Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-16-01426/USCOURTS-ca13-16-01426-0/pdf.json

Parties Involved:
Dubai Wire FZE
Not party
Itochu Building Products Co., Inc.
Not party
Mid Continent Nail Corporation
Appellant
Precision Fasteners, LLC
Appellee
United States
Not party

Document Text:

United States Court of Appeals 

for the Federal Circuit ______________________ 

MID CONTINENT NAIL CORPORATION,

Plaintiff-Appellant

v.

UNITED STATES, DUBAI WIRE FZE, ITOCHU 

BUILDING PRODUCTS CO., INC.,

Defendants

PRECISION FASTENERS, LLC,

Defendant-Appellee

______________________ 

2016-1426

______________________ 

Appeal from the United States Court of International 

Trade in Nos. 1:12-cv-00133-GWC, 1:12-cv-00153-GWC,

1:12-cv-00162-GWC, Judge Gregory W. Carman.

______________________ 

Decided: January 27, 2017

______________________ 

DAVID ALBERT YOCIS, Picard Kentz & Rowe LLP, 

Washington, DC, argued for plaintiff-appellant. Also 

represented by ANDREW WILLIAM KENTZ, ROOP BHATTI,

MEIXUAN LI, DOUGLAS KNOX BEMIS, JR. 

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2 MID CONTINENT NAIL CORPORATION v. US

MICHAEL PAUL HOUSE, Perkins Coie, LLP, Washington, DC, argued for defendant-appellee. Also represented 

by DAVID JOHN TOWNSEND, DAVID STEWART CHRISTY, JR. 

______________________ 

Before NEWMAN, LOURIE, and DYK, Circuit Judges.

DYK, Circuit Judge. 

In 2012, the Department of Commerce issued a final 

determination in an antidumping investigation of certain 

steel nails from the United Arab Emirates (“UAE”) finding that Precision Fasteners, LLC had engaged in targeted dumping and imposed a duty. In calculating Precision’s 

dumping margin, Commerce declined to apply a regulation limiting the use of the average-to-transaction methodology to non-targeted sales because the agency asserted 

that the regulation had been withdrawn in 2008. See 19 

C.F.R. § 351.414(f)(2) (2008). 

The Court of International Trade (“Trade Court”) held 

that Commerce had violated the Administrative Procedure Act (“APA”) by withdrawing the regulation without

providing notice and opportunity for comment. On remand, Commerce redetermined Precision’s duty by applying the withdrawn regulation and found that no duty was 

owing. The Trade Court affirmed. We hold that Commerce 

violated the requirements of the APA in withdrawing the 

regulation, leaving the regulation in force; that its violation of the APA was not harmless; and that the agency did 

not err in applying the regulation on remand. We therefore affirm the final judgment of the Trade Court. 

BACKGROUND

I 

In 2011, appellant Mid Continent Nail Corp. filed a 

petition with Commerce alleging that “imports of certain 

steel nails from the UAE . . . [were being] sold in the 

United States at less than fair value, . . . and that such 

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MID CONTINENT NAIL CORPORATION v. US 3 

imports [were] materially injuring, or threatening material injury to, an industry in the United States.” Certain 

Steel Nails From the United Arab Emirates: Initiation of 

Antidumping Duty Investigation, 76 Fed. Reg. 23,559, 

23,560 (Apr. 27, 2011). Commerce initiated an antidumping investigation during which it determined that appellee Precision was among the mandatory respondents, i.e., 

an importer whose dumping rate would be individually 

determined in the course of the investigation.1 See Certain Steel Nails From the United Arab Emirates: Preliminary Determination, 76 Fed. Reg. 68,129 (Nov. 3, 2011).

In 2012, Commerce issued an antidumping duty order

imposing a 2.51 percent duty on Precision. See Certain 

Steel Nails From the United Arab Emirates: Final Determination, 77 Fed. Reg. 17,029, 17,031–32 (Mar. 23, 

2012); Certain Steel Nails from the United Arab Emirates: Amended Final Determination, 77 Fed. Reg. 27,421, 

27,422 (May 10, 2012). 

Commerce found that Precision had engaged in “targeted dumping” because Precision’s sales reflected a 

“pattern of export prices . . . that differ[ed] significantly 

among certain customers, regions, and time periods.” 77 

Fed. Reg. at 17,031; see also 19 U.S.C. § 1677f1(d)(1)(B)(i); U.S. Steel Corp. v. United States, 621 F.3d 

1351, 1359 (Fed. Cir. 2010). And, central to this appeal, 

the agency proceeded to calculate Precision’s dumping 

margin by applying the average-to-transaction methodology to all U.S. sales reported by Precision, irrespective of 

 1 Another mandatory respondent identified by 

Commerce, Dubai Wire FZE (“Dubai Wire”), participated 

in the agency’s dumping investigation and intervened in 

the Trade Court, but did not file a brief in this appeal. We 

have limited our recitation of the facts to those pertinent 

to Precision, but note that the relief sought by Mid Continent could impact Dubai Wire as well. 

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4 MID CONTINENT NAIL CORPORATION v. US

whether the agency had deemed a sale to be targeted or 

not. See 77 Fed. Reg. at 17,031.

The average-to-transaction methodology is one of the 

three methods that Commerce may use in an investigation to calculate dumping margins in accordance with the 

Tariff Act of 1930, as amended by the Uruguay Round 

Agreements Act (URAA), Pub. L. No. 103–465, 108 Stat. 

4809 (1994). The statute provides that, in general, Commerce “shall determine whether . . . subject merchandise 

is being sold in the United States at less than fair value” 

by either: (1) “comparing the weighted average of the 

normal values to the weighted average of the export 

prices (and constructed export prices) for comparable 

merchandise”; or (2) “comparing the normal values of 

individual transactions to the export prices (or constructed export prices) of individual transactions for comparable 

merchandise.” 19 U.S.C. § 1677f-1(d)(1)(A)(i)–(ii). These 

two methods are respectively known as the “average-toaverage” and “transaction-to-transaction” methodologies. 

The statute permits Commerce to use a third method—the average-to-transaction methodology—if certain 

conditions are met. The average-to-transaction methodology “compar[es] the weighted average of the normal 

values to the export prices (or constructed export prices)

of individual transactions for comparable merchandise.” 

Id. § 1677f-1(d)(1)(B). To calculate dumping margins 

using the average-transaction methodology, however, 

Commerce must find “a pattern of export prices (or constructed export prices) for comparable merchandise that 

differ significantly among purchasers, regions, or periods 

of time,” (i.e., targeted dumping) and explain “why such 

differences cannot be taken into account using” the first 

two methods. Id. § 1677f-1(d)(1)(B)(i)–(ii). In other words, 

Commerce must first conclude that a respondent is engaged in targeted dumping and explain why the other two 

statutory methodologies fail to sufficiently account for it. 

See U.S. Steel, 621 F.3d at 1358–59. 

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MID CONTINENT NAIL CORPORATION v. US 5 

In calculating dumping margins using the average-totransaction methodology, Commerce has “historically” 

used a practice known as “zeroing” in which “negative 

dumping margins (i.e., margins of sales of merchandise 

sold at nondumped prices) are given a value of zero and 

only positive dumping margins (i.e., margins for sales of 

merchandise sold at dumped prices) are aggregated.” 

Union Steel v. United States, 713 F.3d 1101, 1104 (Fed. 

Cir. 2013). As a result, “dumping margins for sales below 

normal value are not offset by ‘negative dumping margins’

for those sales made above normal value.” Corus Staal BV 

v. United States, 502 F.3d 1370, 1372 (Fed. Cir. 2007). 

This lack of offsetting leads to higher dumping margins

when the average-to-transaction methodology is used, 

which has made calculation of margins using this methodology “controversial.” See Union Steel, 713 F.3d at 1104. 

II

Shortly after the enactment of the URAA, Commerce 

promulgated a regulation through notice-and-comment 

rulemaking restricting the agency’s use of the average-totransaction methodology. This regulation—known as the 

“Limiting Regulation”—provided that even in cases 

meeting the statutory criteria for applying the average-totransaction methodology, the agency would “normally . . . 

limit [its] application . . . to those sales that constitute 

targeted dumping,” as opposed to applying the average-totransaction methodology to all of a respondent’s sales. See 

19 C.F.R. § 351.414(f)(2) (2008); see also Antidumping 

Duties; Countervailing Duties, Final Rule, 62 Fed. Reg. 

27,296, 27,375 (May 19, 1997).

In 2008, however, Commerce withdrew the Limiting 

Regulation, along with several other regulations governing the agency’s handling of targeted dumping allegations. See Withdrawal of the Regulatory Provisions 

Governing Targeted Dumping in Antidumping Duty 

Investigations, Interim Final Rule, 73 Fed. Reg. 74,930, 

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6 MID CONTINENT NAIL CORPORATION v. US

74,931 (Dec. 10, 2008) [hereinafter Withdrawal Notice]. 

The agency stated that it had originally promulgated the

regulations “without the benefit of any experience on the 

issue of targeted dumping,” and that the regulations “may 

have established thresholds or other criteria that . . . 

prevented the use of [the average-to-transaction] methodology to unmask dumping, contrary to the [c]ongressional 

intent.” Id. Commerce noted that withdrawal would allow 

the agency to gain “additional experience” with targeted 

dumping through “case-by-case adjudication.” Id. 

Commerce acknowledged in Withdrawal Notice that 

repeal of the targeted dumping regulations was subject to 

“the requirement to provide prior notice and opportunity 

for public comment, pursuant to . . . 5 U.S.C. § 553(b)(B),” 

but expressly “waive[d] the requirement” by invoking the

APA’s “good cause” exception to notice-and-comment 

rulemaking. 73 Fed. Reg. at 74,931.

In finding good cause, Commerce explained that notice-and-comment rulemaking was “impracticable and 

contrary to the public interest” because the rescinded 

regulations were “applicable to ongoing antidumping 

investigations” and that “immediate revocation [was] 

necessary to ensure the proper and efficient operation of 

the antidumping law[s].” Id. At no point in Withdrawal 

Notice did Commerce refer to any prior notices proposing 

to withdraw the Limiting Regulation, or otherwise suggest that the agency had provided adequate notice and 

opportunity for comment under the APA. 

In calculating Precision’s dumping margin three years 

later in this proceeding, Commerce applied the averageto-transaction methodology, having found both “a pattern 

of export prices . . . that differ[ed] significantly among 

customers, regions, or by time-period,” and that applying 

the “average-to-average methodology mask[ed] differences 

in the patterns of prices between the targeted and nontargeted groups.” 77 Fed. Reg. at 17,031. In this appeal, 

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MID CONTINENT NAIL CORPORATION v. US 7 

no party has challenged Commerce’s determination that 

the statutory criteria for applying the average-totransaction methodology were met. What the parties 

dispute is the agency’s decision to apply the average-totransaction methodology not just to “those sales that 

constitute[d] targeted dumping,” as the Limiting Regulation had previously provided, but “to all U.S. sales reported by . . . Precision.” See id. (emphasis added). 

III 

Precision challenged Commerce’s final determination 

in the Trade Court. See Mid Continent Nail Corp. v. 

United States (Mid Continent I), 999 F. Supp. 2d 1307, 

1309–10 (Ct. Int’l Trade 2014). In relevant part, Precision 

argued that Commerce was required to apply the Limiting Regulation to calculate Precision’s dumping margin

because the agency’s repeal of the regulation in “Withdrawal Notice was ineffective and contrary to law,” as it 

had “occurred outside the basic procedural framework 

required by Congress under the [APA].” Id. at 1319–20. 

According to Precision, had the agency applied the Limiting Regulation, application of the average-to-transaction 

methodology to all of Precision’s domestic sales would not 

have been “justif[ied]” because the agency had “only found 

evidence of targeting for less than one percent” of Precision’s U.S. sales, the exact scenario that had concerned

Commerce when it adopted the Limiting Regulation in 

the first place. Id. at 1319.2

The Trade Court agreed that Commerce’s withdrawal 

of the Limiting Regulation violated the APA. After concluding that withdrawal of the regulation was subject to 

 2 Commerce stated at the time that “it would be 

‘unreasonable and unduly punitive’ to apply the [averageto-transaction methodology] to all sales where, for example, targeted dumping accounted for only one percent of a 

firm’s total sales.” 62 Fed. Reg. at 27,375.

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8 MID CONTINENT NAIL CORPORATION v. US

notice-and-comment rulemaking, the court rejected the 

argument that the agency had provided adequate notice 

and opportunity for comment through two earlier Federal 

Register notices because those notices had not proposed to 

repeal the regulation. See id. at 1322. The court also 

rejected Commerce’s invocation of good cause and found 

that the agency’s procedural default was not excusable as

harmless error. See id. Accordingly, the Trade Court 

remanded Commerce’s final determination and instructed 

the agency to “redetermine [Precision’s] dumping margin[] by applying the Limiting Regulation.” Id. at 1323. 

IV

On remand, Commerce applied the Limiting Regulation as ordered by the Trade Court. As the regulation 

provided that Commerce would “normally” not apply the 

average-to-transaction methodology to all sales, see 19 

C.F.R. § 351.414(f)(2) (2008), the agency concluded that 

application of the average-to-transaction methodology to 

all of Precision’s sales was unwarranted because “the 

record does not contain evidence to suggest that this 

normal limitation should not be applied.” J.A. 89. As a 

consequence of limiting the average-to-transaction methodology to only targeted sales, Commerce found that 

Precision’s dumping margin was “de minimis,” and therefore imposed a duty of 0.00 percent. Id.

Mid Continent appealed Commerce’s remand redetermination to the Trade Court, arguing that the agency 

had misapplied the Limiting Regulation. See Mid Continent Nail Corp. v. United States (Mid Continent II), 113 F. 

Supp. 3d 1318, 1326 (Ct. Int’l Trade 2015). The court 

rejected Mid Continent’s argument and affirmed Commerce’s remand redetermination. See id. at 1327–28, 

1331. Mid Continent then filed this appeal, which Commerce has not joined. We have jurisdiction under 28 

U.S.C. § 1295(a)(5).

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V 

During the pendency of the Trade Court proceedings, 

and in light of the court’s ruling that Withdrawal Notice

was ineffective to repeal the Limiting Regulation,3 Commerce in 2013 initiated a new proceeding to accomplish 

the repeal. The agency published a Notice of Proposed 

Rulemaking (“NPRM”) in which it sought comments on a 

proposal “not to apply . . . the previously withdrawn 

regulatory provisions governing targeted dumping.” NonApplication of Previously Withdrawn Regulatory Provisions Governing Targeted Dumping in Antidumping Duty 

Investigations, Proposed Rule, 78 Fed. Reg. 60,240, 

60,240 (Oct. 1, 2013). In 2014, Commerce issued a final 

rule making withdrawal of the regulations effective May 

22, 2014. See 79 Fed. Reg. 22,371 (Apr. 22, 2014). No 

party to this appeal has challenged the 2014 withdrawal, 

or contended that it should be applied retroactively. 

Accordingly, this case solely addresses whether the withdrawn regulations were in effect during the period between December 10, 2008, and May 22, 2014.

DISCUSSION

We review the Trade Court’s decision to uphold Commerce’s remand redetermination de novo. See U.S. Steel, 

621 F.3d at 1357. We will affirm the agency unless its 

decision “is unsupported by substantial evidence on the 

record, or otherwise not in accordance with law.” 19 

U.S.C. § 1516a(b)(1)(B)(i). “Commerce’s decision will [also] 

be set aside if it is arbitrary and capricious.” Changzhou 

Wujin Fine Chem. Factory Co. v. United States, 701 F.3d 

1367, 1374 (Fed. Cir. 2012). 

We do not defer to an agency’s interpretation of the 

APA’s statutory requirements, although the statute itself 

 3 The Trade Court first reached this conclusion in 

an earlier case, Gold East Paper (Jiangsu) Co. v. United 

States, 918 F. Supp. 2d 1317, 1328 (Ct. Int’l Trade 2013).

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presumes that review of agency action under the arbitrary-and-capricious standard is “highly deferential.” 

Nat’l Org. of Veterans’ Advocates, Inc. v. Sec’y of Veterans 

Affairs, 260 F.3d 1365, 1372 (Fed Cir. 2001); see also

Collins v. Nat’l Transp. Safety Bd., 351 F.3d 1246, 1253 

(D.C. Cir. 2003) (“For generic statutes like the APA, . . . 

the broadly sprawling applicability undermines any basis 

for deference, and courts must therefore review interpretative questions de novo.”); Mobil Oil Corp. v. Dep’t of 

Energy, 728 F.2d 1477, 1486–87 (Temp. Emer. Ct. App. 

1983) (“We are free to make an independent determination of the legal question as to whether the agency has 

made a showing of good cause.”).4 

I 

We first address Mid Continent’s contention that

Commerce provided adequate notice for the repeal of the 

Limiting Regulation through two Federal Register notices 

issued in 2007 and 2008: (1) Targeted Dumping in Antidumping Investigations; Request for Comment, 72 Fed. 

Reg. 60,651 (Oct. 25, 2007) [hereinafter Request for Comment]; and (2) Proposed Methodology for Identifying and 

Analyzing Targeted Dumping in Antidumping Investigations; Request for Comment, 73 Fed. Reg. 26,371 (May 9, 

2008) [hereinafter Proposed Methodology]. 

 4 Accord Sorenson Commc’ns Inc. v. FCC, 755 F.3d 

702, 706 (D.C. Cir. 2014); Iowa League of Cities v. EPA, 

711 F.3d 844, 872 (8th Cir. 2013); Meister v. U.S. Dep’t of 

Agric., 623 F.3d 363, 370–71 (6th Cir. 2010); Reno-Sparks 

Indian Colony v. EPA, 336 F.3d 899, 909 n.11 (9th Cir. 

2003); Warder v. Shalala, 149 F.3d 73, 79 (1st Cir. 1998); 

Weyerhaeuser Co. v. Shalala, 590 F.2d 1011, 1027 (D.C. 

Cir. 1978). See generally United States v. Reynolds, 710 

F.3d 498, 507–09 (3d Cir. 2013); Jared P. Cole, Cong. 

Research Serv., R44356, The Good Cause Exception to 

Notice and Comment Rulemaking: Judicial Review of 

Agency Action 13–14 (2016).

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MID CONTINENT NAIL CORPORATION v. US 11

A 

The requirement that an agency provide adequate notice before altering its regulations is rooted in the APA’s

provisions governing the administrative rulemaking 

process. Under the APA, whenever an agency decides to 

“formulat[e], amend[], or repeal[] a rule,” it must first 

publish an NPRM setting forth “either the terms or 

substance of the proposed rule[,] or a description of the 

subjects and issues involved.” 5 U.S.C. §§ 553(b), 551(5).

For the purposes of notice and comment, withdrawal or 

repeal of an existing regulation is treated the same as 

promulgation of a new regulation. See Tunik v. MSPB, 

407 F.3d 1326, 1342 (Fed. Cir. 2005). Although the notice 

“need not specify every precise proposal which [the agency] may ultimately adopt,” it “must be sufficient to fairly 

apprise interested parties of the issues involved.” Nuvio 

Corp. v. FCC, 473 F.3d 302, 310 (D.C. Cir. 2006) (quoting 

Action for Children’s Television v. FCC, 564 F.2d 458, 470 

(D.C. Cir. 1977)). Adequate notice “is crucial to ‘ensure 

that agency regulations are tested via exposure to diverse 

public comment, . . . to ensure fairness to affected parties, 

and . . . to give affected parties an opportunity to develop 

evidence in the record to support their objections to the 

rule and thereby enhance the quality of judicial review.’” 

Int’l Union, United Mine Workers of Am. v. Mine Safety & 

Health Admin., 626 F.3d 84, 95 (D.C. Cir. 2010) (quoting 

Int’l Union, United Mine Workers of Am. v. Mine Safety & 

Health Admin., 407 F.3d 1250, 1259 (D.C .Cir. 2005)). 

The dispositive question in assessing the adequacy of 

notice under the APA is whether an agency’s final rule is 

a “logical outgrowth” of an earlier request for comment. 

Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 174 

(2007); Veteran’s Justice Grp., LLC v. Sec’y of Veterans 

Affairs, 818 F.3d 1336, 1344 (Fed. Cir. 2016). 

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The logical outgrowth doctrine recognizes that a certain degree of change between an NPRM and a final rule 

is inherent to the APA’s scheme of rulemaking through 

notice and comment. See Int’l Harvester Co. v. Ruckelshaus, 478 F.2d 615, 632 n.51 (D.C. Cir. 1973). Accordingly, judicial formulations of the doctrine have sought to 

“balance” the values served by adequate notice, see Int’l 

Union, 626 F.3d at 94–95, with “the public interest in 

expedition and finality.” Small Refiner Lead Phase-Down 

Task Force v. EPA, 705 F.2d 506, 547 (D.C. Cir. 1983). We 

recently stated, for instance, that “[a] final rule is a logical 

outgrowth of a proposed rule only if interested parties 

should have anticipated that the change was possible, and 

thus reasonably should have filed their comments on the

subject during the notice-and-comment period.” Veteran’s 

Justice, 818 F.3d at 1344 (alterations and internal quotation marks omitted).5 

Courts have consistently upheld final rules as logical 

outgrowths “where the NPRM expressly asked for comments on a particular issue or otherwise made clear that 

the agency was contemplating a particular change.” CSX 

Transp. Inc. v. Surface Transp. Bd., 584 F.3d 1076, 1081 

(D.C. Cir. 2009) (citing Owner–Operator Indep. Drivers 

Ass’n v. Fed. Motor Carrier Safety Admin., 494 F.3d 188, 

209–10 (D.C. Cir. 2007); and City of Portland v. EPA, 507 

F.3d 706, 715 (D.C. Cir. 2007)); see also, e.g., Alto Dairy v. 

Veneman, 336 F.3d 560, 570 (7th Cir. 2003) (upholding 

final rule prohibiting “paper pooling” of milk producers

with “distant supply plants” because agency’s notice 

raised the issue of “pool” eligibility); Public Service Com-

 5 See also Am. Water Works Ass’n v. EPA, 40 F.3d 

1266, 1274 (D.C .Cir. 1994) (“We apply [the logical outgrowth] standard functionally by asking . . . whether a 

new round of notice and comment would provide the first 

opportunity for interested parties to offer comments that 

could persuade the agency to modify its rule.”).

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mission v. FCC, 906 F.2d 713, 715 (D.C. Cir. 1990) (final 

rule was logical outgrowth because board affiliated with 

the agency asked for comments on the proposal that was 

finally adopted, even though the agency itself did not).

Courts applying the logical outgrowth doctrine have 

also permitted agencies to drop critical elements of proposed rules even if a resulting final rule effectively abandons an agency’s initial proposal. In Long Island Care, for 

example, the Department of Labor proposed a rule that 

would have rendered certain “companionship workers” 

outside the exemption to wage and hour restrictions 

under the Fair Labor Standards Act (“FLSA”). See 551 

U.S. at 174–75. The rule the agency eventually adopted, 

however, left these workers within the FLSA’s exemption. 

The Court sustained the agency’s final rule, observing

that “[s]ince the proposed rule was simply a proposal, its 

presence meant that the Department was considering the 

matter; after that consideration the Department might 

choose to adopt the proposal or to withdraw it.” Id. at 175. 

Because this result was “reasonably foreseeable,” the 

Court held that the agency had complied with notice-andcomment rulemaking. Id.6 

Nonetheless, there are limits to how far a notice of 

proposed rulemaking may be stretched under the logical 

outgrowth doctrine. In some cases, these limits may be 

difficult to discern, Kooritzky v. Reich, 17 F.3d 1509, 1513 

(D.C. Cir. 1994), but certain clear lines have been drawn. 

“The logical outgrowth doctrine does not extend to a final 

 6 See also, e.g., Veterans Justice, 818 F.3d at 1345 

(upholding a final rule because “[o]ne logical outgrowth of 

a proposal is surely . . . to refrain from taking the proposed step”); Ariz. Pub. Serv. Co. v. EPA, 211 F.3d 1280, 

1299 (D.C. Cir. 2000) (“In first proposing that tribes 

would have to meet the ‘same requirements’ [for judicial 

review under the Clean Air Act] as states, EPA effectively 

raised the question as to whether this made sense.”).

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rule that finds no roots in the agency’s proposal because 

something is not a logical outgrowth of nothing, . . . [or]

where interested parties would have had to divine the 

agency’s unspoken thoughts, because the final rule was 

surprisingly distant from the [a]gency’s proposal.” Envtl. 

Integrity Project v. EPA, 425 F.3d 992, 996 (D.C. Cir. 

2005) (internal quotation marks and citations omitted). 

B 

Having summarized the principles animating the logical outgrowth doctrine, we turn to whether Commerce’s 

repeal of the Limiting Regulation in Withdrawal Notice 

was a logical outgrowth of Request for Comment and

Proposed Methodology. The Trade Court determined that 

the notices were insufficient because neither notice made 

“obvious to an interested observer that . . . rule making [to 

withdraw the rule was] intended” by the agency. Mid 

Continent I, 999 F. Supp. 2d at 1322. We agree. 

We begin with the statute. The Tariff Act as amended

by the URAA obligates Commerce to make two findings 

before the agency may use the average-to-transaction 

methodology to assess targeted dumping in an investigation. First, the agency must find “a pattern of export 

prices (or constructed export prices) for comparable merchandise that differ significantly among purchasers, 

regions, or periods of time.” 19 U.S.C. § 1677f-1(d)(1)(B)(i). 

Second, Commerce must “explain[] why such differences 

cannot be taken into account using” the other two statutory methods. Id. § 1677f-1(d)(1)(B)(ii). 

Once these criteria are met, however, the statute 

leaves undefined the precise scope of Commerce’s application of the average-to-transaction methodology; this led to 

concerns that if a respondent had been found to be engaged in targeted dumping, but only in some limited 

fashion, application of the methodology to “all of [the 

respondent’s] sales . . . would be unreasonable and unduly 

punitive.” See Antidumping Duties; Countervailing DuCase: 16-1426 Document: 59-2 Page: 14 Filed: 01/27/2017
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ties, 61 Fed. Reg. 7308, 7350 (Feb. 27, 1997). Commerce 

responded to these concerns by promulgating the Limiting 

Regulation, which provided that the agency would “normally limit the application of the average-to-transaction 

method[ology] to those sales that constitute targeted 

dumping.” 19 C.F.R. § 351.414(f)(2) (2008). Thus, even if 

the agency had found a respondent to have engaged in 

targeted dumping—a condition precedent to the agency’s 

use of the average-to-transaction methodology—under the 

Limiting Regulation, Commerce would “normally” limit 

the scope of the average-to-transaction methodology to the 

respondent’s targeted sales—instead of all sales.

Ten years after promulgating the Limiting Regulation, Commerce published Request for Comment, in which 

the agency sought guidance regarding an appropriate test 

to determine the existence of targeted dumping. In this 

notice, Commerce admitted that it had accrued only 

“limited experience with targeted dumping” despite the 

intervening years; that it had yet to develop a standard 

targeted dumping test; and that its “experience with 

regard to the use of the [average-to-transaction] method 

ha[d] been very limited.” 72 Fed. Reg. at 60,651. By 

publishing Request for Comment, Commerce hoped to 

solicit the public’s views on “its development of a methodology for determining whether targeted dumping is occurring in antidumping investigations,” and “input on

standards and tests that may be appropriate in a targeted 

dumping analysis.” Id. Specifically, the agency sought 

guidance on: (1) how to determine the existence of a 

“pattern of export prices . . . among purchasers, regions, 

or periods of time”; (2) how to determine if such a pattern 

“differ[s] significantly”; and (3) the “appropriate statistical 

techniques” to assess targeted dumping. Id.

Despite raising these concerns, Request for Comment

was not published in the Federal Register as an NPRM, 

meaning that the notice on its face did not indicate that 

Commerce was considering a rulemaking. More problemCase: 16-1426 Document: 59-2 Page: 15 Filed: 01/27/2017
16 MID CONTINENT NAIL CORPORATION v. US

atically, Request for Comment did not propose any kind of 

rule or raise any question about the scope of the averageto-transaction methodology, much less the conditions

under which the agency should depart from its “normal” 

practice of not applying the methodology to all sales. 

Request for Comment did not even include a citation to the 

Limiting Regulation. Instead, in Request for Comment,

Commerce simply sought information on the broad issue 

of how the agency should determine the existence of 

targeted dumping—a distinct, predicate issue to the 

problem addressed by the Limiting Regulation (i.e., the 

scope of the average-to-transaction methodology). 

The consequence of these deficiencies is that Request 

for Comment falls short of satisfying the APA’s requirements for notice and opportunity for comment. We find 

the D.C. Circuit decision in Kooritzky to be instructive on 

this point. At issue in Kooritzky was a “no-substitution” 

rule promulgated by the Department of Labor that prohibited employers from substituting one alien for another 

with respect to certifications necessary for obtaining 

employment-based visas. See 17 F.3d at 1512. In a notice 

of proposed rulemaking to implement then-recent statutory amendments, the agency made no mention of substitution. Id. at 1513. In rejecting the agency’s NPRM as 

inadequate, the D.C. Circuit observed that the “notice . . . 

contain[ed] nothing, not the merest hint, to suggest that 

the [agency] might tighten its existing practice of allowing 

substitution,” and that the preamble to the agency’s 

notice in the Federal Register “offered no clues” to a 

“nonexpert reader . . . of what was to come.” Id. 

Like the notice at issue in Kooritzky, Request for 

Comment gave no indication that Commerce was contemplating a potential change in the Limiting Regulation. 

Nor did commentators responding to Request for Comment perceive the agency to be raising the issue of the 

regulation’s repeal or revision, or suggest such repeal or

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MID CONTINENT NAIL CORPORATION v. US 17

revision themselves.7 We therefore have no doubt that 

Commerce’s repeal of the Limiting Regulation was not a 

logical outgrowth of Request for Comment because, as in 

Kooritzky, “[s]omething is not a logical outgrowth of

nothing.” 17 F.3d at 1513.

C 

Six months after Request for Comment, Commerce—

still concerned with the appropriate test for determining 

the existence of targeted dumping—proposed a new twopart test addressing the problem in Proposed Methodology.8 This second notice acknowledged the responses that 

 7 At best, commenting parties understood the agency to be open to suggestions on how to apply the Limiting 

Regulation. To illustrate, as one commentator stated: 

“[T]he Department should clarify when it will apply the 

average-to-transaction methodology to all sales, rather 

than only targeted sales. We think it would be appropriate . . . to apply the average-to-transaction method to all 

sales . . . where the targeted quantity exceeds twenty 

percent of the U.S. sales database.” Letter from David A. 

Hartquist, Executive Director, Committee to Support U.S. 

Trade Laws to David Spooner, Assistant Secretary for 

Import Administration 3 (Dec. 10, 2007) (emphasis added), available at https://perma.cc/5FJR-WKZD. 8 Under this test—also known as the Nails test, see 

JBF RAK LLC v. United States, 790 F.3d 1358, 1367 & 

n.5 (Fed. Cir. 2015)—Commerce first “determine[s], on an 

exporter-specific basis, the share of the allegedly targeted 

customer’s purchases of subject merchandise, by sales 

value, that are at prices more than one standard deviation below the weighted-average price to all customers of 

that exporter, targeted and non-targeted.” 73 Fed. Reg. at 

26,372. “If that share exceeds 33 percent of the total value 

of the exporter’s sales of subject merchandise to the 

allegedly targeted customer, then the pattern requirement is met.” Id. In the second part of the Nails test, 

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18 MID CONTINENT NAIL CORPORATION v. US

Commerce had received following Request for Comment, 

but did not offer the agency’s response thereto. See Proposed Methodology, 73 Fed. Reg. at 26,371. In addition to 

seeking new comments on its proposed test for determining the existence of targeted dumping, Commerce also 

raised several “related issues.” Id. In particular, the 

agency “request[ed] comment on the application of the 

[average-to-transaction methodology] and the conditions, 

if any, under which the [average-to-transaction] methodology should apply to all sales to the target, even if some 

sales of a control number do not pass the targeted dumping test.” Id. at 26,372 (emphasis added). 

Proposed Methodology thus presents a closer question 

under the logical outgrowth doctrine than Request for 

Comment. The Limiting Regulation had provided that 

Commerce would “normally” apply the average-totransaction methodology only to “those sales” found to 

“constitute targeted dumping.” 19 C.F.R. § 351.414(f)(2) 

(2008). Therefore, by seeking public comment on “the 

conditions, if any,” under which the average-totransaction methodology should be applied to all sales

made by a respondent—instead of just the respondent’s 

targeted sales—Commerce effectively raised the general 

subject of the Limiting Regulation, perhaps suggesting 

 

Commerce “determine[s] the total sales value for which 

the difference between (i) the sales-weighted average 

price to the allegedly targeted customer and (ii) the next 

higher sales-weighted average price to a non-targeted 

customer exceeds the average price gap . . . for the nontargeted group.” Id. If the share of sales satisfying these 

criteria “exceeds 5 percent of the total value of sales of 

subject merchandise to the allegedly targeted customer,” 

then the pattern of price differences is deemed “significant,” and the exporter will be found to have engaged in 

targeted dumping. Id. 

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MID CONTINENT NAIL CORPORATION v. US 19

wholesale elimination of the agency’s discretion to apply 

the average-to-transaction methodology to all sales. 

Although courts have found logical outgrowths when 

an NPRM “expressly asked for comments on a particular 

issue or otherwise made clear that the agency was contemplating a particular change,” CSX, 584 F.3d at 1081, 

we do not think that this principle supports holding

Proposed Methodology to have provided the “necessary 

predicate” for Withdrawal Notice. Kooritzky, 17 F.3d at 

1513. For starters, like Request for Comment, Proposed 

Methodology on its face did not indicate that further 

action to withdraw the Limiting Regulation was being 

considered. Instead, Proposed Methodology merely sought 

public views on how to interpret the regulation itself—

which provided that the agency would “normally” not 

apply the average-to-transaction methodology to all 

sales—that is, how exactly Commerce should apply the

“normally” limitation. Because the agency had left the 

circumstances in which it would have applied the average-to-transaction methodology to all sales largely undefined, “interested persons” would have perceived the 

question regarding the Limiting Regulation posed in 

Proposed Methodology as simply Commerce’s first step in 

clarifying the scope of its own regulation. Indeed, comments that the agency received in response to Proposed 

Methodology did not understand Commerce to be raising a 

broader question, i.e., whether to repeal the Limiting 

Regulation. See note 10, infra. 

Posing such a general “scope” question does not suffice to provide the requisite “fair notice” for an agency rule 

to be upheld as a logical outgrowth. See Long Island Care, 

551 U.S. at 174. In CSX, the D.C. Circuit confronted a 

similar problem in addressing a rule promulgated by the 

Surface Transportation Board (“STB”) to resolve railroad 

rate disputes. The STB had originally proposed a rule 

allowing such disputes to be resolved using “comparison 

groups drawn from the most recent year of waybill samCase: 16-1426 Document: 59-2 Page: 19 Filed: 01/27/2017
20 MID CONTINENT NAIL CORPORATION v. US

pling.” 584 F.3d at 1078. In the rule finally adopted, 

however, the agency “switch[ed] from one year to four 

years’ worth of data.” Id. The STB argued that the final 

rule was a logical outgrowth because “mention[ing] . . . 

the release of one-year data . . . gave notice that the

amount of data available . . . might change.” Id. at 1082. 

The D.C. Circuit rejected this argument for two reasons. First, the court observed that although the STB’s 

notice had proposed a number of related regulatory 

changes, “it nowhere even hinted that [the agency] might 

consider expanding the number of years from which 

comparison groups could be derived.” Id. Second, permitting the “mere mention” of the one-year timeframe for 

drawing comparison groups to provide adequate notice 

would allow the agency “to justify any final rule it might 

be able to devise by whimsically picking and choosing 

within the four corners of a lengthy ‘notice.’” Id. (quoting 

Envtl. Integrity Project, 425 F.3d at 998). “Such a rule 

would hardly promote the purposes of the APA’s notice 

requirement.” Id.

The same reasoning applies to Proposed Methodology.

Despite mentioning the subject matter of the Limiting 

Regulation, Commerce’s primary purpose in the Proposed 

Methodology was to propose a new test for determining 

whether a respondent was engaged in targeted dumping 

and to seek public comment on this proposal. As a “related issue” the agency posed a general question of when to 

apply the average-to-transaction methodology to all sales, 

not just targeted sales. But this question did not raise the 

“particular issue” of withdrawing the Limiting Regulation; it sought only to clarify the meaning of the Limiting 

Regulation’s recitation of the word “normally.” And, as in 

CSX, allowing Commerce’s question in Proposed Methodology to provide adequate notice for Withdrawal Notice 

would permit the agency to adopt a final rule from a

limitless continuum of regulatory actions. Given this 

range of possibilities, we cannot say that Commerce’s 

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MID CONTINENT NAIL CORPORATION v. US 21

repeal of the Limiting Regulation was “reasonably foreseeable.” Long Island Care, 551 U.S. at 175. It follows 

that neither Request for Comment nor Proposed Methodology provided adequate notice and opportunity for comment necessary for compliance with the APA.

D 

Mid Continent argues that even if Commerce did not 

itself provide the required notice, comments made in

response to Request for Comment and Proposed Methodology urged Commerce to apply the average-to-transaction 

methodology to “all sales” and thereby effectively raised 

the issue of repealing the Limiting Regulation. 

Although responses by commentators may be relevant 

to the court’s inquiry under the logical outgrowth doctrine, as a general matter, an agency “cannot bootstrap 

notice from a comment.” Fertilizer Inst. v. EPA, 935 F.2d 

1303, 1312 (D.C. Cir. 1991).9 Here, the comments relied 

on by Mid Continent never urged Commerce to repeal the 

Limiting Regulation; commentators simply asked the 

agency to construe the regulation more or less broadly.10

 9 See also Shell Oil Co. v. EPA, 950 F.2d 741, 751 

(D.C. Cir. 1991) (noting that under NRDC v. Thomas, 838 

F.2d 1224, 1243 (D.C. Cir. 1998), comments to an agency 

proposal are a relevant factor if they raise a “foreseeable 

possibility of agency action”); Int’l Union, 407 F.3d at 

1261 (underscoring that NRDC v. Thomas represents “the 

outer limits of the ‘logical outgrowth’ doctrine” and that 

the agency in that case gave notice and opportunity for 

comment two weeks before promulgating the final rule).

10 Responses to Proposed Methodology, for example, 

suggested a number of ways to apply the Limiting Regulation, including the establishment of numerical thresholds that if satisfied would result in applying the averagetransaction methodology to all sales. See Letter from King 

& Spalding LLP to Hon. David Spooner, Assistant SecreCase: 16-1426 Document: 59-2 Page: 21 Filed: 01/27/2017
22 MID CONTINENT NAIL CORPORATION v. US

Many of these comments simply urged Commerce to 

follow the approach the agency had set forth when it first 

promulgated the regulation in 1997, viz., that “in some 

instances, it may be necessary to apply the average-totransaction methodology to all sales to the targeted area, 

. . . or even to all sales of a particular respondent,” 62 Fed. 

Reg. at 27,375 (noting that such cases could encompass 

 

tary for Import Administration 12 (June 23, 2008), available at https://perma.cc/Q7T6-5RH3 (proposing a twenty 

percent threshold based on U.S. sales); Letter from Skadden, Arps, Slate, Meagher & Flom LLP to David Spooner,

Assistant Secretary for Import Administration 20 (June 

23, 2008), available at https://perma.cc/HUJ4-UXPE

(proposing a twenty percent threshold or “when the 

Department cannot identify the full scope of the respondent’s targeted dumping”). 

Mid Continent identifies a number of specific comments responding to Proposed Methodology that it contends addressed “possible modification” of the Limiting 

Regulation. We disagree. These comments addressed 

Commerce’s interpretation of the Limiting Regulation’s 

“normally” limitation and did not suggest revision or 

repeal. To illustrate, one comment cited by Mid Continent 

stated that Commerce “should apply the [average-totransaction] methodology to all of the sales to the target” 

because “[o]nce a customer or region has been identified 

as being targeted by a respondent . . . [Commerce] should 

consider that all sales to that target are subject to the 

same pricing practices and are, therefore, targeted sales.” 

Letter from David A. Hartquist, Kelley Drye & Warren 

LLP to Secretary of Commerce 30 (June 23, 2008) (emphasis added), available at https://perma.cc/D34C-VU94. 

The emphasized portions of this comment underscore the 

comment’s consistency with the Limiting Regulation, i.e., 

that Commerce should “normally” limit the average-totransaction methodology to “sales that constitute targeted 

dumping.” 19 C.F.R. § 351.414(f)(2) (2008).

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MID CONTINENT NAIL CORPORATION v. US 23

respondents engaged in “widespread” or “extensive[]”

targeted dumping). See note 10, supra. And, the fact that

comments responding to Request for Comment and Proposed Methodology were entirely silent on the issue of 

repealing the Limiting Regulation supports the conclusion 

that these notices were insufficient to render the agency’s 

actions in Withdrawal Notice a “logical outgrowth.” See, 

e.g., Council Tree Commc’ns, Inc. v. FCC, 619 F.3d 235, 

256 (3d Cir. 2010). 

Finally, our conclusion that Withdrawal Notice is not 

a logical outgrowth of either Request for Comment or 

Proposed Methodology is further bolstered by four other 

considerations. First, Commerce never referred to Request 

for Comment or Proposed Methodology in Withdrawal 

Notice, nor responded to the comments it had received in 

response to the two earlier notices.11 Second, in Withdrawal Notice the agency did not adopt any of the proposals made by commentators, choosing instead to resolve 

the scope of the average-to-transaction methodology 

through “case-by-case adjudication.” 73 Fed. Reg. at 

74,931. Third, Commerce curiously requested further 

comments regarding its repeal of the Limiting Regulation 

in Withdrawal Notice, which suggests that the agency 

believed itself to not have secured adequate comments on 

the issue. In contrast, Commerce did not make a similar 

request for additional comments in its 2014 rulemaking to 

withdraw the Limiting Regulation. See 79 Fed. Reg. at 

22,378. Last but not least, Commerce did not suggest in 

Withdrawal Notice that it had in fact complied with the 

 11 See, e.g., Motor Vehicle Mfrs. Ass’n v. State Farm 

Mut. Auto. Ins. Co., 463 U.S. 29, 48 (1983); Disabled Am. 

Veterans v. Gober, 234 F.3d 682, 692 (Fed. Cir. 2000) 

(“[I]nextricably intertwined with . . . 5 U.S.C. § 553(c) is 

the agency’s need to respond, in a reasoned manner, to 

any comments received by the agency that raise significant issues with respect to a proposed rule.”). 

Case: 16-1426 Document: 59-2 Page: 23 Filed: 01/27/2017
24 MID CONTINENT NAIL CORPORATION v. US

APA by issuing the earlier notices. To the contrary, Commerce thought it necessary to invoke the APA’s good 

cause exception, which implies that the agency did not 

consider its prior notices to have satisfied the statute’s

procedural requirements. Although the inconsistency of 

simultaneously invoking good cause and arguing post hoc

compliance with the APA is not dispositive, the tension 

between these conflicting positions strongly supports our 

view that Commerce’s (and now, Mid Continent’s) assertion that the agency had complied with notice-andcomment rulemaking is not supportable. 

In summary, we hold that Commerce’s repeal of the 

Limiting Regulation in Withdrawal Notice was not a 

logical outgrowth of Request for Comment and Proposed 

Methodology, and that agency failed to provide adequate 

notice under the APA.

II

We must now consider whether Commerce’s failure to 

provide adequate notice may be excused for good cause, 

the sole ground Commerce cited for dispensing with notice 

and comment in Withdrawal Notice. An agency may forgo 

notice-and-comment rulemaking for good cause if it “finds 

(and incorporates the finding and a brief statement of 

reasons therefor in the rules issued) that notice and 

public procedure thereon are impracticable, unnecessary, 

or contrary to the public interest.” 5 U.S.C. § 553(b)(3)(B).

As a general matter, exceptions to notice-andcomment rulemaking under the APA are “narrowly construed and only reluctantly countenanced.” Mobil Oil, 728 

F.2d at 1490 (quoting New Jersey v. EPA, 626 F.2d 1038, 

1045 (D.C. Cir. 1980)).12 In Mobil Oil, we stated that an 

 12 Accord NRDC v. Abraham, 355 F.3d 179, 204 (2d 

Cir. 2004); United States v. Reynolds, 710 F.3d 498, 507–

08 (3d Cir. 2013); United States v. Gould, 568 F.3d 459, 

469 (4th Cir. 2009); United States v. Johnson, 632 F.3d 

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MID CONTINENT NAIL CORPORATION v. US 25

invocation of good cause requires an agency to show that 

delaying the rule at issue would create “a significant 

threat of serious damage to important public interests” as 

the exception would otherwise become an “all purpose 

escape-clause” to the APA’s rulemaking provisions. Id. at 

1492. Such “significant threat[s]” encompassed situations 

where the announcement of a proposed rule itself would 

“precipitate activity by affected parties that would harm 

the public welfare,” for example, price controls subject to 

predatory regulatory arbitrage or other market dislocations. Id. (citing Nader v. Sawhill, 514 F.2d 1064, 1068–

69 (Temp. Emer. Ct. App. 1975)). Other courts have 

emphasized the need to find similarly serious threats in 

order to invoke the good cause exception. See, e.g., Mack 

Trucks, Inc. v. EPA, 682 F.3d 87, 93 (D.C. Cir. 2012)

(citing “possible imminent hazard to aircraft, persons, and 

property” and rules of “life-saving importance” necessary 

to “stave off any imminent threat to the environment or 

safety or national security”); Haw. Helicopter Operators 

Ass’n v. FAA, 51 F.3d 212, 214 (9th Cir. 1995) (citing a 

“recent escalation of fatal air tour accidents”).

The requirement that an agency “incorporate[] the 

finding and a brief statement of reasons” for good cause 

“in the rules issued” means that we are limited to examining the reasons Commerce cited in Withdrawal Notice to 

justify its invocation of good cause. See Mobil Oil Corp. v. 

Dep’t of Energy, 610 F.2d 796, 802–03 (Temp. Emer. Ct. 

App. 1979); see also N.C. Growers’ Ass’n, Inc. v. United 

 

912, 928 (5th Cir. 2011); United States v. Cain, 583 F.3d 

408, 420–21 (6th Cir. 2009); Nw. Airlines, Inc. v. Goldschmidt, 645 F.2d 1309, 1321 (8th Cir. 1981); Alcaraz v. 

Block, 746 F.2d 593, 612 (9th Cir. 1984); N. Am. Coal 

Corp. v. Dep’t of Labor, 854 F.2d 386, 388 (10th Cir. 1988); 

United States v. Dean, 604 F.3d 1275, 1279 (11th Cir. 

2010); Utility Solid Waste Activities Grp. v. EPA, 236 F.3d 

749, 754 (D.C. Cir. 2001).

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26 MID CONTINENT NAIL CORPORATION v. US

Farm Workers, 702 F.3d 755, 766–67 (4th Cir. 2012).

Commerce cited two of the three available statutory 

grounds for invoking the good cause exception. First, the

agency stated that notice and comment were “impracticable” because the Limiting Regulation was applicable to 

ongoing dumping investigations, and “immediate revocation [was] necessary to ensure the proper and efficient 

operation of the antidumping law and to provide the relief 

intended by Congress.” 73 Fed. Reg. at 74,931. Mid Continent relatedly asserts that dumping investigations are 

subject to statutory deadlines that cannot be extended at 

the agency’s discretion. See 19 U.S.C. §§ 1673b(b)(1)(A), 

1673b(c), 1673d(a).

“Notice and comment on a rule may be found to be 

‘impracticable’ when ‘the due and required execution of 

the agency functions would be unavoidably prevented by 

its undertaking public rulemaking proceedings.’” N.C. 

Growers, 702 F.3d at 766 (quoting Nat’l Nutritional Foods 

Ass’n v. Kennedy, 572 F.2d 377, 384–85 (2d Cir. 1978)).

Critically, we along with several other courts have held 

that statutory deadlines in and of themselves do not 

generally provide a basis for invoking good cause on the 

ground of impracticability. See, e.g., Shell Oil Co. v. Fed. 

Emer. Admin., 527 F.2d 1243, 1248 (Temp. Emer. Ct. 

App. 1975).13 But see Phila. Citizens in Action v. Schweiker, 669 F.2d 877, 885–86 (3d. Cir. 1982) (upholding good 

cause where Congress gave the agency only 49 days to 

promulgate regulations implementing a complex scheme 

of federally funded state benefits). A contrary rule would 

encourage administrative gamesmanship because “an 

agency unwilling to provide notice or an opportunity to 

comment could simply wait until the eve of a statutory, 

 13 See also Council of S. Mountains, Inc. v. Donovan, 

653 F.2d 573, 581 (D.C. Cir. 1981); U.S. Steel Corp. v. 

EPA, 595 F.2d 207, 213 (5th Cir. 1979); Am. Iron & Steel 

Inst. v. EPA, 568 F.2d 284, 292 (3d Cir. 1977).

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MID CONTINENT NAIL CORPORATION v. US 27

judicial, or administrative deadline, then raise up the 

‘good cause’ banner and promulgate rules without following APA procedures.” Council of S. Mountains, Inc. v. 

Donovan, 653 F.2d 573, 581 (D.C. Cir. 1981). In fact, the 

temporal exigency implied by Withdrawal Notice appears 

more theoretical than actual—as Mid Continent observes, 

Commerce did not have occasion to apply the Limiting 

Regulation’s withdrawal until eight months after Withdrawal Notice, and did not issue a final determination 

relying on the withdrawal until fifteen months later.14

Thus, the fact that Commerce would have had to apply 

the Limiting Regulation to ongoing investigations cannot 

constitute a basis for good cause excusing its failure to go 

through notice and comment.

Second, Commerce invoked the good cause exception 

on the ground that notice was “contrary to the public 

interest” because the agency’s application of the Limiting 

Regulation “may have . . . prevented the use of [the average-to-transaction] methodology to unmask dumping.” 73 

Fed. Reg. at 74,931. This argument, however, is again 

foreclosed by precedent because an assertion of mere 

pocketbook (or balance-sheet) harm to regulated entities 

is generally not sufficient to establish good cause as 

nearly every agency rule imposes some kind of economic 

cost.15 See Mack Trucks, 682 F.3d at 95 (contrasting such 

economic harms with a situation “in which an entire 

 14 See Polyethylene Retail Carrier Bags From Taiwan, Preliminary Determination, 74 Fed. Reg. 55,183, 

55,187–88 (Oct. 27, 2009); Polyethylene Retail Carrier 

Bags From Taiwan, Final Determination, 75 Fed. Reg. 

14,569, 14,569 (Mar. 26, 2010).

15 See generally Maeve P. Carey, Cong. Research 

Serv., R41974, Cost-Benefit and Other Analysis Requirements in the Rulemaking Process (Dec. 9, 2014) (summarizing presidential and congressional actions requiring 

agencies to conduct economic cost-benefit analysis).

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28 MID CONTINENT NAIL CORPORATION v. US

industry and its customers [are] imperiled”). As the Trade 

Court observed, the denial of regulatory relief in this case 

is not the sort of “pressing urgency of a type that does not 

always exist in the trade context.” Mid Continent I, 999 F. 

Supp. 2d at 1323 (citing Gold East Paper (Jiangsu) Co. v. 

United States, 918 F. Supp. 2d 1317, 1327 (Ct. Int’l Trade 

2013)). Thus, Commerce did not show a public interest 

consideration sufficient to support the agency’s invocation 

of good cause.

On appeal, Mid Continent offers a new justification

for good cause that Commerce did not adopt in Withdrawal Notice. Citing Commerce’s statement that the “effect” of 

the agency’s targeted dumping regulations was “to deny 

relief to domestic industries,” and that this effect was 

“inconsistent with the [agency’s] statutory mandate to 

provide [such] relief,” 73 Fed. Reg. at 74,931, Mid Continent argues that Commerce “had determined the withdrawal was necessary because the existing regulations 

were contrary to law,” and thus “immediate withdrawal 

was . . . fully justified.” In connection with this argument, 

Mid Continent cites the doctrine of deference to agency 

statutory interpretations under Chevron, U.S.A., Inc. v. 

Nat. Res. Def. Council, Inc., 467 U.S. 837, 842–45 (1984), 

to assert that the Limiting Regulation was contrary to 

statute because it was inconsistent with Commerce’s view 

of the statute in Withdrawal Notice. Mid Continent’s 

theory, therefore, is that there was no need for Commerce 

to undergo notice-and-comment rulemaking because the 

Limiting Regulation was contrary to the statutory provisions of the Tariff Act.

This theory of good cause did not appear in Withdrawal Notice and therefore cannot support a finding of 

good cause. See N.C. Growers, 702 F.3d at 767. In any 

case, we do not agree with Mid Continent’s premise that 

the agency had determined the Limiting Regulation to be 

“contrary to law.” Commerce did not state in Withdrawal 

Notice that the Limiting Regulation was contrary to an 

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MID CONTINENT NAIL CORPORATION v. US 29

unambiguous statutory provision—and, to our knowledge, 

no party has ever challenged the validity of the Limiting 

Regulation under the Tariff Act. What Commerce actually

stated was that the “effect” of the regulations was “inconsistent . . . with [its] statutory mandate,” which the agency broadly framed as “provid[ing] relief to domestic 

industries materially injured by unfairly traded imports.” 

73 Fed. Reg. at 73,931. These statements are not tantamount to a determination that a regulation is contrary to 

an unambiguous provision of statutory law.16 

Nor do we agree that the inconsistency of a regulation 

adopted under an agency’s previous statutory interpretation with the agency’s present statutory interpretation 

ipso facto renders the regulation “contrary to law.” By 

definition, an agency’s ability to alter its statutory interpretation requires statutory ambiguity, and, under Chevron, an agency can only reject a prior interpretation of an 

ambiguous statute if it explains why it is doing so. See, 

e.g., Nat’l Cable & Telecomms. Ass’n v. Brand X Internet 

Servs., 545 U.S. 967, 981–82 (2005); Smiley v. Citibank 

(South Dakota), N.A., 517 U.S. 735, 742 (1996); Rust v. 

Sullivan, 500 U.S. 173, 186–87 (1991). In this situation, 

notice-and-comment rulemaking under the APA is more—

rather than less—important to lay the groundwork for the

agency’s exercise of its Chevron authority. 

Thus, we agree with the Trade Court that Commerce’s 

invocation of the good-cause exception did not support its 

decision to dispense with notice-and-comment rulemaking 

under the APA.

 16 See Nat’l Customs Brokers & Forwarders Ass’n v. 

United States, 59 F.3d 1219, 1223–24 (Fed. Cir. 1995) 

(upholding agency’s invocation of good cause where regulation was amended without notice or comment to exactly 

parallel intervening statutory amendment).

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30 MID CONTINENT NAIL CORPORATION v. US

III

Mid Continent argues that even if Commerce’s repeal 

of the Limiting Regulation violated the APA, the agency’s 

actions may nonetheless be affirmed on the ground of 

harmless error. The APA directs reviewing courts to take 

“due account . . . of the rule of prejudicial error” in deciding whether to “hold unlawful and set aside agency action.” See 5 U.S.C § 706(2). The Supreme Court has dedescribed this provision as an “administrative law . . . 

harmless error rule.” Shinseki v. Sanders, 556 U.S. 396, 

406 (2009). We must therefore determine whether Commerce’s failure to comply with notice-and-comment rulemaking may be excused as harmless error.

Mid Continent contends that Commerce’s procedural 

error was harmless because Precision cannot show prejudice of a sort cognizable under the statute. Relying on our 

decision in Intercargo Insurance Co. v. United States, Mid 

Continent argues that “[p]rejudice . . . means injury to an 

interest that the statute, regulation, or rule in question 

was designed to protect,” and that the only injury Precision can show—that Commerce reached an adverse decision in its dumping investigation—is not an interest 

protected by notice and comment. 83 F.3d 391, 396 (Fed. 

Cir. 1996). Precision counters that it was required to show

only that Commerce’s procedural error had some “bearing 

on . . . the substance of [the] decision reached,” and that 

given the magnitude of the agency’s error and its inability 

to participate in a rulemaking, this standard is satisfied. 

Riverbend Farms, Inc. v. Madigan, 958 F.2d 1479, 1487 

(9th Cir. 1992). 

In determining whether a procedural error committed 

in the course of rulemaking was harmless under the APA, 

courts have distinguished between an agency’s “technical 

failure” or substantial compliance with the APA’s procedural requirements on one hand (which may constitute 

harmless error), and its “complete failure” to do so on the 

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MID CONTINENT NAIL CORPORATION v. US 31

other (which may prevent the error from being harmless). 

United States v. Reynolds, 710 F.3d 498, 516–19 (3d Cir. 

2013).17 “In the first category, the agency has provided 

some notification and method for commenting but some 

technical failure in that process violates statutory requirements. In these ‘technical failure’ cases, the party 

challenging the agency rule ‘may be required to demonstrate that, had proper notice been provided, they would 

have submitted additional, different comments that could 

have invalidated the rationale’ of the rule.” Id. at 516

(internal citation omitted) (quoting City of Waukesha v. 

EPA, 320 F.3d 228, 246 (D.C. Cir. 2003)). 

 17 See also, e.g., Sprint Corp. v. FCC, 315 F.3d 369, 

376 (D.C. Cir. 2003) (“[A]n utter failure to comply with 

notice and comment cannot be considered harmless if 

there is any uncertainty at all as to the effect of that 

failure.”); Shell Oil Co. v. EPA, 950 F.2d 741, 752 (D.C. 

Cir. 1991) (“While petitioners must show that they would 

have submitted new arguments to invalidate rules in the 

case of certain procedural defaults, such as an agency’s 

failure to provide access to supplemental studies, petitioners need not do so here, where the agency has entirely 

failed to comply with notice-and-comment requirements, 

and the agency has offered no persuasive evidence that 

possible objections to its final rules have been given 

sufficient consideration.” (citations omitted)); compare 

Int’l Union, 407 F.3d at 1259–61 (final rule setting maximum air velocity cap where proposed rule only set minimum cap was not a logical outgrowth, not harmless), with 

Int’l Union, 626 F.3d at 95–96 (D.C. Cir. 2010) (challenger 

failed to demonstrate prejudice because it was able to 

participate in the agency’s rulemaking proceedings and 

raised issues on appeal that were already “encompassed 

in its comments”).

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32 MID CONTINENT NAIL CORPORATION v. US

To illustrate this first “technical failure” category of 

cases, in Riverbend Farms, the Ninth Circuit concluded 

that the Secretary of Agriculture’s failure to publish 

notice in the Federal Register and refusal to accept written comments were harmless because the parties challenging the rule were given actual notice—albeit not 

published in the Federal Register—and had the opportunity to give oral comments at meetings conducted by 

the agency. See 958 F.2d at 1488. Similarly, in Friends of 

Iwo Jima v. National Capital Planning Commission, the 

Fourth Circuit held that the National Capital Planning 

Commission’s failure to provide notice for two meetings in 

a “protracted process” was harmless because the challengers had notice of other opportunities to submit comments, and the substance of the comments they allegedly 

would have submitted was the “main focus of each stage 

in the approval process.” 176 F.3d 768, 774 (4th Cir. 

1999); see also, e.g., Air Transport Ass’n of Am. v. Civil 

Aeronautics Bd., 732 F.2d 219, 224 n.11 (D.C. Cir. 1984) 

(agency’s failure to timely provide internal staff studies 

was harmless in the absence of petitioner “explain[ing] 

what it would have said had it been given earlier access”).

Our decision in Intercargo is consistent with these

“technical failure” cases. In Intercargo, after concluding 

that the Customs Service was required to recite a statutory basis when issuing an extension of time to liquidate 

import entries, we considered whether the Service’s 

failure to do so was harmless. See 83 F.3d at 392, 394. We 

noted that the “omission of the requisite language . . . had 

no effect on [the] right to challenge the extension” and 

that the importer had not alleged the absence of a statutory basis—the agency had simply failed to identify the 

basis in its notice. Id. at 396. In rejecting the imposition of 

additional duties as a source of prejudice, we observed 

that “[a] party is not ‘prejudiced’ by a technical defect

simply because that party will lose its case if the defect is 

disregarded.” Id. (emphasis added). 

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In the second, “complete failure” category of cases, the 

total absence of notice-and-comment rulemaking and the 

resulting thin or nonexistent record make it difficult for a 

reviewing court to conclude with certainty that no prejudice has ensued. See Reynolds, 710 F.3d at 518. In such 

cases, even a minimal showing of prejudice may suffice to 

defeat a claim of harmless error because “an utter failure 

to comply with notice and comment cannot be considered 

harmless if there is any uncertainty at all as to the effect 

of that failure.” Sugarcane Growers Coop. of Fla. v. Veneman, 289 F.3d 89, 96 (D.C. Cir. 2002); see also, e.g., Sprint 

Corp. v. FCC, 315 F.3d 369, 376 (D.C. Cir. 2003); Paulsen 

v. Daniels, 413 F.3d 999, 1007 (9th Cir. 2005).

Commerce’s failure to comply with the APA was not a 

mere technical defect, but amounted to a complete failure 

to provide the adequate notice and opportunity for comment that the APA requires. There is considerable uncertainty as to the effect of this failure. We find it significant 

that during Commerce’s subsequent rulemaking to withdraw the Limiting Regulation, the agency relied on its 

post-2008 experience to justify the repeal. See 79 Fed. 

Reg. at 22,375 (noting Commerce’s development of “differential pricing analysis”). Moreover, Commerce did not in 

Withdrawal Notice address any substantive objections to 

withdrawing the Limiting Regulation. Cf. United States v. 

Johnson, 532 F.3d 912, 931 (5th Cir. 2011) (finding harmless error where the agency “thoroughly engage[d] the 

issues and challenges inherent in the regulation” and 

“was able to address objections in the interim final rule”).

The agency in fact did not address those objections until 

its 2014 rulemaking. See 79 Fed. Reg. at 22,374–75. All

this suggests that Commerce’s failure to go through notice 

and comment could well have affected the result reached 

in Withdrawal Notice.18 

 18 We also do not think that Commerce’s subsequent 

decision to formally withdraw the Limiting Regulation 

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34 MID CONTINENT NAIL CORPORATION v. US

Accordingly, we hold that Commerce’s failure to comply with notice-and-comment rulemaking cannot be 

excused as harmless error.

IV

We finally address Mid Continent’s argument that 

Commerce erred in applying the Limiting Regulation on 

remand from the Trade Court. To recap, Commerce’s 

remand redetermination applied the Limiting Regulation

and concluded that application of the average-totransaction methodology to all of Precision’s sales was 

unwarranted because “the record does not contain evidence to suggest that this normal limitation should not be 

applied.” J.A. 89. On appeal, Mid Continent argues that 

Commerce misapplied the Limiting Regulation by failing 

to reinterpret the regulation to be consistent with the 

agency’s post-2008 interpretation of the statute, which 

assertedly requires broader application of the average-totransaction methodology. In connection with this argument, Mid Continent suggests that Commerce misinterpreted the Trade Court’s remand instructions as 

prohibiting the agency from reinterpreting the regulation, 

or that the court erred by depriving the agency of such 

discretion and then deferring to Commerce’s application 

of the Limiting Regulation on remand. 

Having examined Commerce’s remand redetermination, we find Mid Continent’s arguments unavailing. The 

Trade Court’s instructions did not compel Commerce to 

apply the average-to-transaction methodology only to 

targeted sales, and on remand, the agency did not misinterpret the court’s instructions. See Mid Continent II, 113 

F. Supp. 3d at 1327 (“To the extent that [Mid Continent] 

 

changes the calculus of our decision; agency attempts to 

cure procedural defects ex post are not generally accepted 

as validating prior missteps. See, e.g., Mack Trucks, 682 

F.3d at 95; U.S. Steel Corp., 595 F.2d at 214–15.

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MID CONTINENT NAIL CORPORATION v. US 35

argues that the government adopted an inappropriately 

narrow view of its authority . . . and inaccurately construed the remand order as cover for doing so, [Mid Continent] is mistaken.”). 

As for Mid Continent’s argument that Commerce 

erred by not reinterpreting the Limiting Regulation, this 

argument misses the mark. There is no serious contention 

that Commerce’s application of the Limiting Regulation 

contravened an unambiguous provision of statutory law,

or was otherwise “plainly erroneous or inconsistent with 

the [Limiting] [R]egulation” itself. Auer v. Robbins, 519 

U.S. 452, 462 (1997); Bowles v. Seminole Rock & Sand 

Co., 325 U.S. 410, 414 (1945). Nor has Mid Continent 

argued that the agency’s application of the regulation was 

arbitrary, capricious, or unsupported by substantial 

evidence. In the absence of these contentions, a court is 

not free to displace an agency’s reasoned application of its 

own rule. Mid Continent’s argument that Commerce 

misapplied the Limiting Regulation in the agency’s remand redetermination is without merit.

CONCLUSION

For the stated reasons, we hold that Commerce failed 

to comply with notice-and-comment rulemaking under the 

APA by repealing the Limiting Regulation in Withdrawal 

Notice, that its failure cannot be excused for good cause or 

harmless error, and that the agency did not err in applying the Limiting Regulation on remand. The judgment of 

the Court of International Trade is 

AFFIRMED

COSTS

Costs to appellee. 

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