CSC Sugar LLC v. United States, Slip Op. 19-132

413 F.Supp.3d 1318

CSC SUGAR LLC, Plaintiff,

v.UNITED STATES, Defendant.

Slip Op. 19-132

Court No. 17-00215

United States Court of International Trade.

October 18, 2019

Jeffrey S. Neeley and Michael Klebanov, Husch Blackwell, LLP, of Washington, DC, for Plaintiff CSC Sugar LLC.

Alexander O. Canizares, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC for Defendant United States. With him on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and Reginald T. Blades, Jr., Assistant Director. Of counsel on the brief was Brandon Custard, Attorney, U.S. Department of Commerce, Office of the Chief Counsel for Trade Enforcement and Compliance of Washington, DC.

Robert C. Cassidy, Jr., Charles S. Levy, James R. Cannon, Jr., and Jonathan M. Zielinski, Cassidy Levy Kent (USA) LLP, of Washington, DC, for Defendant-Intervenors the American Sugar Coalition, American Sugar Cane League, American Sugarbeet Growers Association, American Sugar Refining, Inc., Florida Sugar Cane League, Rio Grande Valley Sugar Growers, Inc., Sugar Cane Growers Cooperative of Florida, and the United States Beet Sugar Association.

Irwin P. Altschuler, Rosa S. Jeong, and Daniel E. Parga, Greenberg Traurig, LLP, of Washington, DC, for Defendant-Intervenor Cámara Nacional de Las Industrias Azucarera y Alcoholera.

Gregory J. Spak, Kristina Zissis, and Ron Kendler, White and Case LLP, of Washington, DC, for Defendant-Intervenor Imperial Sugar Company.

Gordon, Judge:

This action involves a challenge to the U.S. Department of Commerce's ("Commerce") determination to amend the suspension agreement regarding the antidumping duty ("AD") investigation on sugar from Mexico. See Sugar from Mexico, 82 Fed. Reg. 31,945, PD 114¹ (Dep't of Commerce July 11, 2017) (amendment to AD Suspension Agreement) ("AD Amendment").²

Before the court is the motion of Plaintiff CSC Sugar LLC ("Plaintiff" or "CSC Sugar") for judgment on the agency record under USCIT Rule 56.2. See Pl.'s Mot. for J. on the Agency R., ECF No. 88³ ("Pl.'s Mot."); see also Def.'s Resp. to Pl.'s Mot. for J. on the Agency R., ECF No. 100 ("Def.'s Resp."); Def.-Intervenor Cámara Nacional de Las Industrias Azucarera y Alcoholera Resp. Opp. Pl.'s Mot. for J. on the Agency R., ECF No. 93 ("Cámara Resp."); Def.-Intervenors American Sugar Coalition, American Sugar Cane League, American Sugarbeet Growers Association, American Sugar Refining, Inc., Florida Sugar Cane League, Rio Grande Valley Sugar Growers, Inc., Sugar Cane Growers Cooperative of Florida, and the United States Beet Sugar Association's Resp. Opp. Pl.'s Mot. for J. on the Agency R., ECF No. 95 ("ASC Resp."); Pl.'s Reply in Supp. Of Mot. for J. on the Agency R., ECF No. 104 ("Pl.'s Reply"). The court has jurisdiction over this matter pursuant to § 516A(a)(2)(B)(iv) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iv),⁴ and 28 U.S.C. § 1581(1)(c) (2012). For the reasons set forth below, the court grants Plaintiff's motion.

I. Background

In 2014, after the American Sugar Coalition and its members (collectively, "ASC"), filed a petition with Commerce and the U.S. International Trade Commission ("ITC"), the agencies conducted an investigation as to whether imports of sugar from Mexico were being sold at less than fair value, and whether such imports were injurious to the U.S. industry. After Commerce issued a preliminary determination that sugar from Mexico was being sold, or was likely to be sold, into the United States at less than fair value, Commerce and the Government of Mexico negotiated and signed a suspension agreement. See Sugar From Mexico: Suspension of Antidumping Investigation, 79 Fed. Reg. 78,039 (Dep't of Commerce Dec. 29, 2014) ("AD Agreement").

In 2017, Commerce and the Government of Mexico negotiated amendments to the suspension agreement. See AD Amendment. Among other changes, this amendment altered the definition of "refined sugar" in the AD Agreement. See id. (amending definition of "refined sugar" to consist of sugar with a polarity 99.2 degrees and above, instead of 99.5 degrees polarity and above). In response, CSC Sugar commenced this action. See Compl., ECF No. 11. After Commerce filed the administrative record pursuant to 19 U.S.C. § 1516a(b)(2)(A)(i) and USCIT Rule 73.2(a), CSC Sugar contended that Commerce did not meet its obligation to file a complete administrative record. See Pl.'s Mot. to Complete Admin. R., ECF Nos. 32 & 33. Specifically, CSC Sugar argued that Commerce failed to memorialize and include in the record ex parte communications between Commerce officials and interested parties (including the domestic sugar industry and representatives of Mexico) as required by 19 U.S.C. § 1677f(a)(3). Id.

The court agreed and ordered Commerce to supplement the administrative record with any ex parte meetings about the AD Amendment. See CSC Sugar LLC v. United States, 42 CIT ––––, ––––, 317 F. Supp. 3d 1334, 1345 (2018) (" CSC Sugar I"). Commerce then supplemented the administrative record with two logs. The first, a "Consultations Log," documented the ex parte meetings that were held or may have been held in relation to the AD Agreement Amendment. See Consultations Log, ECF No. 62-1. The second was an "Email Log" that included email correspondence, with attached documents, between interested parties and Commerce. See Email Log, ECF No. 62-2. CSC Sugar subsequently filed a motion for judgment on the agency record under USCIT Rule 56.2 arguing that Commerce's failure during the suspension amendment negotiations to maintain contemporaneous ex parte meeting memoranda (pursuant to § 1677f(a)(3) ) could not be adequately remedied by the Government's belated and incomplete supplementation of the record. See Pl.'s Mot. CSC Sugar maintains that the only adequate remedy to address Commerce's willful disregard of its statutory obligations is to vacate the AD Amendment. Id. at 23–29.

II. Standard of Review

The court sustains Commerce's "determinations, findings, or conclusions" unless they are "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C § 1516a(b)(1)(B)(i). More specifically, when reviewing agency determinations, findings or conclusions for substantial evidence, the court assesses whether the agency action is reasonable given the record as a whole. Nippon Steel Corp v. United States, 458 F.3d 1345, 1350–51 (Fed. Cir. 2006). Substantial evidence has been described as "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." DuPont Teijin Films USA v. United States, 407 F.3d 1211, 1215 (Fed. Cir. 2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938) ). Substantial evidence has also been described as "something less than the weight of evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's findings from being supported by substantial evidence."

Consolo v. Fed. Mar. Comm'n, 383 U.S. 607, 620, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966). Fundamentally, though, "substantial evidence" is best understood as a word formula connoting a reasonableness review. 3 Charles H. Koch, Jr., Administrative Law and Practice § 9.24[1] (3d ed. 2019). Therefore, when addressing a substantial evidence issue raised by a party, the court analyzes whether the challenged agency action "was reasonable given the circumstances presented by the whole record." 8A West's Fed. Forms, National Courts § 3.6 (5th ed. 2019).

The court does not set aside agency action for procedural errors unless the error is prejudicial to the party seeking to have the action set aside. See Sea-Land Serv. Inc., v. United States, 14 C.I.T. 253, 257, 735 F. Supp 1059, 1063 (1990) ), aff'd and adopted, 923 F.2d 838 (Fed. Cir. 1991). However, in circumstances where the administrative record "looks complete on its face and appears to support the decision of the agency but there is a subsequent showing of impropriety in the process, that impropriety creates an appearance of irregularity which the agency must then show to be harmless." See Portland Audubon Soc. v. Endangered Species Comm., 984 F.2d 1534, 1548 (9th Cir. 1993) (addressing application of the Administrative Procedure Act to executive agency's failure to document prohibited ex parte communications).

III. Discussion

In CSC Sugar I, the court held that 19 U.S.C. § 1516a(b)(2)(A)(i) unambiguously required that "all information presented to or obtained by" Commerce in the course of reaching its AD Amendment determination be provided to the court in order to review CSC Sugar's challenge to that determination. See 42 CIT at ––––, 317 F. Supp. 3d at 1340. The court therefore ordered the Government to comply with §§ 1516a(b)(2) and 1677f(a)(3) and to supplement the record with the memoranda summarizing "any ex parte meetings about the AD Amendment." Id. 42 CIT at ––––, 317 F. Supp. 3d at 1345. Commerce then supplemented the administrative record with the Consultations and Email Logs that attempted to provide detail as to Commerce's ex parte communications with interested parties during the AD Amendment negotiations.

The question the court must now address is whether CSC Sugar is entitled to have the AD Amendment vacated given that Commerce did not and cannot provide contemporaneous memoranda of its ex parte meetings during the negotiation of the AD Amendment as required under § 1677f(a)(3). Plaintiff contends that "[b]ecause the relevant statutes and regulation are ‘intended to provide important procedural benefits,’ the court must vacate the [AD Amendment ] unless Commerce shows its error was harmless." See Pl.'s Mot. at 23–25 (relying on Guangdong Chemicals Imp. & Exp. Corp. v. United States, 30 C.I.T. 85, 414 F. Supp. 2d 1300 (2006), and Portland Audubon Soc. v. Endangered Species Comm., 984 F.2d 1534 (9th Cir. 1993) ). CSC Sugar...