Monday, March 26, 2012

Opposition to CVD/NME Law Tips Its Hand re: a Constitutional Challenge

As I've repeatedly mentioned over the last several weeks, one of the biggest concerns surrounding the recently enacted law allowing the Commerce Department to impose countervailing duties on imports from countries deemed to be "non-market economies" under the US anti-dumping law was the law's retroactive application to the 24 completed CVD/NME investigations (and the collection of duties pursuant to those cases) that Commerce completed without proper legal authority.  That retroactivity raises several possible constitutional issues under, for example, the Due Process Clause and the Takings Clause of the Fifth Amendment and the ban on Ex Post Facto laws under Article I.  Those claims, however, are murky, although it's pretty likely that some US importer or other party harmed by the new CVD/NME law will formally lodge a constitutional challenge to it.

We haven't yet seen such a challenge, but the folks at Law360 report that a party to the original court case which led to the new CVD/NME law, GPX Int'l Tire Corp v. United Stateshas given us a little taste of at least one legal argument that we might see in any future constitutional challenge:
A new law allowing the U.S. government to apply countervailing duties to imports from nonmarket economies should be found unconstitutional because it applies retroactively, the Chinese tire company at the center of the case that prompted Congress to act told the Federal Circuit on Friday....

Tianjin United Tire & Rubber International Co., the government and the United Steelworkers union responded to a request by the Federal Circuit for briefs about how the legislation enacted March 13 would impact the case over duties on Tianjin's tires.

Tianjin told the court that the legislation should have no effect on the case because it unconstitutionally purports to apply to all proceedings initiated after November 2006. There is no practical reason for such a lengthy period of retroactivity, the company argued....
Tianjin also argued that the law's double counting provisions will be "wholly ineffective," and that the original decision of the Federal Circuit - overturned by the new CVD/NME law - should still stand because it is "unreasonable and unlawful" to concurrently apply antidumping duties and CVDs on non-market economy imports.  Those arguments are interesting and, in my opinion, have merit, but for now I'd like to focus on Tianjin's constitutional argument.

According to their recent response to the CAFC, Tianjin argued that the new CVD/NME law violated the Due Process Clause:
At the outset, we note the retroactivity provisions of Section 1 (b) are unconstitutional. Any retroactivity is "generally disfavored," as at odds "with 'fundamental notions of justice' that have been recognized throughout history." See Eastern Enterprises v. Apfel, 524 U. S. 498, 532 (1998)(citations omitted). Moreover, the severe period of retroactivity here - more than five years - magnifies the grave constitutional concerns as it departs from "customary congressional practice" to confine retroactivity "to short and limited periods required by the practicalities of producing national legislation." US. v. Carlton, 512 U.S. 26,33 (1993) (citations omitted). There are no practicalities inherent in the production of this legislation that warrant so lengthy a retroactive application.

Moreover, the asymmetrical periods of retroactivity in the new legislation are logically incoherent. Section 1 (b) extends the scope of the CVD law to include NNIE countries going far back in time. In contrast, Section 2(b) applies the legislative fix for the "double counting" that results from such extension of the CVD law only prospectively. This inconsistency makes no logical sense. If the application of the CVD law to NME countries requires a fix for double countingas Congress seems to think by passing Section 2(a) - there is no reason to apply that fix only prospectively. This inconsistency cannot reflect any legitimate legislative purpose. For that reason, the retroactivity provisions of Section l(b) must be severed from the new legislation as an unconstitutional violation of due process. A five-year retroactive period that is logically inconsistent with the remainder of the legislation "is far outside the bounds of retroactivity permissible under our law." Eastern Enterprises, 524 U.S. at 550 (Kennedy, J., concurring).
That's the entirety of Tianjin's constitutional argument (appropriate considering that the CVD/NME law itself is not being challenged in these proceedings), and, despite seeming like quite a reasonable claim, it's unlikely that the CAFC will act on it (for the same reasons).  However, the excerpt above provides a nice little glimpse of any future litigation where, unlike here, the new law would be directly challenged and far more robust arguments would be made.  Given my very public feelings about the law - some of which are echoed above - I certainly hope that someone throws down the real gauntlet soon.

So stay tuned.

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