National Fisheries v. U.S. Bureau of Customs

• Decision Date: 25 August 2009
• Docket Number: Slip Op. 09-89. Court No. 05-00683.
• Citation: 637 F.Supp.2d 1270
• Parties: NATIONAL FISHERIES INSTITUTE, INC., et al., Plaintiffs, v. UNITED STATES BUREAU OF CUSTOMS AND BORDER PROTECTION, Defendant.
• Court: U.S. Court of International Trade

637 F.Supp.2d 1270

NATIONAL FISHERIES INSTITUTE, INC., et al., Plaintiffs, v. UNITED STATES BUREAU OF CUSTOMS AND BORDER PROTECTION, Defendant.

Slip Op. 09-89. Court No. 05-00683.

United States Court of International Trade.

August 25, 2009.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Steptoe & Johnson LLP (Eric C. Emerson, Gregory S. McCue, and Michael A. Pass), Washington, DC, for plaintiffs.

Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, Barbara S. Williams, Attorney in Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice (Stephen C. Tosini); Chi S. Choy, Customs and Border Protection, United States Department of Homeland Security, of counsel, for defendant.

OPINION AND ORDER

STANCEU, Judge.

Plaintiffs National Fisheries Institute, Inc. ("NFI"), a non-profit trade association, and twenty-seven of its members move, pursuant to USCIT Rule 56. 1, for judgment upon the agency record against United States Customs and Border Protection ("Customs," "CBP," or the "Agency"). Pls.' Mot. for J. on the Agency R. 1 ("Pls.' Mot."). Plaintiffs claim that Customs contravened statutory provisions in imposing a new and more stringent bonding requirement (the "enhanced bonding requirement") on importers of certain shrimp products that are subject to antidumping duty liability. See Mem. of P. & A. in Supp. of Pls.' Mot. for J. on the Agency R. 1, 3-16 ("Public Mem. of P. & A."). Plaintiffs also claim that Customs arbitrarily and capriciously applied its enhanced bonding requirement to shrimp importers without any basis for concluding that shrimp importers pose an increased risk of default, that Customs relied on formulas without considering factors specific to each importer, and that requiring shrimp importers to satisfy the enhanced bonding requirement is not a solution reasonably related to the problem of under-collection of antidumping duties. Id. at 17-23. The twenty-seven plaintiff importers contest individual bond sufficiency determinations in which Customs applied the enhanced bonding requirement to govern their continuous entry bonds. Pls.' Mot. 1.

The twenty-seven member plaintiffs are commercial importers of shrimp products that are subject to six antidumping duty orders issued by the United States Department of Commerce ("Commerce" or the "Department").¹ First Am. Compl. ¶¶ 1, 19. Earlier in these proceedings, in November 2006, eight of the twenty-seven member plaintiffs obtained a preliminary injunction. Nat'l Fisheries Inst., Inc. v. U.S. Bureau of Customs and Border Prot., 30 CIT 1838, 1842, 465 F.Supp.2d 1300, 1305 (2006) ("Nat'l Fisheries I"). The twenty-seven member plaintiffs, in the memorandum supporting their Rule 56.1 motion, seek additional equitable relief. Arguing that Customs is statutorily precluded from considering antidumping duty liability in the determination of bond sufficiency, they urge the court to order Customs to allow replacement of their bonds with bonds for which the limit of liability is determined without regard to potential antidumping duty liability. See Public Mem. of P. & A. 4, 28-30. They also seek a permanent injunction to prohibit Customs from applying the enhanced bonding requirement to them in the future and from considering potential antidumping duty liability when setting the liability limits for their bonds. Pls.' Mot., Attach. 1 at 2-4 ("Pls.' Proposed Order"); see Public Mem. of P. & A. 30-31.

The court rejects plaintiffs' argument that Customs lacks any statutory authority whatsoever to consider potential antidumping duties when determining bond sufficiency but concludes, nevertheless, that the authority Customs possesses in this subject area is narrowly confined by the ministerial character of Customs' role in the administration of the antidumping duty laws. The court also rejects the government's argument that the enhanced bonding requirement, as related to the sufficiency determinations that Customs made on plaintiffs' bonds, is consistent with law. The court holds that the enhanced bonding requirement is arbitrary and capricious in imposing greatly increased bond requirements only on importers of shrimp products subject to antidumping duty orders. The court also holds that the enhanced bonding requirement is unreasonable in applying a formula that secures potential antidumping duties at a substantial amount over the required cash deposit. The court concludes that Commerce, as the agency to which Congress delegated authority to determine estimated antidumping duty liability, is required by law to set the cash deposit by estimating the final antidumping duty liability as accurately as possible. For these reasons, the court sets aside as contrary to law the contested individual bond determinations that Customs made according to the enhanced bonding requirement and orders relief, in the form of a remand order, appropriate to this case.

I. BACKGROUND

Background information is set forth in National Fisheries I, 30 CIT at 1843-47, 465 F.Supp.2d at 1305-09, in which the court granted preliminary injunctive relief, and is supplemented below.

Directive 99-3510-004 (the "Bond Directive"), originally issued by Customs on July 23, 1991, established guidelines under which Customs port directors are to assess the adequacy of an importer's continuous entry bond. See Monetary Guidelines for Setting Bond Amounts, Directive 99-3510-004 (July 23, 1991), available at http://www. cbp.gov/linkhandl er/cgov/trade/legal/directives/3510-004.ctt/3510-004.txt (last visited Aug. 24, 2009) ("Bond Directive"). Prior to the amendment by Customs in 2004, the Bond Directive set a non-discretionary, minimum continuous entry bond amount at $50,000 and established a formula by which "the bond limit of liability amount shall be fixed in multiples of $10,000 [or $100,000] nearest to 10 percent of duties, taxes and fees paid by the importer or broker acting as importer of record during the calendar year preceding the date of the [bond] application." Id. (setting forth formulas under "Activity 1— Importer or Broker—Continuous"). Whether the bond limit was fixed in multiples of $10,000 or $100,000 depended upon whether the total duty and tax liability for an importer during the calendar year preceding its bond application exceeded $1,000,000. Id.

A. Modifications of the Bond Directive and Its Application to Shrimp Importers

Customs, on July 9, 2004, posted on its website an amendment to the Bond Directive (the "Amendment"), which set forth new formulas for calculating minimum continuous entry bond amounts. See Amendment to Bond Directive 99-3510-004 for Certain Merchandise Subject to Antidumping/Countervailing Duty Cases (July 9, 2004), available at http://www. cbp.gov/xp/cgov/trade/priority—trade/revenue/bonds/07082004.xml (last visited Aug. 24, 2009) ("Amendment"). The Amendment was neither published in the Federal Register nor subjected to the established notice-and-comment procedures provided for under the Administrative Procedure Act ("APA"), 5 U.S.C. § 553 (2000). Customs did not publish the Amendment in the Customs Bulletin.

The Amendment was the first issuance of several in which Customs set forth special bonding requirements for importers of agricultural and aquacultural merchandise that is subject to an antidumping or countervailing duty order. The Amendment required all Customs port directors "to review continuous bonds for importers who import agriculture/aquaculture merchandise subject to antidumping/countervailing duty cases and obtain larger bonds where necessary." Amendment. A formula contained in the Amendment directed that "in fixing the limit of liability amount," port directors will calculate the product of an importer's antidumping or countervailing duty rate and the value of merchandise subject to antidumping or countervailing duties imported by that importer during the previous year. Id. (setting forth the formula as the "[Commerce] rate at Order [multiplied by the] value of imports of merchandise subject to the case by the importer during the previous year"). The Amendment also applied similar formulas to importers subject to provisional measures and to importers with no prior history of importing agricultural or aquacultural merchandise. Id.

In the Amendment, Customs cited an "increasing concern regarding the collection of antidumping and countervailing duties, the impact of these collections on the amount of disbursements pursuant to the Continued Dumping and Subsidy Offset Act (CDSOA or Byrd Amendment) and continued vigilance by CBP to ensure collection of all appropriate antidumping and countervailing duties." Id. Customs listed under-collections of antidumping duty liabilities for imports of fresh garlic and crawfish as examples of why it deemed it necessary to change the formula for determining minimum bond requirements. Id.

On January 24, 2005, Customs posted on its website a document entitled "Current Bond Formulas," which contained, inter alia, the formulas described in the Amendment. Current Bond Formulas (Jan. 24, 2005), available at http://www.cbp.gov/xp/ cgov/t rade/priority—trade/revenue/bonds/pilot—program/ (last visited Aug. 24, 2009) ("Current Bond Formulas"). The document, which was not published in the Federal Register or Customs Bulletin, also stated that a "new comprehensive CBP Directive will be issued at a later date." Id.

In February 2005, subsequent to the issuance of the Amendment and Current Bond Formulas, Commerce issued antidumping duty orders for certain frozen warmwater shrimp ("subject shrimp") from Brazil, China, Ecuador, India, Thailand, and Vietnam.² Pursuant to the Amendment and Current Bond Formulas, Customs issued to all twenty-seven plaintiffs letters advising that their continuous entry bonds have been deemed insufficient under the Customs regulations, 19 C.F.R. Part 113 (2004), and...