Opinion ID: 2801753
Heading Depth: 3
Heading Rank: 1

Heading: Stated Legislative Purpose

Text: When Congress enacted the CDSOA in 2000, it ex- plained the purpose of the legislation in a section titled “Findings of Congress”: Congress makes the following findings: (1) Consistent with the rights of the United States under the World Trade Organization, injurious dumping is to be condemned and actionable sub- sidies which cause injury to domestic industries must be effectively neutralized. (2) United States unfair trade laws have as their purpose the restoration of conditions of fair trade so that jobs and investment that should be in the United States are not lost through the false mar- ket signals. (3) The continued dumping or subsidization of im- ported products after the issuance of antidumping orders or findings or countervailing duty orders can frustrate the remedial purpose of the laws by preventing market prices from returning to fair levels. (4) Where dumping or subsidization continues, domestic producers will be reluctant to reinvest or rehire and may be unable to maintain pension and health care benefits that conditions of fair trade would permit. Similarly, small businesses 4 SCHAEFFLER GROUP USA, INC. v. US and American farmers and ranchers may be una- ble to pay down accumulated debt, to obtain work- ing capital, or to otherwise remain viable. (5) United States trade laws should be strength- ened to see that the remedial purpose of those laws is achieved. Pub. L. No. 106–387, § 1002, 114 Stat. 1549 (2000) (codified at 19 U.S.C. § 1675c (2000)) (emphases added) (“CDSOA Findings”). These findings indicate the stated purpose of the CDSOA is to “strengthen[]” the trade laws so they may achieve their “remedial purpose,” CDSOA Findings ¶ 5, and that the purpose of United States unfair trade laws generally is “the restoration of conditions of fair trade,” id. ¶ 2; see also Gov’t Accountability Office, GAO-05-979, Issues and Effects of Implementing the Continued Dumping and Subsidy Offset Act 3 (2005), available at http://www.gao.gov/new.items/d05979.pdf (explaining that “in passing CDSOA, Congress aimed to strengthen the remedial nature of U.S. trade laws”). To the extent CDSOA distributions “restor[e] . . . conditions of fair trade,” CDSOA Findings ¶ 2, they do so differently than the antidumping and countervailing duties from which they are drawn. Antidumping duties by statute must be imposed “in an amount equal to the amount by which the normal value exceeds the export price (or the constructed export price) for the merchandise.” 19 U.S.C. § 1673; see also 19 U.S.C. § 1671(a) (Countervailing duties are to be imposed in an amount “equal to the amount of the net countervailable subsidy.”). By imposing a duty in an amount that offsets unlawfully low prices, these orders serve to “neutralize[]” the effects of dumping or actionable subsidies. See CDSOA Findings ¶ 1. Because they apply generally to imported goods that compete with domestically produced goods, the duties serve to remedy harm to the domestic industry as a whole. SCHAEFFLER GROUP USA, INC. v. US 5 By contrast, CDSOA subsidies are drawn from the antidumping duties collected by United States Customs and Border Protection and redistributed to only those members of industry who supported the antidumping petition. See SKF, 556 F.3d at 1341–42; id. at 1351 (The CDSOA “did not compensate all injured domestic producers.”). Because antidumping and countervailing duties already help to restore conditions of fair trade by raising the price of imported goods to their fair value, an argument could be made that CDSOA distributions do not promote the restoration of fair trade but instead constitute a double remedy, an issue not addressed by the SKF court. 1 1 The extent to which the CDSOA promotes fair trade was called into question by the report of the World Trade Organization’s Appellate Body, which found the CDSOA “inconsistent with certain [United States treaty obligations under] the Anti-Dumping Agreement and the [Agreement on Subsidies and Countervailing Measures].” World Trade Organization, Report of the Appellate Body, United States—Continued Dumping and Subsidy Offset Act of 2000, WT/DS234/AB/R ¶ 318(b) (Jan. 16, 2003) (“Appellate Body Report”); see also Giorgio Foods, Inc. v. United States, No. 2013-1304, 2015 WL 1865702, at  (Fed. Cir. Apr. 24, 2015) (Reyna, J., dissenting) (“[P]etition support expressions, in [U.S. International Trade Commission] questionnaire responses, do not further the enforcement of antidumping laws.”). The Appellate Body stated that “[o]ffset payments to ‘affected domestic producers’ when combined with anti-dumping duties operate to impose a double remedy in respect of dumped goods.” Appellate Body Report ¶ 43. The CDSOA was repealed after the Appellate Body’s ruling. Deficit Reduction Act of 2005, Pub. L. No. 109-171, 6 SCHAEFFLER GROUP USA, INC. v. US There is little doubt that restoring conditions of fair trade is a legitimate government interest. However, even assuming the CDSOA as a whole promotes this interest, to survive substantive due process scrutiny the legitimate interest must be rationally furthered not only by the legislation as a whole, but also by the retroactive portion of the legislation. Gray, 467 U.S. at 730 (“‘The retroactive aspects of legislation, as well as the prospective aspects, must meet the test of due process, and the justifications for the latter may not suffice for the former.’” (quoting Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 17 (1976)); Landgraf v. USI Film Prods., 511 U.S. 244, 266 (1994) (“[A] justification sufficient to validate a statute’s prospective application under the [Due Process] Clause may not suffice to warrant its retroactive application.”) (internal quotation marks and citation omitted). The problem with the CDSOA is that the asserted ex- planation of how the retroactive portion of the legislation rationally furthers the government’s legitimate interest in restoring conditions of fair trade borders on the frivolous. In SKF, the government asserted the retroactive aspect of the CDSOA promotes the restoration of fair trade by compensating those who were injured by dumping, and petition support is merely a surrogate for injury. See SKF, 556 F.3d at 1351. In the government’s view, those members of the domestic industry that supported the petition are assumed to have suffered the greatest injury. Id. Although the SKF court upheld the law and agreed the CDSOA as a whole “was designed to compensate domestic producers injured by dumping,” the court rejected the government’s argument that the petition support requirement served only to identify those suffering the § 7601(a), 120 Stat. 4, 154 (Feb. 8, 2006; effective Oct. 1, 2007). SCHAEFFLER GROUP USA, INC. v. US 7 greatest injury, finding this rationale “simply implausible in light of . . . the absence of any evidence in the legislative history that the support requirement was designed as a proxy for injury, and the availability of far more direct and accurate methods of measuring injury.” Id. at 1350, 1351. The restoration of conditions of fair trade might have been rationally furthered by the retroactive portion of the CDSOA had Congress chosen to either compensate all injured industry members or allocate funds in some colorable relation to injury. However, petition support as a proxy for injury is far too inaccurate a measure if indeed it relates to injury at all. As explained by the dissent in SKF, “[A] domestic producer might oppose a petition to protect business relationships in foreign countries having nothing to do with the domestic market, or it might decline to support a petition for fear of retaliation in export markets.” SKF, 556 F.3d at 1374 (Linn, J., dissenting). Indeed, although not controlling on the issue of congressional intent, id. at 1352, the United States took the position before the World Trade Organization that “[t]he amount of the [CDSOA] distributions have [sic] nothing to do with the injury to the domestic producer or the recovery of ‘damages’ by the domestic producer.” World Trade Organization, Report of the Panel, United States—Continued Dumping and Subsidy Offset Act of 2000, WT/DS217/R, WT/DS234/R ¶ 4.502 (Sept. 16, 2002), aff’d, Appellate Body Report (emphasis added). While “under the deferential standard of review applied in substantive due process challenges to economic legislation there is no need for mathematical precision in the fit between justification and means,” Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension Trust for S. Cal., 508 U.S. 602, 639 (1993), an inappropriate means must, at some point, become unconstitutionally arbitrary, Washington v. Glucksberg, 521 U.S. 702, 735 (1997) (finding the means employed by the government to be “at 8 SCHAEFFLER GROUP USA, INC. v. US least reasonably related” to “unquestionably important and legitimate” interests); see also Reno v. Flores, 507 U.S. 292, 305 (1993) (The Due Process Clause “demands no more than a reasonable fit between government purpose . . . and the means chosen to advance that purpose.”) (internal quotation marks omitted) (emphasis added); cf. FCC v. Beach Comm’cns, Inc., 508 U.S. 307, 313–14 (1993) (stating that a statutory classification will be upheld “if there is any reasonably conceivable state of facts that could provide a rational basis for [it]”) (emphasis added); Nordlingher v. Hahn, 505 U.S. 1, 11 (1992) (“[T]he relationship of the classification to its goal” must not be “so attenuated as to render the distinction arbitrary or irrational.”). The due process right may not require that Congress’s actions reflect “mathematical exactitude” in fitting means to ends, City of New Orleans v. Dukes, 427 U.S. 297, 303 (1976), but the connection between means and ends must be grounded on something more than an unreasonable, hypothetical connection that the United States has expressly disclaimed in related proceedings. Moreover, the problem the government was facing was not one that “may justify, if . . . not require, rough accommodations.” Heller v. Doe, 509 U.S. 312, 321 (1993) (quoting Metropolis Theatre Co. v. Chicago, 228 U.S. 61, 69–70 (1913)). To the extent Congress’s purpose was to restore conditions of fair trade by neutralizing the effects of injurious dumping and actionable subsidies, “far more direct and accurate methods of measuring injury” were readily available to it. SKF, 556 F.3d at 1351. The present case is nothing like cases upholding acts of Congress as rationally related to a legitimate government interest despite the fact that the law was “not made with mathematical nicety.” City of Dallas v. Stanglin, 490 U.S. 19, 21, 26 (1989) (internal quotation marks and citation omitted) (upholding a law restricting admission to certain dance halls to persons between the ages of fourteen and SCHAEFFLER GROUP USA, INC. v. US 9 eighteen to protect them from “detrimental influences of older teenagers and young adults”); Vance v. Bradley, 440 U.S. 93 (1979) (upholding a law imposing mandatory retirement at age sixty for certain employees but not others); Dandridge v. Williams, 397 U.S. 471 (1970) (upholding a law limiting welfare benefits to $250 per month regardless of family size). Instead, it bears a closer resemblance to cases such as Plyler v. Doe, in which the Supreme Court found irrational a law that purportedly furthered a state’s interest in protecting itself from an influx of illegal immigrants by denying a free education to undocumented children. 457 U.S. 202 (1982). The Court explained that because “[t]he dominant incentive for illegal entry into the State of Texas is the availability of employment,” charging tuition to undocumented children “constitutes a ludicrously ineffectual attempt to stem the tide of illegal immigration, at least when compared with the alternative of prohibiting the employment of illegal aliens.” Id. at 228–29 (internal quotation marks and citation omitted).