Ellwood City Blues

Despite being judicial review of agency action, principles of administrative law do not always apply to customs law. That is because most decisions by Customs and Border Protection affecting the importation of merchandise are subject to administrative review in the protest process and then judicial review on a de novo standard. That means the judge will make a decision based on the evidence presented to the court rather than the administrative record on which the agency based its decision. 

For comparison, in a trade case, the court will uphold a Commerce Department dumping margin calculation as long as the decision is based on substantial evidence in the record and is otherwise in accordance with law. That means the agency can prevail even if the court would have reached a contrary conclusion. That is the opposite of, for example, a tariff classification case in which the court is required to reach the correct result based on the evidence before it with little regard for Customs' original decision. There is some nuance involving so-called Skidmore deference and the power of Customs' prior decision to persuade the court, but that is a pretty marginal circumstance. After all, if the CBP determination is sufficiently logical and consistent to persuade the judge, that just means it is how the judge would have decided on his or her own.

Even traditional on-the-record review in dumping and countervailing duty cases do not rely on the Administrative Procedure Act standard of review. The trade laws set the standard of review in 19 USC 1516a. Cases brought under the Enforce and Protect Act have their own standard of review in 19 USC 1517(g). The trade cases that directly apply the APA are those brought under the Court's so-called "residual jurisdiction" of 28 USC 1581(i), which has been getting a workout in challenges to Section 301 and 232 duties and is also relevant where Commerce's instructions to Customs, but not the underlying decision, are being challenged.

Despite all that, I am certain that the law school class that had the most day-to-day impact on my work life was Administrative Law, because sometimes agencies have to be held accountable for actions that are not specifically identified in the trade laws. These are bigger-picture issues including things like requiring that agencies follow their own regulations and follow notice and comment requirements for new regulations. That was true in Royal Brush, which we discussed in the last post, in which the Federal Circuit required Customs to comply with due process in EAPA investigations.

That is also where Ellwood City Forge Co. v. United States is relevant. This case involves a dumping order on something called a forged steel fluid end block. A normal part of a dumping case is an on-site verification of information the respondent foreign manufacturer or exporter provided. That requires international travel. In this case, that process got waylaid by COVID travel restrictions. As an expedient alternative, Commerce issued a written questionnaire in lieu of a verification. Commerce accepted and relied on that information as "facts available," but did not make an adverse inference.

The domestic petitioner argued that the information the respondent provided was incomplete or false and resulted in lower general and administrative expenses. That adjustment made an affirmative dumping determination less likely. When the petitioner sued, Commerce (eventually) moved for a voluntary remand to reconsider its position with respect to the information it collected via the questionnaire.

On remand, Commerce changed its treatment of the questionnaire response and determined that it had in fact verified the information, just not in person. 

This is the nub of the controversy. Remands are generally limited in scope to what was ordered by the Court. Moreover, remands for further agency action usually require that the agency reconsider some specific fact or methodology and provide a fuller explanation of the decision the agency had already made. The decision to treat the questionnaire response as verified is not the decision Commerce had already made. 

According to the Court of International Trade, in 2020, the Supreme Court gave agencies an additional path forward in a case called Dep’t of Homeland Sec. v. Regents of the Univ. of California, 140 S. Ct. 1891 (2020) (Regents). Under Regents, the agency can either provide a fuller explanation of its original decision or it can take new agency action and provide new reasoning. An agency that does the latter, must comply with the procedural requirements for a new action.

Here, the Court could not discern that Commerce had properly taken either available path. The remand decision was not a fuller explanation of a prior decision. Rather, in the remand, Commerce changed its position and treated the questionnaire response as verified. That, according to the Court is a new agency action. In the words of the Supreme Court, that is looking at the question "afresh." The problem for Commerce is that it failed to follow the procedural requirements for a new agency action. Those requirements include (1) explaining why it will not now conduct an on-site verification, (2) consideration of possible alternatives, and (3) explaining of how the new decision does not violate any of the Plaintiff's legitimate reliance interests.

As a result, the Court remanded the matter back to Commerce to act in accordance with Regents.