Tung Fong Industrial Co., Inc. v. U.S., Slip Op. 05-39.

• Decision Date: 23 March 2005
• Docket Number: Court No. 01-00070.,Slip Op. 05-39.
• Citation: 366 F.Supp.2d 1308
• Parties: TUNG FONG INDUSTRIAL CO., INC., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

366 F.Supp.2d 1308

TUNG FONG INDUSTRIAL CO., INC., Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 05-39.

Court No. 01-00070.

United States Court of International Trade.

March 23, 2005.

Miller & Chevalier Chartered (Peter J. Koenig), Washington, DC, for Plaintiff.

Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director, and Jeanne M. Davidson, Deputy Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Richard P. Schroeder); Philip J. Curtin, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, for Defendant, of counsel.

OPINION

RIDGWAY, Judge.

At issue in this action is the U.S. Department of Commerce's final affirmative antidumping determination imposing substantial duties on certain pipe fittings produced overseas and exported to the United States by companies including plaintiff Tung Fong Industrial Company, Inc. ("Tung Fong"), a small, family-owned Philippine manufacturer. See Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Butt-Weld Pipe Fittings From the Philippines, 65 Fed.Reg. 81,823 (Dec. 27, 2000) ("Final Determination").¹

In brief, Tung Fong I found that the petition that launched the antidumping investigation here at issue falsely alleged that Tung Fong had made sales in its home market. See Tung Fong Indus. Co. v. United States, 28 CIT at ___, ___, 318 F.Supp.2d 1321, 1331-33 (2004) ("Tung Fong I"). In addition, Tung Fong I rejected Commerce's determination that Tung Fong "failed to cooperate by not acting to the best of its ability" in responding to the agency's requests for information during the course of the investigation (which was the agency's asserted justification for its use of partial "adverse facts available" in calculating Tung Fong's antidumping margin). See Tung Fong I, 28 CIT at ___, 318 F.Supp.2d at 1333-37.

Tung Fong I therefore remanded this matter to the Department of Commerce, "to enable it to reconsider the adequacy of the underlying antidumping duty petition, and the consequences of the falsity of the petition's allegations of home market sales by Tung Fong; to allow the Department to reconsider its decision to resort to adverse facts available in calculating Tung Fong's antidumping duty margin (and, if appropriate, to reevaluate the particular adverse facts selected); and to accord the agency the opportunity to fully articulate the reasoning underlying its findings, conclusions and determinations." Tung Fong I, 28 CIT at ___, 318 F.Supp.2d at 1323; see also 28 CIT at ___, 318 F.Supp.2d at 1338.

Now pending before the Court are Commerce's Final Results of Redetermination Pursuant to Court Remand ("Remand Results"), together with the comments thereon filed by Tung Fong. See Letter from Counsel to Tung Fong to Clerk of the Court (Nov. 12, 2004) ("Plaintiff's Comments").² As a result of its reconsideration on remand, Commerce has recalculated the antidumping margin for Tung Fong. As revised, Tung Fong's weighted-average margin for the relevant period of investigation is 7.59%. See Remand Results at 19-20.³

As discussed more fully below, the Remand Results that Commerce has filed comply with Tung Fong I. They are, therefore, sustained.

I. Analysis

A. The Sufficiency of the Domestic Manufacturers' Petition

As Tung Fong I explained, Tung Fong's threshold attack on Commerce's Final Determination challenged the very premise of the underlying investigation. Specifically, Tung Fong argued that the antidumping petition filed by the domestic manufacturers was insufficient to justify an investigation, because the linchpin of that petition — the allegation that Tung Fong had home market sales during the period of investigation — was false. Pointing to its initial questionnaire responses, which attested (under oath) that the company had no home market sales of the merchandise at issue, Tung Fong emphasized that it put Commerce on notice of the relevant facts within one week of the initiation of the investigation, but that the agency ignored that information and never looked back. See Tung Fong I, 28 CIT at ___, ___, 318 F.Supp.2d at 1325-27, 1331-32; Pub. Doc. 26 at 2 (Tung Fong's February 7, 2000 response to Commerce's initial questionnaire concerning "Quantity and Value of Sales," indicating the total quantity and value of the company's "affiliated" and "unaffiliated" sales in its home market to be "NONE," "NONE," "NONE," and "NONE").

Significantly, in its response to Tung Fong's motion for judgment on the agency record, the Government did not dispute the veracity of Tung Fong's claim of no home market sales. Instead, the Government maintained that Commerce's hands were tied by the statute. Specifically, the Government argued that Commerce was permitted to decline to initiate an investigation only where the investigation would be "clearly frivolous" or where the petitioner failed to provide information reasonably available to it. The Government further asserted that, once an investigation is launched, the process marches inexorably on — absent an intervening negative determination by either Commerce or the International Trade Commission — until a final affirmative determination is made and an antidumping order is issued. See Tung Fong I, 28 CIT at ___, 318 F.Supp.2d at 1332-33 (citing Defendant's Memorandum in Opposition to Plaintiff's Motion for Judgment Upon the Agency Record ("Defendant's Brief") at 14-16). But see Gilmore Steel Corp. v. United States, 7 CIT 219, 585 F.Supp. 670 (1984) (sustaining Commerce's authority to reconsider the sufficiency of a petition and terminate an investigation two months after issuance of an affirmative preliminary determination, when a fundamental defect in the petition came to agency's attention) ("Gilmore").⁴

Tung Fong I remanded the issue of the sufficiency of the domestic manufacturers' petition, questioning the notion that Commerce is utterly without power to terminate an ongoing investigation even where the agency becomes aware early in a proceeding of the falsity of information that is essential to the petition's sufficiency. Postulating the "worst case scenario":

The Government's reading of the statute and the regulations would seem to leave the Commerce Department and innocent respondents at the mercy of hypothetical unscrupulous petitioners willing to fabricate evidence and able to sustain their lie at least long enough to get an investigation launched.... [T]here can be no suggestion that Congress intended to license domestic industries to prevaricate in order to initiate investigations, which could then be used as "fishing expeditions" in a quest for other, truthful evidence of dumping.

Tung Fong I, 28 CIT at ___, 318 F.Supp.2d at 1333.

On remand, Commerce reconsidered the sufficiency of the petition (focusing particularly on the truth of the allegations of home market sales), and any related implications for the termination of the investigation. The Remand Results explain:

The Department takes seriously the accuracy of the information upon which it bases antidumping investigations. The legitimacy of the antidumping investigation process requires that high standards of evidence be maintained throughout the entire proceeding, beginning with the petition. Thus, the Department requires that information contained in a petition be adequately supported.

Remand Results at 3.

Significantly, the Remand Results further state that, "[w]here [Commerce] find [s] that a petitioner has acted with reckless disregard for the truth when preparing a petition, [the agency] will terminate an investigation." Id.⁵ The Remand Results emphasize, however, that Commerce "distinguishes between the submission of information in which a petitioner has recklessly disregarded the truth and the submission of imperfect information which petitioner believes to be true and which constitutes the best information reasonably available to a petitioner." Id. at 4. "Thus, the Department does not automatically terminate an investigation simply because, as the investigation developed, information was placed on the record which was found to be inconsistent with some of the information in the petition." Id.⁶

In light of that framework, Commerce cast its inquiry on remand as "whether the petitioners acted reasonably and without reckless disregard of the truth when they alleged that Tung Fong had home market sales." Id. at 4.⁷ Commerce sought and obtained a complete copy of the foreign market research report on which the petition here was based. Id. at 5. Based on its review of the report and the petition, Commerce found that "the information presented in the petition is consistent with the foreign market research report." Id. at 5. Moreover, based on its review of the report and the record as a whole, Commerce found that "there is insufficient evidence to conclude that the petition was unsupported." Id. at 5.⁸ Indeed, Commerce went even further, finding "no conclusive evidence that the parties acted with reckless disregard for the truth." Id. at 5.

The Remand Results note that the petition here alleged that Tung Fong had a viable home market of a specified volume of sales in calendar year 1998. Tung Fong sought to refute that allegation, emphasizing that its registration with the Philippine government's Economic Zone Authority ("EZA") as an export producer of pipe fittings precludes it from making sales in its home market, absent a waiver from EZA officials.⁹ And, according to documentation submitted by Tung Fong, the company's last waiver expired in mid-1998. See Remand Results at 6.¹⁰

However, the Remand Results note that — even if true¹¹ — the information that Tung Fong supplied does not necessarily mean that the information in the petition was false. As Commerce explains, it is at least possible to reconcile the two positions. The home market data in the petition was assertedly drawn from Tung Fong's financial reports for calendar year 1998.¹²...