Nan Ya Plastics Corp. v. United States , 6 F. Supp. 3d 1362 ( 2014 )

Slip Op. 14-94
UNITED STATES COURT OF INTERNATIONAL TRADE
NAN YA PLASTICS CORPORATION, LTD.,
Plaintiff,
Before: Leo M. Gordon, Judge
v.
Court No. 11-00535
UNITED STATES,
Defendant.
OPINION
[Remand results sustained.]
Dated: August 14, 2014
Peter J. Koenig, Squire Sanders (US) LLP, of Washington, DC, for Plaintiff Nan Ya
Plastics Corporation, Ltd.
David F. D’Alessandris, Trial Attorney, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, of Washington, DC, for Defendant United States. With him on the
briefs were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, Patricia
M. McCarthy, Assistant Director. Of counsel on the briefs was George Kivork, U.S. Department
of Commerce, Office of the Chief Counsel for Import Administration, of Washington, DC.
Jeffrey I. Kessler, David M. Horn, Patrick J. McLain, and Ronald I. Meltzer, Wilmer,
Cutler, Pickering, Hale and Dorr LLP, of Washington, DC for Defendant-Intervenors
Mitsubishi Polyester Film, Inc. and SKC, Inc.
Gordon, Judge: This action involves an administrative review conducted by the
U.S. Department of Commerce (“Commerce”) of the antidumping duty order covering
polyethylene terephthalate film, sheet, and strip from Taiwan. See Polyethylene
Terephthalate Film, Sheet, and Strip from Taiwan, 76 Fed. Reg. 76,941 (Dep’t of
Commerce Dec. 9, 2011) (final results admin. review) (“Final Results”); see also Issues
and Decision Memorandum, A-583-837 (Dep’t of Commerce Dec. 5, 2011), available at
Court No. 11-00535 Page 2
http://enforcement.trade.gov/frn/summary/taiwan/2011-31695-1.pdf (last visited this
date) (“Decision Memorandum”). Before the court are the Final Results of
Redetermination, ECF No. 66 (“Remand Results”), filed by Commerce pursuant to Nan
Ya Plastics Corp. v. United States, 37 CIT ___, 906 F. Supp. 2d 1348 (2013)
(“Nan Ya I”). 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) (2012),1 and 28 U.S.C. § 1581(c)
(2012).
Plaintiff Nan Ya Plastics Corporation, Ltd. (“Nan Ya”) challenges Commerce’s
continued assignment of a total adverse facts available (“AFA”) rate of 74.34%. See Nan
Ya Comments on Remand Results 1, ECF No. 84 (“Pl.’s Br.”). For the reasons set forth
below, the court sustains the Remand Results.
I. Standard of Review
For administrative reviews of antidumping duty orders, the court sustains
Commerce’s “determinations, findings, or conclusions” unless they are “unsupported by
substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C.
§ 1516a(b)(1)(B)(i). More specifically, when reviewing agency determinations, findings,
or conclusions for substantial evidence, the court assesses whether the agency action is
reasonable given the record as a whole. Nippon Steel Corp. v. United States, 458 F.3d
1345, 1350-51 (Fed. Cir. 2006). Substantial evidence has been described as “such
relevant evidence as a reasonable mind might accept as adequate to support a
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.
Court No. 11-00535 Page 3
conclusion.” DuPont Teijin Films USA v. United States, 407 F.3d 1211, 1215 (Fed. Cir.
2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). Substantial
evidence has also been described as “something less than the weight of the evidence,
and the possibility of drawing two inconsistent conclusions from the evidence does not
prevent an administrative agency's finding from being supported by substantial evidence.”
Consolo v. Fed. Mar. Comm'n, 383 U.S. 607, 620 (1966). Fundamentally, though,
“substantial evidence” is best understood as a word formula connoting reasonableness
review. 3 Charles H. Koch, Jr., Administrative Law and Practice § 9.24[1] (3d ed. 2014).
Therefore, when addressing a substantial evidence issue raised by a party, the court
analyzes whether the challenged agency action “was reasonable given the circumstances
presented by the whole record.” Edward D. Re, Bernard J. Babb, and Susan M. Koplin,
8 West's Fed. Forms, National Courts § 13342 (2d ed. 2014).
Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 842-45 (1984), governs judicial review of
Commerce's interpretation of the antidumping statute. See United States v. Eurodif S.A.,
555 U.S. 305, 316 (2009) (Commerce's “interpretation governs in the absence of
unambiguous statutory language to the contrary or unreasonable resolution of language
that is ambiguous.”).
II. Background
As a consequence of Nan Ya’s failure to cooperate during the administrative
review, Commerce preliminarily assigned Nan Ya a total AFA rate of 99.31%, which it
derived from two of Nan Ya’s transaction-specific margins from the prior administrative
Court No. 11-00535 Page 4
review. See Polyethylene Terephthalate Film, Sheet, and Strip from Taiwan, 76 Fed.
Reg. 47,540, 47,545 (Dep’t of Commerce Aug. 5, 2011) (preliminary results); Decision
Memorandum at 5. Nan Ya argued in its administrative case brief that Commerce should
have instead used information obtained during the current administrative review,
specifically, the transaction-specific data of cooperating mandatory respondent Shinkong
Materials Technology Co., Ltd. (“Shinkong”). Case Br. of Nan Ya Plastics Corporation,
Ltd., 7 (Dep’t of Commerce Oct. 4, 2011), PD 23.2 Commerce agreed and in the Final
Results selected Shinkong’s highest transaction-specific margin, 74.34%, as Nan Ya’s
total AFA rate. Commerce reasoned “this rate is representative of Nan Ya’s current
business practice” because “the data from the most recent review in which Nan Ya
participated show . . . numerous [transaction-specific] margins for Nan Ya far above 74.34
percent.” Assignment of the Adverse Facts Available Rate for Nan Ya Plastics
Corporation, Ltd. (Nan Ya), 3 (Dep’t of Commerce Dec. 5, 2011), CD 27 (“AFA
Assignment Memorandum”).
Nan Ya then commenced this action challenging the 74.34% total AFA rate as “an
unlawful aberrant outlier” that did not reflect its “commercial reality albeit with some built
in increase to induce compliance.” Nan Ya I, 37 CIT at ___, 906 F. Supp. 2d at 1351; see
Nan Ya Plastics Corporation Rule 56.2 Mot. for J. on the Agency R. 3, ECF No. 3 (“Pl.’s
56.2 Br.”). Among its contentions Nan Ya proffered what appeared to be several
compelling statistical arguments in support of its position. See Nan Ya I, 37 CIT at ___,
2
“PD” refers to a document contained in the public administrative record. “CD” refers to
a document contained in the confidential record.
Court No. 11-00535 Page 5
906 F. Supp. 2d at 1353-55. However, because Commerce changed Nan Ya’s AFA rate
between the preliminary and final results, Nan Ya’s first opportunity to present these
arguments was in its opening brief before the court. The court therefore remanded the
action for Commerce to address Nan Ya’s arguments in the first instance. Id. at ___, 906
F. Supp. 2d at 1354-55.
The court also remanded to Commerce for further explanation the issue of the
applicability of corroboration. Id. Although Commerce appeared, consistent with its
practice, to corroborate the selected rate with Nan Ya’s own transaction-specific data from
a prior review, see, e.g., PAM, S.p.A. v. United States, 582 F.3d 1336, 1340 (Fed. Cir.
2009); Ta Chen Stainless Steel Pipe, Inc. v. United States, 298 F.3d 1330, 1339–40 (Fed.
Cir. 2002); Fujian Lianfu Forestry Co. v. United States, 34 CIT ___, ___, 700 F. Supp. 2d
1361, 1363 (2010), Defendant claimed that Commerce technically was not required to do
so under 19 U.S.C. § 1677e(c) because Commerce selected the AFA rate from data
obtained during the current administrative review. Def.’s Resp. to Pl.’s R. 56.2 Mot. 11,
ECF No. 48. This, in turn, raised an issue about the applicability of the de Cecco standard
the courts use to evaluate the reasonableness of Commerce’s total AFA rates, a standard
that emanates from the statute’s corroboration requirement. Nan Ya I, 37 CIT at ___, 906
F. Supp. 2d at 1355 (citing F.LLI de Cecco Di Filippo Fara S. Martino S.p.A. v. United
States, 216 F.3d 1027, 1032 (Fed. Cir. 2000) (“de Cecco”)).
On remand, Commerce assigned the same total AFA rate of 74.34% to Nan Ya.
Remand Results at 2. Commerce also elaborated that the need to corroborate under
19 U.S.C. § 1677e(c) only applies to “secondary information” and not “information
Court No. 11-00535 Page 6
obtained in the course of the . . . review,” like Shinkong’s data. Id. at 5. Commerce noted
that although the de Cecco standard does not apply, Commerce’s selection of an AFA
rate must nevertheless still be supported by substantial evidence. Id. at 10-13.
Commerce also addressed and rejected each of Nan Ya’s arguments contesting the
reasonableness of the AFA rate.
In its comments on the Remand Results, Nan Ya again challenges Commerce’s
AFA selection as unreasonable (unsupported by substantial evidence). Pl.’s Br. at 2-3.
III. Discussion
In a total AFA scenario Commerce typically cannot calculate an antidumping rate
for an uncooperative respondent because the information required for such a calculation
(in this case the respondent’s sales and cost information for the subject merchandise
during the period of review) has not been provided. As a substitute, Commerce relies on
other sources of information (the petition, the final determination from the investigation,
prior administrative reviews, or any other information placed on the record), 19 U.S.C.
§ 1677e(b), to select a proxy that should be a “reasonably accurate estimate of the
respondent's actual rate, albeit with some built-in increase intended as a deterrent to
noncompliance.” de Cecco, 216 F.3d at 1032.
When selecting an appropriate total AFA proxy, “Commerce must balance the
statutory objectives of finding an accurate dumping margin and inducing compliance.”
Timken Co. v. United States, 354 F.3d 1334, 1345 (Fed. Cir. 2004). The proxy’s purpose
“is to provide respondents with an incentive to cooperate, not to impose punitive,
aberrational, or uncorroborated margins.” de Cecco, 216 F.3d at 1032. Although a higher
Court No. 11-00535 Page 7
AFA rate creates a stronger incentive to cooperate, “Commerce may not select
unreasonably high rates having no relationship to the respondent's actual dumping
margin.” Gallant Ocean (Thailand) Co. v. United States, 602 F.3d 1319, 1323 (Fed. Cir.
2010) (citing de Cecco, 216 F.3d at 1032). Commerce must select a rate that has “some
grounding in commercial reality.” Id. at 1323-24.
As de Cecco explained, these requirements are logical outgrowths of the statute’s
corroboration requirement, see de Cecco, 216 F.3d at 1032, which mandates that
Commerce, to the extent practicable, corroborate “secondary” information with
independent sources reasonably at its disposal. 19 U.S.C. § 1677e(c). In practice
“corroboration” involves confirming that secondary information has “probative value,”
19 C.F.R. § 351.308(d) (2013), by examining its “reliability and relevance.” Mittal Steel
Galati S.A. v. United States, 31 CIT 730, 734, 491 F. Supp. 2d 1273, 1278 (2007) (citing
Ball Bearings and Parts Thereof from France, Germany, Italy, Japan, Singapore, and the
United Kingdom, 70 Fed. Reg. 54,711, 54,712-13 (Dep’t of Commerce Sept. 16, 2005)
(final results admin. reviews)). More simply, to corroborate the selection of a total AFA
rate, Commerce must, to the extent practicable, “demonstrate that the rate is reliable and
relevant to the particular respondent” in light of the whole record before it. Yantai Xinke
Steel Structure Co. v. United States, 36 CIT ___, ___, Slip Op. 12-95 at 27 (July 18, 2012)
(emphasis added); PSC VSMPO-AVISMA Corp. v. United States, 35 CIT ___, ___, 755
F. Supp. 2d 1330, 1336-37 (2011) (citing Gallant Ocean, 602 F.3d at 1323-24); de Cecco,
216 F.3d at 1032.
Court No. 11-00535 Page 8
A. Secondary Information and Corroboration
Section 1677e of the antidumping statute mandates that Commerce use the “facts
otherwise available” to fill information gaps on the administrative record. 19 U.S.C.
§ 1677e(a). When the gap results from a party’s non-cooperation, Commerce “may use
an inference that is adverse to the interests of that party in selecting from among the facts
otherwise available.” 19 U.S.C. § 1677e(b). As noted above, to identify a suitable total
AFA proxy, Commerce may consult the petition, the final determination in the
investigation, any previous review or determination, or any other information placed on
the record, which would include cooperating party information, like Shinkong’s margin
transaction data. See id. The corroboration requirement is housed in subsection (c), and
provides that when Commerce “relies on secondary information rather than on
information obtained in the course of an investigation or review, [Commerce] . . . shall, to
the extent practicable, corroborate that information from independent sources that are
reasonably at [its] disposal.” Id. § 1677e(c) (emphasis added).
Commerce makes a fairly airtight argument that Nan Ya’s total AFA margin
selected from Shinkong’s data is not “secondary information” within the meaning of the
statute because that data was obtained in the course of the instant review, and ergo, no
corroboration is required. Remand Results at 4-6 & nn.2, 3. It is a straightforward
Chevron step one interpretation that focuses on the plain meaning of subsection (c), one
the court has approved on two prior occasions. See iScholar Inc. v. United States, 35 CIT
___, ___, Slip Op. 11-4 at 5-7 (Jan. 13, 2011); Ass’n of Am. Sch. Paper Suppliers v.
United States, 32 CIT 1196, 1200-04 (2008). With corroboration inoperative, Commerce
Court No. 11-00535 Page 9
maintains that the de Cecco standard is also inapplicable, leaving only the more general
requirement that its AFA selection must be supported by substantial evidence
(reasonable).
And yet, in both the Final Results and Remand Results, Commerce did not simply
select Shinkong’s highest transaction specific margin in setting Nan Ya’s rate, and leave
it at that. Commerce went further and measured the rate’s appropriateness by analyzing
Nan Ya’s own prior transaction-specific data. Remand Results at 15; Nan Ya I, 37 CIT at
___, 906 F. Supp. 2d at 1352. Despite asserting the inapplicability of de Cecco and
corroboration, Commerce nevertheless followed its standard corroboration playbook to
tie the selected AFA rate (chosen from another party’s data) to the uncooperative
respondent, Nan Ya. Compare Remand Results at 15, with PAM, S.p.A., 582 F.3d at
1338-40 (tying “the highest margin applied to any party that had been previously upheld
in the proceeding” to the uncooperative respondent using uncooperative respondent’s
own data from a prior administrative review), Ta Chen, 298 F.3d at 1339-40 (tying the
highest rate from the investigation to the uncooperative respondent using uncooperative
respondent’s own data from the current administrative review), and Fujian Lianfu
Forestry, 34 CIT at ___, 700 F. Supp. 2d at 1363 (tying rate originally assigned to another
respondent in a contemporaneous new shipper review to uncooperative respondent using
uncooperative respondent’s own model-specific margins from the prior proceeding). And
when Commerce suggests that de Cecco is inapplicable, leaving the more general
substantial evidence standard to review its AFA selection, the question arises:
“substantial evidence of what exactly?” Commerce provides the answer by effectively
Court No. 11-00535 Page 10
corroborating the rate with Nan Ya’s own data from the prior review. It can be viewed as
an effort to justify Shinkong’s highest transaction-specific margin as a reasonably
accurate estimate of Nan Ya’s actual rate plus some built-in increase intended as a
deterrent against non-compliance. So de Cecco applies after all. And it is that familiar
standard the court will apply in reviewing the reasonableness of Commerce’s AFA
selection, to which the court now turns.
B. Nan Ya’s AFA Rate
Commerce frequently selects AFA rates from among the highest rates assigned
during any segment of the proceeding, the highest transaction- or model-specific margins
available on the administrative record, or somewhat more rarely, the highest rates alleged
in the petition. E.g., Certain Lined Paper Products from the People’s Republic of China,
74 Fed. Reg. 63,387, 63,389-90 (Dep’t of Commerce Dec. 3, 2009) (final determ. second
admin. review) (highest rate from prior segment of the proceeding); Polyethylene Retail
Carrier Bags From Taiwan, 75 Fed. Reg. 14,569, 14,570 (Dep’t of Commerce Mar. 26,
2010) (LTFV final determ.) (highest margin alleged in the petition); Certain Tow Behind
Lawn Groomers and Certain Parts Thereof from the People’s Republic of China, 74 Fed.
Reg. 29,167, 29,170 (Dep’t of Commerce June 19, 2009) (LTFV final determ.) (“highest
margin on an individual model which fell within the mainstream of [a cooperative
respondent]’s transactions”); see Remand Results at 16-17.3 Commerce also often uses
3
This approach is a vestige from the old pre-URAA “Best Information Available” or total
BIA cases in which Commerce presumed the highest margin “is the most probative
evidence of current margins because, if it were not so, the importer, knowing the rule [that
Court No. 11-00535 Page 11
similarly high-value data to corroborate AFA rates derived from secondary information.
E.g., Wire Decking from the People’s Republic of China, 75 Fed. Reg. 32,905, 32,908
(Dep’t of Commerce June 10, 2010) (LTFV final determ.) (corroborating petition rate using
“the highest CONNUM-specific margin from the two mandatory respondents”); Narrow
Woven Ribbons with Woven Selvedge from the People’s Republic of China, 78 Fed. Reg.
10,130, 10,133 (Dep’t of Commerce Feb. 13, 2013) (final results admin. review)
(corroborating petition rate using highest “model-specific rates calculated for the
mandatory respondent” during the prior proceeding).
It is not surprising, then, that plaintiffs in total AFA cases often argue that
Commerce’s selected AFA rate or corroborating information is aberrational or outlying
(unreasonable) when measured against other margin data from the whole administrative
record (which includes whatever corroborating information Commerce or the parties add
to the record). See, e.g., Gallant Ocean, 602 F.3d at 1323-25 (agreeing that adjusted
petition rate was “aberrational” in light of record data used to calculate significantly lower
rates for “over a dozen” cooperative respondents); Fujian Lianfu Forestry, 34 CIT at ___,
700 F. Supp. 2d at 1362-63 (arguing that model-specific margins used to corroborate
were “aberrant” because they were too high and based on too small a percentage of total
sales); PSC VSMPO-AVISMA, 35 CIT at ___, 755 F. Supp. 2d at 1337-38 (arguing that
the “rate is impermissibly aberrational because it is based on an outlier sale” that had “an
Commerce would assign it to uncooperative parties], would have produced current
information showing the margin to be less.” Rhone Poulenc, Inc. v. United States, 899
F.2d 1185, 1190 (Fed. Cir. 1990).
Court No. 11-00535 Page 12
unusually low quantity, unusually high freight expenses”); Universal Polybag Co. v. United
States, 32 CIT 904, 918-19 & n.12, 577 F. Supp. 2d 1284, 1298 & n.12 (2008) (arguing
that transaction-specific margins used to corroborate AFA rate were aberrational with
respect to percentage rate and product type).
Nan Ya is no different than the typical AFA plaintiff, arguing that Shinkong’s
transaction underlying the 74.34% rate is aberrational because it is based on too small a
percentage of Shinkong’s total sales, and involves a model with atypical features that
Shinkong sold infrequently during the POR. Pl.’s 56.2 Br. at 6-8; Pl.’s Br. at 12-14.
Although these arguments have some merit, they do not render Commerce’s use of that
transaction unreasonable because other competing record information suggests that the
transaction was not aberrational. The transaction involved a larger quantity than many of
Shinkong’s other sales, and differed from other models in “the least important physical
characteristics.” Remand Results at 14. More important, as Commerce noted, “[i]n the
underlying review, Shinkong, the party that knows best which of its products are unusual,”
and the party with the greatest incentive to minimize the impact of its own high-margin
data, “did not argue that the transaction resulting in the margin should be excluded for
any reason.” Id. at 16. A reasonable mind would therefore not have to conclude that
Shinkong’s highest margin transaction was aberrational. Stated another way, the
administrative record does not mandate a finding that Shinkong’s highest margin
transaction was aberrational.
Beyond the more typical arguments challenging an AFA proxy, Nan Ya also
presents a formal statistical analysis to demonstrate that the AFA rate was an outlier and
Court No. 11-00535 Page 13
therefore unreasonable. Nan Ya applies three “commonly accepted statistical test[s]” to
Shinkong’s data: (1) a “gap test”, (2) an interquartile range methodology used by the
Internal Revenue Service, and (3) a standard deviation analysis. Pl.’s 56.2 Br. at 8-13;
Pl.’s Br. at 7-9; Nan Ya I, 37 CIT at ___, 906 F. Supp. 2d at 1352-54.
Just as a quick aside, applying statistical tests to Commerce’s selection of the
“highest” rate as an AFA proxy makes good practical sense if a respondent ultimately
plans to challenge whether that “extreme value”4 is a reasonable choice given the “central
tendency”5 of other data on the administrative record. At the very least, it would seem to
identify the probable commercial realities of an uncooperative respondent more
concretely than the guesswork occasioned by an undeveloped record with comparatively
superficial assertions about outliers and aberrancy.
Unfortunately, Nan Ya did not apply its statistical analysis to the full data set upon
which Commerce relied. When selecting the 74.34% rate, Commerce relied on
Shinkong’s transaction-specific margins, as well as Nan Ya’s own transaction-specific
margins from the prior administrative review (finding multiple Nan Ya transactions above
the 74.34% rate). Decision Memorandum at 15; AFA Assignment Memorandum at 3.
The reasonableness of the 74.34% rate therefore depends on both Shinkong’s and Nan
Ya’s data. It is that combined data set against which Nan Ya needed to apply its statistical
4
W. Paul Vogt, Dictionary of Statistics & Methodology 115 (3d ed. 2005) (defining
“extreme values” as “[t]he largest and smallest values in a distribution of values”).
5
Id. at 41 (defining “central tendency” as “[a] point in a distribution of [values] that
corresponds to a typical, representative or middle [value] in that distribution—such as the
[]mode, []mean, and []median”).
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analysis. Nan Ya, though, has treated Shinkong’s data as a closed set (as if it were the
only data supporting Commerce’s decision), and has ignored its own data. Nan Ya
therefore leaves unchallenged Commerce’s corroborative justification for the
reasonableness of the 74.34% rate: “Nan Ya was capable of dumping at” 74.34% as
evidenced by Nan Ya’s own data. Decision Memorandum at 15 (emphasis added).
Nan Ya does not offer much of an explanation as to why it failed to incorporate its
own prior data into its statistical analysis.6 Nan Ya instead tries to minimize the
significance of that data through two arguments, neither of which the court finds
persuasive. First, Nan Ya argues that when Commerce summarized Nan Ya’s argument
in the Final Results “without objection” (Nan Ya’s words), Commerce ostensibly
“admitted” that Nan Ya’s two 99.31% transaction-specific margins are aberrational. Pl.’s
Br. at 15-16. Commerce, though, made no such admission, but simply explained that
Nan Ya’s arguments about the preliminary rate “no longer need[ed] to be addressed”
because Commerce chose a different rate. Decision Memorandum at 7. More important,
in the Final Results and Remand Results, Commerce relied on more than those two
transactions to tie the 74.34% rate to Nan Ya, and Nan Ya simply never addresses this
additional data. Second, Nan Ya argues that Commerce was required to corroborate the
corroborating data; that is, corroborate Nan Ya’s transactional data from the prior review.
See Pl.’s Br. at 14-15. Not much need be said here other than that corroboration need
not go on ad infinitum. The statute authorizes Commerce to corroborate Shinkong’s
6
For whatever reason, Nan Ya also chose not to access and analyze Nan Ya’s more than
10 years’ worth of prior margin data that Commerce did not use for corroboration.
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transaction-specific margin with information “from independent sources that are
reasonably at [its] disposal,” 19 U.S.C. § 1677e(c), which certainly includes Nan Ya’s own
prior transactional data. See PAM, S.p.A., 582 F.3d at 1340; Fujian Lianfu Forestry,
34 CIT at ___, 700 F. Supp. 2d at 1363. The burden was not on Commerce to corroborate
the corroborating data, but instead on Nan Ya to (1) analyze its own prior transactional
data, (2) provide a compelling narrative of its “commercial reality”, and (3) propose an
alternative total AFA proxy, all with the aim of demonstrating the unreasonableness of the
total AFA rate of 74.36%.
It is Nan Ya that ultimately bears the burden to demonstrate that Commerce’s AFA
selection is unreasonable. See 28 U.S.C. § 2639(a)(1) (“[T]he decision of . . . the
administering authority . . . is presumed to be correct. The burden of proving otherwise
shall rest upon the party challenging such decision.”). By failing to address its own data
that provided the corroborative support for Commerce’s assignment of the 74.34% total
AFA proxy, Nan Ya has failed to meet that burden. Viewed alongside Shinkong’s data,
Nan Ya’s numerous transaction-specific margins appear to show that the 74.37% rate
may well be a reasonably accurate estimate of Nan Ya’s actual rate plus some built-in
increase intended as a deterrent against non-compliance. Accordingly, the court must
sustain Commerce’s AFA selection. See Hubscher Ribbon Corp. v. United States, 38
CIT ___, ___, 979 F. Supp. 2d 1360, 1366-71 (2014) (“[Plaintiff] . . . passed up an
important opportunity to crunch [the cooperative respondent’s] data against its own data
and create a narrative of its own commercial experience to discredit [the AFA rate]. . . .
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[Plaintiff] has left too much unexplained and has not met its burden to demonstrate the
unreasonableness of Commerce's corroboration.”).
With that said, although Nan Ya’s statistical arguments are not persuasive here,7
such statistical methodologies could very well support or enhance an analysis of the
reasonableness of Commerce’s total AFA selection under the de Cecco standard.
Commonly-accepted interquartile range methodologies might be useful in describing
outliers in non-normally distributed data sets, as they are in other contexts. See, e.g.,
Jared A. Wilkerson, Defending the Current State of Section 363 Sales, 86 Am. Bankr. L.J.
591, 618 n.132 (2012); John F. Pfaff, The Durability of Prison Populations, 2010 U. Chi.
Legal F. 73, 77 (2010); Lee Epstein, Andrew D. Martin & Christina L. Boyd, On the
Effective Communication of the Results of Empirical Studies, Part II, 60 Vand. L. Rev.
801, 815 n.38 (2007). A “gap test” might also be helpful as Commerce itself employed a
“gap test” of sorts when evaluating its own potential choices for the preliminary results,
settling upon Nan Ya’s 99.31% rate after rejecting several higher transaction-specific
7
Even overlooking the problematical data omission, Nan Ya failed to demonstrate the
unreasonableness of the 74.34% rate using Shinkong’s data alone. Under the “gap test”
analysis, the gaps between Shinkong’s highest transaction-specific margins do appear
small enough to be “consistent with” Commerce’s conclusion that Shinkong’s “margins
steadily increase by small amounts over the course of [all its] transactions.” Remand
Results at 18; see id. at 27 (explaining that, by comparison, Nan Ya’s highest transaction-
specific margins were not suitable preliminary choices for an AFA rate because they
“suddenly jumped” significantly, with similar gaps absent in Shinkong’s data). Also, the
IRS interquartile methodology does not help identify a suitable alternative AFA proxy (at
least when applied to Shinkong’s data alone), because it yields AFA proxy choices lower
than Nan Ya’s prior 18.30% calculated rate. See id. at 19. Finally, as Commerce
reasonably explains, Shinkong’s transaction-specific margin data does not appear to lend
itself to a proper standard deviation analysis. See id. at 19-20.
Court No. 11-00535 Page 17
margins because they “suddenly jumped” higher than the two 99.31% transactions. See
Remand Results at 27. It may be, however, that incorporating statistical tests to challenge
an AFA rate is easier said than done; otherwise one might have anticipated a more
prevalent role in the many AFA cases since the de Cecco standard emerged nearly 15
years ago.
In any event, for the reasons set forth above, the court sustains Commerce’s
assignment of a total AFA rate of 74.34% for Nan Ya. Judgment will be entered
accordingly.
/s/ Leo M. Gordon
Judge Leo M. Gordon
Dated: August 14, 2014
New York, New York