CAFC Judges Probe Arguments Defending Total AFA in Light of Reporting Error in AD Case

Judges at the U.S. Court of Appeals for the Federal Circuit in a June 10 oral argument probed an antidumping petitioner's position that a supposed "methodological error" committed by a respondent in the reporting of its home market sales justified the use of total adverse facts available. Hitachi Energy USA, formerly known as ABB Enterprise, argued that errors committed in reporting the gross unit price for one home market sale justified tossing out the entire U.S. and home market sales database. Judges Pauline Newman, Kara Stoll and Leonard Stark asked counsel for Hitachi and respondent Hyundai Electric & Energy Systems questions over this position (Hyundai Electric v. U.S., Fed. Cir. #21-2312).

The case concerns the fourth administrative review of the antidumping duty order on large power transformers from South Korea, in which Hyundai and Hyosung served as mandatory respondents. In the review, Commerce hit both respondents with total AFA, finding Hyundai's reporting of its home market prices warranted the label. Following two court opinions, Commerce eventually dropped the AFA finding, prompting the Court of International Trade to uphold the case's second remand results.

Under respectful protest, Commerce said Hyundai still understated the gross unit price for a home market sale in which it treated a certain part as a nonforeign like product, but treated the same part as a foreign like product in another home market sale. Hitachi appealed, and in its opening brief pointed to the agency's first remand results, in which Commerce deemed this misreporting to be a "methodological error" on Hyundai's part and that the respondent was well-aware of the scope of the order as a "seasoned respondent," and had made similar errors in the past, warranting the use of total AFA (see 2111230087).

Stoll and Stark asked Ron Kendler, counsel for Hyundai, if the court can consider historical experience when weighing whether the respondent cooperated to the best of its ability and whether the court had the administrative record to do so. "As far as I'm aware on the appendix submitted to the court, the record from all the different reviews that appellant is citing to is not before this court, and looking to the prior jurisprudence discussed [in prior Federal Circuit cases] this court should not consider that under the appropriate legal standard," Bond said. Counsel further said Commerce is required to only take evidence on the record of the immediate proceeding into account.

Stoll also expressed skepticism over the idea that a "bright-line rule" could be applied in that one incorrectly reported sale could never stand as the grounds for total AFA. To this, Kendler responded he's not advocating for a bright-line rule but merely that the use of total AFA should be fact-specific. He said Hitachi has failed to cite any instance or precedent where the reporting error in this case would lead to total AFA. Throughout the oral argument, Kendler described the appellant's argument as being based on "speculation" since it only guesses as to whether all of Hyundai's sales reporting was plagued by this same error.