In our September 2015 edition of the Trade Advisor, we discussed the effect that recent amendments to the antidumping laws would have on the U.S. Department of Commerce’s (“the Department”) ability to apply facts available with adverse inferences to uncooperative parties. We observed that the Department published a Federal Register notice that indicated the amendment, Section 502 of the Trade Preferences Extension Act of 2015 (“the Act”), would apply to Department determinations made on or after August 6, 2015 and that the Department of Justice had taken the position in a public filing to the Court of Appeals for the Federal Circuit (“Federal Circuit”) that this effective date included remand determinations made after that day. This article will provide a few important updates.
On October 5, 2015, the Federal Circuit issued an opinion in which it held that the new law did not apply to Department decisions that are currently on appeal. See Ad Hoc Shrimp Trade Action Comm. v. United States, 802 F.3d 1339, 1349-52 (Fed. Cir. 2015) (“Ad Hoc Shrimp”). More specifically, after comparing Section 502 of the Act with the legislation’s other provisions and reviewing the Act’s legislative history, the Court found that Congress did not intend section 502 to apply retroactively. Id. The Federal Circuit, however, expressly declined to determine “whether Commerce’s application of section 502 of the Act after the effective date nevertheless has an impermissible retroactive effect based upon event occurring prior to the effective date.” Id. at 1351 n.12.
On November 30, 2015, the U.S. Court of International Trade (“CIT”) held that Section 502 of the Act did not apply to decisions made by the Department on remand after the effective date for which the Department’s initial determination was made before the effective date. See Fresh Garlic Producers Ass’n v. United States, No. 14-00180, 2015 WL 7748613, at *11-14 (Ct. Int’l Trade Nov. 30, 2015) (hereinafter “FGPA”). The Court explained that if the Department applied Section 502 of Act on remand, the Department “would be in effect” applying “the law retroactively.” Id. at *14. The Court also explained that “the crucial moment for retroactivity” was Commerce’s determination that the company in question “failed to cooperate to the best of its ability and selected total AFA.” Id. at *13.
Another recent Federal Circuit case has provided the Department with a clear path to avoid litigation over AFA rates in the interim. On January 19, 2016, the Federal Circuit affirmed the Department’s selection of an AFA rate that was based on a cooperative respondent’s highest-transaction specific margin in the same segment of the proceeding. See Nan Ya Plastics Corp. v. United States, No. 15-1054, Slip Op. at 19-25 (Fed. Cir. Jan. 19, 2016) (“Nan Ya”). Notably, the Department did not corroborate the rate because the rate was based on “primary” information (i.e., information obtained during the segment) as opposed to “secondary” information (i.e., information obtained from the petition or a separate segment of the proceeding). See id. at 7-8. Relying on the plain terms of the statute, the Federal Circuit affirmed the rate the Department applied and its decision not to corroborate the rate. See id. at 19-20, 24-25.
In summary, Commerce will not be permitted to apply Section 502 of the Act to any determination in which it found a party to be uncooperative before August 6, 2015. In the interim, the Department will continue to grapple with the state of the law before Section 502 of the Act was enacted, including corroborating rates based on secondary information and demonstrating that the rates reflect commercial reality. If the Department chooses a rate based on information from the relevant segment, including the highest transaction-specific margin calculated for a cooperative respondent in that segment, the Department will not have to corroborate that rate.