from the United States Court of International Trade in Nos.
1:12-cv-00133-GWC, 1:12-cv-00153-GWC, 1:12-cv-00162-GWC,
Judge Gregory W. Carman.
Albert Yocis, Picard Kentz & Rowe LLP, Washington, DC,
argued for plaintiff-appellant. Also represented by Andrew
William Kentz, Roop Bhatti, Meixuan Li, Douglas Knox Bemis,
Michael Paul House, Perkins Coie, LLP, Washington, DC, argued
for defendant-appellee. Also represented by David John
Townsend, David Stewart Christy, Jr.
Newman, Lourie, and Dyk, Circuit Judges.
2012, the Department of Commerce issued a final determination
in an antidumping investigation of certain steel nails from
the United Arab Emirates ("UAE") finding that
Precision Fasteners, LLC had engaged in targeted dumping and
imposed a duty. In calculating Precision's dumping
margin, Commerce declined to apply a regulation limiting the
use of the average-to-transaction methodology to non-targeted
sales because the agency asserted that the regulation had
been withdrawn in 2008. See 19 C.F.R. §
Court of International Trade ("Trade Court") held
that Commerce had violated the Administrative Procedure Act
("APA") by withdrawing the regulation without
providing notice and opportunity for comment. On remand,
Commerce redetermined Precision's duty by applying the
withdrawn regulation and found that no duty was owing. The
Trade Court affirmed. We hold that Commerce violated the
requirements of the APA in withdrawing the regulation,
leaving the regulation in force; that its violation of the
APA was not harmless; and that the agency did not err in
applying the regulation on remand. We therefore affirm the
final judgment of the Trade Court.
2011, appellant Mid Continent Nail Corp. filed a petition
with Commerce alleging that "imports of certain steel
nails from the UAE . . . [were being] sold in the United
States at less than fair value, . . . and that such imports
[were] materially injuring, or threatening material injury
to, an industry in the United States." Certain Steel
Nails From the United Arab Emirates: Initiation of
Antidumping Duty Investigation, 76 Fed. Reg. 23, 559, 23, 560
(Apr. 27, 2011). Commerce initiated an antidumping
investigation during which it determined that appellee
Precision was among the mandatory respondents, i.e.,
an importer whose dumping rate would be individually
determined in the course of the investigation. See
Certain Steel Nails From the United Arab Emirates:
Preliminary Determination, 76 Fed. Reg. 68, 129 (Nov. 3,
2011). In 2012, Commerce issued an antidumping duty order
imposing a 2.51 percent duty on Precision. See
Certain Steel Nails From the United Arab Emirates: Final
Determination, 77 Fed. Reg. 17, 029, 17, 031-32 (Mar. 23,
2012); Certain Steel Nails from the United Arab Emirates:
Amended Final Determination, 77 Fed. Reg. 27, 421, 27, 422
(May 10, 2012).
found that Precision had engaged in "targeted
dumping" because Precision's sales reflected a
"pattern of export prices . . . that differ[ed]
significantly among certain customers, regions, and time
periods." 77 Fed. Reg. at 17, 031; see also 19
U.S.C. § 1677f-1(d)(1)(B)(i); U.S. Steel Corp. v.
United States, 621 F.3d 1351, 1359 (Fed. Cir. 2010).
And, central to this appeal, the agency proceeded to
calculate Precision's dumping margin by applying the
average-to-transaction methodology to all U.S. sales reported
by Precision, irrespective of whether the agency had deemed a
sale to be targeted or not. See 77 Fed. Reg. at 17,
average-to-transaction methodology is one of the three
methods that Commerce may use in an investigation to
calculate dumping margins in accordance with the Tariff Act
of 1930, as amended by the Uruguay Round Agreements Act
(URAA), Pub. L. No. 103-465, 108 Stat. 4809 (1994). The
statute provides that, in general, Commerce "shall
determine whether . . . subject merchandise is being sold in
the United States at less than fair value" by either:
(1) "comparing the weighted average of the normal values
to the weighted average of the export prices (and constructed
export prices) for comparable merchandise"; or (2)
"comparing the normal values of individual transactions
to the export prices (or constructed export prices) of
individual transactions for comparable merchandise." 19
U.S.C. § 1677f-1(d)(1)(A)(i)-(ii). These two methods are
respectively known as the "average-to-average" and
statute permits Commerce to use a third meth-od-the
average-to-transaction methodology-if certain conditions are
met. The average-to-transaction methodology "compar[es]
the weighted average of the normal values to the export
prices (or constructed export prices) of individual
transactions for comparable merchandise." Id.
§ 1677f-1(d)(1)(B). To calculate dumping margins using
the average-transaction methodology, however, Commerce must
find "a pattern of export prices (or constructed export
prices) for comparable merchandise that differ significantly
among purchasers, regions, or periods of time, "
(i.e., targeted dumping) and explain "why such
differences cannot be taken into account using" the
first two methods. Id. §
1677f-1(d)(1)(B)(i)-(ii). In other words, Commerce must first
conclude that a respondent is engaged in targeted dumping and
explain why the other two statutory methodologies fail to
sufficiently account for it. See U.S. Steel, 621
F.3d at 1358-59.
calculating dumping margins using the average-to-transaction
methodology, Commerce has "historically" used a
practice known as "zeroing" in which "negative
dumping margins (i.e., margins of sales of
merchandise sold at nondumped prices) are given a value of
zero and only positive dumping margins (i.e.,
margins for sales of merchandise sold at dumped prices) are
aggregated." Union Steel v. United States, 713
F.3d 1101, 1104 (Fed. Cir. 2013). As a result, "dumping
margins for sales below normal value are not offset by
'negative dumping margins' for those sales made above
normal value." Corus Staal BV v. United States,
502 F.3d 1370, 1372 (Fed. Cir. 2007). This lack of offsetting
leads to higher dumping margins when the
average-to-transaction methodology is used, which has made
calculation of margins using this methodology
"controversial." See Union Steel, 713 F.3d
after the enactment of the URAA, Commerce promulgated a
regulation through notice-and-comment rulemaking restricting
the agency's use of the average-to-transaction
methodology. This regulation-known as the "Limiting
Regulation"-provided that even in cases meeting the
statutory criteria for applying the average-to-transaction
methodology, the agency would "normally . . . limit
[its] application . . . to those sales that constitute
targeted dumping, " as opposed to applying the
average-to-transaction methodology to all of a
respondent's sales. See 19 C.F.R. §
351.414(f)(2) (2008); see also Antidumping Duties;
Countervailing Duties, Final Rule, 62 Fed. Reg. 27, 296, 27,
375 (May 19, 1997).
2008, however, Commerce withdrew the Limiting Regulation,
along with several other regulations governing the
agency's handling of targeted dumping allegations.
See Withdrawal of the Regulatory Provisions
Governing Targeted Dumping in Antidumping Duty
Investigations, Interim Final Rule, 73 Fed. Reg. 74, 930, 74,
931 (Dec. 10, 2008) [hereinafter Withdrawal Notice].
The agency stated that it had originally promulgated the
regulations "without the benefit of any experience on
the issue of targeted dumping, " and that the
regulations "may have established thresholds or other
criteria that . . . prevented the use of [the
average-to-transaction] methodology to unmask dumping,
contrary to the [c]ongressional intent." Id.
Commerce noted that withdrawal would allow the agency to gain
"additional experience" with targeted dumping
through "case-by-case adjudication." Id.
acknowledged in Withdrawal Notice that repeal of the
targeted dumping regulations was subject to "the
requirement to provide prior notice and opportunity for
public comment, pursuant to . . . 5 U.S.C. § 553(b)(B),
" but expressly "waive[d] the requirement" by
invoking the APA's "good cause" exception to
notice-and-comment rulemaking. 73 Fed. Reg. at 74, 931.
finding good cause, Commerce explained that
no-tice-and-comment rulemaking was "impracticable and
contrary to the public interest" because the rescinded
regulations were "applicable to ongoing antidumping
investigations" and that "immediate revocation
[was] necessary to ensure the proper and efficient operation
of the antidumping law[s]." Id. At no point in
Withdrawal Notice did Commerce refer to any prior
notices proposing to withdraw the Limiting Regulation, or
otherwise suggest that the agency had provided adequate
notice and opportunity for comment under the APA.
calculating Precision's dumping margin three years later
in this proceeding, Commerce applied the
average-to-transaction methodology, having found both "a
pattern of export prices . . . that differ[ed] significantly
among customers, regions, or by time-period, " and that
applying the "average-to-average methodology mask[ed]
differences in the patterns of prices between the targeted
and non-targeted groups." 77 Fed. Reg. at 17, 031. In
this appeal, no party has challenged Commerce's
determination that the statutory criteria for applying the
average-to-transaction methodology were met. What the parties
dispute is the agency's decision to apply the
average-to-transaction methodology not just to "those
sales that constitute[d] targeted dumping, " as the
Limiting Regulation had previously provided, but "to
all U.S. sales reported by . . . Precision."
See id. (emphasis added).
challenged Commerce's final determination in the Trade
Court. See Mid Continent Nail Corp. v. United States
(Mid Continent I), 999 F.Supp.2d 1307, 1309-10 (Ct.
Int'l Trade 2014). In relevant part, Precision argued
that Commerce was required to apply the Limiting Regulation
to calculate Precision's dumping margin because the
agency's repeal of the regulation in "Withdrawal
Notice was ineffective and contrary to law, " as it
had "occurred outside the basic procedural framework
required by Congress under the [APA]." Id. at
1319-20. According to Precision, had the agency applied the
Limiting Regulation, application of the
average-to-transaction methodology to all of
Precision's domestic sales would not have been
"justif[ied]" because the agency had "only
found evidence of targeting for less than one percent"
of Precision's U.S. sales, the exact scenario that had
concerned Commerce when it adopted the Limiting Regulation in
the first place. Id. at 1319.
Trade Court agreed that Commerce's withdrawal of the
Limiting Regulation violated the APA. After concluding that
withdrawal of the regulation was subject to
notice-and-comment rulemaking, the court rejected the
argument that the agency had provided adequate notice and
opportunity for comment through two earlier Federal Register
notices because those notices had not proposed to repeal the
regulation. See id. at 1322. The court also rejected
Commerce's invocation of good cause and found that the
agency's procedural default was not excusable as harmless
error. See id. Accordingly, the Trade Court remanded
Commerce's final determination and instructed the agency
to "redetermine [Precision's] dumping mar-gin by
applying the Limiting Regulation." Id. at
remand, Commerce applied the Limiting Regulation as ordered
by the Trade Court. As the regulation provided that Commerce
would "normally" not apply the
average-to-transaction methodology to all sales, see
19 C.F.R. § 351.414(f)(2) (2008), the agency concluded
that application of the average-to-transaction methodology to
all of Precision's sales was unwarranted because
"the record does not contain evidence to suggest that
this normal limitation should not be applied." J.A. 89.
As a consequence of limiting the average-to-transaction
methodology to only targeted sales, Commerce found that
Precision's dumping margin was "de minimis,
" and therefore imposed a duty of 0.00 percent.
Continent appealed Commerce's remand rede-termination to
the Trade Court, arguing that the agency had misapplied the
Limiting Regulation. See Mid Continent Nail Corp. v.
United States (Mid Continent II), 113 F.Supp.3d
1318, 1326 (Ct. Int'l Trade 2015). The court rejected Mid
Continent's argument and affirmed Commerce's remand
redetermination. See id. at 1327-28, 1331. Mid
Continent then filed this appeal, which Commerce has not
joined. We have jurisdiction under 28 U.S.C. §
the pendency of the Trade Court proceedings, and in light of
the court's ruling that Withdrawal Notice was
ineffective to repeal the Limiting Regulation,  Commerce in 2013
initiated a new proceeding to accomplish the repeal. The
agency published a Notice of Proposed Rulemaking
("NPRM") in which it sought comments on a proposal
"not to apply . . . the previously withdrawn regulatory
provisions governing targeted dumping." Non-Application
of Previously Withdrawn Regulatory Provisions Governing
Targeted Dumping in Antidumping Duty Investigations, Proposed
Rule, 78 Fed. Reg. 60, 240, 60, 240 (Oct. 1, 2013). In 2014,
Commerce issued a final rule making withdrawal of the
regulations effective May 22, 2014. See 79 Fed. Reg.
22, 371 (Apr. 22, 2014). No party to this appeal has
challenged the 2014 withdrawal, or contended that it should
be applied retroactively. Accordingly, this case solely
addresses whether the withdrawn regulations were in effect
during the period between December 10, 2008, and May 22,
review the Trade Court's decision to uphold
Commerce's remand redetermination de novo.
See U.S. Steel, 621 F.3d at 1357. We will affirm the
agency unless its decision "is unsupported by
substantial evidence on the record, or otherwise not in
accordance with law." 19 U.S.C. §
1516a(b)(1)(B)(i). "Commerce's decision will [also]
be set aside if it is arbitrary and capricious."
Changzhou Wujin Fine Chem. Factory Co. v. United
States, 701 F.3d 1367, 1374 (Fed. Cir. 2012).
not defer to an agency's interpretation of the APA's
statutory requirements, although the statute itself presumes
that review of agency action under the
arbi-trary-and-capricious standard is "highly
deferential." Nat'l Org. of Veterans'
Advocates, Inc. v. Sec'y of Veterans Affairs, 260
F.3d 1365, 1372 (Fed Cir. 2001); see also Collins v.
Nat'l Transp. Safety Bd., 351 F.3d 1246, 1253 (D.C.
Cir. 2003) ("For generic statutes like the APA, . . .
the broadly sprawling applicability undermines any basis for
deference, and courts must therefore review interpretative
questions de novo."); Mobil Oil Corp. v. Dep't
of Energy, 728 F.2d 1477, 1486-87 (Temp. ...