Court Opinion

ID: 817840
Source: CourtListenerOpinion
Date Created: 2013-02-01 01:58:41.452601+00
Date Added: 2024-06-11T13:14:18.084121
License: Public Domain

Slip Op. 11B 159

            UNITED STATES COURT OF INTERNATIONAL TRADE
______________________________
                               :
MUELLER COMERCIAL DE MEXICO, :
S. DE R.L. DE C.V.,            :
                               : Before: Richard K. Eaton, Judge
     and                      :
                               : Court No. 10-00163
SOUTHLAND PIPE NIPPLES CO.,    :
INC.,                          :
                               :
     Plaintiffs,               :
                               :
     v.                        :
                               :
UNITED STATES,                 :
                               :
     Defendant,               :
                               :
     and                      :
                               :
UNITED STATES STEEL            :
CORPORATION,                   :
INC.                           :
                               :
     Defendant-Intervenor.     :
______________________________:

                        OPINION AND ORDER

[Plaintiffs‟ motion for judgment on the agency record is granted,
and the matter is remanded to the Department of Commerce.]

                                         Dated: December 16, 2011

     White & Case LLP (David E. Bond, Yohai Baisburd, and Jay C.
Campbell), for plaintiffs Mueller Comercial de Mexico, S. de R.L.
de C.V. and Southland Pipe Nipples Co., Inc.

     Tony West, Assistant Attorney General; Jeanne E. Davidson,
Director, Patricia M. McCarthy, Assistant Director, Commercial
Litigation Branch, Civil Division, United States Department of
Justice (Douglas Edelschick); Office of Chief Counsel for Import
Administration, U.S. Department of Commerce (Ahran Kang McCloskey),
of counsel, for defendant.
     Skadden, Arps, Slate, Meagher & Flom LLP (Robert E. Lighthizer
and Jeffrey D. Gerrish), for defendant-intervenor United States
Steel Corporation.

     Eaton, Judge:   Before the court is plaintiffs‟ motion for

judgment on the agency record, pursuant to USCIT R. 56.2, challenging

the Department of Commerce‟s (“Commerce” or the “Department”) final

results of the Sixth Administrative Review of the antidumping duty

order on Certain Circular Welded Non-Alloy Steel Pipe (“CWP”) from

Brazil, the Republic of Korea, Mexico, and Venezuela, 57 Fed. Reg.

49,453 (Dep‟t of Commerce Nov. 2, 1992) (final determination and

amendment to final determination of sales at less than fair value)

(the “Order”) for the period of review (“POR”) August 1, 2007 through

July 31, 2008.   See CWP from Mexico, 75 Fed. Reg. 20,342 (Dep=t of

Commerce Apr. 19, 2010) (final results) and the accompanying Issues

and Decision Memorandum (“Issues & Dec. Mem.”) (collectively, the

“Final Results”).

     The court has jurisdiction pursuant to 28 U.S.C. § 1581(c)

(2006) and 19 U.S.C. § 1516a(a)(2)(B)(i) (2006).     For the reasons

set forth herein, the plaintiffs= motion is granted and the matter

is remanded to Commerce.

                             BACKGROUND

     Plaintiffs Mueller Comercial de Mexico, S. de R.L. de C.V.

(“Mueller”) and Southland Pipe Nipples Co., Inc. (“Southland”)
Court No. 10-00163                                            Page 3

(collectively, “plaintiffs”) challenge the Department=s

determination, in the Final Results, to assign Mueller an antidumping

duty rate of 48.33% based on adverse facts available (“AFA”).1

Plaintiff Mueller is a Mexican company whose business includes

selling CWP in the United States that it purchases from Mexican

producers.   Mueller‟s merchandise is imported by its U.S. affiliate,

plaintiff Southland.

     On November 3, 2008, Commerce published notice of the

opportunity to request an administrative review of the Order for the

POR November 1, 2007 through October 31, 2008.     Thereafter, both

Mueller and defendant-intervenor United States Steel Corporation

asked Commerce to conduct an administrative review of Mueller‟s

entries of CWP.   On March 10, 2009, the Department selected Mueller,

Tuberia Nacional, S.A. de C.V. (“TUNA”), and Hylsa, S.A. de C.V.

     1
           The Department generally makes its antidumping
determinations based on the information it solicits and receives from
interested parties concerning the normal value and export price of
the subject merchandise. Commerce may, however, rest its
determinations on “facts otherwise available . . . to fill in the
gaps when Commerce has received less than the full and complete facts
needed to make a determination.” Gerber Food (Yunnan) Co., Ltd. v.
United States, 29 CIT 753, 767, 387 F. Supp. 2d 1270, 1283 (2005)
(quoting Nippon Steel Corp. v. United States, 337 F.3d 1373, 1381
(Fed. Cir. 2003)). Having determined that the use of facts otherwise
available is warranted, if the Department further finds that “an
interested party has failed to cooperate by not acting to the best
of its ability to comply with a request for information . . .
[Commerce] may use an inference that is adverse to the interests of
that party in selecting from among the facts otherwise available.”
19 U.S.C. § 1677e(b).
Court No. 10-00163                                              Page 4

(“Hylsa”) as mandatory respondents in the administrative review.

See Mem. re Selection of Respondents, A-201-805 (Dep‟t of Commerce

Mar. 10, 2009) at 7 (P.R. Doc. 24).   Mueller had not been a respondent

in any of the five previous reviews of the Order.

     Plaintiffs claim that both prior to and during the POR, Mueller

purchased the CWP it exported to the United States from the two

Mexican producers that were mandatory respondents in the review–TUNA

and Hylsa.   According to plaintiffs, relying on Commerce‟s reseller

policy2 in the period before and during the POR, Southland posted cash

deposits on the entries Mueller purchased from TUNA and Hylsa at those

producers‟ respective antidumping duty deposit rates of 2.92% and

10.38%.   See Mem. to File re CWP from Mexico: Customs Package

Information of 2007-2008 Period of Review, A-201-805 (Dep‟t of

Commerce June 9, 2009) (C.R. Doc. 9) (“Customs Data File”).

     On May 29, 2009, after responding only to Section A of Commerce‟s

Antidumping Duty Questionnaire, Mueller informed Commerce that it

would not participate in the administrative review.    See Letter from

White & Case LLP to Secretary of Commerce (May 29, 2009) (P.R. Doc.

     2
           Pursuant to the reseller policy, under certain
circumstances, an exporter that does not produce the goods it exports
pays the cash deposit rate of its producer. See Parkdale Int’l, Ltd.
v. United States, 31 CIT 1229, 1231, 508 F. Supp. 2d 1338, 1343 (2007)
(“Because the producer is assumed to be the first company in the
commercial chain that knew of the product‟s destination, cash
deposits for antidumping duties on all merchandise sold to identified
resellers is initially set at the producer‟s cash deposit rate.”).
Court No. 10-00163                                              Page 5

53).       According to Mueller, it decided not to participate because

the review had been rescinded with respect to TUNA,3 and it became

apparent that Hylsa was not going to participate.    Mueller maintains

that it would have been futile for it to continue further with the

review because the information necessary to determine its

antidumping duty rate would have had to come from its producers, TUNA

and Hylsa. Pls.‟ Mem. Pts. Auth. Supp. Mot. J. Agency R. (“Pls.‟

Mem.”) 4.

       Based on Mueller‟s withdrawal from participation in the review,

Commerce applied AFA to determine Mueller=s antidumping duty rate.

See Issues & Dec. Mem. at 10 (“Because Mueller did not cooperate in

this review by refusing to respond to the Department‟s questionnaire,

we have applied total AFA for these final results.”); see also Gallant

Ocean (Thailand) Co. v. United States, 602 F.3d 1319, 1321 (Fed. Cir.

2010) (quoting 19 U.S.C. § 1677e(b)) (“Upon a finding that an

interested party refuses to cooperate with [Commerce‟s] information

requests, Commerce „may use an inference that is adverse to the

interests of that party in selecting from among the facts otherwise

available.‟”).      The Department assigned Mueller the AFA rate of

48.33% based on a single transaction of TUNA=s during the Fifth

       3
          The Department rescinded the review with respect to TUNA
because the company timely notified Commerce, in accordance with 19
C.F.R. § 351.213(d)(3) (2011), that it did not have any exports of
subject merchandise to the U.S. during the POR. Issues & Dec. Mem.
at 15.
Court No. 10-00163                                            Page 6

Administrative Review of the Order, which covered the period 1998

through 1999.   See Issues & Dec. Mem. at 10; see also Memorandum re

CWP from Mexico, Use of Adverse Facts Available (AFA) and

Corroboration of AFA Rate, A-201-805 (Dep‟t of Commerce Nov. 30,

2009) (the “AFA Memo”).

                          STANDARD OF REVIEW

     The standard of review is set forth in 19 U.S.C. §

1516a(b)(1)(B)(i), which provides, in relevant part, that the court

“shall hold unlawful any determination, finding, or conclusion found

. . . to be unsupported by substantial evidence on the record or

otherwise not in accordance with law.”

                              DISCUSSION

I.   Commerce‟s Final Results

     In the Final Results, Commerce assigned Mueller the AFA rate

of 48.33%,4 which was greater than the highest overall rate

determined in either the original investigation or any subsequent

review.   In assigning that rate, the Department did not follow its

established practice of applying the highest overall margin

determined in any segment of the proceeding - in this case, the

     4
          In arriving at this rate, Commerce chose the highest
transaction-specific margin calculated for TUNA in the Fifth
Administrative Review. Issues & Dec. Mem. at 10.
Court No. 10-00163                                                  Page 7

all-others rate of 32.62% - to an uncooperative respondent.      See AFA

Memo at 7 (“Generally, the Department finds that selecting the

highest rate from any segment of the proceeding as AFA is

appropriate.”).

        Commerce reasoned that it should assign a rate even higher than

the all-others rate because Aas Mueller has never previously been

reviewed by the Department, it is currently subject to the 32.62

percent rate.@    AFA Memo at 9; see also Issues & Dec. Mem. at 11. Based

on this finding, Commerce further concluded that by withdrawing from

the review, Mueller demonstrated that “the all-others rate [of

32.62%] proved insufficiently adverse to induce Mueller to cooperate

to the best of its ability in this administrative review.”      AFA Memo

at 9.    Accordingly, Commerce “deem[ed] it necessary to apply a rate

higher than the all-others rate to which Mueller is already subject.

Otherwise, Mueller would have no incentive to cooperate.”       AFA Memo

at 9.     The Department ultimately found “48.33 percent to be

sufficiently high so as to encourage Mueller=s participation in future

segments of this proceeding.”      AFA Memo at 9.    According to

Commerce,

        applying 48.33 percent to . . . Mueller would ensure [that
        the company] shall not benefit from [its] failure to
        cooperate in this administrative review and provides an
        incentive for . . . Mueller to cooperate in future segments
        of the proceeding.

AFA Memo at 8.     In other words, Commerce determined that, because
Court No. 10-00163                                             Page 8

Mueller was subject to the 32.62% rate prior to the POR and

nevertheless withdrew from the review, a higher rate was needed to

insure that it did not profit from its decision not to participate

in the review and to encourage compliance in future reviews.

      In addition, the Department determined that it could not take

into account Mueller‟s claim that it complied with Commerce‟s

reseller policy by making cash deposits for its entries equal to the

antidumping duty rates assigned to its alleged producers - TUNA and

Hylsa.    Commerce found that “[w]hile we recognize Mueller‟s claim

that its entries of subject merchandise sourced from TUNA and [Hylsa]

would be subject to those producers= individual cash deposit rates,

because of Mueller=s failure to cooperate, we cannot determine the

universe of Mueller=s sales, let alone the origin of those unreported

sales.”   Issues & Dec. Mem. at 11.   Put another way, the Department

found that Mueller=s failure to participate in the review prevented

Commerce from determining if its entries were subject to the rate

set under the reseller policy.   Thus, according to Commerce, it would

be “inappropriate” to determine if the reseller policy would apply

to Mueller‟s entries.    See Issues & Dec. Mem. at 11.

II.   Plaintiffs Insist Mueller Should Be Assigned the All-Others
      Rate

      Plaintiffs‟ threshold argument is that the Department‟s
Court No. 10-00163                                             Page 9

determination is unlawful because Commerce lacked any reasonable

basis for departing from its established practice of assigning an

uncooperative respondent5 the highest overall rate from any segment

of the proceeding as the AFA rate.     Here, the all-others rate of

32.62%.     Plaintiffs assert that the Department=s determination to

depart from its established practice was contrary to law because “it

is only in extraordinary circumstances - none of which are present

here - that [the Department] deviates from using the highest rate

assigned in a previous segment of the proceeding.”     Pls.‟ Mem. 15.

Plaintiffs maintain that such “extraordinary circumstances” exist

when the highest overall margin is equal to the cash deposit rates

of a respondent subject to AFA, such that the “adverse consequences

for the respondent would have been diminished . . . because [the

respondent] would not have owed monies over and above the deposited

amounts.”     Pls.‟ Mem. 16.

     According to plaintiffs, such extraordinary circumstances are

not present here because Mueller‟s cash deposit rates were well below

the 32.62% all-others rate.    Specifically, they claim that Mueller‟s

cash deposit rates were 2.92% for merchandise manufactured by TUNA,

and 10.38% for merchandise manufactured by Hylsa.    Thus, they insist

that “[b]ecause the rates at which Mueller deposited duties were far

     5
          Plaintiffs do not dispute that, by failing to answer the
Department‟s questionnaires, Mueller was an uncooperative
respondent subject to the application of AFA.
Court No. 10-00163                                           Page 10

below the 32.62% rate, assigning AFA to Mueller Mexico based on

[Commerce=s] declared practice would have had significant adverse

consequences.” Pls.= Mem. 17.   For plaintiffs, “[u]nder these

circumstances, there was no legitimate reason or reasonable basis

for [Commerce] to depart from its established practice and select

an aberrationally high, transaction-specific rate as AFA.”       Pls.‟

Mem. 17.

     Moreover, plaintiffs contend that the record does not support

Commerce‟s finding that it could not determine whether Southland

posted cash deposits at the rates of TUNA and Hylsa.     While

recognizing that Mueller withdrew its questionnaire responses,

plaintiffs assert that these responses were unnecessary to a finding

relating to the deposits.    Rather, plaintiffs note that the

Department itself obtained Customs‟ documentation for eleven of

Mueller‟s entries during the POR, all of which confirmed that

Southland paid cash deposits on those entries at TUNA‟s and Hylsa‟s

antidumping duty rates.   Pls.‟ Mem. 17-18; see also Customs Data

File.   Plaintiffs further insist that, if this documentation was not

sufficient to establish the amounts of Southland‟s cash deposits,

Commerce could have further confirmed Southland‟s cash deposits by

obtaining the balance of Mueller‟s entry documentation from Customs.

Pls.‟ Mem. 18.
Court No. 10-00163                                           Page 11

III.       Analysis

       A. Legal Framework for the Selection of AFA Rates

       When selecting an appropriate AFA rate, “Commerce must balance

the statutory objectives of finding an accurate dumping margin and

inducing compliance.”    Timken Co. v. United States, 354 F.3d 1334,

1345 (Fed. Cir. 2004).    Under 19 U.S.C. § 1677e(b), the Department

may select “secondary information” as facts otherwise available in

determining AFA rates, which “includes „[i]nformation derived from

the petition that gave rise to the investigation or review, the final

determination concerning the subject merchandise, or any previous

review under [19 U.S.C. § 1675] concerning the subject merchandise.‟”

KYD, Inc. v. United States, 607 F.3d 760, 765 (Fed. Cir. 2010)

(citations omitted).

       It is undisputed that Commerce‟s usual practice is to assign

an uncooperative respondent the highest overall rate from any segment

of the proceeding as AFA.6    See AFA Memo at 7 (“Generally, the

       6
           Just what constitutes a lack of cooperation to justify the
application of this rule is an open question. In the seminal case
Rhone Poulenc, Inc. v. United States, 899 F.2d 1185 (Fed. Cir. 1990),
the Federal Circuit first confirmed the “common sense presumption”
that a respondent that fails to answer Commerce‟s questionnaires does
so “knowing the rule” that it will be assigned the highest rate from
any segment of the proceeding. This presumption, however, has been
refined over the years.

       In addition, in the most recent cases where the [Rhone
       Poulenc] presumption is mentioned, the Federal Circuit
       appears to restrict its use to situations where a
Court No. 10-00163                                          Page 12

Department finds that selecting the highest rate from any segment

of the proceeding as AFA is appropriate.”).

     This practice was first upheld by the Federal Circuit in Rhone

Poulenc, Inc. v. United States, 899 F.2d 1185 (Fed. Cir. 1990).   As

this Court has recently noted:

     The Rhone Poulenc case is most often cited for its
     statement on the assignment of the highest prior margin
     to an uncooperative respondent: “[I]t reflects a common
     sense inference that the highest prior margin is the most
     probative evidence of current margins because, if it were
     not so, the importer, knowing of the rule, would have
     produced current information showing the margin to be
     less.” Rhone Poulenc, 899 F.2d at 1190. In other words,
     the case stands for the proposition that a respondent can
     be assumed to make a rational decision to either respond
     or not respond to Commerce's questionnaires, based on
     which choice will result in the lower rate.

     Tianjin Mach. Imp. & Exp. Corp. v. United States, 35 CIT __,

     respondent has not answered Commerce's questionnaire at
     all, rather than when the questionnaire responses were
     found wanting for one reason or another. In fact, in the
     most recent case citing the Rhone Poulenc presumption, the
     Federal Circuit paid particular attention to the fact that
     the exporter put nothing on the record. See KYD, 607 F.3d
     at 764 (“King Pac had elected not to cooperate at all in
     the review.”); see also id. at 767 (“King Pac's failure
     to cooperate deprived Commerce of the most direct evidence
     of King Pac's actual dumping margin.”). Thus, the KYD case
     seems to confirm that “common sense” restricts the Rhone
     Poulenc presumption to cases where a respondent can be
     assumed to have chosen not to respond to a questionnaire
     at all, in order to achieve a lower rate.

Tianjin Mach. Imp. & Exp. Corp. v. United States, 35 CIT __, __, 752
F. Supp. 2d 1336, 1347 (2011). Here, it is apparent that Mueller
was an uncooperative respondent because it withdrew all of its
answers to Commerce‟s questionnaires.
Court No. 10-00163                                           Page 13

__, 752 F. Supp. 2d 1336, 1348 (2011).    Thus, Rhone Poulenc

established that Commerce may assign the highest rate from any

segment of the proceeding to an uncooperative respondent based on

that respondent‟s knowing7 decision to accept this highest rate as

a result of its considered choice not to answer Commerce‟s

questionnaires.   This idea that an uncooperative respondent

receives the highest rate by choice, based on an understanding of

its position, is carried forward in recent cases.   See KYD, 607 F.3d

at 766-67 (quoting Rhone Poulenc, 899 F.2d at 1190).

     As is the case with all established agency practices, if the

Department chooses to depart from this practice it is required to

provide a reasonable explanation for doing so.   See Allegheny Ludlum

Corp. v. United States, 24 CIT 452, 459, 112 F. Supp. 2d 1141, 1148

(2000) (“„Although Commerce is traditionally granted broad

discretion in its selection of methodology to implement the

     7
          What a respondent knows, or should know, is a common aspect
of the unfair trade laws. See, e.g., Quingdao Taifa Group Co. v.
United States, 33 CIT __, __, 637 F. Supp. 2d 1231, 1239 (2009) (“A
reasonable and responsible foreign producer would have known that
it must keep and maintain documents such as factory-out slips,
production notices, and production subledgers, and [respondent‟s]
officials‟ efforts to avoid producing the requested documents
demonstrates that Taifa failed to put forth maximum efforts to
investigate and obtain the documents.”). Indeed, the reseller
policy itself relies on the notion that the antidumping duty rate
should be that of the “first company in the commercial chain that
knew, at the time merchandise was sold, that the merchandise was
destined for the United States.” Reseller Notice, 63 Fed. Reg. at
55,362.
Court No. 10-00163                                            Page 14

[antidumping and countervailing duty statutes], Commerce may not

abuse its discretion and its choice of methodology may not be

arbitrary.‟   Rather, „an agency must either conform itself to its

prior decisions or explain the reasons for its departure.‟”)

(internal citations omitted).

     B. Commerce‟s Determination to Depart from Its Established
        Practice was Contrary to Law and Unsupported By Substantial
        Evidence

     Here, Commerce has not adequately explained its reasons for

departing from its established practice of assigning the highest

previous rate to an uncooperative respondent as AFA.   This is because

it has failed to support its findings with respect to the antidumping

duty rate to which Mueller‟s entries were subject prior to the POR.

This failure has two aspects.   First, Commerce has not adequately

explained its basis for determining that Mueller knew or should have

known it was subject to the 32.62% all-others rate prior to the POR.

Second, Commerce‟s determination that Mueller was subject to the

all-others rate is not supported by substantial evidence because it

ignores record evidence that Mueller‟s entries were, in fact, subject

to lower rates based on Commerce‟s reseller policy.      Accordingly,

the court finds that the Department‟s determination to apply the

48.33% rate must be remanded.

     As noted, in accordance with Rhone Poulenc and its progeny, a
Court No. 10-00163                                            Page 15

prerequisite to Commerce‟s assignment of a rate in excess of 32.62%

is that Mueller knew, or could be presumed to have known, that it

was subject to the all-others rate prior to the POR.      Here, the

Department‟s reason for departing from its established practice was

that, as a respondent that had not been previously reviewed, Mueller

was subject to the highest prior margin from the investigation

onward.   This being the case, it was apparent to Commerce that a rate

higher than the all-others rate of 32.62% was necessary in order to

keep Mueller from profiting from its decision not to participate in

this review, and to encourage Mueller‟s compliance in future reviews.

In other words, Commerce assumed that Mueller was subject to the

all-others rate prior to the POR and, based on this assumption,

concluded that, because Mueller withdrew from the review, the

all-others rate was clearly not sufficiently adverse to it to insure

the company‟s cooperation.

     Therefore, Commerce determined not to follow its established

practice by assigning Mueller the highest previous rate from any

segment of the antidumping proceeding, because it found that

     the all-others rate proved insufficiently adverse to
     induce Mueller to cooperate to the best of its ability in
     this administrative review . . . [because] as Mueller has
     never previously been reviewed by the Department, it is
     currently subject to the 32.62 percent rate. We deem it
     necessary to apply a rate higher than the all-others rate
     to which Mueller is already subject. Otherwise, Mueller
     would have no incentive to cooperate.
Court No. 10-00163                                             Page 16

AFA Memo at 9 (emphasis added).

     As has been seen, for Commerce‟s determination to be lawful,

Mueller must be found to have made a knowing decision not to respond

to Commerce‟s questionnaire requests.    That is, it must have been

the case that Mueller was aware, or that Mueller could have reasonably

been presumed to be aware, that it was subject to the all-others rate

prior to the POR for Commerce to be justified in departing from its

established practice.   Notably, while the Department assumed that

Mueller was subject to the all-others rate, Commerce does not discuss

how it was that Mueller knew that it was subject to this rate or how

the company could reasonably be charged with such knowledge.    Since

a knowing decision not to participate in the review is required for

the assignment of the highest rate from any segment, the same is also

necessary for Commerce to assign an even higher rate pursuant to AFA.

The Department‟s failure to address the question of whether Mueller

had, or could be charged with, knowledge that it was at all times

subject to the 32.62% rate, thus, requires a remand.

     In addition, Commerce‟s reseller policy suggests that Mueller

was not, in fact, subject to the all-others rate prior to the POR.

Under the reseller policy, “company-specific [antidumping]

assessment rates must be based on the sales information of the first

company in the commercial chain that knew, at the time the merchandise

was sold, that the merchandise was destined for the United States.”
Court No. 10-00163                                            Page 17

Antidumping and Countervailing Duty Proceedings: Assessment of

Antidumping Duties, 63 Fed. Reg. 55,361, 55,362 (Dep=t of Commerce

Oct. 15, 1998) (notice and request for comment on policy concerning

assessment of antidumping duties) (“Reseller Notice”).    Because the

Department presumes that foreign producers are aware of the ultimate

destination of their merchandise, resellers are required to post

antidumping duty deposits at the same rates as the producers from

whom they acquire the merchandise they export into the United States.

Reseller Notice, 63 Fed. Reg. at 55,362.

     Accordingly, if a reseller identifies a producer on the forms

it submits to Customs and Border Protection (“Customs”), and the

reseller has not been assigned a company-specific cash deposit rate,8

the agency will require the payment of cash deposits for those entries

at the rates of the identified producers.     These entries are then

liquidated at the producer=s cash deposit rate, unless an

administrative review is requested for either the producer or

reseller.   Reseller Notice, 63 Fed. Reg. at 55,362 (“The Department

instructs Customs to apply any reseller‟s company-specific cash

deposit rate to entries of merchandise sold by that reseller.      If

there is no company-specific reseller cash deposit rate and the

     8
          A reseller, or a producer, may have its own
company-specific cash deposit rate if one was determined for it in
the initial investigation or an administrative review. Both TUNA
and Hylsa had company-specific rates determined during the Fifth
Administrative Review.
Court No. 10-00163                                           Page 18

importer identifies the producer, the Department instructs Customs

to apply the producer's cash deposit rate to the entry.   This logic

stems from the fact that, when subject merchandise enters the United

States through a reseller, the Department does not know who set the

price of the subject merchandise to the United States.     The

Department instructs Customs to apply the producer's cash deposit

rate where the producer of the merchandise is identified on the

assumption that the producer knew that the merchandise was destined

for the United States.   This assumption is more often true than not.

Subject merchandise sold through a reseller and imported where there

is no company-specific reseller rate or where the importer did not

identify the producer of the merchandise is subject to the all-others

cash deposit rate.”).

     Importantly, under the reseller policy, the all-others rate9

only applies to a reseller when (1) either Commerce “determines in

an administrative review that the producer did not know10 that the

     9
          The all-others rate is a default cash deposit rate that
applies when no company-specific deposit rate has been determined
for goods from a particular exporter in the initial investigation
or during any prior administrative review. Entries will only be
liquidated at the all-others rate when cash deposits are made at the
all-others rate, and those entries are not subject to an
administrative review. See 19 U.S.C. § 1504(a).
     10
          If Commerce determines that a producer did not know that
merchandise sold to a reseller was destined for the United States
then the reseller‟s goods will not be liquidated at the producer‟s
rates under the reseller policy.
Court No. 10-00163                                             Page 19

merchandise it sold to the reseller was destined for the United

States” or no producer-specific or reseller-specific cash deposit

rate has been determined; and (2) “there was no company-specific

review of the reseller for that review period.”       Reseller Notice,

63 Fed. Reg. at 55,362-63.    Here, Commerce assumed that Mueller was

subject to the all-others rate prior to the POR because it had never

been subject to a review under the Order.     This assumption, however,

does not necessarily hold when the record evidence is examined under

Commerce‟s reseller policy.

     The only evidence on the record concerning the cash deposits

made on Mueller‟s entries suggests that Mueller, as a reseller

without its own cash deposit rate, paid cash deposits at the rates

of its producers.    See Customs Data File.    That is, Commerce itself

placed on the record information it solicited from Customs relating

to eleven of Mueller‟s entries, all of which demonstrate that

Southland paid cash deposits for these entries equal to either TUNA‟s

or Hylsa‟s antidumping duty rate.

     By making these deposits it appears clear that plaintiffs

believed that these entries were subject to Mueller‟s producers‟

rates in accordance with the reseller policy.       Because this Sixth

Review is the first review under the Order in nearly ten years,

Mueller‟s entries have likely been liquidated at its producers‟ cash

deposit rates of 2.92% and 10.38% for almost a decade.      Therefore,
Court No. 10-00163                                            Page 20

Commerce‟s determination that Mueller was subject to the all-others

deposit rate from the outset does not seem to be in accord with the

only evidence on the record.

     Except to decline to take it into account, however, Commerce

does not discuss this evidence in the Final Results.     See Issues &

Dec. Mem. at 11 (“[B]ecause the Department has been unable to examine

Mueller‟s claim that it sourced subject merchandise from TUNA and

[Hylsa], it is inappropriate to assign separate assessment rates for

those entries, as advocated by Mueller.”).    Commerce attempts to

justify its failure to address the evidence of Mueller‟s cash deposit

rates by finding that “what rate Mueller was or was not subject to

at the beginning of this administrative review is moot, because the

fact remains that Mueller refused to cooperate with the Department=s

requests for information and is now subject to AFA.” Issues & Dec.

Mem. at 11.

     A respondent‟s failure to cooperate, however, does not relieve

the Department of its responsibility to assign a rate sufficient,

but no more than sufficient, to insure cooperation.   Timken, 354 F.3d

at 1345; F.Lli de Cecco Di Filipo Fara S. Martino, S.p.A. v. United

states, 216 F.3d 1027, 1032 (Fed. Cir. 2000) (“Obviously a higher

adverse margin creates a stronger deterrent, but Congress tempered

deterrent value with the corroboration requirement.     It could only

have done so to prevent the petition rate (or other adverse inference
Court No. 10-00163                                            Page 21

rate), when unreasonable, from prevailing and to block any temptation

by Commerce to overreach reality in seeking to maximize

deterrence.”).   Nor does it mean that Commerce can ignore evidence

that it put on the record itself.    See Kaiyuan Group Corp. v. United

States, 28 CIT. 698, 724, 343 F. Supp. 2d 1289, 1314 (2004)

(“Substantial evidence requires that the agency's determination be

based on the whole record and the reviewing court must examine all

evidence that fairly supports and detracts from the

determination.”); Huaiyin Foreign Trade Corp. v. United States, 322

F.3d 1369, 1374 (Fed. Cir. 2003) (quoting Atl. Sugar, Ltd. v. United

States, 744 F.2d 1556, 1562 (Fed. Cir. 1984) (The existence of

substantial evidences is determined “by considering the record as

a whole, including evidence that supports as well as evidence that

„fairly detracts from the substantiality of the evidence.‟”).

     Evidence of the rate Mueller was subject to at the beginning

of the review, therefore, was not rendered moot by Mueller‟s status

as an uncooperative respondent.     Further, this rate is important to

the outcome of this case because, if Mueller was not subject to the

all-others rate at the beginning of the POR the Department=s

established practice leads to the conclusion that 32.62% would be

sufficiently high to encourage Mueller‟s future cooperation.      As a

result, Commerce‟s failure to examine this information provides the

second reason for a remand.
Court No. 10-00163                                            Page 22

                             CONCLUSION

     The Department‟s practice of applying the highest previously

determined overall rate to an uncooperative respondent as AFA is

based on the presumption that such a rate is inherently adverse.

This practice is longstanding, frequently used, and has been held,

in most circumstances, to be lawful.   See, e.g., Rhone Poulenc, 899

F.2d at 1190; NSK Ltd. v. United States, 28 CIT 1535, 1561, 346 F.

Supp. 2d 1312, 1335 (2004); Shanghai Taoen Int’l Trading Co. v. United

States, 29 CIT 189, 199, 360 F. Supp. 2d 1339, 1348 (2005).     Thus,

any decision to abandon the application of this rate in favor of the

highest transaction specific rate for another respondent in a

previous review must be fully explained and based on substantial

evidence.   See Cultivos Miramonte S.A. v. United States, 21 CIT 1059,

1064 n.7, 980 F. Supp. 1268, 1274 n.7 (1997) (“A change is arbitrary

if the factual findings underlying the reason for change are not

supported by substantial evidence.”); see also SKF USA Inc. v. United

States, 263 F.3d 1369, 1382 (Fed. Cir. 2001) (“[A]n agency action

is arbitrary when the agency offer[s] insufficient reasons for

treating similar situations differently.”) (internal quotation and

citation omitted).

     The Final Results do not provide a reasonable explanation for

departing from Commerce‟s established practice based on Mueller‟s

knowledge that it was subject to the all-others rate and,
Court No. 10-00163                                           Page 23

nonetheless, withdrew from the review.    Nor has the Department

supported with substantial evidence its conclusion that Mueller was,

in fact, subject to the all-others rate during the time leading up

to the POR.   Thus, the Final Results do not provide a lawful

explanation, supported by substantial evidence, for departing from

Commerce‟s established practice of assigning to an uncooperative

respondent the highest overall rate from any segment of the

proceeding as the AFA rate.

                               ORDER

     Accordingly, for the reasons stated, it is hereby

     ORDERED that, upon remand, Commerce issue a redetermination

that complies in all respects with this Opinion and Order, is based

on determinations that are supported by substantial record evidence,

and is in accordance with law; it is further

     ORDERED that Commerce shall reconsider its determination not

to apply the all-others rate to Mueller‟s entries.   In doing so, the

Department shall consider whether Mueller knew, or could be charged

with knowing, that it was subject to the all-others rate of 32.62%

prior to the POR, and discuss the record evidence related to the cash

deposits made on Mueller‟s entries.    Commerce shall then determine

an antidumping duty rate for Mueller; it is further

     ORDERED that the Department may reopen the record to solicit
Court No. 10-00163                                            Page 24

any information it reasonably deems necessary to make its

determination; it is further

     ORDERED that the remand results shall be due on April 16, 2012;

comments to the remand results shall be due thirty (30) days following

filing of the remand results; and replies to such comments shall be

due fifteen (15) days following filing of the comments.

                                      /s/ Richard K. Eaton
                                          Richard K. Eaton

Dated: December 16, 2011
       New York, New York