OPINION
Before this Court are cross-motions for summary judgment submitted by Plaintiff United States (the “Government”) and Defendants Great American Insurance Company of New York (“Great American”) 1 and Washington International Insurance Company (‘Washington International”).
The Government seeks to recover in excess of $8 million on eight single transaction bonds (“STBs”) identifying Great American as surety and one continuous entry bond (“CEB”) identifying Washington International as surety. The bonds at issue secure the payment of antidumping duties on entries imported by New Phoenix International Trade Corp. (“New Phoenix”), the principal on the bonds. The bonds cover seven entries of crawfish tail meat imported into the United States from the People’s Republic of China (“PRC”) during 2000 and 2001.
The Plaintiffs motion is granted in part and denied in part. The Defendant Great American’s motion is granted in part and denied in part. The Defendant Washington International’s motion is denied.
BACKGROUND
The pertinent facts are not in dispute.
On August 1, 1997, the U.S. Department of Commerce (“Department” or “Commerce”) issued an antidumping duty order covering crawfish tail meat from the PRC (the “subject merchandise”).
2
Between October 5, 2000 and May 17, 2001, New Phoenix (now defunct) imported seven entries of the subject merchandise from two PRC exporters. Five of the entries (the “Suqian Entries”) were exports by Suqian Foreign Trade Corp. (“Suqian”). The oth
New Phoenix posted bonds in lieu of a cash deposit for the Coastal and Suqian Entries. 3 Customs accepted eight STBs identifying New Phoenix as the principal and Great American as the surety. Customs also accepted one CEB, valued at $50,000, identifying New Phoenix as the principal and Washington International as the surety. For the five Suqian Entries, James C. Davis signed and executed the STBs provided to Customs as Great American’s agent (the “Suqian Bonds”). For the two Coastal Entries, Great American filed three STBs (the “Coastal Bonds”). Agent Davis signed and executed one of the Coastal Bonds. Another Great American agent, William Groves, signed and executed the remaining two STBs (the “Groves Bonds”) for the other Coastal Entry. At the time Davis and Groves executed the STBs with New Phoenix, they were agents of Great American with power-of-attorney authority to execute surety bonds on Great American’s behalf. See 19 C.F.R. § 113.37(g)(4) (a corporate surety power of attorney continues in force and effect until revoked).
On October 26, 2001, in response to timely requests from interested parties,
4
Commerce published a notice in the Federal Register that it was initiating an administrative review of the antidumping order covering the subject merchandise from the PRC for the period of review (“POR”) between September 1, 2000 and August 31, 2001.
Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part,
66 Fed.Reg. 54,195, 54,196 (Dep’t Commerce Oct. 26, 2001)
(“Notice of Initiation
”). Pending the outcome of the administrative review, Commerce suspended the liquidation of merchandise subject to the review, including the entries at issue.
See id.
(listing Coastal and Suqian as named exporters subject to the review). Customs provided notice of the suspension to New Phoenix and Washington International pursuant to section 504 of the Tariff
On August 6, 2002, Commerce rеscinded its administrative review of Coastal, as well as certain other PRC exporters of the subject merchandise, via publication in the Federal Register. Notice of Rescission, 67 Fed.Reg. at 50,861. On January 7, 2003, Commerce issued liquidation instructions to Customs for the Coastal Entries at the “as-entered” rate. On April 21, 2003, Commerce published the final results of the administrative review. See Freshwater Crawfish Tail Meat from the People’s Republic of China, 68 Fed.Reg. 19,-504 (Dep’t Commerce Apr. 21, 2003) (final results of administrative review) (“Final Results ”). Commerce then issued liquidation instructions to Customs for the entries suspended pending the completion of the administrative review.
After liquidation of the subject entries, Customs was unable to obtain payment of the assessed antidumping duties from New Phoenix. Customs sought payment from both sureties. To date, Great American and Washington International have not made any payments. The Government commenced this action on May 8, 2009.
JURISDICTION AND STANDARD OF REVIEW
The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1582(2) (2006).
Both parties have filed for summary judgment. Summary judgment is appropriate “if the pleadings, discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law.” USCIT R. 56(c);
see Celotex Corp. v. Catrett,
DISCUSSION
Great American’s motion for summary judgment raises a number of affirmative defenses to the Government’s action to recover on the bonds at issue.
First, Great American claims that the five Suqian Bonds and two Grovеs Bonds are void under principles of agency law because the value of the STBs exceeded the power-of-attorney authority of the agents who executed the STBs on Great American’s behalf.
Second, Great American argues that the Government’s claims on all of the STBs are time-barred. According to Great American, Customs’ failure to provide Great American with section 1504(c)
6
notice of the suspension of liquidation of the entries at issue invalidated the suspension as a matter of law. Consequently, Great American asserts the entries liquidated by operation of law one year from the date of entry, pursuant to 19 U.S.C. § 1504(a)(1), more than six years before the Government filed its complaint. See 28 U.S.C. § 2415(a). Although Washington International received notice of the suspension, it
Third, Great American asserts that Customs’ failure to provide notice of the suspension of liquidation of the subject entries discharged Great American’s obligations as surety under the law of suretyship.
Finally, according to Greаt American, even if the court finds the suspension of liquidation valid despite Great American’s lack of notice, the Government’s claims under the three Coastal Bonds are still untimely because the Coastal Entries were deemed liquidated six months after Commerce published the Notice of Rescission in the Federal Register, pursuant to 19 U.S.C. § 1504(d), more than six years before the Government filed its complaint. See 28 U.S.C. § 2415(a).
The court examines these defenses separately.
1. The Validity of the Suqian and Groves Bonds Under Agency Law Principles
Great American claims that the five Suqian Bonds executed by agent Davis are invalid because the value of the bonds exceeded his power-of-attorney authority to execute surety bonds on Great American’s behalf. Great American further claims that Customs improperly accepted the two Groves Bonds for a single entry. Moreover, the combined value of the Groves Bonds exceeded Groves’s power-of-attorney authority, as stated on the face of the bonds. The court disagrees and finds that the Suqian and Groves Bonds are not void.
a. The Suqian Bonds are not void under agency law principles
Under Customs’ regulations, a surety must file a corporate surety power-of-attorney on a Customs Form 5297 (“Form 5297”) for agents it appoints to execute customs bonds on its behalf. See 19 C.F.R. § 113.37(g). In 1996, Great American filed a Form 5297 for Davis. 7 Between September 2000 and February 2001, Davis executed a separate STB for each of the five Suqian Entries with importer New Phoenix, the principal on the bonds. Each of the Suqian Bonds had a face value of approximately $1.2 million and identified Great American as the surety.
Great American challenges the validity of the Suqian Bonds. According to Great American, the Suqian Bonds are void and unenforceable under principles of agency law because Davis’s authority to issue bonds on its behalf was limited to $1 million on any single bond obligation.
The court finds that the Suqian Bonds are valid contracts between Great
New Phoenix entered into the Suqian Bonds with Davis, an agent holding himself out as having the apparent authority to bind Great American. The record does not dеmonstrate that it was unreasonable for New Phoenix to believe that Davis was authorized to execute bonds valued in excess of $1 million. See Restatement (Third) of Agency § 2.03. Even if Great American’s underwriting authority letter granting Davis authorization to issue bonds limited Davis’s authority up to a certain amount, there is no indication that New Phoenix received copies of these letters or otherwise knew about the limitations on Davis’s authority. Limitations specified in the underwriting authority letter for Davis or in Great American’s agency agreement authorizing the agency to underwrite and execute customs bonds on Great American’s behalf 8 does not relieve Great American of its liability given that Davis had apparent authority to enter into the Suqian Bonds with New Phoenix. See Restatement (Third) of Agency § 2.03, cmt. c (“In the principal’s relations with third parties, restrictions that the principal has placed on the agent’s authority are inoperative if apparent authority is present just as, by analogy, an offeror’s unexpressed meaning that is unknown to the offeree is inoperative as to the offeror’s contractual relations with the offeree.”).
Nevertheless, Great American maintains that it is relieved of liability on the Suqian Bonds because the Form 5297 filed with Customs in 1996 stated that Davis’s authority on any single bond obligation was limited to $1 million. Thus, Great American’s argument that the Suqian Bonds are invalid under principles of agency law does not focus on the validity of the contractual relationship between the surety and the principal, i.e. the bond agreements with New Phoenix. Instead, Great American focuses on the alleged error of Customs, the obligee or third-party beneficiary under the Suqian Bonds,
9
as a
The Form 5297 is the only document Great American filed with Customs advising Customs of Davis’s authority to issue bonds on Great American’s behalf. Neither Great American nor Customs can provide an original or a copy of the Form 5297 for agent Davis submitted to Customs.
10
Great American alleges that Customs’ electronic record, which does not indicate any such limit on Davis’s authority, is the result of a data entry mistake.
11
The Government argues that the information in Customs’ computer records is presumed to be accurate and that Great American does not overcome this presumption because it cannot produce any contemporaneously created documents providing information different from that in Customs’ electronic records.
See Int’l Cargo and Sur. Ins. Co. v. United States,
However, even assuming that Great American is factually correct that the Form 5297 it submitted to Customs stated that Davis was authorized to issue bonds up to $1 million, the Suqian Bonds are valid contracts entered into by importer New Phoenix and agent Davis on bеhalf of Great American as surety. The Suqian Bonds are not invalid and unenforceable if Customs erred in inputting the data submitted on Davis’s Form 5297 into its electronic record.
In order for Customs to accept a bond, the amount must be less than or equal to the authorization limits on record. Cus
Thus, Great American’s argument that Customs did not have a reasonable basis for concluding that Davis had authority to execute the Suqian Bonds is unpersuasive.
See Natl Labor Relations Bd. v. Dist. Council of Iron Workers,
b. The Groves Bonds are not void under agency law principles
The parties also dispute the validity of the two Groves Bonds executed by Groves to secure a single Coastal entry. 13 The bonds were valued at $500,000 and $450,200, together totaling $950,200. The legend on the face of both bonds, below Groves’ signature, states, “Authority limited to $500,000.” Great American had previously filed a Form 5297 with Customs stating that Groves was authorized to execute customs bonds up to $1 million.
Great American formulates an anemic argument that the Groves Bonds are unauthorized and invalid. According to Great American, because of the limiting language on the face of the bonds, Groves lacked the authority to bind Great American for more than $500,000. Therefore, Great American maintains that Commerce improperly accepted the Grоves Bonds for a single entry because the combined value of the bonds exceeded the agent’s authori
Moreover, Great American’s assertion that Customs improperly accepted two STBs for a single entry, thus negating the validity of the STBs, lacks legal and evidentiary support. There is no statute or regulation relieving a surety of any responsibility for payment if two bonds cover the same entry. Great American does not identify a statute or regulation prohibiting Customs from accepting two bonds on a single entry. Great American also fails to identify any contract or written policy in its agency agreement or in the letter formulating Groves’s authority expressly prohibiting two bonds on a single entry. Therefore, the Groves Bonds are not void under principles of agency law.
2. The Effect of Great American’s Lack of Notice on the Validity of the Suspension
One of the significant issues in this case is the effect, if any, of Customs’ failure to provide a surety with section 1504(c) notice of a suspension of liquidation. Specifically, the issue is whether Customs’ failure to provide Great American with notice of the suspension of liquidation of the subject entries invalidated the suspension. For the reasons set forth below, the court holds that it does not.
Liquidation occurs either as a result of action by Customs (active liquidation) or by operation of law as a result of the passage of a period of time specified by statute (deemed liquidation). An entry of merchandise is deemed liquidated by operation of law one year after the date of entry unless liquidation is extended or suspended. 19 U.S.C. § 1504(a). If the liquidation of any entry is suspended, notice is to be provided to the importer and to any authorized agent and surety of such importer. 19 U.S.C. § 1504(c).
Customs’ claim for antidumping duties from Great American is barred “unless the complaint is filed within six years after the right of action accrues.” 28 U.S.C. § 2415. The Government’s right of action accrues from the date of liquidation. The Government’s right to collect additional duties attaches when the entry liquidates. 19 C.F.R. § 113.62(a). The obligation to pay the additional duties attached upon liquidation, and because liability is joint and several, the surety’s liability accrued at the same time the importer’s (principal’s) liability accrued. See id. (the obligors, (principal and surety, jointly and severally) agree to pay, as demanded by Customs, all additional duties, taxes, and charges subsequently found due, lеgally fixed, and imposed on any entry secured by the bond.). The parties agree that the six year statute of limitations period runs from the date of liquidation However, the parties disagree as to when the liquidation of the entries occurred.
The Government asserts that the lack of notice to Great American did not invalidate the suspension
of
liquidation on multiple grounds. According to the Government, the notice provisions of section 1504(c) are merely directory or permissive, not mandatory, because they do not state a consequence for the Government’s failure to comply with the notice requirement.
See Canadian Fur Trappers Corp. v. United States,
a. The suspension of liquidation was not invalidated by the failure of Customs to provide Great American with notice of the suspension
As this Court has previously determined, as a matter of law, Customs’ failure to provide a surety with notice of a valid suspension of liquidation does not invalidate an otherwise valid suspension.
See United States v. Am. Home Assurance Co.,
Slip Op. 11-57,
Under the statutory scheme, “the administrative review determination conducted by Commerce ‘shall be the basis for the assessment of ... antidumping duties on entries of merchandise covered by [Commerce’s] determination and for deposits.’ ”
Koyo Corp. v. United States,
Here, liquidation of the entries at issue was suspended, pursuant to section 1675(a)(2), when Commerce received timely requests, in accordance with 19 C.F.R. § 351.213(b), for an administrative review of the antidumping duty covering the subject entries.
See AHA,
As the court explained in
AHA,
under the statutory framework, suspension is “automatic, upon Commerce’s receipt of the requests.”
AHA,
If the liquidation of an entry is suspended, Customs is to provide notice of the suspension to the importer, and to any authorized agеnt and surety of such importer. 19 U.S.C. § 1504(c);
see
19 C.F.R. § 159.12(c). Nevertheless, “failure to provide notice of a suspension does not necessarily vitiate a suspension.”
ANF,
suspension of liquidation is a condition precedent to the notice requirement, not vice versa. Accordingly a surety is not entitled to notice until after liquidation has been suspended. In other words, notice is not a prerequisite to suspension but is provided as a consequence of a suspension having occurred.
This comports with the statutory framework under which Commerce determines the rate and amount of antidumping duties under 19 U.S.C. § 1514(a)(2), whereas Customs merely provides a ministerial role in antidumping duty determinations.
See Mitsubishi Elec. Am., Inc. v. United States,
Great American’s claim that Customs’ failure to notify Great American invalidated the suspension as a matter of law is inconsistent with the statutory framework and is unsupported by the plain language of 19 U.S.C. § 1504. “Deemed liquidation results from operation of law and Customs makes no decision and performs no act in order to bring about a deemed liquidation.”
AHA,
In sum, there is no deemed liquidation while a valid suspension is in place.
See AHA
b. Customs was required to notify Great American of the suspension of liquidation
Once the entries were validly suspended, Customs was statutorily required to provide notice to Great American. The plain language of the notice provisions clearly provides that Customs is to provide notice of the suspension to “any authorized agent and surety of such importer of record.” See 19 U.S.C. § 1504(c). Moreover, by regulation, the port director “promptly shall notify” the surety of the suspension. See 19 C.F.R. § 159.12(c).
Consistent with this Court’s prior rulings, the notice provisions of section
Moreover the provision of notice to Washington International did not discharge Customs of its statutory obligation to provide notice to Great American. The Government’s claim that the requirement in section 1504(c) to provide notice to “any surety” means “оne” as opposed to “every” surety of the importer of record is an incorrect interpretation of the plain language of the statute. The statute requires notice to “any surety” because the requirement only applies if any such sureties are securing antidumping duties on a suspended entry. Furthermore, the Government’s interpretation is contrary to the intent of the notice provisions: to ensure that sureties are better able to control their liabilities and minimize the risk of loss.
See Hanover,
c. Customs’ error in failing to notify Great American is harmless
Although Customs’ failure to provide notice to Great American did not invalidate the suspension as a matter of law, the court still must determine the consequence, if any, of Customs’ procedural error. “If, as is often the case, no law or regulation specifies the consequence of noncompliance with a regulation, the court must determine what remedy, if any, should be imposed.”
AHA
To determine the consequence of Customs’ procedural error in failing to notify a surety of the suspension of liquidation, the court applies principles of “harmless error” or the “rule of prejudicial error.”
AHA
“Procedural errors by Customs are harmless unless the errors are ‘prejudicial to the party seeking to have the action declared invalid.’”
ANF,
However, even if the lack of notice was prеjudicial to Great American, the suspension of liquidation of the entries is not invalidated as a consequence. As previously discussed, the suspension was automatic once Commerce received a request for the periodic review, which occurs by operation of law and is not dependent upon the notice provisions of section 1504(c). Similarly, the validity of a suspension itself is not dependent on a subsequent court determination that Customs’ failure to provide notice of the suspension to an interested party was harmless error. Therefore, the court disagrees with Great American’s argument that a prejudicial error determination would render the Government’s claims time-barred by invalidating the suspension and triggering deemed liquidation one year after entry. Rather, if Customs’ failure to provide notice of the suspension prejudiced Great American, Great American would be entitled to appropriate relief.
See AHA,
Prejudice, for purposes of harmless error analysis, “means injury to an interest that the statute, regulation, or rule in question was designed to protect.”
Intercargo,
Great American alleges that Customs’ failure to provide notice of the suspension was prejudicial because it took away liability reduction opportunities that were an essential component of Great American’s risk under the bonds. According to Great American, notification would have enabled Great American to make sure that, at least with respect to continuing activities, the risk of loss would be minimized. Specifically, Great American argues that if it had received notice, it could have 1) sought collateral or other security from importer New Phoenix; 2) restricted its agents from issuing certain additional bonds; and 3) participated in Commerce’ administrative review of the. subject entries to seek the reduction or elimination of antidumping duties on those entries. The court finds Great American’s examples unpersuasive and finds there was no prejudicial harm from the procedural error.
First, Great American has not established any basis on which it could have demanded additional collateral from New Phoenix after the STBs had been issued. Great American, as surety, was already obligated under the STBs. Great American does not explain how New Phoenix could become obligated to provide more collateral simply because Great American received notice that the liquidation of the entries covered by the STBs was suspended. Thus, a demand for additional collateral would, in effect, amount to a unilateral attempt to modify the contract. Great American would be making a demand on the principal without establishing that the principal would have received anything in exchange. The record evidence does not demonstrate prejudicial harm from the alleged lost opportunity to intervene with the importer to foreclose further exposure on these STBs.
The court acknowledges that the situation could be quite different for CEBs because, on a CEB, the surety can terminate the bond as to future entries. In
Hanover,
the court mentions the legislative history of the notice provisions of section 1504: “[T]he House committee explained, ‘Thus, the sureties can take appropriate measures upon receiving this notice to make sure that at least as to continuing activities, the risk of loss will be minimized.’ ”
Hanover,
Great American’s argument that it was prejudiced because it could have imposed stricter limits on its agents is equally unpersuasive. Great American alleges that if it had received notice, it could have instructed its agents not to issue any additional bonds securing entries of merchandise subject to antidumping duty orders or
Finally, Great American maintains that it was prejudiced by losing the opportunity to stand in the shoes of the importer and participate in Commerce’s administrative review of the subject entries. This lost opportunity, in itself, is insufficient to demonstrate prejudice.
This Court has found that sureties are “interested parties” within the meaning of 19 U.S.C. § 1677(9), and acquire their bond principals’ “administrative and judicial rights ... to appear and participate in antidumping ... duty proceedings having a potential impact on them.”.
See Lincoln Gen. Ins. Co. v. United States,
Unlike the surety in Lincoln, Great American does not indicate any potential claims that it could have brought on behalf of the importer to reduce or eliminate its risk of loss under the bonds. Great American does not explain how it could have conceivably reduced or eliminated the duties assessed on the subject entries had it participated in the administrative review.
Even if Great American stood in the shoes of New Phoenix, an importer does not have a claim for a separate duty rate. The Federal Circuit has affirmed Commerce’s methodology whereby an importer is not entitled to an assessment rate different from the rate assigned to the exporter, even if the importer was independent frоm the exporter and cooperative with Commerce.
See KYD, Inc. v. United States,
Although Commerce is not required to calculate a separate dumping margin for individual importers, the particular duty rate must be supported by substantial evi
Furthermore, Great American does not maintаin that any relevant facts were excluded from the administrative record. In
Hide-Away Creations, Ltd., v. United States,
the court found that the International Trade Administration’s (ITA) failure to publish in the Federal Register the specific date for commencing an administrative review, as required by statute, prejudiced the plaintiff.
Customs’ procedural error, in itself, does not amount to a denial of due process establishing prejudicial harm.
See Former Emps. of Apache Corp. v. United States,
Great American’s prejudice claim, in its briefs and during oral argument, assumes harm without requiring a showing thereof. Great American’s position suggests that any surety that failed to receive notice of a suspension, provided the surety did not have actual or constructive notice, could establish prejudicial harm by merely stating that it was deprived of the opportunity to participate in the administrative review, or by alleging other hypothetical liability-reduction opportunities, regardless of their feasibility. However, whether an error is prejudicial or harmless depends on the facts of a given case.
Shinseki v. Sanders,
Great American fails to show that Customs’ failure to notify Great American of the suspension of liquidation amounts to prejudicial harm in this action. Customs’ procedural error is harmless.
3. Whether Great American is Discharged Under the Law of Surety-ship
Customs’ failure to give Great American notice of the suspension of liquidation does not discharge Great American’s obligations under the bonds.
This Court has relied upon surety-ship law principles explained in the
Restatement (Third) of Suretyship and Guaranty
in determining the rights and obligations of parties under customs bonds.
See, e.g., Washington Int’l Ins. Co. v. United States,
If the obligee acts to increase the secondary obligor’s risk of loss by increasing its potential cost of performance or decreasing its potential ability to cause the principal obligor to bear the cost of performance, the secondary obligor is discharged as described [in other subsections] .... An act that increases the secondary obligor’s risk of loss by increasing its potential cost of performance or decreasing its potential ability to cause the principal obligor to bear the cost of performance is an impairment of suretyship status.
The critical question is whether an act of the obligee, in this case the Government, “fundamentally alter[ed] the risks imposed on the secondary obligor,” in this case, Great American.
Id.
at § 37(2). In order for there to be an impairment of suretyship such that the surety is discharged of its obligation, the increase in the surety’s risk must be material.
See Old Republic Ins. Co. v. United States,
Here, as in
Old Republic,
the increase in Great American’s risk due to the failure to receive notice is not material.
See
The lack of notice did not fundamentally alter the bargained-for exchange or materially alter any of the contractual provisions in a way that increased Great American’s contractual liability.
See Washington Int’l,
4. Whether the Government’s claims under the Coastal Bonds are time-barred
The court now turns to Great American’s deemed liquidation claim relating to the two Coastal Entries. When Commerce initiated its administrative review, liquidation of entries falling within the scope of the review, including the Coastal Entries, was suspended. On August 6, 2002, Commerce rescinded its administrative review of Coastal’s entries for the POR via publication in the Federal Register. See Notice of Rescission, 67 Fed.Reg. at 50,861. 17 On May 9, 2003, Customs liquidated the Coastal Entries.
The parties disagree as to when the Coastal Entries liquidated. Specifically, the parties dispute whether the Coastal Entries were deemed liquidated as a matter of law on February 6, 2003, six months after Commerce published the Notice of Rescission rescinding its review of those entries.
The statute that is the focus of this issue, 19 U.S.C. § 1504(d), governs the deemed liquidation of entries whose liquidation previously was suspended. Liquidation of an entry is suspended by statute or court order. 19 U.S.C. § 1504(d). When a suspension of liquidation required by statute or court order is removed:
The Customs service shall liquidate the entry ... within 6 months after receiving notice of the removal from the Department of Commerce ... Any entry ... not liquidated by the Customs Service within 6 months after receiving such notice shall be treated as having been liquidated at the rate of duty, value, quantity, and amount of duty asserted at the time of entry by the importer of record.
19 U.S.C. § 1504(d). Thus, in order for deemed' liquidation to occur: 1) the suspension of liquidation that was in place must have been removed; 2) Customs must have received notice of the removal of suspension; and 3) Customs must not liquidate the entry at issue within six months of receiving such notice.
Fujitsu,
Great American maintains that Commerce’s publication of the
Notice of Rescission
of the review of thе Coastal Entries in the Federal Register both removed the suspension of liquidation on those entries, and served as section 1504(d) notice to Customs that the suspension was removed. Because Customs did not liquidate the Coastal Entries within six months of publication, Great American asserts that the entries were deemed liquidated by opera
The Government claims that the publication of the Notice of Rescission did not remove suspension of liquidation of the Coastal Entries because the entries became tentatively subject to the PRC-wide rate still under review. In other words, the Government maintains that the Notice of Rescission did not trigger Customs’ six-month period, pursuant to section 1504(d), to liquidate the Coastal Entries. According to the Government, the suspension was not removed until April 21, 2003, when Commerce published the final results of the administrative review, or, on January 17, 2003, when Customs received liquidation instructions from Commerce for the Coastal Entries. 18
Therefore, the court must determine: 1) whether the Notice of Rescission removed the suspension of liquidation of the Coastal Entries for section 1504(d) purposes; and, if so, 2) whether the Notice of Rescission constituted section 1504(d) notice to Customs that the suspension of the Coastal Entries was removed.
a. The publication of the Notice of Rescission removed the suspension of liquidation on the Coastal Entries
The statutory scheme governing suspension of liquidation supports Great Ameriean’s position that the Notice of Rescission removed the suspension of the Coastal Entries.
The rationale articulated in
Int’l Trading
and
Fujitsu
is instructive. In
Int’l Trading,
the liquidation of certain entries of merchandise subject to an antidumping duty order was suspended by statute while Commerce undertook an administrative review of the order.
Int’l Trading,
tying the removal of suspension to the issuance of an antidumping duty order or final results has the virtue of parallelism with the mechanisms by which suspension was initiated; thus suspension is begun by publication of an announcement of the antidumping investigation, and suspension is removed by the publication of the announcement of the conclusion of the investigation.
Id.
at 1272. In
Fujitsu^
liquidation of the subject entries was enjoined by order of this Court, pursuant to 19 U.S.C. §
1516a(fi)(2),
pending litigation.
See Fujitsu General v. United States,
Here, liquidation of the Coastal Entries was suspended by statute pending the outcome of the administrative review for the POR covering those entries. See 19 U.S.C. § 1675(a). In accordance with Int’l Trading and Fujitsu, the suspension was removed when the act triggering the suspension, in this case the administrative review of the Coastal Entries, concluded.
The
Notice of Rescission
concluded the review of the Coastal Entries. The notice unambiguously states that “[s]ince petitioner submitted timely withdrawals of its request for review of ... Coastal ... the Department is rescinding its antidumping administrative review of those companies .... ”
Notice of Rescission,
Although the Government admits that publication of a rescission notice may, in some cases, remove the suspension of liquidation, it claims that the Notice of Rescission in this case did not remove the suspension. According to the Government, as a consequence of the rescission, the Coastal Entries became tentatively subject to a PRC-wide rate once that rate was determined. To support its position, the Government points to a footnote in the Notice of Initiation. See 66 Fed.Reg. at 54,196 n. 2 (“Footnote 2”). Footnote 2 states that if one of the listed companies, which included Coastal, “does not qualify for a separate rate, all other exporters of freshwater crawfish tail meat from the People’s Republic of China who have not qualified for a separate rate are deemed to be covered by this review as part of the single PRC entity of which the named exporters are a part.” Id. The Government reasons that the duties owed on the Coastal Entries were unknown and unknowable when Commerce rescinded its review of the Coastаl Entries because the PRC-wide rate could not be determined until the completion of the administrative review. Therefore, according to the Government, the Notice of Rescission did not remove the suspension of liquidation of the Coastal Entries.
The Government’s argument that the Coastal Entries remained under review after publication of the
Notice of Rescission
The language of the Notice of Rescission does not indicate that a consequence of rescission would be to subject the Coastal Entries to a PRC-wide rate. In fact, Commerce’s statement in the Notice of Rescission that it “will issue appropriate assessment instructions to the Customs Service” suggests that liquidation instructions were forthcoming and undermines Commerce’s present assertion that the notice сontinued the suspension of liquidation of the Coastal Entries. See 67 Fed.Reg. at 50,861. Regardless of whether the Government intended to continue the suspension of liquidation of the Coastal Entries by including those entries as part of the administrative review of the PRC-wide entity, the Government’s intent does not overcome the plain meaning of the Notice of Rescission and the effect of that rescission as defined by 19 C.F.R. § 351.213.
Moreover, the Government’s argument that the
Notice of Rescission
fails to remove the suspension because the notice is silent as to whether the suspension is removed is meritless. Language explicitly stating that a suspension is removed is not required to remove a suspension of liquidation. In
Int’l Trading,
where the court determined that the final results removed the suspension, the final results did not explicitly state that the suspension was removed.
See Shop Towels From Bangladesh,
61 Fed.Reg. 5377 (Dep’t of Commerce Feb. 12, 1996) (final results of administrative review). Likewise, in
Fujitsu,
where this Court had enjoined liquidation of the subject merchandise pending litigation, the court held that the Federal Circuit decision ending the underlying litigation removed the court-ordered suspension even though that decision did not even mention the suspension of liquidation that this Court had ordered.
See
Finally, the Government’s own conduct contradicts its position. Commerce issued liquidation instructions for the Coastal Entries in January 2003, more than three months before it completed the administrative review and issued the final results that would tentatively determine the PRC-wide rate. 21 If liquidation of the Coastal Entries remained suspended, as the Government claims, it would be illogical, or at least premature, to issue liquidation instructions to Customs prior to publication of the final results. 22
For the foregoing reasons, the court concludes that Commerce’s publication of
b. Customs received notice that suspension of liquidation was removed
Because the
Notice of Rescission
removed the suspension of liquidation of the Coastal Entries, the court must now determine when Customs received notice from Commerce that the suspension had been removed.
See
19 U.S.C. 1504(d);
Fujitsu,
To be sufficient for purposes of section 1504(d), the notice must be unambiguous that the suspension of liquidation has been removed.
NEC Solutions, Inc. v. United States,
Similarly, in this case, the publication of the Notice of Rescission in the Federal Register served as unambiguous notice to Customs that the suspension of the Coastal Entries was removed. On that date, Custоms received notice that the administrative review of the Coastal Entries, the act triggering the suspension of those entries, had concluded. The notice clearly stated that since the petitioner submitted a timely withdrawal of its request for review of Coastal, among others, “the Department is rescinding its antidumping administrative review of those companies.... ” Notice of Rescission, 67 Fed.Reg. at 50,861. In the case of publication of the rescission notice at issue, like the issuance of the final results in Int’l Trading, the act removing the suspension and the act notifying Customs of the removal, are one and the same.
The removal of suspension of liquidation is effected by Federal Register publication, an act that provides general notification to affected parties regarding the reported action. In that setting, there is no reason to interpret section 1504(d) to require that notice of the removal of suspension of liquidation be provided by a mechanism separate from the act that effects the removal of suspension.
Int’l Trading,
The Government points out that the notice in
Fujitsu
provided Customs with an actual duty rate to be applied, whereas here, the notice does not provide a rate for the Coastal Entries. However, whether or not the notice states the specif
Moreover, the Government’s claim that the Notice of Rescission does not provide an actual duty rate to be applied in the liquidation instructions is misleading. The Notice of Rescission explicitly refers to Commerce’s memorandum from June 2, 2002 to Customs, announcing Commerce’s intent to rescind its review of Coastal’s entries, among other exporters’ entries. See Notice of Rescission, 67 Fed.Reg. 50861. 23 The memorandum informed Customs that “the Department will assess antidumping duties for those companies, on the subject merchandise entered or withdrawn from the warehouse for consumption during the period of September 1, 2000, through August 31, 2001, at the cash deposit rate or bonding rate in effect on the date of entry.” Memorandum of Intent to Rescind (emphasis added). In the Notice of Rescission, Commerce states that it provided a copy of the memorandum to all interested parties, including Coastal, belying the Government’s claim that Coastal was on notice that a failure to qualify for a separate rate would cause it to be conditionally subject to review of the PRC-wide entity. See 67 Fed.Reg. at 50,-851. This memorandum, discussed in the Notice of Rescission, clearly communicates that a consequence of the rescission would be to establish the antidumping duty rate for the Coastal Entries at the “as entered rate.” 24
The Government’s argument that the Notice of Rescission did not constitute section 1504(d) notice bypasses the unambiguous language of the notice clearly concluding Commerce’s review of those entries. The Government’s position that the Coastal Entries remained under review as part of the PRC-wide entity upon rescission, pursuant to Footnote 2 in the Notice of Initiation, is unpersuasive.
As an initial matter, the court finds the language of Footnote 2 ambiguous. The
Regardless of whether Commerce intended to continue to suspend the Coastal Entries, the court must give effect to the language of the Federal Register notice.
See NEC Solutions,
Therefore, the court holds that the publication of the
Notice of Rescission
removed the suspension of liquidation of the Coastal Entries. The publication of the
Notice of Rescission
also constituted section 1504(d) notice to Customs that the suspension had been removed. Because Customs did not liquidate within six months of August 6, 2002, the date of publication, the Coastal Entries liquidated by operation of law pursuant to section 1504(d). The Government’s cause of ac
CONCLUSION
For the foregoing reasons, the Government’s Motion for Summary Judgment is granted in part and denied in part. The Government’s Motion for Summary Judgment is granted with respect to the Suqian Bonds and the CEB identifying Washington Intеrnational as surety. The Government’s Motion for Summary Judgment is denied with respect to the Coastal Bonds because the Government’s right to collect any duties on the entries covered by the Coastal Bonds is time-barred. Great American’s Cross-Motion for Summary Judgment is granted with respect to the Coastal Bonds. With respect to all other defenses, Great American’s Cross-Motion for Summary Judgment is denied. Washington International’s Motion for Summary Judgment is denied. Judgment will enter accordingly.
Notes
. Great American Insurance Company of New York, a subsidiary of Great American Insurance Company, was formerly known as American National Fire Insurance Company. "Great American” refers to the company both before and after the name change.
. After Commerce made its preliminary determination that crawfish tail meat from the
. Both Suqian and Coastal were subject to new shipper reviews when the Suqian and Coastal Entries entered the United States. See Freshwater Crawfish Tail Meat from the People's Republic of China, 64 Fed.Reg. 61,-833, 61,834 (Dep't Commerce Nov. 15, 1999) (initiation of new shipper review); Freshwater Crawfish Tail Meat from the People’s Republic of China, 65 Fed.Reg. 66,525 (Dep’t Commerce Nov. 6, 2000) (initiation of new shipper review). Commerce instructed Customs to allow, at the option of the importer, the posting of a bond or a security in lieu of a cash deposit for each entry of merchandise exported by a company subject to a new shipper review. Id.; see 19 U.S.C. § 1675(a)(2)(B)(iii); 19 C.F.R. § 351.214(e).
. "On September 28, 2001, the Department received a timely request from the Crawfish Processors Alliance, petitioner in this case, and the Louisiana Department of Agriculture & Forestry and Bob Odom, Commissioner, for an administrative review covering the period from September 1, 2000, through August 31, 2001, in accordance with 19 CFR 351.213(b)(1).” Freshwater Crawfish Tail Meat From the People’s Republic of China, 67 Fed.Reg. 50,860 (Dep't Commerce Aug. 6, 2002) (notice of rescission in part) (''Notice of Rescission ”).
. Further citations to the Tariff Act of 1930, as amended, are to the relevant portions of Title 19 of the U.S.Code, 2006 edition.
. Section 1504(c) refers to 19 U.S.C. § 1504(c).
. In 1996, Great American executed an agency agreement authorizing Chesapeake Brokers International ("CBI”) to underwrite and execute customs bonds on Great American’s behalf. Great American later filed a Form 5297 for CBI employee, James Davis. In 1999, after the CIMA companies ("CIMA”) acquired CBI, Great American entered into a similar agency relationship with CIMA. The Form 5297 for Davis remained in force following CIMA’s acquisition of CBI and was in effect when Davis executed the Suqian Bonds.
. Great American asserts that its agreement with CBI and CIMA limited the authority of CBI and CIMA agents: an agent could not execute an STB for more than $500,000 without advance approval from Great American. With аdvance approval, the agents could execute bonds up to $1 million.
. A “surety bond creates a three-party relationship, in which the surety becomes liable for the principal's debt or duty to the third
. The Form 5297 was a three-part form and only the top form was sent to Customs. Great American did not produce a copy of the Form 5297 submitted to Customs or an "original” second or third copy of the three-part form. The Government notes that the documentation produced by Great American to support its position is an incomplete copy of a Form 5297 for Davis that lacks the corporate seal and one of the two required signatures.
. According to Great American, Customs’ electronic record is not the best evidence. Great American points out that Customs incorrectly inputted information into the electronic record from a Form 5297 for another agent, including failing to state the limit on that agent's authority. That Form 5297 was submitted to Customs along with the Form 5297 for Davis. Thus, Great American argues the electronic error reflects a mistake on the part of the person inputting the information into Customs’ record, and indicates that the same mistake was made when entering the authorization limit for Davis. Moreover, Great American points out that the Form 5297 for Davis contained two typographical errors and switched Davis’s first and last name. Great American further argues that the statutory presumption of correctness does not apply in a civil action like this case where no previous Customs’ ruling is under review.
. According to Great American, it first leaned of the existence of the bonds at issue in September 2003 from counsel for Washington International. Great American states that this is a not a fact upon which its motion is based.
. When the Groves Bonds were issued, Groves was employed by CIMA, Great American’s managing general agent for customs bonds.
. The
Woodrum
court found that the Secretary’s failure to conduct an investigation and his failure to publish notice of the receipt of a petition for trade adjustment assistance preju
. As the court explained, "petitioners have sixty days from the date of publication of a notice of a final determination within which to seek judicial review of that determination.”
Id.
at 52,
. As support, Great American repeats the prejudicial error argument that lack of notice deprived it of the opportunity to participate in the administrative proceeding to reduce or eliminate the antidumping duties on the entries and to intervene promptly with New Phoenix and/or Great American’s agent to foreclose further exposure.
. As Commerce explained, "pursuant to our regulations, the Department will rescind an administrative review, ‘if a party that requested the review withdraws the request within 90 days of publication of notice of initiation of dle requested review.' ” Notice of Rescission, 67 Fed.Reg. at 50,861 (quoting 19 C.F.R. § 351.213(d)(1)). On December 10, 2001, the petitioner withdrew its request for review of Coastal.
. As the Government points out, either way, Customs liquidated the Coastal Entries on May 9, 2003, within six months of the removal of suspension and less than six years before the Government brought this action.
.
Fujitsu Gen. Ltd. v. United States,
. On November 6, 2000, Commerce had initiated a new shipper review of Coastal’s entries which was to cover entries and sales made between September 1, 1999 and August 31, 2000 upon Coastal's request. During the course of the review, Commerce determined that Coastal had not made entries during the period of review and therefore rescinded the review of Coastal. Freshwater Crawfish Tail Meat from the People’s Republic of China, 66 Fed.Reg. 41,831 (Dep’t Commerce Aug. 9, 2001) (final rescission of antidumping shipper review). Thus, when Commerce published the Notice of Initiation of the periodic administrative review on October 26, 2001, Coastal was not under any other review.
. The PRC-wide rate was not determined in the Final Results.
. The Government does not explain why Commerce would issue liquidation instructions for the Coastal Entries prior to the issu
. The Notice of Rescission cites to the Memorandum to the File from Adina Teodorescu, Case Analyst, through Barbara E. Tillman, Director, Office of AD/CVD Enforcement VII: Intent to Partially Rescind the Antidumping Administrative Review (on file in the Department's Central Records United in Room B-099 ("Memorandum of Intent to Rescind ")).
. The court is not ruling that Commerce's
Memorandum of Intent to Rescind
constituted notice to Customs under section 1504(d) that the suspension had been removed.
See Travelers Indem. Co. v. United States,
. In other rescission notices, where the Government rescinded only its separate rate analysis, not the administrative review of the entries, it stated as such. See, e.g., New Pneumatic Off-the-Road. Tires From the People’s Republic of China, 75 Fed.Reg. 28567, 28568 (Dep’t Commerce May 21, 2010) (notice of partial rescission) (in rescinding its review as to certain entries from the PRC, the rescission notice explicitly distinguished those companies whose entries remained under review as part of the PRC entity. The rescission notice stated that "their respective entries may be under review in the ongoing administrative review. Accordingly, the Department will not order liquidation of entries” for those companies.” In contrast, for the other companies subject to the rescission, the notice stated that Commerce will instruct Customs to assess antidumping duties on all appropriate entries at the cash deposit rate at the time of entry.); Certain New Pneumatic Off-the-Road Tires From the People’s Republic of China, 76 Fed.Reg. 14,919 (Dep’t Commerce Mar. 18, 2011) (notice of partial rescission).