Mittal Canada, Inc. v. United States

Slip Op. 06-143

UNITED STATES COURT OF INTERNATIONAL TRADE

MITTAL CANADA, INC.,

Plaintiff, Before: Richard W. Goldberg,
Senior Judge
v.
Court No. 05-00689
UNITED STATES,

Defendant,

and

GERDAU AMERISTEEL CORP., and
KEYSTONE CONSOLIDATED
INDUSTRIES, INC.,

Defendant-
Intervenors.

OPINION

[Plaintiff’s motion for summary judgment denied.]

Dated: September 22, 2006

Cameron & Hornbostel LLP (Dennis James, Jr. and Alexandra E.A.
Minoff) for Plaintiff Mittal Canada, Inc.

Peter D. Keisler, Assistant Attorney General; Marisa Beth
Goldstein, U.S. Department of Commerce, Office of Chief Counsel
for Import Administration; Commercial Litigation Branch, Civil
Division, U.S. Department of Justice (Michael D. Panzera), for
Defendant United States.

Kelley Drye Collier Shannon (Mary Tuck Staley, Paul Charles
Rosenthal, and Robin H. Gilbert) for Defendant-Intervenors
Gerdau Ameristeel Corp. and Keystone Consolidated Industries,
Inc.
Court No. 05-00689 Page 2

GOLDBERG, Senior Judge: This case presents the Court with

plaintiff Mittal Canada, Inc.’s (“Mittal”) challenge to

liquidation instructions that the United States Department of

Commerce (“Commerce”) issued to United States Customs and Border

Protection (“Customs”) on December 15, 2005. The events leading

to this dispute are described in the Court’s opinion of February

10, 2006 that denied Mittal’s request for preliminary injunctive

relief enjoining Customs from liquidating the entries at issue.

See Mittal Can., Inc. v. United States, 30 CIT ___, ___-__, 414

F. Supp. 2d 1347, 1348-50 (2006) (“Mittal-PI”).

Since the denial of the preliminary injunction motion,

Customs has liquidated the entries at issue consistent with the

liquidation instructions that Mittal’s case calls into question.

Mittal has moved for summary judgment on its underlying claim,

requesting that the Court enter judgment in its favor and remand

to Commerce with instructions to order Customs to reliquidate

the entries at 3.86 percent and refund the difference between

that amount and the 8.11 percent at which they were already

liquidated. See Pl.’s Br. at 36. For the reasons stated in

Mittal-PI, and because in this case liquidation does not operate

to divest the United States Court of International Trade (“CIT”)

of jurisdiction, see Shinyei Corp. of Am. v. United States, 355

F.3d 1297, 1312 (Fed. Cir. 2004), the Court has jurisdiction

over this case under 28 U.S.C. § 1581(i).
Court No. 05-00689 Page 3

I. BACKGROUND

Because the parties are familiar with the background of

this case, and because all relevant facts have already been

recited at Mittal-PI, 30 CIT at ___, 414 F. Supp. 2d at 1348-50,

a lengthy description of the facts is not necessary at this

stage. It suffices for the moment to note that Mittal requested

and received a changed circumstances review1 of Carbon and

Certain Alloy Steel Wire Rod from Canada, 67 Fed. Reg. 65944

(Dep’t Commerce Oct. 29, 2002) (notice of amended final

determination and antidumping duty order). That antidumping

duty order had provided for a weighted average dumping margin of

3.86 percent for Ispat Sidbec Inc. (“Ispat”). The “all others”

rate was 8.11 percent. The final results of the changed

circumstances review acknowledged that Mittal was the successor-

in-interest to Ispat, and directed Customs to require a cash

deposit rate of 3.86 percent for Mittal entries occurring in the

future. Commerce then instructed Customs to assess duties at

the cash deposit rate in effect at the time of entry for all

merchandise that had entered between October 1, 2004 and

September 30, 2005 — a period that included the pendency of the

changed circumstances review. Mittal’s entries were accordingly

1
Commerce published the final results of the changed
circumstances review in the Federal Register at Carbon and
Certain Alloy Steel Wire Rod from Canada, 70 Fed. Reg. 39484
(Dep’t Commerce July 8, 2005) (notice of final results of
changed circumstances review).
Court No. 05-00689 Page 4

liquidated at the 8.11 percent “all others” rate that was in

effect at the time of those entries.

At the preliminary injunction stage in the proceedings,

Mittal’s argument could be characterized as broadly alleging

that Commerce’s instructions, by failing to order assessment at

the lower rate of 3.86 percent, were contrary to the legal

conclusion, articulated in the final results of the changed

circumstances review, that Mittal was the successor-in-interest

of Ispat. Since then, Mittal has refined its argument.

On June 19, 2006, Mittal filed a motion for judgment upon

the agency record. In its motion, Mittal made two arguments:

(1) that in this case the “automatic liquidation” regulation

under which Commerce ordered liquidation, 19 C.F.R. § 351.212,

does not require that duties be automatically liquidated at the

deposit rate in effect at the time of entry; and (2) that the

regulation, if it is construed to contain such a requirement, is

itself arbitrary and capricious.

II. STANDARD OF REVIEW

Mittal has filed a motion for judgment on the agency record

under USCIT Rule 56.1. Rule 56.1 outlines the procedures for

adjudicating a motion for judgment on an agency record in “an

action other than that described in 28 U.S.C. § 1581(c).” USCIT

R. 56.1. Since this case invokes the CIT’s residual
Court No. 05-00689 Page 5

jurisdiction under 28 U.S.C. § 1581(i), a Rule 56.1 motion is

the appropriate vehicle under which to proceed.

Courts review 28 U.S.C. § 1581(i) actions as provided in 5

U.S.C. § 706. See 28 U.S.C. § 2640(e) (2000). Section 706 of

Title 5 requires a reviewing court to “hold unlawful and set

aside agency action, findings, and conclusions found to be

arbitrary, capricious, an abuse of discretion, or otherwise not

in accordance with law . . . .” 5 U.S.C. § 706(2)(A) (2000).

In this case, the administrative action challenged by Mittal is

the issuance of liquidation instructions directing Customs to

assess antidumping duties at the deposit rate in effect at the

time of entry, which was 8.11 percent for the entries at issue.

Normally, “[i]t is emphatically the province and duty of

the judicial department to say what the law is,” Marbury v.

Madison, 5 U.S. (1 Cranch) 137, 177 (1803), but when Congress

has cloaked an administrative agency with interpretive

authority, the federal courts’ authority is concomitantly

reduced. The threshold question a court must answer is how

much, if any, deference Congress has granted to the agency.

This case involves judicial review of two separate types of

agency activity. First, Mittal challenges Commerce’s

promulgation of the automatic liquidation regulation, codified

at 19 C.F.R. § 351.212. Second, Mittal challenges Commerce’s

interpretation of language in the automatic liquidation
Court No. 05-00689 Page 6

regulation. These questions present different problems, and

merit distinct treatment by a reviewing court.

III. DISCUSSION

A. Commerce’s Regulation 19 C.F.R. § 351.212 Is in Accordance
with Law

Mittal contends that Commerce’s automatic liquidation

regulation 19 C.F.R. § 351.212 is not in accordance with law.

Specifically, Mittal claims that the regulation is internally

inconsistent and that the failure to provide an exemption from

automatic liquidation for changed circumstances reviews is

arbitrary and capricious.

1. Commerce’s Promulgation of 19 C.F.R. § 351.212 Is
Entitled to Chevron Deference

As noted above, the Court must determine how much, if any,

deference is due to Commerce’s automatic liquidation regulation.

Congress delegates interpretive authority to agencies both

expressly and impliedly. Where Congress has “explicitly left a

gap for the agency to fill, there is an express delegation of

authority to the agency to elucidate a specific provision of the

statute by regulation.” Chevron, U.S.A., Inc. v. Natural Res.

Def. Council, Inc., 467 U.S. 837, 843-44 (1984). In other

circumstances, Congress may impliedly authorize an agency to

pronounce its judgment on an issue with the force of law. See

id. at 844; see also Cathedral Candle Co. v. United States, 400
Court No. 05-00689 Page 7

F.3d 1352, 1361 (Fed. Cir. 2005). An agency has implicit

authority when it is

apparent from the agency’s generally conferred
authority and other statutory circumstances that
Congress would expect the agency to be able to speak
with the force of law when it addresses ambiguity in
the statute or fills a space in the enacted law, even
one about which “Congress did not actually have an
intent” as to a particular result.

United States v. Mead Corp., 533 U.S. 218, 229 (2001) (quoting

Chevron, 467 U.S. at 845). Where Chevron deference is

applicable, the court must give effect to the agency’s statutory

interpretation provided that the interpretation is reasonable

and not arbitrary. See Lacavera v. Dudas, 441 F.3d 1380, 1383

(Fed. Cir. 2006).

As a general matter, Commerce is the “master” of

antidumping law, and where its rules and regulations implement a

statutory provision or scheme, it is entitled to considerable

deference. See Daewoo Elecs. Co. v. Int’l Union of Electronic,

Electrical, Technical, Salaried & Mach. Workers, 6 F.3d 1511,

1516 (Fed. Cir. 1993); Smith-Corona Group v. United States, 713

F.2d 1568, 1571 (Fed. Cir. 1983). Therefore, the Court’s

inquiry must commence by examining the statutory provisions and

scheme that purportedly authorized the regulation.

If an antidumping duty investigation determines that

dumping is occurring, Commerce publishes an antidumping duty

order which directs Customs to assess antidumping duties “equal
Court No. 05-00689 Page 8

to the amount by which the normal value [of the merchandise]

exceeds the export price (or the constructed export price) for

the merchandise . . . .” 19 U.S.C. § 1673 (2000). The method

by which Customs is to assess the duties, however, is not

specified in section 1673.

Prior to 1984, Commerce conducted yearly administrative

reviews for all antidumping duty orders.2 See 19 U.S.C. §

1675(a)(1) (1982); 19 C.F.R. § 353.53(a) (1983). Commerce

promulgated regulations that governed the assessment of

antidumping duties for merchandise subsequent to these

administrative reviews. See 19 C.F.R. § 353.53(d) (1983)

(requiring the publication of a revised antidumping duty order

subsequent to each administrative review); id. § 353.48(a)(1)

(requiring Commerce to instruct Customs to assess duties as soon

as Commerce “has received satisfactory information upon which

such assessment may be based”). In 1984, Congress amended the

statute to remove automatic yearly administrative reviews, and

instead made administrative reviews available only on request.

See Pub. L. No. 98-573, § 611, 98 Stat. 3031 (1984). After the

2
For purposes of this opinion, the term “administrative review”
refers to a “periodic review” under 19 U.S.C. § 1675(a), as
distinguished from a “changed circumstances review” under 19
U.S.C. § 1675(b). Although it may perhaps be more faithful to
the statutory text to refer to “changed circumstances reviews”
and “periodic reviews” as subcategories of “administrative
reviews,” the Court adopts the customary agency vocabulary by
equating “administrative reviews” with 19 U.S.C. § 1675(a)
“periodic reviews.”
Court No. 05-00689 Page 9

amendment, then, there was a gap in the statute whereby entries

that were not subject to administrative reviews would not be

subject to the assessment regulation 19 C.F.R. § 353.48(a)(1)

(1983). Congress was aware of this gap, and contemplated a

regulatory solution: “the administering authority [i.e.,

Commerce] should provide by regulation for the assessment of

antidumping and countervailing duties on entries for which

review is not requested . . . .” H.R. Rep. No. 98-1156, at 181

(1984) (Conf. Rep.), reprinted in 1984 U.S.C.C.A.N. 5220, 5298.3

In 1985, Commerce filled this lacuna by promulgating 19

C.F.R. § 353.53a(d), which was the precursor to the current

automatic liquidation regulation 19 C.F.R. § 351.212(c). See

Antidumping and Countervailing Duties; Administrative Reviews on

Request; Transition Provisions, 50 Fed. Reg. 32556, 32557-58

(Dep’t Commerce Aug. 13, 1985) (notice of rulemaking). In

creating 19 C.F.R. § 351.212, Commerce has put in place

procedures designed to effectuate Congress’ imprecise command

for Commerce to assess duties, see 19 U.S.C. § 1673. Because

the statute leaves a gap for the agency to fill, and because 19

C.F.R. § 351.212 fills that gap, the Court owes Chevron

3
See also Torrington Co. v. United States, 19 CIT 1189, 1198,
903 F. Supp. 79, 87 (1995) (“The legislative history of this
provision, however, clearly required Commerce to promulgate a
regulation for the assessment of antidumping duties on entries
for which no review is requested.”).
Court No. 05-00689 Page 10

deference to the agency, and will overturn its regulation only

if it is unreasonable, arbitrary, or capricious.

2. Commerce’s Automatic Liquidation Regulation 19 C.F.R.
§ 351.212 Is Neither Internally Inconsistent Nor
Unreasonable on Account of the Lack of Exception for
Changed Circumstances Reviews

Mittal contends that 19 C.F.R. § 351.212 is arbitrary and

therefore void.4 First, Mittal argues that the regulation is

internally inconsistent because subsection (a) conflicts with

subsection (c). Second, Mittal claims Commerce’s failure to

create an exception to automatic liquidation that takes account

of findings in changed circumstances reviews is arbitrary and

capricious. See Pl.’s Br. at 34-36.

4
Mittal also makes a broad claim that Commerce’s “regulations”
are arbitrary because “there is no specific provision in the
regulations for changed circumstances reviews that do not
involve revocation of an order.” Pl.’s Br. at 34. Notably,
Mittal has adduced no argument as to why the regulations ought
to involve anything more than a revocation of an order, and the
Court cannot discern Mittal’s argument even in the context of
the rest of its brief. As such, the terms of the contention do
not lend themselves to judicial examination. Cf. Seay v. TVA,
339 F.3d 454, 478 (6th Cir. 2003) (“Because we cannot discern
from the vague reference to ‘MSPB standards’ what Plaintiff’s
argument is, we affirm the district court’s dismissal of this
count.”). It is possible that Mittal is claiming that Commerce
acted illegally by conducting a changed circumstances review and
ordering relief other than revocation. However, this dispute is
not the occasion to bring that question before the CIT; after
all, in this case, Mittal not only brought the changed
circumstances review itself, but it also is insisting that
relief other than revocation be imputed to the final changed
circumstances determination.
Court No. 05-00689 Page 11

Where an agency’s interpretation of a statute is internally

inconsistent, its claim to reasonableness is obviously

compromised. Cf. Taylor v. Vt. Dept. of Educ., 313 F.3d 768,

779 (2d Cir. 2002) (refusing to approve interpretation of a

regulation that would create internal inconsistencies); but see

IAL Aircraft Holding, Inc. v. FAA, 206 F.3d 1042, 1050 (11th

Cir. 2000) (Cox, J., dissenting) (noting that internal

inconsistency is not problematic unless it renders an agency

interpretation unreasonable). Subsection (a) introduces how

Customs is to assess duties on entries:

Generally, the amount of duties to be assessed is
determined in a review of the order covering a
discrete period of time. If a review is not
requested, duties are assessed at the rate established
in the completed review covering the most recent prior
period or, if no [administrative] review has been
completed, the cash deposit rate applicable at the
time merchandise was entered.

19 C.F.R. § 351.212(a) (2005). Later, subsection (c) describes

the process as follows:

If the Secretary does not receive a timely request for
an administrative review of an order . . . the
Secretary, without additional notice, will instruct
the Customs Service to . . . [a]ssess antidumping
duties or countervailing duties, as the case may be,
on the subject merchandise . . . at rates equal to the
cash deposit of, or bond for, estimated antidumping
duties or countervailing duties required on that
merchandise at the time of entry . . . .

Id. § 351.212(c)(1).
Court No. 05-00689 Page 12

Mittal notes that subsection (a) contemplates two possible

assessment rates for entries as to which no administrative

review is requested: (1) the rate established in the completed

review covering the most recent prior period and (2) the cash

deposit rate applicable at the time merchandise was entered. On

the other hand, subsection (c) mandates assessment at the “rates

equal to the cash deposit of, or bond for, estimated antidumping

duties or countervailing duties required on that merchandise at

the time of entry . . . .” Id. On Mittal’s reading, the

inclusion of “the rate established in the completed review

covering the most recent prior period” in subsection (a)

contradicts the plain language of subsection (c), which appears

to require assessment at the deposit rates in all cases where a

review is not requested for the current period. See Pl.’s Br.

at 34 (citing id. at 26 n.4). Mittal believes that this alleged

inconsistency is “a remnant of a proposed change in section

351.212(c) that should not be in the final version of the

regulation.” Id. at 26 n.4; see also Def. Int.’s Br. at 8 n.2

(agreeing with Mittal’s assessment of the inconsistency).

Mittal’s inconsistency argument is not properly before the

Court because Mittal lacks standing. After all, Mittal did not

merely decline to request a review for the current period: it
Court No. 05-00689 Page 13

never requested a review for any prior period either.5 If an

inconsistency exists, it did not in any way affect the treatment

of Mittal in this case. Both subsections require the same

result as to Mittal’s entries, and Mittal accordingly stands to

gain nothing from a determination that the inclusion of a

separate treatment for past administrative reviews in subsection

(a) is unreasonable. There is no line of causation between the

agency action and Mittal’s injury. See Warth v. Seldin, 422

U.S. 490, 504 (1975). Because the U.S. Constitution prevents

federal courts from adjudicating hypothetical disputes, see

Steel Co. v. Citizens for a Better Envm’t, 523 U.S. 83, 101-02

(1998), Mittal’s inconsistency argument must be disregarded.

Mittal certainly has standing to pursue its second

argument, which merits more attention. As discussed earlier,

automatic liquidation applies only “[i]f [Commerce] does not

receive a timely request for an administrative review of an

order.” 19 C.F.R. § 351.212(c)(1) (2005). The regulation also

exempts entries subject to new shipper reviews and expedited

antidumping reviews from automatic liquidation. See id.

351.212(c)(3). Mittal questions why Commerce may provide for

these exemptions, but not provide an exemption for changed

5
Of course, the lack of administrative reviews from prior
periods is explained by the fact that Mittal was only recently
constituted.
Court No. 05-00689 Page 14

circumstances reviews. Mittal’s argument relies on an

assumption that a changed circumstances review is identical in

all relevant aspects to the new shipper review and the expedited

antidumping review. If the reviews are indeed identical, the

distinction is arbitrary and even under Chevron deference the

Court must invalidate the regulation. If, however, Commerce has

a reasonable basis for not exempting changed circumstances

reviews from automatic liquidation, the distinction is not

arbitrary and the Court will defer to the agency’s construction

of the statutes it is charged with implementing. See Chevron,

467 U.S. at 844.

Commerce argues that the distinction can be attributed to

the different consequences flowing from the two sets of reviews.

It points out, correctly, that when Commerce conducts a new

shipper review or an expedited antidumping review, it calculates

the normal value and export price of specific entries and

determines an actual dumping margin that serves as the basis for

assessment of duties. See 19 U.S.C. § 1673e(c) (2000) (allowing

Commerce to permit posting bond or other security in lieu of

depositing duties, provided an expedited review of the normal

value and export price is possible); id. § 1675(a)(2)(B)

(requiring Commerce to “conduct a review . . . to establish an

individual weighted average dumping margin” during a new shipper
Court No. 05-00689 Page 15

review).6 In this respect, these reviews are identical to the

administrative reviews that are exempted outright from automatic

liquidation.

Changed circumstances reviews, however, do not necessarily

calculate the normal value and export price, and do not

necessarily relate to specific entries. Commerce emphasizes the

broad range of matters to which changed circumstances reviews

may relate.7 Commerce contends that 19 C.F.R. § 351.212 seeks to

6
The “weighted average dumping margin” mentioned in 19 U.S.C. §
1675(a)(2)(B) signifies “the percentage determined by dividing
the aggregate dumping margins determined for a specific exporter
or producer by the aggregate export prices and constructed
export prices of such exporter of producer.” 19 U.S.C. §
1677(35)(B) (2000). The term “dumping margin” means “the amount
by which the normal value exceeds the export price or
constructed export price of the subject merchandise.” Id. §
1677(35)(A).
7
Commerce may initiate a changed circumstances review to
examine several factors wholly unrelated to assessment rates.
The scope of Commerce’s authority to initiate changed
circumstances reviews under 19 U.S.C. § 1675(b) is delimited
only by the general requirement that there be “changed
circumstances sufficient to warrant a review” of the antidumping
order. See 19 U.S.C. § 1675(b)(1) (2000). Commerce’s
discretion is broad, and the range of matters subject to changed
circumstances reviews is wide. See, e.g., Or. Steel Mills, Inc.
v. United States, 862 F.2d 1541, 1545 (Fed. Cir. 1988) (review
of amount of domestic industry support of antidumping duty
order); Jia Farn Mfg Co., Ltd. v. United States, 17 CIT 187,
193, 817 F. Supp. 969, 974 (1993) (review of importer’s resales
of other producer’s merchandise); Stainless Steel Sheet and
Strip in Coils from the Republic of Korea, 71 Fed. Reg. 37906
(Dep’t Commerce July 3, 2006) (final results of changed
circumstances review) (successor-in-interest review); Carbon and
Certain Alloy Steel Wire Rod from Ukraine, 70 Fed. Reg. 21396
(Dep’t Commerce Apr. 26, 2005) (notice of initiation of changed
circumstances review) (reviewing non-market economy status).
Court No. 05-00689 Page 16

halt automatic liquidation at the deposit rates when there is an

ongoing review of the assessment rate. On this view, the agency

declined to similarly exempt changed circumstances reviews

because many, if not most, of those reviews do not result in

modified assessment rates. The Court finds that Commerce’s

distinction, implicit in 19 C.F.R. § 351.212, between changed

circumstances reviews and reviews which necessarily determine

assessment rates, is reasonable and the regulation is therefore

in accordance with law.

B. Commerce’s Interpretation of 19 C.F.R. § 351.212 Is in
Accordance with Law

1. Commerce’s Interpretation of 19 C.F.R. § 351.212 Is
Entitled to Seminole Rock/Auer Deference

Here, Commerce interprets 19 C.F.R. § 351.212 as requiring

automatic liquidation at the cash deposit rate in effect at the

time of entry. Courts will defer to an agency’s fair and

considered interpretation of its own ambiguous regulation,

unless it is “plainly erroneous or inconsistent with the

regulation.” Bowles v. Seminole Rock & Sand Co., 325 U.S. 410,

413-14 (1945); see also Auer v. Robbins, 519 U.S. 452, 461

(1997); Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 515

(1994). The United States Court of Appeals for the Federal

Circuit (“Federal Circuit”) has recently distilled the various

factors affecting deference to agencies’ regulatory

interpretations into a tripartite test. In Gose v. United
Court No. 05-00689 Page 17

States Postal Service, the Federal Circuit observed that “in

order to merit Seminole Rock deference, the agency’s

interpretation (1) must have been directed to regulatory

language that is unclear; (2) must have been actually applied in

the present agency action; and (3) must not be plainly erroneous

or inconsistent with the regulation.” Gose v. U.S. Postal Svc.,

451 F.3d 831, 839 (Fed. Cir. 2006). “In addition,” that court

added, “we consider the consistency vel non with which the

agency has applied that interpretation.” Id.; see also INS v.

Cardoza-Fonseca, 480 U.S. 421, 446 n.30 (1987) (“An agency

interpretation of a relevant provision which conflicts with the

agency’s earlier interpretation is entitled to considerably less

deference than a consistently held agency view.”) (quotation

marks omitted).8

Turning to the first of the Gose test factors, the

regulation is ambiguous in that the interpretation urged by

Mittal is not compelled by the plain language of the text of the

8
An agency’s consistency over time in interpreting its
regulations eliminates the danger that the agency is attempting
a post hoc rationalization of its actions. Where an agency has
maintained a steady interpretive position over time, it is
obvious that that position has not been adopted as a litigation
tool to defend its past conduct. Cf. Bowen v. Georgetown Univ.
Hosp., 488 U.S. 204, 213 (1988) (“Deference to what appears to
be nothing more than an agency’s convenient litigating position
would be entirely inappropriate.”).
Court No. 05-00689 Page 18

regulation.9 Second, Mittal does not dispute that Commerce

applied its interpretation to the liquidation instructions at

issue.

Moreover, this case does not present an interpretation of

an agency regulation conflicting with a prior interpretation.

As will be discussed below, the interpretive stance taken by

Commerce in Antidumping and Countervailing Duty Proceedings:

Assessment of Antidumping Duties, 68 Fed. Reg. 23954 (Dept’

Commerce May 6, 2003) (notice of policy) (“Reseller Policy”)

applies to a different set of circumstances, and is in no way

inconsistent with Commerce’s interpretation of the issue

presented in this case. It is true, as Mittal points out, that

Commerce argued before the CIT in 1993 that automatic

liquidation applied only to entries of companies that were

subject to a specific cash deposit rate and not to those entries

subject to the “all others” rate. See Federal-Mogul Corp. v.

United States, 17 CIT 442, 447, 822 F. Supp. 782, 787 (1993).

In that case, however, the CIT refused Commerce’s

interpretation, holding that

the statutory framework for administrative reviews
clearly anticipates that in cases where a company

9
In this case, it is more likely that Commerce’s
interpretation, and not Mittal’s, represents the unambiguous
import of the regulation at issue. However, the Court will
assume that there is some substantial interpretive question to
resolve in light of the Reseller Policy, discussed below.
Court No. 05-00689 Page 19

makes cash deposits on entries of merchandise subject
to antidumping duties, and no administrative review of
these entries is requested, the cash deposit rate
automatically becomes that company’s assessment rate
for those entries. . . . In a situation where a
company’s entries are unreviewed, the prior cash
deposit rate from the [less than fair value]
investigation becomes the assessment rate . . . .

Federal-Mogul, 17 CIT at 448, 822 F. Supp. at 787-88. Since

then, Mittal has provided no example of Commerce interpreting

the automatic liquidation instruction in a way that contravenes

the Federal-Mogul holding. On the other hand, Commerce has

reiterated its commitment to liquidate at the cash deposit rate

in effect at the time of entry where automatic liquidation

applies. See, e.g., Antidumping Duties; Countervailing Duties,

62 Fed. Reg. 27296, 27313 (Dep’t Commerce May 19, 1997) (notice

of rulemaking) (Commerce declaring its intention “instruct the

Customs Service to liquidate that entry and assess duties at the

rate in effect at the time of entry”) (emphasis added).

Therefore, Commerce’s reading of the regulation constitutes

a consistent interpretation of an ambiguous regulation that was

actually applied in the issuance of the liquidation

instructions. As such, the Court will apply a highly

deferential review to Commerce’s interpretation of 19 C.F.R. §

351.212, and will set aside the agency action only if Commerce’s

action was “plainly erroneous or inconsistent with the

regulation.” Gose, 451 F.3d at 839.
Court No. 05-00689 Page 20

2. Commerce’s Interpretation that the “Rate Applicable”
Mentioned in 19 C.F.R. § 351.212(a) and the “Required
Rate” in 19 C.F.R. § 351.212(c)(1) Refer to the
Deposit Rate in Effect at the Time of Entry Is Neither
“Plainly Erroneous” Nor “Inconsistent with the
Regulation” and Therefore Is in Accordance with Law

As discussed in some detail at Mittal-PI, 30 CIT at ___,

414 F. Supp. 2d at 1355-56, the United States uses a

“retrospective” system for the assessment of antidumping duties

and countervailing duties. The system is “retrospective”

because importers or their brokers are required to deposit

estimated duties prior to imports entering the stream of

commerce in the United States. See 19 U.S.C. § 1673e(a)(3)

(2000). These deposits are merely estimates, however, of a

final amount due at a later date when the entries are liquidated

and the duties are assessed.

19 C.F.R. § 351.212 regulates the assessment of antidumping

and countervailing duties. The regulation, as noted above,

contains two provisions relating to the automatic liquidation of

merchandise not subject to an administrative review. Subsection

(a) provides that where no administrative review has been

requested, “duties are assessed at . . . the cash deposit rate

applicable at the time merchandise was entered.” 19 C.F.R. §

351.212(a) (2005). Later, subsection (c) requires that Commerce

instruct Customs to liquidate entries as to which no review has

been requested “at rates equal to the cash deposit of . . .
Court No. 05-00689 Page 21

estimated antidumping duties or countervailing duties required

on that merchandise at the time of entry . . . .” Id. §

351.212(c)(1). Commerce interprets both these provisions to

constitute a requirement for Commerce to instruct Customs to

liquidate the entries and assess duties equal to the deposit

rate in effect at the time of entry.

Mittal contends that Commerce’s interpretation of

subsections (a) and (c)(1) are outside the bounds of

reasonableness. Specifically, Mittal maintains that the “cash

deposit rate applicable at the time the merchandise was entered”

(subsection (a)) and “the rate equal to the cash deposit of

estimated antidumping duties required on that merchandise at the

time of entry” (subsection (c)(1)) are the cash deposit rate

found to be appropriate following a changed circumstances

review. See Pl.’s Br. at 27.

a. Subsection (a): “The Cash Deposit Rate Applicable
at the Time the Merchandise Was Entered”

Mittal argues that “applicable,” as used in 19 C.F.R. §

351.212(a), means “able of being applied” or “appropriate.” See

id. at 26. While Mittal admits that the “applied” cash deposit

rate was 8.11 percent, it insists that after the publication of

the changed circumstances review results, the “applicable” cash

deposit rate was 3.86 percent. See id. at 27.
Court No. 05-00689 Page 22

The Court does not dispute Mittal’s flexible reading of the

word “applicable.” The term appears countless times in modern

statutory language, and in multifarious contexts. Neither does

the Court dispute the numerous court decisions and dictionary

definitions of “applicable” that Mittal cites in support of its

interpretation. See Pl.’s Br. at 26 (citing two dictionaries,

state appellate court cases from Florida, Indiana, and

Washington, and two federal district court cases). Mittal’s

argument nevertheless fails because the rate “applicable at the

time merchandise was entered” was, in this case, the rate that

was actually “applied.” The additional language “at the time

merchandise was entered” introduces a backward-looking

temporality, elided by Mittal’s interpretation, that informs any

reasonable interpretation of the term “applicable” as used in

subsection (a).

The regulation does not refer simply to the “applicable”

rate, but to the rate “applicable at the time merchandise was

entered.” 19 C.F.R. § 351.212(a) (2005). Had Commerce intended

to provide for automatic liquidation to take into account new

information communicated to Commerce post-entry, its regulation

would have ordered its personnel to instruct Customs to

liquidate at the rate “applicable at the time of liquidation” or

something to that effect. Even leaving the “applicable”

unmodified would have at least created more ambiguity than the
Court No. 05-00689 Page 23

regulation before the Court in this instance. Instead, the rate

applicable at the time of entry is the rate that a correct

application of the U.S. antidumping laws and regulations would

yield, at that moment.

Mittal’s interpretation of “applicable at the time

merchandise was entered” would gloss over the regulation’s

obvious temporality. In this case, the rate “applicable at the

time the merchandise was entered” must be the “all others” cash

deposit rate of 8.11 percent for one simple reason: at the time

of entry, it was impossible for Commerce to know that the former

Ispat was operating as Mittal, and that Mittal entries were

potentially entitled to a lower rate. As discussed in Mittal-

PI, 30 CIT at ___, 414 F. Supp. 2d at 1355, the retrospective

duty assessment system relies on an efficient transfer of

information. It anticipates and contemplates that at the time

of entry, Customs will not possess sufficient information to

assess with finality the duty amount owed. By introducing the

backward-looking language, the regulation links the assessment

rate to Commerce’s “state of mind,” or the allocation of

information, at the moment of entry. Mittal’s interpretation

amounts to reading the regulation as referring to “the rate

applicable at the time of entry, as determined by a later

review”; such an interpretation is nearly unintelligible, and in

no way could such a reading be countenanced as required by the
Court No. 05-00689 Page 24

statute. Instead, the rate “applicable at the time merchandise

was entered” is the rate that a correct application of the U.S.

antidumping laws and regulations would yield at the moment of

entry. It would be absurd to hold Commerce to a standard of

omniscience such that the rate “applicable at the time

merchandise was entered” refers to the correct rate in light of

information that was not in Commerce’s possession.

Of course, it is entirely possible that Commerce’s

regulation does not achieve Congress’ purposes in the most

efficient manner, but that is a question for the political

branches to discuss. More importantly, it is Commerce’s

interpretation of the phrase “applicable at the time merchandise

was entered” that is here at issue. For a federal court

reviewing that interpretation, it suffices to point out its

obvious reasonableness, and move on. Commerce acted in

accordance with law by holding the 8.11 percent rate to be the

applicable rate at the time of entry under 19 C.F.R. §

351.212(a).

b. Subsection (c)(1): “Rates Equal to the Cash
Deposit of, or Bond for, Estimated Antidumping
Duties or Countervailing Duties Required on That
Merchandise at the Time of Entry”

Regarding subsection (c)(1), Mittal similarly argues that

“required” means “to call for as obligatory or appropriate.”

See Pl.’s Br. at 28. Mittal cites numerous cases that have
Court No. 05-00689 Page 25

associated “required” with “need” or “necessity.” See id.

Thus, according to Mittal, the “required” rate referred to in

subsection (c)(1) is the “appropriate rate” and not the rate “in

effect” at the time of entry. See id. Mittal points out that

the words “in effect” appear nowhere in the relevant

regulations. Id. at 31. Thus, Mittal argues the “rate required

at the time of entry” should be the “appropriate” rate, even in

cases where the “appropriate” rate is determined well after “the

time of entry.” See id. at 28. Commerce interprets subsection

(c)(1) in the same manner as it interprets subsection (a): as a

requirement that duties be assessed at the cash deposit rate in

effect at the time of entry.

This argument is indistinguishable in all relevant aspects

from Mittal’s erroneous interpretation of subsection (a). For

the reasons articulated above, Commerce’s alternative reading is

sustained as reasonable.

Before moving on, the Court addresses Commerce’s Reseller

Policy, in which Mittal contends Commerce has articulated a

contrary interpretation of subsection (c)(1). See id. at 28-31.

The relevance of the putatively divergent interpretation is

twofold: first, a novel interpretation breaking with past

practice may strip Commerce’s actions of Seminole Rock

deference, see Cardoza-Fonseca, 480 U.S. at 446 n.30; and

second, a prior and well-reasoned inconsistent interpretation
Court No. 05-00689 Page 26

may undercut the interpretation that Commerce advocates in this

case.

It was and is uncontroversial that, when a dumping producer

has knowledge that goods it sells are destined for the U.S.

market, imported purchases of dumped goods are dutiable as if

the entries were made by the producer itself. See Tung Mung

Dev. Co. v. United States, 354 F.3d 1371, 1374 (Fed. Cir. 2004).

Commerce, in the Reseller Policy, clarified that automatic

liquidation would not apply to entries of merchandise sold by

resellers that entered the merchandise at the deposit rate of a

producer currently the subject of an administrative review: “If

[Commerce] conducts a review of a producer of the reseller’s

merchandise where entries of the merchandise were suspended at

the producer’s rate, automatic liquidation will not apply to the

reseller’s sales.” 68 Fed. Reg. at 23954. Commerce insisted

the clarification was necessary to address an ambiguity in the

earlier system that allowed resellers to benefit from automatic

liquidation by depositing duties at the lower of the producer’s

rate or the “all others” rate. Id. at 23960. If a reseller

entered the goods at the deposit rate applicable for the dumping

producer’s domestic sales, the automatic liquidation process

would assess those duties. However, only certain resellers were

entitled to the producer’s rate: those to whom the producer sold

for resale in the U.S. market.
Court No. 05-00689 Page 27

During the notice-and-comment period, the Canadian

government objected to the proposed clarification on the grounds

that it would violate 19 C.F.R. § 351.212(c)’s provision of

automatic liquidation for all entries as to which an

administrative review was not requested. See id. Commerce

explained that the clarification did not conflict with 19 C.F.R.

§ 351.212(c) because that regulation required automatic

liquidation at the rate “required on that merchandise at the

time of entry,” not the rate actually deposited:

This [declared cash deposit] rate may or may not be
the proper cash-deposit rate required for those
imports because the proper rate depends on the
identity of the seller. Where the cash deposit is not
the cash-deposit rate of the seller (the price
discriminator), it is not the proper cash deposit
“required at the time of entry” under U.S. law or
[Commerce’s] regulations.

Id.

Mittal claims this language suggests that in the Reseller

Policy, Commerce articulated the position that the rate

“‘required at the time of entry’ means not what was actually

deposited, but, rather, what should have been deposited.” Pl.’s

Br. at 29. On Mittal’s reading, the Reseller Policy proves that

“Commerce itself has recognized that the term ‘required’ in the

‘automatic assessment’ provision language does not, in fact,

mean that only the duty ‘in effect at the time of entry’ will be

assessed.” Id.
Court No. 05-00689 Page 28

Mittal’s argument conflates the “rate that was in effect”

with the “rate that was applied.” However, those two rates are

different in crucial respects; Commerce has never read 19 C.F.R.

§ 351.212(c)’s mention of the rates “required at the time of

entry” as referring to the amounts that the importer actually

deposited (i.e., the rates “applied”).10 For instance, an

importer may enter merchandise at a rate inferior to the rate

that corresponds to its entries. In fact, the clarification in

10
In an attempt to justify a proposed (though ultimately
rejected) rule change in 1997, Commerce observed that when it
“did not receive a request for the review of particular entries
of subject merchandise, [Commerce] would instruct [Customs] to
liquidate those entries and assess duties at the cash deposit
rate applied to those entries at the time of entry.”
Antidumping Duties, Countervailing Duties, 62 Fed. Reg. 27296,
27313 (Dep’t Commerce May 19, 1997) (final rule) (emphasis
added). However, later in the notice Commerce articulated its
definitive ruling, which indicated that its practice was to
liquidate automatically at the rate in effect:
In light of the comments received, [Commerce] has
decided to continue its current practice with respect
to automatic assessment; i.e., if an entry is not
subject to a request for a review, [Commerce] will
instruct [Customs] to liquidate that entry and assess
duties at the rate in effect at the time of entry.
Id. at 27314 (emphasis added). The distinction between the rate
in effect and the rate applied was not relevant to the proposed
rule change. It is more reasonable to read the reference to the
“rate applied” as a description of Commerce’s general practice.
That is to say, Commerce was merely observing that in nearly all
cases, 19 C.F.R. § 351.212(c) operates to require liquidation at
the rate applied. This is because in nearly all cases, the rate
applied is the rate in effect at the time of entry. Indeed, the
Reseller Policy example presents an exceedingly rare, perhaps
anomalous, case where the importer does not request a review but
Commerce learns of information prior to liquidation that sheds
light on the rate that was in effect at the time of the
reseller’s entries.
Court No. 05-00689 Page 29

the Reseller Policy was aimed at curtailing precisely this

abuse. In such a case, the amount and rate of duties deposited

is lower than the amount and rate of duties that a proper

application of U.S. antidumping duty law would have yielded for

those entries. The Reseller Policy interprets 19 C.F.R. §

351.212(c) to mandate automatic liquidation at the proper

antidumping duty rates as determined by Commerce in an

administrative review of the producer. These rates, then, are

the rates “required on . . . merchandise at the time of entry,”

19 C.F.R. § 351.212(c).

At the time of entry, there is a determinable and

quantifiable amount of duty that must be deposited for each

entry of merchandise into the United States that is subject to

an antidumping or countervailing duty order. Most of the time,

upon entry importers will deposit estimated duties as required

by the duty law. In the case of resellers, this means that most

resellers will accurately report which of their entries are

dutiable at the rate of the producer based on the producer’s

knowledge of the merchandise’s eventual sale in the United

States. However, it no doubt transpires that on occasion

resellers deposit a lower rate than the required rate. In many

such cases, the misreporting importer will go undetected and

Commerce will instruct Customs to liquidate automatically at the

underreported deposit rate. Other times, Customs will detect
Court No. 05-00689 Page 30

the error, and order the collection of any deficiency under 19

U.S.C. §§ 1484-85. And yet there is still a peculiar subset of

entries, as described by the Reseller Policy, where a collateral

administrative review of a producer will shed light on the

accuracy of the rates deposited by the reseller.

During the producer’s review, Commerce is able to inquire

into the proper deposit rates for the reseller’s entries as

well. Recalling that deposit rates are merely estimated duties,

it would be strange indeed to prefer assessment at the deposit

rate when the producer’s administrative review will determine

what the appropriate assessment rate is based on the producer’s

testimony relating to the dispositive factor: i.e., whether the

producer knew that the merchandise sold to the reseller was

destined for the U.S. market. The Reseller Policy points out

that since the producer’s administrative review will elucidate

the actual deposit rates in effect at the time of entry, it

would be premature to proceed with automatic liquidation. In

essence, the Reseller Policy imposed a stay on Commerce’s

automatic liquidation process, which aims at a rough

approximation of duties owed, when an ongoing administrative

review offered the possibility of a more precise approximation

of duties owed.

Most importantly, the new information regarding the

producer’s knowledge of the merchandise’s destination did not
Court No. 05-00689 Page 31

purport to change the “applicable” rate; instead, it simply shed

light on what that rate was. By investigating the producers’

intentions at the time of the original sale, Commerce determines

the resellers’ applicable rates at the time on entry. This

backward-looking evidentiary investigation is fundamentally

different than the changed circumstances review at issue in this

case. Since in the case of a reseller the rate in effect at the

time of entry depends entirely on the producer’s knowledge,

testimony relating to that dispositive factor impacts

significantly on the question of which rate was applicable at

the time of entry. Conversely, a changed circumstances review

examining a successor-in-interest determination in no way

impacts the cash deposit rate in effect at the time of entry.

Until the name change is formally recognized (usually in a

changed circumstances review) and Commerce establishes a new

cash deposit rate, the deposit rate in effect at the time of

entry is the rate that appeared in the Federal Register on the

date of entry. In the case of Mittal (at the time, still not

the successor-in-interest to Ispat as far as Commerce was

aware), that rate was the “all others” rate of 8.11 percent.

Commerce’s actions in the events leading to this case do

not contradict any agency interpretations in the Reseller

Policy, and its interpretation of both subsections (a) and

(c)(1) are entitled to full Seminole Rock deference. Because
Court No. 05-00689 Page 32

both interpretations are reasonable, Commerce’s actions were in

accordance with law.

IV. CONCLUSIONS

Commerce’s regulation 19 C.F.R. § 351.212 is a reasonable

accommodation of Congress’ delegated authority for Commerce to

instruct Customs to assess antidumping duties. Commerce’s

interpretation of subsections (a) and (c)(1) of that regulation

are similarly reasonable, and well within the bounds of its

discretion. Accordingly, Plaintiff’s motion for judgment on the

agency record is denied. An order will be issued dismissing the

case, see USCIT R. 56.1(f).

/s/ Richard W. Goldberg_____
Richard W. Goldberg
Senior Judge
Dated: September 22, 2006
New York, New York