US Defends Decision Not to Pay Out Delinquency Interest Under CDSOA

The Court of International Trade correctly held that the Continued Dumping and Subsidy Offset Act of 2000 does not require CBP to distribute interest assessed after liquidation, known as delinquency interest, to affected domestic producers, the U.S. argued in a pair of reply briefs at the U.S. Court of Appeals for the Federal Circuit (Hilex Poly Co. v. U.S., Fed. Cir. # 22-2106) (Adee Honey Farms v. U.S, Fed. Cir. #22-2105).

Responding to claims in two cases -- one brought by Monterey Mushrooms and the other by Hilex Poly Co. and American Drew -- the government said that CBP's "longstanding regulation reflects the best reading of the CDSOA's direction" to put all assessed antidumping and countervailing duties into a special account, then distribute that account to affected domestic producers.

While at the trade court, 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). The government claims that 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. At issue in the case is whether the phrase "including interest earned on such duties" includes delinquency interest.

The trade court came down in favor of the government (see 2206160074), holding 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 finalizes the amount due on an entry.

On appeal, the appellants argued that the plain language of the statute mandates the inclusion of delinquency interest in CDSOA distributions to affected domestic parties (see 2210280053).

In its replies, the U.S. echoed CIT's ruling, which explained that the statutory history shows that "interest" under the relevant law runs from the date cash deposits are paid until the date of liquidation. Balances owed after liquidation are covered by a completely different statute, 19 U.S.C. Section 1505(d), which covers the delinquency regime for all owed duties and does not differentiate between the sources of those sums, the government said. "Section 1505(d) delinquency interest, therefore, is not 'earned on' antidumping and countervailing duties within the meaning of the CDSOA; rather it is earned on a different pool of money encompassing normal tariffs and fees entirely unconnected from such duties," the briefs said.

The government also pointed to the passage of the Trade Facilitation and Trade Enforcement Act of 2015 as evidence that delinquency interest need not be sent out to affected producers. The U.S. said that this bill included new section 1505(d) interest subject to the CDSOA's distribution requirement, though it only covered AD/CVD from sureties and not from importers.

"Importantly, this new TFTEA requirement would have been entirely unnecessary on Monterey’s reading of the CDSOA, under which all section 1505(d) interest would have been subject to distribution since the CDSOA’s enactment in 2000," the brief said. "TFTEA manifests Congress’s contrary intent, and this should decline Monterey’s invitation to adopt a reading of the CDSOA that would render nugatory Congress’s carefully calibrated 2016 choice to make only certain types of section 1505(d) interest subject to the CDSOA’s distribution regime. And even if Monterey’s proposed interpretation were somehow consistent with the statute as a whole, including TFTEA, CBP’s contrary interpretation is, at a minimum, reasonable and entitled to deference."