Atar, S.r.L. v. United States , 2011 CIT 87 ( 2011 )

Slip Op. 11-87
UNITED STATES COURT OF INTERNATIONAL TRADE
______________________________
:
ATAR, S.r.L., :
:
Plaintiff, :
:
v. : Before: Richard K. Eaton, Judge
:
UNITED STATES, : Court No. 08-00004
:
Defendant, :
:
and :
:
AMERICAN ITALIAN PASTA CO., :
et al., :
:
Deft.-Ints. :
______________________________:
OPINION
[Plaintiff’s motion for judgment on the agency record is denied
and the United States Department of Commerce’s Final Results, as
amended by the Final Remand Determination, are sustained.]
Dated: July 22, 2011
Riggle & Craven (David J. Craven), for plaintiff Atar,
S.r.L.
Tony West, Assistant Attorney General; Jeanne E. Davidson,
Director, Reginald T. Blades, Jr., Assistant Director, Commercial
Litigation Branch, Civil Division, United States Department of
Justice (Jane C. Dempsey); Office of Chief Counsel, United States
Department of Commerce (Mykhaylo Gryzlov), of counsel, for
defendant United States.
Kelley Drye & Warren, LLP (Paul C. Rosenthal and David C.
Smith), for defendant-intervenors American Italian Pasta Company,
Dakota Growers Pasta Company, and New World Pasta Company.
Eaton, Judge: Before the court is plaintiff’s motion for
judgment on the agency record, challenging the United States
Court No. 08-00004 Page 2
Department of Commerce’s (the “Department” or “Commerce”) final
results of the tenth administrative review of the antidumping
duty order on pasta from Italy, covering the period of review
(“POR”) July 1, 2005 through June 30, 2006, as amended by a
voluntary remand. See Certain Pasta from Italy, 72 Fed. Reg.
70,298 (Dep’t of Commerce Dec. 11, 2007) (notice of final results
of the tenth administrative review and partial rescission of
review) (the “Final Results”) and the accompanying Issues and
Decision Memorandum (Dep’t of Commerce Dec. 4, 2007) (“Issues &
Dec. Mem.”); Final Remand Determination (Dep’t of Commerce May 6,
2010) (the “Remand Results”). The court has jurisdiction
pursuant to 28 U.S.C. § 1581(c) (2006) and 19 U.S.C.
§ 1516a(a)(2)(B)(iii). For the reasons set forth below,
plaintiff Atar, S.r.L.’s (“Atar”) motion for judgment on the
agency record is denied, and the Final Results, as amended by the
Remand Results, are sustained.
BACKGROUND
The principal issue before the court is plaintiff’s status
as a producer by tolling. In a tolling arrangement, a producer
employs a subcontractor that provides processing services for, or
material for incorporation into, the merchandise that is sold by
the producer. See United States v. Eurodif S. A., 129 S. Ct.
878, 885 (2009). Here, the question is whether Atar had a
Court No. 08-00004 Page 3
sufficient role in the manufacture and sale of the pasta for the
company to be a producer for the purposes of the unfair trade
laws. Atar’s status as a producer is important because it is
determinative of the antidumping duty rate assigned to the
entries of pasta.
On January 15, 2009, Atar moved for judgment on the agency
record pursuant to USCIT Rule 56.2, contending that in the Final
Results, the Department wrongfully: (1) determined that Atar was
not a producer by tolling; (2) rescinded the administrative
review with respect to Atar; (3) issued instructions to liquidate
entries resold by Atar at the “all others” rate; and (4) accepted
American Italian Pasta’s uncertified submission relating to
Atar’s questionnaire responses. Mot. For J. on the Agency Rec.
Submitted Pursuant to R. 56.2 of the Rules of the USCIT (“Pl.’s
Mot.”) 2—4.
Defendant-intervenors American Italian Pasta Company, Dakota
Growers Pasta Company, and New World Pasta Company
(“defendant-intervenors”) opposed the motion and fully supported
the Final Results. Commerce, however, asked for a voluntary
remand to reconsider its decision to rescind the administrative
review and to reexamine its conclusions with respect to the rate
at which the entries would be liquidated. The court granted the
voluntary remand on November 10, 2009, and Commerce filed the
Remand Results on May 6, 2010. See Atar, S.r.L. v. United
Court No. 08-00004 Page 4
States, Court No. 08-00004, Order at 1 (Nov. 10, 2009) (granting
“defendant’s request for a full voluntary remand”).
In the Remand Results, Commerce reversed its initial
determination to rescind the review with respect to Atar, a
reversal supported by both plaintiff and defendant-intervenors.
The Department also reviewed the appropriate assessment rate for
Atar’s entries, and, based on its reseller policy,1 decided to
use the duty rates applicable to Atar’s subcontractors, rather
than applying the “all others” rate to the entries.
Following the Remand Results, Atar (1) continues to argue
that the court should find it was properly a producer by tolling,
and (2) renews its objection to American Italian Pasta’s
submission relating to Atar’s questionnaire responses. For their
part, defendant-intervenors oppose the use of the reseller policy
to set rates for the entries, contending that Commerce should
have invoked its “facts available” authority and applied the “all
others” rate to Atar’s entries.
STANDARD OF REVIEW
The court must uphold a final determination by the
Department in an antidumping proceeding unless it is “unsupported
1
Commerce relies on the reseller policy when producers,
in this case Atar’s subcontractors, have not made the final sale
themselves, but are aware that their goods will eventually be
sold in the United States. See Parkdale Int’l, Ltd. v. United
States, 31 CIT 1229, 1231, 508 F. Supp. 2d 1338, 1343 (2007).
Court No. 08-00004 Page 5
by substantial evidence on the record, or otherwise not in
accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).
DISCUSSION
I. Atar’s Status As a Producer by Tolling
A. Atar Argues that Past Practice Requires Commerce to
Continue to Find It Is a Producer by Tolling
As plaintiff sees it, its history of producing pasta is one
that reflects its status as a producer by tolling, a status
accepted by Commerce as valid in a previous new shipper review
and an administrative review. See Certain Pasta form Italy, 70
Fed. Reg. 30,083 (Dep’t of Commerce May 25, 2005) (notice of
final results of new shipper review of the antidumping duty
order); Certain Pasta from Italy, 72 Fed. Reg. 7,011 (Dep’t of
Commerce Feb. 14, 2007) (notice of final results of the ninth
administrative review of the antidumping duty order); see also
Rep. of Pl. Atar, S.r.L. (“Pl.’s Rep.”) 4—5 (“[B]y the time of
THIS administrative review, Atar had been involved in the
production of Pasta by means of tolling for more than a year.
Atar had already been reviewed in a new shipper review and a
regular administrative review. The history of THIS
administrative review is that it reflects the continued tolling
of a company which had been previously [] tolling and [whose]
tolling had been accepted by the United States as valid.”).
In addition to pointing to its specific history of having
Court No. 08-00004 Page 6
been found to be a producer by tolling, Atar points to the
Department’s previous history in another pasta determination to
make its arguments. Atar relies on what it characterizes as “the
specific tests as to what constitutes a producer by tolling”
found in the administrative decisions of Certain Pasta from
Italy, 63 Fed. Reg. 53,641 (Dep’t of Commerce Oct. 6, 1998)
(preliminary results of new shipper antidumping duty
administrative review) and Certain Pasta from Italy, 64 Fed. Reg.
852 (Dep’t of Commerce Jan. 6, 1999) (final results of new
shipper antidumping duty administrative review) (collectively,
“Corex”).2 Pl.’s Rep. 10. In doing so, the company contends
that the determination relied upon by Commerce, Polyvinyl Alcohol
from Taiwan, 63 Fed. Reg. 32,810 (Dep’t of Commerce June 16,
1998) (final results of antidumping duty administrative review)
(“PVA”), is not pertinent. Pl.’s Rep. 10—11.
2
The Department argues that the court should disregard
Atar’s reliance on Corex in this litigation because “Atar did not
raise any arguments regarding Commerce’s examination of its
circumstances based upon [PVA] in its case brief during the
administrative proceeding.” Def.’s Con. Supp. Mem. in Opp. to
Pl.’s R. 56.2 Mot. for J. Upon the Agency Rec. and Resp. to
Def.-Ints.’ Comm. Upon the Remand Redetermination 18. The court,
however, agrees with Atar that its case brief “addressed the
issues raised by PVA in its discussion of Corex.” Pl.’s Rep. 12.
Although Atar may not have cited the PVA case below, it
nonetheless raised all its relevant arguments there, and
preserved them for use again here.
Court No. 08-00004 Page 7
B. Commerce Distinguishes Atar from Past Practice
The Department claims that its determination that Atar was
not a producer by tolling flows from its “totality of the
circumstances” approach that Commerce suggests the United States
Supreme Court endorsed by its focus on the “economic reality” of
tolling contracts in United States v. Eurodif S. A., 129 S. Ct.
878, 887 (2009). Def.’s Con. Supp. Mem. in Opp. to Pl.’s R. 56.2
Mot. for J. Upon the Agency Rec. and Resp. to Def.-Ints.’ Comm.
Upon the Remand Redetermination (“Def.’s Mem.”) 9. The agency
explains that the approach allowed it to examine the actual
effect of Atar’s tolling agreements, and not just the legal
formalities employed by the parties. See Def.’s Mem. 9
(“Commerce’s approach focuses upon the economic reality rather
than the labels given within the tolling contracts.”).
Specifically, Commerce considered: (1) the history of Atar’s
business relationships with the subcontractors; (2) the timing of
Atar’s decision to begin a toll production operation; (3) the
close and continuing relationships between the U.S. importer and
the pasta producers; (4) Atar’s purchases of inputs from these
producers; and (5) the claimed lack of meaningful value added to
the production process by Atar, considering the overall
arrangement through which the purchase and sale of pasta
occurred. Def.’s Mem. 10.
First, the Department sets out Atar’s business history, and
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the continuing business relationships of its subcontractors, to
support its determination that Atar was not a producer of pasta.
According to Commerce, Atar was originally founded as an
electrical engineering firm, changed ownership multiple times,
and is currently a trading company, selling pasta and various
non-scope products. Def.’s Mem. 10—11. The company’s tolling
operation began shortly after some Italian pasta producers
received high antidumping rates during the sixth administrative
review of pasta from Italy for the POR July 1, 2001 through June
30, 2002. See PAM, S.p.A. v. United States, 582 F.3d 1336 (Fed.
Cir. 2009) (affirming 45.49 percent adverse facts available
rate).
In late 2003 or early 2004, an importer, adversely affected
because its producers had received these high rates, approached
Atar. Def.’s Mem. 12. As a result of the approach, the two
companies entered into an agreement whereby the importer
purchased the same brands of pasta from Atar that it had
previously purchased from, what were now, Atar’s subcontractors.
Def.’s Mem. 12. Because Atar was a new shipper, the importer was
able to secure the 11.26 percent “all others” cash deposit rate
for its U.S. imports. Def.’s Mem. 12. This rate was lower than
the rates the subcontractors would have received.
According to Commerce, little else changed as a result of
the agreement. Thus, the same pasta factories manufactured the
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same brands of pasta and shipped them directly to the same U.S.
importer. Def.’s Mem. 12. The Department further asserts that
Atar took on little responsibility in this new arrangement. That
is, it did not maintain a sales force in Italy or the United
States, engage in marketing or advertising efforts, pay sales
calls to customers, or provide any product support or product
development services in any of its markets. Def.’s Mem. 14—15.
Indeed, according to Commerce, Atar did not know which customers
owned the various brands of pasta it purportedly produced, nor
did it play any role in price negotiations or sales beyond
issuing invoices and receiving payments. See Issues & Dec. Mem.
at 7. Atar does not meaningfully quarrel with these findings.
Next, the Department claims that Atar did not add any
significant value to the production process. As to the pasta
ingredients, Commerce cites to record evidence it claims
establishes that, in many instances, the subcontractors used
ingredients from their inventories to produce the pasta. Def.’s
Mem. 13. In this regard, the Department cites to Atar’s
questionnaire response that “the toll producer would be
responsible for the shortage” if it did not receive all of the
semolina Atar had ordered for it to process. Def.’s Mem. 20
(quoting Antidumping Supplement Questionnaire Sections A and D
Response of Atar S.r.L. (Apr. 12, 2007) (“Apr. 12, 2007 Resp.”)
5). For Commerce, this indicates that “whatever value Atar
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purportedly contributed to the production process by purchasing
semolina was not reflected in the total price Atar paid for
pasta.” Def.’s Mem. 14. In other words, Atar’s purchase of
semolina, or failure to purchase, did not affect the price it
paid its subcontractors for the pasta. In addition, although
Atar apparently purchased the bulk of the semolina, it purchased
it from the subcontractors themselves and their suppliers, and
“failed to demonstrate that it maintained control over this
input.” Def.’s Mem. 13. According to the Department, this is
demonstrated by Atar’s inability to match up the amount of
claimed semolina purchases with the amount of finished product.
Def.’s Mem. 21 (citing Antidumping 2nd Supplemental Questionnaire
Sections D Response of Atar S.r.L. (May 25, 2007) Exhibit SSD-3)
(“Ex. SSD-3"). Atar disputes these findings, insisting that
record evidence supports its claim to having purchased the pasta
inputs. Pl.’s Rep. 10.
Finally, the Department claims that no evidence exists on
the record that Atar conducted independent product testing,
independently made arrangements for warehousing, performed
quality control, received deliveries of inputs for the finished
pasta, oversaw the state of the products, or prepared the pasta
at any phase for delivery to the customers. Issues & Dec. Mem.
at 7. Atar does not challenge some of these conclusions as a
matter of fact, but rather questions the relevance of any of
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these activities to its status as a producer by tolling. See
Pl.’s Mot 29 (“[S]uch analysis does not include an evaluation as
to what a producer by tolling would do.”).
Taken altogether, then, Commerce concludes the “totality of
the circumstances” indicates that Atar had no significant role in
the production or selling of the pasta entries. See Issues &
Dec. Mem. at 7 (“Based upon our analysis of the totality of
circumstances, we continue to find that Atar is not properly
treated as a toll producer.”).
Looking at its previous tolling determinations, the
Department believes Atar’s circumstances are most like those of
the respondent Perry Chemical Corporation (“Perry”) in PVA. 63
Fed. Reg. at 32,811. Perry was a U.S. importer and reseller of
polyvinyl alcohol and, like Atar, entered into a production
arrangement after a producer was found to be dumping and assigned
a high antidumping margin. Def.’s Mem. 16. Prior to the
imposition of this high dumping margin, Perry was not in the
business of producing or manufacturing any chemical. Def.’s Mem.
16. After entering into, what it characterized as, a tolling
agreement, Perry purchased the major production input through its
purported subcontractor’s affiliate, and the subcontractor
retained possession and control of this input. Def.’s Mem. 16.
According to Commerce, the primary benefit of the tolling
arrangements in PVA and this case is identical: it “allowed
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importers to purchase the same products made from the same
factories without having to pay the cash deposits applicable to
the producers.” Def.’s Mem. 17. Based on these facts, Commerce
concluded that Perry was not a producer by tolling. See PVA, 63
Fed. Reg. at 32,813 (“We find the mere rearrangement of Perry's
contractual relationship with [its subcontractor] insufficient to
establish Perry as a producer . . . .”). Thus, the Department
maintains that, here, it has acted in a manner consistent with
its previous methodology for determining the validity of tolling
arrangements, and insists that Atar is being treated in a manner
consistent with its previous determinations.
The Department further argues that plaintiff’s heavy
reliance on the grant of toll producer status in Corex to be
mistaken. The Corex administrative review involved another
Italian pasta exporter that the Department ultimately found to be
a producer by tolling, based on evidence that it purchased all of
the pasta inputs, paid the subcontractor a processing fee,
maintained ownership at all times of the inputs as well as the
final product, conducted product testing, and marketed the pasta.
Corex, 63 Fed. Reg. at 53,642. The Department claims that Atar
does not meet all of the material factors set forth in Corex.
Def.’s Mem. 19—20. In particular, Commerce stresses that, unlike
the Corex producer, Atar: (1) did not purchase all the pasta
ingredients; (2) did not maintain the ownership of inputs from
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purchase to the sale of the subject merchandise; and (3) conceded
that it failed to conduct independent product testing and
marketing research. Def.’s Mem. 20—21.
Finally, the Department maintains that its previous
determinations finding that Atar was a producer by tolling
provide no support for the company’s contention that it is a
producer. First, as to the new shipper review, “Atar was the
only participating party and its tolling arrangement was not
challenged.” Def.’s Mem. 17. With respect to the one previous
administrative review in which Atar was a participant (the
ninth), Commerce insists, that there, it was unable to rule on
the tolling arrangements because the record contained
insufficient evidence. Def.’s Mem. 17—18 (citing Issues and
Decisions for the Final Results of the Ninth Administrative
Review of the Antidumping Duty Order on Certain Pasta from Italy
and Determination to Revoke in Part (Dep’t of Commerce Feb. 5,
2007) (“Ninth Review Issues & Dec. Mem.”) at Comm. 1 (“[T]he
Department has serious concerns with respect to the overall
nature of Atar’s operation and its claim to be a producer of
pasta under the tolling regulation. While in the new shipper
review of Atar and in this current administrative review the
Department has accepted Atar’s claim to be the producer of
subject merchandise and foreign like product under the tolling
regulation, after having reviewed the record of this case and
Court No. 08-00004 Page 14
Department precedent cited below, we are concerned with respect
to this conclusion.”)).
C. Substantial Evidence Supports Commerce’s Determination
that Atar is Not a Producer by Tolling
At the heart of plaintiff’s challenge to Commerce’s
determination is, what it sees as, inconsistent treatment by the
Department of (1) the same facts that were before it in prior
reviews of Atar, and (2) the same facts in determinations
relating to other companies. As the Federal Circuit recently
reiterated, “an agency action is arbitrary when the agency offers
insufficient reasons for treating similar situations
differently.” Dongbu Steel Co., Ltd. v. United States, 635 F.3d
1363, 1371 (Fed. Cir. 2011) (citation omitted). The court,
however, is not convinced that Commerce has acted arbitrarily
here.
It is well-established that “[w]hen an agency changes its
practice, it is obligated to provide an adequate explanation for
the change.” SKF USA Inc. v. United States, 630 F.3d 1365, 1373
(Fed. Cir. 2011) (citing Motor Vehicle Mfrs. Ass’n of the United
States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29(1983)). As long as an adequate explanation is provided,
“Commerce is entitled to change its views,” even if it is
“changing [a] longstanding policy only in the present case.”
Saha Thai Steel Pipe (Pub.) Co. Ltd. v. United States, 635 F.3d
Court No. 08-00004 Page 15
1335, 1342, 1341 (Fed. Cir. 2011).
Here, Commerce has reached a different conclusion as to
Atar’s producer status from the new shipper review and previous
administrative review. The Department, however, explains that in
the new shipper review “Atar was the only participating party and
its tolling arrangement was not challenged,” meaning “Commerce
had no reason to question Atar’s tolling arrangement upon the
basis of the record.” Def.’s Mem. 17. Put another way, a
challenge to Atar’s producer status was not before it when
Commerce made its new shipper determination, and so the
Department did not question Atar’s assertion of that status.
As to the previous administrative review, Commerce states
that it “was unable to rule upon petitioners’ challenge to Atar’s
toll producer status because the record contained insufficient
evidence regarding this issue.” Def.’s Mem. 17. Nonetheless,
despite lacking “sufficient information to conduct a full
analysis of Atar’s tolling operation” in that review, Commerce
stated that it “intend[ed] to fully pursue this issue and
analysis in the subsequent, ongoing review . . . .” Ninth
Review Issues & Dec. Mem. at Comm. 1. In other words, the
Department concluded that it had insufficient information to
reverse its position in the ninth review, but stated that it
intended to make a record sufficient to make a determination in
the next succeeding review, which it has now done.
Court No. 08-00004 Page 16
Thus, in both the new shipper review and the ninth
administrative review, it is apparent that Commerce did not make
a determination based on all the facts concerning the various
questions that were presented relating to Atar’s status as a
producer by tolling. Commerce now has made its determination
based on a fully-developed record. That being the case, the
court holds that Commerce has provided sufficient reasons for
making its new finding, and that the company cannot rely on these
previous reviews to preclude a change in Commerce’s
determination. See Nakornthai Strip Mill Pub. Co. Ltd. v. United
States, 32 CIT __, __, 587 F. Supp. 2d 1303, 1308 (2008) (finding
Commerce had “adequately distinguished and reasonably explained
its departure” from previous case when agency “demonstrated
several key distinguishing facts between the two cases”).
Moreover, Commerce has marshalled sufficient evidence from
Atar’s questionnaire responses to distinguish it from the
producer by tolling in Corex. In the original Federal Register
notice for Corex, Commerce noted that the company “purchase[d]
all of the inputs,” “maintain[ed] ownership at all times of the
inputs as well as the final product,” and “conduct[ed]
independent product testing and marketing research,” facts that
led Commerce to determine that Corex was the producer of the
tolled merchandise. Corex, 63 Fed. Reg. at 53,642; see also
Corex, 64 Fed. Reg. at 852 (stating that the “final results do
Court No. 08-00004 Page 17
not differ from the preliminary results”).
Accordingly, Commerce did not confront the same factual
situation in Corex as in this case. “[U]nlike Corex, Atar did
not maintain ownership of the inputs from the time of purchase to
the time of sale to United States customers. Specifically, Atar
was unable to connect the purchase of inputs to the corresponding
sale of the finished product.” Def.’s Mem. 20—21; see, e.g., Ex.
SSD-3 (illustrating that Atar’s ordered and delivered quantities
of semolina failed to correspond to the ordered and delivered
quantities of pasta). “Additionally, Atar conceded that the
pasta factories commingled the semolina purchased by Atar with
their own semolina.” Def.’s Mem. 21 (citing Pl.’s Mot. 21).
While Atar disputes some of this evidence, an examination of the
record does not support the conclusion that Atar maintained
ownership of the semolina at all times. See, e.g., Response of
Atar S.r.L. to Section D Antidumping Questionnaire (Nov. 13,
2006) 3 (describing that raw material inputs are “shipped by the
vendors directly to the processors’ facilities and maintained by
the processors in inventory” before “the pasta is shipped
directly from the unaffiliated processor to Atar’s customers”).
In addition, Atar noted in its April 12, 2007 response that
“the toll producer would be responsible for [a] shortage” if it
did not receive all of the semolina Atar had ordered for it to
process. Apr. 12, 2007 Resp. 5. This response indicates that
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Atar had not and did not necessarily intend to purchase all of
the semolina its subcontractors used to make the pasta. The
agreements show that “the factories bore the risk of the short
fall or loss of raw materials and the finished product.” Def.’s
Mem. 20 (citing Apr. 12, 2007 Resp. 4-5 (noting that the factory
was responsible for shortfalls in the inputs).
Finally, Atar conceded that it did not conduct product
testing or marketing research, stating instead that such
activities are “wholly unnecessary” because “pasta is a mature
product.” Pl.’s Mot. 27. As the Department notes, though, the
producer in Corex was selling the same product, and its product
testing and marketing research were significant to Commerce’s
determination. Def.’s Mem. 21—22. Thus, Commerce concluded that
one of the factors that was important to its finding that Corex
was a producer by tolling was missing here.
Commerce, however, did support with substantial evidence its
finding that the facts in Atar’s arrangements were strikingly
similar to those addressed in PVA. “[S]imilar to the respondent
in PVA, Atar, Atar’s subcontractors, and their customers merely
restructured their relationship to avoid payment of antidumping
duties.” Issues & Dec. Mem. at 8. Atar, like Perry, entered a
new market after Commerce assigned producers high antidumping
duty rates. Additionally, Atar purchased its major production
input through its subcontractors’ previous vendors, and the
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subcontractors maintained control over the input. Putting these
factors together, then, it was reasonable for Commerce to
conclude that “Atar is more similar to the respondent in PVA
where the Department determined that the respondent was not a
toll manufacturer, rather than to the respondent in Corex.”
Issues & Dec. Mem. at 9.
Indeed, in addition to the differences between this case and
Corex and the similarities to PVA, Commerce had a variety of
evidence to support its conclusion that Atar was not a producer
by tolling. For instance, (1) Atar’s decision to enter into the
pasta market directly after Commerce imposed a high antidumping
duty rate on its subcontractors, a move that brought a much lower
cash deposit rate for the entries as a result of Atar’s new
shipper status, (2) the company’s relationship with the
subcontractors and its purchase of inputs from them, (3) its
failure to contribute any meaningful value to the production
process because it did not purchase or control all the inputs,
(4) its ignorance as to which customers owned the various brands
of pasta produced by the subcontractors, and (5) Atar’s lack of
any sales, price negotiating, marketing, or product development
efforts on behalf of its new venture. Moreover, the continuing
relationships between the subcontractors and the U.S. importer,
before and after tolling allegedly began, indicate the true
nature of the business arrangements, i.e., the same factories
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produced the same brands of pasta and shipped them directly to
the same importer.
As noted, Commerce believes that these facts make up a
totality of the circumstances that lead to the conclusion that
Atar was not a producer by tolling. The court agrees that, taken
as a whole, Commerce has supplied the substantial evidence
necessary to sustain its determination that Atar was not a
producer by tolling. Notably, the Department adequately
explained its departure from its conclusions in earlier reviews,
demonstrated that it had acted in a manner consistent with its
reviews of other claimed producers by tolling, and highlighted
evidence indicating Atar’s attenuated connection with the
production and sales of the entries.
II. Applicable Duty Rates
A. Defendant-Intervenors Insist Circumstances Demand Use
of Commerce’s “Facts Available” Authority
While Atar takes issue with Commerce’s tolling findings,
defendant-intervenors challenge Commerce’s application of its
reseller policy to Atar’s subcontractors to determine the various
applicable duty rates for Atar’s entries. Based on this policy,
Commerce applied to Atar’s entries previously calculated rates
for the subcontractors that produced the pasta. See Remand
Results at 13 (“In light of our findings during the proceeding
that entities other than Atar were producers of the subject pasta
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and had knowledge that pasta was destined for the United States,
our task is to determine an appropriate rate for these
entries.”).
Defendant-intervenors describe this change as affording Atar
“the opportunity to significantly lower its dumping liability, by
providing information it withheld during the original
administrative proceeding.” Deft.-Ints.’ Comm. In Opp. to
Portions of Commerce’s May 5, 2010 Final Remand Det.
(“Deft.-Ints.’ Comm.”) 3. Thus, defendant-intervenors insist
that Atar was given an unlawful opportunity to put information on
the record relating to the subcontractors’ rates. According to
defendant-intervenors, Atar withheld this information while it
pursued the “charade” that it was a manufacturer under a tolling
operation it had arranged with the actual producers.
Deft.-Ints.’ Comm. 4. Therefore, they ask the court to reject
the Remand Results insofar as they apply producer-specific cash
deposit rates to some of Atar’s entries, and direct Commerce to
continue to apply the “all others” rate to all of Atar’s entries.
Deft.-Ints.’ Comm. 4.
In making their argument, defendant-intervenors rely on
Commerce’s “facts available” authority,3 arguing that it was
3
See 19 U.S.C. § 1677e(a) (“If . . . necessary
information is not available on the record, . . . the
administering authority . . . shall . . . use the facts otherwise
available in reaching the applicable determination under this
subtitle.”).
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“designed specifically to allow the agency to address situations
such as the one at bar.” Deft.-Ints.’ Comm. 6. According to
defendant-intervenors, in administering its reseller policy,
Commerce typically “would have sent its questionnaires to the
actual producers.” Deft.-Ints.’ Comm. 4. Here, however, the
questionnaires were sent to Atar, not the subcontractors, so the
record contained no information as to the production costs and
sales prices of the actual manufacturers, information necessary
for the reseller policy to be used. Saying the statute directs
Commerce to use “facts available” when needed information is not
available, defendant-intervenors insist that Commerce should have
“filled the gaps” resulting from the missing information by
using facts otherwise available on the original record.
Deft.-Ints.’ Comm. 5. For defendant-intervenors, by allowing
Atar to first make its claim that it was a producer by tolling,
and only having failed to make this case, then allowing it to
provide information relating to its subcontractors, the
Department gave the company a second chance at a lower rate.
Ultimately, defendant-intervenors see the findings resulting
from the Remand Results as serving to “undermine all applicable
statutory and regulatory deadlines by permitting Atar the
opportunity to submit actual producer information on an
entry-by-entry basis, when the company claimed such information
was not available—and more importantly failed to provide
Court No. 08-00004 Page 23
it—during the course of the administrative review.” Deft.-Ints.’
Comm. 7—8. For defendant-intervenors, Atar’s behavior places the
company squarely within the facts available provisions of the
statute. See Deft.-Ints.’ Comm. 6 (“[T]he agency strives to wrap
its [invocation of the reseller policy] in the cloak of accuracy,
while assiduously avoiding invocation of its statutory “facts
available” authority, which was designed specifically to allow
the agency to address situations such as the one at bar (where
necessary information is missing from the record).”).
B. Commerce Relies on Reseller Policy
The Department argues that its modification on remand to
producer-specific duty rates is supported by substantial evidence
and in accordance with law. Def.’s Mem. 23. Commerce states
that, under its reseller policy, if a producer is aware of the
destination of a sale by a reseller, the Department will find
that the producer set the price of sale into the United States
and will assess the antidumping duty based on that producer’s
rate. See Parkdale Int’l, Ltd. v. United States, 31 CIT 1229,
1231, 508 F. Supp. 2d 1338, 1343 (2007) (“By identifying the
party that had knowledge of the destination of the subject
merchandise, Commerce determines which entity was the ‘price
discriminator’ that engaged in the dumping, and hence which
company's dumping margin should apply to a given entry.”)
Court No. 08-00004 Page 24
(citation omitted). In other words, on remand Commerce looked
behind Atar’s claims that it was a producer by tolling, found
them wanting, and then, using its reseller policy, applied rates
previously calculated for the subcontractors Atar hired.
Commerce argues that it decided to apply producer-specific
rates to the pasta entries because the subcontractors were the
real producers of the pasta and had knowledge that the goods were
destined for the United States. Def.’s Mem. 23. Responding to
defendant-intervenors’ insistence that Commerce should have
assessed duties upon the pasta entries at the “all others” rate
as “facts available,” the Department answers that there was no
factual gap in the record to fill. Commerce claims that it
obtained all necessary information on remand to assess
producer-specific duty rates. Def.’s Mem. 24—25. The Department
further states that it has “broad discretion to determine the
extent of investigation and the information it needs.” Def.’s
Mem. 25 (citing Micron Tech., Inc. v. United States, 117 F.3d
1386, 1394—95 (Fed. Cir. 1997); PPG Indus., Inc. v. United
States, 978 F.2d 1232, 1238 (Fed. Cir. 1992)).
C. Commerce Did Not Err in Declining to Invoke Its “Facts
Available” Authority
The relevant section of the antidumping duty statute, 19
U.S.C. § 1677e, governs Commerce’s decision to use facts
otherwise available. Importantly, “[t]he use of facts otherwise
Court No. 08-00004 Page 25
available . . . is only appropriate to fill gaps when Commerce
must rely on other sources of information to complete the factual
record.” Zhejiang Dunan Hetian Metal Co., Ltd. v. United States,
No. 2010-1367, slip op. at 26 (Fed. Cir. June 22, 2011).
Defendant-intervenors insist that the use of facts available
is warranted here because the “necessary information” to use the
Department’s reseller policy “is missing from the record.”
Deft.-Ints.’ Comm. 5. In other words, they assert that Commerce
exceeded its discretion by obtaining additional information
during a voluntary remand, instead of using the existing record.
In PPG Industries, Inc. v. United States, 978 F.2d 1232 (Fed.
Cir. 1992) (“PPG”), however, the Federal Circuit held that
Commerce has the “discretionary authority to determine the extent
of investigation and information it needs.” PPG, 978 F.2d at
1238; see also id. at 1239 (“[F]or this court to reverse and
remand for further investigation, PPG would have to show that the
ITA abused its discretion in not conducting further
investigation.”).
The court finds that Commerce did not err in declining to
invoke its “facts available” authority. Having found that Atar
was not a producer by tolling, the Department was confronted with
the question of what rate to apply to the entries. Commerce
examined this question in the context of a full voluntary remand
during which it was within its authority to put new evidence on
Court No. 08-00004 Page 26
the record. See Union Camp Corp. v. United States, 23 CIT 264,
282, 53 F. Supp. 2d 1310, 1327 (1999) (“[I]t is Commerce, and not
this Court, which is in the best position to initially decide
whether it should consider new evidence [on remand]”). In
addition, the Department’s duty on remand continued to be to set
the most accurate rate for the entries. See U.S. Steel Corp. v.
United States, 34 CIT __, __, Slip Op. 10-104 at 8 n.9 (Sept. 13,
2010) (not reported in the Federal Supplement) (“The Court
generally affords the Department reasonable discretion to
establish the breadth of its review of a particular issue on
remand so that the agency may reach the most accurate results.”)
(citation omitted), aff’d, No. 2011–1074, 2011 WL 2648708 (Fed.
Cir. July 7, 2011).
Defendant-intervenors cite no authority for this Court to
prevent Commerce from seeking new information on remand or from
using this new information to close any gaps in the record.
As to the record evidence itself, the court finds that
Commerce has offered the substantial evidence needed to justify
the Department’s reliance on producer-specific rates via its
reseller policy. See Remand Results at 7 (“[A]t our request,
Atar provided information to link specific producers to specific
pasta products and explained how this information could be tied
to specific entries.”). Thus, Commerce was able to determine
which company produced which pasta and who it was sold to. Since
Court No. 08-00004 Page 27
these producers were aware that their product would be sold in
the United States and had participated in earlier reviews under
the order, Commerce was able to apply more accurate, company-
specific rates to their entries.
As the Department notes, this meant avoiding liquidating “at
the incorrect rate, . . . rather than at the rates applicable to
the producers that produced the pasta and knowingly shipped it to
the United States.” Remand Results at 6—7. Because, on remand,
Commerce closed any gaps in needed information and because it
further considered information to assign more accurate rates for
the entries, the court rejects defendant-intervenors’ request
that Commerce use facts available and apply, on remand, the “all
others” rate to Atar’s entries.
III. Uncertified Submission
In the initial administrative review, the Department
accepted for placement on the record a twenty page letter
submitted on July 9, 2007 by defendant-intervenor American
Italian Pasta. Atar cites 19 C.F.R. § 351.303(g) (2010), which
requires a party to file “with each submission containing factual
information the [proper] certification,” to challenge the
Department’s acceptance of the letter. Plaintiff insists that
placement of factual information on the record without
certification, and over the objection of the other party, cannot
Court No. 08-00004 Page 28
be allowed, and is more than simply a procedural defect. Pl.’s
Mot. 39.
For its part, Commerce states that it did not rely on the
submission and therefore, the issue is moot. Def.’s Mem. 26—27.
This Court faced an identical question in GSA, S.r.L. v.
United States, 23 CIT 920, 77 F. Supp. 2d 1349 (1999) (“GSA”).
Relying on Intercargo Insurance Co. v. United States, 83 F.3d 391(Fed. Cir. 1996), the GSA Court analyzed the uncertified
submissions under the “harmless error” rubric applicable to
agency proceedings. See Sea-Land Service, Inc. v. United States,
14 CIT 253, 257, 735 F. Supp. 1059, 1063 (1990) (“[C]ourts will
not set aside agency action for procedural errors unless the
errors ‘were prejudicial to the party seeking to have the action
declared invalid.’”) (citation omitted), aff’d, 923 F.2d 838(Fed. Cir. 1991). As “none of the facts submitted by the
domestic producers were considered by Commerce in drawing its
conclusions” and the plaintiff “failed to allege that such
information was actually used in Commerce’s decision or even that
[it] was somehow prejudiced,” the GSA Court concluded that
“Commerce’s error was harmless.” GSA, 23 CIT at 930, 77 F. Supp.
2d at 1357.
With GSA in mind, the court holds that this case’s facts
compel the same result. Like the plaintiff in GSA, Atar does not
allege that Commerce used the information in this submission or
Court No. 08-00004 Page 29
that it was prejudiced. Moreover, Commerce denies that it used
information from the submission in its final analysis.
Therefore, the court finds that any procedural error on
Commerce’s part in accepting the submission was harmless, and
does not require the relief requested by plaintiff.
CONCLUSION
Based on the foregoing, the court sustains Commerce’s Final
Results, as amended by the Remand Results. Therefore,
plaintiff’s motion is denied. Judgment shall be entered
accordingly.
/s/ Richard K. Eaton
Richard K. Eaton
Dated: July 22, 2011
New York, New York