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Antidumping Law's Retroactive Petition Support Req. Upheld

The Continued Dumping and Subsidy Offset Act's petition support requirement does not violate due process, the Federal Circuit ruled recently. That Act, also known as the Byrd Amendment, though in effect only briefly, allowed for the collection and distribution of duties on imported goods found to have been dumped into the U.S. market by foreign producers. Only domestic producers who supported the petition are allowed to receive the collected funds.

That petition support requirement, however, effected support decisions that were made before the law was passed. Thus, producers who did not support a petition were stopped from receiving antidumping duties, even though they had no prior warning that this would be the case. That was a reasonable requirement, the court found, one which rewarded producers for the support of the law.

Schaeffler's Challenge

One such producer, the Schaeffler Group, challenged the CDSOA as unconstitutional, alleging it violated the Fifth Amendment by failing to provide due process in distribution decisions.

Schaeffler's suit stems from a 1988 antidumping investigation into "antifriction bearings," which reduce friction between moving and fixed machine parts. The ITC found dumping and instituted duties in 1989. When it sought to distribute the funds raised, Schaeffler was not identified as eligible since its predecessor corporations did not indicate their support of the investigation.

Schaeffler petitioned Customs for distribution and filed a series of complaints seeking review of ITC and Customs decisions. It argued that the CDSOA's petition support requirement -- refusing to allow distribution to companies that did not support the petition -- was impermissibly retroactive under the Due Process Clause. The Court of International Trade disagreed, as did the Federal Circuit.

A Rational "Reward Rationale"

The Federal Circuit rejected Schaeffler's due process challenge. The court found that the petition support requirement reasonably rewarded eligible recipients who assisted the government. That "reward rationale" was supported by the government's substantial interest in promoting enforcement assistance.

Further, the retroactive application of the petition report requirement was not arbitrary or irrational. The court emphasized that only rational basis review applied to due process challenges to economic legislation, placing a burden on Schaeffler to prove there was no reasonable explanation for the rule -- something Schaeffler could not do.

Though the CDSOA was repealed in 2007, the Federal Circuit's ruling will still have a significant impact. Under its repeal, duties collected prior to 2007 are still eligible for distribution under the CDSOA's rules. In 2015, more than $55 million remained to be distributed to domestic industries.

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