## United States Court of Appeals for the Federal Circuit
06-1084, -1085

PAM, S.p.A., Plaintiff-Appellee,
and JCM, LTD., Plaintiff,

v.

UNITED STATES, Defendant-Appellant,
and A. ZEREGA’S & SONS, D AKOTA GROWERS PASTA CO., NEW WORLD PASTA CO., and AMER ICAN ITALIAN PASTA CO. Defendants-Appellants.

David L. Simon , Law Office of David L. Simon, of Washington, DC, argued for plaintiff-appellee. David C. Smith, Jr. , Collier, Shannon, Scott, PLLC, of Washington, DC, argued for defendants-appellants A. Ze rega’s & Sons, et al. Wi th him on the brief was Paul C. Rosenthal

. Patricia M. McCarthy Assistant Director, Commerc ial Litigation Branch, Civil Division, United States D epartment of Justice, of Washington, DC., argued for defendant-appellant United States. With her on the brief were Peter D. Keisler , Assistant Attorney General, and David M. Cohen , Director. Of counsel was Mykhaylo A. Gryzlov, Attorney International, Office of the General Counsel, Office of the Chief Counsel for Import Administration, United States Departm ent of Commerce, of Washington, DC.Appealed from: United States Court of International Trade Judge Gregory W. Carman

## United States Court of Appeals for the Federal Circuit

06-1084, -1085

PAM, S.p.A., Plaintiff-Appellee,
and JCM, LTD., Plaintiff,

v. UNITED STATES, Defendant-Appellant,
and A. ZEREGA'S & SONS, D AKOTA GROWERS PASTA CO., NEW WORLD PASTA CO., and AMER ICAN ITALIAN PASTA CO., Defendants-Appellants.

_________________________ DECIDED: September 13, 2006

_________________________ Before MICHEL, Chief Judge , FRIEDMAN, Senior Circuit Judge , and MAYER, Circuit Judge

. MICHEL, Chief Judge

. The United States and it s co-defendants, various domestic pasta producers, appeal the final judgment of the United States Court of International Trade that the Department of Commerce's ("Commerce") late st administrative review of dumping by eight foreign pasta exporters, including PAM, S. p.A. ("PAM"), was void ab initio as toPAM because the domestic petitioners failed to serve PAM as required by 19 C.F.R. § 351.303(f)(3)(ii). PAM, S. p.A. v. United States , 395 F. Supp. 2d 1337 (Ct. Int'l Trade 2005). In so holding, the Court of Inter national Trade reasoned that strict compliance with section 351.303(f)(3)(ii) is required and that Commerce may not "relax or modify its regulations in this case." Id. at 1343. We disagree. Rescission of a completed administrative review is not a proper remedy for lack of service in this case because PAM did not demonstrate substantial prejudi ce. We therefore reverse the judgment voiding the review as to PAM and remand fo r adjudication on the merits of Commerce's final determination of further dumping by PAM, in view of the challenges set forth in PAM's complaint.
I. On July 1, 2002, Commerce publis hed in the Feder al Register notice of an opportunity to reques t another ( apparently the sixth) administ ra tive review of certain pasta imported into the United States for possible changes in dumping m a rgins and hence antidumping duties. On July 31, 2002, certain members of the dom e stic pasta industry, specifically A. Ze rega' s & Sons, Dakota Growers Past a Co., New World Pas t a Co., and American Italian Past a Co. (collect ively, "Zerega"), submitted a request for further administrative review of eight co mpanies, including PAM, that were under dumping duty orders. Zerega s e rved its reques t for review on s o me of the companies,
but not on PAM. 1 On August 27, 2002, Commerce pub lished in the Federal Register notice of its initiation of this review, as requir ed by statute. This not ice did list PAM. On

1 Zerega explains that this omission occurred because it had inadvertently relied upon a list of companies involved in a previous a d minist rative revie w th at did not include PAM and four other expor ters.

06-1084, -1085 2August 28, 2002, (i.e. , the next day), counsel for PAM entered an appearance in Commerce's adminis trative review. On August 29, 2002, Commerce sent questionnaires to the forei gn companies, inc l uding PAM. On September 3, 2002, PAM notified Commerce that it had not been properly served by Zerega and requested a 29-day extens ion of time to fi le its response in orde r to "mitigate to some extent the harm to PAM." 2 PAM did not request rescis s ion in this September 3 letter to Comme rce. On September 27, 2002, Commerce granted PAM a
two-week extens ion. On October 8, 2002, PAM request ed anot her extension of three weeks, but again did not request rescission. 3 On October 18, 2002, Commerce gav e PAM a 15-day extension, in effect grantin g the 29-day extension PAM had initially requested. Commerce later granted PAM at l east six additional extensions of time. 4 In August 2003, Com m erce pub lished the preliminary resu lts of its review. It conclud ed that PAM was still du mping and to an even greater extent, findin g that PAM had underreported its hom e sales. Commerce applied t he highes t antidumping margin, which res u lted in higher duties payable by PAM. In February 2004, Commerce

2 Although PAM requested an extensi on of 29 days, it was only 17 day s between the time that Zerega should have served notice of its request for review on PAM (i.e. , by August 10, 2002) and the time t hat C o mmerce published its notice of initiation of its review in the Federal Register (i.e. , on August 27, 2002).

3 It is unclear at what point PA M requested a rescission as opposed to merely an extens ion of time. It appears that PAM first requested rescission on September 22, 2003, in a Case Brief to Commerce, over a year after it first requested only an extension of time and approximat ely one month after the publication of preliminary results in which Commerc e determined there was dumping by PAM.

4 According to the record subm itted on appeal, it appears that PAM requested and receiv ed additional extens ions of time on: (1) February 21, 2003, (2) March 10, 2003, (3) April 17, 2003, (4 ) May 29, 2003, (5) July 3, 2003, and (6) August 18, 2003.

06-1084, -1085 3published its final results, affirm ing its preliminary results. PAM appealed to the Court of International Trade, arguing that the review was void ab initio under sectio n 351.303(f)(3)(ii) due to the lack of service by Zerega. The Court of International Trade held that the review was void as to PAM, reasoning t hat: (1) the plain language of the regulation at issue divested Co mmerce of any discretion to relax its procedural rule on notice, and (2) the regulation at issue c onfers important procedural benefits upon foreign entities like PAM and theref ore requires strict compliance. The government and Z e rega appeal, arguing that the Court of International Trade erred by: (1) not following t he general rule of agency discretion in re laxing procedura l rules, as described in American Farm Lines v. Black Ball Freight Service , 397 U.S. 532 (1970), and (2) not requiring a showing of substantial prej udice to PAM before rescinding Commerce's administrative review , as required by t he Supreme Court in
American Farm Lines and by th e Fed e ral Circuit in K e mira Fibr es Oy v. United States , 61 F.3d 866, 875 (Fed. Cir. 1995) and Inte rcargo Insurance Co. v. United States , 83 F.3d 391, 394 (Fed. Cir. 1996). PAM responds t hat the Court of Internati o nal Trade correctly held that Commerce must strictly enforce its notice regulation and lack s discretion t o relax this rule, even if no prejudice is shown. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

II. A. The regulat ion at issue, entitled "R equest for review," provides that: [A]n interested party that files with the Department a request for . . . an administrative review . . . must se rve a c opy of the request on each exporter or producer specifi ed in the request and on t he petitioner by the end of the anniversary month or within ten days of filing the req u est for

06-1084, -1085 4review, whichever is later. If the in terested party that files the request is unable to locate a particular exporter or producer, or the petitioner, the Secretary may accept the request for re view if the Secretary is satisfied that the party made a reasonable attemp t to serve a copy of the request on such person. 19 C.F.R. § 351.303(f)(3)( ii) (emphasis added).

The threshold issue is whether PAM was re quired to s how subst antial prejudice. PAM asserts that a showing of substantial prejudic e may only be required if the regulation at issue does not confer an important proced ural benefit on the foreign companies. Section 351.303(f)(3)(ii), it asse rts, does confer im portant procedura l benefits on foreign companies, namely, trans parency, notice, and procedural fairness. Thus, PAM argues, an agency must strictly enfor ce this regulation, whether or not the foreign company was prejudiced. The gov ernment cou n ters that this regu la tion is merely intend ed to facilitate the orderly transaction of busine ss before the agency. It give s foreign companies a few
weeks adv ance notic e before Commerce notifie s them by publishing in the Federal Register. The gover nment also responds t hat substantial prejudice must be shown even if the regulation does confer an import ant procedural benef it. We agree with the government that the Court of International Trade should hav e conducted an a n alysis of whether PAM proved substantia l prejudice, regardless of w hether the regul ation confers an important procedural benefit on foreign companies. Be cause no such analysis was done here, we reverse. We further find, on this record, that no substantial prejudice was shown as a matter of law. Although PAM contends t hat American Farm Lines requires a showing of substantial prejudice to the reviewed party only if the regulation does not confer an

06-1084, -1085 5important procedural benef it, we do not agree. Rather, American F a rm Lines states that it is a "general principle" that agencies ma y relax or modify their procedural rules and teaches that a subsequent agency action is only rescindable "upon a showing of substantial prejudice." 397 U.S. at 539. Nor does our own prec edent read American Farm Lines as PAM suggests. Both Kemira and Intercargo discussed whether substantial prejudice was show n. Yet, neither opinion addr essed whether the regulation at issue c o nfers an im portant procedural benefit nor im plied that the lack thereof was a prerequisit e to requiring a show ing of substantial prejudice. Indeed, PAM's reading of American Farm Lines seems to defy common sense. Even if a regulation is intended to confer an important procedural benefit, if the failure of a party to provide notice as required by such a r egulation does not prejudice t he non-notified party, then we thin k neither the government, t he non-serving part y , nor the public should be penaliz ed for such a failure . PAM's reading also defies logic.
American Farm Lines states: "The rules were not intended primarily to confer important procedural benefits upon individuals . . . . Thus there is no reason to exempt this case from the general princi ple that ' [ i]t is always within t he discretion of a court or an administrative agency to relax or modify it s procedural rules adopted for the orderly transaction of busines s before it when in a given c a se the ends of justice require it.'" 397 U.S. at 538-39 (citations omitted and emphases added). It does not necessarily follow that if a given rule is intended primarily to confer important procedural benefit s upon indiv i duals then there is a reason to exempt it from agency discretion. 5 That is,

5 PAM's reasoning reflects a common e rror in log i c. That is, g i ven the statement: if not A, then not B, one might infer the reve rse condit i onal statement: if A, then B. The second statement, however, does not logic a lly follow from the first.

06-1084, -1085 6even if a rule does confer important proc edural benefits upon individua ls, there may still be a reason—such as lack of su bstantial prejudice—to allow a court or administrative agency to relax or modify the rule. Quite simply, the Supreme Court in American Farm
Lines was not contemplating (and did not opine on) situations in whic h the rule in question did confer important proc edural benefits on individual s. Rat h er, it only discussed circumstances in whic h the rule did not confer important procedural benefits, as those were the facts in that case. Thus, we need not decide whether section 303.351(f)(3)(ii) confers such a benefit bec ause we believ e t hat substantial prejudice still must be shown.

B. The real question, then, is whether PAM proved that it was substantially prejudiced by Zerega' s lack of service, which delayed its notification by several weeks

. See Am. Farm Lines , 397 U.S. at 539 (requiring "a s how ing of substantial prejudice" ) (citations omitted); Intercargo , 83 F.3d at 396 (reversing and remanding because we were "unable to discern any prejudice" caus ed by Commerce's failure to strictly comply
with 19 U. S.C. § 1504(a) in publishing its no tice of an antidumping review); Kemira , 61 F.3d at 875 (reasoning that because the notice requirement of 19 C. F.R. § 353.25(d)(4) was "merely procedural, Kemira must estab lish that it was prejudiced by Commerce's non-compliance with this requirement").
Here, PAM received c onstructive and actual notice of the review by publication in the Federal Register, a mere 17 days after t he petition for adminis tr ative review sho u ld have been served by Zerega. PA M neither claims nor attempts to show that Zerega' s failure to serve it impeded its ability to respond to and defend its interests in the

06-1084, -1085 7administrative review. Instead, PAM asserts in attorney argument, in purely c onclusory fashion, that it suffered prejudic e bec ause "Commerce never granted any of PAM's
extens ion r equests in full an d so never enabled PAM fully to cat c h up from the harm occasioned by the ori g inal failur e of serv ice." Appellee's Br. at 39. Yet, the total amount of additional time Co mmerce granted to PAM via ei ght ext ensions far exceeded the 17 day s PAM lost due to the lack of serv ice by Zer ega. Indeed, even the first two
extens ions alone c o mpensated f o r the 17-day del ay in notice to PAM. All in all, PAM was allowed more than enough time to "catch up." PAM did not suffer substantial prejudice as required by American Farm Lines , Intercargo , and Kemira . This is clearly establis hed as a matter of law. T he multiple
extens ions of time it was later granted by Commerce far exceeded the 17-day delay in notification caused by Zerega's failure to comply with 19 C.F.R. § 351.303(f)(3)(ii).

III. The Court of International Trade erred in voiding ab initio the administrativ e review as to PAM on the grounds that strict complianc e with the regulation is required and that Commerce may not relax its proc edur al rules. Supreme Court and Federal Circuit precedent dic t ate that substantial prejudice must be shown to overturn an agency review wher e the agen cy exercised its discreti on to relax a regulation concerning notice. Since PA M has failed to make such a showing, we reverse the judgment and remand for further proceedings on the merits. REVERSED and REMANDED

.

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