In multiple administrative reviews of the antidumping duty order on Chinese shrimp, the Chinese shrimp producer and exporter Hilltop International provided false information to the U.S. Department of Commerce (Commerce) regarding the relationship the company had with a Cambodian company (Ocean King (Cambodia)) that exported shrimp to the United States. Although Hilltop International claimed to have no relationship with Ocean King, the Ad Hoc Shrimp Trade Committee supplied Commerce with information demonstrating a strong affiliation between the two companies that was ultimately confirmed by ownership documents obtained by the agency from the Cambodian government. In response to Hilltop International’s inaccurate claims, Commerce determined that information supplied to the agency by the exporter was unreliable and set antidumping duty rates of 112.81% based on “adverse facts available” to Commerce.
Hilltop International appealed Commerce’s actions, arguing, in part, that the agency inappropriately found all of the exporter’s factual claims to be unreliable based of the company’s failure to provide accurate information in response to inquiries about the company’s affiliations. In October 2015, the U.S. Court of Appeals for the Federal Circuit rejected Hilltop’s contentions. Noting that Hilltop International had also refused to answer any questions regarding potential transshipment schemes involving Ocean King intended to evade the payment of antidumping duties, the Federal Circuit observed: “Indeed, Commerce properly determined both that Hilltop’s misrepresentation rendered the entirety of its submissions unreliable and that Hilltop’s failure to respond to the transshipment evidence prevented Commerce from evaluating the impact of Hilltop’s misrepresentations.”
The Federal Circuit’s rejection of Hilltop’s arguments cleared the way for Commerce to respond to discoveries of fraud upon the agency with a determination that the information supplied by the exporter was not credible. Because of the decision, Commerce was not obligated to definitively demonstrate that every single factual assertion made by an exporter was inaccurate but, instead, could reasonably conclude that a fraud practiced on the agency undermined the reliability of all information submitted to Commerce by the company committing the fraud.
On Monday morning, the U.S. Supreme Court denied the request of a German producer and exporter of lightweight thermal paper to review and limit the Federal Circuit’s decision in Ad Hoc Shrimp Trade Action Committee v. United States, 802 F. 3d 1339 (Fed. Cir. 2015). The company, Papierfabrik August Koehler SE (Koehler), had submitted a petition for a Writ of Certiorari to the United States Supreme Court requesting that the high court “review the limits of Commerce’s discretion in using adverse facts available to impose excessive antidumping duty rates.” In its case, an appeal of the final results of the third administrative review of the antidumping duty order on lightweight thermal paper from Germany, Koehler had admitted to structuring sales made to customers in Germany so as to appear to have been made to another country in order to manipulate Commerce’s dumping margin calculations. Koehler only did so after the domestic industry provided Commerce with information describing and documenting the scheme.
Koehler argued that Commerce should not have found all the rest of the information submitted by the company to the agency to be unreliable. In a December 2016 decision, the Federal Circuit rejected Koehler’s arguments. Koehler asked the Supreme Court to review the Federal Circuit’s decision, complaining that, under Ad Hoc Shrimp Trade Action Committee, the Federal Circuit had approved of “an adverse facts available rate more than twelve times higher than the highest weighted-average margin calculated for a cooperative respondent . . . .” Yesterday, the Supreme Court formally denied Koehler’s request.
With the Supreme Court’s denial of the Writ of Certiorari, the Federal Circuit’s decisions in both Papierfabrik August Koehler SE v. United States and Ad Hoc Shrimp Trade Action Committee v. United States remain the law of the land and Commerce maintains significant discretionary options through which to respond to fraud in its administrative proceedings.
See the U.S. Supreme Court’s announcement of “CERTIORARI DENIED” for December 11, 2017 here: https://www.supremecourt.gov/orders/courtorders/121117zor_n64o.pdf
Review the U.S. Supreme Court’s docket for Papierfabrik August Koehler SE v. United States here: https://www.supremecourt.gov/search.aspx?filename=/docket/docketfiles/html/public/17-171.html