top of page

The Limits of Deference – Again

Returning to one of the themes discussed in my note posted in February of this year, the U.S. Court of Appeals for the Federal Circuit has recently issued two more decisions reflecting skepticism toward the reasoning of the U.S. Department of Commerce in anti-dumping cases. Such judicial skepticism generally has focused on the interpretation of statutory text, rather than the evaluation of factual evidence on the record. This is not surprising, given that appellate judges are removed from the process of building and parsing the complex factual records on which dumping determinations are made, and that the standard of judicial review of agencies’ factual determinations (“substantial evidence”) is a lenient one. The interpretation of text, on the other hand, is a more abstract legal task with which judges may feel more comfortable.

(Before I go too far with this simple vision of appellate review, however, I should note that there are – and must be – exceptions. To take one example, in SolarWorld Americas, Inc. v. United States, 962 F.3d 1351 (Fed. Cir. 2020), in which I was involved, the Court of Appeals studied very detailed Thai surrogate value data used to construct the normal value for Chinese exports of solar panels to the United States. The Court concluded that certain elements of the Thai data were aberrational, which resulted in artificially inflated dumping margins.)

The most recent example of the Court’s statutory construction is found in YC Rubber Co. v. United States, issued on August 29. The issue on appeal concerned the calculation of the “all-others” rate for cooperative but non-mandatory respondents in an anti-dumping annual review in which there was only one mandatory respondent (after the second respondent selected as a mandatory withdrew from the review). The statute provides that generally a dumping margin is to be calculated for each individual respondent, but it provides an exception in situations where there are too many, in which case Commerce may calculate individual margins for a “reasonable number” of respondents. 19 U.S.C. 1677f-1(c)(2). [1] Commerce is then directed to calculate an average “all-others” rate to be applied to the non-selected respondents on the basis of those individual dumping margins (with exceptions not relevant here). 19 U.S.C. 1673d(c)(5).

The central question on appeal was whether an “average” could be based on a single datapoint in the numerator and the number “1” in the denominator. Commerce has long thought it could calculate an average on this basis, and the Court of International Trade (CIT) agreed. The Court of Appeals reversed, explaining that the statutory phrase “reasonable number of exporters and producers” in section 1677f-1(c)(2) demonstrated a legislative intent that more than one mandatory respondent would be subject to individual analysis. And for the purpose of calculating the “all-others” rate, section 1673d(c)(5)(A) uses the phrase “the estimated weighted average dumping margins established for exporters and producers individually investigated” – again contemplating a number greater than one. [2]

The decision in YC Rubber may have a significant impact on the administration of anti-dumping reviews, because it appears to compel Commerce to select at least one new mandatory respondent in cases where it initially selected only two and one of them has subsequently withdrawn from the review. Doing so under the statutory deadlines may place significant time pressures on Commerce and the newly-selected respondent.

The Court of Appeals’ reliance on statutory text to question Commerce’s reasoning is seen in another recent case, Hitachi Energy USA Inc. v. United States, 34 F.4th 1375 (2022). [3] Here, Commerce initially accepted a respondent’s reporting of expenses associated with its U.S. sales, but later, upon remand, revised its methodology. Commerce then claimed that information on certain U.S. expenses needed under the new methodology was missing from the record, but it refused to provide the respondent an opportunity to submit the missing evidence. Instead, Commerce applied partial “adverse facts available” (“AFA”) to determine the respondent’s dumping margin. The CIT affirmed Commerce’s decision, but the Court of Appeals reversed.

The Court of Appeals focused on the statute governing reporting deficiencies, 19 U.S.C. 1677m(d), which requires Commerce to “promptly inform the person submitting the response of the nature of the deficiency and . . . to the extent practicable, provide that person with an opportunity to remedy or explain the deficiency.” The Court rejected Commerce’s arguments as to why a deficiency notice was not required in this case, stating that “the statutory entitlement to notice and opportunity to remedy any deficiency is unqualified.” 34 F.4th at 1384. The Court also concluded that Commerce failed to demonstrate that the respondent had engaged in any of the “transgressions” listed in 19 U.S.C. 1677e(a), which would authorize recourse to AFA in determining the dumping margin under section 1677e(b).

But there are limits to judicial skepticism. Over the years, the Court of Appeals has shown a greater degree of deference toward agency decisions involving analysis of detailed factual records (despite the exception noted in my parenthetical above). It also has deferred to Commerce’s interpretation of statutory text in situations where the statute is perceived as ambiguous or silent, in which case the Court analyzes Commerce’s interpretation pursuant to the two-step Chevron framework. A very recent example of such deference is found in Shanzi Hairui Trade Co. v. United States, 39 F.4th 1357 (Fed. Cir. 2022), in which the Court of Appeals affirmed Commerce’s application of an AFA-based margin to compute the “all-others” rate in an annual review. The statute – specifically, the same section 1673d(c)(5) parsed in YC Rubber, discussed above – expressly excludes the use of AFA-based rates to calculate the all-others rate, but only in investigations. As to annual reviews, “Congress ‘left a gap for {Commerce} to fill’,” 39 F.4th at 1361 (quoting Chevron), and the Court of Appeals accepted the manner in which Commerce filled that gap. [4]

In sum, the Court of Appeals’ unsurprising, if imperfectly-consistent, hospitality toward text-based legal arguments should influence the manner in which parties challenge – and defend – decisions of the U.S. trade agencies.

* * * * *

Through his 38 years of experience in the international trade regulatory field, Neil Ellis has litigated numerous cases involving the U.S. trade laws before the administrative agencies, U.S. courts, and in WTO dispute settlement proceedings. Please contact us at with questions that you may have regarding trade litigation strategy.

[1] In the slip opinion, the Court unfortunately confuses the analysis by repeatedly referring to this statutory provision as “1677(c)” and “1677(c)(2)”. There are no such statutory provisions, and the text quoted in the opinion is actually found in sections 1677f-1(c) and 1677f-1(c)(2), to which the opinion sometimes correctly refers.

[2] The Court of Appeals noted that the CIT in fact had already adopted this interpretation of the statutory text in decisions issued over a decade ago. But that line of cases was ignored by Commerce over the years and distinguished by the CIT (erroneously, it turned out) in YC Rubber.

[3] In addition, as discussed in my February note, the Court of Appeals rejected Commerce’s textual interpretation in another recent case, regarding the so-called “particular market situation” statutory provision. Hyundai Steel Co. v. United States, 19 F.4th 1346 (Fed. Cir. 2021). I will forego repeating that discussion here, except to note that since that time, the Court of Appeals has reaffirmed its position by denying a motion for rehearing.

[4] As stated in my February note, however, there have been times when the Court of Appeals has refused to defer to Commerce’s interpretation of the statute, concluding that the legislative silence indicates a prohibition, not a “gap” that may be filled by Commerce. These alternative strands of judicial reasoning create an unresolved tension in the jurisprudence.

48 views0 comments

Recent Posts

See All

Customs and the Constitution

Do the U.S. Constitution’s procedural protections governing the deprivation of life, liberty and property apply in the context of import regulation? That question may deserve a skeptical response, es

When Statistics Matter

Appellate litigation is generally the final throw of the dice, so to speak, in U.S. trade regulatory disputes. Litigants, therefore, should carefully consider both the substance and presentation of th


bottom of page