Deacero S.A.P.I. De C v. v. United States , 2019 CIT 99 ( 2019 )

Slip Op. 19-99
UNITED STATES COURT OF INTERNATIONAL TRADE
DEACERO S.A.P.I. DE C.V. and DEACERO
USA, INC.,
Plaintiffs,
v.
Before: Claire R. Kelly, Judge
UNITED STATES,
Court No. 17-00183
Defendant,
and
NUCOR CORPORATION,
Defendant-Intervenor.
OPINION AND ORDER
[Remanding the U.S. Department of Commerce’s remand redetermination in the
administrative review of carbon and certain alloy steel wire rod from Mexico.]
Dated: August 1, 2019
Rosa S. Jeong and Irwin P. Altschuler, Greenberg Traurig, LLP, of Washington, DC, for
plaintiffs, Deacero S.A.P.I. de C.V. and Deacero USA, Inc.
Elizabeth Anne Speck, Senior Trial Counsel, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, of Washington, DC, for defendant. With her on the brief were
Tara K. Hogan, Assistant Director, Jeanne E. Davidson, Director, and Joseph H. Hunt,
Assistant Attorney General. Of Counsel on the brief was Emma Thomson Hunter,
Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S.
Department of Commerce, of Washington, DC.
Alan Hayden Price, Daniel Brian Pickard, and Derick G. Holt, Wiley Rein, LLP, of
Washington, DC, for defendant-intervenor, Nucor Corporation.
Court No. 17-00183 Page 2
Kelly, Judge: Before the court is the U.S. Department of Commerce’s
(“Commerce”) remand redetermination filed pursuant to the court’s order in Deacero
S.A.P.I. de C.V. v. United States, 42 CIT __, __, 353 F. Supp. 3d 1303, 1314–15 (2018)
(“Deacero I”). See Final Results of Redetermination Pursuant to Ct. Remand [in Deacero
I], Mar. 15, 2019, ECF No. 58-1 (“Remand Results”).
In Deacero I, the court explained that Commerce failed to corroborate the 40.52%
petition rate it assigned to respondent as total facts available with an adverse inference
in the 2014–2015 administrative review of the antidumping duty (“ADD”) order covering
carbon and certain alloy steel wire rod from Mexico and remanded the decision to
Commerce for further explanation or reconsideration. See Deacero I, 42 CIT at __, 353
F. Supp. 3d at 1312–14; see also Carbon and Certain Alloy Steel Wire Rod From Mexico,
82 Fed. Reg. 23,190 (Dep’t Commerce May 22, 2017) (final results of [ADD] admin.
review and final determination of no shipments; 2014–2015) (“Final Results”) and
accompanying Decision Mem. for [the] Final Results of 2014/15 [ADD] Admin. Review:
Carbon and Certain Alloy Steel Wire Rod from Mexico, A-201-830, (May 15, 2017), ECF
No. 21-5 (“Final Decision Memo”); Carbon and Certain Alloy Steel Wire Rod from Brazil,
Indonesia, Mexico, Moldova, Trinidad and Tobago, and Ukraine, 67 Fed. Reg. 65,945,
65,947 (Dep’t Commerce Oct. 29, 2002) (notice of [ADD] orders) (“ADD Order”).
Commerce explains that evidence it placed on the record on remand demonstrates
the probative value of the assigned rate and satisfies the statutory corroboration
Court No. 17-00183 Page 3
requirement. See Remand Results at 4–7; see also 19 U.S.C. § 1677e(c). 1 For the
following reasons, Commerce’s Remand Results do not comply with the court’s remand
order in Deacero I and its decision to apply the 40.52% AFA-rate to Deacero continues
to be unsupported by substantial evidence.
BACKGROUND
The court assumes familiarity with the facts of this case as discussed in the prior
opinion, see Deacero I, 42 CIT at __, 353 F. Supp. 3d at 1306, and here restates the facts
relevant to the court’s review of the Remand Results. Commerce’s administrative review
covered subject merchandise entered during the period of October 1, 2014, through
September 30, 2015, and respondent Deacero S.A.P.I de C.V. (“Deacero” or
“respondent”). See Initiation of Antidumping and Countervailing Duty Admin. Reviews,
80 Fed. Reg. 75,657, 75,658 (Dep’t Commerce Dec. 3, 2015). Pertinent here, in the final
determination, Commerce used total facts available with an adverse inference (“AFA”)2
to calculate Deacero’s final dumping margin, explaining that the revised section D cost
1
Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of Title 19
of the U.S. Code, 2012 edition. Citations to 19 U.S.C. § 1677e, however, are to the unofficial U.S.
Code Annotated 2018 edition, which reflects the amendments made to 19 U.S.C. § 1677e by the
Trade Preferences Extension Act of 2015 (“TPEA”). See Trade Preferences Extension Act of
2015, Pub. L. No. 114-27, 129 Stat. 362 (2015).
2
Parties and Commerce sometimes use the shorthand “adverse facts available” or “AFA” to refer
to Commerce’s reliance on facts otherwise available with an adverse inference to reach a final
determination. However, AFA encompasses a two-part inquiry pursuant to which Commerce
must first identify why it needs to rely on facts otherwise available, and second, explain how a
party failed to cooperate to the best of its ability as to warrant the use of an adverse inference
when “selecting among the facts otherwise available.” See 19 U.S.C. § 1677e(a)–(b). The phrase
“total adverse inferences” or “total AFA” encompasses a series of steps that Commerce takes to
reach the conclusion that all of a party’s reported information is unreliable or unusable and that
as a result of a party’s failure to cooperate to the best of its ability, it must use an adverse inference
in selecting among the facts otherwise available.
Court No. 17-00183 Page 4
dataset Deacero submitted following the preliminary determination was unreliable and
impeded the review process. See Final Decision Memo at 4–8, 12; see generally
Deacero’s Resp. Suppl. Sections A–E at Exs. Supp. D-6–7, PD 52, bar code 3490088-
04 (July 21, 2016). 3 Pursuant to 19 U.S.C. § 1677e(b) and in accordance with its practice,
Commerce chose the highest margin alleged in the 2001 petition—40.52%—as
Deacero’s final weighted-average dumping margin. See Final Decision Memo at 8–9 &
n.33; Final Results, 82 Fed. Reg. at 23,190.
In Deacero I, the court sustained Commerce’s decision to apply total-AFA to
calculate Deacero’s final weighted-average dumping margin. 4 See Deacero I, 42 CIT at
__, 353 F. Supp. 3d at 1307–12, 1314. The court, however, determined that Commerce
failed to corroborate the 40.52% AFA-rate it assigned to Deacero because it did not place
any information demonstrating the rate’s probative value, as required under 19 U.S.C. §
1677e(c)(1) and 19 C.F.R. § 351.308(d) (2015). 5 See id. at __, 353 F. Supp. 3d at 1314–
15. As a result, the court remanded the corroboration issue for further explanation or
reconsideration. Id.
3
On September 5, 2017, Defendant filed indices to the public and confidential administrative
records underlying Commerce’s final determination. These indices are located on the docket at
ECF Nos. 21-2–3. On April 1, 2019, Defendant filed indices to the public and confidential
administrative records underlying Commerce’s remand redetermination. These indices are
located on the docket at ECF Nos. 61-2–3. Citations to administrative record documents in this
opinion are to numbers Commerce assigned to such documents in the indices.
4
Relatedly, the court did not reach challenges to Commerce’s (1) decision to calculate a U.S.
affiliate’s general and administrative expenses without accounting for further manufacturing costs
incurred, (2) failure to address certain clerical errors made in the preliminary determination, and
(3) use of zeroing to calculate Deacero’s dumping margin, because these issues became moot
as a result of the court sustaining Commerce’s decision to rely on AFA to calculate Deacero’s
rate. See Deacero I, 42 CIT at __, 353 F. Supp. 3d at 1314.
5
Further citations to Title 19 of the Code of Federal Regulations are to the 2015 edition.
Court No. 17-00183 Page 5
Commerce filed the Remand Results on March 15, 2019. On remand, Commerce
placed copies of the Federal Register notice announcing the initiation of an ADD
investigation into carbon and certain alloy steel wire rod from Mexico and the public
version of the Wire Rod from Mexico Initiation Checklist on the record. See Remand
Results at 6; Placement Wire Rod from Mexico Less Than Fair Value (LTFV) Notice of
Initiation & Accompanying Public Version Wire Rod from Mexico Initiation Checklist on
R., PRR 1, bar code 3790294-01 (Feb. 6, 2019) (“Initiation Notice” 6 and “Initiation
Checklist”). Commerce continues to apply the 40.52% AFA-rate to Deacero and explains
that the documents it placed on the record demonstrate that the rate was corroborated
using independent sources during the pre-initiation analysis. See Remand Results at 6–
7, 12–16. Deacero S.A.P.I. de C.V. and Deacero USA, Inc. (collectively “Plaintiffs”) argue
that Commerce did not satisfy the statutory corroboration requirement because it did not
show that the 40.52% AFA-rate has probative value and is reliable and relevant. See
[Pls.’] Comments Opp’n [Remand Results] at 6–14, May 6, 2019, ECF No. 64 (“Pls.’
Comments”). Plaintiffs also contend that it would be “futile” for this court to remand the
corroboration issue to Commerce for reconsideration and request this court to instruct
Commerce to choose Deacero’s weighted-average dumping margin from among the
rates calculated for Deacero in the investigation or any of the prior administrative reviews
of the ADD Order. Id. at 14–17. Defendant-Intervenor, Nucor Corporation (“Nucor”) filed
6
The Federal Register notice announcing the initiation is also available at Carbon and Certain
Alloy Steel Wire Rod From Brazil, Canada, Egypt, Germany, Indonesia, Mexico, Moldova, South
Africa, Trinidad and Tobago, Ukraine, and Venezuela, 66 Fed. Reg. 50,164 (Dep’t Commerce
Oct. 2, 2001) (notice of initiation of [ADD] investigations).
Court No. 17-00183 Page 6
comments supporting the agency’s position. See Def.-Intervenor [Nucor]’s Comments
[Remand Results] at 4–10, May 7, 2019, ECF No. 66 (“Nucor’s Comments”).
JURISDICTION AND STANDARD OF REVIEW
The Court has jurisdiction pursuant to section 516A(a)(2)(B)(iii) of the Tariff Act of
1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) and 28 U.S.C. § 1581(c) (2012).
Commerce’s antidumping determinations must be in accordance with law and supported
by substantial evidence. 19 U.S.C. § 1516a(b)(1)(B)(i). “The results of a redetermination
pursuant to court remand are also reviewed ‘for compliance with the court’s remand
order.’” Xinjiamei Furniture (Zhangzhou) Co. v. United States, 38 CIT __, __, 968 F.
Supp. 2d 1255, 1259 (2014) (quoting Nakornthai Strip Mill Public Co. v. United States, 32
CIT 1272, 1274, 587 F. Supp. 2d 1303, 1306 (2008)).
DISCUSSION
Plaintiffs argue that Commerce’s corroboration analysis does not rely upon
independent sources and fails to demonstrate that the petition rate is probative, relevant,
and reliable. Pls.’ Comments at 6–14. Plaintiffs also argue that the determination on
remand evidences “that [Commerce] is incapable of corroborating its chosen AFA rate”
and ask the court to issue a remand order with specific instructions that Commerce
assign, as Deacero’s rate, a rate calculated in any prior segment of this proceeding. Id.at 14–17. Defendant responds that Commerce verified the rate’s reliability, relevancy,
and probative value during the pre-initiation analysis, that the independent sources
Commerce relied upon are reflected in the Initiation Notice and Initiation Checklist, and
that respondent should not be allowed to choose its own rate via this court’s remand
Court No. 17-00183 Page 7
instructions. Def.’s Resp. to Comments [Remand Results] at 8–15, June 20, 2019, ECF
No. 67 (“Def.’s Comments”). For the following reasons, Commerce’s Remand Results do
not comply with the court’s remand order, are unsupported by substantial evidence, and
are remanded for further explanation or reconsideration consistent with this opinion.
Whenever Commerce relies on information not “obtained in the course of an
investigation or review,” such as allegations in a petition, it is relying on secondary
information and is required, “to the extent practicable, [to] corroborate that information
from independent sources that are reasonably at [its] disposal.” 19 U.S.C. § 1677e(c)(1); 7
see also Uruguay Round Agreements Act, Statement of Administrative Action, H.R. Doc.
No. 103-465, vol. 1, at 870 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4199 (“SAA”)
(providing the same); 19 C.F.R. § 351.308(c)(1)(i) (listing, as a source of “[s]econdary
information,” information derived from “[t]he petition”). Commerce corroborates
secondary information by “examin[ing] whether the secondary information to be used has
probative value.” 19 C.F.R. § 351.308(d); see also SAA at 870, 1994 U.S.C.C.A.N. at
4199 (tying corroboration to whether the secondary information has probative value).
Examples of independent sources include “published price lists, official import
statistics and customs data, and information obtained from interested parties during the
instant investigation or review.” 19 C.F.R. § 351.308(d); SAA at 870, 1994 U.S.C.C.A.N.
at 4199 (listing the same sources). The independent nature of a source depends on who
7
Since the passage of the TPEA, Commerce is no longer required to link the selected adverse
rate to the respondent’s commercial reality. 19 U.S.C. § 1677e(d)(3)(B). Commerce, however,
is still required to demonstrate, “to the extent practicable,” the probative value of the secondary
information it is using. 19 C.F.R. § 351.308(d).
Court No. 17-00183 Page 8
originates the information provided and not by who files the information. KYD, Inc. v.
United States, 607 F.3d 760, 765 (Fed. Cir. 2010) (concluding that import statistics, price
quotations, and affidavits from officials in a third-party company, attached to an
antidumping petition, were independent sources).
The court must base its review of Commerce’s corroboration upon the record of
the proceeding, which consists of
(i) a copy of all information presented to or obtained by the Secretary, the
administering authority, or the Commission during the course of the
administrative proceeding, including all governmental memoranda
pertaining to the case and the record of ex parte meetings required to be
kept by section 1677f(a)(3) of this title; and
(ii) a copy of the determination, all transcripts or records of conferences or
hearings, and all notices published in the Federal Register.
19 U.S.C. § 1516a(b)(2)(A)(i)–(ii). Commerce’s regulations require it to maintain “the
official record of each segment of the proceeding[ ]” that will form the record reviewed by
this Court. 19 C.F.R. § 351.104(a)(1). The official record will contain,
all factual information, written argument, or other material developed by,
presented to, or obtained by the Secretary during the course of a
proceeding that pertains to the proceeding. . . . [and] government
memoranda pertaining to the proceeding, memoranda of ex parte meetings,
determinations, notices published in the Federal Register, and transcripts
of hearings. The official record will contain material that is public, business
proprietary, privileged, and classified.
Id.Here, and in line with its practice, Commerce selected the highest margin alleged
in the petition as Deacero’s AFA-rate. See Final Decision Memo at 8 (citations omitted).
In Deacero I, the court determined Commerce did not corroborate Deacero’s rate
because it failed to place any information demonstrating the rate’s probative value, as
Court No. 17-00183 Page 9
required under 19 U.S.C. § 1677e(c)(1) and 19 C.F.R. § 351.308(d), on the record. See
Deacero I, 42 CIT at __, 353 F. Supp. 3d at 1313–14. Specifically, the court stated that
the statutory requirement for Commerce to corroborate the assigned rate “to the extent
practicable,” 19 U.S.C. § 1677e(c)(1), “at a bare minimum, requires Commerce to
produce the documents it relied upon to analyze why the chosen rate is probative.” Id. at
__, 353 F. Supp. 3d at 1314.
In response, on remand, Commerce supplemented the administrative record with
a copy of the Initiation Notice and Initiation Checklist. See Remand Results at 6.
Commerce, however, did not rely upon the Initiation Notice and Initiation Checklist to
corroborate Deacero’s rate. The Initiation Notice and Initiation Checklist present the
conclusions Commerce reached and describe the evidence available to Commerce at the
time of the pre-initiation analysis. The Initiation Checklist, in addition to redacting all
confidential information, merely marks off documents supportive of initiating an
investigation into the subject merchandise and is evidence of the allegations that the
petitioners successfully made. See Initiation Checklist at 13–16.
Indeed, Commerce’s explanation reveals that it merely drew on the conclusions
stated in the Initiation Notice and Initiation Checklist to conclude that the 40.52% AFA-
rate is probative and is reliable and relevant. Commerce explains that during the pre-
initiation stage it looked at various independent sources, provided either in the petition
itself or solicited through supplemental requests, and that these documents show the
40.52% AFA-rate’s probative value. See Remand Results at 6–7. Specifically, it explains
that the rate is probative because
Court No. 17-00183 Page 10
[d]uring our pre-initiation analysis, we examined the information used as the
basis of export price (EP) (i.e., affidavits of U.S. prices offerings for a
Mexican wire rod manufacturer), and normal value (NV), (i.e., constructed
value calculated based on U.S. producers’ cost of producing carbon and
steel wire rod, adjusted for known differences between the Mexican and
U.S. markets), in the Petition, and the calculations used to derive the
alleged margins.
Id. at 6 (citing Initiation Checklist at 13, 26). Yet, none of the documents Commerce
references to support its calculations as to export price and normal value have been
placed on the record. 8 Further, Commerce contends that because it examined the
adequacy and accuracy of the evidence resulting in the 40.52% rate in its pre-initiation
analysis, absent evidence to the contrary, the rate continues to be reliable as an AFA
rate. Id. at 7. The court cannot assess the reasonableness of the preceding statement
because the documents which Commerce relied upon in making it are not on the record.
Relatedly, Commerce’s explanation that because it corroborated the 40.52% AFA-
rate during the pre-initiation stage, the rate continues to be corroborated now, Remand
Results at 6–7, 13–14, is conclusory. 9 If the obligation to demonstrate the probative value
8
The statutory framework governing initiation requires petitioner(s) to allege all elements
necessary for the imposition of ADDs and to support such allegations with information reasonably
at its disposal. 19 U.S.C. §§ 1673a(b)(1), 1673. Commerce, however, is not required to confirm
the probative nature of the information underlying the petition at the initiation stage. See 19 U.S.C.
§ 1673a(b)(1); 19 U.S.C. § 1673a(c)(1) (explaining that the agency will examine the adequacy
and accuracy of the evidence in the petition to determine whether elements necessary to impose
a duty were met); see also SAA at 870, 1994 U.S.C.C.A.N. at 4199 (recognizing that secondary
information derived from the petition is not de facto reliable because “it is based on unverified
allegations[.]”). Commerce, therefore, cannot now claim that it corroborated the 40.52% rate,
applied as AFA to respondent here, by pointing to the conclusions of the pre-initiation analysis,
but not the independent sources upon which the rate’s probative value is based.
9
Further, to the extent that Commerce and Defendant-Intervenor interpret the court’s remand
order as simply requiring Commerce to produce the documents cited in the final determination’s
(footnote continued)
Court No. 17-00183 Page 11
of a rate is to have any meaning, Commerce must do more than refer to conclusions of
calculations it carried out previously. Commerce has not complied with the court’s
instructions that it “produce the documents it relied upon to analyze why the chosen rate
is probative[,]” 10 Deacero I, 42 CIT at __, 353 F. Supp. 3d at 1314, and its corroboration
analysis continues to be unsupported by substantial evidence.
Defendant argues that it is not necessary for Commerce to place evidence
underlying the Initiation Notice and Initiation Checklist on the administrative record
because Commerce’s remand redetermination does not directly cite to the supporting
evidence. Def.’s Comments at 9 n.3. The question is not what Commerce cited in the
Remand Results, but what it relied upon to analyze whether the rate was probative,
reliable, and relevant. Defendant also claims that Commerce corroborated the 40.52%
AFA-rate using independent sources at its disposal. Id. at 12–13. The independent
sources may be embedded in the pre-initiation analysis; however, the pre-initiation
corroboration analysis, see Remand Results at 5–6; Nucor’s Comments at 4–5; see also Final
Decision Memo at 8–9, both read the Deacero I decision too narrowly. See generally Deacero I,
42 CIT at __, 353 F. Supp. 3d at 1312–14. Deacero I did not rule that Commerce met the statutory
corroboration requirement and that, on remand, Commerce simply needed to produce documents
cited to in the final determination. Id. at __, 353 F. Supp. 3d at 1314. In fact, the court clearly
stated that “Commerce did not corroborate the AFA rate and therefore, its decision to rely on the
petition rate is remanded for further explanation or reconsideration consistent with this opinion.”
Id.
10
Although petitioner Nucor placed excerpts of the public version of the petition on the record,
along with several underlying exhibits, [Nucor’s] Draft Comments on Remand, PRR 4, bar code
3793273-01 (Feb. 13, 2019), nowhere in the Remand Results does Commerce identify which
exhibits pertain to its corroboration analysis.
Court No. 17-00183 Page 12
analysis itself is not an independent source. 11 Defendant cannot claim that Commerce
used independent sources to corroborate the 40.52% AFA-rate, as applied to Deacero,
Def.’s Comments at 10–13, without identifying which independent sources Commerce
relied upon, placing all such sources on the record, and explaining how such sources
corroborate the AFA rate.
Finally, in its second remand order, the court will not, as Plaintiffs request, provide
explicit instructions to Commerce to abandon its chosen 40.52% AFA-rate and instead,
select an AFA-rate from among the rates previously calculated for Deacero in a prior
segment of this proceeding. Pls.’ Comments at 14–17. The facts and circumstances of
this case do not warrant such a response. Commerce has not shown that it is unwilling
or unable to corroborate the 40.52% AFA-rate or comply with the court’s orders.
CONCLUSION
For the foregoing reasons, it is
ORDERED that Commerce’s decision to rely on the 40.52% AFA-rate is remanded
for further explanation or reconsideration consistent with this opinion; and it is further
ORDERED that Commerce shall file its remand redetermination with the court
within 90 days of this date; and it is further
11
To the extent that Plaintiffs challenge the independence of sources Commerce relied upon in
its pre-initiation analysis because of who submitted information and when, see Pls.’ Comments at
10–11, the challenge fails. As explained above, independence is a measure of who generates
the information contained in the document, not who files it and during which proceeding.
Therefore, a document filed by a domestic party and attached to a petition may constitute an
independent source. However, because Commerce did not produce the sources underlying the
pre-initiation analysis, the court cannot opine on whether such sources are independent.
Court No. 17-00183 Page 13
ORDERED that the parties shall have 30 days thereafter to file comments on the
remand redetermination; and it is further
ORDERED that the parties shall have 30 days thereafter to file their replies to
comments on the remand redetermination.
/s/ Claire R. Kelly
Claire R. Kelly, Judge
Dated: August 1, 2019
New York, New York