Raoping Xingyu Foods Co. v. United States , 28 Ct. Int'l Trade 1438 ( 2004 )

Slip Op. 04 - 111
UNITED STATES COURT OF INTERNATIONAL TRADE
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RAOPING XINGYU FOODS CO., LTD., :
Plaintiff, :
v. :
UNITED STATES, : Court No. 02-00550
Defendant, :
-and-
:
COALITION FOR FAIR PRESERVED MUSHROOM
TRADE, :
Intervenor-Defendant. :
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Memorandum
[Plaintiff's motion for judgment on the
agency record denied; action dismissed.]
Decided: August 31, 2004
DeKieffer & Horgan (John J. Kenkel and J. Kevin Horgan) and
Lee & Xiao (Yingchao Xiao) for the plaintiff.
Peter D. Keisler, Assistant Attorney General; David M. Cohen,
Director, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice (A. David Lafer); and Office of Chief Counsel
for Import Administration, U.S. Department of Commerce (Peter J.S.
Kaldes), of counsel, for the defendant.
Collier Shannon Scott, PLLC (Michael J. Coursey and Adam H.
Gordon) for the intervenor-defendant.
AQUILINO, Judge: According to the Trade Agreements Act
of 1979, as amended, in determining whether foreign merchandise is
being, or is likely to be, sold in the United States at less than
fair value, a comparison shall be made between the export (or con-
Court No. 02-00550 Page 2
structed export) price and "normal value." 19 U.S.C. §1677b(a).
And when such merchandise is produced in a nonmarket-economy
country, the act authorizes the International Trade Administration,
U.S. Department of Commerce ("ITA") to
determine the normal value of the subject merchandise on
the basis of the value of the factors of production
utilized in producing the merchandise . . .. [T]he valu-
ation of the factors of production shall be based on the
best available information regarding the values of such
factors in a market economy country or countries consid-
ered to be appropriate by [it].
19 U.S.C. §1677b(c)(1). The list of those factors in the statute
includes "amounts of energy and other utilities consumed". 19
U.S.C. §1677b(c)(3)(C). And the act further provides:
(4) Valuation of factors of production
The [ITA], in valuing factors of production under
paragraph (1), shall utilize, to the extent possible, the
prices or costs of factors of production in one or more
market economy countries that are--
(A) at a level of economic development
comparable to that of the nonmarket economy
country, and
(B) significant producers of comparable
merchandise.
19 U.S.C. §1677b(c)(4).
I
The complaint filed in this action alleges that the
above-named plaintiff is a privately-held company organized under
Court No. 02-00550 Page 3
the laws of the People's Republic of China ("PRC"), which country
is still considered to have a nonmarket economy. See, e.g.,
Coalition for the Preservation of American Brake Drum & Rotor
Aftermarket Mfrs. v. United States, 28 CIT , 318 F.Supp.2d 1305(2004). Certain mushrooms produced and preserved there and export-
ed to the United States have become subject to an ITA antidumping-
duty order published at 64 Fed.Reg. 8,308 (Feb. 19, 1999). The
petitioner for that relief, the above-encaptioned intervenor-
defendant herein, requested an agency administrative review of
exports of such merchandise subject to that order emanating from
some 28 named PRC enterprises, including the plaintiff company now
at bar.
That process resulted in a weighted-average dumping
margin for it of 161.57 percent for the period of review ("POR")
per the ITA's Certain Preserved Mushrooms From the P[RC]: Final
Results of Third New Shipper Review and Final Results and Partial
Rescission of Second Antidumping Duty Administrative Review, 67
Fed.Reg. 46,173, 46,175 (July 12, 2002). The plaintiff seeks
relief from this determination via a motion for judgment upon the
record compiled by the agency in connection therewith.
The court's jurisdiction to hear and decide this motion
that has been proffered pursuant to USCIT Rule 56.2 is based upon
28 U.S.C. §§ 1581(c), 2631(c).
Court No. 02-00550 Page 4
A
The sum and substance of plaintiff's complaint is that
the ITA
used a surrogate value for the wrong type of fuel in
calculating the dumping margin for Raoping. Raoping
argued and submitted supporting data for Commerce to use
a value for the actual type of fuel it uses, namely
"heavy" fuel oil. Rather, Commerce decided to use a
value for "furnace oil," a different product. Such an
apples-to-oranges comparison is unsupported by substan-
tial evidence on the record and otherwise not in accord-
ance with law.
Count I, para. 13. Its motion takes the position that the other-
wise-not-in-accordance-with-law element of the court's standard of
review per 19 U.S.C. §1516a(b)(1)(B)(i) governs relief in this
matter in that the "use of a value for a factor of production not
utilized by Raoping Xingyu is unlawful", to borrow the words (but
not the printed emphasis) of its statement of the sole issue,
plaintiff's memorandum, page 1.
Of course, counsel must recognize that the resolution of
an issue of law often depends on the underlying facts. Here, they
include ITA issuance to Raoping Xingyu of a dumping questionnaire
on or about March 30, 2001, section D of which, pursuant to 19
U.S.C. §1677b(c)(1), supra, was concerned with the company's
factors of production. Part IIA thereof, for example, requested a
"description of . . . [it]s productional process for the merchan-
dise under consideration" to include:
Court No. 02-00550 Page 5
. . . 5. . . . all inputs used to produce the merchan-
dise . . ., including specific types of raw materials,
labor, energy, subcontractor services, research and
development, etc.
Boldface in original. The court has reviewed in camera Raoping
Xingyu's initial response 1 to that part of the agency's question-
naire and found reference to many such inputs, including, for
example, electricity2, water3, and coal4, but no reference to the
input, liquid fuel, still at issue. A subsequent response on be-
half of the company and "its supplier Raoping Yucan Canned Foods
Factory . . . submit[ted] minor corrections to Raoping Yucan's
factors of production data."5 Among other things, that submission
refers to "industrial heavy oil"6.
That submission was followed by an ITA letter to company
counsel, apprising them of the agency's "first resort to the use of
publicly available published information from surrogate countries"
and offering an "opportunity to submit any such information which
they believe the Department should consider when valuing the
factors of production". Defendant's Memorandum, Appendix 3, p. 1.
1
Defendant-Intervenor's [Confidential] Response Brief,
Appendix 3.
2
See id., pp. D-17 to D-18.
3
See id., p. D-18.
4
See id., pp. D-18 to D-19.
5
Ibid., Appendix 4, first page.
6
See, e.g., id., fifth page.
Court No. 02-00550 Page 6
Counsel were thereafter admonished by the ITA for "deficiencies,
omissions and areas where further clarification is needed"7 pur-
portedly found in the Raoping Xingyu response(s) to its question-
naire. Whatever the precise nature thereof, the court has reviewed
the company's response8 to that agency letter dated October 3, 2001
and its responses9 to supplemental ITA questionnaires10. The re-
sponses dated January 11, 2002 and May 10, 2002 each have line
items labelled "Heavy Oil". The January 11 submission explains
that, once washed and then sliced, Raoping's mushrooms are blanched
in a stainless steel tank heated by steam produced by a boiler,
which burns "heavy oil". Plaintiff's [Confidential] Memorandum,
Appendix 4, eighth page, para. 3.
The ITA's Preliminary Results of its administrative re-
view, which were published at 67 Fed.Reg. 10,128 et seq. (March 6,
2002), stated, in pertinent part, that, to
value furnace oil, we used price data contained in
Hindustan Lever Limited's . . . 1999-2000 financial
report because no other data was available from the other
financial reports on the record.
67 Fed.Reg. at 10,132, col. 2. The reference to that firm in India
was the result of the agency's reaffirmance of its position that
7
Defendant's Memorandum, Appendix 5.
8
Defendant-Intervenor's [Confidential] Response Brief, Ap-
pendix 5.
9
Id., Appendix 14; Plaintiff's [Confidential] Memorandum, Ap-
pendixes 4, 5.
10
Defendant's Memorandum, Appendixes 7, 10.
Court No. 02-00550 Page 7
the PRC continue to be treated as a nonmarket-economy country11 and
its determination that
India is among the countries comparable to the PRC in
terms of overall economic development . . .. In addition,
based on publicly available information placed on the
record, India is a significant producer of the subject
merchandise. Accordingly, we considered India the pri-
mary surrogate country for purposes of valuing the fac-
tors of production because it meets the Department's
criteria for surrogate country selection.
Id. at 10,131, col. 3.
This selection precipitated the filing of a case brief
with the ITA on behalf of Raoping, to wit:
The furnace oil that Hindustan Lever used is of
different quality from the heavy fuel (which was trans-
lated literally into "heavy oil" in Raoping's question-
naire response) that Raoping used for its canned mushroom
production during the POR. First, the huge difference
between the prices of Hindustan Lever's and Raoping's
fuel indicates that the qualities of the two fuels are
different. We understand that as in a non-market econ-
omy, Raoping's fuel price cannot be used for such a
comparison. However, the heavy fuel price that the
Department used for China in a different proceeding is
just a fraction of that of Hindustan Lever's furnace oil.
. . . [T]he only heavy fuel price . . . used was in the
Persulfates case (A-570-847), which is $0.12337 per
kilogram. In the current review the furnace oil that the
Department used is USD 0.45 per kilogram, 3.6 times of
that in the Persulfates case, and it is even more ex-
pensive than the diesel oil which is a purer and better
quality fuel than heavy fuel. . . . The dramatic dif-
ference of the prices indicates that the two fuels are of
different quality. The heavy fuel that Raoping used is
the last residual of oil refining process and it was so
cheap that Raoping actually reduced its production cost
by using it. . . . Raoping's boiler is also specially
designed to use cheap fuel. While we have no information
11
See 67 Fed.Reg. at 10,131, col. 3.
Court No. 02-00550 Page 8
in the record regarding how and for what products . . .
Hindustan Lever used the furnace oil, we know that canned
mushroom is a small portion of Hindustan Lever's produc-
tion, and it is very likely that Hindustan used the fuel
in the production of the products that require a higher
quality oil. Even [if] Hindustan Lever uses the furnace
oil for its canned mushroom production, it may be of a
higher quality and more efficient oil than that of Rao-
ping's. Before we know that the two fuels are of similar
quality, using . . . Hindustan Lever's oil price to
calculate Raoping's cheap heavy fuel cost is not proper.
For these reasons, we urge the Department to find a sur-
rogate price of a fuel that is close to what Raoping used
during the POR, or continue its past practice to use the
heavy fuel price in the Persulfates case with adjust-
ments.
Plaintiff's Memorandum, Appendix 6, third-fourth pages (citations
omitted). This plea was rejected by the ITA in its Issues and
Decision Memorandum as follows:
. . . First, we find that the price of Hindustan's fi-
nancial report is more contemporaneous to the POR than
the price from Energy, Prices and Taxes. In addition,
after examining information contained in Hindustan's
financial report, we find no basis which supports Raoping
Xingyu's contention that the furnace oil Hindustan uses
is not comparable to the furnace oil Raoping Xingyu uses
in its production process. The mere fact that there is a
difference in the price of furnace oil contained in
Hindustan's financial report and in Energy, Prices and
Taxes does not necessarily indicate that there is an
issue with regard to the quality of the furnace oil
contained in either resource, especially when one
recognizes that the price from Energy, Prices and Taxes
is at least four years older than the price from Hin-
dustan's financial report. Absent any supporting docu-
mentation or resources, we find that we cannot agree with
Raoping Xingyu's claim that it uses furnace oil which is
vastly different from that used by Hindustan. Thus, we
are continuing to value this input using data from
Hindustan's financial report.
Id., Appendix 3, pp. 6-7. The agency's subsequently-published Final
Results that are now before the court adopted this reasoning. See
67 Fed.Reg. at 46,175, col. 1.
Court No. 02-00550 Page 9
B
That adoption, and that of defendant's counsel in their
memorandum, pages 9-10, seem somewhat incongruous. If the court's
understanding is correct that Energy Prices & Taxes is a continu-
ing, quarterly publication of statistics by the Organisation for
Economic Cooperation and Development's International Energy Agency
("IEA"), then Hindustan Lever's past fuel prices are not "more con-
temporaneous to the POR than the price from Energy, Prices and
Taxes." Ibid. Indeed, independent of the IEA, the U.S. government
is or should be awash in oil data gathered and published by its own
Energy Information Administration.
Be that as it may, the ongoing, world-wide phenomenon
that is the flighty pricing of petroleum in all of its combinations
and permutations has made contemporaneity a most-fleeting element
of any related equation. Spot price is what counts. In this
matter, however, as the court reads the record, the plaintiff
failed to proffer any price paid for, or understood-grade of, its
fuel oil.12 Belatedly, it pleaded for reference, as quoted above,
to an oil factor listed in the ITA's Index of Factor Values for Use
12
Its counsel concede the timely "opportunity to submit any
such information which they believe the [ITA] should consider when
valuing the factors of production". Plaintiff's Memorandum, p. 10,
quoting Appendix 8 thereto, p. 1. Cf. Tianjin Machinery Import &
Export Corp. v. United States, 16 CIT 931, 936, 806 F.Supp. 1008,
1015 (1992)("the burden of creating an adequate record lies with
respondents and not with Commerce"), citing Chinsung Indus. Co. v.
United States, 13 CIT 103, 705 F.Supp. 598 (1989).
Court No. 02-00550 Page 10
in Antidumping Duty Investigations Involving Products from the
P[RC]: Memorandum from Richard Moreland to All Reviewers (April
1997). Cf. Plaintiff's Memorandum, Appendix 6, Exhibit 1, p. 2.
While that factor may well have been of moment during the period
indicated, October 1994 to March 1995, to require the ITA now to
resort thereto would reduce the requirement of 19 U.S.C.
§1677b(c)(1) of "the best available information regarding the
values of such factors" to a degree certainly not contemplated by
Congress or countenanced by the courts. Given the record, such as
it is herein, this court cannot find that the Hindustan Lever data
are not the best available, nor can this court conclude that the
agency's reliance thereon was not in accordance with the law
recited hereinabove.
II
In view of the foregoing, plaintiff's motion for judgment
upon the agency record must be denied and this action dismissed.
Judgment will enter accordingly.
Decided: New York, New York
August 31, 2004
Thomas J. Aquilino, Jr.
Judge