CONNUM-Specific Reporting Requirement in AD Review Illegal, Respondent Tells Federal Circuit

The Commerce Department's requirement that an antidumping respondent report all of its factors of production (FOP) data on a control number (CONNUM)-specific basis violated the law because it's a legislative rule subject to the Administrative Procedure Act but was imposed without the required notice-and-comment period, respondent Shanxi Pioneer Hardware Industrial Co. said in a Jan. 26 brief. Responding to arguments from the Department of Justice and the AD petitioner at the U.S. Court of Appeals for the Federal Circuit, Pioneer also said that even if the requirement isn't deemed a legislative rule, Commerce's CONNUM-specific rule is unlawful since it restricted the agency's ability to rely on non-CONNUM-specific data (Xi'an Metals & Minerals Import & Export Co. v. U.S., Fed. Cir. #21-2205).

The case concerns the 10th administrative review of the antidumping duty order on steel nails from China, in which Pioneer was tapped as a mandatory respondent. In its preliminary results, Commerce assigned Pioneer a 13.88% dumping rate -- a rate Pioneer deemed "reasonable" -- but in its final determination, the agency raised Pioneer's rate to 118.04% based on total adverse facts available for its failure to report its data in a CONNUM-specific fashion.

Commerce found that Pioneer's refusal to submit its FOP data in the requested form and manner impeded the administrative review and justified the use of total AFA. Pioneer challenged this practice as "unlawful and unreasonable." However, CIT said that since this had been Commerce practice since the third administrative review of steel nails, Pioneer should have understood it as the proper method in which to submit the FOP data (see 2106090048).

Pioneer then appealed the decision. At the Federal Circuit, DOJ argued that, contrary to Pioneer's contentions, the requirement of CONNUM-specific reporting isn't the implementation of a legislative rule and didn't require notice and comment (see 2112280055). In its response, Pioneer said that it's a legislative rule because it amends an existing legislative rule, constricts Commerce's discretion, requires parties to actively change their reporting practices and significantly affects the outcomes of AD proceedings.

DOJ also argued that ,since it does not universally apply the CONNUM-specific reporting rule, it's not a legislative rule. Pioneer said this doesn't matter. Just because there's some "flexibility" in the rule's enforcement doesn't change its nature as a legislative rule, so failure to conduct notice and comment renders even all partial enforcement unlawful, the respondent said.

Even if it were not a legislative rule, the CONNUM-specific reporting requirement violates the Tariff Act, the brief said. The act requires Commerce to consider all available evidence on the proper allocation of costs in AD duty proceedings, and this reporting requirement "restricts the ability of parties to report, and of Commerce to rely on, non-CONNUM-specific normal books and records." Pioneer said that no party is contesting that its ordinary-course FOP data complies with all the other requirements for data entry and that it accurately reflects Pioneer's costs of production.

If the appellate court were to find that the use of facts available is warranted in this instance, the use of total AFA is unwarranted, Pioneer argued. "Commerce’s only problem with Pioneer’s submission was that Pioneer did not report FOPs on a CONNUM-specific basis," the brief said. "But neither the CONNUM-Specific Rule nor Commerce’s explanation on the record shows that there was any problem with the remainder of Pioneer’s submission, including its undisputedly complete and substantial U.S. sales database and its separate-rate information."