Nippon Steel Corp. v. United StatesNippon Steel Corp. v. United States
OPINION
This challenge to
Hot-Rolled Flat-Rolled Carbon-Quality Steel Products from Japan,
64 Fed.Reg. 24,329 (Dep’t Comm.1999) (final admin, rev.)
[“Final
Results”] is before the court following a remand determination (“Remand De-term.”) by the United States Department of Commerce (“Commerce” or “the Department”). Plaintiff Nippon Steel Corporation (“NSC”), one of the respondents in the underlying antidumping duty investigation, argues that (1) the Department has failed to implement properly this court’s injunction regarding the placement on record of memoranda on
ex paHe
meetings, and (2) the Department continues to rely impermissibly on adverse facts available without adequately supporting the requisite finding that NSC “failed to cooperate
I. Ex Parte Meetings
In its earlier opinion, the court found that Commerce violated
issue instructions that ex parte memo-randa required by19 U.S.C. § 1677f(a)(3) will be drafted expeditiously in all cases, reviewed by a person in attendance at the meeting, and placed in the record as soon as possible, so that parties may comment effectively on the factual matters presented. The memo-randa are required whether or not the factual information received was received previously, is expected to be received later in the proceedings, or is expected to be used or relied on.
Id.
at 1374. Commerce attempted to comply with this court’s injunction by circulating a policy statement on
ex parte
memo-randa to Import Administration staff.
See
Def.’s Reply Br. at 13 & Attach. Because that statement was not published and apparently failed to include all the stated elements of the court’s instruction, NSC challenged the Department’s policy statement as inconsistent with the court’s injunction. The court subsequently issued an Order to Show Cause as to why the Assistant Secretary for Import Administration should not be held in contempt for not obeying in full the court’s injunction. At the show cause hearing on February 15, 2001, while maintaining that the injunction had been obeyed, representatives from the Department agreed to comply more fully with the court’s injunction and to take additional measures to ensure that all Commerce officials were aware of their statutory obligations under
On March 28, 2001, the Department published in the Federal Register a revised policy statement. See Policy Statement Regarding Issuance of Ex Parte Memoranda, 66 Fed.Reg. 16,906 (Dep’t Comm.2001). This policy statement is also available on the Web site of the International Trade Administration, at http://m. ita. doc.gov/policy/ex-parte-memo. htm. Upon reviewing the Department’s statement, the court finds that the agency has complied with the court’s injunction in Nippon I.
II. Use of Adverse Facts Available
A cooperating respondent’s failure simply to respond completely or correctly to the Department’s
initial
request for specific information does not warrant resort by the agency to facts otherwise available under
The Department, therefore, must cite factors beyond NSC’s failure to respond correctly to the agency’s two requests for the weight conversion factor. In its remand determination, Commerce attempts to support its application of adverse facts available against NSC with the following observations: (1) NSC has had significant experience with antidumping proceedings; (2) NSC provided “incorrect” responses when the Department asked repeatedly for the weight conversion factor because NSC failed to make the requisite internal inquiries to retrieve the requested information; and (3) the weight conversion factor was within NSC’s control, and NSC was therefore fully capable of complying with the Department’s requests. Because these observations still do not support a finding that NSC’s actions rose above “a simple mistake,” id. at 1379, the Department’s determination is unsupported by substantial evidence.
A. Evidence Cited by Commerce to Support the Use of Adverse Facts Available
First, NSC’s status as “one of the most successful and sophisticated steel companies in the world [with] significant prior experience with dumping proceedings,” Remand Determ, at 3, is irrelevant to whether NSC acted to the best of its ability in this case. This is not a case where the Department points to the respondent’s prior participation in dumping proceedings as a basis for rejecting data that fails to satisfy the Department’s procedures or standards for the submission of data.
2
Nor is this a case where the Department highlights an error made by the respondent in a previous review and which the respondent continues to make in the current review, as evidence of the respondent’s unwillingness to comply with the Department’s requests for information.
3
Rather, Commerce here seeks to base its evaluation of NSC’s failure to submit a weight conversion factor, in part, on NSC’s experience as a respondent in dumping proceedings. A generalized familiarity with antidumping proceedings, however, cannot support a finding that NSC did not cooperate to the best of its ability because it failed to provide the answer to one eso
Second, in reiterating NSC’s failure to provide the weight conversion factor, the Department conflates the prerequisites for use of facts available with the additional findings necessary to warrant an adverse inference. See Remand Determ. at 4-5 (citing respondent’s inaccurate responses to original and supplemental questionnaire as support for adverse inference); Def.’s Reply Br. at 6 (same). Commerce’s reasoning in this regard is encapsulated in the following paragraph from the Remand Determination:
A “reasonable respondent,” acting to the “best of its ability” to comply with the Department’s request for [weight conversion factors], would minimally have contacted the factory, where the steel coils were produced and where weighing was most likely to take place, to determine whether they were weighed and the weight data maintained. A “reasonable respondent” would have attempted to obtain the data when it was first requested, or at least when it was requested for the second time, rather than telling the Department, without any factual basis to support such a claim, that the respondent did not believe the Department needed the information. With respect to this issue, NSC was not acting as a “reasonable respondent” nor was it acting “to the best of its ability,” as required by the statute.
Remand Determ, at 5. In other words, according to the Department, NSC did not respond accurately or in a timely fashion to the Department’s questionnaire
5
because the company did not make the proper inquiries of its factory employees, and this error reflects NSC’s failure to act “to the best of its ability.” The fact that NSC did not make appropriately timely submissions as a result of inadequate inquiries, however, only provides sufficient basis for the use of facts available pursuant to
Third, Commerce emphasizes the existence of the requested weight conversion data at NSC’s factories as further evidence in support of the agency’s adverse inference. The Department is undoubtedly correct that, as the court has noted previously, “it is reasonable to charge a respondent with full knowledge of its own operations.” Def.’s Reply Br. at 6 (citing
Mannesmannrohren-Werke AG v. United States,
In the absence of additional evidence supporting a finding that a respondent “failed to cooperate by not acting to the best of its ability,” where a claim of inadvertence is at issue, the simple fact of a respondent’s failure to report information within its control does not warrant an adverse inference.
7
The court in
Mannes-mann II
upheld the Department’s resort to adverse facts available in the context of other, more revealing factors: the Department had provided Mannesmann with an original and
two
supplemental questionnaires,
id.
at 1078; respondent had offered answers that were non-responsive (i.e., unverifiable, in the wrong form, incomplete) to
four
questions in the course of addressing those requests for information, thereby establishing a “pattern of unresponsiveness,”
id.
at 1077-80, 1084-87; and additional evidence strongly indicating a specific intent on the part of the respondent to evade the Department’s requests for information.
8
This case, in contrast, presents no such additional probative factors to support Commerce’s finding that NSC’s actions “constitute[ ] anything more than an inadvertent error.”
Mannesmann I,
In cases where a respondent claims an
inability
to comply with the agency’s requests for information, the Department may permissibly draw an adverse inference upon a reasonable showing that the respondent, in fact, could have complied.
See, e.g., Ta Chen II,
B. Impact on NSC’s Dumping Margins
Finally, the parties dispute the relevance of any impact the missing weight conversion data may have had on NSC’s final margin calculations.
12
Commerce argues that it is precluded from evaluating the effects of the missing data because, pursuant to
Where a party has not cooperated, Commerce and the Commission may employ adverse inferences about the missing information to ensure that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully. In employing adverse inferences, one factor the agencies will consider is the extent to which a party may benefit from its own lack of cooperation.
SAA, at 870, H.R. Rep. 103-316, reprinted in 1994 U.S.C.C.A.N. 4040, 4199. This language reveals that Commerce is to utilize adverse facts available when the respondent’s failure to cooperate may conceivably provide the respondent with a “more favorable result.” 14 Id. The SAA states that the Department “will consider ... the extent to which a party may benefit.” Id. In requiting Commerce to undertake this consideration, the SAA apparently presupposes that the respondent could have somehow benefitted from its noncooperation, for the Department is not to consider whether the respondent benefit-ted, but rather, the extent of that benefit. 15
The SAA has been adopted by statute as “an authoritative expression by the United States concerning the interpretation and application of the [URAA] in any judicial proceeding in which a question arises concerning such interpretation or application.”
16
The record indicates that NSC likely would have gained a meaningless benefit by its failure to submit the weight conversion factor.
19
The potential expected benefit is so low that no reasonable fact-finder would find it to be the motivation for NSC’s action. Even if the Department had considered this factor, in conjunction with the agency’s marginally informative observation that NSC possessed the requested data within its control, Commerce would have lacked substantial evidence to support its conclusion that NSC’s error was more than an excusable inadvertence and that reliance on adverse facts available was therefore appropriate.
20
While it is true that “Commerce must necessarily draw some inferences from a pattern of behavior,”
Borden II,
CONCLUSION
Commerce’s recently-issued policy statement conforms to the requirements of the court’s injunction regarding the placement on record of memoranda detailing
ex parte
communications between parties and Department officials. Commerce’s determination that NSC “failed to cooperate by not acting to the best of its ability,” however, is unsupported by substantial evidence. Because those factors relied upon by Commerce, from which a reasonable inference
Notes
.
See also Mannesmannrohren-Werke AG v. United States,
.
Cf. Heveafil Sdn. Bhd. v. United States,
No. 98-04-00908,
.Cf. Chrome-Plated Lug Nuts from Taiwan,
64 Fed.Reg. 17,314, 17,316 (Dep't Comm.1999) (final admin, rev.) (“Gourmet has been aware of, but has not corrected, deficiencies in its accounting system even though these deficiencies caused the Department to use facts available for the last several administrative reviews.”),
aff'd, Gourmet Equip.,
. See
Taiwan Semiconductor Indus. Ass’n v. United States,
. NSC claims that the Department did not properly request the correct weight conversion data in its supplemental questionnaire. In particular, NSC notes that the Department requested the weight conversion factors "in [NSC's] home market sales listing.” NSC Obj. at 4 n. 1 (quoting Supplemental Questionnaire, Field 16.1 (emphasis added)). The relevant weight conversion data necessary for the Department to perform its comparison, however, was for NSC's U.S. sales. Because Commerce’s adverse inference was based on the lack of weight conversion data for U.S. sales, which the agency had only requested in its original questionnaire, NSC seems to suggest that the Department had not properly sought the information from NSC before applying adverse facts available. Because NSC failed to raise this argument in its original pleadings in this action, and appears to have failed to raise it at the agency level, the court does not address this argument.
. NSC does not contest the propriety of this finding or the Department's reliance on (non-adverse) facts available. While Commerce could have waived the deadline and accepted the information, it was not required to do so. Commerce remains free to use NSC's data or other non-adverse data, as it deems appropriate.
.
Cf. Ta Chen Stainless Steel Pipe, Inc. v. United States,
No. 97-08-01344,
. Specifically, Commerce noted (1) that the respondent sought to re-frame the question posed by the Department through selective reference to the questionnaire’s definition section, and (2) that an official working for the respondent acknowledged facts that were patently inconsistent with certain questionnaire responses, and the same official admitted that he had been involved in the preparation of those questionnaire responses.
See Mannes-mann II,
. In a supplemental filing, NSC urged this court to consider the recent decision of a
. Commerce rejects this standard and seeks to apply a pure “ability to comply'' standard, but a completely errorless investigation is simply not a reasonable expectation. Even the most diligent respondents will make mistakes, and Commerce must devise a non-arbitrary way of distinguishing among errors.
See F.LLI De Cecco Di Filippo Fara San Martino S.p.A. v. United States,
. Compare Stainless Steel Bar from India, 65 Fed.Reg. 3662, 3664-65 (Dep't Comm.2000) (final new shipper rev.) (refusing to apply adverse facts available where respondent provided untimely data because data was verifiable, complete, easily usable, and respondent "misunderstood” reporting instructions), and Circular Welded Non-Alloy Steel Pipe from the Republic of Korea, 63 Fed.Reg. 32,833, 32,837 (Dep't Comm. 1998) (final admin, rev.) (refusing to apply adverse facts available where respondent provided untimely data because errors "affectfed] only a minuscule number of transactions and appear[ed] to be inadvertent”), with Final Results, 64 Fed.Reg. at 24,-360-61 (applying adverse facts available despite verifiable and complete data submission, and minimal impact of error).
. In responding to this issue raised by NSC in its remand case brief, Commerce properly recognizes that “[(Information necessary to the calculation of an antidumping duty margin is important whether it raises or lowers the margin.” Remand Determ, at 9. The relative importance of information sought by the Department, however, is separate from the possible benefit a respondent may have gained by failing (intentionally or inadvertently) to provide data needed by the agency. Requiring Commerce to examine whether a respondent would benefit from its errors does not undermine or contradict the importance the agency may reasonably ascribe to a particular piece of requested data.
.
(1) ... The Secretary will include in the official record all factual information, written argument, or other material developed by, presented to, or obtained by the Secretary during the course of a proceeding that pertains to the proceeding.
(2) Material returned.
(i) The Secretary, in making any determination under this part, will not use factual information, written argument, or other material that the Secretary returns to the submitter.
(ii) The official record will include a copy of a returned document, solely for purposes of establishing and documenting the basis for returning the document to the submitter, if the document was returned because:
(A) The document, although otherwise timely, contains untimely filed new factual information ...
(iii) In no case will the official record include any document that the Secretaryreturns to the submitter as untimely filed, or any unsolicited questionnaire response ....
. Although the SAA foresees a respondent’s achieving a “more favorable result” from its non-cooperation as a basis for the use of an adverse inference, the Department is not necessarily limited to using adverse inferences only when respondent's dumping margins would be reduced by respondent’s actions. The Department may employ adverse inferences, notwithstanding the impact upon a respondent’s margins, provided that Commerce explains how the respondent might receive some benefit as a result of its non-cooperation. For example, a party may be choosing the benefit of avoidance of expenses of cooperation. Commerce does not allege facts supporting such a scenario here.
.
Cf. Mannesmann I,
. Cf. Antonin Scalia, Judicial Deference to Administrative Interpretations of Law, 1989 Duke LJ. 511, 515-16 (1989) (courts do not defer to agency interpretations of a statute where Congress includes a provision in the statute stating that courts should give no deference on issues of interpretation or application of statute).
.
See Alaskan Arctic Gas Pipeline Co. v. United States,
. In any event, because the Department is mandated by law to consider the impact of respondent’s non-cooperation, the court may require Commerce to place the requisite documentation on the administrative record.
See Acciai Speciali Terni, S.P.A. v. United States,
. In terms of its dumping margin, NSC’s benefit (as calculated by NSC and uncontested by Commerce and defendant-intervenors) amounted to [ ]. NSC Obj. at 11 n. 2.
. Commerce also identifies NSC’s submission of the weight conversion factor data within only ten days of the preliminary determination as additional support for the agency’s use of adverse facts available.
See
Remand Determ, at 3; Def.'s Reply Br. at 7. The court fails to see, and the Department does not explain, exactly how the dispatch with which a respondent provides information that it failed to provide earlier evinces a respondent's failure to cooperate by not acting to the best of its ability. In fact, respondents should be encouraged to produce such information as soon as possible, for example, as in this case, before verification, so that the Department may more likely be able to incorporate the reliable data and thereby ''determin[e] current margins as accurately as possible.”
D & L Supply Co. v. United States,