LIQ-4
OT:RR:CTF:ER H077235 DCC
Mr. W. David Sims
Chief, Programs Branch
Revenue Division, Office of Finance
U.S. Customs and Border Protection
6650 Telecom Drive
Indianapolis, IN 46278
RE: Affected Domestic Parties, Continued Dumping and Subsidy Offset Act of 2000
Dear Mr. Sims:
This is in response to a request for internal advice, dated September 23, 2009, from Mary Jo Mills, pursuant to 19 C.F.R. § 177.11. The request seeks guidance regarding the request for reconsideration, pursuant to 19 C.F.R. § 159.64(c)(3), of a denial of a distribution under the Continued Dumping and Subsidy Offset Act (“CDSOA”) of 2000 filed on behalf of Five Rivers Innovations, Inc. (“Five Rivers”).
FACTS:
On May 29, 2009, U.S. Customs and Border Protection (“CBP”) published a notice in the Federal Register of its intent to distribute assessed antidumping and countervailing duties to certain U.S. businesses, individuals, and associations pursuant to the CDSOA for Fiscal Year 2009. See Distribution of Continued Dumping and Subsidy Offset to Affected Domestic Producers, 74 Fed. Reg. 25,814 (May 29, 2009) (“FY 09 Distribution Notice”). For Antidumping Order A-570-884, covering certain color television receivers from China, the list of affected domestic producers (“ADPs”) included Five Rivers.
On July 24, 2009, the Revenue Division of CBP received Five Rivers’ claim for a CDSOA offset distribution from antidumping duties collected on entries of imported merchandise that liquidated during Fiscal Year 2009. In its certification of eligibility, Five Rivers states:
Furthermore, Five Rivers “remain in operations.” See 19 U.S.C. § 1675c(b)(1)(B); 19 C.F.R. § 159.61(b). Five Rivers continue to produce related products used to make the subject merchandise (such as printed circuit boards), maintains the subject merchandise in inventory, maintains the equipment necessary to produce the subject merchandise maintains production facilities, incurs general maintenance costs incidental to maintaining this merchandise and equipment, and has the ability to produce the subject merchandise. As such, Five Rivers “remains in operation.” Although Five Rivers is not currently producing the subject product, Five Rivers could produce the subject merchandise. Notably, even when filing a petition, a domestic interested party is not required to produce the subject merchandise. 19 U.S.C. § 1673. Finally, the repeals of the CDSOA was effective as of October 1, 2007. Deficit Reduction Act of 2005, Pub. L. No. 109-171, Title VII, Subtitle F § 7601(a), 120 Stat. 154 (Feb. 8, 2006). Thus, the duties that are available for distribution by necessity can only relate to entries of dumped merchandise that entered prior to this date. For this reason, CBP only permits affected domestic producers to submit qualifying expenditures that related to production operations that preceded this date. See Distribution of Continued Dumping and Subsidy Offset to Affected Domestic Producers, 74 Fed. Reg. 25,814 (May 29, 2009). With the repeal of the statute, the only duties that are currently available for distribution pertain to entries that occurred prior to October 1, 2007. Five Rivers was producing the subject merchandise at the time that these dumped goods were imported into the United States and it is the injury that those particular imports caused to the domestic industry that the CDSOA was intended to remedy. Given that (1) Five Rivers was injured by the dumped imports that entered prior to the repeal of the law, (2) CBP only allows companies to report qualifying expenditures that cover that time period, (3) the qualifying expenditures submitted by Five Rivers pertain to that time period; (4) Five Rivers continued to sell and maintain inventory of the subject merchandise during the current fiscal year, (5) Five Rivers produced components and incurred production-related expenses related to its sale of the merchandise and maintaining is [sic.] facilities and equipment during the current fiscal year, (6) Five Rivers was producing at the time the dumped imports entered the U.S. prior to repeal of the statues, Five Rivers should be eligible for 2009 CDSOA disbursements. (Emphasis added).
On August 19, 2009, CBP denied Five Rivers’ request for a Fiscal Year 2009 CDSOA offset disbursement. In a letter to Five Rivers, CBP provided the following explanation for the denial:
Under 19 C.F.R. § 159.63(b)(3)(iii) the domestic producer must remain in operation and continue to produce the product covered by the particular order or finding under which distribution is sought. The [Five Rivers] certification CBP has received for case number A-570-884 certifies that your company remains in operation, but is not currently producing the product covered by case number A-570-884.
On September 17, 2009, counsel for Five Rivers filed a request for reconsideration of your denial pursuant to 19 C.F.R. § 159.64(c)(3). Subsequently, on September 23, 2009, you forwarded Five Rivers’ reconsideration request to this office for internal advice.
ISSUE:
Whether Five Rivers is eligible to receive a disbursement as an affected domestic producer pursuant to the CDSOA for Fiscal Year 2009.
LAW & ANALYSIS:
Initially, we note that Five Rivers timely filed its request for reconsideration. Pursuant to 19 C.F.R. § 159.64(c)(3), affected domestic producers must file any request for reconsideration within 30 calendar days of CBP’s denial of the disbursement request.
In 2000, Congress enacted the CDSOA as part of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act of 2001, Pub. L. No. 106-387, §§ 1001-03, 114 Stat. 1549, 19 U.S.C. § 1675c (2000) (repealed 2006) (“CDSOA Repeal”). Under the CDSOA, CBP reviews the producers’ certifications to determine whether they are eligible
to receive payments and, if so, the amount of their qualifying expenditures for reimbursement. Upon certification, CBP distributes antidumping and countervailing duties collected from foreign producers to certain members of the domestic industry as reimbursement for specified qualifying expenditures.
Pursuant to 19 U.S.C. § 1675c(2004), antidumping and countervailing duties collected under the CDSOA are, “distributed on an annual basis under this section to the affected domestic producers for qualifying expenditures.” The statue defines qualified claimants as follows:
(b) Definitions. As used in this section:
(1) Affected domestic producer. The term “affected domestic producer” means any manufacturer, producer, or farmed, rancher, or worker representative (including associations of such persons) that—
(A) was a petitioner or interested party in support of the petition with respect to which an antidumping duty order, a finding under the Antidumping Act of 1921, or a countervailing duty order has been entered, and
(B) remains in operation.
19 U.S.C. § 1675c(b). The statute specifies, however, that
Companies, businesses, or persons that have ceased the production of the product covered by the order or finding or who have been acquired by a company or business that is related to a company that opposed the investigation shall not be an affected domestic producer.
Id. (emphasis added).
The CBP regulations implementing the “remains in business” requirement provide as follows:
Exceptions. A party who is named on the USITC list is not an “affected domestic producer” under the following circumstances:
(i) Product no longer produced. A company, business or person that has ceased production of the product covered by the antidumping duty order or finding, or countervailing duty order, i.e., did not manufacture that product at all during the fiscal year that is the subject of the disbursement, is not an affected domestic producer under this section.
19 C.F.R. § 159.61(b)(2)(i).
In addition, the relevant provision of the CBP regulations that describes the certification procedure provides as follows:
(iii) Continued production of product covered by order or finding; acquisition by related company. The statement must include information as to whether the domestic producer remains in operation and continues to produce the product covered by the particular order or finding under whether the distribution is sought (see § 159.61(b)(2)(i)).
19 C.F.R. § 159.63(b)(3)(iii).
The statutory and regulatory requirement that the affected domestic producer continues to produce the subject merchandise was also contained in the FY 09 Distribution Notice, which states:
Moreover, as required by 19 U.S.C. 1675c(b)(1) and 19 CFR 159.63(b)(3)(iii), the certification must include information as to whether the domestic producer remains in operation at the time the certifications are filed and continues to produce the product covered by the particular order or finding under which the distribution is sought. If a domestic producer is no longer in operation, or no longer produces the product covered by the order or finding, the producer will not be considered an affected domestic producer entitled to receive a distribution.
FY 09 Distribution Notice, 74 Fed. Reg. at 25,817.
Five Rivers argues that because the CDSOA was repealed, and given that distributions must be based on dumping duties paid on merchandise entered before October 1, 2007, the domestic production requirement should only be applied to domestic producers as of the time subject merchandise was entered for consumption. Five Rivers notes that only antidumping duties available for distribution are those collected for entries that liquidated during Fiscal Year 2009. Furthermore, Five Rivers notes that domestic producers may only submit qualifying expenditures that were incurred prior to repeal of the CDSOA. Based on the fact that it was producing before October 1, 2007—when the dumped merchandise was entered and the qualifying expenditures incurred—Five Rivers argues that it should be irrelevant whether it continued to produce after the CDSOA was repealed.
In applying the domestic production requirement of the CDSOA we initially must examine the text of the statutory provision. See United States v. Alvarez-Sanchez, 511 U.S. 350 (1994) (“When interpreting a statute, we look first and foremost to its text.”). “If the statute is clear and unambiguous ‘that is the end of
the matter, for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.’” Board of Governors, FRS v. Dimension Financial Corp., 474 U.S. 361, (1986), quoting Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, (1984).
In this case, there is no ambiguity in the statute with respect to the requirement that affected domestic producers continue to produce the subject merchandise. The plain language of the CDSOA states that domestic producers that have ceased production of the product covered by the order shall not be considered an affected domestic producer. See 19 U.S.C. § 1675c(a)-(b) (2004).
Moreover, even if the statute is not clear on when production must occur, CBP’s regulations implementing the CDSOA are entitled to deference under the framework established by the Supreme Court in Chevron U.S.A. Inc. v. Natural Resources Defense Council Inc., 467 U.S. 837 (1984), and United States v. Haggar Apparel Co., 526 U.S. 380 (1999), which applied the Chevron standard to CBP regulations. Under Chevron, when a regulation that represents the agency’s statutory interpretation is promulgated by an administrative agency such that it “fills a gap or defines a term in a way that is reasonable in light of the legislature’s revealed design,” that regulation must be given controlling weight and thus, will receive judicial deference. Haggar Apparel Co., 526 U.S. at 392.
As explained in the preamble to the final rule, Subpart F was drafted in order to, “implement the Continued Dumping and Subsidy Offset Act of 2000, by prescribing the administrative procedures, including the time and manner, under which antidumping and countervailing duties assessed on imported products would be distributed to affected domestic producers as an offset for certain qualifying expenditures.” Distribution of Continued Dumping and Subsidy Offset to Affected Domestic Producers, 66 Fed. Reg. 48,546 (Sept. 21, 2001) (“CDSOA Final Rule”). In the CDSOA Final Rule, CBP responded to comments requesting clarification of the term “producer.” CBP specifically addressed the requirement that affected domestic producers continue to produce the merchandise. CBP noted that such companies would be considered, “affected domestic producers for purposes of section 1675c, if they remained in operation and continued to produce the product covered by the relevant order or finding . . . ” CDSOA Final Rule, 66 Fed. Reg. at 48,547 (emphasis added). The CDSOA Final Rule further explains that, “companies will be considered to have ceased production if they did not produce the product covered by an order or finding at all during the fiscal year that is the subject of the disbursement,” and notes that this production requirement would be incorporated into section 159.61(b)(1), which was redesignated as section 159.61(b)(2)(i) in the final rule. Therefore, both the statute and the applicable regulation dictate that Five Rivers does not meet the criteria to receive a disbursement under the CDSOA for Fiscal Year 2009.
Finally, contrary to Five Rivers’ claim, the CDSOA Repeal specifically states that repeal of the CDSOA does not affect the distribution of disbursements. In particular, the statute provides that,
REPEAL.—Effective upon the date of enactment of this Act, section 754 of the Tariff Act of 1930, and the item relating to section 754 in the table of contents of title VII of that Act, are repealed.
DISTRIBUTION ON CERTAIN ENTRIES.—All duties on entries of goods made and filed before October 1, 2007, that would but for subsection (a) of this section, be distributed under section 754 of the Tariff Act of 1930, shall be distributed as if section 754 of the Tariff Act had not been repealed by subsection (a).
CDSOA Repeal, 120 Stat. at 154-55. Therefore, because the requirement that domestic producers continue to produce the merchandise was contained in the statute, i.e., 19 U.S.C. § 1675c, before it was repealed, the CDSOA Repeal does not alter the production requirement.
HOLDING:
For the reasons discussed above, Five Rivers is not eligible to receive a disbursement as an affected domestic producer pursuant to the Continued Dumping and Subsidy Offset Act for Fiscal Year 2009.
You are to mail this decision to counsel for the importer no later than 60 days from the date of this letter. On that date, the Office of International Trade will make the decision available to CBP personnel, and to the public on the Customs Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division