Bebitz Flanges Works Private Ltd. v. United States

• Decision Date: 03 March 2020
• Docket Number: Court No. 18-00229,Slip Op. 20-27
• Citation: 433 F.Supp.3d 1309
• Parties: BEBITZ FLANGES WORKS PRIVATE LIMITED, Plaintiff, v. UNITED STATES, Defendant, and Coalition of American Flange Producers, Defendant-Intervenor.
• Court: U.S. Court of International Trade

433 F.Supp.3d 1309

BEBITZ FLANGES WORKS PRIVATE LIMITED, Plaintiff,

v. UNITED STATES, Defendant,andCoalition of American Flange Producers, Defendant-Intervenor.

Slip Op. 20-27

Court No. 18-00229

United States Court of International Trade.

March 3, 2020

Peter Koenig, Squire Patton Boggs (US) LLP, of Washington, DC, argued for plaintiff.

Geoffrey M. Long, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With him on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and Tara K. Hogan, Assistant Director. Of counsel Daniel J. Calhoun and Kirrin Ashley Hough, Office of the Chief Counsel for Trade Enforcement & Compliance, Office of the General Counsel, U.S. Department of Commerce, of Washington, DC. With them on the brief was Caroline D. Bisk.

Enbar Toledano, Wiley Rein LLP, of Washington, DC, argued for defendant-intervenor. With her on the brief were Daniel B. Pickard, Stephanie M. Bell and Cynthia C. Galvez.

OPINION

Katzmann, Judge:

This case presents the potential tension in the administrative process between the statutory obligation of an agency to render its determinations within clear time deadlines and the ability of parties to participate in a meaningful fashion in that process. It involves the application of adverse inferences to a mandatory respondent in an antidumping ("AD") investigation by the U.S. Department of Commerce ("Commerce"), where the respondent failed to provide timely and complete information in compliance with Commerce’s deadlines and guidelines. Plaintiff Bebitz Flanges Works Private Limited ("Bebitz"), a foreign producer and exporter of stainless steel flanges from India, brings this action against the United States ("the Government") to challenge Commerce’s Stainless Steel Flanges from India: Final Affirmative Determination of Sales at Less Than Fair Value and Final Affirmative Critical Circumstance Determination, 83 Fed. Reg. 40,745 (Dep't Commerce Aug 16, 2018) ("Final Determination"), and accompanying issues and decision memorandum (Dep't Commerce Aug. 10, 2018), P.R. 227 ("IDM"), in which Commerce used adverse inferences to set an AD duty rate for Bebitz and its affiliates. Bebitz requests that the court "remand Commerce’s decision for a decision in accordance with law and supported by substantial evidence." Pl.’s Rule 56.2 Mot. for J. on the Agency Rec. and Opening Br. at 6, June 7, 2019, ECF No. 25 ("Pl.’s Br."). The Government responds that the court should "reject Bebitz’s challenges and sustain Commerce’s determination." Def.’s Resp. to Pl.’s Mot. for J. on the Agency Rec. at 1, Aug. 16, 2019, ECF No. 29 ("Def.’s Br."). The court now sustains the Final Determination as supported by substantial evidence and otherwise in accordance with law.

BACKGROUND

I. Legal

To ameliorate trade distortions caused by unfair economic practices, Congress enacted the Tariff Act of 1930,¹ which empowers Commerce to investigate potential dumping or subsidies, and if appropriate, issue orders imposing duties on the subject merchandise. Sioux Honey Ass'n v. Hartford Fire Ins. Co., 672 F.3d 1041, 1046–47 (Fed. Cir. 2012). These AD and countervailing duty ("CVD") actions are intended to be remedial, not punitive, in nature, Chaparral Steel Co. v. United States, 901 F.2d 1097, 1103 (Fed. Cir. 1990), and it is Commerce’s duty to determine margins as accurately as possible, Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed. Cir. 1990). Pursuant to 19 U.S.C. § 1673, Commerce imposes AD duties on foreign goods if they are being or are likely to be sold in the United States at less than fair value and the International Trade Commission ("ITC") determines that the sale of the merchandise at less than fair value materially injures, threatens, or impedes the establishment of an industry in the United States. See also Diamond Sawblades Mfrs. Coal. v. United States, 866 F.3d 1304, 1306 (Fed. Cir. 2017) ; Shandong Rongxin Imp. & Exp. Co. v. United States, 42 C.I.T. ––––, ––––, 331 F. Supp. 3d 1390, 1394 (2018). "Sales at less than fair value are those sales for which the ‘normal value’ (the price a producer charges in its home market) exceeds the ‘export price’ (the price of the product in the United States)." Apex Frozen Foods, 862 F.3d 1322, 1326 (Fed. Cir. 2017) (quoting Union Steel v. United States, 713 F.3d 1101, 1103 (Fed. Cir. 2013) ). The amount of the AD duty is "the amount by which the normal value exceeds the export price (or the constructed export price) for the merchandise." 19 U.S.C. § 1673. See also Shandong Rongxin, 331 F. Supp. 3d at 1394.

A. Reliance on Facts Otherwise Available and Adverse Facts Available

In investigating whether foreign goods are being sold in the United States at less than fair value, Commerce may select and issue questionnaires to mandatory respondents² to gather information for its determination. See 19 U.S.C. § 1677f-1(c)(2). Questionnaire responses are intended to give Commerce the information necessary to determine whether dumping is occurring. See, e.g., Letter from Paul Walker, Program Manager AD/CVD Operations, to Peter Koenig, Squire Patton Boggs LLP (Oct. 3, 2017), P.R. 8 ("Original Questionnaire"). Where Commerce determines that dumping is occurring, Commerce uses the information collected to calculate the margin at which goods are being dumped into the United States and the corresponding AD duty rate to counter this dumping. See, e.g., id. Where an agency’s request is clear and relevant to the investigation, 19 U.S.C. § 1677m requires a respondent to timely "prepare an accurate and complete record in response to questions plainly asked by Commerce." Tung Mung Dev. Co. v. United States, 25 C.I.T. 752, 758, 23 ITDR 1775 (2001) (citing Olympic Adhesives, Inc. v. United States, 899 F.2d 1565, 1571–72 (Fed. Cir. 1990) ). If Commerce deems a response to its request deficient, then Commerce "shall promptly inform the person submitting the response of the nature of the deficiency and shall, to the extent practicable, provide that person with an opportunity to remedy or explain the deficiency in light of the time limits established for the completion of investigations or reviews under this subtitle."

19 U.S.C. § 1677m(d). Commerce provides this notice and the opportunity to remedy deficiencies through issuance of a supplemental questionnaire.

In order to meet its statutory deadlines, Commerce generally has discretion to create its own rules of procedure related to the development of record information. PSC VSMPO–Avisma Corp. v. United States, 688 F.3d 751, 760–61 (Fed. Cir. 2012) (citing Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, Inc., 435 U.S. 519, 543–44, 564, 98 S.Ct. 1197, 55 L.Ed.2d 460 (1978) ("Absent constitutional constraints or extremely compelling circumstances the administrative agencies should be free to fashion their own rules of procedure and to pursue methods of inquiry capable of permitting them to discharge their multitudinous duties.")). Commerce’s exercise of its discretion, however, must be reasonable in light of its statutory obligations. See Sterling Fed. Sys., Inc. v. Goldin, 16 F.3d 1177, 1182 (Fed. Cir. 1994) (noting that the agency abuses its discretion when its decision is "clearly unreasonable, arbitrary, or fanciful"). In the context of AD proceedings, while Commerce clearly has the discretion to regulate administrative filings, that discretion is bounded at the outer limits by the obligation to carry out its statutory duty of "determin[ing] dumping margins ‘as accurately as possible.’ " NTN Bearing Corp. v. United States, 74 F.3d 1204, 1208 (Fed. Cir. 1995) (quoting Rhone Poulenc, 899 F.2d at 1191 ).

If a party fails to satisfactorily respond to Commerce’s requests for "necessary information" to calculate a dumping margin by (1) withholding requested information, (2) failing to provide information by the submission deadlines or in the form or manner requested, (3) significantly impeding a proceeding, or (4) providing information that cannot be verified, Commerce shall use facts otherwise available to calculate the margin. 19 U.S.C. § 1677e(a)(2). "The use of facts otherwise available ... is only appropriate to fill gaps when Commerce must rely on other sources of information to complete the factual record." Zhejiang Dunan Hetian Metal Co. v. United States, 652 F.3d 1333, 1346 (Fed. Cir. 2011) (citing Nippon Steel Corp. v. United States, 337 F.3d 1373, 1381 (Fed. Cir. 2003) ).

Furthermore, under 19 U.S.C. § 1677e(b)(1), Commerce may apply adverse facts available ("AFA") when 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[.]" A respondent does not cooperate to the "best of its ability" when it fails to "put forth its maximum effort to provide Commerce with full and complete answers to all inquiries." Nippon Steel, 337 F.3d at 1382. See also Dillinger France S.A. v. United States, 42 C.I.T. ––––, ––––, 350 F. Supp. 3d 1349, 1356 (2018). The Federal Circuit in Nippon Steel explained that Commerce must make an objective and subjective determination regarding respondent’s efforts in assessing whether it acted to the best of its ability. 337 F.3d at 1382–83. The Federal Circuit clarified that this test applies "regardless of motivation or intent" on the part of the respondent, but that it simply "does not condone inattentiveness, carelessness, or inadequate record keeping." Id.

The statute explicitly provides Commerce with the discretion to select among any dumping margins "under the applicable [AD] order," including "the highest such rate or margin."

19 U.S.C. § 1677e(d)(1)(B)–(2). "[W]here there is useable information of record but the record is incomplete," Commerce applies partial AFA. Wash. Int'l Ins. v. United States, 33 C.I.T. 1023, 1035 n.18, 31 ITRD 1803 (2009) (citing Yantai Timken Co., Ltd....