## Facts

- Mid Continent Nail Corp., a domestic nail producer, petitioned Commerce alleging steel nails from the United Arab Emirates were sold in the United States at less than fair value and injured the domestic industry.
- Commerce investigated and selected Precision Fasteners, LLC as a mandatory respondent for an individual antidumping margin.
- Commerce found “targeted dumping” and used the average-to-transaction (A–T) comparison method with “zeroing.”
- Commerce applied A–T to all of Precision’s sales, relying on a 2008 agency notice purporting to withdraw 19 C.F.R. § 351.414(f)(2) (2008), a rule that limited A–T to targeted sales.
- Commerce’s 2008 withdrawal invoked the APA “good cause” exception to bypass notice-and-comment, citing the need to avoid delaying ongoing investigations.
- The Court of International Trade (CIT) held the withdrawal violated the APA, remanded for application of the limiting rule, and Commerce’s remand calculation produced a 0.00% dumping margin; the CIT affirmed that remand result.
- Mid Continent appealed, arguing the withdrawal was valid or any APA error was harmless, and that Commerce need not apply the limiting rule.

## Issues

1. Whether Commerce violated the APA by withdrawing 19 C.F.R. § 351.414(f)(2) without notice-and-comment rulemaking.
2. If there was an APA violation, whether it was harmless error.
3. Whether Commerce lawfully applied § 351.414(f)(2) on remand by limiting A–T comparisons to targeted sales.

## Decision

- The Federal Circuit affirmed the CIT.
- Commerce’s 2008 withdrawal of § 351.414(f)(2) was a substantive rule change requiring notice and comment; the asserted desire to avoid delay in ongoing investigations did not constitute APA “good cause.”
- The withdrawal was not a “logical outgrowth” of earlier notices addressing targeted dumping tests and methodology because those notices did not alert parties to a complete repeal.
- The APA error was not harmless because notice and comment could have affected the agency’s decisionmaking and justification.
- Because the withdrawal was invalid, § 351.414(f)(2) remained operative, and Commerce properly applied it on remand, yielding a 0.00% margin for Precision.

## Legal Principles

- Repeal or withdrawal of a substantive regulation is itself substantive rulemaking and must comply with APA notice-and-comment procedures.
- The APA “good cause” exception requires more than an agency preference to avoid delay; the agency must show notice and comment is impracticable, unnecessary, or contrary to the public interest.
- A final rule may be sustained as a “logical outgrowth” only if the proposal reasonably alerted interested parties to the possibility of the final change.
- In rulemaking, procedural error is not harmless where the absence of notice and comment could plausibly affect the outcome or the agency’s reasoning.
- An invalid repeal attempt leaves the prior regulation in force and binding on the agency until lawfully changed.

## Conclusion

The Federal Circuit held that Commerce unlawfully withdrew a binding limitation on the A–T targeted-dumping methodology without APA notice and comment, rejected harmless-error and logical-outgrowth arguments, and affirmed Commerce’s remand use of the still-effective regulation that reduced the respondent’s dumping margin to zero.


Mid Continent Nail Corp. v. United States, 846 F.3d 1364 (Fed. Cir. 2017)