Government, Plaintiffs Spar in Oral Arguments Over Burden of Selecting Second Review Respondent

In oral arguments March 7, Court of International Trade Judge Timothy Reif heard the government’s and exporters’ arguments in a case regarding an administrative review on multilayered wood flooring from China. The review’s final results were based on the calculated rate of only one respondent after it was discovered selection of the other was based on an error by the Commerce Department (Jiangsu Senmao Bamboo and Wood Industry Co. v. U.S., CIT # 20-03885).

The government argued that a remand to select a new respondent would impose a large burden on Commerce for little reward, especially as the agency would have to examine use of China's Export Buyer's Credit Program. In response, the lead plaintiff claimed that the EBCP subsidy investigations, at least, would not be difficult because no exporter has ever proven its customers' lack of use of the program to Commerce's satisfaction.

Commerce has previously verified non-use of the EBCP in other CVD cases after receiving certificates from all of an exporter's U.S. customers (see 2306140032).

Commerce’s decision was reasonable because the department had realized that the administrative burden would outweigh the “marginal” benefit of working with a second respondent, DOJ attorney Kelly Geddes said.

The burden of seeking and investigating an entirely separate respondent was “extensive"; Commerce usually has a year to do so, she said. She said that there still remains much work to be done after selection of a new respondent, even if that respondent did end up being plaintiff and exporter Jiangsu Senmao Bamboo and Wood Industry -- who has been requesting selection and already provided a questionnaire to the department.

Commerce would have to issue a supplemental questionnaire in response to Senmao Bamboo’s original answers, as well as send questionnaires and supplemental questionnaires to the government of China -- and possibly to the exporter’s customers as well if the EBCP program is part of the review.

Along with those questionnaires, Commerce also has to allow time for parties to provide benchmark information and for the department itself to analyze everything and reach a preliminary and final determination, the government said.

“Is she exaggerating, Mr. Brophy?” Reif asked Senmao Bamboo's attorney. “If the court remands and directs Commerce to select another mandatory respondent, aren’t those actually things that Commerce is likely to have to do?”

Brophy admitted that there would be more questionnaires involved, but said that information regarding the Chinese government’s EBCP program would likely not be provided or need analysis.

“No exporter has ever passed Commerce’s test on getting all the information from their customers, so that probably wouldn’t even become an issue because the customers probably, as in past reviews, would not respond,” he said. “I don’t think it would take that much time, Your Honor.”

Senmao Bamboo and another exporter argued that Commerce’s error could have been caught much earlier, as multiple parties, including petitioners, pointed it out to Commerce in their original questionnaire responses. However, like it was wearing blinders, the department “steamed ahead,” Brophy said.

Justice also requires that there “has to be a remedy” for Commerce’s legal error, they said.

Reif also asked DOJ if ruling in the government’s favor would provide Commerce officials a “get out of jail free” card in future reviews during which an error is caught relatively late.

“And similarly, if the court were to say, ‘This is not an adequate rationale,’ it would have the effect of maybe perpetuating for the analysts at the department that this foundational decision of respondent selection is one that needs to be taken with great care,” Reif said.

This situation is incredibly rare, DOJ replied; the CBP data Commerce relies upon to select respondents is almost always accurate. It said that government officials are presumed to be acting in good faith, and that the existence of this litigation is enough to impact Commerce officials’ future respondent selections.

DOJ argued that Commerce has the discretion to, and did, make a reasonable decision that only one respondent would be necessary in the review in question. The other respondent was removed late in the game, post-final results, unlike in YC Rubber, it said, as the department made an error in relying on unreliable CBP data. Even if Reif would have made the decision differently himself, he must still rule on that basis, it said.

“It’s not necessary to motivate Commerce to take this issue seriously,” it said.

The proceedings then moved to a closed hearing so that the parties could discuss whether the review’s sole respondent was representative.