1 Slip Op. 02- 134 UNITED STATES COURT OF INTERNATIONAL TRADE Before: Judge Judith M. Barzilay

___________________________________ MARINE HARVEST (CHI LE) S.A., :

: Plaintiff, Court No. 01-00808

: v. : UNI TED STATE S, :

Defend ant.

___________________________________ : [Plaintiff’s Motion for Judgment Upon the Agency Record Granted in Part; Department of Commerce Ordered to Refund Cash Deposits; Case Remanded on I ssue of Successorship.] Decided: October 31, 2002 Arnol d & Porter, (Micha el T. Shor), for Plaintiff. Robert D. McCallum , Jr. , Assistan t Attorne y G eneral , David M. Cohen , Direct or; (Lucius B. Lau) , Assistant Director; Commercial Litigation B ranch, Civil Division, Department of Justice; Glenn R, Butterton , Attorney, Off ice of Chief Counsel for Import Administration, United States Department of Commerce, Of Counsel.

OPINION BARZILAY, JUDGE: I. I NTRODUCTI ON This case challenges an ag ency a ction taken within the purview of the United States antidumping laws and presents the court with a clear example of a case in which the facts compel the result. Two entities, now merged into one company , exported fresh Atlantic salmon from1 The purpose of an antidumping investigation is to determine whethe r imported merchandise is being dumped or sold at less than its fair value (“LTFV”) in the United States. Section 1673 of Title 19 of the United States Code (1999) describes a two-step proce ss where Commerce first conducts an LTFV investigation and, if Commerce makes an affir mative determination of dumping, the Inter national Trade Commission (“ITC”) next investigates whether a domestic industry has been materially

injured or threatened with material injury

. See also Badger-Powhatan v. United States , 9 CIT 213, 216, 608 F. Supp. 653, 656 (1985) (holding that both affirmative LTFV a nd material injury dete

rminations are required before an antidumping order may

issue).

2 “[A] weig

hted ave rage d umping ma

rgin is d e minimis if

[Commerce ] determines that it is less than 2 percent ad valorem or the equivalent specif ic rate for the subject merchandise.” 19 U.S.C. § 1673b(b)(3) (1999). “Subject merchandise” is mercha ndise subject to an antidumping investigation, review or order. § 1677(25). 2 Chile to the United States. Despite the fact that only one of the companies was ever found to be selling its goods at less than fair value 1 and eve n so at almo st de minimi

s margins 2 and, further, for only one of the

three examined pe

riods, the merge d company

now has be en forc ed to depo sit millions of dollars with the United States government and compelled to undergo administrative reviews on its past a

nd future entries. It se eks relie f from thi s Court. Plaintiff Marine Harvest (Chile) S.A. (“Marine Harve st”) has filed a USCIT R. 56.2 Motion for Judgment Upon the Agency Record, challenging ce

rtain aspects of the Department of Commerce’s ("Commerce” or " government") preliminary and final determinations of the changed circumstances re view that it conducted concerning Marine H arvest. See Notice of Final Results of Changed Circumstances Antidumping Duty Review: Fresh Atlantic Salmon From Chile , 66 Fed Reg. 42,506 (Aug. 13, 2001) (“ Changed Circumstances Final ”); Notice of Initiationand Prelim inary Res ults of Chang ed Circum

stances A ntidumping

Duty Review: Fres h Atlantic S almon FromChile , 65 Fed. Reg. 52,065 (Aug. 28, 2000) ( “ Changed Circumstances Prelimina ry ”). The court exercises jurisdiction pursuant to 28 U.S.C. § 1581(c).3 Fresh Atlantic salmon that fell within the scope of the investigation ref ers to farmed Atlantic salmon, whether imported "dressed" or c ut. The merchandise subject to the investigation is classifiable as item numbers 0302.12.0003 and 0304.10.4091 of the Harmonized Tariff Schedule of the United States. See Init iation of An tidumping Duty Inve stigation: Fresh Atlantic S almon fromChile , 62 Fed. Reg. 37,027 (July 10, 1997)

.

3 II. B ACKGROUND On June 12, 1 997, the Co alition for Fair A tlantic Sa lmon Trad

e (“FA ST” or “d

omestic industry”) petitioned Commerce to initiate a less-than-fair-value (“L TFV”) investigation, allegi ng that i mports of f

resh Atla ntic salmon from Chil e 3 were be ing, or were like ly to be, sold in the United States at less than their fair value, and that such imports were mate rially injuring, or threatening m aterial inj ury to, a U.S. indu stry. On July 10, 1997, Commerce began t he LTFV investigation of fresh Atlantic salmon from Chile. See Init iation of An tidumping Duty Investig ation: Fre

sh Atlantic

Salmon fro m Chile , 62 Fed. Reg. 37,027 (July 10, 1997) . After determining that it could not examine all Chilean producers and exporters, Commerce specifically inve stigated five leading Chilean produce rs including Marine Harvest and Pesquera Mares Australes Ltda. ( “Mares Australes”). See id. On June 9, 19 98, Commer ce anno unced its final determination that “fresh Atlantic salmon from Chile [was] being sold, or [was] likely to be sold, in the United States at less than fair value.” See Notice of Final Determination of Sales at Less Than Fa ir Value: Fresh Atla ntic Salmo n from Chile , 63 Fed. Reg. 31,411, 31,412 (June 9, 1998). The weighted-avera ge dumping margin perc entages of Marine Harve st and Mares Australes were found to be 1.36 ( de minimi s ) a nd 2. 24 , r es pe ct iv el y. 4 See id. at 31,437. The5 The all-others rate was also revised to 4.57. See Notice of Amended Final

Determi nation of Sa les at Less

Than Fair Va lue and An tidumping Duty Orde r: Fresh A tlantic Salmon from Chile, 63 Fed. Reg. 40,699 (July 30, 1998) (“ Amended Final ”). The

all-othe rs rate equals the weighted averag e of the estimated dumping margins of all exporters and produc ers investigated, “excluding any zero and de minimi

s margins.” § 1673d(c)(5)(A). Thus, in the calculation of the all-others rate, the dumping mar gin of Marine Harvest was excluded and that of Mares Australes was included.

6 This determination by the I TC was later interpreted by Commerce to be a “threat determination,” as opposed to a “material injury ” determination. See Ame nded Fina l at 40,700. 4 dumping margin f

or Mare s Austral es was la ter cor rected to 2.23 pe

rcent. 5 See Notice of Amended Final Dete

rmination o

f Sales at Le

ss Than Fair

Value and

Antidumpi

ng Duty Or

der: Fresh Atla ntic Salmo n from Chile , 63 Fed. Reg. 40,699, 40,700 (July 30, 1998) ( “Amended Final ”). Acc ordingl

y, C ommerce

excluded M arine Ha

rvest fr om its fina

l determi nation be cause its de minimi

s rate in the investigative stage meant that it was not dumping and, therefore, did not suspend liquidation on Marine Harvest’s entries into the United States. See 19 U.S.C. § 1673d(a)(4) (1999). On July 28, 1998, the International Trade

Commission (“ITC”) issued an affirmative determination that “an industry in the United States [was] materially injured or threatened with material injury by reason of

imports” of fresh Atlantic salmon from Chile. 6 Fresh Atla ntic Salmo n from Chile , 63 Fed. Reg. 40,315 (July 28, 1998) . On July 30, 1998, Commerce issued an antidumping duty order, announcing its intention to direct the United States Customs Service (“Customs”) to “assess . . . antidumping duties on all unliquidated entries of fresh At lantic sa lmon from C hile” at p ar with th e estimat ed dumping

margin percen tages, starting on the date of the I TC injury determination. Amended Final at 40,700 . Marine Harves t was excluded from the antidumping duty order. See 19 C.F.R. § 351.204(e)(1) (2002). Consequently, Customs was instructed not to collect antidumping duty cash deposits on Marine7 The court notes that July 1, 2000 was the first day of the second administrative review period f or Mare s Austral es. This op inion will r efer to Marine H arvest a

fter the merge r as “pos tmerger Marine Harve st,” and Marine Harvest before the mer ger as “pre-merg er Marine Harvest.” 5 Harves t’s entri es into the

United Sta

tes. On July 15, 1999, Nutreco B.V. ( “Nutreco”), the Dutch parent compa ny of Mare s Australes, purchased all of the outstanding share s of Marine Harvest. See Pl.’s Mem. in Supp. of its Rule 56.2 Mot. For J. Upon the Agency R. (“Pl.’s Br.”) at 3. On July 1, 2000, Ma res Au st ra le s w as me rg ed in to Ma ri ne Ha rv es t a nd no lo ng er ex is te d a s a le ga l e nt it y. 7 Id. at 4. In a June 22, 2000 letter, Mares Australes and Marine Harvest informe d Commerce of the upcoming merger, urging

it to treat the post-merger Marine Har vest as a continuation of the pre-merge r Marine H arvest a

nd thus to c ontinue Ma

rine Har vest’s exclusion fr

om the ant

idumping duty order. See Letter from Shor to Daley of June 22, 2 000, at 8, in App. toPl’s Br. After the initial LTFV investig ation, Commerce continued to review entries of Mares Australes and later, Marine Harvest using its authority under two distinct statutory provisions. First, as to Mares Australes, Commerce started the norma l administrative review process of the antidumping duty order

on fresh Atlantic salmon from Chile. On August 30, 1999, Commerce initiated the first administr

ative re view for the peri od cover

ing Unite d States sa

les betwe en July 28, 1998 and June 30, 1999. See Init iation of An tidumping a nd Counter vailing Du ty Administra tive Reviews and Re quests for Revoca tion in Part

, 64 Fed. Reg. 47,167 (Aug. 30, 1999). On

August 8 , 2000, Commerce pu blished th e prelimi

nary results of the first administrative review, where it determined, inter alia , a zero dumping margin for Mares Australes. See Notice of Preliminary Results of Antidumping Duty Administrative Review and Partial Rescission of Antidumping Duty Administrative Review: Fresh Atlantic Salmon From8 In making this determination, Commerce c onsidered the questionnaire responses

submitted by Mares Australe s and “other information on the record.” Notice of P reliminar y Results of Antidumpi

ng Duty Ad

ministrativ

e Revie w and Partia l Resciss ion of Antid umping Du ty Administra tive Review: Fres h Atlantic Salmon fro m Chile , 66 Fed. Reg. 18,431, 18,432 (Apr. 9, 2001) (“ Second A dministrat ive Prel iminary ”).

9 The applicable regulations are f ound in 19 C.F.R. § 351.401(f) (2002). The regulations provide that two “affiliated producers” will be trea ted “as a single entity

where [they] have production facilities for similar or identical products that would not require substantial retooling of either facility

in order to restructure manufacturing priorities” and where “significant potential for the manipulation of price or production” exists. § 351.401(f)(1). I n determining whether 6 Chile , 65 Fed. Reg. 48,457, 48,463 (Aug. 8, 2000) ( “First Admin istrative Prelimina ry ”). On December 15, 2000, Commerce published the final results of the first a dministrative review, again determining Mares Austra les’ dumping margin to be zero. See Notice of Final Results of Antidumpi

ng Duty Ad

ministrativ

e Revie w: Fresh A tlantic Sal

mon from Ch ile , 65 Fed . Reg. 78,472, 78,473 (Dec. 15, 2000) (“ First Administrative Final ”). On September 6, 2000, Commerce initiated the second review for the period c overing sales between July 1, 1999 and June 30, 2000. See Initiation of Antidumping and Countervailing Duty Administrative Review and Reque

sts for Rev

ocation inPart , 65 Fed. Reg. 53,980 (Sept. 6, 2000). On April 9, 2001, Commerce published the preliminary results of the second administrative review. See Notice of Preliminary Results of Antidumping Duty Administrative Review and Partial Rescission of Antidumpi

ng Duty Ad

ministrativ

e Revie w: Fresh A tlantic Sal

mon from Ch ile , 66 Fed . Reg. 18,431 (Apr. 9, 2001) (“ Second A dministrat ive Prel iminary ”). These announced Commerce’s contention that “the record establishe[d] that Mares Australes and Marine H arvest were under common ownership by anothe r company [and, there fore,] the two companies [were] affiliated under” 19 U.S.C. § 1677(33)(F). 8 Id. at 18,433. This finding allowed Commerce to “collapse” the two companies, i.e. tre at them as a single entity under Com

merce’ s regul ations. 9 Id. In thethere is a significant potential for the manipulation of price or production, the factors to be considered include “the level of common ownership,” the e xtent the firms share managers, and the extent their “operations are intertwined.” § 351.401(f)(2) . In addition to its finding of “common ownership,” Commerce also found that Mares Australe s and Marine Harvest “had production facilities for similar or identical products that would not require substantial retooling of either facility ,” and that there was “a significa nt potential for manipulation of price or production.” Second Administrative Preliminary at 18,433. As a footnote to the finding of “production fac ilities for

similar or

identica l product s,” Commer

ce noted that the two compani es’ operations were not identical because, e.g ., Marine Harvest owned its processing plant whe reas Mares Australes subcontracted processing and where Mares Australes purcha sed its feed for salmon from an affiliated supplier, Marine Harvest used una ffiliated suppliers. Id. 18,433 n.1. 7 final re sults of the

second r eview pe riod, Comme

rce ag ain dete

rmined a dumping margin percentage of zero for Ma res Australes. See Notic e of Final R esults of A ntidumping Duty Administra tive Review and Par tial Resc ission of An tidumping Duty Admin istrative Review: Fresh Atla ntic Salmo n From Chile , 66 Fed. Reg. 42,505 (Aug. 13, 2001) ( “ Second Administrative Final ”). On August 20, 2001, Commerce initiated the third administrative review for the period covering sales betwe en July 1, 2000 and June 30, 2001. See Initiation of Antidumpi

ng and Coun tervailin

g Duty Adm inistrativ

e Revie ws and Requ ests for Re

vocationin Part , 66 Fed. Reg. 43,570 (Aug. 20, 2001). I n the preliminary re sults for the third administrative review period, Commerce determined a de minimi s , 0.11 dumping margin for the post-merg er Marine Harvest. See Notic e of Preli minary Re

sults of Anti

dumping D uty Admin istrative Review, Preliminary Determination to Revoke the Order in Part, and Partial Rescission of Antidumping Duty Adm inistrativ

e Revie w: Fresh A tlantic Sal

mon from Ch ile , 67 Fed. Reg. 51,182, 51,191 (Aug. 7, 2002) (“ Third Admin istrative Prelimina ry ”). The final results for the third administrative review period are due Dec ember 5, 2002. On August 27, 2002, Commerce initiated the fourth administrative review for the period covering sales between July 1, 2001 and June 30, 2002, and intends to issue the final results “not10 The court notes that, at this time, the margin on Mares Australes’ imports had be en

determined to be 2.23 (.23 above de minimi s ) in the ini

tial L TFV inve stigation. Shortly thereafter, in the preliminary results of the first administrative review published August 28, 2000, Mares Australes’ dumping margin wa s zero. 8 later than July 31, 2003.” Initiation of Antidumping and Countervailing Duty Administrative Review a nd Reque

sts for Rev

ocation inPart , 67 Fed. Reg. 55,000 (Aug. 27, 2002). In addition to conducting administrative re views of the antidumping duty order that included Mares Au strales, Commerce also beg an a “changed

circumst ances” review o f the post

merger Marine Harve st under section 1675(b) of Title 19 to determine whether the antidumping duty order c overed salmon exported by the post-me rger Marine Harvest. On July 25, 2000, FAST filed a letter with Commerce responding to the mer ger (“FAST letter”). See Def.’s Mem. in Opp. to Pl.’s Rule 56.2 Mot. For J. Upon the Agency R. (“Def.’s Br.”) at 5-6. FAST argued that Nutreco was “‘poised’” to channel Ma res Australes’ products subject to duty through Marine Harvest “‘to avoid dumping duties.’” Id. at 6 (citing to FAST letter). 10 FAST requested that Co mm er ce as si gn th e d ep os it ra te of Ma re s A us tr al es “‘ to al l e nt ri es ma de by t he me rg ed en ti ty’ and indicated its desire to request a review of these entries in the context of the second administrative review.” Id. On August 28, 2000, Commerce published the preliminary results of the changed circumstances antidumping duty review. Changed Circumstances Preliminary. This was a lso the first time that Commerce notified Marine Harvest that it had been conduc ting a changed cir cum st anc es r evi ew. On t he s ame day, Co mm erc e re vok ed M ari ne H arv est ’s C ust om er ID number and directed Customs to suspend liquidation of entries of subject merchandise “unde r the name of Marine Harvest,” retroa ctive to the date of the merger. Message No. 0241210 from9

Commerc e to Custom

s of Aug. 28, 2000, in App. to Pl.’s Br . In its preliminary results of chang ed circ

umstance s review , Commerc e deter mined tha t “the pos t-merg er Marine Harve st [was] not the successor-in-interest to either of the pre-merg er companies, and [was] covered by the antidumping duty orde r on fresh Atlantic salmon from Chile.” Changed Circumstances Preliminary at 52,065

. In determining that the post-mer ger Marine Harvest was not a successor to either the pre-merger Ma rine Harvest or Mares Australes, Commerce used the so-called “successor-in-interest test,” considering such factors as the companies’ manag ement, production facilities, supplier relationships, and customer base. Id. at 52,066. According to Commerce, “eviden ce on the record establishe[d] that [the

post-mer ger] Ma rine Har vest . . . [wa s] substantially different than the pre-merger Marine H arvest” because (1) the management of the post-mer ger Ma rine Har vest answ ered to t

he pare nt compan

y of former M ares Au strales w hose management team included former Ma res Australes officials, including the operations mana ger; (2) the companies’ production facilities merge d; (3) the post-merger Marine Ha rvest now purchased all its feed from an affiliate of f ormer Mares Australes, whereas the pre-merger Marine Harvest used unaffiliated suppliers; and (4) the distribution channels of the two c ompanies merged, thus changing

the customer base. Id. In determining that the post-mer ger Marine Harvest was also “substantially different from the pre-merg er Mares Australes,” Commerce noted that (1) the president and the finance and a ccounting manager of the post-merger Marine Harvest had worked for the pre-me rger Marine Harvest; (2)

the merged company

was a larger company than e ither former Mares Australes or the pre -merger Marine Har vest; (3) where Mares Australes did not have a processing plant, the merg ed company ha d a large processing pla

nt; and (4) the me

rged c ompany

sold reta il, where as the former Mar es Austra les sold so lely

to10

distributors. Id. Based on these observations, Commerce inexplicably determined that it was “more appropriate to assign the rate currently a

pplicable to the pre-merger Mar es Australes rather than the currently

applicable all others rate.” Id. In the preliminary

results of the changed circumstance s review, Commerce also noted that its regulations allow the issuance of the preliminary results of the changed circumstance s review “concu rrently with the in

itiation of the revi ew if [Comme

rce] dete rmines tha

t expedited

action is warranted.” Id. (citing 19 C.F.R. § 351.221(c)(3)(ii) (2002)). Commerce justified its issuance of both notice and preliminary results simultaneously by noting without further explanation that there was “substantial evidence reg arding the purchase and merg er of Marine Harvest with Mares Australes.” Changed Circumstances Preliminary at 52,066. Of course, because of the concurrent initiation and announcement of preliminary results, no parties other than Commerce and the domestic industry had a ny opportunity

to comment on or offer input into Commerce’s conclusions. In the final results of the cha nged circumstances review, Commerc e again determined that the post-merger Marine Harve st is “not the successor-in-interest to either the pre-merg er Marine Harvest or the pre-merge

r Mares Australes, but rather [was] a new entity subject to the antidumping duty order

” on fresh Atlantic salmon from Chile. Changed Cir cumstanc es Final at 42,507. Contrary to the pre liminary results of the cha nged circumstances review, Commerc e reassig ned the po st-merg er Marine Harve st’s “ca sh deposit rate [as] 0 .00 perc ent, the r ate calculated for the combined sales of Marine H arvest and Mares Australes during the se cond administrative review.” Id. On October 12, 2001, Marine Harvest filed a c omplaint with this court claiming that11

Commerce “lack[ed] legal authority under the antidumping statute or its regulations to revoke the . . . exclusion of Marine Harvest from the antidumping duty order and LTFV Final Determination grante d to Marine Harve st, and sus pend the l iquidation

of entrie s of subje ct merchandise produced and exported by Marine Harvest.” Compl . ¶ 21. Marine Harvest further claimed that Commerce

violated “the pro cedura

l require ments of the antidum

ping sta tute and d ue proce ss require ments unde

r the Unit ed States Constitution

” by imposing antidumpin

g duty cash dep osits at a rate of 2.23 percent in a preliminary determination without giving Marine Harvest notice a nd an opportunity to comment. Compl . ¶ 24. Marine Harvest further claimed that Commerc e’s “application of a successorship analy sis, and its determination that Marine Harvest is the successor to neither Marine Harvest nor Mar es Australes, but is a ‘new entity ’ for antidumping purposes” are not supported by substantial evidence and/or are contrary to law. Compl . ¶ 26. On March 19, 2002, Marine Harvest moved for Judgment upon the Agency Rec ord. See USCIT R. 56.2. Marine Harvest asked this cour t to hold that Commerce’s preliminary a nd final results of the changed circumstance s review, published respectively on August 28, 2000 and August 13, 2001, are unlawful. Marine Har vest specifically a

lleged that (1) Commerce violated the statute by chang

ing Marine Harvest’s antidumping duty cash deposit rate from zero to 2.23
percen t in a pre liminary

determination, wit

hout givi ng Mari ne Harv est notice

and an op

portunity

to commen

t; (2) Comme

rce lac ked autho rity to chang e Marine

Harves t’s antidu

mping dut

y c ash deposit rate without computing a new dumping margin; (3) Commerce lacked authority to revoke Marine Harvest’s exclusion from the antidumping duty order; and (4) Commerce’s conclusion that Mari ne Harv est is a “new entity ” is not sup

ported by substantia

l evidenc e and not i

n accordance with law. Pl.’s Br. at x-xiv. Commerce responded by claiming tha t (1) under12

Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), deference is due to its interpretations of the statute and (2) its finding that the post-merger Marine Harves t is a “ne

w entity ” is suppor

ted by substantia

l evidenc e and othe

rwise in a ccorda nce with law. Def.’s Br. at 18-20.

III. S TAND ARD O F R EVIEW Plaintiff asks this court to hold that Commerce’s determinations in the preliminary and final results of the changed circumstanc es review are unlawful. This court must evaluate w hether the findin gs in que stion are

supporte d by

substantia

l evidenc e on the r

ecord or are othe rwise in accordance with law. See 19 U.S.C. § 1516a(b)(1)(B) (1999). Substantial evidence is “suc h relevant evidence as a rea sonable mind might accept as adequate to support a c onclusion.” Consolidated Edison Co. of New York v. NLRB , 305 U.S. 197 , 229 (1938); Matsushita Elec. Indus. Co., Ltd. v. United States , 750 F.2d 927, 933 (Fed. Cir. 1984). To determine if the
agenc y’ s interpr

etation o f the stat

ute is in ac cordanc e with law the cour t “must first care fully investigate the matter to determine whether Cong ress’s purpose and intent on the question at issue is judicially ascertaina ble.” Timex V.I., Inc. v. United States , 157 F.3d 879, 881 (Fed. Cir. 1998). The expressed will or intent of Congress on a specific issue is dispositive. See Japan Whaling Ass’n v. Am. Cetacean Soc’ y , 478 U.S. 221, 233-37 (1986). If the cour t determines that the statute is silent or ambiguous, the question to be asked is whether the ag ency’s c onstruction of the statute is permissible. See Chevron , 467 U.S. a t 843. This d

efere nce is due when it appears that Congress deleg ated authority to the agency g enerally to make rules carry

ing the force of law, and that the age ncy interpre

tation claiming deference was pr omulgated in the11 At first glance, t his court is compell ed to obse

rve that Commerce ’s action s and its accompa nyi ng rea sonings a

re inter nally inconsiste

nt. If the post- merge

r Marine Harves t is a “new en tity ,” it fall s outside the antidum ping duty order is sued prior to the me rger. As an ent

ity not invest igated in the initi al LTFV inves tigation , it must be a ssessed a n all-othe rs rate f or cash deposits or must go through a new shipper review and be assessed a new cash deposit rate. A s Commerce noted, to impose on the merged entity the all-others rate from the L TFV investigation would have been inappropriate since that rate was higher than the rate of either company. See Changed Cir

cumstanc es Prelim inary

at 52,066

. By

assigni ng the p ost-merg er Marine Harve st the rate of Mares Australes, Commerce c ompels the conclusion that the post-merger Marine Harvest was a successor to an existing entity, perhaps to Mares Australes. I f the post-merger Marine H arvest w as a succ essor to one of the companie s or both, i

t could not

be a succ essor to neither and thus it could not be a new entity . Commerce’s second anomaly is how an entity that came into existence solely by two separate entities merging is not a continuation of e ither, but

13 ex er ci se of

th at au th or it y. United States v. Mead Corp. , 533 U.S. 2 18, 226-2 7 (2001). This deference is not limited to notice and comment rulemaking but is also given to those “statutory determinations that are articulated in any ‘relatively f

ormal administrative procedure.’” Pesquer a Mares Australes Ltda. v. United States , 266 F .3d 13 72, 13 80 (Fed . Cir . 2001 ) (cit ing Mead , 533 U.S. at 252).

IV. D ISCU SSI ON There a re esse ntially two issues

in this cas e that this

court mus t resolve . The fir st issue is whether Commerce’s imposing a cash deposit, without notice, in a pre liminary chang ed circumstances review, on the post-merg er Marine Harvest at the rate of Ma res Australes from the LTFV investigation is in acc ordance with law. The second issue is whether Commerce ’s conclusion (in both the preliminary a nd final results of the changed circumstanc es review) that the post-merger Marine Harve st is a “new entity” a nd a successor to neither the pre-merg er Marine H arvest nor Mare s Austral es is supported by substantia

l evidenc e or othe

rwise in accordance with law. 11something entirely differe nt.

12 This court is mindful of the fact that a potential for circumventing the a ntidumping statute exists when one compan y that is cove

red unde r an anti dumping d

uty order me rges with another that is excl

uded and then atte mpts to ado

pt the man

tle of the excluded c ompany

so as to evade duties. However, the antidumping statute is remedia l, not punitive. See, e. g., NTN Bearing Corp. v. United States , 74 F.3d 1204, 1208 (Fed. Cir. 1995). Therefore , it should not be used to teach a lesson. Or at the very least, that lesson is not needed in the case of Marine Harvest where all save one dumping ma rgin assessed for both companies were either zero or de minimis . For example, in the case of Jia Farn that led to a cong ressional investigation and litigation before this Court, a small Taiwanese company that was excluded from an antidumping duty order g rew exponentially

(from one perce

nt market share in

the Unite d States to

fifty percent) as a result of transshipping the mer chandise of other covered Taiwane se manufacturers who ther eby avoided a

ntidumping

duties. There, however, Jia Farn wa s subseque

ntly found to have virtually no manuf

acturing capability

itself, despite Commerce’s repeated determinations that it was a manufacturer, and the antidumping mar gins that were circumvented wer e well above 20 percent. See Report on the Activity of the Committee on Energy and Commerce for the 103d Congress , H.R. Rep. 103-882 at 216-19 (Jan. 2, 1995); Jia Farn Mfg. Co. v. United States , 17 CIT 187, 817 F. Supp. 969 (1993). 14 For the r easons ou tlined be low, the im

position on

Marine H arvest o f the ca sh deposit rate of former Mares Australes without notice in a preliminary changed circumstances re view is not in accor dance w ith law, a nd Commerc e’s conc lusion, as a result o f the app lication o f its successor-in-interest test to Marine Harvest, that it is a “new entity” is neither supported by substantial evidence nor in accordance w ith law. 12

1. COMMERCE DI

D NOT HAV

E THE AUTHORI TY TO I MPOSE A CASH DEPOSIT WITHOUT NOTICE I N THE PRELI

MINARY CHANGED CI RCUMSTANCES DETERMINATI ON. The statute provides for changed c ircumstances reviews in § 1675(b) of Title 19 of the United States Code. Subsection 1675(b)(1) allows Commerce or the ITC to conduct a review after receiving information of “ changed circumstances suff icient to warrant a review” of “a final13 Under the statute, either Commerce or the I TC can conduct a changed c ircumstances review, dependin

g on the nature o f the cha

nge. A c hange in the ownership or

name of a

n entity subject to an antidumping order ty pically triggers an investigation by Commerce, whereas the ITC may conduct an investigation to ascertain whether ma terial injury or thre at of material injury has ceased to exist. See, e.g., Titanium Metals Co. v. United States , 15 5 F. Su pp. 2d 7 50 ( CIT 2001).

14 Even though on the face of the statute, a c hanged circumstances revie w seems to be authorized to determine only whe ther an antidumping duty order should be revoked

, this Court has held that the statutory provision “doe s not prohibit Commerce from using a changed circumstances review in a procee ding where a revocation is not contemplated.” Jia Farn , 17 CIT at 193, 817 F. Supp. at 974. Moreover, changed c ircumstances reviews may be conducted under similar circumstances as those of this case. The Jia Farn court also held that Commerce acted reasonably

in conducting a changed c ircumstances review instead of initiating new antidumping proceedings, based upon an alleg ation that a previously excluded compa ny was “tra

nsshipping the merchandise produced by other manufacturers.” Id. at 193. Thus, the court does not question Commerce’s ability to initiate a cha nged circumstances review in this context.

15 affirmative determination that resulted in an antidumping duty order.” 13 Subsection 1675(b)(1) further requires that the review will be conducted “after publishing notice of the review in the Federal Register.” Subsection 1675(b)(2) provides that in a changed circumstanc es review the ITC will “dete

rmine whe

ther re vocation of the [an

tidumping

duty] order . . . is likely

to lead to continuation or recurrence of mater ial injury.” 14 Interpreting the

statutory provision, Commerce’s re gulations provide that, if Commerce finds that changed circumstances exist, it “will conduct a chang ed circumstances review under § 351.216.” 19 C.F.R. § 351.222(g)(2) (2002). “An intere sted party may request a changed circumstances review . . . of an order ,” at any time. § 351.216(b) . The time limit to initiate a review is 45 day s after it is requested. Id. In addition, to be able to initiate a review w ithin 24 months of the final LTFV deter mination, Commerce needs to find “good cause.” § 351.216( c). In conducting the r

eview, Commerce must adhere to the procedure s outlined in § 351.221 that govern all reviews including cha nged circumstances (“re

view procedures”). § 351.216(d).15 In conjunction with subsection 351.221(b)(5), subsection 351.216(e) further requires

that the issuance of the final results of the chang ed circumstances review will be “within 270 day s after t

he date on which th e chang ed circ umstance s review

is initiate d, or withi

n 45 day s if all parties to the proceeding ag ree to the outcome of the review.”

16 For all reviews, section 351.221 requires Commerce to “ [p]romptly publish . . . notice of initiation of the review,” § 351.221(b)(1); to request submission of factual information in the form of answers by

interested parties to questionnaires, § 351.221(b)(2); to publish notice of the preliminary re sults of review, containing any rates assigned and “an invitation for arg ument,” § 351.221( b)(4); a nd to publish final re sults, incl uding a ny r ates det ermined , § 351.221 (b)(5) , – in that order. 15 “If the ty

pe of review . . . involves a determination [of] the amount of duties to be assessed, promptly af

ter publication of the notice of final resul

ts [Commerce will] instruct the Customs Service to assess antidumping duties . . . on the subject merchandise covered by the review. ” § 351.22 1(b)(6) (emphas is added) . “I f the re view invo lves a re

vision to the

cash deposit r ates for estimate d antidump ing dutie s, [Commerc e will] instr uct the Cus toms Servic e to collect cash deposits at the revised rates on future e ntries.” § 351.221(b)(7). For changed circumstanc es reviews in particular, subsection 351.221(c)(3) supplies a set of special rules. In a c

hanged circumstances revie w, Commerce “[w]ill include in the preliminary re sults of review and the final results of review a desc ription of any action [Commerce] proposed based on the preliminary or final results.” § 351.221(c)(3)(i). Commerce may also “combine the

notice of initiation of the review and the preliminary results of review in a single notice if [it] concludes that expedited action is warranted.” § 351.221(c)(3) (ii). The regulations do not provide when an “expedited action” may be “warranted.” The re cited instructions are the only one s provided in the statute and the regulations concerning changed16 The SK W court also stressed the disutility of conducting administrative and changed

circumstances reviews simultaneously , however. See SKW, 21 CIT at 1340, 989 F. Supp. at 257. In condoning Commerce ’s termination of a changed circumstanc es review when an annual administrative review was in progress, the SK W court noted that Commerce’s interpretation “that Congre ss did not in

tend it to c onduct tw o review s of the sa me merchandise f

or the sa me purpos e [was] reasonable” because otherwise “duplica te proceedings which expend Commerce’s limited resources” and “inconsistent findings” may result. Id. 17 circumstances reviews. Certainly neither the statute nor the regulations specifica lly permit the government to revise or assess a ca sh deposit rate in a preliminary determination (and start collecting duties from an exporter) without notice to the exporter under re view. As the government points out,“[b]y its own terms, [the statutory changed circumstances review] provision does not mandate (or even discuss) the parame ters of a changed circ

umstances review nor limits [sic] the types of actions that Commerce may take in a changed circumstanc es review.” Def.’s B r. at 27. The statute also does not address the issue as to what should happen when two types of r

eviews have been initiated, one as a chang ed circumstances review, the other as an administrative review. See SKW Stickstoffwerke Piesteritz GmbH v. U nited States , 21 CIT 1336, 1339, 989 F. Supp. 253, 256-57 (1997). 16 The gov ernment argue s that “[w]he

n the statu

te is read in context, . . . it is appa

rent tha t a chang e in the c ash depo sit rate i s one of the permiss ible actions that Commerce may take in a changed circumstanc es review.” Def.’s B r. at 27. The government reasons that chang ed circumstances reviews are c onducted to review the final determinations of an LTFV inve stigation and a cash deposit rate (or the lac k thereof) is one of the determinations made in an LTFV investigation. Id. Therefore, “a decision made by the agency with respect to cash deposits is one that may be reviewed in the context of a change d circumstances review.” Id. at 28. The government alternatively argues that “[e]ven if this contextual analy sis is insufficient18

to affirmatively support Commerc e’s authority in a c hanged circumstances proce eding to review and change the applicable c ash deposit rate . . . , nothing in the statute precludes Commerce fr om doing so.” Id. at 28. The government thus concludes that its interpretation of the statutory silence is reasonable and should be accorde d judicial deference under Chevron

. Id. at 29. Under Chevron , when the intent of Congress is clear on the fac e of the statute, the inquiry

as to th e r ea so na bl en es s o f a n a ge nc y’s ac ti on s e nd s b ec au se “t he co ur t, as we ll as th e a ge nc y, must give effect to the unambiguously expressed intent of Congress.” Chevron , 467 U.S. at 842- 43; see also Ipsco, Inc. v. United States , 899 F.2d 1192, 1195 (Fed. Cir. 1990) (“we cannot sustain [Commerce’s] exercise of administrative discretion if it contravenes statutory objectives.”). Thus, Chevron deference applies only when there is an ambiguity in the statute. The government does not point to any ambiguity in the statute. Ne ither does this court find any. The government’s position is merely (a) that the entire statutory scheme supports its actions and (b) that, even if it does not, it does not preclude them. The court cannot a gree. First, Commerce does not have absolute discretion to take action on and r evise existing antidumping orders. Ericsson GE Mobile Communications, Inc. v. United States , 60 F.3d 778, 782 (Fed. Cir. 1995) (even though “Commerce . . . enjoys substantial free dom to interpret and clarify its antidumping duty orders . . . , it may not cha nge them” (citation omitted)). For example, in

a scope d etermina tion, Comme

rce “c annot ‘in

terpret’ an ant

idumping order so as to chang e the sco

pe of tha t order, nor can C ommerce interpre t an orde r in a man

ner cont rary to its terms.” Eckstrom Indus., Inc. v. United States , 254 F.3d 1068, 1072 (Fed. Cir. 2001) (citation omitted).19

More importantly, the statute does not support Commerce ’s authority to chang e a final cash deposit rate in a preliminary changed circumstances dete rmination without following the procedural safeguar

ds embedded therein. It is true that the sta tute does not explicitly forbid such action. However, a review of the e ntire statutory and re gulatory scheme compels the conclusion that Commerce acted unreasonably and contrary

to the statutory scheme. The changed circumstances review provision in the statute emphasizes that review will be conduc ted “ after publishing notice of the review in the Federa l Register.” 19 U.S.C. § 1675(b)(1) (1999) (emphasis added). Thus, the statute on its face does not allow the initiation of the review without prior notice. Moreover, the regula tions about review procedures are conditioned on a mple notice and opportunity to comment before antidumping duties may be imposed. See 19 C.F.R. § 351.221 (2002). In particular, the regulations are explicit that antidumping duties will be imposed after the p ublication of final res ults

. See § 351.221( b)(5) & (6) (emp hasis add ed). I t is true tha t the provision conc erning the revi sion of ca sh deposit rates do es not con

tain a time frame, see § 351.221(b)(7), and that Commerce may combine notice of initiation with notice of preliminary re sults, see § 351.221(c)(3)(ii); however, read w ithin the context of the entire § 351.221, these provisions fall short of granting Commerce the a uthority to combine notice of initiation with preliminary results and to impose a cash de posit requirement at the same time. Furthermore, there is no prior case w here Commerce conjoined the initiation of review, the publication of preliminary r esults, and the imposition of antidumping duties. The government relies on Jia Farn Mfg. Co. , 17 CI T 187, 193, 817 F. Sup p. 969, 974

(1993), t o argue that this Court has previously approved such authority . However, the government’s reliance on Jia Farn is misplaced. Even though in Jia Farn this Court upheld the imposition of a17 In the case of Jia Farn a

lso, Commer

ce did not make a bl anket de

terminat ion that a ll entries by the pre

viously excluded company were now subject to the antidumping duty order and was careful differentiating between the entries subject to the order and the e ntries which were not. See Sweaters Wholly or in Chief W eight of Man-Made Fiber from Taiwan; Final Results of Changed Circumstances Antidumping Duty Administrative Review , 58 Fed. Reg. 32,644, 32,654 (June 11, 1993) (“Entries made subsequent to the period of this change d circumstances review . . . will be considered entries not manufactured by Jia Farn, and thus subject to the antidumping duty order, e

xcept to the extent that Jia Farn can satisfy [Commerce], in the course of f uture reviews, that it was the actual manufacturer of any [excluded] sweaters it exports to the United States.”).

20 cash dep osit requ

irement a s of the da

te of a pr eliminar y change d circum stances

determination, it did not say that the require ment of a cash deposit is permissible in a preliminary changed circumstances review without first giving pa rties sufficient notice of the initiation of the review. See id. at 193. Apart from the clear factual diff erences between this case and Jia Farn , see footnote 12, supra , the plaintiff in Jia Farn was notified of the review more than two months before its initiation. 17 See Sweaters Wholly or in Chief W eight of Man-Made Fiber From Taiwan; Initiation of Changed Circumstances Antidumping Duty Administrative Review , 57 Fed. Reg. 43, 705 (Sept. 22, 1992) ; Prelimina ry Result s of Change

d Circumst

ances An tidumping Duty Administrative Review , 57 Fed. Reg. 56,322 (Nov. 27, 1992). This Court has alway s recognized that “[p]reliminary results are pre sumably less reliable than f inal results of investigations or administrative reviews.” China Nat’l Arts and Crafts Imp. and Exp. Corp. v. United States , 15 CIT 417, 422, 771 F. Supp. 407, 412 (1991). The rationale is that “[p]reliminary results are reviewed and commented upon by interested parties before becoming final.” Id. (citations omitted). “Hearings are held, if re quested.” Id. Commerce “uses the time between preliminary and fina l determi nations to correc t and adju st its prel iminary finding s and rea

ch more a ccurat e18 Typically , Commerce maintains a company ’s current cash deposit rate until the publication of the final results of a changed c ircumstances review. See, e.g., Certain CorrosionResistant Carbon Steel Flat Products from Japan: Notice of Initiation and Preliminary Results of Changed Cir

cumstanc es Revie

w of the Anti

dumping O

rder, and Intent to R evoke O

rder in Par

t , 67 Fed. R eg. 47, 766, 47,76 8 (July

22, 2002)(contai

ning boil erplate

langua ge that is repea ted in most preliminary results: “The c urrent requirement for a cash deposit of e stimated antidumping duties on [merchandise] will continue unless and until we publish a final determination to revoke in part.”). In instances whe re Commerce determined preliminarily that a new company

is the success or of a f

ormer one, it allowed the ne w compan

y to retain the cash de

posit rate of its predecessor until the publication of final results. See, e.g., Brake Rotors From the People’s Republic of China: Initiation and Preliminary Results of Changed-Circumstances Antidumping Duty Administrative Review , 65 Fed. Reg. 69,732, 69,733 (Nov. 20, 2000); Certain Hot-Rolled Lead and Bi

smuth Carbo n Steel Pr

oducts Fro m the Unit

ed Kingdom : Initiatio n and Prel iminary Results of Changed-Circumstances Antidumping and Countervailing Duty Administrative Reviews , 64 Fed. Reg. 53, 994, 53,99 5 (Oct. 5 , 1999); Polyethylene Terephthalate Film, Sheet and Strip From the Republic of Korea: Initiation and Preliminary Results of Changed Circumstances Antidumping Duty Administrative Review , 62 Fed. Reg. 61,801, 61,802 (Nov. 19, 1997). I n the one a

nd only occasion cited in

Defend ant’s br ief wher e Commerc e found that a joint venture was a successor to neither of the companie s that created it, the new company was assigned an all-others rate in the preliminary determination. See Notice of Initiation and Preliminary Results of Changed Circumstances Antidumping Duty Review: Certain Polyester Staple Fiber from the Republic of Korea , 66 Fed. Reg. 1642, 1643-44 (Jan. 9, 2001). 21 conclusions in the final determination.” Id. (citation omitted). Here, Commerce did in fact revise Marine Harvest’s cash deposit rate to zero from the preliminary to the f inal changed circumstances results – which action removes any credibility from its imposition of a 2.23
pe rc en t c as h d ep os it ra te on Ma ri ne Ha rv es t i n t he pr el im in ar y. A survey of Commerc e’s past practice in change d circumstances reviews y ields no further examples where even a revision of the cash deposit re quirement accompanied the simultaneous issuance of notice and of pr eliminar y r esults. 18 Impos ing on Ma rine Har vest a ca sh deposit requirement of 2.23 percent in the preliminary determination allowed the government to collect money (totaling millions of dollars) on the e ntries of the company

in the course of a whole y ear (from Au gust 200 0 to Augu st 2001) un til the cha nged c ircumsta

nces re view bec ame fina

l. This19 The gov ernment claims tha

t the antid umping du

ties colle cted fr

om Marine

Harves t entries during that y

ear will be refunded when the final dete rmination of the third administrative review i ssues in De cember , 2002, as suming that the pr eliminar y ma rgins of zero forthe postmerger Marine Harve st are confirmed for the final. Commerce is trea ting the third administrative review period for Mares Australes a s the first administrative review period of the merge d entity. Since Mar

ine Harv est was de

termined to be a “new entity

” by Commerce

it will be r

equired to participate in three full reviews showing no dumping before it can be excluded from the order. See 19 C.F.R. § 351.222(b)(1)(i)(A) (2002). 22 case is before the court because Commerce has ye

t to refund the money, a

lthough in the final results of the chan ged cir cumstanc es revie

w the mer

ged en tity was rea ssigned

a cash de posit rate of zero. 19 See Chang

ed Circum

stances F inal at 42,507

. Moreover, prior to the preliminary changed circumstances re sults (on August 28, 2000), Mares Australes was assigne d a dumping margin of zero in

the prel iminary

first adm inistrativ e revie

w results

. See First Administrative Preliminary (Aug. 8, 2000). Subsequent to the preliminary changed circumstances re sults, Mares Australe s and late

r the post -merg er Marine Harve st were f ound not to b e dumping

on at lea st four separate occasions. See First Administra tive Fina l (Dec. 1 5, 2000); Second Administrative Preliminary (Apr. 9, 2001); Second A dministrat ive Final (Aug. 1 3, 2001); Third Administrative Preliminary (Aug. 7, 2002). In a ddition, the pre-merger Marine Ha rvest was never found to be dumping. Commerce

acts con trary to the stat

utory scheme w

hen it posi

ts a theor y that allows

it to take and keep the money of an exporter which, if given the chance during any

kind of investigation, would have been able to show that no dumping had oc curred. Nor is it re asonable

to conclu de that su ch an exporter kne

w or shoul d have kn

own that it would be shortly subjected to antidumping duties. The government contends that the antidumpin

g duty order “ provided Marine H arvest w

ith prior n

otice of the merc handise s ubject to antidumping duties.” Def.’s B r. at 30. But Marine Harvest was excluded from that order . The20 Subsection 1675(a )(2)(B )(i) re ads as fo llows: If the administering a

uthority rece ives a request from an exporter or produce r of the s ubject me rchandi se estab lishing that– (I) such exporter or produc er did not export the merchandise that was the subject of an antidumping duty . . . order to the United States . . . during the period of investigation, and (II ) such exporter or p

roducer is not affiliated (within the meaning of section 1677(33) of this title) with any e xporter or producer who exported the subject merchandise to the United States . . . during that period, the admin istering authority shall con duct a re view unde

r this subse ction to establish an individual weighted average dumping margin . . . for such exporter or producer (emphasis added).

23 most that can be inferred may be that the antidumping duty or der could have provided Marine Harvest with notice that a changed c ircumstances review might have bee n conducted in the event of the merger and that perha ps antidumping duties could have been assessed in the final determination, but not that such duties would be assessed in a preliminary determination. The government further arg ues that “the company

should have requested a new shipper review” if it “des ired a [sic ] opportuni ty to comment before Commerce imposed a

cash dep osit requirement with respect to its merchandise.” Def.’s B r. at 32 (emphasis in the original) (citing 19 U.S.C. § 1675(a)(2)(B) (1999) (“De termination of antidumping or countervailing duties for new exporters and producers”)). The c ourt fails to see how Marine Harvest could have known that it was a new shipper when it did not fit the statutory definition. To be considered a new shipper, the new entity must be ne ither a former exporter nor affiliated with a forme r exporter. § 1675(a)(2)(B)(i). 20 “Two or more persons directly or indirectly controlling , or controlled by, or21 Mares Australes, the pre-merg er and the post-merger Marine Harvest have all been at some point under the control of the same company . Nutreco, originally the parent company

of Mares Australes, purchased Marine Ha rvest and merged Mares Austra les into Marine Harvest. Marine Harvest then became a subsidiary of Nutreco. Having a pare nt company in common, Marine H arvest is

thus “af filiated ” with both

Mares Au strales a

nd the pre -merg er Marine Harve st for the purposes of § 1675(a)(2)(B ).

22 Two other

statutory provision s, on which Commerc e implicitl y r elies to im

pose a ca sh deposit r equirement on Mar

ine Harv est (name ly, the provi sions that a llow the imp osition of c ash deposits at the preliminary a nd final stages of an L TFV investigation), merely give Commerce the option

of imposing

cash dep osits and d

o not compe l it. For e

xample, § 16 73d(c)( 1)(B)( ii) provides that “the administering authority shall order the posting of a cash deposit, bond, or other security, as the a

dministering authority dee ms appropriate” if the final determination of the LTF V investig ation is af

firmativ e. I

n other w ords, Comme

rce cou ld have a sked Mar

ine Harv est to post a bond or another security instead of collecting its money prematurely . Here, Marine Harvest was not given the option of posting a bond. 24 under common control with, any person” are “affiliated.” § 1677( 33)(F). 21 Commerce itself found that “Mares Australes and Marine Har vest were under common ownership by another company [and] the two companies [were] aff iliated under section” 1677(33)(F). See Second Administrative Preliminary & Final . Therefore, Marine Harve st would have been misreading the

statute to assume it q

ualified for a ne w shipper review. Howeve

r, had Ma rine Har vest bee n able to request a new shipper review, that indeed would have been to its advantage, as subsection 1675(a) (2)(B) (iii) allows “the p osting, u ntil the completion of

the revi ew, of a

bond or se curity

in lieu of a cash deposit for each entry of the subject merchandise,” and bonds are le ss costly than cash dep osits. 22 In sum, this court finds no support in the statutory and regulatory

language for Commerce’s imposition of a cash deposit on Marine Harvest’s entries without notice in a prelimina ry determination. Thi s court a lso questions the impo sing on Ma rine Har vest’s e ntries a cash deposit at the dumping margin of Mare s Australes found in the LTFV investig ation. Under23 On July 22, 2002, an oral arg ument was held before this court. “Tr.” ref ers to the transcript of the oral argument. This approa ch would have been permissible given that at the time of the merger, “Marine Ha rvest was by f

ar the bigger produce

r of the two companies, having produced and sold almost 50 percent more salmon in the first five months of 2000 than Mare s Australes,” Pl.’s Br. at 4, the pre-mer ger Ma rine Har vest would

plausibly be assig ned at le ast a 50 percent weight in the merge d entity, and the merg ed entity would thus be excluded from the order by this appr

oach. 25 one better approach, Commerce could have used a 50-50 weighted average of the dumping margin s of the pr

e-merg er Marine Harve st and Mar es Austra les that w ould have

yie lded a ca sh deposit r ate of 1. 795 for the post-me rger M arine Ha

rvest, wh ich is de minimi

s , dictating the conclusion that the merged entity would have been excluded from the antidumping order. See Oral Arg. Tr. 11:2-12. 23 Inde ed, almos t any other choice Comme

rce cou ld have ma

de would have been more reasonable than its actions at issue before the court in this case. By assigning the merged entity

the rate of Mares Australes, Commerce see ms to have presumed that the merged entity is all Mares Australe s and nothing else. Moreover, given that the f irst administrative review’s preliminary

results indicated a zero percent dumping margin for Mares Australes and the pre-merger Marine

Harvest had a de minimi

s margin, there was no justification to assign the post-merger Marine Harve st an above de minimi s margin. Commerce could also have waited four months until Mares Australes’ cash deposit rate was finalized in the first administrative review to assign a cash deposit rate to the post-mer ger Marine Harvest, which by all reasoning could only be zero or de minimi s . “[I]t i s Commerce's duty to determine margins as accurate ly as possible, and to use the best information available to it in doing so.” Lasko Metal Prods., Inc. v. United States , 43 F.3d 1442, 1443 (Fed. Cir. 1994). Even though “best infor mation” does not necessarily

mean the most current margin, the imposition of a high possible marg in on a
company should be r

eserve d for thos e cases

where Commerce needs to a ssign the higher rate to26

compel cooperation in providing accurate data. See Rhone Poulenc Inc. v. United States , 899 F.2d 1185 , 1190-91 (Fed. Ci r. 1990). In the

case of Marine H arvest, there wa s no reas on to use the higher margin as an “inf ormal club,” id. at 1191, to ensure cooperation in the future since there was no indication (or allegation) that Mar ine Harvest or Mares Australes was providing Commerce with inaccurate data. In addition to arguing

that the entire statutory sc heme supports its actions, the government
argue s in the alt

ernativ e that the

statute do es not pre clude its a ctions an d, there fore, its interpretation of statutory silenc e should be accorded Chevron deference. However, Chevron does not a

llow an agency

to fill ga ps in a sta tute wher e there is no ambig

uity , or take

authority upon itself where no such authority has been explicitly or implicitly granted. Recently , in FAG Italia S.p.A v. United States , the Federal Circuit drew a distinction between ambig uous statutory langua ge that create s a “ga

p” in the s tatute tha

t an age ncy could re asonably

fill and a silence in th e st atu te f

rom whi ch a n ag enc y can not cre ate aut hor it y. 29 1 F. 3d 8 06 ( Fed . C ir. 200 2). In FAG Italia , the issue was whether Commerce had statutory authority to conduct an a bsorption inquiry in y

ears other than the second or fourth afte r a transition order was issued, as was provided in the statute. See id. at 808. Commerce argued that it had authority “because both the

statute a nd its leg islative h

istory [were] sile

nt as to whe

ther Comme

rce [cou ld] conduct duty absorpti on inquiri es in y

ears oth er than y

ears 2 a nd 4, and t

he statute [did] not explic itly

prohibit or deny it such authority .” Id. at 815. In finding that Commerce lacked such authority , the Feder al Circui t noted tha

t no case has held t

hat “an a dministra tive ag ency

has authority

to fill gaps in a statute that exist because of the absence of statutory authority .” Id. at 816. “To the contrary , . . . ‘an agency

literally has no power

to act . . . unless and until Congress confers power27

upon it.’” Id. (quot ing La. Pub. Se rv. Comm’

n v. FCC , 476 U.S. 355, 374 (1986)). Accordingly , “the absence of a statutory authority cannot be the

source of agency

authority.” Id. Moreover, “ Chevron specifically f orbids agencies from crea ting ambiguities in statutes to expand their power.” Cases and R ecent D evelopm ents , 12 Fed. Cir. B.J. 13 5, 180 (20 02). Simila rly here, nowhere in the statute is the collection of antidumping duties authorized prior to a meaningful review. Commerce’s ac tions here are clearly

unreasonable viewed in the context of the statute’s requirements for meaningful par ticipation and review. 2. COM MER CE ’S C ONC LUSIO N IN T HE S UCC ES SO R-IN -INT ER ES T TE ST IS NO T IN ACCORDANC E WITH

LAW AN

D IS N OT SUPPORTED BY SUB STANTI AL EV IDEN CE Commerce ’s deter

mination that Marine

Harves t is a new e

ntity is not in ac cordanc e with law. While the court must defer to an agency ’s reasonable interpretations of ambiguous statutory language, no defer

ence is due under Chevron to agency interpretations that contravene the statute. C ommerce ’s succe ssor-in- interest test appe ars neither in the antidumpin

g statut e nor in the regulations. Commerce appropriately developed the test to determine, e.g. whether a company re

mains subject to an antidumping duty orde r, under changed circumstanc es, such as corporate reorganization, and has use d the test, for at least a decade, “to ensure the proper administration of the antidumping laws.” Brass Sheet and Strip from Canada; Final Results of Antidumping Duty Administrative Review , 57 Fed. Reg. 20, 460, 20,46 1 (May 13, 1992) . While the court need not determine whether Commerce’ s use of the successor-in-interest test in gene ral is reasonable, the court observes that in this case, Commerce’ s conclusion, as the result of the application of the successor-in-interest test, that Marine Ha rvest is a new entity c annot be reconciled with provisions of the antidumping statute and is not supported by substantial28

evidence. Specifically, Commerce

ignored statutory

mandates for defining new entities under a n order. Under the antidumping statute, a new e xporter is an exporter that enters the market after the issuance of an antidumping order and which is ne ither a former exporter, nor affiliated with a former exporter. See § 1675(a)(2)(B) (providing a review for new exporters). “Two or more persons directly or

indirectly controlling , or controlled by, or unde r common control with, any person” are “affiliated.” § 1677( 33)(F). Mares Australes, the pre- merger and the post-merg er Marine Harvest, the producers of the mer chandise in question, have all been at some point under the control of the same company , Nutreco. Marine Harvest is thus “affiliated” w ith both Mares Australe s and the pre-mer ger Ma rine Har vest unde r this def inition. Mor

eover, C ommerce

itself determined that Mares Australes and Marine Ha rvest are “affiliated” under § 1677( 33)(F), which finding allowed Commerce to collapse the two companies for purposes of review. See Second Administrative Preliminary & Final . Since Marine Harvest is affiliated with one or two former exporter s which we

re in busi ness at th e time of t

he issuan ce of the antidumpin

g duty order, i t cannot be a new exporter under the antidumping statute. If it is not a “new exporter” under the statute, t hen Commer

ce cann ot deter mine that i

t is a “ne w entity,” for su

ch deter mination w ould clearly be contrary to the statute. Furthermore, by arguing that Marine Har

vest “should have requested a new shipper review,” Def.’s B r. at 32, the government effectively conceded that when it says “ne

w entity” or “ne

w shipper,” it really

means “new exporter.” Thus, the government’s argument also contr adicts the statute by imply ing that Marine Harvest comes under the purview of the new exporter review provision of the antidumping statute. Moreover, even though Commerce may depart from its earlier determinations and its own24 To illustrate how Commerce cannot reasonably assert such a conclusion, the court offers the follow

ing ana logy . Ind ividual A a

nd In dividual B claim ownership to the same automobile. A and B come before a judg e to sort out the matter. The judge decides that A is not 29 prior precedent, “[w]hatever the ground f or departure from prior norms, however, it must be clearly se t forth so that the reviewing court may understand the basis of the agency ’s actions and so may judge

the consistency of tha

t action with the agency ’s mandate.” Atchison, T. & S.F. Ry. v. Wichita Bd. Of Trade , 412 U.S. 800, 808 (1973). Such unexplained departures are not permissible. See NLRB v. Int’l Union of Operating Engineers, Local 925 , 460 F.2d 589, 604 ( 5th Cir. 1972). Here, Commerce never explained the inconsistency of its determinations that, on the one hand , Mares A

ustrales and Mari ne Harv est are

affilia ted and, o n the othe r hand, the postmerger Marine Harve st is a new entity. Thus, this court finds that Commerce’ s interpretation of the statute is unreasonable. Commerce’s determination that Marine Harvest is a new e ntity is also not supported by substantial evidence. Actually , there is no evidence in the record that Marine Harvest is a new entity and not a succe ssor to either Mares Australes or the pre-mer ger Marine Harvest. Marine Harvest came into being by the merging of the operations of two c ompanies with nothing

extraneo us added to the mix. I

n fact, i n finding that the p ost-merg er Marine Harve st is not a successor to the pre-merger Marine Harvest, Commerce listed as evidence a ll the factors that the post-merger Marine Harve st has in common with Mares Australes. See Changed Circumstances Preliminary at 52,066 . In f inding that the pos t-merg er Marine Harve st is not a su ccessor to Mares Australes, Commerce listed as evidence a ll the factors that the post-merger Marine Harvest has in common with the pre-merger Marine Harvest. See id. At the end, Commerce concluded that the post-merger Marine Harvest is a successor to neither. 24 If Ma rine Har vestthe owner of the automobile because B’s na me appears on its title. The judge further dec ides that B is not the owner of the automobile because A’s name appears on its title. The judge thus concludes that evidence shows that the automobile belongs to neither A nor B because both of th ei r n am es ar e o n i ts ti tl e, in st ea d o f d ec id in g t ha t a ll ev id en ce po in ts to jo in t o wn er sh ip by A and B of the automobile.

25 Nor did it seek this Court’s jurisdiction to overturn the final determination. Commerce never de noted the joint ventu

re as “n ew entity ,” it mere ly d

ecided t hat it was not a succ essor to either c ompany . Commerc e’s rea soning in the succ essorshi

p determ ination c ontains th e same logical fallacy

as here, but there is at least some justification in assigning the a ll-others rate to the joint venture as one of its predecessors was never investigated. 30 could not b e Marine

Harves t becaus e it is too c lose to Ma res Austr ales and if Marine Harves t could not be Mares Australes because it is too close to Marine Ha rvest, how could it be that Marine H arvest is

differe nt than ei ther, thu s a new e

ntity ? By the eviden

ce that Commerce i

tself cites, Ma rine Har vest has t o be a suc cessor t

o both comp anies or

at least t o one of them. Commerce cites only one prior case where under similar circ umstances in a changed circumstances review, using the succ essor-in-interest test, it determined that a joint venture was not a successor to either of the companies that cre ated it. See Notice of Final Results of Changed Circumstances Antidumping Duty Review: Certain Polyester Staple Fiber From the Republic of Korea , 66 Fed. Reg. 30,411 (June 6, 2001); Notice of Initiation and Preliminary Results of Changed Circumstances Antidumping Duty Review: Certain Polyester Staple Fiber From the Republic of Korea , 66 Fed. Reg. 1642 (Jan. 9, 2001). As a result, the joint venture was assig ned an all-other s rate. One of t he former comp anies was in vestigated i n the init ial LTFV investigation, found not dumping, was thus excluded from the order, where as the other was never investigated. Although the joint venture initially argued that it was the successor to the excluded company, it never

challenged the preliminary results of the changed circumstance s review that de te rm in ed th at it wa s a su cc es so r t o n ei th er co mp an y. 2531

To the extent this court determines that the post-merger Marine Ha rvest is not a new entity, Commerce has to dete rmine whether it is a successor to either one of the compa nies or both. The court therefore remands to Commerce to be guided by

this opinion to decide whether the post-merger Marine Harve st is a successor to either company or both. The court is cognizant of the fact that if the post-merger Ma rine Harvest is a successor to the pre-mer ger Marine Harves t, it was ne

ver unde r the ant idumping order a nd thus all

reviews of the company

must

cease. If the post-me

rger M arine Ha

rvest is a success or to Mar

es Austra les or to b oth compa

nies, it is now going through its third annual review, and if it is found not dumping in this revie w (as in the previous two annual reviews and the preliminary determination of the third), it must be excluded by Commerce fr om the existing antidumping duty order w hen the final determination of the third annual review is issued. Commerce has 60 day s to issue its remand determination; however, the court is also mindful of the fact should the final determination of the third a nnual review be issued before that and should the post-merg er Marine Harvest be found not to be dumping, the remand may become moot.32 V. C ONCLUSI ON For the r easons ou tlined ab ove, the i

mposition on

Marine H arvest o f the ca sh deposit rate of former Mares Australes without notice in a preliminary changed circumstances re view is not in accordance with law and those deposits must be timely refunded. Commerce’s conclusion, as a result of the application of its successor-in-interest test to Marine Ha rvest, that it is a “new entity ” is neithe

r support ed by substantia

l evidenc e nor in a

ccorda nce with l aw and th e court, therefore, will remand to the age ncy for r eview and action consistent with this opinion.

Dated: ________________

_______________________ New York, NY Judith M. Barzilay JudgeERRATA

Marine Harvest (Chile) S.A. v. United States , Court No. 01-00808, Slip Op. 02-134, Dated October 31, 2002. Page 3, line 16 (last line): Delete superscript 4 after “respe ctively.” Ther e is no footnote text corresponding to superscript 4. Renumber the subsequent footnotes accordingly , i.e. footnote 5 should be renumbered footnote 4, etc. November 6, 2002