Dixon Ticonderoga Co. v. U.S. Customs and Border Prot., Slip Op. 05-46.

• Decision Date: 04 April 2005
• Docket Number: Slip Op. 05-46.,Court No. 04-00027.
• Citation: 366 F.Supp.2d 1352
• Parties: DIXON TICONDEROGA COMPANY, Plaintiff, v. UNITED STATES CUSTOMS AND BORDER PROTECTION and Robert C. Bonner, Defendants.
• Court: U.S. Court of International Trade

Page 1352

366 F.Supp.2d 1352

DIXON TICONDEROGA COMPANY, Plaintiff, v. UNITED STATES CUSTOMS AND BORDER PROTECTION and Robert C. Bonner, Defendants.

Slip Op. 05-46.

Court No. 04-00027.

United States Court of International Trade.

April 4, 2005.

Gray Robinson, P.A. (A. Anthony Giovanoli), Guy S. Haggard, New York City, for Plaintiff.

Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director; Jeanne E. Davidson, Deputy Director, (David S. Silverbrand), Trial Attorney, U.S. Department of Justice, Civil Division, Commercial Litigation Branch; Charles Steuart, Office of Chief Counsel, United States Customs & Border Protection, for Defendant, of counsel.

OPINION

BARZILAY, Judge.

Plaintiff, Dixon Ticonderoga Company ("Dixon"), seeks review of a decision by Defendant, United States Customs and Border Protection of the Department of Homeland Security ("Customs" or "the Government") to deny its application to receive its share of assessed Chinese pencil anti-dumping duties for fiscal year 2003. Customs denied Dixon's application because it was filed late, and Dixon argues that this decision was arbitrary and capricious because Customs itself failed to publish notice of intent to distribute the offset in the Federal Register at least 90 days before the end of Customs' fiscal year, as required by Customs' own regulations. Dixon also argues that Customs' failure to timely publish this notification was substantially prejudicial, and requests that this court either require Customs to reverse its denial of Dixon's application and allow Dixon to receive its share of the disbursement for fiscal year 2003, waive the 2003 application deadline for all U.S. pencil manufacturers, or require Customs to void the distribution process thus far and republish its Notice of Intent so that applications may be resubmitted. Although the court finds that the regulatory deadline set forth in 19 C.F.R. § 159.62(a) constitutes a mere procedural guideline, Dixon's motion is granted because the court finds that Customs' failure to abide by its own notice regulations was substantially prejudicial to Dixon.

Background

This case concerns a distribution pursuant to the Continued Dumping and Subsidy Offset Act of 2000 ("CDSOA"), also known as the Byrd Amendment.¹ 19 U.S.C. § 1675c (2005). In 1994, the Pencil Manufacturers Association, of which Dixon is a member, petitioned the United States Department of Commerce ("Commerce") alleging that certain cased pencils from the People's Republic of China were being sold in the United States at less-than-fair value. See Notice of Final Determination of Sales at Less than Fair Value: Certain Cased Pencils From the People's Republic of China, 59 Fed.Reg. 55625 (Nov. 8, 1994). After concluding that pencils from China were being sold at less-than-fair value in the United States, Commerce published an antidumping duty order. See Antidumping Duty Order: Certain Cased Pencils from the People's Republic of China, 59 Fed.Reg. 66909 (Dec. 28, 1994).

As part of the CDSOA distribution process, Customs is statutorily required to publish a "Notice of Intent to Distribute" at least 30 days before the distribution of a continued dumping and subsidy offset. 19 U.S.C. § 1675c(d)(2) (2003). Furthermore, according to Customs' own regulations, it is required to publish the Notice of Intent to Distribute at least 90 days before the end of the fiscal year. 19 C.F.R. § 159.62(a) (2003). Claimants seeking a share of the distribution then have 60 days from the date of publication of the Notice of Intent to Distribute to file the certifications required to receive an offset distribution. 19 C.F.R. § 159.63(a) (2003). In 2003, Customs published the Notice of Intent to Distribute on July 14 — 78 days prior to the end of the fiscal year and 12 days after the regulatory deadline. Distribution of Continued Dumping and Subsidy Offset to Affected Domestic Producers, 68 Fed.Reg. 41, 597 (July 14, 2003).

On October 23, 2004 — 102 days after Customs' publication of the Notice of Intent to Distribute — Dixon filed its application to receive a portion of the assessed Chinese pencil duties for that fiscal year. Dixon argued to Customs that Customs' own failure to provide notice as required by 19 C.F.R. § 159.62(a) caused it as well as other domestic pencil manufacturers to file late. Nonetheless, Customs denied Dixon's application in a letter dated December 16, 2003, stating that because "all certifications were due no later than September 12, 2003," and because Customs received Dixon's certification on October 24, 2003, "more than 60 days after the publication date of the FR Notice, [Customs] must deny [Dixon's] claim for a FY 2003 disbursement under the CDSOA." Certified Admin. R. at 3.

Analysis

This court has jurisdiction over this matter pursuant to 28 U.S.C. § 1581(i). Thus, the court will set aside any agency action, findings or conclusions found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 5 U.S.C. § 706(2)(A) (2005). Under this standard of review, an administrative action must be upheld if the court finds that the agency "has considered the relevant factors and articulated a rational connection between the facts found and the choice made." Baltimore Gas & Electric v. N.R.D.C., 462 U.S. 87, 105, 103 S.Ct. 2246, 76 L.Ed.2d 437 (1983).

It is uncontested that Customs failed to timely comply with the regulatory notice requirement of section 159.62(a).² Customs, however, asserts that although it published notice of its intent to distribute late, it retains the authority to reject distribution applications for untimeliness pursuant to 19 C.F.R. § 159.63(a).³ Dixon argues that this seeming "double-standard" of treating its own deadline to provide notice to the domestic industry as a "mere guideline" while treating the domestics' deadline to apply for distributions as a "hard and strict rule" constitutes an arbitrary and capricious construction of Customs' own regulations. Dixon further argues that Customs' failure to provide notice of its intent to distribute by the regulatory deadline is a strong signal to the domestic industry that no distribution is forthcoming for that fiscal year, as domestics have no other indication that a distribution is forthcoming.⁴ Thus, because of its own failure to provide timely notice, according to Dixon, Customs should have waived the deadline for domestic pencil manufacturers, provided notice of a reasonable extension, or simply re-started the process.

Customs responds that it acted reasonably in providing the full 60 days required by section 159.63(a) after the date of publication of notice in the Federal Register of its intent to distribute, and that Dixon was given constructive notice of the intent to distribute by virtue of this publication.

The Supreme Court, in Brock v. Pierce County, 476 U.S. 253, 106 S.Ct. 1834, 90 L.Ed.2d 248 (1986), provides direction regarding this issue. The Court in that case considered section 106(b) of the Comprehensive Employment and Training Act ("CETA"), 29 U.S.C. § 816(b) and its implementing regulations. 476 U.S. at 255, 106 S.Ct. 1834. The statute and regulations directed the Secretary of Labor to issue a final determination as to the misuse of CETA funds by a grant recipient within 120 days after receiving a complaint alleging such a misuse. Id. at 256, 106 S.Ct. 1834. After examining the statutory language and legislative history, the Court held that the Secretary's failure to satisfy the 120-day statutory timing requirement did not necessarily deprive the Secretary of the power to recover misused funds. Id. at 266, 106 S.Ct. 1834. The Court stated that it "would be most reluctant to conclude that every failure of an agency to observe a procedural requirement voids subsequent agency action, especially when important public rights are at stake." Id. at 260, 106 S.Ct. 1834.

Furthermore, the Federal Circuit's opinion in Kemira Fibres Oy v. United States, 61 F.3d 866 (Fed.Cir.1995), is instructive. In that case, the Department of Commerce failed to publish a notice of its intention to revoke a particular finding that had been made under the antidumping laws, in violation of Commerce's own regulations. Kemira, 61 F.3d at 868. Considering whether Commerce's failure to comply with the regulatory notice requirement voided its subsequent administrative action, the Court held that the administrative default by Commerce did not compel the court to revoke the antidumping finding where the plaintiff, a foreign importer, could not establish that it was prejudiced by the default. Id. at 876. The Court explained that the plaintiff "should not become immune from the antidumping laws because Commerce missed the deadline ... [t]he national interest in the regulation of importation should not fall victim to an oversight by Commerce..." Id. at 873.

Thus, this court must first determine whether, under the Brock standard, Congress intended Customs to lose its authority to administer the CDSOA, having failed to meet its regulatory timing requirements. Cf. Brock, 476 U.S. at 266, 106 S.Ct. 1834. If the court finds that Congress did not intend Customs to lose its authority, and that the timing requirements are merely procedural guidelines, the court must then inquire into whether Dixon was substantially prejudiced by Customs' failure. Cf. Kemira, 61 F.3d at 873.

A. Customs' Authority to Administer the CDSOA

As a general rule, an agency is required to comply with its own regulations. Kemira, 61 F.3d at 871 (citation omitted). However, "not every failure of an agency to observe timing requirements voids subsequent agency action." Id. (citing Brock, 476 U.S. at 260, 106 S.Ct. 1834). In Kemira, the Federal Circuit noted that "in the context of an agency's failure to comply with statutorily-mandated timing directives, the Supreme court has rejected the argument that non-compliance with a timing requirement renders subsequent...