Floral Trade Council of Davis, California v. US

• Decision Date: 27 December 1988
• Docket Number: Court No. 87-04-00627.
• Citation: 704 F. Supp. 233
• Parties: FLORAL TRADE COUNCIL OF DAVIS, CALIFORNIA, Plaintiff, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

704 F. Supp. 233

FLORAL TRADE COUNCIL OF DAVIS, CALIFORNIA, Plaintiff, v. The UNITED STATES, Defendant.

Court No. 87-04-00627.

United States Court of International Trade.

December 27, 1988.

COPYRIGHT MATERIAL OMITTED

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

John R. Bolton, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch (Elizabeth C. Seastrum), Civil Div., U.S. Dept. of Justice, Washington, D.C., Douglas S. Cohen, Office of Import Administration, U.S. Dept. of Commerce, for defendant.

OPINION

RESTANI, Judge:

This is one of several actions challenging International Trade Administration (ITA) determinations rendered as a result of a petition filed by plaintiff concerning fresh cut flowers from eight countries. This particular case involves antidumping duties with regard to miniature and standard carnations and pompon and standard chrysanthemums from Ecuador. The final determination at issue resulted in findings of weighted average dumping margins for various producers of between 2 and 19 percent. Certain Fresh Cut Flowers From Ecuador, 52 Fed.Reg. 2,128 (Jan. 20, 1987), as amended 52 Fed.Reg. 8,494 (Mar. 18, 1987).

Plaintiff takes issue with the adequacy of the investigation, and the methodology used, as well as with certain decisions made with regard to calculation of foreign market value derived from cost of production data.

I. Failure to Conduct a Below Cost of Production Investigation

Plaintiff's first claim is that defendant failed to fulfill its statutory duty to conduct a less than cost of production investigation. In its determination, ITA stated that the request to conduct such an investigation one month in advance of the final determination was untimely and would be denied on that basis.

Section 773(b) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1677b(b) (1982) provides:

(b) Sales at less than cost of production.

Whenever the administering authority has reasonable grounds to believe or suspect that sales in the home market of the country of exportation, or, as appropriate, to countries other than the United States, have been made at prices which represent less than the cost of producing the merchandise in question, it shall determine whether, in fact, such sales were made at less than the cost of producing the merchandise. If the administering authority determines that sales made at less than cost of production —

(1) have been made over an extended period of time and in substantial quantities, and

(2) are not at prices which permit recovery of all costs within a reasonable period of time in the normal course of trade,

such sales shall be disregarded in the determination of foreign market value. Whenever sales are disregarded by virtue of having been made at less than the cost of production and the remaining sales, made at not less than cost of production, are determined to be inadequate as a basis for the determination of foreign market value under subsection (a) of this section, the administering authority shall employ the constructed value of the merchandise to determine its foreign market value.

In this case, plaintiff did not specifically request ITA to perform a less than cost of production analysis at the time it filed its petition. Apparently, at that time, plaintiff did not possess data which it believed would constitute "reasonable grounds to believe or suspect" that such an investigation should be undertaken. See 19 U.S.C. § 1677b(b) (1982). Defendant does not dispute this, but avers that by the end of October plaintiff knew everything it knew on December 12 when plaintiff actually requested such an investigation and that clearly one month is too short a time in which to conduct an investigation. (Plaintiff does not appear to disagree with defendant's assertion that one month is an insufficient amount of time to conduct a cost of production investigation.) It is unclear whether ITA would have acceded to plaintiff's request had it made it one month or six weeks earlier, but plaintiff offers no acceptable reason for not immediately alerting ITA as soon as it possessed information it contends indicates that a less than cost of production investigation was necessary.

The argument plaintiff makes here is that ITA had reasonable grounds to suspect that the investigation was needed as early as September and that under the statute it had a duty to perform the investigation without waiting for a request from plaintiff. It is well accepted that ITA's duties are largely investigatory,¹ but given the burdens placed upon ITA by the statute it is not reasonable to expect ITA in every case to pursue all investigative avenues, even such important areas as less than cost of production sales, without some direction by petitioners. It should be remembered that cost of production need not be investigated in every case, but only when reasonable grounds are present. Part of whether ITA has "reasonable grounds to believe or suspect" that a less than cost of production analysis is needed is whether it has been requested. See Floral Trade Council v. United States, 698 F.Supp. 925 (C.I.T.1988) (Review of ITA final determination as to fresh cut flowers from Costa Rica).

Plaintiff argues further that even if it has some duty to act, it was obvious from the record that home market sales were being made at less than cost of production, and therefore there was no need for such a request. The court finds that the need for the investigation was not as obvious as plaintiff claims it to be.

In its petition, plaintiff gave cost of production figures based on costs in the United States, but said nothing about the need for a below cost of production investigation. Available to ITA was some information on cost of production for Columbia. At least one source indicated that production conditions in Ecuador were only slightly different from those in Columbia. By mid-September, ITA also had home market price data from some Ecuadorian producers. Those figures indicated that Ecuadorian sales data available to ITA were at values less than the non-Ecuadorian cost of production. In mid-September, however, ITA had not determined what adjustments to petitioner's cost of production figures should be made to make them appropriate to Ecuador. By the end of October, ITA had arrived at a proxy production cost figure for Ecuador based on "best information available." Thus, by the end of October ITA had some information available to it from which it might have concluded that sales in Ecuador might have been at less than the cost of production. Nonetheless, ITA was not required to conclude sua sponte that cost of production in Ecuador, in reality, would approximate the proxy figure, which would be the basis of any suspicion of less than cost sales. The best information available rule allows the agency to use values which may have little to do with reality. The information used as best information available may form the basis of a reasonable suspicion, under certain circumstances, that less than cost of production sales are occurring. It does not necessarily follow from this that the need for the investigation was facially apparent here.²

The court finds that given ITA's need to synthesize data and to draw various conclusions from evidence not directly applicable to the home market in order to arrive at any opinion as to whether a below cost of production investigation should be undertaken, the need for the investigation cannot be described as obvious. Due to the late development of the relevant information, plaintiff was under an obligation to notify ITA as soon as possible of its belief that such an investigation was needed and the reason for its belief. Under the circumstances of this case, ITA was not unreasonable in declining to conduct a less than below cost investigation requested one month prior to the issuance of the final determination.³

II. Use of Monthly Averaging for U.S. Price Purposes

The next issue raised by plaintiff is whether the use of monthly averages to calculate United States price unreasonably obscures dumping during low demand periods.

Pursuant to the Trade and Tariff Act of 1984, Pub.L. No. 98-573, Title VI, § 620, 98 Stat. 3039, the antidumping law was amended to expressly permit use of averaging in the determination of U.S. price. 19 U.S.C. § 1677f-1 (Supp. IV. 1986) now reads:

§ 1677f-1. Sampling and averaging

(a) In general

For the purpose of determining United States price or foreign market value under sections 1677a and 1677b of this title, and for purposes of carrying out annual reviews under section 1675 of this title, the administering authority may —

(1) use averaging or generally recognized sampling techniques whenever a significant volume of sales is involved or a significant number of adjustments to prices is required, and

(2) decline to take into account adjustments which are insignificant in relation to the price or value of the merchandise.

(b) Selection of samples and averages

The authority to select appropriate samples and averages shall rest exclusively with the administering authority; but such samples and averages shall be representative of the transactions under investigation.

Thus, although averaging may be used under the circumstances described in subsection (a), it may not be utilized in a manner that produces results which are "unrepresentative." 19 U.S.C. § 1677f-1(b). The purpose of the amendment was to ease ITA's burdens. H.R.Rep. No. 725, 98th Cong., 2d Sess. 45-46 (1984), U.S.Code Cong. & Admin.News 1984, pp. 4910, 5172, 5173. An interpretation of the statute which furthers that goal and is still within the strictures of the statute will be sustained.

The first question to be addressed in this case is whether subsection (a) of the statutes is satisfied. The proceeding under review was initiated by simultaneous petitions by this plaintiff...