Zhejiang Native Produce & Animal By-Products Import & Export Corp. v. United States

Slip Op. 10-30

UNITED STATES COURT OF INTERNATIONAL TRADE

______________________________
:
ZHEJIANG NATIVE PRODUCE :
& ANIMAL BY-PRODUCTS IMPORT & :
EXPORT CORP., et al., :
:
Plaintiffs, : Before: Richard K. Eaton, Judge
:
v. : Court No. 02-00057
:
UNITED STATES, :
:
Defendant, :
:
and :
:
THE AMERICAN HONEY PRODUCERS :
ASSOCIATION and THE SIOUX :
HONEY ASSOCIATION, :
:
Def.-Ints. :
______________________________:

OPINION AND ORDER

[The United States Department of Commerce’s results of
redetermination pursuant to remand are remanded]

Dated: March 24, 2010

Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP
(Bruce M. Mitchell, Mark E. Pardo and Ned H. Marshak), for
plaintiffs Zhejiang Native Produce & Animal By-Products Import &
Export Corp.; Kunshan Foreign Trade Co., China (Tushu) Super Food
Import & Export Corp.; High Hope International Group Jiangsu
Foodstuffs Import & Export Corp.; National Honey Packers &
Dealers Association; Alfred L. Wolff, Inc.; C.M. Goettsche & Co.;
China Products North America, Inc.; D.F. International (USA)
Inc.; Evergreen Coyle Group, Inc.; Evergreen Produce, Inc.; Pure
Sweet Honey Farm, Inc.; and Sunland International, Inc.

Tony West, Assistant Attorney General; Jeanne E. Davidson,
Director, Commercial Litigation Branch, Civil Division, United
States Department of Justice; Reginald T. Blades, Jr., Assistant
Director, Commercial Litigation Branch, Civil Division, United
States Department of Justice (Jane C. Dempsey); Office of the
Court No. 02-00057 Page 2

Chief Counsel for Import Administration, United States Department
of Commerce (William J. Kovatch, Jr.), of counsel, for defendant.

Kelley Drye & Warren LLP (Michael J. Coursey and R. Alan
Luberda), for defendant-intervenors the American Honey Producers
Association and the Sioux Honey Association.

Eaton, Judge: This action is before the court following

remand for resolution of plaintiffs’ USCIT Rule 56.2 motion for

judgment upon the agency record.1 Defendant-intervenors, the

American Honey Producers Association and the Sioux Honey

Association (together, “defendant-intervenors”), challenge the

finding of no critical circumstances in the United States

Department of Commerce’s (“Commerce” or “the Department”) Results

of Redetermination Pursuant to Remand (Dep’t of Commerce Sept. 5,

2006), Zhejiang Native Produce & Animal By-Products Import &

Export Corp., et al. v. United States, Court No. 02-00057)

(“Remand Redetermination”). The Remand Redetermination resulted

from the court’s remand order in Zhejiang Native Produce & Animal

By-Products Import & Export Corp. v. United States, 30 CIT 725,

Slip Op. 06-85 (June 6, 2006) (not reported in the Federal

1
“Plaintiffs” refers collectively to Zhejiang Native
Produce & Animal By-Products Import & Export Corp.; Kunshan
Foreign Trade Co.; China (Tushu) Super Food Import & Export
Corp.; High Hope International Group Jiangsu Foodstuffs Import &
Export Corp.; National Honey Packers & Dealers Association;
Alfred L. Wolff, Inc.; C.M. Goettsche & Co.; China Products North
America, Inc.; D.F. International (USA) Inc.; Evergreen Coyle
Group, Inc.; Evergreen Produce, Inc.; Pure Sweet Honey Farm,
Inc.; and Sunland International, Inc.
Court No. 02-00057 Page 3

Supplement) (the “Remand Order”). Plaintiffs, and defendant the

United States on behalf of Commerce, support the redetermination

results, and ask the court to affirm the Remand Redetermination.

Pls.’ Comments Regarding Remand Redetermination (“Pls.’ Comm.”)

2; Response of the United States to the Comments of Pls. and

Def.-Ints. upon the Dep’t of Commerce’s Final Results of

Redetermination Pursuant to Court Order (“Def.’s Resp.”) 1.

The court’s Remand Order was made following the opinion of

the United States Court of Appeals for the Federal Circuit (the

“Federal Circuit”) in Zhejiang Native Produce & Animal By-

Products Import & Export Corp. v. United States, 432 F.3d 1363

(Fed. Cir. 2005) (“Zhejiang II”).2 See Remand Order, 30 CIT 725,

2
In related proceedings, following the issuance of
Zhejiang II, plaintiffs moved for relief from the judgment in
Zhejiang I. Pls.’ Rule 60(b) Mot. for Rel. from J. (“Pls.’ Rule
60(b) Mot.”) 1. By their motion, plaintiffs sought an order
directing Commerce to find that their sales made during the
period of investigation, January 1, 2000 through June 30, 2000,
were not made at less than fair value. Pls.’ Rule 60(b) Mot. 1-
2. The court denied plaintiffs’ motion on September 26, 2007.
Zhejiang Native Produce & Animal By-Products Import & Export
Corp. v. United States, Court No. 02-00057 (Sept. 26, 2007)
(order denying plaintiffs’s motion for relief from judgment).
Plaintiffs appealed the court’s order, and the court’s
proceedings were stayed on January 11, 2008, pending resolution
of the appeal. Zhejiang Native Produce & Animal By-Products
Import & Export Corp. v. United States, Court No. 02-00057 (Jan.
11, 2008) (order staying proceedings). The Federal Circuit
dismissed plaintiffs’ appeal holding that, because plaintiffs
appealed an interlocutory order, the Court lacked jurisdiction to
hear the matter. Zhejiang Native Produce & Animal By-Products
Import & Export Corp. v. United States, 339 Fed. Appx. 992, 993-
94 (Fed. Cir. 2009) (“Zhejiang III”) (“Except in a few well-
defined circumstances, courts of appeals review final judgments,
(continued...)
Court No. 02-00057 Page 4

Slip Op. 06-85. In Zhejiang II, the Federal Circuit held that

Commerce could not use its standard 25 percent method3 to impute

knowledge of below fair market sales to plaintiffs during a

period that a suspension agreement was in place. Thus, the

Federal Circuit held that Commerce’s critical circumstances

determination was not supported by substantial evidence. The

Federal Circuit then remanded the matter to this Court where it

was further remanded to Commerce. Zhejiang II, 432 F.3d at 1368;

Remand Order, 30 CIT at 725, Slip Op. 06-85 at 2. On remand,

Commerce reversed its previous determination and found that

critical circumstances were not present during the period of

investigation.

Defendant-intervenors argue that the court should once again

remand the case to Commerce with instructions for it to determine

whether critical circumstances were present by: (1) using a

methodology other than the 25 percent method; and/or (2) using a

2
(...continued)
not particular issues as they arise in the course of trial
proceedings.”). The Federal Circuit’s mandate in Zhejiang III
was subsequently issued on September 14, 2009.
3
Although it has never promulgated regulations, Commerce
has adopted, as a general practice, a method for determining
whether critical circumstances exist. Using this method,
Commerce imputes knowledge of sales at below fair value prices
during the period of investigation, to those respondents whose
dumping margins are calculated to be greater than 25 percent.
See Honey From the PRC, 66 Fed. Reg. 24,102, 24,106 (Dep’t of
Commerce May 11, 2001) (notice of preliminary determination of
sales at less than fair value).
Court No. 02-00057 Page 5

period different from the period of investigation for making its

determination. Defendant-Intervenors’ Remand Comments (“Def.-

Ints.’ Comm.”) 3.

Jurisdiction is had pursuant to 28 U.S.C. § 1581© (2006) and

19 U.S.C. §§ 1516a(a)(2)(A)(i)(II) and (B)(i) (2006). For the

reasons set forth below, the Remand Redetermination is remanded.

BACKGROUND

The facts of this case are fully set forth in the court’s

prior decision in Zhejiang Native Produce & Animal By-Products

Import & Export Corp. v. United States, 27 CIT 1827, Slip Op. 03-

151 (Nov. 21, 2003) (not reported in the Federal Supplement)

(“Zhejiang I”), Zhejiang II, and the court’s Order of September

26, 2007 denying plaintiffs’ rule 60(b) motion for relief from

judgment. A brief restatement of the case follows in order to

place this opinion in context.

In 1994, Commerce conducted an unfair trade investigation of

honey from the People’s Republic of China (“PRC”). Commerce

subsequently halted this investigation and entered into a

suspension agreement with the PRC. See Honey From the PRC, 60

Fed. Reg. 42,521 (Dep’t of Commerce Aug. 16, 1995) (suspension of

investigation) (the “Suspension Agreement”). The Suspension

Agreement was in effect from August 16, 1995, through August 16,

2000. Honey From the PRC, 65 Fed. Reg. 46,426 (Dep’t of Commerce
Court No. 02-00057 Page 6

July 28, 2000) (termination of suspended antidumping duty

investigation). In 2000, following the Suspension Agreement’s

termination, and at the urging of the domestic industry, Commerce

commenced a second investigation. Honey from Argentina and the

PRC, 65 Fed. Reg. 65,831 (Dep’t of Commerce Nov. 2, 2000)

(initiation of antidumping duty investigations) (the “Second

Investigation”). During the course of the Second Investigation,

the petitioners alleged the existence of critical circumstances.

See 19 U.S.C. § 1673b(e)(1). Commerce identified the period of

investigation (“POI”) as January 1, 2000, through June 30, 2000,

a period during which the Suspension Agreement was in effect.

During the course of its proceedings the Department used the POI

to determine both if respondents were dumping their merchandise

and for purposes of determining if critical circumstances were

present. See Honey From the PRC, 66 Fed. Reg. 24,101, 24,106

(Dep’t of Commerce May 11, 2001) (notice of preliminary

determination of sales at less than fair value) (“Preliminary

Results”).

Following the investigation, Commerce’s final determination

contained an affirmative dumping finding. Honey From the PRC, 66

Fed. Reg. 50,608, 50,610 (Dep’t of Commerce Oct. 4, 2001) (notice

of final determination of sales at less than fair value), as

amended by Honey from the PRC, 66 Fed. Reg. 63,670 (Dep’t of

Commerce Dec. 10, 2001) (notice of amended final determination of
Court No. 02-00057 Page 7

sales at less than fair value and antidumping duty order). The

final determination also contained an affirmative finding of

critical circumstances based on the 25 percent method’s

imputation of knowledge of dumping. 66 Fed. Reg. at 50,6010.

This imputation of knowledge of dumping was predicated on the

Department’s practice of considering

margins of 25 percent or more for [export
price] sales sufficient to impute knowledge
of dumping . . . . In other words, in cases
where, as here, export price is calculated by
reference to sales made to unaffiliated
purchasers in the United States, and Commerce
determines that the antidumping duty margin
with respect to those sales is 25% or more,
Commerce “imputes” knowledge of dumping to
the importer [during the period leading up to
the investigation].

Zhejiang I, 27 CIT at 1842-43, Slip Op. 03-151 at 26. (footnote

omitted; first alteration in original). Commerce found that,

based on the 25 percent method, “there is evidence of the

knowledge of dumping . . . [that was] demonstrated by the fact

that Zhejiang, Kunshan, High Hope, and the PRC-wide entity all

have dumping margins of over 25 percent.” Id. at 1843, Slip Op.

03-151 at 27 (citation omitted).

Plaintiffs sought judicial review in this Court of

Commerce’s final determination and, among other things, objected

to Commerce’s imputation of knowledge, arguing that compliance

with the Suspension Agreement foreclosed a finding of dumping

based on substantial evidence. The court rejected plaintiffs’
Court No. 02-00057 Page 8

argument and held that the Suspension Agreement did not prevent

Commerce from using its 25 percent method. Id. at 1849-50, Slip

Op. 03-151 at 36-37. Therefore, the court sustained Commerce’s

affirmative critical circumstances determination. Id. at 1851,

Slip Op. 03-151 at 39.

Plaintiffs appealed Zhejiang I to the Federal Circuit. See

generally Zhejiang II, 432 F.3d at 1363-64. On appeal,

plaintiffs again argued that the existence of the Suspension

Agreement prevented the imputation of knowledge of dumping using

Commerce’s 25 percent methodology. Id. at 1366-67. The Federal

Circuit found that Commerce could not impute knowledge of dumping

using the 25 percent method during the POI because the Suspension

Agreement was in effect. Therefore, the Federal Circuit reversed

the court’s critical circumstances holding, and remanded the case

“for appropriate further proceedings.” Id. at 1368.

The court then remanded the matter to Commerce for

reconsideration of the critical circumstances issue. See Remand

Order, 30 CIT at 725-26, Slip Op. 06-85 at 2-3. Pursuant to the

Federal Circuit ruling, the court instructed Commerce to further

consider “its critical circumstances finding, provided that in no

event shall Commerce impute to plaintiffs any knowledge

prohibited by the [Federal Circuit]’s decision . . . .” Id.

Following remand, Commerce filed its Remand Redetermination,

finding that critical circumstances did not exist. See Remand
Court No. 02-00057 Page 9

Redetermination at 10. Commerce wrote:

Based on the [Federal Circuit]’s holding that
the determination to impute knowledge of
dumping [using the 25 percent method] while a
suspension agreement was in place was not
supported by substantial evidence, and the
[Court of International Trade]’s instruction
to the Department not to impute to plaintiffs
any knowledge prohibited by the [Federal
Circuit]’s decision, the Department finds
that critical circumstances do not exist with
respect to the antidumping investigation of
honey from the PRC.

Id. at 8-9.

STANDARD OF REVIEW

The court must uphold a final determination by the

Department in an antidumping proceeding unless it is “unsupported

by substantial evidence on the record, or otherwise not in

accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).

DISCUSSION

I. Commerce’s Critical Circumstances Determination

The sole matter before the court is whether Commerce erred

in concluding that it could not use alternatives to the 25

percent method, or a time period other than the POI, to

investigate the presence of critical circumstances in this case.
Court No. 02-00057 Page 10

A. Legal Framework

Section 1673d(a)(3) of Title 19 U.S.C. governs Commerce’s

final critical circumstances determinations.4 19 U.S.C.

§ 1673d(a)(3). This provision requires that, when Commerce makes

an affirmative final antidumping determination and the presence

of critical circumstances is alleged under 19 U.S.C. § 1673b(e),

the Department’s final determination “shall also contain a

finding” of whether either (1) there is a history of dumping and

material injury by reason of dumped imports, or (2) the person by

whom, or for whose account, the merchandise was imported knew or

should have known that the exporter was selling the subject

merchandise at less than its fair value and that there would be

material injury by reason of such sales, and (3) there have been

massive imports of the subject merchandise over a relatively

short period. See 19 U.S.C. § 1673d(a)(3)(A)–(B); 19 C.F.R. §

351.206(h) (2009).5 An affirmative critical circumstances

4
See Coal. for the Pres. of Am. Brake Drum & Rotor
Aftermarket Mfrs. v. United States, 23 CIT 88, 112 n.38, 44 F.
Supp. 2d 229, 252 n.38 (1999) (quoting S. Rep. No. 103–412, 103d
Cong., 2d Sess., at 38 (1994)) (“This provision is ‘designed to
address situations where imports have surged as a result of the
initiation of an antidumping or countervailing duty
investigation, as exporters and importers seek to increase
shipments of the merchandise subject to investigation into the
importing country before an antidumping or countervailing duty
order is imposed.’”).
5
Commerce’s massive imports regulation provides in
relevant part:

(continued...)
Court No. 02-00057 Page 11

determination permits Commerce to retroactively impose

antidumping duties “on merchandise entered up to 90 days before

the imposition of provisional measures.” See 19 C.F.R. § 351.

206(a); see also 19 U.S.C. § 1673d(c)(4)(A)–(B).

B. The 25 Percent Method

In order to make a finding as to whether a respondent knew,

or should have known, that merchandise was being sold at less

than fair value, Commerce adopted the 25 percent method to impute

knowledge of below fair value sales. See, e.g., Certain

Cut-To-Length Carbon Steel Plate From The PRC, 62 Fed. Reg.

5
(...continued)
(1) In determining whether imports of the
subject merchandise have been massive under
[19 U.S.C. §§ 1671d(a)(2)(B) or
1673d(a)(3)(B)], the Secretary normally will
examine:

(i) The volume and value of the
imports;

(ii) Seasonal trends; and

(iii) The share of domestic
consumption accounted for by the
imports.

(2) In general, unless the imports during the
“relatively short period” . . . have
increased by at least 15 percent over the
imports during an immediately preceding
period of comparable duration, the Secretary
will not consider the imports massive.

19 C.F.R. § 351.206(h) (citation omitted).
Court No. 02-00057 Page 12

31,972, 31,978 (Dep’t of Commerce June 11, 1997) (preliminary

determination of sales at less than fair value); Tapered Roller

Bearings and Parts Thereof, Finished or Unfinished, from Italy,

52 Fed. Reg 24,198 (Dep’t of Commerce June 29, 1987) (final

determination of sales at less than fair value). It is the

method the Federal Circuit found could not be used here because

of the Suspension Agreement.

C. Alternative Methodologies and Time Periods

The 25 percent method, however, is not the only way in which

Commerce has imputed knowledge in past investigations. Nor for

that matter, has the Department restricted itself to the period

of investigation in making critical circumstances determinations.

Prior to its adoption of the 25 percent method, Commerce found

that, with respect to respondents from non-market economies, it

would use a case by case determination “using all available

information and drawing upon market conditions of the industry

subject to the investigation” when imputing knowledge of less-

than-fair value sales. Potassium Permanganate From the PRC, 48

Fed. Reg. 57,347, 57,349 (Dep’t of Commerce, Dec. 29, 1983)

(final determination of sales at less than fair value)

(“Potassium Permanganate”).

For instance, in Potassium Permanganate, Commerce made a

number of findings that it deemed relevant to its determination
Court No. 02-00057 Page 13

that critical circumstances existed. First, that United States

importers were aware that the merchandise purchased at

“competitive prices” in the European market and subsequently

imported into the United States originated from the PRC, and

therefore were aware of the price of PRC-sourced potassium

permanganate being sold in both United States and European

markets. Id. Second, Commerce noted that importers were aware

of the pricing of potassium permanganate from non-PRC sources and

were therefore aware of the entire range of pricing in a

marketplace where pricing was a major factor in determining

sales. Id. Third, because other foreign producers operated in

non-state-controlled countries, importers should have known, at

least generally, what the value of the product was in market

economy countries, and thus the minimum fair value of the PRC

merchandise. Id. Fourth, that during the period between the

initiation of the investigation and the preliminary

determination, the unit price of the merchandise imported from

the PRC was 22 percent less than the price imported from the only

other foreign nation exporting the product to the United States.

Potassium Permanganate From the PRC, 48 Fed. Reg. at 57,349.

Lastly, because importers knew that the merchandise from the PRC

was priced significantly below that sold for export by the only

other non-United States market economy producer, importers should

have known that the PRC exports were at less than fair value.
Court No. 02-00057 Page 14
Id. Commerce’s critical circumstances determination was upheld

by both this Court and the Federal Circuit in ICC Industries,

Inc. v. United States, 10 CIT 181, 632 F. Supp. 36 (1986), aff’d

812 F.2d 694 (Fed. Cir. 1987) (“ICC Industries”).

Other Court of International Trade cases shed more light on

practices, other than the 25 percent method, that can be used in

making a critical circumstances determination. See, e.g., Nippon

Steel Corp. v. United States, 24 CIT 1158, 118 F. Supp. 2d 1366

(2000). Specifically, the Nippon court listed “numerous press

reports, . . . falling domestic prices resulting from rising

imports, and domestic buyers shifting to foreign suppliers” as

evidence that could support such a determination. Id. at 1168,

118 F. Supp. 2d at 1376 (internal quotation omitted).

In addition to demonstrating that the 25 percent method is

not the only approach that Commerce has used to impute knowledge

of sales at less than fair value, ICC Industries also reveals

that Commerce has used at least one time period other than the

period of investigation as the temporal measure for making a

critical circumstances determination. In ICC Industries, the

period used was “from [i]nitiation of this investigation to [the]

Preliminary Determination.”6 ICC Industries, 10 CIT at 184, 632

F. Supp. at 38.

6
Here, the Suspension Agreement ended on August 16, 2000.
The domestic producers filed their petitions on September 29,
2000 and the preliminary results were published on May 11, 2001.
Court No. 02-00057 Page 15
Indeed, the ICC Industries time period appears to be the

period that Congress anticipated would be used in determining

critical circumstances when it stated that the purpose of the

critical circumstances statute was “to provide prompt relief to

domestic industries suffering from large volumes of, or a surge

over a short period of, imports and to deter exporters whose

merchandise is subject to an investigation from circumventing the

intent of the law by increasing their exports to the United

States during the period between initiation of an investigation

and a preliminary determination by [Commerce].” H.R. Rep. 96-317,

96th Cong., 1st Sess. at 63 (1979) (italics added).

In addition, Commerce, in its regulations, is directed to

look at a period “beginning on the date the proceeding begins

[i.e., the filing of the investigation] and ending at least three

months later.” 19 C.F.R. § 351.206(i). Thus, it is clear that

Commerce has the authority to evaluate time periods other than

the period of investigation when making critical circumstances

determinations.

II. Commerce’s Remand Redetermination

Commerce maintains that: (1) because it used the 25 percent

method during the POI; and (2) because the Federal Circuit has

prohibited the use of this method when the Suspension Agreement

was in place, the administrative record lacks substantial
Court No. 02-00057 Page 16
evidence that critical circumstances were present during the POI.

As a result, defendant insists that Commerce “properly concluded

that the record does not support a finding of critical

circumstances because no record evidence demonstrates that the

importers knew or should have known that honey from the PRC was

being imported at less than its fair value.” Def.’s Resp. 3

(citing 19 U.S.C. § 1673d(a)(3)(A)(ii)).

Moreover, defendant argues:

Whether, upon remand, Commerce should have
changed its methodology and examined a time
period other than the POI to determine
whether importers had knowledge of dumping is
beyond the scope of the remand order.
[Defendant-intervenors’] allegation of error
should, therefore, be rejected.

Def.’s Resp. 4. With respect to this last statement, Commerce

insists that it “[did] not believe that [it had] the authority to

reopen the record and change the time period on which the

original finding of knowledge was based in this remand

proceeding.” Remand Redetermination at 10.

Defendant-intervenors begin their argument in support of the

use of other reasonable methodologies for determining the

presence of critical circumstances, by taking account of

Commerce’s history of making critical circumstances

determinations and noting Commerce’s broad discretion in making

such determinations. Def.-Ints.’ Comm. 8. Defendant-intervenors

insist that the 25 percent method is just one of a range of
Court No. 02-00057 Page 17
reasonable methodologies Commerce has at its disposal. Def.-

Ints.’ Comm. 8. As a result, they reason that the 25 percent

method, though Commerce’s preferred way of determining knowledge

when making a critical circumstances determination, is not its

exclusive methodology. Def.-Ints.’ Comm. 10. They note that

Commerce had conducted critical circumstances inquiries “for

years” before first using the 25 percent test and that no court

has since limited Commerce solely to the application of that

single test. Def.-Ints.’ Comm. 10. They further assert that

“Commerce and the reviewing courts have consistently referred to

the 25 percent test as a ‘general practice’ rule . . . and as the

test Commerce will ‘normally’ apply . . . in the knowledge-of-

dumping context.” Def.-Ints.’ Comm. 10-11 (citing Zhejiang II,

432 F.3d at 1366; see, e.g., Certain Cut-to-Length Carbon Steel

Plate From the PRC, 62 Fed. Reg. at 31,978; Circular Welded

Carbon Steel Pipes & Tubes From Thailand, 51 Fed. Reg. 3384, 3385

(Dep’t of Commerce Jan 27, 1986) (notice of final determination))

(emphasis added). The use of language such as “general practice”

and “normally” is, according to defendant-intervenors, indicative

of Commerce’s awareness that, “while the 25 percent test is the

agency’s preferred knowledge-of-dumping methodology, it is not

suitable for every critical circumstances determination, and that

there will be circumstances where an alternative methodology

would be more appropriate.” Def.-Ints.’ Comm. 11. They further
Court No. 02-00057 Page 18
maintain that both the language and legislative history of 19

U.S.C. § 1673b and § 1673e, as well as Commerce’s regulations,

support their argument that Commerce may focus its inquiry on the

time period between the petition’s filing and the issuance of the

preliminary determination. Def.-Ints.’ Comm. 13

Accordingly, defendant-intervenors seek a further remand and

a direction from the court that Commerce reopen the record and

reconsider whether a finding of knowledge of sales below fair

value is supported by substantial evidence under any methodology

other than the 25 percent method.

III. The Federal Circuit’s Opinion in Zhejiang II

All of the parties rely on the Federal Circuit’s opinion in

Zhejiang II and the court’s subsequent Remand Order in making

their arguments. For instance, Commerce maintains that the

opinion prevents it from reopening the record and/or using an

alternative methodology or considering an alternative time period

to determine whether critical circumstances existed. Remand

Redetermination at 8-10. For their part, plaintiffs argue that

[s]ince the Federal Circuit considered all of
the evidence of record, and found that the
record did not contain evidence to support a
finding that importers ‘knew or should have
known that the exporter was selling the
subject merchandise at less than its fair
value,’ . . . the Department’s determination
on Remand that substantial evidence does not
support a finding of critical circumstances
is the only appropriate result.
Court No. 02-00057 Page 19
Pls.’ Comm. 3 (footnote omitted). Reviewing both the Federal

Circuit opinion and the court’s Remand Order, however, the court

finds nothing that limits Commerce in the way the Department

describes.

The Federal Circuit’s holding in Zhejiang II in its entirety

is as follows:

Zhejiang argues that the “knew or should have
known” requirement for critical circumstances
was not met, and that substantial evidence
does not support the contrary finding based
on imputation. We agree. As Zhejiang
states, “it strains credibility to suggest
that Commerce could establish minimum prices
for honey designed to ‘prevent the
suppression or undercutting of price levels
of the United States honey products’ and then
determine that U.S. importers purchasing
honey in accordance with these pricing
guidelines should have known these sales
would be found to be at less than fair
value.” When all factors are considered,
there is not substantial evidence to support
the finding of critical circumstances.

Zhejiang II, 432 F.3d at 1368 (internal citation omitted). In

other words, the Court held that Commerce could not impute

knowledge of sales of less than fair value to plaintiffs using

the 25 percent method while the Suspension Agreement was in

effect. The court did not otherwise limit Commerce’s use of

alternative methodologies or limit the time period that Commerce

could examine to just the POI.

With the Federal Circuit’s holding in mind, the court in its

Remand Order directed Commerce to “further [consider] its
Court No. 02-00057 Page 20
critical circumstances finding, provided that in no event shall

Commerce impute to plaintiffs any knowledge prohibited by the

[Federal Circuit]’s decision . . . .” Remand Order, 30 CIT at

725-26, Slip Op. 06-85 at 2. The court’s instructions to

Commerce, therefore, directed it not to use the 25 percent method

when the Suspension Agreement was in force. The court’s Remand

Order, however, did nothing to prevent Commerce from considering

other methodologies or other time periods in making its critical

circumstances determination. As has been seen, Commerce has used

both other methodologies and at least one time period other than

the period of investigation when investigating the presence of

critical circumstances. Thus, neither the Federal Circuit’s

holding, nor the Remand Order constrained Commerce in these two

areas. As a result, Commerce has the authority to exercise its

discretion to apply any other reasonable method or look to any

other reasonable time period in making its critical circumstances

determination.

CONCLUSION

Based on the foregoing, the court remands to Commerce and

instructs the Department, using its discretion, to reconsider its

critical circumstances determination found in the Remand

Redetermination. In its Remand Redetermination the Department

addressed the possibility of a remand:
Court No. 02-00057 Page 21
if the court considers that the remand order
is sufficiently broad for the Department to
consider the merits of the petitioners’
argument concerning the time period used to
analyze the issue of knowledge, and remands
the proceeding to the Department to re-open
the record for the submission of information
on alternate time periods, we request that
the Department be given six months time to
complete that remand, as such time would be
necessary in order for the Department to
request additional information from the
parties on alternative time periods, analyze
and verify such information, issue a draft
redetermination to the parties for comment,
and submit a final redetermination to the
Court.

Remand Redetermination at 10. With this request in mind, the

court’s remand order will take into account Commerce’s suggested

time period to make any further determination with regard to

critical circumstances.

The remand results shall be due on September 24, 2010,

comments to the remand results shall be due on October 24, 2010,

and replies to such comments shall be due on November 8, 2010.

/s/ Richard K. Eaton
Richard K. Eaton

Dated: March 24, 2010
New York, New York