American Silicon Technologies v. United States

Slip Op. 02 - 123

UNITED STATES COURT OF INTERNATIONAL TRADE
_____________________________________________
:
AMERICAN SILICON TECHNOLOGIES, :
ELKEM METALS COMPANY and :
GLOBE METALLURGICAL INC. :
:
Plaintiffs, :
:
v. : PUBLIC VERSION
:
UNITED STATES, :
:
Defendant, :
:
and :
:
LIGAS DE ALUMINIO S.A. :
:
Defendant-Intervenor. :
_____________________________________________ : Before: MUSGRAVE, JUDGE
_____________________________________________
: Consolidated Court No. 99-03-00149
ELETROSILEX S.A., :
:
Plaintiff, :
:
v. :
:
UNITED STATES :
:
Defendant, :
:
and :
:
AMERICAN SILICON TECHNOLOGIES, :
ELKEM METALS COMPANY and :
GLOBE METALLURGICAL INC. :
:
Defendant-Intervenors. :
_____________________________________________ :

[Plaintiff Eletrosilex, S.A. contests the Department of Commerce’s determination, on remand from
this Court, that: (1) Eletrosilex failed to act to the best of its ability by not responding to
supplemental antidumping questionnaires from Commerce; (2) it was necessary to use total facts
Consol. Court No. 99-03-00149 Page 2

available since the information Eletrosilex submitted was too incomplete in key areas; and (3) the
93.20 percent surrogate margin applied to Eletrosilex was relevant and reliable. The Court sustains
Commerce’s finding that Eletrosilex failed to act to the best of its ability and its conclusion that it
was necessary to resort to total facts available, but holds that the 93.20 percent surrogate margin
selected by Commerce lacks a rational relationship to Eletrosilex, as required by 19 U.S.C. §
1677e(c) and F.lli De Cecco di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027 (Fed.
Cir. 2000). Therefore the Court remands this matter to Commerce a second time for it to select a
margin that is “a reasonably accurate estimate of the respondent’s actual rate, albeit with some built
in increase intended as a deterrent to non-compliance.” 216 F.3d at 1032.]

Dated: October 17, 2002

Baker Botts, LLP (Kirk K. Van Tine, Samuel J. Waldon, and Matthew T. West) for plaintiffs
and defendant-intervenors American Silicon Technologies, Elkem Metals Company, and Globe
Metallurgical Inc.

Robert D. McCallum, Jr., Assistant Attorney General, David M. Cohen, Director,
Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Reginald T. Blades, Jr.),
and Office of Chief Counsel for Import Administration, U.S. Department of Commerce (Michele D.
Lynch), of counsel, for defendant.

Dorsey & Whitney, LLP (Philippe M. Bruno and Rosa S. Jeong) for plaintiff and defendant-
intervenor Eletrosilex, S.A.

OPINION

In this action plaintiff Eletrosilex S.A., a Brazilian producer of silicon metal, challenges the

decision by the International Trade Administration of the United States Department of Commerce

(“Commerce” or “the agency”) to use total adverse facts available to determine its dumping margin

in the sixth administrative review of the antidumping duty order on silicon metal from Brazil, Silicon

Metal From Brazil: Final Results of Antidumping Duty Administrative Review, 64 Fed. Reg. 6305

(Feb. 9, 1999). Previously, the Court remanded this determination for Commerce to (1) reconsider
Consol. Court No. 99-03-00149 Page 3

whether Eletrosilex failed to respond to the best of its ability, (2) reconsider whether it was

appropriate to resort to total, as opposed to partial, facts available, and (3) explain the relevance and

reliability of the total facts available margin it applied to Eletrosilex, if it concluded that it was still

necessary to use total facts available. See American Silicon Technologies v. United States, 24 CIT__,

__, 110 F. Supp. 2d 992, 1003-04 (2000). Commerce issued Silicon Metal From Brazil; Final

Results of Redetermination Pursuant to Court Remand (“Remand Results”) on January 29, 2001.

In the Remand Results Commerce reached the same conclusions it reached in the final results of the

administrative review, namely, that: (1) Eletrosilex failed to act to the best of its ability by not

responding to supplemental antidumping questionnaires from Commerce; (2) it was necessary to use

total facts available since the information Eletrosilex submitted was too incomplete in key areas; and

(3) the 93.20 percent surrogate margin applied to Eletrosilex was relevant and reliable. See Remand

Results at 8, 10-12, 14-15.

Eletrosilex submitted comments objecting to the Remand Results and Commerce and

defendant-intervenors American Silicon Technologies, Elkem Metals Co., and Globe Metallurgical

Inc. (collectively “American Silicon”) submitted rebuttal comments. Oral argument was held on the

issues raised in the comments, after which the parties submitted supplemental briefs. For the reasons

set forth below, the Court sustains Commerce’s finding that Eletrosilex failed to act to the best of

its ability and its conclusion that it was necessary to resort to total facts available. Nevertheless, the

Court holds that the 93.20 percent surrogate margin selected by Commerce lacks a rational

relationship to Eletrosilex, as required by 19 U.S.C. § 1677e(c) and F.lli De Cecco di Filippo Fara

S. Martino S.p.A. v. United States, 216 F.3d 1027 (Fed. Cir. 2000). Therefore the Court remands this
Consol. Court No. 99-03-00149 Page 4

matter to Commerce a second time for it to select a margin that is “a reasonably accurate estimate

of the respondent’s actual rate, albeit with some built in increase intended as a deterrent to non-

compliance.” 216 F.3d at 1032.

Background

On September 22, 1997 Commerce sent Eletrosilex an initial antidumping questionnaire, and

after analyzing Eletrosilex’s responses, Commerce issued a supplemental questionnaire on March

24, 1998. Eletrosilex responded promptly, but after analyzing this information, Commerce

concluded that additional information was still needed on certain topics. A second supplemental

questionnaire was issued on June 29, 1998 and a third was issued on July 6, 1998. Both

supplemental questionnaires required responses within one week due to Commerce’s statutory

deadline of July 30, 1998 for filing its preliminary results. Eletrosilex did not submit responses to

either request. On July 7, 1998 counsel of record for Eletrosilex informed Commerce that

Eletrosilex was in the process of being acquired. Subsequently, on July 20, 1998 counsel informed

Commerce that because of management reviews and changes in staffing Eletrosilex was not able to

respond in a timely manner to the June 29 and July 6 questionnaires.

In the preliminary results, Commerce concluded, pursuant to section 782(e) of the Tariff Act

of 1930, as amended, 19 U.S.C. § 1677m(e), that “while Eletrosilex data is incomplete for certain

elements of the calculation, nevertheless the Department has enough data on the record to reasonably

calculate a dumping margin.” Silicon Metal from Brazil: Preliminary Results of Antidumping Duty

Administrative Review, 63 Fed. Reg. 42,001, 42,007 (Aug. 6, 1998). In order to make this
Consol. Court No. 99-03-00149 Page 5

calculation, Commerce relied on partial facts available,1 and used an adverse inference2 in applying

those facts. Id. Commerce determined that the adverse inference was appropriate because:

In the past, Eletrosilex has demonstrated an understanding for
requests of additional information by the Department. In this review
Eletrosilex responded on April 10, 1998, to the Department’s March
24, 1998 supplemental questionnaire. However, its failure to provide
responses to our other supplemental questionnaires (i.e. dated June 29
and July 6, 1998) despite numerous opportunities to do so constitutes
a failure to cooperate to the best of its ability with respect to our
requests for information.

Id. (citation omitted). Thus, using adverse partial facts available, Commerce calculated a preliminary

dumping margin of 33.11 percent for Eletrosilex. Id. at 42008.

Commerce then issued its Final Results in which it “determined that Eletrosilex’s

questionnaire responses on the record are insufficient for purposes of conducting a margin analysis.”

Silicon Metal from Brazil: Notice of Final Results of Antidumping Duty Administrative Review, 64

Fed. Reg. 6305, 6310 (Feb. 9, 1999). After repeating its preliminary conclusion that Eletrosilex had

1
Generally, Commerce uses partial facts available only to fill “gaps in the record due to
deficient submissions or other causes.” Statement of Administrative Action accompanying the
Uruguay Round Agreements Act, H.R. Rep. No. 103-826, at 656, 869 (1994) (“SAA”). Pursuant
to 19 U.S.C. § 1677m(d)-(e), when a party’s response to a request for information is deficient and
certain requirements, discussed infra p. 21-22, are not met Commerce may disregard the information
that was submitted and use total, as opposed to partial, facts available.
2
An adverse inference is applied when a party has not acted to the best of its ability to
comply with requests for information. See 19 U.S.C. § 1677e(b). The adverse inference is intended
to “ensure that the party does not obtain a more favorable result by failing to cooperate than if it had
cooperated fully.” SAA at 870. In applying an adverse inference, Commerce may rely on
information from “(1) the petition, (2) a final determination in the investigation under this subtitle,
(3) any previous review under section 1675 of this title or determination under section 1675b of this
title, or (4) any other information placed on the record.” See 19 U.S.C. § 1677e(b). If an adverse
inference is not warranted, “the facts available are information or inferences which are reasonable
to use under the circumstances.” SAA at 869.
Consol. Court No. 99-03-00149 Page 6

failed to cooperate to the best of its ability, Commerce concluded that total adverse facts available

should be used as the basis for Eletrosilex’s dumping margin and imposed “the highest rate

calculated for any respondent in any segment of this proceeding,” 93.20 percent. Id. at 6311.

Discussion

The Court has jurisdiction of this action pursuant to 19 U.S.C. § 1516a(a) and 28 U.S.C. §

1581(c). The Court shall uphold Commerce’s determination 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).

Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to

support a conclusion.” Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927, 933 (Fed. Cir.

1984) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229 (1938), and Universal Camera

Corp. v. NLRB, 340 U.S. 474, 477 (1951)). This standard requires “something less than the weight

of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does

not prevent an administrative agency’s finding from being supported by substantial evidence.”

Consolo v. Federal Maritime Comm’n, 383 U.S. 607, 620 (1966). However, substantial evidence

supporting an agency determination must be based on the whole record, and a reviewing court must

take into account not only that which supports the agency’s conclusion, but also “whatever in the

record fairly detracts from its weight.” Melex USA, Inc. v. United States, 19 CIT 1130, 1132, 899

F. Supp. 632, 635 (1995) (citing Universal Camera Corp. v. NLRB, 340 U.S. 474, 478, 488 (1951)).
Consol. Court No. 99-03-00149 Page 7

I. Commerce’s Finding that Eletrosilex Did Not
Act to the Best of its Ability

In the Remand Results, Commerce determined that although Eletrosilex was undergoing

significant managerial changes during June and July 1998, its failure to respond was ultimately a

business decision; therefore it had not acted to the best of its ability regarding these requests for

information. See Remand Results at 8. Commerce reached this conclusion based on an affidavit

submitted3 by Eletrosilex’s President and Administrative-Financial Director detailing the company’s

management situation and business activities during the period in question. Id. at 6. Specifically,

Commerce found that an investment fund, which was a major investor in Eletrosilex, took control

of the company in April 1998, after the majority owner failed to meet financial obligations. Id. A

number of high level executives including the company President, and Financial and Commercial

Directors and some of the staff reporting to them were dismissed shortly thereafter. Id. In June 1998

the investment fund had found a potential buyer for Eletrosilex and was compiling “a complete

package of historical and commercial data, along with future sales projections” for the buyer. Id.

The only remaining staff capable of preparing responses to Commerce’s questionnaires were busy

during this time preparing the information for the new purchaser and preparing evaluative data for

the investment fund’s own assessment of the company. Id. at 6-7.

3
On remand, the Court instructed Commerce “to reopen the administrative record and
collect additional evidence concerning Eletrosilex’s claimed inability to respond to the supplemental
questionnaires.” American Silicon Technologies v. United States, 24 CIT __, __, 110 F. Supp. 2d
992, 1003 (2000). Although the affidavit of Eletrosilex’s President and Administrative-Financial
Director was filed with the Court as an attachment to Eletrosilex’s Complaint, it was not part of the
administrative record initially before Commerce. Thus, this remand is the first time the agency has
considered evidence concerning Eletrosilex’s alleged inability to respond to the supplemental
questionnaires in this review.
Consol. Court No. 99-03-00149 Page 8

In August 1998, when Commerce issued its preliminary results, the fund managing

Eletrosilex was close to reaching an agreement for the sale of the company and decided to

“temporarily suspend the costs associated with participating in further annual reviews at [Commerce]

until completion of the acquisition discussions.” Id. at 7. As a result, Eletrosilex did not submit case

briefs or rebuttal briefs on the preliminary results, although the petitioners in the review did so. Id.

Furthermore, Commerce found that when discussions with its potential buyer ultimately collapsed,

Eletrosilex hired a new commercial director and resumed participation in antidumping proceedings.

Commerce viewed this as evidence that Eletrosilex’s “management made conscious decisions

regarding what resources to expend for daily operations and where these resources should be

dedicated.” Id. at 7-8.

Eletrosilex alleges that Commerce misrepresents the statements made in the affidavit and

ignores other information submitted by Eletrosilex on remand. Plaintiff Eletrosilex’s Comments on

Final Results of Redetermination Pursuant to Court Remand (“Pl.’s Comments”) at 3. Eletrosilex

contends that the explanations Commerce gave in the Remand Results for its conclusion that

Eletrosilex made a “deliberate ‘management decision’” are the “same arguments that have already

been rejected by this Court as being ‘post hoc rationalizations.’”4 Id. at 4. Furthermore, Eletrosilex

argues that, contrary to Commerce’s conclusion, it “repeatedly explained why it was not able to

4
Indeed, these were post hoc rationalizations when made by counsel for the agency in briefs
submitted on the original Rule 56.2 motions since Commerce itself had not investigated Eletrosilex’s
claim that it was unable to respond. Nevertheless, as American Silicon notes in its rebuttal
comments, that fact does not prohibit the agency from reaching the same conclusion after
considering, on remand, the information submitted by Eletrosilex in support of its claim that it was
unable to comply with Commerce’s requests. See Defendant-Intervenors’ Rebuttal Comments to
Eletrosilex’s Comments on Final Results of Redetermination Pursuant to Court Remand at 5.
Consol. Court No. 99-03-00149 Page 9

dedicate resources to [answering] the supplemental questionnaires.” Id. Eletrosilex charges

Commerce has neglected the additional information it submitted on remand and “disregard[ed] the

statements [regarding Eletrosilex’s inability] contained within the affidavit.” Id. (emphasis in the

original). Specifically, Eletrosilex cites the following portions of the administrative record on

remand:

• Paragraph 13 of the Concado Affidavit: “[W]e had no
capability of responding to those requests at that time under
the time restrictions placed. The Eletrosilex management
team and staff was [sic] decimated . . . .”

• September 29, 2000, Submission at 2: “Eletrosilex continues
to state that it was unable to respond to the Department’s
supplemental questionnaires because it was undergoing
complete management and staffing changes.”

• November 8, 2000, Submission at 2: “[T]he reason
Eletrosilex could not respond to the Department’s
questionnaires was because it had dedicated all of its available
sales, accounting, and managerial personnel to providing
complete and accurate information to the potential acquirers.”

• November 8, 2000, Submission at 3: “Given the heavy
demands made on such personnel by the potential purchasers
in the context of the due diligence process, it was impossible
to pull all of the key personnel away from these urgent
projects to prepare additional responses to the Department,
particularly in sales, that had been involved in prior responses
to the Department and had hands-on information and
experience necessary to answer the supplemental questions.”

• September 29, 2000, Submission, Exhibit 2: Minutes of the
Board of Directors November 4, 1998, meeting detailing the
resignation of Director-President, Mr. Gomez;

• September 29, 2000, Submission, Exhibit 3: Statement
concerning the termination of the labor contracts of other key
personnel;
Consol. Court No. 99-03-00149 Page 10

• September 29, 2000, Submission, Exhibit 4:
Communications from potential investors detailing the large
volume of information requested.

Id. at 4-5. Due to Commerce’s failure to consider the information submitted on remand, Eletrosilex

concludes that the Court should “again remand this case to the Department with instructions to

conduct a meaningful analysis of the substantial evidence collected during the remand proceeding

. . . .” Id. at 3.

The Court finds that Commerce has complied with the Court’s remand order and that its

conclusion is supported by substantial evidence on the record. “In order for its finding to be

supported by substantial evidence, ‘Commerce needs to articulate why it concluded that a party

failed to act to the best of its ability, and explain why the absence of this information is of

significance to the progress of its investigation.’”5 Nippon Steel Corp. v. United States, 24 CIT__,

__, 118 F. Supp. 2d 1366, 1378 (2000) (quoting Mannesmannrohren-Werke AG v. United States, 23

CIT 826, 839, 77 F. Supp. 2d 1302, 1313-14 (1999)). Furthermore, “Commerce must find that a

respondent could comply, or would have had the capability of complying if it knowingly did not

place itself in a condition where it could not comply” and “must also find either a willful decision

not to comply or behavior below the standard for a reasonable respondent.” Nippon Steel Corp., 24

CIT at __, 118 F. Supp. 2d at 1378-79 (citation omitted). In the present matter, the reason

Eletrosilex could not answer Commerce’s supplemental questionnaires was because it dedicated the

personnel capable of answering those questions to preparing information requested by Eletrosilex’s

5
On remand, Eletrosilex does not challenge Commerce’s explanation that the information
requested in the supplemental questionnaires was necessary to determine whether certain sales
should be calculated as Export Price or Constructed Export Price sales. See Remand Results at 9-12.
Consol. Court No. 99-03-00149 Page 11

potential purchaser. See Affidavit of Marco Aurélio Cançado, Pl.’s Comments at App. 2, Ex. 1, ¶

8. The record shows that Eletrosilex decided to suspend certain operations, including participation

in antidumping proceedings, during the period in question in order to curtail costs in anticipation of

the sale of the company. See id. at ¶¶ 5, 10. While Eletrosilex was facing bankruptcy during the

period in question, the fact remains that it allocated its resources toward satisfying the requests of

the prospective purchaser rather than Commerce.

II. Commerce’s Selection and Corroboration of an Adverse Facts
Available Margin for Eletrosilex

In the Remand Results Commerce concluded that the 93.20 percent adverse facts available

dumping margin it applied to Eletrosilex for this administrative review was relevant despite the fact

that it was calculated for a different respondent during the Less Than Fair Value investigation which

took place six years prior to the period of review in question. Remand Results at 15. Commerce

noted that margins calculated for Eletrosilex in prior and subsequent administrative reviews

fluctuated between 18.87 percent and 51.84 percent, and margins for other respondents had

fluctuated from zero to 81.61 percent. Id. at 13-14. Commerce also noted that Eletrosilex was “an

experienced participant in the antidumping proceedings since the 1991-1992 [period of review]

[and] knew that if it failed to act to the best of its ability, and the Department applied adverse [facts

available], the rate selected could very well be the highest calculated rate in the proceeding . . . .”

Id. at 15. Thus, Commerce concluded that “[t]he fact that these disparate rates have continued

throughout the reviews since the original [Less Than Fair Value] investigation, combined with the

Eletrosilex’s [sic] management decision not to respond to the requests for information, supports our
Consol. Court No. 99-03-00149 Page 12

conclusion that the 93.20 percent rate from the investigation remains reasonable and relevant.” Id.

at 15.

Eletrosilex argues that Commerce has not shown that the 93.20 percent margin “is more

probative than other margins calculated for Eletrosilex or other respondents” or that there is a

rational relationship between the chosen margin, which was “calculated for a different respondent

based on six months in 1990 and the margin applicable to Eletrosilex during the 1996-1997 period

of review.” Pl.’s Comments at 11 (footnote omitted). Eletrosilex asks that the Court remand this

issue to Commerce again and select a rate within the range of rates calculated for Eletrosilex in prior

reviews, the highest being 51.84 percent. Id. at 12.

Although Commerce has “discretion to choose which sources and facts it will rely on to

support an adverse inference . . . . Commerce’s discretion in these matters . . . is not unbounded.”

F.lli De Cecco di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1032 (Fed. Cir.

2000). The Federal Circuit Court of Appeals has held that

an adverse facts available rate [is] to be a reasonably accurate
estimate of the respondent’s actual rate, albeit with some built-in
increase intended as a deterrent to non-compliance. Congress could
not have intended for Commerce’s discretion to include the ability to
select unreasonably high rates with no relationship to the
respondent’s actual dumping margin. Obviously a higher adverse
margin creates a stronger deterrent, but Congress tempered the
deterrent value with the corroboration requirement. It could only
have done so to prevent the petition rate (or other adverse inference
rate), when unreasonable, from prevailing and to block any
temptation by Commerce to overreach reality in seeking to maximize
deterrence.

Id; accord Ta Chen Stainless Steel Pipe, Inc. v. United States, 298 F.3d 1330, 1340 (Fed. Cir. 2002).

In the present matter, Commerce is technically correct in stating that antidumping rates have
Consol. Court No. 99-03-00149 Page 13

fluctuated from zero to 81.61 percent, but the 81.61 percent rate was based on partial facts available

and was 13.74 percent higher than the next highest margin. Aside from the 81.61 percent rate, the

highest calculated rates for the first through fifth administrative reviews were 53.63 percent, 51.84

percent, 61.58 percent, 67.93 percent, and 39.00 percent respectively. See Plaintiff Eletrosilex’s

Supplemental Brief at 3-4. The Court also finds it significant that the period of review in question

began six years after the Less Than Fair Value Investigation in which the 93.20 percent margin was

calculated. This fact along with the fact that this margin is 25.27 percent higher than the highest

margin calculated based on actual information in the intervening administrative reviews (i.e. the

67.93 percent margin calculated in the fourth administrative review) leads the Court to conclude that

the 93.20 percent margin is inconsistent with actual commercial practices at and around the time in

question. Although an adverse facts available margin is to have “some built-in increase intended as

a deterrent to non-compliance” in this instance it is so far removed from being “a reasonably accurate

estimate of the respondent’s actual rate” that it is disproportionately punitive in nature. Therefore,

the Court remands this aspect of the Remand Results for a redetermination of the dumping margin

to be applied to Eletrosilex in this administrative review.

Conclusion

For the foregoing reasons, the Remand Results are remanded for a redetermination of the

dumping margin to be assigned to Eletrosilex. Commerce shall have 90 days to submit its remand

determination. The parties shall then have 30 days to submit comments on the remand

determination. Any rebuttal comments shall be submitted within 15 days thereafter.
Consol. Court No. 99-03-00149 Page 14

_________________________________________
R. KENTON MUSGRAVE, JUDGE

Dated: October 17, 2002
New York, New York