Mid Continent Nail Corp. v. United States , 113 F. Supp. 3d 1318 ( 2015 )

Slip Op. 15-122
UNITED STATES COURT OF INTERNATIONAL TRADE
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MID CONTINENT NAIL CORPORATION, |
|
Plaintiff, |
|
v. |
| Before: Gregory W. Carman, Judge
UNITED STATES, |
| Consol. Court No. 12-00133
Defendant, |
|
and |
|
DUBAI WIRE FZE and ITOCHU BUILDING |
PRODUCTS CO., INC., and PRECISION |
FASTENERS, LLC, |
|
Defendant-Intervenors. |
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OPINION AND ORDER
[Affirming the results of the remand redetermination in Commerce’s antidumping duty
investigation of certain steel nails from the United Arab Emirates.]
Dated: November 3, 2015
Andrew W. Kentz, David A. Yocis, Michelle Li, and Roop Kiran Bhatti, Picard Kentz & Rowe
LLP, of Washington, DC, for plaintiff Mid Continent Nail Corporation. With them on the briefs
were Jordan C. Kahn and Nathan W. Cunningham of Picard Kentz & Rowe LLP.
Carrie A. Dunsmore, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC, for defendant United States. With her on the brief
were Stuart F. Delery, Principal Deputy Assistant Attorney General, Jeanne E. Davidson,
Director, Franklin E. White, Jr., Assistant Director. Of counsel on the brief was Melissa M.
Brewer, Attorney, Office of the Chief Counsel for Import Administration, U.S. Department of
Commerce, of Washington, DC.
Bruce M. Mitchell, Mark E. Pardo, Ned H. Marshak, and Kavita Mohan, Grunfeld, Desiderio,
Lebowitz, Silverman & Klestadt LLP, of New York, NY, for defendant-intervenors Dubai Wire
FZE and Itochu Building Products Co., Inc.
Consolidated Court No. 12-00133 Page 2
Michael P. House, Sabahat Chaudhary, David J. Townsend, and David S. Christy, Jr., Perkins
Coie LLP, of Washington, DC, for defendant-intervenor Precision Fasteners, LLC.
Carman, Judge: This consolidated case is currently before the Court for resolution
of challenges to the Final Results of Redetermination Pursuant to Court Remand, ECF Nos. 118
(confidential version) and 119 (public version) (hereinafter “Remand Results”) issued by the U.S.
Department of Commerce (“Commerce” or “the government”).
The remand resulted from an order issued by the Court on June 26, 2014. Mid Continent
Nail Corp. v. United States, 38 CIT ___, 999 F. Supp. 2d 1307 (2014). That order upheld most
aspects of Certain Steel Nails From the United Arab Emirates, 77 Fed. Reg. 17,029 (Dep’t of
Commerce Mar. 23, 2012) (final determination) (“Final Results”), as amended, 77 Fed. Reg.
27,421 (Dep’t of Commerce May 10, 2012) (am. final determination and antidumping duty
order), and the unpublished Issues and Decisions Memorandum incorporated by reference, see
Issues and Decisions Mem. for the Less Than Fair Value Investigation of Certain Steel Nails
from the United Arab Emirates, A-520-804 (Mar. 19, 2012), available at
http://enforcement.trade.gov/frn/summary/uae/2012-7067-1.pdf (last visited October 2, 2015)
(“I&D Memo”). However, the Court determined that Commerce had failed to apply a regulation
that it had improperly withdrawn without notice and comment, and thus remanded the case with
instructions for Commerce to apply the former regulation. 999 F. Supp. 2d at 1323. Because that
change could result in significant differences in Commerce’s targeted dumping analysis, the
Court deferred ruling on other challenges to that aspect of the Final Results. Id. at 1323-24.
Consolidated Court No. 12-00133 Page 3
Commerce has now issued its Remand Results, and each of the parties has submitted its
comments. The comments have raised a number of objections to the Remand Results, all
centered on aspects of the targeted dumping analysis that Commerce conducted. The Court
addresses these issues below, and upholds the Remand Results in full as supported by substantial
evidence and in accordance with law.
BACKGROUND
Plaintiff in this consolidated action is domestic nail producer Mid Continent Nail
Corporation (“MCN” or “Plaintiff”). Defendant-Intervenors Dubai Wire FZE and Itochu
Building Products Co., Inc. (collectively “Dubai Wire” or “DWE”) and Precision Fasteners, LLC
(“Precision”) are producers of subject merchandise from the UAE. 1
In the Court’s prior opinion, the Court upheld the aspects of the Final Results that
determined that (a) Precision was not affiliated with a company called Millennium;
(b) certain financial statements would be used for surrogate profit values; and (c) a particular
interest rate would be imputed to a loan extended to Dubai Wire. See generally Mid Continent
Nail, 999 F. Supp. 2d 1307.
The Court, however, determined that Commerce had improperly applied the law
governing what is commonly called “targeted dumping.” Pursuant to 19 U.S.C.
1
MCN filed this action under Court No. 12-00133, and Dubai Wire and Precision entered Court
No. 12-00133 as Defendant-Intervenors as of right. Separately, Dubai Wire and Precision filed
their own challenges to the investigation; Dubai Wire is therefore the plaintiff in Court No. 12-
00153 and Precision is the plaintiff in Court No. 12-00162. The cases filed by Dubai Wire and
Precision are now consolidated with the current case filed by MCN.
Consolidated Court No. 12-00133 Page 4
§ 1677f-1(d)(1)(A), Commerce “shall determine whether the subject merchandise is being sold
in the United States at less than fair value” in one of two ways: by comparing “the weighted
average of the normal values to the weighted average of the export prices (and constructed
export prices) for comparable merchandise,” or by comparing “the normal values of individual
transactions to the export prices (or constructed export prices) of individual transactions for
comparable merchandise.” These price comparison methods are commonly called average-to-
average (“A-A”) and transaction-to-transaction (“T-T”). The statute contains an exception to this
general rule regarding price comparisons. Commerce “may” make its determination regarding
sales 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 two conditions are satisfied:
(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) [Commerce] explains why such differences cannot be taken into account
using [average-to-average or transaction-to-transaction price comparisons].
19 U.S.C. §1677f-1(d)(1)(B). Such a pattern of export prices is commonly called targeted
dumping, and the comparison method that may be used in this context is termed average-to-
transaction (“A-T”).
In 1997, Commerce promulgated a regulation interpreting this statutory authority, in
relevant part, in the following manner:
(f) Targeted dumping—
(1) In general. . . . the Secretary may apply the average-to-transaction
method . . . in an antidumping investigation if:
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(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) The Secretary 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, the Secretary 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.
19 C.F.R. § 351.414(f) (1997). (Subsection (2) of this regulation will be referred to as the
“Limiting Regulation.”) In 2008, Commerce published a Federal Register notice stating that this
targeted dumping regulation was being withdrawn. Withdrawal of the Regulatory Provisions
Governing Targeted Dumping in Antidumping Duty Investigations, 73 Fed. Reg. 74,930 (Dep’t
of Commerce Dec. 10, 2008) (“Withdrawal Notice”). Although Commerce indicated that it
would accept post-publication comments regarding the withdrawal, the withdrawal was given
immediate effect. Id. It was this purported withdrawal of the Limiting Regulation that the Court
found to be unlawful in its June 26, 2014 order; the Cout consequently instructed Commerce to
apply 19 C.F.R. § 351.414(f) on remand in the manner in which the regulation had been applied
prior to the Withdrawal Notice. 999 F. Supp. 2d at 1323.
The Court also noted in its June 26, 2014 order that Commerce did not address “whether
or not the transaction-to-transaction method would have been able to account for the targeted
Consolidated Court No. 12-00133 Page 6
dumping,” and stated that Commerce should “state its rationale . . . in the redetermination.” Id. at
1324 n.5.
JURISDICTION AND STANDARD OF REVIEW
The Court has jurisdiction over this case pursuant to 28 U.S.C. § 1581(c). When
reviewing the results of a remand, the Court examines the decision “for compliance with the
court’s remand order.” Nakornthai Strip Mill Pub. Co. v. United States, 32 CIT 1272, 1274, 587
F. Supp. 2d 1303, 1306 (2008). Factual findings of Commerce in the Remand Results will be
upheld unless unsupported by substantial evidence on the record, while legal determinations will
be upheld unless not in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i); see also 8A West’s
Fed. Forms, National Courts § 3:6 (5th ed. 2015).
Substantial evidence is “more than a mere scintilla,” amounting to “such relevant
evidence as a reasonable mind would accept as adequate to support a conclusion.” NSK Corp. v.
U.S. Int’l Trade Comm’n, 716 F.3d 1352, 1364 (Fed. Cir. 2013) (internal citations and quotations
omitted). In assessing substantial evidence, the court determines whether the reviewed agency
decision is reasonable given the record as a whole, “even if some evidence detracts from the
[agency’s] conclusion.” Nippon Steel Corp. v. United States, 458 F.3d 1345, 1350-51 (Fed. Cir.
2006).
In assessing whether Commerce’s determination of a legal question is in accordance with
law, “[t]he statute is the starting point . . . . The agency’s action must be authorized by the
statute, and consistent with the agency’s regulations.” West’s Fed. Forms, National Courts,
supra; see Ningbo Dafa Chem. Fiber Co. v. United States, 580 F.3d 1247, 1253-54 (Fed. Cir.
Consolidated Court No. 12-00133 Page 7
2009). When Commerce interprets the antidumping statute, the Court’s review of Commerce’s
determination is conducted under the two-step framework of Chevron, U.S.A., Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 842-45 (1984); see Ningbo Dafa, 580 F.3d at 1253-54.
The Court defers to Commerce’s interpretation unless there is “unambiguous statutory language
to the contrary” or Commerce has reached an “unreasonable interpretation of language that is
ambiguous.” United States v. Eurodif S.A., 555 U.S. 305, 316 (2009). Unless Commerce’s
interpretation of ambiguous language in the statute is “arbitrary, capricious, or manifestly
contrary to the statute,” the court will not set it aside. Chevron, 467 U.S. at 844.
DISCUSSION
I. Remand Results
In the Remand Results, Commerce applies (under protest 2) the Limiting Regulation and
continues “to find that for both DWE and Precision, there was a pattern of export prices (or
constructed export prices) for comparable merchandise that differed significantly among U.S.
customers, regions, and time periods during the period of investigation.” Remand Results at 6.
2
Commerce cites Viraj Group, Ltd. v. United States, 343 F.3d 1371 (Fed. Cir. 2003) to explain
why it files the Remand Results under protest. In Viraj Group, the Federal Circuit held that
Commerce, despite technically having prevailed below, had standing to appeal after the Court of
International Trade upheld its remand redetermination since the remand redetermination was
issued only pursuant to court order and under protest. See id. at 1374-77. Commerce’s filing of
the Remand Results here “under protest” appears solely intended to preserve its ability to seek
appellate review. The Court of International Trade has stated that “[t]he only legitimate purpose
of registering a protest in a remand determination is to preserve a particular issue for appeal
where the agency has been compelled to take a particular step that results in an outcome not of
its choosing.” GPX Int'l Tire Corp. v. United States, 37 CIT ___, ___, 942 F. Supp. 2d 1343,
1348 n.2 (2013). Commerce has lodged such a legitimate protest here.
Consolidated Court No. 12-00133 Page 8
This finding is based on the results of what Commerce refers to as “the Nails test” an
analytic framework Commerce applied in targeted dumping investigations during the time period
applicable to this case. Def.’s Resp. to Pl.’s and Def.-Intervenor’s Comments on the Remand
Redetermination (“US Response”), ECF No. 138, at 3. 3 The Nails test is a two-step
methodology. Commerce first analyzes the prices of allegedly targeted sales to identify whether
more than 33% of the sales were priced more than one standard deviation below the weighted-
average price of all sales. Id. This is the “standard deviation” test. Where such a price pattern is
found, Commerce moves to the second step, known as the “gap test.” At this step, Commerce
“examines all sales of subject merchandise by the respondent to the allegedly targeted group
which passed the first stage of the Nails test,” “determines the total volume of sales for which the
difference between the weighted-average price of sales to the allegedly targeted group and the
next higher weighted-average price of sales to a non-targeted group exceeds the average price
gap (weighted by sales volume) for the non-targeted groups,” and concludes, if “the volume of
the sales that meets this test exceeds five percent of the total sales volume of subject merchandise
to the allegedly targeted,” that the sales pass the Nails test. Id. at 3-4. This methodology is the
means by which Commerce affirmatively finds targeted dumping by Dubai Wire and Precision
on remand. Id. at 6.
3
The Nails test originated with Certain Steel Nails from the People’s Republic of China, 73 Fed.
Reg. 33,977 (Dep’t of Commerce June 16, 2008) (final determination of sales at less than fair
value), which was upheld by the Court of International Trade in Mid Continent Nail v. United
States, 34 CIT ___, 712 F. Supp. 2d 1370 (2010).
Consolidated Court No. 12-00133 Page 9
Commerce examines the dumping margins calculated for Dubai Wire and Precision using
A-A comparison against the margins calculated using A-T comparison (limited to the allegedly
targeted sales in accordance with the Limiting Regulation). Id. Because the margin for Precision
is de minimis regardless of which methodology is applied, Commerce determines that the pattern
of pricing differences can be taken account of using the standard A-A comparison method,
without resorting to A-T comparison. Id. A rate of 0.00% is calculated for Precision. 4 Id.However, the margin calculated for Dubai Wire is de minimis using A-A comparison, but above
the de minimis threshold using A-T comparison. Id. Commerce therefore finds that Dubai Wire’s
pattern of pricing differences cannot be accounted for using A-A comparison, and applies A-T
comparison, resulting in a weighted-average dumping margin for Dubai Wire of 2.68%. Id.Commerce also decides that examining whether to use T-T comparison is unnecessary
and that, in any case, T-T comparison is unwarranted under the facts of the case. Remand Results
at 3-6. Commerce bases this decision on an interpretation of 19 U.S.C. §1677f-1(d)(1)(B) that
sees the statute as mandating only that Commerce explain, before using A-T comparison, why
one of the statutorily-preferred comparison methods (A-A or T-T) cannot account for the
targeted dumping pattern. Id. at 3-4. In Commerce’s view, “[a]n interpretation of the statute by
which the Department would be required to explain why both the [A-A] and the [T-T] methods
cannot account for such differences would read into the statute’s express terms a requirement
4
Precision urges the Court to uphold the Remand Results. See generally Pl./Def.-Intervenor
Precision Fasteners’ Comments on Remand Results, ECF No. 125. Precision correctly notes that
because its “dumping margin is de minimis, the additional issues raised by Precision are rendered
moot and need not be considered by the Court in affirming” the Remand Results. Id. at 3.
Consolidated Court No. 12-00133 Page 10
that is not present.” Id. at 4. Commerce bases this on the language of the statute, which requires
that before employing A-T comparison, Commerce “explains why such differences [i.e. the
targeted dumping differential price patterns] cannot be taken into account using a method
described in paragraph (1)(A)(i) [i.e. A-A comparison] or (ii) [i.e. T-T comparison].” 19 U.S.C.
§ 1677f-1(d)(1)(B)(ii). Commerce sees the use of “a method” and “or” in this clause as giving
Commerce the discretion to choose a preferred method from the options given (A-A and T-T),
and mandating only that Commerce check whether its preferred method accounts for the targeted
dumping pattern when considering whether to use A-T comparison. Remand Results at 3-4.
As support for this view of the statute, Commerce references the Statement of
Administrative Action (“SAA”) issued by Congress in conjunction with the passage of the
Uruguay Round Agreements Act, as well as several of Commerce’s regulations. In particular,
Commerce focuses on statements in the SAA that Commerce will use T-T comparison “far less
frequently” than A-A comparison given its “past experience with this methodology” and the
“difficulty in selecting appropriate comparison transactions.” Id. at 5 (citing Uruguay Round
Agreements Act, Statement of Administrative Action, H.R. Doc. No. 103–316, vol. 1, at 842-843
(1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4178.) The SAA also indicates that T-T
comparison will be appropriate where “there are very few sales and the merchandise sold in each
market is identical or very similar or is custom made.” SAA at 842-43.
Commerce notes that there are a “substantial number of sales” here. Remand Results at 5.
Commerce also notes that price volatility, a consideration that may favor use of T-T
Consolidated Court No. 12-00133 Page 11
comparisons, is not “present with respect to DWE’s and Precision’s sales.” Id. at 6. As a result,
Commerce finds that “use of the [T-T] method is inappropriate[.]” Id.
In reviewing the Remand Results, the Court must defer to Commerce’s interpretation of
its statute unless there is “unambiguous statutory language to the contrary” or Commerce has
reached an “unreasonable interpretation of language that is ambiguous.” Eurodif S.A., 555 U.S.
at 316. The language requiring Commerce to explain why the pattern of price differences
“cannot be taken into account using a method described in paragraph (1)(A)(i) [i.e. A-A
comparison] or (ii) [i.e. T-T comparison]” seems to the Court to be most naturally read, in
context, as requiring Commerce to eliminate both of the statute’s standard comparison methods
before applying A-T comparison. However, Commerce identified an alternative reading that
shows that the language is ambiguous—i.e., open to two different interpretations. The Court
cannot say that Commerce’s interpretation of this ambiguous language is unreasonable, since
Commerce supports its interpretation with the SAA. The Court therefore determines that
Commerce’s interpretation of 19 U.S.C. § 1677f-1(d)(1)(B) is entitled to Chevron deference and
is in accordance with law. The Court also determines that substantial evidence supports
Commerce’s application of the statute here, since Commerce has reasoned that T-T methodology
is inappropriate where, as here, there are a large number of sales and no concerns such as price
volatility. The Court therefore upholds the Remand Results in this respect.
II. The Objections of MCN Are Without Merit
MCN objects to the Remand Results. See generally Mid Continent Nail Corp.’s
Comments on Final Results of Redetermination Pursuant to Court Remand (“MCN Comments”),
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ECF No. 126. MCN argues that the Court’s remand order merely required Commerce to apply
19 C.F.R. § 351.414(f) as it existed prior to the Withdrawal Notice, but did not require
Commerce to interpret that regulation such that A-T comparison would only apply to sales found
to be targeted. Id. at 1-2, 7-8. MCN contends that Congress intended Commerce to apply A-T to
all sales where necessary to deal with masked dumping, so “it would clearly be opposed to the
intent of Congress for Commerce to ignore the existence of masked dumping and refuse to apply
the A-T methodology” in such a situation. Id. at 7. The proper reading of the Limiting Regulation
according to MCN is that where targeting—a pattern of sales differing in price among customer,
time period, or region—exists, all sales that comprise that pattern, not solely the low-priced
sales. Id. at 8-9. MCN contends that Commerce “acted arbitrarily and contrary to the Court’s
instructions” in failing to apply the Limiting Regulation in a manner consistent with this view. Id.
at 13; see also id. at 12. MCN also argues that substantial evidence on the record shows that
targeted dumping was so extensive and masked that it was unreasonable to segregate targeted
and untargeted sales, so the A-T methodology should have been applied to all sales pursuant to
the Limiting Regulation. See id. at 13-20. The evidence that MCN cites consists of the
differences in weighted average dumping margins resulting from application of the A-A and A-T
methods to the respondents. See id. at 13-16. From this, MCN claims that Commerce should
have determined that it was appropriate to apply A-T comparison beyond the limited realm of the
sales identified as targeted. Finally, MCN claims that the Nails test does not identify the set of
targeted sales, but simply identifies whether targeting occurred. See id. at 20-22. MCN argues
Consolidated Court No. 12-00133 Page 13
that Commerce improperly failed to evaluate whether targeting was so extensive as to require A-
T comparisons for all sales, instead relying on the under-inclusive Nails test. See id. at 22-23.
Commerce responds that it considered whether the record supported deviation from
“normal” application of the Limiting Regulation, and determined that it did not. US Response at
8, citing Remand Results at 6-7. Commerce notes that MCN’s extensive discussion of the statute
and the regulatory framework around targeted dumping is generally consistent with the current
views of Commerce, which are the views that led Commerce to issue the Withdrawal Notice
invalidated by the Court’s remand order. Id. at 8-9. However, Commerce was required on
remand to apply the Limiting Regulation and did so in a manner consistent with both the remand
order and the language of the regulation. Id. at 9. On remand, Commerce considered the record
and determined that no evidence made it appropriate to deviate from the normal application of
the Limiting Regulation. Id., citing Remand Results at 13-18. Commerce also argues that MCN
has not provided any rationale to support its argument that a comparison of the results of the
various comparison methodologies is an appropriate basis for determining whether the “normal”
application of the Limiting Regulation should apply. Id. at 10-12. Commerce also rejects MCN’s
argument that targeting was so extensive that targeted sales could not practically be segregated
from non-targeted sales, and that the A-T comparison method should therefore have applied
more broadly. Id. at 12-13. Commerce conducted an analysis of sales data to determine whether
the Nails test was improperly limiting its determination of how widespread targeting was in the
sales. Id. at 13-14. The results showed that the volume of sales not tested under the Nails test was
insignificant. Id. at 15.
Consolidated Court No. 12-00133 Page 14
The Court finds that Commerce has complied with the remand order by applying the
Limiting Regulation as it would have done had the invalid Withdrawal Notice not been issued.
To the extent that MCN argues that the government adopted an inappropriately narrow view of
its authority under the Limiting Regulation, and inaccurately construed the remand order as a
cover for doing so, MCN is mistaken (and Commerce is correct) about the remand order.
Much of MCN’s argument must be rejected because it is based on the notion that
Commerce was required to exercise its interpretive discretion over the statute and its own
Limiting Regulation in a particular manner. But the language of the statute and the Limitation
Regulation explicitly grant Commerce broad discretion in the context of applying a remedy to
targeted dumping. The statute says that Commerce “may” employ A-T comparison in the
targeted dumping context. 19 U.S.C. § 1677f-1(d)(1)(B). The Limiting Regulation also
incorporates a certain amount of the flexibility that is characteristic of discretion when it states
Commerce “normally will limit the application of the average-to-transaction method to those
sales that constitute targeted dumping[.]” 19 C.F.R. § 351.414(f)(2) (emphasis added). The
statutory use of “may” is an especially strong counterpoint to MCN’s contention that Commerce
acted illegally in failing to apply A-T comparison more broadly, since the statute leaves to
Commerce the choice of whether to apply A-T, even when evidence of targeted dumping permits
doing so. To the extent that Commerce’s Remand Results adopted a different interpretation of the
statute than the one MCN preferred, the Court upholds the Remand Results.
Finally, MCN’s argument that the Remand Results are unsupported by substantial
evidence fails. Commerce took MCN’s contentions seriously and conducted detailed analysis of
Consolidated Court No. 12-00133 Page 15
the record data to ascertain whether or not the Nails test was distorting its understanding of how
extensive targeting was in this case, but the results of that analysis were negative. Commerce
examined the evidence for other indicators that the normal application of the Limiting Regulation
should be put aside, but found none. These determination were certainly supported by more than
a scintilla of evidence, and were reasonable in light of the record as a whole. The Court therefore
upholds the Remand Results over MCN’s challenges.
III. The Objections of Dubai Wire Are Without Merit
A. Dubai Wire’s Arguments
Dubai Wire argues that Commerce committed reversible error in finding targeting by
time period based on increases in Dubai Wire’s prices over the period of investigation (“POI”).
Dubai Wire FZE, et al, Comments in Resp. to the Dep’t of Commerce’s Final Results of
Redetermination (Dubai Wire Comments) at 4-11, ECF No. 123. Dubai Wire contends that these
price increases were directly related to increased costs, avoided dumping by maintaining prices
above cost of production, and that it was therefore improper to use them as a basis for a finding
of unfair trade in the form of targeted dumping. Id. at 5-6. Contending that Commerce must
make its decisions based on the commercial realities surrounding a case, Dubai Wire claims that
Commerce has acted unreasonably in applying its mathematical dumping analysis without
considering why Dubai Wire’s pricing fell into the observed patterns. Id. at 6-7. Noting that
Commerce verified its cost and sale data, Dubai Wire claims that record evidence establishes a
correlation between surging costs for wire rod (making up nearly all of Dubai Wire’s input) and
increasing nail prices. Id. at 8-9. Dubai Wire attacks Commerce’s claim that its cost increases
Consolidated Court No. 12-00133 Page 16
over the POI were not significant enough to require adjustment to the targeted dumping analysis,
which Commerce based on the 25% increase Commerce requires to calculate constructed value
costs over a shorter period than the entire POI. Id. at 10. Dubai Wire claims there is no reason to
link this unrelated test to the targeted dumping analysis, since price increases below 25% can
lead to a finding of targeted dumping and the exporter should be allowed to justify its price
increases by showing related cost increases. Id.
Dubai Wire claims that Commerce erred when it determined that Dubai Wire had
engaged in targeting by customer and by region. Id. at 11-15. Dubai Wire argues that these
findings were based on a miniscule percentage of total sales, which did not constitute a
“commercially recognizable” pattern and should, in Dubai Wire’s view, be considered de
minimis (and therefore be ignored) by Commerce. Id. at 12. According to Dubai Wire,
Commerce’s rejection of this proposed de minimis standard for the targeting analysis was
contrary to several recent Commece decisions, yet Commerce did not justify applying a different
standard. Id. at 14-15.
Dubai Wire also claims that Commerce erred in treating certain low-priced sales, made to
three customers, as targeted despite the fact that two of these customers purchased “second
quality, non-prime goods” sold “at a discounted price, on an ‘as-is’ basis,” and the third
purchased “nails which had been sitting in inventory” as “old stock” for years. Id. at 16-17.
Dubai Wire claims that Commerce erred in finding these sales to be commercially
interchangeable with the nails in Dubai Wire’s sales to other customers.
Consolidated Court No. 12-00133 Page 17
Challenging Commerce’s finding of targeting by geographic region, Dubai Wire claims
that it accidentally failed to recover freight costs for a shipment to a particular inland customer,
resulting in a small shortfall not contemplated in its agreement with the customer, who later
informed Commerce of its intent to conform the sale with the agreement to cover the shortfall.
Id. at 19-20. In Dubai Wire’s view, Commerce acted unreasonably in basing its finding of
targeted dumping by geographic region on this shortfall. Id.
Dubai Wire claims that the statute does not permit non-dumped sales to be used to
establish a pattern of prices constituting targeted dumping. Id. 20-21. Dubai Wire notes that the
SAA “provides that targeted dumping takes place when ‘an exporter may sell at a dumped price
to particular customers or regions, while selling at higher prices to other customers or regions,’”
and argues that this supports a reading of the statute that requires Commerce to find sales to be
dumped before they can be analyzed for targeting. Id. at 21. Dubai Wire claims that any other
construction of the law could “lead to the absurd result of finding that an exporter is guilty of
‘targeted dumping’ without selling merchandise at dumped prices.” Id.
Dubai Wire’s final challenge to the Remand Results claims that Commerce erred when it
refused to offset the positive margin from the A-T results with the negative margin from the A-A
results. Id. at 23-24. Dubai Wire identifies three separate applications of this practice of failing to
offset positive margins with negative ones, a practice known as “zeroing”: (1) zeroing negative
margins in the A-T results from tested sales found not to be targeted; (2) zeroing negative
margins in A-A results when combining them with positive margins from A-T results within the
same product type (known as a “CONNUM”); and (3) zeroing negative margins in A-A results
Consolidated Court No. 12-00133 Page 18
when combining them with positive margins from A-T results for other CONNUMs. Id. at 23.
Dubai Wire claims there is no rationale for repeating zeroing in steps two and three under
Commerce’s own methodology. Id. at 23.
B. Commerce’s Responses to Dubai Wire
Commerce argues that the statute does not require it to first ascertain that sales were
made at less than fair value (i.e. dumped) before considering whether those sales were targeted.
US Response at 19-20. In Commerce’s view, the statute refers solely to analyzing export or
constructed export prices when determining if there is a pattern of prices that indicates targeting;
it is only after such a pattern is identified that the statute contemplates comparison of normal
value to export price or constructed export price, and the comparison method Commerce should
use. Id. Therefore, in Commerce’s view, the statute can only be read as calling for a targeting
analysis prior to a dumping finding, since the dumping finding can only be reached once a
comparison method is identified and applied. Id.
Likewise, the government argues that Commerce is only required by the statute to
identify a pattern of targeted sales and need not consider whether there is a de minimis number of
such sales. See id. at 20-23. The government contends that the cumulative amount of targeting is
the important consideration under the statute, rather than the targeting along each of the three
axes (customer, location, and time period) in isolation. Id. at 21-22. In any case, the government
argues that the cumulative volume of Dubai Wire’s sales that were found to be targeted is well
above a level that could be considered de minimis even were Commerce to impose a de minimis
test here. Id. at 22-23.
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The government rejects Dubai Wire’s contention that its sales to particular customers
were discounted due to being of second quality or from old stock because such a conclusion was
not clear from the evidence in the administrative record. Id. at 23-24. As for Dubai Wire’s
purported “mistake” regarding the failure to recover freight costs for a particular sale, Commerce
contends that no evidence of this mistake, or the customer’s intention to correct it, is reflected in
the record, upon which Commerce is required to base its decision. Id. at 24.
Commerce disputes Dubai Wire’s argument that it should have considered the
commercial reasons why Dubai Wire’s prices varied over the POI (i.e. due to input cost increases
that Dubai Wire sought to recover). Id. at 26-28. Commerce states that it is not required by
statute to consider the reasons behind patterns of low-priced sales by time period, and cites
several recent court decisions as supporting the proposition that Commerce need not consider
motive when finding targeting. Id. at 26-27.
The United States argues that the statute and Limiting Regulation do not specify how
Commerce must compare the results of the A-A method with the A-T method in applying the
Limiting Regulation. Id. at 30-31. Commerce contends that it reasonably segregated the results of
the two methodologies by applying zeroing in the A-A comparison but not in the A-T
comparison, and then by calculating margins separately for each comparison methodology
without offsetting the results of one method with the results of the other. Id. at 31.
C. Analysis
The Court finds Commerce’s construal of the statute reasonable and entitled to deference
with regard to the issues raised by Dubai Wire. The statute does not specify whether Commerce
Consolidated Court No. 12-00133 Page 20
may consider non-dumped sales when identifying whether there is a pattern of prices constituting
targeting, as Dubai Wire claims. In the absence of a clear command from Congress via the
statute, Commerce has wide latitude under Chevron to adopt a reasonable construal. Here,
Commerce has adopted the reasonable interpretation of first identifying whether a pricing pattern
exists, and only then determining whether that pricing pattern involves dumping. Not only is this
a reasonable interpretation of the language of the statute, but it is hard to imagine how the statute
could be administered were Commerce to adopt Dubai Wire’s preferred approach. This is
because no determination can be reached as to whether dumping has occurred without comparing
the prices of sales of the subject merchandise in the home market with the prices of sales of the
product in the United States. But Commerce cannot make that determination without choosing to
compared prices using either the A-A, T-T, or A-T method. It would be putting the cart before
the horse to use the outcome of the price comparison methodology to determine which price
comparison methodology could be used. Because Commerce has reasonably construed the
statute in this regard, the Court upholds this aspect of the Remand Results.
On the issue of whether Commerce must adopt a de minimis number of sales beneath
which those sales will not support a finding of targeting, the Court also rejects Dubai Wire’s
argument. This is, again, an issue not specified by the statute and thus reviewable only for
whether Commerce has come to a reasonable interpretation of the statute that it administers.
Commerce’s determination that the relevant concern is the total volume of targeted sales across
all three of the targeting axes is a reasonable approach not contradicted by the statute. And
Commerce is correct that, even if Commerce were to adopt a de minimis level of targeting
Consolidated Court No. 12-00133 Page 21
beneath which it would not apply the A-T comparison method, the volume of Dubai Wire’s sales
found to be targeted would exceed that level based on the record evidence in this case. For these
reasons, the Court upholds this aspect of the Remand Results.
The Court finds that Commerce’s determination of the factual issues raised by Dubai
Wire—whether certain sales were of second quality or old stock—was supported by substantial
evidence. Dubai Wire’s argument rests on a generous interpretation of the information on the
record, which Commerce considered but by which it was not persuaded. The Court finds that
Commerce’s rejection of this argument was proper. Similarly, Commerce is required to make its
determinations solely on the basis of evidence in the record. Commerce therefore could not take
into account the purported mistake regarding freight costs associated with a shipment of Dubai
Wire’s nails, about which the record was silent. The Court therefore upholds the Remand Results
on this issues.
The issue of whether Commerce must consider explanations for why there exists a pattern
of prices that varies (i.e. targeting) was definitively resolved in JBF RAK LLC v. United States,
790 F.3d 1358 (Fed. Cir. 2015). The Court of Appeals held in that case that 19 U.S.C.
§ 1677f-1(d)(1)(B) “does not require Commerce to determine the reasons why there is a pattern
of export prices for comparable merchandise that differs significantly among purchasers, regions,
or time periods, nor does it mandate which comparison methods Commerce must use in
administrative reviews. As a result, Commerce looks to its practices in antidumping duty
investigations for guidance. . . . we agree with the CIT that requiring Commerce to determine the
intent of a targeted dumping respondent ‘would create a tremendous burden on Commerce that is
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not required or suggested by the statute.’” JBF RAK LLC, 790 F.3d at 1368 (quoting JBF RAK
LLC v. United States, 38 CIT ___, ___, 991 F. Supp. 2d 1343, 1355 (2014)). The Court therefore
rejects Dubai Wire’s argument on this issue and affirms the Remand Results in this regard.
Finally, the statute and regulations are silent as to how Commerce should compare the
results of the A-A method with the A-T method in applying the Limiting Regulation. The matter
is therefore squarely within Commerce’s purview and the Court defers to Commerce’s
reasonable decision to reject an offset of the results of A-T method with the results of the A-A
method. Therefore the Court upholds this aspect of the Remand Results as well.
CONCLUSION
For the reasons given above, the Court determines that the Remand Results complied with
the Court’s remand order, were not contrary to law, and were supported by substantial evidence.
The Remand Results are therefore affirmed. Judgment shall enter for Defendant.
/s/Gregory W. Carman
________________________________
Gregory W. Carman, Senior Judge
Dated: November 3, 2015
New York, NY