Slip Op. 11B 159
UNITED STATES COURT OF INTERNATIONAL TRADE
______________________________
:
MUELLER COMERCIAL DE MEXICO, :
S. DE R.L. DE C.V., :
: Before: Richard K. Eaton, Judge
and :
: Court No. 10-00163
SOUTHLAND PIPE NIPPLES CO., :
INC., :
:
Plaintiffs, :
:
v. :
:
UNITED STATES, :
:
Defendant, :
:
and :
:
UNITED STATES STEEL :
CORPORATION, :
INC. :
:
Defendant-Intervenor. :
______________________________:
OPINION AND ORDER
[Plaintiffs‟ motion for judgment on the agency record is granted,
and the matter is remanded to the Department of Commerce.]
Dated: December 16, 2011
White & Case LLP (David E. Bond, Yohai Baisburd, and Jay C.
Campbell), for plaintiffs Mueller Comercial de Mexico, S. de R.L.
de C.V. and Southland Pipe Nipples Co., Inc.
Tony West, Assistant Attorney General; Jeanne E. Davidson,
Director, Patricia M. McCarthy, Assistant Director, Commercial
Litigation Branch, Civil Division, United States Department of
Justice (Douglas Edelschick); Office of Chief Counsel for Import
Administration, U.S. Department of Commerce (Ahran Kang McCloskey),
of counsel, for defendant.
Skadden, Arps, Slate, Meagher & Flom LLP (Robert E. Lighthizer
and Jeffrey D. Gerrish), for defendant-intervenor United States
Steel Corporation.
Eaton, Judge: Before the court is plaintiffs‟ motion for
judgment on the agency record, pursuant to USCIT R. 56.2, challenging
the Department of Commerce‟s (“Commerce” or the “Department”) final
results of the Sixth Administrative Review of the antidumping duty
order on Certain Circular Welded Non-Alloy Steel Pipe (“CWP”) from
Brazil, the Republic of Korea, Mexico, and Venezuela, 57 Fed. Reg.
49,453 (Dep‟t of Commerce Nov. 2, 1992) (final determination and
amendment to final determination of sales at less than fair value)
(the “Order”) for the period of review (“POR”) August 1, 2007 through
July 31, 2008. See CWP from Mexico, 75 Fed. Reg. 20,342 (Dep=t of
Commerce Apr. 19, 2010) (final results) and the accompanying Issues
and Decision Memorandum (“Issues & Dec. Mem.”) (collectively, the
“Final Results”).
The court has jurisdiction pursuant to 28 U.S.C. § 1581(c)
(2006) and 19 U.S.C. § 1516a(a)(2)(B)(i) (2006). For the reasons
set forth herein, the plaintiffs= motion is granted and the matter
is remanded to Commerce.
BACKGROUND
Plaintiffs Mueller Comercial de Mexico, S. de R.L. de C.V.
(“Mueller”) and Southland Pipe Nipples Co., Inc. (“Southland”)
Court No. 10-00163 Page 3
(collectively, “plaintiffs”) challenge the Department=s
determination, in the Final Results, to assign Mueller an antidumping
duty rate of 48.33% based on adverse facts available (“AFA”).1
Plaintiff Mueller is a Mexican company whose business includes
selling CWP in the United States that it purchases from Mexican
producers. Mueller‟s merchandise is imported by its U.S. affiliate,
plaintiff Southland.
On November 3, 2008, Commerce published notice of the
opportunity to request an administrative review of the Order for the
POR November 1, 2007 through October 31, 2008. Thereafter, both
Mueller and defendant-intervenor United States Steel Corporation
asked Commerce to conduct an administrative review of Mueller‟s
entries of CWP. On March 10, 2009, the Department selected Mueller,
Tuberia Nacional, S.A. de C.V. (“TUNA”), and Hylsa, S.A. de C.V.
1
The Department generally makes its antidumping
determinations based on the information it solicits and receives from
interested parties concerning the normal value and export price of
the subject merchandise. Commerce may, however, rest its
determinations on “facts otherwise available . . . to fill in the
gaps when Commerce has received less than the full and complete facts
needed to make a determination.” Gerber Food (Yunnan) Co., Ltd. v.
United States, 29 CIT 753, 767, 387 F. Supp. 2d 1270, 1283 (2005)
(quoting Nippon Steel Corp. v. United States, 337 F.3d 1373, 1381
(Fed. Cir. 2003)). Having determined that the use of facts otherwise
available is warranted, if the Department further finds that “an
interested party has failed to cooperate by not acting to the best
of its ability to comply with a request for information . . .
[Commerce] may use an inference that is adverse to the interests of
that party in selecting from among the facts otherwise available.”
19 U.S.C. § 1677e(b).
Court No. 10-00163 Page 4
(“Hylsa”) as mandatory respondents in the administrative review.
See Mem. re Selection of Respondents, A-201-805 (Dep‟t of Commerce
Mar. 10, 2009) at 7 (P.R. Doc. 24). Mueller had not been a respondent
in any of the five previous reviews of the Order.
Plaintiffs claim that both prior to and during the POR, Mueller
purchased the CWP it exported to the United States from the two
Mexican producers that were mandatory respondents in the review–TUNA
and Hylsa. According to plaintiffs, relying on Commerce‟s reseller
policy2 in the period before and during the POR, Southland posted cash
deposits on the entries Mueller purchased from TUNA and Hylsa at those
producers‟ respective antidumping duty deposit rates of 2.92% and
10.38%. See Mem. to File re CWP from Mexico: Customs Package
Information of 2007-2008 Period of Review, A-201-805 (Dep‟t of
Commerce June 9, 2009) (C.R. Doc. 9) (“Customs Data File”).
On May 29, 2009, after responding only to Section A of Commerce‟s
Antidumping Duty Questionnaire, Mueller informed Commerce that it
would not participate in the administrative review. See Letter from
White & Case LLP to Secretary of Commerce (May 29, 2009) (P.R. Doc.
2
Pursuant to the reseller policy, under certain
circumstances, an exporter that does not produce the goods it exports
pays the cash deposit rate of its producer. See Parkdale Int’l, Ltd.
v. United States, 31 CIT 1229, 1231, 508 F. Supp. 2d 1338, 1343 (2007)
(“Because the producer is assumed to be the first company in the
commercial chain that knew of the product‟s destination, cash
deposits for antidumping duties on all merchandise sold to identified
resellers is initially set at the producer‟s cash deposit rate.”).
Court No. 10-00163 Page 5
53). According to Mueller, it decided not to participate because
the review had been rescinded with respect to TUNA,3 and it became
apparent that Hylsa was not going to participate. Mueller maintains
that it would have been futile for it to continue further with the
review because the information necessary to determine its
antidumping duty rate would have had to come from its producers, TUNA
and Hylsa. Pls.‟ Mem. Pts. Auth. Supp. Mot. J. Agency R. (“Pls.‟
Mem.”) 4.
Based on Mueller‟s withdrawal from participation in the review,
Commerce applied AFA to determine Mueller=s antidumping duty rate.
See Issues & Dec. Mem. at 10 (“Because Mueller did not cooperate in
this review by refusing to respond to the Department‟s questionnaire,
we have applied total AFA for these final results.”); see also Gallant
Ocean (Thailand) Co. v. United States, 602 F.3d 1319, 1321 (Fed. Cir.
2010) (quoting 19 U.S.C. § 1677e(b)) (“Upon a finding that an
interested party refuses to cooperate with [Commerce‟s] information
requests, Commerce „may use an inference that is adverse to the
interests of that party in selecting from among the facts otherwise
available.‟”). The Department assigned Mueller the AFA rate of
48.33% based on a single transaction of TUNA=s during the Fifth
3
The Department rescinded the review with respect to TUNA
because the company timely notified Commerce, in accordance with 19
C.F.R. § 351.213(d)(3) (2011), that it did not have any exports of
subject merchandise to the U.S. during the POR. Issues & Dec. Mem.
at 15.
Court No. 10-00163 Page 6
Administrative Review of the Order, which covered the period 1998
through 1999. See Issues & Dec. Mem. at 10; see also Memorandum re
CWP from Mexico, Use of Adverse Facts Available (AFA) and
Corroboration of AFA Rate, A-201-805 (Dep‟t of Commerce Nov. 30,
2009) (the “AFA Memo”).
STANDARD OF REVIEW
The standard of review is set forth in 19 U.S.C. §
1516a(b)(1)(B)(i), which provides, in relevant part, that the court
“shall hold unlawful any determination, finding, or conclusion found
. . . to be unsupported by substantial evidence on the record or
otherwise not in accordance with law.”
DISCUSSION
I. Commerce‟s Final Results
In the Final Results, Commerce assigned Mueller the AFA rate
of 48.33%,4 which was greater than the highest overall rate
determined in either the original investigation or any subsequent
review. In assigning that rate, the Department did not follow its
established practice of applying the highest overall margin
determined in any segment of the proceeding - in this case, the
4
In arriving at this rate, Commerce chose the highest
transaction-specific margin calculated for TUNA in the Fifth
Administrative Review. Issues & Dec. Mem. at 10.
Court No. 10-00163 Page 7
all-others rate of 32.62% - to an uncooperative respondent. See AFA
Memo at 7 (“Generally, the Department finds that selecting the
highest rate from any segment of the proceeding as AFA is
appropriate.”).
Commerce reasoned that it should assign a rate even higher than
the all-others rate because Aas Mueller has never previously been
reviewed by the Department, it is currently subject to the 32.62
percent rate.@ AFA Memo at 9; see also Issues & Dec. Mem. at 11. Based
on this finding, Commerce further concluded that by withdrawing from
the review, Mueller demonstrated that “the all-others rate [of
32.62%] proved insufficiently adverse to induce Mueller to cooperate
to the best of its ability in this administrative review.” AFA Memo
at 9. Accordingly, Commerce “deem[ed] it necessary to apply a rate
higher than the all-others rate to which Mueller is already subject.
Otherwise, Mueller would have no incentive to cooperate.” AFA Memo
at 9. The Department ultimately found “48.33 percent to be
sufficiently high so as to encourage Mueller=s participation in future
segments of this proceeding.” AFA Memo at 9. According to
Commerce,
applying 48.33 percent to . . . Mueller would ensure [that
the company] shall not benefit from [its] failure to
cooperate in this administrative review and provides an
incentive for . . . Mueller to cooperate in future segments
of the proceeding.
AFA Memo at 8. In other words, Commerce determined that, because
Court No. 10-00163 Page 8
Mueller was subject to the 32.62% rate prior to the POR and
nevertheless withdrew from the review, a higher rate was needed to
insure that it did not profit from its decision not to participate
in the review and to encourage compliance in future reviews.
In addition, the Department determined that it could not take
into account Mueller‟s claim that it complied with Commerce‟s
reseller policy by making cash deposits for its entries equal to the
antidumping duty rates assigned to its alleged producers - TUNA and
Hylsa. Commerce found that “[w]hile we recognize Mueller‟s claim
that its entries of subject merchandise sourced from TUNA and [Hylsa]
would be subject to those producers= individual cash deposit rates,
because of Mueller=s failure to cooperate, we cannot determine the
universe of Mueller=s sales, let alone the origin of those unreported
sales.” Issues & Dec. Mem. at 11. Put another way, the Department
found that Mueller=s failure to participate in the review prevented
Commerce from determining if its entries were subject to the rate
set under the reseller policy. Thus, according to Commerce, it would
be “inappropriate” to determine if the reseller policy would apply
to Mueller‟s entries. See Issues & Dec. Mem. at 11.
II. Plaintiffs Insist Mueller Should Be Assigned the All-Others
Rate
Plaintiffs‟ threshold argument is that the Department‟s
Court No. 10-00163 Page 9
determination is unlawful because Commerce lacked any reasonable
basis for departing from its established practice of assigning an
uncooperative respondent5 the highest overall rate from any segment
of the proceeding as the AFA rate. Here, the all-others rate of
32.62%. Plaintiffs assert that the Department=s determination to
depart from its established practice was contrary to law because “it
is only in extraordinary circumstances - none of which are present
here - that [the Department] deviates from using the highest rate
assigned in a previous segment of the proceeding.” Pls.‟ Mem. 15.
Plaintiffs maintain that such “extraordinary circumstances” exist
when the highest overall margin is equal to the cash deposit rates
of a respondent subject to AFA, such that the “adverse consequences
for the respondent would have been diminished . . . because [the
respondent] would not have owed monies over and above the deposited
amounts.” Pls.‟ Mem. 16.
According to plaintiffs, such extraordinary circumstances are
not present here because Mueller‟s cash deposit rates were well below
the 32.62% all-others rate. Specifically, they claim that Mueller‟s
cash deposit rates were 2.92% for merchandise manufactured by TUNA,
and 10.38% for merchandise manufactured by Hylsa. Thus, they insist
that “[b]ecause the rates at which Mueller deposited duties were far
5
Plaintiffs do not dispute that, by failing to answer the
Department‟s questionnaires, Mueller was an uncooperative
respondent subject to the application of AFA.
Court No. 10-00163 Page 10
below the 32.62% rate, assigning AFA to Mueller Mexico based on
[Commerce=s] declared practice would have had significant adverse
consequences.” Pls.= Mem. 17. For plaintiffs, “[u]nder these
circumstances, there was no legitimate reason or reasonable basis
for [Commerce] to depart from its established practice and select
an aberrationally high, transaction-specific rate as AFA.” Pls.‟
Mem. 17.
Moreover, plaintiffs contend that the record does not support
Commerce‟s finding that it could not determine whether Southland
posted cash deposits at the rates of TUNA and Hylsa. While
recognizing that Mueller withdrew its questionnaire responses,
plaintiffs assert that these responses were unnecessary to a finding
relating to the deposits. Rather, plaintiffs note that the
Department itself obtained Customs‟ documentation for eleven of
Mueller‟s entries during the POR, all of which confirmed that
Southland paid cash deposits on those entries at TUNA‟s and Hylsa‟s
antidumping duty rates. Pls.‟ Mem. 17-18; see also Customs Data
File. Plaintiffs further insist that, if this documentation was not
sufficient to establish the amounts of Southland‟s cash deposits,
Commerce could have further confirmed Southland‟s cash deposits by
obtaining the balance of Mueller‟s entry documentation from Customs.
Pls.‟ Mem. 18.
Court No. 10-00163 Page 11
III. Analysis
A. Legal Framework for the Selection of AFA Rates
When selecting an appropriate AFA rate, “Commerce must balance
the statutory objectives of finding an accurate dumping margin and
inducing compliance.” Timken Co. v. United States, 354 F.3d 1334,
1345 (Fed. Cir. 2004). Under 19 U.S.C. § 1677e(b), the Department
may select “secondary information” as facts otherwise available in
determining AFA rates, which “includes „[i]nformation derived from
the petition that gave rise to the investigation or review, the final
determination concerning the subject merchandise, or any previous
review under [19 U.S.C. § 1675] concerning the subject merchandise.‟”
KYD, Inc. v. United States, 607 F.3d 760, 765 (Fed. Cir. 2010)
(citations omitted).
It is undisputed that Commerce‟s usual practice is to assign
an uncooperative respondent the highest overall rate from any segment
of the proceeding as AFA.6 See AFA Memo at 7 (“Generally, the
6
Just what constitutes a lack of cooperation to justify the
application of this rule is an open question. In the seminal case
Rhone Poulenc, Inc. v. United States, 899 F.2d 1185 (Fed. Cir. 1990),
the Federal Circuit first confirmed the “common sense presumption”
that a respondent that fails to answer Commerce‟s questionnaires does
so “knowing the rule” that it will be assigned the highest rate from
any segment of the proceeding. This presumption, however, has been
refined over the years.
In addition, in the most recent cases where the [Rhone
Poulenc] presumption is mentioned, the Federal Circuit
appears to restrict its use to situations where a
Court No. 10-00163 Page 12
Department finds that selecting the highest rate from any segment
of the proceeding as AFA is appropriate.”).
This practice was first upheld by the Federal Circuit in Rhone
Poulenc, Inc. v. United States, 899 F.2d 1185 (Fed. Cir. 1990). As
this Court has recently noted:
The Rhone Poulenc case is most often cited for its
statement on the assignment of the highest prior margin
to an uncooperative respondent: “[I]t reflects a common
sense inference that the highest prior margin is the most
probative evidence of current margins because, if it were
not so, the importer, knowing of the rule, would have
produced current information showing the margin to be
less.” Rhone Poulenc, 899 F.2d at 1190. In other words,
the case stands for the proposition that a respondent can
be assumed to make a rational decision to either respond
or not respond to Commerce's questionnaires, based on
which choice will result in the lower rate.
Tianjin Mach. Imp. & Exp. Corp. v. United States, 35 CIT __,
respondent has not answered Commerce's questionnaire at
all, rather than when the questionnaire responses were
found wanting for one reason or another. In fact, in the
most recent case citing the Rhone Poulenc presumption, the
Federal Circuit paid particular attention to the fact that
the exporter put nothing on the record. See KYD, 607 F.3d
at 764 (“King Pac had elected not to cooperate at all in
the review.”); see also id. at 767 (“King Pac's failure
to cooperate deprived Commerce of the most direct evidence
of King Pac's actual dumping margin.”). Thus, the KYD case
seems to confirm that “common sense” restricts the Rhone
Poulenc presumption to cases where a respondent can be
assumed to have chosen not to respond to a questionnaire
at all, in order to achieve a lower rate.
Tianjin Mach. Imp. & Exp. Corp. v. United States, 35 CIT __, __, 752
F. Supp. 2d 1336, 1347 (2011). Here, it is apparent that Mueller
was an uncooperative respondent because it withdrew all of its
answers to Commerce‟s questionnaires.
Court No. 10-00163 Page 13
__, 752 F. Supp. 2d 1336, 1348 (2011). Thus, Rhone Poulenc
established that Commerce may assign the highest rate from any
segment of the proceeding to an uncooperative respondent based on
that respondent‟s knowing7 decision to accept this highest rate as
a result of its considered choice not to answer Commerce‟s
questionnaires. This idea that an uncooperative respondent
receives the highest rate by choice, based on an understanding of
its position, is carried forward in recent cases. See KYD, 607 F.3d
at 766-67 (quoting Rhone Poulenc, 899 F.2d at 1190).
As is the case with all established agency practices, if the
Department chooses to depart from this practice it is required to
provide a reasonable explanation for doing so. See Allegheny Ludlum
Corp. v. United States, 24 CIT 452, 459, 112 F. Supp. 2d 1141, 1148
(2000) (“„Although Commerce is traditionally granted broad
discretion in its selection of methodology to implement the
7
What a respondent knows, or should know, is a common aspect
of the unfair trade laws. See, e.g., Quingdao Taifa Group Co. v.
United States, 33 CIT __, __, 637 F. Supp. 2d 1231, 1239 (2009) (“A
reasonable and responsible foreign producer would have known that
it must keep and maintain documents such as factory-out slips,
production notices, and production subledgers, and [respondent‟s]
officials‟ efforts to avoid producing the requested documents
demonstrates that Taifa failed to put forth maximum efforts to
investigate and obtain the documents.”). Indeed, the reseller
policy itself relies on the notion that the antidumping duty rate
should be that of the “first company in the commercial chain that
knew, at the time merchandise was sold, that the merchandise was
destined for the United States.” Reseller Notice, 63 Fed. Reg. at
55,362.
Court No. 10-00163 Page 14
[antidumping and countervailing duty statutes], Commerce may not
abuse its discretion and its choice of methodology may not be
arbitrary.‟ Rather, „an agency must either conform itself to its
prior decisions or explain the reasons for its departure.‟”)
(internal citations omitted).
B. Commerce‟s Determination to Depart from Its Established
Practice was Contrary to Law and Unsupported By Substantial
Evidence
Here, Commerce has not adequately explained its reasons for
departing from its established practice of assigning the highest
previous rate to an uncooperative respondent as AFA. This is because
it has failed to support its findings with respect to the antidumping
duty rate to which Mueller‟s entries were subject prior to the POR.
This failure has two aspects. First, Commerce has not adequately
explained its basis for determining that Mueller knew or should have
known it was subject to the 32.62% all-others rate prior to the POR.
Second, Commerce‟s determination that Mueller was subject to the
all-others rate is not supported by substantial evidence because it
ignores record evidence that Mueller‟s entries were, in fact, subject
to lower rates based on Commerce‟s reseller policy. Accordingly,
the court finds that the Department‟s determination to apply the
48.33% rate must be remanded.
As noted, in accordance with Rhone Poulenc and its progeny, a
Court No. 10-00163 Page 15
prerequisite to Commerce‟s assignment of a rate in excess of 32.62%
is that Mueller knew, or could be presumed to have known, that it
was subject to the all-others rate prior to the POR. Here, the
Department‟s reason for departing from its established practice was
that, as a respondent that had not been previously reviewed, Mueller
was subject to the highest prior margin from the investigation
onward. This being the case, it was apparent to Commerce that a rate
higher than the all-others rate of 32.62% was necessary in order to
keep Mueller from profiting from its decision not to participate in
this review, and to encourage Mueller‟s compliance in future reviews.
In other words, Commerce assumed that Mueller was subject to the
all-others rate prior to the POR and, based on this assumption,
concluded that, because Mueller withdrew from the review, the
all-others rate was clearly not sufficiently adverse to it to insure
the company‟s cooperation.
Therefore, Commerce determined not to follow its established
practice by assigning Mueller the highest previous rate from any
segment of the antidumping proceeding, because it found that
the all-others rate proved insufficiently adverse to
induce Mueller to cooperate to the best of its ability in
this administrative review . . . [because] as Mueller has
never previously been reviewed by the Department, it is
currently subject to the 32.62 percent rate. We deem it
necessary to apply a rate higher than the all-others rate
to which Mueller is already subject. Otherwise, Mueller
would have no incentive to cooperate.
Court No. 10-00163 Page 16
AFA Memo at 9 (emphasis added).
As has been seen, for Commerce‟s determination to be lawful,
Mueller must be found to have made a knowing decision not to respond
to Commerce‟s questionnaire requests. That is, it must have been
the case that Mueller was aware, or that Mueller could have reasonably
been presumed to be aware, that it was subject to the all-others rate
prior to the POR for Commerce to be justified in departing from its
established practice. Notably, while the Department assumed that
Mueller was subject to the all-others rate, Commerce does not discuss
how it was that Mueller knew that it was subject to this rate or how
the company could reasonably be charged with such knowledge. Since
a knowing decision not to participate in the review is required for
the assignment of the highest rate from any segment, the same is also
necessary for Commerce to assign an even higher rate pursuant to AFA.
The Department‟s failure to address the question of whether Mueller
had, or could be charged with, knowledge that it was at all times
subject to the 32.62% rate, thus, requires a remand.
In addition, Commerce‟s reseller policy suggests that Mueller
was not, in fact, subject to the all-others rate prior to the POR.
Under the reseller policy, “company-specific [antidumping]
assessment rates must be based on the sales information of the first
company in the commercial chain that knew, at the time the merchandise
was sold, that the merchandise was destined for the United States.”
Court No. 10-00163 Page 17
Antidumping and Countervailing Duty Proceedings: Assessment of
Antidumping Duties, 63 Fed. Reg. 55,361, 55,362 (Dep=t of Commerce
Oct. 15, 1998) (notice and request for comment on policy concerning
assessment of antidumping duties) (“Reseller Notice”). Because the
Department presumes that foreign producers are aware of the ultimate
destination of their merchandise, resellers are required to post
antidumping duty deposits at the same rates as the producers from
whom they acquire the merchandise they export into the United States.
Reseller Notice, 63 Fed. Reg. at 55,362.
Accordingly, if a reseller identifies a producer on the forms
it submits to Customs and Border Protection (“Customs”), and the
reseller has not been assigned a company-specific cash deposit rate,8
the agency will require the payment of cash deposits for those entries
at the rates of the identified producers. These entries are then
liquidated at the producer=s cash deposit rate, unless an
administrative review is requested for either the producer or
reseller. Reseller Notice, 63 Fed. Reg. at 55,362 (“The Department
instructs Customs to apply any reseller‟s company-specific cash
deposit rate to entries of merchandise sold by that reseller. If
there is no company-specific reseller cash deposit rate and the
8
A reseller, or a producer, may have its own
company-specific cash deposit rate if one was determined for it in
the initial investigation or an administrative review. Both TUNA
and Hylsa had company-specific rates determined during the Fifth
Administrative Review.
Court No. 10-00163 Page 18
importer identifies the producer, the Department instructs Customs
to apply the producer's cash deposit rate to the entry. This logic
stems from the fact that, when subject merchandise enters the United
States through a reseller, the Department does not know who set the
price of the subject merchandise to the United States. The
Department instructs Customs to apply the producer's cash deposit
rate where the producer of the merchandise is identified on the
assumption that the producer knew that the merchandise was destined
for the United States. This assumption is more often true than not.
Subject merchandise sold through a reseller and imported where there
is no company-specific reseller rate or where the importer did not
identify the producer of the merchandise is subject to the all-others
cash deposit rate.”).
Importantly, under the reseller policy, the all-others rate9
only applies to a reseller when (1) either Commerce “determines in
an administrative review that the producer did not know10 that the
9
The all-others rate is a default cash deposit rate that
applies when no company-specific deposit rate has been determined
for goods from a particular exporter in the initial investigation
or during any prior administrative review. Entries will only be
liquidated at the all-others rate when cash deposits are made at the
all-others rate, and those entries are not subject to an
administrative review. See 19 U.S.C. § 1504(a).
10
If Commerce determines that a producer did not know that
merchandise sold to a reseller was destined for the United States
then the reseller‟s goods will not be liquidated at the producer‟s
rates under the reseller policy.
Court No. 10-00163 Page 19
merchandise it sold to the reseller was destined for the United
States” or no producer-specific or reseller-specific cash deposit
rate has been determined; and (2) “there was no company-specific
review of the reseller for that review period.” Reseller Notice,
63 Fed. Reg. at 55,362-63. Here, Commerce assumed that Mueller was
subject to the all-others rate prior to the POR because it had never
been subject to a review under the Order. This assumption, however,
does not necessarily hold when the record evidence is examined under
Commerce‟s reseller policy.
The only evidence on the record concerning the cash deposits
made on Mueller‟s entries suggests that Mueller, as a reseller
without its own cash deposit rate, paid cash deposits at the rates
of its producers. See Customs Data File. That is, Commerce itself
placed on the record information it solicited from Customs relating
to eleven of Mueller‟s entries, all of which demonstrate that
Southland paid cash deposits for these entries equal to either TUNA‟s
or Hylsa‟s antidumping duty rate.
By making these deposits it appears clear that plaintiffs
believed that these entries were subject to Mueller‟s producers‟
rates in accordance with the reseller policy. Because this Sixth
Review is the first review under the Order in nearly ten years,
Mueller‟s entries have likely been liquidated at its producers‟ cash
deposit rates of 2.92% and 10.38% for almost a decade. Therefore,
Court No. 10-00163 Page 20
Commerce‟s determination that Mueller was subject to the all-others
deposit rate from the outset does not seem to be in accord with the
only evidence on the record.
Except to decline to take it into account, however, Commerce
does not discuss this evidence in the Final Results. See Issues &
Dec. Mem. at 11 (“[B]ecause the Department has been unable to examine
Mueller‟s claim that it sourced subject merchandise from TUNA and
[Hylsa], it is inappropriate to assign separate assessment rates for
those entries, as advocated by Mueller.”). Commerce attempts to
justify its failure to address the evidence of Mueller‟s cash deposit
rates by finding that “what rate Mueller was or was not subject to
at the beginning of this administrative review is moot, because the
fact remains that Mueller refused to cooperate with the Department=s
requests for information and is now subject to AFA.” Issues & Dec.
Mem. at 11.
A respondent‟s failure to cooperate, however, does not relieve
the Department of its responsibility to assign a rate sufficient,
but no more than sufficient, to insure cooperation. Timken, 354 F.3d
at 1345; F.Lli de Cecco Di Filipo Fara S. Martino, S.p.A. v. United
states, 216 F.3d 1027, 1032 (Fed. Cir. 2000) (“Obviously a higher
adverse margin creates a stronger deterrent, but Congress tempered
deterrent value with the corroboration requirement. It could only
have done so to prevent the petition rate (or other adverse inference
Court No. 10-00163 Page 21
rate), when unreasonable, from prevailing and to block any temptation
by Commerce to overreach reality in seeking to maximize
deterrence.”). Nor does it mean that Commerce can ignore evidence
that it put on the record itself. See Kaiyuan Group Corp. v. United
States, 28 CIT. 698, 724, 343 F. Supp. 2d 1289, 1314 (2004)
(“Substantial evidence requires that the agency's determination be
based on the whole record and the reviewing court must examine all
evidence that fairly supports and detracts from the
determination.”); Huaiyin Foreign Trade Corp. v. United States, 322
F.3d 1369, 1374 (Fed. Cir. 2003) (quoting Atl. Sugar, Ltd. v. United
States, 744 F.2d 1556, 1562 (Fed. Cir. 1984) (The existence of
substantial evidences is determined “by considering the record as
a whole, including evidence that supports as well as evidence that
„fairly detracts from the substantiality of the evidence.‟”).
Evidence of the rate Mueller was subject to at the beginning
of the review, therefore, was not rendered moot by Mueller‟s status
as an uncooperative respondent. Further, this rate is important to
the outcome of this case because, if Mueller was not subject to the
all-others rate at the beginning of the POR the Department=s
established practice leads to the conclusion that 32.62% would be
sufficiently high to encourage Mueller‟s future cooperation. As a
result, Commerce‟s failure to examine this information provides the
second reason for a remand.
Court No. 10-00163 Page 22
CONCLUSION
The Department‟s practice of applying the highest previously
determined overall rate to an uncooperative respondent as AFA is
based on the presumption that such a rate is inherently adverse.
This practice is longstanding, frequently used, and has been held,
in most circumstances, to be lawful. See, e.g., Rhone Poulenc, 899
F.2d at 1190; NSK Ltd. v. United States, 28 CIT 1535, 1561, 346 F.
Supp. 2d 1312, 1335 (2004); Shanghai Taoen Int’l Trading Co. v. United
States, 29 CIT 189, 199, 360 F. Supp. 2d 1339, 1348 (2005). Thus,
any decision to abandon the application of this rate in favor of the
highest transaction specific rate for another respondent in a
previous review must be fully explained and based on substantial
evidence. See Cultivos Miramonte S.A. v. United States, 21 CIT 1059,
1064 n.7, 980 F. Supp. 1268, 1274 n.7 (1997) (“A change is arbitrary
if the factual findings underlying the reason for change are not
supported by substantial evidence.”); see also SKF USA Inc. v. United
States, 263 F.3d 1369, 1382 (Fed. Cir. 2001) (“[A]n agency action
is arbitrary when the agency offer[s] insufficient reasons for
treating similar situations differently.”) (internal quotation and
citation omitted).
The Final Results do not provide a reasonable explanation for
departing from Commerce‟s established practice based on Mueller‟s
knowledge that it was subject to the all-others rate and,
Court No. 10-00163 Page 23
nonetheless, withdrew from the review. Nor has the Department
supported with substantial evidence its conclusion that Mueller was,
in fact, subject to the all-others rate during the time leading up
to the POR. Thus, the Final Results do not provide a lawful
explanation, supported by substantial evidence, for departing from
Commerce‟s established practice of assigning to an uncooperative
respondent the highest overall rate from any segment of the
proceeding as the AFA rate.
ORDER
Accordingly, for the reasons stated, it is hereby
ORDERED that, upon remand, Commerce issue a redetermination
that complies in all respects with this Opinion and Order, is based
on determinations that are supported by substantial record evidence,
and is in accordance with law; it is further
ORDERED that Commerce shall reconsider its determination not
to apply the all-others rate to Mueller‟s entries. In doing so, the
Department shall consider whether Mueller knew, or could be charged
with knowing, that it was subject to the all-others rate of 32.62%
prior to the POR, and discuss the record evidence related to the cash
deposits made on Mueller‟s entries. Commerce shall then determine
an antidumping duty rate for Mueller; it is further
ORDERED that the Department may reopen the record to solicit
Court No. 10-00163 Page 24
any information it reasonably deems necessary to make its
determination; it is further
ORDERED that the remand results shall be due on April 16, 2012;
comments to the remand results shall be due thirty (30) days following
filing of the remand results; and replies to such comments shall be
due fifteen (15) days following filing of the comments.
/s/ Richard K. Eaton
Richard K. Eaton
Dated: December 16, 2011
New York, New York