Florida Citrus Mut. v. U.S.

• Decision Date: 18 December 2008
• Docket Number: No. 2008-1102.,2008-1102.
• Parties: FLORIDA CITRUS MUTUAL, A. Duda & Sons (doing business as Citrus Belle), Citrus World, Inc., and Southern Gardens Citrus Processing Corporation (doing business as Southern Gardens), Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee, and Fischer a/a Agroindustria, Defendant-Appellee, and Citrus Products, Inc. and Sucocitrico Cutrale Ltda, Defendants-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

550 F.3d 1105

FLORIDA CITRUS MUTUAL, A. Duda & Sons (doing business as Citrus Belle), Citrus World, Inc., and Southern Gardens Citrus Processing Corporation (doing business as Southern Gardens), Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee, and Fischer a/a Agroindustria, Defendant-Appellee, and Citrus Products, Inc. and Sucocitrico Cutrale Ltda, Defendants-Appellees.

No. 2008-1102.

United States Court of Appeals, Federal Circuit.

December 18, 2008.

Matthew T. McGrath, Barnes, Richardson & Colburn, of Washington, DC, argued for plaintiffs-appellants. With him on the brief was Stephen W. Brophy.

Michael J. Dierberg, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee United States. With him on the brief were Jeffrey S. Bucholtz, Acting Assistant Attorney General; Jeanne E. Davidson, Director; and Franklin E. White, Jr., Assistant Director. Of counsel on the brief was Mildred E. Steward, Senior Attorney, Office of Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC. Of counsel was Mykhaylo A. Gryzlov.

Robert G. Kalik, Kalik Lewin, of Bethesda, MD, for defendant-appellee Fischer S/A Agroindustria. With him on the brief was Brenna S. Lenchak.

Christopher Dunn, Heller Ehrman LLP, of Washington, DC, for defendants-appellees Citrus Products, Inc., and Sucocitrico Cutrale Ltda. With him on the brief was Valerie S. Ellis.

Before MICHEL, Chief Judge, and MOORE, Circuit Judge, O'GRADY, District Judge.^*

O'GRADY, District Judge.

The question presented in this appeal is whether the Department of Commerce ("Commerce") reasonably interpreted ambiguous language in 19 U.S.C. § 1677a(c)(2)(A). This language allows a reduction in the U.S. price of imported merchandise for "United States import duties" before that domestic price is compared against the foreign price in an antidumping analysis. The court finds Commerce's interpretation reasonable because it accords with the statutory language and accurately reflects the overall duty costs to importers. Accordingly, we affirm the decision of the Court of International Trade.

I. BACKGROUND

A. Proceedings Before The Department of Commerce.

Appellants are four U.S. orange juice producers, Florida Citrus Mutual, A. Duda & Sons, Citrus World, Inc., and Southern Gardens Citrus Processing Corp., collectively referred to as "FCM." Appellees are Brazilian orange juice producers: Citrosuco Paulista S.A. d/b/a Fischer S/A-Agroindustria ("Fischer"), and Citrus Products, Inc. and Sucocitrico Cutrale SA ("Cutrale").

On December 27, 2004, FCM filed an antidumping petition with the Department of Commerce and the U.S. International Trade Commission ("ITC"), alleging that sales of two types of frozen orange juice from Brazil were materially injuring the domestic industry. On February 11, 2005, Commerce launched an investigation. It selected Fischer, Cutrale, and Montecitrus Industria e Comercio Limitada ("Montecitrus")—the three largest Brazilian orange juice importers—as mandatory respondents in the investigation. On March 7, 2005, Commerce distributed the standard antidumping duty questionnaire to the Brazilian companies. Section C of the questionnaire asked the respondents to report the "unit amount of any customs duty paid on the subject merchandise." Fischer and Cutrale reported figures for "import duties" that included refunds the companies had received as part of U.S. "drawback" programs. These drawback programs allow foreign companies to receive refunds of duties paid on merchandise that is exported, or destroyed, within three years of entry into the United States. Over FCM's objection, Commerce calculated the "constructed export price" using net import duties, which were the duties paid to Customs minus the drawback refunds as reported by Fischer and Cutrale. Fischer and Cutrale argued that the drawback refunds should be used to offset U.S. duties paid as that amount more accurately reflected the actual duties paid by the companies on the imported orange juice.

Whether Fischer and Cutrale were entitled to the proposed offset for drawback refunds was an issue of first impression for Commerce. Commerce performed an antidumping analysis—comparing export price or constructed export price in the United States to the normal value in the foreign market.¹ In its Final Determination, Commerce concluded that the applicable statute, 19 U.S.C. § 1677a(c)(2)(A), allowed the offset for drawback refunds. It therefore calculated a constructed export price for Fischer and Cutrale by reducing the U.S. price of the orange juice by the net duties paid. In its Issues and Decision Memorandum, Commerce explained that calculating net import duties would "encompass the net duty experience of the respondents." Commerce further reasoned that the calculation of net import duties was consistent with the statutory mandate to reduce U.S. price by all movement expenses incident to importing the goods into the United States. It concluded that allowing the offset for drawback refunds provided a fair comparison to normal value of the orange juice in the Brazilian market.

On February 2, 2006, FCM filed a ministerial error allegation, which asserted that Commerce had erred in calculating dumping margins for Cutrale and Fischer in its Final Determination. On February 21, 2006, Commerce published an Amended Final Determination, in which it corrected various ministerial errors and made minor adjustments to its original calculations, but rejected FCM's challenge to its price calculation methodology. On March 9, 2006, Commerce published its antidumping order as Antidumping Duty Order: Certain Orange Juice from Brazil, 71 Fed.Reg. 12,183 (Dep't of Commerce Mar. 9, 2006).

B. Proceedings Before the Court of International Trade.

On April 6, 2006, FCM timely filed a civil action in the U.S. Court of International Trade. On May 23, 2006 and June 6, 2006, respectively, the court granted Fischer and Cutrale's motions to intervene as interested parties. The court held oral argument on July 25, 2007, wherein FCM asserted that Commerce's determination to adjust the U.S. price by the net import duties (allowing the drawback refund offset) was improper. FCM also argued that Commerce employed improper methodology for calculating the net import duties.

The court rejected FCM's arguments in their entirety. In Florida Citrus Mutual v. U.S. Fischer, 515 F.Supp.2d 1324 (Ct. Int'l Trade 2007), the court found that Commerce had reasonably interpreted "United States import duties" to mean net import duties, and thus sustained Commerce's determination. It reasoned that Commerce's construction of the statute reflected "a policy decision which was made within the statutory scheme and is well within the bounds of the agency's discretion in accordance with Chevron." Id. at 1332. The court rejected FCM's argument that because the drawback refunds came later in time they could not be "incident to bringing the subject merchandise" into the United States, reasoning that the refunds should be considered part of the movement expenses enumerated by the statute. Id. at 1334. The court concluded that Commerce's methodology produced an accurate U.S. price in accord with the statute.

II. DISCUSSION

A. Jurisdiction.

FCM appeals from the decision of the U.S. Court of International Trade entered on September 13, 2007. The Court of International Trade exercised subject matter jurisdiction under 28 U.S.C. § 1581(c). Appellants filed a timely notice of appeal on November 9, 2007. This court has jurisdiction over the appeal under 28 U.S.C. § 1295(a)(5).

B. Standard of Review.

"We review de novo whether Commerce's interpretation of a governing statutory provision is in accordance with law, but we do so within the framework established by Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)." Agro Dutch Indus. Ltd. v. United States, 508 F.3d 1024, 1029-30 (Fed.Cir. 2007). "Under Chevron, a reviewing court must first ask `whether Congress has directly spoken to the precise question at issue.'" FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132, 120 S.Ct. 1291, 146 L.Ed.2d 121 (2000) (quoting Chevron, 467 U.S. at 842, 104 S.Ct. 2778). "If Congress has done so, the inquiry is at an end; the court `must give effect to the unambiguously expressed intent of Congress.'" Id. at 132, 120 S.Ct. 1291 (quoting Chevron, 467 U.S. at 843, 104 S.Ct. 2778). "In the absence of clear direction from the statute," we must proceed to "ask whether there is ambiguous statutory language that might authorize the agency to fill a statutory gap," and "whether Commerce's interpretation of ambiguous statutory language is based on a permissible interpretation of the statute." Agro Dutch Indus., 508 F.3d at 1030 (internal quotation marks omitted); see also Chevron, 467 U.S. at 843, 104 S.Ct. 2778 ("[I]f the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute."). Ultimately, "this court will uphold Commerce's determinations, findings, and conclusions unless they are `unsupported by substantial evidence on the record, or otherwise not in accordance with the law.'" Wheatland Tube Co. v. United States, 495 F.3d 1355, 1359 (Fed.Cir.2007) (quoting 19 U.S.C. § 1516a(b)(1)(B)(i)).

C. Analysis.

1. Commerce's Decision To Account For Drawback Refunds Was Reasonable.

The drawback program permits importers to claim reimbursement of 99 percent of U.S. duties paid on imports when "commercially interchangeable" merchandise is either (1) exported from the United States, or (2) destroyed within three years of the date of importation. 19 C.F.R. § 191.32(a) (2008); see generally 19 U.S.C. § 1313. The Code of Federal Regulations defines "drawback" as ...