Mid Continent Nail Corporation v. United States
2017 U.S. App. LEXIS 1478
Fed. Cir.2017Background
- In 2012 Commerce found Precision Fasteners engaged in "targeted dumping" on UAE steel nails and used the average-to-transaction methodology across all U.S. sales, producing a 2.51% duty.
- Commerce historically had a 1997 "Limiting Regulation" (19 C.F.R. § 351.414(f)(2)) that said it would normally restrict average-to-transaction to only the sales that constitute targeted dumping.
- In 2008 Commerce issued an interim final rule (Withdrawal Notice) rescinding the Limiting Regulation without notice-and-comment, invoking the APA good-cause exception.
- The Court of International Trade held the 2008 repeal violated the APA and remanded, directing Commerce to apply the Limiting Regulation; on remand Commerce limited average-to-transaction to targeted sales and found Precision's margin de minimis (0.00%).
- The Trade Court affirmed the remand redetermination; the Federal Circuit likewise affirmed, holding Commerce’s 2008 repeal procedurally invalid and that the agency did not err in applying the Limiting Regulation on remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Commerce’s 2008 Withdrawal Notice provided adequate APA notice (logical outgrowth of prior notices) | Withdrawal was invalid because prior 2007–2008 notices did not fairly apprise interested parties that repeal (not mere interpretation) was under consideration | Prior notices and comments addressed targeted-dumping methodology and thus gave fair notice for repeal | Held: Withdrawal was not a logical outgrowth of prior notices; APA notice-and-comment was required and was not satisfied |
| Whether Commerce validly invoked the APA good-cause exception to avoid notice-and-comment | Good cause justified immediate repeal because the Limiting Regulation applied to ongoing investigations and interfered with statutory duties | Good cause not established; statutory deadlines alone or asserted policy harms insufficient to bypass notice | Held: Good-cause invocation was improper; Commerce did not show the narrow, serious exigencies required |
| Whether the procedural error was harmless (i.e., no prejudicial effect) | Any error is harmless because outcomes of investigations are not harms protected by notice-and-comment; Precision suffered no cognizable prejudice | Error was not harmless: complete absence of notice-and-comment created uncertainty and could have affected the record and outcome | Held: Error was not harmless; complete failure to provide notice-and-comment defeated harmless-error defense |
| Whether Commerce misapplied the Limiting Regulation on remand | Mid Continent argued Commerce should have reinterpreted the Limiting Regulation consistent with post-2008 practice and applied average-to-transaction more broadly | Commerce applied the Limiting Regulation as written and reasonably limited average-to-transaction to targeted sales on the record | Held: Commerce did not err on remand; its application of the Limiting Regulation was within agency discretion and not arbitrary or unlawful |
Key Cases Cited
- U.S. Steel Corp. v. United States, 621 F.3d 1351 (Fed. Cir. 2010) (statutory prerequisites for average-to-transaction methodology)
- Corus Staal BV v. United States, 502 F.3d 1370 (Fed. Cir. 2007) (discussion of zeroing and aggregation of margins)
- Union Steel v. United States, 713 F.3d 1101 (Fed. Cir. 2013) (context on zeroing and controversy around average-to-transaction)
- Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158 (2007) (logical outgrowth doctrine for notice-and-comment)
- CSX Transp. Inc. v. Surface Transp. Bd., 584 F.3d 1076 (D.C. Cir. 2009) (rejecting insufficiently specific notice as a basis for broad final rule)
- Kooritzky v. Reich, 17 F.3d 1509 (D.C. Cir. 1994) (notice invalid where NPRM gave no hint of the change adopted)
- Mobil Oil Corp. v. Dep’t of Energy, 728 F.2d 1477 (Temp. Emer. Ct. App. 1983) (good-cause exception narrowly construed; significant public-interest threats required)
- Intercargo Ins. Co. v. United States, 83 F.3d 391 (Fed. Cir. 1996) (harmless-error framework for procedural defects)
- Shinseki v. Sanders, 556 U.S. 396 (2009) (harmless error rule in administrative review)