by Dennis Crouch
Sunpreme Inc. v. US (Fed. Cir. 2020) (en banc)
The Federal Circuit has issued an en banc decision in Supreme v. US, a case involving Customs & Border Protection (CBP) and antidumping / countervailing duty orders. The particular question presented was as follows:
When merchandise enters the United States, whether CBP may preliminarily apply an antidumping or countervailing duty order and implement certain measures to protect the public revenue, regardless of the clarity of the order.
Here, the particular duty order comes from two Dep’t of Commerce regulations that cover crystalline silicon photovoltaic cells but expressly exclude “thin film photovoltaic products produced from amorphous silicon (a-Si).” Products that fall within the order are subject to additional tariffs.
Sunpreme claims its products fall within the exclusion (and thus outside the Order), but CBP disagreed. Eventually the case went before the Court of International Trade (CIT) who characterized the DOC Orders as “ambiguous” with respect to Sunpreme’s modules. In its initial decision, the Federal Circuit agreed with regard to ambiguity:
This is not a close case. The Orders in this case cover certain solar modules and expressly exclude others, without providing a definition of the class expressly excluded. Sunpreme’s solar modules are hybrid products, mixing characteristics of the included and excluded solar cells.
Fed. Cir. Vacated Opinion (2019).
The ambiguity was important because CBP enforcement is seen as a ministerial action — CBP is not authorized to interpret or fill gaps in ambiguous orders. The court explained in its original opinion: “Ambiguity is the line that separates lawful ministerial acts from unlawful ultra vires acts by Customs.”
In its new en banc decision, the Federal Circuit has changed course — now holding that CBP has “authority to preliminarily suspend liquidation of goods based on an ambiguous antidumping or countervailing duty order, such that the suspension may be continued following a scope inquiry by Commerce.” In its decision, the full court found confirmed that CBP’s role is “ministerial” but found that its authorized ministerial acts include interpreting ambiguous orders from the CBP. In particular, CBP can make “individual product-by-product application decisions.”
Customs is tasked with determining, for every imported product, whether the product falls within the scope of an antidumping or countervailing duty order. 19 U.S.C. § 1500(c). That necessarily entails evaluating both the product and the order. In each instance, Customs is statutorily tasked with answering a yes-or-no question as to whether the order applies, in order to fix the duty owed. When the order is ambiguous, Customs is nonetheless called upon to answer the question. . . . Answering that question does not transform Customs’s yes-or-no question into an interpretive act that would “modify Commerce’s determinations” or otherwise impinge upon Commerce’s authority to issue and set the scope of duty orders.
En Banc Decision. The policy behind antidumping or countervailing duty orders is to protect US industry — and the Gov’t argued that the original opinion frustrated that policy by creating a likely procedural delay.
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The issues in this case remind me of what happens with claim construction and infringement analysis in district court litigation. The Judge decides claim construction while the jury decides whether the product infringes those claims (as interpreted). When a judge fully construes a claim, a jury is left with almost nothing to do except the ministerial act of finding infringement. For tough infringement questions, there is always a tendency to argue that the claims should have been more fully construed. However, I believe that approach drains too much power from the finder of fact – the Jury.
Here, we have a similar situation in the Commerce case where the Orders are not ambiguous on their face, but do not fully define all potential situations. You might conclude that a new situation reveals ambiguity inherent in the order; Alternatively, you might instead conclude that the ambiguity is in how the situation applies to the order.