New Mexico Garlic Growers Coal. v. United States

Slip Op. 18-162
UNITED STATES COURT OF INTERNATIONAL TRADE
NEW MEXICO GARLIC GROWERS
COALITION AND EL BOSQUE FARM,
Plaintiffs,
QINGDAO TIANTAIXING FOOD CO.,
LTD.,
Consolidated Plaintiff,
and
SHANDONG JINXIANG ZHENGYANG
IMPORT & EXPORT CO., LTD. AND
JINING ALPHA FOOD CO., LTD.,
Before: Mark A. Barnett, Judge
Plaintiff-Intervenors, Consol. Court No. 17-00146
v.
UNITED STATES,
Defendant,
and
ZHENGZHOU HARMONI SPICE CO.,
LTD., HARMONI INTERNATIONAL
SPICE, INC., FRESH GARLIC
PRODUCERS ASSOCIATION,
CHRISTOPHER RANCH, L.L.C., THE
GARLIC COMPANY, VALLEY GARLIC,
AND VESSEY AND COMPANY, INC.,
Defendant-Intervenors.
OPINION
[Sustaining the U.S. Department of Commerce’s final results and partial rescission of
the 21st administrative review of the antidumping duty order on fresh garlic from the
People’s Republic of China.]
Consol. Court No. 17-00146 Page 2
Dated: November 26, 2018
Robert T. Hume, Hume & Associates LLC, of Taos, NM, argued for Plaintiffs New
Mexico Garlic Growers Coalition and El Bosque Farm.
Yingchao Xiao, Lee & Xiao, of San Marino, CA, argued for Consolidated Plaintiff
Qingdao Tiantaixing Foods Co., Ltd.
John J. Kenkel, deKieffer & Horgan, PLLC, of Washington, DC, argued for Plaintiff-
Intervenors Shandong Jinxiang Zhengyang Import & Export Co., Ltd. and Jining Alpha
Food Co., Ltd. With him on the brief were Gregory S. Menegaz, J. Kevin Horgan, and
Alexandra H. Salzman.
Meen Geu Oh, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC, argued for Defendant United States. With
him on the brief were Chad A. Readler, Acting Assistant Attorney General, Jeanne E.
Davidson, Director, and Reginald T. Blades, Jr., Assistant Director. Of counsel on the
brief was Emma T. Hunter, Attorney, Office of the Chief Counsel for Trade Enforcement
and Compliance, U.S. Department of Commerce.
Ned H. Marshak, Grunfeld Desiderio Lebowitz Silverman & Klestadt LLP, of New York,
NY, argued for Defendant-Intervenors Zhengzhou Harmoni Spice Co., Ltd. and Harmoni
International Spice Inc. With him on the brief were Bruce M. Mitchell, Alan G. Lebowitz,
Jordan C. Kahn, and Jamie L. Maguire.
Michael J. Coursey, Kelley Drye & Warren LLP, of Washington, DC, argued for
Defendant-Intervenor Fresh Garlic Producers Association. With him on the brief were
John M. Herrmann and Joshua R. Morey.
Barnett, Judge: In this consolidated action, Plaintiffs New Mexico Garlic Growers
Coalition and El Bosque Farms (collectively “NMGGC”), Consolidated Plaintiff, Qingdao
Tiantaixing Foods Co., Ltd. (“QTF”), and Plaintiff-Intervenors, Shandong Jinxiang
Zhengyang Import & Export Co., Ltd. (“Zhengyang”) and Jining Alpha Food Co., Ltd.
(“Alpha”) (together with Zhengyang, “separate rate respondents”), challenge the U.S.
Department of Commerce’s (“Commerce” or the “agency”) final results and partial
rescission of the 21st administrative review (“AR 21”) of the antidumping duty order on
Consol. Court No. 17-00146 Page 3
fresh garlic from the People’s Republic of China (“PRC” or “China”). See Fresh Garlic
from the People’s Republic of China, 82 Fed. Reg. 27,230 (Dep’t Commerce June 14,
2017) (final results and partial rescission of the 21st antidumping duty admin. review;
2014-2015) (“Final Results”), ECF No. 23-5, and accompanying Issues and Decision
Mem., A-570-831 (June 7, 2017) (“I&D Mem.”), ECF No. 23-6. 1 For the reasons
discussed below, the Final Results are sustained.
BACKGROUND
In 1994, Commerce issued an order imposing antidumping duties on fresh garlic
from the PRC. See Antidumping Duty Order: Fresh Garlic from the People’s Republic
of China, 59 Fed. Reg. 59,209 (Dep’t of Commerce Nov. 16, 1994) (AD Order).
Commerce calculated a weighted-average duty margin for the PRC-wide entity of
376.67 percent. AD Order, 59 Fed. Reg. at 59,210.
In November 2015, Commerce published a notice informing interested parties of
the opportunity to request an administrative review of the AD Order for the period of
review (“POR”) November 1, 2014, through October 31, 2015. See Antidumping or
Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Req.
Admin. Review, 80 Fed. Reg 67,706, 67,707 (Dep’t Commerce Nov. 3, 2015). In
response, Commerce received requests from multiple entities; three of those entities,
1 The administrative record is divided into a Public Administrative Record (“PR”), ECF
No. 23-2, and a Confidential Administrative Record (“CR”), ECF Nos. 23-3, 23-4.
Parties submitted joint appendices containing record documents cited in their briefs.
See Public J.A. (“PJA”), ECF Nos. 82 (Vol. I), 82-1 (Vol. II), 82-2 (Vol. III), 82-3 (Vol. IV);
Confidential J.A. (“CJA”), ECF Nos. 83 (Vol. I), 81-1 (Vol. II), 81-2 (Vol. III), 81-3 (Vol.
IV). The court references the confidential versions of the relevant record documents, if
applicable, throughout this opinion, unless otherwise specified.
Consol. Court No. 17-00146 Page 4
Zhengzhou Harmoni Spice Co., Ltd. (“Harmoni”), Fresh Garlic Producers Association
and its individual members (collectively, “FGPA”), 2 and NMGGC, requested a review of
Harmoni. See Req. for Admin. Review of the Antidumping Duty Order on Fresh Garlic
from the PRC (Nov. 30, 2015), PR 6, CJA Vol. I, PJA Vol. I; Pet’rs’ Review Req.; Req.
for Antidumping Review of Zhenghou [sic] Harmoni Spice Co., Ltd. and Affiliates (Nov.
28, 2015) (“NMGGC Review Req.”), PR 4, CJA Vol. I, PJA Vol. I; Respondent Selection
Mem. (March 1, 2016) (“Selection Mem.”) at 2, CR 15, PR 47, CJA Vol. I, PJA Vol. I
(noting that the agency received requests for review of 44 Chinese exporters).
Commerce initiated AR 21 on January 7, 2016. Initiation of Antidumping and
Countervailing Duty Admin. Reviews, 81 Fed. Reg. 736 (Dep’t Commerce Jan. 7, 2016)
(“Initiation Notice”). Due to the large number of producers and exporters involved,
Commerce selected Harmoni and QTF, the two producers and exporters “with the
largest volume of imports of subject merchandise during the POR,” as mandatory
respondents. 3 Selection Mem. at 4. After Commerce initiated AR 21 but before it
published its preliminary results, FGPA and Harmoni withdrew their review requests
2 The Fresh Garlic Producers Association and its individual members (Christopher
Ranch, L.L.C., The Garlic Company, Valley Garlic, and Vessey and Company, Inc.) are
Defendant-Intervenors in this case. See Pet’rs’ Reqs. for Admin. Review (Nov. 30,
2015) (“Pet’rs’ Review Req.”) at 1 n.1, PR 7, CJA Vol. I, PJA Vol. I; Order (July 3, 2017),
ECF No. 21 (granting motion to intervene).
3 Generally, the agency must determine an individual weighted-average dumping
margin for each known exporter and producer of the merchandise under review. 19
U.S.C. § 1677f-1(c)(1). However, if it is not practicable to do so because of the large
number of exporters or producers involved, the agency may limit its examination to
“exporters and producers accounting for the largest volume of the subject merchandise
from the exporting country that can be reasonably examined.” 19 U.S.C. § 1677f-
1(c)(2)(B).
Consol. Court No. 17-00146 Page 5
with respect to Harmoni. Harmoni Withdrawal of Review Req. (Mar. 4, 2016), PR 49,
CJA Vol. I PJA Vol. I; Pet’rs’ Withdrawal of Certain Reqs. for Admin. Review (Mar. 11,
2016), PR 71, CJA Vol. I, PJA Vol. I.
Commerce published its preliminary results on December 9, 2016. Fresh Garlic
from the People’s Republic of China, 81 Fed. Reg. 89,050 (Dep’t Commerce Dec. 9,
2016) (prelim. results and partial rescission of the 21st antidumping duty admin. review;
2014-2015), PR 401, CJA Vol. IV, PJA Vol. IV, and accompanying Decision Mem., A-
570-831 (Dec. 5, 2016) (“Prelim. Mem.”), PR 389, CJA Vol. III, PJA Vol. III. Commerce
preliminarily determined that QTF timely submitted a separate rate certification and
demonstrated its eligibility for a separate rate. Prelim. Mem. at 2 & n.9 (citation
omitted); id. at 13. Commerce found, however, that QTF failed to cooperate to the best
of its ability and significantly impeded the proceeding because it provided false or
incomplete information regarding its affiliations. Id. at 10-11, 17. The agency used
facts available with an adverse inference (referred to as “adverse facts available” or
“AFA”) to find that QTF and four other companies should be collapsed into a single
entity, termed the “QTF-entity.” Id. at 17. Using AFA, Commerce assigned the QTF-
entity a rate of $4.71 per kilogram, which was the highest margin on the record of this
proceeding. 4 Id.
4 At the time of the instant review, the PRC-wide entity rate was $4.71 per kilogram.
Prelim. Mem. at 14 & n. 66 (citing Fresh Garlic from the People’s Republic of China, 80
Fed. Reg. 34,141, 34,142 (Dep’t Commerce June 15, 2015) (final results and partial
rescission of the 19th antidumping duty admin. review; 2012-2013).
Consol. Court No. 17-00146 Page 6
Commerce likewise found that Harmoni withheld information requested by the
agency, failed to provide information within the established deadlines, and significantly
impeded the proceeding. Id. at 16. Commerce determined that Harmoni was not
eligible for a separate rate, and considered Harmoni part of the PRC-wide entity. Id. at
16-17.
Commerce issued its final results in June 2017. See Final Results; I&D Mem.
Commerce continued to find that QTF provided false or incomplete information
regarding its affiliations and failed to act to the best of its ability. I&D Mem. at 31.
Commerce found that QTF was affiliated with two additional entities beyond the four
addressed in the preliminary results, including Hebei Golden Bird Trading Co., Ltd.
(“Golden Bird”). Id. Commerce determined that some of the six companies with which
QTF was affiliated were part of the PRC-wide entity and, therefore, denied the QTF-
entity a separate rate, finding that it was part of the PRC-wide entity and subject to the
China-wide rate of $4.71 per kilogram. Id. at 30-36, 37. Commerce rescinded the
review of Harmoni because it found that NMGGC’s review request—the only remaining
review request with respect to Harmoni—“was illegitimate ab initio.”5 Id. at 18.
Before the court, QTF and the separate rate respondents challenge Commerce’s
decisions to collapse QTF with six other entities, deny it a separate rate, and apply to
QTF the PRC-wide rate. See generally Consol. Pl. Mem. in Supp. of Rule 56.2 Mot. for
J. Upon the Agency R. (“QTF Br.”), ECF No. 38; Pl.’s Reply Br. (“QTF Reply”), ECF No.
64; Pl.-Int. Shandong Jinxiang Zhengyang Import & Export Co., Ltd. et al.’s Rule 56.2
5 Further factual background is provided below.
Consol. Court No. 17-00146 Page 7
Mot. for J. Upon the Agency R., ECF No. 36, and Mem. of Law in Supp. of Mot. for J.
Upon the Agency R. (“Z&A Br.”), ECF No. 36-1. NMGGC challenges Commerce’s
decision to rescind its review of Harmoni. See generally Mot. of Pls. New Mexico Garlic
Growers Coalition and El Bosque Farm for J. on the Agency R. and Revised Mem. in
Supp. of the Mot. of Pls. New Mexico Garlic Growers Coalition and El Bosque Farm for
J. on the Agency R. (“NMGGC Br.”), ECF No. 42. The court heard oral argument on
September 25, 2018. See Docket Entry, ECF No. 86; Oral Arg. Tr., ECF No. 89.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to § 516A(a)(2)(B)(iii) of the Tariff Act of
1930, 6 as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2012), and 28 U.S.C. § 1581(c).
The court will uphold an agency determination that is supported by substantial evidence
and otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i).
6 Citations to the Tariff Act of 1930, as amended, are to Title 19 of the U.S. Code, and
references to the United States Code are to the 2012 edition, except that citations to 19
U.S.C. § 1677e are to the 2016 edition, which reflects amendments to § 1677e pursuant
to the Trade Preferences Extension Act (“TPEA”), Pub. L. No. 114–27, § 502, 129 Stat.
362, 383–84 (2015). The TPEA amendments affect all antidumping determinations
made on or after August 6, 2015, and, therefore, apply to this proceeding. See Dates of
Application of Amendments to the Antidumping and Countervailing Duty Laws Made by
the Trade Preferences Extension Act of 2015, 80 Fed. Reg. 46,793 (Dep’t Commerce
Aug. 6, 2015).
Consol. Court No. 17-00146 Page 8
DISCUSSION
I. QTF’s and the Separate Rate Respondents’ Motions
A. Relevant Legal Framework
1. Separate Rate Status in Non-Market Economy Proceedings
In antidumping duty proceedings involving a nonmarket economy country, such
as China, “Commerce presumes all respondents are government-controlled and
therefore subject to a single country-wide rate.” Ad Hoc Shrimp Trade Action Comm. v.
United States, 802 F.3d 1339, 1353 (Fed. Cir. 2015). A respondent may rebut that
presumption and obtain a “separate” antidumping duty rate by demonstrating the
absence of both de jure (in law) and de facto (in fact) government control over its export
activities. See id. at 1353.
An entity wishing to secure a separate rate must submit to the agency a separate
rate application or, for an entity who received a separate rate in the most recent
segment of the proceeding, a certification that the entity continues to meet the criteria
for obtaining a separate rate. Initiation Notice, 81 Fed. Reg. at 737. Commerce may
disregard a respondent’s separate rate submission when the agency determines that
the information submitted is unreliable. See, e.g., Ad Hoc Shrimp, 802 F.3d at 1355-57;
Jiangsu Changbao Steel Tube Co. Ltd. v. United States, 36 CIT __, __, 884 F. Supp. 2d
1295, 1309-1310 (2012). In that circumstance, Commerce continues to rely on the
presumption of government control and use the country-wide rate for the named
respondent. See Jiangsu Changbao Steel Tube, 884 F. Supp. 2d at 1303. However,
“Commerce’s determination that a party is not entitled to a separate rate because its
separate rate information is unreliable must be based on substantial evidence.” Fresh
Consol. Court No. 17-00146 Page 9
Garlic Producers Ass’n v. United States, 39 CIT __, __, 121 F. Supp. 3d 1313, 1328
(2015) (citation omitted).
2. Collapsing
The antidumping duty statute does not address the consequences of finding that
two or more entities are affiliated when calculating the dumping margin. Jinko Solar
Co., Ltd. v. United States, 41 CIT __, __, 229 F. Supp. 3d 1333, 1344 (2017) (citing 19
U.S.C. §§ 1675(a)(2)(A)(ii), 1677b(a)). Rather, Commerce has promulgated regulations
that treat closely related companies as a single entity (a process referred to as
“collapsing”) for purposes of the dumping inquiry. See 19 C.F.R. § 351.401(f).
Specifically, the regulations provide that Commerce
will treat two or more affiliated producers as a single entity [when] those
producers have production facilities for similar or identical products that
would not require substantial retooling of either facility in order to
restructure manufacturing priorities and the [agency] concludes that there
is a significant potential for the manipulation of price or production.
Id. § 351.401(f)(1). When assessing whether there is “significant potential for
manipulation,” Commerce considers relevant factors including, but not limited to:
(i) The level of common ownership;
(ii) The extent to which managerial employees or board members of one
firm sit on the board of directors of an affiliated firm; and
(iii) Whether operations are intertwined, such as through the sharing of
sales information, involvement in production and pricing decisions, the
sharing of facilities or employees, or significant transactions between the
affiliated producers.
Id. § 351.401(f)(2).
3. Facts Available and Adverse Facts Available
When “necessary information is not available on the record,” or an interested
party “withholds information” requested by Commerce,” “fails to provide” requested
Consol. Court No. 17-00146 Page 10
information by the submission deadlines, “significantly impedes a proceeding,” or
provides information that cannot be verified pursuant to 19 U.S.C. § 1677m(i),
Commerce “shall . . . use the facts otherwise available.” 19 U.S.C. § 1677e(a).
Additionally, if Commerce determines that the party “has failed to cooperate by not
acting to the best of its ability to comply with a request for information,” it “may use an
inference that is adverse to the interests of that party in selecting from among the facts
otherwise available.” 7 Id. § 1677e(b). Commerce uses total adverse facts available
when “none of the reported data is reliable or usable,” such as when all of the
“submitted data exhibit[s] pervasive and persistent deficiencies that cut across all
aspects of the data.” Zhejiang DunAn Hetian Metal Co., Ltd. v. United States, 652 F.3d
1333, 1348 (Fed. Cir. 2011) (citation omitted).
Commerce employs adverse inferences to “ensure that the party does not obtain
a more favorable result by failing to cooperate than if it had cooperated fully.” Uruguay
Round Agreements Act, Statement of Administrative Action, H.R. Doc. No. 103–316,
vol. 1, at 870 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4199 (“SAA”). 8 Commerce
determines whether a party has acted to the “best of its ability” by assessing whether
that party “has put forth its maximum effort to provide Commerce with full and complete
answers to all inquiries in an investigation.” Nippon Steel Corp. v. United States, 337
7 Commerce’s authority to use the facts otherwise available is subject to 19 U.S.C.
§ 1677m(d). See 19 U.S.C. § 1677e. Section 1677m(d) provides the procedures
Commerce must follow when a party files a deficient submission. See id. § 1677m(d).
8 The SAA “shall be regarded as an authoritative expression by the United States
concerning the interpretation and application of the Uruguay Round Agreements and
this Act in any judicial proceeding in which a question arises concerning such
interpretation or application.” 19 U.S.C. § 3512(d).
Consol. Court No. 17-00146 Page 11
F.3d 1373, 1382 (Fed. Cir. 2003). Commerce may apply an adverse inference “under
circumstances in which it is reasonable for Commerce to expect that more forthcoming
responses should have been made.” Id.
B. Relevant Facts
After QTF submitted a separate rate certification, Commerce issued a
questionnaire to the company. See Prelim. Mem. at 2 & n.9 (citation omitted); Req. for
Information (Mar. 7, 2016) (“Initial QTF Questionnaire”), PR 52, CJA Vol. I, PJA Vol. I.
Section A of the questionnaire requested information regarding QTF’s corporate
structure and disclosure of any affiliations with other Chinese garlic entities. Initial QTF
Questionnaire at A-1—A-2, A-5—A-6. In response, QTF stated that it “has no
relationship with any other producers or exporters” of fresh garlic from the PRC, and it
“does not share any managers or owners with any other entity.” SAQR in 21st
Antidumping Admin. Review filed on Behalf of QTF (Apr. 1, 2016) (“QTF Initial Sec. A
Resp.”) at A-3, CR 48, PR 98, CJA Vol. II, PJA Vol. II. It also asserted that it “does not
have any affiliated producers of the merchandise under consideration.” Id. at A-13.
Following QTF’s responses and before the preliminary results, FGPA alleged that
QTF had misreported its affiliations. See Comments on Deficiencies in QTF’s Initial
Questionnaire Resps. (May 12, 2016) (“Pet’rs’ Deficiency Cmts.”), CR 81, PR 175, CJA
Vol. III, PJA Vol. III. Relying on affidavits of three different individuals claiming personal
knowledge of the allegations, FGPA alleged that an individual named Wenxuan Bai
(“Mr. Bai”), and his immediate family members and a business partner named Roupeng
Wang (“Mr. Wang”), own or control a number of Chinese garlic exporters or producers,
Consol. Court No. 17-00146 Page 12
including QTF and Golden Bird. 9 Id. at 5-6. They alleged that Mr. Wang also was the
“founder of Huamei [Consulting] and [Robert] Hume’s Chinese co-counsel.” 10 Id. at 6
(citation omitted). FGPA further alleged that QTF shipped fresh garlic to the United
States in packages that identified Golden Bird as the processor. Id. at 8. Based on
these allegations, FGPA urged the agency to issue a supplemental questionnaire
requiring that QTF address the deficiencies in its Section A responses. Id. at 15.
Commerce issued a supplemental questionnaire to QTF on August 12, 2016,
asking numerous questions related to QTF’s possible affiliation with other entities,
including Golden Bird and Mr. Bai. Second Suppl. Questionnaire to QTF (Aug. 12,
2016) (“QTF 2nd Suppl. Questionnaire”), CR 109, PR 301, CJA Vol. III, PJA Vol. III.
QTF denied any connection to Mr. Bai or Golden Bird and denied having exported any
“fresh garlic that was processed or packaged by Golden Bird.” Resp. to Second Suppl.
Questionnaire (Sept. 6, 2016) (“QTF’s Second Suppl. Resp.”) at 1, CR 114, PR 325,
CJA Vol. III, PJA Vol. III. Notwithstanding its assertion that it had no connection to Mr.
9 The other named companies were Qingdao Xintianfeng Food Co., Ltd. (“QXF”) and
Qingdao Lianghe International Trade Co., Ltd. (“Lianghe”). Pet’rs’ Deficiency Cmts. at
5-6.
10 “Huamei Consulting is a Chinese consulting firm [that was] working with several
Chinese garlic exporters, including QTF and Golden Bird.” I&D Mem. at 8. Huamei
Consulting also worked with Hume & Associates LLC (“Hume & Associates”), Robert T.
Hume’s law firm. Id. Mr. Hume initially represented QTF in this review, but later
withdrew his representation of QTF and represented NMGGC for the remainder of the
review. See Entry of Appearance and Appl. for Admin. Protective Order on behalf of
QTF (Jan. 12, 2016), PR 23, CJA Vol. I, PJA Vol. I; I&D Mem. at 7; Letter from Hume &
Associates LLC to Secretary of Commerce Pertaining to QTF Withdrawal as Councel
[sic] to QTF (June 22, 2016), PR 220, ECF No. 23-2.
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Bai, QTF acknowledged that Mr. Bai is the brother of QTF’s legal representative at that
time, Leiwen Bai. Id.
In its preliminary results, Commerce explained that it had discovered, through
publicly available documents, that QTF was affiliated with four Chinese entities—
Qingdao Tianhefeng Foods Co., Ltd. (“QTHF”), an agricultural processor; Qingdao
Beixing Trading Co., Ltd. (“QBT”), a garlic trading company; QXF, a garlic producer
subject to AR 21; and Lianghe, another garlic producer subject to the review. 11 Prelim.
Mem. at 10-11. Commerce found that these companies were affiliated by way of
common control by a single family—the Bai family. Id. at 11. Based on this information,
Commerce determined that QTF provided false and incomplete information regarding its
affiliations, significantly impeded the proceeding, and failed to cooperate to the best of
its ability; therefore, the agency used adverse facts available to preliminarily determine
that QTF, QXF, QTHF, QBT, and Lianghe “should be collapsed into a single entity,” the
QTF-entity. Id. at 17.
In the Final Results, Commerce revised its findings and included Golden Bird and
Huamei Consulting in the group of affiliated companies referred to as the QTF-entity.
I&D Mem. at 31. Moreover, Commerce found that the QTF-entity included companies
that were not eligible for separate rates and, on that basis, determined that the QTF-
entity was part of the PRC-wide entity. Id. at 34-35. Consequently, based on “total
11The publicly available documents that Commerce reviewed were reports from China’s
State Administration of Industry and Commerce’s National Credit Information System
pertaining to the individual entities. See Prelim. Mem. at 10-11 & nn.43, 45-48 (citations
omitted); QTF Affiliation Docs. (Dec. 5, 2016) (“Affiliation Docs.”), PR 394, CJA Vol. IV,
PJA Vol. IV.
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AFA,” the agency continued to collapse the QTF-entity, declined to use any of the other
information QTF reported in its Section A response, and found the QTF entity to be part
of the PRC-wide entity and subject to the China-wide rate. Id. at 32-36.
C. Parties’ Arguments
QTF and the separate rate respondents challenge Commerce’s decisions to
apply an adverse inference and to collapse the QTF entity. See generally QTF Br.; QTF
Reply; Z&A Br. at 7-8. In particular, they argue that QTF’s failure to provide the
requested information was due to inadvertence and misunderstanding; 12 Commerce
failed to comply with 19 U.S.C. § 1677m(d) because the agency did not provide QTF
with an opportunity to cure its deficient responses; and Commerce’s collapsing
determination failed to comply with 19 C.F.R. 351.401(f) because the agency did not
make a finding, supported by substantial evidence, that there is a “significant potential
for manipulation” by the QTF-entity. QTF Br. at 7-8, 11-13, 15-21, 23-26; Z&A Br. at 7-
11. QTF also contends that Commerce’s selection of the China-wide rate as an
adverse inference is overly punitive and runs counter to the fundamental principles of
equity and fairness in antidumping duty proceedings. See QTF Br. at 19-20.
The Government and FGPA argue that Commerce’s finding that QTF submitted
false and incomplete information is supported by substantial evidence, and the agency’s
issuance of the supplemental questionnaire provided QTF an opportunity to correct the
12Zhengyang and Alpha argue that “QTF fully answered each question,” and
Commerce failed to “show that QTF’s failure involved anything more than inadvertence.”
Z&A Br. at 2, 8.
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deficiencies in its initial Section A response. 13 Confidential Def.’s Opp’n to Pls.’, Consol.
Pl.’s and Pl.-Ints.’ Rule 56.2 Mots. For J. on the Agency R. (“Gov. Resp.”) at 16-21, ECF
No. 60; FGPA’s Resp. in Opp’n to Pls.’ Mots. For J. on the Agency R. (“FGPA Resp.”) at
41-42, ECF No. 49. The Government and FGPA further contend that Commerce
properly found QTF to be part of the PRC-wide entity. Gov. Resp. at 25-26; FGPA
Resp. 42-43. According to the Government, QTF impeded Commerce’s ability to
conduct the collapsing analysis because it withheld affiliation information that is integral
to that analysis; therefore, Commerce properly based its collapsing determination on
AFA. Id. at 25. Likewise, without the affiliation information, QTF’s separate rate
information was unreliable and, combined with the finding of affiliation with other
companies not entitled to separate rates, the agency’s denial of a separate rate to the
entire QTF-entity was supported by substantial evidence. Id. at 26-28.
D. Analysis
1. Commerce’s Application of Adverse Facts Available is Supported
by Substantial Evidence on the Record And is Otherwise in
Accordance with Law
Substantial evidence supports Commerce’s finding that QTF provided false or
incomplete information regarding its affiliations. Section A of Commerce’s questionnaire
instructed QTF to identify all affiliated companies. Initial QTF Questionnaire at A-2, A-6.
The Glossary of Terms appended to the questionnaire defined affiliated persons as
including “members of a family,” and “an officer or director of an organization and that
organization.” Id., App. I. The Glossary also referenced the statutory and regulatory
13Harmoni has not presented any arguments concerning issues raised in QTF’s and the
separate rate respondents’ briefs.
Consol. Court No. 17-00146 Page 16
provisions for the definition of “affiliated” or “affiliated persons.” Id., App. I. (citing 19
U.S.C. § 1677(33); 19 C.F.R. § 351.02(b)). Both the statutory and regulatory provisions
include members of a family and officers or directors of an organization within the
definition of affiliated persons. See 19 U.S.C. § 1677(33)(A)-(B); 19 C.F.R. § 351.02(b).
QTF responded that it was not affiliated with any other exporters or producers of
fresh garlic from the PRC. QTF Initial Sec. A Resp. at A-3. In point of fact, QTF was
affiliated with at least four other entities through family relationships.14 I&D Mem. at 31,
33 & n.222 (citation omitted); Prelim. Mem. at 11 & nn.43, 45-48; Affiliation Docs.
Furthermore, QTF does not dispute that it was affiliated with most of those entities or
that it failed to provide information responsive to Commerce’s request. See QTF Br. at
18 (acknowledging that the “common denominator” for QTF, QTHF, QBT, and Lianghe
“is the familial relationship through the Bai brothers”); id. at 8, 15-16 (arguing that QTF’s
failure to provide the information was due to inadvertence, misunderstanding, or
mistake); QTF Reply at 3. Accordingly, Commerce’s finding that QTF failed to comply
with Commerce’s request for information is supported by substantial evidence. 15
14 Commerce described the nature of these affiliations as follows:
QTF’s legal representative and manager, Bai Leiwen, is a [50] percent
shareholder in [QTHF]. . . . In addition, QTF states that Bai Leiwen is
brother to Bai Wenxuan[ who], according to publicly-available documents,
is the legal representative of QXF. . . . Furthermore, QXF’s only public
shareholder is [QBT] . . . and all of its registered capital was provided by
Bai Wenxuan. According to publicly-available documents, the brothers’
father, Bai Xuezhong, is a shareholder in QBT. Furthermore, the wife of
Bai Wenxuan, Chen Hongxia, is the manager and legal representative of .
. . Lianghe.
Prelim. Mem. at 10-11; see also Affiliation Docs.
15 “The focus of [19 U.S.C. § 1677e(a)] is respondent's failure to provide information.
The reason for the failure is of no moment.” Nippon Steel, 337 F.3d at 1381.
Consol. Court No. 17-00146 Page 17
Substantial evidence also supports Commerce’s decision to apply an adverse
inference. Commerce may use an adverse inference when the respondent “fail[s] to
cooperate by not acting to the best of its ability to comply with a request for information.”
19 U.S.C. § 1677e(b)(1)(A). Commerce concluded that the QTF-entity failed to
cooperate to the best of its ability because the information in question was “standard
affiliation information requested of all respondents in [antidumping] proceedings,” I&D
Mem. at 32, 33 & n.223 (citation omitted), and the “QTF-entity should have been able to
provide this information if it had made the appropriate effort” when it received the initial
questionnaire, id. at 35. Commerce’s factual findings are supported by substantial
evidence.
Commerce’s questionnaire requested information for all companies affiliated with
QTF, and clearly defined the scope of its request. Initial QTF Questionnaire at A-6,
App. I. QTF asserts that its failure to provide the requested information was inadvertent
and based on the assumption that “‘control[]’ was a requisite component of affiliation.”
QTF Br. at 16. QTF did not seek guidance from Commerce, even in light of FGPA’s
allegations raising concerns regarding QTF’s initial Section A responses and
Commerce’s issuance of a supplemental questionnaire requesting further affiliation
information. QTF, therefore, failed to act to the best of its ability. See Reiner Brach
GmbH & Co.KG v. United States, 26 CIT 549, 556-557, 563-64, 206 F. Supp. 2d 1323,
1330-31, 1337-38 (2002) (application of an adverse inference merited when Commerce
requested information about “‘all’ home market sales [] for ‘identical or similar
Consol. Court No. 17-00146 Page 18
merchandise’” and respondent “never asked Commerce to clarify whether its
assumption was correct,” instead, using its own interpretation of the relevant term).
Although QTF admits that its assumption was ultimately erroneous, QTF claims
“inadvertence,” “misunderstanding,” or “mistake.” QTF Br. at 7, 16; QTF Reply at 3.
QTF’s conduct is more appropriately described as an inadequate inquiry into the proper
scope of Commerce’s request for information and the company’s obligation to respond
accordingly. QTF is “a sophisticated company with experienced counsel,” I&D Mem. at
34, and both the entity and its counsel have a history of prior participation in multiple
segments of this and other proceedings before the agency, id. at 32 & n.219 (citing
previous administrative reviews in which QTF and its counsel participated and U.S.
Court of International Trade cases that QTF’s counsel litigated). Thus, QTF could and
should have made further efforts to understand the relevant provisions of the statute
and regulations pertaining to the definition of “affiliated persons” or entities. 16 See
Nippon Steel, 337 F.3d at 1382 (the “best of its ability” standard “assumes that
importers are familiar with the rules and regulations that apply to the import activities
undertaken”). 17
16 QTF asserts, without citation to any record evidence, that it is a “simple and rural
company, lacking [in] many [] resources.” QTF Br. at 21. However, that QTF was
selected as a mandatory respondent because it was one of the two largest exporters
subject to the review undermines QTF’s assertion.
17 The information in question concerned basic affiliation information, “the type that a
respondent should reasonably be able to provide.” I&D Mem. at 35. In fact, “once QTF
confirmed that Mr. Bai [] was the brother of QTF’s legal representative,” Commerce was
able to identify QTF’s affiliates. Id. at 33. The availability of the information in public
documents further evinces QTF’s failure to exert “maximum effort to provide Commerce
with full and complete answers to all inquiries in an investigation.” Nippon Steel, 337
F.3d at 1382.
Consol. Court No. 17-00146 Page 19
QTF’s and the separate rate respondents’ arguments that Commerce failed to
comply with 19 U.S.C. § 1677m(d) are also unavailing. As discussed above, following
QTF’s responses and before the preliminary results, the agency received comments
from FGPA regarding QTF’s misreporting and issued a supplemental questionnaire.
See Pet’rs’ Deficiency Cmts. at 15; QTF 2nd Suppl. Questionnaire at 3-4. Although
QTF did disclose at that time that its legal representative was Mr. Bai’s brother, it
nevertheless maintained that QTF itself “has never had any connection to Mr. Bai.” 18
QTF 2nd Suppl. Resp. at 1. Thus, QTF had the opportunity to remedy the deficiencies
in its earlier submission, but failed to do so. 19
QTF relies on Mukand, Ltd. v. United States, Slip Op. 13-41, 2013 WL 1339399
(CIT Mar. 25, 2013), to suggest that Commerce’s supplemental questionnaire was
insufficient. See QTF Br. at 19. While Commerce chose to elicit the same information
on five separate occasions in Mukand, the case does not stand for the proposition that
Commerce is required to issue multiple supplemental questionnaires. 2013 WL
18 QTF appears to attribute its purported misunderstanding of the initial question to its
former counsel’s failure to adequately explain the question. See QTF Reply at 3. QTF
was represented by Mr. Hume at the time it submitted its initial response and by Ms.
Xiao when it submitted the supplemental response. See QTF Initial Sec. A Resp.; QTF
2nd Suppl. Questionnaire Resp. QTF states that once its new counsel “explained the
definition of ‘affiliation,’” QTF disclosed the familial relationship between Mr. Bai and
QTF’s legal representative in the supplemental response. QTF Reply at 3. However,
even with its newfound understanding of the definition of affiliation, QTF maintained that
it “never had any connection to Mr. Bai” or Golden Bird. QTF 2nd Suppl. Resp. at 1.
19 QTF’s assertion that Commerce took no action between QTF’s initial questionnaire
response and the preliminary results of review is belied by the record. See QTF Br. at
12-13. During this time, the agency received and reviewed FGPA’s allegations that
QTF had misreported its affiliations, and issued a supplemental questionnaire to QTF
addressing those allegations. See Pet’rs’ Deficiency Cmts.; QTF 2nd Suppl.
Questionnaire.
Consol. Court No. 17-00146 Page 20
1339399 at *6. Rather, one supplemental questionnaire is enough. See Maverick Tube
Corp. v. United States, 857 F.3d 1353, 1361 (Fed. Cir. 2017) (Commerce satisfied its
obligation under 19 U.S.C. § 1677m(d) when the respondent “failed to provide the
information requested in Commerce’s original questionnaire, and the supplemental
questionnaire notified [the respondent] of that defect”).
Commerce explained that additional questionnaires in this review were
unnecessary because “once QTF confirmed that Mr. Bai Wenxuan was the brother of
QTF’s legal representative,” the agency “had already collected [on its own] the required
information to complete its analysis of the QTF-entity’s affiliations.” I&D Mem. at 33. In
sum, the agency provided QTF two opportunities to provide accurate affiliation
information, and QTF failed to do so. Commerce was not required to provide additional
supplemental questionnaires seeking the same information.
2. Commerce’s Collapsing Determination is Supported by
Substantial Evidence and in Accordance with Law
As set forth above, Commerce’s regulations guide its decision to collapse two or
more entities. See 19 C.F.R. § 351.401(f). In this case, however, Commerce found that
QTF withheld information necessary to conduct that analysis. I&D Mem. at 35. Instead,
due to QTF’s failure to cooperate to the best of its ability, the agency based its
collapsing decision on the application of adverse facts available. Id. at 32, 35.
QTF and the separate rate respondents argue that Commerce failed to comply
with 19 C.F.R. § 351.401(f) by not making a finding, supported by substantial evidence,
that there is a “significant potential for manipulation” by the QTF-entity. QTF Br. at 22-
30; Z&A Br. at 9-11. Normally, Commerce determines whether there is a “significant
Consol. Court No. 17-00146 Page 21
potential for manipulation” by evaluating the levels of common ownership, whether
directors, managers, or officers within firms are affiliated, and whether operations of
relevant entities are intertwined. 19 C.F.R. § 351.401(f)(2). However, because QTF did
not provide requested information on its affiliates, the agency lacked the information to
evaluate this factor. I&D Mem. at 35.
QTF should have been able to provide the basic affiliation information to which it
had ready access. I&D Mem. at 32-33. “Because Commerce lacks subpoena power,
Commerce’s ability to apply adverse facts is an important one.” Maverick Tube, 857
F.3d at 1360 (quoting Essar Steel Ltd. v. United States, 678 F.3d 1268, 1276 (Fed. Cir.
2012)). In this case, Commerce pointed to evidence on the record, which showed that
garlic shipped to the United States in “Golden Bird’s name[] was actually QTF’s garlic”.
I&D Mem. at 35 & n.231 (citation omitted). To the agency, this “indicate[d that] there is
a significant potential for the manipulation of price or production of QTF’s garlic.” 20 Id.
20Commerce also found that Golden Bird was licensing its previous low rate to other
Chinese exporters through a “scheme” where Golden Bird (owned by Mr. Bai) would
ship the garlic to the United States, and the U.S. customers would pay Lianghe, a
member of the QTF-entity (whose manager and legal representative was Mr. Bai’s
wife). I&D Mem. at 31 & n.210 (describing the scheme) (citing, inter alia, Pet’rs
Comments in Supp. of Harmoni’s Fraud Claim, Part 1 (Apr. 5, 2016) (“Pet’rs 4/5/16
Letter Pt. 1”) at 5, PR 102, CJA Vol. II, PJA Vol. II); id. at 8 (identifying Mr. Bai as owner
or controller of Golden Bird); Prelim. Mem. at 10-11 (describing Mr. Bai’s wife’s role at
Lianghe). Evidence also showed that “following Golden Bird’s receipt of an AFA rate at
the conclusion of the 18th administrative review, QTF began shipping large amounts of
garlic to the United States.” I&D Mem. at 31 & n.211 (citing, inter alia, Pet’rs 4/5/16
Letter Pt. 1). Commerce thus found that QTF was “attempting to undermine the
administrative review process,” further necessitating the use of an adverse inference
and need to collapse the QTF-entity. See id. at 32.
Consol. Court No. 17-00146 Page 22
at 35. Moreover, because QTF failed to cooperate by providing necessary information,
the agency reasonably concluded that “QTF cannot benefit from [its] failure.” Id.
The agency properly filled a gap in the record that QTF itself created. Cf.
Zhaoqing New Zhongya Aluminum Co. v. United States, 39 CIT __, __, 70 F. Supp. 3d
1298, 1305-06 (2015) (holding that that Commerce’s decision to collapse three affiliated
producers into a single entity was reasonable when “evidence regarding intertwined
operations during the period of review was limited due to [two of those producers’]
failure to cooperate”). With regard to QTF’s assertion that Commerce’s collapsing
determination runs counter to the statutory mandate to calculate dumping margins as
accurately as possible, any inaccuracies resulting from Commerce’s use of adverse
facts available are a function of QTF’s failure to cooperate and provide accurate
information. See id. at 1306 (collapsing to address possible future manipulation “arises
out of the basic purposes of the statue—determining current margins as accurately as
possible”) (internal quotation marks and citation omitted).
3. Commerce’s Denial of QTF’s Request for Separate Rate is
Supported by Substantial Evidence
Commerce concluded that QTF was not eligible for a separate rate and offered
several reasons for its decision. QTF’s “inaccurate responses with respect to its
affiliations were in response to questions in the ‘Separate Rate’ section of the [agency’s
initial] questionnaire.” I&D Mem. at 34. Without this critical information, Commerce
lacked the basic information necessary for determining whether QTF was eligible for a
separate rate. Id. Moreover, record evidence confirmed that the QTF-entity is affiliated
with companies that are part of the PRC-wide entity; thus, the other information that
Consol. Court No. 17-00146 Page 23
QTF provided in its Section A response was unreliable. 21 Id. at 34-35 & n.228 (citing
Affiliation Docs.). Having found all of QTF’s information unreliable, Commerce used
total AFA to find that the QTF-entity was not entitled to a separate rate. Id. at 31, 35;
see also id. at 37.
QTF asserts that the agency’s use of total AFA is “unfairly and improperly
punitive.” QTF Br. at 15. The court is not persuaded. The instant case is analogous to
Ad Hoc Shrimp, in which a respondent repeatedly denied its affiliation with a third-
country company “until confronted with the public registration documents unequivocally
revealing the affiliation.” 802 F.3d at 1356. As a consequence, Commerce rejected the
respondent’s separate rate information because it deemed “the entirety of [the
respondent's] submissions unreliable,” and found that the respondent did not rebut the
presumption that it [was] part of the China-wide entity. See id. at 1357-58. The U.S.
Court of Appeals for the Federal Circuit (“Federal Circuit”) affirmed Commerce’s
determination to rely on total AFA rate because “the necessary information missing from
the record was . . . an accurate representation of [the respondent’s] corporate structure
and indications of government control exercised through the company’s Chinese
affiliates,” and such information was deemed “core, not tangential” to Commerce's
separate rate analysis because it went “to the heart of [the respondent's] corporate
ownership and control.” Id. at 1356, 1357 (citations omitted).
21In its preliminary results, Commerce stated that two QTF-entity members, Lianghe
and QXF, were subject to the instant review. Prelim. Mem. at 10-11. Neither of those
companies submitted a separate rate certification or application. See id. at 2 (listing the
companies that made submissions).
Consol. Court No. 17-00146 Page 24
Here, Commerce properly determined that QTF’s misrepresentations rendered
the entirety of its submissions unreliable when the information it withheld included the
identity of its affiliates, at least some of which are part of the PRC-wide entity. QTF’s
failure to provide the necessary affiliation information prevented Commerce from
evaluating QTF’s eligibility for a separate rate. That separate rate inquiry is a binary
question—QTF either is or is not eligible for a separate rate. In that circumstance, when
the agency is permitted to make an adverse inference, that inference must manifest
itself in the answer to that binary question, in this case resulting in the denial of a
separate rate.
4. Commerce’s decisions to apply an adverse inference and
collapse the QTF entity were not arbitrary and capricious
QTF also argues that the agency’s decisions to apply an adverse inference and
collapse the QTF entity were arbitrary and capricious. QTF Br. at 7-10, 22. “‘[A]n
agency’s finding may be supported by substantial evidence,’ yet ‘nonetheless reflect
arbitrary and capricious action.’” Changzhou Wujin Fine Chem. Factory Co. Ltd. v.
United States, 701 F.3d 1367, 1377 (Fed. Cir. 2012) (quoting Bowman Transp., Inc. v.
Ark.–Best Freight Sys., Inc., 419 U.S. 281, 284 (1974)). While “the substantial evidence
standard applies to review of factual determinations,” the “the arbitrary and capricious
(or contrary to law) standard” applies to review of the agency’s reasoning. Id. (citing
Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 48-49 (1983)).
The agency “must examine the relevant data and articulate a satisfactory explanation
for its action including a ‘rational connection between the facts found and the choice
made.’” Motor Vehicle Mfrs. Ass’n, 463 U.S. at 43 (quoting Burlington Truck Lines v.
Consol. Court No. 17-00146 Page 25
United States, 371 U.S. 156, 168 (1962)). In reviewing the agency’s explanation, the
court finds that the agency considered the relevant factors with respect to both
determinations that QTF challenges. The agency’s decision evinces a rational
connection between the record facts and the choice made. The court finds no “clear
error of judgment” on the agency’s part. See id. (quoting Bowman, 371 U.S. at 168).
E. Conclusion
For the reasons set forth above, QTF’s and Zhengyang and Alpha’s motions for
judgment on the agency record are denied. Commerce’s application of total adverse
facts available and its determination to deny QTF a separate rate and collapse QTF with
six other entities are supported by substantial evidence and otherwise in accordance
with law.
II. NMGGC’s Motion
A. Relevant Legal Framework
The antidumping duty statute provides that, in the anniversary month of an
antidumping duty order, “if a request for such a review has been received,” Commerce
shall “review, and determine … the amount of any antidumping duty.” 19 U.S.C.
§ 1675(a)(1). Although the current statute requires Commerce to conduct such a review
if properly requested, the statute does not provide for “how Commerce should proceed if
a request, once made, is withdrawn.” Glycine & More, Inc. v. United States, 880 F.3d
1335, 1337 (Fed. Cir. 2018). To address this situation, Commerce has promulgated a
regulation, which states:
The [agency] will rescind an administrative review under this section, in
whole or in part, if a party that requested a review withdraws the request
within 90 days of the date of publication of notice of initiation of the
Consol. Court No. 17-00146 Page 26
requested review. The [agency] may extend this time limit if the [agency]
decides that it is reasonable to do so.
19 C.F.R. § 351.213(d)(1). 22 The regulation further provides: (1) a domestic interested
party may request a review “of specified individual exporters or producers covered by
an order” if it explains the reasons for the request; 23 (2) an exporter or producer covered
by the order may request a review of itself; and (3) an importer of the merchandise may
request a review of the exporter or producer of the merchandise imported by that
importer. 24 19 C.F.R. § 351.213(b).
B. Relevant Facts
On November 28, 2015, NMGGC timely requested a review of Harmoni and
Jinxiang Jinma Fruits Vegetables Products Co., Ltd., a Harmoni affiliate. 25 See
NMGGC Review Req. Joey Montoya, Esq. (“Mr. Montoya”) of Hume & Associates filed
the request on behalf of NMGGC, 26 and advised the agency that Mr. Montoya was
“handling this case independent from any member of [Hume & Associates] for the
purpose of avoiding the appearance of a conflict of interest.” Id. at 2. NMGGC asserted
22 The predecessor to the current regulation was 19 C.F.R. § 353.22. See 19 C.F.R.
§ Pt. 351, Annex V; Antidumping Duties, 54 Fed. Reg. 12,742 (Dep’t Commerce Mar.
28, 1989) (final rule).
23 A domestic interested party is “a manufacturer, producer, or wholesaler in the United
States of a domestic product.” 19 U.S.C. § 1677(9)(C).
24 Commerce also has the ability to self-initiate a review. See 19 C.F.R.
§ 351.213(d)(2).
25 While NMGGC included both Harmoni and Jinxiang Jinma Fruits Vegetables
Products Co., Ltd. in its request, Commerce only selected Harmoni as a mandatory
respondent. I&D Mem. at 7 n.36. To that end, the court limits its discussion to
Harmoni.
26 NMGGC identified its members as Stanley Crawford (“Mr. Crawford”), owner and
operator of El Bosque Farm of Dixon, New Mexico and Avrum Katz (“Mr. Katz”), owner
and operator of Boxcar Farm of Penasco, New Mexico. NMGGC Review Req. at 1 n.1.
Consol. Court No. 17-00146 Page 27
that its members are producers or wholesalers in the United States of fresh garlic,
seeking the review as a “domestic interested party” pursuant to 19 U.S.C. § 1677(9)(C).
See id.
NMGGC supplemented its initial review request on December 3, 2015 with
additional comments explaining to the agency “why investigating Harmoni [was]
important to the ability of NMGGC and to similar garlic producers throughout New
Mexico to compete in the fresh garlic market.” Suppl. Comments for the 21st Admin.
Review on behalf of NMGGC (Dec. 3, 2015) (“NMGGC Suppl. Review Req. Cmts”) at 2,
PR 8, CJA Vol. I, PJA Vol. I. NMGGC stated that Mr. Crawford had requested a review
of Harmoni in the preceding period of review (“AR 20”), but “Mr. Crawford was scared
off and withdrew his request after private investigators were sent [by Harmoni and
FGPA] to inspect his facility and pry into his business.” Id. at 4-5.
On January 9, 2016, two days after the initiation of AR 21, Mr. Montoya entered
an appearance on behalf of NMGGC and informed Commerce that he would be
representing NMGGC “without collaboration, conjunction, or advisement of any other
attorney of Hume & Associates [].” Application for Admin. Protective Order and Entry of
Appearance on Behalf of NMGGC (Jan. 9, 2016) (“Montoya Entry of Appearance”) at 1-
2, PR 21, CJA Vol. I, PJA Vol. I. He further stated that Hume & Associates “has
counsel representing opposing parties for [AR 21], however, said counsel has built a so-
called ‘Chinese Wall’ to avoid conflict of interest issues arising from representing clients
with adverse interest in the same proceeding.” Id. at 2. Following Mr. Montoya’s
appearance on behalf of NMGGC, Mr. Hume entered an appearance on behalf of QTF.
Consol. Court No. 17-00146 Page 28
Entry of Appearance and Appl. for Admin. Protective Order on behalf of QTF (Jan. 12,
2016) (“Hume First Entry of Appearance”), PR 23, CJA Vol. I, PJA Vol. I.
On March 8, 2016, NMGGC notified the agency that Mr. Montoya was
withdrawing from representation of NMGGC and stated that Hume & Associates would
continue to represent NMGGC. See 21st Admin. Review Withdrawal (Mar. 8, 2016), PR
56, CJA Vol. I, PJA Vol. I. The following day, Mr. Hume entered an appearance on
behalf of NMGGC. See Notice of Appearance (Mar. 9, 2016) (“Hume Second Entry of
Appearance”), PR 59, CJA Vol. I, PJA Vol. I.
On April 8, 2016, the agency issued a set of questions to NMGGC to evaluate
whether its members are producers or wholesalers of fresh garlic and, thus, domestic
interested parties that may request an administrative review. See Letter from
Commerce to NMGGC (Apr. 8, 2016), PR 116, CJA Vol. II, PJA Vol. II. The agency
requested information regarding the quantity of fresh garlic produced during the POR,
the total production value, the total amount of investment in garlic production, the
employment numbers for the POR, and other costs and activities related to fresh garlic
production in the United States. See id. at Attach. II. NMGGC provided its members’
responses to those questions on April 15, 2016. See NMGGC Resp. to Gilgunn Letter
Confirming NMGGC Members are Domestic Interested Parties as they are Producers or
Wholesalers Within the United States of the Domestic Like Product – filed on Behalf of
NMGGC Parts 1-3 (Apr. 15, 2016) (“NMGGC Questionnaire Resp.”), CR 60-62, PR
137-39, CJA Vol. III, PJA Vol. III. Relying on those responses, the agency issued a
memorandum on June 3, 2016, finding that NMGGC and its individual members are
Consol. Court No. 17-00146 Page 29
domestic producers of fresh garlic and had standing to request an administrative review
of Harmoni. See Commerce’s Mem. on Whether the Members of NMGGC are U.S.
Domestic Producers of Fresh Garlic (June 3, 2016) at 4 & nn.23-29, CR 104, PR 214,
CJA Vol. III, PJA Vol. III (citations omitted).
Specifically, the agency relied on information that Mr. Katz and Mr. Crawford
provided regarding each member’s output, sales, investments, and labor expenses. Id.
at 4. The agency also relied on a statement by Mr. Katz with respect to NMGGC’s
“stake” in the proceeding, which read:
The price of my garlic is absolutely affected by changes in imported garlic
price. Cheap, imported Chinese garlic is used to set price. People at my
market stand ask us all the time why the supermarket prices are so much
cheaper. It is not unusual for someone to place their garlic on the scale,
hear our price, and walk away.
Id. at 4-5 & n.32 (quoting NMGGC Questionnaire Resp. at page 1 of Mr. Katz’s
response). In this memorandum, Commerce acknowledged that Harmoni had made
several allegations of fraud by NMGGC members, but stated it would fully address the
arguments in the preliminary results, after giving the parties an opportunity to address
those allegations and other record filings. Id. at 5.
In its preliminary results, Commerce continued to find that NMGGC’s members
are domestic producers of fresh garlic and, therefore, the requested review of Harmoni
would continue. Prelim. Mem. at 8. Commerce also noted, however, that it had not had
time to consider all the recent factual submissions. Id.
On December 14, 2016, shortly after Commerce issued the preliminary results,
Mr. Katz withdrew from NMGGC. See Withdrawal of Avrum Katz from NMGGC (Dec.
Consol. Court No. 17-00146 Page 30
14, 2016), PR 402, CJA Vol. IV, PJA Vol. IV. Subsequently, on February 2017, Mr.
Katz submitted a letter to Commerce containing various allegations pertaining to
NMGGC and Mr. Hume. I&D Mem. at 2 & n.11 (citing untitled Letter from Avrum Katz
to Commerce (Feb. 10, 2017) (“Katz 2/10/17 Letter”), PR 440, CJA Vol. IV, PJA Vol.
IV). 27 Mr. Katz wanted to address “fraud recently discovered in connection with [AR 21]
concerning the fraudulent and misleading scheme perpetrated by Mr. Hume and Mr.
Crawford.” Katz 2/10/17 Letter at 1. Among other things, he alleged that Mr. Hume
“intentionally misled” Mr. Katz on the nature and purpose of AR 21. Id. at 2. Mr. Katz
stated that he was unaware that Mr. Hume was simultaneously representing Chinese
clients, and alleged that Mr. Hume was using “small New Mexico farmers as puppets to
petition the government for his Chinese clients.” Id. at 2-3. He further alleged that Mr.
Hume was compensated $100,000 by his Chinese clients to initiate a review request
with respect to Harmoni, and Mr. Crawford received $50,000 and garlic harvesting
equipment for participating in the review request. Id. at 3. Mr. Katz expected he would
receive similar payment in exchange for his participation. Id. at 3-4. Moreover,
contradicting his earlier statement in the questionnaire response, Mr. Katz stated:
Boxfarm’s fundamental problem was, and is, a lack of capital for
infrastructure to increase our production. [Mr.] Hume and [Mr.] Crawford
led us to believe that if we went along with their narrative and forced
Harmoni out of business, money would come from China to take care of
some of those infrastructure problems.
Id. at 5.
27Mr. Katz filed the submission on February 2, 2017, but Commerce rejected it on
procedural grounds. Mr. Katz then resubmitted the letter on February 10, 2017, and
Commerce accepted the letter. See I&D Mem. at 2 n.11 (citations omitted).
Consol. Court No. 17-00146 Page 31
In light of this information, Commerce established deadlines by which parties
could submit comments and rebuttal information about Mr. Katz’s allegations. See I&D
Mem. at 2-5. The agency also held a public hearing on May 11, 2017. Id. at 5.
After reviewing the additional information placed on the record, Commerce
concluded that it could no longer credit NMGGC’s submissions. See id. at 17-23.
Commerce noted three examples to demonstrate that NMGGC and Mr. Hume made
representations to the agency that were contradicted by record evidence. Id. at 18-21.
Those representations undermined NMGGC’s and Mr. Hume’s credibility and the
credibility of their remaining submissions on the record, including claims that NMGGC is
a domestic interested party. See id. at 18, 20. Thus, “because [] NMGGC lack[ed]
credibility, its review request was illegitimate ab initio,” and the agency rescinded its
review of Harmoni. Id. at 18.
The three factual claims made by NMGGC and Mr. Hume that Commerce
discussed were whether: (1) Chinese exporters and businessmen were involved in
NMGGC’s review request; (2) members of NMGGC and Mr. Hume received any direct
or indirect compensation for their participation in AR 21; (3) Mr. Crawford withdrew his
previous review request because he was intimidated by a private investigator sent by
Harmoni. Id. at 18-21. Commerce identified additional issues that caused the agency
concern regarding NMGGC’s submissions. Commerce explained that Mr. Katz’s
February 2017 submission raised questions about NMGGC’s initial questionnaire
responses upon which Commerce had relied in determining that NMGGC was a
domestic interested party. Id. at 21. Commerce also identified “serious problems” with
Consol. Court No. 17-00146 Page 32
NMGGC’s certifications. Id. at 22. In sum, Commerce concluded that it could not
consider any of the information that NMGGC submitted to be reliable, and therefore,
NMGGC failed to demonstrate that it was a domestic interested party. Id. at 23.
C. Parties’ Arguments
NMGGC challenges Commerce’s authority to rescind its review of Harmoni,
Commerce’s factual findings and credibility determinations with respect to NMGGC, and
Commerce’s decision not to refer the allegations of collusion between Harmoni and
FGPA to the U.S. Department of Justice (“DOJ”). See NMGGC Br. at 8-13, 16-39.
NMGGC frames the issue of Commerce’s authority to rescind its review of Harmoni as a
Chevron step one inquiry, arguing that once a review is initiated of any
producer/exporter, all producers/exporters from the subject country must be reviewed
and rescission of the review is not permitted. 28 Id. at 8, 16-21. Next, NMGGC contends
that Commerce’s factual findings and credibility determinations with respect to NMGGC
were arbitrary, capricious, an abuse of discretion, and unsupported by substantial
evidence. Id. at 21-35. Further, NMGGC claims that Commerce abused its discretion
by failing to request that the DOJ investigate and prosecute NMGGC’s allegations that
28 The two-step framework provided in Chevron, U.S.A., Inc. v. Nat. Res. Def. Council,
Inc., 467 U.S. 837, 842–45 (1984), guides judicial review of Commerce’s interpretation
and implementation of the antidumping and countervailing duty statutes. See Apex
Frozen Foods Private Ltd. v. United States, 862 F.3d 1337, 1344 (Fed. Cir. 2017). First,
the court must determine “whether Congress has directly spoken to the precise question
at issue.” Id. (quoting Chevron, 467 U.S. at 842). If Congress’s intent is clear, “that is
the end of the matter,” and the court “must give effect to the unambiguously expressed
intent of Congress.” Id. (quoting Chevron, 467 U.S. at 842-43). However, “if the statute
is silent or ambiguous,” the court must determine whether the agency’s action “is based
on a permissible construction of the statute.” Id. (quoting Chevron, 467 U.S. at 843).
Consol. Court No. 17-00146 Page 33
Harmoni and the FGPA “engag[ed] in collusion” and “effectively established a monopoly
in trade for Chinese garlic.” Id. at 39.
The Government and FGPA aver that 19 U.S.C. § 1675 is silent on the issue of
rescission and, therefore, Commerce’s authority to rescind a review of a
producer/exporter when no requests are pending is a Chevron step two inquiry. See
Gov. Resp. at 42; FGPA Resp. at 23-25. They argue that under the Chevron step two
analysis, Commerce’s rescission policy is a permissible construction of the statute. 29
Gov. Resp. at 42-46; FGPA Resp. at 26-27. Moreover, the Government, FGPA, and
Harmoni argue that the agency’s factual findings are supported by substantial evidence,
and urge the court to defer to Commerce’s credibility findings. See Gov. Resp. at 37-
41; Harmoni Resp. at 24-38; FGPA Resp. at 28-29. FGPA and Harmoni further aver
that the agency properly concluded it lacked authority to pursue a criminal action
against Harmoni. 30 FGPA Resp. at 39; Harmoni Resp. at 45.
D. Analysis
1. Commerce’s Rescission Policy is a Permissible Construction of
the Statute
As previously stated, the statute provides for a review of an antidumping duty
order when Commerce receives a request for such a review. 19 U.S.C. § 1675(a)(1).
While specifying that Commerce shall conduct a review upon request, the statute does
not provide for “how Commerce should proceed if a request, once made, is
29 Harmoni likewise argues that NMGGC’s arguments “ignore directly controlling
congressional intent, judicial precedent, and longstanding administrative practice.”
Confidential Def.-Int. Harmoni’s Am. Resp. to Pls.’ Rule 56.2 Mot. for J. on the Agency
R. (“Harmoni Resp.”) at 40-44, ECF No. 52.
30 The Government did not address this issue in its brief.
Consol. Court No. 17-00146 Page 34
withdrawn.” 31 See Glycine & More, 880 F.3d at 1337. Accordingly, pursuant to
Chevron, the court must determine whether Commerce’s interpretation of 19 U.S.C.
§ 1675(a)(1) as allowing the agency to rescind a review upon the withdrawal of the
request(s) upon which the review was initiated is a “permissible construction of the
statue.” 32 Chevron, 467 U.S. at 842-43.
Section 1675(a) previously provided for mandatory annual reviews of
antidumping duty orders. Floral Trade Council of Davis, Cal. v. United States, 888 F.2d
1366, 1369 (Fed. Cir. 1989) (citing 19 U.S.C. § 1675(a)(1) (1982)); see also Trade
Agreement Act of 1979, Pub. L. No. 96–39, § 751, 93 Stat 144. In 1984, Congress
amended the statute to require review only when the agency received such a request or
upon the agency’s initiative. Trade and Tariff Act of 1984, Pub. L. No. 98–573, tit. VI,
§ 611(a)(2), 98 Stat. 2948, 3031; Floral Trade Council of Davis, 888 F.2d at 1369. The
legislative history associated with the 1984 amendments demonstrates that Congress
recognized that an “increasing number of outstanding orders subject to review each
year impose[d] an unnecessarily heavy burden on [Commerce’s] limited staff
31 Commerce’s regulation, 19 C.F.R. § 351.213(d)(1), contains two provisions that
address how Commerce proceeds when a review request is withdrawn: the first deals
with the effect of a party’s withdrawal of a review request, if such withdrawal occurs
within 90 days, and the second deals with Commerce’s discretion to extend the 90-day
time limit to withdraw a request. While Glycine & More concerned Commerce’s
discretion to extend the 90-day time limit, 880 F.3d at 1339, the court reached that
question only after finding that, while § 1675 required Commerce to commence a review
if properly requested, it left open the question whether any such review must continue
upon withdrawal of the underlying request.
32 NMGGC did not withdraw its request for review of Harmoni; nevertheless, it led with
this argument, suggesting that even if Commerce’s reconsideration of NMGGC’s status
was supported by substantial evidence, Commerce was legally obligated to complete
the review of Harmoni.
Consol. Court No. 17-00146 Page 35
resources.” H.R. REP. No. 98-725, at 22-23 (1984), as reprinted in 1984 U.S.C.C.A.N.
5127, 5149. This amendment was intended “to reduce the administrative burden on
[Commerce] of automatically reviewing every outstanding order even though
circumstances do not warrant it or parties to the case are satisfied with the existing
order.” Id.; see also H.R. REP. NO. 98-1156, at 181 (1984) (Conf. Rep.), as reprinted in
1984 U.S.C.C.A.N. 5220, 5298 (explaining that the amendment was intended to “limit
the number of reviews in cases in which there is little or no interest, thus limiting the
burden on petitioners and respondents, as well as the administering authority”). The
House Conference Report also indicates that Commerce was to “provide by regulation
for the assessment of antidumping and countervailing duties on entries for which review
is not requested. . . .” H.R. REP. NO. 98-1156, at 181 (1984) (Conf. Rep.), as reprinted
in 1984 U.S.C.C.A.N. 5220, 5298.
“Commerce promulgated the [withdrawal] regulation in essentially its current form
in 1989.” Glycine & More, Inc. v. United States, 39 CIT __, __, 107 F. Supp. 3d 1356,
1365 (2015), aff’d, 880 F.3d 1335 (Fed. Cir. 2018); see also Antidumping Duties, 54
Fed. Reg. at 12,778. Consistent with the statute’s legislative intent, the regulation
provides that Commerce will rescind a review “if a party that requested a review
withdraws the request within 90 days of the date of publication of notice of initiation of
the requested review.” 19 C.F.R. § 351.213(d)(1). In other words, the regulation is on
par with the legislative intent that Commerce not conduct a review when interest in such
a review is absent.
Consol. Court No. 17-00146 Page 36
Congress adopted a statutory provision that requires Commerce to conduct an
administrative review upon request, but does not answer what Commerce is to do when
that requisite request is withdrawn. Commerce acted upon this implicit legislative
delegation by adopting 19 C.F.R. § 351.213(d)(1) and, so long as that regulation
provides a reasonable construction of the statute, it is not to be disturbed. Chevron,
467 U.S. 843-44. NMGGC’s claims that Commerce’s regulation is contrary to the
statute are unpersuasive. While recognizing that the statute is silent on withdrawals of
review requests, NMGGC contends that “the Act specifies affirmatively the procedures
Commerce must follow and these procedures negate rescissions once Commerce
publishes a notice of the review in the Federal Register.” NMGGC Br. at 8 (citing 19
U.S.C. § 1675(a)(1),(2)); id. at 16-17.
Section 1675(a)(1) establishes the procedural groundwork for when reviews must
commence once Commerce receives a request for review. See 19 U.S.C. § 1675(a)(1)
(instructing Commerce to initiate reviews “[a]t least once during each 12-month period
. . . if a request for such review has been received . . .”). This language predicates
Commerce’s obligation to conduct a review only upon receiving a review request (and
after publishing the notice). The language does not address a situation when the
request is later withdrawn, let alone mandate that Commerce complete the review in all
circumstances once the agency publishes the notice. Such a reading would run
contrary to the legislative intent of easing the administrative burden on Commerce and
preserving its limited staff resources when industry interest is lacking.
Consol. Court No. 17-00146 Page 37
In Glycine & More, the Federal Circuit analyzed whether the Court of
International Trade properly remanded Commerce’s decision to continue a review of a
company for which all review requests had been withdrawn, even though the last
request was withdrawn after the 90-day deadline set forth in the agency’s regulations.
See 880 F.3d at 1342-44. The Federal Circuit affirmed the lower court’s opinion that
Commerce could have reasonably granted an extension to allow the requesting party to
withdraw the review request because Commerce received the request a few days after
the deadline, the agency had not devoted significant resources to the review, and all
other parties that had requested review of the company had filed timely withdrawals. 33
Id. at 1342, 1345. If NMGGC’s interpretation of the statute is correct, that once initiated,
a review may not be rescinded by Commerce, then the Federal Circuit could not have
reached the result it did—Commerce would have been statutorily required to complete
the review.
NMGGC cites to 19 U.S.C. § 1675(a)(2) and 19 U.S.C. § 1677f-1(c)(1) to
suggest that Commerce is required to review each entry of merchandise for all
exporters and producers when it conducts a review, regardless of whether a request is
made for the particular producer/exporter of the entry. See NMGGC Br. at 18-19
(arguing that “the Act does not authorize Commerce to allow requests that specify
33 The agency’s initial decision to complete the review was based on a guidance
document interpreting 19 C.F.R. § 351.213(d)(1), which impermissibly limited the scope
of granting an extension to withdraw a review request. Glycine & More, 880 F.3d at
1344.
Consol. Court No. 17-00146 Page 38
‘individual exporters or producers’”). NMGGC, however, fundamentally misunderstands
the antidumping duty law.
Section 1675(a)(2) requires Commerce, for purposes of determining the amount
of a dumping duty pursuant to section 1675(a)(1)(B) to “determine (i) the normal value
and export price (or constructed export price) of each entry of the subject merchandise,
and (ii) the dumping margin for each such entry.” 19 U.S.C. § 1675(a)(2). Nothing in
subsection (a)(2) expands the breadth of the review being conducted pursuant to
subsection (a)(1) to all entries subject to the order. In fact, while section 1675(a)(1)
provides for a review upon request, nothing in that provision suggests that it must be a
review of the order as a whole. Because the review is to “determine … the amount of
any antidumping duty” and such duties are calculated on a company-specific basis, the
better reading of section 1675(a)(1) is that it provides for company-specific reviews
upon request. 34
Simple reference to the conduct of “a review” does not predetermine the breadth
of the proceeding. Instead, the breadth of any “review” is determined by the context of
the provision giving rise to the proceeding. For example, section 1675(a)(2)(B) provides
for company-specific reviews of new exporters and producers. On the other hand,
34 Indeed, subsection (a) is titled, “[p]eriodic review of amount of duty,” not “periodic
review of an order,” with subsection (a)(1)(B) referring to the review and determination
of “the amount of any antidumping duty.” Thus, the “request for such a review” provided
for in subsection (a)(1) is a request for a review of an amount of duty, which amounts
are company-specific. Because antidumping duties are imposed pursuant to a
particular antidumping duty order, the request for review is temporally aligned with
publication of that order; however, that does not mean that the review must encompass
the order as a whole, or all exporters/producers subject thereto.
Consol. Court No. 17-00146 Page 39
section 1675(b) provides for changed circumstance reviews, whereby Congress
specified that it is the determination resulting in the antidumping order that is reviewed.
Similarly, section 1675(c) provides for five year (sunset) reviews and, therein, Congress
specified that the review is of the continued need for the order. Thus, as considered
herein, it is clear that Commerce’s interpretation of a review pursuant to section
1675(a)(1) as a company-specific exercise is a reasonable interpretation of the statute.
NMGGC’s argument regarding section 1677f-1(c)(1) is similarly unconvincing.
That subsection provides that, generally, the agency must determine an individual
weighted-average dumping margin for each known exporter and producer of the
merchandise under review, but allows the agency, in certain circumstances, to limit its
examination to “exporters and producers accounting for the largest volume of the
subject merchandise from the exporting country that can be reasonably examined.” 19
U.S.C. § 1677f-1(c). While the starting point for the application of the provision allowing
selection of the largest exporters is the number of companies involved in the review,
nothing in this language suggests that it requires Commerce to expand the review to
include exporters or producers for which a review was not requested. Plaintiff’s
argument again fails.
Furthermore, Commerce’s regulations provide that a domestic interested party
may request a review “of specified individual exporters or producers covered by an
order” if it explains the reasons for the request. 19 C.F.R. § 351.213(b)(1).
Commerce’s ability to rely on this regulation to review named producers/exporters and
to decline to review other exporters not expressly named in the review request was
Consol. Court No. 17-00146 Page 40
tested and affirmed soon after its adoption by the agency in its original form. 35 In Floral
Trade Council, 888 F.2d at 1369, the Federal Circuit held that requiring the review
requester to name the specific party to be reviewed is “consistent with and promotes the
articulated statutory purpose of reducing [Commerce’s] burden in reviewing outstanding
orders.” The court affirmed Commerce’s decision not to review certain companies not
adequately identified in the review request, while the review of other identified
companies went forward. NMGGC’s argument cannot be squared with Floral Trade
Council’s affirmance of the review of some, but not all, foreign producers and exporters
subject to the order in question. 36 Rather than attempt to distinguish or explain Floral
Trade Council, NMGGC ignores it. 37
35 Neither passage of the Uruguay Round Agreements Act (“URAA”) in 1994 nor the
implementing regulations adopted by Commerce thereafter changed the statutory or
regulatory landscape in any way relevant to this analysis. Moreover, Commerce’s
interpretation of the statute, as implemented by its regulations, as providing for
company-specific review upon request, was well-established and well-known during
consideration of the URAA, and Congress took no steps to alter or clarify the statute in
any relevant fashion in that Act. See N.L.R.B. v. Bell Aerospace Co. Div. of Textron,
416 U.S. 267, 275 (1974) (Congressional failure to revise or repeal an agency’s
interpretation of the statue it administers is persuasive evidence that the interpretation is
the one intended by Congress).
36 Similarly, in Transcom, Inc. v. United States, 182 F.3d 876, 880-83 (Fed. Cir. 1999),
the Federal Circuit held that Commerce violated its statutory and regulatory notice
obligations when it reviewed an exporter from a non-market economy country which had
not been named in the notice of initiation, and the notice contained no indication that
unnamed exporters were subject to the review. Again, the Federal Circuit would not
have reached this decision if Commerce was required to calculate antidumping duty
margins for all exporters.
37 Plaintiff generally cites Floral Trade Council of Davis as setting the standard for
reviewing the validity of a regulation, NMGGC Br. at 6, but does not otherwise address
its holding.
Consol. Court No. 17-00146 Page 41
For these reasons, Commerce has authority to conduct reviews limited to named
companies and to rescind reviews when the request has been withdrawn.
Consequently, NMGGC’s appeal of Commerce’s rescission of the review of Harmoni
turns on the reasonableness of the agency’s decision that NMGGC’s review request
was illegitimate, leading to the rescission of the review ab initio, the issue to which the
court now turns.
2. Commerce’s Factual Findings and Credibility Determinations Are
Supported by Substantial Evidence
In the Final Results, Commerce identified three examples of misrepresentations
by Mr. Hume and NMGGC that undermined their credibility and led the agency to
conclude that NMGGC’s submissions were unreliable. I&D Mem. at 18-21. Commerce
noted additional concerns that caused the agency to question many of NMGGC’s
questionnaire responses and other submissions. Id. at 21-23. Ultimately, because the
agency “determine[d] that the entirety of [] NMGGC’s information, including its garlic
production information, [was] unusable,” it found that NMGGC “failed to demonstrate
that it is a domestic interested party. As such, there [was] no valid review request of
Harmoni.” Id. at 23. For the reasons discussed below, the agency’s credibility
determinations and factual findings are supported by substantial evidence.
i. Commerce’s finding that NMGGC misrepresented that Chinese
exporters and businessmen were not involved in NMGGC’s review
request
Substantial evidence supports Commerce’s credibility finding with respect to
NMGGC’s claim that Chinese exporters or businessman did not have any involvement
in its review request. I&D Mem. at 18 & n.109 (citation omitted). Specifically,
Consol. Court No. 17-00146 Page 42
Commerce cited email exchanges from 2010 in which Mr. Hume and Mr. Wang
discussed a plan to “attack [the] Harmoni issue,” (i.e. to get Commerce to review
Harmoni). I&D Mem. at 18-19 & nn.110-111 (citing Harmoni New Factual Information in
Resp. to Mar. 7, 2017 Mem. (Mar. 9, 2017) (“Harmoni 3/9/17 Letter”), Ex 6 (email), CR
239, PR 466, CJA Vol. IV at ECF p. 771, PJA Vol. IV). Commerce then cited a more
detailed outline of a plan, discussed between Mr. Hume and an employee of Mr. Wang
in 2014, to get Commerce to review Harmoni. I&D Mem. at 19 & n.112 (citing Harmoni
Rebuttal Factual Information (Feb. 21, 2017) – Part 2 (“Harmoni 2/21/17 Letter Pt. 2”),
Ex. 3 (email), PR 455, CJA Vol. IV, PJA Vol. IV). Specifically, Mr. Hume told his
Chinese client:
I have been considering [] filing a review request against Harmoni in my
name (H[ume] & A[ssociates]) and letting [another Hume & Associates
employee] do the responses. We could “create a Chinese wall” where
lawyers in the same firm represent clients on different sides of a
proceeding . . . to give teh [sic] appearance they are not working together.
Of course, I need a “client” that is a US garlic producer. NOTE: This is
only an option, but one that can work since I know most of the issues and
Huamei can do the other work. In fact, Huamei can do the filings from
China. . .
Harmoni 2/21/17 Letter Pt. 2, Ex. 3 (email).
The following year, Hume & Associates attempted to locate U.S. garlic producers
and, when contacting solicitants, “[did] not indicate [the firm was] Chinese affiliated.”
NMGGC Reply to 3/3/17 Harmoni Submission (Mar. 9, 2017) – Part 6 (“NMGGC 3/9/17
Letter Pt. 6”), Ex. 9 (email), PR 472, CJA Vol. IV at ECF p. 937, PJA Vol. IV; see also
I&D Mem. at 19 & n.113. Commerce also had an email communication, dated
November 12, 2015, in which Mr. Hume directed Mr. Montoya on the contents of
Consol. Court No. 17-00146 Page 43
NMGGC’s review request for AR 21. I&D Mem. at 19 & n.114 (citing NMGGC 3/9/17
Letter Pt. 6, Ex. 9 (email) at ECF p. 939). This direction, however, was inconsistent with
Mr. Montoya’s representation in the review request itself, that he was representing
NMGGC “without collaboration, conjunction, or advisement of any other attorney of
Hume & Associates.” 38 Montoya Entry of Appearance. Thus, Mr. Hume’s and
NMGGC’s actions before the agency were consistent with Mr. Hume’s 2014 plan of
finding a “client” and creating a so-called “Chinese wall” to give the “appearance” that
the attorneys within the same firm are not working together. See Harmoni 2/21/17
Letter Pt. 2, Ex. 3 (email).
38 As stated above, in the beginning of the underlying proceeding, Mr. Hume entered an
appearance on behalf of QTF, a Chinese respondent. See Hume First Entry of
Appearance. Mr. Montoya entered an appearance on behalf of NMGGC, the purported
domestic producer. See Montoya Entry of Appearance. After Mr. Montoya withdrew his
representation of NMGGC, Mr. Hume entered an appearance on behalf of NMGGC.
See Hume Second Entry of Appearance. The record indicates that Mr. Hume
represented both QTF and NMGGC for several months. Compare Hume Second Entry
of Appearance (dated March 9, 2016), with Letter from Hume & Associates LLC to
Secretary of Commerce Pertaining to QTF Withdrawal as Councel [sic] to QTF (June
22, 2016), PR 220, ECF No. 23-2. Representing both the domestic producer and
foreign exporter simultaneously in the same proceeding would undoubtedly raise
conflict of interest concerns. Indeed, Mr. Montoya acknowledged that the interests of
NMGGC and QTF were “adverse” when he represented to the agency that Hume &
Associates had created a “Chinese Wall” to address the conflict of interest. See
Montoya Entry of Appearance. The court raised these ethical concerns with Mr. Hume
during oral argument, but did not receive a satisfactory response. While those concerns
remain to be addressed, the court’s task here is to determine whether substantial
evidence supports Commerce’s decision to rescind its review of Harmoni, and whether
that decision is in accordance with law. After careful consideration, the court has
determined that it is able to apply that standard of review based on the record before it
and need not resolve its ethical concerns with Mr. Hume’s conduct prior to rendering a
decision in this case.
Consol. Court No. 17-00146 Page 44
Plaintiff disputes that the cited evidence reflects “involvement by Chinese
businessmen,” and argues that “the absence of involvement is obvious by the fact that
Harmoni had all of [Hume & Associates] emails and produced no evidence of
involvement in [AR 21].” NMGGC Br. at 10 (citing Harmoni Pre-Prelim. Comments
(Nov. 21, 2016), Ex. 2, CR 171, PR 376, CJA Vol. III, PJA Vol. III; Harmoni 2/21/17
Letter Pt. 2, Exs. 6-7; Harmoni 3/9/17 Letter, Ex. 6; Harmoni 3/9/17 Letter, Ex. 7, ECF
No. 87). However, while it is clear that Harmoni did obtain access to some of Hume &
Associates’ emails, the record does not indicate that Harmoni had all of the firm’s
emails. Moreover, those emails do reflect involvement by Mr. Wang in Mr. Hume’s plan
to get Commerce to review Harmoni as early as 2010. 39 See Harmoni 3/9/17 Letter, Ex
6. Mr. Wang is part owner of Huamei Consulting and, from November 2015 to
November 2016, owned Golden Bird, a Chinese garlic company found to be affiliated
with QTF. NMGGC Reply to 2/10/2017 Katz Submission (Feb. 20, 2017) (“NMGGC
2/20/17 Letter”), Ex. 2 (Decl. of Wang Ruopeng) (“Wang Decl.”) ¶ 1, PR 450, CJA Vol.
IV, PJA Vol. IV; see also I&D Mem. at 8.
NMGGC also argues that Commerce failed to address other evidence supporting
the conclusion that Chinese exporters and businessmen were not involved in NMGGC’s
39 NMGGC also supports its position with a citation to its March 31, 2017 rebuttal brief to
the agency. NMGGC Br. at 25 & n.62 (citation omitted). That brief relies on Mr.
Crawford’s declaration that he and Mr. Katz were not paid by any Chinese company.
Rebuttal Br. Filed on Behalf of NMGGC and El Bosque Farm – Part 1 (Mar. 31, 2017) at
13 & n.38, PR 509, CJA Vol. IV, PJA Vol. IV). Commerce, however, found Mr. Crawford
not credible. See I&D Mem. at 18 (finding that NMGGC lacks credibility); id. at 23
(finding that Mr. Crawford’s inability to provide complete and accurate responses tainted
all of his statements). Commerce’s decision not to credit Mr. Crawford’s self-serving
declaration was reasonable.
Consol. Court No. 17-00146 Page 45
review request. See NMGGC Br. at 24. In particular, NMGGC points to Mr. Wang’s
declaration wherein he stated that NMGGC’s review request “was done on their own”
(referring to NMGGC) and “ha[d] nothing to do with any Chinese garlic company.”
NMGGC Br. at 24 & n.57 (quoting Wang Decl. ¶ 10). NMGGC also points to Mr.
Hume’s declaration wherein he stated that he was “pursuing [his] interest in finding a
garlic farmer to file a review request.” NMGGC Br. at 24 & n.59 (citing I&D Mem. at 19).
As noted, Mr. Wang is associated with Huamei Consulting, Wang Declaration
¶ 1, “a Chinese consulting firm” that “works with [Hume & Associates],” I&D Mem. at 8.
Although not explicitly stated, it may reasonably be inferred that by concluding Mr.
Hume and NMGGC were not credible, Commerce also discredited Mr. Wang’s
declaration. See I&D Mem. at 23 (stating NMGGC’s “inability to provide complete and
accurate responses taint all of the . . . information that [it has] submitted on the record of
this review”). Alternatively, “it may be inferred” from Commerce’s failure to discuss
certain evidence that the agency “determined that the [] evidence was insignificant,
immaterial, or not seriously undermining enough to merit discussion.” Diamond
Sawblades Mfrs. Coal. v. United States, Slip Op. 13-130, 2013 WL 5878684, at *7 (CIT
Oct. 11, 2013). The substantial evidence standard does not preclude the possibility that
some record evidence may support an alternative conclusion. Here, when the record
actions of Mr. Hume, his associate, and his client (about whom Commerce identified
serious questions) are consistent with the documented plan Mr. Hume concocted with
his Chinese clients, the court has no difficulty in finding that the agency’s decision was
based on substantial evidence.
Consol. Court No. 17-00146 Page 46
ii. Commerce’s finding that NMGGC misrepresented whether its
members or Mr. Hume received direct or indirect compensation for
their participation in AR 21
NMGGC made several claims to the agency that neither its members nor Mr.
Hume received direct or indirect compensation for their participation in AR 21. 40 I&D
Mem. at 20 & n.117 (citation omitted). Substantial evidence supports Commerce’s
finding that NMGGC’s representations were unreliable.
The record shows that Mr. Hume paid Mr. Crawford $50,000 following his
withdrawal of the Harmoni review request in AR 20. 41 I&D Mem. at 20 & n.119 (citing
Boxcar Farm Rebuttal Comments (Feb. 21, 2017) (“Katz 2/21/17 Letter”), Ex. 1 (email),
CR 235, PR 452, CJA Vol. IV at ECF pp. 511-15, PJA Vol. IV) (Mr. Crawford stating “I
received payment re: AR 20”); see also Katz 2/10/17 Letter at 3 (stating that “Mr.
Crawford had received $50,000 from some ‘very nice’ Chinese businessman in March
2015 for withdrawing his review request in AR 20”). Shortly thereafter, in July of 2015,
Mr. Hume and Mr. Crawford traveled to China, and Mr. Wang partially paid for their trip.
I&D Mem. at 20 & n.120 (citing Wang Decl.); see also Wang Decl. ¶ 11.
40 See NMGGC’s 2/20/17 Letter at 15 (“NMGGC was not financed by any Chinese
entity; there were no promises of any future compensation”); id., Ex. 4 (Decl. of Robert
T. Hume (Feb. 16, 2017) ¶ 4 (“I was not compensated, nor did I expect any
compensation, for my time or expertise in representing the NNMGGC [sic] in [AR 21]”);
Stanley Crawford Decl. in Resp. to Avrum Katz’s Req. for Recons. (Feb. 6, 2017)
(“Crawford Decl.”) ¶ 13, PR 428, CJA Vol. IV, PJA Vol. IV (“I have received no
compensation for my participation in AR 21”).
41 This payment occurred shortly before Mr. Montoya commenced efforts to contact
additional U.S. garlic growers to establish a group to request that Commerce review
Harmoni in AR 21. See I&D Mem. at 19 & n.113 (citing NMGGC 3/9/17 Letter Pt. 6, Ex.
9).
Consol. Court No. 17-00146 Page 47
Evidence also shows that Mr. Hume provided $15,000 to Mr. Katz between June
and November 2016. Id. at 20 & n.118 (citing NMGGC 2/9/17 Letter, Ex. 4 (personal
checks for $5,000 and $10,000 from Mr. Hume to Mr. Katz), ECF No. 87. Thereafter, in
March of 2017, Mr. Crawford received garlic processing equipment, “shipped from
China for use by coalition members.” Id. at 20 & n.121-122 (citing Crawford Decl.
Harmoni 3/9/17 Letter, Ex. 4 (importation of processing equipment shipped from
Qingdao, China to Hume & Associates)); see also Crawford Decl. ¶ 15.
NMGGC does not dispute any of these transfers of funds or equipment or that
Mr. Wang partially paid for Mr. Crawford’s and Mr. Hume’s trip to China in July of 2015.
See NMGGC Br. at 32. Instead, NMGGC asserts that the $50,000 payment to Mr.
Crawford was “was an unexpected gift from Mr. Hume,” arising out of Mr. Crawford’s
participation in AR 20 and “willing[ness] to fight Harmoni.” Id. at 31. Regarding Mr.
Wang’s partial payment of Mr. Crawford’s and Mr. Hume’s trip to China, NMGGC
attributes those expenses to Chinese hospitality. Id. at 12. NMGGC states that Mr.
Crawford’s payment of $5,000 to Mr. Katz was “charity to a beleaguered farmer,”
whereas the $10,000 was a loan. Id. at 11-12.
Commerce identified record evidence, which showed that Mr. Hume’s Chinese
clients made monthly payments to Hume & Associates throughout 2016. 42 I&D Mem. at
42 Commerce stated that Mr. Hume also received a $100,000 payment between
February and May of 2016 from his Chinese clients. I&D Mem. at 20-21 & n.124
(citations omitted). The record evidence upon which Commerce relied in support of this
statement does not establish that Mr. Hume received $100,000 between February and
May of 2016. See Harmoni 2/21/17 Letter Pt. 2, Ex. 6 at ECF pp. 587-94 (Aug & Sep.
2016 emails); NMGGC Reply to 3/3/17 Harmoni Submission (Mar. 9, 2017) – Part 5
(“NMGGC 3/9/17 Letter Pt. 5”), Ex. 7 (retainer agreement between Hume & Associates
Consol. Court No. 17-00146 Page 48
20-21 & nn.123-24 (citations omitted). Commerce concluded that while his Chinese
clients were compensating Mr. Hume, Mr. Hume was compensating Mr. Katz and Mr.
Crawford. Id. at 21. In fact, a retainer agreement, dated January 1, 2016, between
Hume & Associates and Huamei Consulting states that Hume & Associates was to
receive $13,500 per month to represent clients of Huamei Consulting at the Court of
International Trade in cases concerning the 16th through 19th administrative reviews of
the AD Order. NMGGC 3/9/17 Letter Pt. 5, Ex. 7; see also Wang Decl. ¶ 16 (the
$13,500 monthly payments were for “office expenses, office rent, payments for [Mr.
Hume’s] staff, and his work, [including] . . . travel expenses.”).
While NMGGC attempts to explain the evidence and invites the court to interpret
the evidence in a different way, “[a]n agency finding may still be supported by
substantial evidence even if two inconsistent conclusions can be drawn from the
evidence.” Ad Hoc Shrimp, 802 F.3d at 1348 (quoting Consolo v. Fed. Mar. Comm’n,
383 U.S. 607, 620 (1966)). To the extent NMGGC argues that the evidence before the
agency “could be open to multiple interpretations, its argument does not require, or
even allow, reversal.” Mitsubishi Heavy Indus., Ltd. v. United States, 275 F.3d 1056,
& Huamei Consulting), PR 471, CJA Vol. IV at ECF pp. 921-23, PJA Vol. IV. The
Government points to additional evidence as establishing that Hume & Associates
received $100,000 from Mr. Hume’s Chinese clients during the pendency of the instant
review. Gov. Resp. at 33 (citing Katz 2/10/17 Letter at 3; Harmoni Pre-Prelim.
Comments (Nov. 21, 2016), Ex. 2 (email exchange on August 7 and 13, 2014), CR 171,
PR 376, CJA Vol. III, PJA Vol. III). While the cited evidence does not adequately
support a conclusion that Mr. Hume received “a payment” of $100,000 during the
pendency of the instant review, the fact that this subsidiary finding is unsupported by
substantial evidence does not undermine Commerce’s overall conclusion such that
remand would be necessary.
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1062 (Fed. Cir. 2001) (citing Matsushita Elec. Indus. Co. Ltd. v. United States, 750 F.2d
927, 933 (Fed. Cir. 1984)). Instead, given the temporal overlap between these receipts
and payments, the court finds that substantial evidence supports the agency’s finding
that “Mr. Hume was compensated by his Chinese clients during the entire course of his
representation of NMGGC,” and at the same time, “Mr. Katz and Mr. Crawford were
compensated by Mr. Hume.” I&D Mem. at 21.
iii. Commerce’s finding that NMGGC misreported the reasons behind
Mr. Crawford’s withdrawal of his previous review request
concerning Harmoni
As noted in the factual background section, NMGGC represented to the agency
that Mr. Crawford had requested a review of Harmoni in AR 20, but “withdrew his
request after private investigators were sent [by Harmoni and the FGPA] to inspect his
facility and pry into his business.” NMGGC Suppl. Review Req. Cmts at 4-5.
Commerce determined this statement was contradicted by record evidence, which
showed that Mr. Hume and Mr. Crawford withdrew the request in AR 20 “at the behest
of Mr. Hume’s Chinese clients.” I&D Mem. at 21. Indeed, in sworn declarations to the
agency, Mr. Hume stated the reason for the withdrawal as follows:
Harmoni went after Mr. Bai in China. . . . When I learned (and
communicated with [Mr.] Crawford) that Harmoni was jeopardizing [Mr.
Bai’s] business and [Mr.] Wang [] asked me to consider asking [Mr.]
Crawford to withdraw his review request. [Mr.] Crawford agreed, and we
did.
I&D Mem. at 21 & n.126 (quoting NMGGC Refiling of 3/22/16 Submission (Apr. 8, 2016)
– Part 2, Ex. 5 (Decl. of Robert T. Hume) (Mar. 22, 2016), PR 115, CJA Vol. II, PJA Vol.
II).
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NMGGC asserts that events relating to the withdrawal of the review request in
AR 20 are not relevant to the current review because each review is a separate
segment. NMGGC Br. at 34. Regardless of the actual reason for the withdrawal of the
review request in AR 20, these inconsistent representations were made to the agency in
AR 21 and support the agency’s credibility assessment in this review.
iv. Commerce’s other findings and credibility determinations
In addition to the foregoing examples, the agency also noted other contradictions
between Mr. Katz’ statements in his February 2017 submission and NMGGC’s
questionnaire response upon which Commerce relied to make its initial finding that
NMGGC qualified as a domestic interested party. See I&D Mem. at 21. Specifically,
the agency explained:
[R]regarding its status as a domestic producer, [] NMGGC claimed that
“[g]arlic farmers in the United States cannot compete with the Chinese
garlic funneled into the United States by Harmoni that is exempt from the
[agency’s] administrative reviews.” However, Mr. Katz later stated that
“Boxcar Farm’s fundamental problem is not competition from cheap garlic
coming in from China,” and that “[b]ased on nearly two years of
conversation with Crawford and Hume, there was usually never any
pretense otherwise in verbal conversation.” Referring again to Mr.
Crawford and Mr. Hume, Mr. Katz stated that “[o]ur stated moral high
ground – ‘leveling the playing field,’ etc., etc. – inevitably came with a
‘wink, wink’ whenever we talked about it.”
Id. at 21 & nn.128-31 (citing NMGGC Questionnaire Resp. at 4; Katz 2/10/17 Letter;
Katz 2/21/17 Letter at 7) (second, fourth, and fifth alterations in original).
The agency further noted “serious problems with the certifications” that NMGGC
submitted pursuant to 19 C.F.R. § 351.303(g). 43 Id. at 22. Mr. Katz claimed that he
43 Pursuant to 19 C.F.R. § 351.303(g), “person(s) officially responsible for presentation
of factual information” and “the legal counsel or other representative,” if applicable, must
Consol. Court No. 17-00146 Page 51
had not personally signed company certifications that his counsel submitted to
Commerce on his behalf, and had not provided his approval to counsel to make those
submissions. Id. at 22 & n.136 (citing Katz 2/21/17 Letter at 7) (Mr. Katz stating that he
“only signed one Certification document - at the very beginning”). NMGGC confirmed
that its counsel “adopted a procedure of compliance similar to the use of an autopen.”
NMGGC Reply to 3/3/17 Harmoni Submission – Part 1 (Mar. 8, 2017) (“NMGGC 3/8/17
Letter Pt. 1”) at 2, PR 461, CJA Vol. IV at ECF p. 461, PJA Vol. IV; see also I&D Mem.
at 22. Commerce acknowledged that while Mr. Hume produced some emails in which
he or his office staff requested permission from Mr. Katz and Mr. Crawford for the
placement of their “e-signature” on documents or approval of drafts prepared, this
evidence did not account for all of the submissions. I&D Mem. at 22; see also NMGGC
3/8/17 Letter Pt. 1, Exs. 3 (sample emails seeking authorization), 4 (sample approvals).
Moreover, “Mr. Crawford attempt[ed] to retroactively approve certain submissions” by
belatedly signing certifications, but Commerce determined that “the contradictions and
inconsistencies present in the statements made by the members of [] NMGGC raise[d]
further concerns regarding the reliability of all of [] NMGGC’s submissions.” I&D Mem.
at 23. Overall, the court finds Commerce’s reliance on these additional concerns to be
supported by substantial evidence.
v. Commerce’s rescission of its review of Harmoni
The agency “possesses inherent authority to protect the integrity of its yearly
administrative review decisions.” Tokyo Kikai Seisakusho, Ltd. v. United States, 529
certify to the accuracy of each document submitted to the agency and indicate the date
the certification.
Consol. Court No. 17-00146 Page 52
F.3d 1352, 1361 (Fed. Cir. 2008). Having concluded that Commerce’s individual
findings and credibility determinations with respect to NMGGC are supported by
substantial evidence, the court affirms Commerce’s decision that NMGGC’s review
request was illegitimate ab initio.
3. Commerce’s decision not to refer NMGCC’s claims to the DOJ
As noted previously, NMGCC claims that Commerce abused its discretion in
failing to request that the DOJ investigate and prosecute NMGGC’s allegations that
Harmoni and the FGPA “engag[ed] in collusion” and “effectively established a monopoly
in trade for Chinese garlic.” NMGGC Br. at 39. Commerce concluded that it did not
have the authority to enforce the criminal laws of the United States, and declined to
offer an opinion on NMGGC’s allegations. I&D Mem. at 23. In challenging that
conclusion before the court, NMGGC simply cites to 18 U.S.C. § 1001 and 18 U.S.C.
§ 371, both of which are criminal statutes. See NMGGC Br. at 39.
Plaintiff has failed to develop this argument in that it does not provide any
authority that would have obligated Commerce to accept NMGGC’s suggestion of
referring the matter to the DOJ, let alone any precedent establishing that Commerce
abused any discretion in declining to do so here. Moreover, NMGGC has not
addressed whether Commerce’s refusal to exercise that discretion is judicially
reviewable by this court pursuant to 28 U.S.C. § 1581(c), the jurisdictional basis of
NMGGC’s complaint. See Compl. ¶ 12, ECF No. 12. Based on NMGGC’s failure to
develop its argument, the court deems it waived. See Home Prods. Int’l., Inc. v. United
States, 36 CIT __, __, 837 F. Supp. 2d 1294, 1301 (2012) (quoting United States v.
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Zannino, 895 F.2d 1, 17 (1st Cir. 1990) (“[I]ssues adverted to in a perfunctory manner,
unaccompanied by some effort at developed argumentation, are deemed waived.”)).
E. Conclusion
For the reasons set forth above, NMGGC’s motion for judgment on the agency
record also is denied.
Judgment will enter accordingly.
/s/ Mark A. Barnett
Mark A. Barnett, Judge
Dated: November 26, 2018
New York, New York