                         Slip Op. 11-110

           UNITED STATES COURT OF INTERNATIONAL TRADE

______________________________
                              :
ZHEJIANG NATIVE PRODUCE       :
& ANIMAL BY-PRODUCTS IMPORT & :
EXPORT CORP., et al.,         :
                              :
               Plaintiffs,    :   Before: Richard K. Eaton, Judge
                              :
     v.                       :   Court No. 02-00057
                              :
UNITED STATES,                :
                              :
               Defendant,     :
                              :
     and                      :
                              :
THE AMERICAN HONEY PRODUCERS :
ASSOCIATION and THE SIOUX     :
HONEY ASSOCIATION,            :
                              :
               Def.-Ints.     :
______________________________:

                       OPINION AND ORDER

[The United States Department of Commerce’s Results of Redeter-
mination Pursuant to Remand are remanded.]

                                           Dated: September 6, 2011

     Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP
(Bruce M. Mitchell, Mark E. Pardo, and Ned H. Marshak), for
plaintiffs Zhejiang Native Produce & Animal By-Products Import &
Export Corp., Kunshan Foreign Trade Co., China (Tushu) Super Food
Import & Export Corp., High Hope International Group Jiangsu
Foodstuffs Import & Export Corp., National Honey Packers &
Dealers Association; Alfred L. Wolff, Inc.; C.M. Goettsche & Co.,
China Products North America, Inc., D.F. International (USA)
Inc., Evergreen Coyle Group, Inc., Evergreen Produce, Inc., Pure
Sweet Honey Farm, Inc., and Sunland International, Inc.

     Tony West, Assistant Attorney General; Jeanne E. Davidson,
Director, Reginald T. Blades, Jr., Assistant Director, Commercial
Litigation Branch, Civil Division, United States Department of
Justice (Jane C. Dempsey); Office of the Chief Counsel for Import
Administration, United States Department of Commerce (Sapna
Court No. 02-00057                                            Page 2


Sharma), of counsel, for defendant United States.

     Kelley Drye & Warren, LLP (Michael J. Coursey and R. Alan
Luberda), for defendant-intervenors the American Honey Producers
Association and the Sioux Honey Association.


     Eaton, Judge:    This case involves the Department of

Commerce’s (the “Department” or “Commerce”) finding of critical

circumstances in the final results of Honey From the People’s

Republic of China (“PRC”), 66 Fed. Reg. 50,608, 50,610 (Dep’t of

Commerce Oct. 4, 2001) (notice of final determination of sales at

less than fair value), as amended by Honey from the PRC, 66 Fed.

Reg. 63,670 (Dep’t of Commerce Dec. 10, 2001) (notice of amended

final determination of sales at less than fair value and

antidumping duty order) (the “Final Results”).    It is now before

the court following the most recent remand order directing the

Department to reconsider its critical circumstances

determination.     See Zhejiang Native Produce & Animal By-Products

Imp. & Exp. Corp. v. United States, 34 CIT __, Slip-Op. 10-30

(Mar. 24, 2010) (not reported in the Federal Supplement)

(“Zhejiang IV”).     In remanding the case, the court observed that

“Commerce has the authority to exercise its discretion to apply

any other reasonable method or look to any other reasonable time

period in making its critical circumstances determination.”     Id.

at __, Slip Op. 10-30 at 20.

      On December 8, 2010, Commerce filed the Results of
Court No. 02-00057                                            Page 3


Redetermination Pursuant to Remand (the “Second Remand Results”),

finding that critical circumstances existed for Zhejiang Native

Produce & Animal By-Products Import & Export Corp. (“Zhejiang”)

because “record evidence demonstrates that importers knew or

should have known that the exporter was selling the subject

merchandise at less than its fair value. . . .”   Second Remand

Results at 42.

     Plaintiffs1 ask the court find that critical circumstances

did not exist.   The defendant-intervenors support the Second

Remand Results in their entirety.2   Commerce, in addition to

seeking to have the Second Remand Results sustained, asks for a

further remand so that it might use the same methodology, as

employed here, for the other named plaintiffs.

     The court has jurisdiction pursuant to 28 U.S.C. § 1581(c)

(2006) and 19 U.S.C. §§ 1516a(a)(2)(A)(i)(II) and (B)(i) (2006).

For the reasons set forth below, the Second Remand Results are



     1
          “Plaintiffs” refers collectively to Zhejiang Native
Produce & Animal By-Products Import & Export Corp.; Kunshan
Foreign Trade Co.,; China (Tushu) Super Food Import & Export
Corp.; High Hope International Group Jiangsu Foodstuffs Import &
Export Corp.; National Honey Packers & Dealers Association;
Alfred L. Wolff, Inc.; C.M. Goettsche & Co.; China Products North
America, Inc.; D.F. International (USA) Inc.; Evergreen Coyle
Group, Inc.; Evergreen Produce, Inc.; Pure Sweet Honey Farm,
Inc.; and Sunland International, Inc.
     2
          Defendant-intervenors’ arguments are substantially the
same as the Department’s. Thus, only Commerce’s arguments are
summarized herein.
Court No. 02-00057                                              Page 4


not supported by substantial evidence and the matter is remanded

to Commerce with instructions.



                             BACKGROUND

       In 1994, Commerce initiated an unfair trade investigation of

honey from the PRC.   Subsequently, the investigation was halted

and the Department entered into a suspension agreement with the

PRC.    See Honey From the PRC, 60 Fed. Reg. 42,521 (Dep’t of

Commerce Aug. 16, 1995) (suspension of investigation) (the

“Suspension Agreement”).   The Suspension Agreement was in effect

from August 16, 1995 through August 16, 2000.    Honey From the

PRC, 65 Fed. Reg. 46,426 (Dep’t of Commerce July 28, 2000)

(termination of suspended antidumping duty investigation).

       In 2000, following the termination of the Suspension

Agreement, and at the urging of the domestic industry, Commerce

initiated a second investigation.    Honey from Argentina and the

PRC, 65 Fed. Reg. 65,831 (Dep’t of Commerce Nov. 2, 2000)

(initiation of antidumping duty investigations) (the “Second

Investigation”).   During the course of the Second Investigation,

the petitioners alleged the existence of critical circumstances.

See 19 U.S.C. § 1673b(e)(1).     If the criteria for critical

circumstances are met, then antidumping duties are made effective

ninety days earlier than the effective date of antidumping duties

in the absence of critical circumstances.    19 C.F.R. § 351.206(a)
Court No. 02-00057                                            Page 5


(2010).

     Commerce identified the period of investigation (the “POI”)

as January 1, 2000, through June 30, 2000, a period during which

the Suspension Agreement was in effect.   Thus, during the course

of its investigation the Department used the POI to determine

both if respondents were dumping their merchandise, and for the

purpose of determining if critical circumstances were present.

See Honey From the PRC, 66 Fed. Reg. 24,101, 24,106 (Dep’t of

Commerce May 11, 2001) (notice of Preliminary Results of sales at

less than fair value) (“Preliminary Results”).

     Following the investigation, Commerce’s final determination

contained an affirmative dumping finding.   Honey From the PRC, 66

Fed. Reg. 50,608 (Dep’t of Commerce Oct. 4, 2001) (notice of

final determination of sales at less than fair value), as amended

by Honey from the PRC, 66 Fed. Reg. 63,670 (Dep’t of Commerce

Dec. 10, 2001) (notice of amended final determination of sales at

less than fair value and antidumping duty order).   The final

determination also contained an affirmative finding of critical

circumstances, based upon Commerce’s frequently employed 25%

method for imputing knowledge of dumping to respondents.   Final

Results, 66 Fed. Reg. at 50,610.   This imputation of knowledge of

dumping was predicated on the Department’s practice of

considering

     margins of 25 percent or more for [export price] sales
Court No. 02-00057                                            Page 6


     sufficient to impute knowledge of dumping . . . . In
     other words, in cases where, as here, export price is
     calculated by reference to sales made to unaffiliated
     purchasers in the United States, and Commerce
     determines that the antidumping duty margin with
     respect to those sales is 25% or more, Commerce
     “imputes” knowledge of dumping to the importer . . . .

Zhejiang Native Produce & Animal By-Products Import & Export

Corp. v. United States, 27 CIT 1827, 1842-43 (2003) (not

published in the Federal Supplement) (footnote omitted; first

alteration in original) (“Zhejiang I”).   Commerce found that,

based on the 25% method, “there is evidence of the knowledge of

dumping . . . [that was] demonstrated by the fact that Zhejiang,

Kunshan, High Hope, and the PRC-wide entity all have dumping

margins of over 25 percent.”   Id. at 1843 (citation omitted).

     Plaintiffs sought judicial review of the Final Results in

this Court and, among other things, objected to the use of

Commerce’s 25% methodology, arguing that compliance with the

Suspension Agreement foreclosed the imputation of knowledge of

dumping.   The court found for the Department, and held that the

Suspension Agreement did not prevent Commerce from imputing

knowledge of dumping using its 25% method.    Id. at 1849-50.

Therefore, the court sustained Commerce’s affirmative critical

circumstances determination.   Id. at 1851.

     Plaintiffs appealed Zhejiang I to the Federal Circuit.      On

appeal, plaintiffs again argued that the existence of the

Suspension Agreement prevented the imputation of knowledge of
Court No. 02-00057                                            Page 7


dumping using Commerce’s 25% methodology.   The Federal Circuit

held that plaintiffs’ compliance with the Suspension Agreement

precluded a finding that knowledge of sales at less than fair

value could be imputed using the Department’s 25% methodology

during the POI.   See Zhejiang Native Produce & Animal By-Products

Imp. & Exp. Corp. v. United States, 432 F.3d 1363, 1368 (Fed.

Cir. 2005) (citation omitted) (“Zhejiang II”) (“As Zhejiang

states, ‘it strains credibility to suggest that Commerce could

establish minimum prices for honey designed to “prevent the

suppression or undercutting of price levels of the United States

honey products” and then determine that U.S. importers purchasing

honey in accordance with these pricing guidelines should have

known these sales would be found to be at less than fair value.’

When all factors are considered, there is not substantial

evidence to support the finding of critical circumstances.”).

Therefore, the Federal Circuit reversed the court’s critical

circumstances holding, and remanded the case “for appropriate

further proceedings.”   Id.

     The court then remanded the matter to Commerce for

reconsideration of the critical circumstances issue.   Zhejiang

Native Produce & Animal By-Products Imp. & Exp. Corp. v. United

States, 30 CIT 715, 725-26 (2006) (not published in the Federal

Supplement) (“Zhejiang III”).   Pursuant to the Federal Circuit

ruling, in its remand instructions the court directed Commerce to
Court No. 02-00057                                            Page 8


further consider “its critical circumstances finding, provided

that in no event shall Commerce impute to plaintiffs any

knowledge prohibited by the [Federal Circuit]’s decision . . . .”

Id.

      Following remand, Commerce filed its Remand Redetermination,

finding that critical circumstances did not exist.3   The court

remanded again, explaining that the Federal Circuit’s decision in

Zhejiang II did not prevent the Department from considering

analyses other than the 25% methodology or time periods other

than the POI, in making its critical circumstances determination.

Zhejiang IV, 34 CIT at __, Slip Op. 10-30 at 20 (“Commerce has

the authority to exercise its discretion to apply any other

reasonable method or look to any other reasonable time period in

making its critical circumstances determination.”).

      For the following reasons, the court finds that the Second

Remand Results are not supported by substantial evidence and



      3
          Plaintiffs also moved under USCIT Rule 60(b)
“purporting to seek relief from the . . . court's previous final
judgment in 2004” in which the court held that compliance with a
suspension agreement did not preclude the Department from finding
a respondent to have made sales at less than fair value, i.e.,
that it had dumped its merchandise during the POI. Zhejiang
Native Produce & Animal By-Products Imp. & Exp. Corp. v. United
States, 339 F. App’x 992, 993 (Fed. Cir. 2009). The court denied
this motion by order on September 26, 2007, and the Federal
Circuit dismissed the appeal, finding that it was interlocutory
and, therefore, was “simply an effort to obtain review of an
issue in a pending trial court proceeding without waiting for the
trial court to enter a final judgment in the case.” Id. at 994.
Court No. 02-00057                                            Page 9


remands this matter to Commerce.



                        STANDARD OF REVIEW

     The court must uphold a final determination by the

Department in an antidumping proceeding unless it is “unsupported

by substantial evidence on the record, or otherwise not in

accordance with law.”   19 U.S.C. § 1516a(b)(1)(B)(i).



                              DISCUSSION

I.   Critical Circumstances

     Pursuant to 19 U.S.C. § 1673d(a)(3), critical circumstances

can be found when:

     (A)(ii) the person by whom, or for whose account, the
     merchandise was imported knew or should have known that
     the exporter was selling the subject merchandise at
     less than its fair value and that there would be
     material injury by reason of such sales, and

     (B) there have been massive imports of the subject
     merchandise over a relatively short period.


(emphasis added).

     If these criteria are met,

     then antidumping duties are made effective ninety days
     earlier than the effective date of antidumping duties
     in the absence of critical circumstances. The
     foundation of this enlarged imposition of antidumping
     duties is, as the statute states, that the importer
     “knew or should have known” that the price was below
     fair value and would materially injure domestic
     industry, and that there were “massive imports” at
     dumping prices.
Court No. 02-00057                                           Page 10


      The statute does not state how “knew or should have
      known” is determined. Commerce has adopted the general
      practice of imputing such knowledge whenever the
      dumping margin is greater than 25 percent, without
      requiring evidence of actual knowledge.

Zhejiang II, 432 F.3d at 1366 (emphasis added) (citation

omitted).



II.   Parties’ Positions on Critical Circumstances Finding

      In the Second Remand Results, the Department summed up its

critical circumstances findings as follows:

      [T]he Department finds that there is a reasonable basis
      to believe or suspect that the importers of honey from
      the PRC, sold by Zhejiang, during the [less than fair
      value] investigation, knew, or should have known, that
      the exporter was selling the subject merchandise at
      less than its fair value. The Department’s analysis
      indicates that the average values for imports of honey
      from the PRC sold by Zhejiang after the termination of
      the suspension agreement, and during the 190-day period
      between the initiation of the investigation and the
      Preliminary Results, were on average greater than 25
      percent below the normal values calculated during the
      [less than fair value] investigation. Therefore, we
      find a reasonable basis to impute knowledge of dumping
      by importers of honey from the PRC, sold by Zhejiang,
      during the [less than fair value] investigation, and
      that such importers knew, or should have known, that
      the exporter was selling the subject merchandise at
      less than its fair value.

Second Remand Results at 62—63.

      The fundamental difference between the Second Remand Results

and the critical circumstances determination found in the Final

Results resulting from the investigation and first Remand

Determination is that, here, Commerce based its finding on the
Court No. 02-00057                                            Page 11


period between the initiation of the dumping investigation

(October 26, 2000) and the Preliminary Results (May 11, 2001),

rather than during the POI.4   As has been noted, the Suspension

Agreement had terminated on August 16, 2000.

     Plaintiffs make a number of arguments by which they insist

that Commerce’s 25% methodology is not lawful when used in an

investigation of an NME respondent.   Pls.’ Comm. Rem. Red.

(“Pls.’ Comm.”) 9-21.   Because the court considered these

arguments, and found them without merit in Zhejiang I, it will

not address them again.   See Zhejiang I, 27 CIT 1827.   In

addition, plaintiffs contend that the Suspension Agreement

eliminated the possibility of finding that plaintiffs had dumped

their merchandise during the POI.   Pls.’s Comments, pages 22-25.

The court has also considered this argument and found it wanting

See Order, Zhejiang Native Produce & Animal By-Products Imp. &

Exp. Corp., et al., v. United States, Court No. 02-00057 (Sept.

26, 2011).

     As to the new issues raised by the Second Remand Results,

plaintiffs raise two main points.   First, they assert the

initiation of the less than fair value investigation cannot be


     4
          Commerce also used “the average values for imports of
honey from the PRC sold by Zhejiang . . . during the 190-day
period between the initiation of the investigation and the
Preliminary Results” rather than the export price, calculated
during the POI, when making the comparison to normal value.
Second Remand Results at 62-63.
Court No. 02-00057                                         Page 12


found to have alerted them that prices roughly equal to those set

by the Suspension Agreement were dumped prices.   Pls.’ Comm. 25

(“Contrary to the Department’s suggestion, the fact that an

[antidumping] investigation is initiated does not constitute

evidence that dumping is taking place.   The allegation of dumping

in a Petition is nothing more than an allegation by an adversary.

Respondents do not have the right to file comments opposing

Petitioners’ claims or to otherwise participate in the initiation

process.   Thus, the fact that the Department has decided to

initiate an [unfair trade] investigation does not constitute

evidence that the unfair act, in fact, has taken place, let alone

evidence that importers should believe that Petitioners [sic]

allegations have merit.”).

      In addition, plaintiffs point out that the allegations of

dumping (but not critical circumstances) related to the period

that the Suspension Agreement was in effect.   Plaintiffs point

out that this was a period during which the Federal Circuit has

found that the respondents could not be charged with knowledge of

dumping.   Pls.’ Comm. 26 (“Moreover, Petitioners allegations

which led to the Department’s decision to initiate its

investigation related to prices paid for honey imports during the

period of time in which the Suspension Agreement was in effect. .

. .   Thus, the Department’s decision that ‘there is reason to

believe that imports of honey from . . . China are being, or are
Court No. 02-00057                                           Page 13


likely to be, sold at less than fair value’ was expressly

rejected by the Federal Circuit’s decision in [Zhejiang II] that

Chinese honey was not being dumped during this period in view of

the fact that Chinese prices conformed to the Suspension

Agreement.   Accordingly, the Department’s belief that its Notice

of Initiation rendered Suspension Agreement prices unreliable has

been rejected by the Federal Circuit in [Zhejiang II] and,

accordingly, must be rejected by the Court at this time.”)

     Second, plaintiffs argue that the 25% method of imputing

knowledge of dumping to respondents cannot be found to constitute

substantial evidence under the “known or should have known”

standard, when the prices used to calculate the margin were

essentially the same as those established under the Suspension

Agreement.   Pls.’ Comm. 28 (“Record evidence in the instant case

reveals that from October 26, 2000 [the initiation of the

investigation] – May 11, 2001 [publication of the Preliminary

Results] the prices which importers paid for honey exported by

Zhejiang were “broadly the same as, or slightly higher than, the

prices for shipments of honey exported by Zhejiang during the

last six months of the Suspension Agreement.”)

     The Suspension Agreement terminated on April 16, 2000 and

the investigation was initiated on October 26, 2000.   Thus,

plaintiffs assert that, if knowledge of dumping could not be

imputed to the importers based on prices established by the
Court No. 02-00057                                           Page 14

Suspension Agreement during the POI, then knowledge of dumping

could not be imputed with respect to virtually the same prices

for a period following soon thereafter.   Pls.’ Comm. 26 (“[I]f

importers could not be charged with knowledge of dumping with

respect to prices paid during the time period which was the focus

of the Petition, it strains credibility to suggest that they

should be charged with knowledge of dumping when they were paying

the same or slightly higher prices shortly thereafter.”).



III. The Department Defends Critical Circumstances Finding

     The Department first argues that “[b]y examining honey sales

in the 190-day period following the expiration of the

[S]uspension [A]greement, Commerce complied with the court’s

specific instructions.”   Def.’s Rep. to Pls.’ Comm. Upon the

Second Remand Redetermination (“Def.’s Rep.”) 8.   In other words,

the Department asserts that the use of the time period between

the initiation of the investigation and the Preliminary Results

was specifically authorized by the court in Zhejiang IV.

     Next, Commerce asserts that its determination was legally

justified because (1) the initiation of the investigation alerted

plaintiff that the prices formally established by the Suspension

Agreement might be dumped prices, and (2) use of the 25%

methodology, in the period after the Suspension Agreement had

terminated, was valid.
Court No. 02-00057                                           Page 15

     According to Commerce, the basis of the 25% test is that

when the antidumping duty margins are 25% or above, Commerce

“‘expects importers knew or should have known that the prices are

too good to be true, whereby a product noticeably undersells its

fairly traded competition.’”   Def.’s Rep. 10 (quoting Second

Remand Results at 51).   Commerce emphasizes that it did not

impute knowledge of sales at less than fair value to importers

during the time when the Suspension Agreement was in effect, but

rather during the period immediately after the Suspension

Agreement expired.   The Department thus argues that it reasonably

cited its initiation of the antidumping investigation as a factor

in finding critical circumstances, because the commencement of

the investigation itself served to put plaintiffs on notice that

they could not rely on prices set under the Suspension Agreement

as a means to avoid the imputation of knowledge.   See Def.’s Rep.

13 (. . . once [Commerce] had publicly announced that it had

“reason to believe the imports of honey from . . . China are

being, or are likely to be sold at less than fair value,”

importers could no longer reasonably rely on prices issued

pursuant to an expired suspension agreement, and assume that

imports were not being dumped. . . . Indeed, plaintiffs do not,

nor can they, justify importer reliance upon prices from a

suspension agreement that had been expressly terminated.”).

     With respect to the 25% methodology itself, the Department
Court No. 02-00057                                           Page 16

does not directly address plaintiffs’ argument that knowledge of

dumping could not be imputed to the importers when the import

prices were “broadly the same” as those determined by the

Suspension Agreement.   Rather, the Department states:

      In making its critical circumstances determination,
      however, Commerce is not required to compare prices
      provided in a suspension agreement to the prices during
      the time period it examined in making a critical
      circumstances finding. As previously discussed,
      Commerce normally considers the requirements of the
      statute to be satisfied and will impute knowledge of
      sales at less than fair value during the period of
      investigation if it calculates dumping margins that are
      greater than 25 percent for any respondent.

Def.’s Rep. 15.


IV.   The Department’s Critical Circumstances Determination is Not
      Supported by Substantial Evidence

      In Zhejiang IV, the court held that Commerce was not

restricted to the POI when applying the 25% methodology, nor was

it required to use that methodology or any particular time period

when making a critical circumstances determination.   34 CIT at

__, Slip Op. 10-30 at 20.   As the court explained,

      The 25 percent method, however, is not the only way in
      which Commerce has imputed knowledge in past
      investigations. Nor for that matter, has the
      Department restricted itself to the period of
      investigation in making critical circumstances
      determinations. Prior to its adoption of the 25
      percent method, Commerce found that, with respect to
      respondents from non-market economies, it would use a
      case by case determination “using all available
      information and drawing upon market conditions of the
      industry subject to the investigation” when imputing
      knowledge of less-than-fair value sales. Potassium
Court No. 02-00057                                        Page 17

     Permanganate From the PRC, 48 Fed. Reg. 57,347, 57,349
     (Dep’t of Commerce, Dec. 29, 1983) (final determination
     of sales at less than fair value) (“Potassium
     Permanganate”).

     For instance, in Potassium Permanganate, Commerce made
     a number of findings that it deemed relevant to its
     determination that critical circumstances existed.
     First, that United States importers were aware that the
     merchandise purchased at “competitive prices” in the
     European market and subsequently imported into the
     United States originated from the PRC, and therefore
     were aware of the price of PRC-sourced potassium
     permanganate being sold in both United States and
     European markets. Id. Second, Commerce noted that
     importers were aware of the pricing of potassium
     permanganate from non-PRC sources and were therefore
     aware of the entire range of pricing in a marketplace
     where pricing was a major factor in determining sales.
     Id. Third, because other foreign producers operated in
     non-state-controlled countries, importers should have
     known, at least generally, what the value of the
     product was in market economy countries, and thus the
     minimum fair value of the PRC merchandise. Id.
     Fourth, that during the period between the initiation
     of the investigation and the Preliminary Results, the
     unit price of the merchandise imported from the PRC was
     22 percent less than the price imported from the only
     other foreign nation exporting the product to the
     United States. Potassium Permanganate From the PRC, 48
     Fed. Reg. at 57,349.   Lastly, because importers knew
     that the merchandise from the PRC was priced
     significantly below that sold for export by the only
     other non-United States market economy producer,
     importers should have known that the PRC exports were
     at less than fair value. Id. Commerce’s critical
     circumstances determination was upheld by both this
     Court and the Federal Circuit in ICC Industries, Inc.
     v. United States, 10 CIT 181, 632 F. Supp. 36 (1986),
     aff’d 812 F.2d 694 (Fed. Cir. 1987) (“ICC Industries”).

     Other Court of International Trade cases shed more
     light on practices, other than the 25 percent method,
     that can be used in making a critical circumstances
     determination. See, e.g., Nippon Steel Corp. v. United
     States, 24 CIT 1158, 118 F. Supp. 2d 1366 (2000).
     Specifically, the Nippon court listed “numerous press
Court No. 02-00057                                        Page 18

     reports, . . . falling domestic prices resulting from
     rising imports, and domestic buyers shifting to foreign
     suppliers” as evidence that could support such a
     determination. Id. at 1168, 118 F. Supp. 2d at 1376
     (internal quotation omitted).

     In addition to demonstrating that the 25 percent method
     is not the only approach that Commerce has used to
     impute knowledge of sales at less than fair value, ICC
     Industries also reveals that Commerce has used at least
     one time period other than the period of investigation
     as the temporal measure for making a critical
     circumstances determination. In ICC Industries, the
     period used was “from [i]nitiation of this
     investigation to [the] Preliminary Results.” ICC
     Industries, 10 CIT at 184, 632 F. Supp. at 38.

     Indeed, the ICC Industries time period appears to be
     the period that Congress anticipated would be used in
     determining critical circumstances when it stated that
     the purpose of the critical circumstances statute was
     “to provide prompt relief to domestic industries
     suffering from large volumes of, or a surge over a
     short period of, imports and to deter exporters whose
     merchandise is subject to an investigation from
     circumventing the intent of the law by increasing their
     exports to the United States during the period between
     initiation of an investigation and a Preliminary
     [Results] by [Commerce].” H.R. Rep. 96-317, 96th Cong.,
     1st Sess. at 63 (1979) . . . .


     In addition, Commerce, in its regulations, is directed
     to look at a period “beginning on the date the
     proceeding begins [i.e., the filing of the
     investigation] and ending at least three months later.”
     19 C.F.R. § 351.206(i). Thus, it is clear that
     Commerce has the authority to evaluate time periods
     other than the period of investigation when making
     critical circumstances determinations.

Zhejiang IV, 34 CIT at __, Slip Op. 10-30 at 12—15 (emphsis

removed).

   In its Second Remand Results, the Department used a time
Court No. 02-00057                                           Page 19

period different from the POI; and relied on evidence of sales

prices into the U.S. that was different from that used in its

standard 25% methodology.   Otherwise the Department relied on its

standard 25% methodology to impute knowledge of dumping.    As has

been discussed, Commerce cited two factors in reaching its

finding:   (1) that the initiation of the antidumping

investigation of honey from the PRC put the honey importers on

notice that they no longer could rely upon prices issued under

the terminated Suspension Agreement to presume that the imports

were not dumped; and (2) the average values for imports of honey

produced by Zhejiang after the termination of the Suspension

Agreement and during the 190-day period between the initiation of

the investigation and Commerce’s publication of the Preliminary

Results were, on average, greater than 25% below the normal

values calculated during the original investigation.    Second

Remand Results at 56, 63.

      As an initial matter, the court finds Commerce’s application

of the 25% methodology to the 190-day period beginning at the

initiation of the less than fair value investigation through the

Department’s Preliminary Results is clearly authorized by

Zhejiang IV.   See Zhejiang IV, 34 CIT at __, Slip Op. 10-30 at

20.   Nonetheless, the critical circumstances determination itself

lacks the support of substantial evidence because (1) the

initiation of the antidumping investigation cannot be said to
Court No. 02-00057                                                        Page 20

have put plaintiff on notice that the prices set by the

Suspension Agreement were dumped prices, and (2) the prices

importers paid did not materially change from the period when the

Suspension Agreement was in effect.

         The Department’s notice argument exaggerates the gravity of

Commerce’s notice stating that an investigation has been

initiated.         According to Commerce, once it "announced that it had

'reason to believe that imports of honey from Argentina and China

are being, or are likely to be sold at less than fair value,'

importers could no longer reasonably rely on prices issued

pursuant to an expired suspension agreement, and assume that

imports were not being dumped.”                Def.’s Rep. 13 (quoting Second

Remand Results at 54).

         As is generally the case, here, the less than fair value

investigation was initiated as a result of a petition filed by

domestic producers.            The petition, however, constitutes an

allegation of dumping, not a determination of dumping.                  Prior to

initiating an investigation, the Department makes no

determination with respect to unfair trade practices.                  Rather, it

merely decides if the petitioners have provided a sufficient

basis for initiating an investigation, i.e., whether they allege

the elements necessary for the imposition of an antidumping duty.

MANUAL   FOR THE   PRACTICE   OF   U.S. INTERNATIONAL TRADE LAW 595 (Willam K.

Ince & Leslie A. Glick, eds. 2001) (“Generally, the Department
Court No. 02-00057                                           Page 21

will refuse to initiate only when the petition is clearly

defective – e.g., if the petitioning party has no standing under

the statute, or the petition does not contain basic information

required by the regulations.”); see 19 U.S.C. § 1673a(c)(1)(A)(i)

(“[Commerce] shall . . . determine whether the petition alleges

the elements necessary for the imposition [of unfair trade

duties] . . . .”); see also Republic Steel Co. v. United States,

4 C.I.T. 33, 41, 544 F. Supp. 901, 908 (1982) (finding that

“petitions should not be dismissed except for notable

deficiencies . . .”); S. Rep. No. 96-249, at 47 (1979), reprinted

in 1979 U.S.C.A.N.N. 381, 449 (“The committee intends section

702(c)(1) to result in investigations unless the authority is

convinced that the petition and supporting information fail to

state a claim upon which relief can be granted under section 701

or the petition does not provide information supporting the

allegations which is reasonably available to him.”).

     As plaintiffs note, “the fact that the Department has

decided to initiate an [antidumping] investigation does not

constitute evidence that the unfair act, in fact, has taken

place, let alone evidence that importers should believe that

[p]etitioners [sic] allegations have merit.”   Pls.’ Comm. 25.

In addition, in this case, the allegation of dumping was for the

period that the Suspension Agreement was in effect, a period

during which the Federal Circuit has found that importers could
Court No. 02-00057                                           Page 22

not be imputed with knowledge of dumping.

     As to the use of prices that were essentially unchanged from

those established by the Suspension Agreement, the Federal

Circuit in Zhejiang II quoted approvingly plaintiffs’ assertion

that “it strains credibility to suggest that Commerce could

establish minimum prices for honey designed to ‘prevent the

suppression or undercutting of price levels of the United States

honey products' and then determine that U.S. importers purchasing

honey in accordance with these pricing guidelines should have

known these sales would be found to be at less than fair value.”

Zhejiang II, 432 F.3d at 1368 (citation omitted).

     The Suspension Agreement terminated on August 16, 2000 and

the Department initiated its investigation on October 26, 2000.

The Preliminary Results were issued on May 11, 2001.   The

Department itself described the prices paid in the months after

the expiration of the Suspension Agreement as “broadly the same,

or slightly higher” than the prices paid in the last six months

of the Suspension Agreement.   Preliminary Results of Second

Remand Results at 2 (Dep’t of Commerce Sept. 24, 2010).

     In Zhejiang II, the Federal Circuit found that substantial

evidence did not support the proposition that importers knew or

should have known the prices during the Suspension Agreement were

being sold at less than fair value.   In accordance with this

holding, the court further finds that a critical circumstances
Court No. 02-00057                                           Page 23

determination based solely on prices that are “broadly the same”

as those established under the Suspension Agreement, even if

taken from the period following the Suspension Agreement’s

termination, cannot be supported by substantial evidence either.

Put another way, the mere termination of the Suspension

Agreement, without more, does not erase the ability of plaintiffs

to rely on these prices as not being the prices of goods sold at

less than fair value.

     Finally, the court notes that, as was shown in Zhejiang IV,

Commerce had other evidentiary tools that it might have used to

produce the substantial evidence needed to make its case.    For

instance, in Potassium Permanganate From the PRC, 48 Fed. Reg.

57,347 (Dec. 29, 1983) (final determination of sales at less than

fair value) (“Potassium Permanganate”), Commerce found that the

importers were actually aware of the pricing of the merchandise

for non-Chinese sources, and were, therefore, “aware of the

entire range of pricing in a marketplace where pricing was a

major factor in determining sales.”   In Nippon Steel Corp. v.

United States, 24 CIT 1158, 118 F. Supp. 2d 1366 (2000), this

Court listed “numerous press reports, . . . falling domestic

prices resulting from rising imports” to support its

determination.   24 CIT at 1168, 118 F. Supp. 2d at 1376 (internal

citation and quotations omitted).

     Here, Commerce has made no effort to demonstrate that the
Court No. 02-00057                                          Page 24

importers had the actual knowledge of honey prices that was

important in Potassium Permanganate and Nippon.    Rather than

demonstrating actual knowledge of less than fair value pricing by

the importers, the Department has chosen to impute knowledge

based on the idea that “margins of 25 percent or above ‘are of

such a magnitude that the importer should have reasonably known

that dumping exists with regard to the subject merchandise.’”

Second Remand Results at 51 (citation omitted).   While nothing

prevents the Department from using a modified version of its 25%

methodology to identify critical circumstances, in doing so it

must support its determination with substantial evidence.

Commerce has failed to present sufficient evidence to do so here.



                              CONCLUSION

     Because the court has found that Commerce’s critical

circumstances determination is not supported by substantial

evidence, the case is remanded.    On remand, the Department may

use any analysis permitted by Zhejiang IV to complete its

critical circumstances review, provided that it not use evidence

prohibited by this opinion.    In addition, Commerce may, in its

discretion, reopen the record.    Further, Commerce’s request for a

remand to apply the methodology used in the Second Remand Results

for the other named plaintiffs is denied.   Remand results are due

on or before January 6, 2012.    Comments to the remand results are
Court No. 02-00057                                          Page 25

due on or before February 6, 2012.    Replies to such comments are

due on or before February 21, 2012.




                                           /s/ Richard K. Eaton
                                            Richard K. Eaton


Dated:      September 6, 2011
            New York, New York
