CIT Blasts Commerce's Use of 154% AFA Rate Over 16-Minutes-Late Submission in AD Review

The Court of International Trade rejected the Commerce Department's imposition of a total adverse facts available rate of 154.33% on antidumping duty respondent Oman Fasteners as the result of one 16-minutes-late submission, in a Feb. 15 opinion made public Feb. 27. Judge M. Miller Baker said the lawsuit was "not a close case," blasting Commerce's inadequate explanation for why one late submission due to a filing difficulty was enough to conclude that Oman Fasteners failed to cooperate to the best of its ability or why the company deserved the punitive rate.

In a rare move, the judge consolidated the exporter's motion for a preliminary injunction against the AD case's cash deposits with a motion for judgment on the agency record, even though only the PI motion had been briefed. Baker said he did so because "Commerce’s challenged actions here are the very definition of abuse of discretion" as the agency "made no effort to justify the draconian sanction it imposed here."

The case stems from the sixth administrative review of the antidumping duty order on steel nails from Oman. In the previous five reviews, the exporter said it received AD rates of 0.56%, zero, zero, zero and 1.65%, respectively. Other than the 16-minutes-late supplemental Section C questionnaire response -- the response was rejected despite passing the "check file" feature on Commerce's ACCESS -- Oman Fasteners also cooperated fully in the sixth review.

The respondent said it did not reach out to Commerce concerning the delay because the agency said there would be no further extensions and the company timely submitted final versions of the documents the next day under Commerce's one-day lag rule. The agency rejected the supplemental questionnaire submission and assigned Oman Fasteners the 154.33% AFA rate. Commerce justified this rate as one that would "confer an adverse inference and induce cooperation."

Baker ruled Commerce's justification was "not an explanation. It amounts to, 'We choose this as the adverse rate because it’s crushing.'" He noted that the Federal Circuit has "repeatedly admonished" Commerce that an AFA rate "cannot be punitive or aberrational" and must reflect the seriousness of the non-cooperating party's misconduct.

The judge noted Commerce has an automatic 15.5-hour extension for filings if Commerce fails to rule on an extension request by the typical 5 p.m. deadline. But he said Commerce has not codified this practice, making it "an abuse of discretion for Commerce to require a showing of 'extraordinary circumstances' to support a retroactive extension request in the narrow circumstance where, as here, the filing is completed after 5:00 p.m. but prior to 8:30 a.m. the following work day -- that is, when the filing is completed within the automatic window that Commerce’s rulemaking comment response authorizes."

He said the unofficial agency policy should mean respondents have a boilerplate extension ready to fire off at the eleventh hour since the agency would almost certainly grant it this 15.5-hour extension.

Baker said the agency "astonishingly" said it does not have an established practice of leniency for first-time late filers. The judge ruled that this contradicts its own past statements and amounts to "an abuse of discretion (at best) or arbitrary and capricious action (at worst). The Department said, five times, that it has a 'practice' of allowing a law firm one tardy filing -- a 'one-bite rule,' as it were. This court will hold Commerce to its stated practice."

Baker, in a highly redacted section of the opinion, also addressed Oman Fasteners' request for a PI preventing collection of the high cash deposits as a result of the review. The judge ruled that the respondent adequately showed, largely via testimony from its CEO Steve Karaga, that it was likely to suffer four types of irreparable injury without the injunction: insolvency, insolvency through default with lenders, damage to customer relationships and termination of employees. The balance of hardships "lopsidedly" falls in Oman Fasteners' favor, Baker said.

"Absent injunctive relief, the company faces catastrophe," the opinion said. "The harm to the government from granting such relief, in contrast, is minimal to non-existent, because it will receive no revenue from Oman if the company goes bankrupt."

(Oman Fasteners v. U.S., Slip Op. 23-17, CIT # 22-00348, dated 02/15/23, amended 02/22/23, Judge M. Miller Baker; Attorneys: Michael Huston of Perkins Coie for plaintiff Oman Fasteners; Kelly Geddes for defendant U.S. government; Adam Gordon for The Bristol Group for defendant-intervenor Mid Continent Steel & Wire)