Opinion ID: 3007030
Heading Depth: 3
Heading Rank: 2

Heading: Adverse Facts Available

Text: During its periodic administrative reviews, Commerce requests information from respondents and if a respondent “withholds information that has been requested by [Commerce],” “fails to provide such information by the 14 A “nonmarket economy country” is “any foreign country that [Commerce] determines does not operate on market principles of cost or pricing structures, so that sales of merchandise in such country do not reflect the fair value of the merchandise.” 19 U.S.C. § 1677(18)(A). “Because it deems China to be a nonmarket economy country, Commerce generally considers information on sales in China and financial information obtained from Chinese producers to be unreliable for determining, under 19 U.S.C. § 1677b(a), the normal value of the subject merchandise.” Dongtai Peak Honey Indus. Co. v. United States, 777 F.3d 1343, 1350 n.1 (Fed. Cir. 2015) (internal quotation marks and citation omitted). 26 AD HOC SHRIMP TRADE ACTION COMM. v. UNITED STATES deadlines . . . or in the form and manner requested,” “significantly impedes a proceeding,” or “provides such information but the information cannot be verified,” Commerce is permitted to use “facts otherwise available” in making its determinations. 19 U.S.C. § 1677e(a)(2)(A)– (D). If Commerce further finds a respondent has “failed to cooperate by not acting to the best of its ability to comply with a request for information,” then it “may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available” (i.e., it may apply AFA). Id. § 1677e(b). “[T]he statutory mandate that a respondent act to ‘the best of its ability’ requires the respondent to do the maximum it is able to do.” Nippon Steel Corp. v. United States, 337 F.3d 1373, 1382 (Fed. Cir. 2003). In selecting an AFA rate, Commerce may use infor- mation from the petition, investigation, prior administrative reviews, or “any other information placed on the record.” 19 U.S.C. § 1677e(b); see Gallant Ocean, 602 F.3d at 1323 (“[I]n the case of uncooperative respondents,” Commerce has discretion to “select from a list of secondary sources as a basis for its adverse inferences.”); F.lli De Cecco di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000). However, when Commerce “relies on secondary information rather than on information obtained in the course of an investigation or review,” it “shall, to the extent practicable, corroborate that information from independent sources that are reasonably at [its] disposal.” 19 U.S.C. § 1677e(c). To corroborate secondary information, Commerce must find the information has “probative value,” KYD, Inc. v. United States, 607 F.3d 760, 765 (Fed. Cir. 2010), by demonstrating the rate is both reliable and relevant, Gallant Ocean, 602 F.3d at 1323–25. AD HOC SHRIMP TRADE ACTION COMM. v. UNITED STATES 27 IV. Commerce’s Decision to Deny Appellant Separate Rate Status Was Supported by Substantial Evidence and Was in Accordance with Law A. Commerce’s AFA Determination Hilltop argues Commerce’s determination that Hilltop was ineligible for a separate rate is unsupported by substantial evidence and contrary to law. It notes the decision “to reject all of Hilltop’s reported data and to treat Hilltop as part of the [China]-wide entity as total [AFA] . . . [was] predicated upon a single finding”: that Hilltop failed to report its affiliation with Ocean King on its questionnaire responses. Appellants’ Br.-1647, at 18; Appellants’ Br.-1514, at 20. According to Hilltop, because “the information regarding the Ocean King affiliation was not pertinent to Commerce’s margin calculation in [the Fourth and Fifth Reviews], there was no legitimate basis to apply facts available or an adverse inference for its omission.” Appellants’ Br.-1647, at 19; Appellants’ Br.- 1514, at 21 (capitalization omitted). In support, Hilltop contends “the application of facts otherwise available and an adverse inference requires that there be a ‘gap’ of necessary information missing from the record,” and “[i]f the unreported information is not necessary, then there is no valid basis for application of any adverse inference.” Appellants’ Br.-1647, at 24; Appellants’ Br.-1514, at 26. That is, Hilltop contends because information regarding third-country affiliates is “not pertinent to the calculation of Hilltop’s margin,” Commerce has failed to show there is a gap in the record. Appellants’ Br.-1647, at 23; Appellants’ Br.-1514, at 25. Hilltop says that its omission is not relevant because “information regarding a third country affiliate that is not involved in the production, sale or distribution of subject merchandise is of no consequence in the calculation of a dumping margin.” Appellants’ Br.-1647, at 27; Appellants’ Br.-1514, at 29 (emphasis added). In support, 28 AD HOC SHRIMP TRADE ACTION COMM. v. UNITED STATES Hilltop cites a prior administrative review and asserts, “Commerce has previously determined that the failure to disclose an affiliate does not require an adverse inference unless the affiliate was involved in the production or sale of the subject merchandise during the period under review.” Appellants’ Br.-1647, at 24; Appellants’ Br.-1514, at 26 (citing Certain Stainless Steel Butt-Weld Pipe Fittings from Taiwan, 70 Fed. Reg. 1870 (Dep’t of Commerce Jan. 11, 2005) (final results of administrative review)). Hilltop also cites the CIT’s decision in Ta Chen Stainless Steel Pipe Co. v. United States, 31 Ct. Int’l Trade 794, 821–22 (2007) (unpublished), where it stated “[i]f, as the plaintiff and the defendant assert, the entities allegedly affiliated with Ta Chen within the meaning of 19 U.S.C. § 1677(33)(A)–(E) were in fact uninvolved with the subject merchandise, a finding on remand of affiliation would not have any impact thereon.” Here, Hilltop argues, had the company disclosed its affiliation with Ocean King, this information would have “no impact on Commerce’s margin calculation.” Appellants’ Br.-1647, at 29; Appellants’ Br.-1514, at 30. This is because, Hilltop contends, “there were no shipments at all of shrimp from Cambodia during the [Fourth and Fifth Reviews]”; “Hilltop (through its US affiliate, Ocean Duke) made only a de minimis quantity of sales of shrimp originating from Cambodia in [the Fourth Review]”; and “had no sales of Cambodian shrimp in [the Fifth Review].” Appellants’ Br.-1647, at 27; Appellants’ Br.-1514, at 30. Hilltop also argues “[e]ven if the record herein did contain substantial evidence to support allegations of transshipment or circumvention, it would be improper to address such allegations in the context of the [Fourth and Fifth Review] proceeding[s].” Appellants’ Br.-1647, at 42; Appellants’ Br.-1514, at 43. This is because, according to Hilltop, investigations into the circumvention of antidumping duty orders are “entirely separate proceeding[s]” with “separate procedures” than administrative reviews. AD HOC SHRIMP TRADE ACTION COMM. v. UNITED STATES 29 Appellants’ Br.-1647, at 42; Appellants’ Br.-1514, at 43– 44. Finally, Hilltop argues there is no support for Commerce’s use of total, as opposed to partial, AFA. Hilltop claims Commerce “cannot support its use of total AFA against Hilltop by claiming that the omission of Ocean King from the list of third country affiliates justifies the rejection of all of Hilltop’s reported data.” Appellants’ Br.- 1647, at 33; Appellants’ Br.-1514, at 35. Hilltop says this court and the CIT “have repeatedly stated that a resort to total AFA is only permissible if the missing or unusable information is ‘core’ rather than ‘tangential’ to Commerce’s dumping determination or where the deficiencies are so pervasive that they permeate all aspects of the reported data.” Appellants’ Br.-1647, at 33; Appellants’ Br.-1514, at 35. In support, Hilltop cites, inter alia, Jiangsu Changbao Steel Tube Co. v. United States, 884 F. Supp. 2d 1295, 1305–06 (Ct. Int’l Trade 2012), where the CIT sustained the application of total AFA because the discovery of false statements and altered production and accounting records impeached the reliability of all reported data. Substantial evidence supports Commerce’s determination that Hilltop’s withholding of information and its repeated misrepresentations rendered the company’s submissions unreliable, and therefore the company was unable to rebut the presumption that it is part of the China-wide entity. Under 19 U.S.C. § 1677e(a)(2), if a respondent “withholds information that has been requested by [Commerce]” or “significantly impedes a proceeding,” Commerce is permitted to use “facts otherwise available” in making its determinations. Here, Hilltop repeatedly withheld and misrepresented information regarding its affiliation with Ocean King. Indeed, while the public registration documents for Ocean King identified Mr. To as “a board member and 35 percent share- holder beginning in July 2005 and ending in September 30 AD HOC SHRIMP TRADE ACTION COMM. v. UNITED STATES 2010,” AR4 Remand Results at 8; AR5 1st Remand Re- sults at 8, Hilltop misrepresented to Commerce that “[n]one of the [Hilltop] Group companies or their individual owners own 5 percent or more in stock in any third parties,” AR4 Remand Results at 11; AR5 1st Remand Results at 12, and none of Hilltop’s managers “held positions with any other firm, government entity, or industry organization during the [period of review],” AR4 Remand Results at 12 n.63; AR5 1st Remand Results at 13 n.65. In addition, the record shows Hilltop subsequently denied and concealed its affiliation with Ocean King until confronted with the public registration documents unequivocally revealing the affiliation. As the CIT found, Hilltop provided no explanation of its failure to disclose and subsequent repeated denial of its affiliation with Ocean King beyond a vague state- ment that the error may have been due to Mr. To’s lack of personal involvement with Ocean King (despite unequivocal record evidence of his per- sonal involvement and substantial investment during Ocean King’s incorporation), “or for whatever reason.” Ad Hoc Shrimp II, 992 F. Supp. 2d at 1291 (emphasis added) (footnote omitted). Substantial evidence supports Commerce’s conclusion that “Hilltop’s failure to disclose its relationship with Ocean King . . . surely demonstrates that it impeded the proceeding by not disclosing the affiliation.” AR4 Remand Results at 19; AR5 1st Remand Results at 19. In addition to “significantly imped[ing] a proceeding,” 19 U.S.C. § 1677e(a)(2), if Commerce further finds a respondent has “failed to cooperate by not acting to the best of its ability to comply with a request for information,” then it may apply AFA. Id. § 1677e(b). Here, Commerce properly applied an adverse inference because, through material misrepresentations and refusal to AD HOC SHRIMP TRADE ACTION COMM. v. UNITED STATES 31 respond to its inquiries, Hilltop “failed to cooperate by not acting to the best of its ability.” See Nippon Steel, 337 F.3d at 1383 (“[I]ntentional conduct, such as deliberate concealment . . . , surely evinces a failure to cooperate.”). Hilltop erroneously argues there was no gap in the information necessary to calculate its dumping margin. Commerce concluded that because Hilltop “provided false and incomplete information regarding its affiliates,” it could not “determine whether any other misrepresentations exist on the record with regard to Hilltop’s full universe of affiliates, corporate structure and sales process, or whether other information may be missing from the record,” and therefore it was “unable to rely upon any of Hilltop’s submissions in this segment.” AR4 Remand Results at 2; AR5 1st Remand Results at 2. As is evident, the necessary information missing from the record was information supporting Hilltop’s claim that it was eligible for a separate rate, including an accurate representation of Hilltop’s corporate structure and indications of government control exercised through the company’s Chinese affiliates. See Ad Hoc Shrimp II, 992 F. Supp. 2d at 1293. Equally unavailing is Hilltop’s argument that its affiliation with Ocean King was immaterial because Ocean King was not involved in the production of subject merchandise, so disclosure would have had no effect on the calculation of its duty rate. First, the CIT’s decision in Ta Chen does not stand for the proposition, as Hilltop suggests, that third-country affiliate information “is of no consequence” if the affiliate is not involved in the production, sale, or distribution of subject merchandise. Indeed, while the CIT recognized such information might not have an effect, it also stated “[Commerce] has discretion on remand to request and evaluate new data. And it is not absolutely certain that affirmative affiliation determinations on remand would have no effect upon the plaintiff’s antidumping-duty rate.” Ta Chen, 31 Ct. Int’l Trade at 822 (emphasis added) (citations omitted). Second, at 32 AD HOC SHRIMP TRADE ACTION COMM. v. UNITED STATES issue here is whether the nondisclosure affected Hilltop’s request for separate rate status, which it surely did. Indeed, Commerce’s decision to reject Hilltop’s submissions was based on its nondisclosure of its affiliate which called into question Hilltop’s credibility. When offered the opportunity to explain itself, moreover, Hilltop continued to deny its affiliation until faced with irrefutable evidence. That Ocean King may not have been involved in the production of subject merchandise is irrelevant. Hilltop’s arguments regarding the transshipment evidence are also irrelevant. As the CIT noted, “Commerce’s decision to invalidate Hilltop’s separate rate representations as unreliable was not based on a definitive finding of transshipment, but rather on the impeachment of Hilltop’s credibility as a consequence of evidence reasonably indicating that Hilltop deliberately withheld and misrepresented information,” and these misrepresentations “may reasonably be inferred to pervade the data in the record beyond that which Commerce has positively confirmed as misrepresented.” Ad Hoc Shrimp II, 992 F. Supp. 2d at 1293 (footnote omitted). Indeed, Commerce properly determined both that Hilltop’s misrepresentations rendered the entirety of its submissions unreliable and that Hilltop’s failure to respond to the transshipment evidence prevented Commerce from evaluating the impact of Hilltop’s misrepresentations. Commerce also properly applied total AFA, as op- posed to partial AFA, because Hilltop’s failure to disclose its affiliates and its misrepresentations undermined all of Hilltop’s submissions regarding its ownership and corporate structure, as well as Commerce’s ability to rely on Mr. To’s certifications of those submissions. See Mukand, Ltd. v. United States, 767 F.3d 1300, 1308 (Fed. Cir. 2014) (“In general, use of partial facts available is not appropriate when the missing information is core to the antidumping analysis and leaves little room for the substitution of partial facts without undue difficulty.”). As the CIT AD HOC SHRIMP TRADE ACTION COMM. v. UNITED STATES 33 explained, information about Hilltop’s corporate structure “is core, not tangential, to Commerce’s analysis because it goes to the heart of Hilltop’s corporate ownership and control.” Ad Hoc Shrimp I, 925 F. Supp. 2d at 1324 (footnote omitted); see also Ad Hoc Shrimp II, 992 F. Supp. 2d at 1294–95. Here, “none of [Hilltop’s] reported data is reliable or usable” because the “submitted data exhibited pervasive and persistent deficiencies that cut across all aspects of the data.” See Zhejiang DunAn Hetian Metal Co. v. United States, 652 F.3d 1333, 1348 (Fed. Cir. 2011). B. Hilltop’s Claimed Exemption from the Separate Rate