Opinion ID: 798878
Heading Depth: 2
Heading Rank: 2

Heading: The United States and US Steel's Cross-Appeal

Text: The United States and US Steel (collectively, the cross-appellants) appeal from the trial court's decision affirming the post-remand determination that Essar received no countervailable benefits through the CIP. The cross-appellants argue that the court should have let stand Commerce's previous determination applying adverse facts. Commerce has the power to apply adverse facts when an interested party has failed to cooperate by not acting to the best of its ability to comply with a request for information. 19 U.S.C. § 1677e(b). The trial court acknowledged that Essar did not act to the best of its ability when responding to Commerce's questions, but nonetheless vacated and remanded Commerce's determination to apply adverse facts. The trial court based its remand on Essar's belated admissionafter the imposition of adverse factsthat it had a facility in Chhattisgarh and on the court's own identification of the two letters relating to Essar's facility in Chhattisgarh. The trial court ordered the remand and required Commerce to place the letters on the record and consider them. This exceeded the trial court's authority and was erroneous. Essar's responses to Commerce's questions in the initial determination demonstrate that it did not act to the best of its ability to comply with requests for information. When asked the first time about facilities in Chhattisgarh, Essar stated that Essar does not have any manufacturing facilities in the State of Chhattisgarh. J.A. 662. After finding the Press Release about Essar's Chhattisgarh plant, Commerce presented the question a second time, but Essar still withheld the truth about its Chhattisgarh facility: Commerce: On page III-68 of your May QR, you stated that you do { } not have any manufacturing facilities in the State of Chhattisgarh. An Essar press release on the record of this review appears to indicate that you have an iron ore beneficiation plant located in ... Chhattisgarh. Please state whether you received subsidies under the Chhattisgarh Industrial Policy with respect to an iron ore beneficiation plant in [Chhattisgarh] and any other facility in Chhattisgarh. Essar: No. Essar does not have an iron ore beneficiation plant in ... Chhattisgarh. J.A. 1179. Essar repeatedly denied having a plant (manufacturing or beneficiation) in Chhattisgarh. If Essar had no plant in Chhattisgarh, then there would be no question about the CIP subsidies. Both of these denials occurred after Essar had applied for these exact same CIP subsidies claiming entitlement because of its Chhattisgarh plant. Hence, Essar was applying for CIP benefits because of its Chhattisgarh facility and then telling Commerce it does not even have a plant in Chhattisgarh. Essar then received a response to its application for subsidies from the government of Chhattisgarhdespite Essar's Chhattisgarh plant, the government of Chhattisgarh determined that it was not entitled to CIP subsidies. After its repeated claims that it did not have a plant in Chhattisgarh, Essar did not submit the letter which indicated that its plant in Chhattisgarh was not entitled to CIP benefits to Commerce. At the time Commerce determined to apply adverse facts with regard to whether Essar received CIP benefits the only evidence of record was Essar's repeated claims that it had no manufacturing or beneficiation plant in Chhattisgarh and a press release and annual report indicating that Essar did have a plant in Chhattisgarh. Only after Essar was denied benefits under the CIP and after Commerce had applied adverse facts against Essar did Essar change its story. In light of the record, there can be no doubt Commerce's decision to apply adverse facts was supported by substantial evidence. Essar had custody of both its request for benefits and the government's rejection during Commerce's investigation. Yet Essar withheld these documents and provided contradictory information to Commerce. We have held that [c]ompliance with the `best of its ability' standard is determined by assessing whether respondent 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 F.3d 1373, 1382 (Fed.Cir.2003). Providing false information and failing to produce key documents unequivocally demonstrate that Essar did not put forth its maximum effort. See id. at 1383 (While intentional conduct, such as deliberate concealment or inaccurate reporting, surely evinces a failure to cooperate, the statute does not contain an intent element.). Because Commerce lacks subpoena power, Commerce's ability to apply adverse facts is an important one. Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed.Cir.1990). The purpose of the adverse facts statute is to provide respondents with an incentive to cooperate with Commerce's investigation, not to impose punitive damages. F.lli De Cecco Di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1032 (Fed. Cir.2000). An appropriate decision based on adverse facts is a reasonably accurate estimate of the respondent's actual rate, albeit with some built-in increase intended as a deterrent to non-compliance. Id. at 1032. A decision based on adverse facts is not punitive when determined in accordance with the statutory requirements, as Commerce did here. KYD, Inc. v. United States, 607 F.3d 760, 767-68 (Fed.Cir. 2010). The imposition of adverse facts can be inappropriate if it is overly punitive. For example, in Gallant Ocean (Thailand) Co. v. United States, 602 F.3d 1319, 1324 (Fed.Cir.2010), Commerce imposed an unreasonably high antidumping margin, which was more than ten times higher than the average dumping margin for cooperating respondents. Id. at 1324. That rate was punitive, aberrational, or uncorroborated. Id. In this case, however, the countervailing duty imposed for Essar's participation in the CIP was on par with similar subsidy programs and therefore not punitive. Commerce did not err in its application of adverse facts, and no party argues that the application of adverse facts based on the record before the remand was punitive. Without the ability to enforce full compliance with its questions, Commerce runs the risk of gamesmanship and lack of finality in its investigations. Indeed, Essar's actions demonstrate both. Essar withheld information about its Chhattisgarh facility. Only when Essar knew that it would face countervailable subsidies did it finally make concessions about its Chhattisgarh facility. In addition, Essar's failure to cooperate with Commerce's questions lengthened the investigation. The trial court's remand to Commerce was precipitated by Essar's belated admissionafter the imposition of adverse factsrelating to its Chhattisgarh facility and the court's independent identification of Essar's lack of eligibility for benefits under the CIP. The trial court did not conclude that the application of adverse facts, in light of the record before Commerce was improper. In fact, the trial court held that the court accepts that Essar did not act to the best of its ability during the review with regard to this issue. J.A. 2472. The trial court was aware of Essar's application for CIP benefits and the government of Chhattisgarh's denial of those benefits because of an administrative review in a different year where Essar did admit the existence of a plant in Chhattisgarh and did submit those documents into the record. Essar, 721 F.Supp.2d at 1300. The trial court then asked the government if it would voluntarily remand this case for consideration of those additional documents. J.A. 2472. The government declined to do so. The government explained that it would not seek a voluntary remand and reopen the record because Essar had an opportunity to place this document in the administrative record for the 2007 period of review, which Commerce conducted between January 26, 2008, and May 6, 2009, a period that includes and extends beyond the date of that letter. J.A. 1628. The government further explained that the agency makes its decision solely on the basis of the record; that the government should not consider evidence not timely filed; that Essar had the responsibility to create an accurate record; Essar had these documents and chose not to submit them; and Essar failed to cooperate and gave false statements. J.A. 1628. After the government declined to voluntarily remand and reopen the record, the trial court ordered Commerce to reopen the administrative record, place two lettersEssar's application for CIP benefits and the government of Chhattisgarh's denial of benefitson the record, and consider these documents in its reassessment of whether Essar benefitted from Chhattisgarh's Industrial Program. Essar Steel, 721 F.Supp.2d at 1301. The trial court explained that the evidence strongly impugn, if not outright refute, the Department's determination that Essar benefitted from the CIP. Id. at 1300. The government argues that the trial court exceeded its authority when it ordered Commerce to reopen the record and admit the documents in this case. We agree. It is Essar's burden to create an accurate record during Commerce's investigation. See Zenith Elecs. Corp. v. United States, 988 F.2d 1573, 1583 (Fed.Cir.1993). Commerce must consider all information timely filed by interested parties. 19 C.F.R. § 351.301(c)(3)(ii). The trial court then reviews the record, which consists of a copy of all information presented to or obtained by [Commerce] during the course of the administrative proceeding. 19 U.S.C. § 1516a(b)(2)(A). The record on review did not include Essar's request for benefits under the CIP, nor the government of Chhattisgarh's denial of those benefits. The record on review included Essar's repeated dishonest denials of a facility in Chhattisgarh, as well as Commerce's questionnaire including a press release contradicting those statements. To allow constant reopening and supplementation of the record would lead to inefficiency and delay in finality. The Supreme Court has stated: Administrative consideration of evidence... always creates a gap between the time the record is closed and the time the administrative decision is promulgated [and, we might add, the time the decision is judicially reviewed].... If, upon the coming down of the order litigants might demand rehearings as a matter of law because some new circumstance has arisen, some new trend has been observed, or some new fact discovered, there would be little hope that the administrative process could ever be consummated in an order that would not be subject to reopening. Vermont Yankee Nuclear Power Corp. v. Natural Res. Defense Council, Inc., 435 U.S. 519, 554-55, 98 S.Ct. 1197, 55 L.Ed.2d 460 (1978) (citations omitted); see also Co-Steel Raritan, Inc. v. Int'l Trade Comm'n, 357 F.3d 1294, 1316 (Fed.Cir.2004) (Interest of finality of agency decisions is best served by not reopening and supplementing the record.). We have carved out a small number of exceptions when we allow supplementation of an agency record. For example, one exception is to allow a remand to supplement the record when the original record was tainted by fraud. Home Prods. Int'l, Inc. v. United States, 633 F.3d 1369, 1379 (Fed.Cir.2011). We have also made an exception and allowed supplementation when the underlying agency decision was based on inaccurate data that the agency generating those data indicates are incorrect. Borlem S.A.-Empreedimentos Industriais v. United States, 913 F.2d 933, 937 (Fed.Cir.1990). The present case does not fall into one of these exceptions, nor does it merit the creation of a new exception. Certainly Commerce could have requested that the trial court remand to allow them to reopen the record if it believed that was warranted. The trial court could have remanded the case to Commerce with instructions for Commerce to decide whether to reopen and supplement the record. [1] It was improper in this case, however, for the trial court to remand and require that Commerce reopen and supplement the record. The government is correct that the trial court's order usurps agency power, undermines Commerce's ability to administer the statute entrusted to it, contradicts important principles of finality, and discourages compliance. Commerce generally does not consider untimely filed factual information. 19 C.F.R. § 351.302(d)(1) ([T]he Secretary will not consider or retain in the official record of the proceeding ... untimely filed factual information....); QVD Food Co. v. United States, 658 F.3d 1318 (Fed.Cir. 2011) (Commerce correctly declined to rely on late-filed evidence.). Important principles of timeliness and finality undergird all aspects of litigation. Essar had an opportunity to present its evidence regarding the CIP subsidies to Commerce during the review. Instead it denied having a plant in Chhattisgarh. Only after the record closed, after adverse facts were applied, after the case was being reviewed by the trial court, these documents surfaced. In light of the facts of this case, Commerce did not err when it declined to reopen the record after it had long since closed to accept evidence that Essar at all times had and had refused to provide. The decision to reopen the record is best left to the agency, in this case Commerce. We cannot conclude that the agency abused its discretion by refusing to reopen the record and admit the evidence in this case. In light of this, the trial court exceeded its authority when it ordered the agency to do so. Commerce's application of adverse facts against Essar was appropriate. We have recognized Commerce's authority to apply adverse facts, even when a party provides relevant factual information if a party has not acted to the best of its ability to provide the information. In Nippon Steel, Nippon Steel withheld relevant information from Commerce after Commerce asked for it twice during the investigation. 337 F.3d at 1383. Nippon Steel provided the information to Commerce only after Commerce published its preliminary results, which applied adverse facts against Nippon Steel. Id. at 1378. Because Nippon Steel did not timely file the information, Commerce chose not to accept it, and instead upheld its application of adverse facts against Nippon Steel in its final results. Id. The Court of International Trade, after several remands to Commerce, ordered Commerce to use the late-filed information, instead of adverse facts. Id. at 1379. We reversed the Court of International Trade's decision, and held that Commerce's decision to apply adverse facts was supported by substantial evidence. Id. at 1385. The only difference between Nippon Steel and this case is that here, it was the trial court, not Essar, who identified the late-filed documents. That does not change the fact that Commerce's application of adverse facts was supported by substantial evidence and should have been upheld. The Court of International Trade exceeded its authority when it ordered Commerce to reopen and expand the agency record. Article III courts are different from Article I agencies, and we must be ever mindful that we not usurp their role in this process.