CAFC Rules Against Producers Seeking Surety Byrd Funds for AD New Shipper Duties, Etc.

Domestic producers of honey, mushrooms, garlic and crawfish sued the U.S. government and multiple import sureties, citing both the failure of the U.S. trade agencies to collect, liquidate and distribute new shipper antidumping duties, and the failure of the sureties for Chinese food product shippers to require and fulfill sufficient bond guarantees. While the appeals court largely upheld a 2010 decision by the CIT dismissing all of the plaintiffs’ claims, the CAFC did overrule the lower court in concluding that the CIT’s jurisdiction could not extend to disputes between the domestic producers and sureties, as they are two non-governmental parties.

Domestics Sought both Byrd Amendment Duties Share and Heightened Enforcement by ITA, CBP

The domestic producers sought 1) to be paid distributions of AD duties under the Continued Dumping and Subsidy Offset Act of 2000 (CDSOA or Byrd Amendment); 2) to compel the International Trade Administration to issue additional liquidation instructions they say it failed to issue following AD new shipper reviews; 3) to force U.S. Customs and Border Protection to make additional AD assessments per ITA's AD review results and assessment instructions; 4) to oblige CBP to collect on surety bonds posted on behalf of Chinese food product exporters that were respondents in new shipper reviews from 1995 to 2006; and 5) to force surety providers that posted bonds for the Chinese exporters of such food products to honor customs bonds covering assessed shipments. (Leading underwriters active in customs bonding were co-defendants alongside CBP and ITA - see list below.)¹

Domestic Producers Claimed Customs Failed to Collect and Sureties Failed to Pay Out Bonds

The duties stemmed mainly from new shipper reviews of Chinese honey, garlic, mushrooms and crawfish: the domestic producers argued that a large portion of the uncollected funds they hoped to make CBP collect can be traced back to Customs bonds posted in conjunction with new shipper reviews of those products. Thus, most of the uncollected duties are owed by sureties who posted Customs bonds on behalf of new shippers, without collecting sufficient guarantees, plaintiffs argued, noting that the Chinese exporters in question ceased shipping when bonding privileges ended.¹

But CAFC Upholds CIT Dismissal of Complaints Against Gov't

Among other determinations, the appeals court agreed with the CIT that the domestic producers lacked standing to sue in part because they were not parties to the customs bond contracts which they were seeking to enforce, even if they did stand to gain indirectly from possible Byrd Amendment redistributions of duties collected. The higher court also agreed with the government that the contested actions, or decisions not to act, on the part of the ITA and CBP, were "discretionary agency actions not subject to judicial review."

Appeals Court Said Factual Detail Lacking in Complaint

Regarding the allegations that the ITA and CBP failed to take various actions required by law to assess, collect, and distribute AD duties, the higher court noted that the plaintiffs’ data originated in public information published by Customs on its website, and faulted the lack of specific records, holding that “Plaintiffs have not provided enough factual detail in the Complaint to render these conclusions plausible.” The court suggested plaintiffs should have sought detailed entry and duty assessment records under the Freedom of Information Act or “by simply calling or writing Commerce or Customs for information.”

CAFC also Finds no Jurisdiction for Suit Against Sureties at CIT

The CAFC disagreed with the CIT‘s decision that the plaintiffs‘ action against the surety companies could be tried at the CIT in conjunction with the complaints against the ITA and CBP: the higher court maintained that the CIT’s jurisdiction cannot reach to disputes between two non-governmental parties.

¹ The surety providers that were defendant-appellees are: Hartford Fire Insurance Company and affiliates; Aegis Security Insurance Company; Lincoln General Insurance Company; American Contractors Indemnity Company; American Home Assurance Company; XL Specialty Insurance Company; Great American Alliance Insurance Company and affiliates; International Fidelity Insurance Company; and Washington International Insurance Company.

(See ITT’s Online Archives 10090217 for summary of CIT decision. See ITT’s Online Archives 11052734 for summary of May 25, 2011, testimony from government officials before the Senate Appropriations Subcommittee on gaps and challenges in the enforcement of AD CV duty laws.)

CAFC Appeal 2011-1040, dated 02/07/12, before Rader, Chief Judge, Lourie and Prost, Circuit Judges.