Floral Trade Council v. US

• Decision Date: 25 May 1993
• Docket Number: Court No. 92-06-00393.
• Citation: 822 F. Supp. 766
• Parties: FLORAL TRADE COUNCIL, Plaintiff, v. The UNITED STATES, Defendant, Visaflor, S.A., Rancho Daisy, Rancho Guacatay, and Rancho Mision El Descanso, Defendant-Intervenors.
• Court: U.S. Court of International Trade

822 F. Supp. 766

FLORAL TRADE COUNCIL, Plaintiff, v. The UNITED STATES, Defendant Visaflor, S.A., Rancho Daisy, Rancho Guacatay, and Rancho Mision El Descanso, Defendant-Intervenors.

Court No. 92-06-00393.

United States Court of International Trade.

May 25, 1993.

Stewart & Stewart, Eugene L. Stewart, Terence P. Stewart, James R. Cannon, Jr. and Amy S. Dwyer, Washington, DC, for plaintiff.

Stuart E. Schiffer, Acting Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Marc E. Montalbine; Office of Chief Counsel for Import Admin., U.S. Dept. of Commerce, Patrick V. Gallagher, Jr., of counsel, Washington, DC, for defendant.

Porter, Wright, Morris & Arthur, Leslie Alan Glick, Washington, DC, for defendant-intervenor, Visaflor, S.A.

Katten Muchin Zavis & Dombroff, James M. Lyons, Washington, DC, for defendant-intervenors, Rancho Daisy, Rancho Guacatay, and Rancho Mision El Descanso.

OPINION

RESTANI, Judge:

This matter is before the court on plaintiff's Rule 56.1 motion for judgment upon the agency record. This is a challenge to the final results of the fourth administrative review of an antidumping order. Certain Fresh Cut Flowers from Mexico, 57 Fed.Reg. 19,597 (Dep't Comm.1992) (final results of antidumping duty admin. review) (hereinafter "Final Results"). Plaintiff, Floral Trade Council ("FTC"), protests the decision of the International Trade Administration ("ITA") to calculate a single unified antidumping duty rate, which would be applied to all shippers, both old and new, who did not receive their own individual rates in either the original less than fair value ("LTFV") investigation or a subsequent administrative review.

For the five producers named in the administrative review, ITA was satisfied with the data submitted by the producers, finding no need to base calculations on best information available ("BIA"). See 19 U.S.C. § 1677e(c) (1988). For the two producers whose home market sales were below their cost of production ("COP"), ITA based foreign market value ("FMV") on constructed value ("CV"). FTC challenges ITA's verification procedure and its methodology in calculating CV to determine the rate for one of the producers, Rancho Mision el Descanso ("Rancho Mision"). As the only positive rate, and therefore, the highest rate calculated, Rancho Mision's rate, according to current ITA practice, would apply to all future entries made by producers who did not receive their own rate.

BACKGROUND

In accordance with 19 CFR § 353.22(a)(1) (1992), FTC requested an administrative review for three producers/exporters of fresh cut flowers from Mexico: Rancho del Pacifico, Rancho Daisy, and Rancho Mision. The review covered production of standard carnations, standard chrysanthemums, and pompon chrysanthemums for the period April 1, 1990 through March 31, 1991. Two other producers, Rancho Guacatay and Visaflor, asked to be included in the review. All five producers submitted questionnaire responses to ITA.

On November 1, 1991, FTC requested a COP investigation for Rancho Daisy, Visaflor and Rancho Mision. ITA rejected FTC's untimely COP allegations against Visaflor. Rancho Daisy and Rancho Mision responded to the COP questionnaires sent by ITA.

In its COP questionnaire response, Rancho Mision allocated various costs. ITA's verification report indicated that the agency was able to reconcile Rancho Mision's COP responses for various costs with the appropriate accounting records or source documents. It was unable, however, to verify by means of the general ledger the cultivation-area allocation methodology used in the COP response. Visual identification of cultivation area was also hampered by the fact that, at the time of verification, Rancho Mision had converted many of its greenhouses from the production of carnations to the production of other flowers. ITA stated, however, that by using methods other than strict visual inspection, it was able to verify cultivation area as reported by Rancho Mision. It accepted Rancho Mision's cost allocation as an appropriate method for estimating the cost of cultivating the carnations.

As Rancho Mision was the only producer receiving a positive rate in this review, ITA designated its rate as the cash deposit for future entries of all other shippers who did not receive an individual duty rate. The 18.20% "all other" rate calculated in the LTFV investigation was discarded.

FTC challenged ITA's adoption of a unified rate in a previous action before this court. Floral Trade Council v. United States, 16 CIT ___, 799 F.Supp. 116 (1992) ("Floral Trade I"). In that case, this court noted that the industry was extremely fragmented, with new producers entering the market frequently, and it is difficult for Customs to determine which producers are new shippers. Id. at ___, 799 F.Supp. at 118. Therefore, this court determined that "assuming that no statutory or regulatory barriers to use of a single rate exist," ITA's decision to utilize a single rate to avoid administrative difficulties appears to be practical and justified. Id. Although FTC did not allege a conflict with ITA's regulation, the court expressed skepticism regarding ITA's interpretation of the plain language of 19 C.F.R. § 353.22(e)(2) and a concern that not all relevant arguments had been made on the issue. Floral Trade I, 16 CIT at ___ n. 2, 799 F.Supp. at 119 n. 2. Thus, the court declined to hold that ITA's new approach was consistent with its regulation. Id. at ___ & n. 2, 799 F.Supp at 119 & n. 2. Rather, the court held that ITA was not precluded for purposes of that case from using one "all other" rate for "old" and "new" shippers. Id. at ___, 799 F.Supp. at 120. In this case, unlike the previous one, FTC challenges the regulation outright and both domestic and exporting interests are participating. Thus, the issue is now squarely presented. The court will first address this issue, then turn to the challenge to verification procedures.

DISCUSSION

I. Use of Unified "All Other" Rate

FTC challenges ITA's new procedure for setting an "all other" rate on several bases: 1) administrative ease is an insufficient reason to change a long-standing practice relied upon by domestic producers; 2) ITA failed to provide notice of the proposed change and an opportunity for interested parties to comment; 3) shippers, anticipating lower "all other" rates, will be less likely to participate in subsequent administrative reviews to obtain an individual rate, thereby placing an undue burden on domestic producers to identify shippers who should be reviewed; and 4) Congress specifically instructed ITA to establish regulations to provide for the automatic assessment of duties when a review is not requested.

A. Long-standing Practice of Dual Rates

It was ITA's long-standing practice to calculate an "all other" rate in the original LTFV determination. Certain Fresh Cut Flowers from Mexico, 55 Fed.Reg. 12,696, 12,699 (Dep't Comm.1990) (final results of antidumping duty admin. review). The rate would apply to all producers currently active in that market who did not receive an individual rate in the investigation. ITA continued to apply that rate to future shipments of "old shippers" unless those firms received an individual rate in a subsequent administrative review. Floral Trade I, 16 CIT at ___, 799 F.Supp. at 118. Firms that began exporting to the United States after the last day of the review period, so-called "new shippers," were assigned the highest verified rate of any reviewed firm in the administrative review. Id. at ___, 799, F.Supp. at 118; see Certain Fresh Cut Flowers, 55 Fed.Reg. at 12,700.

ITA consistently followed this practice until it issued its determination in Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, 56 Fed.Reg. 11,178 (Dep't Comm.1991) (prelim. results of antidumping duty admin. reviews). In that review, ITA did not assign the highest non-BIA rate in the review to new exporters only. Rather, that rate was now designated as the "cash deposit rate for all other manufacturers/exporters." Id. at 11,181 (emphasis added). Prior to this determination, the agency neither announced its intention to change the procedure nor solicited comments on the effects of the change. When later challenged, ITA's major justification for the change was that the Customs Service was experiencing administrative difficulties in distinguishing shippers that qualified under the "all other" rate from those covered by the "new shipper" rate. Floral Trade I, 16 CIT at ___, 799 F.Supp. at 118; Certain Circular Welded Carbon Steel Pipes and Tubes From Thailand, 57 Fed.Reg. 38,668, 38,671-72 (Dep't Comm.1992) (stating that for administrative reasons, ITA did not have the option of reverting to the previous practice). FTC argues that agency convenience, without more, is not a sufficient basis to change a long-standing procedure. The domestic industry, FTC contends, relies upon the existence of an 18.20% "all other" rate in deciding whether to request a review and which companies to include in its request.

ITA itself admits that the dual rate practice was in effect for a substantial period of time. In fact, it was only in April 1990, during the first administrative review in Certain Fresh Cut Flowers, that ITA denied the request of five respondents for revision of the "all other" rate on the basis of new margins established in the current administrative review. 55 Fed.Reg. at 12,699. It was ITA's position then that application of the LTFV "all other" rate to companies that did not request a review was a "long-standing practice ... upheld by the Court of International Trade." Id. Yet, only one year later, ITA changed its practice to the one suggested by those five respondents, claiming administrative necessity.¹ At that time ITA did not explain why applying the new shipper rate was more appropriate than use of the "all other" rate...