OAS
NORTH AMERICAN FREE TRADE AGREEMENT
ARTICLE 1904
OPINION AND ORDER OF THE PANEL


In the matter of:

GRAY PORTLAND CEMENT AND
CLINKER FROM MEXICO

File no. USA-97-1904-02

2. Investigating Authority Selection of a BIA Rate

The final step in our analysis of whether the scope of the Investigating Authority’s discretion under the "best information available" provision includes the authority to apply as BIA a margin that was not in effect during the one-year time period for administrative reviews, is to determine whether applying the 109.43 percent rate to Cemex under the circumstances of this case was unreasonable. The Department has discretion to determine the BIA rate, but that discretion is not unlimited. We must assess the reasonableness of the 109.43 percent rate under the Investigating Authority’s 1st-tier BIA methodology in light of the purposes of the BIA provision and the particular circumstances of the fourth administrative review.

The purpose of the BIA rule is to "facilitate the determination of dumping margins as accurately as possible within the confines of extremely short statutory deadlines." 105 Since the Investigating Authority has no subpoena power, BIA effectively induces respondents to comply with agency requests for data necessary to conduct statutorily mandated administrative reviews. 106 Thus, the BIA rule induces respondents to provide timely, complete and accurate information and prevents respondents from controlling the results of administrative reviews by providing partial or delayed information. 107

For the purposes of this Panel review, Cemex does not contest the Department’s application of an adverse first-tier BIA margin. 108 Cemex contends, however, that application of a BIA rate that came into effect only after the deadline for completion of the administrative review is impermissible because it is contrary to the language and purpose of the entire statutory scheme. The Investigating Authority argues that it is a reasonable exercise of its discretionary authority to apply a BIA rate in effect on the date of its final results in an annual administrative review, and that the application of the 109.43 percent rate in this case was reasonably adverse to Cemex and was consistent with the purposes of BIA.

The Tariff Act of 1930, as amended, provides in relevant part as follows:

"If . . . an interested party . . . withholds information that has been requested by the administering authority . . . , fails to provide such information by the deadlines for submission of the information or in the form and manner requested . . . ,[or] significantly impedes a proceeding . . . the administering authority . . . shall . . . use the facts otherwise available in reaching the applicable determination under this title." 109

Applying the first step of the Chevron analysis to 1677(e), it is apparent that neither the plain language of the statute nor relevant legislative history reveal a clear Congressional direction regarding the selection or application of "best information available". 110 The language of the statute evinces a clear Congressional intent that the Investigating Authority use BIA with respect to a respondent who withholds requested information, or does not supply information in a timely manner, or in the form required, or otherwise impedes the proceeding. However, the statutory language is silent regarding the issue in question in this panel review, whether the Investigating Authority can use as BIA a margin that came into effect after the one-year period for completionof the administrative review. Because the statute does not speak directly to the issue of temporal restrictions on the Investigating Authority’s selection of BIA rates, this Panel’s review of the Investigating Authority’s interpretation of 1677(e) is guided by Chevron’s second prong. Therefore this Panel must accord considerable deference to the Investigating Authority’s interpretation of its statutory authority to select and apply a BIA rate pursuant to 1677(e).

Our conclusion that the statutory language of 1677(e) indicates no clear Congressional direction, and that Chevron thus commands this Panel to defer to reasonable Investigating Authority interpretations of the BIA provision, is supported by ample judicial authority. By not directly addressing what constitutes best information available, Congress "explicitly left a gap for the agency to fill." 111 Reviewing courts have repeatedly recognized that the Investigating Authority has broad discretion in executing the antidumping law. 112 Courts recognize that enforcing the Tariff Act is a difficult task given the intricate framework of the Act, the numbers of factors involved, the difficulty of quantification of those factors, and the repercussions on foreign policy.113

Nevertheless, the Panel notes that the Investigating Authority’s discretion under the antidumping statute, while broad, is not completely unfettered. While use of BIA is an informal club, 114 it cannot be wielded arbitrarily. 115 Accordingly, courts have at times constrained the Department’s resort to BIA. For example, the Department cannot invoke its BIA authority by making repeated requests for information which a party has already submitted until the party becomes frustrated and refuses to comply, or characterize a failure to list sales as a refusal to answer if in fact there were no sales. 116 Moreover, the Investigating Authority may not continue to use an antidumping duty rate that has been vacated during judicial review as erroneous. 117 The question to percent margin lies beyond the Investigating Authority’s discretion under Chevron, and therefore is not in accordance with the law.

Cemex argues that applying the 109.43 percent in the fourth administrative review is unreasonable because it had no notice of Investigating Authority policy to apply a BIA margin that was not in effect during the 12-month period for completion of administrative reviews. In its brief, Cemex asserted that the Investigating Authority could cite no case where it applied as BIA a margin that was not in effect during the period for completion of administrative reviews. At oral argument, counsel for Southern Tier seemed to state that the BIA rate applied in the final results of the third administrative review came into existence after the 12-month period. The third review was initiated on September 30, 1993 118 therefore the 12-month period for completing the administrative review elapsed on September 30, 1994. In the final results of the third review, issued well after the 12-month period on May 19, 1995, the Investigating Authority applied a BIA margin of 61.85 percent. 119 This 61.85 percent BIA rate was Cemex’s own margin determined pursuant to the final remand in the original investigation, and approved by the CIT on September 24, 1994. 120 Thus the 61.85 percent BIA rate, applied in the final results of the third review, had been judicially approved before completion of the 12-month period for the administrative review. 121 Neither the Investigating Authority nor Southern Tier has provided this Panel with a precedent for applying a BIA rate in the final results of an administrative review that was not in effect during the 12-month period.

However, we are cognizant that the 109.43 percent BIA rate is respondent’s own margin from a previous review, and we consider this relevant to the reasonableness of applying the 109.43 percent margin to Cemex in the circumstances of the fourth administrative review. As the Investigating Authority notes, this number is based on information provided by Cemex itself during the second review, and was upheld by the CAFC after litigation in which Cemex participated extensively. 122

In holding that the Department’s two-tier methodology "is a reasonable and permissible exercise of the [Department’s] statutory authority to use best information available when a respondent refuses or is unable to provide requested information," the CAFC cited with approval the " ‘common sense inference’ that the highest prior margins are the most indicative of current market conditions." 123 Selection of the highest prior margin as BIA thus "avoids rewarding the uncooperative and recalcitrant party for its failure to supply requested information." 124 Similarly,in the present case, the Department may rationally regard the selection of the 109.43 percent BIA rate as "most indicative of current market conditions" and therefore as reasonably calculated to achieve the purposes of 1677(e).

The Participants disagree whether applying the 109.43 percent margin to Cemex in this review furthers the statutory purpose of inducing cooperation and preventing respondents from manipulating the review process. Cemex contends that the 109.43 percent margin was punitive because Cemex did eventually proffer the requested information in the fourth administrative review, and thus resort to BIA was unnecessary. 125 Yet Cemex conceded in its brief and before this Panel that it does not contest the Department’s application of 1st-tier uncooperative BIA in the fourth review.

The only basis for holding that the Investigating Authority exceeded its authority under the BIA statute would require a showing that use of the 109.43 percent margin was an unreasonable or otherwise unsupportable exercise of the Investigating Authority’s discretion. No such showing has been made.

Our colleague’s dissenting opinion suggests that the Department’s selection of the 109.43 percent margin was arbitrary and unreasonable, given that that number did not become available until long after the 12 month period for reviews had passed. The majority disagree. If, as this opinion demonstrates, the Investigating Authority faces no legal obstacle in taking more than 12 months to complete an administrative review, and cannot be penalized for doing so, the Investigating Authority has the discretion— in seeking the highest available first tier BIA— to use the highest BIA approved in any prior review within the extended period, in this case, 109.43 percent. There is here no question of retroactivity. The 109.43 percent applied in the Department’s final results in this fourth Administrative Review cannot be characterized as "retroactive" for two reasons: First, the 109.43 percent was derived from a prior review (the second Administrative Review), and, second, final judicial approval of the 109.43 percent in the second Administrative Review took place prior to the time at which the Department concluded the fourth Administrative Review.

As discussed above, the standard of review applicable in panel review of agency determinations in the United States requires this Panel to afford the Investigating Authority great deference in interpreting the antidumping laws. Considering that the 109.43 percent margin applied in the final results was calculated from data supplied by Cemex in a prior review, we believe that selection of this margin is neither arbitrary nor irrational and was within the Department’s discretion.

V. Order

For the reasons set forth in this opinion, the final results of the fourth administrative review of the antidumping order in Gray Portland Cement and Clinker from Mexico are affirmed.

Decision Issued on December 4, 1998.

Executed in the original:

__________________________________

David A. Gantz, Chairman

__________________________________

Lewis H. Goldfarb

__________________________________

Daniel G. Partan

__________________________________

Jose Alejandro Romero Carreto

 

Continue to the DECISION OF VICTOR CARLOS GARCIA MORENO


105 Allied-Signal Aerospace Co. v. U.S., 996 F.2d 1185, 1191 (Fed. Cir. 1993).

106 Id., quoting Olympic Adhesives, Inc. v. United States, 899 F.2d 1565, 1571 (Fed. Cir. 1990).

107 See Rhone-Poulenc, Inc. v. United States, 710 F.Supp 341, 347 (Ct. Int’l Trade 1989)(stating that the purpose of using best information available is to elicit the fullest cooperation from recalcitrant respondents).

108 Cemex brief at 8.

109 19 U.S.C. 1677(e).

110 Other than a statement that Congress intended the Investigating Authority to use the most up-to-date information available, the House and Senate Reports accompanying the Trade Agreements Act of 1979 are silent on what constitutes BIA. See H.R. Rep. No. 317, 96th Cong., 1st Sess. 77 (1979); S. Rep. No. 249, 96th Cong., 1st Sess. (1979).

111 Allied-Signal Aerospace Co. v. United States, 996 F.2d 1185, 1911 (Fed. Cir. 1993), quoting Chevron, 467 U.S. at 834-44.

112 Daewoo Electronics Co., Ltd. v. International Union, 6 F.3d 1511, 1516 (Fed. Cir. 1993) (recognizing the ITA as the "master" of antidumping law worthy of considerable deference); American Lamb Co. v. United States, 785 F.2d 994, 1001 (Fed. Cir. 1986) (deferring to ITA’s interpretation of statutory "reasonable indication" standard as entailing more than "mere possibility" as permissible in light of language and statutory intent).

113 Smith-Corona Group, Consumer Products Div., SCM Corp. v. United States, 713 F.2d 1568, 1571 (Fed. Cir. 1983).

114 See Atlantic Sugar, 744 F.2d 1556, 1560 (Fed. Cir. 1984).

115 See Olympic Adhesive, Inc. v. United States, 899 F.2d 1565, 1572 (Fed. Cir.1990).

116 Id.

117 D&L Supply Co. v. United States, 113 F.3d 1220, 1224 (Fed. Cir. 1997); Sigma Corp. v. United States, 117 F.3d 1401, 1410 (Fed. Cir. 1997) (rejecting the Department’s use of an invalidated BIA).

118 58 Fed. Reg. 50153 (Sept. 30, 1993).

119 60 Fed. Reg. 26865 (May 19, 1995).

120 Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v. United States, 18 CIT 917 (1994), 1994 WL 534945, aff’d 68 F.3d 487 (1995).

121 Counsel for Southern Tier, in discussing the third review, stated that it was a precedent "where Commerce changed the rate from the preliminary to the final and after the one-year point had passed." OT at 84. For purposes of determining whether Cemex was on notice of this practice, however, changing the rate after the one-year period to a number that had been judicially approved within the one-year period is not the same as changing the rate to a number that was still in litigation and had not been judicially approved.

122 Investigating Authority brief at 28-29.

123 Allied Signal, 996 F.2d at 1192, quoting Rhone Poulenc, 889 F.2d at 1190.

124 Allied Signal at 1192.

125 Cemex communicated to the Investigating Authority on February 8, 1996 that it was ready to submit the requested information regarding Type I. In a letter dated February 16, 1996, the Investigating Authority responded that the administrative record was closed and no further factual information would be accepted.

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