NORSK HYDRO CANADA, INC., Plaintiff-Appellee, v. UNITED STATES, Defendant-Appellant, and U.S. MAGNESIUM LLC, Defendant-Appellant.
06-1044, -1052
United States Court of Appeals for the Federal Circuit
December 14, 2006
Before MICHEL, Chief Judge, PROST, Circuit Judge, and ELLIS, District Judge. ELLIS, District Judge.
Appealed from: United States Court of International Trade. Judge Donald C. Pogue.
Stephen C. Tosini, Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellant United States. With him on the brief were Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director; and Jeanne E. Davidson, Deputy Director. Of counsel on the brief was Ada E. Bosque, Attorney, Office of Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC.
Jeffrey M. Telep, King & Spalding LLP, of Washington, DC, argued for defendant-appellant U.S. Magnesium LLC. With him on the brief was Stephen A. Jones. Of counsel was Joseph W. Dorn.
DECIDED: December 14, 2006
Before MICHEL, Chief Judge, PROST, Circuit Judge, and ELLIS, District Judge.* ELLIS, District Judge.
This appeal concerns the interpretation of the countervailing duty laws and the division of authority between the two entities responsible for implementing these laws—the Department of Commerce (“Commerce“) and the U.S. Customs and Border Protection (“Customs“). In this case, Customs collected duties on 1997 magnesium and magnesium alloy imports at too high a rate from appellee Norsk Hydro Canada, Inc. (“NHC“). Rather than liquidate countervailing duties against NHC at the proper 2.02% rate, Customs allowed some duties to be “deemed liquidated” at cash deposit rates ranging from approximately 3% to 7%. The government pocketed the difference, and as permitted by law, redistributed some of this amount to NHC‘s American competitors. NHC did not attempt to protest this overcharge by Customs at the time, choosing instead to wait several years until Commerce held an annual administrative review of the amount of the net countervailable subsidy provided to NHC, at which time NHC sought a setoff of the overcharge against duties due on its imports for a later year. Commеrce rejected this request on the ground that it lacked legal authority to grant the setoff. NHC appealed this decision to the Court of International Trade, which agreed with NHC and remanded the matter to Commerce with instructions to grant the setoff. Following the remand, Commerce made the setoff under protest,1 and the matter then returned to the Court of International Trade, which granted judgment for NHC on the administrative record. This appeal followed. We now reverse.
As an aid to understanding the issues presented, we summarize briefly the law governing the setting and collection of countervailing duties.
A. Countervailing Duties and Subsidies
If the production of goods abroad is subsidized by a foreign government, the goods can be subject to a countervailing duty (“CVD“) when imported2 to the United States.
A countervailing duty investigation may be initiated at the request of an interested party or on Commerce‘s own motion.
The countervailing duty imposed by Commerce must equal the “net countervailable subsidy,”
Although countervailing duties must be “equal to” countervailing subsidies, the two concepts are not functionally interchangeable.5 The procedures for determining the amount of a countervailable subsidy are different from those for collecting the countervailing duty; indeed, as noted, the two tasks are undertaken by two different entities, Commerce and Customs. More importantly for our purposes, the procedures for contesting an erroneous subsidy calculation are different from those for contesting an erroneous duty assessment. Compare
B. Liquidation
While a CVD‘s ad valorem rate is determined administratively by Commerce, the duty itself is collected by Customs.6 Commerce dictates to Customs the proper
As noted, liquidation of a duty is suspended while a countervailing duty investigation is underway.
In the process of liquidating entries, Customs must give parties proper notice, and this is so whether the liquidation is actual or deemed. In particular, “bulletin notices” of liquidations must be posted in “a conspicuous place in the customshouse at the pоrt of entry . . . or lodged at some other suitable place.”
A liquidation decision itself is “final and conclusive” as to all parties, including the United States, unless protested with Customs, and this is so even if the liquidation contains a “clerical error, mistake of fact, or other inadvertence” adverse to the importer.
In addition to a protest, other remedies for liquidation errors exist. Customs may sua sponte reliquidate an entry, including an entry “deemed liquidated,” within 90 days of its giving notice of the original liquidation to the importer.
II. Facts and Proceedings Below
The material facts are undisputed. Commerce, at the behest of appellant U.S. Magnesium, a domestic producer of magnesium products, investigated certain benefits received by NHC, an importer of magnesium and magnesium alloy.9 The investigation revealed that NHC received countervailable subsidies in the form of grants from the governments of Canada and Quebec. Final Affirmative Countervailing Duty Determinations: Pure Magnesium and Alloy Magnesium From Canada,
In 1999, Commerce conducted an administrative review of NHC‘s 1997 magnesium entries. As a result of this review, Commerce set a countervailing subsidy rate of 2.02%. Pure Magnesium and Alloy Magnesium from Canada: Final Results of Countervailing Duty Administrative Review, 64 Fed. Reg. 48,805, 48,806 (Sept. 8, 1999). Accordingly, on December 8, 1999, Commerce lifted the suspension of liquidation then in effect for Canadian magnesium imports and instructed Customs to liquidate the 1997 entries and collect countervailing duties at 2.02%. Customs did not immediately liquidate some of the 1997 entries, with the result that those entries were deemed liquidated by operation of law on March 8, 2000, six months after the 1999 Final Results were published in the Federal Register. See
Instead, NHC waited until the administrative review of its 2001 entries to allege that Customs had over-collected the duties on its 1997 entries, and accordingly requested Commerce to setoff the subsidy rate for the 2001 entries by the amount of the overpayment on the 1997 entries.12 Commerce concluded it lacked the authority to make the requested setoff, stating that it
does not have authority to address what is essentially a customs protest issue concerning entries from a prior, completed review in the context of this administrative review. Parties cannot revive an issue for which the deadlines for proper challenge have already passed by raising it in an on-going administrative proceeding.
Pure Magnesium and Alloy Magnesium from Canada: Preliminary Results of Countervailing Duty Administrative Reviews, 68 Fed. Reg. 25,339 (May 12, 2003).
NHC then filed suit in the Court of International Trade, alleging jurisdiction under
III. Jurisdiction
The threshold question is whether the Court of International Trade correctly concluded it had jurisdiction to hear NHC‘s claim. Our review of this ruling is de novo, as a trial court‘s determination of subject matter jurisdiction is a legal conclusion. Consol. Bearings v. U.S., 348 F.3d 997 (Fed. Cir. 2003).
NHC‘s claim in the Court of International Trade was brought under
determination . . . under section 1675 of this title.”
Appellants seek to avoid this result by arguing that the Court of International
This argument, closely scrutinized, fails. It is true that the Court of International Trade, like all federal courts, is a court of limited jurisdiction, and that the party invoking that jurisdiction bears the burden of establishing it. See Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). It is also true that a party may not expand a court‘s jurisdiction by creative pleading. As we have noted, “mere recitation of a basis for jurisdiction, by either a party or a court, cannot be controlling . . . we look to the true nature of the action in the district court in determining jurisdiction of the appeal.” Williams v. Sec‘y of Navy, 787 F.2d 552, 557 (Fed. Cir. 1986) (internal citations omitted). Importantly, however, the “true nature” of NHC‘s action in the Court of Internatiоnal Trade is an appeal of Commerce‘s legal determination that it lacked authority to setoff the erroneous liquidations. Given that this is the “true nature” of the action, it follows that the matter falls squarely within § 1581(c), and hence the Court of International Trade correctly concluded that it had jurisdiction.
It is also worth noting that appellants mislabel their jurisdictional argument as “artful pleading” or as the failure to exhaust remedies. Neither label fits. NHC has not engaged in “artful pleading” in the true sense of the term, as there is no contention that NHC premised jurisdiction on an impermissibly anticipated defense or counterclaim, or intentionally failed to plead a necessary federal issue in order to avoid federal jurisdiction. Compare Skelly Oil v. Phillips Petroleum, 339 U.S. 667, 671-74 (1950); see generally Miller, Artful Pleading: A Doctrine in Search of Definition, 76 Tex. L. Rev 1781 (1998). To argue, as appellants do, that jurisdiction here is the product of artful pleading amounts to no more than argument by epithet.
Nor does appеllant‘s argument fare any better when framed as a failure to exhaust remedies. In fact, appellants argue not failure to exhaust, but rather that NHC‘s sole and exclusive remedy was a timely protest to Customs followed, if necessary, by Court of International Trade review pursuant to § 1581(a). While it is true that NHC could have remedied the deemed liquidations to Customs had it acted in a timely fashion16 and that the results of such a protest would have been judicially reviewable pursuant to § 1581(a), this case is not a request to review any such protest, but rather a request to review Commerce‘s legal determination that it has no authority to make the requested setoff. To put this point differently, the Court of International Trade correctly determined its jurisdiction because the availability of remedies under § 1581(a) at some
point in the past does not preclude, and indeed has no bearing on, the availability of remedies under § 1581(c) today. As the Court of International Trade correctly pointed out, § 1581(a) and (c) mаke no reference to each other; each is a “separate and distinct avenue for relief.” NHC I, 350 F. Supp. 2d at 1179-80. While
The propriety of jurisdiction in this case is vividly illustrated if one assumes, contrary to what occurred here, that Commerce had decided it did have authority to make the setoff. In that circumstance, we doubt that U.S. Magnesium would be arguing that the Court of International Trade lacked jurisdiction over an appeal from such a determination made in the course of the Commerce proceeding. To the contrary, it is clear that U.S. Magnesium would be attempting to invoke the Court of International Trade‘s jurisdiction to dispute Commerce‘s substantive authority. It is pellucidly clear from this that § 1581(c) properly provided the Court of International Trade jurisdiction to review Commerce‘s legal determination concerning the setoff whatever that determination might be.
Appellants’ cited cases do not persuade us to the contrary. This is not a case like the ubiquitously-cited American Air Parcel Forwarding v. United States, 718 F.2d 1546 (Fed. Cir. 1983), where a litigant seeks to invoke the Court of International Trade‘s § 1581(i) residual jurisdiction because the litigant cannot pass muster under any of the more specific grants of jurisdiction in § 1581(a)-(h). Rather, here NHC seeks to substitute one specific grant of jurisdiction, namely § 1581(c), for another specific jurisdictional grant no longer available, namely § 1581(a). As long as plaintiff alleges an injury actionable under subsection (c), there is no reason to disallow it simply because, at one time, that injury would have been redressable under subsection (a).18 Nor is the Juice Farms v. United States, 18 Ct. Int‘l Trade 1037 (1994), case cited by appellants on point. Although it is true that Juice Farms held that challеnges to liquidations cannot be brought under § 1581(c), it did so in the context of a direct appeal of a Customs liquidation protest, not an appeal of a Commerce determination in a countervailing duty proceeding. Finally, the case of Nichimen v. United States, 938 F.2d 1286 (Fed. Cir. 1991), is also of no avail to appellants.
Commerce duty proceeding when the substance of the protest challenges a Customs error. This argument fails because the Court of International Trade‘s lack of jurisdiction over some claims in Nichimen resulted from the fact that the decisions in that case were not amenable to Customs protest at all under the applicable protest statute. See id. at 1290-92. By contrast, the administrative review statute here in issue,
Once the issue presented to the Court of International Trade and reviewed here is properly framed not as a challenge to the erroneous liquidation, but rather as a challenge to Commerce‘s determination that it lacked the authority to make the setoff, it is apparent that the Court of International Trade correctly determined its jurisdiction. This is so because Commerce‘s decision that it lacked authority to remedy the deemed liquidation was a “legal conclusion upon which its determination is based.”19
IV. The Merits
We next review the Court of International Trade‘s decision that Commerce had both the power and the obligation to make the requested setoffs. And we use the same standard of review the Court of International Trade used in reviewing the Commerce administrative record: Commerce‘s determinations of fact must be sustained unless unsupported by substantial evidence in the record and its legal conclusions must be sustained unless not in accordance with law.
We begin, as we must, with the language of the applicable statutes. The parties correctly argue that Commerce‘s authority to make the requested setoffs, if it exists, must be found in
The success of NHC‘s argument turns on two controverted interpretations of § 1671. Specifically, NHC argues, and the Court of International Trade agreed, that duties are “imposed” when the relevant entry is liquidated or collected. NHC I, 350 F. Supp. 2d at 1180-82. If duties are “imposed” when liquidated or collected, then the duties liquidated and collected must equal the subsidy received to avoid an imposition error. In contrast, if, as appellants argue, duties are “imposed” earlier in the CVD process, when the subsidy and material injury determinations are made, an error later in the CVD process (such as during liquidation), while still an error, does not cause an imposition error as to that POR.
NHC also argues, as it must to prevail, that § 1671‘s requirement that the CVDs must equal the countervailing subsidy applies to the entire useful life of a nonrecurring subsidy, rather than to each POR therein. The Court of International Trade agreed with this proposition as well. NHC I, 350 F. Supp. 2d at 1184. The significance of this issue is that, even if we grant that duties are “imposed” when liquidated, the appellants would still prevail if PORs are sufficiently inviolable that Commerce is not obligated to correct mistakes from one POR in another. Of course, appellants argue that PORs are distinct and that mistakes in one are not correctable in another, or at least that Commerce acted reasonably in so holding.
If we accept both propositions – that duties are imposed when liquidated and that the integrity of the POR may be violated to ensure that duties imposed equal subsidies received – then Commerce arguably violates § 1671 by refusing to take past erroneous liquidations into account when calculating countervailable subsidies in subsequent PORs. This is so because the duty “imposed” over the life of the subsidy would be greater than the value of the subsidy itself. In contrast, if appellants’ arguments are accepted, the statute‘s mandate that duties “imposed” equal the net countervailable subsidy would not be violated by Commerce‘s refusal to alter the CVD rate to account for liquidation errors from a prior POR, since those errors do not affect imposition in the current POR. We address each link in the chain of NHC‘s argument in turn: first, when duties are “imposed,” and second,
A. The Meaning of “Impose”
First, NHC raises the possibility that the appellants may have procedurally forfeited the issue of the meaning of “impose” by not raising the issue below, see NHC I, 350 F. Supp. 2d at 1181 n.8, or in its initial brief before this Court. We disagree. In Consolidation Coal v. United States, 351 F.3d 1374, 1378 (Fed Cir. 2003), we stated that preserving an issue for appeal dоes not require “the incantation of particular words; rather, it requires that the lower court be fairly put on notice as to the substance of the issue.” (internal citations omitted). The Court of International Trade knew it had to construe the term “imposed,” see NHC I, 350 F. Supp. 2d at 1180-82, and it is obvious here, as well. We conclude it is proper to resolve this issue on appeal.
We turn now to the merits of the issue. NHC argues that duties are “imposed” when “assessed” and that they are “assessed” when liquidated. In support, they contend Commerce itself has interpreted “imposed” to mean “assessed and paid,” and that it would be unreasonable for Commerce to use a different definition here. It is true that Commerce has occasionally interpreted “imposed” to mean “assessed,” but it is also true that it has done so only in a different statutory context, namely the anti-dumping laws. See Serampore Indus. v. United States, 675 F. Supp. 1354, 1358-60 (Ct. Int‘l Trade 1987) (construing then
CVD context, imposition of CVDs and assessment or liquidation of those duties are distinct events that should not be equated or conflated.
Given that the CVD laws clearly state that such duties are “imposed” by Commerce
did so it was entitled to assume that liquidation would occur consistent with its instructions for that POR. Because Commerce is entitled to so assume, it is not obligated to correct an assessment or liquidation error from a past POR when reviewing the correctness of the duties imposed in the instant POR.
In short, an assessment error as to one entry does not cause an imposition error as to that entry because assessment is a distinct step in the CVD process that occurs after imposition. Put another way, an assessment error as to one entry also does not cause an imposition error as to a future entry or POR – unless Commerce is required by the statute to take account of errors from prior PORs. We take this question up next and resolve it in the negative.
B. The POR
The second issue we must resolve is whether the Court of International Trade erred in holding that Commerce is legally required to take account of entries outside the POR in order to implement the statutory mandate that countervailing duties must equal countervailable subsidies. If Commerce‘s review pursuant to § 1675(a) is limited solely to the 2001 entries, then it follows that Commerce correctly concluded that there could be no setoff.
Analysis of this question properly begins with the text of the statute governing administrative review of Commerce‘s countervailing duty decisions. Section 1675(a)(1)(A) provides that
at least once during each 12-month period beginning on the anniversary of the
date of publication of a countervailing duty order . . . the administering authority, if a request for such a review has been received and after publication of notice of such review in the Federal Register, shall review and determine the amount of any net countervailable subsidy.
While the text of § 1675 is silent on the length of the POR, Commerce has interpreted this statute to mean that only entries received during the one-year period under review may be considered. Specifically, the pertinent regulation provides that, “except as provided . . . an administrative review under this section normally will cover entries . . . during the most recently completed calendar year.”
We are persuaded that Commerce‘s interpretation is reasonable, indeed invited by the statute. This is so because the statute contemplates annual reviews, and hence limiting § 1675 review to entries made during the POR in issue reasonably serves important goals of finality and efficiency. Given that Commerce undertakes annual reviews, it would be duplicative and wasteful for later reviews to revisit matters subject to review in prior PORs. Revisiting issues that were resolved in prior review proceedings would impair the finality of any one annual review, potentially prolonging a CVD dispute far beyond the year to which it relates. The same potential exists with respect to issues relating to entries from a prior year that were not raised for Commerce review during the appropriate POR. With respect to these issues there is also the risk that, owing to the passage of time, relevant evidence might be lost. The reasonableness of Commerce‘s interpretation finds further support in thе reported decisions, which while not directly on point, are nonetheless persuasive. These decisions upheld as reasonable Commerce‘s decision to confine its review to entries made during the POR by permitting discretionary recission of administrative reviews where no entries were made during the POR. See e.g., Allegheny Ludlum v. United States, 346 F.3d 1368, 1371 (Fed. Cir. 2003); Chia Far Indus. Factory Co. v. United States, 343 F. Supp. 2d 1344, 1373-74 (Ct. Int‘l Trade 2004). For these reasons, we believe Commerce‘s construction of § 1675 is reasonable.
NHC‘s arguments to the contrary do not persuade us. NHC first argues that if Commerce is allowed to construe § 1675(a)(1)(A) to preclude it from correcting a prior POR Customs liquidation error, Commerce will not calculate correctly the net countervailable subsidy, and thus violate
give it the power to correct its own errors. Once a liquidation error is remedied by Customs, the CVD collected will equal the subsidy, as required by the statute.
The fact that the liquidation in this case was deemed, rather than actual, does not change this analysis or the conclusion reached here. We have quoted the Court of International Trade with approval to the effect that a deemed liquidation adverse to an importer is protestable. See Cemex v. United States, 384 F.3d at 1318 (“If a deemed liquidation or any liquidation is adverse to an importer, it has its protest remedies under
Customs remedies were available to NHC. The availability of such remedies to correct liquidation errors means that Commerce‘s interpretation of § 1675 is not unreasonable, as it need not cause liquidation errors to distort countervailing duties.
NHC‘s second argument against the reasonableness of Commerce‘s construction of § 1675 is that Commerce in its annual reviews in fact considers events outside the POR when it amortizes the countervailing subsidy over a fourteen
The authorities cited by NHC to prove otherwise are not persuasive. In particular, the hypothetical posed by the Commerce Department in Certain Pasta from Italy is not analogous. There, Commerce suggested that if an importer repays part of a prior non-recurring subsidy to the foreign government during a later POR, Commerce would reduce the amount of subsidy to be countervailed. See Certain Pasta From Italy: Final Results of the Fourth Countervailing Duty Administrative Review 66 Fed. Reg. 40,987 at cmt. 7 (Dec. 12, 2001). This statement does not help NHC for several reasons. First, Commerce ultimately concluded that it could set off repaid subsidies only if they were not yet countervailed, that is, if they were received and repaid during the current POR. Certain Pasta From Italy: Preliminary Results and Partial Recission of Countervailing Duty Administrative Review, 67 Fed. Reg. 16,722, 16,726 (Apr. 8, 2002). Second, repayment of a nonrecurring subsidy to a foreign government is different from
overpayment of duties intended to countervail a nonrecurring subsidy. Commerce acts reasonably in treating the two cases differently.
In summary, Commerce‘s refusal to consider the 1997 entries during the 2001 POR reflected a permissible interpretation of § 1675. That other interpretations may also be plausible does not render Chevron deference inappropriate. Therefore we defer to Commerce‘s interpretation under Chevron.
V. Conclusion
There remains only the proper disposition of the appeal. For the reasons stated herein, the judgment of the Court of International Trade is REVERSED and the matter is REMANDED so that the setoff issued by Commerce at the Court of International Trade‘s direction can be vacated.
REVERSED and REMANDED
Notes
This voluntary reliquidation provision was repealed in 2004. Pub. L. 108-429, Title II, § 2105, Dec. 3, 2004, 118 Stat. 3598. The § 1520(c) one year limitations period formerly applicable to discretionary reliquidation by Customs must be distinguished from the 90 day limitations period in § 1514(c)(3) applicable to the importer‘s right to file a protest with Customs.notwithstanding a valid protest was not filed, the Customs Service may . . . reliquidate an entry to correct . . . a clerical error, mistake of fact, or other inadvertence, not amounting to an error in the construction of law, adverse to the importer . . . when the error, mistake, or other inadvertence is brought to the attention of the Customs Service within one year after the date of liquidation.