05-84 - U.S. Court Of International Trade

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GERBER FOOD (YUNNAN) CO., LTD. and
GREEN FRESH (ZHANGZHOU) CO., LTD.,
Plaintiffs,
v. UNITED STATES,
Defendant,
and
COALITION FOR FAIR PRESERVED
MUSHROOM TRADE,
Defendent-Intervenor.
Slip Op. 05-84
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: Timothy C. Stanceu, Judge
Court No. 03-00544
OPINION AND ORDER
[Final results of antidumping administrative review applying “total adverse facts available”
remanded for further proceedings upon plaintiffs’ motion for judgment on agency record]
Dated: July 18, 2005
Garvey Schubert Barer (William E. Perry, Lizbeth R. Levinson and Ronald M. Wisla) for
plaintiffs.
Peter D. Keisler, Assistant Attorney General, Barbara S. Williams, Attorney-in-Charge,
International Trade Field Office, David M. Cohen, Director, Commercial Litigation Branch,
Jeanne E. Davidson, Deputy Director, Commercial Litigation Branch, Richard P. Schroeder,
Trial Attorney, United States Department of Justice; Scott D. McBride, Office of Chief Counsel,
United States Department of Commerce, of counsel, for defendant.
Collier Shannon Scott, PLLC (Michael J. Coursey and Adam H. Gordon) for defendantintervenor.
Stanceu, Judge: Plaintiffs Gerber Food (Yunnan) Co., Ltd. (“Gerber”) and Green Fresh
(Zhangzhou) Co., Ltd. (“Green Fresh”) challenge certain aspects of a decision issued in July
Court No. 03-00544 Page 2
2003 by the International Trade Administration, U.S. Department of Commerce (“Commerce,”
or the “Department”) in an antidumping proceeding. The challenged decision was the
culmination of an administrative review of an order, issued in 1999, imposing antidumping
duties on imports of preserved mushrooms imported from the People’s Republic of China
(“China” or the “PRC”). Final Results and Partial Rescission of the New Shipper Review and
Final Results and Partial Rescission of the Third Antidumping Duty Administrative Review for
Certain Preserved Mushrooms From the People’s Republic of China, 68 Fed. Reg. 41,304
(July 11, 2003) (“Final Results”). The administrative review pertained to imported preserved
mushrooms from China that were subject to the antidumping duty order and that were entered for
consumption during the period of February 1, 2001 through January 31, 2002 (“period of
review”).
Plaintiffs contend that Commerce exceeded its statutory authority, and failed to support
its decision with substantial evidence on the record, in resorting to what Commerce terms “total
adverse facts available” to determine the antidumping duty rate Commerce would assess on
imports of subject mushrooms associated with Gerber and Green Fresh for the period of review.
Relying on statutory provisions allowing it to “use an inference that is adverse to the interests
of” a party that “has failed to cooperate by not acting to the best of its ability to comply with a
request for information” in the review proceeding, Commerce rejected all data relevant to
antidumping duty assessment rates that Gerber and Green Fresh had submitted in response to its
information requests. 19 U.S.C. § 1677e(b) (2000); see 19 U.S.C. §§ 1677e(a), 1677m(d)-(e)
(2000). Although it had calculated preliminary antidumping duty assessment rates for Gerber
and Green Fresh of 1.17 percent and 46.61 percent, respectively, Commerce refused to calculate
Court No. 03-00544 Page 3
final antidumping duty assessment rates for Gerber and Green Fresh based on the information
the two companies had submitted, and Commerce had verified, during the administrative review.
Instead, Commerce assigned Gerber and Green Fresh an antidumping duty assessment rate of
198.63 percent, which was the highest rate assigned to any producer or exporter in the
challenged review and the previous administrative review. In addition, this rate was the rate
assigned to producers and exporters who could not establish freedom from control of the
government of the PRC. Commerce applied this rate to Gerber and Green Fresh even though it
previously had found as a fact that both plaintiffs were free of government control.
In the Final Results, Commerce gave as a justification for invoking “total adverse facts
available” its finding that Gerber and Green Fresh had made misrepresentations to Commerce in
claiming that Green Fresh, for some of the mushroom shipments to the United States occurring
during the period of review, had acted as Gerber’s agent and exporter in return for payment of a
commission. Commerce concluded that Green Fresh’s role was largely limited to providing
blank sales invoices to Gerber and, accordingly, that Green Fresh did not have sufficient
involvement in the international sales transactions to justify a claim that it had acted as exporter
of Gerber’s merchandise. Commerce further concluded that Green Fresh’s participation as an
agent in Gerber’s transactions was a means to allow Gerber to circumvent the cash deposit
requirements Commerce had applied to Gerber. Citing to the alleged misrepresentations,
Commerce claimed it was justified in rejecting all the responses of both respondents to its
inquiries during the entire review proceeding.
The court exercises jurisdiction pursuant to 19 U.S.C. § 1516a(a)(2)(A) (2000) and
28 U.S.C. § 1581(c) (2000). Gerber and Green Fresh participated as respondents in the
Court No. 03-00544 Page 4
administrative review proceeding that resulted in the decision being challenged. Therefore,
plaintiffs are “interested parties” within the meaning of 19 U.S.C. § 1677(9)(A) (2000) and,
pursuant to 28 U.S.C. § 2631(c) (2000), have standing to challenge the Commerce
determination.
The court concludes, for the reasons discussed herein, that Commerce exceeded its
statutory authority by rejecting all the data relevant to antidumping duty assessment rates
submitted by Gerber and Green Fresh and refusing to calculate specific assessment rates for the
two plaintiffs. The court also concludes that certain factual determinations relied upon by
Commerce in its invoking of “total adverse facts available” are not supported by substantial
evidence. The court remands this matter to Commerce with instructions to conduct further
proceedings in conformity with this opinion.
I. BACKGROUND
A. Commerce’s Initiation of the Third Administrative Review
Commerce issued its antidumping duty order on preserved mushrooms from the PRC in
early 1999. See Notice of Amendment of Final Determination of Sales at Less Than Fair Value
and Antidumping Duty Order for Certain Preserved Mushrooms From the People’s Republic of
China, 64 Fed. Reg. 8,308 (Feb. 19, 1999). Approximately three years later, the Department
announced the opportunity to request the administrative review at issue in this case, which was
the third such administrative review of the antidumping duty order. See Opportunity To Request
Administrative Review for Antidumping or Countervailing Duty Order, Finding, or Suspended
Investigation, 67 Fed. Reg. 4,945 (Feb. 1, 2002). Gerber and Green Fresh requested this review
on February 28, 2002. On that same day, the petitioner in the antidumping investigation, the
Court No. 03-00544 Page 5
Coalition for Fair Preserved Mushroom Trade, also requested an administrative review, asking
that Commerce review the mushroom import transactions of seven companies, including those of
Gerber and Green Fresh. The Coalition for Fair Preserved Mushroom Trade has defendantintervenor status in this proceeding, having satisfied the requirements for intervention set forth
by 28 U.S.C. § 2631(j) and USCIT Rule 24(a). Commerce initiated the administrative review in
response to the requests. See Initiation of Antidumping and Countervailing Duty Administrative
Reviews and Requests for Revocations in Part, 67 Fed. Reg. 14,696, 14,696-97 (Mar. 27, 2002).
B. Cash Deposit Rates for Gerber and Green Fresh During the Period of Review
Under the antidumping statute and regulations, importers who enter merchandise that is
within the scope of an antidumping duty order must make a cash deposit of estimated
antidumping duties. See 19 U.S.C. § 1673d(c)(1)(B)(ii) (requiring the posting of a cash deposit,
bond, or other security, as Commerce deems appropriate, in the final antidumping determination
Commerce makes in the investigation); 19 C.F.R. § 351.211(b)(2) (requiring cash deposits of
estimated antidumping duties at rates Commerce determined in the final antidumping
determination, once an antidumping order is in effect); see also 19 C.F.R. § 351.221(b)(7)
(establishing new cash deposit requirement during an administrative review). Commerce issues
instructions to the Bureau of Customs and Border Protection (“Customs”) directing the
collection of the cash deposits. Actual antidumping duties are determined later, upon liquidation
of the entry, which also is performed according to instructions from Commerce to Customs.
Entries of Green Fresh’s and Gerber’s mushrooms made during the period of review each
were subject to changing cash deposit rates. From the beginning of the period of review on
February 1, 2001 through July 5, 2001, the cash deposit rate in effect for importations of
Court No. 03-00544 Page 6
Gerber’s mushrooms was 142.11 percent, the antidumping duty margin established for Gerber in
the antidumping investigation concluded in 1999. Gerber’s cash deposit rate subsequently was
adjusted downward, to 121.33 percent, which was the antidumping duty assessment rate
Commerce determined to apply to Gerber’s mushrooms that were entered during the period
covered by the first administrative review. See Amended Final Results of First New Shipper
Review and First Antidumping Duty Administrative Review for Certain Preserved Mushrooms
From the People’s Republic of China, 66 Fed. Reg. 35,595, 35,596 (July 6, 2001). On July 6,
2001, the 121.33 percent rate became the new cash deposit rate for future entries of Gerber’s
mushrooms, which cash deposit rate remained in effect for the remainder of the period of review,
which ended on January 31, 2002. Green Fresh obtained a cash deposit rate of 29.87 percent as
a result of its requesting and obtaining a new shipper review. That cash deposit rate went into
effect on August 27, 2001. See Final Results of New Shipper Review for Certain Preserved
Mushrooms From the People’s Republic of China, 66 Fed. Reg. 45,006, 45,007 (Aug. 27, 2001).
Gerber’s and Green Fresh’s cash deposit rates were set forth in instructions that
Commerce issued to Customs. The instructions included individual cash deposit rates to be
applied based on the identity of specific exporters and producers. In the instructions, Commerce
also addressed the situation arising where an entry covered merchandise for which the producer
and exporter were different parties, each of which was the subject of an individual cash deposit
rate. In that case, Commerce instructed Customs to apply the exporter’s cash deposit rate. As of
August 27, 2001, Gerber’s cash deposit rate for the subject merchandise was 121.33 percent, and
Green Fresh’s cash deposit rate was 29.87 percent. Thus, as a result of the way that Commerce
structured its cash deposit instructions, any mushrooms produced by Gerber but exported by
Court No. 03-00544 Page 7
Green Fresh were subject to a cash deposit rate that was considerably lower than the rate
applying if Gerber were both producer and exporter.
C. Agreement between Gerber and Green Fresh on Exports of Mushrooms Produced by Gerber
Approximately midway in the period of review, Gerber and Green Fresh entered into an
agreement under which Green Fresh would perform services in the role of exporter for
mushrooms produced by Gerber. Under the agreement, which was the subject of a written
contract executed in September 2001, Green Fresh agreed to prepare export documents for
shipments of mushrooms Gerber produced and to “[a]ct as an agent for [Gerber] to export” its
shipments of merchandise to the United States. See Second Supplemental Resp. of Gerber Food
(Yunnan) Co., Ltd. for Certain Preserved Mushrooms from China, Third Review (Sept. 12, 2002)
(Pub. App. to Pls.’ Rule 56.2 Mot. for J. Upon the Agency R. Ex. 7). In return, Gerber agreed to
pay Green Fresh a commission.
Gerber was the producer for a total of 34 shipments of mushrooms exported to the United
States during the period of review. For 24 of those 34 shipments, the entry documentation filed
in the United States listed Green Fresh as the exporter, and as a result the cash deposits on those
24 shipments were made at the cash deposit rate applying to Green Fresh, i.e., 29.87 percent,
rather than the 121.33 percent rate applying to shipments exported by Gerber. Of the 24
shipments of Gerber-produced mushrooms for which Green Fresh was listed as the exporter,
eleven were made pursuant to the Gerber-Green Fresh agreement discussed above, under which
Green Fresh agreed to serve as exporter in an agency relationship. Green Fresh actually
prepared the export documentation on only the first two of the eleven shipments; on the
remaining nine shipments Gerber prepared the export-related commercial documentation,
Court No. 03-00544 Page 8
1 Gerber and Green Fresh disputed the effect of Green Fresh’s notice of termination of
the export agency agreement. Green Fresh took the position that the contract ended upon its
giving notice to Gerber of termination, which occurred in December 2001. Gerber took the
position that the effect of the notice of termination was that the contract would not be renewed
after its expiration at the end of May 2002. Verification of the Resp. of Gerber Foods (Yunnan)
Co., Ltd. (“Gerber”) in the Third Antidumping Duty Administrative Review of Certain Preserved
Mushrooms from the People’s Republic of China (“PRC”) at 6-7 (Feb. 12, 2003) (Pub. App. to
Pls.’ Rule 56.2 Mot. for J. Upon the Agency R. Ex. 14); Verification of the Resp. of Green Fresh
Foods (Zhangzhou) Co., Ltd. (“Green Fresh”) and Zhangzhou Longhai Lu Bao Food Co., Ltd.
(“Lu Bao”) the Third Antidumping Duty Administrative Review of Certain Preserved
Mushrooms from the People’s Republic of China (“PRC”) at 7 (Feb. 12, 2003) (Pub. App. to
Pls.’ Rule 56.2 Mot. for J. Upon the Agency R. Ex. 13).
including invoices that it prepared using Green Fresh’s blank invoice forms, with Green Fresh’s
authorization. On the remaining 13 of the 24 shipments of Gerber mushrooms, Green Fresh was
listed as the exporter on the entry documentation, including invoices, without Green Fresh’s
authorization. By that time, Green Fresh had terminated the export agency agreement it had
entered into with Gerber.1 Commerce applied the 198.63 percent assessment rate, in the Final
Results, to all 34 shipments of Gerber-produced mushrooms made during the period of review.
During the period of review, Green Fresh exported more than 100 shipments of
mushrooms produced by an entity other than Gerber, with no participation by Gerber. In the
Final Results, Commerce applied the 198.63 percent assessment rate to these shipments as well,
even though these shipments were not involved in the export agency agreement with which
Commerce took issue in its decision.
D. Commerce’s Preliminary Results in the Third Administrative Review
Commerce issued the preliminary results of the administrative review in March 2003.
See Preliminary Results and Partial Rescission of Fourth New Shipper Review and Preliminary
Results of Third Antidumping Duty Administrative Review for Certain Preserved Mushrooms
Court No. 03-00544 Page 9
from the People’s Republic of China, 68 Fed. Reg. 10,694 (Mar. 6, 2003) (“Preliminary
Results”). In the Preliminary Results, Commerce reported its calculated preliminary
antidumping duty assessment rates for both respondents. The preliminary antidumping duty
assessment rate for Gerber was calculated to be 1.17 percent; for Green Fresh the rate was
calculated to be 46.61 percent. See id. at 10,702. In the Preliminary Results, Commerce
indicated its disapproval of the agreement between Gerber and Green Fresh under which Green
Fresh was to act as exporter of record for Gerber’s merchandise. Commerce proposed to act on
its disapproval by departing from its normal practice, under which the cash deposit rate for future
entries would have been set at the individual assessment rate for each individual respondent.
Instead, Commerce proposed to assign both companies the rate of 46.61 percent as a cash deposit
rate for future entries. See id. Thus, the action would not have changed the cash deposit rate for
Green Fresh but would have had as its effect the setting of Gerber’s cash deposit rate at 46.61
percent instead of the 1.17 percent cash deposit rate that Commerce ordinarily would have
established.
The Coalition for Preserved Mushroom Trade, the petitioner in the original antidumping
investigation, criticized as too lenient the way Commerce, in the Preliminary Results, had
proposed to address the export agency arrangement between Gerber and Green Fresh. In its case
brief, filed with Commerce on May 1, 2003, the petitioner argued that Commerce should invoke
“total adverse facts available” against both Gerber and Green Fresh by applying to both
respondents the highest possible antidumping duty assessment rate for the period of review.
Petitioners argued that Commerce’s invoking “total adverse facts available” to this degree would
Court No. 03-00544 Page 10
2 Petitioner also proposed several less stringent measures to be applied to the two
respondents for use in the event Commerce rejected petitioner’s proposal for “total adverse facts
available.” Among them was a proposal that both respondents be subjected to an assessment rate
equal to the cash deposit rate of 121.33 percent assigned to Gerber in the first administrative
review. Issues and Decision Memorandum for the Final Results of the Antidumping Duty New
Shipper and Administrative Reviews on Certain Preserved Mushrooms from the People’s
Republic of China - February 1, 2001, through January 31, 2002 at 5-6 (Pub. App. to Def.’s
Mem. in Opp’n to Pls.’ Rule 56.2 Mot. for J. Upon the Agency R. Ex. B).
be the appropriate response to what petitioners viewed as serious wrongdoing by the two
respondents.2
The following July, Commerce issued the final decision that plaintiffs challenge in this
litigation. See Final Results, 68 Fed. Reg. at 41,304. In the Final Results, Commerce, after
holding an ex parte meeting with petitioner and a subsequent, separate ex parte meeting with
respondents, took the harshest course of action urged by the petitioner, assessing antidumping
duties of 198.63 percent upon all entries of the subject merchandise of both respondents made
during the period of review. See id. at 41,309.
E. Commerce’s Final Results in the Third Administrative Review
In the Final Results, Commerce made several findings of fact, disputed by plaintiffs, the
common thread of which is that Commerce disbelieved that Green Fresh actually acted as the
exporter for shipments of Gerber’s mushrooms to the United States. Commerce based its severe
action against Gerber and Green Fresh on its finding that “both companies withheld crucial
information prior to verification and actively colluded to circumvent the cash deposit rates in
effect during the [period of review] . . . [such that] the use of total adverse facts available is
warranted in this case with respect to determining Gerber’s and Green Fresh’s cash deposit and
assessment rates. . . .” Id. at 41,306. Commerce found as a fact that “Gerber continually
Court No. 03-00544 Page 11
misrepresented in its questionnaire responses the true nature of its relationship with Green Fresh
during the [period of review].” Id. Commerce concluded that “Gerber’s misrepresentations
were highly material to the Department’s analysis and call into question the veracity of other
responses provided by Gerber.” Id. “Because the Department relies on original sales invoices to
verify the accuracy of the sales listing, the information Gerber mis-characterized and withheld
was fundamental and material to the Department’s analysis. Gerber’s actions now lead
[Commerce] to question [its] verification findings which were predicated on the reliability of
Gerber’s own information and records.” Id. at 41,307.
Commerce drew similar conclusions about Green Fresh. “With respect to Green Fresh,
its representations on the record significantly impeded this proceeding as well.” Id. According
to Commerce, Green Fresh had been a willing participant in the “misrepresentation” in that it
had claimed to have been Gerber’s agent. Commerce concluded that “Green Fresh never acted
as Gerber’s agent for most of the Gerber/Green Fresh reported transactions.” Id. at 41,306.
Commerce reasoned that “the willingness of Green Fresh to assist another company to evade the
payment of legally required cash deposits, as well as its consistent mis-characterization of the
facts on the record (despite its representatives’ certification of the facts contained in multiple
submissions to the Department as truthful when they were not), leads [Commerce] to again
question the validity of the books and records examined by the Department at verification.” Id.
at 41,307.
F. Principal Contentions of the Parties
Plaintiffs argue that Commerce’s decision to apply the 198.63 percent rate to Gerber and
Green Fresh was unsupported by substantial evidence on the record and otherwise not in
Court No. 03-00544 Page 12
accordance with law. They assert that substantial evidence did not support Commerce’s
invoking of the “facts otherwise available” procedure of 19 U.S.C. § 1677e(a) and that therefore,
by definition, Commerce did not have the authority to invoke the “adverse inferences” procedure
of 19 U.S.C. § 1677e(b). According to their argument, Gerber and Green Fresh responded to all
questionnaires, timely produced all required documentation, and replied to the best of their
ability to Commerce’s questions about their business relationship as it pertained to the export
agency agreement. Plaintiffs characterize the administrative record as containing verified
information on U.S. sale prices, moving expenses, proof of payment, factors of production, and
all other subjects that is sufficient to allow the Department to calculate individual antidumping
margins for both respondents. Rather than a legitimate resort to the “facts otherwise available”
and “adverse inferences” procedures in the statute, the Commerce action was, in their view, an
unlawful attempt to punish Gerber and Green Fresh for the way in which the two respondents
structured their business relationship.
Defendant and defendant-intervenor maintain that Commerce was justified in imposing
the 198.63 percent rate because Commerce found, based on substantial evidence, that Gerber and
Green Fresh misrepresented the facts concerning the export agency agreement, particularly in
stating that Green Fresh acted as an export agent for Gerber’s shipments of mushrooms to the
United States. They contend that Gerber’s and Green Fresh’s responses to Commerce’s requests
for information concerning that agreement reveal that both plaintiffs withheld information and
significantly impeded the antidumping proceeding. Those responses justified, in their view,
Commerce’s determination that none of the information that the two respondents submitted
during the entire investigation could be verified. Based on these findings, defendant and
Court No. 03-00544 Page 13
defendant-intervenor argue that the criteria for invoking the “facts otherwise available”
procedure of 19 U.S.C. § 1677e(a) were met and further argue that Gerber and Green Fresh did
not cooperate to the best of their ability in responding to Commerce’s requests for information,
thus justifying the invoking of “adverse inferences” pursuant to 19 U.S.C. § 1677e(b). They also
argue that Commerce’s construction of § 1677e(a) and (b) is entitled to deference under the
Supreme Court’s decision in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.,
467 U.S. 837 (1984). Defendant and defendant-intervenor submit, additionally, that the
imposition of the 198.63 percent rate was appropriate as an exercise of Commerce’s inherent
authority to respond to circumvention of the antidumping duty laws.
II. STANDARD OF REVIEW
This court must evaluate whether the challenged findings by the Department are
supported by substantial evidence on the record or are otherwise in accordance with law. See
19 U.S.C. § 1516a(b)(1)(B)(i). Substantial evidence is “such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion.” Consol. Edison Co. v. NLRB, 305 U.S.
197, 229 (1938).
III. DISCUSSION
This case presents the issue of whether Commerce acted in accordance with law in
applying the 198.63 percent rate to the shipments of Gerber and Green Fresh for antidumping
duty assessment purposes. The court concludes that Commerce failed to support, with
substantial evidence on the record, certain findings of fact in the challenged decision. Because
these findings were required for the application of the “facts otherwise available” and “adverse
inferences” provisions set forth in 19 U.S.C. § 1677e, the challenged decision exceeded the
Court No. 03-00544 Page 14
authority granted by Congress in those provisions. The court further concludes that the Final
Results, in assigning the 198.63 percent antidumping duty assessment rate to the plaintiffs,
cannot be justified by deference to an agency construction of § 1677e, nor can it be justified by
deference to a construction of the antidumping laws in general under which Commerce may
exercise its “inherent” authority to prevent circumvention of those laws.
In the Final Results, Commerce rejected the applicable data pertaining to the calculation
of individual assessment rates that Gerber and Green Fresh submitted in response to its
questionnaires, and declined to calculate individual antidumping duty assessment rates for
Gerber and Green Fresh, even though Commerce had verified those data prior to using them to
calculate preliminary antidumping duty assessment rates in the Preliminary Results. Instead,
Commerce applied both “facts otherwise available” under subsection (a) of § 1677e and “adverse
inferences” under subsection (b) of § 1677e, an application that Commerce characterized as
“total adverse facts available.” Relying on these provisions, Commerce applied an antidumping
duty assessment rate of 198.63 percent to both plaintiffs for all entries of mushrooms produced
by Gerber or exported by Green Fresh during the period of review. It also established this rate as
the new cash deposit rate for future entries, which action plaintiffs also challenge.
Had Commerce adopted in the Final Results the antidumping duty assessment rates it had
calculated in the Preliminary Results, Gerber’s assessment rate would have been 1.17 percent
and Green Fresh’s rate would have been 46.61 percent. The assessment rates in the Preliminary
Results were intended by Commerce to reflect the amount by which “normal value,” as
determined for goods of a non-market economy country, exceeded the U.S. prices associated
with the sales of Gerber’s and Green Fresh’s subject merchandise during the period of review.
Court No. 03-00544 Page 15
As discussed below, Commerce in the Final Results did not adopt the 198.63 percent assessment
rate with that intent, adopting it instead in response to its disapproval of the export agency
agreement entered into by Gerber and Green Fresh and the way the parties reported that
agreement in the responses to the Department’s questionnaires. Commerce, however, failed to
support with substantial evidence on the record the findings of fact on which it relied in invoking
§ 1677e. The court reaches this conclusion for two reasons.
The first reason for the court’s conclusion is the lack of substantial evidence on the
record to support Commerce’s apparent finding that the information submitted by both plaintiffs
did not qualify for use in calculating actual assessment rates. Commerce apparently rejected all
of that information based on findings of fact under 19 U.S.C. § 1677e(a)(2) and § 1677m(e) that
neither the information submitted by Gerber, nor the information submitted by Green Fresh,
contained in questionnaire responses and necessary to determining actual assessment rates, could
be “verified.” However, a finding that the information is not verifiable is unsupported by
substantial evidence. In fact, the record reveals that Commerce itself had verified both sets of
information and used them in calculating the separate assessment rates for Gerber and Green
Fresh that it reported in the Preliminary Results.
The second reason for the court’s conclusion is that Commerce erred in applying
19 U.S.C. § 1677e(b) by determining that the PRC-wide assessment rate should apply as
“adverse facts available” and by failing to support that determination with substantial evidence
on the record. There is a complete absence of evidentiary support for the specific choice of the
198.63 percent rate, which is the rate Commerce applied in the subject review, and the previous
review, to respondents who failed to demonstrate independence from control of the government
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of the PRC. The record lacks any evidence that either Gerber or Green Fresh is subject to PRC
control; moreover, Commerce made findings of fact in the Preliminary Results, which it did not
subsequently reverse or modify, that both plaintiffs were not subject to PRC control.
Absent the substantial evidence necessary to support the findings that Commerce made
pursuant to 19 U.S.C. § 1677e, Commerce’s determination of the 198.63 percent assessment rate
on the basis of “total adverse facts available” exceeded the authority Congress provided in
19 U.S.C. § 1677e. To explain its conclusion that Commerce erred in determining that the
PRC-wide rate of 198.63 percent was the appropriate assessment rate for Gerber and Green
Fresh, the court, in the discussion below, (A) examines how Commerce incorrectly applied
subsection (a) of § 1677e in conjunction with subsection (e) of § 1677m by disregarding verified
information relevant to calculating individual assessment rates and by failing to base its findings
on substantial evidence on the record, (B) analyzes how Commerce erred in applying subsection
(b) of § 1677e by determining that the PRC-wide assessment rate should apply as “adverse facts
available” and by failing to support its determination with substantial evidence on the record,
and (C) explains why Commerce’s determination is not justified by deference to Commerce’s
construction of either 19 U.S.C. § 1677e or the antidumping laws in general, which Commerce
insists permit it to exercise its “inherent authority” to prevent circumvention of those laws.
A. Commerce Erred in Applying 19 U.S.C. § 1677e(a) by Disregarding Verified, CompanySpecific Information for Gerber and Green Fresh Without Basing its Decision on Substantial
Evidence on the Record
Commerce erred in applying 19 U.S.C. § 1677e(a) by invoking the “facts otherwise
available” procedure when Commerce possessed verified, company-specific information from
which to determine the assessment rates for Gerber and Green Fresh. Subsection (a) of § 1677e
Court No. 03-00544 Page 17
allows Commerce to invoke “facts otherwise available” when “necessary information is not
available on the record” or when any of four conditions specified in subparagraph (a)(2) is met.
The four conditions apply to situations where a party:
(A) withholds information that has been requested by the administering
authority . . . under this subtitle, . . .
(B) fails to provide such information by the deadlines for submission of the
information or in the form and manner requested, subject to subsections (c)(1) and
(e) of section 1677m of this title,
(C) significantly impedes a proceeding under this subtitle,
or (D) provides such information but the information cannot be verified as
provided in section 1677m(i) of this title.
19 U.S.C. § 1677e(a)(2). Where a party meets any of these four conditions, the statute provides
that Commerce shall, subject to § 1677m(d), “use the facts otherwise available in reaching the
applicable determination.” 19 U.S.C. § 1677e(a). In the Final Results, Commerce concluded
that the plaintiffs’ reporting of the export agency agreement satisfied conditions (A), regarding
the withholding of information, (C), concerning significantly impeding a proceeding, and (D),
with respect to information that was provided but cannot be verified. See Final Results, 68 Fed.
Reg. at 41,307.
In subjecting the use of “facts otherwise available” to 19 U.S.C. § 1677m(d), the statute
applies a procedure when Commerce determines that a response to a request for information
does not comply with the request. In sum, subsection (d) of § 1677m requires that Commerce
promptly inform the submitter of the nature of the deficiency and, “to the extent practicable,
provide that person with an opportunity to remedy or explain the deficiency in light of the time
limits established for the completion of investigations or reviews under this subtitle.” 19 U.S.C.
§ 1677m(d). If Commerce determines that the response of the submitter is not satisfactory, or if
Court No. 03-00544 Page 18
such response is not timely, Commerce then “may, subject to subsection (e) of [§ 1677m],
disregard all or part of the original and subsequent responses.” Id.
When applying subsection (a) of § 1677e, Commerce, pursuant to subsection (d) of
§ 1677m, must comply with the requirements of § 1677m(e). Accordingly, Commerce must
determine whether information is “necessary to the determination” and whether that particular
information must be considered even if Commerce concludes that such information does not
meet all of its requirements. See 19 U.S.C. § 1677m(e) (providing that in reaching
administrative review determinations under § 1675, among other determinations, Commerce
“shall not decline to consider information that is submitted by an interested party and is
necessary to the determination but does not meet all the applicable requirements established by
[Commerce]”). The statute provides five criteria, which, if met, preclude Commerce from
declining to consider submitted information: (1) the information must be submitted by the
deadline; (2) the information must be verifiable; (3) the information must not be “so incomplete
that it cannot serve as a reliable basis for reaching the applicable determination”; (4) “the
interested party [must] demonstrate[] that it acted to the best of its ability in providing the
information and meeting the requirements established by [Commerce] with respect to the
information”; and (5) the information must be such that it “can be used without undue
difficulties.” 19 U.S.C. § 1677m(e).
In the Final Results, Commerce does not explain adequately why the five criteria in
19 U.S.C. § 1677m(e) are not satisfied by Gerber’s and Green Fresh’s submission of the
subsequently-verified information that was necessary to the calculation of individual assessment
Court No. 03-00544 Page 19
rates. Nor does Commerce explain which of its specific “applicable requirements,” as referenced
in § 1677m(e), were not satisfied by this information.
Commerce regarded as not verifiable the information that Gerber and Green Fresh had
submitted during the review and that was necessary to the calculation of individual assessment
rates. Commerce concluded that the export agency agreement and the misleading responses or
misrepresentations it alleges to have been made by both plaintiffs concerning that agreement
caused it to question the veracity of all other information submitted by the parties in the review
proceeding:
For purposes of the [Final Results], [the Department] now find[s] that Gerber and
Green Fresh’s joint efforts during the [period of review] to illegally evade
antidumping duty cash deposits and subsequent misleading responses to the
Department’s questionnaires, illustrate a pattern of behavior intended to
undermine the antidumping duty law and the ability of the Department to enforce
it. Such behavior calls into question the validity of all of the information
provided to the Department in the questionnaire responses and leads the
Department to question both parties’ business practices and the veracity and
commercial validity of Gerber[’s] and Green Fresh’s reported information.
Issues and Decision Memorandum for the Final Results of the Antidumping Duty New Shipper
and Administrative Reviews on Certain Preserved Mushrooms from the People’s Republic of
China - February 1, 2001, through January 31, 2002 at 9 (“Decision Memorandum”) (Pub. App.
to Def.’s Mem. in Opp’n to Pls.’ Rule 56.2 Mot. for J. Upon the Agency R. Ex. B).
The rationale that Commerce put forth does not justify Commerce’s dispensing with the
requirements of 19 U.S.C. § 1677m(e). The record evidence concerning the
“misrepresentations” alleged to have been made by Gerber and Green Fresh is not sufficient to
support a conclusion that none of the submitted information pertaining to the calculation of
actual assessment rates – information that was separate from the information the two parties
Court No. 03-00544 Page 20
reported concerning the export agency agreement – was “verifiable” for purposes of 19 U.S.C.
§ 1677m(e)(2) and § 1677e(a)(2)(D). Based on the record evidence, Commerce indicated that
Gerber and Green Fresh misrepresented the nature of their export agency agreement in several
ways: (1) the use of certain terms in the export agency agreement that Commerce considered to
imply a more active role for Green Fresh than Commerce believes Green Fresh to have assumed;
(2) the alleged misrepresentation by Gerber and Green Fresh regarding their motive for entering
into the export agency agreement; (3) the alleged failure of both parties to disclose initially the
fact that they did not adhere to the original terms of the export agency agreement; and (4) the
alleged failure of Green Fresh to provide supporting documentation for shipments that Gerber
made using Green Fresh’s invoices. Decision Memorandum at 10-13. This record evidence of
“material misrepresentations” uniquely concerns the terms and execution of the export agency
agreement between Gerber and Green Fresh. See id. at 10, 12. Although Commerce could
demonstrate, with record evidence, that one or both of the parties were less than forthcoming
regarding certain aspects of the export agency agreement, this record evidence is not sufficient to
impugn the veracity of all other record evidence, i.e., record evidence that Commerce used to
calculate the assessment rates in the Preliminary Results.
Commerce never explained adequately why the other record evidence was not
“verifiable.” Instead, Commerce offered vague assertions, insisting that it “must have
confidence that transactions reviewed at verification are legitimate with no mis-characterization
or mislabeling of the information being verified” and added the general notion that “[t]he
verification process is highly dependent upon the accurate and comprehensive characterization
by respondents of the facts supporting their books and records, and the information contained
Court No. 03-00544 Page 21
therein.” Decision Memorandum at 9. With respect to Gerber, Commerce then concluded that
Gerber is untrustworthy and hence that Commerce cannot treat its findings at verification as
accurate. See id. at 11. Commerce drew a similar conclusion with respect to Green Fresh;
Commerce concluded that it could not rely on any of the information that Green Fresh provided
because the misrepresentations it alleged regarding the export agency agreement led Commerce
to question the validity of all the information reviewed at verification. See id. at 13-14.
At verification, however, other than the record evidence regarding the export agency
agreement, Commerce found few discrepancies with the information that Gerber and Green
Fresh provided, and Commerce resolved any inaccuracies found during verification. See
Verification of the Resp. of Gerber Foods (Yunnan) Co., Ltd. (“Gerber”) in the Third
Antidumping Duty Administrative Review of Certain Preserved Mushrooms from the People’s
Republic of China (“PRC”) (Feb. 12, 2003) (“Gerber Verification Report”) (Pub. App. to Pls.’
Rule 56.2 Mot. for J. Upon the Agency R. Ex. 14); Verification of the Resp. of Green Fresh
Foods (Zhangzhou) Co., Ltd. (“Green Fresh”) and Zhangzhou Longhai Lu Bao Food Co., Ltd.
(“Lu Bao”) the Third Antidumping Duty Administrative Review of Certain Preserved
Mushrooms from the People’s Republic of China (“PRC”) (Feb. 12, 2003) (“Green Fresh
Verification Report”) (Pub. App. to Pls.’ Rule 56.2 Mot. for J. Upon the Agency R. Ex. 13).
Even after noting the alleged misrepresentations concerning the export agency agreement that
were discovered at verification, Commerce declined to use “facts otherwise available” and
“adverse inferences” when calculating preliminary individual assessment rates and
acknowledged that “for assessment purposes, [the Department] verified that the sales data
reported by each respondent was accurate and, for purposes of this review, can calculate
Court No. 03-00544 Page 22
importer-specific assessment rates using this data.” Memorandum from Louis Apple, Director,
Office of AD/CVD Enforcement 2, to Susan Kuhbach, Acting Deputy Assistant Secretary for
Import Administration at 6 (Feb. 28, 2003) (discussing the appropriate cash deposit rates and the
calculation of individual assessment rates for Gerber and Green Fresh given the findings
regarding the export agency agreement) (“Cash Deposit Memorandum”) (Pub. App. to Def.Intervenor’s Mem. in Resp. to Pls.’ Rule 56.2 Mot. for J. Upon the Agency R. Ex. 24); see
Preliminary Results, 68 Fed. Reg. at 10,697. Having made such favorable findings concerning
the accuracy and suitability of the submitted information needed to calculate assessment rates,
and having failed to support with substantial evidence any later findings to the contrary,
Commerce may not refuse to consider that information. Commerce cannot maintain plausibly
that, for purposes of § 1677m(e)(2), the information cannot be verified or that, for purposes of
§ 1677m(e)(4), Gerber and Green Fresh failed to demonstrate that they acted to the best of their
ability in providing the information and meeting Commerce’s requirements.
As the Court of Appeals for the Federal Circuit has observed, the use of facts otherwise
available is to “fill in the gaps” when “Commerce has received less than the full and complete
facts needed to make a determination.” Nippon Steel Corp. v. United States, 337 F.3d 1373,
1381 (Fed. Cir. 2003). Legislative history illustrates that Commerce’s action in the Final Results
is based on an impermissible use of the authority under 19 U.S.C. § 1677e. The language of
§ 1677e was included in the Uruguay Round Agreements Act of 1994, Pub. L. No. 103-465,
108 Stat. 4809 (1994). The Statement of Administrative Action explains that subsection (a) of
§ 1677e pertains to situations “where requested information is missing from the record or cannot
be used because, for example, it has not been provided, it was provided late, or Commerce could
Court No. 03-00544 Page 23
not verify the information.” Uruguay Round Agreements Act, Statement of Administrative
Action, H.R. Doc. No. 103-316, at 869 (1994), as reprinted in 1994 U.S.C.C.A.N. 4040, 4198
(“SAA”).
As Commerce demonstrated in the Preliminary Results, it had sufficiently full and
complete facts, which Commerce itself had verified, to find that Gerber and Green Fresh were
free from PRC-control and to determine the preliminary antidumping assessment rates to be 1.17
percent for Gerber and 46.41 percent for Green Fresh. See Preliminary Results, 68 Fed. Reg. at
10,702. The subsequent refusal by Commerce to use the verified sales data was based solely on
its disapproval of the export agency relationship and the way in which the two plaintiffs reported
that relationship. See Final Results, 68 Fed. Reg. at 41,306-07. However, the facts on record
pertaining to the export agency relationship do not support a conclusion that the verified
information provided by both respondents could not be used to calculate separate assessment
rates. Commerce never identified any gaps or deficiencies in that information such as would
preclude Commerce from relying on that information for the purpose of calculating assessment
rates. Nor did Commerce identify any inaccuracy, mis-characterization, or discrepancy in the
information to support a conclusion that the information is no longer “verifiable.”
Viewed against the “substantial evidence” requirement as defined in Consolidated Edison
Co., 305 U.S. at 229, the record evidence in this case is not such as “a reasonable mind might
accept as adequate to support a conclusion” that none of the information submitted by either
Gerber or Green Fresh in the third administrative review could be verified for use in calculating
individual assessment rates. Because Commerce failed to justify its rejection of that information
Court No. 03-00544 Page 24
under the requirements of 19 U.S.C. § 1677m(e), Commerce’s rationale for invoking the “facts
otherwise available” procedure of 19 U.S.C. § 1677e(a) is insufficient.
In addition to the criterion for invoking “facts otherwise available” that is set forth in
§ 1677e(a)(2)(D), which is satisfied only if an interested party provides necessary information
that “cannot be verified,” Commerce also invoked criteria (A) and (C) of § 1677e(a)(2), which
are satisfied if the party “withholds information” that Commerce requested, or “significantly
impedes a proceeding,” respectively. Neither criterion (A) nor criterion (C), however, justifies
Commerce’s actions in the Final Results. Commerce made findings that Gerber and Green Fresh
initially withheld information by misrepresenting the nature of the export agency agreement and
that these misrepresentations impeded a proper review of the transactions affected by the export
agency agreement. See Decision Memorandum at 11, 13. Even assuming, arguendo, that the
two parties initially withheld some information about the export agency agreement, none of the
information allegedly withheld was necessary to the calculation of individual antidumping duty
assessment rates. Because Commerce did not satisfy the requirements of 19 U.S.C. § 1677m(e)
as to the information that actually was necessary to the calculation of individual assessment
rates, Commerce’s invoking of criterion (A) of § 1677e(a)(2) is insufficient to justify the actions
taken in the Final Results. With respect to criterion (C) of § 1677e(a)(2), Commerce did not
reveal its reasoning and failed to cite to evidence on the record that could support a finding that
the administrative review proceeding was “significantly impeded” as a result of actions taken by
either Gerber or Green Fresh.
Court No. 03-00544 Page 25
B. Commerce Erred in Its Applying 19 U.S.C. § 1677e(b) by Determining that the PRC-Wide
Assessment Rate Should Apply as “Adverse Facts Available” and by Failing to Support its
Determination with Substantial Evidence on the Record
Commerce erred further in its applying subsection (b) of § 1677e. If Commerce makes
the findings, based on substantial record evidence, that are required for invoking subsection (b)
of 19 U.S.C. § 1677e, it may “use an inference that is adverse to the interests of that party [(i.e.,
the party that failed to cooperate by not acting to the best of its ability to comply with a request
by Commerce for information)] in selecting from among the facts otherwise available.”
19 U.S.C. § 1677e(b) (emphasis added). In selecting from among “facts otherwise available,”
Commerce can rely on information derived from “the petition,” “a final determination in the
investigation under this subtitle,” “any previous review under 19 U.S.C. § 1675 or determination
under 19 U.S.C. § 1675b,” or “any other information placed on the record.” 19 U.S.C.
§ 1677e(b).
Subsection (b) of § 1677e cannot properly be read in isolation. In limiting the procedure
thereunder to the agency’s “selecting from among the facts otherwise available,” subsection (b)
refers back to subsection (a). Therefore, if it is assumed, arguendo, that subsection (b) is
available to be invoked against Gerber and Green Fresh based on each party’s failure to respond
to the best of its ability to Commerce’s requests for information concerning the nature of the
export agency agreement, Commerce, in determining assessment rates, nevertheless is confined
by subsection (b) to “selecting from among the facts otherwise available.” Commerce did not so
confine its action.
In the Preliminary Results, Commerce made findings of fact based on substantial
evidence that both Gerber and Green Fresh were independent of control of the government of the
PRC. See Preliminary Results, 68 Fed. Reg. at 10,698-99. Gerber was deemed to be
Court No. 03-00544 Page 26
3 Neither the statute nor Commerce’s regulations refer to the procedure Commerce
identifies as “total adverse facts available.” The statute sets forth two individual, but related,
procedures in subsections (a) and (b) of 19 U.S.C. § 1677e.
independent of government control because it “is wholly owned by persons located outside the
PRC.” Id. at 10,698. As to Green Fresh, Commerce determined in the Preliminary Results that
Green Fresh has demonstrated absence of both de jure and de facto government control. See id.
at 10,698-99. Commerce reported no findings of fact in the Final Results that contradicted or
cast doubt on its earlier findings related to the matter of government control of either plaintiff.
On the basis of those findings, and consistent with its past practice, Commerce proceeded
to calculate separate preliminary antidumping duty assessment rates: 1.17 percent for Gerber and
46.61 percent for Green Fresh. While Commerce, in the Preliminary Results, took exception to
the way the export agency agreement was reported, Commerce did not invoke its “total adverse
facts available” procedure, which encompasses both subsection (a) (“facts otherwise available”)
and subsection (b) (“adverse inferences”), on the calculation of the assessment rates, instead
invoking that procedure to set a higher-than-normal cash deposit rate for future entries of
Gerber’s merchandise.3 See Preliminary Results, 68 Fed. Reg. at 10,702. Commerce explained
that “for assessment purposes, [the Department] verified that the sales data reported by each
respondent was accurate and, for purposes of this review, can calculate importer-specific
assessment rates using this data . . . . Therefore, [the Department] do[es] not believe the use of
adverse facts available . . . for each of these respondents is warranted.” Cash Deposit
Memorandum at 6 (emphasis added).
In the Final Results, however, Commerce invoked the “total adverse facts available”
procedure to disregard all data relevant to calculation of actual assessment rates that either party
Court No. 03-00544 Page 27
had submitted. Pursuant to its application of its “total adverse facts available” procedure,
Commerce offered the unsupported and conclusory statement that “as adverse facts available, in
light of record evidence of material misrepresentations by Gerber as noted above and the
potential for future misconduct, the assignment of a cash deposit and assessment rate equal to the
PRC-wide rate of 198.63 percent is appropriate.” Decision Memorandum at 11. Commerce
reached the same conclusion for Green Fresh. See Decision Memorandum at 13-14. Instead of
selecting, and identifying in its decision, facts that were “otherwise available” for use in
determining assessment rates, Commerce saddled Gerber and Green Fresh with a punishing
assessment rate that was hugely disproportionate to the individual assessment rates it had
calculated in the Preliminary Results.
But an assessment rate, standing alone, is not a “fact” or a set of “facts otherwise
available,” and under no reasonable construction of the provision could it be so interpreted. The
statute does not permit Commerce to choose an antidumping duty assessment rate as an “adverse
inference” without making factual findings, supported by substantial evidence, justifying a
conclusion that the body of record information necessary to the calculation of that assessment
rate is to be rejected for reasons consistent with the statutory scheme, including in particular
§ 1677e(b) when read in conjunction with § 1677e(a) and § 1677m(e).
As the Court of Appeals for the Federal Circuit observed, Commerce does not have the
discretion under 19 U.S.C. § 1677e(b) to impose an “unjustifiably high, punitive rate” that
ignores the facts discovered in the course of its own investigation. F.lli De Cecco di Filippo
Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1033 (Fed. Cir. 2000) (“De Cecco”).
Although Commerce has considerable discretion in making antidumping determinations and in
applying 19 U.S.C. § 1677e(b), that discretion is not boundless. See De Cecco, 216 F.3d at 1034
Court No. 03-00544 Page 28
4 Subsection (c) of § 1677e requires that Commerce, “to the extent practicable,”
corroborate from independent sources reasonably at its disposal “secondary information” that it
relied upon and that was not obtained in the course of an investigation or review. 19 U.S.C.
§ 1677e(c).
(“By requiring corroboration of adverse inference rates, Congress clearly intended that such rates
should be reasonable and have some basis in reality.”).4 Commerce exceeds its discretion if it
imposes an “unjustifiably high, punitive rate” that is contrary to its own findings of fact. See id.
at 1033. The Court of Appeals for the Federal Circuit reiterated these principles in a decision
issued in 2002:
Congress could not have intended for Commerce’s discretion to include the
ability to select unreasonably high rates with no relationship to the
respondent’s actual dumping margin. Obviously a higher adverse margin
creates a strong deterrent, but Congress tempered deterrent value with the
corroboration requirement. It could only have done so to prevent the petition
rate (or other adverse inference rate), when unreasonable, from prevailing and
to block any temptation by Commerce to overreach reality in seeking to
maximize deterrence.
Ta Chen Stainless Steel Pipe, Inc. v. United States, 298 F.3d 1330, 1340 (Fed. Cir. 2002)
(quoting De Cecco, 216 F.3d at 1032).
Instead of calculating an assessment rate for Gerber based on record information,
Commerce instead took an action that was intended, at least in part, as a punishment of Gerber,
stating in the Decision Memorandum that “[t]he Department cannot tolerate the existence of
schemes to evade the antidumping law, such as the one applied by Gerber in this case” and that
“[t]he Department considers the assignment of this rate to Gerber sufficient to encourage it to
cooperate with the Department in further reviews, and to ensure that Gerber cannot undermine
the efficacy of the antidumping law by posting insufficient and improper deposits.” Decision
Memorandum at 11.
Court No. 03-00544 Page 29
Commerce’s statements concerning Green Fresh also reveal the intent to inflict
punishment on a respondent. Commerce stated that “[it] considers the assignment of this rate to
Green Fresh as sufficient to encourage it to cooperate with the Department in future reviews, and
to ensure that Green Fresh does not participate in other schemes to evade the antidumping duty
law and payment of appropriate cash deposit rates in the future.” Id. at 14. The punitive intent
of Commerce’s action is also apparent because, as noted previously, Commerce in the subject
third administrative review applied the 198.63 percent PRC-wide rate to more than 100
shipments of mushrooms exported by Green Fresh and produced by an entity other than Gerber,
even though Gerber had no involvement in these shipments. Commerce failed to provide a
rational explanation of how Green Fresh’s participation in the export agency agreement, and the
circumstances surrounding its reporting of that agreement, affected the unrelated information
needed to calculate an antidumping duty rate for application to all shipments by Green Fresh of
mushrooms subject to the administrative review.
Consistent with the Federal Circuit’s instruction that an assessment rate calculated using
adverse inferences have some basis in reality, this Court has held that Commerce acts unlawfully
in imposing a rate that presumes government control, such as the PRC-wide rate applied in this
case, when a respondent has been found to be independent of government control. See Shandong
Huarong Gen. Group Corp. v. United States, No. 01-00858, 2003 Ct. Intl. Trade LEXIS 153, at
*61-*66 (Oct. 22, 2003), subsequently remanded by Shandong Huarong Gen. Group Corp. v.
United States, 2004 Ct. Intl. Trade LEXIS 121 (Sept. 13, 2004). The Court in Shandong
Huarong found that “the findings that justified the use of facts available and a resort to adverse
facts available with respect to the [respondents’] sales data and factors of production, cannot be
used to accord similar treatment to issues relating to the [respondents’] evidence of
Court No. 03-00544 Page 30
independence from state control.” Id. at *62. As the Court in Shandong Huarong explained
with regard to the respondents’ independence from government control, “[t]he [respondents]
supplied the requested information and Commerce has not adequately demonstrated a sufficient
reason to disregard the [respondents’] submissions of evidence of their entitlement to separate
antidumping duty margins and resort to adverse facts available.” Id. at *66.
The reasoning in Shandong Huarong is pertinent to the issue presented in this case by
Commerce’s choice of the 198.63 percent PRC-wide assessment rate. Commerce took issue
with the way in which the plaintiffs disclosed their agreement under which Green Fresh was to
act as exporter of record for Gerber’s merchandise, and with the agreement itself. The findings
of fact the agency relied upon to support its invoking “total adverse facts available” pertained to
the disclosures of the terms of the agreement in questionnaire responses by the two plaintiffs.
These findings were factually unrelated to the issue of government control. Commerce neither
cited record evidence showing that, nor made a finding of fact that, either plaintiff was subject to
the control of the PRC government. As noted previously, Commerce made, and maintained
through the review, an actual finding of fact that both Green Fresh and Gerber were not subject
to government control. Consistent with the decision of the Court of Appeals in De Cecco and
this Court’s decision in Shandong Huarong, the court concludes that the determination set forth
in the Final Results to apply the 198.63 percent assessment rate to the shipments of Gerber and
Green Fresh was not supported by substantial evidence and, accordingly, was contrary to law.
The legislative history of 19 U.S.C. § 1677e(b) further illustrates that Commerce’s action
in the Final Results is based on an impermissible use of the authority thereunder. Subsection (b)
of § 1677e “permits Commerce and the Commission to draw an adverse inference where a party
has not cooperated in a proceeding,” by “not act[ing] to the best of its ability to comply with
Court No. 03-00544 Page 31
requests for necessary information.” SAA at 870, as reprinted in 1994 U.S.C.C.A.N. at 4199.
The Statement of Administrative Action makes clear that Commerce may not be indiscriminate
in drawing an adverse inference. “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.” Id. (emphasis added). Because Commerce is empowered to use adverse inferences only
in “selecting from among the facts otherwise available,” it may not do so in disregard of
information of record that is not missing or otherwise deficient under subsection (a). See
19 U.S.C. § 1677e(b).
In summary, Commerce erred in applying § 1677e(b) by determining that the PRC-wide
rate should apply to Gerber and Green Fresh as “adverse inferences.” The choice of the
PRC-wide rate, which Commerce based solely on the existence of the export agency agreement
and the way Gerber and Green Fresh had reported that agreement, bore no relationship to record
evidence needed to calculate actual antidumping margins pertaining to shipments of mushrooms
associated with Gerber or Green Fresh during the period of review. Commerce does not attempt
to establish such a relationship. Instead, contrary to § 1677e(b), Commerce assigned the PRCwide rate to Gerber and Green Fresh to punish them for the existence of the export agency
agreement and the manner in which the parties reported it. In this respect as well as the
inconsistency with Commerce’s findings of fact on the absence of government control, the
determination to apply the 198.63 percent assessment rate to the merchandise produced by both
plaintiffs was not supported by substantial evidence.
Court No. 03-00544 Page 32
C. Commerce’s Choice of the PRC-Wide Assessment Rate Cannot Be Justified by Deference to
Commerce’s Construction of Either 19 U.S.C. § 1677e or the Antidumping Laws Generally
This court cannot agree with defendant’s argument that the principle of deference
established by Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. at 837,
requires the court to uphold Commerce’s decision to assign a 198.63 percent antidumping duty
assessment rate to the two plaintiffs. According to defendant, that decision must be upheld as an
exercise of Commerce’s authority to interpret 19 U.S.C. § 1677e or the antidumping laws
generally.
Commerce’s interpretations of the statute it is charged with administering, whether
adopted pursuant to a rulemaking or adjudicative proceeding, are accorded deference consistent
with the Supreme Court’s decision in Chevron. See Chevron, 467 U.S. at 842-43; see also
Pesquera Mares Australes Ltda. v. United States, 266 F.3d 1372, 1379-82 (Fed. Cir. 2001). As
directed by the Supreme Court in Chevron, the court first must consider “whether Congress has
directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end
of the matter; for the court, as well as the agency, must give effect to the unambiguously
expressed intent of Congress.” Chevron, 467 U.S. at 842-43. If, however, “the statute is silent
or ambiguous with respect to the specific issue, the question for the court is whether the agency’s
answer is based on a permissible construction of the statute.” Id. at 843. In the absence of
specific findings of fact required under § 1677e and the related provisions under § 1677m, no
permissible construction of § 1677e and provisions related thereto could allow Commerce to
impose the 198.63 percent assessment rate on the mushroom shipments associated with Gerber
and Green Fresh. Although Congress provided Commerce considerable discretion in 19 U.S.C.
§ 1677e, Congress, in that and related statutory provisions, has spoken directly to the issue of
Court No. 03-00544 Page 33
what findings of fact are necessary to invoke the procedure thereunder. In this case, Commerce
did not make all the necessary findings of fact, and significant findings of fact that Commerce
did make must be set aside because Commerce failed to support them with substantial evidence
on the record.
Defendant and defendant-intervenor make an additional argument that, aside from
19 U.S.C. § 1677e, Commerce’s adoption of the PRC-wide assessment rate was justified by
Commerce’s “inherent authority” to address circumvention of the antidumping laws. Defendant
and defendant-intervenor fail to cite a specific statutory provision that conceivably could be
construed (reasonably or otherwise) to support this claim of inherent authority. Nor is the court
aware of any such provision.
Defendant cites to a number of cases before this Court and the Court of Appeals for the
Federal Circuit in suppo

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