Slip Op. 00-146
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
______________________________________
:
TRANSCOM, Inc., :
:
Plaintiff, :
:
L & S BEARING COMPANY, :
:
Plaintiff-Intervenor, :
:
v. : Court No. 97-02-00248
:
THE UNITED STATES, :
:
Defendant, :
:
THE TIMKEN COMPANY, :
:
Defendant-Intervenor. :
_____________________________________ :
Plaintiff Transcom, Inc. (“Transcom”), a United States
corporation, moves pursuant to USCIT R. 56.2 for judgment upon the
agency record challenging various aspects of the United States
Department of Commerce, International Trade Administration’s
(“Commerce”) final determination, entitled Final Results of
Antidumping Duty Administrative Review and Revocation in Part of
Antidumping Duty Order on Tapered Roller Bearings and Parts
Thereof, Finished and Unfinished, From the People’s Republic of
China (“Final Results”), 62 Fed. Reg. 6189 (Feb. 11, 1997).
Specifically, Transcom contends that Commerce: (1) failed to
provide notice to Transcom and Transcom’s Hong Kong exporters as
required under 19 U.S.C. §§ 1675(a), 1677e(b)(1994) and 19 C.F.R.
§ 353.22(a),(c) (1994); (2) unlawfully resorted to punitive use of
best information available in determining the antidumping rate
applicable to Transcom’s entries from Transcom’s Hong Kong
exporters in violation of 19 U.S.C. § 1675(a) and 19 C.F.R. §§
353.22, 355.37; and (3) by doing so, deprived Transcom of its Fifth
Amendment Due Process rights.
Court No. 97-02-00248 Page 2
Held: Transom’s USCIT R. 56.2 motion is denied. Case
dismissed.
Dated: November 7, 2000
Neville, Peterson & Williams (George W. Thompson, John M.
Peterson and Curtis W. Knauss) for plaintiff.
Cohen Darnell & Cohen, P.L.L.C. (Mark A Cohen) for plaintiff-
intervenor.1
David W. Ogden, Assistant Attorney General; David M. Cohen,
Director; Commercial Litigation Branch, Civil Division, United
States Department of Justice (Henry R. Felix); of counsel: Mildred
E. Steward, Office of the Chief Counsel for Import Administration,
United States Department of Commerce, for defendant.
Stewart and Stewart (Terence P. Stewart, James R. Cannon, Jr.
and Amy S. Dwyer) for defendant-intervenor.
OPINION
TSOUCALAS, Senior Judge: Plaintiff, Transcom, Inc.
(“Transcom”), a United States corporation, moves pursuant to USCIT
R. 56.2 for judgment upon the agency record challenging various
aspects of the United States Department of Commerce, International
Trade Administration’s (“Commerce”) final determination, entitled
Final Results of Antidumping Duty Administrative Review and
Revocation in Part of Antidumping Duty Order on Tapered Roller
1
L & S Bearing Company has intervened in this action but
filed neither motion for judgment upon the agency record nor
supporting brief.
Court No. 97-02-00248 Page 3
Bearings and Parts Thereof, Finished and Unfinished, From the
People’s Republic of China (“Final Results”), 62 Fed. Reg. 6189
(Feb. 11, 1997). Specifically, Transcom contends that Commerce:
(1) failed to provide notice to Transcom and Transcom’s Hong Kong
exporters as required under 19 U.S.C. §§ 1675(a), 1677e(b)(1994)
and 19 C.F.R. § 353.22(a),(c) (1994); (2) unlawfully resorted to
punitive use of best information available in determining the
antidumping rate applicable to Transcom’s entries from Transcom’s
Hong Kong exporters in violation of 19 U.S.C. § 1675(a) and 19
C.F.R. § 353.22, 355.37; and (3) by doing so, deprived Transcom of
its Fifth Amendment Due Process rights.
BACKGROUND
This case concerns the seventh administrative review of the
antidumping duty order on tapered roller bearings (“TRBs”) and
parts thereof, finished and unfinished, imported from the People’s
Republic of China (“PRC”) during the period of review (“POR”)
covering June 1, 1993, through May 31, 1994. Commerce published
the preliminary results on September 26, 1995. See Preliminary
Results of Antidumping Administrative Review on Tapered Roller
Bearings and Parts Thereof, Finished and Unfinished, From the
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People’s Republic of China (“Preliminary Results”), 60 Fed. Reg.
49,572. Commerce published Final Results on February 11, 1997.
See 62 Fed. Reg. 6189.
Since this administrative review was initiated before December
31, 1994, the applicable statutory provisions are those that
existed prior to January 1, 1995, the effective date of the
amendments made by the Uruguay Round Agreements Act (“URAA”), Pub.
L. No. 103-465, 108 Stat. 4809 (1994) (effective Jan. 1, 1995).
JURISDICTION
The Court has jurisdiction over this matter pursuant to 19
U.S.C. § 1516a(a)(2) (1994) and 28 U.S.C. § 1581(c) (1994).
STANDARD OF REVIEW
In reviewing a challenge to Commerce’s final determination in
an antidumping administrative review, the Court will 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) (1994).
Court No. 97-02-00248 Page 5
I. Substantial Evidence Test
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 Consolidated 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 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) (citations omitted). Moreover, “[t]he court may not
substitute its judgment for that of the [agency] when the choice is
‘between two fairly conflicting views, even though the court would
justifiably have made a different choice had the matter been before
it de novo.’” American Spring Wire Corp. v. United States, 8 CIT
20, 22, 590 F. Supp. 1273, 1276 (1984) (quoting Penntech Papers,
Inc. v. NLRB, 706 F.2d 18, 22-23 (1st Cir. 1983) (quoting, in turn,
Universal Camera, 340 U.S. at 488)).
II. Chevron Two-Step Analysis
To determine whether Commerce’s interpretation and application
Court No. 97-02-00248 Page 6
of the antidumping statute is “in accordance with law,” the Court
must undertake the two-step analysis prescribed by Chevron U.S.A.
Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837
(1984). Under the first step, the Court reviews Commerce’s
construction of a statutory provision to determine whether
“Congress has directly spoken to the precise question at issue.”
Id. at 842. “To ascertain whether Congress had an intention on the
precise question at issue, [the Court] employ[s] the ‘traditional
tools of statutory construction.’” Timex V.I., Inc. v. United
States, 157 F.3d 879, 882 (Fed. Cir. 1998) (citing Chevron, 467
U.S. at 843 n.9). “The first and foremost ‘tool’ to be used is the
statute’s text, giving it its plain meaning. Because a statute’s
text is Congress’s final expression of its intent, if the text
answers the question, that is the end of the matter.” Id.
(citations omitted). Beyond the statute’s text, the tools of
statutory construction “include the statute’s structure, canons of
statutory construction, and legislative history.” Id. (citations
omitted); but see Floral Trade Council v. United States, 23 CIT
___,___ n.6, 41 F. Supp. 2d 319, 323 n.6 (1999) (noting that “[n]ot
all rules of statutory construction rise to the level of a canon,
however”) (citation omitted).
Court No. 97-02-00248 Page 7
If, after employing the first prong of Chevron, the Court
determines that the statute is silent or ambiguous with respect to
the specific issue, the question for the Court becomes whether
Commerce’s construction of the statute is permissible. See
Chevron, 467 U.S. at 843. Essentially, this is an inquiry into the
reasonableness of Commerce’s interpretation. See Fujitsu Gen. Ltd.
v. United States, 88 F.3d 1034, 1038 (Fed. Cir. 1996). Provided
Commerce has acted rationally, the Court may not substitute its
judgment for the agency’s. See IPSCO, Inc. v. United States, 965
F.2d 1056, 1061 (Fed. Cir. 1992); see also Koyo Seiko Co. v. United
States, 36 F.3d 1565, 1570 (Fed. Cir. 1994) (holding that “a court
must defer to an agency’s reasonable interpretation of a statute
even if the court might have preferred another”). The “[C]ourt
will sustain the determination if it is reasonable and supported by
the record as a whole, including whatever fairly detracts from the
substantiality of the evidence.” Negev Phosphates, Ltd. v. United
States Dep’t of Commerce, 12 CIT 1074, 1077, 699 F. Supp. 938, 942
(1988) (citations omitted). In determining whether Commerce’s
interpretation is reasonable, the Court considers the following
non-exclusive list of factors: the express terms of the provisions
at issue, the objectives of those provisions and the objectives of
Court No. 97-02-00248 Page 8
the antidumping scheme as a whole. See Mitsubishi Heavy Indus. v.
United States, 22 CIT ___, ___, 15 F. Supp. 2d 807, 813 (1998).
III. Southern Cal. Edison Co. Analysis
If the language of a regulation validly implemented under the
Chevron test speaks unambiguously to the issue at hand, the precise
letter of this regulation must be followed. See Christensen v.
Harris County, 120 S. Ct. 1655, 1663 (2000). Otherwise, the
Court’s deference to a contrary agency position would “permit the
agency, under the guise of interpreting a regulation, to create de
facto a new regulation.” Id.
Conversely, an agency's interpretation of its own regulation
is entitled to deference when the language of the regulation is
ambiguous or the regulation is silent about the issue at hand. See
id. (citing Auer v. Robbins, 519 U.S. 452 (1997)). Deference,
however, is proper only if the agency’s interpretation is
reasonable. “[A]n agency’s interpretation of its own regulations
must be given effect ‘so long as the interpretation sensibly
conforms to the purpose and wording of the regulations.’” Southern
Cal. Edison Co. v. United States, 226 F.3d 1349, 1356 (Fed. Cir.
2000) (quoting Martin v. Occupational Safety and Health Review
Court No. 97-02-00248 Page 9
Comm’n, 499 U.S. 144, 150 (1991)). The Court’s deference is
particularly appropriate when
the agency is applying its regulations to a complex or
changing circumstance, thus requiring the agency to bring
to bear its unique expertise and policy-making
prerogatives. When . . . judicial deference is [proper],
a court must accept the agency's reasonable
interpretation of a regulation, even if there may be
other reasonable interpretations to which the regulation
is susceptible, and even if the court would have
preferred an alternative interpretation.
Id. at 1357 (internal citations omitted).
DISCUSSION
I. Proper and Sufficient Notice
A. Background
This case concerns Commerce’s procedure for conducting an
administrative review and imposing antidumping duties. The
procedure involves four steps: (1) Commerce publishes a notice of
Opportunity to Request an Administrative Review for the POR at
issue; (2) upon receipt of such request, Commerce publishes a
notice of Initiation of an Administrative Review in the Federal
Register; (3) Commerce, in order to obtain pertinent information,
distributes or makes available questionnaires to those entities
Commerce designated in the notice of Initiation; and (4) on the
Court No. 97-02-00248 Page 10
basis of the information gathered, Commerce determines the
antidumping duty rates applicable to each entry or type of entries
and publishes these determinations in the Federal Register. See
generally, 19 U.S.C. § 1675(a); 19 C.F.R. §§ 353.22, 353.31, 355.31
(1994).
On June 7, 1994, in accordance with 19 C.F.R. § 353.22,
Commerce published a notice of Opportunity to Request an
Administrative Review for the 1993-94 POR of TRBs from the PRC.
See Opportunity to Request Administrative Review of Antidumping or
Countervailing Duty Order, Finding, or Suspended Investigation, 59
Fed. Reg. 29,411. In response, on June 30, 1994, The Timken
Company (“Timken”) requested a review of one hundred and one
companies known to Timken to be sources of TRBs and, in addition,
requested a review of “all merchandise covered by the order, from
whatever source.” See Def.’s Mem. Opp’n Pl.’s Mot. J. Agency R.
(“Def.’s Mem.”) at 4 (citing to P.D. 1, Fi. 1, Fr. 1, 3-12). The
list of one hundred and one companies did not include Goldhill
International Trading & Services Co. and Direct Source
International (collectively “Transcom’s Hong Kong exporters”),
entities that were Hong Kong nationals exporting TRBs from the PRC
for Transcom, a United States importer. See id. at 8.
Court No. 97-02-00248 Page 11
On July 26, 1994, Commerce informed the PRC government and the
PRC Ministry of Foreign Trade and Economic Cooperation (“MOFTEC”)
about the impending administrative review and requested information
concerning “‘all companies, including third-party exporters, that
. . . exported’ TRBs from the PRC.” Id. at 5 (citing to P.D. 4,
Fi. 1, Fr. 34) (emphasis supplied); see also Preliminary Results,
60 Fed. Reg. at 49,572.
On August 24, 1994, Commerce initiated the review at issue,
naming in the notice of Initiation the one hundred and one
companies identified by Timken, thus omitting Transcom’s Hong Kong
exporters. See Initiation of Antidumping Duty Administrative
Reviews and Requests for Revocation in Part (“Notice of
Initiation”), 59 Fed. Reg. 43,537. The Notice of Initiation also
provided that “[a]ll other exporters of tapered roller bearings are
conditionally covered by this review.” Id. at 43,539.
On December 5, 1994, Commerce sent a copy of the Notice of
Initiation and the questionnaires to the PRC’s Secretary General of
the Basic Machinery Division of the Chamber of Commerce for Import
and Export of Machinery and Electronics (“Machinery Division”), the
contact entity suggested by MOFTEC. See Def.’s Mem. at 5 (citing
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to P.D. 4, Fi. 1, Fr. 34). Commerce directed the Machinery
Division to send the questionnaires to all companies named in the
list and indicated that the information sought in the
questionnaires may be required from exporters not specifically
listed in the Notice of Initiation.2 See Def.’s Mem. at 6 (citing
to P.D. 17, Fi. 2, Fr. 31).
On September 26, 1995, after the time period to answer the
questionnaires had expired, Commerce published the results of its
preliminary review. See Preliminary Results, 60 Fed. Reg. 49,572.
Subsequently, Transcom appeared and identified its Hong Kong
exporters as resellers of TRBs from the PRC. See Def.’s Mem. at 8.
On February 11, 1997, Commerce published the Final Results, and the
determinations made therein unfavorably affected Transcom’s entries
from its Hong Kong exporters. See 62 Fed. Reg. at 6189, 6211-13.
2
Commerce informed the Machinery Division that Commerce
would, in addition, personally present the questionnaires to the
members of the Machinery Division. See Def.’s Mem. at 6-7 (citing
to P.D. 16, Fi. 2, Frs. 25-30). The presentation took place in
Beijing on December 7-9, 1994, and was attended by ten out of one
hundred and one respondents named on the Notice of Initiation and
one voluntary respondent, Xiangfan International Trade Corp., that
was not named in the list. See Preliminary Results, 60 Fed. Reg.
at 49,572.
Court No. 97-02-00248 Page 13
B. Contentions of the Parties
Transcom contends that under 19 U.S.C. § 1675(a) and 19
C.F.R. § 353.22 Commerce lacked authority to review and impose the
resulting determinations upon entries of any company other than
those identified by name in the Notice of Initiation. See Pl.’s
Br. Supp. Mot. J. Agency R.(“Pl.’s Br.”) at 13-16; Pl.’s Reply Br.
Supp. Mot. J. Agency R. (“Pl.’s Reply Br.”) at 4, 6. Transcom
argues that the statutory and regulatory language requires Commerce
to provide exporters and their United States importers with
individual notice in order to properly subject the entries in which
these parties may have an interest to Commerce’s review
determinations. See Pl.’s Br. at 15-16.
Transcom further points out that Commerce had a practice of
personally identifying each exporter subject to review by name.
See id. at 18. In addition, Transcom asserts that its Hong Kong
exporters were automatically entitled to receive individual notices
because they were nationals of a market economy. See id. at 21-23,
32. Transcom concludes that the language Commerce used in its
Notice of Initiation failed to provide Transcom and its Hong Kong
exporters with adequate notice that their interests may be
affected. See id. at 3-4, 32.
Court No. 97-02-00248 Page 14
Commerce argues that it: (1) was obligated to provide notice
only to “respondents” determinable under the “first to know test,”
here, the PRC suppliers to Transcom’s Hong Kong exporters; (2)
could not have provided better notice because it had “no
independent source of information on Chinese TRB exporters
superior to the industry information possessed by Timken”; and (3)
provided the maximum amount of notice available to the trade
community by (a) issuing a statement in the Federal Register that
“[a]ll other exporters of tapered roller bearings are conditionally
covered by this review”; (b) contacting the PRC government with an
implicit request to identify third-country exporters; and (c)
traveling to Beijing to present the questionnaires to the members
of the Machinery Division. Def.’s Mem. at 15-17, 43-45.
Timken agrees with Commerce’s contention that the language
“[a]ll other exporters of tapered roller bearings are conditionally
covered by this review” included in the Notice of Initiation
provided Transcom and its Hong Kong exporters with adequate notice
that Transcom’s entries were subject to the review. See Timken’s
Resp. Opp’n Pl.’s Mot. J. Agency R. (“Timken’s Resp.”) at 9-12.
Timken also points out that neither the statute nor the regulation
requires Commerce to limit an administrative review to specifically
Court No. 97-02-00248 Page 15
identified exporters only. See Timken’s Resp. at 14-19 (citing to
19 U.S.C. §§ 1675(a), 1677e(b); 19 C.F.R. § 353.22(a),(c)).
C. Analysis
The Court’s analysis begins with an examination of the
relevant statutory and regulatory provisions. The applicable
statute does not expressly designate the parties to whom notice is
due. Section 1675(a)(1) only provides that a review can be
conducted “after publication of notice of such review in the
Federal Register . . . .” 19 U.S.C. § 1675(a)(1).
Because the language of the statute does not address the
issue, the Court turns to the legislative history of § 1675(a)(1)
to determine whether Congress has “directly addressed the precise
question at issue.” Chevron, 467 U.S. at 843; see Suramerica de
Aleaciones Laminadas, C.A. v. United States, 966 F.2d 660, 667
(Fed. Cir. 1992). The extensive legislative history of §
1675(a)(1), however, does not indicate that Congress addressed the
issue of individual notice. See generally, Omnibus Trade and
Competitiveness Act of 1988, Pub. L. No. 100-418 (codified as 19
U.S.C. § 2901 (1994)); Trade and Tariff Act of 1984, Pub. L. No.
98-573 (codified as 19 U.S.C. § 1675); Trade Agreements Act of
Court No. 97-02-00248 Page 16
1979, Pub. L. No. 96-39 (codified as 19 U.S.C. § 2501 (1994)).
In situations where Congress has not provided clear guidance
on an issue, Chevron requires the Court to defer to Commerce’s
interpretation of 19 U.S.C. § 1675(a)(1) so long as this
interpretation is reasonable. See Chevron, 467 U.S. at 845; Koyo
Seiko Co., 36 F.3d at 1570. This Court, therefore, turns to the
language of a regulation implemented under the statutory mandate of
19 U.S.C. § 1675(a)(1).
The regulation provides only that the notice of “Initiation of
Antidumping Duty Administrative Review” must be published in the
Federal Register “[a]fter receipt of a timely request . . . or on
[Commerce’s] own initiative when appropriate . . . .” 19 C.F.R. §
353.22(c)(1). An accompanying regulation mandates that a notice of
initiation must include the following: “[a] description of the
merchandise . . .; [t]he name of the home market country . . . ;
and [a] summary of the available information that would, if
accurate, support the imposition of antidumping duties.” 19 C.F.R.
353.11(a)(2) (1994).
Both regulations, 19 C.F.R. § 353.22(c)(1) and 19 C.F.R.
353.11(a)(2), are reasonable implementations of 19 U.S.C. §
Court No. 97-02-00248 Page 17
1675(a)(1) and warrant this Court’s deference. See Chevron, 467
U.S. at 845; Koyo Seiko Co., 36 F.3d at 1570. In fact, the
language of 19 C.F.R. § 353.22(c)(1) is greatly similar to that of
19 U.S.C. § 1675(a)(1) and 19 C.F.R. § 353.11(a)(2) is a typical
notice provision,3 a legitimate mechanism effectuating the
statutory mandate. See 19 U.S.C. § 1675(a)(1), 19 C.F.R. §§
353.11(a)(2), 353.22(c)(1).
Neither regulation, however, states whether Commerce itself
must identify an exporter by name in the notice of initiation of
review in order to make the entries of merchandise obtained from
this exporter subject to the results of the review. Thus, this
Court needs to examine whether the language of these regulations
was reasonably interpreted and applied by Commerce in the instant
case. See Southern Cal. Edison Co., 226 F.3d at 1356. The two
issues arising from the contentions set forth above are: (1) to
whom is the notice due; and (2) whether the particular language
employed by Commerce constituted adequate notice.
3
The regulation makes a typical requirement to describe and
designate the location of the subject matter of the review and
provide an aggrieved party with an opportunity to offer contrary
evidence. See 19 C.F.R. § 353.11(a)(2); cf. DAVID D. SIEGEL, NEW YORK
PRACTICE 82 (3d ed. 1999) (noting that “[c]ase law suggests . . .
that not much is needed to qualify . . . as notice”).
Court No. 97-02-00248 Page 18
1. Parties to Whom Notice Is Due
The lack of express statutory or regulatory guidelines
regarding who is a proper respondent for the purpose of notice
prompts creative interpretations by both Transcom and Commerce.
Commerce initially states that if an antidumping duty order
covers a product from a nonmarket economy (“NME”), like the PRC,
“all exporters of the subject merchandise and the PRC government
are the proper respondents” for the purpose of receiving notice.
Def.’s Mem. at 17 (emphasis supplied). From this simple and clear
statement, Commerce leaps to the “first to know” test which it
presents as “a solid analytical construct for determining whether
the NME supplier or a third-country reseller is the proper
respondent.” Id. The “first to know” test, as Commerce explains,
is a step in the antidumping duty computation. Id. at 17-18
(citing to Ferrovanadium and Nitrided Vanadium From the Russian
Federation, 60 Fed. Reg. 27,957 (May 26, 1995); Fuel Ethanol From
Brazil, 51 Fed. Reg. 5572 (Feb. 14, 1986); and Certain Stainless
Steel Sheet and Strip Products From the Federal Republic of
Court No. 97-02-00248 Page 19
Germany, 48 Fed. Reg. 20,459 (May 6, 1983)).4 Commerce’s logic
escapes this Court. Commerce does not adequately explain how the
calculation of an antidumping duty rate, that is, the amount of
money to be paid by an importer for an entry of merchandise that
could pass through the hands of many resellers, including NME as
well as market economy resellers, could reveal the identity of the
proper producer or reseller Commerce ought to notify.
Disregarding this incongruity, Commerce concludes that only
where “evidence indicates that a reseller . . . directs the sale of
the subject merchandise to the United States, Commerce [regards]
that reseller . . . as the proper respondent” for the purpose of
receiving notice. Def.’s Mem. at 17. Taking this proposition to
its logical conclusion, Commerce would need to receive evidence
from a reseller or a third party that the reseller is the “proper
4
The test turns on which entity in the chain of exportation
has “the knowledge that the merchandise [is] destined for the
United States.” Def.’s Mem. at 18. The answer is determined for
the purpose of assessment of less than fair value (“LTFV”). Id.
Each of the decisions cited by Commerce, accordingly, addresses the
issue of LTFV assessment, the computation formula. Computation of
LTFV sales involves three steps: (1) calculation of the U.S. market
price; (2) calculation of the foreign market value; and (3)
calculation of the difference between these two amounts. See
generally, 19 U.S.C. §§ 1677, 1677b (1994); 19 C.F.R. §§ 353.41,
353.46 (1994).
Court No. 97-02-00248 Page 20
respondent” in order to notify that very reseller. Obviously, the
proposition of getting evidence from a reseller in order to notify
this reseller about its obligation to supply the very evidence on
the basis of which the reseller has to be notified is circular.
The alternative scenario of getting evidence from a third party in
order to notify a reseller who is the “proper respondent” suggests
a fatuous regime where, in NME cases,5 the following would occur:
(1) Commerce would be allowed to notify an “improper” entity in the
chain of exportation with a hope that this notified improper
entity, although not threatened with any potential loss because of
its “improper” status, would somehow readily possess all the
necessary and correct evidence; (2) this improper entity would take
pains to submit this evidence and notify Commerce to issue another
notice to the “proper” entity; (3) this “proper” entity would
meaningfully respond; and (4) this whole chain of events would
happen within the limited time allocated under the regulations.6
5
Neither party contests that “[i]f the administrative
review[] ha[s] been for products from a market economy country, the
scope of the review[] would have been limited to those exporters
named in the notices of initiation.” Transcom, Inc. v. United
States, 182 F.3d 876, 881 (Fed. Cir. 1999).
6
Commerce must receive all responses from the “proper”
respondents within the maximum of 180 days. See 19 C.F.R. §
353.31(a)(1)(ii).
Court No. 97-02-00248 Page 21
Clearly, the Court cannot embrace the interpretation proposed
by Commerce. The regime Commerce contemplated would run afoul of
the statutory mandate of 19 U.S.C. § 1675(a)(1) and the logic
behind regulatory language of 19 C.F.R. § 353.22(c). It would also
violate the reasonableness tests posed by Southern Cal. Edison Co.
and the second prong of Chevron. See Chevron, 467 U.S. at 845;
Auer v. Robbins, 519 U.S. 461; Southern Cal. Edison Co., 226 F.3d
at 1356.
Transcom’s reading of the regulatory language is equally
unpersuasive. Specifically, Transcom relies on 19 C.F.R. §
353.22(a) which provides that “an interested party . . . may
request in writing . . . [an] administrative review of specified
individual producers or resellers covered by an order . . . .”
Pl.’s Br. at 13 (emphasis in the brief). Transcom concludes that
this language obligates Commerce to identify every producer or
reseller by name. Id. at 13-14. Transcom misreads the regulation.
Section 353.22(a) applies to the request for review of the
“interested party” (here, Timken7); it does not provide that
7
Indeed Commerce’s attempt to explain the lack of notice to
Transcom’s Hong Kong exporters by quoting Timken’s request for a
review of “all merchandise covered by the order, from whatever
(continued...)
Court No. 97-02-00248 Page 22
Commerce must similarly specify the names of individual resellers
in its Notice of Initiation in order for the resulting
administrative review to cover entries of merchandise purchased
from these resellers. See generally, 19 C.F.R. § 353.22(a).
In support of its proposition Transcom cites Federal-Mogul
Corp. v. United States, 17 CIT 442, 822 F. Supp. 782 (1993) and 19
C.F.R. § 353.22(c). See Pl.’s Br. at 13-14, 16. These
authorities, however, do not support Transcom’s assertion.
Federal-Mogul addresses a different issue, the assessment of
companies never reviewed; the case does not examine the situation
where companies are reviewed under a notice of questionable
adequacy. See generally, 17 CIT 442, 822 F. Supp. 782. Section
7
(...continued)
source,” in addition to those entities Timken specifically
identified, cannot succeed. Def.’s Mem. at 3, 43-44. The
generalized language in Timken’s request clearly contradicts the
requirement for “specified individual” identification posed by 19
C.F.R. § 353.22(a). As Transcom correctly points out, “Commerce
has no obligation to do a domestic industry’s homework in
identifying specified foreign producers and resellers in a review
request.” Pl.’s Reply Br. at 8 (citing to Floral Trade Council v.
United States, 17 CIT 1417 (1993)). The shortcomings of Timken’s
request are, however, irrelevant to the issue of Commerce’s Notice
of Initiation and Transcom is not warranted in its effort to
interpret the language of Floral Council as placing the burden on
Commerce to identify those exporters the domestic industry failed
to name.
Court No. 97-02-00248 Page 23
353.22(c) similarly does not lend support to Transcom’s contention.
The regulation merely provides that Commerce must send
questionnaires to appropriate interested parties. See 19 C.F.R. §
353.22(c)(2). Nowhere does the regulation define “appropriate”
parties as producers or resellers that are individually named. See
generally, 19 C.F.R. § 353.22.
Finally, Transcom claims that Commerce “could have identified
all other suppliers of TRBs from the PRC and named them in the
Notice of Initiation . . . .” in order to better fulfill the
requirement of 19 C.F.R. § 353.22. Pl.’s Br. at 15 (emphasis
supplied); see Pl.’s Reply Br. at 9. Transcom ignores the fact
that Commerce had no independent source of information on Chinese
TRB exporters superior to the industry information possessed by
Timken. See Def.’s Mem. at 15-17, 43-35. Transcom similarly
ignores Commerce’s contacts with MOFTEC and the Machinery Division
and Commerce’s distribution of questionnaires in Beijing, all of
which constituted an adequate bona fide effort on the part of
Commerce to identify other exporters of TRBs from the PRC. See id.
at 5.
While realizing the enormous importance of adequate notice,
Court No. 97-02-00248 Page 24
the Court refuses to embrace the onerous regulatory regime
suggested by Transcom. Under Transcom’s interpretation, Commerce
would be forced to go through every invoice involved in the chain
of distribution of every piece of merchandise that enters the
United States in an effort to identify and personally name each
producer as well as each intermediate reseller prior to issuing a
notice of initiation. The notice requirement must be balanced
against practical considerations. “[T]he reasonableness of the
notice provided must be tested with reference to the existence of
'feasible and customary' alternatives and supplements to the form
of notice chosen.” Greene v. Lindsey, 456 U.S. 444, 454 (1982)
(citations omitted).
Commerce is not “required to give personal notice to [each and
every] party that could be affected by an administrative review”
and is “free to choose a variety of means to give reasonable notice
. . . [as long as Commerce] provide[s] some form of notice that the
administrative review may result in an increase in the importer’s
liability . . . .” Transcom, Inc. v. United States (“Transcom
CAFC”), 182 F.3d 876, 882, 884 (Fed. Cir. 1999) (emphasis
supplied).
Court No. 97-02-00248 Page 25
The Court concludes that while it was Commerce’s basic
responsibility to provide adequate notice to all parties that could
potentially be affected by the review, Commerce was not obligated
to list these parties by name in order to satisfy the notice
requirements posed by 19 U.S.C. § 1675(a)(1) and 19 C.F.R. §
353.22(c).
2. Adequacy of the Language Employed
Having established that Commerce was not under an obligation
to provide individual notice, the Court now turns to the question
whether the particular language Commerce chose to employ in the
Notice of Initiation provided Transcom and its Hong Kong exporters
with adequate notice.
In addition to listing the one hundred and one companies
subject to the review, the Notice of Initiation provided that
“[a]ll other exporters of tapered roller bearings are conditionally
covered by this review.” Notice of Initiation, 59 Fed. Reg. at
43,539. Transcom contends that this language was inadequate to
provide proper notice because Commerce was required to identify
Transcom’s Hong Kong exporters, nationals of a market economy, by
name in the Notice of Initiation. See Pl.’s Br. at 21-23. This is
Court No. 97-02-00248 Page 26
incorrect.
Neither the statute nor the regulation actually requires the
review to cover only the companies “specifically” listed in the
Notice of Initiation. See generally, 19 U.S.C. § 1675(a); 19
C.F.R. § 353.22. Commerce’s practice only dictates that “the
administrative reviews . . . for products from a market economy
country . . . [are] limited to those exporters [specifically] named
in the notices of initiation. . . . [T]he case is different
[however, and the rule does not apply to products from] nonmarket
economy countries such as the People’s Republic of China.”
Transcom CAFC, 182 F.3d at 881 (emphasis supplied).
Transcom failed to distinguish between the country of
nationality of its exporters and the country of origin of its
imported product. In the case at hand, the merchandise at issue
was a product of the PRC, a nonmarket economy. Commerce’s practice
with regard to market economy products–-the practice of limiting
the scope of administrative reviews to the exporters identified by
name in the Notice of Initiation--was, therefore, inapplicable.
Alternatively, Transcom alleges that Commerce’s statement that
“[a]ll other exporters of tapered roller bearings are conditionally
Court No. 97-02-00248 Page 27
covered by this review” was “actively misleading” because it failed
to indicate that the exporters that were not personally identified
in the Notice of Initiation could nevertheless be subject to the
review, and the statement did “not fulfill the notice requirement
contained in the regulations.” Pl.’s Br. at 3, 15, 19. The Court
disagrees. “What the statutory and regulatory notification
provisions require is that any reasonably informed party should be
able to determine, from the published notice of initiation read in
light of announced . . . policy, whether particular entries in
which it has an interest may be affected by the administrative
review.” Transcom CAFC, 182 F.3d at 882-83 (emphasis supplied).
Transcom maintains that it was unaware of Commerce’s new
policy of including the entities identified by an all-encompassing
definition into the scope of Commerce’s review. See Pl.’s Br. at
13. Transcom alleges that, in view of Commerce’s prior practice of
personally identifying all covered exporters in its notices of
initiation, Transcom could not have been aware of Commerce’s new
policy.8 See Pl.’s Reply Br. at 10-13.
8
Transcom successfully challenged the antidumping duties
assessed against Transcom by Commerce at the conclusion of the
fourth, fifth and sixth administrative reviews (covering the period
(continued...)
Court No. 97-02-00248 Page 28
Transcom’s position is without merit. As a prominent member
of the industry, Transcom was aware and was expected to make itself
aware of publications in the Federal Register. See, e.g., id. at
11 (meticulously observing that an indication of Commerce’s new
policy appeared in a document filed on March 25, 1995, but was
reflected in the Federal Register only on February 27, 1996).
After reading the Notice of Initiation in the Federal Register and
encountering the unfamiliar statement that “[a]ll other exporters
of tapered roller bearings are conditionally covered by this
review,” Transcom, a seasoned importer of the merchandise at issue
8
(...continued)
from 1990-93). See Transcom CAFC, 182 F.3d 877. The challenge was
based on Commerce’s failure to include the names of Transcom’s
exporters in the list of entities specifically identified in
Commerce’s notices of initiation of those reviews and Commerce’s
attempt to subject the entries from these unnamed exporters to
upward assessment of duties. See id. at 877-78. The preliminary
determinations of the fourth, fifth and sixth administrative
reviews were published on August 25, 1995, and they stated that
“for other non-PRC exporters of subject merchandise from the PRC,
the cash deposit rate will be the rate applicable to the PRC
supplier of that exporter,” causing Transcom to appear and object.
Preliminary Results of Antidumping Administrative Reviews on
Tapered Roller Bearings and Parts Thereof, Finished and Unfinished,
From the People’s Republic of China, 60 Fed. Reg. 44,302; see
Transcom CAFC, 182 F.3d at 878. Timken argues that this statement
put Transcom on notice that its Hong Kong exporters would be
subject to the review. See Timken’s Resp. at 7-8. This court is
unconvinced. The statement put Transcom on notice of possible
applicable rates but was irrelevant to the issue of the scope of
Commerce’s review.
Court No. 97-02-00248 Page 29
from the particular country at issue, should have been aware that
the usual language of notices of initiation had changed. The
newly-included language, the very fact of the change, put Transcom
on notice that Commerce’s policy could have changed and provided
Transcom with the information necessary to extrapolate the fact
that the “particular entries in which it has an interest may be
affected by the administrative review.” Transcom CAFC, 182 F.3d at
882-83 (emphasis supplied).
Moreover, as Timken correctly points out, the Court of Appeals
for the Federal Circuit (“CAFC”) already indicated that the very
language employed by Commerce would constitute sufficient notice.
The CAFC observed that
[if] Commerce [states] . . . in the notice[] of
initiation of administrative review[] of the tapered
roller bearing antidumping order that all unnamed
exporters of tapered roller bearings from the People’s
Republic of China are conditionally covered by the review
. . . [, this statement] would constitute sufficient
notice of the administrative review to the unnamed
exporters, and thus sufficient notice to the importer of
those exporters’ goods [and] . . . satisfy the statutory
and regulatory notification requirements. . . . [S]uch
statement [would] go far beyond any notice, constructive
or otherwise, given to the unnamed exporters (and, by
Court No. 97-02-00248 Page 30
extension, to Transcom) in this case.9
Id. at 882 (emphasis supplied).
This Court agrees. The statement that “[a]ll other exporters
of tapered roller bearings are conditionally covered by this
review” gave Transcom, a seasoned importer, more than sufficient
constructive notice10 that the particular entries in which Transcom
had an interest could possibly be affected by the administrative
review.
Transcom and its exporters could have made an inquiry to
9
Transcom alleges that Commerce’s actions, in addition to
being injurious to Transcom, were “fundamentally prejudicial to
[Transcom’s] exporters” and “penalized these companies . . . [in a
way] inherently unfair, and grossly incompatible with the statute.”
Pl.’s Br. at 3-4, 31. Transcom’s Hong Kong exporters, however, are
not parties to this action and this Court shall not entertain any
claims on their behalf.
10
Constructive notice is
information or knowledge of a fact imputed by law to a
person . . . because he could have discovered the fact by
proper diligence, and his situation was such as to cast
upon him the duty of inquiring into it. Every person who
has actual notice of circumstances sufficient to put a
prudent man upon inquiry as to a particular fact, has
constructive notice of the fact itself in all cases in
which, by prosecuting such inquiry, he might have learned
such fact.
Constructive “notice” includes . . . inquiry notice.
BLACK'S LAW DICTIONARY 1062 (6th ed. 1990).
Court No. 97-02-00248 Page 31
Commerce. They could have alerted their PRC producers or prompted
them to attend the distribution of questionnaires in Beijing.
Transcom’s exporters could have obtained a questionnaire themselves
and submitted it to Commerce, just like Xiangfan International
Trade Corporation did. See Preliminary Results, 60 Fed. Reg. at
49,572-73. Yet Transcom and its Hong Kong exporters did none of
the above, choosing instead to complacently wonder what the term
“conditionally covered” means. See Pl.’s Br. at 18. Had Transcom
been in doubt about the meaning of the term, it was but a phone
call away from the answer.
Transcom and its exporters’ refusal to act upon Commerce’s
notice cannot constitute evidence of unreasonableness of this
notice. In view of the rapidly-changing world of global trade and
Commerce’s limited resources, Commerce should be able to rely on
its “unique expertise and policy-making prerogatives” by
designating parties subject to the review with a collective term.
See Southern Cal. Edison Co., 226 F.3d at 1357; Def.’s Mem. at 43
(attesting to Commerce’s inability to obtain personal information
about all potential exporters). Because Commerce’s use of the
statement that “[a]ll other exporters of tapered roller bearings
are conditionally covered by this review” was a valid application
Court No. 97-02-00248 Page 32
of notice requirement contained in the regulation to a complex or
changing circumstance, it should not be disturbed. See Southern
Cal. Edison Co., 226 F.3d at 1357.
This Court concludes that the collective, all-encompassing
language “[a]ll other exporters of tapered roller bearings are
conditionally covered by this review” satisfied the requirements
posed by the statutory mandate of 19 U.S.C. § 1675(a)(1) and the
regulatory language of 19 C.F.R. § 353.22(c).
II. Application of Uncooperative BIA
A. Background
On September 26, 1995, Commerce published the results of its
preliminary review. See Preliminary Results, 60 Fed. Reg. 49,572.
In Preliminary Results, Commerce determined a separate antidumping
duty rate for each of the companies that had responded to the
questionnaires. See id. at 49,573-74. In addition, Commerce
stated its intention to apply the “best information available”
(“BIA”) rate to “those companies for which [Commerce] initiated a
review and which did not respond to the questionnaires.” Id. at
49,575.
Court No. 97-02-00248 Page 33
In its final determination, Commerce assigned the
“uncooperative BIA” rate of 25.56 percent (equal to the PRC rate)
to all the entries from the PRC exporters that failed to respond to
the questionnaires supplied by Commerce and, therefore, were deemed
not entitled to a separate rate because of their inability to
establish their independence from the PRC. See Final Results, 62
Fed. Reg. at 6208. In addition, Commerce assigned the “cooperative
BIA” rate of 25.56 percent (equal to the “uncooperative BIA” rate)
to all the entries by those exporters who failed to establish their
independence from the PRC by submitting responses containing
“deficiencies[,] . . . lack[ing in] supplier data and includ[ing]
significant errors . . . .” See id. at 6210, 6214. Finally,
Commerce stated that for entries from the “other non-PRC exporters
of subject merchandise from the PRC [, that is, the exporters
covered by the review that were neither supplied with the
questionnaires nor participated on their own], the . . . rate will
be the rate applicable to the PRC supplier of that exporter.” Id.
at 6214.
B. Contentions of the Parties
Transcom contends that because neither its Hong Kong exporters
Court No. 97-02-00248 Page 34
nor their PRC suppliers were given notice, Commerce was precluded
from subjecting Transcom’s entries to the “punitive”(meaning
“uncooperative”) BIA rate reserved for those entities that were
supplied with the questionnaires but neglected to respond. See
Pl.’s Br. at 27-28. In addition, Transcom argues that the entries
from its Hong Kong exports should not be subject to the BIA rate
because: (1) the usage of BIA ensues from the concept of “state-
controlled enterprise”;11 and (2) Transcom’s Hong Kong exporters,
nationals of a market economy, are inherently not subject to the
PRC government’s control. See id. at 21-23.
Commerce maintains that it acted in accordance with its
practice by initially presuming that, in an NME case, all producers
and exporters are part of a single state-controlled enterprise.
11
Under the “state-controlled enterprise” concept, companies
subject to the review are required to show their independence from
the state-controlled enterprise in order to receive a separate
antidumping duty rate. See Transcom CAFC, 182 F.3d at 878-79. If
all companies covered by the review succeed in proving their
independence from the state-controlled enterprise, each of these
companies is accorded a separate treatment, and the state-
controlled enterprise is consequently deemed excluded from the
review. Id. Conversely, if some companies included in the review
fail to establish their independence, Commerce concludes that the
state-controlled enterprise is covered by the review, and those
companies that fail to prove their independence receive a single
rate of the state-controlled enterprise. Id.
Court No. 97-02-00248 Page 35
See Final Results, 62 Fed Reg. at 6212. If the state-controlled
enterprise fails to cooperate, Commerce establishes the rate
applicable to companies deemed to be part of the state-controlled
enterprise, in the instant case, the PRC rate, using uncooperative
BIA. See id. Commerce points out that “the Act mandates
application of BIA for such companies because they were properly
included in the review and [through the inaction of the state-
controlled enterprise] did not respond to [Commerce’s] request for
information.” Id.
Commerce further asserts that the exporters notified without
individual identification were obliged to demonstrate their
independence from the state-controlled enterprise in the very same
fashion as the exporters individually named in the Notice of
Initiation or would risk being considered a part of the state-
controlled enterprise, that is, deemed ineligible for separate
treatment and assigned that enterprise’s single rate. See Def.’s
Mem. at 27.
Timken argues that Commerce was entitled to resort to BIA in
determining the rate for exporters not individually named in the
Notice of Initiation because Commerce contacted the PRC government,
Court No. 97-02-00248 Page 36
provided it with the questionnaires and directed it to transmit the
questionnaires to all companies in the PRC that produced TRBs for
export to the United States. See Timken’s Resp. at 19-20.
C. Analysis
Transcom and Timken conflate the threshold procedural issue of
notice sufficiency with the entirely distinct issue of Commerce’s
right to rely on BIA in its calculation of actual dumping duties.
See generally, Pl.’s Br. at 23-33, 27-28; Pl.’s Reply Br. at 19-20;
Timken’s Resp. at 19-20. Having established that the notice given
by Commerce was sufficient, this Court now turns to the remaining
issues: (a) Commerce’s use of uncooperative BIA in calculating the
antidumping duty rate; and (b) Commerce’s application of BIA to the
merchandise produced in an NME country but imported into the United
States through a market economy exporter.
Actual dumping duties are calculated by Commerce after an
administrative review. See 19 U.S.C. § 1675(a). In such a review,
Commerce provides a questionnaire to the foreign producer in order
to solicit sales information for United States sales and home-
market sales for the particular POR covered and, on the basis of
Court No. 97-02-00248 Page 37
this information, calculates the actual dumping duty.12 When
Commerce cannot obtain the information in a timely manner or
receives incomplete information, the statute and regulation allow
and, in certain circumstances, require Commerce to use BIA. See 19
U.S.C. § 1677e(b); 19 C.F.R. § 355.37(a).
1. Commerce’s Resort to Uncooperative BIA
The relevant statutory provision dictates that if Commerce
“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 . . . [Commerce], . . . [Commerce] may use . . .
the facts otherwise available.” 19 U.S.C. § 1677e(b); accord 19
U.S.C. § 1677e(c) (1988) (stating that “[i]n making [antidumping
duty] determinations . . . [Commerce] shall, whenever a party or
any other person refuses or is unable to produce information
requested in a timely manner and in the form required, or otherwise
12
To the extent that this actual dumping duty differs from the
estimated duty deposit collected pursuant to the previously issued
antidumping duty order, the difference is refunded or charged to
the importer. See 19 U.S.C. § 1673f (1994). “Dumping duties are
not penal in nature, but are 'additional duties' to equalize
competitive conditions between the exporter and [affected U.S.
industries].” Imbert Imports, Inc. v. United States, 67 Cust. Ct.
569, 576 n.10, 331 F. Supp. 1400, 1406 n.10 (1971), aff’d, 60 CCPA
123, 475 F.2d 1189 (1973).
Court No. 97-02-00248 Page 38
significantly impedes an investigation, use the best information
otherwise available”).
The statutory language is clear and unambiguous. A statute’s
text is Congress’s final expression of its intent, and if the text
answers the question, that is the end of the matter. See Timex
V.I., Inc., 157 F.3d at 882 (citing Chevron, 467 U.S. at 843 n.9).
Commerce's regulation must completely conform to the statutory
language. See id.
The regulation implemented under the statute provides that
Commerce is entitled to resort to BIA if Commerce “(1) [d]oes not
receive a complete, accurate, and timely response to [its] request
for factual information; or (2) [i]s unable to verify, within the
time specified, the accuracy and completeness of the factual
information submitted.” 19 C.F.R. § 355.37(a) (1994). The
language of § 355.37(a) is a practical implementation of the
statutory mandate, a mechanism to prevent the impediments to
investigation proscribed by the statute. See 19 U.S.C. § 1677e(b).
The regulation conforms to the clear and unambiguous statutory
language, thus satisfying the first prong of the Chevron test. See
Chevron, 467 U.S. at 842-43.
Court No. 97-02-00248 Page 39
Transcom’s protest to Commerce’s use of BIA is unfounded.
Commerce did exactly as the statute, regulation and its own
announced policy mandated when it requested but procured no
information from parties “conditionally covered,” such as
Transcom’s Hong Kong exporters and their PRC suppliers.13 The
statute required Commerce to enter a determination with regard to
the entries by companies covered by the review. See 19 U.S.C.
1675b(b)(1)(B) (1994). Commerce had no other statutorily
permissible or practicably feasible way to calculate the rate
(except on the basis of BIA) if the interested parties did not
produce information requested. See 19 U.S.C. § 1677e(b). Thus,
Commerce acted fully in accordance with the controlling provisions.
Transcom’s expectations are beside the point. “[T]he
13
Transcom contends that the PRC suppliers of its Hong Kong
exporters were not notified. See Pl.’s Br. at 27-28. This Court
is unconvinced. Commerce’s efforts were more than diligent: it
notified MOFTEC and the Machinery Division, requested that the
questionnaires be transmitted to all companies in the PRC that
produced tapered roller bearings for export during the POR at issue
and even went to Beijing to personally distribute the
questionnaires. The Court agrees with Timken’s observation that
“[i]f Transcom’s suppliers never received a copy of that
questionnaire, the problem lies with the state under whose control
they operate, not with [Commerce]. By analogy, a single factory
could not avoid service by asserting that only the corporate
headquarters was served.” Timken’s Resp. at 20.
Court No. 97-02-00248 Page 40
expectations of the U.S. importer are irrelevant in setting a
dumping margin. When a United States importer deals with a foreign
company that is subject to an antidumping duty order, the importer
must realize that the dumping margin could change to its benefit or
detriment” after the actual dumping duty is calculated by Commerce
on the basis of information Commerce receives. Union Camp Corp. v.
United States, 22 CIT ___, ___ n.7, 8 F. Supp. 2d 842, 852 n.7
(1998).
Transcom asserts that Commerce abused its discretion when it
applied the “punitive” uncooperative BIA rate (equal to the PRC
rate) to the entries from Transcom’s Hong Kong exporters,14 that is,
companies obviously not subject to the PRC control, because the
same BIA rate was assigned to the companies that were subject to
14
Commerce established an “uncooperative” BIA rate equal to
the “cooperative” one. Final Results, 62 Fed. Reg. at 6214. It
shall be noted that “[i]f an interested party refuses to provide
factual information requested, . . . [Commerce] may take that into
account in determining what is the best information available” and
may assign an uncooperative BIA rate for the entries of such party
different from “cooperative” BIA rates accorded to the parties that
participated in the review but provided insufficient information.
19 C.F.R. § 355.37(b); see Final Results, 62 Fed. Reg. at 6208-10.
Thus, Commerce could, but did not, assign a less favorable BIA rate
to “uncooperative” parties. In view of the fact that the
“uncooperative” BIA rate was equal to the “cooperative” one, it is
unclear how Transcom concluded that it was assigned one and not the
other.
Court No. 97-02-00248 Page 41
the PRC control or failed to prove their independence from the PRC.
See Pl.’s Br. at 21-22, 26-28.
Transcom misses the point in questioning Commerce’s political
and geographical aptitude and distorts the statement Commerce made
in the Final Results. Commerce’s use of uncooperative BIA does not
necessarily make the resulting rate “punitive” in nature or
classify the exporter as an entity subject to the PRC control. See
generally, Final Results, 62 Fed. Reg. 6189.
“In order for the agency's application of the best information
rule to be properly characterized as ‘punitive,’ the agency would
have had to reject low margin information in favor of high margin
information that was demonstrably less probative of current
conditions.” Allied-Signal Aerospace Co. v. United States, 996
F.2d 1185, 1191 (Fed. Cir. 1993) (citation omitted).
In the instant case, Commerce had no “low margin” information
“demonstrably [more] probative of current conditions” to reject.
Rather, the determinations Commerce made were deductive in nature.
First, Commerce has determined that “for [entries purchased from]
other non-PRC exporters of subject merchandise from the PRC [like
Transcom’s Hong Kong exporters], the cash deposit rate [would] be
Court No. 97-02-00248 Page 42
the one applicable to the PRC supplier[s] of that exporter.” Final
Results, 62 Fed. Reg. at 6212 (emphasis supplied). Second,
Commerce determined that if such suppliers were “companies in the
government-controlled enterprise [that] failed to respond to
[Commerce’s] requests for information,” they, accordingly, were
subject to the rate determined by using uncooperative BIA.” Id.
Thus, the BIA rate applicable to Transcom’s entries was derived
from the PRC rate assigned to the PRC suppliers of Transcom’s Hong
Kong exporters and was not directly related to the national status
of Transcom’s Hong Kong exporters. See Final Results, 62 Fed. Reg.
at 6212-14.
Commerce’s deductive determination was entirely justified.
Transcom must bear responsibility for the failure of its sources to
provide the necessary information. As Commerce correctly points
out, “when resellers choose to use uncooperative suppliers that are
under a dumping order,” they must bear the consequences. Def.’s
Mem. at 20-21 (citing Yue Pak, Ltd. v. U.S. Int’l Trade Admin., 20
CIT 495, 504(1996), aff’d, 111 F.3d 142 (Fed. Cir. 1997)).
The Court concludes that Commerce acted in accordance with the
statutory and regulatory provisions when it based its determination
Court No. 97-02-00248 Page 43
upon BIA, the only information Commerce had available. See 19
U.S.C. § 1677e(b); 19 C.F.R. § 355.37.
2. Application of BIA to the Merchandise Imported
Through a Market Economy Exporter
While 19 C.F.R. § 355.37(a) is reasonably implemented under 19
U.S.C. § 1677e(b), neither the statute nor the regulation explains
whether Commerce may rely on BIA in order to calculate the
antidumping duty rate for merchandise produced in an NME country
but imported into the United States through a market economy
exporter. See generally, 19 U.S.C. § 1677e(b); 19 C.F.R. § 355.37.
Thus, Commerce’s “interpretation of its own regulations must be
given effect so long as it conforms to the purpose and wording of
the regulations,” with particular deference given to Commerce’s
interpretation in situations where Commerce applied the regulation
“to a complex or changing circumstance, thus requiring the agency
to bring to bear its unique expertise and policy-making
prerogatives.” Southern Cal. Edison Co., 226 F.3d at 1357.
Commerce’s practice of reliance on BIA in calculating the
applicable rate is uncontested in cases where Commerce does not
receive a complete, accurate and timely response to its request for
Court No. 97-02-00248 Page 44
factual information. See 19 U.S.C. § 1677e(b), 19 C.F.R. §
355.37(a); Def.’s Mem. at 52-55; Pl.’s Br. at 28. There is nothing
in the language of the statute or the regulation inherently
limiting the use of BIA to cases concerning merchandise produced in
an NME country or purchased from an NME exporter. See generally,
19 U.S.C. § 1677e, 19 C.F.R. § 355.37; see, e.g., Neuweg Fertigung
GmbH v. United States, 16 CIT 724, 797 F. Supp. 1020 (1992)
(holding that Commerce was justified in resorting to the use of BIA
in calculating the margin for exporter's sales of bearings from
Germany under 19 U.S.C. § 1677e(b) where exporter's questionnaire
responses were inadequate and untimely). Conversely, Commerce
enjoys very broad, although not unlimited, discretion with regard
to the propriety of its use of BIA. See generally, Olympic
Adhesives, Inc. v. United States, 899 F.2d 1565 (Fed. Cir. 1990)
(acknowledging Commerce’s broad discretion with regard to the use
of BIA but pointing out that Commerce's resort to BIA was an abuse
of discretion where the information Commerce requested did not and
could not exist). Commerce is justified in its reliance on BIA if
the information sought exists and Commerce is unable to receive the
information in spite of its bona fide efforts. See id.; 19 U.S.C.
§ 1677e(b); 19 C.F.R. § 355.37.
Court No. 97-02-00248 Page 45
The policy underlying Commerce’s action was to prevent
“uncooperative PRC producers [from being] free to hide behind and
[from] continu[ing to] export[] through low-rate [market economy]
exporters.” Final Results, 62 Fed. Reg. at 6213. The applicable
statutory and regulatory scheme clearly contemplates the
importation of merchandise produced in an NME but exported through
entities which could be located in market economy countries.
Consequently, Commerce applied the regulation to the complex and
changing circumstances of the realities of modern trade and acted
in accord with the purpose and wording of 19 C.F.R. § 355.37(a)
when it extended the application of BIA to the entries of
merchandise produced in an NME but exported through market economy
entities. Thus, Commerce’s determination warrants deference by
this Court. See Southern Cal. Edison Co., 226 F.3d at 1356. As
the Supreme Court pointed out, “[w]hen the construction of an
administrative regulation rather than a statute is in issue,
deference is even more clearly in order.” Udall v. Tallman, 380
U.S. 1, 16 (1964).
Conversely, the interpretation advocated by Transcom would
sabotage the entire review scheme. If an entry of NME-produced
merchandise channeled through the hands of a market economy
Court No. 97-02-00248 Page 46
exporter and undetectable to Commerce was entitled to separate
treatment and reevaluation, there would be no incentive for all the
other parties in the chain of distribution to participate in the
review process. These parties would be effectively encouraged to
remain silent and impair Commerce’s review, knowing that they have
secured their chance to have a second bite at the apple and to
obtain a different rate whenever they pull the ace, a market
economy exporter, out of their sleeve. This is a scenario 19
U.S.C. § 1677e(b) and 19 C.F.R. § 355.37 were design to prevent.
The Statement of Administrative Action accompanying the URAA
clarifies that “Commerce’s potential use of BIA provides the only
incentive to foreign exporters and producers to respond to
Commerce’s questionnaires.” H.R. Doc. No. 103-316, at 868 (1994)
(emphasis supplied).
Based on the foregoing, this Court concludes that Commerce
acted within the statutory grant of 19 U.S.C. § 1677e(b) and in
accordance with 19 C.F.R. § 355.37(a) when it applied the BIA rate
(equal to the rate allocated to state-controlled enterprises from
the PRC) to the entries of merchandise produced in the PRC but
channeled into the United States through exporters from a market
economy country.
Court No. 97-02-00248 Page 47
III. Fifth Amendment Due Process
A. Contentions of the Parties
Transcom argues that “Commerce’s failure to provide notice
that the two Hong Kong exporters were included in the review and
its use of best information available in determining the
antidumping rate deprived Transcom of its Fifth Amendment Due
Process rights”15 to notice and an opportunity to be heard prior to
a potential deprivation of its property, the additional money
Transcom would be required to pay for the entries of its
merchandise. Pl.’s Br. at 4; see Pl.’s Reply Br. at 26 (citing
Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314
(1950)).
While Timken fails to address the constitutional issue,
Commerce asserts that Transcom’s Fifth Amendment Due Process rights
could not have been violated because Transcom does not have a
15
For reasons not entirely clear to this Court, Transcom added
a constitutional Due Process claim under the Fourteenth Amendment
to its reply brief. See Pl.’s Reply Br. at 25. While the
Fourteenth Amendment of the United States Constitution operates
upon the states, the Fifth Amendment operates upon the federal
government. See Barron v. Mayor and City Council of Baltimore, 32
U.S. (7 Pet.) 243 (1833); Slaughter-House Cases, 83 U.S. (16 Wall.)
36 (1872). Considering that Commerce is a federal agency, this
Court will only address the issue of procedural Due Process under
the Fifth Amendment.
Court No. 97-02-00248 Page 48
protected property interest in its “right to the continued
importation” of its merchandise. Def.’s Mem. at 56. Commerce
points out that “no one has a Congressionally untouchable right to
the continued importation of product.” Id. (citing Arjay Assocs.,
Inc. v. Bush, 891 F.2d 894 (Fed. Cir. 1989)).
It is impossible to comprehend how an importer’s lack of a
vested right to import merchandise in the future negates the
obligation to provide the importer with notice prior to imposing an
antidumping duty for the merchandise already imported. The Court
shares Transcom’s bewilderment. See Pl.’s Reply Br. at 25-28. The
Court shall not entertain Commerce’s argument since it fails to
differentiate between substantive and procedural Due Process claims
and lacks any merit.16
This Court has already established that Commerce satisfied the
statutory requirements of 19 U.S.C. §§ 1675(a)(1), 1677e(b) and the
regulatory requirements of 19 C.F.R. §§ 353.22(c) and 355.37(a).
Therefore, the only constitutional issue remaining is whether the
16
This Court pointed out the very same mistake to Commerce two
years ago. See Transcom, Inc. v. United States, 22 CIT ___, 5
F.Supp. 2d 984, 990 (1998) rev’d on other grounds, Transcom CAFC,
182 F.3d 876. Obviously, it was to no avail.
Court No. 97-02-00248 Page 49
particular language Commerce employed in its Notice of Initiation
violated Transcom's Due Process right to notice under the Fifth
Amendment even though it satisfied Commerce's statutory and
regulatory obligations. The only way Transcom may have a viable
claim is if the statutory and regulatory requirements are
constitutionally deficient either on their face or as applied.
See, e.g., Kimmes v. Harris, 647 F.2d 1028 (10th Cir. 1981).
B. Analysis
It is undisputed that the test for constitutional sufficiency
of notice is whether
[the] notice [is] reasonably calculated, under all the
circumstances, to apprize interested parties of the
pendency of the action and afford them an opportunity to
present their objections. The notice must be of such
nature as reasonably to convey the required information,
and it must afford a reasonable time for those interested
to make their appearance . . . .
. . . .
. . . The reasonableness and hence the
constitutional validity of any chosen method may be
defended on the ground that it is in itself reasonably
certain to inform those affected.
Mullane, 339 U.S. at 314, 315 (internal citations omitted).
Thus, there are two issues to analyze: (1) the reasonableness
Court No. 97-02-00248 Page 50
of the notice requirement contained in the provisions addressing
initiation of review, that is, 19 U.S.C. § 1675(a)(1) and 19 C.F.R.
§ 353.22(c); and (2) the sufficiency of notice element present in
the language of provisions allowing for the use of BIA, that is, 19
U.S.C. § 1677e(b) and 19 C.F.R. § 355.37(a).
1. Notice of Initiation of Review
The statute provides that a review can be conducted “after
publication of notice of such review in the Federal Register . . .
.,” while the regulation requires that a “notice of Initiation of
Antidumping Duty Administrative Review” must be published in the
Federal Register “[a]fter receipt of a timely request . . . or on
[Commerce's] own initiative when appropriate . . . .” 19 U.S.C. §
1675(a)(1); 19 C.F.R. § 353.22(c).
Both provisions expressly mandate that notice to a potentially
affected party must be placed in the Federal Register, a
publication that a seasoned member of the industry, such as
Transcom, is expected to review. The requirement is constitutional
on its face. See Mullane, 339 U.S. at 318 (a notice by publication
is sufficient as to any party whose specific interest or address is
unknown).
Court No. 97-02-00248 Page 51
In addition, the statutory and regulatory requirements were
constitutionally applied. Commerce was justified in its good faith
decision to designate all parties unknown to Commerce under the
term “conditionally covered” while individually naming respondents
indicated by Timken. Commerce’s action was reasonably certain to
inform those parties that could be potentially affected, including
Transcom. Accord Mullane, 339 U.S. at 315.
Finally, the extensive explanations contained in Notice of
Initiation reasonably conveyed all the information required for a
meaningful response: the merchandise at issue, the purpose of the
review and actions expected of potentially affected parties. See
generally, Notice of Initiation, 59 Fed. Reg. 43,537.
This Court concludes that under the test set forth in Mullane,
the statute and the implementing regulation clearly pass
constitutional muster, either on their face or as applied. The
statutory and regulatory language, taken together with Commerce’s
publication of the Notice of Initiation (which contained the phrase
“other exporters . . . are conditionally covered” and commenced
the review that covered the particular merchandise Transcom
imported and the POR during which Transcom was dealing), reasonably
Court No. 97-02-00248 Page 52
alerted Transcom to the fact that its entries may be affected by
Commerce’s determination.
2. Notice of Reliance on BIA
The unequivocal language of § 1677e(b) provides for Commerce’s
use of BIA whenever an entity subject to a review did not produce
the information requested. See 19 U.S.C. § 1677e(b). The language
of the relevant regulation specifies that Commerce may resort to
BIA if it is “unable to verify, within the time specified, the
accuracy and completeness of the factual information submitted.”
19 C.F.R. § 355.37(a)(2).
It is hard to craft a notice more plain and straightforward to
advise a potentially affected party like Transcom that its silence
or inaction would lead to Commerce’s reliance upon BIA in its
determination of applicable rates. While neither provision
expressly addresses the particular circumstances of an importer
dealing in merchandise produced in an NME but handled by an
exporter from a market economy, the statute and the regulation do
not violate the Due Process Clause of the Fifth Amendment. Both
provisions are facially constitutional because the element of
notice requirement, as interpreted by Mullane, does not call for
Court No. 97-02-00248 Page 53
the statutory or regulatory language to anticipate and spell out
every applicable scenario. The Due Process Clause of the Fifth
Amendment merely expects the provisions to apprize interested
parties of the alternatives available to Commerce. See Mullane,
339 U.S. at 314.
Similarly, Commerce’s application of the statute and
implementing regulation was constitutionally valid. Commerce is
not required or expected to map out every business dealing and
every possible chain of distribution of merchandise that could be
deemed subject to the review in order for Commerce’s action to come
within the constitutional safeguards of the Fifth Amendment Due
Process Clause.
This Court holds that neither the language nor Commerce’s
application of 19 U.S.C. § 1675(a)(1) and 19 C.F.R. § 355.37(a) was
constitutionally deficient and, therefore, Commerce did not violate
Transcom’s procedural Due Process rights.
CONCLUSION
For the foregoing reasons, this Court finds that the form of
notice contained in the Notice of Initiation and Commerce’s
Court No. 97-02-00248 Page 54
reliance on BIA in its determination of the applicable antidumping
duty rates were: (1) reasonable under the relevant statutes and
implemented regulations; and (2) constitutionally sufficient.
______________________________
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: November 7, 2000
New York, New York
Erratum
Slip Opinion 00-146
Transcom v. United States, Court No. 97-02-00248
On page 10, lines 3-5, “See generally, 19 U.S.C. § 1675(a); 19
C.F.R. §§ 353.22, 353.31, 355.31 (1994)” should be “See generally,
19 U.S.C. § 1675(a); 19 C.F.R. §§ 353.22, 353.31 (1994).”
November 21, 2000
Transcom, Inc. v. United States
Court: United States Court of International Trade
Date filed: 2000-11-07
Citations: 121 F. Supp. 2d 690, 24 Ct. Int'l Trade 1253, 123 F. Supp. 2d 1372
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