Slip Op. 01-52
UNITED STATES COURT OF INTERNATIONAL TRADE
:
NIPPON STEEL CORPORATION, :
:
Plaintiff, :
:
v. :
:
THE UNITED STATES, :
:
Defendant, :
:
and :
:
BETHLEHEM STEEL CORPORATION, :
U.S. STEEL GROUP, A UNIT OF USX :
CORPORATION, ISPAT INLAND INC., :
LTV STEEL COMPANY, INC.; GALLATIN :
STEEL, IPSCO STEEL, INC., STEEL :
DYNAMICS, INC., and WEIRTON STEEL :
CORPORATION, :
: Consolidated Court
Defendant-Intervenors. : No. 99-08-00466
:
: Public Version
BETHLEHEM STEEL CORPORATION, :
U.S. STEEL GROUP, A UNIT OF USX :
CORPORATION, ISPAT INLAND INC., :
and LTV STEEL COMPANY, INC. :
:
Plaintiffs, :
:
v. :
:
THE UNITED STATES, :
:
Defendant, :
:
and :
:
NIPPON STEEL CORPORATION, :
:
Defendant-Intervenor. :
:
CONSOL. COURT NO. 99-08-00466 PAGE 2
[ITA Remand Determination Remanded.]
Dated: April 20, 2001
Gibson, Dunn & Crutcher LLP (Daniel J. Plaine, Gracia M.
Berg, Merritt R. Blakeslee, and Seth M. M. Stodder) for plaintiff
Nippon Steel Corporation.
Skadden, Arps, Slate, Meagher & Flom LLP (Robert E.
Lighthizer and John J. Mangan) for plaintiffs Bethlehem Steel
Corporation, U.S. Steel Group, a unit of USX Corporation, Ispat
Inland, Inc. and LTV Steel Company, Inc.
Stuart E. Schiffer, Acting Assistant Attorney General, David
M. Cohen, Director, Commercial Litigation Branch, Civil Division,
United States Department of Justice (Kyle E. Chadwick), John D.
McInerney, Elizabeth C. Seastrum, and Linda S. Chang, Office of
the Chief Counsel for Import Administration, United States
Department of Commerce, of counsel, for defendant.
Schagrin Associates (Roger B. Schagrin) for defendant-
intervenors Gallatin Steel, IPSCO Steel, Inc., Steel Dynamics,
Inc. and Weirton Steel Corp.
OPINION
RESTANI, Judge: This challenge to Hot-Rolled Flat-Rolled
Carbon-Quality Steel Products from Japan, 64 Fed. Reg. 24,329
(Dep’t Comm. 1999) (final admin. rev.) [“Final Results”] is
before the court following a remand determination (“Remand
Determ.”) by the United States Department of Commerce (“Commerce”
or “the Department”). Plaintiff Nippon Steel Corporation
(“NSC”), one of the respondents in the underlying antidumping
duty investigation, argues that (1) the Department has failed to
implement properly this court’s injunction regarding the
placement on record of memoranda on ex parte meetings, and (2)
CONSOL. COURT NO. 99-08-00466 PAGE 3
the Department continues to rely impermissibly on adverse facts
available without adequately supporting the requisite finding
that NSC “failed to cooperate by not acting to the best of its
ability.” 19 U.S.C. § 1677e(b) (1994). Familiarity with the
opinion ordering remand is presumed. See Nippon Steel Corp. v.
United States, 118 F. Supp. 2d 1366 (Ct. Int’l Trade 2000)
(“Nippon I”).
I. Ex Parte Meetings
In its earlier opinion, the court found that Commerce
violated 19 U.S.C. § 1677f(a)(3) because the Department had
failed to place in the administrative record any memoranda
recording the agency’s ex parte meetings with petitioners. See
id. at 1372-74. The court therefore ordered the Department to
issue instructions that ex parte memoranda required by
19 U.S.C. § 1677f(a)(3) will be drafted expeditiously
in all cases, reviewed by a person in attendance at the
meeting, and placed in the record as soon as possible,
so that parties may comment effectively on the factual
matters presented. The memoranda are required whether
or not the factual information received was received
previously, is expected to be received later in the
proceedings, or is expected to be used or relied on.
Id. at 1374. Commerce attempted to comply with this court’s
injunction by circulating a policy statement on ex parte
memoranda to Import Administration staff. See Def.’s Reply Br.
at 13 & Attach. Because that statement was not published and
apparently failed to include all the stated elements of the
CONSOL. COURT NO. 99-08-00466 PAGE 4
court’s instruction, NSC challenged the Department’s policy
statement as inconsistent with the court’s injunction. The court
subsequently issued an Order to Show Cause as to why the
Assistant Secretary for Import Administration should not be held
in contempt for not obeying in full the court’s injunction. At
the show cause hearing on February 15, 2001, while maintaining
that the injunction had been obeyed, representatives from the
Department agreed to comply more fully with the court’s
injunction and to take additional measures to ensure that all
Commerce officials were aware of their statutory obligations
under 19 U.S.C. § 1677f(a)(3).
On March 28, 2001, the Department published in the Federal
Register a revised policy statement. See Policy Statement
Regarding Issuance of Ex Parte Memoranda, 66 Fed. Reg. 16,906
(Dep’t Comm. 2001). This policy statement is also available on
the Web site of the International Trade Administration, at
http://ia.ita.doc.gov/policy/ex-parte-memo.htm. Upon reviewing
the Department’s statement, the court finds that the agency has
complied with the court’s injunction in Nippon I.
II. Use of Adverse Facts Available
A cooperating respondent’s failure simply to respond
completely or correctly to the Department’s initial request for
specific information does not warrant resort by the agency to
CONSOL. COURT NO. 99-08-00466 PAGE 5
facts otherwise available under 19 U.S.C. § 1677e(a)(2)(B). See
19 U.S.C. §§ 1677e(a); 1677m(d). See also Ta Chen Stainless
Steel Pipe, Inc. v. United States, No. 97-08-01344, 1999 WL
1001194, at *17 (Ct. Int’l Trade 1999) (“Ta Chen I”). If a
cooperating respondent fails to respond adequately to Commerce’s
supplemental request for information, the Department may then use
facts otherwise available in lieu of missing or incomplete data.
See 19 U.S.C. §§ 1677e(a); 1677m(d). See also NTN Bearing Corp.
v. United States, No. 97-10-01801, 2001 WL 180255, at *7 (Ct.
Int’l Trade 2001); SKF USA Inc. v. United States, 116 F. Supp. 2d
1257, 1268 (Ct. Int’l Trade 2000). “Once Commerce has determined
under 19 U.S.C. § 1677e(a) that it may resort to facts available,
it must make additional findings prior to applying 19 U.S.C. §
1677e(b) and drawing an adverse inference.” Ferro Union, Inc. v.
United States, 44 F. Supp. 2d 1310, 1329 (Ct. Int’l Trade 1999)
(“Ferro Union I”).1 Where, as here, a respondent gives an
incorrect response to one of the Department’s requests for
information in an original and one supplemental questionnaire,
such error may justify reliance on facts otherwise available
under 19 U.S.C. § 1677e(a)(2)(B), but does not suffice, in the
absence of further evidence, to permit an adverse inference to be
1
See also Mannesmannrohren-Werke AG v. United States, 77
F. Supp. 2d 1302, 1315-16 (Ct. Int’l Trade 1999) (“Mannesmann
I”); Borden, Inc. v. United States, 4 F. Supp. 2d 1221, 1246-47
(Ct. Int’l Trade 1998) (“Borden I”), rev’d on other grounds, No.
99-1575, 2001 WL 312232 (Fed. Cir. Mar. 12, 2001).
CONSOL. COURT NO. 99-08-00466 PAGE 6
drawn against the respondent. See Nippon I, 118 F. Supp. 2d at
1377-79.
The Department, therefore, must cite factors beyond NSC’s
failure to respond correctly to the agency’s two requests for the
weight conversion factor. In its remand determination, Commerce
attempts to support its application of adverse facts available
against NSC with the following observations: (1) NSC has had
significant experience with antidumping proceedings; (2) NSC
provided “incorrect” responses when the Department asked
repeatedly for the weight conversion factor because NSC failed to
make the requisite internal inquiries to retrieve the requested
information; and (3) the weight conversion factor was within
NSC’s control, and NSC was therefore fully capable of complying
with the Department’s requests. Because these observations still
do not support a finding that NSC’s actions rose above “a simple
mistake,” id. at 1379, the Department’s determination is
unsupported by substantial evidence.
A. Evidence Cited by Commerce to Support the Use of Adverse
Facts Available
First, NSC’s status as “one of the most successful and
sophisticated steel companies in the world [with] significant
prior experience with dumping proceedings,” Remand Determ. at 3,
is irrelevant to whether NSC acted to the best of its ability in
CONSOL. COURT NO. 99-08-00466 PAGE 7
this case. This is not a case where the Department points to the
respondent’s prior participation in dumping proceedings as a
basis for rejecting data that fails to satisfy the Department’s
procedures or standards for the submission of data.2 Nor is this
a case where the Department highlights an error made by the
respondent in a previous review and which the respondent
continues to make in the current review, as evidence of the
respondent’s unwillingness to comply with the Department’s
requests for information.3 Rather, Commerce here seeks to base
its evaluation of NSC’s failure to submit a weight conversion
factor, in part, on NSC’s experience as a respondent in dumping
proceedings. A generalized familiarity with antidumping
proceedings, however, cannot support a finding that NSC did not
cooperate to the best of its ability because it failed to provide
2
Cf. Heveafil Sdn. Bhd. v. United States, No. 98-04-
00908, 2001 WL 194986, at *4 (Ct. Int’l Trade 2001) (rejecting
documentation submitted during verification because it was not
“maintained in the ordinary course of business”); Gourmet Equip.
(Taiwan) Corp. v. United States, No. 99-05-00262, 2000 WL 977369,
at *4-5 (Ct. Int’l Trade 2000) (rejecting submission of
unverifiable data).
3
Cf. Chrome-Plated Lug Nuts from Taiwan, 64 Fed. Reg.
17,314, 17,316 (Dep’t Comm. 1999) (final admin. rev.) (“Gourmet
has been aware of, but has not corrected, deficiencies in its
accounting system even though these deficiencies caused the
Department to use facts available for the last several
administrative reviews.”), aff’d, Gourmet Equip., 2000 WL 977369,
at *4-5.
CONSOL. COURT NO. 99-08-00466 PAGE 8
the answer to one esoteric question posed by the Department.4 In
this facts available context, generic experience as a respondent
offers no insight into NSC’s actions during the current
proceeding. The department has not shown, for example, that the
inadvertence claimed in this case also occurred in another
review, or that the specific element focused on in a previous
review (e.g., weight conversion factor, major input valuation) is
also at issue in this case. To allow the Department to draw
detailed conclusions about respondent because of its generalized
knowledge would improperly penalize now those firms that had been
the subject of antidumping actions previously.
Second, in reiterating NSC’s failure to provide the weight
conversion factor, the Department conflates the prerequisites for
use of facts available with the additional findings necessary to
warrant an adverse inference. See Remand Determ. at 4-5 (citing
respondent’s inaccurate responses to original and supplemental
questionnaire as support for adverse inference); Def.’s Reply Br.
at 6 (same). Commerce’s reasoning in this regard is encapsulated
in the following paragraph from the Remand Determination:
A “reasonable respondent,” acting to the “best of its
ability” to comply with the Department’s request for
[weight conversion factors], would minimally have
4
See Taiwan Semiconductor Indus. Ass’n v. United States,
105 F. Supp. 2d 1363, 1379 (Ct. Int’l Trade 2000) (agency
determination not sustained where agency “failed to articulate a
‘rational connection between the facts found and the choice
made’”) (citations omitted) .
CONSOL. COURT NO. 99-08-00466 PAGE 9
contacted the factory, where the steel coils were
produced and where weighing was most likely to take
place, to determine whether they were weighed and the
weight data maintained. A “reasonable respondent”
would have attempted to obtain the data when it was
first requested, or at least when it was requested for
the second time, rather than telling the Department,
without any factual basis to support such a claim, that
the respondent did not believe the Department needed
the information. With respect to this issue, NSC was
not acting as a “reasonable respondent” nor was it
acting “to the best of its ability,” as required by the
statute.
Remand Determ. at 5. In other words, according to the
Department, NSC did not respond accurately or in a timely fashion
to the Department’s questionnaire5 because the company did not
make the proper inquiries of its factory employees, and this
error reflects NSC’s failure to act “to the best of its ability.”
The fact that NSC did not make appropriately timely submissions
as a result of inadequate inquiries, however, only provides
sufficient basis for the use of facts available pursuant to 19
5
NSC claims that the Department did not properly request
the correct weight conversion data in its supplemental
questionnaire. In particular, NSC notes that the Department
requested the weight conversion factors “in [NSC’s] home market
sales listing.” NSC Obj. at 4 n.1 (quoting Supplemental
Questionnaire, Field 16.1 (emphasis added)). The relevant weight
conversion data necessary for the Department to perform its
comparison, however, was for NSC’s U.S. sales. Because
Commerce’s adverse inference was based on the lack of weight
conversion data for U.S. sales, which the agency had only
requested in its original questionnaire, NSC seems to suggest
that the Department had not properly sought the information from
NSC before applying adverse facts available. Because NSC failed
to raise this argument in its original pleadings in this action,
and appears to have failed to raise it at the agency level, the
court does not address this argument.
CONSOL. COURT NO. 99-08-00466 PAGE 10
U.S.C. § 1677e(a)(2)(B). The Department’s explanation for its
adverse inference is thus merely a more detailed restatement of
the finding6 that NSC “fail[ed] to provide [necessary
information] by the deadlines for submission.” 19 U.S.C. §
1677e(a)(2)(B). Commerce may not in this manner “simply repeat[]
its 19 U.S.C. § 1677e(a)(2)(B) finding, using slightly different
words,” in lieu of making the requisite additional findings
before drawing an adverse inference. Borden I, 4 F. Supp. 2d at
1246. See also Ferro Union I, 44 F. Supp. 2d at 1329-31.
Third, Commerce emphasizes the existence of the requested
weight conversion data at NSC’s factories as further evidence in
support of the agency’s adverse inference. The Department is
undoubtedly correct that, as the court has noted previously, “it
is reasonable to charge a respondent with full knowledge of its
own operations.” Def.’s Reply Br. at 6 (citing Mannesmannrohren-
Werke AG v. United States, 120 F. Supp. 2d 1075, 1083 (Ct. Int’l
Trade 2000) (“Mannesmann II”)). The failure to provide
information otherwise readily available within the scope of a
respondent’s business operations may be relevant to determining a
respondent’s threshold ability to comply with its statutory
6
NSC does not contest the propriety of this finding or
the Department’s reliance on (non-adverse) facts available.
While Commerce could have waived the deadline and accepted the
information, it was not required to do so. Commerce remains free
to use NSC’s data or other non-adverse data, as it deems
appropriate.
CONSOL. COURT NO. 99-08-00466 PAGE 11
obligations. Mannesmann II, 120 F. Supp. 2d at 1083.
Nevertheless, this does not explain whether a respondent may have
committed an excusable inadvertence or failed to act as a
reasonable respondent should.
In the absence of additional evidence supporting a finding
that a respondent “failed to cooperate by not acting to the best
of its ability,” where a claim of inadvertence is at issue, the
simple fact of a respondent’s failure to report information
within its control does not warrant an adverse inference.7 The
court in Mannesmann II upheld the Department’s resort to adverse
facts available in the context of other, more revealing factors:
the Department had provided Mannesmann with an original and two
supplemental questionnaires, id. at 1078; respondent had offered
answers that were non-responsive (i.e., unverifiable, in the
wrong form, incomplete) to four questions in the course of
addressing those requests for information, thereby establishing a
“pattern of unresponsiveness,” id. at 1077-80, 1084-87; and
additional evidence strongly indicating a specific intent on the
part of the respondent to evade the Department’s requests for
7
Cf. Ta Chen Stainless Steel Pipe, Inc. v. United
States, No. 97-08-01344, 2000 WL 1225799, at *2-3 (Ct. Int’l
Trade 2000) (“Ta Chen II”) (adverse inference upheld where, in
addition to respondent’s having access to data requested from
affiliate, Commerce noted that respondent had provided other
confidential data from affiliate, and that respondent did not
fulfill its responsibility to maintain records relevant to
administrative review).
CONSOL. COURT NO. 99-08-00466 PAGE 12
information.8 This case, in contrast, presents no such
additional probative factors to support Commerce’s finding that
NSC’s actions “constitute[] anything more than an inadvertent
error.” Mannesmann I, 77 F. Supp. 2d at 1316.9
In justifying its conclusion that NSC had “failed to
cooperate by not acting to the best of its ability,” Commerce has
8
Specifically, Commerce noted (1) that the respondent
sought to re-frame the question posed by the Department through
selective reference to the questionnaire’s definition section,
and (2) that an official working for the respondent acknowledged
facts that were patently inconsistent with certain questionnaire
responses, and the same official admitted that he had been
involved in the preparation of those questionnaire responses.
See Mannesmann II, 120 F. Supp. 2d at 1078-79.
9
In a supplemental filing, NSC urged this court to
consider the recent decision of a WTO dispute settlement panel.
The decision arose from the instant underlying investigation and
addressed the same challenge to the Department’s use of adverse
facts available raised by NSC in this case. See United States –
Anti-Dumping Measures on Certain Hot-Rolled Steel Products from
Japan, WT/DS184/R, at ¶¶ 7.31-7.57 (Feb. 28, 2001), available at
http://www.wto.org/english/tratop_e/ dispu_e/distab_e.htm. The
court does not find the reasoning of the WTO panel relevant to
the issue here. The WTO panel held that, under the relevant WTO
law, an investigating authority may not refuse to consider
untimely submitted factual information, provided that the
information was submitted with sufficient time to allow for
verification of the new data. See id. at ¶ 7.55. As a result,
the panel found that the Department should not have resorted to
facts available at all, but instead, should have relied on the
late data in calculating NSC’s dumping margin. See id. at ¶
7.57. Whatever the merits of this holding in light of WTO rules,
it plainly contradicts the applicable statute, which permits the
agency to employ at least non-adverse facts available under these
circumstances. See 19 U.S.C. § 1677e(a)(2)(B). See also Nippon
I, 118 F. Supp. 2d at 1377 (citing Seattle Marine Fishing Supply
Co. v. United States, 12 CIT 60, 71, 679 F. Supp. 1119, 1128
(1988)). The panel decision therefore has no bearing on the
propriety of the Department’s resort beyond facts available to
the drawing of an adverse inference.
CONSOL. COURT NO. 99-08-00466 PAGE 13
insufficiently explained how NSC’s actions fall “below the
standard for a reasonable respondent.” Nippon I, 118 F. Supp. 2d
at 1379.10 The record reveals that NSC made significant efforts
throughout the investigation to satisfy the Department’s requests
for information, producing voluminous submissions within the
narrow time frame of the investigation. NSC’s efforts must also
be viewed in the context of what the Department recognized as a
difficult case raising “unique and complex issues.” Respondent
Selection Mem. (Oct. 30, 1998), at 3, P.R. Doc. 62. Admittedly,
NSC failed to provide Commerce with the weight conversion factor
at the time requested, despite having the information within the
company’s control. Nevertheless, when NSC did provide the weight
conversion data, ten days after issuance of the preliminary
results, its delay was not so great as to hinder the progress of
the investigation. Cf. Roller Chain, Other Than Bicycle from
Japan, 63 Fed. Reg. 63,671, 63,674-75 (Dep’t Comm. 1998) (final
admin. rev.) (finding continuous errors made by respondent
10
Commerce rejects this standard and seeks to apply a
pure “ability to comply” standard, but a completely errorless
investigation is simply not a reasonable expectation. Even the
most diligent respondents will make mistakes, and Commerce must
devise a non-arbitrary way of distinguishing among errors. See
F. Lli De Cecco Di Filippo Fara San Martino S.p.A. v. United
States, 216 F.3d 1027, 1032 (Fed. Cir. 2000) (“Commerce's
discretion [when drawing adverse inferences] is not unbounded.”).
See also Bowe-Passat v. United States, 17 CIT 335, 343 (1993)
(“This predatory ‘gotcha’ policy does not promote cooperation or
accuracy or reasonable disclosure by cooperating parties intended
to result in realistic dumping determinations.”).
CONSOL. COURT NO. 99-08-00466 PAGE 14
throughout investigation, “the magnitude of which prevented the
Department from using [respondent’s] information in the margin
calculations”).
In cases where a respondent claims an inability to comply
with the agency’s requests for information, the Department may
permissibly draw an adverse inference upon a reasonable showing
that the respondent, in fact, could have complied. See, e.g., Ta
Chen II, 2000 WL 1225799, at *3; Kawasaki Steel Corp. v. United
States, 110 F. Supp. 2d 1029, 1036-38 (Ct. Int’l Trade 2000).
Here, however, where the respondent acknowledges the ability to
comply, but claims it did not do so because of simple
inadvertence, the Department must show more. As the court
observed in its opinion ordering remand, those cases that do not
suggest willfulness on the part of the respondent pose particular
challenges for the Department to draw appropriate lines in order
to determine whether to draw an adverse inference. See Nippon I,
118 F. Supp. 2d at 1378-79. Perhaps in light of such challenges,
the Department has understandably resisted attempts to establish
definitive rules, proceeding instead to make “[t]he determination
of whether a company has acted to the best of its ability . . .
on a fact- and case-specific basis.” Antidumping Duties;
Countervailing Duties, 62 Fed. Reg. 27,296, 27,340 (Dep’t Comm.
1998) (final rule). In doing so, however, the Department risks
the appearance of acting arbitrarily as to when it forgives
CONSOL. COURT NO. 99-08-00466 PAGE 15
respondents and when it penalizes them.11 This the Department
cannot do. See Olympic Adhesives, Inc. v. United States, 899
F.2d 1565, 1572 (Fed. Cir. 1990) (quoting Atlantic Sugar, Ltd. v.
United States, 744 F.2d 1556, 1560 (Fed. Cir. 1984)) (“[T]he ITA
has not been given power that can be ‘wielded’ arbitrarily as an
‘informal club.’”). Commerce should therefore seek greater
coherence and consistency in its application of adverse facts
available against respondents claiming simple error.
B. Impact on NSC’s Dumping Margins
Finally, the parties dispute the relevance of any impact the
missing weight conversion data may have had on NSC’s final margin
calculations.12 Commerce argues that it is precluded from
11
Compare Stainless Steel Bar from India, 65 Fed. Reg.
3662, 3664-65 (Dep’t Comm. 2000) (final new shipper rev.)
(refusing to apply adverse facts available where respondent
provided untimely data because data was verifiable, complete,
easily usable, and respondent “misunderstood” reporting
instructions), and Circular Welded Non-Alloy Steel Pipe from the
Republic of Korea, 63 Fed. Reg. 32,833, 32,837 (Dep’t Comm. 1998)
(final admin. rev.) (refusing to apply adverse facts available
where respondent provided untimely data because errors
“affect[ed] only a minuscule number of transactions and
appear[ed] to be inadvertent”), with Final Results, 64 Fed. Reg.
at 24,360-61 (applying adverse facts available despite verifiable
and complete data submission, and minimal impact of error).
12
In responding to this issue raised by NSC in its remand
case brief, Commerce properly recognizes that “[i]nformation
necessary to the calculation of an antidumping duty margin is
important whether it raises or lowers the margin.” Remand
Determ. at 9. The relative importance of information sought by
the Department, however, is separate from the possible benefit a
(continued...)
CONSOL. COURT NO. 99-08-00466 PAGE 16
evaluating the effects of the missing data because, pursuant to
19 C.F.R. § 351.104(a) (2000),13 the untimely submission of NSC’s
12
(...continued)
respondent may have gained by failing (intentionally or
inadvertently) to provide data needed by the agency. Requiring
Commerce to examine whether a respondent would benefit from its
errors does not undermine or contradict the importance the agency
may reasonably ascribe to a particular piece of requested data.
13
Section 351.104(a) of Title 19 of the Code of Federal
Regulations provides, in relevant part, as follows:
(1) . . . The Secretary will include in the official
record all factual information, written argument,
or other material developed by, presented to, or
obtained by the Secretary during the course of a
proceeding that pertains to the proceeding.
* * *
(2) Material returned.
(i) The Secretary, in making any determination
under this part, will not use factual
information, written argument, or other
material that the Secretary returns to the
submitter.
(ii) The official record will include a copy of a
returned document, solely for purposes of
establishing and documenting the basis for
returning the document to the submitter, if
the document was returned because:
(A) The document, although otherwise timely,
contains untimely filed new factual
information . . .
* * *
(iii) In no case will the official record include
any document that the Secretary returns to
the submitter as untimely filed, or any
unsolicited questionnaire response . . . .
CONSOL. COURT NO. 99-08-00466 PAGE 17
weight conversion factor was not a part of the record before the
agency and therefore may not serve as a basis for the
Department’s decision on adverse inferences. See Remand Determ.
at 9 & n.3; Def.’s Reply Br. at 11-12. The Statement of
Administrative Action, however, dictates otherwise:
Where a party has not cooperated, Commerce and the
Commission 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. In employing adverse
inferences, one factor the agencies will consider is
the extent to which a party may benefit from its own
lack of cooperation.
SAA, at 870, H.R. Rep. 103-316, reprinted in 1994 U.S.C.C.A.N.
4040, 4199. This language reveals that Commerce is to utilize
adverse facts available when the respondent’s failure to
cooperate may conceivably provide the respondent with a “more
favorable result.”14 Id. The SAA states that the Department
“will consider . . . the extent to which a party may benefit.”
Id. In requiring Commerce to undertake this consideration, the
SAA apparently presupposes that the respondent could have somehow
14
Although the SAA foresees a respondent’s achieving a
“more favorable result” from its non-cooperation as a basis for
the use of an adverse inference, the Department is not
necessarily limited to using adverse inferences only when
respondent’s dumping margins would be reduced by respondent’s
actions. The Department may employ adverse inferences,
notwithstanding the impact upon a respondent’s margins, provided
that Commerce explains how the respondent might receive some
benefit as a result of its non-cooperation. For example, a party
may be choosing the benefit of avoidance of expenses of
cooperation. Commerce does not allege facts supporting such a
scenario here.
CONSOL. COURT NO. 99-08-00466 PAGE 18
benefitted from its non-cooperation, for the Department is not to
consider whether the respondent benefitted, but rather, the
extent of that benefit.15
The SAA has been adopted by statute as “an authoritative
expression by the United States concerning the interpretation and
application of the [URAA] in any judicial proceeding in which a
question arises concerning such interpretation or application.”16
19 U.S.C. § 3512(d). Commerce may not circumvent the binding
quasi-legislative requirements of the SAA by acting pursuant to
the agency’s regulatory prohibition against placing certain
documents in the administrative record.17 Therefore, to the
extent that 19 C.F.R. § 351.104(a) limits the Department’s
ability to examine the impact of respondent’s submission in cases
15
Cf. Mannesmann I, 77 F. Supp. 2d at 1323-24
(respondent’s errors found to be de minimis because “errors in
the figures [respondent] provided would have given it almost no
advantage compared to the ‘correct’ figures calculated by
Commerce,” thereby warranting remand).
16
Cf. Antonin Scalia, Judicial Deference to
Administrative Interpretations of Law, 1989 Duke L.J. 511, 515-16
(1989) (courts do not defer to agency interpretations of a
statute where Congress includes a provision in the statute
stating that courts should give no deference on issues of
interpretation or application of statute).
17
See Alaskan Arctic Gas Pipeline Co. v. United States,
831 F.2d 1043, 1050 (Fed. Cir. 1987) (“This court will not defer
to an agency's interpretation of a statute or an agency’s
application of regulations promulgated pursuant to a statute if
the agency action either ‘contravenes clearly discernible
legislative intent’ or is otherwise unreasonable.”) (citation
omitted).
CONSOL. COURT NO. 99-08-00466 PAGE 19
involving possible reliance on adverse inferences, that
regulation is not in accordance with law.18
The record indicates that NSC likely would have gained a
meaningless benefit by its failure to submit the weight
conversion factor.19 The potential expected benefit is so low
that no reasonable fact-finder would find it to be the motivation
for NSC’s action. Even if the Department had considered this
factor, in conjunction with the agency’s marginally informative
observation that NSC possessed the requested data within its
control, Commerce would have lacked substantial evidence to
support its conclusion that NSC’s error was more than an
excusable inadvertence and that reliance on adverse facts
available was therefore appropriate.20 While it is true that
18
In any event, because the Department is mandated by law
to consider the impact of respondent’s non-cooperation, the court
may require Commerce to place the requisite documentation on the
administrative record. See Acciai Speciali Terni, S.p.A. v.
United States, 120 F. Supp. 2d 1101, 1104 (Ct. Int’l Trade 2000)
(discussing F. Lli De Cecco Di Filippo Fara San Martino S.p.A. v.
United States, 21 CIT 1124, 980 F. Supp. 485 (1997)).
19
In terms of its dumping margin, NSC’s benefit (as
calculated by NSC and uncontested by Commerce and defendant-
intervenors) amounted to [ ]. NSC
Obj. at 11 n.2.
20
Commerce also identifies NSC’s submission of the weight
conversion factor data within only ten days of the preliminary
determination as additional support for the agency’s use of
adverse facts available. See Remand Determ. at 3; Def.’s Reply
Br. at 7. The court fails to see, and the Department does not
explain, exactly how the dispatch with which a respondent
provides information that it failed to provide earlier evinces a
(continued...)
CONSOL. COURT NO. 99-08-00466 PAGE 20
“Commerce must necessarily draw some inferences from a pattern of
behavior,” Borden II, 1998 WL 895890, at *1, the agency is
nevertheless “not free to prescribe what inferences from the
evidence it will accept and reject, but must draw all those
inferences that the evidence fairly demands.” Pohang Iron &
Steel Co. v. United States, No. 98-04-00906, 1999 WL 970743, at
*11 (Ct. Int’l Trade 1999) (quoting Allentown Mack Sales & Serv.
v. NLRB, 522 U.S. 359, 378 (1998) (emphasis added)).
CONCLUSION
20
(...continued)
respondent’s failure to cooperate by not acting to the best of
its ability. In fact, respondents should be encouraged to
produce such information as soon as possible, for example, as in
this case, before verification, so that the Department may more
likely be able to incorporate the reliable data and thereby
“determin[e] current margins as accurately as possible.” D & L
Supply Co. v. United States, 113 F.3d 1220, 1223 (Fed. Cir. 1997)
(quoting Rhone Poulenc, Inc., v. United States, 899 F.2d 1185,
1191 (Fed. Cir. 1990)). See also Allied-Signal Aerospace Co. v.
United States, 996 F.2d 1185, 1192-93 (Fed. Cir. 1993) (“One of
the fundamental purposes of the rules is to induce the timely
submission of information to assist the ITA in determining
accurate dumping margins.”). Undoubtedly, had NSC been unable to
procure the necessary information for a much longer period of
time, for example, until after verification, the Department would
have referred to respondent’s significant delay or unverifiable
submission as further evidence to support the use of adverse
facts available. See, e.g., Heavy Forged Hand Tools, Finished or
Unfinished, With or Without Handles, from
the People's Republic of China, 65 Fed. Reg. 12,202, 12,204-05
(Dep’t Comm. 2000) (prelim. admin. rev.). Commerce may not apply
its facts available methodology so as to place respondents who
attempt to correct inadvertent errors in such a “catch-22”
situation. Silver Reed America, Inc. v. United States, 12 CIT
910, 915, 699 F. Supp. 291, 295 (1988).
CONSOL. COURT NO. 99-08-00466 PAGE 21
Commerce’s recently-issued policy statement conforms to the
requirements of the court’s injunction regarding the placement on
record of memoranda detailing ex parte communications between
parties and Department officials. Commerce’s determination that
NSC “failed to cooperate by not acting to the best of its
ability,” however, is unsupported by substantial evidence.
Because those factors relied upon by Commerce, from which a
reasonable inference could be drawn, do not constitute
substantial evidence for a conclusion that NSC’s actions were
more than an inadvertent error, the court does not remand this
case for further examination of the adverse inference issue.
Rather, the court remands this case with instructions to the
Department to re-calculate NSC’s dumping margin without utilizing
adverse facts available, in accordance with this opinion.
____________________________
Jane A. Restani
JUDGE
Dated: New York, New York
This 20th day of April, 2001.