NATIONAL F ISHE RIES INS TITUTE ,

INC., ET AL. , Plaintiffs,

v. UNITED STAT ES B UREAU OF CUSTOMS AND BORDER P ROTECTIO N ,

Def endant. Slip Op. 10-61 UNITED STAT ES COURT OF INTERNATIONAL TRADE

Before: Tim othy C. Stanceu, Judge Court No. 05- 00683

OP INION AND ORDER [Orderingadditional rema nd of re deter

mination by

United States Customs and Borde r Protection of limits of li ability

for c erta in bonds on which plaintiffs ar e princ ipals] Dated: Ma

y 25, 2010 Steptoe &Johnson LLP

( Eric C. Emerson , Gregory S. M cCue , and Michae l A. Pass ) for plaintiffs. Tony W est , Assistant Attorney

Gene ral, JeanneE. Davidson , Direc tor, Patricia M. McCarthy , Assistant Director , Barbara S. W illiams , Attorney

in Charg e, International Trade Field Of fice , Commercial L itigation B ranc h, Civil Division, United St ates De partment of Justice ( Stephen C. Tosini ); Chi S. Choy , Customs and B order Protection, United States Depa rtment of Homeland Sec urity , of counse l, for def endant. Stanceu, Judge : Be fore the cour t is the redete rmination (“Rema nd Redeter

mination”) that United States Customs and Borde r Protection (“ Customs ,” “CB P,” or the “ Ag ency”) issued in response to the court’s r emand or der in National Fisheries Institute, Inc. v . U.S. Bureau of Customs & Border Protec tion , 33 CI T __, 637 F. Supp. 2d 1270 (2009) (“ National Fisheries II

”). Plaintiffs (the “NF I

I mporters” ) ar e domestic importer s of shrimp who broug ht this action to contest the application by Customs of a ne w, more string ent bondingrequire mentCourt No. 05- 00683 P age 2

(the “ enhanc ed bondingrequire ment,” or “ EBR” ) to deter mine the limits of liability on bonds that Customs require d of all importers of shrimp products subject to antidumping duty liability

. Id. at __, 637 F. Supp. 2d at 1273. In National Fisheries Institute, Inc. v . U.S. Bureau of Customs & Border Protec tion , 30 CI T 1838, 465 F. Supp. 2d 1300 (2006) (“ National Fisheries I

”), the court orde red pr eliminary injunctive relief

. In National

Fisheries II

, the cour t, ruling on plaintiffs’ motion for judg ment upon the ag ency rec ord, held “ that the enha nced bonding r equire ment is arbitrar y and ca pricious in imposing g reatly incre ased bond r equire ments only on importers of shrimp produc ts,” that it “is unrea sonable in applying a formula that se cure s potential antidumping duties at a substantial amount over the require d cash de posit,” and that it resulted f rom the Ag ency ’s exceedingits discretion. Nat’l Fisheries II , 33 CI T at __, 637 F. Supp. 2d at 1274. The court orde red Customs to redete rmine the liability limit s on the bonds on which the plaintiffs in this case are principals. Id. at __, 637 F. Supp. 2d at 1304- 05. Be cause the Remand Rede termination is not, in all respects, a satisfac tory

resolution of the

rema ining issues in this liti g ation, the cour t orders a second r emand. I. B A C K G R O U N D Ba ckg round information is presented in National Fisheries I

, 30 CI T at 1843-47, 465 F

. Supp. 2d at 1305-09, and inNational Fisheries II

, 33 CI T at __, 637 F . Supp. 2d at 1274-81. A brief summary of the ba ckground is prese nted her ein. Customs Direc tive 99-3510-004 ( the “B ond Direc tive” or “ Direc tive 99-3510-004” ), orig inally issued by Customs on J uly

23, 1991, established guidelines under which Customs port direc tors are to assess the ade quacy of an importer ’s continuous entry bond. See Monetary Guidelines for Setting Bond Amounts , Direc tive 99-3510-004 ( J uly 23, 1991),Court No. 05- 00683 P age 3

http:// www.c bp.g ov/linkhandler/cg ov/trade/leg al/direc tives/3510-004.ctt/3510-004.tx t (last visited May

25, 2010) (“

Bond Directive ”). B efor e Customs amended it in 2004, the Bond Direc tive set a non-disc retionar y , minimum continuous entry bond amount at $50,000 and established a f

ormula by

which “the bond limit of liability amount shall be fixed in mult iples of $10,000 [or $100,000] near est to 10 perc ent of duties, taxes and fe es paid by the importer or broker actingas importer of

rec ord during

the ca lendar

y ear prec edingthe date of

the [bond] application.” Id. (settingforth for mulas under “ Activity

1 - Importer or

Br oker - Continuous”). Whether the bond limit was fix ed in multiples of $10,000 or $100,000 depe nded upon whe ther the total duty

and tax liabili ty

for a n importer duringthe ca lendar y ear prec edingits bond application excee ded $1,000,000. Id. A. Modifications of the B ond Direc tive and Its Application to Shrimp I mporters Customs , on J uly

9, 2004, posted on its website an amendment to the B ond Direc tive (the “Amendme nt”), whic h set forth ne w formulas f or use in ca lculating minimum continuous entry bond amounts in certa in circumstanc es. See Amendm ent to Bond Directive99-3510-004 for Certain Merchandise Subje ct to Antidumping/Count ervailing Duty Cases (Jul y 9, 2004) (“ Amendm ent ”) ( Mem. of P. & A . in Supp. of Pl s.’ Mot. for Prelim. Inj., Ex . 1 (“Pls. Prelim. I nj. Mem.”)) . The Ame ndment was the f irst issuance of

sever al in which Customs set forth specia l bonding r equire ments for a pplication to importers of agricultural a nd aquac ultural merc handise that is subject to an antidumping or counter vailing duty

order . The Ame ndment require d all Customs port direc tors “to re view continuous bonds for importe rs who import ag riculture/a quaculture merc handise subjec t to antidumping/counter vailing duty

case s and obtain larg er bonds whe re ne cessa ry .” Amendm ent. A formula in the A mendment direc ted that “inCourt No. 05- 00683 P age 4

fix ing the limit of liability amount,” port dire ctors will calc ulate the pr oduct of a n importer’s antidumping or

counter vailing duty

rate and the va lue of mer chandise subject to antidumping or counter vailing duties imported by that importer duringthe pre vious y ear . Id. (setting forth the formula a s the “[Comm erc e] rate at Order [m ultipli ed by

the] value of imports of merc handise subject to the ca se by

the importer dur ing the previous y ear ”). On J anuar

y 24, 2005, Customs posted on its website a doc ument entitled “Curre nt Bond For mulas,” which c ontained, inter alia , the formulas de scribed in the A mendment. Current Bond Formulas (Jan. 24, 2005) (Pls. P relim. Inj. Mem., Ex . 2). Customs also stated in the document that a “ new c omprehe nsive CBP Direc tive will be issued at a late r date .” Id. In Fe bruar

y 2005, subsequent to the issuance of the Ame ndment and Curre nt Bond For mulas, Commerce issued a ntidumping duty

order s for c erta in frozen war mwater shrimp from Br azil, C hina, Ecua dor, India, Thailand, a nd Vietnam. Pursuant to the Amendment and Curr ent

1 Bond F ormulas, Customs i ssued to all twenty -seve n plaintiffs letters a dvising that their continuous entry

bonds had bee n deeme d insufficient unde r the Customs regulations, 19 C.F.R.

Notice of Am. Final Determination of Sales at Less Than Fair Value &Antidumping 1 Duty Orde r: Certain Frozen W armwater Shrimp from Brazil , 70 Fe d. Reg . 5143 (F eb. 1, 2005); Notice of Am. Final Determination of Sales at Less Than Fair Value &Antidumping Duty Order: Certain Frozen W

armwater Shrimp From the People ’s Republic of China , 70 Fe d. Reg . 5149 (F eb. 1, 2005); Notice of Am. Final Determination of Sales at Less Than Fair Value & Antidumping Duty Order: Ce rtain Frozen W armwater Shrimp from Ecuador , 70 Fe d. Reg . 5156 (F eb. 1, 2005); Notice of Am. Final Determination of Sales at Less Than Fair Value & Antidumping Duty Order: Ce rtain Frozen W armwater Shrimp from India , 70 Fe d. Reg . 5147 (F eb. 1, 2005); Notice of Am. Final Determination of Sales at Less Than Fair Value & Antidumping Duty Order: Ce rtain Frozen W armwater Shrimp from Thai land , 70 Fe d. Reg . 5145 (F eb. 1, 2005); Notice of Am. Final Determination of Sales at Less Than Fair Value & Antidumping Duty Order: Ce rtain Frozen W armwater Shrimp From the Socialist Republic of Vietnam , 70 Fe d. Reg . 5152 (F eb. 1, 2005).Court No. 05- 00683 P age 5

Part 113 (2004), a

nd require d plaintiffs to obtain new c ontinuous entry bonds with substantially highe r limits of li ability

. Nat’l Fisheries I , 30 CI T at 1845, 465 F . Supp. 2d at 1307. After the application of the Amendment to shrimp importers’ bonds, Customs posted on its website a cla

rification to the Amendment of the B ond Direc tive (the “ Clarification”), which established two cla sses of mer chandise , “Specia l Categ ories” a nd “Covere d Cases.” See Clarif ication to July 9, 2004 Ame nded Mone tary Guidelines for Setting Bond Amounts for Special Categories of Merc handise Subject to Antidumping and/or Countervailing Duty Cases 3 (Aug . 10, 2005) (Pls. Prelim. I nj. Mem., Ex . 3). The Clar ification desig nated only ag ricultural/aqua cultural mer chandise as a Spec ial Categ ory and only shrimp antidumping and counter vailing duty

case s as Covere d Cases. Id. As a re sult, importers of shrimp subject to antidumping or ders a

re the only

U.S. importers who we re subjec ted to the enha nced bonding require ment. In October

2006, more than a

y ear afte r the issuanc e of the Clarification, and over nine months after pla intiffs had commenc ed their la wsuit on Dece mber 21, 2005, seeSummons , Customs published a F eder al Reg ister notice ( the “Oc tober 2006 Notice ”) “ to provide additional information on the proc ess used to dete rmine bond amounts for importations invol ving e levated collection risks and to see k public comment on that proc ess.” Monetary G uidelines for Setting Bond Amounts for Importations Subject to Enhanced Bonding Re quirements , 71 Fe d. Reg . 62,276, 62,276 (Oc t. 24, 2006) (“ Oct. 2006 Notice ”). The October 2006 Notice a

nnounced chang es to the proc ess discussed in the Ame ndment and the Clarif ication and, a lthough inviting public comment, made the chang es in the proc ess ef fec tive upon publication. Id. at 62,276-78. Despite the c hang es, Customs retained the same basic f ormulas for c alculatinglimit s of liabilityCourt No. 05- 00683 P age 6

for the c ontinuous entry

bonds require d of importers of merc handise in Specia l Categ ories. Id. at 62,277. The O ctober

2006 Notice a lso reiterated much of the proce dure f or appe al first set forth in the Clarific ation. Id. at 62,278. Unlike the Ame ndment and the Clarif ication, the October 2006 Notice wa s published in the Fede ral Reg ister. B. Judicial Procee dings Plaintiffs filed their summons and complaint in Dec ember 2005. Summons ; Compl . In November

2006, the cour

t gr anted a

preliminary

injunction with respect to eight of the twenty

seven pla intiffs in this action after c onsideringthe B ond Direc tive as modified by the Amendment, Curre nt Bond F ormulas, and Clarif ication. Nat’l Fisheries I , 30 CI T at 1842, 465 F. Supp. 2d at 1305. The court issued the injunction to maintain the status quo and limited the injunction to the eig ht plaintiffs who had testified be fore the cour t, on the g round that only those eig ht plaintiffs had demonstrated immediate, irre para ble har m. Id. at 1880-81, 465 F

. Supp. 2d at 1333. The cour t also order ed Customs to review, and modify as appr opriate, the sufficie ncy

deter minations ithad made on cer tain of the bonds of the eig ht plaintiffs addre ssed in the pre liminary

injunction order. Id. at 1883, 465 F. Supp. 2d at 1335. Soon there afte r, as direc ted in the pre liminary injunction order, de fenda nt reporte d on the status of ce rtain member plaintiffs with bonds for which the limit of liability was $1.5 million or gr eate r. SeeStatus Report in Resp. to the Ct.’s I nj. 1, J an. 26, 2007. On J anuar

y 18, 2007, plaintiffs moved for judgme nt upon the ag ency rec ord pursua

nt to USCI T Rule 56.1, which def endant oppose d. Pls.’ Mot. for J . on the Ag ency R.; Def.’s Resp. in Opp’n to NF I ’s Mot. for J. Upon the Admin. R. The court held ora l argument in April 2007. Ora l Argument Tr., Apr . 17, 2007. In Marc h 2008, at def endant’ s reque st, the court held a n inCourt No. 05- 00683 P age 7

came ra status confe renc e on the r ecor d, duringwhich plaintiffs set f orth the status of plaintiffs’ individual bonds. S tatus Confere nce T r. (Confidential) 6-27, Mar . 28, 2008. Plaintiffs later submitt ed additional information on plaintiffs’ individual bonds. P ls.’ Submis sion of Supplemental Information Reque sted by the Ct. During In Camera Procee dings on Ma r. 28, 2008. In National

Fisheries II

, the cour t held that “[a]ll of the individual bond sufficie ncy deter minations at issue . . . must be set aside as c ontrary to law” be cause they

wer e “unla

wful in multipl e re spects.” 33 CI T at __, 637 F . Supp. 2d at 1304. The cour t ordere d, inter alia , that the enhanc ed bondingrequire ment and all bond dete rminations made pursua nt to such require ment be set a side as ar

bitrary , capr icious, and otherw ise not in acc ordanc e with law, id. , and that Customs “ef

fec t, in accor dance with [ the opinion and orde r in National Fisheries II

], an individual redete rmination of the limit of liabili ty on eac h individual continuous entry bond at issue in this action without application of the enha nced bondingrequire ment.” Id. at __, 637 F. Supp. 2d at 1305. On September

3, 2009, defe ndant moved for a cla rification of the court’ s order in National Fisheries II

. Def .’s Mot. for Clarific ation. The c ourt denied this motion in National Fisheries Institute, Inc. v . U.S. Bureau of Customs & Border Protec tion , 33 CI T __, Slip Op. 09-104 (Sept. 25, 2009). Customs filed re mand re sults in which it s tates that it rede termined the limit of liability

on eac h of plaintiffs’ c ontinuous entry bonds at issue in this action acc ordingto the 10% for mula set forth in the B ond Direc tive issued in 1991. Redetermination, Oc t. 26, 2009 (“Remand Redeter mination”); Bond Directive . Plaintiffs object to the Remand Rede termination on sever alCourt No. 05- 00683 P age 8

g rounds and r equest that the c ourt order Customs to “ca

ncel e ach of

Plaintiffs’ bonds that have a liability limit deter

mined acc ordingto the unlawful e nhance d bonding r equire ments without requiringany

NFI I mporter to obtain super sedingbonds” and “ to issue written confir mation of bond canc ellation to the sureties, a nd provide a

ny other mate rials or a ssistance ne cessa ry to fac ilitate the return of

collater al from the sur eties to Plaintiffs.” Pls.’ Comm ents on Remand Deter mination 10 (“Pls.’ Comments”). Plaintiffs state that further rema nd would be futile beca use def endant ha s not complied with the remand or der, a rguing that Custom s unlawfully considere d antidumping duty liability in rede termining bond limit s acc ordingto a formula, f ailed to consider the r eal f

inancial r isk as confine d to unliquidated entries, fa iled to provide any explanation for the re deter minations, and failed to indicate a time per iod in which it would cance l the bonds. Pls.’ Comm ents 2, 7-9. C. Proceeding s Subsequent to Dispute Settlement at the World Trade O rg anization Prior to the court’s issuanc e of its opinion in National Fisheries II

, Customs conclude d it would cea se applica

tion prospectively

of the e nhance d bonding r equire ment. Enhance d Bonding Requireme nt for Certai n Shrimp Importers , 74 Fe d. Reg . 14,809, 14,811 (Apr. 1, 2009) (“ Apr. 2009 Notice ”). Customs adopted this position because pa rallel proc eeding s at the World Trade Org anization (“WTO”) r esulted in dec isions by the Dispute Settlement Body of the WTO that held that the application of the enha nced bonding

require ment to shrimp importers is inconsistent with the obligations of the United States. See Enhance d Bonding Requireme nt for Certain Shrimp Importers , 74 Fe d. Reg . 1224, 1224 (Jan. 12, 2009) (“ Jan. 2009 Notice ”). The United States deter

mined it would comply

with the decisions of the World Tra de Or g anization and, in ea rly 2009, Customs published a notice pr oposing to e nd the designation of shrimpCourt No. 05- 00683 P age 9

subject to antidumping or counter vailing duty

order s as a spe cial categ ory or cove red c ase subjec t to the enhanc ed bondingrequire ment (“January 2009 Notice” ). Id. at 1225. Customs st ated that “shrimp importers may

reque st termination of exist ing c ontinuous bonds pursuant to 19 C.F.R. [§] 113.27(a) and submit a new c ontinuous bond application pursuant to 19 C.F.R. [§] 113.12(b).” Id. Customs explained that “[a]ny chang e to the desig nation of [shrimp] and the bond amounts require d of importers of [shrim p] wil l be ef

fec tive for e ntries made on or afte r the date of publication of the fina l notice.” Id. The c ourt held a te lephonic status conf ere nce w ith the parties af

ter g rantingdefe ndant’s motion for leave to file a status re port addre ssing the January 2009 Notice. SeeOrde r, F eb. 17, 2009; Status R eport (D ef.) , Fe b. 17, 2009. In the conf ere nce, c ounsel for de fenda nt responded to the cour t’s question conce rningthe Ag ency ’s intention reg ardingthe var ious bonds that are the subject of this litigation. The c ourt asked, spe cifica lly , if Customs i ntended to take actions that could re solve the re maining disputes be tween the parties. Counsel for defe ndant clar ified that the J anuar y 2009 Notice did not sig nify an intent on the par

t of Customs t o consider te rminating , and allowing substitut ion of, any bonds other than those on which importers of shr imp curre ntly are importing mer chandise . In the conf ere nce, the parties c onfirmed to the c ourt that the liability limit s on some continuous bonds for past pe riods of importations remaine d in contention and that the cur rent proposa l by

Customs , if implemented, would not resolve the re maining issues in this litigation. On April 1, 2009, Customs publi shed a se cond notice c oncer ning its implementation of the Appellate Body

decision (“ April 2009 Notice” ). Apr. 2009 Notice , 74 Fe d. Reg . 14,809. Customs announce d that it was endingthe desig nation of shrimp subject to antidumping orCourt No. 05- 00683 P age 10

counter vailing duty

order s as a spe cial categ ory or cove red c ase subjec t to an enhanc ed bonding require ment. Id. at 14,809. Customs announced that it would permit importers to see k termination of cur

rent bonds but conf

irmed that it would take no a ction to alter the liability on bonds for pre vious terms. Id. at 14,811-12. Customs gave seve ral re asons for r efusingto apply retroa ctively

its rescission of the enha nced bondingrequire ment. Id. Customs mentioned its obligation to protect the re venue a nd ensure compliance with law; its reluctanc e to interfe re w ith the contra ctual re lationship between pr incipals and sure ties; its concern that the exis tence of two bonds for the same per iod could pose leg al conf usion and lead to c ourt ac tion between c ompeting sureties, re sulting in serious risk to the ag ency ’s ability to collect duties lawf

ully owed; and that the cour t, in National

Fisheries I

, did not order Customs to take any action on the pr evious bonds. Id. II. D I S C U S S I O N The Remand Re deter

mination before the cour

t consists of a one- pag e docume nt, which sets forth the de cision Custom s rea ched on r emand, a nd an “E x hibit A,” which pre sents information on individual continuous entry bonds for e ach of

twenty -seve n plaintiff importers. SeeRemand Redete rmination 1. For e ach suc h bond, Ex hibit A lis ts the “B ond Number,” the “B ond Period,” the “ L iability Amount,” and the “ Bond A mount if Calculated without Reg ard to Enhanc ed B onding Re quirement (E BR) a nd Diffe rent fr om Actual B ond Amount.” Id. Ex . A. The Remand Re deter

mination states that “[t] he re deter minations were ma de by

application of Customs Direc tive 99-3510-004, . . . i.e., the limit of liability was de termined ba sed on 10 perc ent of the duties, taxes and fe es (ten pe rce nt formula) pa id by the importer dur ing theCourt No. 05- 00683 P age 11

rele vant bond per iod” and se ts forth one of the new bond amount calculations as a n example. Remand Redete rmination 1. The Remand Re deter

mination further state s that “[i] n addition to the bonds with li mits of liability calc ulated usingthe EB R, the attache d sprea dsheet [Ex hibit A] also includes the bonds that wer e in place befor e the EB R was applied.” Id. Customs explains t hat “[a] review of the total duties, tax es, and f

ees pa id duringthose bond periods indicate that the limits of liabili ty should have be en hig her” and sets for th an example of an individual bond re deter mination. Id. Contesting the Rema

nd Redeter

mination as unrea sonable a nd contra ry to law, plaintiffs raise thr ee pr incipal objections. F irst, they argue that Customs ex cee ded its authority when it deter mined the new bond a

mounts by

applying a

fix ed ten- perc ent formula to a sum of duties, taxes, and fee s that included potential antidumping duty liability , rathe r than de terminingnew bond amounts individually afte r consider ing the pay ment history

or financ ial circ umstance of the plaintiff importers. Pls.’ Comments 3-4. Second, plaintiffs ar g ue that the r eca lculation “fa il[ s] to rec og nize that many

prior entr ies have been liquidated a nd now should no longe r be inc luded in the calc ulation” bec ause a pplication of 10% bondingto “the amount of a ll entries duringa g iven bond per iod, reg ardle ss of their liquidation status, dramatica lly overstate s the amount of

secur ity nece ssary .” Id. at 5. Third, plaintiffs objec t that Custom s, in applying D irec tive 99- 3510-004, incre ased the bond amounts for c erta in older bonds to which the e nhance d bonding require ment was ne ver a

pplied, an ac tion they

char acte rize as contra

ry to the court’s de cision in National Fisheries II. Id. at 7. Arguing that a furthe r re mand would be f utile, plaintiffs urg e the court to “issue a

n Orde r that shall ca

ncel e ach of

Plaintiffs’ bonds that have a liability limit deter mined acc ordingto the unlawful e nhance d bonding r equire ments without requiringany NFICourt No. 05- 00683 P age 12

importer to obtain superse ding bonds.” Id. at 10. Plaintiffs reque st, further, that the court orde r defe ndant “to issue wr itten confirmation of bond c ance llation to the sureties, and provide any other mate rials or a ssistance ne cessa ry to fac ilitate the return of

collater al from the sur eties to Plaintiffs.” Id.

A. Inclusion of Antidumping Duties a nd Deposits in the 10% Calculation Plaintiffs’ first objection to the Remand Rede termination is that Custom s exceede d its authority when it deter

mined the new bond a

mounts by

applying a

fix ed 10% f

ormula to a sum of duties, tax es, and f

ees that included potential antidumping duty liability , rathe r than de termining new bond a

mounts indi vidually

afte r consider ing the pay ment history

or financ ial circ umstance of the plaintiff importer s. Pls.’ Com ments 3-4. Plaintiffs argue that the Rema nd Redeter mination is i nconsistent with the decision in National Fisheries II

and “c annot be sustained.” Id. at 2. Plaintiffs interpre t National Fisheries II

to hold that the authority of Customs “to establish its own secur ity for potential a

ntidumping liability

over a nd above the cash deposit require d by

Commerce w as extremely limit ed,” id. at 3, and that Customs “ca n require

secur ity for potential a

ntidumping duty

liability only under limited circ umstances, suc h as whe n supported by

actua l evidence of a likely inability to pay .” Id. at 4. Plaintiffs’ argument misconstrues the holding of National Fisheries II

. The c ase he ld that Customs acte d unrea sonably and contr ary

to law in imposing an one rous new bonding require ment that in effe ct demande d secur ity of 100% in addition to the re quired a ntidumping cash de posit. National

Fisheries II

, 33 CI T at __, 637 F . Supp. 2d at 1294. The cour t’s decision reje cted in par

t plaintiffs’ ar gument that Customs lacks a uthority to consider potential antidumping duty

liability when se tting amounts for continuous entry

bonds. Id. NationalCourt No. 05- 00683 P age 13

Fisheries II

did not hold that C ustoms lacks authority to include potential antidumping duty liability in the 10% ca lculation when a pplying the Bond D irec tive. That direc tive, orig inally issued in 1991 as Direc tive 99-3510-004, se t a non-discr etionary , minimum continuous entry bond amount at $50,000 and e stablished a for mula by which “the bond limit of liability amount shall be fixed in mult iples of $10,000 [or $100,000] near est to 10% of duties, taxes and fe es paid by the importer or

broker actingas importer of

rec ord duringthe ca lendar y ear prec edingthe date of the [bond] application.” See National Fisheries II , 637 F. Supp. 2d at 1274 (quoting Bond Directive ). As the cour

t observed in National

Fisheries II

, the ca sh deposit repre sents an estimate by Commerce of

the future antidumping duty liability

. National

Fisheries II

, 33 CI T at __, 637 F. Supp. 2d at 1293-94. A ny estimate may

be expected to va

ry to some degree from the f inal

asce rtained a

mount. The court doe s not consider it unrea sonable, or a n abuse of

discretion, for Customs to allow for the possibility that the final a scer

tained antidumping duty

liability on an entry may exceed that e stimate by

10%. In applying the formula of the B ond Direc tive in the 2 Remand Redete rmination, Custom s treate d antidumping duty deposits in the same wa

y in which it treated or dinary

duties, for whic h an importer de posits estim ated duties upon makingentry of the merc handise. B eca

use Customs is g rante d a mea sure of discretion by

19 U.S.C. § 1623 (2000) to set bond liability limit s to protect the r evenue , the cour t disag ree s with plaintiffs’

Application of the 10% formula of Direc tive 99-3510-004 to a bond de termination by 2 Customs was uphe ld in Carolina T obacco Co. v . Bureau of Customs & Border Protec tion , 402 F.3d 1345 ( Fe d. Cir. 2005). That ca se did not involve the question of whe ther it is lawful for Customs to include antidumping duties w ithin the 10% formula of D irec tive 99-3510-004. See id. The holdingin Carolina T obacco Co. , there fore , does not control the outcome on the issues prese nted by

this redeter

mination upon remand (“ Remand Redete rmination”).Court No. 05- 00683 P age 14

argument that Customs lacks a uthority to include potential antidumping duty liability when applying the 10% for

mula of the B ond Direc tive. Acc ording ly , the cour t rejec ts the first argument that plaintiffs adva nce in objec ting to the Rema nd Redeter

mination. B. Inclusion of Duties fr om L iquidated Entries in the Calculation of the Bond A mount Second, plaintiffs a

rgue that the r eca lculation “fa il[ s] t o rec og nize that many prior entr ies have be en liquidated and now should no longe r be inc luded in the ca lculation” and, the ref ore, that the application of 10% to “the a mount of all entries duringa g iven bond per iod, reg ardle ss of their liquidation status, dramatically overstate s the amount of sec urity nece ssary .” Pls.’ Comments 5. Accordingto plaintiffs, “[a]s t he ag ency responsible for

liquidating these entries, CBP has exact information on the liquidation s tatus of all entrie s for a ll NFI I mporters for

all bonding pe riods” and that “[w] ith mini mal eff ort, CBP could have deter mined how many

of these e ntries re mained unliquidated.” Id. at 6. “As a result,” plaintiffs c ontend, “CB P’s bond[ s] 3

are unrea sonably

high g iven the amount of e ntries that re main unliquidated.” Id. Customs states in the Remand Rede termination that it has decide d to base its rede termined bond amounts on “10 perc ent of the duties, taxes and fe es (ten pe rce nt formula) paid by the importer dur ing the rele vant bond per iod” but does not explain why doing so is appropr iate eve n though liquidations likely have oc curr ed duringthe sig nificant time ela psing since the e nd of ea ch “r eleva nt bond period.” Rema

nd Redeter

mination 1. The question of whether duties, tax es, and f

ees f or alre ady -liquidated entrie s should be included bec omes rele vant beca use Customs, due to the special c ircumstance s of this case, is de termining bond amounts for Counsel for plaintiffs indicate that they offe red to provide to Custom s the status of the 3 liquidation of entries for

eac h plaintiff but that Customs did not reply . Pls.’ Com ments on Remand De termination 6, n.2 (“Pls.’ Comments”).Court No. 05- 00683 P age 15

periods that longag o have e nded. This is in contrast to the ordinar y situation in which Cust oms applies Dire ctive 99-3510- 004, wher eupon a liability limitfor the “ rele vant bond per iod” is deter mined prospec tively , befor e entr ies have occur red. 4 I t may be ar g ued that Customs, by applying the formula to the or igina l amount, would place the plaintiffs in the position that would have re sulted had the e nhance d bonding require ment never

been imposed, due to the exis ting pr actice under which a bond or dinarily is not canc elled until all liabilit y is satisfied for a ll entries sec ured the reunde r. Althoug h such an argument may

have me rit in the g ener al context of bond canc ellations, the court f inds it unconvincingin the particula r circ umstances of

this li tigation. Application of the 10% f ormula to the entire a

mount of duties, tax es, and f ees f or the bond pe riod, including duties on entries for which liquidation is final and liability is satisfied, results in an ac tual level of se curity that could exceed substantially

the guideline level of

10%, as a

pplied to the actua l amount of duties at risk of nonpay ment. A liquidated entry

on which all liability

for duties, taxes, and fe es has be en

asce rtained upon liquidation and pa id poses no appre ciable risk to the revenue . There fore , a bond sufficie ncy

calc ulation that does not make a n adjustment for such e ntries ca nnot be descr ibed as re asonable and would tre at plaintiffs less favorably than importers a

re tre ated g ener ally when Dir ective 99- 3510-004 is applied. In resolvingthe re maining issues in this litigation, the cour

t must require that Customs treat plaintiffs fa irly and equitably . Setting bond

Direc tive 99-3510-004 a pplies the 10% ca lculation to “duties, taxes and fee s paid by the 4 importer or br oker a cting as importer of rec ord duringthe ca lendar y ear prece ding the date of the [bond] application .” Monetary G uidelines for Setting Bond Amounts , Direc tive 99-3510-004 (Jul y 23, 1991), http://www.cbp.g ov/linkhandler/cg ov/trade/leg al/direc tives/3510-004.ctt/3510- 004.tx t (last visited May

25, 2010) (e mphasis added) (“ Bond Directive ”). D irec tive 99-3510-004 does not addre ss the specific situation of a superc edingbond for a period that oc curr ed y ear s prior to the date on which the de cision is being ma de.Court No. 05- 00683 P age 16

amounts without adjusting for e ntries on which a ll duty liability has bee n satisfied would not satisfy this objective, on the re cord be fore the cour t. Moreover , in resolving the re maining issues in this protracted litig ation, the cour t is mi ndful that plaintiffs unre asonably have be en for ced to incur c osts resulting f

rom an unlaw ful enha

nced bondingrequire ment to which other, similarly

situated importers we re ne ver subjec ted. 5 On re mand, Customs m ust reconside r its application of the 10% formula to amounts that include entr ies for which duty liability , as dete rmined upon liquidation, is already satisfied. I f Customs ag ain choose s to apply the 10% bond for

mula of Dire ctive 99-3510- 004, it must consider the specia l circumstanc es of this litigation and must ensure a re asonable result that is demonstrably

fair a nd equitable to plaintiffs in the c ontext of this liti g ation. C. I ncre ases in L iability

L imits for Cer

tain Older B onds Customs announce d in the Remand Redete rmination its int ention to chang e the liability limit s for c erta in of plaintiffs’ bonds that we re de termined be fore the enha nced bonding require ment was a

pplied, stating that “[t] he limits of liabili ty for these bonds were g ener ally set at the minimum amount of $50,000.” Remand Rede termination 1. As a r eason f or takingthis action, the Rema

nd Redeter

mination states that “[a] review of the total duties, taxes, and fe es paid duringthose bond periods indicate that the limits of liabili ty should have be en higher .” Id. (empha sis added). The Remand Redete rmination identifies these older bonds by number a nd

As discussed in the bac kg round sec tion of this Opinion and Order, Customs decide d not 5 to provide complete relief to the plaintiff-importer s after issuing Enhance d Bonding Requireme nt for Certain Shri mp Importers , 74 Fe d. Reg . 1224, 1225 (Jan. 12, 2009) (“ Jan. 2009 Notice ”); see Enhance d Bonding Requireme nt for Certai n Shrimp Importers , 74 Fe d. Reg . 14,809, 14,811 (Apr. 1, 2009) (“

Apr. 2009 Notice ”). That decision by the Ag ency

extended the time during which plaintiffs we re subjec ted to the enha nced bondingrequire ment and prolong ed this litigation.Court No. 05- 00683 P age 17

specifie s a newlimit of liability based on the 10% for

mula. See id. , Ex . A. Plaintiffs object that “De fenda nt’s revie w did not consider e ither the pa rticular N FI

I mporter’ s ability

to pay or the liquidation st atus of any

entries c overe d by

these bonds.” Pls.’ Comments 7. The c ourt g leans fr om the one-pa g e Remand Rede termination, viewe d in the context of the re cord in this case , that Customs is addressingolder bonds, for previous bond per iods, to which Customs never a

pplied the enha

nced bondingrequire ment and which ha ve not bef

ore be en at issue in this li tigation. SeeRemand Redete rmination 1. Be y ond the statement that “ the limits of liability should have be en higher ,” id. (empha sis added), Customs give s no rea son why it has decide d to take this action in the Remand Rede termination althoug h not ordere d to do so. The Ag ency ’s dec isions to m odify the liability

limit s on the older bonds in question exceeds the scope of the c ourt’s re mand orde r in National Fisheries II

, which addr essed only

those individual bond sufficie ncy

deter minations that were e ffe cted a ccor ding to the e nhance d bonding r equire ment. 6 Nat’l Fisheries II

, 33 CI T at __, 637 F . Supp. 2d at 1304-05.

In National

Fisheries II

, the cour t, inter alia , 6 ORDERED that all of plaintiffs’ individual bond suffic iency deter minations that were ma de ac cordingto the enhanc ed bondingrequire ment be, and her eby

are , set aside a s arbitra

ry , capr icious, and otherw ise not in acc ordanc e with law; [and]

. . . ORDERED that the individual bond sufficienc y deter minations at issue in this action are rema

nded to Customs for rede termination . . . duringwhich re mand period Customs shall effe ct, in acc ordanc e with this Opinion and Order , an individual redete rmination of the limit of liabili ty on eac h individual continuous entry bond at issue in this action without application of the enha nced bonding require ment unless it chooses to canc el all liability on a bond outrig ht, as provided in this Opini on and Or der. Nat’l Fisheries Inst., Inc. v . U.S. Bureau of Customs & Border Prot. , 33 CI T __, __, 637 F. Supp. 2d 1270, 1304-05 (2009) (“ National Fisheries II

”).Court No. 05- 00683 P age 18

Under the “r ule of mandate,” a

court ordina

rily will not permit an ag ency to consider a new issue on r emand. See Corus Staal BV v. U.S. D ep’t of Commerc e , 27 CI T 1180, 1184 & n.9, 279 F. Supp. 2d 1363, 1368 & n.9 (2003). Exceptions to the rule of ma ndate have bee n

rec og nized, but they

do not apply

here

. Id. at 1184, 279 F. Supp. 2d at 1368 ( citing United States v. Be ll , 5 F.3d 64, 67 ( 4th Cir. 1993)) (re cog nizi ng exceptions where controllingleg al authority has cha ng ed dra matically ; significa

nt new evide nce, not e arlier obtainable in the e x erc ise of due diligenc e, has c ome to light; or a blatant er ror in the pr ior dec ision will , if uncorr ecte d, result in a serious injustice). The ref ore, in the se cond re mand re deter mination Cust oms may

not specify incre ases in liability

limit s for these older bonds, which liability limit s previously

have not be en at issue in this li tigation. D. Cance llation of Ex isting B onds Plaintiffs base their a

rgument that the cour

t should order, at this t ime, canc ellation of the bonds at issue in this case on their pr emise that a f urther r emand would be futile due to “De fenda nt’s conduct,” which plaintiffs c hara cter ize as beingin bad fa ith. Pl s.’ Comments 7-8. They perc eive ba d faith in the alleg ed fa ilure of Customs to comply with the languag e in National Fisheries II

descr ibing the limited nature of Customs’ authority to require secur ity

for antidumping duty

liability and also in the fa ilure of Customs to specify when it intends to canc el the exist ing bonds. Id. at 8. Additionally , they arg ue that “[e]ven more e g reg iously , by ref using to consider the liquidation status of entrie s cover ed by these bonds, De fenda

nt’s rec alculations fail to ref lect the r eal f

inancial r isk, if any , fac ed by the United States.” Id. Plaintiffs’ arguments do not convince the court that orde ringa sec ond rema nd would be futile in the circ umstances of this case. Plaintiffs’ f

irst argument conce rningthe scope ofCourt No. 05- 00683 P age 19

authority to provide sec urity

for unde rpay

ment of antidumping duties is unavailing be cause it misconstrues National

Fisheries II

. The c ourt discussed above why it disagr ees w ith plaintiffs’ view that Customs lacks any authority to include antidumping duty liability in the 10% calc ulation of Direc tive 99-3510-004. Conce rningthe time frame for c ance llation of the bonds, raised in plaintiffs’ second a rgument, Customs was not orde red in National Fisheries II

to specify a par ticular date or dates on which it would eff ect suc h canc ellations. See33 CI T at __, 637 F. Supp. 2d at 1304-06. Plaintiffs’ third a rgument is also unconvincing . Customs has not y et had the oppor

tunity to respond to the cour

t’s conclusion, re ache d in this Opini on and Or der, that Customs has fa iled to achieve an ade quate r esolution of the issue of e ntries for which liquidation has occurr ed and duty liability has bee n satisfied. Althoug h the cour t finds unsatisfac tory

the re solution of that issue by Customs thus far, the proce dural posture of this case ref utes plaintiffs’ position that Custom s has demonstrate d bad fa ith such that it should not be g iven the opportunity

to issue a sec ond rema

nd rede termination that corr ects the pr oblem the court ha s identified. III. C O N C L U S I O N Although Customs has re sponded to ce rtain issues the cour t raised in National Fisheries II

, the Remand Rede termination is not in all respects a satisfac tory

resolution of the

rema ining issues in this liti g ation. The de cisions in the Remand Redeter mination fail to treat plaintiffs rea sonably

or fa irly and ar e par

ticularly inequitable whe n compar ed to the tre atment Customs has ac corde d importers that we re ne ver subjec t to the enhanc ed bondingrequire ment. In addition, Custom s impermissibly has soug ht to effe ct incre ases in liability limit s for bonds and bond periods not pre viously at issue in this li tigation and beyond the scope of the c ourt’sCourt No. 05- 00683 P age 20

mandate. A ccor dingly , the cour t remands this matter to Customs for rec onsideration and rede termination in acc ordanc e with the dec isions the court has re ache d in this Opini on and Or der. ORDER For the re asons stated in this Opinion and Orde r, upon consider ation of the Redeter mination of United States Customs and B order Protection (“Customs”), da ted Oct. 26, 2009 (“Rema

nd Redeter

mination”), and a ll papers a nd proce eding s here in, upon due deliberation, and in acc ordanc e with the scope of the c ourt’s re mand orde r in National Fisheries Institute, Inc. v . U.S. Bureau of Customs & Border Protec tion , 33 CI T __, 637 F. Supp. 2d 1270 (2009) ( “ National Fisheries II

”); it is here by ORDERED that the Remand Rede termination be, a nd here by is, remande d to Custom s for r econside ration and r edete rmination; it i s further ORDERED that Customs , in its second rema nd rede termination, shall rede termine, a s appropr iate ac cordingto the decisions the cour t has rea ched in this Opinion and Orde r, the limits of liability

for the bonds a

nd bond periods at issue in this liti g ation; it is further ORDERED that Customs , in its second rema nd rede termination, may

not increa se the limit of liability

for a ny bond or bond per iod that was not previously at issue in this li tiga

tion and with respec t to which the enha nced bondingrequire ment was ne ver a pplied; it is further ORDERED that Customs shall submit i ts second re mand re deter mination within t hirty (30) da y s from the da

te of this Opinion and Orde r; it is further ORDERED that plaintiffs may submit comments in response to the second r emand rede termination within fifteen ( 15) day s of the date on which the se cond re mand re deter mination is submit ted; and it is further ORDERED that defe ndant may submit comments replying to plaintiffs’ comments within fifteen ( 15) day s of the date on which plaintiffs’ c omments are submitted.

/s/ Timot hy

C. St ance u Timothy C. St ance u J udg e Dated: May

25, 2010 New Y ork, Ne w York