Crawfish Processors Alliance v. United States

Slip Op. 05-123

UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
________________________________________
CRAWFISH PROCESSORS ALLIANCE; :
LOUISIANA DEPARTMENT OF :
AGRICULTURE AND FORESTRY; :
BOB ODOM, COMMISSIONER, :
:
Plaintiffs, :
:
v. :
:
UNITED STATES, :
:
Defendant, :
:
and : Consol. Court No.
: 02-00376
HONTEX ENTERPRISES, INC., d/b/a :
LOUISIANA PACKING COMPANY; :
QINGDAO RIRONG FOODSTUFF CO., LTD. :
and YANCHENG HAITENG AQUATIC :
PRODUCTS & FOODS CO., LTD; :
BO ASIA, INC., GRAND NOVA :
INTERNATIONAL, INC., PACIFIC :
COAST FISHERIES CORP., :
FUJIAN PELAGIC FISHERY GROUP CO., :
QINGDAO ZHENGRI SEAFOOD CO., LTD. :
and YANGCHENG YAOU SEAFOOD CO., :
:
Defendant-Intervenors :
and Plaintiffs. :
________________________________________:

[The United States Department of Commerce’s Final Remand
Results are remanded.]

Adduci, Mastriani & Schaumberg, L.L.P. (Will E. Leonard and
John C. Steinberger) for Crawfish Processors Alliance, Louisiana
Department of Agriculture and Forestry, and Bob Odom, Commissioner,
plaintiffs.

Coudert Brothers LLP (John M. Gurley and Matthew J. McConkey)
for Hontex Enterprises, Inc., d/b/a Louisiana Packing Company,
defendant-intervenor and plaintiff.
Consol. Court No. 02-00376 Page 2

Peter D. Keisler, Assistant Attorney General; David M. Cohen,
Director; Patricia M. McCarthy, Assistant Director, Commercial
Litigation Branch, Civil Division, United States Department of
Justice (David S. Silverbrand); of counsel: Marisa Beth Goldstein,
Office of Chief Counsel for Import Administration, United States
Department of Commerce, for the United States, defendant.

Date: September 13, 2005

OPINION

STANDARD OF REVIEW

The Court will uphold the United States Department of

Commerce’s (“Commerce”) redetermination pursuant to the Court’s

remand 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) (2000). Substantial evidence is “more than a

mere scintilla. It means such relevant evidence as a reasonable

mind might accept as adequate to support a conclusion.” Universal

Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951) (quoting Consol.

Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). Substantial

evidence “is something less than the weight of the evidence, and

the possibility of drawing two inconsistent conclusions from the

[same] evidence does not prevent an administrative agency’s finding

from being supported by substantial evidence.” Consolo v. Fed.

Mar. Comm’n, 383 U.S. 607, 620 (1966) (citations omitted).
Consol. Court No. 02-00376 Page 3

JURISDICTION

The Court has jurisdiction over this matter pursuant to 19

U.S.C. § 1516a (2000) and 28 U.S.C. § 1581(c) (2000).

BACKGROUND

The relevant facts and procedural history in this case are set

forth in the Court’s remand opinion, Crawfish Processors Alliance

v. United States, 28 CIT ___, 343 F. Supp. 2d 1242 (2004), of which

familiarity is presumed. A brief summary is also included here.

On April 22, 2002, Commerce issued its final results of the

antidumping duty administrative review on freshwater crawfish from

the People’s Republic of China covering the period of review

(“POR”) from September 1, 1999, through August 31, 2000. See

Notice of Final Results of Antidumping Duty Administrative Review,

and Final Partial Recission of Antidumping Duty Administrative

Review of Freshwater Crawfish Tail Meat from the People’s Republic

of China (“Final Results”), 67 Fed. Reg. 19,546 (Apr. 22, 2002).

Plaintiffs, Crawfish Processors Alliance, Louisiana Department of

Agriculture and Forestry, and Bob Odom, Commissioner (collectively,

“CPA”) and defendant-intervenors and plaintiffs, Hontex

Enterprises, Inc., d/b/a Louisiana Packing Company (“Hontex”),

Qingdao Rirong Foodstuff Co., Ltd., Yancheng Haiteng Aquatic

Products & Foods Co., Ltd., Bo Asia, Inc., Grand Nova

International, Inc., Pacific Coast Fisheries Corp., Fujian Pelagic
Consol. Court No. 02-00376 Page 4

Fishery Group Co., Qingdao Zhengri Seafood Co., Ltd. and Yangcheng

Yaou Seafood Co. filed a motion for judgment upon the agency record

challenging various aspects of the Final Results. On May 6, 2004,

the Court remanded this matter in part to Commerce with

instructions to 1) include Hontex’s March 2002, submissions

(“Hontex’s Submissions”) and explain their effect, if any, on the

Final Results; 2) explain why Commerce’s collapsing methodology for

non-market economy (“NME”) country exporters is a permissible

interpretation of the antidumping duty statute; and 3) explain

Commerce’s finding that Jiangsu Hilong International Trade Co.,

Ltd. (“Jiangsu”) and Ningbo Nanlian Frozen Foods Company, Ltd.

(“Nanlian”)1 should be collapsed. See Crawfish, 28 CIT at ___, 343

F. Supp. 2d at 1272. The Final Results were affirmed with regard

to all other issues. See id.

On November 2, 2004, Commerce submitted its final remand

results pursuant to the Court remand. See Final Results of

Determination Pursuant to Court Remand (“Final Remand Results”).

Hontex filed comments on January 31, 2005. See Comments Def.’s

Resp. Remand Issued Ct. (“Hontex’s Comments”). Commerce filed its

response to Hontex’s Comments on March 17, 2005. See Def.’s Resp.

1
Hontex, d/b/a Louisiana Packing Company, is the United
States based part-owner of Nanlian. Jiangsu is a separate trading
company. See Final Remand Results at 34 & 37; Hontex’s Comments at
32. For clarity, the Court will attribute all references to
Louisiana Packing in the record as to Hontex here.
Consol. Court No. 02-00376 Page 5

Opp’n Def.-Intervenors’ Comments Upon Commerce’s Final Results

Redetermination Pursuant Ct. Remand (“Commerce’s Resp.”). CPA

filed its response to Hontex’s Comments on March 17, 2005. See

Pls.’ Resp. Def.-Intervenor’s Comments Remand Determination (“CPA’s

Resp.”). The Court heard oral arguments from the parties on May 9,

2005.

DISCUSSION

I. Commerce Reasonably Concluded that Hontex’s Submissions Had No
Effect on Its Determination

In the Final Results, Commerce rejected two submissions made

by Hontex, dated March 19, 2002, and March 20, 2002, as untimely

new factual information. See Crawfish, 28 CIT at ___, 343 F. Supp.

2d at 1261-62. The Court held that Commerce improperly rejected

these submissions. See id. Accordingly, the Court instructed

Commerce to include Hontex’s Submissions in the administrative

record, and “explain what bearing, if any, [Hontex’s] submissions

have on Commerce’s final determination.” Id. at ___, 343 F. Supp.

2d at 1262 (emphasis added). Commerce did so and determined that

Hontex’s Submissions did not alter its reasoning that the Spanish

Study2 was an unreliable source of information for valuing live

2
Estudio Sobre el Impacto Económico del Sector de Congrejo
de Rio en Andalucia (“Spanish Study”) was submitted by Hontex after
the preliminary results were published by Commerce. See Final
Remand Results at 8-9. A review of Commerce’s decision finding the
Spanish Study unreliable is fully described and addressed in
Consol. Court No. 02-00376 Page 6

whole crawfish during the POR. See Final Remand Results at 7-27.

Consequently, Commerce reaffirmed its decision to use Australian

data as the best available information to calculate normal value

during the POR. See id. at 18.

Hontex argues that its submissions corroborate the Spanish

Study and that Commerce’s continual rejection of the Spanish Study

is unsupported by substantial evidence.3 See Hontex’s Comments at

2 & 20. In Hontex’s Submissions, three Spanish companies state

that they informed Commerce that the prices in the Spanish Study

were an accurate reflection of crawfish prices in Spain during the

POR. See id. at 14-16. Hontex asserts that Commerce unreasonably

determined that a chart of crawfish prices included in Hontex’s

Submissions was not reliable enough to verify the prices used in

the Spanish Study. See id. at 17-19. Hontex notes that the trends

and price ranges reported in the chart are identical to the Spanish

Study, thus further corroborating it. See id. at 18-19. Finally,

Hontex argues that its submission of a newspaper article dated

August 2001, also supports the prices used in the Spanish Study.

See id. at 19-20.

Crawfish, 28 CIT at ___, 343 F. Supp. 2d at 1260-62.
3
The bulk of Hontex’s comments criticize Commerce’s
examination of the Spanish data and decision to use Australian
data. See Hontex’s Comments at 6-13 & 20-27. Hontex does not
focus on how its submissions affect Commerce’s final determination.
Consol. Court No. 02-00376 Page 7

Contrary to Hontex’s arguments, the Court did not order

Commerce to reconsider every aspect of its decision of whether

Australian or Spanish data was the best available information to

determine the surrogate value of live whole crawfish. Rather, the

Court’s instructions were narrower in scope. Commerce was to

reconsider its decision to use Australian or Spanish data only if

Hontex’s submissions were so compelling that its original decision

to not use the Spanish data became unreasonable. If Commerce

determined that Hontex’s submissions had little or no impact on its

decision that Australian data was the best information available,

then it could reasonably assert its original decision in the Final

Results. The Court finds, based on the reasons stated below, that

Commerce followed the Court’s remand instructions.

Commerce concluded that while three Spanish companies stated

that the prices in the Spanish Study were accurate, the Spanish

Study still failed to overcome the problems Commerce identified

regarding how it was structured, conducted, and verified. See

Final Remand Results at 12-14. Furthermore, Commerce did not find

the chart of Spanish prices to be a reliable source which

independently corroborated the prices in the Spanish Study. See

id. at 14-15. Commerce stated that Hontex failed to adequately

explain the context in which the chart was prepared and used. See

id. at 15. Commerce also found that the newspaper article “offers
Consol. Court No. 02-00376 Page 8

no support to the argument that [Commerce] should rely on the

Spanish study” because the crawfish price referenced therein are

not specific to the POR. Id. at 15. The Court finds that Commerce

reasonably explained how each document in Hontex’s Submissions was

either unpersuasive or unreliable and did not overcome Commerce’s

apprehension of the reliability and veracity of the Spanish Study.

Commerce’s explanation why Hontex’s Submissions had no effect on

its Final Results is reasonable and supported by substantial

evidence. Accordingly, the Court holds that Commerce properly

followed the remand instructions.

II. Commerce Properly Explained its Collapsing Methodology for NME
Producers but its Decision to Collapse and Assign a Joint Rate
to Jiangsu and Nanlian is not Supported by Substantial
Evidence

A. Background

In the Final Results, Commerce concluded that Jiangsu and

Nanlian should be collapsed and assigned a single antidumping duty

rate because the two companies did not present sufficient evidence

demonstrating that their relationship was different from that which

formed the basis of Commerce’s original collapsing determination in

the 1997-1998 POR. See Crawfish, 28 CIT at ___, 343 F. Supp. 2d at

1265. The Court determined that Commerce had not sufficiently

explained which factors formed the basis of its collapsing

determination. See id. Accordingly, the Court remanded this issue
Consol. Court No. 02-00376 Page 9

back to Commerce with instructions to articulate why its NME

collapsing methodology is a permissible interpretation of the

antidumping statute and why its findings warranted collapsing

Jiangsu and Nanlian. See id. Thereafter, the court reviewed

Commerce’s determination to collapse Jiangsu and Nanlian for the

1997-1998 POR in Hontex Enterprises Inc. v. United States (“Hontex

II”), 28 CIT ___, ___, 342 F. Supp. 2d 1225, 1230-34 (2004),4 and

affirmed Commerce’s collapsing methodology for NME producers. In

the Final Remand Results, Commerce explained why its collapsing

methodology for NME producers was a permissible interpretation of

the antidumping statute. See Final Remand Results at 27-32.

Commerce offered the same explanation for its NME collapsing

methodology which was affirmed in Hontex II. See id.; see also

Hontex II, 28 CIT at ___, 342 F. Supp. 2d at 1230-34.

B. Contentions of the Parties

1. Hontex’s Contentions

Hontex asserts that Commerce’s decision to collapse Jiangsu

and Nanlian was based on Commerce’s discovery of evidence at

verification implying the two companies maintained a business

relationship and shared Mr. Wei’s services. See Hontex’s Comments

at 29. Hontex argues that even if both facts are true, they may

4
Hontex II is currently being litigated before Judge
Eaton. See Hontex Enterprises, Inc. v. United States, 29 CIT ___,
2005 Ct. Int’l Trade LEXIS 126, Slip Op. 05-116 (Aug. 31, 2005).
Consol. Court No. 02-00376 Page 10

not reasonably be interpreted to mean a “significant potential for

manipulation” of crawfish prices existed pursuant to 19 C.F.R. §

351.401(f) (2000). See id. As evidence of a business relationship

between Jiangsu and Nanlian, Commerce cited invoices Jiangsu sent

to Hontex during the POR for a commission based on the crawfish

Nanlian purchased using information provided by Jiangsu. See id.

at 30-31. Because neither company reported the interaction on

their questionnaire responses, Commerce determined that Jiangsu and

Nanlian’s statements were evasive and did not support a finding

that the two companies were no longer a single entity. See id.

Hontex argues, however, that Nanlian’s questionnaire response was

forthright because Nanlian only exchanged information with Jiangsu

once during the POR, thus it had a minor interaction with Jiangsu.

See id. at 31-32. Hontex believes this minor interaction simply

does not constitute a business relationship. See id. Moreover,

Hontex further contends that Mr. Wei5 provided no meaningful nexus

between Nanlian and Jiangsu during the POR. See id. at 33-34.

While Hontex did not comment on Commerce’s collapsing

methodology for NME producers, it argues that a “significant

underpinning” of Commerce’s decision to collapse Jiangsu and

5
Mr. Philip Wei is an individual whom Commerce found to be
a shared employee by Jiangsu and Nanlian during a prior
administrative review. See Final Remand Results at 33 & 37.
Commerce found that Mr. Wei continued to perform functions for both
companies during the POR at issue. See id.
Consol. Court No. 02-00376 Page 11

Nanlian for the 1999-2000 POR is its decision to collapse the two

companies for the 1997-1998 POR. See Hontex’s Comments at 2 & 29.

Thus, if the court in Hontex II determines that Commerce’s decision

for the 1997-1998 POR is unsupported by substantial evidence, then

Commerce’s decision for the 1999-2000 POR must similarly fail. See

id. at 28-29.

2. Commerce and CPA’s Contentions

Commerce responds that neither Jiangsu nor Nanlian presented

sufficient evidence demonstrating that the relationship between the

two companies was different from that which formed the basis of

Commerce’s decision in the 1997-1998 POR. See Commerce’s Resp. at

20. Commerce states that because Jiangsu and Nanlian have been

collapsed in two previous reviews, “the actions of any part of that

entity are attributable to the whole.” Id. at 23. Once Commerce

determines that two entities should be collapsed, the burden falls

upon the respondent to provide substantial evidence proving that

circumstances have changed. See id. at 25. Commerce argues that

Jiangsu and Nanlian did not satisfy that burden here. See id.

Commerce argues that Nanlian and Jiangsu disclosed at

verification that they had a business relationship during the POR,

despite previously submitting questionnaire responses to the

contrary. See id. at 21. Commerce determined that a business

relationship existed because Jiangsu assisted Nanlian in locating
Consol. Court No. 02-00376 Page 12

sources of crawfish, later invoicing Hontex a commission for its

services. See id. at 21-22. Commerce also argues that three hotel

bills that Jiangsu paid on behalf of Mr. Wei, obtained at

verification, indicated a continuing relationship between Mr. Wei

and Jiangsu during the POR. See id. at 22. Commerce concludes

that the information obtained at verification called into question

the accuracy and completeness of responses given to Commerce

regarding Mr. Wei’s activities. See id. at 22-23. Therefore, it

reasonably determined that the pre-existing relationship between

the two companies continued. See id. at 25.

CPA agrees generally that Commerce’s decision to continue to

collapse Jiangsu and Nanlian is supported by substantial evidence

on the record. See CPA’s Resp. at 4. CPA also concurs with

Commerce that the Court should uphold Commerce’s collapsing

methodology for NME exporters. See id.

C. Analysis

An entity from a NME country may obtain a separate antidumping

rate from the country-wide rate if it can demonstrate that its

export activities are independent of governmental control. See

Sigma Corp. v. United States, 117 F.3d 1401, 1405-06 (Fed. Cir.

1997); see also Final Determination of Sales at Less Than Fair

Value for Sparklers from the People’s Republic of China, 56 Fed.

Reg. 20,588, 20,589 (May 6, 1991). Two NME producers independent
Consol. Court No. 02-00376 Page 13

of governmental control, however, may be “collapsed” into a single

entity if they are affiliated. See Hontex Enter., Inc. v. United

States (“Hontex I”), 27 CIT ___, ___, 248 F. Supp. 2d 1323, 1342-44

(2003). The “collapsed” entity is then assigned a single

antidumping margin where there is a “significant potential for

manipulation” of export pricing or exporting activities. See id.

Under Commerce’s collapsing methodology, Commerce must determine

whether two companies are affiliated under 19 U.S.C. § 1677(33)(F)

& (G) (1994), meaning one company controls the other or both

companies are under common control pursuant to 19 C.F.R. §

351.102(b) (2000). See Hontex II, 28 CIT at ___, 342 F. Supp. 2d

at 1232. Even though two companies may be affiliated, Commerce

must also show that there is a “significant potential for the

manipulation of price or production.” 19 C.F.R. § 351.401(f)(2).

In addition to potential price manipulation, Commerce examines the

temporal aspect of control, including the possibility that a short-

term relationship could result in control. See Hontex II, 28 CIT

at ___, 342 F. Supp. 2d at 1233. The Court holds that Commerce

properly explained its collapsing methodology for NME producers and

therefore complied with the Court’s remand instructions.

In applying Commerce’s collapsing methodology for NME

producers, Commerce’s decision to continue to collapse Jiangsu and

Nanlian is not supported by substantial evidence on the record.
Consol. Court No. 02-00376 Page 14

Commerce has failed to show how the contacts between Jiangsu and

Nanlian amount to control of one over the other or over both and

how the contacts had a significant potential to manipulate their

prices, production, or export decisions. Commerce’s determination

to collapse Jiangsu and Nanlian was based on its decisions in

earlier administrative reviews. See Final Remand Results at 40-41.

Jiangsu and Nanlian could overcome Commerce’s presumption by

presenting new information or substantial evidence that they were

no longer affiliated. See id. Commerce’s decision to collapse

Jiangsu and Nanlian in the 1997-1998 administrative review,

however, is currently being litigated before the court. See Hontex

Enterprises, Inc. et al v. United States, 29 CIT ___, 2005 Ct.

Int’l Trade LEXIS 126, Slip Op. 05-116 (Aug. 31, 2005). The Court

finds that Commerce failed to support its determination in the

administrative review at issue with substantial evidence.6

Irrespective of the earlier reviews, Commerce must independently

show substantial evidence on the record supporting its decision to

collapse Nanlian and Jiangsu.

Commerce argues that it discovered evidence at verification

that Jiangsu and Nanlian had a continuing business relationship

6
As Commerce even states, “[t]his case must be decided
upon the administrative record before the Court at this time.” See
Commerce’s Resp. at 23. The Court notes that Commerce must base
its decision on clearer and more substantial record evidence than
presented here.
Consol. Court No. 02-00376 Page 15

with each other and were less than candid about the relationship in

their questionnaire responses. See Final Remand Results at 37.

Based on questionnaire responses that were incongruous to each

company’s verification report, Commerce determined that Jiangsu and

Nanlian were still affiliated. Hontex characterizes Nanlian’s

interaction with Jiangsu as minor single interaction and certainly

not a business relationship. See Hontex’s Comments at 30-34.

While few interactions may amount to a business relationship and a

business relationship may rise to control, the Court holds that

Commerce has failed to show that progression of facts here.

Commerce has not sufficiently explained how the invoices from

Jiangsu to Hontex warranted a determination of affiliation with

Nanlian. Commerce even states that “[w]hile business relationships

and advice, in and of themselves, are not indicative of the

potential to control, this discovery at verification must be

considered in the context of the sequence of events during the

administrative review.” See Final Remand Results at 40. Commerce,

however, has also not explained what other events or facts support

a finding of control between Jiangsu and Nanlian. The little

evidence that Commerce relies upon is not reasonably adequate to

support its conclusion. See Universal Camera, 340 U.S. at 477.

Accordingly, the Court holds that Commerce improperly concluded

that Jiangsu and Nanlian’s questionnaire responses illustrate

affiliation.
Consol. Court No. 02-00376 Page 16

Furthermore, Commerce’s reliance on Mr. Wei’s contacts with

Jiangsu and Nanlian during the POR as a factor in its collapsing

decision is also not supported by substantial evidence. Commerce

states that Jiangsu paid for three hotel bills paid on behalf of

Mr. Wei. See Final Remand Results at 40. Mr. Lee, owner of Hontex

which in turn is part-owner of Nanlian, stated during verification

that he still requested assistance from Mr. Wei on business

matters. See id. Hontex asserts that Mr. Wei’s only interactions

with Nanlian during the POR was with regard to shrimp. See

Hontex’s Comments at 34. Again, Commerce concluded that Jiangsu

and Nanlian were evasive on their questionnaire responses by

stating that neither company had any connection to the other,

whereas in actuality they were connected through Mr. Wei. See

Final Remand Results at 40. While Mr. Wei may have had minimal

interactions with both Jiangsu and Nanlian during the POR, Commerce

has failed to show the importance of these interactions.

Specifically, Commerce has not shown how Mr. Wei’s contacts with

one company necessarily translates to the potential to manipulate

crawfish prices at the other company or over both. The Court finds

that Commerce has not shown how Nanlian and Jiangsu maintained a

business relationship or shared Mr. Wei’s services to support the

conclusion that they were affiliated. Accordingly, Commerce’s

determination to collapse Jiangsu and Nanlian is unsupported by
Consol. Court No. 02-00376 Page 17

substantial evidence or otherwise not in accordance with law.

CONCLUSION

Commerce reasonably concluded that Hontex’s Submissions had no

effect on its Final Results. Furthermore, Commerce properly

explained its collapsing methodology for NME producers. Commerce’s

decision to collapse Jiangsu and Nanlian, however, is not supported

by substantial evidence. Therefore, this case is remanded again to

Commerce with instructions to either: (1)(a) explain with

specificity how the interactions between Jiangsu and Nanlian

indicate that one company has control over the other or both,

especially how the invoices from Jiangsu to Hontex created a

business relationship with Nanlian during the POR, and (b) explain

with specificity how Mr. Wei’s contacts with Jiangsu and Nanlian

demonstrate control of either company on behalf of the other or

control over both; and (c) if Commerce is unable to provide

substantial evidence supporting its collapsing decision then

Commerce is instructed to treat Jiangsu and Nanlian as unaffiliated
Consol. Court No. 02-00376 Page 18

entities and assign separate company specific antidumping duty

margins to each using verified information on the record.

/s/ Nicholas Tsoucalas
NICHOLAS TSOUCALAS
SENIOR JUDGE

Dated: September 13, 2005
New York, New York