CAFC Says No Delinquency Interest in CDSOA Payouts

The Continued Dumping and Subsidy Offset Act of 2000 doesn't require payouts of interest assessed after liquidation, known as delinquency interest, to affected domestic producers, the U.S. Court of Appeals for the Federal Circuit said July 15. Judges Alan Lourie, Kara Stoll and Tiffany Cunningham said that the statute only provides for interest that's "earned on" antidumping and countervailing duties and "assessed under" the associated AD or CVD order.

The three judges used the "traditional tools of statutory interpretation," as recently instructed by the Supreme Court (see 2406280051), to assess whether delinquency interest is provided for in the CDSOA, starting with the text of the law itself. The judges looked to two provisions of the CDSOA in particular -- Section 1675c(e)(2) and 1675c(d)(3).

The first provision tells CBP to deposit all AD/CVD, including interest earned on the duties, that are "assessed ... under the antidumping order or finding or the countervailing duty order." The court said the phrase in quotations applies to the terms "duties" and "interest earned on such duties," leaving the only question to be what type of interest is covered.

To assess this question, the judges looked to the other parts of the Tariff Act of 1930, which were in effect at the time the CDSOA was enacted. This "statutory scheme shows that only § 1677g interest," or interest paid on the difference between estimated AD/CVD and finally assessed and owed duties, and not delinquency interest, "meets these criteria."

Section 1677g interest is "uniquely associated with" AD/CVD, whereas delinquency interest "fits very differently into the statutory scheme and is not assessed under an" AD/CVD order, the decision said. Delinquency interest appears in the Tarirff Act under a provision applying broadly to "duties, fees, and interest."

The second provision the court looked to, 1675c(d)(3), tells CBP to distribute all funds, including interest earned on the funds from assessed duties received in the preceding fiscal year, to affected domestic producers. The only source of these funds are deposits made under Section 1675c(e)(2), meaning the funds don't include "any additional interest that is not deposited under § 1675c(e)(2)," the court held.

Various domestic producers said that the word "all" in the statute undercuts this interpretation. To this, the judges held that "a statute’s meaning does not always turn solely on the broadest imaginable definitions of its component words. Linguistic and statutory context also matter.” The placement of the word "all" after the word "including," restricts the meaning of "all interest" to interest deposited under Section 1675c(e)(2).

The court added that its interpretation doesn't read the word "all" out of the CDSOA, since "all interest" is "best understood as a command that Customs should distribute the entirety of the interest it collects from importers for underpayments, without deducting the interest it pays to importers for overpayments.”

The judges also discussed the legislative history of the CDSOA, finding that it "does not mention interest at all," and the Trade Facilitation and Trade Enforcement Act of 2015, which says that delinquency interest paid by sureties after Oct. 1, 2014, must be distributed via the CDSOA. The judges said the fact that the TFTEA mentions delinquency interest "provides some limited evidence that the prior version of the Tariff Act did not already provide for the allocation of delinquency interest.”

The Federal Circuit also affirmed the Court of International Trade's holding that CBP's final rule, adopted in 2001, gave adequate notice of CBP's decision not to include delinquency interest in CDSOA payouts (see 2206160074). As a result, the trade court said the claims were brought after the two-year statute of limitations to challenge the rule, though because claims against CDSOA distributions accrue annually, the court only dismissed the claims regarding distributions made more than two years from the filing of the complaint.

The appellate court said CIT didn't err in "dismissing the claims outside the two-year statutory period as untimely.” The judges said CBP "communicated its decision regarding the exclusion of delinquency interest both in the operative text of the Final Rule and in the preamble." The text says the funds aren't interest-bearing unless specified by Congress, meaning no interest will accrue in them, save for interest charged on the AD/CVD at liquidation, which will be transferred when collected from the importer.

(Adee Honey Farms v. United States, Fed. Cir. # 22-2105, dated 07/15/24; Judges: Alan Lourie, Kara Stoll, Tiffany Cunningham; Attorneys: Adam Gordon of The Bristol Group for plaintiff-appellant Monterey Mushrooms; Jeremy Bylund of King & Spalding for plaintiffs-appellants led by American Drew; Beverly Farrell for defendant-appellee U.S. government)

(Hilex Poly Co. v. United States, Fed. Cir. # 22-2106)

(American Drew v. United States, Fed. Cir. # 22-2114)