Chinese Exporter Says 'High Time' for CAFC to Review Legality of Commerce's NME Policy

Chinese exporter Jilin Forest Industry Jinqiao Flooring Group Co. urged the U.S. Court of Appeals for the Federal Circuit to "re-visit and question" the Commerce Department's basis for its non-market economy policy in antidumping duty proceedings. The exporter noted that the policy "has reigned for over twenty years without serious legal challenge," arguing that the appellate court has never directly reckoned with the policy's legality and that it's "high time" for such a review (Jilin Forest Industry Jinqiao Flooring Group Co. v. United States, Fed. Cir. # 23-2245).

Jilin Forest pointed to the U.S. Supreme Court's recent oral arguments in the Loper Bright v. Raimondo and Relentless v. Commerce cases in which the high court questioned the validity of Chevron deference as evidence of the need to revisit the policy (see 2401180060).

In the decision on appeal, the Court of International Trade ruled that Commerce failed to explain how its NME policy is rooted in either statute or the agency's regulations (see 2302090073). Judge Richard Eaton noted in his opinion questioning the policy that "recent cases suggest that the wind is blowing against wide-ranging claims for deference," which the U.S. offered in this action. Jilin Forest cited to this language, along with the Supreme Court's apparent critical view of Chevron, in claiming that the policy must be reviewed.

The exporter noted that, despite using the NME policy for decades, by which the agency sets a country-wide AD/CVD rate and allows individual companies to rebut the presumption of foreign state control, Commerce has never identified the policy's source in law allowing the presumption or even "given a real reason for the NME presumption's use." Jilin Forest noted that there's "no statute or regulation enacting or authorizing the NME Policy."

Without this statutory basis, "the NME Policy remains just that -- a policy," which isn't "tantamount to a statute or regulation and is not entitled to deference under Chevron or any other framework," the brief said. "It is axiomatic that the laws of the United States, including the antidumping laws, are enacted by Congress, not by the U.S. Department of Commerce." Agencies can formalize "rule-making procedures," but "informal measures," including policy statements, "do not make law," the company said.

In its opening brief, the U.S. cited three Federal Circuit cases that purportedly sustain the legality of the NME policy (see 2401220048). In response, Jilin Forest said that in all three of these opinions the court "has never squarely addressed the issue raised here."

In the first such case, Sigma Corp. v. U.S., which was decided in 1997, the Federal Circuit said that Commerce "has broad authority to interpret the antidumping statute and devise procedures to carry out the statutory mandate," adding that it was within the agency's authority to use a "presumption of state control for exporters in a nonmarket economy." The later two cases have simply "bootstrapped" the Sigma ruling "without further analysis or questioning," the exporter said, citing Eaton's opinion, which added that the NME presumption is "merely a practice bolstered by Federal Circuit dicta that" the agency has broad authority to set the AD procedures.

As a result, Jilin Forest argued, the principles of stare decisis don't resolve the matter because "Commerce failed to identify the statutory or regulatory source authorizing the application of the NME Policy and failed to engage in rule-making mandated by the Administrative Procedures Act." Without such statutory or regulatory authority, the agency "lacked the inherent authority to promulgate the NME presumption," the brief said.

The policy "should at a minimum be disallowed on the grounds that Commerce failed to promulgate a rule or regulation in accordance with the informal or formal rule-making requirements specified by the APA," the exporter claimed.