PISTACHIO GROUP OF ASS'N OF FOOD IND. v. US

Citation11 CIT 668,671 F. Supp. 31
Decision Date29 September 1987
Docket NumberCourt No. 86-08-01037.
PartiesPISTACHIO GROUP OF THE ASSOCIATION OF FOOD INDUSTRIES, INC., et al., Plaintiffs, v. The UNITED STATES, Defendant, and California Pistachio Commission, et al., Defendant-Intervenors.
CourtU.S. Court of International Trade

Harris & Berg, Cheryl Ellsworth, Washington, D.C., for plaintiffs.

Richard K. Willard, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Platte B. Moring, III, Civ. Div., U.S. Dept. of Justice, Washington, D.C., for defendant.

Fried, Frank, Harris, Shriver & Jacobson, David E. Birenbaum and Alan Kashdan, Washington, D.C., for defendant-intervenors.

OPINION

RESTANI, Judge:

Before the court is plaintiffs' Rule 56.1 motion for judgment based upon the record before the International Trade Administration of the Department of Commerce (ITA), which resulted in the final affirmative antidumping duty determination concerning Certain In-Shell Pistachio Nuts from Iran. 51 Fed.Reg. 18919 (1986).

Plaintiffs assert two bases for their claim that the determination is not supported by substantial evidence of record and is not in accordance with law. First, plaintiffs assert that use of official Iranian exchange rates to convert fair market value figures from Iranian rials to United States (U.S.) dollars was contrary to the antidumping laws, because actual market rates of exchange were ignored. Second, plaintiffs assert that ITA acted unreasonably in rejecting information provided by the respondent in the investigation, Rafsanjan Pistachio Producers Cooperative (RPPC), and by using the information submitted by petitioners.

Defendant responds that an appropriately promulgated, longstanding regulation required use of the official exchange rates in this case. Defendant further responds that the "best information available" rule allowed it to reject respondent's information on fair market value because respondent's answer to the questionnaire provided by ITA was incomplete, and further that it is permitted to use information supplied by the petitioner.

Defendant-intervenors take the same position as defendant, but also assert that both the exchange rate certified by the Federal Reserve Bank of New York and utilized by ITA, and the information submitted in its petition, were correct.

FACTS

Important to the analysis here are the following facts:

1. Throughout the period of the investigation the United States had no diplomatic relations with Iran. The questionnaires and the responses were transmitted through the government of Algeria.

2. The only respondent, RPPC, also the only known producer of pistachios in Iran, provided prices for its home market sales without clearly delineating which were for export and which were for domestic consumption. RPPC does not export. The pricing information was provided at the time slightly beyond the deadline established.

3. RPPC, though requested to do so, did not obtain sales information from exporters, but indicated to ITA who the likely exporters were.

4. During the preliminary investigation plaintiffs sought a declaration by ITA that the proceedings were extraordinarily complicated. Such a declaration would have triggered an extension of time to respond to the questionnaire. A shorter, four-week extension was granted on the basis that RPPC displayed some cooperation in the investigation. A similar request by the Government of Iran was denied because it was not a participant in the proceedings.

5. RPPC was advised in advance that the ITA would use the "best information available" if it did not receive complete responses.

6. The final dumping margin was set at 241.14 per cent ad valorem; the scope of the finding was clarified so that only raw pistachios were included.

7. Following an affirmative determination of threat of material injury by the International Trade Commission (ITC) an antidumping order was issued.

8. The official Iranian exchange rate is 90 rials to the dollar. Both the Central Bank of Iran and the International Monetary Fund use this rate. Plaintiffs admit this is the official rate and the Government of Iran claims it is the only legal rate in Iran.

9. During the relevant period some exchange transactions existed outside of Iran at the rate of 600-650 rials to the dollar. Evidence of published quotations from inside and outside Iran were presented to the ITA.

10. Most, if not all, of the margins found would be eliminated if an exchange rate of 600-650 rials to the dollar was used, as opposed to the 90 rial to the dollar official exchange rate.

11. The 90 rial rate has remained relatively constant despite tremendous inflation in Iran.

USE OF EXCHANGE RATES CERTIFIED BY THE FEDERAL RESERVE

Pursuant to 19 C.F.R. § 353.561 ITA, in order to administer the antidumping laws, must make currency conversions in accordance with 31 U.S.C. § 5151.2 Because the Secretary of the Treasury did not publish a current value for the Iranian rial, and because there was no current buying rate specified by the Federal Reserve Bank of New York (N.Y. Fed), the N.Y. Fed was to specify an appropriate exchange rate, pursuant to statutory provisions, as incorporated by ITA's regulation.

The regulation seemingly is written in absolute terms; on its face it appears to permit no deviation from the section 5151 scheme. Although there are procedures for obtaining a hearing at the N.Y. Fed regarding the appropriateness of rates, there is no mechanism for direct judicial review of the rate setting decision. In cases involving assessment of duties under the customs laws, the Supreme Court has held that rates set by the N.Y. Fed are not subject to judicial review. Barr v. United States, 324 U.S. 83, 65 S.Ct. 522, 89 L.Ed. 765 (1945); Hadden v. Merritt, 115 U.S. 25, 5 S.Ct. 1169, 29 L.Ed. 333 (1885); Cramer v. Arthur, 102 U.S. (12 Otto) 612, 26 L.Ed. 259 (1880). The record is clear that ITA made no independent decision regarding the currency exchange rates, and ITA asserts it could not do so under its regulation.

The process described above has presented the court with two overlapping issues: first, whether a delegation of authority from ITA to the N.Y. Fed has occurred, and, if so, whether that delegation is valid; and, second, whether the ITA's interpretation of its regulation is correct, and if so, whether the regulation is valid under such an interpretation. These issues are addressed in detail below.

DELEGATION OF AUTHORITY

Initially, the parties disagree about whether section 353.56(a) constitutes a delegation of authority from ITA to the N.Y. Fed. Defendant-intervenor appears to contend that a valid subdelegation has occurred. Plaintiff contends that no delegation has taken place, but that if such delegation did exist, it would be invalid. Defendant argues that no delegation or subdelegation has occurred because ITA merely "relied upon the particular institution that Congress has designated to develop and issue exchange rates for duty assessment and collection purposes." Defendant's Supplemental Brief at 3. According to defendant, the exchange rates set by the N.Y. Fed are comparable to other types of information that ITA routinely uses during its investigations. Specifically, defendant notes that in critical circumstances determinations, ITA may rely upon dumping determinations made by other countries and import statistics provided by the Bureau of Census. See 19 U.S.C. § 1673b(e)(1) (1982). In countervailing duty investigations, ITA apparently also relies upon interest rate benchmark figures provided by appropriate agencies in foreign countries to determine whether loans that are inconsistent with commercial considerations have been made. See 19 U.S.C. § 1677(5)(B)(i) (1982).

The analogy drawn between exchange rates and these other forms of information fails. ITA states that it has no discretion to review exchange rates set by N.Y. Fed, but it has not made a similar claim with respect to the other information it uses. Furthermore, ITA is required by regulation to obtain rates from N.Y. Fed during the course of the antidumping proceeding, even when N.Y. Fed has not published such rates in the ordinary course of its business. In ITA's other examples, the information gathered is not prepared specifically at the request of ITA, nor is its preparation an integral part of ITA's procedure.

The defendant also contends that there has been no delegation because the calculation of LTFV margins is merely incident to the calculation of rates for the collection and assessment of duties under section 5151. In essence, defendant argues that by authorizing the N.Y. Fed to calculate exchange rates for assessment and collection purposes, Congress implicitly delegated the authority to calculate rates for related procedures.

This interpretation of section 5151 obfuscates the distinction that our Court of Appeals has drawn between LTFV determinations and the collection and assessment process. In Melamine Chemicals, Inc. v. United States, 732 F.2d 924 (Fed.Cir.1984), the court specifically rejected appellee's argument that the "assessment and collection" language contained in section 5151 encompasses ITA's fair value investigation. The court stated:

Melamine incorrectly asserts that the ultimate purpose of a fair value investigation and calculation is the assessment and collection of antidumping duties. The purpose of a fair value investigation is to determine whether LTFV sales are occurring to the injury of domestic industry. Such investigations may or may not result in the assessment and collection of antidumping duties.
The notion that assessment and collection includes calculation of fair value, so that the two phases must be merged as argued by Melamine, has been laid to rest by the Supreme Court in United States v. George S. Bush & Co., 310 U.S. 371, 60 S.Ct. 944, 84 L.Ed. 1259 (1940), and in Barr v. United States, 324 U.S. 83, 65 S.Ct. 522, 89 L.Ed. 765 (1945).

Melamine, ...

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