amending statute; and
(d) such amendment, as applicable to that other Party, is
not inconsistent with
(continued...)
Consol. Ct. No. 05-00324 Page 6
the United States does amend its antidumping or countervailing
duty laws as to goods from Canada or Mexico: (1) it will notify
“in writing the Parties to which the amendment applies of the
amending statute as far in advance as possible of the date of
enactment of such statute,” (2) it will consult with the affected
party before adopting the amending statute, and (3) any such
amendment may not run counter to the General Agreement on Tariffs
and Trade (“GATT”) or the principles of NAFTA. Id. at art.
1902(2)(b)-(d).
Congress approved NAFTA in the North American Free Trade
Agreement Implementation Act (“NAFTA Implementation Act”) which
2
(...continued)
(i) the General Agreement on Tariffs and Trade
(GATT), the Agreement on Implementation of Article
VI of the General Agreement on Tariffs and Trade
(the Antidumping Code) or the Agreement on the
Interpretation and Application of Articles VI, XVI
and XXIII of the General Agreement on Tariffs and
Trade (the Subsidies Code), or any successor
agreement to which all the original signatories to
this Agreement are party, or
(ii) the object and purpose of this Agreement and
this Chapter, which is to establish fair and
predictable conditions for the progressive
liberalization of trade between the Parties to this
Agreement while maintaining effective and fair
disciplines on unfair trade practices, such object
and purpose to be ascertained from the provisions of
this Agreement, its preamble and objectives, and the
practices of the Parties.
Consol. Ct. No. 05-00324 Page 7
also amended U.S. law to reflect the NAFTA framework. NAFTA
Implementation Act, Pub. L. No. 103-182, 107 Stat. 2060-2164
(1993), codified at 19 U.S.C. §§ 3301-3473 (2000). Specifically,
in implementing NAFTA art. 1902, Section 408 of the NAFTA
Implementation Act, codified at 19 U.S.C. § 3438 (“Section 408"),
provides that “[a]ny amendment . . . [to] title VII of the Tariff
Act of 1930 [19 U.S.C. §§ 1671 et seq.], or any successor statute
. . . shall apply to goods from a NAFTA country only to the
extent specified in the amendment.” The NAFTA Implementation
Act, including 19 U.S.C. § 3438, became effective January 1,
1994.
B.
Subsequent to the passage of the NAFTA Implementation Act,
in 2000, Congress amended Title VII of the Tariff Act of 1930
with the passage of the Byrd Amendment, 19 U.S.C. § 1675c. The
passage of the Byrd Amendment was intended to strengthen the
remedial purposes of the antidumping and countervailing duty
laws.3 Specifically, prior to the Byrd Amendment, under Title
3
In adopting the Byrd Amendment, Congress made the following
specific findings:
(1) Consistent with the rights of the United States
under the World Trade Organization, injurious dumping
is to be condemned and actionable subsidies which cause
injury to domestic industries must be effectively
(continued...)
Consol. Ct. No. 05-00324 Page 8
VII of the Tariff Act of 1930, Customs collected antidumping and
countervailing duties on dumped and subsidized imports,
implementing such orders to attempt to neutralize the distortive
and adverse effects of dumping and subsidization; Customs then
deposited all revenues collected from these duties into the U.S.
Treasury, from which the duties were available to pay for general
government expenses. See generally 21A Am Jur 2d, Customs Duties
(...continued)
neutralized.
(2) United States unfair trade laws have as their
purpose the restoration of conditions of fair trade so
that jobs and investment that should be in the United
States are not lost through the false market signals.
(3) The continued dumping or subsidization of imported
products after the issuance of antidumping orders or
findings or countervailing duty orders can frustrate
the remedial purpose of the laws by preventing market
prices from returning to fair levels.
(4) Where dumping or subsidization continues, domestic
producers will be reluctant to reinvest or rehire and
may be unable to maintain pension and health care
benefits that conditions of fair trade would permit.
Similarly, small businesses and American farmers and
ranchers may be unable to pay down accumulated debt, to
obtain working capital, or to otherwise remain viable.
(5) United States trade laws should be strengthened to
see that the remedial purpose of those laws is
achieved.
Continued Dumping and Subsidy Offset Act of 2000, Pub. L. No.
106-387, § 1(a), § 1002, 114 Stat. 1549, 1549A-72 (2000).
Consol. Ct. No. 05-00324 Page 9
and Import Regulations § 221 (2004) (“In general, all receipts
from customs must be promptly paid into the Treasury.”).
After the Byrd Amendment’s passage, Customs still collects
antidumping and countervailing duties that attempt to neutralize
the distortive and adverse effects of dumping and subsidization,
but now, following the Byrd Amendment, Customs deposits all
duties collected into “special accounts” established within the
U.S. Treasury for each antidumping and countervailing duty order.
19 U.S.C. § 1675c(e); 19 C.F.R. § 159.64.4 In addition, each
year, Customs distributes all monies contained in those special
accounts, plus interest, on a pro rata basis, to “affected
domestic producers,” i.e., companies (who continue to produce the
subject merchandise under the antidumping or countervailing duty
order) and worker groups that supported the petition for the
antidumping or countervailing duty order. The funds distributed,
known as the “continued dumping and subsidy offset,” 19 U.S.C. §
1675c(a); 19 C.F.R. § 159.61(a) (“Byrd Distributions”), are
intended to strengthen trade law remedies, through an allocation
4
Customs deposits monies into special accounts only after the
entries of the goods have been liquidated, i.e., final duties
have been collected and deposited. Prior to liquidation,
Customs deposits all monies collected, i.e., cash deposits, in
clearing accounts. See 19 C.F.R. § 159.64(a). When goods are
liquidated, the money in the clearing accounts are transferred to
special accounts. See 19 C.F.R. § 159.64(b).
Consol. Ct. No. 05-00324 Page 10
based on “qualifying expenditures,” i.e., certain enumerated
business expenses such as manufacturing facilities, equipment,
input materials, health benefits for employees, and “[w]orking
capital or other funds needed to maintain production,” paid by
affected domestic producers, 19 U.S.C. §§ 1675c(b)(4);
1675c(d)(2)-(3); 19 C.F.R. § 159.61(c).
On February 8, 2006, President Bush signed the Deficit
Reduction Act of 2005 repealing the Byrd Amendment. See, Deficit
Reduction Act of 2005, Pub. L. No. 109-171, § 7601(b), 120 Stat.
4, 154 (2006). As provided by this repeal: “All duties on
entries of goods made and filed before October 1, 2007, that
would, but for [the repeal]” be distributed will continue to be
distributed under the Byrd Amendment, 19 U.S.C. § 1675c.” Id.
C.
The Byrd Amendment does not specify that it applies to goods
from Canada or Mexico, see 19 U.S.C. § 1675c, nor did the United
States provide advance notice of the Byrd Amendment to Canada or
Mexico or engage in consultations with regard thereto.
Seeking to challenge the Byrd Amendment, and alleging that
the Byrd Amendment violated the Uruguay Round Agreements,5 Canada
5
The Uruguay Round Agreements are the most recent completed trade
(continued...)
Consol. Ct. No. 05-00324 Page 11
and Mexico joined with nine other foreign governments in bringing
a claim against the United States before the Dispute Resolution
Body of the World Trade Organization (“WTO”).6 In the
proceedings, both a panel of the Dispute Resolution Body, Panel
Reports, United States-Continued Dumping and Subsidy Offset Act
of 2000, WT/DS217/R, WTDS234/R (Sept. 16, 2002), and the
Appellate Body, Appellate Body Reports, United States-Continued
Dumping and Subsidy Offset Act of 2000, WT/DS217/AB/R,
WTDS234/AB/R (Jan. 16, 2003), ruled against the United States,
determining that the Byrd Distributions were inconsistent with
the Uruguay Round Agreements.7
5
(...continued)
agreements conducted under the GATT (now the WTO).
6
The other complaining nations were Australia, Brazil, Chile, the
European Communities, India, Indonesia, Japan, Korea, and
Thailand. See Decision by the Arbitrator, United States –
Continued Dumping and Subsidy Offset Act of 2000, ¶ 1.2 n.3,
WT/DS234/ARB/CAN (Aug. 31, 2004).
7
Specifically, the Panel found that the Byrd Amendment was not a
specific, and therefore actionable, subsidy. United States-
Continued Dumping and Subsidy Offset Act of 2000, ¶¶ 7.115-16,
WT/DS217/R, WTDS234/R. This conclusion was not appealed.
However, the WTO Appellate Body found that the Byrd Amendment was
a “specific action against dumping” and a “specific action
against a subsidy” not taken in accordance with GATT 1994.
United States-Continued Dumping and Subsidy Offset Act of 2000, ¶
318, WT/DS217/AB/R, WTDS234/AB/R. Thus, while finding that the
Byrd Distributions were not specific subsidies, the WTO found
that Byrd Distributions were injurious to importers. See, e.g.,
United States-Continued Dumping and Subsidy Offset Act of 2000, ¶
256, WT/DS217/AB/R, WTDS234/AB/R. The court provides this only
(continued...)
Consol. Ct. No. 05-00324 Page 12
Pursuant to the WTO adjudication, and after consultation and
arbitration, the WTO authorized the complaining nations to
suspend tariff concessions and other obligations in an amount
equal to a portion of the prior Byrd Distributions which the WTO
had determined to be improper. Decision by the Arbitrator,
United States – Continued Dumping and Subsidy Offset Act of 2000,
¶ 5.2, WT/DS234/ARB/CAN (Aug. 31, 2004). Specifically, the WTO
authorized Canada to suspend tariff concessions in an amount
equal to 72% of the value of the United States’ annual Byrd
Distributions during fiscal 2004, id., that percentage having
been determined to be “the extent to which disbursement under the
[Byrd Amendment] affect[ed] exports” from Canada, id. at ¶ 3.76.
Additionally, Canada is authorized to suspend tariff concessions,
and other obligations, totaling 72% of the value of distributions
made by the United States for all years subsequent to 2004 (as
annually calculated by the arbitrator). Id. at ¶ 5.1. Pursuant
to this authorization, Canada imposes a 15% surtax on imports of
live swine, cigarettes, oysters, and certain speciality fish,
from the United States. See International Trade Canada, Trade
Negotiations and Agreements: Dispute Settlement (2005),
(...continued)
as background information; the remainder of the court’s opinion
relies exclusively on U.S. law and principles pertaining thereto.
Consol. Ct. No. 05-00324 Page 13
http://www.dfait-maeci.gc.ca/tna-nac/disp/factsheet-en.asp. The
WTO has also approved Mexico’s suspension of trade concessions
authorizing Mexico to impose tariffs ranging from 9% to 30% on
imports of chewing gum and candy, dairy, blends used for products
such as baby formula, and various wines from the United States.
See Decreto por el que se modifica temporalmente el artículo 1 el
Decreto por el que se establece la Tasa Aplicable durante 2003
del Impuesto General de Importacíon para las mercancías
originarias de América del Norte publicado el 31 diciembre de
2002 por lo que respecta para las mercancías originarias de EE.UU
[Decree temporarily modifying various tariff rates applied to
North American goods], Diario Oficial de la Federación [D.O.], 17
de Agosto de 2005 (Mex.) (2005) at 68-69, available at
http://gobernacion.gob.mx/dof/2005/
agosto/dof_17-08-2005.pdf.
D.
Plaintiffs in this case are producers and exporters of goods
from Canada (collectively “Canadian Producers”) and the
Government of Canada (“Canada”); the Canadian Producers were all
subject to countervailing and antidumping duty orders at one
point of time since the passage of the Byrd Amendment and are
direct competitors with recipients of Byrd Distributions, see,
Consol. Ct. No. 05-00324 Page 14
e.g., Allan Decl., Pl.’s Ex. 1 at 4; Vincent Decl., Pl.’s Ex. 2
at 4; Milton Decl., Pl.’s Ex. 3 at 3; LaFlamme Decl., Pl.’s Ex. 4
at 5; Beudry Decl., Pl.’s Ex. at 10; Thompson Decl., Pl.’s Ex. at
3. The Government of Mexico has also participated in these
proceedings as an amicus curiae.
Plaintiffs the Canadian Lumber Trade Alliance, the Ontario
Forest Industry Association, the Ontario Lumber Manufacturers
Association, and the Free Trade Lumber Council (“Lumber
Plaintiffs”)8 all represent Canadian Producers and exporters of
softwood lumber whose imports into the United States are
currently subject to antidumping and countervailing duty orders.
See Certain Softwood Lumber Products From Canada, 67 Fed. Reg.
36,068 (Dep’t Commerce May 22, 2002) (notice of amended final
determination of sales at less than fair value and antidumping
duty order), Certain Softwood Lumber Products From Canada, 67
Fed. Reg. 36,070 (Dep’t Commerce May 22, 2002) (notice of amended
final affirmative countervailing duty determination and notice of
countervailing duty order). Based on these orders and pursuant
to the Byrd Amendment, the Commissioner distributed $3,278,700.42
to 106 affected domestic producers in 2005, $5,378,612.97 to 126
8
The parties do not dispute, and the court does not challenge,
that these associations have standing on behalf of their members.
See generally Automobile Workers v. Brock, 477 U.S. 274 282
(1986); Hunt v. Wash. State Apple Advert. Comm'n, 432 U.S. 333,
346 (1977).
Consol. Ct. No. 05-00324 Page 15
affected domestic producers in 2004, and $73,422.34 to at least
102 affected domestic producers in 2003. Revised Jt. Stip.
Undisp. Facts at 6, Ex. 1 to Pl.’s Status Report Regarding a
Revised Stmt. Undisp. Mat. Facts (Jan. 20, 2006) (“Pl.’s Stip.
Facts”); Jt. Stip. Undisp. Mat. Facts at para. 8-9 (Nov. 17,
2005) (“Def.-Int.’s Stip. Facts”). In addition, in accordance
with these orders, Customs is currently holding cash deposits of
$4,189,827,439.59 (as of October 1, 2005) from entries of imports
awaiting liquidation. Pl.’s Stip. Facts at 10.
Plaintiff Norsk Hydro Canada Inc. (“Norsk”) is a producer
and exporter of pure and alloy magnesium ingots. Norsk’s imports
into the United States are currently subject to countervailing
duties pursuant to Pure Magnesium and Alloy Magnesium From
Canada, 57 Fed. Reg. 39,392 (Dept. Commerce August 31, 1992)
(countervailing duty order). The Commissioner has distributed
$25,486.40 in 2005, $63,405.69 in 2004, and $7,787.58 in 2003 to
U.S. Magnesium (or its predecessor), Norsk’s domestic competitor.
Pl.’s Stip. Facts at 6-7; Def.-Int.’s Stip Facts at para. 10.9
Under this order, Customs holds cash deposits (as of October 1,
2005) of $6,328,090.94. Pl.’s Stip. Facts at 10.
9
There are numerous other orders on related products from Canada
that are not detailed here.
Consol. Ct. No. 05-00324 Page 16
Plaintiff the Canadian Wheat Board purchases hard red spring
wheat from Canadian farmers and sells that wheat in Canada and
export markets including the United States. The Canadian Wheat
Board was subject to antidumping and countervailing duty orders,
Certain Durum and Hard Red Spring Wheat From Canada, 68 Fed. Reg.
52,747 (Dept. Commerce Sept. 5, 2003) (notice of final
affirmative countervailing duty determinations); Certain Durum
and Hard Red Spring Wheat From Canada, 68 Fed. Reg. 52,741 (Dept.
Commerce Sept. 5, 2003) (notice of final determinations of
antidumping duty investigations), until Commerce rescinded those
orders effective as of January 2, 2006, Antidumping Duty
Investigation and Countervailing Duty Investigation of Hard Red
Spring Wheat from Canada: Notice of Panel Decision, Revocation of
Countervailing and Antidumping Duty Orders and Termination of
Suspension of Liquidation, 71 Fed. Reg. 8,275 (Dep’t Commerce
Feb. 16, 2005). On June 1, 2005, Customs published a notice of
intent to make distributions of monies collected from the
Canadian Wheat Board identifying a single eligible affected
domestic producer: Defendant-Intervenor the North Dakota Wheat
Commission. See Distribution of Continued Dumping and Subsidy
Offset to Affected Domestic Producers, 70 Fed. Reg. 31,566,
32,132 (Dep’t Customs June 1, 2005) (notice of intent to
distribute offset for Fiscal Year 2005). Pursuant to the two
Consol. Ct. No. 05-00324 Page 17
orders on hard red spring wheat from Canada, the Commissioner
distributed $127,643.68 to the North Dakota Wheat Commission
(“NDWC”) in November 2005, Def.’s Resp. Def. Int.’s Proposed
Stmt. Facts at para. 59 (Jan. 30, 2006), and currently holds cash
deposits of $290,021.87 from unliquidated entries (as of October
1, 2005), Pl.’s Stip. Facts at 10.
E.
Plaintiffs filed their summonses and complaints in this
action on April 29, 2005, claiming jurisdiction under 28 U.S.C.
§1581(i).10 On July 12, 2005, the Defendant moved to dismiss
10
28 U.S.C. § 1581(i) provides:
In addition to the jurisdiction conferred upon the
Court of International Trade by subsections (a)-(h) of
this section and subject to the exception set forth in
subsection (j) of this section, the Court of
International Trade shall have exclusive jurisdiction
of any civil action commenced against the United
States, its agencies, or its officers, that arises out
of any law of the United States providing for--
(1) revenue from imports or tonnage;
(2) tariffs, duties, fees, or other taxes on the
importation of merchandise for reasons other than
the raising of revenue;
(3) embargoes or other quantitative restrictions on
the importation of merchandise for reasons other
than the protection of the public health or
safety; or
(4) administration and enforcement with respect to
the matters referred to in paragraphs (1)-(3) of
this subsection and subsections (a)-(h) of this
section.
(continued...)
Consol. Ct. No. 05-00324 Page 18
each action pursuant to USCIT Rules 12(b)(1) and 12(b)(5),
asserting that the court lacked subject matter jurisdiction and
that the Plaintiffs had failed to state a claim for which relief
could be granted because Plaintiffs’ complaints were not
authorized by domestic law. In a telephone conference held on
August 2, 2005, Plaintiffs informed the court that they would
oppose the Defendant’s motion to dismiss for lack of subject
matter jurisdiction with affidavits and would be filing motions
for summary judgment pursuant to USCIT Rule 56 (more
appropriately, motions for judgment on the agency record under
Rule 56.1). Following the Supreme Court’s suggestion in Pennell
v. San Jose, 485 U.S. 1, 7 (1988) (“We strongly suggest that in
future cases parties litigating in this Court under circumstances
similar to those here take pains to supplement the record in any
manner necessary to enable us to address with as much precision
as possible any question of standing that may be raised.");
Bennett v. Spear, 520 U.S. 154, 167-68 (1997) (outlining the
(...continued)
This subsection shall not confer jurisdiction over an
antidumping or countervailing duty determination which
is reviewable either by the Court of International
Trade under section 516A(a) of the Tariff Act of 1930
[19 U.S.C. § 1516a(a)] or by a binational panel under
article 1904 of the North American Free Trade Agreement
or the United States-Canada Free-Trade Agreement and
section 516A(g) of the Tariff Act of 1930 [19 U.S.C. §
1516a(g)].
Consol. Ct. No. 05-00324 Page 19
evidentiary requirements of standing), the court, in light of the
Plaintiffs’ proposed filings, converted all pending motions into
cross motions for summary judgment/motions for judgment on the
agency record,11 and pursuant to Rule 56 (d), on March 27 and
March 28, 2006, held a hearing to resolve any disputed facts
related to jurisdiction. The court also granted a motion by
Plaintiffs to consolidate all of Plaintiffs’ cases under Docket
Number 05-324.
I. Overview
Defendant and Defendant-Intervenors allege numerous
jurisdictional defects in the Plaintiffs’ Complaints. Because
jurisdictional bars to entertaining Plaintiffs’ suits are a
threshold inquiry, Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574,
577-78 (1999); Steel Co. v. Citizens for a Better Env’t, 523 U.S.
83, 89-102 (1998), the court must find that jurisdiction exists
before it may reach the merits. Nevertheless, because many of
11
The Defendant correctly notes that the merits of this case are
solely determined on the basis of the administrative record. As
such, the court has no fact-finding role with respect to the
merits of the case at bar. Therefore, in this instance, a motion
to dismiss brought under USCIT R. 12(b)(5) is effectively the
same as a motion for judgment on the agency record brought under
USCIT Rule 56.1. Accordingly, in the interests of a “just,
speedy, and inexpensive,” resolution of such cases, USCIT R. 1,
the court prefers that parties move under USCIT Rule 56.1 for
judgment on the agency record.
Consol. Ct. No. 05-00324 Page 20
the jurisdictional arguments depend on at least a superficial
understanding of the statutory scheme at issue, the court will
here briefly discuss the text, purpose, and effect of Section 408
while leaving discussion of the bona fide disagreements over its
interpretation to Section V below.
Plaintiffs, including Canada, raise their claims under the
Administrative Procedure Act (“APA”), 5 U.S.C. § 702, to enforce
Section 408 of the NAFTA Implementation Act as applied to
Customs’ administration of the Byrd Amendment. Plaintiffs ask
the court to: (1) find unlawful Defendant’s disbursements of
monies collected on goods from Canada; (2) permanently enjoin
future distributions; and (3) instruct Defendants to reclaim
distributions made on March 15, 2004 and December 17, 2004. See,
e.g., Gov’t Canada Compl. 9, Can. Lum. Compl. 11-12.
It follows that, while Plaintiffs’ causes of action are
stated under the APA, the thrust of Plaintiffs’ claims rest on
Section 408. Section 408 provides that:
Any amendment enacted after the Agreement enters into
force with respect to the United States that is made
to--
(1) section 303 or title VII of the Tariff Act of
1930 [19 U.S.C. §§ 1671 et seq.], or any successor
statute, or
(2) any other statute which--
(A) provides for judicial review of final
determinations under such section, title, or
successor statute, or
Consol. Ct. No. 05-00324 Page 21
(B) indicates the standard of review to be
applied,
shall apply to goods from a NAFTA country only to the
extent specified in the amendment.
By requiring that amendments apply to goods from Canada and
Mexico “only to the extent specified in the amendment,” Congress,
through Section 408, imposed a “magic words”12 rule of
interpretation on amendments to U.S. trade laws, i.e., that any
amendment to title VII of the Tariff Act of 1930 must contain
certain “magic words” for Congress to indicate that it intends to
alter antidumping and countervailing duty laws with respect to
NAFTA parties. SAA, reprinted in H.R. Doc. No. 103-159, p. 203
(1993) (“Section 408 of the bill implements the requirement of
Article 1902 that amendments to the AD and CVD laws shall apply
to a NAFTA country only if the amendment so states explicitly.”).
12
A “magic words” rule, also referred to as a “magical password,”
“express-reference” or “express-statement” rule, is a strict
clear statement rule which requires the use of certain words to
signal a particular Congressional intent. See, e.g., Lockhart v.
United States, 126 S. Ct. 699, 703 (2005); cf. Demore v. Kim, 538
U.S. 510, 517 (2003) (discussing INS v. St. Cyr, 533 U.S. 289,
327 (2001) (Scalia, J. concurring). Here, the required “magic
words” are “shall apply to goods from Canada and Mexico.” Cf.
Section 234, Uruguay Round Agreements Act, 108 Stat. 4809, 4901
(1994) (“Pursuant to article 1902 of the North American Free
Trade Agreement and section 408 of the North American Free Trade
Agreement Implementation Act, the amendments made by this title
shall apply with respect to goods from Canada and Mexico.”). The
court reserves discussion of the propriety of a “magic words”
rule for Section V.b below.
Consol. Ct. No. 05-00324 Page 22
In so doing, Section 408 insulates NAFTA parties, including their
exporters, from some changes to the antidumping and
countervailing duty laws unless Congress has explicitly stated
otherwise. Such an exercise of self-restraint was intended to
ensure that future Congresses, agencies, and courts did not
inadvertently abrogate the rights NAFTA parties negotiated, or,
alternatively, to require future Congresses to give due
consideration to the United States’ NAFTA obligations before they
amend the antidumping and countervailing duty laws. See id.; cf.
Spector v. Norwegian Cruise Line Ltd., 125B S. Ct. 2169, 2182
(2005) (“These clear statement rules ensure Congress does not, by
broad or general language, legislate on a sensitive topic
inadvertently or without due deliberation.”); EEOC v. Arabian Am.
Oil Co., 499 U.S. 244, 248 (1991) (applying a clear statement
rule “to protect against unintended clashes between [U.S.] laws
and those of other nations which could result in international
discord” which Congress presumably seeks to avoid); Lauritzen v.
Larsen, 345 U.S. 571, 582 (1953) (applying the Charming Betsy
canon, a clear statement canon, because, “in dealing with
international commerce we cannot be unmindful of the necessity
for mutual forbearance if retaliations are to be avoided[.]”).
Consequently, Plaintiffs claim, when the Byrd Amendment is read
in conjunction with Section 408, the Byrd Amendment states that
Consol. Ct. No. 05-00324 Page 23
Customs shall distribute monies collected on duty orders except
for duty orders on goods from Canada or Mexico.
With this overview in mind, the court will first consider
the Defendant and Defendant-Intervenors’ jurisdictional
objections. Taken together, the Defendant and Defendant-
Intervenors’ assert that (1) the Plaintiffs lack the legal
capacity to bring their complaints, i.e., they lack standing
(both under Article III and because of prudential limitations on
standing); and (2) Plaintiffs’ claims are barred by the political
question doctrine.13 Relatedly,14 Defendant and Defendant-
Intervenors contend that Plaintiffs cause of action is barred by
13
All parties agree, as they must, that Congress’ repeal of the
Byrd Amendment does not moot this case. Not only are Plaintiffs
seeking disgorgement of prior distributions which the repeal does
not address, but also, because 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), injunctive relief
may still be appropriate for monies collected until October 1,
2007.
14
“The question whether a federal statute creates a claim for
relief is not jurisdictional.” Nw. Airlines, Inc. v. County of
Kent, 510 U.S. 355, 365 (1994); Air Courier Conf. v. Am. Postal
Workers Union, 498 U.S. 517, 523 n.3 (1991) (absence of a cause
of action defense is waiveable because “[w]hether a cause of
action exists is not a question of jurisdiction.”). Cf. Steel
Co., 523 U.S. at 89 (“the absence of a valid (as opposed to
arguable) cause of action does not implicate [a court’s] subject
matter jurisdiction”); Mathews v. Eldridge, 424 U.S. 319, 330
(1976) (finding that the “final agency action” requirement of the
APA is waiveable). The court discusses whether Plaintiffs have a
cause of action in Section IV below.
Consol. Ct. No. 05-00324 Page 24
Section 102(c) of the NAFTA Implementation Act, codified at 19
U.S.C. § 3312(c). Because the court finds that it does have
jurisdiction with respect to the Canadian Producers, and that
they have a cause of action under U.S. law, it will then consider
the merits.
II. STANDING
Article III of the United States Constitution provides that
“[t]he judicial Power shall extend to [certain] Cases . . . [and]
Controversies . . . .” U.S. Const. art. III, § 2, cl. 1; cf. 28
U.S.C. § 251 (establishing the Court of International Trade as an
Article III court). In accordance with this language, courts
have required that every pending matter before an Article III
Court be a “case” or “controversy.” See Valley Forge Christian
Coll. v. Americans United for Separation of Church and State,
Inc., 454 U.S. 464, 471 (1982). One of the cornerstones of this
inquiry is whether the complaining parties have standing to raise
their claims.
“In . . . pedestrian terms, [standing] is an answer to the
very first question that is sometimes rudely asked when one
person complains of another’s actions: ‘What’s it to you?’”
Antonin Scalia, The Doctrine of Standing as an Essential Element
of the Separation of Powers, 17 Suffolk U. L. Rev. 881, 882
Consol. Ct. No. 05-00324 Page 25
(1983). Specifically as this question relates to challenges to
administrative decision making, Plaintiffs must demonstrate that
they have been, or likely will be, injured by Defendant’s
conduct, in a manner redressable by the court, and that the
prudential considerations have been met. Nat’l Credit Union
Admin. v. First Nat’l Bank & Trust Co., 522 U.S. 479, 488 (1998)
(“NCUA”); Dir. v. Newport News Shipbuilding & Dry Dock Co., 514
U.S. 122, 126-27 (1995); Ass’n of Data Processing Service Org.,
Inc. v. Camp, 397 U.S. 150, 152-53 (1970) (“Data Processing”).
Each prong will be addressed in turn.
A. Article III Standing:
Article III standing requires plaintiffs to demonstrate: (1)
that they have suffered some injury-in-fact; (2) a causal
connection between the defendant’s conduct and this injury-in-
fact; and (3) that this injury is redressable by the court.
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)
(“Defenders of Wildlife”) (citations omitted). Although the
prongs of the test are not always factually separable, each prong
must be satisfied. See, e.g., Allen v. Wright, 468 U.S. 737, 753
n.19 (1984); Wyo. Sawmills Inc. v. U.S. Forest Serv., 383 F.3d
1241, 1247-48 (10th Cir. 2004), cert. denied 126 S. Ct. 330
(2005); The Friends for Ferrell Parkway, LLC v. Stasko, 282 F.3d
Consol. Ct. No. 05-00324 Page 26
315, 320 (4th Cir. 2002). Because the Canadian Producers’
standing claim turns on a different analysis than that of the
Government of Canada, the court will consider each claim
separately.
i. Canadian Producers’ Standing
a. The Injury-in-fact Requirement
Article III first requires Plaintiffs to demonstrate that
they have suffered an injury-in-fact “which is (a) concrete and
particularized, [and] (b) ‘actual or imminent, not conjectural or
hypothetical.'" Defenders of Wildlife, 504 U.S. at 560 (quoting
Whitmore v. Arkansas, 495 U.S. 149, 155 (1990)). The injury-in-
fact requirement aims not to shield defendants from litigation,
but to ensure that the plaintiffs have a stake in the fight and
will therefore diligently prosecute the case, United Food &
Commer. Workers Union Local 751 v. Brown Group, Inc., 517 U.S.
544, 556 (1996) (the standing requirement assures “adversarial
vigor”); Sierra Club v. Morton, 405 U.S. 727, 740 (1972), while,
at the same time, ensuring that the claim is not abstract or
conjectural so that resolution by the judiciary is both
manageable and proper, Fed. Election Comm’n v. Akins, 524 U.S.
11, 20 (1998); Allen, 468 U.S. at 752; Los Angeles v. Lyons, 461
U.S. 95, 101 (1983). Accordingly, while injury-in-fact must be
Consol. Ct. No. 05-00324 Page 27
found in every case regardless of the statutory provision at
issue, Defenders of Wildlife, 504 U.S. at 577-78; Simon v. E. Ky.
Welfare Rights Org., 426 U.S. 26, 39 (1976), it is nonetheless a
“very generous” test, requiring only that claimants “allege[]
some specific identifiable trifle of injury . . . .” Bowman v.
Wilson, 672 F.2d 1145, 1151 (3rd Cir. 1982) (citing United States
v. SCRAP, 412 U.S. 669, 689 n.14 (1973) (rejecting the argument
that plaintiffs’ interests must be “significantly” affected,
noting that only an “identifiable trifle” is sufficient)).
Applying these principles, courts “routinely recognize
probable economic injury resulting from [governmental actions]
that alter competitive conditions [are] sufficient to satisfy the
[Article III 'injury-in-fact' requirement].” Clinton v. City of
New York, 524 U.S. 417, 433 (1998) (quoting III Kenneth Kulp
Davis & Richard J. Pierce, Administrative Law Treatise 13-14 (3d
ed. 1994)). Accordingly, courts have held that parties may
“‘suffer constitutional injury in fact when agencies . . . allow
increased competition’ against them.” U.S. Telecom Ass’n v. FCC,
295 F.3d 1326, 1331 (D.C. Cir. 2002) (quoting La. Energy & Power
Auth. v. FERC, 141 F.3d 364, 367 (D.C. Cir. 1998)).
In this case, there can be no doubt that the Plaintiffs are
direct competitors with the recipients of Byrd Amendment
distributions. Cf. Sualt Ste. Marie Tribe of Chippewa Indians v.
Consol. Ct. No. 05-00324 Page 28
United States, 288 F.3d 910, 916 (6th Cir. 2002) (denying
standing because plaintiff failed to offer any evidence that a
casino forty miles away would detract from its business); Dek
Energy Co. v. FERC, 248 F.3d 1192, 1196 (D.C. Cir. 2001) (denying
standing because of only a “vague probability” that competitor’s
product would “actually reach that market and a still lower
probability that its arrival will cause [plaintiff] to lose
business or drop its prices.”); Area Transp., Inc. v. Ettinger,
219 F.3d 671, 673 (7th Cir. 2000) (where competitor was barred
from the market, plaintiff lacked standing to seek disgorgement
of subsidy). If it were not the case that the Canadian Producers
and the domestic industries are direct competitors, it would be
unlikely that the domestic producers would be entitled to obtain
the protection of the underlying antidumping and countervailing
duty orders that are the source of the Byrd Distributions. See,
e.g., 19 U.S.C. §§ 1671d(b)(1) & 1673d(b)(1) (requiring
International Trade Commission to find material injury); 19
U.S.C. § 1675a(a) (same); 19 U.S.C. § 1677(9)(A) (defining
interested parties to proceedings to include producers of the
subject merchandise). Nor can it be seriously questioned that a
direct payment to, i.e., conferring of a subsidy on, a direct
competitor may be sufficient to cause increased competition and
therefore “a concrete and particularized injury” that is “actual
Consol. Ct. No. 05-00324 Page 29
or imminent.” See, e.g., W. Lynn Creamery, Inc. v. Healy, 512
U.S. 186, 195 n.10 & 196 n.12 (1994);15 Bacchus Imps., Ltd. v.
15
The Supreme Court did not discuss standing in W. Lynn Creamery.
Nevertheless, the Court did discuss at length the injurious
effect of subsidies, see W. Lynn Creamery, 512 U.S. at 195 n.10,
and the Court has incorporated W. Lynn Creamery, and its
analysis, into its standing jurisprudence. See Gen. Motors Corp.
v. Tracy, 519 U.S. 278, 287 (1997).
Both Defendant and Defendant-Intervenors rely on the W. Lynn
Creamery Court’s statement that “[a] pure subsidy funded out of
general revenue imposes no burden on interstate commerce, but
merely assists local business,” to argue that the Byrd
Distributions do not cause competitive injuries. See, e.g.,
Def.’s Supp. Br. at 25 (quoting W. Lynn Creamery, 512 U.S. at
199). This reliance, however, is misplaced for two reasons.
First, the scheme at issue here is not funded out of “general
revenue sources” but from special accounts funded by duty orders
on foreign competitors. Therefore, the Court’s statement, under
its own terms, cannot aid the Defendant and Defendant-
Intervenors. See id. (“The pricing order in this case, however,
is funded principally from taxes on the sale of milk produced in
other states.”). Secondly, this court agrees with Justice
Scalia’s assessment of this language when he stated in his
concurrence:
The Court guardedly asserts that a "pure subsidy funded
out of general revenue ordinarily imposes no burden on
interstate commerce, but merely assists local business,"
but under its analysis that must be taken to be true
only because most local businesses (e.g., the local
hardware store) are not competing with businesses out of
State.
W. Lynn Creamery, 512 U.S. at 208 (Scalia, J. concurring)
(citation omitted) (emphasis in original). Here, this
assumption does not hold as the recipients of Byrd
Distributions are most assuredly “competing with businesses
out of State.” Consequently, the majority’s discussion of how
it is axiomatic that subsidies harm competitors, e.g., W. Lynn
Creamery, 512 U.S. at 195 n.10, is in no way negated by this
statement.
Consol. Ct. No. 05-00324 Page 30
Dias, 468 U.S. 263, 267 (1984);16 United States Telecom Ass’n,
295 F.3d at 1326; Exxon Co., U.S.A. v. FERC, 182 F.3d 30, 43
(D.C. Cir. 1999); Adams v. Watson, 10 F.3d 915, 920-21 (1st Cir.
1993); Westport Taxi Serv., Inc. v. Adams, 571 F.2d 697, 700-01
(2d Cir. 1978); Rental Hous. Ass’n of Greater Lynn, Inc. v.
Hills, 548 F.2d 388, 389-90 (1st Cir. 1977); Ray Baillie Trash
Hauling, Inc. v. Kleppe, 477 F.2d 696, 701 (5th Cir. 1973). Cf.
Area Transp., Inc. v. Ettinger, 219 F.3d at 673. Indeed, it must
be the case that subsidies to competitors confer standing under
our trade laws -- if parties did not suffer an injury-in-fact
from an agency’s failure to countermand such a subsidy, then no
member of the domestic industry would have standing to challenge
a negative determination by the Department of Commerce or
International Trade Commission in an antidumping and
countervailing duty case, see Shieldalloy Metallurgical Corp. v.
United States, 20 CIT 1362, 1374, 947 F. Supp. 525, 536 (1996)
(“As a direct competitor of Shieldalloy, Galt would suffer injury
16
Bacchus involved a challenge to a tax exemption which is
similar to, and results in similar ends, as a subsidy. See Regan
v. Taxation with Representation of Wash., 461 U.S. 540, 544
(1983); cf. Camps v. Newfound/Owatonna, Inc. v. Town of Harrison,
520 U.S. 564, 588-594 (1997) (although factually similar, tax
exemptions are permitted under the Establishment Clause whereas
subsidies are not); W. Lynn Creamery, 512 U.S. at 207-12 (Scalia,
J. concurring) (noting that although they achieve the same
result, it appears that subsidies are permissible under the
Dormant Commerce Clause whereas tax exemptions are not).
Consol. Ct. No. 05-00324 Page 31
in fact if Commerce were to calculate Shieldalloy's dumping
margin based on distorted or impermissible data.”), or (perhaps),
even intervene in such cases before this Court, Diamond v.
Charles, 476 U.S. 54, 68-69 (1986) (leaving open whether
intervenors must have standing).17
17
The Defendant also tries to distinguish Shieldalloy
Metallurgical Corp., 20 CIT 1362, 947 F. Supp. 525 (1996),
asserting that, in that case, the statute provided standing.
This argument fails to recognize that injury-in-fact is an
indispensable constitutional minimum. No act of Congress may
displace this requirement. Defenders of Wildlife, 504 U.S. at
560; Muskrat v. United States, 219 U.S. 346, 362 (1911).
Therefore, the Article III injury does not turn on whether
Congress has granted parties a cause of action. See Defenders of
Wildlife, 504 U.S. at 576 ("[T]here is absolutely no basis for
making the Article III inquiry turn on the source of the asserted
right."); Lac Du Flambeau Band of Lake Superior Chippewa Indians
v. Norton, 422 F.3d 490, 497 (7th Cir. 2005); compare Clinton,
524 U.S. at 433-34 n.22 with id. at 456 (Scalia J. dissenting);
cf. Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 103
n.5 (1998) (“Also contrary to JUSTICE STEVENS' unprecedented
suggestion . . . redressability -- like the other prongs of the
standing inquiry -- does not depend on the defendant's status as
a governmental entity.” (citation omitted)). The court further
notes that whatever minimum evidentiary requirement applies here
must apply to all cases; this requirement is blind to whether the
plaintiff is a member of the domestic industry appealing a
negative determination or an importer appealing an affirmative
determination. Furthermore, standing is a matter this court
must determine de novo, Fieldturf Inc. v. Sw. Recreational
Indus., Inc., 357 F.3d 1266, 1268 (Fed. Cir. 2004); therefore,
whatever standard the court applies here, it must apply in every
case nothwithstanding a finding of material injury by the
International Trade Commission. See generally Steel Co., 523
U.S. at 94 (the question of standing is one the court is “bound
to ask and answer for itself” (quoting Great S. Fire Proof Hotel
Co. v. Jones, 177 U.S. 449, 453 (1900)); cf. United Transp. Union
v. ICC, 891 F.2d 908, 916 (D.C. Cir. 1989) (while the court may
(continued...)
Consol. Ct. No. 05-00324 Page 32
Nevertheless, both Defendant and Defendant-Intervenors argue
that the Canadian Producers do not have standing to maintain
their challenge because: (a) the Complaints did not sufficiently
plead standing; (b) economic injury is an insufficient basis to
confer standing; and (c) Plaintiffs have suffered no injury-in-
fact as a matter of fact. Each objection will be addressed in
turn.
1) Sufficiency of the Complaints
17
(...continued)
consider Congressional findings, it must ultimately conclude for
itself that standing exists). Certainly, many injury
determinations by the International Trade Commission are not
based on the type of specific injuries that the Defendants would
have us require.
Even after oral argument, the Defendant continues to press
its attempt to distinguish Shieldalloy. Citing Warth v. Seldin,
422 U.S. 490, 514 (1975) (“Congress may create a statutory right
or entitlement the alleged deprivation of which can confer
standing to sue even where plaintiff would have suffered no
judicially cognizable injury in the absence of statute.”), the
Defendant argues that because “an aggrieved petitioner for an
antidumping or countervailing duty order may challenge a final
negative injury determination by the International Trade
Commission (“ITC”) contending that it is ‘unsupported by
substantial evidence on the record, or otherwise not in
accordance with law,’ 19 U.S.C. § 1516a,” Congress has created a
statutory right of the type contemplated by Warth, “(i.e., by
enacting the antidumping and countervailing duty statutes,
Congress has made ‘legally cognizable,’ a petitioner’s claim).”
Def.’s Post-Hearing Supp. Br. at 3.
This argument, however, ignores the requirements of
Defenders of Wildlife that constitutional standing be met in
every case; in addition, it inappropriately conflates the
analysis of a plaintiff’s cause of action with the analysis of
standing. See infra at pp. 43-44.
Consol. Ct. No. 05-00324 Page 33
In their Complaints, the Canadian Producers allege that they
are exporters in “direct competition” with recipients of Byrd
Distributions, and that they “have suffered, and will continue to
suffer harm to their economic and competitive interests as a
result of the distribution of funds pursuant to [the Byrd
Amendment].” Can. Lum. Compl. 4. See also Norsk Compl. 4
(same); Ontario Forest Indus. Compl. 3; CWB Compl. 3 (alleging
that it “will suffer harm to its economic interests”). The
Defendant, citing the Federal Circuit’s decision in McKinney v.
U.S. Dep’t of Treasury, 799 F.2d 1544, 1555 (Fed. Cir. 1986),
avers that the Canadian Producers alleged no “specific injury
whatsoever” in their complaints. Def.’s Mem. Supp. Def.’s Mot.
Dismiss at 16 (“Def.’s Mem.”). See also Def.’s Combined Reply
Supp. Mot. Dismiss & Opp. Pl.’s Mot. Summ. J. at 25-26 (“Def.’s
Reply”).18
18
Defendant’s argument also overlooks the fact that a court, in
considering a motion to dismiss under 12(b)(1), may look at
materials outside the complaint. Def.’s Reply at 9 (quoting
Cedars-Sinai Med. Ctr. v. Watkins, 11 F.3d 1573, 1584 (Fed. Cir.
1993)). In other words, the court need not limit itself to the
four corners of the complaint, but may consider affidavits,
reports by the International Trade Commission, Congressional
Research Service, factual assessments by the WTO, or the statute
itself, see Section II(1)(C) below. Moreover, (and as Defendant-
Intervenors appear to concede with regard to cases in which
standing is uncontested) the Supreme Court has required very
little evidence in finding economic injuries cognizable. See,
e.g., Clarke v. Sec. Indus. Ass'n, 479 U.S. 388, 395 (1987);
(continued...)
Consol. Ct. No. 05-00324 Page 34
Although Defendant’s argument may be supported by language
in McKinney, in the years since that decision, the Supreme Court
has clarified pleading requirements for standing. See, e.g.,
Bennett v. Spear, 520 U.S. 154, 167-68 (1997); Lujan v. Nat’l
Wildlife Fed’n, 497 U.S. 871, 889 (1990) (“Nat’l Wildlife
Fed’n”). According to the Supreme Court’s current articulation
of the pleading requirements, “each element of Article III
standing ’must be supported in the same way as any other matter
on which the plaintiff bears the burden of proof, i.e., with the
manner and degree of evidence required at the successive stages
of the litigation.’" Bennett, 520 U.S. at 167-68 (quoting
Defenders of Wildlife, 504 U.S. at 561). Because Plaintiffs’
Complaint need only “set forth . . . a short and plain statement
of the grounds upon which the court’s jurisdiction depends,”
USCIT R. 8, "[a]t the pleading stage, general factual allegations
of injury resulting from the defendant's conduct may suffice, for
on a motion to dismiss we ‘presum[e] that general allegations
embrace those specific facts that are necessary to support the
(...continued)
Bacchus Imp., Ltd., 468 U.S. at 267 (the regulation “increase[d]
the price of [plaintiffs’] products as compared to the exempted
beverages, and the wholesalers are surely entitled to litigate
whether the discriminatory tax has had an adverse competitive
impact on their business.”); Bryant v. Yellen, 447 U.S. 352, 367
(1980).
Consol. Ct. No. 05-00324 Page 35
claim.’" Defenders of Wildlife, 504 U.S. at 561 (quoting Nat’l
Wildlife Fed’n, 497 U.S. at 889). Consequently, a district court
may only dismiss a complaint if it can presume no “specific facts
under which the petitioners will be injured.” Bennett, 520 U.S.
at 168; see also Baur v. Veneman, 352 F.3d 625, 631 (2d Cir.
2003); Alliant Energy Corp. v. Bie, 277 F.3d 916, 920 (7th Cir.
2002) (Easterbrook, J.) (“supplying details is not the function
of a complaint. It is easy to imagine facts consistent with this
complaint and affidavits that will show plaintiffs' standing, and
no more is required.” (emphasis in original)); S. Austin Coal.
Cmty. Council v. SBC Commc’ns., Inc., 274 F.3d 1168, 1171 (7th
Cir. 2001) (“Complaints need not be elaborate, and in this
respect injury (and thus standing) is no different from any other
matter that may be alleged generally.”); S. Christian Leadership
Conf. v. Supreme Court of La., 252 F.3d 781, 788 (5th Cir. 2001)
(noting the “expansive and deferential way in which [courts]
construe pleadings” with respect to injury).19
Applying the rule stated in Defenders of Wildlife, in this
case, the court cannot fail to presume the specific facts
necessary to satisfy standing here because such consequences are
implicit in the statutory scheme itself. Here, it is apparent
19
Neither Defendant nor Defendant-Intervenors offered an
explanation as to why the Complaints did not meet this standard.
Consol. Ct. No. 05-00324 Page 36
that the Plaintiffs’ sales may be diverted to a competitor that
is better able to compete as a result of the Byrd Amendment
distributions. See, e.g., W. Lynn Creamery, Inc., 512 U.S. at
195 n.10 & 196 n.12; Data Processing, 397 U.S. at 152 (proving
injury by reference to customers who had switched to
competitors); Inv. Co. Inst. v. Camp, 401 U.S. 617, 620 (1971);
FCC v. Sanders Bros. Radio Station, 309 U.S. 470, 476-77 (1940)
(granting license to competitor sufficient to satisfy injury-in-
fact); Leaf Tobacco Exp. Ass’n v. Block, 749 F.2d 1106, 1112 (4th
Cir. 1984); Ray Baillie, 477 F.2d at 701 (Government contract
scheme “enabled [plaintiff’s competitor] to receive a premium
price above that which would have prevailed under competitive
bidding and that [its competitor has] since used this premium to
submit low bids for private commercial contracts, thus causing
the plaintiffs to lose some of their customers to [its
competitor].”). See also C & A Carbone, Inc. v. Town of
Clarkstown, 511 U.S. 383, 430 (1994) (Souter, J. dissenting) (“a
subsidized competitor can effectively squelch competition by
underbidding it.”); United States v. Butler, 297 U.S. 1, 71
(1936) (“If the cotton grower elects not to accept the [subsidy],
he will receive less for his crops; those who receive payments
will be able to undersell him.”). Relatedly, Plaintiffs’
comparative advantage may be undermined thereby reducing the
Consol. Ct. No. 05-00324 Page 37
price they may charge (and therefore reducing their profit
margins). See, e.g., Sugar Cane Growers Coop. of Fla. v.
Veneman, 289 F.3d 89, 94 (D.C. Cir. 2002); Minn. Milk Producers
Ass'n v. Madigan, 956 F.2d 816, 817-19 (8th Cir. 1992) (agency
action which causes supply to increase created injury); Bullfrog
Films, Inc. v. Wick, 847 F.2d 502, 506 (9th Cir. 1988) (injury
caused by a tax which upset comparative advantage); Panhandle
Producers & Royalty Owners Ass’n v. Econ. Regulatory Admin., 822
F.2d 1105, 1108-09 (D.C. Cir. 1987) (“Under undisputed economic
principles, such an increase in supply is likely to depress the
prices that petitioner's members can secure.”); Tax Analysts &
Advocates v. Blumenthal, 566 F.2d 130, 137-38 (D.C. Cir. 1977)
(same); cf. Bryant, 447 U.S. at 367 (government program that made
possible the sale of excess lands at below market price
sufficient to confer standing on potential purchasers interested
in maintaining program). The increase (or sustaining) of
competition may cause Plaintiffs’ costs to grow to counter this
competition, again reducing their profit margin. See, e.g.,
Nat'l Park Hospitality Ass'n v. DOI, 538 U.S. 803, 819 (2003)
(Breyer, J. dissenting); DIRECTV, Inc. v. FCC, 110 F.3d 817, 830
(D.C. Cir. 1997) (injury caused by divesture requirement in
bidding process); cf. Clinton, 524 U.S. at 432 (denial of benefit
during bargaining process sufficient to confer standing). The
Consol. Ct. No. 05-00324 Page 38
competitiveness of the market may make Plaintiffs’ business
ventures less attractive to potential investors, reducing the
Plaintiffs’ ability to raise capital or sell their business
interests. See, e.g., Alliant Energy Corp., 277 F.3d at 920
(“Higher costs of capital injure the firm, making [plaintiffs]
the right plaintiffs.”); Mount Wilson FM Broadcasters, Inc. v.
FCC, 884 F.2d 1462, 1465 (D.C. Cir. 1987) (approving this
theory); Tax Analysts, 566 F.2d at 136-37; cf. McKinney, 799 F.2d
at 1555.
Because economic logic suggests that Plaintiffs have been
injured, and because Defendant-Intervenors are the only parties
who would have any evidence as to how the distributions have
been, and will be, used and, therefore, whether they have
enhanced affected domestic producers’ abilities to compete,
requiring anything further in the way of allegations at the
pleading stage would convert pleading requirements into a
formidable barrier – a result at odds with the liberal notice
pleading requirements underlying USCIT R. 8. See, e.g., United
Transp. Union, 891 F.2d at 912 n.7 (“Allegations founded on
economic principles such as . . . in competitor standing cases,
while perhaps not as reliable as allegations based on the laws of
physics, are at least more akin to demonstrable facts than are
predictions based only on speculation.”); Alliance for Clean
Consol. Ct. No. 05-00324 Page 39
Coal v. Miller, 44 F.3d 591, 593-94 (7th Cir. 1995); cf. Sugar
Cane Growers, 289 F.3d at 94 (it was the Government’s burden if
it wanted to contest Plaintiff’s economic theory of injury to
request a hearing); Alliant Energy Corp., 277 F.3d at 916
(plaintiff does not have to negate defenses in its complaint);
Adams, 10 F.3d at 925 (defendants can refute economic theory at
summary judgment or an evidentiary hearing). This principle is
especially true here given that subsidies are known for their
lack of transparency. See Alan O. Sykes, Regulatory
Protectionism and the Law of International Trade, 66 U. Chi. L.
Rev. 1, 30-31 (1999); cf. Testimony of Dr. David John Teece,
Trial Transcript of March 28, 2006 Hearing at 282.
Accordingly, following clear Supreme Court precedent,
Defendant’s argument to dismiss on this basis must be rejected.
2) Whether competitive injuries are cognizable
Defendant and Defendant-Intervenors contend that economic
injuries are not cognizable within the meaning of the injury-in-
fact test. See, e.g., Def.’s Reply at 22-24; Def.’s Mem. at 14,
17; Def.-Int.’s Reply Mot. Supp. Def.-Int.’s Mot. Summ. J. &
Resp. Opp. Pl.’s Cross-Mot. Summ. J. at 30-32 (“Def.-Int.’s
Reply”). Specifically, relying on the Supreme Court’s statement
in Hardin v. Ky. Utils. Co., 390 U.S. 1, 5-6 (1968) that “[t]his
Consol. Ct. No. 05-00324 Page 40
Court has, it is true, repeatedly held that the economic injury
which results from lawful competition cannot, in and of itself,
confer standing on the injured business to question the legality
of any aspect of its competitor's operations,” and the
proposition that there is no constitutional right to import, see,
e.g., Norwegian Nitrogen Prods. Co. v. United States, 288 U.S.
294, 318 (1933); Bd. of Trustees of the Univ. of Ill. v. United
States, 289 U.S. 48, 58 (1933), Defendant and Defendant-
Intervenors argue that Plaintiffs have suffered no injury. The
court disagrees.
First, Defendant and Defendant-Intervenors’ reliance on this
authority is unfounded. Although they correctly quote one line
of Hardin, the very next lines of that decision read:
But competitive injury provided no basis for
standing in the above cases simply because the
statutory and constitutional requirements that
the plaintiff sought to enforce were in no way
concerned with protecting against competitive
injury. In contrast, it has been the rule, at
least since the Chicago Junction Case, 264
U.S. 258 (1924), that when the particular
statutory provision invoked does reflect a
legislative purpose to protect a competitive
interest, the injured competitor has standing
to require compliance with that provision.
Consol. Ct. No. 05-00324 Page 41
Hardin, 390 U.S. at 6 (emphasis added).20 The Hardin Court then
went on to find standing because of competitive injuries. Id.
Neither Defendant, nor Defendant-Intervenors, mention this second
and third sentence, or the Court’s holding.
Defendant-Intervenors attempt to buttress their argument by
quoting Arnold Tours, Inc. v. Camp, 408 F.2d 1147, 1149 (1st Cir.
1969) (“because of the policy encouraging free and open
competition – a policy that favors competition in the market
place, not in the courts.”), claiming that this decision was
20
The Defendant claims that Hardin has been cited approvingly by
the Supreme Court. It matters, however, how Hardin was being
cited. Most recently, Justice O’Connor cited Hardin in her
dissent in NCUA to contrast a case where the statute concerned
competition, i.e., Hardin, from plaintiffs’ case in NCUA. NCUA,
522 U.S. at 518 (O’Connor, J. dissenting). Justice O’Connor also
made this argument in relation to the zone of interest test,
discussed infra at 63-69, not the injury-in-fact test. In
Defenders of Wildlife, 504 U.S. at 578, the Court noted that
cases decided around the time of, and including, Hardin “involved
Congress' elevating to the status of legally cognizable injuries
concrete, de facto injuries that were previously inadequate in
law (namely, injury to an individual's personal interest in
living in a racially integrated community, see Trafficante v.
Metro. Life Ins. Co., 409 U.S. 205, 208-212 (1972), and injury to
a company's interest in marketing its product free from
competition, see Hardin v. Kentucky Utilities Co., 390 U.S. 1, 6
(1968)).” In other words, Defenders of Wildlife recognized that
Hardin stood for the proposition that economic injuries were
cognizable and that the line of analysis upon which Defendant
relies is out of vogue. These later cases, just like the court
here, do not read Hardin to preclude Plaintiffs’ standing but to
support it. See also Bradford Sch. Bus Transit, Inc. v. Chi.
Transit Auth., 537 F.2d 943, 946 (7th Cir. 1976); Scanwell Labs,
Inc. v. Shaffer, 424 F.2d 859, 865 (D.C. Cir. 1970).
Consol. Ct. No. 05-00324 Page 42
“reversed on other grounds” by Arnold Tours, Inc. v. Camp, 397
U.S. 315 (1969).21 Def.-Int.’s Reply at 30. The First Circuit’s
decision in Arnold Tours, however, was not “reversed on other
grounds,” it was vacated, Arnold Tours, 397 U.S. at 315, and
therefore may not be cited. Moreover, as the Supreme Court
recounted the following year when it again took up the case:
“Following our decisions last Term . . . we vacated and remanded
the case for reconsideration . . . and the Court of Appeals
reaffirmed its previous decision.” Arnold Tours, Inc. v. Camp,
400 U.S. 45, 46 (1970). In this latter decision, the Court
reversed the First Circuit and found standing. Id. In other
words, the case upon which the Defendant-Intervenors rely was not
“reversed on other grounds” it was vacated and then, when the
Supreme Court granted certiorari again, reversed on those
grounds. See, e.g., Def.-Int.’s Reply at 32 n.25 (properly
noting this subsequent history in light of the District Court’s
21
Similarly, Defendant repeatedly relies on Kan. City Power &
Light Co. v. McKay, 225 F.2d 924, 928 (D.C. Cir. 1955) for the
proposition that where plaintiffs “have not been subjected to any
obligation or duty . . . decisions of the Supreme Court . . .
establish that an interest of this kind is not sufficient to
enable them to sue to enjoin execution of . . . [a] program of
the Government.” See, e.g., Def.’s Supp. Br. at 15; Def.’s Reply
at 21. This, however, is a statement of the legal rights test,
and has been rejected by the Supreme Court. See Sierra Club v.
Morton, 405 U.S. 727, 733 & n.4 (1972); see also Simon v. E. Ky.
Welfare Rights Org., 426 U.S. 26, 39 & n.18 (1976).
Consol. Ct. No. 05-00324 Page 43
decision in Arnold Tours). From this authority, and others, the
First Circuit agreed eight years later that there exists “no
authority for the proposition that competitive harm is an
insufficient allegation of injury in fact. Quite the contrary,
the cases finding allegations of competitive injury sufficient
are legion.” Rental Housing Ass’n v. Hills, 548 F.2d 388, 389
(1st Cir. 1977).
Furthermore, Plaintiffs’ claims do not rest on a
constitutional right to import but on a statutory right not to
have the antidumping and countervailing duties laws amended to
disadvantage their access to U.S. markets (without Congress
explicitly including them within the amendment); cf. Logan v.
Zimmerman Brush Co., 455 U.S. 422, 430 (1982) (canvassing
extensive authority on this distinction in finding that statutes
providing substantial evidence review create due process
interests); Warth v. Seldin, 422 U.S. 490, 500 (1975) (“The
actual or threatened injury required by Art. III may exist solely
by virtue of ‘statutes creating legal rights, the invasion of
which creates standing . . . .’) (quoting Linda R. S. v. Richard
D., 410 U.S. 614, 617, n.3 (1973)), rendering any argument that
Plaintiffs’ have no constitutional right of no relevance. This
does not mean that when Congress does create a legal right,
plaintiffs do not have to demonstrate standing. To the contrary,
Consol. Ct. No. 05-00324 Page 44
the “‘[statutory] broadening [of] the categories of injury that
may be alleged in support of standing is a different matter from
abandoning the requirement that the party seeking review must
himself have suffered an injury.’" Defenders of Wildlife, 504
U.S. at 578 (quoting Sierra Club, 405 U.S. at 738). As such,
although injuries to interests that are not constitutionally
protected are sufficient, “injury amounting only to the alleged
violation of a right to have the Government act in accordance
with law [is] not judicially cognizable.” Id. at 575.
Perhaps even more importantly, Defendant’s argument rests on
a standing analysis that has long been rejected by the Supreme
Court. In Data Processing, the Supreme Court rejected the “legal
interest” analysis which required claimants to demonstrate an
injury to their legally protected rights. See, e.g., Akins, 524
U.S. at 19; Barlow v. Collins, 397 U.S. 159, 164 (1970);
Panhandle Producers, 822 F.2d at 1108-09 (noting that although
counterintuitive, “[c]ompetitors have a seemingly unbroken record
of success in securing standing to challenge decisions involving
agency licensing.”). In repudiating that earlier test, the Court
noted that the “‘legal interest’ test [went] to the merits
[whereas the] question of standing is different,” Data
Processing, 397 U.S. at 153, and that the legal interest test
conflicted with the “broadly remedial purpose" of the APA, id. at
Consol. Ct. No. 05-00324 Page 45
156. The Supreme Court’s rejection of the “legal interest”
analysis was absolute and unqualified. See Jonathan R. Siegel,
Zone of Interests, 92 Geo. L. J. 317, 320 (2004) (“Data
Processing rejected the ‘legal right’ test and created the now-
familiar rule that Article III of the Constitution permits a
plaintiff to bring suit in federal court provided the plaintiff
is ‘injured in fact,’ without regard to whether the plaintiff has
a legal right to be free from injury.”); Sanford A. Church, A
Defense of the “Zone of Interests” Standing Test, 1983 Duke L.J.
447, 449-52 (1983) (“Before 1968, courts used a ‘legal interest’
test to decide the standing of a party challenging agency action
. . . The [Data Processing Court] replaced the legal interest
test with the zone of interests test.”); David P. Currie,
Misunderstanding Standing, 1981 Sup. Ct. Rev. 41, 42 (“The Data
Processing case in 1969, rejected the ‘legal right’ test, [and]
declared in apparently general” terms that the zone of interest
analysis would apply to future cases); Kenneth Culp Davis, The
Liberalized Law of Standing, 37 U. Chi. L. Rev. 450, 453 (1970)
(“A huge portion of the former foundation of the law of standing
was thus knocked out. The old test of ‘a recognized legal
interest’ was specifically rejected.”). Any remnants of this
analysis are now relevant only to prudential considerations in
Consol. Ct. No. 05-00324 Page 46
the context of the zone of interest test discussed below. Air
Courier Conference, 498 U.S. at 524.
Defendant-Intervenors address the fact that Data Processing
and its progeny rejected the legal interest analysis asserting
that these cases are not controlling because they dealt only with
new competitors, whereas plaintiffs’ claim alleges unlawful
competition from existing competitors. Def.-Int.’s Reply at 31.
This distinction, however, is unpersuasive. Data Processing
rejected the legal interest analysis in definitive terms, not
only relating to new competitors. Moreover, the distinction
Defendant-Intervenors attempt to draw fails to recognize that the
Plaintiffs are alleging new competitive threats as a result of
Byrd Amendment distributions. Cf. Alliance for Clean Coal, 44
F.3d at 593-94; Adams, 10 F.3d at 919; Nat’l Coal Ass'n v.
Hodel, 825 F.2d 523, 526 (D.C. Cir. 1987). This attempted
distinction is also belied by the fact that parties regularly
bring suit against existing competitors in antitrust, copyright,
and trade cases. Accordingly, this distinction is of no moment.
3) Lack of injury-in-fact
Last, Defendant and Defendant-Intervenors assert that the
Byrd Amendment has not so altered the competitive conditions for
the Canadian Producers as to cause an injury-in-fact. As noted
Consol. Ct. No. 05-00324 Page 47
above, the court held a two day hearing to resolve this factual
dispute. At that hearing, the court took testimony from Mr. Neal
Fisher, Administrator for the North Dakota Wheat Commission, Mr.
Mike Legge, President of U.S. Magnesium, Professor Janusz
Alexander Ordover, Professor of Economics at New York University
and Professor David John Teece, Professor of Business
Administration at the Walter A. Haas School of Business at the
University of California Berkeley.
At the outset on this issue, the Canadian Producers contend
that the Byrd Distributions enhance the ability of affected
domestic producers to compete; this alteration of the competitive
environment, the Canadian Producers claim, will invariably lead
to competitive injuries. More specifically, the Canadian
Producers maintain, supported by the expert testimony of Dr.
Ordover, that the Byrd Amendment leads to two types of harm:
(1) “Ex Ante” Harms: The Canadian Producers claim that the
Byrd Amendment encourages affected domestic producers to
invest in qualifying expenditures that they would not have
made but for the Byrd Amendment. Under this theory, because
each prospective recipient’s share of the money available
for distribution is determined by its claimed qualifying
expenditures, affected domestic producers have an incentive
to expend resources on qualifying expenditures to increase
their share of the funds available. To use a simplified
example, consider the investment choice of a firm purchasing
new equipment. If a firm considers purchasing equipment
that will, absent the Byrd Amendment, return ninety-nine
cents for every dollar invested, the firm will not invest in
the new equipment as its projected investment yields a
negative return. However, with the Byrd Amendment, if the
Consol. Ct. No. 05-00324 Page 48
expected Byrd Distribution for this qualifying expenditure
is more than one cent per dollar invested, the expected
value of purchasing that equipment becomes positive, leading
the firm to buy the new equipment. The purchase of new
equipment may lead to higher production, or lower marginal
costs, which will adversely affect the firm’s market
competitors. Accordingly, under this claim, even without
Customs actually distributing money, the mere prospect of
Byrd Distributions will lead to competitive investments.22
(2) “Ex Post” Harms: This claim is that once the Byrd
Distributions are made, domestic industries can use those
funds to enhance their productivity or weather turbulent
economic markets. Because the Byrd Distributions come with
no strings attached, firms will make efficient business
choices. Nevertheless, the Byrd Distributions allow firms
access to “free money.” This not only may lower their costs
of capital, but also, lead them to make more investments
than those that their creditors otherwise would have
sponsored. For example, if there is a downturn in the
market for a given product (say because of an oversupply of
a commodity within a market), affected domestic producers
may turn to cash reserves cumulated through Byrd
Distributions to out-wait their competitors – a choice their
creditors may not have approved.
Both theories are supported by either government studies or
economic principles adopted by courts. See infra at note 44.
22
Plaintiffs concede that, because the North Dakota Wheat
Commission and U.S. Magnesium are the only eligible affected
domestic producers, this incentive structure will not apply to
them. This concession may have been made in haste. If a company
is choosing between closing down operations or staying in
business, the prospect of future distributions may tilt the
balance in favor of staying in the market. For example, if a
company is projected to lose $10 dollars in the next fiscal year,
it may decide to close its operations. However, if the expected
value of the Byrd Distributions is $10.01 dollars, it may stay in
business an additional year to receive that pay off.
Consol. Ct. No. 05-00324 Page 49
Defendant introduced expert testimony attempting to rebut
these hypotheses. In response to the “ex ante” analysis,
Defendant’s expert, Dr. Teece, argued that there is a large
measure of uncertainty with regard to future Byrd Distributions.
Specifically, because the money Customs holds on unliquidated
entries may never be transferred from the “clearing accounts,”
i.e., the escrow-like accounts Customs creates for cash deposits,
to “special accounts,” i.e., the accounts from which
distributions are then made (from the duties collected on
liquidated entries), Dr. Teese opined that firms are not
presently considering future allocations in their investment
calculus; moreover, Dr. Teece argued, in terms of the Lumber
Plaintiffs in particular because there are so many affected
domestic producers vying for Byrd Distributions, each company’s
share will be very small thereby dissipating any incentive to
invest in qualifying expenditures.
Dr. Teece also argued that the Canadian Producers’ “ex post”
analysis fails. Contrasting production subsidies, i.e.,
subsidies for which the terms or conditions of receipt are
directly or indirectly tied to productive enterprises, with pure
subsidies, i.e., lump sum cash grants that may be dedicated to
any purpose (“manna from heaven”), Dr. Teece opined that the Byrd
Distributions are pure subsidies and can be used for any purpose.
Consol. Ct. No. 05-00324 Page 50
As such, firms may use this money to diversify their investments
into other markets, increase dividends, shut down their
operations, or maintain larger cash reserves for use at some
distant date in the future. In essence, Dr. Teece maintained,
there are too many alternative ways affected domestic producers
may spend their distributions to warrant any conclusion that
those expenditures will have any adverse affect on the Canadian
Producers.23
As stated above, in weighing these competing claims, the
court must consider whether plaintiffs have demonstrated that
their claimed injuries are probable and imminent as opposed to
23
The Defendant and Defendant-Intervenors have also marshalled
evidence showing that the Canadian Producers’ market shares have
not declined since Byrd Distributions started. This fact,
however, is not relevant to the injury-in-fact inquiry. Pennell
v. San Jose, 485 U.S. 1, 8 (1988) (“The likelihood of
enforcement, with the concomitant probability that a landlord's
rent will be reduced below what he or she would otherwise be able
to obtain in the absence of the Ordinance, is a sufficient threat
of actual injury to satisfy Art. III's requirement . . . .”);
Hunt v. Wash. State Apple Advertising Comm'n, 432 U.S. 333, 345
(1977) (“In the event the North Carolina statute results in a
contraction of the market for Washington apples or prevents any
market expansion that might otherwise occur, it could reduce the
amount of the assessments due the Commission and used to support
its activities.”); Lac Du Flambeau Band of Lake Superior Chippewa
Indians, 422 F.3d 490, 498 (7th Cir. 2005); Alliance for Clean
Coal, 44 F.3d at 595 (“The alleged injury stems from the fact
that sales have not increased as much or as rapidly as they would
have on a level playing field without the Coal Act.”).
Consol. Ct. No. 05-00324 Page 51
speculative or conjectural.24 See, e.g., Clinton v. City of New
York, 524 U.S. 417, 430 (1998); Defenders of Wildlife, 504 U.S.
at 561; cf. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs.,
Inc., 528 U.S. 167, 184 (2000) (noting that there was nothing
“improbable” about plaintiffs’ alleged harm). Moreover, the
injury need not be great, an identifiable trifle is sufficient,
i.e., there is no defense that a harm is de minimus. See United
States v. SCRAP, 412 U.S. 669, 689 n.14 (1973); see also Akins,
524 U.S. at 21 (finding that deprivation of information
constitutes an injury because “[t]here is no reason to doubt
their claim that the information would help them”); accord
Laidlaw Envtl. Servs., 528 U.S. at 186. Moreover, although a
party invoking the court’s jurisdiction has the burden of proving
that jurisdiction is proper, see, e.g., Defenders of Wildlife,
504 U.S. at 561, that party does not have to “negate . . .
speculative and hypothetical possibilities . . . in order to
demonstrate the likely effectiveness of judicial relief," Duke
Power Co. v. Carolina Envtl. Study Group, 438 U.S. 59, 78 (1978).
24
Imminency is satisfied here because the Byrd Distributions are
ongoing, i.e., the putatively illegal governmental action being
protested is occurring now. If the court required the parties to
wait until their competitors actually used the money, given the
two year statute of limitations for bringing claims under 28
U.S.C. § 1581(i), requiring plaintiffs to wait until they were
actually injured would deprive them of any relief.
Consol. Ct. No. 05-00324 Page 52
The court further notes its agreement with Dr. Teece’s assessment
that because money is “completely fungible,” tracing where Bryd
distributions are used is a difficult, if not impossible,
assignment. Testimony of Dr. Teece, Trial Transcript of March
28, 2006 Hearing at 282. Therefore, the court must consider
whether, on the record here, it is likely that any of the past
distributions have been, and/or likely will be, used to Plaintiff
Producers’ detriment.
Bearing these observations in mind, the court is persuaded
by the Canadian Producers’ arguments that there will likely be
some injury as a result of the distributions. As this inquiry
relates to Lumber Plaintiffs, Dr. Teece did not dispute that
affected domestic producers may use a portion of their
distributions to enhance their competitive positions. His
testimony was simply that the uncertainty was too great to
warrant any definitive conclusion that affected domestic
producers would use any of their distributions to enhance their
competitive positions. However, the fact remains that the very
United States Government Accountability Office study that figured
into his analysis noted that at least one firm (if not more) has
used its distributions on expenditures that would likely enhance
its competitive position. United States Government
Accountability Office, Report to Congressional Requesters:
Consol. Ct. No. 05-00324 Page 53
International Trade: Issues and Effects of Implementing the
Continued Dumping and Subsidy Offset Act, 104 (2005) (“GAO
Report”) (noting from survey results that lumber firms used
distributions to “pay debt, past qualifying expenditures, general
operating expenditures, general corporate expenses, and capital
investment.” (emphasis added)). Similarly, although twelve out
of the thirteen recipient firms had noticed “little or no
effects”25 of the Byrd Distributions, one firm did note
“positive effects.” Id. at 102. Nor is the court convinced that
future distributions will not be used in a similar fashion.
Indeed, according to one group representing the domestic
lumber industry, the Byrd Amendment “provides a direct cash
influx for those who have been and continue to be most
harmed by unfair trade, allowing such entities crucial time
and capital to adapt to the unfair trade practices and
maintain employment levels.” Coalition for Fair Lumber
Imports, The American Lumber Industry: Enforcement of the
Trade Laws Essential to the Industry, Pl.’s Ex. 32 at 37
(2005). Such investments may occur even in periods of time
where there is an “oversupply” of the commodity. Testimony
25
Unfortunately, the GAO Study does not differentiate between
little and no effect. Little effect would justify standing
whereas no effect might not.
Consol. Ct. No. 05-00324 Page 54
of Dr. David John Teece, Trial Transcript of March 28, 2006
Hearing at 292. As such, it is implausible for the government to
maintain that none of the money has been, or will be, used to
alter the competitive landscape. This is certainly more than the
identifiable trifle necessary to sustain standing for the Lumber
Plaintiffs.
More problematic are the claims of the Canadian Wheat Board
and Norsk. Neither industry is directly discussed in the GAO
Report. In the case of the Canadian Wheat Board, the North
Dakota Wheat Commission (“NDCW”) is the single recipient of
monies. The NDCW does not produce any hard red spring wheat
(“HRS wheat”) itself; rather the NWDC (among its other duties)
promotes the sale of HRS wheat on behalf of farmers in North
Dakota and sponsors research on HRS wheat. Testimony of Mr. Neal
Fisher, Trial Transcript of March 27, 2006 Hearing at 14-17.
Also problematic for the analysis is that the NDWC received Byrd
Distributions, for the first time, in December 2005; moreover,
because of this litigation, the NDWC has not earmarked the money
from the distribution for any specific future use. Therefore,
the NDWC does not have a track record on how it spends Byrd money
nor does it have a plan on how it will spend that money,
Testimony of Mr. Neal Fisher, Trial Transcript of March 27, 2006
Hearing at 28, 33. As a result, predicting the affect of this
Consol. Ct. No. 05-00324 Page 55
money becomes highly problematic given that some of the ways the
NDWC may spend its distributions, e.g., on research, may actually
aid the Canadian Producers (so long as this expenditure has not
freed up other money it would have spent on research but for the
Byrd Distributions).
Similarly, U.S. Magnesium, the single beneficiary of Byrd
Distributions collected from duties on Norsk’s goods, has placed
its previous distributions in a revolving account with its
creditor. Also weighing into the consideration is that U.S.
Magnesium has not, over the past two years, received substantial
Byrd Distributions as a result of pending litigation over the
underlying determination.
Nevertheless, the court is convinced that the Canadian Wheat
Board and Norsk have standing. Although Byrd Distributions may
only have trickled in over the past few years, cumulatively (and
with future distributions) these monies are not necessarily
insignificant. Second, the U.S. General Accountability Office’s
survey demonstrates that Byrd recipients have used their
distributions to enhance their competitive positions. GAO
Report, supra, at 66, 70, 72, 77, 84, 102-04. Although the NDWC
and U.S. Magnesium may not follow suit, all that plaintiffs must
show is that it is probable. Third, in the case of U.S.
Magnesium, it is conceded that the Byrd Distributions do lower
Consol. Ct. No. 05-00324 Page 56
its “weighted average cost of capital.” Testimony of Dr. Teece,
Trial Transcript of March 28, 2006 Hearing at 310-14. Such
reduction of its costs of capital alters competitive conditions.
See id. Likewise, although the NDWC only promotes HRS wheat, the
NDWC promotion activities (with the assistance of U.S. Wheat
Associates) have “help[ed] to take back market share from
Canadian Wheat in specific export markets[.]” Testimony of Mr.
Neal Fisher, Trial Transcript of March 27, 2006 Hearing at 38.
Therefore, it is unlikely that the money will not, in any way,
alter the conditions of competition.26
26
Defendant also insists that Plaintiffs are required to
demonstrate specific losses. Requiring the demonstration of
actual losses would be contrary to the principle that plaintiffs
need not wait until they are actually injured to have standing.
See, e.g., Bryant v. Yellen, 447 U.S. 352, 367-68 (1980); Reg’l
Rail Reorganization Act Cases, 419 U.S. 102, 143 (1974) (“One
does not have to await the consummation of threatened injury to
obtain preventive relief. If the injury is certainly impending
that is enough." (quoting Pennsylvania v. West Virginia, 262 U.S.
553, 593 (1923)); Alabama-Tombigbee Rivers Coal., 338 F.3d at
1254. Furthermore, the effect of subsidies may not be
immediately clear; rather, the full effect of a subsidy may not
be felt for years. Cf. Ocean Advocates v. United States Army
Corps of Eng'rs, 361 F.3d 1108, 1120 (9th Cir. 2004) amended by,
rehearing denied, rehearing en banc denied,402 F.3d 846 (2005);
Alliance for Clean Coal, 44 F.3d at 594 (“But the showing of
specific ‘lost opportunities’ is neither required to establish
standing nor reasonably expected under the circumstances of this
case.”); Lac Du Flambeau Band of Lake Superior Chippewa Indians,
422 F.3d at 498 (“the present impact of a future though uncertain
harm may establish injury in fact for standing purposes.”);
Rental Hous. Ass’n of Greater Lynn, Inc. v. Hills, 548 F.2d 388,
389 (1st Cir. 1977) (“specific proof of competitive injury is not
(continued...)
Consol. Ct. No. 05-00324 Page 57
Therefore, the court finds that the Canadian Producers meet
the injury-in-fact test.27
b) Causality and Redressability
Having found that the Byrd Amendment is likely to injure
foreign competitors, the court next considers whether these
injuries are traceable to the Byrd Amendment and whether judicial
review may provide relief. In this case, these tests are easily
met. Given that the Commissioner distributes such subsidies, the
injury caused by these subsidies is directly traceable to the
Commissioner’s actions. Moreover, the injuries are redressable
26
(...continued)
possible, it could hardly be thought that administrative action
likely to cause harm cannot be challenged until it is too
late.”); Westport Taxi Serv., Inc. v. Adams, 571 F.2d 697, 700-
701 (2d Cir. 1978). For example, if a competitor uses the
subsidy to build a new manufacturing facility, construction may
take several years to be completed, and even more time to fully
effect the market.
27
The court further notes that the Defendant has acknowledged the
likely effects of Byrd Distributions. In its reply brief, the
Defendant argued that the Byrd Amendment “assists those United
States domestic producers which have been harmed by unfair import
competition,” Def.’s Reply at 22, and “accomplishes the
‘Findings of Congress’ that the injurious effects of persistent
unfair trade practices must be neutralized ‘so that jobs and
investment that should be in the United States are not lost
through false market signals,” id. at 26 (emphasis added). Note,
the Defendant did not argue that is feasible that the Byrd
Amendment works as designed, but rather that the Byrd Amendment
does in fact work as designed. Therefore, it is disingenuous for
the Defendant to now argue that plaintiffs’ injuries are entirely
speculative and hypothetical.
Consol. Ct. No. 05-00324 Page 58
because an order enjoining such distributions will cause them to
cease.
* * *
In sum, the court finds that the Canadian Producers have
Article III standing.
ii. Canada’s Standing
Canada argues that it has standing by virtue of the fact
that it has suffered a breach of NAFTA by the United States.
Canada asserts that Plaintiffs have standing to challenge
breaches of contracts.28 Canada further asserts that
international agreements are (essentially) contracts between
nations. See, e.g, B. Altman & Co. v. United States, 224 U.S.
583, 600 (1912). Canada avers that because the United States has
violated NAFTA by (a) applying amendments to Canadian goods
without the statute so specifically stating, (b) failing to
28
The Defendant claims that a party’s injury cannot be based on a
violation of NAFTA under 19 U.S.C. § 3312(c) (discussed below).
That provision, however, merely states that no person, other than
the United States, shall have a cause of action based on NAFTA or
Congressional approval thereof. Whether a party is injured for
purposes of Article III is an entirely different inquiry than
whether a party has a cause of action to bring a claim.
Therefore, Section 3312(c) does not bar this injury. Cf. Air
Courier Conf., 498 U.S. at 523 n.3; Republic of Para. v. Allen,
949 F. Supp. 1269, 1273 (E.D. Va. 1996) (finding standing to
challenge the United States’ application of a treaty but
concluding that plaintiffs did not have cause of action).
Consol. Ct. No. 05-00324 Page 59
consult with Canada prior to the Amendment’s passage (if it does
apply to Canada), and (perhaps) (c) applying an amendment to
Canada that violated GATT, the United States has injured Canada
within the meaning of the injury-in-fact requirement of Article
III. Pl.’s Mem. at 16 (citing Roeder v. Islamic Republic of
Iran, 333 F.3d 228, 234 (D.C. Cir. 2003), Republic of Para. v.
Allen, 949 F. Supp. 1269, 1273 (E.D. Va. 1996), Gov’t of Jam. v.
United States, 770 F. Supp. 627, 630 n.6 (M.D. Fla. 1991)).
Even assuming arguendo that breaches of a contract per se
confer standing on parties to the contract, and that
international agreements are “contracts,” Canada’s analysis has
failed to account for the fact that it has already elected a
remedy for this breach of its contractual obligations by
pursuing, and winning, its claim before the WTO, and by receiving
compensation in accordance with the WTO decision. Although WTO
adjudications may not be binding on the United States in
requiring the United States to conform its regulatory law to
adverse WTO decisions, see Corus Staal BV v. DOC, 395 F.3d 1343,
1347-49 (Fed. Cir. 2005), cert. denied 126 S. Ct. 1023 (2006);
but see Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 386
n.24 (2000); Allegheny Ludlum Corp. v. United States, 367 F.3d
1339, 1348 (Fed. Cir. 2004), it is nonetheless clear that legal
consequences flow as a result of those decisions, i.e., adverse
Consol. Ct. No. 05-00324 Page 60
decisions require offending states to conform or compensate, see
Andreas F. Lowenfeld, International Economic Law 158-61 (2002).
See generally Medellin v. Dretke, 125B S. Ct. 2088, 2094 (2005)
(Ginsburg J., concurring); La Abra Silver Mining Co. v. United
States, 175 U.S. 423, 463 (1899). In this case, the WTO’s
decision has led to compensation in the form of the suspension of
Canada’s trade concessions guaranteed to the United States (in
contract parlance, garnishment of the United States’ benefits
under the agreement) – a fact that this court cannot refuse to
recognize.
Alternatively, Canada claims that, despite its victory
before the WTO, NAFTA aims at achieving free trade and that the
United States’ breach of NAFTA deprives Canada of this benefit.
Retaliation, Canada claims, simply does not adequately compensate
it for its contractual loses under NAFTA.29 But Canada’s
contract analogy proves too much. Simply because a party might
prefer an alternative remedy for a breach of contract to that
which it received does not entitle a complaining party to
additional remedies. See, e.g., Hickson Corp. v. Norfolk S. Ry.
Co., 260 F.3d 559, 567 (6th Cir. 2001); Artis v. Norfolk & W. Ry
29
NAFTA and the Uruguay Round Agreements are largely coextensive
on this matter. See, e.g., NAFTA art. 1902.2(d). Where, as
here, they are coextensive, a violation of one injures a party to
the same extent as a violation of the other.
Consol. Ct. No. 05-00324 Page 61
Co., 204 F.3d 141 (4th Cir. 2000); Sparaco v. Lawler, Matusky,
Skelly Eng’rs, LLP, 313 F. Supp. 2d 247 (S.D.N.Y. 2004) (“A
plaintiff is not entitled to recover twice for the same
injury.”). See also Dan B. Dobbs, Law of Remedies § 9.4 (2nd ed.
1993). The WTO has provided a remedy intended to make Canada
whole for its loses. See United States – Continued Dumping and
Subsidy Offset Act of 2000, WT/DS234/ARB/CAN ¶ 5.2 (Aug. 31,
2004). Although an election of a remedy does not prevent a party
from seeking redress for legally distinct statutory rights, see
Alexander v. Gardner-Denver Co., 415 U.S. 36, 50 (1974), a party
may not pursue duplicative or inconsistent remedies, see
generally Artis, 204 F.3d at 146; Olympia Hotels Corp. v. Johnson
Wax Dev. Corp., 908 F.2d 1363, 1371 (7th Cir. 1990) (the election
of remedies seeks to prevent double recovery); Wynfield Inns v.
Edward Leroux Group, Inc., 896 F.2d 483, 488-89 (11th Cir. 1990)
(finding inconsistent a quantum meruit remedy and a contract
remedy because the prior assumed the nonexistence of a contract
where the latter presumed the existence of one). Here, if Canada
prevails, the breach of the Uruguay Round Agreements will be
effectively cured thereby undermining the contractual basis of
the WTO’s award and the compensation that Canada has thus far
received. Cf. id. Therefore, by pursuing its action before the
WTO, Canada has elected this remedy at the expense of others.
Consol. Ct. No. 05-00324 Page 62
Furthermore, specific performance (which Canada seeks here)
is generally disfavored as a remedy for a breach of contract.
See, e.g., Great-West Life & Annuity Ins. Co. v. Knudson, 534
U.S. 204, 211 (2002) (canvassing authority). Equity disfavors
specific performance partially because it is difficult for courts
to compel recalcitrant parties to perform on contracts. Trade
disputes between nations are no different. The drafters of the
WTO understood this concept by pragmatically placing any remedy
in the hands of the non-breaching party by permitting them to
garnish the offending nation’s trade concessions. These were the
rules of the road when Canada petitioned the WTO for redress; and
this was the remedy that it could expect. Although the court can
appreciate that Canada may believe that it has been denied the
benefit of its original bargain, the court cannot ignore that in
fact it has already been compensated for this claimed injury in
accordance with the contract upon which it relies to assert
standing.30 Cf. Defenders of Wildlife, 504 U.S. at 560 (injury-
30
Canada makes four additional arguments which warrant brief
attention. First, Canada claims that it is seeking to enjoin
future breaches of the Agreement. However, consistent with the
WTO’s decision, Canada may retaliate so long as the United States
is in material breach of the Agreement and, therefore, Canada has
an adequate remedy at law. Cf. Lyons, 461 U.S. at 112. Second,
Canada claims it has standing because its statutory rights were
violated. As discussed above, see supra at 43-44, the court does
not adopt this view of standing. Third, Canada claims that
Defendant has waived this argument. However, because this
(continued...)
Consol. Ct. No. 05-00324 Page 63
in-fact is an indispensable requirement for standing which
neither Congress, nor the executive, can displace).
Accordingly, the court finds that Canada lacks standing and,
therefore grants Defendant’s motion to dismiss in this respect.
B. Prudential requirements
As noted above, in addition to Article III’s constitutional
requirements for standing, courts have imposed a further
limitation for cases brought under the APA. Recognizing the APA,
this court’s founding statute provides that: “[a]ny civil action
of which the Court of International Trade has jurisdiction, . . .
may be commenced in the court by any person adversely affected or
aggrieved by agency action within the meaning of section 702 of
[T]itle 5.” 28 U.S.C. § 2631(i). In turn, Title 5 section 702
(Section 10(a) of the APA), provides that “[a] person suffering
legal wrong because of agency action, or adversely affected or
(...continued)
analysis flows from Canada’s standing argument, and because
standing cannot be waived, this argument must fail. Fourth,
Canada claims that the WTO did not compensate it for
distributions made prior to 2004. However, in its Complaint,
Canada seeks disgorgement of distributions made only during and
after 2004. Gov’t Canada Compl. 9. Therefore, Canada has not
asked the court to remedy this injury. Accordingly, this cannot
provide a basis for the injuries for which Canada seeks redress,
i.e., distributions made during and after 2004. Cf. Lyons, 461
U.S. at 102-03. See also Lewis v. Casey, 518 U.S. 343, 357
(1996) (“standing is not dispensed in gross”).
Consol. Ct. No. 05-00324 Page 64
aggrieved by agency action within the meaning of a relevant
statute, is entitled to judicial review.” These provisions
require that a party need only be “affected or aggrieved by
agency action” in order to bring a claim. Accordingly, the
statutes manifest “congressional intent to cast the standing net
broadly -- beyond the common-law interests and substantive
statutory rights upon which ‘prudential’ standing traditionally
rested.” Akins, 524 U.S. at 19. However, despite the low bar
set by Article III’s standing requirement, and the APA’s
“‘generous review provisions,’” Data Processing, 397 U.S. at 156
(quoting Shaughnessy v. Pedreiro, 349 U.S. 48, 51 (1955)), “it
was [never] thought . . . that Congress, in enacting § 702, had .
. . intended to allow suit by every person suffering injury in
fact.” Clarke v. Sec. Indus. Ass'n, 479 U.S. 388, 395 (1986).
Therefore, courts have “supplied [a] gloss [to the APA’s
language] by adding to the requirement that the complainant be
‘adversely affected or aggrieved,’ i.e., injured in fact, the
additional requirement that ‘the interest sought to be protected
by the complainant [be] arguably within the zone of interests to
be protected or regulated by the statute or constitutional
guarantee in question.’” Id. at 395-96 (quoting Data
Processing, 397 U.S. at 153); Dir., Office of Workers'
Compensation Programs v. Newport News Shipbuilding & Dry Dock
Consol. Ct. No. 05-00324 Page 65
Co., 514 U.S. 122, 126-27 (1995). This is the relevant
prudential requirement for standing here.
In this case, Plaintiffs claim that the Commissioner’s
interpretation of the Byrd Amendment contravenes Section 408.
Section 408, therefore, is the relevant statute under which to
conduct the zone of interest analysis. Nat’l Wildlife Fed’n, 497
U.S. at 883 ("the plaintiff must establish that the injury he [or
she] complains of . . . falls within the 'zone of interests'
sought to be protected by the statutory provision whose violation
forms the legal basis for his complaint." (emphasis added)). See
also Bennett, 520 U.S. at 175-76; Air Courier Conf., 498 U.S. at
523-524.31 According to the Supreme Court’s most recent
articulation of the zone of interest test in NCUA, 522 U.S. at
492, the court must “first discern the interests ‘arguably . . .
to be protected’” by Section 408, then “inquire whether the
31
Defendant argues that the Byrd Amendment is the relevant
statute and that, because the Byrd Amendment seeks to assist
domestic industries, Plaintiffs’ interests are inconsistent with
the Byrd Amendment. However, as explained above, Section 408 is
an interpretative rule that applies to all amendments to the
antidumping and countervailing duty laws. Consequently, the Byrd
Amendment, when read in conjunction with Section 408, authorizes
Customs to distribute money except from duty orders on Canadian
or Mexican goods, if those duty orders apply to goods. It is
this explicit exception that Section 408 places on the Byrd
Amendment and upon which Plaintiffs rely.
Consol. Ct. No. 05-00324 Page 66
plaintiff's interests affected by the agency action in question
are among them.” (internal citation omitted).
In conducting this two-part analysis, the Supreme Court has
further maintained that the "zone of interest" test operates
under the presumption that agency actions are subject to judicial
review, and therefore, “is not meant to be especially demanding;
in particular, there need be no indication of congressional
purpose to benefit the would-be plaintiff[s].” Clarke, 479 U.S.
at 399-400 (footnote omitted); see also NCUA, 522 U.S. at 488-89
(“Although our prior cases have not stated a clear rule for
determining when a plaintiff's interest is ‘arguably within the
zone of interests’ to be protected by a statute, they nonetheless
establish that we should not inquire whether there has been a
congressional intent to benefit the would-be plaintiff.”).
Rather, the zone of interest test only "denies a right of review
if the plaintiff's interests are . . . marginally related to or
inconsistent with the purposes implicit in the statute . . . ."
Clarke, 479 U.S. at 399. For the reasons explained below, it is
clear that the Canadian Producers’ interests are so sufficiently
related to, and not inconsistent with, the purposes of Section
408 that those interests provide a basis for standing.
As noted above, Section 408 provides that “[a]ny amendment
enacted after the Agreement enters into force with respect to the
Consol. Ct. No. 05-00324 Page 67
United States that is made to [the antidumping and countervailing
duty laws] . . . shall apply to goods from a NAFTA country only
to the extent specified in the amendment.” As Plaintiffs
correctly note, this provision operates under the auspices of a
trade regime which otherwise fosters “conditions of fair
competition.” NAFTA, art. 102. See generally SAA, reprinted in
H. R. Doc. No. 103-159, p. 3 (1993); Sykes, supra, at 14-15.
Indeed, the main purpose behind the U.S. trade laws is to
regulate the level of competition between foreign and domestic
producers. Cf. Zenith Radio Corp. v. United States, 437 U.S.
443, 456 (1978) (countervailing duty laws are “intended to offset
the unfair competitive advantage that foreign producers would
otherwise enjoy from export subsidies paid by their
governments.”); J.W. Hampton & Co. v. United States, 276 U.S.
394, 411 (1928) (noting a predecessor to the modern antidumping
regime aimed at “protection that will avoid damaging competition
to the country’s industries by the importation of goods from
other countries at too low a rate to equalize foreign and
domestic competition in the markets of the United States.”);
Globe Metallurgical, Inc. v. United States, 28 CIT __,__, 350 F.
Supp. 2d 1148, 1157 (2004) dismissed by 403 F. Supp. 2d 1305
(2005) (“The goal of the [antidumping] statute is not punitive;
the goal is to level the playing field for United States
Consol. Ct. No. 05-00324 Page 68
producers of similar goods with producers in an [other]
country.”). Cf. Wheatland Tube Co. v. United States, 30 CIT
___,___, Slip Op. 06-08 at 22 (Jan. 17, 2006) (Antidumping
“duties are intended to offset price discrimination from overseas
competitive industries.”). Therefore, by imposing a “magic
words” rule on future amendments, the apparent purpose of Section
408 is to protect Canadian and Mexican importers from some
statutory alterations of the competitive environment contemplated
by the antidumping and countervailing duty laws in effect as of
January 1, 1994.
Certainly, the Canadian Producers (as importers into the
United States subject to antidumping and countervailing duty
orders) have an interest in seeing that the antidumping and
countervailing duty laws are not statutorily adjusted to alter
the level of competition contemplated by these laws without
Congress making its intent to amend these laws explicit. Because
Plaintiffs’ interests need only be “marginally related to . . .
. [the] purposes implicit in the statute," Clarke, 479 U.S. at
399, the Canadian Producers’ interest in maintaining the
antidumping and countervailing duty laws as they existed in 1994
falls “arguably within the zone of interests to be protected or
regulated by the statute,” Data Processing, 397 U.S. at 153; see
also Hardin, 390 U.S. at 6 (“when the particular statutory
Consol. Ct. No. 05-00324 Page 69
provision invoked does reflect a legislative purpose to protect a
competitive interest, the injured competitor has standing to
require compliance with that provision.”). Cf. Zenith Radio
Corp., 437 U.S. at 457-58 (noting the reliance interests of
foreign producers on both the continuity of U.S. laws, and the
adherence to international legal principles); Made in the USA
Found., 242 F.3d at 1318.
Because prudential standing is satisfied when the injury
asserted by a plaintiff "'arguably [falls] within the zone of
interests to be protected or regulated by the statute . . . in
question,'" Akins, 524 U.S. at 20 (quoting NCUA, 522 U.S. at
488), there are no prudential standing restraints to bar
Plaintiffs’ claims here, accord United Food & Commer. Workers
Union Local 751 v. Brown Group, Inc., 517 U.S. 544, 555-58 (1996)
(holding that Congress may dispense with prudential standing
requirements).
III. POLITICAL QUESTION DOCTRINE
Defendant also raises concern that the subject matter of the
Plaintiffs’ Complaints is not proper for judicial resolution.
Specifically, Defendant asserts that “plaintiffs’ complaints
about the [Byrd Amendment] directly implicate foreign affairs and
diplomacy, not matters properly addressed pursuant to the APA . .
Consol. Ct. No. 05-00324 Page 70
. [and therefore] present non-justiciable political questions and
must be dismissed.”32 Def.’s Reply at 36.33
The political question doctrine is founded on the
recognition that the federal government is composed of three
branches of government, each with its own responsibilities.
Under this separation of powers principle, courts have recognized
32
The court notes, by way of comparison, that Congress explicitly
provided for judicial review in actions commenced by foreign
governments. For example, 28 U.S.C. § 2631(c) provides that “[a]
civil action contesting a determination listed in section 516A of
the Tariff Act of 1930 [19 U.S.C. § 1516a] may be commenced in
the Court of International Trade by any interested party who was
a party to the proceeding in connection with which the matter
arose” where “[t]he term ‘interested party’ [includes] . . . the
government of a country in which such merchandise is produced or
manufactured or from which such merchandise is exported,” 19
U.S.C. § 1677(9)(B). Moreover, the legislative history of the
court, as raised by Plaintiffs, evidence that “a major goal” in
the creation of this Court, was the “enlargement of the class of
persons eligible to sue in civil actions in the Court of
International to include . . . foreign government and those who
would otherwise be adversely affected or aggrieved by
administrative decisions or litigation arising out of our
international trade and tariff laws . . . .” Customs Court Act
of 1979: Hearing on S. 1654 Before the S. Subcomm. on
Improvements in Judicial Machinery, 96th Cong. 28 (1979).
Reflective of this principle, this court has entertained cases
brought by foreign governments. See, e.g., Royal Thai Gov't v.
United States, 28 CIT __, 341 F. Supp. 2d 1315 (2004) aff’d in
part, rev’d in part Royal Thai Gov't v. United States, 2006 U.S.
App. LEXIS 2415 (Fed. Cir. Feb. 1, 2006), Gov't of Uzbekistan v.
United States, 25 CIT 1084 (2001), see also Floral Trade Council
v. United States, 21 CIT 1401, 991 F. Supp. 655 (1997) (wherein
the Government of Colombia was a defendant-intervenor).
33
At oral argument, Defendant told the court that it intended
this argument only to apply to Canada. However, because the
Defendant referenced all plaintiffs in its briefs, the court will
address the matter.
Consol. Ct. No. 05-00324 Page 71
that where a subject matter is exclusively assigned to a
coordinate branch, or involves questions the political branches
are better-suited to answer than the judicial branch, such a
subject matter is not appropriate for judicial resolution. See,
e.g., Baker v. Carr, 369 U.S. 186, 211 (1962).
As properly noted by Plaintiffs, Defendant’s objection
raised here is similar to the one directly rejected by the
Supreme Court in Japan Whaling Ass’n v. Am. Cetacean Soc., 478
U.S. 221 (1986). In Japan Whaling, plaintiffs sought a writ of
mandamus to compel the Secretary of Commerce (“Secretary”) to
certify that the Japanese whaling industry was diminishing the
effectiveness of the International Convention for the Regulation
of Whaling, Dec. 2, 1946, 62 Stat. 1716, T.I.A.S. No. 1849
(entered into force Nov. 10, 1948), and, as a consequence of
certification, to prohibit the importation of fish products from
Japan under the Pelly Amendment to the Fishermen's Protective Act
of 1967, 22 U.S.C. § 1978. Japan Whaling, 478 U.S. at 220-28.
The Secretary defended the decision not to certify Japan, inter
alia, on the basis of an executive agreement reached between the
United States and Japan in which Japan agreed to certain harvest
limits with the cessation of whaling by 1988. Id.
Before the Supreme Court, the defendant-intervenors in Japan
Whaling argued that the Supreme Court was precluded by the
Consol. Ct. No. 05-00324 Page 72
political question doctrine from entertaining plaintiffs’ suits.
Clearly rejecting this argument, the Supreme Court held that:
[N]ot every matter touching on politics is a political
question . . . and more specifically, that it is "error
to suppose that every case or controversy which
touches foreign relations lies beyond judicial
cognizance." [Baker v. Carr, 369 U.S. 186, 211 (1969)].
The political question doctrine excludes from judicial
review those controversies which revolve around policy
choices and value determinations constitutionally
committed for resolution to the halls of Congress or
the confines of the Executive Branch. The Judiciary is
particularly ill suited to make such decisions, as
"courts are fundamentally underequipped to formulate
national policies or develop standards for matters not
legal in nature." United States ex rel. Joseph v.
Cannon, 642 F.2d 1373, 1379 (1981) (footnote omitted),
cert. denied, 455 U.S. 999 (1982).
As Baker plainly held, however, the courts have the
authority to construe treaties and executive
agreements, and it goes without saying that
interpreting congressional legislation is a recurring
and accepted task for the federal courts. It is also
evident that the challenge to the Secretary's decision
not to certify Japan for harvesting whales in excess of
IWC quotas presents a purely legal question of
statutory interpretation. The Court must first
determine the nature and scope of the duty imposed upon
the Secretary by the Amendments, a decision which calls
for applying no more than the traditional rules of
statutory construction, and then applying this analysis
to the particular set of facts presented below. We are
cognizant of the interplay between these Amendments and
the conduct of this Nation's foreign relations, and we
recognize the premier role which both Congress and the
Executive play in this field. But under the
Constitution, one of the Judiciary's characteristic
roles is to interpret statutes, and we cannot shirk
this responsibility merely because our decision may
have significant political overtones. We conclude,
therefore, that the present cases present a justiciable
Consol. Ct. No. 05-00324 Page 73
controversy, and turn to the merits of petitioners'
arguments.
Japan Whaling, 478 U.S. at 229-30 (emphasis added).
The issues presented in Plaintiffs’ case here are even more
appropriate for judicial resolution than those in Japan Whaling.
First, like plaintiffs’ suit in Japan Whaling, Plaintiffs here
are seeking enforcement of Customs’ non-discretionary statutory
obligation under Section 408. Cf. Vieth v. Jubelirer, 541 U.S.
267, 278 (2004) (finding that the political question doctrine
applies where there are no “standards” or “rules” to apply, and
where no decision that is “principled, rational, and based upon
reasoned distinctions,” can be rendered.”); Nixon v. United
States, 506 U.S. 224, 228-29 (1993).
Second, in Japan Whaling the Secretary was responsible for
determining whether the Japanese whaling industries were
“diminish[ing] the effectiveness of an international fishery
conservation program,” Japan Whaling, 478 U.S. at 225; not a
very precise standard. In contrast, here, neither the Byrd
Amendment nor Section 408 require any level of judgment call –
the terms of the Byrd Amendment and Section 408 are clear and
unqualified.
Third, because Japan Whaling involved matters of foreign
relations where the President has inherent authorities, U.S.
Consol. Ct. No. 05-00324 Page 74
Const. art. II, §§ 2-3; United States v. Curtiss-Wright Exp.
Corp., 299 U.S. 304, 320 (1936), the principles announced therein
must be applicable in the arena of foreign commerce where the
Constitution grants Congress plenary authority, see, e.g., U.S.
Const. art. I, § 8; Barclays Bank PLC v. Franchise Tax Bd. of
Cal., 512 U.S. 298, 324 (1994); Itel Containers Int’l Corp. v.
Huddelston, 507 U.S. 60, 85 (1993) (Blackmun, J. dissenting)
(“The constitutional power over foreign affairs is shared by
Congress and the President . . . but the power to regulate
commerce with foreign nations is textually delegated to Congress
alone.” (citations omitted)). Cf. Nat’l Cable Television Ass’n
v. United States, 415 U.S. 336, 340 (1974) (“Taxation is a
legislative function, and Congress . . . is the sole organ for
levying taxes”); Office of Pers. Mgmt. v. Richmond, 496 U.S. 414,
424 (1990) (“Our cases underscore the straightforward and
explicit command of the Appropriations Clause. ‘It means simply
that no money can be paid out of the Treasury unless it has been
appropriated by an act of Congress.’” (quoting Cincinnati Soap
Co. v. United States, 301 U.S. 308, 321 (1937))). Cf. Baker, 369
U.S. at 217 (the political question doctrine applies when there
exists a “textually demonstrable constitutional commitment of the
issue to a coordinate political department”). Indeed, when the
President exercises authority in regulating foreign commerce, he
Consol. Ct. No. 05-00324 Page 75
or she does so as Congress’ “agent.” Field v. Clark, 143 U.S.
649, 692-94 (1892); see also Fed. Energy Admin. v. Algonquin SNG,
Inc., 426 U.S. 548, 558-60 (1976); J.W. Hampton Jr., & Co. v.
United States, 276 U.S. 394, 406-410 (1928); B. Altman, 224 U.S.
at 602. Consequently, Customs is in no way authorized to avoid
compliance with statutory law under the guise of international
diplomacy. See Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S.
579, 587-89 (1952) (President not authorized to seize steel
factory to secure production of war materials); United States v.
Guy W. Capps, Inc., 204 F.2d 655, 659-60 (4th Cir. 1953)
(“whatever the power of the executive with respect to making
executive trade agreements regulating foreign commerce in the
absence of action by Congress, it is clear that the executive may
not through entering into such an agreement avoid complying with
a regulation prescribed by Congress.”); accord United States v.
Yoshida Int'l, Inc., 526 F.2d 560, 572 (C.C.P.A. 1975) (noting
that the President has no independent authority over foreign
commerce).
Therefore, the decision in Japan Whaling precludes applying
the political question doctrine to bar Plaintiffs’ suits here.
Consol. Ct. No. 05-00324 Page 76
Accordingly, this matter is not barred by the political question
doctrine.34
IV. CAUSE OF ACTION
Defendant and Defendant-Intervenors also assert that U.S.
law does not confer on Plaintiffs a cause of action for the
complaints in this action. Def.’s Reply at 3, Def.-Int.’s Reply
at 7. As noted above, Plaintiffs claim a right of action under
the APA, 5 U.S.C. § 702, which presumptively provides judicial
review of final agency actions. See 5 U.S.C. § 701(a); Bowen v.
Mich. Acad. of Family Physicians, 476 U.S. 667, 670 (1986)
(noting a “strong presumption that Congress intends judicial
review of administrative action”); accord Block v. Cmty.
Nutrition Inst., 467 U.S. 348, 349 (1984); Abbott Labs. v.
Gardner, 387 U.S. 136, 140-41 (1967). Nonetheless, this strong
presumption in favor of reviewability, may be “overcom[e]
whenever the congressional intent to preclude review is ‘fairly
discernible in the statutory scheme,’” Block, 467 U.S. at 351
(quoting Data Processing, 397 U.S. at 157); accord Abbott Labs.,
387 U.S. at 141 (the presumption may be overcome by “clear and
convincing evidence.”).
34
Of, and to the extent, Defendant also raises this challenge
pursuant to the APA, that argument was also rejected by the
Supreme Court on the same basis in Japan Whaling.
Consol. Ct. No. 05-00324 Page 77
In Block, the Supreme Court identified five types of
evidence courts consider in determining whether judicial review
is precluded:
(1) specific statutory language, (2) specific
legislative history, (3) contemporaneous judicial
construction followed by Congressional acquiescence,
(4) the collective import of the legislative and
judicial history of the statute, and (5) inferences
drawn from the statutory scheme as a whole.
III Richard J. Pierce, Jr., Administrative Law Treatise § 17.8
(4th ed. 2002) (citing Block, 467 U.S. at 349 (1983)); accord
United States v. Fausto, 484 U.S. 439, 444 (1987) (courts examine
“the purpose [of the law], the entirety of its text, and the
structure of review that it establishes.”). Of particular
importance to this inquiry is whether judicial review would
frustrate the statutory objectives of the NAFTA Implementation
Act. See, e.g., Califano v. Sanders, 430 U.S. 99, 108 (1977);
accord Switchmen’s Union of N. Am. v. Nat’l Mediation Bd., 320
U.S. 297, 304 (1943); Morris v. Gressette, 432 U.S. 491, 499-507
(1977).
In this case, Defendant-Intervenors point to Section 102(c)
of the NAFTA Implementation Act, codified at 19 U.S.C. § 3312(c),
which provides that “[n]o person other than the United States .
. . shall have any cause of action or defense under . . . the
Agreement or by virtue of Congressional approval thereof[.]” 19
Consol. Ct. No. 05-00324 Page 78
U.S.C. § 3312(c) (emphasis added). Defendant-Intervenors claim
that this provides “specific statutory language” barring
Plaintiffs’ suits. See also 5 U.S.C. § 701(a) (the APA provides
judicial review except where “statutes preclude judicial
review”). Alternatively, the Defendant proposes that the NAFTA
Implementation Act (more generally) evidences Congressional
intent to foreclose judicial review. Each argument will be
addressed in turn.
1. “Approval Thereof” Does Not Extend to Implementing
Legislation
Defendant-Intervenors assert that the words “Congressional
approval thereof” includes the passage of the implementing
legislation, and that therefore neither the Agreement nor any of
the provisions incorporated into U.S. law with the passage of the
implementing legislation provide a cause of action. Def. Int.’s
Resp. at 8. Under Defendant-Intervenors’ theory, the NAFTA
Implementation Act approved NAFTA, and by consequence of this
approval, implemented the Agreement. The “fast track” process
meant that Congress approved and enacted such agreements through
a single vote. Id. Accordingly, Defendant-Intervenors claim,
Congress could not have intended there to be rights of action
stemming from the implementing legislation. Id. Therefore, so
Consol. Ct. No. 05-00324 Page 79
the argument goes, the bar on rights of action extends to actions
such as this one which is based on the implementing legislation.
Specifically, even though Plaintiffs’ actions are brought
pursuant to Section 408 of the NAFTA Implementation Act, 19
U.S.C. § 3438, Defendant-Intervenors argue that Plaintiffs’
actions are foreclosed.
There are three reasons this argument fails: (1) the text
and history of the NAFTA Implementation Act refute this theory;
(2) general principles of foreign relations law distinguish
between approving an international agreement and the passage of
legislation implementing that agreement; and (3) such a reading
would produce absurd results.
(A) The text and history of the NAFTA Implementation Act
refute this theory
First, the text and history of the NAFTA Implementation Act
establish that Congress’ reference to the “approval of the
Agreement” does not include enactment of the Implementation Act.
Accordingly, the text and history of the NAFTA Implementation Act
clearly refute Defendant-Intervenors’ theory.
As noted above, the NAFTA Implementation Act was enacted
under the legislative procedure referred to as “fast track.” See
Consol. Ct. No. 05-00324 Page 80
19 U.S.C. § 2191 et seq.; see also 19 U.S.C. § 2901 et seq.35
The “fast track” legislation recognized the complementary
constitutional division of power between the executive and
Congress in the area of foreign commercial agreements. Because
constitutional authority over foreign commerce is exclusively
granted to Congress, U.S. Const. art. I, § 8, but the authority
to negotiate commercial agreements with foreign nations is vested
in the President, U.S. Const. art. II, § 2, the President and
Congress agreed to a procedure that would co-ordinate their
respective responsibilities to a common, rather than a
conflicting, end. The result was the passage of legislation,
establishing the “fast track,” wherein Congress authorized the
President to negotiate trade agreements within certain
parameters, while agreeing to expeditious consideration of, and
an up-or-down vote on, any agreements and on the legislation
proposed to implement those agreements. See 19 U.S.C. § 2191 et
seq.; 19 U.S.C. § 2901 et seq.
As is relevant here, “fast track” required that before any
trade agreement “entered into force,” the President would submit
to Congress three separate documents: (i) the text of the
35
The version of “fast track” authority employed for the passage
of NAFTA expired in 1994. The current version of “fast track,”
called “Bipartisan Trade Promotion Authority Act,” was adopted by
Congress in 2002. See 19 U.S.C. § 3801 et. seq. (West Supp.
2005).
Consol. Ct. No. 05-00324 Page 81
agreement, (ii) the implementing legislation, and (iii) a
statement of administrative action. 19 U.S.C. §
2903(a)(1)(B),(i)-(iii);36 see also 19 U.S.C. § 2191(b)(1)(A).37
36
Title 19 Section 2903(a) provides in relevant part:
Implementation of trade agreements
(a) In general.
(1) Any agreement entered into under [19 U.S.C. §
2902(b) or (c)] shall enter into force with
respect to the United States if (and only if)--
(A) the President, at least 90 calendar days
before the day on which he enters into the
trade agreement, notifies the House of
Representatives and the Senate of his
intention to enter into the agreement, and
promptly thereafter publishes notice of such
intention in the Federal Register;
(B) after entering into the agreement, the
President submits a document to the House of
Representatives and to the Senate containing
a copy of the final legal text of the
agreement, together with--
(i) a draft of an implementing bill,
(ii) a statement of any administrative
action proposed to implement the trade
agreement, and
(iii) the supporting information
described in paragraph (2); and
(C) the implementing bill is enacted into
law.
37
Title 19 Section 2191(b) provides, in relevant part:
Definitions. For purposes of this section--
(1) The term "implementing bill" means only a bill of
either House of Congress which is introduced as
provided in subsection (c) . . . , submitted to the
House of Representatives and the Senate under[19 U.S.C.
§ 2112, 19 U.S.C. § 3572 or 19 U.S.C. § 3805(a)(1)] and
which contains--
(A) a provision approving such trade agreement or
(continued...)
Consol. Ct. No. 05-00324 Page 82
Significantly, any agreement could only enter into force after
the implementing bill was “enacted” into law. 19 U.S.C. §
2903(a)(1)(C). This provision recognized and protected Congress’
authority over legislation implementing any agreement. The clear
requirement under “fast track” that three separate documents be
submitted to Congress shows the intention that approval of the
agreement is distinct from the instrument of legislation
implementing that agreement.
Following this “fast track” framework, in passing the NAFTA
Implementation Act, see 19 U.S.C. § 3311(a), Congress: (1)
approved NAFTA (thereby approving the United States’
international legal obligations specified by the Agreement); (2)
approved the statement of administrative action;38 and (3)
(...continued)
agreements or such extension,
(B) a provision approving the statement of
administrative action (if any) proposed to
implement such trade agreement or agreements, and
(C) if changes in existing laws or new statutory
authority is required to implement such trade
agreement or agreements or such extension,
provisions, necessary or appropriate to implement
such trade agreement or agreements or such
extension, either repealing or amending existing
laws or providing new statutory authority.
38
The Statement of Administrative Action was the Executive
Branch’s proposal on how it would implement the Agreement, see 19
U.S.C. § 2903(a)(1)(B)(ii), 19 U.S.C. § 3311(a)(2), which was
specifically and separately approved by Congress, 19 U.S.C. §
3311(a)(2); cf. 19 U.S.C. § 3512(d) (noting that the SAA for the
(continued...)
Consol. Ct. No. 05-00324 Page 83
amended the statutory law of the United States to conform to
NAFTA. That Congress considered these three distinct actions is
best evidenced by Section 101(a) of the NAFTA Implementation Act,
codified at 19 U.S.C. § 3311(a), in which Congress “approve[d]”
separately – “(1) the North American Free Trade Agreement entered
into on December 17, 1992, with the Governments of Canada and
Mexico and submitted to the Congress on November 4, 1993; and (2)
the statement of administrative action proposed to implement the
Agreement that was submitted to the Congress on November 4,
1993.” Noticeably absent from this “approval” was mention of the
implementing legislation itself. Equally significant, regarding
the third requirement, the Statement of Administrative Action,
Congress separately noted its approval of the Statement of
Administrative Action and (therefore) did not consider approval
of the Agreement to include, in and of itself, approving anything
more than the Agreement. See SAA, reprinted in H. R. Doc. No.
103-159, p. 5 (1993) (“Section 101(a) of the bill provides
Congressional approval for the NAFTA and this Statement.”).
As is apparent from both the “fast track” process and
Section 101(a) of the NAFTA Implementation Act, Congress
(...continued)
Uruguay Round Agreements Act is the “authoritative expression” of
the United States concerning the interpretation of the Uruguay
Round Agreements Implementation Act).
Consol. Ct. No. 05-00324 Page 84
considered the implementation of the Agreement to be separate
from, and not a part of, the “approval” of the Agreement itself.
Therefore, when Congress employed the term “approval thereof” in
Section 102(c), it meant to encompass only its approval of the
Agreement, see SAA, reprinted in H. R. Doc. No. 103-159, p. 13-14
(1993) (“The prohibition of a private right of action based on
the NAFTA, or on Congressional approval of the agreement in
section 101(a) . . . .” (emphasis added)), and did not bar
actions brought under the implementing legislation, see SAA,
reprinted in H. R. Doc. No. 103-159, p. 13 (1993) (“Section
102(c) of the implementing bill precludes private right of action
or remedy against a federal, state or local government, or
against a private party, based on the provisions of the NAFTA or
of the labor or environmental supplemental agreements.” (emphasis
added)).
This reading is supported by the fact that Congress knew how
to refer to the implementation of the Agreement when it so
intended. See, e.g., North American Free Trade Agreement
Implementation Act, Pub. L. 103-82, 107 Stat 2057, Preamble (“A
Bill To Implement the North American Free Trade Agreement”);
Section 1 (noting that the Act may be cited as the North American
Free Trade Agreement Implementation Act); Section 101(b)(1)(A)
(if the President determines that “such country has implemented
Consol. Ct. No. 05-00324 Page 85
the statutory changes” he may exchange notes with Canada and
Mexico providing for entry into force of NAFTA); Section
101(b)(1)(B)(ii) (the President must provide to Congress a report
on how Canada and Mexico have ensured the “effective
implementation of the binational panel review process”); Section
202(a)(1) (“For purposes of implementing the tariff treatment”).
This is especially compelling here where Congress was required to
“enact,” not “approve,” the implementing legislation. Compare
19 U.S.C. § 2903(a)(1)(C) (an agreement will enter into force
only after “the implementing bill is enacted into law”) with
Pub. L. 103-82, 107 Stat 2057 (“A Bill To Implement the North
American Free Trade Agreement. Be it enacted . . .”); cf. 1
U.S.C. § 101 (“The enacting clause of all Acts of Congress shall
be in the following form: ‘Be it enacted by the Senate and House
of Representatives of the United States of America in Congress
assembled.’"); H.R. Rep. No. 103-826 at 25 (1994) (“This
treatment is also consistent with the Congressional view that
necessary changes in Federal statutes should be specifically
enacted, not preempted by international agreements.”). Given
that Congress has demonstrated that it knows how to refer to
implementing legislation, the court cannot conclude that
“approval of the Agreement” means, or extends to, barring actions
under the implementing legislation itself. Cf. EEOC v. Arabian
Consol. Ct. No. 05-00324 Page 86
Am. Oil Co., 499 U.S. 244, 258 (1991) (evidence that Congress
used express language in other statutory provisions sufficient to
satisfy that the presumption against extraterritoriality had not
been overcome); Dole Food Co. v. Patrickson, 538 U.S. 468, 476
(2003) (evidence that Congress used different language in other
statutory provisions did not upset reliance on using corporate
law principles in construing the Foreign Sovereign Immunities
Act). Therefore, both the text and history of the NAFTA
Implementation Act indicate that Congress did not intend the
“approval thereof” language of Section 102(c) to bar Plaintiffs’
action. Accordingly, because Plaintiffs’ cause of action is
based on the Implementation Act, and not on the Agreement, the
cause of action is not barred by 19 U.S.C. § 3312 (c).
B. “Approval” is also separate from implementation
legislation when viewed in context of foreign relations law
The court’s reading of § 102(c) of the NAFTA Implementation
Act is confirmed when the term “approval” is viewed in the
context of U.S. foreign relations law. The word “approval,” used
for Congressional-executive agreements, is the equivalent to the
word “ratification” used for treaties, and does not extend to
separate legislative enactment. See, e.g., Am. Ins. Ass'n v.
Garamendi, 539 U.S. 396, 415 (2003) (“the President has authority
Consol. Ct. No. 05-00324 Page 87
to make ‘executive agreements’ with other countries, requiring no
ratification by the Senate or approval by Congress, this power
having been exercised since the early years of the Republic.”);
Lord McNair, The Law of Treaties 130 (1961) (Ratification means
“loosely and popularly, the approval of the legislature or other
State organ whose approval may be necessary.”).
Primarily, an international agreement, be it a treaty or a
congressional-executive agreement, creates legal obligations on
the international level. Cf. Vienna Convention on the Law of
Treaties, 8 I.L.M. 679 (1969) at Article 2(b) (“[R]atification”,
“acceptance”, “approval” and “accession” mean in each case the
international act so named whereby a State establishes on the
international plane its consent to be bound by [an international
agreement].”). Secondarily, a treaty may be self-executing upon
ratification. See Foster v. Neilson, 27 U.S. (2 Pet.) 253, 314
(1829) (“Our Constitution declares a treaty to be the law of the
land . . . [it is regarded as] equivalent to an act of the
legislature, whenever it operates of itself without the aid of
any legislative provision.”). When this is the case, the treaty
acts in the same manner as an Act of Congress. See, e.g.,
Medellin v. Dretke, 125B S. Ct. 2088, 2103 (2005) (O’Connor, J.
dissenting) (noting that Article 36 of the Vienna Convention on
Consular Relations was self-executing); Volkswagenwerk
Consol. Ct. No. 05-00324 Page 88
Aktiengesellschaft v. Schlunk, 486 U.S. 694, 699 (1988) (holding
that the Hague Service Convention is self-executing); Trans World
Airlines, Inc. v. Franklin Mint Corp., 466 U.S. 243, 252 (1984)
(finding the Warsaw Convention self-executing). Thirdly, just
like domestic statutes, agreements may also create private rights
of action whereby private parties may enforce the agreement in
courts. See Jogi v. Voges, 425 F.3d 367, 376-85 (7th Cir. 2005);
Louis Henkin, Foreign Affairs and the United States Constitution
176-230 (2nd ed. 2002).
As noted, only some treaties embrace the second and third
attributes, i.e., only some treaties, after ratification, may be
self-executing and may create private rights of action; when they
do not, Congress must separately enact legislation to implement
any agreement if it wants to give the agreement effect under U.S.
law. This analysis is equally applicable to congressional-
executive agreements, see, e.g., B. Altman & Co. v. United
States, 224 U.S. 583, 601 (1912), and executive agreements, see,
e.g., Garamendi, 539 U.S. at 415-17; Dames & Moore v. Regan, 453
U.S. 654, 679 (1981), which, with certain limitations, are
treated the same as treaties under the law, see, e.g., Weinberger
v. Rossi, 456 U.S. 25 (1982); B. Altman & Co., 224 U.S. at 602;
cf. Restatement (Third) The Foreign Relations Law of the United
States ¶ 301 (1990), Vienna Convention on the Law of Treaties,
Consol. Ct. No. 05-00324 Page 89
supra, at Article 2(a), Made in the USA Found. v. United States,
242 F.3d 1300, 1314 (11th Cir. 2001).
Accordingly, when using the term “approval” in Section
101(a), Congress was only speaking to its consent to the
“ratification” of the Agreement under international law.
Therefore, when Congress again used the term “approval” in
Section 102(c), it did so to make abundantly clear that no act
taken by the United States, i.e., neither the Agreement or
Congress’ consent thereto, would create a right of action under
NAFTA itself. Cf. Hal Shapiro & Lael Brainard, Trade Promotion
Authority Formerly Known as Fast Track: Building Common Ground on
Trade Demands More Than a Name Change, 35 Geo. Wash. Int'l L.
Rev. 1, 13 (2004) (“Congressional approval of an agreement,
rather, has the effect of giving the United States new
obligations under international law, but the implementing bill
defines the domestic application of the agreement.”).
Apart from merely approving the Agreement however, Congress
has separately implemented portions of that Agreement by enacting
specific provisions into domestic law. SAA, reprinted in H. R.
Doc. No. 103-159, p. 1 (1993) (“The bill approves and makes
statutory changes required or appropriate to implement the
Agreement.” (emphasis added)); Corrpro Cos. v. United States, 433
F.3d 1360, 1361 (Fed. Cir. 2006) (noting that Section 102(c)
Consol. Ct. No. 05-00324 Page 90
approved and implemented NAFTA). Accordingly, Section 102(c)
does not foreclose rights of action under this latter enactment
by Congress, i.e., the NAFTA Implementation Act and specifically
Section 408, 19 U.S.C. § 3438.
(C) Absurd Results
Defendant-Intervenors’ argument would also have perverse
consequences. For example, 19 U.S.C. §§ 3331 & 2 provide duty
free treatment when an import originates in the territory of a
NAFTA nation. Section 3332 was part of the NAFTA Implementation
Act. Suppose Customs blatantly ignored Section 3332 despite the
importer’s protests, and commenced a collection action under 19
U.S.C. § 1592(d) to collect duties at the pre-NAFTA level; were
Section 102(c) to be read to bar the recognition of a cause of
action or defense under the Implementation Act, the importer
would have no defense under 19 U.S.C. §§ 3331 & 2.
Alternatively, if Defendant-Intervenors were correct, a person
could not bring a protest under 19 U.S.C. § 1514(a), to contest a
Customs’ determination which improperly interpreted any amendment
Consol. Ct. No. 05-00324 Page 91
to the Harmonized Tariff Schedule of the United States (“HTSUS”)
based on NAFTA.39
Similarly, if Defendant-Intervenors’ theory were correct,
Defendant-Intervenors themselves would not be able to assert a
Section 102(c) defense here because Section 102(c) is part of the
enabling legislation, and Defendant-Intervenors are private
39
Section 102(c) does not discriminate between rights of action
under the APA or any other statutory provision; therefore, the
same result must obtain regardless of which statutory provision
plaintiffs invoke as the basis of their cause of action. See
Fausto, 484 U.S. at 443 (finding actions foreclosed under
numerous statutory provisions, including, but not limited to, the
APA); Lopez v. United States, 309 F. Supp. 2d 22, 27 (D.D.C.
2004) (finding that claims under NAFTA were barred under “any
provision of law”). Customs appears to suggest that actions may
be brought to enforce the HTSUS, which it argues, is analytically
different than the implementing legislation. Customs’ argument
fails to take into account that the HTSUS consists of: (a)
Congressionally enacted provisions as of 1989; (b)statutory
amendments since 1989; and (c) “[e]ach modification or change
made to the Harmonized Tariff Schedule by the President under
authority of law.” 19 U.S.C. § 3004(c)(1); see also United
States v. Haggar Apparel Co., 526 U.S. 380, 388-89 (1999).
Significantly, at the core of the HTSUS, exists the recognition
that the President may be authorized to “proclaim” changes to the
HTSUS “to effect the import treatment necessary or appropriate to
carry out, modify, withdraw, suspend, or terminate, in whole or
in part, trade agreements.” 19 U.S.C. § 3004(c)(2)(A) (emphasis
added). In regard to NAFTA, Congress explicitly provided the
President authority to proclaim changes to the HTSUS necessary or
appropriate in effecting deals reached as a result of the NAFTA
negotiations. See, e.g., 19 U.S.C. §§ 2902, 3332(q). In sum,
not only are the changes to the HTSUS made pursuant to the NAFTA
Implementation Act, but also, the fact that Customs’ recognizes
that such proclamations may give rise to causes of actions
underscores that Congress did not intend to foreclose private
actions brought under provisions implementing the NAFTA
Agreement.
Consol. Ct. No. 05-00324 Page 92
parties. Therefore, their own defense, based on Section 102,
would preclude private parties from raising defenses under the
implementing legislation (which includes Section 102(c)). This
would frustrate the very objectives of that provision.
Likewise, the United States agreed in NAFTA to amend its
statutory law to conform with the Agreement. That domestic law
was to be modified demonstrates the importance that the new
statutory provisions and amendments would have in protecting the
rights of the NAFTA parties and their exporters. See, e.g., 19
U.S.C. § 3311(b)(1)(A) (requiring the President to assure that
NAFTA parties “implemented the statutory changes necessary to
bring that country into compliance with its obligations” before
exchanging notes of approval). Hence, the Defendant-Intervenors’
argument cannot be sustained.
* * *
The court appreciates that the conclusion reached here is
contrary to that reached by Judge Coyle in Bronco Wine Co. v.
U.S. Dep’t of Treasury, 997 F. Supp. 1318, 1322 (E.D. Cal.
1997)40 which held that the enabling legislation of the Uruguay
40
Defendant-Intervenors note that this decision was affirmed by
Bronco Wine Co. v. BATF, 1999 U.S. App. Lexis 2130 (9th Cir.
1999). The Ninth Circuit’s decision was unpublished. Pursuant
to the Ninth Circuit’s rules, "[u]npublished dispositions and
orders of this Court are not binding precedent . . . [and
generally] may not be cited to or by the courts of this circuit .
(continued...)
Consol. Ct. No. 05-00324 Page 93
Rounds Agreement Acts, 19 U.S.C. § 3512(c), did not create a
right of action under the APA. Nevertheless, the United States’
judiciary is specifically divided into circuits to foster
thoughtful discussion of law, while providing uniformity through
appellate review by the Supreme Court.
2. Implication
Alternatively, the Defendant claims that this case is “in
reality” a claim under NAFTA. Def.’s Reply at 5,6. Given that
it is “fairly discernible” that Congress meant to foreclose any
NAFTA claim, Defendant claims, judicial review is foreclosed
here. Id. The Defendant also argues that some provisions of the
NAFTA Implementation Act are meant only to ensure promises to the
(...continued)
. . ." Hart v. Massanari, 266 F.3d 1155, 1159 (9th Cir. 2001)
(quoting Ninth Cir. R. 36-3). Accordingly, this court will not
attribute weight to the Ninth Circuit’s affirmation of the
district court.
Moreover, other courts have relied upon the NAFTA
Implementation Act in reviewing agency actions. Xerox Corp. v.
United States, 423 F.3d 1356, 1364 (Fed. Cir. 2005); see also
Miss. Poultry Ass'n v. Madigan, 31 F.3d 293, 303 (5th Cir. 1994);
but cf. Timken Co. v United States, 354 F.3d 1334 (Fed. Cir.
2004) (noting in dicta that Section 3512(c) bars actions “against
the government on the ground that Commerce acted inconsistently
with the Uruguay Round Agreements Act” but then deciding that
Commerce (properly) applied Section 229(b) of the Uruguay Rounds
Agreement Act, codified at 19 U.S.C. § 1677(35)(A)).
Consol. Ct. No. 05-00324 Page 94
NAFTA party governments, and therefore, implicitly exclude
private parties from raising claims thereunder.
“In reality,” however, the Plaintiffs’ claims are advanced
under an Act of Congress, 19 U.S.C. § 3438, See 19 U.S.C.
3312(a)(2) (“Nothing in this Act shall be construed . . . to
amend or modify any law of the United States . . . unless
specifically provided for in this Act.”), not the Agreement
itself, cf. Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363,
386 n.24 (2000) (rejecting a similar argument in relation to the
Uruguay Round Agreements Act in using WTO proceedings as evidence
in construing an Act of Congress); NSK Ltd. v. United States, 29
CIT __,__ n.6, 346 F. Supp. 2d 1312, 1322 n.6 (2004). Therefore,
the proper focus of the inquiry is not whether claims under NAFTA
are permissible, but rather, whether Congress foreclosed judicial
review under Section 408.
Here, Congress’ intent to foreclose claims brought under
NAFTA does not implicate claims brought under Section 408.
Indeed, because Congress made explicit its foreclosure of rights
of action under the Agreement, its failure to explicitly
foreclose rights under the implementing legislation itself
indicates that Congress intended to permit rights of action under
that implementing legislation. Cf. Amgen, Inc. v. Smith, 357
F.3d 103, 112-113 (D.C. Cir. 2004). The Supreme Court has
Consol. Ct. No. 05-00324 Page 95
repeatedly held that the reverse is true, i.e., that when
Congress explicitly authorizes rights of actions for some claims
but not others, no right of action exists for those claims not so
enumerated. See, e.g., Fausto, 484 U.S. at 448-49; United States
v. Erika, Inc., 456 U.S. 201, 208 (1982); Switchmen’s Union of N.
Am., 320 U.S. at 305-306. It seems apparent to the court that
this principle must also mean that Congressional foreclosure of
some causes of action implies that others are appropriate for
judicial review. This conclusion also follows from the APA’s
strong presumption in favor of judicial review, cf. Abbott Labs.,
387 U.S. at 140 (“The question is phrased in terms of
‘prohibition’ rather than ‘authorization.’”), and from the
generous statutory provision of standing for complaining parties,
see 28 U.S.C. § 2631(i) (permitting causes of action to enforce
the administration of trade laws). In sum, there can be no
indirect prohibition precluding review here.
Defendant’s argument that Congress excluded the right of
private parties to enforce obligations owing to their governments
is also unpersuasive for the same reasons.41 Section 408
41
Interestingly, the United States’ obligation to consult with
Canada and Mexico prior to any amendment was not part of the
NAFTA Implementation Act. In other words, those obligations that
were truly sovereign in nature were simply not included as part
of the implementing legislation. Moreover, U.S. trade laws have
long recognized private rights of action based on U.S.
(continued...)
Consol. Ct. No. 05-00324 Page 96
provides meaningful procedural protections to both the Government
of Canada and to its private exporters. Both benefit from the
forebearance promised by Section 408.
In addition, Defendant has failed to explain how Plaintiffs’
actions would frustrate the legislation’s statutory objectives.
Neither the Byrd Amendment, nor Section 408, are discretionary in
nature, cf. Webster v. Doe, 486 U.S. 592 (1988) (the CIA
Director’s authority to discharge employees, when it was
necessary or advisable “exude[d] deference”); United States v.
George S. Bush & Co., 310 U.S. 371, 380 (1940) (delegating the
President authority to make “necessary or appropriate”
modifications to the tariff schedule precluded judicial review);
nor would allowing rights of action frustrate Customs’
deliberative process because there is none in this matter;
Customs’ duty is non-discretionary, cf. Switchmen’s Union of. N.
Am., 320 U.S. at 305-306 (finding that the National Mediation
Board was intended to be a referee of explosive and pressing
matters, rendering judicial review of its decision
(...continued)
obligations owed to foreign sovereigns. See, e.g., B. Altman &
Co. v. United States, 224 U.S. 583, 601 (1912); Field v. Clark,
143 U.S. 649, 690-94 (1898); accord Oldfield v. Marriott, 51 (10
How.) U.S. 146, 161 (1851). Of course, trade agreements exist
for the benefit of importers and exporters.
Consol. Ct. No. 05-00324 Page 97
inappropriate). Indeed, Section 408's emphatic terms
specifically provide for, rather than against, enforcement.
V. MERITS
Having satisfied itself that jurisdiction exists, and that
the Canadian Producers have a cause of action, the court turns to
the merits.
As discussed above, Section 408 provides that:
Any amendment enacted after the Agreement enters into
force with respect to the United States that is made
to--
(1) section 303 or title VII of the Tariff Act of
1930 [19 U.S.C. §§ 1671 et seq.], or any successor
statute, or
(2) any other statute which--
(A) provides for judicial review of final
determinations under such section, title, or
successor statute, or
(B) indicates the standard of review to be
applied,
shall apply to goods from a NAFTA country only to the
extent specified in the amendment.
Section 408, however, is not of universal applicability with
respect to any amendment passed by Congress that could alter U.S.
laws with respect to NAFTA parties. Rather, it applies only
where: (1) Congress has enacted an amendment to specific and
particular laws; (2) that amendment was enacted after NAFTA
entered into force; (3) only in instances where any administering
Consol. Ct. No. 05-00324 Page 98
authority is applying that amendment to goods from a NAFTA
country; and (4) the amendment is silent on its applicability to
goods from Canada and/or Mexico.
In this case, the Byrd Amendment amended title VII of the
Tariff Act of 1930, see 114 Stat. 1549, 1549A-72; Congress
enacted the Byrd Amendment after NAFTA entered into force with
respect to the United States, id.; and the Byrd Amendment fails
to specify its applicability to Canada or Mexico, id. Moreover,
the Byrd Amendment, unless read in conjunction with Section 408,
amended the antidumping and countervailing duty laws with respect
to trade remedies imposed upon goods that have entered into the
United States from Canada and Mexico.
Despite the fact that the plain language of Section 408
appears to mandate that Customs should not apply the Byrd
Amendment to goods from Canada or Mexico, Defendant and
Defendant-Intervenors insist (1) that because the Byrd Amendment
relates to proceeds of antidumping and countervailing duty
orders, its does not “apply to goods” from Canada or Mexico; (2)
the Byrd Amendment supersedes Section 408; and (3) any other
interpretation would interfere with Congress’ broad spending
power. Each objection will be addressed in turn.
A) The Byrd Amendment is covered by Section 408
Consol. Ct. No. 05-00324 Page 99
Defendant and Defendant-Intervenors insist that the Byrd
Amendment relates only to proceeds collected from antidumping and
countervailing duty orders. See, e.g., Def.’s Reply at 45, Def.-
Int.’s Reply at 63 (“Section 3438 does not cover all amendments
to Title VII. Section 3438, however, by its own terms, applies
only to Title VII amendments that apply to goods. The [Byrd
Amendment] applies to money, not goods.”). Therefore, Defendants
assert, Byrd Distributions do not “apply to goods” and
consequently, fall outside the scope of Section 408.
Specifically, Defendant, citing to numerous definitions of
goods, argues that money collected by Customs is not goods.
However, Defendant’s attempt to read the “apply to goods” clause,
in this manner, violates the “fundamental principle of statutory
construction (and, indeed, of language itself) that the meaning
of a word cannot be determined in isolation, but must be drawn
from the context in which it is used.” Deal v. United States,
508 U.S. 129, 132 (1993)). This failure to consider the context
in which the “apply to goods” clause is used leads Defendant to
erroneously interpret this clause.
When Section 408 is triggered, it does not render an
amendment to the trade laws null and entirely void; rather,
Section 408 demands that preferential treatment be given to goods
from Canada and Mexico by exempting such goods from the auspices
Consol. Ct. No. 05-00324 Page 100
of any qualifying amendment. The “apply to goods” clause simply
imposes a rule of origin requirement thereby articulating which
type of imports are exempted from any amendment. Absent the
“apply to goods clause,” Section 408 would state that no
amendment “shall apply to a NAFTA party” leaving an ambiguous
rule of origin, i.e., whether Section 408 covers just goods
imported from Canada or Mexico by an importer who is a national
of a NAFTA party, any importer importing from a NAFTA party, or
any national from a NAFTA party importing from anywhere in the
world. By including the “apply to goods” clause, this potential
ambiguity disappears, especially in light of the NAFTA
Implementation Act’s rules of origin provisions, see, e.g., NAFTA
Implementation Act, Section 202(a) (“Originating goods”).
This reading is supported by the fact that goods are not
used in administering and effectuating the purposes of the
antidumping and countervailing duty laws; rather, they are the
subject matter, and the only subject matter, regulated by those
laws, see Eurodif S.A. v. United States, 411 F.3d 1355, 1361
(Fed. Cir. 2005) (noting that the antidumping statute only
applies to goods); 19 U.S.C. § 1671(a) (imposing the same
requirement for the countervailing duty statute). Therefore, the
“apply to goods” clause must speak to how the antidumping and
countervailing duty laws are administered in relation to goods.
Consol. Ct. No. 05-00324 Page 101
For example, Defendant and Defendant-Intervenors assert that
if Congress should find that Commerce is systematically
understating dumping margins and therefore amends the antidumping
and countervailing duty laws to require Customs to augment all
duty margins by five percent, Section 408 would be triggered
precluding this amendment from applying to imports from Canada or
Mexico. Cf. Def.-Int.’s Reply at 66 (arguing that amendments to
the rate of duty would trigger Section 408). However, under
Defendant’s reading of Section 408, this hypothetical amendment
does not apply to “goods,” it applies to a rate of duty.
Alternatively, Defendant-Intervenors suggest that if Congress
changes the rules on proprietary information used in antidumping
and countervailing duty proceedings, then Section 408 would be
triggered. Def.-Int.’s Reply at 73 n.50. But again, proprietary
information is not “goods” either. In other words, Defendant
and Defendant-Intervenors’ argument would foreclose Section 408
in scenarios where Section 408 must obviously apply.
Relatedly, Defendant-Intervenors argue that the “apply to
goods” clause limits Section 408 to amendments that directly
apply to goods; because the Byrd Amendment indirectly applies to
goods, Defendant-Intervenors claim, Section 408 is not triggered.
See, e.g., Def.-Int.’s Reply at 75. But this reading stretches
the language of Section 408 beyond recognition; there is simply
Consol. Ct. No. 05-00324 Page 102
no means or basis for distinguishing between direct and indirect
applications of any amendment. Cf. SAA, reprinted in H. R. Doc.
No. 103-159, p. 203 (1993) (“Section 408 of the bill implements
the requirement of Article 1902 that amendments to the AD and CVD
laws shall apply to a NAFTA country only if the amendment so
states explicitly.”). Indeed, such a distinction is belied by
Section 408's use of the term “any,” i.e., that “[a]ny amendment”
to the enumerated laws shall not apply. Consequently, that
Congress sought to change the competitive conditions through
disbursements to affected domestic producers, rather than to
increase the rate of duty directly, is of no moment.42
42
For the most part, tariffs are but a means to an end, not an
end in-and-of themselves. The end, of course, is regulating the
level of competition domestic producers should face from foreign
competitors; by adjusting the tariff rate, Commerce increases the
cost to importers of selling in the domestic market, which, in
turn, ameliorates the competitive conditions for domestic
producers. Indeed, for the most part, the tariff is passed onto
the consumer, with the harm to the importer being the increase in
the price of its goods vis-a-vis domestic producers. Cf. Bacchus
Imp., Ltd. v. Dias, 468 U.S. 263, 267 (1984); accord United
States v. Butler, 297 U.S. 1, 63 n.10 (1936) (“The enactment of
protective tariff laws has its basis in the power to regulate
foreign commerce.” (citing Bd. of Trustees of the Univ. of Ill.
v. United States, 289 U.S. 48, 58 (1932))). In other words, the
Byrd Amendment magnifies the effect of the antidumping or
countervailing duty. When properly framed, it is apparent that a
subsidy to domestic producers is no more indirect than a tariff
itself.
Consol. Ct. No. 05-00324 Page 103
Nor are Defendant-Intervenors’ arguments sound as a
practical matter because both the intent43 and effect44 of the
43
See, e.g., Pub. L. No. 106-387, § 1(a), § 1002, 114 Stat. 1549,
1549A-72 (“Consistent with the rights of the United States under
the World Trade Organization, injurious dumping is to be
condemned and actionable subsidies which cause injury to domestic
industries must be effectively neutralized.”); id. (“United
States trade laws should be strengthened to see that the remedial
purpose of those laws is achieved."); id. (“Where dumping or
subsidization continues, domestic producers will be reluctant to
reinvest or rehire and may be unable to maintain pension and
health care benefits that conditions of fair trade would permit.
Similarly, small businesses and American farmers and ranchers may
be unable to pay down accumulated debt, to obtain working
capital, or to otherwise remain viable.”); 106 Cong. Rec. S.497-
01 (daily ed. Jan. 19, 1999) (Statement of Senator DeWine) (“As
my colleagues know, the Tariff Act of 1930 gives the President
the authority to impose duties and fines on imports that are
being dumped in U.S. markets, or subsidized by foreign
governments. Our bill would take the 1930 Act one step further.
Currently, revenues raised through import duties and fines go to
the U.S. Treasury. Under our bill, duties and fines would be
transferred to injured U.S. companies as compensation for damages
caused by dumping or subsidization. We believe this extra step
is necessary. Current law simply has not been strong enough to
deter unfair trading practices.”).
44
See United States Government Accountability Office, Report to
Congressional Requesters: International Trade: Issues and Effects
of Implementing the Continued Dumping and Subsidy Offset Act, 40-
41, 70, 102-04 (2005); Jeanne J. Grimmet, Congressional Research
Service Report for Congress: The Continued Dumping and Subsidy
Offset Act 21-22 (2005); Congressional Budget Office, Economic
Analysis of The Continued Dumping and Subsidy Offset Act of 2000
5-8 (2004). See generally W. Lynn Creamery, 512 U.S. at 210-11
(Scalia, J. concurring) (noting that giving a subsidy would have
the same effect as raising the tariff rate); Sykes, supra, at 7-
10; Christopher R. Drahozal, On Tariffs v. Subsidies in
Interstate Trade: A Legal and Economic Analysis, 74 Wash. U. L.
Q. 1127, 1144-50 (1996); William M. Corden, Trade Policy and
Economic Welfare 12 (1974) (“The production or protection effect
[of a tariff] would be exactly the same as in the case of a
subsidy . . . .”); but cf. Bo Södersten and Geoffrey Reed,
(continued...)
Consol. Ct. No. 05-00324 Page 104
Byrd Amendment is to change the competitive environment for
importers of goods who are subject to antidumping and
countervailing duty orders and to use those laws to accomplish
this end. See, e.g., Huaiyin Foreign Trade Council v. United
States, 322 F.3d 1369, 1380 (Fed. Cir. 2003) (the Byrd
Amendment’s purpose is to “level[] the competitive conditions
through negation of the unfair advantage gained by the price
difference of imported products.”). This is especially evidenced
by the fact that Byrd Distributions are allocated from special
accounts within the U.S. Treasury to parties who supported the
antidumping or countervailing duty order. 19 U.S.C. § 1675c(e),
19 C.F.R. § 159.64.45 Under this arrangement, it is apparent
that Customs merely holds such duties for affected domestic
producers. Cf. Core Concepts of Fla., Inc. v. United States, 327
F.3d 1331, 1338 (Fed. Cir. 2003) (money spent from special
accounts does not constitute an appropriation); United States v.
Aiello, 912 F.2d 4, 7 (2d Cir. 1990) (“We do not believe that
44
(...continued)
International Economics 212 (3rd ed. 1994) (effect of a tariff of
a foreign producers will be greater than a subsidy). In essence,
subsidies have the effect of raising the rate of duty on
importers.
45
The fact that unclaimed funds are remitted to the general U.S.
Treasury is of no moment. The Byrd Amendment is outcome
determinative for any such revenues generated for the U.S.
government, and any funds are deposited into the U.S. Treasury
only after Customs applies the Byrd Amendment to duty orders.
Consol. Ct. No. 05-00324 Page 105
funds collected by the United States pursuant to a judgment of
the District Court are insulated by the Appropriations Clause
from return to the rightful owner in the event of a reversal of
that judgment simply because the funds are held in the Treasury
during the course of the litigation.”); Varney v. Warehime, 147
F.2d 238, 245 (6th Cir. 1945) (where the government merely holds
such monies for others, the expenditure of those funds is not an
appropriation); compare J.W. Hampton & Co., 276 U.S. at 412 (“So
long as the motive of Congress and the effect of its [protective
tariff scheme] are to secure revenue for the benefit of the
general government, the existence of other motives in the
selection of the subjects of taxes can not invalidate
Congressional action.”) with Butler, 297 U.S. at 61 (“‘[a] tax .
. . as [the term is] used in the Constitution, signifies an
exaction for the support of the Government” and, therefore, “has
not been thought to [authorize] the expropriation of money from
one group for the benefit of another.”). As such, it is clear
that the Byrd Amendment is part-and-parcel of legislation
intended to effectively neutralize the adverse effects of dumped
and subsidized goods. See Huaiyin Foreign Trade Council, 322
F.3d at 1380 (“The duties now bear less resemblance to a fine
payable to the government, and look more like compensation to
victims of anticompetitive behavior.”); See 106 Cong. Rec. S.
Consol. Ct. No. 05-00324 Page 106
497-01 (daily ed. Jan. 19, 1999) (Statement of Senator DeWine)
(“It's time we impose a heavier price on dumping and
subsidization. . . . Under our bill, foreign steel producers
would get a double hit from dumping: they would have to pay a
duty, and in turn, see that duty go directly to aid U.S. steel
producers.”).
In sum, essentially, the Byrd Amendment converts what was
just a tariff into a broader compensatory regime. Certainly,
this change in the nature of the remedies available under the
trade laws is something Section 408 is meant to foreclose as to
Canadian and Mexican goods where Congress has not explicitly
stated an intent to change the statutory remedies as to Canada
and Mexico.
B) The Byrd Amendment Does Not Supersede Section 408
Defendant and Defendant-Intervenor next argue that, even if
Section 408 is applicable, the Byrd Amendment supersedes Section
408. As Defendant-Intervenor points to Section 102(a) of the
NAFTA Implementation Act, codified at 19 U.S.C. § 3312(a), which
requires that “[n]o provision of the Agreement, nor the
application of any such provision to any person or circumstance,
which is inconsistent with any law of the United States shall
have effect.” (Emphasis added). As discussed above, however,
Consol. Ct. No. 05-00324 Page 107
Section 408 is a provision of statutory law, not a provision of
NAFTA. Therefore, 19 U.S.C. § 3312(a) is not implicated here.
Moreover, even if Section 102(a) were implicated, there is no
inconsistency between the Byrd Amendment and Section 408. On the
contrary, the two are easily reconciled by limiting the reach of
the Byrd Amendment to non-NAFTA goods. Cf. Spector v. Norwegian
Cruise Line Ltd., 125B S. Ct. 2169, 2182 (2005). Therefore,
Defendant-Intervenors’ argument must fail.
Alternatively, during oral argument, Defendant argued for
the first time that the Byrd Amendment by itself satisfied the
“magic words” requirement of Section 408. Relying on Justice
Scalia’s concurrence in Lockhart v. United States, 126 S. Ct.
699, 702 (2005), and the Supreme Court’s opinions in Marcello v.
Bonds, 349 U.S. 302, 210 (1955), and Great N. R. Co. v. United
States, 208 U.S. 452, 465 (1908), Defendant argues that no
“magical password” is required for Congress to supersede the
requirements of Section 408. Therefore, Defendant claims, the
Byrd Amendment satisfies the requirements of Section 408.
Although the Defendant may be correct that “no magical
password” is necessarily required, this precedent does not mean
that Section 408 is a dead-letter. Rather, the Court has held
that provisions, such as Section 408, may be superseded
“expressly or by necessary implication in a subsequent
Consol. Ct. No. 05-00324 Page 108
enactment.” Great Northern R. Co. v. United States, 208 U.S.
452, 465 (1908). Accord Warden v. Marrero, 417 U.S. 653, 659-660
n.10 (1974) (express statement provisions may be superceded by
“fair implication”). Here, there exists no “express” statement
nor is there any “necessary implication,” or even “fair”
implication, that Congress intended to trump Section 408 when
enacting the Byrd Amendment. Therefore, to read the general
language of the Byrd Amendment as satisfying the requirements of
Section 408 would essentially render Section 408 a dead-letter.
The cases upon which Defendant relies do not support this
conclusion.
Nor does the court find Justice Scalia’s constitutional
arguments availing (as applied here). According to Justice
Scalia, provisions such as Section 408 tend to “entrench”
legislation, i.e., make it more difficult for subsequent
legislatures to repeal a law. Lockhart, 126 S.Ct. at 703; cf.
Eric A. Posner and Adrian Vermeule, Legislative Entrenchment: A
Reappraisal, 111 Yale L.J. 1665, 1697-99 (2002). Because "’one
legislature cannot abridge the powers of a succeeding
legislature.’" Lockhart, 126 S. Ct. at 703 (quoting Fletcher v.
Peck, 10 U.S. (6 Cranch) 87, 135 (1810)), such legislation should
Consol. Ct. No. 05-00324 Page 109
be read narrowly – if considered at all.46 Although these
premises or principles are unquestionably true, see, e.g., United
States v. Winstar Corp., 518 U.S. 839, 872 (1996), such
principles are not implicated here. To the contrary, Section 408
may be repealed, or satisfied, by a simple majority in both
houses (assuming no presidential veto). Therefore, Section 408
is not unduly restrictive of Congressional prerogatives.
All Section 408 purports to do is “function as background
canon[] of interpretation of which Congress is presumptively
aware.” Lockhart, 126 S. Ct. at 703. Indeed, provisions such as
Section 408 are no more entrenching than canons of statutory
interpretation under which courts require Congress to conform.
See, e.g., Hartford Fire Ins. Co. v. Cal., 509 U.S. 764, 814-15
(1994) (Scalia, J. dissenting) (noting that Charming Betsy canon
compelled a certain interpretation of a federal statute); EEOC v.
Arabian Am. Oil Co., 499 U.S. 244, 260 (1991) (Scalia, J.
46
Justice Scalia concluded his dissent with the observation that,
“[i]n any event, I think it does no favor to the Members of
Congress, and to those who assist in drafting their legislation,
to keep secret the fact that such express-reference provisions
are ineffective.” Lockhart, 126 S. Ct. at 704. The court notes
that Justice Scalia’s theory, depending on how construed, could
have staggering effects. Numerous pieces of legislation purport
to define rules of interpretation such as the: Dictionary Act, 1
U.S.C. § 1; Defense of Marriage Act, 1 U.S.C. § 7; General Rules
of Interpretation of the Harmonized Tariff Schedule of the United
States, 19 U.S.C. § 1202; Religious Freedom Restoration Act of
1993, 42 U.S.C. § 2000bb-3(b); National Emergencies Act, 50
U.S.C. § 1621.
Consol. Ct. No. 05-00324 Page 110
concurring) (clear statement rules, such as the presumption
against extraterritoriality, overcome Chevron deference).
Furthermore, as noted by Justice Scalia, provisions such as
Section 408 may “add little or nothing to . . . already-powerful”
canons of interpretation. Lockhart, 126 S. Ct. at 703-04. In
this case, for example, Section 408 exists to protect the United
States’ obligations under NAFTA. Indeed, powerful canons do
exist to protect such interests. See, e.g., Weinberger v.
Rossi, 456 U.S. 25, 32 (1982); McCulloch v. Sociedad Nacional de
Marineros de Honduras, 372 U.S. 10, 21-22 (1963) (overturning the
NLRB’s construction of a statute because Congress did not clearly
state that it intended to violate the law of nations); FPC v.
Tuscarora Indian Nation, 362 U.S. 99, 142 (1960) (Black, J.
dissenting) (“Great nations, like great men, should keep their
word."); Roeder v. Islamic Republic of Iran, 333 F.3d 228, 237-38
(D.C. Cir. 2003) (holding that Congress must speak with a clear
statement if it intends to abrogate an international agreement).
Consequently, because Section 408 is supported by, and plays a
complementary role with, canons of interpretation, the logic
Justice Scalia advances does not preclude application of Section
408 here.
Accordingly, Defendant’s argument must be rejected.
Consol. Ct. No. 05-00324 Page 111
C) Nature of Congressional Power employed is not relevant
As a last resort, Defendant and Defendant-Intervenors argue
that Congress has broad authority under the Spending Clause, U.S.
Const. art. I, § 8, which this court would trample were the court
to adopt Plaintiffs’ construction of Section 408. See, e.g.,
Def.’s Reply at 42; Def.-Int.’s Reply at 72 (arguing that the
Byrd Amendment “addresses the disbursement of U.S. Treasury funds
that have become property of the United States Government
subsequent to the imposition of AD/CVD duties . . . . Once the
funds become property of the U.S. Government, the Congress has
the constitutional power to dispose of the monies under the
Spending Clause.” (emphasis in original)). This case, however,
has nothing to do with Congress’ spending power. What is at
issue is whether the Commissioner is properly distributing monies
derived from duty orders on goods from Canada or Mexico, i.e.,
whether the Commissioner is properly exercising her statutory
authority where the Byrd Amendment does not specify that it
applies to goods from a NAFTA country.
The Byrd Amendment, when read correctly, in light of Section
408, states that distributions should be made from duties
collected pursuant to antidumping and countervailing duty orders
except for duty orders on goods from Canada and Mexico.
Accordingly, Congress has not authorized the Commissioner to
Consol. Ct. No. 05-00324 Page 112
distribute duties collected on goods from Canada and Mexico; in
fact, by failing to specify that the Byrd Amendment applies to
Canada and Mexico, Congress has exercised its authority to
preclude such distributions.
Assuming arguendo that the Byrd Amendment is even an
appropriations measure, because the Constitution grants Congress
the plenary and exclusive authority to expend monies from the
federal treasury, see U.S. Const. art. I, § 7, a fortiori, the
U.S. Constitution does not grant the executive branch authority
to expend monies not appropriated by Congress, see, e.g., Office
of Pers. Mgmt v. Richmond, 496 U.S. 414, 424 (1990) (“Our cases
underscore the straightforward and explicit command of the
Appropriations Clause. ‘It means simply that no money can be paid
out of the Treasury unless it has been appropriated by an act of
Congress.’”) (quoting Cincinnati Soap Co. v. United States, 301
U.S. 308, 321 (1937)). Therefore, because the Commissioner has
no authority either under an Act of Congress or under the
Constitution to make the distributions at issue here, her actions
in distributing such funds are ultra vires and therefore
unlawful. Furthermore, the language of Section 408 does not
speak to the type of Congressional authority invoked, but to the
laws to which amendments are to be made.
Consol. Ct. No. 05-00324 Page 113
The parties also dispute the level of deference owed to
Customs’ interpretation of Section 408. Because there is no hint
of ambiguity in Section 408, the plain language of Section 408
must govern, any deference owed Customs notwithstanding. See
Chevron U. S. A. Inc. v. Natural Res. Def. Council, Inc., 467
U.S. 837, 842-843 (1984) (“If the intent of Congress is clear,
that is the end of the matter; for the court, as well as the
agency, must give effect to the unambiguously expressed intent of
Congress.”); see also Gen. Dynamics Land Sys., Inc. v. Cline, 540
U.S. 581, 600 (2004) (“Even for an agency able to claim all the
authority possible under Chevron, deference to its statutory
interpretation is called for only when the devices of judicial
construction have been tried and found to yield no clear sense of
congressional intent.”); Barnhart v. Sigmon Coal Co., 534 U.S.
438, 462 (2002) (“In the context of an unambiguous statute, we
need not contemplate deferring to the agency’s interpretation.”);
Ad Hoc Comm. of AZ-NM-TX-FL Producers of Gray Portland Cement v.
United States, 13 F.3d 398, 403 (Fed. Cir. 1994) (“Because we
believe the antidumping statute is not silent on the question . .
. the reasonableness or fairness of Commerce's interpretation of
the Antidumping Act is irrelevant.).
Consol. Ct. No. 05-00324 Page 114
Therefore, based on Congress’ plain language in Section 408,
Customs is not authorized to apply the Byrd Amendment to goods
from Canada or Mexico.
VI. REMEDY
The parties also disagree on the appropriate remedy.
Plaintiffs seek both prospective injunctive relief, and
disgorgement of all past distributions as permitted by Customs’
regulations, 19 C.F.R. § 159.64(b)(3). Defendant argues that 19
C.F.R. § 159.64(b)(3) only permits Customs to disgorge any
“overpayments,” and that, because Plaintiffs seek disgorgement of
the entirety of past distributions, Plaintiffs do not seek
disgorgement of an “overpayment.” Def.’s Reply at 50. Defendant
further asserts that Plaintiffs have slept on their rights for
six years, i.e., from the time the Byrd Amendment was passed
until the filing of the Complaints rendering (at least
retrospective) relief inappropriate. Defendant also avers,
without elaboration, that “the Court should exercise its
discretion to limit any remedy to prospective relief.” Def.’s
Reply at 50 (citing Independence Mining Co. v. Babbitt, 105 F.3d
502, 506-07 (9th Cir. 1997); Or. Nat’l Res. Council v. Harrell,
52 F.3d 1499, 1508 (9th Cir. 1995)).
Consol. Ct. No. 05-00324 Page 115
Because the parties have devoted little energy to briefing
the question of remedy, and because the dismissal of Canada’s
claims may impact the parties’ briefing on this question, the
court hereby orders further briefing with respect to remedy.47
CONCLUSION AND ORDER
For the foregoing reasons, Defendant’s motion to dismiss the
Government of Canada is granted; the Defendant’s motion to
dismiss with respect to the Canadian Producers is denied.
The court hereby ORDERS that the parties shall meet and
confer concerning an appropriate remedy; the parties shall submit
any jointly proposed remedy to the court no later than May 8,
2006; if the parties do not agree on a proposed remedy, the
parties shall by said date submit recommendations and arguments
to the court concerning the proper remedy and the scope of such
remedy.
47
In considering the appropriate remedy, the court asks the
parties to bear in mind the following considerations: (1)The
court has found unlawful Byrd Amendment distributions of
antidumping and countervailing duties on goods from a NAFTA
country; (2) disgorgement of monies for which Canada has already
retaliated may unjustly enrich Canada at the expense of the
United States; (3) the public interest in seeing money properly
deposited in the United States’ Treasury, and (4)the lack of
authority the Commissioner has here exercised in distributing
such funds.
Consol. Ct. No. 05-00324 Page 116
IT SO ORDERED.
/s/
Donald C. Pogue, Judge
Dated: April 7, 2006
New York, NY
Canadian Lumber Trade Alliance v. United States
Court: United States Court of International Trade
Date filed: 2006-04-07
Citations: 425 F. Supp. 2d 1321, 30 Ct. Int'l Trade 391
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