CAFC Questions Limits on Commerce's Rebutable Presumption in NME AD Cases
The U.S. Court of Appeals for the Federal Circuit on June 3 sharply questioned counsel for exporter Jilin Forest Industry Jinqiao Flooring Group Co. in its case alleging that the Commerce Department doesn't have the adequate legal authority for its non-market economy policy in antidumping duty cases, which includes a rebuttable presumption that an exporter is controlled by the NME nation (Jilin Forest Industry Jinqiao Flooring Group Co. v. United States, Fed. Cir. # 23-2245).
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Judges Todd Huges, William Bryson and Leonard Stark pressed Brittney Powell, counsel for Jilin Forest, about Commerce's broad discretion in calculating AD rates and in federal agencies' general ability to adopt presumptions. The judges also questioned DOJ attorney Brendan Jordan about what limits exist on the agency's presumption and whether a given exporter could otherwise challenge the country-wide rate should they fail to show independence from foreign government control but be able to prove with 100% certainty that they aren't dumping.
The present case saw the Court of International Trade question the legal backing of Commerce's NME policy in the court's review of the agency's fifth review of the AD order on multilayered wood flooring from China (see 2302090073). Judge Richard Eaton said the statutory language requires the individual calculation of a mandatory respondent's rate, and that nothing exempts the agency from the duty to find a margin for Jilin using its own data, despite the agency's NME practice.
The U.S. appealed the decision, arguing that case law and general principles of administrative law allow for the agency's rebuttable presumption.
At oral argument, the judges first went back-and-forth with Jordan about the specific statutory basis for the policy, with Hughes noting Commerce's broad discretion to calculate AD rates. Hughes then said he believes the court is bound by a string of precedent, namely the court's decision in China Manufacturers Alliance v. U.S., in which the appellate court said country-wide rates assigned in NME cases are individual rates, rather than "all-others" rates as provided for in the statute (see 2106100044).
Bryson then pressed Jordan on whether a company has any recourse to challenge its rate should it fail to rebut the presumption of foreign state control yet be able to prove that it's not dumping its products. If you can't establish independence, "you're pretty much done," the judge said. "It sounds like there's not much left that you can do," Bryson added, questioning if this outcome is fair. In response, Jordon said this is the way the presumption operates, noting that the only real option left would be for the party to challenge the country's NME designation itself before Commerce.
During rebuttal, both Hughes and Bryson pressed Jordan on whether Commerce could wield the presumption "irrationally," with both judges saying that the agency couldn't use it in an irrational way. Hughes presented the DOJ attorney with a hypothetical in which Commerce says all exporters from an NME nation have to pay 1,000% duties as a per se policy. Hughes said Commerce "doesn't have that broad of authority," to which Jordon said the agency is bound by the Administrative Procedure Act in that instance.
Hughes most fervently pressed Powell on her position that there's no legal basis for the NME presumption, first asking her about the court's line of cases upholding the policy. Powell sought to distinguish those cases by arguing that none of them considered the underlying "source of Commerce's legal authority." Hughes questioned how that matters, noting that it doesn't make the cases "any less binding precedent" and claiming that, if Powell's argument won, litigants would come out of the woodwork to make new legal arguments on a host of settled issues.
Bryson then pressed Powell on the settled principle of administrative law that agencies can adopt presumptions, noting Supreme Court precedent going back to 1945. To this, Powell said Eaton correctly recognized the "tension" in Commerce's use of the presumption, which it created without any express delegation from Congress, and in the statute's requirement to individually examine exporters. Hughes then picked up on this line of questioning, noting that the statute is very broad and that Commerce often imposes requirements on companies in its AD proceedings without explicit delegation from Congress.