Floral Trade Council of Davis, Cal. v. US

• Citation: 15 CIT 497,775 F. Supp. 1492
• Decision Date: 27 September 1991
• Docket Number: Consol. Court No. 90-06-00290.
• Parties: FLORAL TRADE COUNCIL OF DAVIS, CALIFORNIA, Plaintiff, v. UNITED STATES, Defendant, and Asociacion Colombiana De Exportadores De Flores, et al., Defendants-Intervenors.
• Court: U.S. Court of International Trade

775 F. Supp. 1492

15 CIT 497

FLORAL TRADE COUNCIL OF DAVIS, CALIFORNIA, Plaintiff, v. UNITED STATES, Defendant and Asociacion Colombiana De Exportadores De Flores, et al., Defendants-Intervenors.

Consol. Court No. 90-06-00290.

United States Court of International Trade.

September 27, 1991.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Stewart & Stewart, Eugene L. Stewart, Terence P. Stewart, James R. Cannon, Jr. and Jimmie V. Reyna, Washington, D.C., for plaintiff.

Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Jeanne E. Davidson, (Andrea Fekkes Dynes, Office of Chief Counsel for Intern. Trade Admin., U.S. Dept. of Commerce, Washington, D.C., of counsel), for defendant.

Arnold & Porter, Lawrence A. Schneider, Michael T. Shor and Susan G. Lee, Akin, Gump, Strauss, Hauer & Feld, Patrick F.J. Macrory, Spencer S. Griffith, Washington, D.C., for defendants-intervenors.

OPINION

RESTANI, Judge:

In this case, domestic and foreign producers of fresh cut flowers challenge the final results of the second antidumping duty review by the International Trade Administration ("ITA") in Certain Fresh Cut Flowers From Colombia, 55 Fed.Reg. 20491 (1990).¹ The review covered 218 producers and exporters of flowers (standard carnations, miniature (spray) carnations, standard chrysanthemums, and pompon chrysanthemums) from Colombia to the United States, and the period March 1, 1988 through February 28, 1989.

The case is before the court on motions for judgment upon the agency record brought by plaintiff, Floral Trade Council of Davis, California ("FTC"), and the intervenors, Asociacion Colombiana de Exportadores de Flores, its individual members, and 201 individual growers and exporters ("Asocolflores"). The government seeks a remand to correct four specific errors.

The court will address plaintiff's claims first, then turn to claims raised by the intervenors and the government.

STANDARD OF REVIEW

ITA's decision will be upheld 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) (1988).² In addition, ITA's interpretation of the statute it administers must be reasonable and must not conflict with Congressional intent. See Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-45, 104 S.Ct. 2778, 2781-83, 81 L.Ed.2d 694 (1984); Four "H" Corp. v. United States, 9 CIT 271, 272, 611 F.Supp. 981, 983 (1985).

DISCUSSION

I. FTC CHALLENGES

A. Constructed Value as Basis for Foreign Market Value.

FTC argues that ITA erred in using constructed value ("CV") as the basis for foreign market value ("FMV") because the statute, regulations and agency practice express a preference for third country prices. According to FTC, adequate third country price information was available, and ITA's decision to reject it was unsupported by the record.

1. Statutory Scheme.

In the preliminary determination, ITA used home market or third country prices as the basis of FMV, and CV when home market or third country prices were not available. Certain Fresh Cut Flowers from Colombia Preliminary Results of Antidumping Duty Administrative Review, 55 Fed.Reg. 456, 457 (1990). In the final determination, ITA rejected home market and third country sales in favor of CV. ITA's decision was based on findings that home market sales were inadequate, and due to an "unusual set of facts" third country prices would not provide an accurate measure of dumping. 55 Fed.Reg. at XXXXX-XXX.

Section 773 of the Tariff Act of 1930, as amended, sets forth three methods for determining FMV: home market sales; third country sales; and constructed value. See 19 U.S.C. § 1677b(a)(1) — (2).³ The statute provides that if home market sales are inadequate, FMV may be determined based on CV, notwithstanding third country sales. 19 U.S.C. § 1677b(a)(2).⁴ Although the statute places third country prices and CV on a nearly equal footing, the regulations express a clear preference for third country prices. See 19 C.F.R. § 353.48(b)⁵ ("the Secretary normally will prefer foreign market value based on sales to a third country rather than on constructed value") (emphasis added). Nonetheless, ITA interpreted the statute and regulation as giving it discretion to disregard third country sales in favor of CV under "extraordinary circumstances." 55 Fed.Reg. at 20492.

ITA's interpretation was reasonable: third country prices may be abandoned if there is an adequate factual basis in the record for doing so. The statute and regulations cited above, and pertinent case law all support this conclusion. See Smith-Corona Group v. United States, 713 F.2d 1568, 1576 n. 20 (Fed.Cir.1983) (CV may be used without regard to availability of third country prices); Asociacion Colombiana de Exportadores de Flores v. United States, 13 CIT ___, 704 F.Supp. 1114, 1124 (1989) ("Asocolflores") (though statute favors actual prices, ITA not required to find third country prices completely unusable before turning to CV). The next issue is whether substantial evidence in the record supports ITA's decision to reject third country prices.

2. Substantial Evidence.

ITA gave three reasons for rejecting third country sales: (i) United States and European price and volume movements were not "positively correlated"; (ii) third country sales occurred only in peak months, making it difficult to find contemporaneous sales; and (iii) the perishability of fresh cut flowers leads to price differences that are unrelated to dumping. 55 Fed.Reg. at XXXXX-XXX. Because of these factors, ITA concluded third country prices would not provide an accurate measure of dumping. 55 Fed.Reg. at 20943.

(i) Lack of correlation between United States and European Markets.

ITA identified several distinctions between United States and European markets which lead to price differences that can "either mask dumping in some instances or exaggerate" it in others. 55 Fed.Reg. at 20492. According to ITA, the United States market is characterized by "extreme price volatility" and pronounced peaks and lulls; in contrast, the European market is mature and demand is consistent throughout the year. Id. Europe supplies most of its own flowers, and during peak production periods Colombian flowers cannot be sold there easily. European prices are primarily determined by the auction houses. Because producers must guarantee a certain volume to sell there, Colombian producers are usually prevented from participating. Finally, ITA noted that United States and European holidays often do not coincide, resulting in different peak periods.⁶ 55 Fed.Reg. at 20492-20493. Although ITA used an extended one year period of investigation because of the cyclical nature of the flower market, it found that European and United States cycles did not coincide.

Given the presence of different price and demand patterns in United States and European markets, ITA correctly concluded that price differences might be the result of factors other than price discrimination. In light of market differences, reliance on third country prices likely would have produced misleading results. ITA's reasoning on this point was sound. In addition, its findings were supported by substantial evidence. Although citations to the record were not given, it appears that ITA relied heavily on three economic reports submitted by Asocolflores.⁷ These reports provide ample support for ITA's findings.

(ii) Third Country Sales Not Made over Entire Year.

ITA also found that third country sales were made only in peak months, not over the entire year, making a fair comparison with United States sales difficult. 55 Fed. Reg. at 20493. ITA reasonably relied on this factor because a comparison of peak foreign and nonpeak United States prices likely would lead to inaccurate results, that is, unreasonably high margins. ITA's finding was supported by questionnaire responses, which indicated that most companies did not have sales to the European market in all months.

(iii) Perishability Factor.

On the supply side, ITA found that flowers are highly perishable, and subject to natural and economic forces unlike those facing nonperishable products. ITA noted that these difficulties are compounded because Colombian producers plan production for the United States market: in the event of excess production, producers might have to sell in unanticipated markets where they are vulnerable to market differences. Here again, ITA's consideration of this factor was reasonable, and its findings concerning product characteristics and Colombian export patterns are supported by substantial evidence in the record.

At oral argument, FTC asserted ITA should have adopted a "company-specific" approach, and used third country price data, for the companies and during the months such data was available, and constructed value in other cases, as it did in some instances during the investigative phase. FTC, however, failed to provide the court with specific data to indicate for which companies and time periods third country price information was available, and should have been used. In any event, even if FTC had supplied this information, utilization of third country prices would not account for different demand and pricing patterns in the United States and Europe.

B. Calculation of Average Constructed Value for Companies that Did not Submit Cost Data.

FTC argues ITA erred in using average CV for companies that did not submit adequate cost data.⁸ ITA reviewed information for fifty producers. It did not request cost data, but thirty-nine producers voluntarily submitted cost as well as price information. Eleven producers did not provide complete cost information. Relying on best information available, ITA assigned each firm a weighted-average CV. 55 Fed. Reg. at 20493. ITA must use "best information available" whenever a party "refuses or is unable to...