Melamine Chemicals, Inc. v. U.S.

• Decision Date: 19 April 1984
• Docket Number: No. 83-1364,83-1364
• Parties: , 2 Fed. Cir. (T) 57 MELAMINE CHEMICALS, INC., Appellee, v. The UNITED STATES, Appellant. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 924

732 F.2d 924

5 ITRD 2077, 2 Fed. Cir. (T) 57

MELAMINE CHEMICALS, INC., Appellee, v. The UNITED STATES, Appellant.

Appeal No. 83-1364.

United States Court of Appeals Federal Circuit.

April 19, 1984.

Francis J. Sailer, Washington, D.C., argued for appellant. With him on the brief were J. Paul McGrath, Asst. Atty. Gen., David M. Cohen, Director, Washington, D.C. and Velta A. Melnbrencis, Asst. Director, New York City.

Bruce E. Clubb, Washington, D.C., argued for appellee. With him on the brief were B. Thomas Peele and Arthur L. George, Washington, D.C.

Before MARKEY, Chief Judge, COWEN, Senior Circuit Judge, and BALDWIN, Circuit Judge.

MARKEY, Chief Judge.

Appeal from the order of the United States Court of International Trade (CIT) rescinding an Amended Final Negative Determination of the Department of Commerce (Commerce), and from a judgment holding unlawful the Commerce's use of the preceding quarter's exchange rate in the fair value investigative phase of a particular anti-dumping proceeding. We vacate and reverse.

Background

On February 23, 1979, Melamine Chemicals, Inc. (Melamine) filed a complaint with the Department of the Treasury (Treasury) alleging sales at Less Than Fair Value (LTFV) of melamine from the Netherlands. Treasury initiated antidumping investigations on May 1, 1979, and published a Tentative Negative Determination (that there had been no sales at LTFV) on November 13, 1979. (44 Fed.Reg. 65517).

On January 2, 1980, Commerce's International Trade Administration Division (ITA), having assumed Treasury's responsibility for LTFV determinations, announced (45 Fed.Reg. 12466) that it found error in Treasury's computations and that there was a dumping margin (LTFV). ITA changed Treasury's Determination to an Affirmative Preliminary Determination.

After a hearing and reception of briefs, Commerce issued an Affirmative Final Determination (45 Fed.Reg. 20152) effective March 27, 1980. On reconsideration and after a hearing and reception of additional briefs, Commerce amended its original findings and published an Amended Final Negative Determination on May 5, 1980, occasioning this litigation.

Pursuant to 19 U.S.C. Sec. 1673d(c)(2), Commerce terminated the investigation in view of its negative determination. (45 Fed.Reg. 26918.)

Melamine's challenge to the Amended Final Negative Determination, filed in the CIT pursuant to 19 U.S.C. Sec. 1516a and 28 U.S.C. Sec. 1581(c), raised a number of issues. ¹ On appeal, Melamine maintains that

Commerce may not in conducting a fair value investigation lawfully use exchange rates from the quarter preceding the period (November 1, 1978--April 30, 1979) being investigated, because a statute, 31 U.S.C. Sec. 372 (now codified at 31 U.S.C. Sec. 5151; cited here as Sec. 372), ² requires use of the exchange rate prevailing for the quarter in which the merchandise was exported.

Proceedings in the CIT

Upon cross-motions for summary judgment, the CIT held that Commerce acted unlawfully in applying the preceding quarter's exchange rate. Melamine Chemicals, Inc. v. United States, 561 F.Supp. 458 (Ct. Int'l Trade 1983).

In its opinion dated August 25, 1983, the CIT stated:

"19 C.F.R. Sec. 353.56 ³ mandate[s] ... conversion of foreign currency ... to determine the difference between United States price and fair value or foreign market value shall be made in accordance with the provisions of 31 U.S.C. Sec. 372" Id. at 462. (emphasis in the original)

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"19 C.F.R. Sec. 353.56(a) specifically mentions both fair value and foreign market value as being subject to 31 U.S.C. Sec. 372. ... By defendant's [United States'] own admissions an antidumping order is not imposed at the fair value stage of the investigation. Therefore, it would be impossible to have an assessment and collection of duties at that juncture. If defendant's contention were upheld it would render certain language referring to fair value in 19 C.F.R. Sec. 353.56(a) meaningless. It is evident that a fair value proceeding and investigation is subject to the conversion rules of 31 U.S.C. Sec. 372." Id. (emphasis added).

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* * * "[W]hat defendant [United States] does not demonstrate is the statutory authority for the enactment of 19 C.F.R. Sec. 353.56(b) and the authority for using a '90 day lag rule'.... The provisions relating to the imposition of antidumping duties were intended to streamline the domestic procedures relating to antidumping actions. Thus, a regulation such as 19 C.F.R. Sec. 353.56(b) promulgated in the spirit of improving administration of the antidumping law by expediting its investigative phase and improving over-all efficiency is well within the intent of the legislature". Id. at 463 (emphasis added).

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"It is axiomatic that where there is a conflict between a statute enacted by the legislature and a rule or administrative regulation promulgated by an administrative agency in accordance with the statute, the statute must prevail." Id.

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"In the present case there is a specific statute, 31 U.S.C. Sec. 372, that authorizes the methodology for currency conversion.... The Customs regulation in issue was promulgated pursuant to the Trade Agreements Act of 1979. On the surface it is harmonious with the legislative enactment. However, Customs' application (the 90 days lag rule) of the statute is hardly in keeping with the legislative intent. In viewing the entire picture one realizes that it is not a mere ninety (90) days for currency fluctuation purposes. By using the currency rate of the preceding quarter for conversion purposes, Commerce is actually permitting the foreign exporter 180 days to rectify its pricing practices to insure that it does not sell at LTFV". Id. at 464. (emphasis added).

Thus the CIT described 19 CFR Sec. 353.56(b) as in conflict with 31 U.S.C. Sec. 372 and unsupported by statutory authority, while at the same time describing that regulation as "well within the intent of the legislature," designed for "improving administration of the antidumping law by expediting its investigative phase and improving over-all efficiency", Id. at 463, and on the surface "harmonious with the legislative enactment". Id. at 464.

The court went on to find Customs' application of "the statute" not "in keeping with the legislative intent", Id. and concluded that "Commerce's arbitrary application of the preceding quarter's conversion rate is outside the scope of the enabling statute [31 U.S.C. Sec. 372]." Id. (emphasis added).

In the court's view, an earlier-proposed 45-day lag, though "the legislature specifically permitted" it, would not be a proper basis for believing that Congress would accept a 90-day lag rule as falling within the "reasonable period of time" language of the regulation involved here (19 CFR Sec. 353.56(b)). Id. at n. 11.

Thus, whatever may have been the view of the CIT respecting the validity of Sec. 353.56(b) itself, its decision can be said to have rested on its conclusion that Commerce had no authority to apply the preceding quarter's exchange rate in conducting a fair value investigation.

The CIT ordered recision of Commerce's Final Negative Determination, remanded the action to Commerce to determine "whether the Netherlands sold melamine at LTFV between November 1, 1978 and March 31, 1979", and directed the Secretary of Commerce to report his redetermination to the CIT within 120 days.

Upon counsel's stipulation, the CIT, also on August 25, 1983, suspended liquidation of Melamine entries from the Netherlands after September 5, 1983, and stayed, pending this appeal, orders it had issued on March 25, 1983 and August 16, 1983. ⁴

Issues

(1) Whether the CIT erred in holding that Commerce is without authority to apply the exchange rate from the preceding calendar quarter in calculating fair value in an antidumping proceeding when prices under consideration are affected by sustained exchange rate fluctuations.

(2) Whether the CIT erred in rescinding Commerce's Amended Final Negative Determination.

OPINION

(1) In General

Though the CIT did not clearly appear to hold Sec. 353.56(b) invalid, and Melamine recognizes that the appealed order and judgment may be affirmed without reaching that question, the CIT's finding of "conflict" with a statute and Melamine's assertions here that the regulation is invalid, impel an expression of our view.

When the issue is the validity of a regulation issued under a statute an agency is charged with administering, it is well established that the agency's construction of the statute is entitled to great weight. Zenith Radio Corp. v. United States, 437 U.S. 443, 98 S.Ct. 2441, 57 L.Ed.2d 337 (1978); Udall v. Tallman, 380 U.S. 1, 85 S.Ct. 792, 13 L.Ed.2d 616 (1964); Selman v. United States, 498 F.2d 1354, 1356 (1974). Similarly, agency regulations are to be sustained unless unreasonable and plainly inconsistent with the statute, and are to be held valid unless weighty reasons require otherwise. Smith-Corona Group v. United States, 713 F.2d 1568, 1575 (Fed.Cir.1983); Zemurray Foundation v. United States, 687 F.2d 97, 100-101 (5th Cir.1982); Mobil Oil Corp. v. Federal Energy Administration, 566 F.2d 87, 93 (Em.App.1977); Review Committee, Venue VII, Etc. v. Willey, 275 F.2d 264, 272 (8th Cir.1960). See also, American Petroleum Institute v. Knecht, 456 F.Supp. 889, 906 (C.D.Cal.1978). Applying those guidelines, we disagree with the CIT's indication that conflict exists between 19 CFR Sec. 353.56(b) and 31 U.S.C. Sec. 372.

(2) Relationship Between Sec. 353.56(b) and Sec. 372

As discussed infra, the regulation under consideration, Sec. 353.56(b), is derived from a regulation promulgated by Treasury in 1976, a regulation in turn derived from Treasury's administrative response to the United States' decision to abandon the gold standard and to permit the dollar to "float" on international exchange rate markets. The essence of Sec. 353.56(b) is to permit the administering authority ...