CAFC Says Pencil Importer Didn't Exhaust Remedies Seeking Separate Rate From China-Wide Margin

Importer Prime Time Commerce failed to exhaust its administrative remedies for its argument that the Commerce Department should look to confidential information to provide "gap-filling" data needed to calculate a rate separate from the China-wide dumping margin for the importer, the U.S. Court of Appeals for the Federal Circuit said in a June 28 opinion. Sustaining the Court of International Trade, Judges Alan Lourie, Haldane Mayer and Tiffany Cunningham also ruled that while CIT and Commerce erred in not accepting Prime Time's submissions since it is an "interested party," the error was a harmless one.

The case concerns Commerce's 2015-16 administrative review of the antidumping duty order on cased pencils from China in which exporter Ningbo Homey Union Co. was selected as the sole individually examined respondent. Prime Time sought to submit information it thought would aid Ningbo Homey's questionnaire responses in the review, only to be denied by Commerce. Ningbo Homey failed to answer Commerce's questionnaires, leading the agency to impose the China-wide rate of 114.90% on the exporter's pencils.

Prime Time appealed that decision to CIT, which found that Commerce's rejection of Prime Time's questionnaire responses and decision to not calculate an importer-specific rate for Ningbo Homey were unsupported. Commerce then accepted Prime Time's information but continued to reject an importer-specific rate for the Chinese company. Only after the final remand did Prime Time challenge Commerce's continued refusal to calculate the importer-specific rate.

The court said Prime Time's argument that Commerce insufficiently explained its practices was barred because the company did not initially raise the arguments before Commerce. Prime Time cannot now argue that its past attempts to get Commerce to reconsider its questionnaire responses rendered any further attempt at reconsideration “futile” simply because the circumstances changed, CIT said (see 2105260054).

The matter was then brought to the Federal Circuit by Prime Time. At the appellate court, the judges agreed with the trade court that the importer failed to exhaust its administrative remedies. While Prime Time does not dispute that it did not submit comments on Commerce's remand results at CIT related to its argument concerning the gap-filling information, the company argued that it did not need to since any comments would have been futile. The Federal Circuit disagreed.

"Here, while it may have been unlikely that Commerce would have accepted Prime Time’s arguments, it is far from certain that the government would have rejected them," Cunningham, the author of the opinion, said. "... Because of Prime Time’s failure to comment on Commerce’s draft remand redetermination and the new arguments that it first raised before the Trade Court, Commerce was not given an opportunity to modify its final determination in response to arguments raised by the parties as it could have during administrative proceedings. Thus, we conclude that the Trade Court did not abuse its discretion in requiring Prime Time to exhaust its administrative remedies by commenting on Commerce’s draft remand redetermination."

Cunningham then addressed Prime Time's argument over the application of the China-wide rate. The company claimed that Commerce erred in using the highest rate available since the agency did not conduct the evaluation required by the law by not properly considering Prime Time's evidence of its efforts to cooperate. The court held that Commerce cannot decline to consider information submitted by an interested party, and given that Prime Time is an interested party being an importer of subject merchandise, Commerce's failure to fully consider the importer's submissions was illegal. However, this was only a minor error, Cunningham ruled.

"Because the Trade Court declined to consider Prime Time’s efforts to cooperate as an importer, the Trade Court thus erred," the opinion said. "However, the failure to consider Prime Time’s efforts to cooperate was a harmless error. Prime Time’s purported evidence of cooperation would not disturb the calculation of the 114.90% China-wide rate nor entitle it to a separate rate."

(Prime Time Commerce v. United States, Fed. Cir. #21-1783, dated 06/28/22, Judges Alan Lourie, Haldane Mayer and Tiffany Cunningham. Attorneys: Mark Lehnardt of Law Offices of David L. Simon for plaintiff-appellant Prime Time Commerce; Ashley Akers for defendant-appellee U.S. government)