Slip Op. 00-91
UNITED STATES COURT OF INTERNATIONAL TRADE
:
KAWASAKI STEEL CORPORATION, :
:
Plaintiff, : Court No. 99-08-
: 00482
v. :
: Public Version
THE UNITED STATES, :
:
Defendant, :
:
and :
:
GALLATIN STEEL; IPSCO STEEL, INC.; :
STEEL DYNAMICS, INC.; AND WEIRTON :
STEEL CORPORATION, :
:
Defendant-Intervenors, :
:
BETHLEHEM STEEL CORPORATION; U.S. :
STEEL GROUP - A UNIT OF USX :
CORPORATION; ISPAT INLAND INC.; :
AND LTV STEEL CO., INC., :
:
Defendant-Intervenors. :
_____________________________________ :
[Antidumping determination affirmed.]
Dated: August 1, 2000
Arent Fox Kintner Plotkin & Khan, PLLC (Robert H. Huey,
Matthew J. Clark and Nancy A. Noonan) for plaintiff Kawasaki
Steel Corporation.
David W. Ogden, Acting Assistant Attorney General, David
M. Cohen, Director, Commercial Litigation Branch, Civil
Division, United States Department of Justice (Kenneth
Kessler), Linda S. Chang, Office of the Chief Counsel for
Import Administration, United States Department of Commerce,
of counsel, for defendant.
Court No. 99-08-00482 Page 2
Shagrin Associates, (Roger Banks and Roger Schagrin) for
defendant-intervenors Gallatin Steel; IPSCO Steel, Inc.; Steel
Dynamics, Inc.; and Weirton Steel Corporation.
Skadden Arps, Slate, Meagher & Flom LLP (Robert E.
Lighthizer, John J. Mangan, and Jeffrey Gerrish) for
defendant-intervenors Bethlehem Steel Corporation; U.S. Steel
Group - a unit of USX Corporation; ISPAT Inland, Inc.; and LTV
Steel Company, Inc.
OPINION
RESTANI, Judge: This matter is before the court on
plaintiff’s motion for judgment upon the agency record
pursuant to USCIT Rule 56.2. Plaintiff Kawasaki Steel
Corporation (“KSC”) challenges the determination of the United
States International Trade Administration (“Commerce” or the
“Department”) in Hot-Rolled Flat-Rolled Carbon-Quality Steel
Products from Japan, 64 Fed. Reg. 24,329 (Dep’t Commerce 1999)
(notice of final determination of sales at LTFV) [hereinafter
“Final Determination”].
KSC argues that Commerce erred in concluding that KSC
failed to comply to the best of its ability and in applying an
adverse inference. KSC also argues that even if an adverse
inference is warranted, Commerce should have considered KSC’s
level of cooperation and selected a less adverse margin.
Court No. 99-08-00482 Page 3
Jurisdiction & Standard of Review
The court has jurisdiction pursuant to 28 U.S.C. §
1581(c) (1994). In reviewing final determinations in
antidumping duty investigations, the court will hold unlawful
those agency determinations which are unsupported by
substantial evidence on the record, or otherwise not in
accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i) (1994).
Background
On October 15, 1998, Commerce initiated an antidumping
duty investigation of certain hot-rolled flat-rolled carbon-
quality products (“hot-rolled steel” or “HRS”) from Brazil,
Japan, and the Russian Federation. Certain Hot-Rolled Flat-
Rolled Carbon-Quality Steel Products from Brazil, Japan, and
the Russian Federation, 63 Fed. Reg. 56,607 (Dep’t Commerce
1998) (initiation of antidumping duty investigations). The
period of investigation (“POI”) covered July 1, 1997 through
June 30, 1998. Id. at 56,610. Commerce initiated the
investigation in response to a petition filed on September 30,
1998 by a group of U.S. Steel producers. Id. at 56,607. The
petitioners included California Steel Industries (“CSI”), an
affiliate of KSC.1 Id.
1 Among the other petitioners were defendant-
(continued...)
Court No. 99-08-00482 Page 4
CSI is a joint venture between KSC and the Brazilian
conglomerate Companhia Vale do Rio Doce (“CVRD”). Final
Determination, 64 Fed. Reg. at 24,368. Through their
respective U.S. affiliates, KSC and CVRD each own 50 percent
of CSI.2 Id.
On October 6, 1998, prior to the commencement of the
investigation, KSC’s director, Makoto Iwahashi, sent a letter
to CSI’s vice president, James Declusin, notifying him of the
possible need for CSI information and requesting CSI’s
cooperation in the impending investigation. KSC’s Case Brief
(Ex. 2) (Apr. 12, 1999), at 86, P.R. Doc. 311, Pl.’s App., Tab
3, at 1 [hereinafter “Letters"]. On October 13, 1998, two KSC
officials, Mr. Ono and Mr. Asakura, met personally with
Declusin. Verification Report, at 22, Def.’s App., Tab 12, at
4. At that time Declusin stated his willingness to cooperate
with KSC as much as possible. Id. On October 19, 1998,
(...continued)
intervenors in this action: Bethlehem Steel Corporation; U.S.
Steel Group (a unit of USX Corporation); Ispat Inland Steel,
Inc.; LTV Steel Company, Inc.; Gallatin Steel Company; IPSCO
Steel, Inc.; Steel Dynamics, Inc.; and Weirton Steel
Corporation.
2 Under the Shareholders’ Agreement, KSC and CVRD
[ ] Verification Report (Mar. 30, 1999), at 21, C.R. Doc.
128, Def.’s App., Tab 12, at 3. In addition, CVRD’s
appointee, Gonçalves, served as president/CEO of CSI at the
time of the investigation.
Court No. 99-08-00482 Page 5
Commerce issued section A of an antidumping questionnaire to
KSC. Hot-Rolled Flat-Rolled Carbon-Quality Steel Products
From Japan, 64 Fed. Reg. 8,291, 8,292 (Dep’t Commerce 1999)
(notice of preliminary determination of sales at LTFV)
[hereinafter “Preliminary Determination”].
On October 21, 1998, Declusin testified for CSI as a
petitioner before the International Trade Commission (“ITC”).
Verification Report, at 22, Def.’s App., Tab 12, at 4. On
October 27, 1998, KSC’s managing director, Fumio Sudo, sent a
letter to CSI’s president, Lourenço Gonçalves, requesting his
cooperation in the effort to respond to the questionnaire by
providing KSC with information on CSI’s sales as a reseller or
further processor of the subject merchandise originating from
KSC, together with relevant cost information. Letters, at 87,
Pl.’s App., Tab 3, at 2. Gonçalves responded by providing KSC
with the data for Section A of the questionnaire and agreeing
to cooperate, but Gonçalves noted that CSI was a petitioner in
the investigation and “eventually ... would be in a difficult
position to supply some kind of information.” Id., at 88,
Pl.’s App., Tab 3, at 3.
Commerce issued questionnaire Sections B, C, D, and E to
KSC on October 30, 1998. Preliminary Determination, 64 Fed.
Reg. at 8,292. Section E of the questionnaire requests
Court No. 99-08-00482 Page 6
information pertaining to the further manufacturing or
assembly of subject merchandise in the United States. A large
percentage3 of KSC’s sales of hot-rolled coil steel to CSI
made during the POI was further processed into cold-rolled or
galvanized steel or pipe. Analysis Memo, at 2, Def.’s App.,
Tab 13, at 2. On November 5, 1998, KSC’s counsel contacted
Gonçalves and attempted to make arrangements to visit CSI’s
facilities to gather data necessary for responding to Section
E. Letters, at 89, Pl.’s App., Tab 3, at 4. Gonçalves
rejected KSC’s visitation request in a letter dated November
6, 1998. Id., at 90, Pl.’s App., Tab 3, at 5. Gonçalves
stated:
Besides the fact that CSI is one of the petitioners in
the antidumping investigation, I should inform you that
some of the data you would like to have access [to] is
confidential CSI data, and even [KSC] being one of our
shareholders, we usually apply some restrictions to the
disclosure of sensitive data . . . . This behavior has
been adopted here at CSI in order to protect the company
as an American steel company, regardless of the Brazilian
and Japanese ownership.
Id.
In response to CSI’s refusal, KSC’s counsel met with
Commerce officials on November 9, 1998 to inform the agency of
the situation. See Letter from H&S to DOC (Dec. 18, 1998), at
3 [ ] percent. DOC Final Analysis Memo (Apr. 28,
1999) at 2, C.R. Doc. 166, Def.’s App., Tab 13, at 2.
Court No. 99-08-00482 Page 7
1, C.R. Doc. 33, Pl.’s App., Tab 3, at 14. In a letter dated
the next day, KSC requested that it be excused from answering
Section E of the questionnaire based on CSI’s reluctance to
provide the necessary information. KSC letter to DOC (Nov.
10, 1998), at 2-4, C.R. Doc. 11, Def.’s App., Tab 1, at 3-5.
KSC did not suggest an alternative method for providing the
information. Id.
On November 16, 1998, Commerce received the Section A
questionnaire responses from KSC. Preliminary Determination,
64 Fed. Reg. at 8,292. Commerce published its preliminary
critical circumstances determination on November 30, 1998.
Certain Hot-Rolled Flat-Rolled Carbon-Quality Steel Products
from Japan and the Russian Federation, 63 Fed. Reg. 65,750
(Dep’t Commerce 1998) (preliminary determinations of critical
circumstances). Commerce determined that there was a
reasonable basis to believe or suspect that critical
circumstances existed in respect to imports of hot-rolled
steel from Japan. Id. at 65,750. Commerce issued a
supplemental Section A questionnaire to KSC on December 4,
1998. Preliminary Determination, 64 Fed. Reg. at 8,292.
On December 8, 1998, KSC’s counsel wrote another letter
to CSI requesting Section E data, and noted the short time
frame remaining for KSC to provide Commerce with the Section E
Court No. 99-08-00482 Page 8
response. Letters, at 91, Pl.’s App., Tab 3, at 10. On
December 14, 1998, Gonçalves responded that because of CSI’s
accounting system, CSI was unable to provide the information
requested. Id., at 94, Pl.’s App., Tab 3, at 13. Gonçalves
further stated that while CSI could provide other information
to KSC, “it would be difficult for us to provide such
information within the time frame specified in your letter.”
Id. Gonçalves further stated his belief that “without being
able to provide the important information of sales prices
requested, the provision of other data requested by [KSC]
would be neither usable nor useful in the investigation of
[KSC] and therefore would be a waste of resources for both CSI
and [KSC].” Id.
On December 18, 1998, KSC informed Commerce of KSC’s
continuing difficulties in gathering the requested CSI data.
Letter from H&S to DOC, at 1, Pl.’s App., Tab 3, at 14. KSC’s
letter reminded Commerce of KSC’s previous meeting and
communication with the Department in November, regarding the
CSI data, and further stated that KSC had “received no
information, guidance, or response from the Department.”4 Id.
4 A few days earlier, [ ] KSC’s Costs & Sales
Verification Exhibits - Exhibit 20 (Mar. 8-12, 1999), at 40,
C.R. Doc. 20 (of costs & sales), Pl.’s App., Tab 11, at 12.
(continued...)
Court No. 99-08-00482 Page 9
KSC renewed its request to be excused from responding to
Section E of the questionnaire regarding CSI’s sales of
subject merchandise and further manufacturing of subject
merchandise, because KSC was not able to provide it. Id., at
2, Pl.’s App., Tab 3, at 15.
On December 21, 1998, Commerce received KSC’s responses
to questionnaire Sections B, C, and D. Preliminary
Determination, 64 Fed. Reg. at 8,292. On January 4, 1999,
Commerce requested supplemental information from KSC on
Sections B, C, and D. Id. Without specifically commenting on
Section E, Commerce simply reissued Section E at the same
time. Supplemental Sections B/C & E (Jan. 4, 1999), at 16-25,
C.R. Doc 47, Def.’s App., Tab 9, at 3-12. On January 25,
1999, Commerce received KSC’s responses to supplemental
Sections B, C, and D. Preliminary Determination, 64 Fed. Reg.
at 8,292. Included with these responses, KSC again informed
Commerce that it was unable to obtain the requested material
from CSI and was therefore unable to complete Section E.
KSC’s Response to Sections B and C (Jan. 25, 1999), at 45,
P.R. Doc. 192, Pl.’s App., Tab 5, at 5.
4(...continued)
[ ]. Verification Report, at 22-23, Def.’s App., Tab 12,
at 4-5.
Court No. 99-08-00482 Page 10
On February 19, 1999, Commerce published its Preliminary
Determination, in which it determined a weighted average
margin of 67.59 percent for KSC. 64 Fed. Reg. at 8,299. This
margin was based on Commerce’s selection of KSC’s highest
calculated dumping margin “found for any individual product
(i.e. CONNUM).”5 Id. at 8,298.
On March 5, 1999 and March 8-12, 1999, Commerce conducted
a sales verification at KSC’s facilities as well as those of
its affiliate, Kawaso Corporation, in Tokyo, Japan.
Verification Report, at 1, Def.’s App., Tab 12, at 1. At
verification, Commerce officials met with KSC’s headquarters
and plant officials. Id. During verification, Commerce asked
KSC about its efforts to obtain information from CSI.
Commerce asked if KSC had suggested that CSI send information
to Commerce directly. Id. at 23, Def.’s App., Tab 12, at 5.
KSC responded that it had done so orally through its counsel
in December, and that CSI had allegedly rejected this
suggestion. Id.
On May 6, 1999, Commerce published the final
5 Each control number, or “CONNUM,” represents a
discrete product, for which there may be multiple sales. By
product-specific margin [Commerce] means “the weighted average
margin for the sales of that discrete product.” Gov’t Br. at
2 n.1.
Court No. 99-08-00482 Page 11
determination. 64 Fed. Reg. at 24,329. As in the preliminary
determination, Commerce chose to invoke adverse facts
available. Commerce based this decision on the collective
failure of Kawasaki and its affiliate CSI to respond to
Section E of the Department’s questionnaire. Id. at 24,368.
KSC claims that Commerce erroneously concluded that KSC
did not cooperate to the best of its ability in the
investigation. KSC argues that Commerce penalized it for
CSI’s unwillingness to cooperate. KSC therefore argues that
because of Commerce’s alleged error, the Department’s resort
to partial adverse facts available in calculating the weighted
average margin was unlawful and unsupported by substantial
evidence. KSC further argues that if Commerce’s resort to
adverse facts was appropriate, KSC’s weighted average margin
should be recalculated using less adverse facts available,
based on KSC’s substantial cooperation throughout the
investigation.
Discussion
I. Application of partial adverse facts available
KSC asserts that Commerce’s decision to resort to adverse
facts available was neither in accordance with law nor
supported by substantial evidence. KSC argues that it was
CSI, and not KSC, that refused to cooperate and that KSC
Court No. 99-08-00482 Page 12
itself made every effort to obtain the information from CSI.
KSC also argues that Commerce failed to respond to KSC after
receiving notice of KSC’s alleged inability to comply with the
Department’s requests for information.
Prior to making an adverse inference, Commerce must first
decide whether the use of facts available is appropriate under
19 U.S.C. § 1677e(a) (1994). Once Commerce determines that
the use of facts available is appropriate, it must make an
additional finding under 19 U.S.C. § 1677e(b) that the party
has failed to act to the best of its ability prior to applying
adverse facts available.6 It has been well established by the
court that a “mere recitation of the relevant standard is not
enough for Commerce to satisfy its obligation under the
statute.” Ferro Union, Inc. v. United States, 44 F. Supp.2d
1310, 1330 (Ct. Int’l Trade 1999); see also Borden, Inc. v.
United States, 4 F. Supp.2d 1221, 1246 (Ct. Int’l Trade 1998),
6 19 U.S.C. § 1677e(b) provides in part:
If the administering authority . . . 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 from the administering authority . . . the
administering authority . . . in reaching the applicable
determination under this subtitle, may use an inference
that is adverse to the interests of that party in
selecting from among the facts otherwise available.
Court No. 99-08-00482 Page 13
aff’d sub nom, F.lli De Cecco di Filippo Fara S. Martino
S.p.A. v. United States, No. 99-1318, 2000 WL 777170 (Fed.
Cir. June 16, 2000).
Here, Commerce first determined to use facts available
based on 1677e(a)(1) because necessary information was missing
from the record. Final Determination, 64 Fed. Reg. at 24,367.
In this case, it is undisputed that KSC’s sales of subject
merchandise through CSI were constructed export price (“CEP”)
sales. Id. Commerce asserts that because the CEP
provisions7 essentially treat the exporter and its U.S.
affiliate as a single entity for the purposes of the margin
calculation, it treats the affiliated parties as a single
entity for the purposes of providing responses in antidumping
proceedings. Id. at 24,367-68.
It is undisputed that KSC and CSI failed to provide the
necessary information. Commerce found that “[b]ecause the
information possessed by a U.S. affiliate such as CSI is
essential to the dumping determination, the antidumping law is
thwarted if the affiliate refuses to provide the necessary
information.” Id. at 24,367. Commerce found that KSC and CSI
7 To calculate CEP, Commerce must begin with the price
of merchandise sold to the first unaffiliated party in the
United States, deducting from it certain expenses incurred by
the United States affiliate. 19 U.S.C. § 1677a(b) (1994).
Court No. 99-08-00482 Page 14
had collectively failed to comply to the best of their
ability. Id. at 24,368. Commerce also found that KSC,
independently of CSI, could have done more to obtain CSI’s
information. Commerce stated that it had investigated KSC’s
claim that it had complied and stated:
KSC’s claim that it acted to the best of its ability
with respect to this issue rests on its assertion that it
was powerless to compel CSI to provide the Department
with this data, given that CSI, as a petitioner in this
case, refused to cooperate. Some of the most important
evidence contradicting KSC on this issue, including
information pertaining to the board and the Shareholders’
Agreement, constitutes business propriety information,
and are discussed only in our propriety Analysis
Memorandum . . . . Generally, however, the record shows
that, although KSC could have been much more active in
obtaining the cooperation of CSI in this investigation,
it limited its efforts to merely requesting the required
data and otherwise took a “hands-off” approach with
respect to CSI’s alleged decision not to provide this
data. For example, KSC officials stated that KSC did not
instruct its members of the CSI board to address this
issue, did not invoke the Shareholders’ Agreement, and
did not discuss this issue with its joint venture
partner. This does not reach the “best efforts” threshold
embodied in [19 U.S.C. § 1677e(b)].
Final Determination, 64 Fed. Reg. at 24,368.
Any application of facts available under 1677e(a) is also
subject to the requirements of 19 U.S.C. § 1677m(d) (1994).8
8 Section 1677e(a) provides:
(a) In general
If -
(continued...)
Court No. 99-08-00482 Page 15
See Borden, 4 F. Supp.2d at 1244 (“Subsection 1677e(a)
provides that in every instance the use of facts available
shall be subject to 19 U.S.C. § 1677m(d)”). Section 1677m(d)
requires that the Department provide a party with notice of
deficient submissions.9 This section is intended to prevent
“the unrestrained use of facts available as to a firm which
makes its best effort to cooperate with the Department.”
Borden, 4 F. Supp.2d at 1245.
In Ta Chen Stainless Steel Pipe, Ltd. v. United States,
No. 97-08-01344, 1999 WL 1001194 (Ct. Int’l Trade Oct. 28,
1999), the court found that Commerce had failed to comply with
8(...continued)
(1) necessary information is not available on the
record . . .
the administering authority . . . shall, subject to
section 1677m(d) of this title, use the facts otherwise
available in reaching the applicable determination under
this subtitle.
9 Section 1677m(d) provides in relevant part:
If the administering authority . . . determines that a
response to a request for information under this subtitle
does not comply with the request, the administering
authority . . . shall promptly inform the person
submitting the response of the nature of the deficiency
and shall, to the extent practicable, provide that person
with an opportunity to remedy or explain the deficiency
in light of the time limits established for the
completion of investigations or reviews under this
subtitle.
Court No. 99-08-00482 Page 16
1677m(d) because it never specifically requested information
on the U.S. sales of respondent’s affiliate. 1999 WL 1001194,
at *12-13. Unlike the respondent in Ta Chen who had a
legitimate reason to believe it had EP sales and did not need
to provide CEP information, KSC knew it was required to
provide data on further manufacturing. The Department’s
questionnaire provided KSC with sufficient notice that it had
to provide the information. Although Commerce did not
expressly inform KSC that its response to questionnaire
Section E was deficient, it was nevertheless made clear to KSC
that Commerce had not decided to excuse KSC from answering
this section, because Commerce reissued Section E to KSC in
January 1999. See Supplemental Sections B/C & E, at 16-25,
Def.’s App., Tab 9, at 3-12. This is not a case where the
Department failed to request the information. Cf. Queen’s
Flowers de Colombia v. United States, 21 CIT 968, 980, 981 F.
Supp. 617, 628 (1997) (stating that under pre-URAA law an
“alleged response deficiency cannot support application of
[best information available] where the information sought was
apparently never requested”). Moreover, KSC must have
understood that information on CSI’s sales was vital to the
Department because these sales involved further manufacturing
Court No. 99-08-00482 Page 17
in the United States.10 Commerce’s reissuance of this section
of the questionnaire provided KSC with notice that its
submission was deficient and provided KSC with another
opportunity to respond.
KSC argues that Commerce failed to reply to its request
to be excused from providing the Section E data, although it
is not making a specific 19 U.S.C. § 1677m(c) argument. Under
section 1677m(c)(1), if a party notifies Commerce that it is
unable to submit the information requested, together with a
full explanation and suggested alternative forms in which the
party is able to submit the information, Commerce must
respond.11 In World Finer Foods, Inc. v. United States, the
10 Pursuant to 19 U.S.C. § 1677a(d), the price used to
establish CEP is reduced by a variety of expenses, including
“the cost of any further manufacture or assembly.” See 19
U.S.C. § 1677a(d)(2).
11 Section 1677m(c)(1) provides:
If an interested party, promptly . . . notifies the
administering authority . . . that such party is unable
to submit the information requested in the requested form
and manner, together with a full explanation and
suggested alternative forms in which such party is able
to submit the information, the administering authority .
. . shall consider the ability of the interested party to
submit the information in the requested form and manner
and may modify such requirements to the extent necessary
to avoid imposing an unreasonable burden on that party.
19 U.S.C. § 1677m(c)(1) (emphasis added).
Court No. 99-08-00482 Page 18
court clarified that when a party is attempting to respond to
the Department’s requests for information, Commerce has a duty
to respond and to assist that party. No. 99-03-00138, 2000 WL
897752 at *3-4 (Ct. Int’l Trade June 26, 2000).
The Government argues that Commerce complied with §
1677m(c)(1) because KSC’s requests to be exempted entirely
from responding to Section E of the questionnaire did not
communicate an inability to provide information, but rather an
unwillingness. The Government’s conclusion is supported. In
this case, it was KSC that did not act in accordance with
1677m(c)(1) because it neither asked for assistance nor
offered an alternative form for supplying the information.
KSC simply asked to be excused from answering Section E
entirely. While it would have been helpful for Commerce to
have responded to KSC with respect to the alleged CSI
conflict, Commerce did make it clear to KSC that KSC was not
excused because Commerce reissued the Section E portion of the
questionnaire in January 1999. In Finer Foods, by contrast,
the respondent explained to Commerce in detail why it could
not provide full information. 2000 WL 897752 at *2-3. The
respondent also offered to supply any information that
Commerce might find worthwhile, and Commerce never offered the
respondent any guidance. Id. at *4. Commerce disregarded the
Court No. 99-08-00482 Page 19
information submitted for the respondent and used extremely
adverse facts available which impacted the completely
cooperative importer instead of the partially cooperative
respondent.12 Id. KSC, by contrast, a sophisticated and
continuing player in the market, never suggested alternatives,
never requested help from Commerce, and provided an
unconvincing account of why it could not comply fully. KSC
wanted Commerce to accept at face value that it could not
obtain the information, and expected Commerce to excuse it
altogether from responding to Section E of the questionnaire.13
KSC argues that Commerce should have asked CSI for the
information directly. Pursuant to section 1677m(c)(2),
Commerce is to assist a party experiencing difficulties.14 As
12 The court also noted in Finer Foods that it was not
holding “that every general overture of cooperation warrants a
response from Commerce,” and that its decision was based on
the particular facts of the case. 2000 WL 897752 at *4 n.5.
13 The court does not accept the position that CSI’s
status as a petitioner automatically excused KSC from
responding to Section E of the questionnaire. Commerce was
entitled to examine KSC’s efforts at obtaining CSI’s
compliance to avoid opening the door to collusive activities
among petitioners and respondents, which could work to the
detriment of competitors.
14 Section 1677m(c)(2) provides:
The administering authority . . . shall take into account
any difficulties experienced by interested parties,
(continued...)
Court No. 99-08-00482 Page 20
acknowledged by KSC, however, KSC did not request Commerce to
assist it in obtaining the relevant CSI data. KSC’s
communications to Commerce on this issue were limited to its
request to be excused from responding. Under these
circumstances, Commerce did not err by failing to ask
CSI for the information directly.
KSC also argues that Commerce failed to comply with
section 1677m(g). This section provides that information
submitted during the course of a review “shall be subject to
comment by other parties to the proceeding.” 19 U.S.C. §
1677m(g);15 see also Wieland-Werke AG v. United States, 4 F.
14
(...continued)
particularly small companies, in supplying information
requested by the administering authority . . . in
connection with investigations and reviews under this
subtitle, and shall provide to such interested parties
any assistance that is practicable in supplying such
information.
19 U.S.C. § 1677m(c)(2).
15 This section provides more fully:
Information that is submitted on a timely basis to the
administering authority . . . during the course of a
proceeding under this subtitle shall be subject to
comment by other parties to the proceeding within such
reasonable time as the administering authority . . .
shall provide. The administering authority . . . before
making a final determination under section 1671d, 1673d,
1675, or 1675b of this title shall cease collecting
(continued...)
Court No. 99-08-00482 Page 21
Supp.2d 1207, 1212 (Ct. Int’l Trade 1998) (“Commerce must
provide an opportunity for the parties to comment on
information submitted to it before it makes a determination.”)
KSC argues that it did not have an opportunity to comment on
the CSI Shareholders’ Agreement because it was not clear that
the Department would rely on KSC’s rights under this agreement
until the Final Determination. KSC notes that Commerce did
not mention the Shareholders’ Agreement in the Preliminary
Determination. The agreement, however, was placed on the
record prior to the publication of the Preliminary
Determination. KSC Br. at 35-36.
KSC ignores that it placed the Shareholders’ Agreement on
the record itself, and that 1677m(g) provides that “other
parties” shall have an opportunity to comment on the
information. Any error in complying with section 1677m(g) was
harmless because KSC did have an opportunity to comment on the
agreement and other aspects of its relationship with CSI
during verification. KSC also had an opportunity for further
15
(...continued)
information and shall provide the parties with a final
opportunity to comment on the information obtained by the
administering authority . . . upon which the parties have
not previously had an opportunity to comment.
19 U.S.C. § 1677m(g) (emphases added).
Court No. 99-08-00482 Page 22
comment in its case brief submitted prior to the Final
Determination.
Commerce’s decision to apply an adverse inference is in
accordance with law and it is also supported by substantial
evidence. While reasonable minds might weigh the evidence
differently, Commerce’s determination that KSC itself
possessed the ability to obtain the information requested but,
instead, took a “hands-off” approach with respect to CSI’s
alleged decision not to provide the data, is supported. A
plain reading of the rights and powers provided to KSC
pursuant to the Shareholders’ Agreement demonstrates that KSC
had the ability to influence CSI’s cooperation.16 Second,
KSC’s members of the CSI board could have, but failed to,
address the issue with its joint venture partner, CVRD.17
Third, instead of invoking any rights under the Shareholders’
Agreement regarding KSC’s access to CSI data,18 KSC merely
16 Under the Shareholders’ Agreement, KSC has [ ]
Shareholders’ Agreement (June 27, 1995), at 7-8, C.R. Doc. 51
(Ex. Supp. A-4), Pl.’s App., Tab 7, at 9-10 [hereinafter
“Shareholders’ Agreement”].
17 In the Verification Report, Commerce noted that
[ ]. Verification Report, at 23, Def.’s App., Tab 12, at
5.
18 [ ]
(continued...)
Court No. 99-08-00482 Page 23
opted to exchange correspondence with its affiliate and then
acquiesced to any communication from CSI that could be
interpreted as a sign of resistance.19 The failure to avail
itself of any of these rights supports Commerce’s conclusion
that KSC did not cooperate to the best of its ability.20
KSC argues strenuously that the fact that CSI is a
petitioner shows that CSI’s interests were antagonistic to
18(...continued)
Shareholders’ Agreement, at 14-15, Pl.’s App., Tab 7, at 15-
16.
KSC argues that the [ ] of the Shareholders’ Agreement
would have prevented it [ ] Id. at 15, Pl.’s App., Tab 7,
at 16. The possible complications of this [ ], however, do
not suffice to excuse KSC from trying more seriously to obtain
the information from CSI in the first place. [ ] concerns
could have been presented to Commerce so that the parties
could come to an agreement with the Department.
19 KSC attempts to minimize its access to CSI data, but
pursuant to [ ] of the Shareholders’ Agreement, KSC would
receive [ ] Shareholders’ Agreement, at 15, Pl.’s App., Tab
7, at 16. This provision further supports the conclusion that
KSC did have access to some CSI information, and might have
proposed alternatives to Commerce.
20 KSC argues that any enforcement of its rights under
the Shareholders’ Agreement would have been futile and that
legal proceedings would have been lengthy with an uncertain
outcome. KSC’s references to Delaware corporate law in
support of this position are not particularly relevant. KSC
ignores that it failed to invoke any powers under the
Shareholders’ Agreement. On the basis of this record of
minimal attempts to obtain CSI’s data, Commerce is permitted
to conclude that futility has not been demonstrated.
Court No. 99-08-00482 Page 24
KSC’s interests and that CSI would not cooperate.21 KSC
further argues that CSI was no longer the importer of record
for KSC-produced hot-rolled steel,22 and that it competed with
CSI in the U.S. market, showing that KSC and CSI did have
competing interests. According to KSC, Commerce did not
consider that CSI allegedly stood to benefit from its own lack
of cooperation. Commerce and defendant-intervenors emphasize
that the Department did not engage in subjective speculation
about CSI’s motives, but rather focused on the record which
shows that during the POI, CSI imported and sold a large
volume of KSC’s subject merchandise.23 Moreover, the
Department noted that it could not reasonably predict or weigh
all of the possible effects a dumping margin would have on
other business interests of interested parties, but could only
attempt to insure that, as affiliated entities, KSC and CSI
21 KSC also insists that CSI operated as an independent
company and cites [ ] of the Shareholders’ Agreement
regarding [ ] which states that CSI [ ] Shareholders’
Agreement, at 14, Pl.’s App., Tab 7, at 15. The fact that CSI
may have been trying to [ ] does not prove that CSI’s
interests were inherently antagonistic, or separate from,
KSC’s.
22 KSC stated that it [ ]. KSC Br. at 33.
23 Over [ ] percent of KSC’s imports of subject
merchandise into the U.S. were sold through CSI during the
POI. Analysis Memo, at 2, Def.’s App., Tab 13, at 2.
Court No. 99-08-00482 Page 25
did not benefit in this investigation through their joint
failure to cooperate. Final Determination, 64 Fed. Reg. at
24,368.24
Despite its general practice of attributing failure of an
affiliate to the respondent, Commerce has applied a more
nuanced approach where a respondent was affiliated with a
petitioner. See Stainless Steel Wire Rod from Taiwan, 63 Fed.
Reg. 40,461 (Dep’t Commerce 1998) (notice of final
determination of sales at LTFV). In Stainless Steel Wire Rod,
the Department did not make an adverse inference with regard
to respondent’s CEP sales, even though respondent’s affiliate,
a petitioner in the investigation, failed to report a large
number of CEP sales. Id. at 40,464. Commerce stated:
Given the nature of the relationship between Walsin [the
respondent] and Carpenter [a Walsin affiliate];
Carpenter’s participation in this proceeding as a
petitioner; and Carpenter’s exclusive control of the
sales and price information at issue, we find that Walsin
was not in a position to report this information. Given
these unusual circumstances, we have not determined that
Walsin failed to act to the best of its ability to comply
24 As CSI did not import from KSC during the first
annual review period, actual duties assessed on entries
suspended by this investigation should not be affected
significantly by any failure of CSI to cooperate. See Daewoo
Elecs. Co. v. United States, 712 F. Supp. 931, 952 (Ct. Int’l
Trade 1989) (“actual assessment of antidumping duties does not
occur until Commerce conducts its first administrative review
of entries subject to an antidumping order”), aff’d in part,
rev’d on other grounds, 6 F.3d 1511 (Fed. Cir. 1993).
Court No. 99-08-00482 Page 26
with the Department’s request for information.
Id. (emphasis added). By contrast in this case, Commerce did
not find that the affiliated petitioner had exclusive control
of the data, but rather found that KSC could have accessed
CSI’s information, or at least exerted more effort to obtain
the information, or demonstrated it could not obtain the
information.
The real motives of the parties in this investigation are
indeed unclear. Whether CSI consulted with KSC or CVRD before
joining as a petitioner in antidumping proceedings against its
shareholders, and why CSI could do so without KSC or CVRD
doing anything about it, are unanswered questions. Focus on
KSC’s level of cooperation, however, shows that far from
employing any forceful steps to provide any of the Section E
information requested by the Department, KSC made efforts
consisting merely of written and oral requests to collect the
data from CSI officials. As stated by Commerce, “the fact
that KSC has provided a great deal of information and has
substantially cooperated with respect to other issues does not
relieve it of the requirement to act to the best of its
ability to provide the requested CSI information.” Final
Determination, 64 Fed. Reg. at 24,368. The determination
regarding KSC’s cooperation was in accordance with law and
Court No. 99-08-00482 Page 27
supported by substantial evidence. Commerce’s decision to
apply partial adverse facts available for the KSC/CSI sales is
therefore affirmed.
II. Selection of Partial Adverse Facts Available Margin
KSC argues that if an adverse inference is warranted, it
should be less adverse than the one chosen here because KSC
substantially cooperated throughout the investigation. KSC
maintains that the Department considers a respondent’s level
of cooperation, even when it is applying adverse facts
available pursuant to 19 U.S.C. § 1677e(b).
In the Final Determination, Commerce explained its
application of partial adverse facts to the CSI sales. The
Department stated it used “the second highest calculated
margin for an individual CONNUM.”25 64 Fed. Reg. at 24,369.
The Department had used the highest margin by CONNUM in the
preliminary determination, but reexamined that decision in the
final determination. Commerce explained its reasoning as
follows:
25 KSC explains that “CONNUM” stands for “control
number.” “The Department requires that the physical
characteristics of each product be assigned a number or letter
pursuant to the ITA’s codes. For example, merchandise that
had the characteristic of being ‘painted’ is assigned number
‘1'; unpainted merchandise if assigned number ‘2.’ The codes
together make a CONNUM.” KSC Br. at 7 n.1.
Court No. 99-08-00482 Page 28
[W]e find that the [preliminary] margin chosen was not
sufficiently within the mainstream of KSC’s sales in that
the rate was derived from sales of a product that
accounted for a very small portion of KSC’s total sales
as well as the highest rate by CONNUM. In selecting the
facts available margin for the final determination, we
sought a margin that is sufficiently adverse so as to
effectuate the statutory purposes of the adverse facts
available rule to induce respondents to provide the
Department with complete and accurate information . . . .
We also sought a margin that is indicative of KSC’s
customary selling practices and is rationally related to
the transactions to which the adverse facts available are
being applied. To that end, we selected a margin for a
CONNUM that involved substantial commercial quantities
and thus fell within the mainstream of KSC’s transactions
based on quantity. Finally, we found nothing on the
record to indicate that the sales that we selected were
not transacted in a normal manner.
Id. This change in the margin selection, however, only
resulted in a small change in the margin, from 67.59 percent
to 67.14 percent. The Government explains that “Commerce
inferred from KSC’s failure to provide data for the CSI sales
that the margins for those sales were at least as high as the
highest margins found for the reported sales.” Gov’t Br. at
27. KSC is not challenging this reasoning, rather it argues
that the Department should have considered the fact that KSC
substantially cooperated during the investigation, and applied
a less adverse margin than the one selected.
In Roller Chain, Other than Bicycle from Japan, 63 Fed.
Reg. 63,671 (Dep’t Commerce 1998) (final results and partial
recission of antidumping duty admin. rev.), Commerce applied
Court No. 99-08-00482 Page 29
adverse facts available, but nevertheless considered the
party’s cooperation. Although Commerce found that the
respondent had not acted to the best of its ability, Commerce
stated that “because the company substantially cooperated
throughout the course of this review, we are resorting to FA
that are less adverse to the interests of [respondent].” 63
Fed. Reg. at 63,674. Likewise in Certain Cut-to-Length
Carbon-Quality Steel Plate Products from Indonesia, 64 Fed.
Reg. 73,164 (Dep’t Commerce 1999) (notice of final
determination of sales at LTFV), the Department applied
adverse facts available, but “because the company was
otherwise cooperative,” Commerce did not draw the “most
adverse inference.” 64 Fed. Reg. at 73,167; see also Certain
Pasta from Italy, 61 Fed. Reg. 30,326, 30,329 (Dep’t Commerce
1996) (notice of final determination of sales at LTFV)
(Commerce determined that an adverse inference was warranted,
but stated that because the respondent “made some effort to
cooperate, even though it did not cooperate to the best of its
ability,” Commerce “did not choose the most adverse rate based
on the petition.”)
The Government maintains that Commerce’s practice is to
determine adverse facts available on a case-by-case basis.
See, e.g. Certain Internal-Combustion Industrial Forklift
Court No. 99-08-00482 Page 30
Trucks from Japan, 62 Fed. Reg. 5,592, 5,594 (Dep’t Commerce
1997) (final results of antidumping duty admin. rev.) (“[W]e
resolve [facts available] matters on a case-by-case basis by
examining the nature and extent of any deficiencies and the
level of cooperation by respondent. Afer such an examination
we determine whether to apply adverse inferences.”) The
Government and defendant-intervenors also seek to distinguish
the determinations relied on by KSC on the ground that those
determinations involved total adverse facts available, and in
this case Commerce applied partial adverse facts available,
which is already less adverse than the most adverse result
possible.
It does seem clear that Roller Chain from Japan, 63 Fed.
Reg. 63,671, and Certain Pasta from Italy, 61 Fed. Reg.
30,326, involved total adverse facts available. Cut-to-Length
Steel from Indonesia, 64 Fed. Reg. 73,164, however, involved
partial adverse facts available because the adverse data
selected was substituted for missing conversion cost data. 64
Fed. Reg. at 73,167. In that determination, the Department
said that adverse facts available were warranted, but that
because of the respondent’s cooperation, it was not drawing
the most adverse inference. Id. In this case, Commerce did
not further discuss KSC’s cooperation once it determined that
Court No. 99-08-00482 Page 31
it had failed to comply to the best of its ability in
providing the CSI information.
In distinguishing KSC’s cites on the basis of total,
rather than partial, adverse facts available, the parties fail
to give a reasoned explanation for why it only makes sense to
look at a party’s cooperation in the total adverse facts
situation, and not the partial.26 Under the former best
information available (“BIA”) rule, Commerce did not consider
a party’s level of cooperation in a partial-BIA situation,
although it did consider cooperation in the total BIA context.
See National Steel Corp. v. United States, 18 CIT 1126, 1131,
870 F. Supp. 1130, 1135 (1994) (noting that degree of
cooperation determines which tier of total BIA is used, and
that partial BIA applies “when only part of the submitted
information is deficient. The adversity of the information
used as partial BIA depends on the level of sufficiency of the
information provided. It is noteworthy that Commerce does not
26 This court has previously noted the advantage of
using partial adverse facts available, as opposed to total
adverse facts available, where the respondent has only failed
to comply in one respect, because the use of partial adverse
facts “furthers the purpose of achieving a reliable and
accurate margin . . . [and] also preserve[s] an adverse
consequence for [the respondent’s] failure to provide
information.” Ferro Union, Inc. v. United States, 74 F.
Supp.2d 1289, 1297 (Ct. Int’l Trade 1999).
Court No. 99-08-00482 Page 32
consider the respondent’s level of cooperation when applying
partial BIA.”) (citations omitted).27
The Government denies that KSC substantially cooperated
as regards the specific issue of providing information on
CSI’s sales. It argues that to the extent cooperation may be
considered in selecting partial facts available, “the
Department is more likely to consider the degree of
cooperation with respect to the element at issue.” Gov’t Br.
at 30. The Government cites to pre-URAA cases where the
Department made a less adverse inference when the errors were
limited in nature, and more adverse inferences when the errors
were “systemic.” Compare Certain Hot-Rolled Carbon Steel Flat
Products and Certain Cold-Rolled Carbon Steel Flat Products
from the Netherlands, 58 Fed. Reg. 37,199, 37,202 (Dep’t
Commerce 1993) (final determinations of sales at LTFV)
27 In the BIA context, Commerce applied the “first
tier” when a respondent refused to cooperate with requests for
information or significantly impeded a review, in which case
Commerce “selected the higher of the highest rate assigned for
any firm in the LTFV investigation or the highest rate
calculated in the administrative review.” Allied-Signal
Aerospace Co. v. United States, 996 F.2d 1185, 1190 (Fed. Cir.
1993). “Second tier” BIA applied to respondents who
substantially cooperated but “nonetheless fail[ed] to provide
requested information in a timely manner.” Id. For second
tier BIA, Commerce assigned to a respondent “the higher of its
own prior LTFV rate or the highest rate calculated in the
current administrative review.” Id. at 1191.
Court No. 99-08-00482 Page 33
(“[B]ecause the errors in [respondent’s] reporting of product
characteristics are limited in nature, we will use, as BIA,
the weighted-average of the calculated positive dumping
margins in each class or kind of merchandise.”) with Certain
Cut-to-Length Carbon Steel Plate from Finland, 58 Fed. Reg.
37,122, 37,124 (Dep’t Commerce 1993) (final determination of
sales at LTFV) (“Because [respondent’s] errors were systemic
in nature, we used, as BIA, for those particular transactions
the higher of: (1) The highest non-aberrant transaction margin
calculated for the firm from among the sales of the same class
or kind of merchandise where we were able to calculate a
margin, or (2) the average petition rate for the same class or
kind of merchandise.”).
In this case, the KSC sales to CSI represented a
substantial portion28 of KSC’s imports of subject merchandise
into the United States. This does seem to be a legitimate
factor for the Department to consider in deciding how adverse
the inference should be. If the missing information is
important, and a large volume of that information is missing,
it is logical to draw a more adverse inference because that
28 They represented [ ] percent of KSC’s exports to the
United States during the POI. Analysis Memorandum, at 2,
Def.’s App., Tab 13, at 2.
Court No. 99-08-00482 Page 34
would further the goal of creating an incentive for
respondents to provide the information. See Statement of
Administrative Action, accompanying H.R. Rep. No. 103-826(I),
at 870, reprinted in 1994 U.S.C.C.A.N. 3773, 4199 (“Where a
party has not cooperated, Commerce . . . may employ adverse
inferences about the missing information to ensure that the
party does not obtain a more favorable result by failing to
cooperate than if it had cooperated fully.”)
The statute is silent on whether cooperation needs to be
considered once the Department has already made the requisite
finding of lack of cooperation to the best of ability. See 19
U.S.C. § 1677e(b). This would therefore seem to leave room
for the Department to further consider cooperation in the
adverse facts available context if it so chooses. KSC’s
argument seems to depend on a finding that it is the
Department’s consistent practice to consider cooperation, even
when it is applying adverse facts. See, e.g. Queen’s Flowers
de Colombia, 21 CIT at 976, 981 F. Supp. at 625 (“It is ‘a
general rule that agency must either conform itself to its
prior decisions or explain the reasons for its departure.’”)
(citation omitted). The difficulty with this argument,
however, is that it is not clear that it is the Department’s
regular practice to consider a party’s level of cooperation in
Court No. 99-08-00482 Page 35
the total or partial adverse facts available context, simply
because Commerce has done so in a few instances where the
facts warranted it. Moreover, the selection of partial
adverse facts available in this case does not seem contrary to
law, although the final margin of 67.14 percent is quite
high.29 Final Determination, 64 Fed. Reg. at 24,370. KSC also
states that the margin selected was higher than the highest
rate from the petition, which was 64 percent. KSC Reply Br.
at 15.30
Nevertheless, in this determination, Commerce’s reasoning
on the selection of partial adverse facts is well articulated.
See Final Determination, 64 Fed. Reg. at 24,369. Commerce had
chosen a slightly higher rate in the preliminary
29 The two other respondents in this determination,
Nippon Steel Corporation and NKK Corporation, received margins
of 19.65 and 17.86 percent, respectively. Final
Determination, 64 Fed. Reg. at 24,370.
30 The court is not entirely content with the result
herein because the margin for deposits is relatively high and
CSI may benefit from the effect on KSC from CSI’s failure to
cooperate. But KSC did not make a full enough record for the
court to conclude that Commerce erred. KSC has not proposed
an alternative less adverse margin. To the extent KSC relies
on broad equitable or unfairness claims unconnected to
specific statutory or regulatory provisions or administrative
practice, the court finds they bear insufficient weight based
on this record. The court also is mindful that KSC may
demonstrate full cooperation and avoid final imposition of
duties in the administrative review, although this is not
determinative.
Court No. 99-08-00482 Page 36
determination, and chose a lower margin in the final
determination because it was closer to the mainstream of KSC’s
sales. Id. Defendant-intervenors also note that the
selection of the margin in this case is comparable to the
selection of the margin in other partial adverse facts
determinations. See Stainless Steel Sheet and Strip in Coils
from Italy, 64 Fed. Reg. 30,750, 30,755 (Dep’t Commerce 1999)
(notice of final determination of sales at LTFV) (“For
[respondent’s] unreported U.S. sales, we have chosen the
highest non-aberrational margin from the rest of
[respondent’s] U.S. sales as partial facts available.”);
Stainless Steel Sheet and Strip in Coils from Mexico, 64 Fed.
Reg. 30,790, 30,803 (Dep’t Commerce 1999) (notice of final
determination of sales at LTFV) (“As adverse facts available
[for the reseller’s unverifiable data] we have assigned the
highest non-aberrational margin calculated on [respondent’s]
properly reported U.S. sales.”)31
31 Corroboration pursuant to 19 U.S.C. § 1677e(c) is
not challenged. From investigation data, Commerce selected a
weighted-average to weighted-average comparison for a
particular CONNUM. It did not select a margin based on a few
individual transactions or on any data outside the
investigation. Cf. Ferro Union, 44 F. Supp.2d at 1334-35
(Commerce must select a total substitute margin which is
relevant and reliable, and bears rational relationship to
matter to which it is applied); Finer Foods, 2000 WL 897752 at
(continued...)
Court No. 99-08-00482 Page 37
Because the Department has in past instances considered
cooperation even when it is applying an adverse inference, it
may have been preferable for Commerce to do so in this case,
but exactly what standard the Department should be applying is
unclear. If Commerce chooses to consider a party’s level of
cooperation when it makes an adverse inference, there seems no
generally applicable reason for the Department not to do so.
There is not, however, an obligation for it to do so in every
case. Given the importance of the missing data with regard to
a substantial number of sales, the court cannot conclude that
Commerce abused its discretion. Commerce’s selection of the
partial adverse facts available margin is therefore affirmed.
Conclusion
The court finds that Commerce’s application of the
adverse inference pursuant to 19 U.S.C. § 1677e(b) was in
accordance with law and supported by substantial evidence.
31(...continued)
*6 (court will not uphold use of individual transaction
margins which bear no apparent relationship to current level
of dumping in industry to corroborate a total substitute
margin).
Court No. 99-08-00482 Page 38
The particular selection of partial adverse facts was also in
accordance with law. The Final Determination is therefore
affirmed in its entirety.
________________________
Jane A. Restani
Judge
Dated: New York, New York
This 1st day of August, 2000.