The Stanley Works (Langfang) Fastening Systems Co., Ltd. v. United States ( 2017 )

Slip Op. 17-
UNITED STATES COURT OF INTERNATIONAL TRADE
THE STANLEY WORKS (LANGFANG)
FASTENING SYSTEMS CO., LTD.,
and STANLEY BLACK & DECKER, INC.,
Before: Gary S. Katzmann, Judge
Plaintiffs,
Court No. 14-00112
v.
UNITED STATES,
Defendant.
OPINION
[Commerce’s Final Results are sustained and plaintiff’s motion for judgment on the agency record
is denied.]
Dated:1RYHPEHU
Lawrence J. Bogard, Neville Peterson, LLP, of Washington, DC, argued for plaintiff. With him
on the brief was Peter J. Bogard.
Stephen C. Tosini, Senior Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC, argued for defendant. With him on the supplemental
brief were Joyce R. Branda, Acting Assistant Attorney General, Jeanne E. Davidson, Director,
Patricia M. McCarthy, Assistant Director and Carrie A. Dunsmore, Trial Attorney. Of counsel on
the brief was Justin Becker, Office of the Chief Counsel for Trade Enforcement & Compliance,
U.S. Department of Commerce of Washington, DC. With them on defendant’s notice of
supplemental authority dated July 6, 2015, was Benjamin C. Mizer, Principal Deputy Assistant
Attorney General, and of counsel on the notice was Michael T. Gagain, Office of the Chief Counsel
for Trade Enforcement & Compliance, U.S. Department of Commerce of Washington, DC. With
them on defendant’s notice of supplemental authority dated November 7, 2017, was Chad S.
Readler, Acting Assistant Attorney General.
Katzmann, Judge: Differential pricing -- an analytical method used to identify the presence
of targeted dumping wherein a class or kind of foreign merchandise is being or is likely to be sold
in the United States at less than its fair value and prices differ significantly among producers,
Court No. 14-00112 Page 2
regions, or time periods -- has been the subject of an evolving jurisprudence. The case before the
court provides an occasion to consider myriad issues arising from the deployment of the
differential pricing methodology. In the final results of the fourth antidumping duty administrative
review of Certain Steel Nails from the People’s Republic of China, the United States Department
of Commerce International Trade Administration (“Commerce”) found that respondents The
Stanley Works (Langfang) Fastening Systems Co., Ltd. and Stanley Black & Decker, Inc.
(collectively “Stanley”) are subject to a weighted average antidumping duty margin of 3.92
percent. 79 Fed. Reg. 19,316, 19,316–18 (Dep’t Commerce Apr. 8, 2014) (Final Results of the
Fourth Antidumping Duty Administrative Review) (“Final Results”) and accompanying Issues and
Decision Memorandum (“IDM”). Stanley now asserts that the Final Results are neither in
accordance with law nor supported by substantial evidence. Pl.’s Mot. for J. on the Agency R.,
Sept. 16, 2014, ECF No. 23 (“Pl.’s Br.”). The Government opposes Stanley’s motion. ECF No.
30 (“Def.’s Br.”). The court concludes that: (1) Commerce’s use of differential pricing to identify
the presence of targeted dumping is a reasonable interpretation of § 777A of the Tariff Act of 1930,
codified at 19 U.S.C. § 1677f-1 (2012), 1 does not contravene congressional intent, and is lawful;
(2) Stanley failed to exhaust its administrative remedies in arguing that Commerce applied its
Meaningful Difference Test unreasonably; and (3) the Final Results do not contravene 19 C.F.R.
§ 351.414(f)(1)(i) and (f)(3) (2008).
BACKGROUND
I. Antidumping Investigations and Analytical Tools
1
Further citations to the Tariff Act of 1930 are to the relevant portions of Title 19 of the U.S.
Code, 2012 edition, and all applicable amendments thereto.
Court No. 14-00112 Page 3
In an antidumping investigation, Commerce determines whether a class or kind of foreign
merchandise is being or is likely to be sold in the United States at less than its fair value, pursuant
to 19 U.S.C. § 1673. There are three methodologies that Commerce may use in an investigation
to calculate dumping margins in accordance with the Tariff Act of 1930, as amended by the
Uruguay Round Agreement Act (“URAA”), Pub L. No. 103-465, 108 Stat. 4809 (1994). Mid
Continent Nail Corp. v. United States, 846 F.3d 1364, 1369 (2017). Commerce can compare the
weighted average of the normal values 2 to the weighted average of the export prices 3 (or
constructed export prices 4) for comparable merchandise, per 19 U.S.C. § 1677f-1(d)(1)(A)(i), or
2
Normal value is:
the price at which the foreign like product is first sold (or, in the
absence of a sale, offered for sale) for consumption in the exporting
country, in the usual commercial quantities and in the ordinary
course of trade and, to the extent practicable, at the same level of
trade as the export price or constructed export price . . . .
19 U.S.C. § 1677b(a)(1)(B)(i).
3
Export price is:
the price at which the subject merchandise is first sold (or agreed to
be sold) before the date of importation by the producer or exporter
of the subject merchandise outside of the United States to an
unaffiliated purchaser in the United States or to an unaffiliated
purchaser for exportation to the United States, as adjusted under
subsection (c) of this section.
19 U.S.C. § 1677a(a).
4
Constructed export price is:
the price at which the subject merchandise is first sold (or agreed to
be sold) in the United States before or after the date of importation
by or for the account of the producer or exporter of such
merchandise or by a seller affiliated with the producer or exporter,
to a purchaser not affiliated with the producer or exporter, as
adjusted under subsections (c) and (d) of this section.
Court No. 14-00112 Page 4
compare the normal values of individual transactions to the export prices (or constructed export
prices) of individual transactions for comparable merchandise, per § 1677f-1(d)(1)(A)(ii). 19
U.S.C. § 1677f-1(d)(1). These comparison methods are known, respectively, as the average-to
average (“A-to-A”) method and the transaction-to-transaction (“T-to-T”) method. When certain
criteria are met, Commerce may apply a third, alternative comparison method, the average-to-
transaction (“A-to-T”) method, wherein it compares averaged values to the values of individual
transactions. 5 Commerce uses this A-T methodology to determine whether a respondent has
engaged in “targeted dumping,” that is, sales at less-than-fair-value made to certain purchasers, in
certain regions, or during certain periods of times, despite complementary sales at fair value
elsewhere. See 19 U.S.C. § 1677f-1(d). Commerce may utilize the A-T method so long as two
conditions are met:
(i) there is a pattern of export prices (or constructed export
prices) for comparable merchandise that differ significantly
among purchasers, regions, or periods of time, and
19 U.S.C. § 1677a(b).
5
19 U.S.C. § 1677f-1(d)(1)(B) states:
Exception.
The administering authority may determine whether the subject
merchandise is being sold in the United States at less than fair value
by comparing the weighted average of the normal values to the
export prices (or constructed export prices) of individual
transactions for comparable merchandise, if—
(i) there is a pattern of export prices (or constructed export prices)
for comparable merchandise that differ significantly among
purchasers, regions, or periods of time, and
(ii) the administering authority explains why such differences
cannot be taken into account using a method described in paragraph
(1)(A)(i) or (ii).
Court No. 14-00112 Page 5
(ii) [Commerce] explains why such differences cannot be taken
into account using a method described in paragraph (1)(A)(i)
[the A-A methodology] or (ii) [the T-T methodology].
19 U.S.C. § 1677f-1(d)(1)(B).
In contrast to the section of the statute covering investigations, the section which addresses
administrative reviews -- 19 U.S.C. § 1677f-1(d)(2) -- contains no provision specifying the
comparison method applicable to administrative reviews. 6 Commerce has stated that it
promulgated 19 C.F.R. § 351.414(b) 7 to fill this gap in the statute:
19 C.F.R. 351.414(b) describes the methods by which NV [Normal
Value] may be compared to export price or constructed export price
in less-than-fair-value investigations and administrative reviews
(i.e., A to-A, T-to-T, and A-to-T). These comparison methods are
distinct from each other. When using T-to-T or A-to-T comparisons,
6
19 U.S.C. § 1677f-1(d)(2) states:
Reviews.
In a review under section 1675 of this title, when comparing export
prices (or constructed export prices) of individual transactions to the
weighted average price of sales of the foreign like product, the
administering authority shall limit its averaging of prices to a period
not exceeding the calendar month that corresponds most closely to
the calendar month of the individual export sale.
7
19 C.F.R. § 351.414(b) (2012) provides:
(1) Average-to-average method. The “average-to-average” method
involves a comparison of the weighted average of the normal values
with the weighted average of the export prices (and constructed
export prices) for comparable merchandise.
(2) Transaction-to-transaction method. The “transaction-to-
transaction” method involves a comparison of the normal values of
individual transactions with the export prices (or constructed export
prices) of individual transactions for comparable merchandise.
(3) Average-to-transaction method. The “average-to-transaction”
method involves a comparison of the weighted average of the
normal values to the export prices (or constructed export prices) of
individual transactions for comparable merchandise.
Court No. 14-00112 Page 6
a comparison is made for each export transaction to the United
States. When using A-to-A comparisons, a comparison is made for
each group of comparable export transactions for which the export
prices, or constructed export prices, have been averaged together
(i.e., for an averaging group). The Department does not interpret the
Act or the SAA [Statement of Administrative Action] to prohibit the
use of the A-to-A method in administrative reviews, nor does the
Act or the SAA mandate the use of the A-to-T method in
administrative reviews. 19 C.F.R. 351.414(c)(l) (2012) fills the gap
in the statute concerning the choice of a comparison method in the
context of administrative reviews. In particular, the Department
determined that in both less-than-fair value investigations and
administrative reviews, the A-to-A method will be used “unless the
Secretary determines another method is appropriate in a particular
case” . . . . [Commerce also] look[s] to practices employed by the
Department in investigations for guidance on this issue. 8
IDM at 19 (quoting 19 C.F.R. § 351.414(c)(l)); see Statement of Administrative Action,
accompanying the URAA, H.R. No. 103–316, vol. 1 (1994), reprinted in 1994 U.S.C.CAN.
4040 (“SAA”). 9
To execute the statutory dictates of 19 U.S.C. § 1677f-1(d)(1)(B)(i), supra n.5, and to
determine specifically whether to apply an alternate comparison method, Commerce conducts an
analysis known as differential pricing. Preliminary Decision Memorandum (“PDM”) at 14, P.R.
258, accompanying Certain Steel Nails from the People’s Republic of China: Preliminary Results
8
“In 2012, Commerce revised its methodology in administrative reviews from using average-to-
transaction comparisons as its general practice in administrative reviews to average-to-average
comparisons as the default method for calculating weighted average dumping margins.” JBF RAK
LLC v. United States, 790 F.3d 1358, 1361 n.2 (Fed. Cir. 2015) (citing Union Steel v. United
States, 713 F.3d 1101, 1106 n.5 (Fed. Cir. 2013) (citing Antidumping Proceedings: Calculation of
the Weighted–Average Dumping Margin and Assessment Rate in Certain Antidumping Duty
Proceedings; Final Modification, 77 Fed. Reg. 8101 (Feb. 14, 2012)) (codified at 19 C.F.R. pt.
351)).
9
The SAA “shall be regarded as an authoritative expression by the United States concerning the
interpretation and application of the Uruguay Round Agreements and this Act in any judicial
proceeding in which a question arises concerning such interpretation or application.” 19 U.S.C. §
3512(d).
Court No. 14-00112 Page 7
of the Fourth Antidumping Duty Administrative Review, 78 Fed. Reg. 56,861 (Dep’t Commerce
Sept. 16, 2013), P.R. 257. The differential pricing analysis consists of three tests, segregated into
two stages. See Apex Frozen Foods Private Ltd. v. United States, 862 F.3d 1337, 1342 n.2 (Fed.
Cir. 2017); PDM at 15.
In the first stage, Commerce utilizes two tests to determine whether there exists a pattern
of prices that differ significantly, such that an alternative comparison method should be considered,
pursuant to 19 U.S.C. § 1677f-1(d)(1)(B)(i). PDM at 15. Commerce begins by applying the
Cohen’s d test (“CDT”), which it characterizes as “a generally recognized statistical measure of
the extent of the difference between the mean of a test group and the mean of a comparison
group.” 10 Id.
First, for comparable merchandise, the Cohen’s d test is applied
when the test and comparison groups of data each have at least two
observations, and when the sales quantity for the comparison group
accounts for at least five percent of the total sales quantity of the
comparable merchandise. Then, the Cohen’s d coefficient is
calculated to evaluate the extent to which the net prices to a
particular purchaser, region or time period differ significantly from
the net prices of all other sales of comparable merchandise. The
extent of these differences can be quantified by one of three fixed
thresholds defined by the Cohen’s d test: small, medium or large.
Of these thresholds, the large threshold provides the strongest
indication that there is a significant difference between the means of
the test and comparison groups, while the small threshold provides
the weakest indication that such a difference exists. For this
analysis, the difference was considered significant if the calculated
Cohen’s d coefficient is equal to or exceeds the large (i.e., 0.8)
threshold.
10
Commerce’s methodological implementation of 19 U.S.C. § 1677f-1(d)(1)(B) has evolved
over time. In implementing the differential pricing analysis methodology, and displacing the
previously utilized “Nails Test,” Commerce stated that it “has continued to seek to refine its
approach with respect to the use of an alternative comparison method. . . . The new approach is
referred to as the ‘differential pricing’ analysis . . . .” Differential Pricing Analysis; Request for
Comments, 79 Fed. Reg. 26,720 (Dep’t Commerce May 9, 2014). Commerce concurrently
sought “public comment on the possible further development of its approach for use of an
alternative comparison method,” including the use of the CDT. Id. at 26,722.
Court No. 14-00112 Page 8
PDM at 15.
Thus, the net price to a particular purchaser, region or time period “passes” the CDT if its
calculated Cohen’s d coefficient is 0.8 or greater. Commerce next applies the Ratio Test, wherein
it assesses the extent of the significant price differences for all sales as measured by the CDT:
If the value of sales to purchasers, regions, and time periods that
pass the Cohen’s d test account for 66 percent or more of the value
of total sales, then the identified pattern of prices that differ
significantly supports the consideration of the application of the A-
T method to all sales as an alternative to the A-A method. If the
value of sales to purchasers, regions, and time periods that pass the
Cohen’s d test accounts for more than 33 percent and less than 66
percent of the value of total sales, then the results support
consideration of the application of an A-T method to those sales
identified as passing the Cohen’s d test as an alternative to the A-A
method, and application of the A-A method to those sales identified
as not passing the Cohen’s d test. If 33 percent or less of the value
of total sales passes the Cohen’s d test, then the results of the
Cohen’s d test do not support consideration of an alternative to the
A-A method.
Id.If Commerce determines that both of these tests demonstrate the existence of a pattern of
prices that differ significantly enough to warrant consideration of an alternative comparison
method, then Commerce proceeds to the second stage of the differential pricing analysis, in which
it examines whether using only the A-A method can appropriately account for those differences,
pursuant to 19 U.S.C. § 1677f-1(d)(1)(B)(ii). PDM at 15. Commerce makes this determination
by applying the Meaningful Difference Test, a methodology which compares the dumping margin
that results from the applied CDT and ratio test, as described supra, with the dumping margin that
would result from the use of the A-A method only. Id. A difference in the weighted-average
dumping margins is considered meaningful if (1) there is a 25 percent relative change in the
weighted-average dumping margin between the A-A method and the appropriate alternative
Court No. 14-00112 Page 9
method where both rates are above the de minimis threshold, or (2) the resulting weighted-average
dumping margin moves across the de minimis threshold. Id. at 15–16. If this determination is
affirmative, Commerce submits that its statutory mandate to “explain[] why such differences
cannot be taken into account using” the A-A or T-T methods, per 19 U.S.C. § 1677f-1(d)(1)(B)(i),
has been fulfilled. Id. at 14.
II. Procedural History
Commerce issued an antidumping duty order covering certain steel nails from the People’s
Republic of China in August 2008. Antidumping Duty Order: Certain Steel Nails from the
People’s Republic of China, 73 Fed. Reg. 44,961 (Dep’t Commerce Aug. 1, 2008). Commerce
initiated the fourth Nails from China administrative review on September 26, 2012. Initiation of
Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in
Part, 77 Fed. Reg. 59,168 (Dep’t Commerce Sept. 26, 2012). Commerce named Stanley a
mandatory respondent pursuant to 19 U.S.C. § 1677f-1(c)(2) 11 on November 20, 2012, and issued
an antidumping duty questionnaire on the following day. See Memorandum Re: Fourth
11
In antidumping duty investigations or administrative reviews, Commerce may select
mandatory respondents pursuant to 19 U.S.C. § 1677f-1(c)(2), which provides:
If it is not practicable to make individual weighted average dumping
margin determinations [in investigations or administrative reviews]
because of the large number of exporters or producers involved in
the investigation or review, the administering authority may
determine the weighted average dumping margins for a reasonable
number of exporters or producers by limiting its examination to--
(A) a sample of exporters, producers, or types of products
that is statistically valid based on the information available
to the administering authority at the time of selection, or
(B) exporters and producers accounting for the largest
volume of the subject merchandise from the exporting
country that can be reasonably examined.
Court No. 14-00112 Page 10
Antidumping Duty Administrative Review of Certain Steel Nails from the People’s Republic
Selection of Respondents for Individual Review (Nov. 20, 2012), P.R. 62; Cover Letter enclosing
the Antidumping Duty Questionnaire for the Fourth Administrative Review (Nov. 21, 2012), P.R.
65.
Commerce published notice of the preliminary results of the fourth administrative review
on September 16, 2013. 78 Fed. Reg. 56,861. Commerce found that the differential pricing
analysis that it had used in recent investigations “may be instructive for purposes of examining
whether to apply an alternative comparison method in this administrative review.” PDM at 14.
Upon conducting the differential pricing analysis, Commerce found that between 33 and 66
percent of Stanley’s United States sales confirm the existence of a pattern of constructed export
prices for comparable merchandise that differ significantly among purchasers, regions, or time
periods. Id. at 16. Specifically, Commerce concluded that 64.7 percent of Stanley’s sales “passed”
the CDT, and thus displayed a pattern of significant price differences. Id.; Memorandum to the
File Re: Preliminary Results Analysis for Stanley, September 3, 2013 at 14, P.R. 261
(“Preliminary Results Memo”). Commerce accordingly determined that there existed a
meaningful difference in the results between the weighted-average dumping margin calculated
using the standard A-A method for all U.S. sales and the margin calculated using the appropriate
alternative comparison method. PDM at 16. Therefore, Commerce concluded, the A-A method
could not take into account the observed differences, and the mixed alternative method was the
appropriate means of calculating Stanley’s weighted-average dumping margin. Id.Commerce preliminarily calculated a weighted-average dumping margin of 22.90 percent
for Stanley using the mixed alternative comparison methodology, wherein Commerce applied the
A-T methodology to those of Stanley’s United States sales that “passed” the CDT, and the A-A
Court No. 14-00112 Page 11
methodology to Stanley’s other United States sales that did not. 78 Fed. Reg. at 56,862; PDM at
16; Preliminary Results Memo at 14. On December 18, 2013, Stanley submitted its Case Brief to
Commerce. P.R. 303–05.
On April 8, 2012, Commerce published the Final Results. 79 Fed. Reg. 19,316. Commerce
continued to find it appropriate to use the mixed alternative methodology and apply the A-T
comparison methodology to those of Stanley’s United States sales that “passed” the CDT, while
applying the A-A methodology to Stanley’s other sales that did not. IDM at 24. Consequently,
Commerce calculated a 3.92 percent weighted-average dumping margin for Stanley. Final Results
at 19,318.
Stanley filed this case to contest Commerce’s Final Results on May 6, 2014. Summons,
ECF No. 1; Compl., May 13, 2014, ECF No. 8. On September 16, 2014, Stanley submitted its
Motion for Judgment on the Agency Record to the Court. Pl.’s Br. Specifically, Stanley asserts
that the Final Results are neither in accordance with law nor supported by substantial evidence,
because: (1) the CDT is an unreasonable means of effecting a targeted dumping analysis under 19
U.S.C. § 1677f-1(d), for several reasons; (2) even if the CDT were a reasonable methodological
choice, Commerce incorrectly applied it to Stanley’s sales data; and (3) Commerce’s application
of the Meaningful Difference Test does not satisfy Commerce’s requirements under the statute.
Stanley also argues that the Final Results contravene 19 C.F.R. § 351.414(f)(1)(i) and (f)(3) (2008).
On December 15, 2014, the Government filed its brief in opposition to Stanley’s motion. Def.’s
Br. Stanley filed its reply on February 2, 2015. ECF No. 37 (“Pl.’s Reply”).
On November 29, 2016, this court stayed this action pending resolution of Mid Continent
Nail Corp. v. United States, CAFC Appeal No. 2016-1426 (Fed. Cir. filed Jan. 6, 2016). Order,
Nov. 29, 2016, ECF No. 53. In Mid Continent, the issue on appeal was whether Commerce
Court No. 14-00112 Page 12
complied with notice-and-comment rulemaking under the Administrative Procedure Act (“APA”),
5 U.S.C. §§ 553(b), 551(5) (2006), by repealing a regulation restricting the agency’s use of the A-
T methodology, 19 C.F.R. § 351.414(f)(2) (2008), known as the “Limiting Regulation,” which
provided that even in cases meeting the statutory criteria for applying the A-T methodology, the
agency would “normally . . . limit [its] application . . . to those sales that constitute targeted
dumping.” Mid Continent, 846 F.3d at 1370 (quoting 19 C.F.R. § 351.414(f)(2)); see Antidumping
Duties; Countervailing Duties, Final Rule, 62 Fed. Reg. 27,296, 27,375 (Dep’t Commerce May
19, 1997). On January 27, 2017, the Federal Circuit issued its Opinion in Mid Continent, in which
it held that Commerce failed to comply with notice-and-comment rulemaking under the APA by
repealing the Limiting Regulation in the Withdrawal of the Regulatory Provisions Governing
Targeted Dumping in Antidumping Duty Investigations, Interim Final Rule, 73 Fed. Reg. 74,931(Dep’t Commerce Dec. 10, 2008); that its failure could not be excused for good cause or harmless
error; and that the agency did not err in applying the Limiting Regulation on remand. 846 F.3d at
1386. The Federal Circuit issued the Mandate in Mid Continent on March 20, 2017.
After teleconference with the parties on April 19, 2017, this court stayed this action a
second time pending the resolution of Apex Frozen Foods Private Ltd. v. United States, CAFC
Appeal No. 2015-2085 (Fed. Cir. filed Sept. 29, 2015) and Apex Frozen Foods Private Ltd. v.
United States, CAFC Appeal No. 2016-1789 (Fed. Cir. filed Apr. 5, 2016). Order, April 19, 2017,
ECF No. 58. The issues in those cases, as relevant here, were whether the Limiting Regulation
applies to administrative reviews as well as investigations and whether Commerce’s Meaningful
Difference Test was a reasonable exercise of Commerce’s discretion. On July 12, 2017, the
Federal Circuit issued its Opinions in Apex Frozen Foods Private Ltd. v. United States, 862 F.3d
Court No. 14-00112 Page 13
1337 (Fed. Cir. 2017) (“Apex I”) and Apex Frozen Foods Private Ltd. v. United States, 862 F.3d
1322 (Fed. Cir. 2017) (“Apex II”).
On August 9, 2017, the court ordered parties to submit supplemental briefing addressing
the relevance of Mid Continent, Apex I, and Apex II to this proceeding. ECF No. 61. Stanley and
the Government submitted their supplemental briefs on September 12, 2017. ECF No. 62; ECF
No. 63 (“Pl.’s Suppl. Br.”). The parties submitted their reply to each other’s supplemental brief
on September 26, 2017. ECF No. 64; ECF No. 65. Oral argument was held before the court on
Tuesday, October 31, 2017. ECF No. 68. At the direction of the court, the parties submitted post-
argument briefing regarding the adoption of the CDT methodology. ECF Nos. 69, 70.
JURISDICTION AND STANDARD OF REVIEW
The Court has jurisdiction over this action pursuant to 28 U.S.C. § 1581(c) (2012) and 19
U.S.C. § 1516a(a)(2)(A)(i)(I) and (a)(2)(B)(iii). The standard of review in this action is set forth
in 19 U.S.C. § 1516a(b)(l)(B)(i): “[t]he court shall hold unlawful any determination, finding or
conclusion found . . . to be unsupported by substantial evidence on the record, or otherwise not in
accordance with law.”
ANALYSIS
Stanley argues 12 (1) Commerce’s use of differential pricing to identify the presence of
targeted dumping is an unreasonable interpretation of the statute and contravenes congressional
12
Stanley initially argued that Commerce has no statutory authority to conduct a targeted dumping
analysis in administrative reviews. Pl.’s Br. at 15. Stanley noted that 19 U.S.C. § 1677f-1(d)(1)(B)
authorizes Commerce to deviate from A-A price comparisons, and resort to A-T price comparisons
in antidumping duty investigations. Id. at 16. The provision governing administrative reviews,
however, does not contain analogous language and thus, according to Stanley, in its initial briefing,
does not confer similar authority. Id. at 16–17 (citing Nken v. Holder, 129 S. Ct. 1749, 1759
(2009)); see GAF Italia S.p.A. v. United States, 291 F.3d 806, 816 (Fed. Cir. 2002) (“It is indeed
well established that the absence of a statutory prohibition cannot be the source of agency
authority.”). Stanley submitted that the Federal Circuit has found the absence of statutory authority
Court No. 14-00112 Page 14
intent; (2) that Commerce applied its Meaningful Difference Test unreasonably; and (3) the Final
Results contravene 19 C.F.R. § 351.414(f)(1)(i) and (f)(3) (2008). For the reasons set forth
hereafter, the court finds Stanley’s arguments unavailing and denies its motion for judgment on
the agency record.
A. Commerce reasonably applied the differential pricing analysis, the Cohen’s d Test,
and the Meaningful Difference Test in this proceeding.
As explained supra pp.6–9, Commerce’s differential pricing analysis is broadly divisible
into three tests: (1) the CDT, (2) the Ratio Test and (3) the Meaningful Difference Test. Stanley
argues that Commerce’s analysis was deficient for a number of reasons. Stanley also argues that
of greater import than policy arguments advanced by Commerce. Pl.’s Br. at 18 (citing Ad Hoc
Comm. of AZ-NM-TX-FL Producers of Gray Portland Cement v. United States, 13 F.3d 398, 403
(Fed. Cir. 1994) (“Even if the statute’s ‘primary goal’ may seem to be ill-served . . ., that conclusion
does not justify reading into the statute agency discretion that clearly is not there.”)).
The arguments made by Stanley here regarding Commerce’s authority to apply the A-T
methodology in administrative reviews are effectively identical to those addressed and disposed
of by the Federal Circuit in JBF RAK LLC v. United States, 790 F.3d 1358 (Fed. Cir. 2015), which
was issued during the pendency of this action and conclusively stated that the A-T method is
statutorily authorized. The Federal Circuit stated that Commerce may perform its duties in the
way it believes most suitable in the absence of any congressionally mandated procedure or
methodology. Id. at 1362. “[I]f Congress has explicitly left a gap for the agency to fill, there is
an express delegation of authority to the agency to elucidate a specific provision of the statute by
regulation. Such legislative regulations are given controlling weight unless they are arbitrary,
capricious, or manifestly contrary to the statute.” Id. at 1364 (quoting Chevron U.S.A, Inc. v.
Natural Res. Def. Council, Inc., 467 U S. 837, 843–44 (1984)). The Federal Circuit found that
Commerce, in promulgating and applying the relevant regulation, 19 C.F.R. § 351.414(b)(1)–(3),
(c)(1), “exercised its gap-filling discretion by applying a comparison methodology[, i.e. the
average-to-transaction, A-T, comparison method,] in reviews that parallels the methodology used
in investigations.” Id. (quoting JBF RAK LLC v. United States, 38 CIT ___, ___, 991 F. Supp.
2d 1343, 1347). Accordingly, “Commerce’s decision to apply its average-to-transaction
comparison methodology in the context of an administrative review is reasonable. Because
Congress did not provide for a direct methodology, Commerce properly ‘fill[ed] th[at] gap.’” Id.(quoting Chevron, 467 U.S. at 843).
Following JBF RAK, the court thus holds, and the parties agreed at oral argument, that
Commerce’s application of the A-T methodology in the instant administrative review, as embodied
in the Final Results, was reasonable and in accordance with law.
Court No. 14-00112 Page 15
the differential pricing methodology altogether runs counter to Congressional intent and is thus
unreasonable.
1. Commerce reasonably applied the Cohen’s d Test.
Stanley asserts first that the CDT is designed to assess a different type of data. Pl.’s Br. at
25. Specifically, Stanley submits that Dr. Cohen, the creator of the CDT, suggests that mean
differences rather than standardized mean differences (d values) should be used in measuring effect
sizes when comparing groups on a variable measured in units that are well understood:
[when] comparing groups on a variable measured in units that are
well understood by your readers (IQ points, or dollars, or number of
children, or months of survival) mean differences are excellent
measures of effect sizes. When this isn’t the case . . . the results can
be translated into standardized mean differences (d values) or some
measure of correlation or association.
Pl.’s Br. at 25 (emphasis added) (citing Jacob Cohen, “Things I Have Learned (So Far),” American
Psychologist, v. 45, no. 12 December 1990, 1304–12). Stanley argues that, consistent with this
observation, the Cohen’s d statistic is not a tool used in business, finance, or other contexts in
which a variable, such as dollars, can be easily quantified. Pl.’s Br. at 26. Stanley thus disputes
Commerce’s characterization of its antidumping analysis as a social science that analyzes a
respondent’s “pricing behavior,” IDM at 26, and argues that Commerce failed to recognize that
the selfsame pricing behavior is measured in easily understood units: dollars. Pl.’s Br. at 26.
Second, Stanley argues that the term “significantly,” found in 19 U.S.C. § 1677f-
1(d)(1)(B)(i) and in the SAA at 843, should be read to mean “statistical significance.” Pl.’s Br. at
27. Stanley thus argues that Commerce, by interpreting “significant” more generally to mean
“large,” did not meet its statutory obligation to determine whether “there is a pattern of export
prices (or constructed export prices) for comparable merchandise that differ significantly among
Court No. 14-00112 Page 16
purchasers, regions, or periods of time.” 19 U.S.C. § 1677f-1; see IDM at 28 (“The statute does
not require that the difference be ‘statistically significant’ only that it be significant.”).
Third, Stanley argues that the Cohen’s d statistic is an estimation tool, suited for making
reasonable queries as to the size of a value given only a sample of data. Pl.’s Br. at 29–30. Rather,
where the entire data population is known, as here, statistical inference tools, among which the
Cohen’s d statistic is not, are appropriate. Id. (citing Kohler, Heinz, Statistics for Business and
Economics, 3rd Ed., Harper Collins (1994), at 293 (“The process of inferring the values of
unknown population parameters from those known sample statistics is called estimation . . . .”)).
Further, Stanley argues that the Cohen’s d statistic is unreasonably applied where no hypothesis is
being tested. Id. at 31–32.
Fourth, Stanley argues that Commerce’s classification of effect sizes as “small,”
“medium,” and “large,” is not a widely accepted division, as Commerce claims, IDM at 26–27,
and is instead a selection of arbitrary thresholds. Pl.’s Br. at 33 (citing Cohen, Jacob, Statistical
Power for the Behavioral Sciences, 2nd Ed., Lawrence Erlbaum Associates (1988), at 484). Per
Stanley, Commerce failed to explain how these thresholds are relevant to the underlying
proceeding and thus rendered the Final Results arbitrary.
Stanley next argues that Commerce has failed to explain how its stratification of sales that
“pass” the CDT into three tiers based on the ratio of the value of “passed” sales to total sales value
-- those (1) below 33 percent; (2) between 33 and 66 percent; and (3) above 66 percent -- identifies
a “pattern” of significant price differences pursuant to 19 U.S.C. § 1677f-1(d)(1)(B)(i). Pl.’s Br.
at 38. Stanley considers the segregation of “pass” rates into these thresholds to be arbitrary, and
argues that the Final Results do not justify the selection of those numerical thresholds or explain
Court No. 14-00112 Page 17
how they reveal a pattern of United States prices that differ significantly among purchasers,
regions, or periods of time. Pl.’s Br. at 38–39.
At the outset, the court notes that the question of the reasonableness of the utilization of
the CDT has not been determined by the Federal Circuit. While the Federal Circuit in Apex I
affirmed an opinion of this court holding that the CDT was a permissible exercise of Commerce’s
discretion under the statute, and thus a reasonable methodological choice in accordance with law,
see Apex Frozen Foods Private Ltd. v. United States, 40 CIT ___, ___, 144 F. Supp. 3d 1308,
1323–29 (2016), aff’d, 862 F.3d 1337 (Fed. Cir. 2017), the Federal Circuit did not have occasion
to directly address whether Commerce’s use of CDT was reasonable and in accordance with law.
See Apex I, 862 F.3d at 1344 (“Apex does not challenge the results of Commerce’s application of
the Cohen’s d test . . . .”) and id. at 1342 n.2 (“A high-level summary of the differential pricing
analysis is sufficient for our purposes, as the parties do not dispute the use and results on
appeal.”). 13
When determining whether Commerce’s interpretation and application of the statute is in
accordance with law, this Court must consider “whether Congress has directly spoken to the
precise question at issue,” and, if not, whether the agency’s interpretation of the statute is
reasonable. Apex I, 862 F.3d at 1344 (quoting Chevron U.S.A, Inc. v. Natural Res. Def. Council,
Inc., 467 U S. 837, 842–43 (1984)). If the Court determines that the statute is silent or ambiguous
with respect to the specific issue, then the traditional second prong of the Chevron analysis asks
what level of deference is owed Commerce’s interpretation. Chevron, 467 U.S. at 842–43; see
United States v. Mead Corp., 533 U.S. 218, 228 (2001). “Chevron requires us to defer to the
13
The reasonableness of the CDT has been considered in two opinions of this Court. See Xi’an
Metals & Minerals Imp. & Exp. Co. v. United States, 41 CIT ___, Slip Op. 17-120 (Sep. 6, 2017);
Tri Union Frozen Prod., Inc. v. United States, 40 CIT ___, 163 F. Supp. 3d 1255 (2016).
Court No. 14-00112 Page 18
agency’s interpretation of its own statute as long as that interpretation is reasonable.” Koyo Seiko
Co., Ltd, v. United States, 36 F.3d 1565, 1573 (Fed. Cir. 1994); see Kyocera Solar, Inc. v. United
States Int’l Trade Comm’n, 844 F.3d 1334 (Fed. Cir. 2016).
The statute does not mandate how Commerce is to conduct its targeted dumping analysis.
See 19 U.S.C. § 1677f-1. Thus the agency’s discretionary choice to employ a particular
methodology, here the CDT, is entitled to deference from this court, so long as that methodological
choice is reasonable. See JBF RAK, 790 F.3d at 1362; Chevron, 467 U.S. at 842–43. The court
emphasizes that “[a]ntidumping . . . duty determinations involve complex economic and
accounting decisions of a technical nature, for which agencies possess far greater expertise than
courts.” PSC VSMPO-Avisma Corp. v. United States, 688 F.3d 751, 764 (Fed. Cir. 2012), cited
in Apex I, 862 F.3d at 1347. The court thus affords Commerce significant deference in those
determinations. See id.; Fujitsu Gen. Ltd. v. United States, 88 F.3d 1034, 1039 (Fed. Cir. 1996).
Despite this wide discretion, Commerce “must cogently explain why it has exercised its discretion
in a given manner.” Motor Vehicle Mfrs. Ass’n of U.S. v. State Farm Mut. Auto. Ins. Co., 463
U.S. 29, 48 (1983). The court therefore asks whether Commerce has adequately explained its
methodological choice, and more generally, whether that choice is reasonable. See CS Wind
Vietnam Co. v. United States, 832 F.3d 1367, 1377 (Fed. Cir. 2016) (“The requirement of
explanation presumes the expertise and experience of the agency and still demands an adequate
explanation in the particular matter.” (citing Burlington Truck Lines, Inc. v. United States, 371
U.S. 156, 167–68 (1962))).
The court finds that Commerce’s application of the CDT here constitutes a reasonable
exercise of its discretion under the statute, and that as to each of Stanley’s arguments, Commerce
adequately explained on the record the choices it made in employing that methodology. The court
Court No. 14-00112 Page 19
is not persuaded by Stanley’s arguments that the CDT is inapposite to the pricing behavior under
Commerce’s consideration, or by Stanley’s characterization of the CDT as “an estimation tool”
that renders the methodology inappropriate when all data points are known to Commerce.
Stanley’s academic citations, Pl.’s Br. at 25–26, do not preclude the possibility that the CDT could
be deployed in a pricing analysis where all of the prices are known to Commerce, even if,
arguendo, another methodology were more suited to determining the presence of significant
differences in price among purchasers, regions, or periods of time. “[W]e cannot say that the
methodology Commerce has chosen to implement Congress’s statutory scheme is unreasonable,
even where its justification may be . . . less than ideal.” Apex I, 862 F.3d at 1347 (citation omitted);
see JBF RAK, 790 F.3d at 1364 (“Because Congress did not provide for a direct methodology,
Commerce properly ‘fill[ed] th[at] gap.’” (quoting Chevron, 467 U.S. at 843)).
Commerce explained in the IDM its justifications for utilizing the CDT, stressing its focus
on the value of effect sizes in quantifying the differences between data points. IDM at 25 & n.110
(quoting Xanthan Gum From the People’s Republic of China: Final Determination of Sales at Less
Than Fair Value, 78 Fed. Reg. 33,351 (Dep’t Commerce June 4, 2013) (“Xanthan Gum”) and
accompanying IDM at 24 (quoting Coe, Robert, “It’s the Effect Size, Stupid: What effect size is
and why it is important,” paper presented at the Annual Conference of British Educational
Research Association (September 12–14, 2002))). Similarly, Commerce adequately explained that
the CDT may be reasonably employed to measure pricing behavior, an element of economic
analysis that may not be quantified in easily understood variables in the manner of a strictly “hard”
science. IDM at 25–26.
The court is likewise unpersuaded by Stanley’s argument that Commerce’s designated
effect sizes -- “small,” “medium,” and “large” -- are arbitrary such that the CDT methodology and
Court No. 14-00112 Page 20
the Final Results are arbitrary and not in accordance with law. While Stanley may dispute the
ubiquity of effect size divisions into those three thresholds, the court does not see that Commerce
applies the thresholds it has chosen in an arbitrary manner. IDM at 26–27. Commerce explained
its decision to consider the large threshold, a 0.8 Cohen’s d coefficient, to be the baseline measure
of a significant difference in prices. Id. at 27 (citing PDM at 15). While Commerce may not have
“explain[ed] how these thresholds relate to selling nails,” Pl.’s Br. at 34, per se, it did explain the
relevance of the thresholds in the overall application of the CDT and its differential pricing
analysis. PDM at 14–15. Commerce responded to Stanley’s concerns, and cited an academic
article in support of its deployment of the relevant thresholds. IDM at 26–27 (quoting Xanthan
Gum IDM at 24 (quoting Coe, supra p.19)). Commerce noted that it restricts CDT “passage” to
those coefficient results that meet or exceed the “large” threshold of 0.8. Id. at 27. Commerce
thus explained its methodological choices and reasonably supplied justifications for them. See
State Farm, 463 U.S. at 48–49. Even assuming arguendo that Commerce’s justification for
utilizing these thresholds is not optimal or consonant with some universal standard, the “court is
not to substitute its judgment for that of the agency, and should uphold a decision of less than ideal
clarity if the agency’s path may reasonably be discerned.” FCC v. Fox Television Stations, Inc.,
556 U.S. 502, 513–14 (2009), cited in Apex I, 862 F.3d at 1347. Commerce’s application of the
thresholds therefore was not arbitrary. See Changzhou Wujin Fine Chem. Factory Co. v. United
States, 701 F.3d 1367, 1377 (Fed. Cir. 2012) (“[H]ere we are evaluating the agency’s reasoning,
which is reviewed under the arbitrary and capricious (or contrary to law) standard.”).
The court turns to Stanley’s argument that the CDT does not measure “statistical
significance” and thus is an unreasonable execution of the statute. Stanley’s reading of 19 U.S.C.
§ 1677f-1 and the SAA is unpersuasive. The plain text of the statute commands only that
Court No. 14-00112 Page 21
Commerce, in applying an alternative methodology, must determine the presence of “a pattern of
export prices (or constructed export prices) for comparable merchandise that differ significantly
among purchasers, regions, or periods of time . . . .” 19 U.S.C. § 1677f-1(d)(1)(B)(i) (emphasis
added). Meanwhile, the SAA explains that the alternative comparison method is appropriate where
the A-A or T-T methods “cannot account for a pattern of prices that differ significantly among
purchasers, regions, or time periods, i.e., where targeted dumping may be occurring.” SAA at 843
(emphasis added). Stanley’s argument that the phrase “differ significantly” necessarily invokes a
difference of “statistical significance,” as opposed to mere “significance,” has no basis in the
statutory language, and Stanley is unable to proffer authority which requires Commerce or this
court to read “significantly” as referring to a more commanding standard. Commerce is entitled
to interpret the statutory language, and the court must defer to that interpretation, so long as it is
reasonable. Chevron, 467 U.S. at 842; Koyo Seiko, 36 F.3d at 1573.
Here, Commerce has deployed the CDT and the Meaningful Difference Test, supra pp.6–9,
to assess the presence and significance of differences of United States sales prices among
purchasers, regions, or periods of time. Commerce reasonably explained that it found no cause to
read the statute as requiring an assessment of “statistical significance.” IDM at 28. As explained
supra, the statute demands the application of no particular methodology. “When a statute fails to
make clear ‘any Congressionally mandated procedure or methodology for assessment of the
statutory tests,’ Commerce ‘may perform its duties in the way it believes most suitable.’” Apex I,
862 F.3d at 1349 (quoting JBF RAK, 790 F.3d at 1363). Here, Commerce reasonably exercised its
discretion under the statute by deploying the CDT. Further, Commerce directly answered Stanley’s
argument that “statistical significance” is the applicable statutory standard:
Statistical significance is used to evaluate whether the results of an
analysis rise above sampling error (i.e., noise) present in the analysis.
Court No. 14-00112 Page 22
The Department’s application of the Cohen’s d test is based on the
mean and variance calculated using the entire population of the
respondent’s sales in the U.S. market, and, therefore, these values
contain no sampling error. Accordingly, statistical significance is
not a relevant consideration in this context.
IDM at 29. The agency thus did explain its decision to deploy its chosen thresholds such that its
application of them is not arbitrary. Even assuming Stanley’s proffered methodology, which would
involve some stricter “statistical significance” standard, constituted a plausible interpretation of the
statute, “it does not necessarily follow that Commerce’s different interpretation would be
unreasonable or impermissible.” Apex I, 862 F.3d at 1347 (citing Chevron, 467 U.S. at 843 n.11
(“The court need not conclude that the agency construction was the only one it permissibly could
have adopted to uphold the construction . . . .”)).
Having found the CDT to be a reasonable methodology in exercise of Commerce’s statutory
discretion, the court similarly finds that Commerce did not apply the CDT to Stanley’s data in an
unreasonable fashion. The court is not persuaded by Stanley’s submitted data, attached to its brief
as Addendum A. See Pl.’s Br. at Add. A. Stanley states that, of 111 respondents described in its
addendum, while 27 respondents either had no sales that “passed” the CDT or had “pass” rates
below the 33 percent threshold, “the average CDT ‘pass’ rate for the remaining 84 respondents was
67.99 percent . . . . In other words, in preliminary decisions Commerce has concluded that 75 percent
of the respondents investigated each targeted more than two-thirds of their sales . . . It is
unreasonable to the point of preposterous to conclude that 75 percent of investigated companies do
so.” Pl.’s Br. at 40 (emphasis added).
This assertion is not correct. By Stanley’s own reading of a CDT “pass” rate corresponding
directly to targeting, the data in Addendum A shows that 46 respondents, and not more than 75
percent, of the 111 listed respondents “each targeted more than two-thirds [i.e., met or exceeded the
Court No. 14-00112 Page 23
66 percent CDT “pass” rate threshold] of their sales.” Pl.’s Br. at Add. A. More pertinently,
Commerce applied the A-T alternative comparison method in only 18 of those instances. Id.
Stanley’s arguments that the CDT produces biased results are therefore unpersuasive.14
2. Stanley’s arguments regarding differential pricing, the Meaningful Difference
Test, and congressional intent are unpersuasive.
a. Stanley failed to exhaust its administrative remedies regarding the Meaningful
Difference Test.
Stanley argues that differential pricing cannot explain, as required by 19 U.S.C. § 1677f-
1(d)(1)(B)(ii), “why such differences” in United States sales prices among purchasers, regions, or
periods of time, “cannot be taken into account using” the A-A or T-T methods. Pl.’s Br. at 35. In
essence, Stanley argues that Commerce’s Meaningful Difference Test, wherein it compares a
respondent’s dumping margin that results from the applied CDT and Ratio Test with the dumping
margin that would result from the use of the A-A method only, does not explain, as required by
the statute, why the routine methodologies are insufficient to account for those differences. Id. at
35–36. Stanley cites to Beijing Tianhai for the proposition that Commerce’s “purported
explanation” as to why the pattern of price differences at issue in the underlying proceeding could
not be taken into account using the standard A-A methodology “says nothing more than that
Commerce found a pattern of differing prices and invoked the mathematical truism that when you
average a set of numbers, the differences among the numbers cease to be apparent.” Pl.’s Br. at
35 (quoting Beijing Tianhai Indus. Co. v. United States, 38 CIT ___, ___, 7 F. Supp. 3d 1318,
1331 (2014)). Stanley offers the point made in that case that Commerce “supplied a conclusion,
14
Stanley’s remaining arguments, see Pl.’s Br. at 44–49, effectively request that the court manage
Commerce’s application of the CDT, even if, as the court has found here, the CDT is a reasonable
methodology performed in exercise of Commerce’s discretion under the statute. See supra pp.
18–23; 19 U.S.C. § 1677f-1(d)(1). The court declines that invitation, for the reasons stated supra.
Court No. 14-00112 Page 24
but not an explanation” and argues that the same is true here. Id. at 36 (quoting Beijing Tianhai,
7 F. Supp. 3d at 1332). Stanley also asserts that Commerce performed its A-A to A-T comparison
(the heart of the Meaningful Difference Test) on the basis of Stanley’s total sales, while it
performed the CDT by looking at sales of individual products as denominated by product control
numbers (i.e., CONNUMs); thus the A-A to A-T comparison “was unreasonably divorced from
the specific price differences that are found to exist under the CDT and failed to explain why the
A-A method could not account for observed price differences.” Pl.’s Br. at 36.
Citing 28 U.S.C. § 2637(d) (2012), the Government contends that Stanley failed to argue
before Commerce that the agency unreasonably performed its A-A to A-T comparison on the basis
of Stanley’s total sales, yet performed the CDT by looking at sales of individual products (i.e.,
CONNUMs). Def.’s Br. at 23–24 (citing 19 C.F.R. § 351.309(c)(2)); see 28 U.S.C. § 2637(d) (“In
any civil action not specified in this section, the Court of International Trade shall, where
appropriate, require the exhaustion of administrative remedies.”). Because the statute does not
address the issue, the Government argues, Commerce should have the first opportunity to address
the argument under Chevron. Id. at 24. The Government asserts that none of the exceptions to
the exhaustion requirement apply here. Id. at 25.
The court agrees that Stanley has failed to exhaust its administrative remedies. This Court
“shall, where appropriate, require the exhaustion of administrative remedies.” 28 U.S.C. §
2637(d). “The doctrine of exhaustion provides ‘that no one is entitled to judicial relief for a
supposed or threatened injury until the prescribed administrative remedy has been exhausted.’”
Essar Steel, Ltd. v. United States, 753 F.3d 1368, 1374 (Fed. Cir. 2014) (quoting Sandvik Steel
Co. v. United States, 164 F.3d 596, 599 (Fed. Cir. 1998)). “Simple fairness to those who are
engaged in the tasks of administration, and to litigants, requires as a general rule that courts should
Court No. 14-00112 Page 25
not topple over administrative decisions unless the administrative body not only has erred but has
erred against objection made at the time appropriate under its practice.” Mittal Steel Point Lisas
Ltd. v. United States, 548 F.3d 1375, 1383–84 (Fed. Cir. 2008) (quoting United States v. L.A.
Tucker Truck Lines, Inc., 344 U.S. 33, 37 (1952)).
Here, Stanley did not raise any arguments regarding the Meaningful Difference Test
element of the differential pricing analysis in its case brief before Commerce. See Stanley’s Case
Brief. Exhaustion serves two main purposes: “to allow an administrative agency to perform
functions within its special competence — to make a factual record, to apply its expertise, and to
correct its own errors,” and to “promot[e] judicial efficiency by enabling an agency to correct its
own errors so as to moot judicial controversies.” Sandvik Steel, 164 F.3d at 600. The issue here -
- the appropriateness of the Meaningful Difference Test -- implicates both of these concerns; had
Stanley raised this argument regarding the Meaningful Difference Test during the administrative
proceedings, Commerce would have had the opportunity to better develop the record and apply its
expertise to assess its use of the Meaningful Difference Test.
Stanley’s contention that “[i]n this case, Stanley clearly challenged the differential pricing
approach at the administrative level” does not excuse its failure to exhaust administrative remedies.
Pl.’s Reply at 19. Broad, generalized challenges to the differential pricing analysis do not
incorporate any conceivable challenge to elements of that analysis, such as to specific applications
of the Meaningful Difference Test. See Apex II, 862 F.3d at 1331–34 (affirming this court’s
refusal to consider plaintiff’s unexhausted argument -- that the Meaningful Difference Test’s
analysis of all a respondent’s sales does not speak to whether the A-A method can account for
targeting specifically -- where plaintiff had only previously criticized the Meaningful Difference
Test for its disparate use of zeroing in comparing A-A and A-T rates).
Court No. 14-00112 Page 26
Further, Stanley has provided neither sufficient justification for its failure to raise its
arguments regarding the Meaningful Difference Test in its case brief before Commerce nor
convincing reasons why any of the exceptions to administrative exhaustion apply. Stanley’s
argument that Beijing Tianhai constitutes an intervening judicial decision exception to the
requirement of administrative exhaustion is not persuasive. As an initial matter, Beijing Tianhai
is not controlling on this court’s disposition of the issue at hand. More importantly, Stanley’s
precise arguments regarding the Meaningful Difference Test -- specifically, that Commerce
unreasonably performed that test on Stanley’s total sales while applying the CDT to individual
CONNUMs -- are not implicated by Beijing Tianhai or Stanley’s citation to it. Stanley
characterizes its argument as an “expan[sion] on the Beijing Tianhai court’s conclusion that the
‘meaningful difference’ element did not meet its statutory obligation to explain why the A-A
comparison could not account for observed price differences.” Pl.’s Reply at 18. But that
proffered application is too broad; Stanley effectively attempts to circumvent the administrative
exhaustion requirement through reference to a non-controlling opinion holding a separate aspect
of the Meaningful Difference Test inadequate. Compare Apex II, 862 F.3d at 1331–34. In
summary, Stanley could have raised its argument before Commerce prior to the issuance of the
Beijing Tianhai opinion.
Stanley also suggested at Oral Argument that the pure question of law exception to
administrative exhaustion applies here, contending that whether the meaningful difference test
fulfills the requirements of 19 U.S.C. § 1677f-1 is an issue of statutory construction. However,
“[s]tatutory construction alone is not sufficient to resolve this case.” Consol. Bearings Co. v.
United States, 348 F.3d 997, 1003 (Fed. Cir. 2003). Rather, the question is whether the
methodology is justifiable, and to resolve that issue, a factual record needs to be developed. See
Court No. 14-00112 Page 27
id. (determining that the pure legal question exception could not apply when the court would have
to assess Commerce’s justifications for its practice); Mittal Steel Point Lisas, 548 F.3d at 1384(finding the pure question of law exception not applicable when argument relies on unique facts
of the case); Fuwei Films (Shandong) Co. v. United States, 35 CIT ___, ___, 791 F. Supp. 2d 1381,
1384–85 (2011) (concluding that the pure legal question exception could not apply when the
statute at issue did not speak to the required methodology and Commerce’s interpretation was
needed to fill the statutory gap).
“[A] litigant must diligently protect its rights in order to be entitled to relief.” JBF RAK,
790 F.3d at 1367 (quoting Mukand Int’l, Ltd. v. United States, 502 F.3d 1366, 1370 (Fed. Cir.
2007)). Because Stanley did not raise this issue during the administrative proceedings and
provides no sufficient reason for its failure to do so, the court declines to consider the merits of
Stanley’s total versus individual comparison argument.
b. Legislative history does not support Stanley’s arguments.
Stanley argues that Commerce’s application of the CDT runs counter to Congressional
intent as expressed in the SAA. Pl.’s Br. at 40–41. Specifically, Stanley argues that the SAA
instructs that the A-T methodology is to be applied “where targeted dumping may be occurring.”
Pl.’s Br. at 41 (quoting SAA at 843). To Stanley, this means that the A-T methodology should be
applied only where United States sales are less than fair value; by contrast, Stanley contends,
Commerce focuses only on significant price differences, regardless of whether those differences
result from sales being higher or lower than fair value. Pl.’s Br. at 41 (quoting IDM at 30 (“The
statutory language references prices that ‘differ’ and does not specify whether the prices differ by
being lower or higher than the comparison sales. . . . [Commerce] explained that higher priced
sales and lower priced sales do not operate independently; all sales are relevant to the analysis.”)).
Court No. 14-00112 Page 28
Thus, Stanley argues, the Final Results do not distinguish between sales that “pass” the CDT
because the weighted-average prices of the test groups are higher than the weighted-average price
of the comparison group, and sales that “pass” because the weighted-average prices of the test
groups are lower than the weighted-averages of the comparison group prices. Pl.’s Br. at 41–42.
This, Stanley claims, runs counter to “the SAA’s clear expression of congressional intent.” Id. at
42.
Stanley also points to the SAA’s statement that “in determining whether a pattern of
significant price difference exists, Commerce will proceed on a case-by-case basis because small
differences may be significant for one industry or one type of product but not for another.” Pl.’s
Br. at 44 (quoting SAA at 843). Stanley argues that Commerce has contravened this admonition
by self-initiating targeted dumping analyses and applying differential pricing according to the
same formula in every proceeding since Xanthan Gum. Pl.’s Br. at 44.
Stanley’s arguments do not persuade the court that the differential pricing analysis runs
counter to congressional intent. The statute provides only that Commerce must determine whether
a pattern of prices that “differ significantly among purchasers, regions, or periods of time” exists,
and does not specify whether Commerce may not consider prices that differ because they are
higher or lower. 19 U.S.C. § 1677f-1(d)(1)(B). The court is not persuaded that Stanley’s reading
of the SAA takes priority over Commerce’s chosen methodology. As an initial matter, the court
does not find that the SAA’s reference to “situations . . . where targeted dumping may be
occurring” necessarily confines any methodology implementing 19 U.S.C. § 1677f-1(d)(1)(B) to
an analysis of sales at less-than-fair-value. Pl.’s Br. at 41 (quoting SAA at 843). Stanley’s
interpretation is not found in the plain text of § 1677f-1(d)(1)(B) and the SAA. More generally,
as explored supra regarding the deference owed Commerce’s interpretation of the phrase “differ
Court No. 14-00112 Page 29
significantly,” Commerce is entitled to fill the statutory gap with a reasonable methodology and
accompanying explanation. Apex II, 862 F.3d at 1330 (citing Chevron, 467 U.S. at 843–44). Here,
Commerce explained in the IDM, inter alia, that “[b]y considering all sales, higher priced sales
and lower priced sales, [Commerce] is able to analyze an exporter’s pricing practice and to identify
whether there is a pattern of prices that differ significantly.” IDM at 30. Further, Commerce
explained on the record that “higher priced sales are equally capable as lower priced sales to create
a pattern of prices that differ significantly,” and that high priced sales offset lower priced sales and
thus “can mask dumping.” Id. The court is satisfied that Commerce’s methodology and
explanation thereof are reasonable and in accordance with the statute, particularly where Stanley
cannot identify statutory language commanding Commerce to conform to a stricter methodology
than allowed by 19 U.S.C. § 1677f-1(d)(1)(B)(i).
The court also is not persuaded that Commerce has acted contrarily to congressional intent
by applying differential pricing in a rote manner. Pl.’s Br. at 44. The court understands Commerce
to require that a respondent’s United States sales sequentially satisfy each of multiple tests in the
differential pricing analysis before determining that the application of the alternate A-T
methodology is appropriate. Further, Commerce stated that it reviews comments from interested
parties regarding its approach. IDM at 31–32; PDM at 16. Indeed, Commerce’s responses to
Stanley’s comments throughout the IDM, though contrary to Stanley’s positions, undermine the
argument that Commerce here applied its methodology in a rote manner. See generally IDM at
23–32. The court therefore cannot say that Commerce has acted in contravention of legislative
intent, nor discordantly with law, in its application of the differential pricing analysis to Stanley in
the underlying proceeding.
B. 19 C.F.R. § 351.414(f)(1), (3) do not apply to this proceeding under Mid Continent,
and Apex II.
Court No. 14-00112 Page 30
Stanley argues that the Final Results violate 19 C.F.R. § 351.414(f) (2008), 15 which the Federal
Circuit held in Mid Continent remained in force during the relevant Period of Review in this case.
Pl.’s Br. at 22; see generally Mid Continent, 846 F.3d 1364. The regulation, 19 C.F.R. §
351.414(f), provides, in relevant part:
(f) Targeted dumping--
(1) In general. Notwithstanding paragraph (c)(1) of this section
[Commerce] may apply the average-to-transaction method, as
described in paragraph (e) of this section, in an antidumping
investigation if:
(i) As determined through the use of, among other things,
standard and appropriate statistical techniques, there is
targeted dumping in the form of a pattern of export prices (or
constructed export prices) for comparable merchandise that
differ significantly among purchasers, regions, or periods of
time; and
(ii) [Commerce] determines that such differences cannot be
taken into account using the average-to-average method or
the transaction-to-transaction method and explains the basis
for that determination.
(2) Limitation of average-to-transaction method to targeted
dumping. Where the criteria for identifying targeted dumping under
paragraph (f)(1) of this section are satisfied, [Commerce] normally
will limit the application of the average-to-transaction method to
those sales that constitute targeted dumping under paragraph
(f)(1)(i) of this section.
(3) Allegations concerning targeted dumping. [Commerce]
normally will examine only targeted dumping described in an
allegation, filed within the time indicated in § 351.301(d)(5).
Allegations must include all supporting factual information, and an
explanation as to why the average-to-average or transaction-to-
transaction method could not take into account any alleged price
differences.
Specifically, Stanley argues that Commerce initiated a differential pricing analysis without
an allegation of targeted dumping, in contravention of § 351.414(f)(3). Pl.’s Br. at 22. Stanley,
15
All references to 19 C.F.R. § 351.414(f) are to the 2008 version, which the Federal Circuit
determined in Mid Continent, 846 F.3d 1364, was not validly repealed that year.
Court No. 14-00112 Page 31
asserting that the CDT is an inapt statistical method, also argues that the Final Results violate the
requirement of (f)(1)(i) that Commerce “use . . . standard and appropriate statistical techniques in
determining whether there is a pattern of prices that differ significantly.” Pl.’s Br. at 23.
1. Stanley possesses standing to challenge Commerce’s non-application of the
regulatory provisions.
The Government argues that Stanley lacks standing to challenge Commerce’s
interpretation of 19 C.F.R. § 351.414(f) because it has not averred any concrete and particularized
injury in fact fairly traceable to the challenged action. Def.’s Br. at 24 (quoting Mendoza v. Perez,
754 F.3d 1002, 1010 (D.C. Cir. 2014) (quoting Lexmark Int’l, Inc. v. Static Control Components,
Inc., 134 S.Ct. 1377, 1386 (2014))). The Government also argues that the regulation applies only
to investigations, and not to administrative reviews; therefore Stanley cannot trace its alleged
injury to that regulation’s non-application. Id. at 34–35.
The court is not persuaded by the Government’s standing argument, which presumes that
its contention, now before the court, that the regulation does not apply to administrative reviews
should prevail. The applicability of certain subsections of § 351.414(f) to the underlying
administrative reviews constitutes a live issue before the court.
When the suit is one challenging the legality of government action
or inaction, the nature and extent of facts that must be averred . . . in
order to establish standing depends considerably upon whether the
plaintiff is himself an object of the action (or forgone action) at
issue. If he is, there is ordinarily little question that the action or
inaction has caused him injury, and that a judgment preventing or
requiring the action will redress it.
Lujan v. Defenders of Wildlife, 504 U.S. 555, 561–62 (1992). Further, when challenging an action
allegedly taken without required procedural safeguards, the plaintiff need not “establish that
correcting the procedural violation would necessarily alter the final effect of the agency’s action
on the plaintiffs’ interest.” Mendoza, 754 F.3d at 1010 (citing Ctr. for Law & Educ. v. Dep’t of
Court No. 14-00112 Page 32
Educ., 396 F.3d 1152, 1160 (D.C. Cir. 2005)). Here, as has been noted, supra p.9 and n.11, Stanley
was a mandatory respondent in the challenged review, and thus possesses a legally protected
interest in a lawful calculation of its dumping margin. Stanley’s preferred interpretation of the
relevant regulatory provisions -- essentially, that they should apply to administrative reviews as
well as investigations -- would redress the alleged harm caused by their non-application to the
underlying proceeding. Stanley thus possesses standing to challenge Commerce’s interpretation
of 19 C.F.R. § 351.414(f).
2. The relevant regulatory provisions, 19 C.F.R. § 351.414(f)(1)(i) and (f)(3), do not
apply to the administrative review at issue.
The question is whether these provisions, see supra pp.29–30, which by their terms apply
to investigations but do not mention administrative reviews, are applicable to the administrative
review in this case. See 19 C.F.R. § 351.414(f). The Federal Circuit’s ruling in Apex II provides
this court with some guidance on the issue. In Apex II, the Federal Circuit considered whether
Commerce was obligated to explain why it would not follow the Limiting Regulation in the Final
Results of the seventh administrative review of the antidumping duty order on Certain Frozen
Warmwater Shrimp from India. Apex II, 862 F.3d at 1335–36; see Certain Frozen Warmwater
Shrimp from India, 78 Fed. Reg. 42,492 (Dep’t Commerce July 16, 2013). The court rejected
plaintiff respondent Apex’s argument that Commerce, by conducting its reviews according to the
investigations statute, 19 U.S.C. § 1677f-1(d)(1), “has now essentially eliminated any meaningful
distinctions between its targeted dumping methodology in [antidumping] reviews and
investigations.” Id. at 1335. The Federal Circuit reasoned that “Commerce did not imply that it
would assume all requirements and follow all regulations associated with investigations, merely
by adopting a single statutory scheme for reviews as well. And Apex cites no authority that
Commerce, in doing so, bound itself to follow the Limiting Rule.” Id. at 1336. The court also
Court No. 14-00112 Page 33
observed that “the Limiting Rule, § 351.414(f), was created at a time when the A-T methodology
was restricted for investigations but used as a matter of course for reviews.” Id. Finally, the
Federal Circuit saw “little reason to extend the Limiting Rule’s application to this case where Apex
offer[ed] no compelling rationale for doing so and where Commerce’s policies have clearly
changed over time.” Id.
Stanley argues that Apex II considers the applicability to administrative reviews of only 19
C.F.R. § 351.414(f)(2), and thus the Federal Circuit’s conclusions do not address those subsections
of § 351.414(f) -- specifically, (1)(i) and (3) -- that Stanley argues were contravened in this
proceeding. Pl.’s Suppl. Br. at 6. Stanley characterizes (f)(2) as “the Limiting Rule,” a designation
which does not incorporate the other subsections of (f). Id. Stanley argues that the Federal
Circuit’s definitive conclusion, that “the ‘Limiting Rule’ only applies to investigations, not
administrative reviews,” Apex II, 862 F.3d at 1336, therefore does not preclude Stanley’s instant
arguments regarding (f)(1)(i) and (3). Pl.’s Suppl. Br. at 6.
Stanley also argues that there is a “compelling rationale” to apply (f)(1)(i) and (3) to the
administrative review at issue here, in line with the Federal Circuit’s notation that it “s[aw] little
reason to extend the Limiting Rule‘s application to this case where Apex offers no compelling
rationale for doing so and where Commerce’s policies have changed over time.” Apex II, 862
F.3d at 1336. In essence, Stanley contends that the “compelling rationale” for applying (f)(3) to
this case is found in Commerce’s statement accompanying the promulgation of that subsection:
It is the Department’s view that normally any targeted dumping
examination should begin with domestic interested parties. It is the
domestic industry that possesses intimate knowledge of regional
markets, types of customers, and the effect of specific time periods
on pricing in the U.S. market in general. Without the assistance of
the domestic industry, the Department would be unable to focus
appropriately any analysis of targeted dumping. For example, the
Department would not know what regions may be targeted for a
Court No. 14-00112 Page 34
particular product, or what time periods are most significant and can
impact prices in the U.S. market.
Antidumping Duties; Countervailing Duties, Final Rule, 62 Fed. Reg. at 27,374. Stanley argues
that applying the “standard and appropriate statistical techniques” provision in (f)(1) “ensures that
Commerce’s analysis of price differences and patterns is reasonable, relevant, statistically valid,
and correctly calculated – the fundamental elements of a lawful determination.” Pl.’s Suppl. Br.
at 8.
The court finds that the provisions of 19 C.F.R. § 351.414(f) presented by Stanley do not
apply to administrative reviews. It bears repeating that “Commerce did not imply that it would
assume all requirements and follow all regulations associated with investigations, merely by
adopting a single statutory scheme for reviews as well.” Apex II, 862 F.3d at 1336. Stanley
presents no authority demonstrating that Commerce had assumed the obligation of applying 19
C.F.R. § 351.414(f) in administrative reviews.
Further, Stanley has not overcome the plain regulatory language indicating that its
proffered subsections apply to investigations. See 19 C.F.R. §§ 351.414(f)(1) (“[Commerce] may
apply the [A-T] method . . . in an antidumping investigation if . . .”), (3) (”[Commerce] normally
will examine only targeted dumping described in an allegation, filed within the time indicated in
§ 351.301(d)(5).”), 351.301(d)(5) (“In an antidumping investigation . . . ”); see Hudgens v.
McDonald, 823 F.3d 630, 638 (Fed. Cir. 2016) (“[A]n agency’s interpretation of its own regulation
controls, unless the interpretation is ‘plainly erroneous or inconsistent with the regulation.’”
(quoting Auer v. Robbins, 519 U.S. 452, 461 (1997))).
The court further finds unpersuasive Stanley’s “compelling rationale” arguments, even if
applicable. To the extent that the Federal Circuit created a “compelling rationale” standard to be
applied, Stanley, like the plaintiff in Apex II, has not offered a compelling rationale for extending
Court No. 14-00112 Page 35
the Limiting Rule’s application “where Commerce’s policies have clearly changed over time.”
Apex II, 862 F.3d at 1336. Stanley’s submitted rationales are essentially policy arguments lacking
the weight of binding authority. Pl.’s Suppl. Br. at 7–8. They do not provide grounds for this
court to rewrite Commerce’s regulation, or to displace Commerce’s application of that regulation
according to its terms. See Hudgens, 823 F.3d at 638 (quoting Auer, 519 U.S. at 461).
Accordingly, assuming the correctness of applying a “compelling rationale” standard,
Stanley has offered no such rationale that would move this court to extend to administrative
reviews the application of a regulation that by its terms, and under the Federal Circuit’s
construction, applies only to investigations.
CONCLUSION
For the foregoing reasons, it is hereby
ORDERED that Stanley’s motion for judgment on the agency record is denied; and it is
further
ORDERED that Commerce’s Final Results are sustained.
/s/ Gary S. Katzmann
Gary S. Katzmann, Judge
Dated:1RYHPEHU
New York, New York