413 F.Supp.3d 1318
Ct. Int'l Trade2019Background
- In 2017 the U.S. Department of Commerce amended a 2014 suspension agreement in the countervailing duty (CVD) investigation on sugar from Mexico by changing the definition of “refined sugar” (polarity from 99.5 to 99.2).
- CSC Sugar challenged the CVD Amendment, asserting Commerce failed to include in the administrative record contemporaneous memoranda of ex parte meetings as required by 19 U.S.C. § 1677f(a)(3) and 19 U.S.C. § 1516a(b)(2)(A)(i).
- The Court previously ordered Commerce to supplement the record; Commerce produced a Consultations Log and an Email Log but not contemporaneous ex parte memoranda prepared at the time of meetings.
- CSC Sugar moved for judgment on the agency record, arguing the recordkeeping failures were prejudicial and required vacatur of the CVD Amendment; Commerce and others argued the amended record was adequate and that CSC Sugar must show substantial prejudice.
- The Court concluded Commerce’s failure to prepare and place contemporaneous ex parte memoranda on the record was not harmless, prejudiced CSC Sugar by foreclosing inspection and comment, and therefore vacated the CVD Amendment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Commerce violated its recordkeeping duties under § 1677f(a)(3) and related rules | Commerce failed to create and place contemporaneous ex parte memoranda on the record, violating statutory and regulatory obligations | Admitted contemporaneous memoranda could not now be prepared, but the supplemented record (logs/emails) permits review | Held: Commerce violated recordkeeping duties; the record is incomplete because contemporaneous memoranda are missing |
| Burden to show prejudice / standard for relief | Violation of § 1677f(a)(3) and § 1516a(b)(2) implicates important procedural rights and requires vacatur unless the agency shows harmlessness | Plaintiff must demonstrate substantial prejudice (relying on cases about notice defects) | Held: Court rejected placing the burden solely on plaintiff here; the error implicated more than mere notice defects and required agency to show harmlessness |
| Whether the amended record permitted effective judicial review | Missing contemporaneous memoranda prevented parties from inspecting/commenting on ex parte communications, foreclosing meaningful review | The amended record provides a fulsome basis for review; absent clear prejudice plaintiff has no relief | Held: The amended logs were insufficient; absence of contemporaneous memoranda undermined the integrity of the record and reviewability |
| Appropriate remedy for the procedural violation | Vacatur of the CVD Amendment is necessary because the error substantially prejudiced CSC Sugar | Remedy should be limited unless plaintiff shows substantial prejudice; agency procedural error may be harmless | Held: Vacatur of the CVD Amendment is required; the error was not harmless and prejudiced the plaintiff |
Key Cases Cited
- Portland Audubon Soc. v. Endangered Species Comm., 984 F.2d 1534 (9th Cir. 1993) (undocumented ex parte communications can require supplementation and remand where impropriety creates appearance of irregularity)
- Suntec Indus. Co. v. United States, 857 F.3d 1363 (Fed. Cir. 2017) (discusses substantial-prejudice requirement in notice-defect contexts)
- PAM, S.p.A. v. United States, 463 F.3d 1345 (Fed. Cir. 2006) (addresses prejudice standard for procedural defects)
- Nippon Steel Corp. v. United States, 458 F.3d 1345 (Fed. Cir. 2006) (clarifies substantial-evidence review and includes discussion of recordkeeping errors in specific circumstances)
- Shinseki v. Sanders, 556 U.S. 396 (U.S. 2009) (harmless-error analysis requires case-specific judgment based on the record)
- Intercargo Ins. Co. v. United States, 83 F.3d 391 (Fed. Cir. 1996) (principles of harmless error apply to agency proceedings)
- Mid Continent Nail Corp. v. United States, 846 F.3d 1364 (Fed. Cir. 2017) (agency procedural errors that leave uncertainty about prejudice are not necessarily harmless)
- DuPont Teijin Films USA v. United States, 407 F.3d 1211 (Fed. Cir. 2005) (defines substantial evidence standard)
- Consolo v. Federal Maritime Comm’n, 383 U.S. 607 (U.S. 1966) (substantial evidence allows inconsistent conclusions but requires reasonable support)