Transcom, Inc. v. United States

Slip Op. 00-146

UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS

______________________________________

:

TRANSCOM, Inc., :

:

Plaintiff, :

:

L & S BEARING COMPANY, :

:

Plaintiff-Intervenor, :

:

v. : Court No. 97-02-00248

:

THE UNITED STATES, :

:

Defendant, :

:

THE TIMKEN COMPANY, :

:

Defendant-Intervenor. :

_____________________________________ :

Plaintiff Transcom, Inc. (“Transcom”), a United States

corporation, moves pursuant to USCIT R. 56.2 for judgment upon the

agency record challenging various aspects of the United States

Department of Commerce, International Trade Administration’s

(“Commerce”) final determination, entitled Final Results of

Antidumping Duty Administrative Review and Revocation in Part of

Antidumping Duty Order on Tapered Roller Bearings and Parts

Thereof, Finished and Unfinished, From the People’s Republic of

China (“Final Results”), 62 Fed. Reg. 6189 (Feb. 11, 1997).

Specifically, Transcom contends that Commerce: (1) failed to

provide notice to Transcom and Transcom’s Hong Kong exporters as

required under 19 U.S.C. §§ 1675(a), 1677e(b)(1994) and 19 C.F.R.

§ 353.22(a),(c) (1994); (2) unlawfully resorted to punitive use of

best information available in determining the antidumping rate

applicable to Transcom’s entries from Transcom’s Hong Kong

exporters in violation of 19 U.S.C. § 1675(a) and 19 C.F.R. §§

353.22, 355.37; and (3) by doing so, deprived Transcom of its Fifth

Amendment Due Process rights.

Court No. 97-02-00248 Page 2

Held: Transom’s USCIT R. 56.2 motion is denied. Case

dismissed.

Dated: November 7, 2000

Neville, Peterson & Williams (George W. Thompson, John M.

Peterson and Curtis W. Knauss) for plaintiff.

Cohen Darnell & Cohen, P.L.L.C. (Mark A Cohen) for plaintiff-

intervenor.1

David W. Ogden, Assistant Attorney General; David M. Cohen,

Director; Commercial Litigation Branch, Civil Division, United

States Department of Justice (Henry R. Felix); of counsel: Mildred

E. Steward, Office of the Chief Counsel for Import Administration,

United States Department of Commerce, for defendant.

Stewart and Stewart (Terence P. Stewart, James R. Cannon, Jr.

and Amy S. Dwyer) for defendant-intervenor.

OPINION

TSOUCALAS, Senior Judge: Plaintiff, Transcom, Inc.

(“Transcom”), a United States corporation, moves pursuant to USCIT

R. 56.2 for judgment upon the agency record challenging various

aspects of the United States Department of Commerce, International

Trade Administration’s (“Commerce”) final determination, entitled

Final Results of Antidumping Duty Administrative Review and

Revocation in Part of Antidumping Duty Order on Tapered Roller

1

L & S Bearing Company has intervened in this action but

filed neither motion for judgment upon the agency record nor

supporting brief.

Court No. 97-02-00248 Page 3

Bearings and Parts Thereof, Finished and Unfinished, From the

People’s Republic of China (“Final Results”), 62 Fed. Reg. 6189

(Feb. 11, 1997). Specifically, Transcom contends that Commerce:

(1) failed to provide notice to Transcom and Transcom’s Hong Kong

exporters as required under 19 U.S.C. §§ 1675(a), 1677e(b)(1994)

and 19 C.F.R. § 353.22(a),(c) (1994); (2) unlawfully resorted to

punitive use of best information available in determining the

antidumping rate applicable to Transcom’s entries from Transcom’s

Hong Kong exporters in violation of 19 U.S.C. § 1675(a) and 19

C.F.R. § 353.22, 355.37; and (3) by doing so, deprived Transcom of

its Fifth Amendment Due Process rights.

BACKGROUND

This case concerns the seventh administrative review of the

antidumping duty order on tapered roller bearings (“TRBs”) and

parts thereof, finished and unfinished, imported from the People’s

Republic of China (“PRC”) during the period of review (“POR”)

covering June 1, 1993, through May 31, 1994. Commerce published

the preliminary results on September 26, 1995. See Preliminary

Results of Antidumping Administrative Review on Tapered Roller

Bearings and Parts Thereof, Finished and Unfinished, From the

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People’s Republic of China (“Preliminary Results”), 60 Fed. Reg.

49,572. Commerce published Final Results on February 11, 1997.

See 62 Fed. Reg. 6189.

Since this administrative review was initiated before December

31, 1994, the applicable statutory provisions are those that

existed prior to January 1, 1995, the effective date of the

amendments made by the Uruguay Round Agreements Act (“URAA”), Pub.

L. No. 103-465, 108 Stat. 4809 (1994) (effective Jan. 1, 1995).

JURISDICTION

The Court has jurisdiction over this matter pursuant to 19

U.S.C. § 1516a(a)(2) (1994) and 28 U.S.C. § 1581(c) (1994).

STANDARD OF REVIEW

In reviewing a challenge to Commerce’s final determination in

an antidumping administrative review, the Court will uphold

Commerce’s determination unless it is “unsupported by substantial

evidence on the record, or otherwise not in accordance with law.”

19 U.S.C. § 1516a(b)(1)(B)(i) (1994).

Court No. 97-02-00248 Page 5

I. Substantial Evidence Test

Substantial evidence is “more than a mere scintilla. It means

such relevant evidence as a reasonable mind might accept as

adequate to support a conclusion.” Universal Camera Corp. v. NLRB,

340 U.S. 474, 477 (1951) (quoting Consolidated Edison Co. v. NLRB,

305 U.S. 197, 229 (1938)). Substantial evidence “is something less

than the weight of the evidence, and the possibility of drawing two

inconsistent conclusions from the evidence does not prevent an

administrative agency’s finding from being supported by substantial

evidence.” Consolo v. Federal Maritime Comm’n, 383 U.S. 607, 620

(1966) (citations omitted). Moreover, “[t]he court may not

substitute its judgment for that of the [agency] when the choice is

‘between two fairly conflicting views, even though the court would

justifiably have made a different choice had the matter been before

it de novo.’” American Spring Wire Corp. v. United States, 8 CIT

20, 22, 590 F. Supp. 1273, 1276 (1984) (quoting Penntech Papers,

Inc. v. NLRB, 706 F.2d 18, 22-23 (1st Cir. 1983) (quoting, in turn,

Universal Camera, 340 U.S. at 488)).

II. Chevron Two-Step Analysis

To determine whether Commerce’s interpretation and application

Court No. 97-02-00248 Page 6

of the antidumping statute is “in accordance with law,” the Court

must undertake the two-step analysis prescribed by Chevron U.S.A.

Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837

(1984). Under the first step, the Court reviews Commerce’s

construction of a statutory provision to determine whether

“Congress has directly spoken to the precise question at issue.”

Id. at 842. “To ascertain whether Congress had an intention on the

precise question at issue, [the Court] employ[s] the ‘traditional

tools of statutory construction.’” Timex V.I., Inc. v. United

States, 157 F.3d 879, 882 (Fed. Cir. 1998) (citing Chevron, 467

U.S. at 843 n.9). “The first and foremost ‘tool’ to be used is the

statute’s text, giving it its plain meaning. Because a statute’s

text is Congress’s final expression of its intent, if the text

answers the question, that is the end of the matter.” Id.

(citations omitted). Beyond the statute’s text, the tools of

statutory construction “include the statute’s structure, canons of

statutory construction, and legislative history.” Id. (citations

omitted); but see Floral Trade Council v. United States, 23 CIT

___,___ n.6, 41 F. Supp. 2d 319, 323 n.6 (1999) (noting that “[n]ot

all rules of statutory construction rise to the level of a canon,

however”) (citation omitted).

Court No. 97-02-00248 Page 7

If, after employing the first prong of Chevron, the Court

determines that the statute is silent or ambiguous with respect to

the specific issue, the question for the Court becomes whether

Commerce’s construction of the statute is permissible. See

Chevron, 467 U.S. at 843. Essentially, this is an inquiry into the

reasonableness of Commerce’s interpretation. See Fujitsu Gen. Ltd.

v. United States, 88 F.3d 1034, 1038 (Fed. Cir. 1996). Provided

Commerce has acted rationally, the Court may not substitute its

judgment for the agency’s. See IPSCO, Inc. v. United States, 965

F.2d 1056, 1061 (Fed. Cir. 1992); see also Koyo Seiko Co. v. United

States, 36 F.3d 1565, 1570 (Fed. Cir. 1994) (holding that “a court

must defer to an agency’s reasonable interpretation of a statute

even if the court might have preferred another”). The “[C]ourt

will sustain the determination if it is reasonable and supported by

the record as a whole, including whatever fairly detracts from the

substantiality of the evidence.” Negev Phosphates, Ltd. v. United

States Dep’t of Commerce, 12 CIT 1074, 1077, 699 F. Supp. 938, 942

(1988) (citations omitted). In determining whether Commerce’s

interpretation is reasonable, the Court considers the following

non-exclusive list of factors: the express terms of the provisions

at issue, the objectives of those provisions and the objectives of

Court No. 97-02-00248 Page 8

the antidumping scheme as a whole. See Mitsubishi Heavy Indus. v.

United States, 22 CIT ___, ___, 15 F. Supp. 2d 807, 813 (1998).

III. Southern Cal. Edison Co. Analysis

If the language of a regulation validly implemented under the

Chevron test speaks unambiguously to the issue at hand, the precise

letter of this regulation must be followed. See Christensen v.

Harris County, 120 S. Ct. 1655, 1663 (2000). Otherwise, the

Court’s deference to a contrary agency position would “permit the

agency, under the guise of interpreting a regulation, to create de

facto a new regulation.” Id.

Conversely, an agency's interpretation of its own regulation

is entitled to deference when the language of the regulation is

ambiguous or the regulation is silent about the issue at hand. See

id. (citing Auer v. Robbins, 519 U.S. 452 (1997)). Deference,

however, is proper only if the agency’s interpretation is

reasonable. “[A]n agency’s interpretation of its own regulations

must be given effect ‘so long as the interpretation sensibly

conforms to the purpose and wording of the regulations.’” Southern

Cal. Edison Co. v. United States, 226 F.3d 1349, 1356 (Fed. Cir.

2000) (quoting Martin v. Occupational Safety and Health Review

Court No. 97-02-00248 Page 9

Comm’n, 499 U.S. 144, 150 (1991)). The Court’s deference is

particularly appropriate when

the agency is applying its regulations to a complex or

changing circumstance, thus requiring the agency to bring

to bear its unique expertise and policy-making

prerogatives. When . . . judicial deference is [proper],

a court must accept the agency's reasonable

interpretation of a regulation, even if there may be

other reasonable interpretations to which the regulation

is susceptible, and even if the court would have

preferred an alternative interpretation.

Id. at 1357 (internal citations omitted).

DISCUSSION

I. Proper and Sufficient Notice

A. Background

This case concerns Commerce’s procedure for conducting an

administrative review and imposing antidumping duties. The

procedure involves four steps: (1) Commerce publishes a notice of

Opportunity to Request an Administrative Review for the POR at

issue; (2) upon receipt of such request, Commerce publishes a

notice of Initiation of an Administrative Review in the Federal

Register; (3) Commerce, in order to obtain pertinent information,

distributes or makes available questionnaires to those entities

Commerce designated in the notice of Initiation; and (4) on the

Court No. 97-02-00248 Page 10

basis of the information gathered, Commerce determines the

antidumping duty rates applicable to each entry or type of entries

and publishes these determinations in the Federal Register. See

generally, 19 U.S.C. § 1675(a); 19 C.F.R. §§ 353.22, 353.31, 355.31

(1994).

On June 7, 1994, in accordance with 19 C.F.R. § 353.22,

Commerce published a notice of Opportunity to Request an

Administrative Review for the 1993-94 POR of TRBs from the PRC.

See Opportunity to Request Administrative Review of Antidumping or

Countervailing Duty Order, Finding, or Suspended Investigation, 59

Fed. Reg. 29,411. In response, on June 30, 1994, The Timken

Company (“Timken”) requested a review of one hundred and one

companies known to Timken to be sources of TRBs and, in addition,

requested a review of “all merchandise covered by the order, from

whatever source.” See Def.’s Mem. Opp’n Pl.’s Mot. J. Agency R.

(“Def.’s Mem.”) at 4 (citing to P.D. 1, Fi. 1, Fr. 1, 3-12). The

list of one hundred and one companies did not include Goldhill

International Trading & Services Co. and Direct Source

International (collectively “Transcom’s Hong Kong exporters”),

entities that were Hong Kong nationals exporting TRBs from the PRC

for Transcom, a United States importer. See id. at 8.

Court No. 97-02-00248 Page 11

On July 26, 1994, Commerce informed the PRC government and the

PRC Ministry of Foreign Trade and Economic Cooperation (“MOFTEC”)

about the impending administrative review and requested information

concerning “‘all companies, including third-party exporters, that

. . . exported’ TRBs from the PRC.” Id. at 5 (citing to P.D. 4,

Fi. 1, Fr. 34) (emphasis supplied); see also Preliminary Results,

60 Fed. Reg. at 49,572.

On August 24, 1994, Commerce initiated the review at issue,

naming in the notice of Initiation the one hundred and one

companies identified by Timken, thus omitting Transcom’s Hong Kong

exporters. See Initiation of Antidumping Duty Administrative

Reviews and Requests for Revocation in Part (“Notice of

Initiation”), 59 Fed. Reg. 43,537. The Notice of Initiation also

provided that “[a]ll other exporters of tapered roller bearings are

conditionally covered by this review.” Id. at 43,539.

On December 5, 1994, Commerce sent a copy of the Notice of

Initiation and the questionnaires to the PRC’s Secretary General of

the Basic Machinery Division of the Chamber of Commerce for Import

and Export of Machinery and Electronics (“Machinery Division”), the

contact entity suggested by MOFTEC. See Def.’s Mem. at 5 (citing

Court No. 97-02-00248 Page 12

to P.D. 4, Fi. 1, Fr. 34). Commerce directed the Machinery

Division to send the questionnaires to all companies named in the

list and indicated that the information sought in the

questionnaires may be required from exporters not specifically

listed in the Notice of Initiation.2 See Def.’s Mem. at 6 (citing

to P.D. 17, Fi. 2, Fr. 31).

On September 26, 1995, after the time period to answer the

questionnaires had expired, Commerce published the results of its

preliminary review. See Preliminary Results, 60 Fed. Reg. 49,572.

Subsequently, Transcom appeared and identified its Hong Kong

exporters as resellers of TRBs from the PRC. See Def.’s Mem. at 8.

On February 11, 1997, Commerce published the Final Results, and the

determinations made therein unfavorably affected Transcom’s entries

from its Hong Kong exporters. See 62 Fed. Reg. at 6189, 6211-13.

2

Commerce informed the Machinery Division that Commerce

would, in addition, personally present the questionnaires to the

members of the Machinery Division. See Def.’s Mem. at 6-7 (citing

to P.D. 16, Fi. 2, Frs. 25-30). The presentation took place in

Beijing on December 7-9, 1994, and was attended by ten out of one

hundred and one respondents named on the Notice of Initiation and

one voluntary respondent, Xiangfan International Trade Corp., that

was not named in the list. See Preliminary Results, 60 Fed. Reg.

at 49,572.

Court No. 97-02-00248 Page 13

B. Contentions of the Parties

Transcom contends that under 19 U.S.C. § 1675(a) and 19

C.F.R. § 353.22 Commerce lacked authority to review and impose the

resulting determinations upon entries of any company other than

those identified by name in the Notice of Initiation. See Pl.’s

Br. Supp. Mot. J. Agency R.(“Pl.’s Br.”) at 13-16; Pl.’s Reply Br.

Supp. Mot. J. Agency R. (“Pl.’s Reply Br.”) at 4, 6. Transcom

argues that the statutory and regulatory language requires Commerce

to provide exporters and their United States importers with

individual notice in order to properly subject the entries in which

these parties may have an interest to Commerce’s review

determinations. See Pl.’s Br. at 15-16.

Transcom further points out that Commerce had a practice of

personally identifying each exporter subject to review by name.

See id. at 18. In addition, Transcom asserts that its Hong Kong

exporters were automatically entitled to receive individual notices

because they were nationals of a market economy. See id. at 21-23,

32. Transcom concludes that the language Commerce used in its

Notice of Initiation failed to provide Transcom and its Hong Kong

exporters with adequate notice that their interests may be

affected. See id. at 3-4, 32.

Court No. 97-02-00248 Page 14

Commerce argues that it: (1) was obligated to provide notice

only to “respondents” determinable under the “first to know test,”

here, the PRC suppliers to Transcom’s Hong Kong exporters; (2)

could not have provided better notice because it had “no

independent source of information on Chinese TRB exporters

superior to the industry information possessed by Timken”; and (3)

provided the maximum amount of notice available to the trade

community by (a) issuing a statement in the Federal Register that

“[a]ll other exporters of tapered roller bearings are conditionally

covered by this review”; (b) contacting the PRC government with an

implicit request to identify third-country exporters; and (c)

traveling to Beijing to present the questionnaires to the members

of the Machinery Division. Def.’s Mem. at 15-17, 43-45.

Timken agrees with Commerce’s contention that the language

“[a]ll other exporters of tapered roller bearings are conditionally

covered by this review” included in the Notice of Initiation

provided Transcom and its Hong Kong exporters with adequate notice

that Transcom’s entries were subject to the review. See Timken’s

Resp. Opp’n Pl.’s Mot. J. Agency R. (“Timken’s Resp.”) at 9-12.

Timken also points out that neither the statute nor the regulation

requires Commerce to limit an administrative review to specifically

Court No. 97-02-00248 Page 15

identified exporters only. See Timken’s Resp. at 14-19 (citing to

19 U.S.C. §§ 1675(a), 1677e(b); 19 C.F.R. § 353.22(a),(c)).

C. Analysis

The Court’s analysis begins with an examination of the

relevant statutory and regulatory provisions. The applicable

statute does not expressly designate the parties to whom notice is

due. Section 1675(a)(1) only provides that a review can be

conducted “after publication of notice of such review in the

Federal Register . . . .” 19 U.S.C. § 1675(a)(1).

Because the language of the statute does not address the

issue, the Court turns to the legislative history of § 1675(a)(1)

to determine whether Congress has “directly addressed the precise

question at issue.” Chevron, 467 U.S. at 843; see Suramerica de

Aleaciones Laminadas, C.A. v. United States, 966 F.2d 660, 667

(Fed. Cir. 1992). The extensive legislative history of §

1675(a)(1), however, does not indicate that Congress addressed the

issue of individual notice. See generally, Omnibus Trade and

Competitiveness Act of 1988, Pub. L. No. 100-418 (codified as 19

U.S.C. § 2901 (1994)); Trade and Tariff Act of 1984, Pub. L. No.

98-573 (codified as 19 U.S.C. § 1675); Trade Agreements Act of

Court No. 97-02-00248 Page 16

1979, Pub. L. No. 96-39 (codified as 19 U.S.C. § 2501 (1994)).

In situations where Congress has not provided clear guidance

on an issue, Chevron requires the Court to defer to Commerce’s

interpretation of 19 U.S.C. § 1675(a)(1) so long as this

interpretation is reasonable. See Chevron, 467 U.S. at 845; Koyo

Seiko Co., 36 F.3d at 1570. This Court, therefore, turns to the

language of a regulation implemented under the statutory mandate of

19 U.S.C. § 1675(a)(1).

The regulation provides only that the notice of “Initiation of

Antidumping Duty Administrative Review” must be published in the

Federal Register “[a]fter receipt of a timely request . . . or on

[Commerce’s] own initiative when appropriate . . . .” 19 C.F.R. §

353.22(c)(1). An accompanying regulation mandates that a notice of

initiation must include the following: “[a] description of the

merchandise . . .; [t]he name of the home market country . . . ;

and [a] summary of the available information that would, if

accurate, support the imposition of antidumping duties.” 19 C.F.R.

353.11(a)(2) (1994).

Both regulations, 19 C.F.R. § 353.22(c)(1) and 19 C.F.R.

353.11(a)(2), are reasonable implementations of 19 U.S.C. §

Court No. 97-02-00248 Page 17

1675(a)(1) and warrant this Court’s deference. See Chevron, 467

U.S. at 845; Koyo Seiko Co., 36 F.3d at 1570. In fact, the

language of 19 C.F.R. § 353.22(c)(1) is greatly similar to that of

19 U.S.C. § 1675(a)(1) and 19 C.F.R. § 353.11(a)(2) is a typical

notice provision,3 a legitimate mechanism effectuating the

statutory mandate. See 19 U.S.C. § 1675(a)(1), 19 C.F.R. §§

353.11(a)(2), 353.22(c)(1).

Neither regulation, however, states whether Commerce itself

must identify an exporter by name in the notice of initiation of

review in order to make the entries of merchandise obtained from

this exporter subject to the results of the review. Thus, this

Court needs to examine whether the language of these regulations

was reasonably interpreted and applied by Commerce in the instant

case. See Southern Cal. Edison Co., 226 F.3d at 1356. The two

issues arising from the contentions set forth above are: (1) to

whom is the notice due; and (2) whether the particular language

employed by Commerce constituted adequate notice.

3

The regulation makes a typical requirement to describe and

designate the location of the subject matter of the review and

provide an aggrieved party with an opportunity to offer contrary

evidence. See 19 C.F.R. § 353.11(a)(2); cf. DAVID D. SIEGEL, NEW YORK

PRACTICE 82 (3d ed. 1999) (noting that “[c]ase law suggests . . .

that not much is needed to qualify . . . as notice”).

Court No. 97-02-00248 Page 18

1. Parties to Whom Notice Is Due

The lack of express statutory or regulatory guidelines

regarding who is a proper respondent for the purpose of notice

prompts creative interpretations by both Transcom and Commerce.

Commerce initially states that if an antidumping duty order

covers a product from a nonmarket economy (“NME”), like the PRC,

“all exporters of the subject merchandise and the PRC government

are the proper respondents” for the purpose of receiving notice.

Def.’s Mem. at 17 (emphasis supplied). From this simple and clear

statement, Commerce leaps to the “first to know” test which it

presents as “a solid analytical construct for determining whether

the NME supplier or a third-country reseller is the proper

respondent.” Id. The “first to know” test, as Commerce explains,

is a step in the antidumping duty computation. Id. at 17-18

(citing to Ferrovanadium and Nitrided Vanadium From the Russian

Federation, 60 Fed. Reg. 27,957 (May 26, 1995); Fuel Ethanol From

Brazil, 51 Fed. Reg. 5572 (Feb. 14, 1986); and Certain Stainless

Steel Sheet and Strip Products From the Federal Republic of

Court No. 97-02-00248 Page 19

Germany, 48 Fed. Reg. 20,459 (May 6, 1983)).4 Commerce’s logic

escapes this Court. Commerce does not adequately explain how the

calculation of an antidumping duty rate, that is, the amount of

money to be paid by an importer for an entry of merchandise that

could pass through the hands of many resellers, including NME as

well as market economy resellers, could reveal the identity of the

proper producer or reseller Commerce ought to notify.

Disregarding this incongruity, Commerce concludes that only

where “evidence indicates that a reseller . . . directs the sale of

the subject merchandise to the United States, Commerce [regards]

that reseller . . . as the proper respondent” for the purpose of

receiving notice. Def.’s Mem. at 17. Taking this proposition to

its logical conclusion, Commerce would need to receive evidence

from a reseller or a third party that the reseller is the “proper

4

The test turns on which entity in the chain of exportation

has “the knowledge that the merchandise [is] destined for the

United States.” Def.’s Mem. at 18. The answer is determined for

the purpose of assessment of less than fair value (“LTFV”). Id.

Each of the decisions cited by Commerce, accordingly, addresses the

issue of LTFV assessment, the computation formula. Computation of

LTFV sales involves three steps: (1) calculation of the U.S. market

price; (2) calculation of the foreign market value; and (3)

calculation of the difference between these two amounts. See

generally, 19 U.S.C. §§ 1677, 1677b (1994); 19 C.F.R. §§ 353.41,

353.46 (1994).

Court No. 97-02-00248 Page 20

respondent” in order to notify that very reseller. Obviously, the

proposition of getting evidence from a reseller in order to notify

this reseller about its obligation to supply the very evidence on

the basis of which the reseller has to be notified is circular.

The alternative scenario of getting evidence from a third party in

order to notify a reseller who is the “proper respondent” suggests

a fatuous regime where, in NME cases,5 the following would occur:

(1) Commerce would be allowed to notify an “improper” entity in the

chain of exportation with a hope that this notified improper

entity, although not threatened with any potential loss because of

its “improper” status, would somehow readily possess all the

necessary and correct evidence; (2) this improper entity would take

pains to submit this evidence and notify Commerce to issue another

notice to the “proper” entity; (3) this “proper” entity would

meaningfully respond; and (4) this whole chain of events would

happen within the limited time allocated under the regulations.6

5

Neither party contests that “[i]f the administrative

review[] ha[s] been for products from a market economy country, the

scope of the review[] would have been limited to those exporters

named in the notices of initiation.” Transcom, Inc. v. United

States, 182 F.3d 876, 881 (Fed. Cir. 1999).

6

Commerce must receive all responses from the “proper”

respondents within the maximum of 180 days. See 19 C.F.R. §

353.31(a)(1)(ii).

Court No. 97-02-00248 Page 21

Clearly, the Court cannot embrace the interpretation proposed

by Commerce. The regime Commerce contemplated would run afoul of

the statutory mandate of 19 U.S.C. § 1675(a)(1) and the logic

behind regulatory language of 19 C.F.R. § 353.22(c). It would also

violate the reasonableness tests posed by Southern Cal. Edison Co.

and the second prong of Chevron. See Chevron, 467 U.S. at 845;

Auer v. Robbins, 519 U.S. 461; Southern Cal. Edison Co., 226 F.3d

at 1356.

Transcom’s reading of the regulatory language is equally

unpersuasive. Specifically, Transcom relies on 19 C.F.R. §

353.22(a) which provides that “an interested party . . . may

request in writing . . . [an] administrative review of specified

individual producers or resellers covered by an order . . . .”

Pl.’s Br. at 13 (emphasis in the brief). Transcom concludes that

this language obligates Commerce to identify every producer or

reseller by name. Id. at 13-14. Transcom misreads the regulation.

Section 353.22(a) applies to the request for review of the

“interested party” (here, Timken7); it does not provide that

7

Indeed Commerce’s attempt to explain the lack of notice to

Transcom’s Hong Kong exporters by quoting Timken’s request for a

review of “all merchandise covered by the order, from whatever

(continued...)

Court No. 97-02-00248 Page 22

Commerce must similarly specify the names of individual resellers

in its Notice of Initiation in order for the resulting

administrative review to cover entries of merchandise purchased

from these resellers. See generally, 19 C.F.R. § 353.22(a).

In support of its proposition Transcom cites Federal-Mogul

Corp. v. United States, 17 CIT 442, 822 F. Supp. 782 (1993) and 19

C.F.R. § 353.22(c). See Pl.’s Br. at 13-14, 16. These

authorities, however, do not support Transcom’s assertion.

Federal-Mogul addresses a different issue, the assessment of

companies never reviewed; the case does not examine the situation

where companies are reviewed under a notice of questionable

adequacy. See generally, 17 CIT 442, 822 F. Supp. 782. Section

7

(...continued)

source,” in addition to those entities Timken specifically

identified, cannot succeed. Def.’s Mem. at 3, 43-44. The

generalized language in Timken’s request clearly contradicts the

requirement for “specified individual” identification posed by 19

C.F.R. § 353.22(a). As Transcom correctly points out, “Commerce

has no obligation to do a domestic industry’s homework in

identifying specified foreign producers and resellers in a review

request.” Pl.’s Reply Br. at 8 (citing to Floral Trade Council v.

United States, 17 CIT 1417 (1993)). The shortcomings of Timken’s

request are, however, irrelevant to the issue of Commerce’s Notice

of Initiation and Transcom is not warranted in its effort to

interpret the language of Floral Council as placing the burden on

Commerce to identify those exporters the domestic industry failed

to name.

Court No. 97-02-00248 Page 23

353.22(c) similarly does not lend support to Transcom’s contention.

The regulation merely provides that Commerce must send

questionnaires to appropriate interested parties. See 19 C.F.R. §

353.22(c)(2). Nowhere does the regulation define “appropriate”

parties as producers or resellers that are individually named. See

generally, 19 C.F.R. § 353.22.

Finally, Transcom claims that Commerce “could have identified

all other suppliers of TRBs from the PRC and named them in the

Notice of Initiation . . . .” in order to better fulfill the

requirement of 19 C.F.R. § 353.22. Pl.’s Br. at 15 (emphasis

supplied); see Pl.’s Reply Br. at 9. Transcom ignores the fact

that Commerce had no independent source of information on Chinese

TRB exporters superior to the industry information possessed by

Timken. See Def.’s Mem. at 15-17, 43-35. Transcom similarly

ignores Commerce’s contacts with MOFTEC and the Machinery Division

and Commerce’s distribution of questionnaires in Beijing, all of

which constituted an adequate bona fide effort on the part of

Commerce to identify other exporters of TRBs from the PRC. See id.

at 5.

While realizing the enormous importance of adequate notice,

Court No. 97-02-00248 Page 24

the Court refuses to embrace the onerous regulatory regime

suggested by Transcom. Under Transcom’s interpretation, Commerce

would be forced to go through every invoice involved in the chain

of distribution of every piece of merchandise that enters the

United States in an effort to identify and personally name each

producer as well as each intermediate reseller prior to issuing a

notice of initiation. The notice requirement must be balanced

against practical considerations. “[T]he reasonableness of the

notice provided must be tested with reference to the existence of

'feasible and customary' alternatives and supplements to the form

of notice chosen.” Greene v. Lindsey, 456 U.S. 444, 454 (1982)

(citations omitted).

Commerce is not “required to give personal notice to [each and

every] party that could be affected by an administrative review”

and is “free to choose a variety of means to give reasonable notice

. . . [as long as Commerce] provide[s] some form of notice that the

administrative review may result in an increase in the importer’s

liability . . . .” Transcom, Inc. v. United States (“Transcom

CAFC”), 182 F.3d 876, 882, 884 (Fed. Cir. 1999) (emphasis

supplied).

Court No. 97-02-00248 Page 25

The Court concludes that while it was Commerce’s basic

responsibility to provide adequate notice to all parties that could

potentially be affected by the review, Commerce was not obligated

to list these parties by name in order to satisfy the notice

requirements posed by 19 U.S.C. § 1675(a)(1) and 19 C.F.R. §

353.22(c).

2. Adequacy of the Language Employed

Having established that Commerce was not under an obligation

to provide individual notice, the Court now turns to the question

whether the particular language Commerce chose to employ in the

Notice of Initiation provided Transcom and its Hong Kong exporters

with adequate notice.

In addition to listing the one hundred and one companies

subject to the review, the Notice of Initiation provided that

“[a]ll other exporters of tapered roller bearings are conditionally

covered by this review.” Notice of Initiation, 59 Fed. Reg. at

43,539. Transcom contends that this language was inadequate to

provide proper notice because Commerce was required to identify

Transcom’s Hong Kong exporters, nationals of a market economy, by

name in the Notice of Initiation. See Pl.’s Br. at 21-23. This is

Court No. 97-02-00248 Page 26

incorrect.

Neither the statute nor the regulation actually requires the

review to cover only the companies “specifically” listed in the

Notice of Initiation. See generally, 19 U.S.C. § 1675(a); 19

C.F.R. § 353.22. Commerce’s practice only dictates that “the

administrative reviews . . . for products from a market economy

country . . . [are] limited to those exporters [specifically] named

in the notices of initiation. . . . [T]he case is different

[however, and the rule does not apply to products from] nonmarket

economy countries such as the People’s Republic of China.”

Transcom CAFC, 182 F.3d at 881 (emphasis supplied).

Transcom failed to distinguish between the country of

nationality of its exporters and the country of origin of its

imported product. In the case at hand, the merchandise at issue

was a product of the PRC, a nonmarket economy. Commerce’s practice

with regard to market economy products–-the practice of limiting

the scope of administrative reviews to the exporters identified by

name in the Notice of Initiation--was, therefore, inapplicable.

Alternatively, Transcom alleges that Commerce’s statement that

“[a]ll other exporters of tapered roller bearings are conditionally

Court No. 97-02-00248 Page 27

covered by this review” was “actively misleading” because it failed

to indicate that the exporters that were not personally identified

in the Notice of Initiation could nevertheless be subject to the

review, and the statement did “not fulfill the notice requirement

contained in the regulations.” Pl.’s Br. at 3, 15, 19. The Court

disagrees. “What the statutory and regulatory notification

provisions require is that any reasonably informed party should be

able to determine, from the published notice of initiation read in

light of announced . . . policy, whether particular entries in

which it has an interest may be affected by the administrative

review.” Transcom CAFC, 182 F.3d at 882-83 (emphasis supplied).

Transcom maintains that it was unaware of Commerce’s new

policy of including the entities identified by an all-encompassing

definition into the scope of Commerce’s review. See Pl.’s Br. at

13. Transcom alleges that, in view of Commerce’s prior practice of

personally identifying all covered exporters in its notices of

initiation, Transcom could not have been aware of Commerce’s new

policy.8 See Pl.’s Reply Br. at 10-13.

8

Transcom successfully challenged the antidumping duties

assessed against Transcom by Commerce at the conclusion of the

fourth, fifth and sixth administrative reviews (covering the period

(continued...)

Court No. 97-02-00248 Page 28

Transcom’s position is without merit. As a prominent member

of the industry, Transcom was aware and was expected to make itself

aware of publications in the Federal Register. See, e.g., id. at

11 (meticulously observing that an indication of Commerce’s new

policy appeared in a document filed on March 25, 1995, but was

reflected in the Federal Register only on February 27, 1996).

After reading the Notice of Initiation in the Federal Register and

encountering the unfamiliar statement that “[a]ll other exporters

of tapered roller bearings are conditionally covered by this

review,” Transcom, a seasoned importer of the merchandise at issue

8

(...continued)

from 1990-93). See Transcom CAFC, 182 F.3d 877. The challenge was

based on Commerce’s failure to include the names of Transcom’s

exporters in the list of entities specifically identified in

Commerce’s notices of initiation of those reviews and Commerce’s

attempt to subject the entries from these unnamed exporters to

upward assessment of duties. See id. at 877-78. The preliminary

determinations of the fourth, fifth and sixth administrative

reviews were published on August 25, 1995, and they stated that

“for other non-PRC exporters of subject merchandise from the PRC,

the cash deposit rate will be the rate applicable to the PRC

supplier of that exporter,” causing Transcom to appear and object.

Preliminary Results of Antidumping Administrative Reviews on

Tapered Roller Bearings and Parts Thereof, Finished and Unfinished,

From the People’s Republic of China, 60 Fed. Reg. 44,302; see

Transcom CAFC, 182 F.3d at 878. Timken argues that this statement

put Transcom on notice that its Hong Kong exporters would be

subject to the review. See Timken’s Resp. at 7-8. This court is

unconvinced. The statement put Transcom on notice of possible

applicable rates but was irrelevant to the issue of the scope of

Commerce’s review.

Court No. 97-02-00248 Page 29

from the particular country at issue, should have been aware that

the usual language of notices of initiation had changed. The

newly-included language, the very fact of the change, put Transcom

on notice that Commerce’s policy could have changed and provided

Transcom with the information necessary to extrapolate the fact

that the “particular entries in which it has an interest may be

affected by the administrative review.” Transcom CAFC, 182 F.3d at

882-83 (emphasis supplied).

Moreover, as Timken correctly points out, the Court of Appeals

for the Federal Circuit (“CAFC”) already indicated that the very

language employed by Commerce would constitute sufficient notice.

The CAFC observed that

[if] Commerce [states] . . . in the notice[] of

initiation of administrative review[] of the tapered

roller bearing antidumping order that all unnamed

exporters of tapered roller bearings from the People’s

Republic of China are conditionally covered by the review

. . . [, this statement] would constitute sufficient

notice of the administrative review to the unnamed

exporters, and thus sufficient notice to the importer of

those exporters’ goods [and] . . . satisfy the statutory

and regulatory notification requirements. . . . [S]uch

statement [would] go far beyond any notice, constructive

or otherwise, given to the unnamed exporters (and, by

Court No. 97-02-00248 Page 30

extension, to Transcom) in this case.9

Id. at 882 (emphasis supplied).

This Court agrees. The statement that “[a]ll other exporters

of tapered roller bearings are conditionally covered by this

review” gave Transcom, a seasoned importer, more than sufficient

constructive notice10 that the particular entries in which Transcom

had an interest could possibly be affected by the administrative

review.

Transcom and its exporters could have made an inquiry to

9

Transcom alleges that Commerce’s actions, in addition to

being injurious to Transcom, were “fundamentally prejudicial to

[Transcom’s] exporters” and “penalized these companies . . . [in a

way] inherently unfair, and grossly incompatible with the statute.”

Pl.’s Br. at 3-4, 31. Transcom’s Hong Kong exporters, however, are

not parties to this action and this Court shall not entertain any

claims on their behalf.

10

Constructive notice is

information or knowledge of a fact imputed by law to a

person . . . because he could have discovered the fact by

proper diligence, and his situation was such as to cast

upon him the duty of inquiring into it. Every person who

has actual notice of circumstances sufficient to put a

prudent man upon inquiry as to a particular fact, has

constructive notice of the fact itself in all cases in

which, by prosecuting such inquiry, he might have learned

such fact.

Constructive “notice” includes . . . inquiry notice.

BLACK'S LAW DICTIONARY 1062 (6th ed. 1990).

Court No. 97-02-00248 Page 31

Commerce. They could have alerted their PRC producers or prompted

them to attend the distribution of questionnaires in Beijing.

Transcom’s exporters could have obtained a questionnaire themselves

and submitted it to Commerce, just like Xiangfan International

Trade Corporation did. See Preliminary Results, 60 Fed. Reg. at

49,572-73. Yet Transcom and its Hong Kong exporters did none of

the above, choosing instead to complacently wonder what the term

“conditionally covered” means. See Pl.’s Br. at 18. Had Transcom

been in doubt about the meaning of the term, it was but a phone

call away from the answer.

Transcom and its exporters’ refusal to act upon Commerce’s

notice cannot constitute evidence of unreasonableness of this

notice. In view of the rapidly-changing world of global trade and

Commerce’s limited resources, Commerce should be able to rely on

its “unique expertise and policy-making prerogatives” by

designating parties subject to the review with a collective term.

See Southern Cal. Edison Co., 226 F.3d at 1357; Def.’s Mem. at 43

(attesting to Commerce’s inability to obtain personal information

about all potential exporters). Because Commerce’s use of the

statement that “[a]ll other exporters of tapered roller bearings

are conditionally covered by this review” was a valid application

Court No. 97-02-00248 Page 32

of notice requirement contained in the regulation to a complex or

changing circumstance, it should not be disturbed. See Southern

Cal. Edison Co., 226 F.3d at 1357.

This Court concludes that the collective, all-encompassing

language “[a]ll other exporters of tapered roller bearings are

conditionally covered by this review” satisfied the requirements

posed by the statutory mandate of 19 U.S.C. § 1675(a)(1) and the

regulatory language of 19 C.F.R. § 353.22(c).

II. Application of Uncooperative BIA

A. Background

On September 26, 1995, Commerce published the results of its

preliminary review. See Preliminary Results, 60 Fed. Reg. 49,572.

In Preliminary Results, Commerce determined a separate antidumping

duty rate for each of the companies that had responded to the

questionnaires. See id. at 49,573-74. In addition, Commerce

stated its intention to apply the “best information available”

(“BIA”) rate to “those companies for which [Commerce] initiated a

review and which did not respond to the questionnaires.” Id. at

49,575.

Court No. 97-02-00248 Page 33

In its final determination, Commerce assigned the

“uncooperative BIA” rate of 25.56 percent (equal to the PRC rate)

to all the entries from the PRC exporters that failed to respond to

the questionnaires supplied by Commerce and, therefore, were deemed

not entitled to a separate rate because of their inability to

establish their independence from the PRC. See Final Results, 62

Fed. Reg. at 6208. In addition, Commerce assigned the “cooperative

BIA” rate of 25.56 percent (equal to the “uncooperative BIA” rate)

to all the entries by those exporters who failed to establish their

independence from the PRC by submitting responses containing

“deficiencies[,] . . . lack[ing in] supplier data and includ[ing]

significant errors . . . .” See id. at 6210, 6214. Finally,

Commerce stated that for entries from the “other non-PRC exporters

of subject merchandise from the PRC [, that is, the exporters

covered by the review that were neither supplied with the

questionnaires nor participated on their own], the . . . rate will

be the rate applicable to the PRC supplier of that exporter.” Id.

at 6214.

B. Contentions of the Parties

Transcom contends that because neither its Hong Kong exporters

Court No. 97-02-00248 Page 34

nor their PRC suppliers were given notice, Commerce was precluded

from subjecting Transcom’s entries to the “punitive”(meaning

“uncooperative”) BIA rate reserved for those entities that were

supplied with the questionnaires but neglected to respond. See

Pl.’s Br. at 27-28. In addition, Transcom argues that the entries

from its Hong Kong exports should not be subject to the BIA rate

because: (1) the usage of BIA ensues from the concept of “state-

controlled enterprise”;11 and (2) Transcom’s Hong Kong exporters,

nationals of a market economy, are inherently not subject to the

PRC government’s control. See id. at 21-23.

Commerce maintains that it acted in accordance with its

practice by initially presuming that, in an NME case, all producers

and exporters are part of a single state-controlled enterprise.

11

Under the “state-controlled enterprise” concept, companies

subject to the review are required to show their independence from

the state-controlled enterprise in order to receive a separate

antidumping duty rate. See Transcom CAFC, 182 F.3d at 878-79. If

all companies covered by the review succeed in proving their

independence from the state-controlled enterprise, each of these

companies is accorded a separate treatment, and the state-

controlled enterprise is consequently deemed excluded from the

review. Id. Conversely, if some companies included in the review

fail to establish their independence, Commerce concludes that the

state-controlled enterprise is covered by the review, and those

companies that fail to prove their independence receive a single

rate of the state-controlled enterprise. Id.

Court No. 97-02-00248 Page 35

See Final Results, 62 Fed Reg. at 6212. If the state-controlled

enterprise fails to cooperate, Commerce establishes the rate

applicable to companies deemed to be part of the state-controlled

enterprise, in the instant case, the PRC rate, using uncooperative

BIA. See id. Commerce points out that “the Act mandates

application of BIA for such companies because they were properly

included in the review and [through the inaction of the state-

controlled enterprise] did not respond to [Commerce’s] request for

information.” Id.

Commerce further asserts that the exporters notified without

individual identification were obliged to demonstrate their

independence from the state-controlled enterprise in the very same

fashion as the exporters individually named in the Notice of

Initiation or would risk being considered a part of the state-

controlled enterprise, that is, deemed ineligible for separate

treatment and assigned that enterprise’s single rate. See Def.’s

Mem. at 27.

Timken argues that Commerce was entitled to resort to BIA in

determining the rate for exporters not individually named in the

Notice of Initiation because Commerce contacted the PRC government,

Court No. 97-02-00248 Page 36

provided it with the questionnaires and directed it to transmit the

questionnaires to all companies in the PRC that produced TRBs for

export to the United States. See Timken’s Resp. at 19-20.

C. Analysis

Transcom and Timken conflate the threshold procedural issue of

notice sufficiency with the entirely distinct issue of Commerce’s

right to rely on BIA in its calculation of actual dumping duties.

See generally, Pl.’s Br. at 23-33, 27-28; Pl.’s Reply Br. at 19-20;

Timken’s Resp. at 19-20. Having established that the notice given

by Commerce was sufficient, this Court now turns to the remaining

issues: (a) Commerce’s use of uncooperative BIA in calculating the

antidumping duty rate; and (b) Commerce’s application of BIA to the

merchandise produced in an NME country but imported into the United

States through a market economy exporter.

Actual dumping duties are calculated by Commerce after an

administrative review. See 19 U.S.C. § 1675(a). In such a review,

Commerce provides a questionnaire to the foreign producer in order

to solicit sales information for United States sales and home-

market sales for the particular POR covered and, on the basis of

Court No. 97-02-00248 Page 37

this information, calculates the actual dumping duty.12 When

Commerce cannot obtain the information in a timely manner or

receives incomplete information, the statute and regulation allow

and, in certain circumstances, require Commerce to use BIA. See 19

U.S.C. § 1677e(b); 19 C.F.R. § 355.37(a).

1. Commerce’s Resort to Uncooperative BIA

The relevant statutory provision dictates that if Commerce

“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 from . . . [Commerce], . . . [Commerce] may use . . .

the facts otherwise available.” 19 U.S.C. § 1677e(b); accord 19

U.S.C. § 1677e(c) (1988) (stating that “[i]n making [antidumping

duty] determinations . . . [Commerce] shall, whenever a party or

any other person refuses or is unable to produce information

requested in a timely manner and in the form required, or otherwise

12

To the extent that this actual dumping duty differs from the

estimated duty deposit collected pursuant to the previously issued

antidumping duty order, the difference is refunded or charged to

the importer. See 19 U.S.C. § 1673f (1994). “Dumping duties are

not penal in nature, but are 'additional duties' to equalize

competitive conditions between the exporter and [affected U.S.

industries].” Imbert Imports, Inc. v. United States, 67 Cust. Ct.

569, 576 n.10, 331 F. Supp. 1400, 1406 n.10 (1971), aff’d, 60 CCPA

123, 475 F.2d 1189 (1973).

Court No. 97-02-00248 Page 38

significantly impedes an investigation, use the best information

otherwise available”).

The statutory language is clear and unambiguous. A statute’s

text is Congress’s final expression of its intent, and if the text

answers the question, that is the end of the matter. See Timex

V.I., Inc., 157 F.3d at 882 (citing Chevron, 467 U.S. at 843 n.9).

Commerce's regulation must completely conform to the statutory

language. See id.

The regulation implemented under the statute provides that

Commerce is entitled to resort to BIA if Commerce “(1) [d]oes not

receive a complete, accurate, and timely response to [its] request

for factual information; or (2) [i]s unable to verify, within the

time specified, the accuracy and completeness of the factual

information submitted.” 19 C.F.R. § 355.37(a) (1994). The

language of § 355.37(a) is a practical implementation of the

statutory mandate, a mechanism to prevent the impediments to

investigation proscribed by the statute. See 19 U.S.C. § 1677e(b).

The regulation conforms to the clear and unambiguous statutory

language, thus satisfying the first prong of the Chevron test. See

Chevron, 467 U.S. at 842-43.

Court No. 97-02-00248 Page 39

Transcom’s protest to Commerce’s use of BIA is unfounded.

Commerce did exactly as the statute, regulation and its own

announced policy mandated when it requested but procured no

information from parties “conditionally covered,” such as

Transcom’s Hong Kong exporters and their PRC suppliers.13 The

statute required Commerce to enter a determination with regard to

the entries by companies covered by the review. See 19 U.S.C.

1675b(b)(1)(B) (1994). Commerce had no other statutorily

permissible or practicably feasible way to calculate the rate

(except on the basis of BIA) if the interested parties did not

produce information requested. See 19 U.S.C. § 1677e(b). Thus,

Commerce acted fully in accordance with the controlling provisions.

Transcom’s expectations are beside the point. “[T]he

13

Transcom contends that the PRC suppliers of its Hong Kong

exporters were not notified. See Pl.’s Br. at 27-28. This Court

is unconvinced. Commerce’s efforts were more than diligent: it

notified MOFTEC and the Machinery Division, requested that the

questionnaires be transmitted to all companies in the PRC that

produced tapered roller bearings for export during the POR at issue

and even went to Beijing to personally distribute the

questionnaires. The Court agrees with Timken’s observation that

“[i]f Transcom’s suppliers never received a copy of that

questionnaire, the problem lies with the state under whose control

they operate, not with [Commerce]. By analogy, a single factory

could not avoid service by asserting that only the corporate

headquarters was served.” Timken’s Resp. at 20.

Court No. 97-02-00248 Page 40

expectations of the U.S. importer are irrelevant in setting a

dumping margin. When a United States importer deals with a foreign

company that is subject to an antidumping duty order, the importer

must realize that the dumping margin could change to its benefit or

detriment” after the actual dumping duty is calculated by Commerce

on the basis of information Commerce receives. Union Camp Corp. v.

United States, 22 CIT ___, ___ n.7, 8 F. Supp. 2d 842, 852 n.7

(1998).

Transcom asserts that Commerce abused its discretion when it

applied the “punitive” uncooperative BIA rate (equal to the PRC

rate) to the entries from Transcom’s Hong Kong exporters,14 that is,

companies obviously not subject to the PRC control, because the

same BIA rate was assigned to the companies that were subject to

14

Commerce established an “uncooperative” BIA rate equal to

the “cooperative” one. Final Results, 62 Fed. Reg. at 6214. It

shall be noted that “[i]f an interested party refuses to provide

factual information requested, . . . [Commerce] may take that into

account in determining what is the best information available” and

may assign an uncooperative BIA rate for the entries of such party

different from “cooperative” BIA rates accorded to the parties that

participated in the review but provided insufficient information.

19 C.F.R. § 355.37(b); see Final Results, 62 Fed. Reg. at 6208-10.

Thus, Commerce could, but did not, assign a less favorable BIA rate

to “uncooperative” parties. In view of the fact that the

“uncooperative” BIA rate was equal to the “cooperative” one, it is

unclear how Transcom concluded that it was assigned one and not the

other.

Court No. 97-02-00248 Page 41

the PRC control or failed to prove their independence from the PRC.

See Pl.’s Br. at 21-22, 26-28.

Transcom misses the point in questioning Commerce’s political

and geographical aptitude and distorts the statement Commerce made

in the Final Results. Commerce’s use of uncooperative BIA does not

necessarily make the resulting rate “punitive” in nature or

classify the exporter as an entity subject to the PRC control. See

generally, Final Results, 62 Fed. Reg. 6189.

“In order for the agency's application of the best information

rule to be properly characterized as ‘punitive,’ the agency would

have had to reject low margin information in favor of high margin

information that was demonstrably less probative of current

conditions.” Allied-Signal Aerospace Co. v. United States, 996

F.2d 1185, 1191 (Fed. Cir. 1993) (citation omitted).

In the instant case, Commerce had no “low margin” information

“demonstrably [more] probative of current conditions” to reject.

Rather, the determinations Commerce made were deductive in nature.

First, Commerce has determined that “for [entries purchased from]

other non-PRC exporters of subject merchandise from the PRC [like

Transcom’s Hong Kong exporters], the cash deposit rate [would] be

Court No. 97-02-00248 Page 42

the one applicable to the PRC supplier[s] of that exporter.” Final

Results, 62 Fed. Reg. at 6212 (emphasis supplied). Second,

Commerce determined that if such suppliers were “companies in the

government-controlled enterprise [that] failed to respond to

[Commerce’s] requests for information,” they, accordingly, were

subject to the rate determined by using uncooperative BIA.” Id.

Thus, the BIA rate applicable to Transcom’s entries was derived

from the PRC rate assigned to the PRC suppliers of Transcom’s Hong

Kong exporters and was not directly related to the national status

of Transcom’s Hong Kong exporters. See Final Results, 62 Fed. Reg.

at 6212-14.

Commerce’s deductive determination was entirely justified.

Transcom must bear responsibility for the failure of its sources to

provide the necessary information. As Commerce correctly points

out, “when resellers choose to use uncooperative suppliers that are

under a dumping order,” they must bear the consequences. Def.’s

Mem. at 20-21 (citing Yue Pak, Ltd. v. U.S. Int’l Trade Admin., 20

CIT 495, 504(1996), aff’d, 111 F.3d 142 (Fed. Cir. 1997)).

The Court concludes that Commerce acted in accordance with the

statutory and regulatory provisions when it based its determination

Court No. 97-02-00248 Page 43

upon BIA, the only information Commerce had available. See 19

U.S.C. § 1677e(b); 19 C.F.R. § 355.37.

2. Application of BIA to the Merchandise Imported

Through a Market Economy Exporter

While 19 C.F.R. § 355.37(a) is reasonably implemented under 19

U.S.C. § 1677e(b), neither the statute nor the regulation explains

whether Commerce may rely on BIA in order to calculate the

antidumping duty rate for merchandise produced in an NME country

but imported into the United States through a market economy

exporter. See generally, 19 U.S.C. § 1677e(b); 19 C.F.R. § 355.37.

Thus, Commerce’s “interpretation of its own regulations must be

given effect so long as it conforms to the purpose and wording of

the regulations,” with particular deference given to Commerce’s

interpretation in situations where Commerce applied the regulation

“to a complex or changing circumstance, thus requiring the agency

to bring to bear its unique expertise and policy-making

prerogatives.” Southern Cal. Edison Co., 226 F.3d at 1357.

Commerce’s practice of reliance on BIA in calculating the

applicable rate is uncontested in cases where Commerce does not

receive a complete, accurate and timely response to its request for

Court No. 97-02-00248 Page 44

factual information. See 19 U.S.C. § 1677e(b), 19 C.F.R. §

355.37(a); Def.’s Mem. at 52-55; Pl.’s Br. at 28. There is nothing

in the language of the statute or the regulation inherently

limiting the use of BIA to cases concerning merchandise produced in

an NME country or purchased from an NME exporter. See generally,

19 U.S.C. § 1677e, 19 C.F.R. § 355.37; see, e.g., Neuweg Fertigung

GmbH v. United States, 16 CIT 724, 797 F. Supp. 1020 (1992)

(holding that Commerce was justified in resorting to the use of BIA

in calculating the margin for exporter's sales of bearings from

Germany under 19 U.S.C. § 1677e(b) where exporter's questionnaire

responses were inadequate and untimely). Conversely, Commerce

enjoys very broad, although not unlimited, discretion with regard

to the propriety of its use of BIA. See generally, Olympic

Adhesives, Inc. v. United States, 899 F.2d 1565 (Fed. Cir. 1990)

(acknowledging Commerce’s broad discretion with regard to the use

of BIA but pointing out that Commerce's resort to BIA was an abuse

of discretion where the information Commerce requested did not and

could not exist). Commerce is justified in its reliance on BIA if

the information sought exists and Commerce is unable to receive the

information in spite of its bona fide efforts. See id.; 19 U.S.C.

§ 1677e(b); 19 C.F.R. § 355.37.

Court No. 97-02-00248 Page 45

The policy underlying Commerce’s action was to prevent

“uncooperative PRC producers [from being] free to hide behind and

[from] continu[ing to] export[] through low-rate [market economy]

exporters.” Final Results, 62 Fed. Reg. at 6213. The applicable

statutory and regulatory scheme clearly contemplates the

importation of merchandise produced in an NME but exported through

entities which could be located in market economy countries.

Consequently, Commerce applied the regulation to the complex and

changing circumstances of the realities of modern trade and acted

in accord with the purpose and wording of 19 C.F.R. § 355.37(a)

when it extended the application of BIA to the entries of

merchandise produced in an NME but exported through market economy

entities. Thus, Commerce’s determination warrants deference by

this Court. See Southern Cal. Edison Co., 226 F.3d at 1356. As

the Supreme Court pointed out, “[w]hen the construction of an

administrative regulation rather than a statute is in issue,

deference is even more clearly in order.” Udall v. Tallman, 380

U.S. 1, 16 (1964).

Conversely, the interpretation advocated by Transcom would

sabotage the entire review scheme. If an entry of NME-produced

merchandise channeled through the hands of a market economy

Court No. 97-02-00248 Page 46

exporter and undetectable to Commerce was entitled to separate

treatment and reevaluation, there would be no incentive for all the

other parties in the chain of distribution to participate in the

review process. These parties would be effectively encouraged to

remain silent and impair Commerce’s review, knowing that they have

secured their chance to have a second bite at the apple and to

obtain a different rate whenever they pull the ace, a market

economy exporter, out of their sleeve. This is a scenario 19

U.S.C. § 1677e(b) and 19 C.F.R. § 355.37 were design to prevent.

The Statement of Administrative Action accompanying the URAA

clarifies that “Commerce’s potential use of BIA provides the only

incentive to foreign exporters and producers to respond to

Commerce’s questionnaires.” H.R. Doc. No. 103-316, at 868 (1994)

(emphasis supplied).

Based on the foregoing, this Court concludes that Commerce

acted within the statutory grant of 19 U.S.C. § 1677e(b) and in

accordance with 19 C.F.R. § 355.37(a) when it applied the BIA rate

(equal to the rate allocated to state-controlled enterprises from

the PRC) to the entries of merchandise produced in the PRC but

channeled into the United States through exporters from a market

economy country.

Court No. 97-02-00248 Page 47

III. Fifth Amendment Due Process

A. Contentions of the Parties

Transcom argues that “Commerce’s failure to provide notice

that the two Hong Kong exporters were included in the review and

its use of best information available in determining the

antidumping rate deprived Transcom of its Fifth Amendment Due

Process rights”15 to notice and an opportunity to be heard prior to

a potential deprivation of its property, the additional money

Transcom would be required to pay for the entries of its

merchandise. Pl.’s Br. at 4; see Pl.’s Reply Br. at 26 (citing

Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314

(1950)).

While Timken fails to address the constitutional issue,

Commerce asserts that Transcom’s Fifth Amendment Due Process rights

could not have been violated because Transcom does not have a

15

For reasons not entirely clear to this Court, Transcom added

a constitutional Due Process claim under the Fourteenth Amendment

to its reply brief. See Pl.’s Reply Br. at 25. While the

Fourteenth Amendment of the United States Constitution operates

upon the states, the Fifth Amendment operates upon the federal

government. See Barron v. Mayor and City Council of Baltimore, 32

U.S. (7 Pet.) 243 (1833); Slaughter-House Cases, 83 U.S. (16 Wall.)

36 (1872). Considering that Commerce is a federal agency, this

Court will only address the issue of procedural Due Process under

the Fifth Amendment.

Court No. 97-02-00248 Page 48

protected property interest in its “right to the continued

importation” of its merchandise. Def.’s Mem. at 56. Commerce

points out that “no one has a Congressionally untouchable right to

the continued importation of product.” Id. (citing Arjay Assocs.,

Inc. v. Bush, 891 F.2d 894 (Fed. Cir. 1989)).

It is impossible to comprehend how an importer’s lack of a

vested right to import merchandise in the future negates the

obligation to provide the importer with notice prior to imposing an

antidumping duty for the merchandise already imported. The Court

shares Transcom’s bewilderment. See Pl.’s Reply Br. at 25-28. The

Court shall not entertain Commerce’s argument since it fails to

differentiate between substantive and procedural Due Process claims

and lacks any merit.16

This Court has already established that Commerce satisfied the

statutory requirements of 19 U.S.C. §§ 1675(a)(1), 1677e(b) and the

regulatory requirements of 19 C.F.R. §§ 353.22(c) and 355.37(a).

Therefore, the only constitutional issue remaining is whether the

16

This Court pointed out the very same mistake to Commerce two

years ago. See Transcom, Inc. v. United States, 22 CIT ___, 5

F.Supp. 2d 984, 990 (1998) rev’d on other grounds, Transcom CAFC,

182 F.3d 876. Obviously, it was to no avail.

Court No. 97-02-00248 Page 49

particular language Commerce employed in its Notice of Initiation

violated Transcom's Due Process right to notice under the Fifth

Amendment even though it satisfied Commerce's statutory and

regulatory obligations. The only way Transcom may have a viable

claim is if the statutory and regulatory requirements are

constitutionally deficient either on their face or as applied.

See, e.g., Kimmes v. Harris, 647 F.2d 1028 (10th Cir. 1981).

B. Analysis

It is undisputed that the test for constitutional sufficiency

of notice is whether

[the] notice [is] reasonably calculated, under all the

circumstances, to apprize interested parties of the

pendency of the action and afford them an opportunity to

present their objections. The notice must be of such

nature as reasonably to convey the required information,

and it must afford a reasonable time for those interested

to make their appearance . . . .

. . . .

. . . The reasonableness and hence the

constitutional validity of any chosen method may be

defended on the ground that it is in itself reasonably

certain to inform those affected.

Mullane, 339 U.S. at 314, 315 (internal citations omitted).

Thus, there are two issues to analyze: (1) the reasonableness

Court No. 97-02-00248 Page 50

of the notice requirement contained in the provisions addressing

initiation of review, that is, 19 U.S.C. § 1675(a)(1) and 19 C.F.R.

§ 353.22(c); and (2) the sufficiency of notice element present in

the language of provisions allowing for the use of BIA, that is, 19

U.S.C. § 1677e(b) and 19 C.F.R. § 355.37(a).

1. Notice of Initiation of Review

The statute provides that a review can be conducted “after

publication of notice of such review in the Federal Register . . .

.,” while the regulation requires that a “notice of Initiation of

Antidumping Duty Administrative Review” must be published in the

Federal Register “[a]fter receipt of a timely request . . . or on

[Commerce's] own initiative when appropriate . . . .” 19 U.S.C. §

1675(a)(1); 19 C.F.R. § 353.22(c).

Both provisions expressly mandate that notice to a potentially

affected party must be placed in the Federal Register, a

publication that a seasoned member of the industry, such as

Transcom, is expected to review. The requirement is constitutional

on its face. See Mullane, 339 U.S. at 318 (a notice by publication

is sufficient as to any party whose specific interest or address is

unknown).

Court No. 97-02-00248 Page 51

In addition, the statutory and regulatory requirements were

constitutionally applied. Commerce was justified in its good faith

decision to designate all parties unknown to Commerce under the

term “conditionally covered” while individually naming respondents

indicated by Timken. Commerce’s action was reasonably certain to

inform those parties that could be potentially affected, including

Transcom. Accord Mullane, 339 U.S. at 315.

Finally, the extensive explanations contained in Notice of

Initiation reasonably conveyed all the information required for a

meaningful response: the merchandise at issue, the purpose of the

review and actions expected of potentially affected parties. See

generally, Notice of Initiation, 59 Fed. Reg. 43,537.

This Court concludes that under the test set forth in Mullane,

the statute and the implementing regulation clearly pass

constitutional muster, either on their face or as applied. The

statutory and regulatory language, taken together with Commerce’s

publication of the Notice of Initiation (which contained the phrase

“other exporters . . . are conditionally covered” and commenced

the review that covered the particular merchandise Transcom

imported and the POR during which Transcom was dealing), reasonably

Court No. 97-02-00248 Page 52

alerted Transcom to the fact that its entries may be affected by

Commerce’s determination.

2. Notice of Reliance on BIA

The unequivocal language of § 1677e(b) provides for Commerce’s

use of BIA whenever an entity subject to a review did not produce

the information requested. See 19 U.S.C. § 1677e(b). The language

of the relevant regulation specifies that Commerce may resort to

BIA if it is “unable to verify, within the time specified, the

accuracy and completeness of the factual information submitted.”

19 C.F.R. § 355.37(a)(2).

It is hard to craft a notice more plain and straightforward to

advise a potentially affected party like Transcom that its silence

or inaction would lead to Commerce’s reliance upon BIA in its

determination of applicable rates. While neither provision

expressly addresses the particular circumstances of an importer

dealing in merchandise produced in an NME but handled by an

exporter from a market economy, the statute and the regulation do

not violate the Due Process Clause of the Fifth Amendment. Both

provisions are facially constitutional because the element of

notice requirement, as interpreted by Mullane, does not call for

Court No. 97-02-00248 Page 53

the statutory or regulatory language to anticipate and spell out

every applicable scenario. The Due Process Clause of the Fifth

Amendment merely expects the provisions to apprize interested

parties of the alternatives available to Commerce. See Mullane,

339 U.S. at 314.

Similarly, Commerce’s application of the statute and

implementing regulation was constitutionally valid. Commerce is

not required or expected to map out every business dealing and

every possible chain of distribution of merchandise that could be

deemed subject to the review in order for Commerce’s action to come

within the constitutional safeguards of the Fifth Amendment Due

Process Clause.

This Court holds that neither the language nor Commerce’s

application of 19 U.S.C. § 1675(a)(1) and 19 C.F.R. § 355.37(a) was

constitutionally deficient and, therefore, Commerce did not violate

Transcom’s procedural Due Process rights.

CONCLUSION

For the foregoing reasons, this Court finds that the form of

notice contained in the Notice of Initiation and Commerce’s

Court No. 97-02-00248 Page 54

reliance on BIA in its determination of the applicable antidumping

duty rates were: (1) reasonable under the relevant statutes and

implemented regulations; and (2) constitutionally sufficient.

______________________________

NICHOLAS TSOUCALAS

SENIOR JUDGE

Dated: November 7, 2000

New York, New York

Erratum

Slip Opinion 00-146

Transcom v. United States, Court No. 97-02-00248

On page 10, lines 3-5, “See generally, 19 U.S.C. § 1675(a); 19

C.F.R. §§ 353.22, 353.31, 355.31 (1994)” should be “See generally,

19 U.S.C. § 1675(a); 19 C.F.R. §§ 353.22, 353.31 (1994).”

November 21, 2000