Plain Language of CDSOA Requires Distribution of Delinquency Interest, Appellants Tell CAFC

CBP's decision not to pay out interest assessed after liquidation, known as delinquency interest, on collected antidumping and countervailing duties violates the plain language of the Continued Dumping and Subsidy Offset Act of 2000, groups of plaintiff-appellants argued in two opening briefs in two different cases at the U.S. Court of Appeals for the Federal Circuit. One brief, penned by appellants led by Hilex Poly Co. and American Drew, said that even if the law was ambiguous, CBP has failed to exercise any authority "in a way that deserves deference" (Hilex Poly Co. v. United States, Fed. Cir. #22-2106) (Adee Honey Farms v. United States, Fed. Cir. #22-2105).

The other brief, filed by Monterey Mushrooms, railed against the proposition that CBP's interpretation of its duties under the CDSOA deserves Chevron deference. "Chevron deference is not afforded to an agency’s statutory interpretation made outside of the regulation itself, where the statute authorizes an agency to act 'by regulation,'" the brief said. The text of the regulation CBP relies on is in fact "entirely silent" on the steps for collecting and distributing delinquency interest, Monterey argued.

While at the Court of International Trade, the appellants argued that the text of the CDSOA as enacted by Congress expressly requires that CBP distribute “all interest” associated with antidumping and countervailing duties to affected domestic producers under the CDSOA (see 2105250069). CBP says delinquency interest is not included in CDSOA distributions.

At CIT, the dispute centered on CBP's interpretation of a few words in the statute. Under one provision, titled "Deposits Into Accounts," the law instructs CBP to deposit into the affected domestic producers' accounts all AD/CV duties "including interest earned on such duties." In another provision, titled "Distribution of Funds," the law says to distribute all funds "including all interest earned on the funds" from assessed duties to affected domestic producers. The question now becomes whether the phrase "including interest earned on such duties" includes delinquency interest.

The trade court said that while the terms of the statute are not entirely favorable to the government, CBP ultimately was correct (see 2206160074). CIT said that interest accrued on the total amount owed on an already liquidated entry cannot be described as interest earned on the AD/CVD, given the concept of liquidation, which makes all the money become "fixed." The appellants took to the Federal Circuit to contest the trade court's ruling, arguing first and foremost that the plain language of the statute mandates the inclusion of delinquicy interest in CDSOA distributions to affected domestic parties.

Monterey argued that placing the word "all" next to "interest" shows Congress' intent to distribute all interest to the affected domestic parties, and there is nothing in the CDSOA that "expressly or impliedly excludes delinquency interest" from this concept. "To say otherwise would effectively read the word “all” out of the CDSOA, a result that courts actively seek to avoid," the brief said. The appellant argued that CIT found ambiguity in the term "interest earned on" by looking to other parts of the Trade and Tariff Act of 1984 "rather than considering the plain language of the CDSOA itself." It is "unclear" why the CIT strayed from the text of the CDSOA itself, the appellant said.

In both cases, the appellants argued against the trade court's reliance on Chevron deference for CBP. The Hilex Poly and American Drew brief said that CBP was not given the statutory authority "to decide not to distribute all duties or to decide what kind of interest to distribute," and that CBP's "declarant" said that the only reason for the decision was a "technological limitation" and was not meant as an interpretation of anything. "Finally, Customs’s final rule does not say it will not distribute all duties or delinquency interest, and Customs cannot rely on language in the preamble to come to that result," the brief said.

Monterey, meanwhile, argued that CBP's "post hoc interpretation" of the statute "hinges entirely on the preamble to the Final Rule," which courts have time and again said does not have the force of law and not entitled to Chevron deference. Further, CBP failed to provide any explanation for its decision to drop delinquency interest distributions, rendering the decision "aribtrary and capricious," the appellant argued.