CAFC Hears Argument in Suit on Critical Circumstances Finding on Vietnamese Honey
The U.S. Court of Appeals for the Federal Circuit on Sept. 2 heard oral argument in a case from importers, led by Sweet Harvest Foods, against the International Trade Commission's finding of critical circumstances for the importers' Vietnamese honey imports, which led to the retroactive imposition of antidumping duties on entries made in the 90-day window prior to the suspension of liquidation. Ron Kendler, counsel for the importers, argued that the ITC violated the logic of the critical circumstances statute, while ITC attorney Michael Haldenstein and Melissa Brower, counsel for petitioner American Honey Producers Association, said the commission's decision was entirely in bounds of the law (Sweet Harvest Foods v. United States, Fed. Cir. # 24-1370).
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The case was heard by Judges Alan Lourie, Richard Taranto and Tiffany Cunningham.
Kendler's argument centered on the notion that the ITC must conduct a "forward-looking analysis," evidenced by various words in both the general critical circumstances statute and the "inventory provision" of the statute. He repeatedly emphasized that the ITC failed to account for the reality that any surge in imports of Vietnamese honey during the critical circumstances period was consumed in the U.S. and not entered into the importers' inventories, clearly demonstrating that the imports aren't threatening to undermine the remedial nature of the AD order.
Taranto questioned Kendler's argument, stating that the point of the critical circumstances statute is to make sure importers don't build up a stockpile of imports prior to the imposition of the AD duties, noting that one way to "hurt the domestic industry is to basically satiate the market so that consumers have all the honey they need for an extended period." The judge asked why that doesn't just lead to a "straightforward" reading of the statute so that "these critical circumstances apply 90 days before the suspension" of liquidation.
In response, Kendler noted that the statute specifically tells the ITC to look at inventories. To this, Taranto noted that the statute said the statutory language says to look out for increases in inventories. Kendler replied that "the notion of an increase takes into account current levels."
The judge said that's "not necessary, precisely because all of that could have been sold off, and so consumers are not going to buy anything from the domestics for a period, even though they're not in the inventory of the importers." Kendler told the judge "that is not the case," since if the end users have used the honey, it's not in inventory and not in the supply chain and consumers' demand will continue. "If the end users have used the honey, then it is not likely to seriously undermine the remedial effect of the order."
Cunningham asked Kendler whether his statutory interpretation argument requires the "timing and volume of the imports to be considered prior to the end of the investigation" or prior to the suspension of liquidation. Kendler said the "timing and volume" provision is a separate one that the importers aren't contesting the analysis of. The judges didn't ask any questions of either the ITC attorney or the petitioner's counsel.
Kendler added that there was evidence on the record "showing that the importers' inventories had, in fact, declined, and that it had been sold off to end users, and that the end users, in the ordinary course of business, do not keep inventory, were not stockpiling and had consumed the honey."
The attorney added that the ITC erred in its data selection. The commission was presented with two data sets. The first included importer inventories collected through the companies' questionnaire responses, which ended eight months before the issuance of the AD order, and the other data set was submitted by importers and honey packers, and it ended three months prior to the issuance of the order. Kendler said the "majority used only the questionnaire data," which is a "critical flaw," since the ITC couldn't conduct the "requisite statutory analysis of understanding the effect of these entries on the order at the time of the issuance."
During her argument, Brewer said the case is "somewhat remarkable," since the importers aren't challenging the fact that the three statutory factors underlying a critical circumstances determination aren't satisfied, nor are they challenging the notion that there was a "rapid increase in imports during the six-month period" examined by the commission. Instead, Sweet Harvest is asking the court to add an "escape hatch" to the statute, which says that importers aren't subject to retroactive duties if inventories are sold off quickly enough.
"We say that's incorrect and in violation of the plain language of the statute," Brewer said.