Baroque Timber Industries (Zhongshan) Co. v. United States , 925 F. Supp. 2d 1332 ( 2013 )

Slip Op. 13 - 96
UNITED STATES COURT OF INTERNATIONAL TRADE
BAROQUE TIMBER INDUSTRIES
(ZHONGSHAN) COMPANY, LIMITED, et
al.,
Plaintiffs,
v. Before: Donald C. Pogue,
Chief Judge
UNITED STATES,
Consol. Court No. 12-000071
Defendant,
and
COALITION FOR AMERICAN HARDWOOD
PARITY, et al.,
Defendant-Intervenors.
OPINION
[final determination of sales at less than fair value affirmed
in part and remanded in part]
Dated: July 31, 2013
Francis J. Sailer, Mark E. Pardo, Andrew T. Schutz,
and John M. Foote, Grunfeld, Desiderio, Lebowitz, Silverman &
Klestadt LLP, of Washington, DC, for Baroque Timber Industries
1
This action was consolidated with court nos. 11-00452, 12-
00013, and 12-00020. Order, May 31, 2012, ECF No. 37. The
complaint filed by the Coalition for American Hardwood Parity in
court no. 11-00452 was heard and decided separately in Baroque
Timber Industries (Zhongshan) Co. v. United States, __ CIT __,
853 F. Supp. 2d 1290 (2012), and Baroque Timber Industries
(Zhongshan) Co. v. United States, __ CIT __, 865 F. Supp. 2d
1300 (2012). The Coalition’s complaint was ultimately
dismissed. Baroque Timber Indus., 865 F. Supp. 2d at 1311.
Consol. Court No. 12-00007 Page 2
(Zhongshan) Co., Ltd.; Riverside Plywood Corp.; Samling Elegant
Living Trading (Labuan) Ltd.; Samling Global USA, Inc.; Samling
Riverside Co., Ltd.; and Suzhou Times Flooring Co., Ltd.
Gregory S. Menegaz, James K. Horgan, and John J.
Kenkel, deKieffer & Horgan, PLLC, Washington, DC, for Zhejiang
Layo Wood Industry Co., Ltd.; Changzhou Hawd Flooring Co., Ltd.;
Dunhua City Jisen Wood Industry Co., Ltd.; Dunhua City Dexin
Wood Industry Co., Ltd.; Dalian Huilong Wooden Products Co.,
Ltd.; Kunshan Yingyi-Nature Wood Industry Co., Ltd.; and Karly
Wood Product Ltd.
Kristin H. Mowry, Jeffrey S. Grimson, Jill A. Cramer,
Susan L. Brooks, Sarah M. Wyss, and Rebecca M. Janz, Mowry &
Grimson, PLLC, of Washington, DC, for Fine Furniture (Shanghai)
Ltd.; Great Wood (Tonghua) Ltd.; and Fine Furniture Plantation
(Shishou) Ltd.
Kristen S. Smith and Mark R. Ludwikowski, Sandler,
Travis & Rosenberg, PA, of Washington, DC, for Lumber
Liquidators Services, LLC; Armstrong Wood Products (Kunshan)
Co., Ltd.; and Home Legend, LLC.
Jeffrey S. Neeley, Michael S. Holton, and Stephen W.
Brophy, Barnes, Richardson & Colburn, Washington, DC, for
Zhejiang Yuhua Timber Co., Ltd.
Alexander V. Sverdlov, Trial Attorney, Commercial
Litigation Branch, Civil Division, United States Department of
Justice, of Washington, DC, for the United States. With him on
the brief were Stuart F. Delery, Principal Deputy Assistant
Attorney General, Jeanne E. Davidson, Director, and Claudia
Burke, Assistant Director. Of counsel on the brief was Shana
Hofstetter, Attorney, International Office of the Chief Counsel
for Import Administration, U.S. Department of Commerce, of
Washington, DC.
Jeffrey S. Levin, Levin Trade Law, P.C., of Bethesda,
MD, for the Coalition for American Hardwood Parity.
Pogue, Chief Judge: This is a consolidated action
seeking review of determinations made by the Department of
Commerce (“Commerce”) in the antidumping duty investigation of
multilayered wood flooring from the People’s Republic of China
Consol. Court No. 12-00007 Page 3
(“China”).2 Currently before the court is Respondents’ Motion
for Judgment on the Agency Record. Respondents3 challenge nine
aspects of Commerce’s Final Determination including: (1)
Commerce’s decision to apply its targeted dumping method on the
basis of non-dumped sales; (2) Commerce’s withdrawal of the
targeted dumping regulations; (3) Commerce’s use of zeroing in
an investigation; (4) the surrogate value of Layo’s core veneer
used for plywood production; (5) the surrogate value of Layo’s
high density fiberboard (“HDF”) input; (6) the surrogate value
of Samling’s HDF input; (7) the surrogate value of Layo’s
plywood inputs; (8) the surrogate value of brokerage and
handling fees; and (9) Commerce’s rejection of certain surrogate
financial statements.
2
Multilayered Wood Flooring from the People’s Republic of
China, 76 Fed. Reg. 64,318 (Dep’t Commerce Oct. 18, 2011) (final
determination of sales at less than fair value) (“Final
Determination”) and accompanying Issues & Decision Memorandum,
A-570-970, POI Apr. 1, 2010 – Sept. 30, 2010 (Oct. 11, 2011)
(“I & D Mem.”).
3
The Respondents who are party to this case include Baroque
Timber Industries (Zhongshan) Co., Ltd., Riverside Plywood
Corp., Samling Elegant Living Trading (Labuan) Ltd., Samling
Global USA, Inc., Samling Riverside Co., Ltd., Suzhou Times
Flooring Co., Ltd., Zhejiang Layo Wood Industry Co., Ltd.,
Changzhou Hawd Flooring Co., Ltd., Dunhua City Jisen Wood
Industry Co., Ltd., Dunhua City Dexin Wood Industry Co., Ltd.,
Dalian Huilong Wooden Products Co., Ltd., Kunshan Yingyi-Nature
Wood Industry Co., Ltd., Karly Wood Product Ltd., and Fine
Furniture (Shanghai) Ltd. Resp’ts’ Mem. L Supp. Mot. J. Agency
R., ECF No. 63 (“Resp’ts’ Br.”) at 1 n.1.
Consol. Court No. 12-00007 Page 4
In response, Commerce requests voluntary remand to
reconsider the valuation of Layo’s plywood input and Samling’s
HDF input. Commerce also requests voluntary remand to
reconsider the application of its method for analyzing targeted
dumping in light of any changes in value that may result from
reconsideration of the two surrogate values for which remand is
requested and in light of its current standards for applying its
targeted dumping method. Commerce contests the remaining
challenges to the Final Determination.
The court has jurisdiction pursuant to
§ 516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended,
19 U.S.C. § 1516a(a)(2)(B)(i) (2006)4 and 28 U.S.C. § 1581(c)
(2006).
As explained below, the Final Determination is
affirmed in part and remanded in part: (1) Commerce’s request
for remand to reconsider the surrogate value determinations for
Layo’s plywood input and Samling’s HDF input is granted; (2)
Commerce’s targeted dumping determination is remanded for
reconsideration in light of any changes to the surrogate value
determinations and in light of Commerce’s current standards;
4
All further citations to the Tariff Act of 1930, as
amended, are to Title 19 of the U.S. Code, 2006 edition, unless
otherwise noted.
Consol. Court No. 12-00007 Page 5
(3) the surrogate value determinations for Layo’s core veneer,
Layo’s HDF input, and the brokerage and handling fees are
remanded for further explanation or reconsideration consistent
with this opinion; and (4) Commerce’s rejection of Respondents’
late filed surrogate financial statements is affirmed.
BACKGROUND5
Responding to a petition by the Coalition for American
Hardwood Parity (“CAHP” or “Petitioners”), Commerce initiated an
antidumping duty investigation of multilayered wood flooring
from China on November 18, 2010. Multilayered Wood Flooring from
the People’s Republic of China, 75 Fed. Reg. 70,714 (Dep’t
Commerce Nov. 18, 2010) (initiation of antidumping duty
investigation). As permitted by the statute, Commerce chose
three mandatory respondents for the investigation: Zhejiang
Yuhua Timber Co., Ltd. (“Yuhua”), Zhejiang Layo Wood Industry
Co., Ltd. (“Layo”), and the Samling Group6 (“Samling”).
Multilayered Wood Flooring from the People’s Republic of China,
5
This is background relevant to all the issues presented;
facts relevant only to particular issues are found in the
discussion section.
6
The Samling Group includes Baroque Timber Industries
(Zhongshan) Co., Ltd., Riverside Plywood Corp., Samling Elegant
Living Trading (Labuan) Ltd., Samling Global USA, Inc., Samling
Riverside Co., Ltd., and Suzhou Times Flooring Co., Ltd.
Resp’ts’ Br. at 1 n.1.
Consol. Court No. 12-00007 Page 6
76 Fed. Reg. 30,656, 30,658 (Dep’t Commerce May 26, 2011)
(preliminary determination of sales at less than fair value)
(“Preliminary Determination”); see also 19 U.S.C.
§ 1677f-1(c)(2)(B). Commerce published its Final Determination
on October 18, 2011, finding that the subject merchandise was
being sold at less than fair value in the United States, i.e.,
dumped. Final Determination, 76 Fed. Reg. at 64,323–24.
Commerce determined that a de minimis dumping margin existed for
Yuhua, but assigned margins of 3.98% and 2.63% to Layo and
Samling respectively. Id.
STANDARD OF REVIEW
When reviewing Commerce’s decisions made in
antidumping investigations, the court “shall hold unlawful any
determination, finding, or conclusion found . . . to be
unsupported by substantial evidence on the record, or otherwise
not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).
DISCUSSION
I. Voluntary Remand
Commerce requests voluntary remand to reconsider two
determinations that it may have made in error: (1) the surrogate
Consol. Court No. 12-00007 Page 7
value7 of Layo’s plywood input and (2) the surrogate value of
Samling’s HDF input. Def.’s Resp. to Pls.’ Consol. Mot. J.
Admin. R., ECF No. 76 (“Def.’s Resp. Br.”) at 28–29. Commerce
also requests remand to reconsider the application of its method
for analyzing targeted dumping in light of any changes to these
two surrogate values and in light of its current standards.
Def.’s Resp. Br. at 29; Def.’s Supplemental Br., ECF No. 116, at
16–18.
While a reviewing court will refuse a request for
voluntary remand that is frivolous or in bad faith, “if the
agency’s concern is substantial and legitimate, a remand is
7
Commerce has designated China a non-market economy
country (“NME”). NME data for measuring normal value is
presumed to be unreliable due to the absence of market forces in
the country; therefore, Commerce calculates normal value for
merchandise from an NME using surrogate values for factors of
production drawn from a market economy country. 19 U.S.C.
§ 1677b(c)(1); see also Shanghai Foreign Trade Enters. Co. v.
United States, 28 CIT 480, 481, 318 F. Supp. 2d 1339, 1341
(2004). Surrogate values must be based on the best available
information, § 1677b(c)(1), drawn from “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,”
§ 1677b(c)(4). The statute does not define best available
information, but it is Commerce’s policy to “choose a surrogate
value that represents country-wide price averages specific to
the input, which are contemporaneous with the [POI], net of
taxes and import duties, and based on publicly available, non-
aberrational, data from a single surrogate [market economy]
country.” I & D Mem., cmt. 13 at 59.
Consol. Court No. 12-00007 Page 8
usually appropriate.” SKF USA Inc. v. United States, 254 F.3d
1022, 1029 (Fed. Cir. 2001). Commerce’s concerns are considered
substantial and legitimate when (1) Commerce supports its
request with a compelling justification, (2) the need for
finality does not outweigh the justification, and (3) the scope
of the request is appropriate. Ad Hoc Shrimp Trade Action Comm.
v. United States, __ CIT __, 882 F. Supp. 2d 1377, 1381 (2013).
This three-pronged test will be applied to each of Commerce’s
requests in turn.
A. Layo’s Plywood Input
The agency justifies its first remand request on the
basis that, “Commerce has discovered that there is conflicting
evidence on the record as to the range of Layo Wood’s plywood
thicknesses.” Def.’s Resp. Br. at 28. Clarifying and correcting
a potentially inaccurate determination is a compelling
justification. See Parkdale Int’l v. United States, 475 F.3d
1375, 1380 (Fed. Cir. 2007) (“[A]n overriding purpose of
Commerce’s administration of antidumping laws is to calculate
dumping margins as accurately as possible . . . .”). In the
context of a routine appeal of a final determination, the need
to accurately calculate margins is not outweighed by the
interest in finality. See Shakeproof Assembly Components Div. of
Ill. Tool Works, Inc. v. United States, 29 CIT 1516, 1523–24,
412 F. Supp. 2d 1330, 1337–38 (2005). In addition, the scope of
Consol. Court No. 12-00007 Page 9
Commerce’s remand request — to clarify the record evidence and
revise the determination if warranted — is an appropriate
response to Commerce’s concern. Therefore, Commerce’s request
for remand to reconsider the surrogate value determination for
Layo’s plywood input is granted.8
B. Samling’s HDF Input
Commerce also requests remand to reconsider the
surrogate value determination for Samling’s HDF input because
the Harmonized Tariff Schedule (“HTS”) category used to value
Samling’s HDF input may not accurately represent Samling’s HDF
input. Def.’s Resp. Br. at 29. The voluntary remand analysis
above also applies to this determination and supports granting
Commerce’s request. As noted above, accuracy is a compelling
8
The court will not, as Layo suggests, require Commerce to
adopt Layo’s recommended procedures and calculations for valuing
the plywood input. Resp’ts’ Reply Br., ECF No. 87, at 21. In
matters of method, the court “defer[s] to the agency whose
expertise, after all, consists of administering the statute.”
Gleason Indus. Prods., Inc. v. United States, 31 CIT 393, 396
(2007); cf. NLRB v. Enter. Ass’n of Steam, Hot Water, Hydraulic
Sprinkler, Pneumatic Tube, Ice Mach. & Gen. Pipefitters, Local
Union No. 638, 429 U.S. 507, 522 n.9 (1977) (“When an
administrative agency has made an error of law, the duty of the
Court is to correct the error of law committed by that body, and
after doing so to remand the case to the [agency] so as to
afford it the opportunity of examining the evidence and finding
the facts as required by law.”) (alteration in original)
(citation omitted) (internal quotation marks omitted).
Consol. Court No. 12-00007 Page 10
justification, which is not outweighed by finality in this case,
and the scope of the remand request is appropriate.
CAHP objects to remand of this determination on the
grounds that Samling failed to exhaust its administrative
remedies.9 Def.-Intervenor’s Resp. to Pls.’ Consol. Mot. J.
Admin. R., ECF No. 82 (“Def.-Intervenor’s Resp. Br.”) at 6–9.
But refusing Commerce’s remand request on exhaustion grounds is
not appropriate on the facts of this case. During verification,
Layo submitted additional information to Commerce regarding the
proper HTS category for the HDF input. Layo Case Br., A-570-970,
POI Apr. 1, 2010 – Sept. 30, 2010 (Aug. 5, 2011), Admin. R. Pt.
9
When reviewing challenges to antidumping determinations,
this court “shall, where appropriate, require the exhaustion of
administrative remedies.” 28 U.S.C. § 2637(d) (2006). Requiring
parties to exhaust their administrative remedies “allows the
agency to apply its expertise, rectify administrative mistakes,
and compile a record adequate for judicial review — advancing
the twin purposes of protecting administrative agency authority
and promoting judicial efficiency.” Camau Frozen Seafood
Processing Imp. Exp. Corp. v. United States, __ CIT __,
880 F. Supp. 2d 1348, 1355 (2012) (quoting Carpenter Tech. Corp.
v. United States, 30 CIT 1595, 1597, 464 F. Supp. 2d 1347, 1349
(2006)). While the “general rule [is] that courts should not
topple over administrative decisions unless the administrative
body not only has erred but has erred against objections made at
the time appropriate under its practice,” Dorbest Ltd. v. United
States, 604 F.3d 1363, 1375 (Fed. Cir. 2010) (quoting United
States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37
(1952)), the statute permits the court discretion to decide when
requiring exhaustion is appropriate, see Camau Frozen Seafood,
__ CIT at __, 880 F. Supp. 2d at 1356.
Consol. Court No. 12-00007 Page 11
2 Pub. Doc. 2, at 25–26. In light of Layo’s submission,
Commerce altered the HTS category used to value Layo’s HDF
input. I & D Mem., cmt. 20 at 81–82. Although HDF is an input
common to Layo and Samling, Commerce did not seek similar
information from Samling or change the HTS category used to
value Samling’s HDF input. See Id. Thus, the issue was before
Commerce, but Commerce declined to address it with regard to
Samling. Cf. Calgon Carbon Corp. v. United States, Slip Op. 11-
21, 2011 WL 637605, at *6 (CIT Feb. 17, 2011) (“Commerce had no
obligation to accept additional evidence at verification. Once
Commerce did accept such evidence, however, Commerce had an
obligation to treat [plaintiff] fairly by giving it a similar
opportunity.”). Moreover, because Commerce has requested
voluntary remand there is little concern that the alleged
failure to exhaust will “deprive[] the agency of the opportunity
to consider these arguments in the first instance.” Carpenter
Tech., 30 CIT at 1598, 464 F. Supp. 2d at 1349. Rather, remand
will “allow[] the agency to apply its expertise, rectify
administrative mistakes, and compile a record adequate for
judicial review . . . .” Id.Therefore, Commerce’s request for remand to reconsider
the proper HTS category for valuing Samling’s HDF input is
granted.
Consol. Court No. 12-00007 Page 12
C. Targeted Dumping
Third, Commerce requests remand to reconsider the
application of its targeted dumping method in light of “any
changes in surrogate values [for Layo’s plywood input and
Samling’s HDF input] and in accordance with its current
standards.” Def.’s Resp. Br. at 29. Commerce contends that
changes in surrogate values and application of updated standards
for applying the targeted dumping method may result, on remand,
in a determination that the targeted dumping method should not
be applied to either Samling or Layo; therefore, Plaintiffs’
targeted dumping challenges may become moot. Def.’s Supplemental
Br. at 10–18. The Government’s Response Brief did not clearly
explain the basis for seeking remand to reconsider the
application of the targeted dumping method; however, in
supplemental briefing filed with leave of the court, the
Government presented a persuasive argument explaining why the
targeted dumping issues may become moot on remand.10
10
The court does not reach the merits of Plaintiffs’
targeted dumping challenges; however, it does note the recent
decision in Gold East Paper (Jiangsu) Co. v. United States, Slip
Op. 13-74, 2013 WL 2996231 (CIT June 17, 2013). Gold East Paper
decided a challenge to the withdrawal of the targeted dumping
regulations similar to that raised by the Plaintiffs in this
case, holding that the regulations were improperly withdrawn.
Id. at *5–8. While the issue is not decided here, considered in
light of Gold East Paper, the Government’s defense of the
withdrawal does not appear strong. Specifically, it does not
(footnote continued)
Consol. Court No. 12-00007 Page 13
To explain: Commerce is permitted by statute to use
an average-to-transaction method, referred to as the targeted
dumping method,11 to calculate the dumping margin if “(i) there
appear persuasive to respond to the Administrative Procedure
Act’s notice and comment requirement by providing an opportunity
to comment in a general way on the application of the targeted
dumping methodology. The government presents no reason to
believe that this general notice, on a different subject, should
be considered adequate notice of an outright withdrawal of the
subject regulations. Nor are the cases the Government cites to
support this method of rulemaking apposite. The withdrawal of
the targeted dumping regulations was neither a “logical
outgrowth” of the prior opportunities to comment, cf. Ariz. Pub.
Serv. Co. v. EPA, 211 F.3d 1280, 1299–1300 (D.C. Cir. 2000)
(denying notice and comment challenge where “the final rule was
not wholly unrelated or surprisingly distant from what the
[agency] initially suggested”), nor was the withdrawal simply an
alteration of a previously proposed rule, see First Am. Discount
Corp. v. Commodity Futures Trading Comm’n, 222 F.3d 1008, 1015
(D.C. Cir. 2000); cf. Fed. Express Corp. v. Mineta, 373 F.3d
112, 120 (D.C. Cir. 2004) (“Although perhaps [the agency] should
not have labeled the First through Third rules as ‘final,’ the
agency has made a compelling showing that it provided a
meaningful opportunity to comment before the Fourth Final Rule
became effective.”) (citations omitted) (internal quotation
marks omitted). Finally, because Commerce had ample opportunity
to provide notice and comment, it does not appear appropriate to
claim that this was an “emergency situation[], or [a situation]
where delay would result in serious harm,” Jifry v. FAA, 370
F.3d 1174, 1179 (D.C. Cir. 2004) (citation omitted), such as
would warrant application of the good cause exception.
11
Commerce determines whether merchandise is sold at less
than fair value, i.e. dumped, by comparing export price to
normal value. 19 U.S.C. § 1677(34), (35)(A) (defining dumping
and dumping margin). The statute provides two default methods
for making the less than fair value determination in an
investigation. § 1677f-1(d)(1)(A). Commerce may compare either
(1) the weighted average normal value to the weighted average
export price for sales of comparable merchandise, the “average-
to-average” or “A-A” method, § 1677f-1(d)(1)(A)(i), or (2) the
(footnote continued)
Consol. Court No. 12-00007 Page 14
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
a method described in paragraph (1)(A)(i) [the commonly employed
average-to-average method] or (ii) [the transaction-to-
transaction method].” § 1677f-1(d)(1)(B).
To satisfy the first element of the statutory test, “a
pattern of export prices . . . that differ significantly among
purchasers, regions, or periods of time,” § 1677f-1(d)(1)(B)(i),
Commerce relies on a test first introduced in the antidumping
investigation of Certain Steel Nails from the People’s Republic
of China (the “Nails from China Test”).12 I & D Mem., cmt. 4
normal values of individual transactions to the export prices of
individual transactions, the “transaction-to-transaction” or “T-
T” method, § 1677f-1(d)(1)(A)(ii). If, however, Commerce makes
the necessary findings pursuant to § 1677f-1(d)(1)(B), discussed
below, then it may compare the weighted average of the normal
values to the export prices of individual transactions, the
“average-to-transaction” or “A-T” method. § 1677f-1(d)(1)(B).
12
Certain Steel Nails from the People’s Republic of China,
73 Fed. Reg. 33,977 (Dep’t Commerce June 16, 2008) (final
determination of sales at less than fair value and partial
affirmative determination of critical circumstances) and
accompanying Issues & Decision Memorandum, A-570-909, POI Oct.
1, 2006 – Mar. 31, 2007 (June 6, 2008) cmts. 3–7 at 15–23.
The Nails from China Test has two steps. In step one,
Commerce “determines the share of the alleged targeted-
customer’s purchases of subject merchandise (by sales volume)
that are at prices more than one standard deviation below the
(footnote continued)
Consol. Court No. 12-00007 Page 15
at 29–31. When Commerce applied the Nails from China Test in
this case, the test did not take into account what proportion of
a respondent’s total sales volume consisted of targeted sales.
Def.’s Supplemental Br. at 17. Commerce has altered its
practice since publication of the Final Determination and now
examines a respondent’s targeted dumping by volume as a
component of the pattern requirement. Id. at 16–17; Certain
Stilbenic Optical Brightening Agents from Taiwan, 76 Fed. Reg.
68,154, 68,156 (Dep’t Commerce Nov. 3, 2011) (preliminary
determination of sales at less than fair value and postponement
of final determination), unchanged in Certain Stilbenic Optical
Brightening Agents from Taiwan, 77 Fed. Reg. 17,027 (Dep’t
Commerce Mar. 22, 2012) (final determination of sales at less
than fair value).
weighted-average price to all customers, targeted and non-
targeted,” and if such share of sales exceeds thirty-three
percent of the total volume of a respondent’s sales of subject
merchandise to the alleged targeted customer, then Commerce
considers there to be a pattern of price differences. I & D
Mem., cmt. 4 at 30. In the second step, Commerce examines all
sales of identical merchandise by a respondent to the alleged
targeted customer and “determines the total volume of sales for
which the difference between the weighted-average price of sales
to the allegedly targeted customer and the next higher weighted-
average price of sales to a non-targeted customer exceeds the
average price gap (weighted by sales volume) for the non-
targeted group,” and if such share of sales exceeds five
percent, Commerce considers there to be a significant difference
in prices. Id. at 30–31.
Consol. Court No. 12-00007 Page 16
Plaintiffs have argued that their proportion of
targeted sales by volume is minimal. Particularly, Plaintiffs
contend that only 2.66% of Layo’s sales were found to be
targeted and only 7.40% of Samling’s sales were found to be
targeted. Resp’ts’ Br. at 18; see also Def.’s Supplemental Br.
at 18. In light of the changes to the Nails from China Test and
the argument put forward by Plaintiffs, Commerce, on remand, may
find that there was not a pattern of significant price
differences pursuant to 19 U.S.C. § 1677f-1(d)(1)(B)(i).13
13
Petitioner’s argue that permitting Commerce to apply its
modified Nails from China Test on remand would be fundamentally
unfair and possibly improper retroactive action. Def.-
Intervenor’s Resp. to Def.’s Supplemental Br., ECF No. 119
at 5-9. Commerce’s request, however, falls squarely within the
parameters for remand articulated in SKF USA:
[T]he agency may request a remand because it believes
that its original decision is incorrect on the merits
and wishes to change the result. . . . The more
complex question, however, involves a voluntary remand
request associated with a change in agency policy or
interpretation. . . . Where there is no step one
Chevron issue, we believe a remand to the agency is
required, absent the most unusual circumstances
verging on bad faith. Under Chevron, agencies are
entitled to formulate policy and make rules “to fill
any gap left, implicitly or explicitly, by Congress.”
Furthermore, an agency must be allowed to assess “the
wisdom of its policy on a continuing basis.” Under
the Chevron regime, agency discretion to reconsider
policies does not end once the agency action is
appealed.
SKF USA, 254 F.3d at 1029–30 (quoting Chevron U.S.A. Inc. v.
Natural Resources Def. Council, 467 U.S. 837, 843, 864 (1983)).
Consol. Court No. 12-00007 Page 17
To satisfy the second part of the statutory test,
i.e., to show that the differences cannot be taken into account
using the A-A method, § 1677f-1(d)(1)(B)(ii), Commerce
calculates the dumping margin using both the A-A method and the
A-T method. See, e.g., Bottom Mount Combination Refrigerator-
Freezers from Mexico, 77 Fed. Reg. 17,422, 17,424 (Dep’t
Commerce Mar. 26, 2012) (notice of final determination of sales
at less than fair value and affirmative critical circumstances
determination). If the A-A and A-T methods yield
insignificantly different margins, then Commerce considers any
price differences found pursuant to the Nails from China Test to
be taken into account by the A-A method and does not apply the
targeted dumping method. Id. Because the dumping margin is
affected by changes in surrogate value, the request for remand
of certain surrogate values, discussed above, and the court’s
remand of other surrogate values, discussed below, may alter the
relative margins produced by the A-A and A-T methods. In
particular, Samling argues, and Commerce acknowledges, that
changing the HTS category used to value Samling’s HDF input –
which Commerce has requested remand to reconsider – is likely to
result in a de minimis margin for Samling using either the A-A
or A-T method. Resp’ts’ Br. at 64; Def.’s Supplemental Br. at
14. Thus, because the court is remanding surrogate value
determinations for reconsideration, Commerce may, on remand,
Consol. Court No. 12-00007 Page 18
determine that part two of the statutory test is unsatisfied for
one or both Plaintiffs.
It follows that Commerce has presented a persuasive
argument that reconsideration upon remand may result in both
Plaintiffs failing to meet the statutory test for application of
the targeted dumping method. If, on remand, Commerce does not
apply the targeted dumping method to any Plaintiff, then the
targeted dumping arguments raised by Plaintiffs will become
moot. The possibility that the targeted dumping method will not
be applicable to Plaintiffs upon remand is a compelling
justification for remand, and the possibility that any decision
this court would make on the merits regarding the targeted
dumping challenges will become moot diminishes concerns of
finality. See Ad Hoc Shrimp Trade Action Comm., __ CIT at __,
882 F. Supp. 2d at 1381. For this reason, the court grants
Commerce’s request for voluntary remand to reconsider
application of the targeted dumping method in light of changes
to surrogate values and in conformity with current standards.14
14
In light of the possibility that Plaintiffs’ substantive
challenges to the method for analyzing targeted dumping will
become moot on remand, it is also possible that Commerce will
not use zeroing in this investigation, thus rendering moot
Plaintiffs’ challenge to the use of this practice in
investigations. Accordingly, any consideration of zeroing will
also be deferred.
Consol. Court No. 12-00007 Page 19
II. Other Surrogate Values
A. Surrogate Value of Layo’s Core Veneer
Commerce defined MLWF for purposes of the
investigation as wood flooring that is “composed of an assembly
of two or more layers or plies of wood veneer(s) in combination
with a core. The several layers, along with the core, are glued
or otherwise bonded together to form a final assembled product.”
Preliminary Determination, 76 Fed. Reg. at 30,657 (footnote
omitted). Layo produces multilayered wood flooring composed of
a face veneer, core layer, and back layer. Layo Sales & FOP
Verification Report, A-570-970, POI Apr. 1, 2010 – Sept. 30,
2010 (July 22, 2011), Admin. R. Pt. 1 Pub. Doc. 599 (“Layo
Verification Report”) at 13. Layo uses core grade wood sheets
and chips, or core veneer,15 to produce plywood for the core
layer of its wood flooring. Layo Section C & D Questionnaire,
A-570-970, POI Apr. 1, 2010 – Sept. 30, 2010 (Feb. 23, 2011),
15
The parties refer to the core-grade wood sheets and chips
used to produce the core layer in a variety of ways, including
core veneer, core chips and sheets, and core material.
Consistent with the Issues and Decision Memorandum in this case,
the court will refer to the materials used to produce the core
layer as core veneer. The core veneer, used to produce the core
layer, is distinct from face veneer, the top-most or exterior
layer of finished MLWF. I & D Mem., cmts. 14–16 at 66–74
(discussing different surrogate values for face veneers and core
veneers).
Consol. Court No. 12-00007 Page 20
Admin. R. Pt. 1 Pub. Doc. 321 (“Layo C & D Questionnaire”)
at 10–11.
In the Preliminary Determination, Commerce valued
Layo’s core veneer using Philippine National Statistics Office
(“NSO”) data, specifically values for Philippine HTS subheading
4408.90.10, which applies to non-coniferous, non-tropical
(“NCNT”) face veneer. I & D Mem., cmt. 16 at 73; Preliminary
Surrogate Value Mem., A-570-970, POI Apr. 1, 2010 – Sept. 30,
2010 (May 19, 2011), Admin. R. Pt. 1 Pub. Doc. 523, at 7. In
comments on the Preliminary Determination, both Layo and
Petitioners agreed that Layo’s core veneers are properly
classified under Philippine HTS subheading 4408.90.90-06, which
is the HTS subheading for “sheets for plywood.” I & D Mem., cmt.
16 at 73. The parties did not, however, agree on a dataset that
would provide a basis for valuing core veneer using the ten
digit subheading, HTS 4408.90.90-06. Petitioners argued that
the only data available for HTS 4408.90.90-06 reflected a low
volume of imports from a single country during 2009, a non-
contemporaneous period; therefore, Petitioners argued, Commerce
should value core veneer using the eight digit basket subheading
HTS 4408.90.90, which includes the ten digit subheading HTS
Consol. Court No. 12-00007 Page 21
4408.90.90-06 along with other ten digit subheadings.16 Id. In
response, Layo argued that the NSO data did not provide values
for the specific subheading at issue and Commerce should value
core veneer on the basis of HTS 4408.90.90-06 drawn from Global
Trade Atlas (“GTA”) data. Id. Commerce agreed with Petitioners
and valued Layo’s core veneer using the basket category, HTS
4408.90.90, drawn from the NSO data. Id. Layo challenges this
determination on the grounds that HTS 4408.90.90 was not the
best available information because it lacked specificity and was
unreasonable because it resulted in a value for core veneer that
exceeded the value for face veneer. Resp’ts’ Br. at 52–57.
16
The breakdown of the basket subheading HTS 4408.90.90 is
as follows:
4408.90.90: Other
4408.90.90-01: A. Sheets for veneering which are
obtained by slicing laminated wood
4408.90.90 B. Other
4408.90.90-02: Sheets for plywood, of White Lauan
4408.90.90-03: White Lauan, sawn lengthwise, sliced or
peeled
4408.90.90-04: Tanguile, sawn lengthwise, sliced or
peeled
4408.90.90-05: Veneer corestock
4408.90.90-06: Sheets for plywood
4408.90.90-07: Narra, sawn lengthwise, sliced or
peeled
4408.90.90-09: Other
Philippine Standard Commodity Classification, Ex. 2 to Pet’rs’
Factor Data, A-570-970, POI Apr. 1, 2010 – Sept. 30, 2010 (July
5, 2011), Admin. R. Pt. 1 Pub. Doc. 581 (asterisks omitted).
Consol. Court No. 12-00007 Page 22
When considering Layo’s challenges, the court will not
substitute its judgment regarding what evidence constitutes the
best available information for that of Commerce, so long as
Commerce’s determination is reasonable. See Zhejiang DunAn
Hetian Metal Co. v. United States, 652 F.3d 1333, 1341 (Fed.
Cir. 2011). There are two aspects of Commerce’s determination,
however, that, absent further explanation, make it unreasonable.
First, the NSO data does not reflect any imports
specific to the input at issue. The 2010 NSO data contains no
record of imports under HTS 4408.90.90-06, the subheading all
parties agree is most appropriate for core veneer. Ex. 4 to
Resp’ts’ Br.; Ex. 9 to Pet’rs’ Rebuttal Surrogate Data, A-570-
970, POI Apr. 1, 2010 – Sept. 30, 2010 (Mar. 21, 2011), Admin.
R. Pt. 1 Pub. Doc. 374. Therefore, the basket category that
Commerce opted to use was a basket containing no like product to
that being valued. In other words, by valuing core veneer on
the basis of HTS 4408.90.90 drawn from the 2010 NSO data,
Commerce valued the core veneer on the basis of exclusively non-
core veneer imports to the Philippines. The unreasonableness of
valuing the core veneer in this way is further revealed by the
unreasonable outcome that resulted, as discussed below.
Consol. Court No. 12-00007 Page 23
Valuing core veneer on the basis of HTS 4408.90.90
results in a surrogate value for core veneer that is higher than
the surrogate value for face veneer.17 In the Final
Determination, Commerce valued Layo’s face veneer at
173.41 USD/m3 and Layo’s core veneer at 300.08 USD/m3. Layo
Final Surrogate Value Sheet, A-570-970, POI Apr. 1, 2010 – Sept.
30, 2010, Admin. R. Pt. 2 Pub. Doc. 23. Were core veneer more
expensive than face veneer, however, there would be no incentive
for Layo, or any wood flooring manufacturer, to use core veneer
17
Commerce argues that the court should not consider Layo’s
argument regarding the relative values of core veneer and face
veneer because Layo did not raise this argument before Commerce
and, therefore, did not exhaust its administrative remedies.
Def.’s Resp. Br. at 14–17. For a summary of the exhaustion
doctrine, see supra note 9. Commerce’s recapitulation of the
record appears to be incorrect. A review of Layo’s Case Brief
reveals the following passage, which the court believes
sufficiently raised the issue to preserve it for appeal:
[T]he value reflected in the GTA import statistics for
HTS 4408.90.9006 is rational because it is lower than
the value for “face veneers” under Philippine HTS
4408.90.10 from the NSO data at USD 173.41/M3 as the
Department found and as indicated in the above table.
In contrast, the value offered by petitioners after
the preliminary determination is higher than the value
determined by the Department for face veneers. Thus,
not only is the basis for petitioners’ recommended
surrogate value for core veneer less specific but it
also defies the economics of MLWF manufacturing and
costs. The core sheets are used as the primary cheap
filler wood whereas face veneer is used precisely
because it is more expensive.
Layo Case Br. at 19.
Consol. Court No. 12-00007 Page 24
materials or invest labor costs in constructing a plywood core
layer from core veneer – a process Layo reported performing and
Commerce verified. Layo Supplemental Section D Questionnaire,
A-570-970, POI Apr. 1, 2010 – Sept. 30, 2010 (Apr. 8, 2011),
Admin. R. Pt. 1 Pub. Doc. 404 at 5; Layo Verification Report
at 13-15. It follows that Commerce’s decision to value core
veneer at a price higher than face veneer, when both the record
and common sense dictate that core veneers are less valuable
than face veneers, is unreasonable. Therefore, this
determination is remanded to Commerce for reconsideration.
B. Surrogate Value of Layo’s HDF Input
Fiberboard is available in a range of densities
measured in kilograms per meter cubed (“kg/m3”). These
densities can be grouped into categories such as medium density
fiberboard (“MDF”) and high density fiberboard (“HDF”). The
Philippine NSO defines fiberboard ranging in density from 500–
800 kg/m3 as MDF, HTS 4411.21, and fiberboard with a density
above 800 kg/m3 as HDF, HTS 4411.11. I & D Mem., cmt. 20 at 82.
Layo reported using fiberboard that ranged in density
from 760 kg/m3 to 880 kg/m3,18 but did not report quantities of
18
Commerce incorrectly identifies the range of densities as
760 kg/m3 to 990 kg/m3 in its Response Brief. Def.’s Resp. Br.
at 18.
Consol. Court No. 12-00007 Page 25
each density. Id. Therefore, Commerce used a simple average of
the two HTS categories, HTS 4411.11 and HTS 4411.21, to
determine the value of Layo’s fiberboard input. Id. Layo now
argues that Commerce should have either used only HTS 4411.11,
because Layo reported 820 kg/m3 as the most common density it
used, or, if averaging, Commerce should not have converted the
values for both HTS categories from USD/kg to USD/m3 using the
same measure of density, 820 kg/m3. Resp’ts’ Br. at 60–61.
Layo’s contention that Commerce should have used only
HTS 4411.11 is not persuasive. Layo argues that “most of the
fiberboard [Layo] consumed had a density of 820kg/m3.” Id.
at 60. Layo further contends that Commerce agrees with this
assertion based on its use of 820 kg/m3 in calculating the
surrogate value for the Final Determination. Id. at 60; see also
Layo Final Surrogate Value Sheet (employing 820 kg/m3 as a
conversion factor for the HDF surrogate value). But Layo’s
contentions are not supported by the record. Layo reported that
it consumed fiberboard in densities ranging from 760 kg/m3 to
880 kg/m3, but nothing in the record indicates that Layo
reported quantities or percentages of particular densities. See
I & D Mem., cmt. 20 at 82; Layo Case Br. at 27. The simple
average of Layo’s reported range of densities is 820 kg/m3;
however, because this is a simple average and not a weighted
average, it does not indicate that 820 kg/m3 was the most common
Consol. Court No. 12-00007 Page 26
density consumed by Layo. Thus, there is no record evidence to
support Layo’s contention that 820 kg/m3 is the most common
density of fiberboard it consumes. Furthermore, even if Layo
predominately consumed fiberboard of a density that fell within
HTS 4411.11, it is reasonable for Commerce to account for the
other fiberboard Layo consumes, which falls within HTS 4411.21.
Layo’s second argument regarding the conversion
factor, however, warrants further explanation or reconsideration
by Commerce. Commerce used a two-step calculation to derive the
surrogate value for fiberboard. In step one, Commerce averaged
the values of HTS 4411.11 and HTS 4411.21. In step two, the
average value was converted from USD/kg (as reported in the NSO)
to USD/m3 (as reported by Layo). The parties’ dispute centers
on the proper order of these steps.
In the Final Determination, Commerce averaged the HTS
values first, arriving at an average value of 0.54 USD/kg. See
Layo Final Surrogate Value Sheet. Commerce then multiplied the
average value by the average density of Layo’s fiberboard, 820
kg/m3, to arrive at a surrogate value of 442.90 USD/m3. See Id.
Layo contends that Commerce should have first converted each HTS
category into USD/m3, by multiplying the value by an appropriate
average density, and then averaged the resultant values.
According to Layo, converting each HTS category to USD/m3 would
be more accurate because HTS 4411.21, which covers 500–800
Consol. Court No. 12-00007 Page 27
kg/m3, would be converted using a density appropriate to that
category rather than the average density for Layo’s input, 820
kg/m3, which would otherwise fall into HTS 4411.11. Resp’ts’ Br.
at 61.
Commerce is afforded wide discretion in its selection
and calculation of surrogate values. Grobest & I-Mei Indus.
(Viet.) Co. v. United States, __ CIT __, 815 F. Supp. 2d 1342,
1351 (2012). “[The] court’s duty is not to evaluate whether the
information Commerce used was the best available, but rather
whether a reasonable mind could conclude that Commerce chose the
best available information.” Id. (quoting Zhejiang DunAn, 652
F.3d at 1341 (alteration in original) (internal quotation marks
omitted). Nonetheless, agency action that is unsupported by a
reasoned explanation will not be affirmed. See SEC v. Chenery
Corp., 332 U.S. 194, 196 (1947) (“[A] reviewing court, in
dealing with a determination or judgment which an administrative
agency alone is authorized to make, must judge the propriety of
such action solely by the grounds invoked by the agency. If
those grounds are inadequate or improper, the court is powerless
to affirm the administrative action by substituting what it
considers to be a more adequate or proper basis.”).
Commerce has not provided any explanation for its
decision to convert the average HTS value by the average density
of Layo’s fiberboard input. While the court will not substitute
Consol. Court No. 12-00007 Page 28
its judgment for that of the agency, Layo has raised legitimate
questions about the propriety of Commerce’s calculation. If
Commerce had chosen to perform the calculation differently, it
would likely have changed the surrogate value for HDF. Without
an explanation of its decision, the court cannot affirm
Commerce’s determination. See Id. Therefore, the surrogate
value for Layo’s fiberboard is remanded for further explanation
or reconsideration.
C. Brokerage and Handling Fees
When calculating the export price, Commerce deducts
“the amount, if any, included in such price, attributable to any
additional costs, charges, or expenses . . . which are incident
to bringing the subject merchandise from the original place of
shipment in the exporting country to the place of delivery in
the United States,” such as brokerage and handling fees.
19 U.S.C. § 1677a(c)(2)(A). In this case, Commerce valued
brokerage and handling fees using data for the Philippines from
the World Bank report Doing Business 2011: Making a Difference
for Entrepreneurs (“Doing Business Report”). Preliminary
Surrogate Value Mem. at 17; Doing Business Report, Ex. 9 to
Preliminary Surrogate Value Mem.
Layo contends that the brokerage and handling fees
reflected in the Doing Business Report are overstated because
they include fees for obtaining a letter of credit, which is not
Consol. Court No. 12-00007 Page 29
a component of Layo’s costs. Resp’ts’ Br. at 81–82. Commerce
contends that there is no indication that letter of credit costs
are included in the Doing Business Report and, if they are, such
costs are generally paid by the purchaser not the exporter. I &
D Mem., cmt. 8 at 48.
The record evidence does not support Commerce’s
determination. The World Bank uses data from its Trading Across
Borders Survey to compile the Doing Business Report. See Trading
Across Borders Survey, Ex. 11 to Layo Surrogate Data, A-570-970,
POI Apr. 1, 2010 – Sept. 30, 2010 (Mar. 15, 2011), Admin. R. Pt.
1 Pub. Doc. 364.19 Layo points out that the survey asks
respondents to “assume that the method of payment will be a
Letter of Credit . . . ,” Trading Across Borders Survey at 3,
and provides respondents an opportunity to detail the costs
associated with an “Export Letter of Credit,” Trading Across
Borders Survey at 5. Commerce responds that the Doing Business
Report contains a list of documents required for export that
does not include a letter of credit, thereby indicating that
19
The Trading Across Borders Survey establishes a
hypothetical import/export scenario between the survey
respondent and a fictional company located in a foreign market.
The survey establishes certain parameters for the hypothetical,
including shipping method and value of goods, and asks the
survey respondent to describe the process for importing and
exporting the hypothetical goods into and out of his or her
country. Trading Across Borders Survey at 3.
Consol. Court No. 12-00007 Page 30
letters of credit are not included in the World Bank’s
calculations. I & D Mem., cmt. 8 at 48; Doing Business Report
at 11.
Commerce’s argument is unpersuasive. The Trading
Across Borders Survey not only contemplates the possibility of
exporters using a letter of credit, it directs the respondent to
assume use of a letter of credit, which indicates that letter of
credit expenses are included as a cost of doing business.
Moreover, in a website discussing the methodology of the Trading
Across Borders Survey and Doing Business Report, the World Bank
states that “[p]ayment is made by letter of credit, and the
time, cost and documents required for the issuance or advising
of a letter of credit are taken into account.” Trading Across
Borders Methodology, Ex. 12 to Layo Surrogate Data. Nor is the
absence of a letter of credit on the list of necessary export
documents particularly informative. First, a letter of credit
may not be a necessary document for exporting, but it is assumed
as part of the exercise. Furthermore, the absence of a letter
of credit from this list does not negate the fact that survey
respondents are told to assume the use of a letter of credit in
constructing their survey response and asked for information
related to acquiring a letter of credit. It is unreasonable to
assume the non-existence in the report of that which the
report’s authors expect the survey respondents to assume.
Consol. Court No. 12-00007 Page 31
Nor is Commerce’s argument that letter of credit
expenses are born by the purchaser persuasive. Commerce asserts
this proposition with no record evidence to support it. See
I & D Mem., cmt. 8 at 48. Layo, in contrast, placed on the
record a printout of a page from the CreditManagementWorld.com
website pertaining to letter of credit fees, which states that
some letter of credit fees are borne by the seller and lists the
relevant fees. Export Letter of Credit Fees, Ex. 14 to Layo
Surrogate Data. The court does not decide what, if any, weight
to give to this evidence, but, at a minimum, Commerce has failed
to consider record evidence that detracts from its
determination. See Universal Camera Corp. v. NLRB, 340 U.S. 474,
488 (1951) (“The substantiality of evidence must take into
account whatever in the record fairly detracts from its
weight.”).20
20
A recent case, Since Hardware (Guangzhou) Co. v. United
States, __ CIT __, 911 F. Supp. 2d 1362 (2013), affirmed
Commerce’s refusal to deduct letter of credit expenses from
brokerage and handling fees valued using Indian data from the
World Bank Doing Business Report. But the Since
Hardware court was presented with a very different record than
that at issue here. Specifically, the Since Hardware court
concluded that “without knowing the exact breakdown of the data
included in the World Bank Report, [Commerce] can no more deduct
a letter of credit expense than add extra expenses which
[plaintiff] incurred but are not reflected by the World Bank
data.” Id. at 1378 (quoting Remand Results at 19–20) (first
alteration in original). Although the Since Hardware court also
(footnote continued)
Consol. Court No. 12-00007 Page 32
For the foregoing reasons, Commerce’s refusal to
adjust the brokerage and handling fees to account for letter of
credit fees is not supported by a reasonable reading of the
record. Therefore, the determination is remanded to Commerce
for further explanation or reconsideration.
D. Surrogate Financial Ratios
Respondents also challenge Commerce’s calculation of
surrogate financial ratios. In particular, Respondents argue
that Commerce improperly rejected, as untimely filed, certain of
Respondents’ surrogate financial statements and, alternatively,
that Commerce did not use the best available information when it
declined to factor 2009 financial statements on the record into
the surrogate financial ratio calculations.
Commerce has established deadlines for submission of
factual information during an investigation. Pursuant to
noted that “[l]etters of credit are not included in the eight
listed expenses for document preparation,” it did not draw
any explicit conclusion from this fact. Id. As discussed above,
the record in the case at issue here does not support a finding
that the list of documents for export settles the matter of
whether letter of credit expenses are part of the World Bank
report’s brokerage and handling expenses. In addition, Commerce
made no claim in this case regarding its inability to determine
an amount for letter of credit expenses to deduct from the
brokerage and handling expenses, as it did in Since
Hardware. For these reasons, Since Hardware is distinguishable,
and it is appropriate, on the facts of this case, to remand this
issue to Commerce for further explanation consistent with the
foregoing discussion.
Consol. Court No. 12-00007 Page 33
19 C.F.R. § 351.301(c)(3)(i) (2010), interested parties have
forty days after the publication of the preliminary
determination to submit surrogate value information. Any
interested party may offer factual information to “rebut,
clarify, or correct” another interested party’s factual
submission within a minimum of ten days following an initial
submission of factual information. § 351.301(c)(1).21 Commerce
has interpreted § 351.301(c)(1) to exclude the submission of new
surrogate value information in rebuttal. I & D Mem., cmt. 3 at
23–24. On this basis, Commerce rejected new surrogate financial
statements submitted by Respondents outside of the forty day
window for surrogate data submissions but within the period
permitted for rebuttals. Id. at 23–25.
21
Section 351.301(c)(1) reads in full:
Any interested party may submit factual information to
rebut, clarify, or correct factual information
submitted by any other interested party at any time
prior to the deadline provided in this section for
submission of such factual information. If factual
information is submitted less than 10 days before, on,
or after (normally only with the Department’s
permission) the applicable deadline for submission of
such factual information, an interested party may
submit factual information to rebut, clarify, or
correct the factual information no later than 10 days
after the date such factual information is served on
the interested party or, if appropriate, made
available under APO to the authorized applicant.
Consol. Court No. 12-00007 Page 34
The court defers to an agency’s interpretation of its
own regulation unless that interpretation is “plainly erroneous
or inconsistent with the regulation.” Amanda Foods (Viet.) Ltd.
v. United States, __ CIT __, 807 F. Supp. 2d 1332, 1342 (2011)
(quoting Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512
(1994)). This deference “is broader than deference to the
agency’s construction of a statute, because in the latter case
the agency is addressing Congress’s intentions, while in the
former it is addressing its own.” Cathedral Candle Co. v. United
States Int’l Trade Comm’n, 400 F.3d 1352, 1363–64 (Fed. Cir.
2005). Furthermore, the court owes Commerce deference in
crafting and executing the procedures necessary to evaluate the
record. See PSC VSMPO-Avisma Corp. v. United States, 688 F.3d
751, 760 (Fed. Cir. 2012) (“[A]bsent [constitutional]
constraints or [extremely compelling] circumstances, courts will
defer to the judgment of an agency regarding the development of
the agency record.”). As the Court of Appeals has made clear,
it is not this court’s role to “intrude[] upon Commerce’s power
to apply its own procedures for the timely resolution of
antidumping [proceedings]. The role of judicial review is
limited to determining whether the record is adequate to support
the administrative action.” Id. at 761.
Respondents contend that Commerce’s interpretation of
§ 351.301(c)(1) is plainly erroneous and inconsistent with the
Consol. Court No. 12-00007 Page 35
regulation because (1) the regulation does not prohibit the
submission of new factual information or surrogate values and
(2) prohibiting submission of new surrogate values in rebuttal
denies parties a meaningful right to respond, as contemplated by
the regulation.22 Resp’ts’ Br.
Respondent’s textual argument is not persuasive.
Respondents contend that “[n]owhere in Section 351.301(c)(1)
does it limit what type of ‘factual information’ can be
submitted to ‘rebut, clarify, or correct.’” Resp’ts’ Br. at 74.
Respondents are only partially correct. Section 351.301(c)(1)
does not permit the submission of any new factual information;
rather, it limits the submission to “factual information to
rebut, clarify, or correct.” § 351.301(c)(1) (emphasis added).
Thus, the type of factual information permitted under
22
Respondents also argue that Commerce’s interpretation of
§ 351.301(c)(1) disadvantages NME respondents in comparison to
market economy respondents. Resp’ts’ Br. at 75–77. Respondents’
argument conflates two different procedures in two different
types of proceedings without a clear justification.
Furthermore, Commerce has discretion to order its market economy
proceedings and NME proceedings differently, as they require
different types of procedures. See Rhone-Poulenc, Inc. v. United
States, 20 CIT 573, 586–87, 927 F. Supp. 451, 462–63 (1996)
(“Commerce’s Antidumping Manual expressly provides for NME-
related investigation methods distinct from those applicable in
market economies. The treatment of exports from market
economies has no bearing here, whether contained in the
[Antidumping Manual] or in a prior Federal Register Notice given
contrary statutory language.”) (citations omitted).
Consol. Court No. 12-00007 Page 36
§ 351.301(c)(1) is limited to information that rebuts,
clarifies, or corrects previously submitted factual information.
This is not an unambiguous construction, but such ambiguity is
for Commerce to interpret in the first instance. See Cathedral
Candle Co., 400 F.3d at 1363 (“The gap between the text of the
regulation and the Commission’s interpretation of section 777 is
filled by the Commission’s interpretation of the regulation.”).
Commerce has interpreted “factual information to
rebut, clarify, or correct” to exclude new surrogate value data.
Nothing in this interpretation is erroneous or inconsistent with
the regulation itself. The regulation for rebuttal,
clarification, or correction of factual information is part of a
larger regulatory section setting forth time limits for
submission of factual information. Interpreting “factual
information to rebut, clarify, or correct” to be limited by
comparison to the other provisions of § 351.301 is consistent
with the creation of a distinct subsection for this purpose.
Commerce’s interpretation is also consistent with the purpose of
the subsection, which is to respond to factual information that
has been placed on the record, not to expand the scope of the
record. Finally, interpreting § 351.301(c)(1) to exclude new
surrogate value data prevents Commerce from facing a scenario in
which either a party has no opportunity to rebut, clarify, or
correct new surrogate values submitted in a rebuttal, or
Consol. Court No. 12-00007 Page 37
Commerce must accede to rolling rebuttals while also complying
with the statutory deadlines for completing investigations and
reviews.
Nor is Respondents’ second argument, concerning the
meaningful right to respond, persuasive. The following facts
are relevant to this aspect of Respondents’ argument: Prior to
the Preliminary Determination, Petitioners argued that Indonesia
should be the surrogate country and submitted surrogate value
data for Indonesia. I & D Mem., cmt. 3 at 25. In the
Preliminary Determination, Commerce chose the Philippines as the
surrogate country. Id. Petitioners submitted their post-
preliminary surrogate values on the last day of the period for
submissions, pursuant to § 351.301(c)(3)(i), but instead of
submitting data on Indonesian surrogate values Petitioners
changed course and submitted surrogate value data for the
Philippines, which included 2010 financial statements for
Philippine plywood producers. Pet’rs’ Factor Data at 16–22.
Respondents offered alternative 2010 financial statements of
Philippine plywood producers in rebuttal, but these statements
were rejected by Commerce. I & D Mem., cmt. 3 at 22–23.
Respondents now argue that they were prejudiced by having no
opportunity to submit new surrogate value data for the
Philippines in response to the surrogate value data submitted by
Petitioners.
Consol. Court No. 12-00007 Page 38
But Respondents’ argument misconstrues the nature of
the proceeding. Respondents were aware that Commerce selected
the Philippines as the primary surrogate country in the
Preliminary Determination and were on notice that Petitioners
might choose to submit surrogate value data for the Philippines.
Respondents had access to the surrogate value data later
rejected by Commerce and an opportunity to put that data on the
record during the forty day window for submission of new
surrogate value data, pursuant to § 351.301(c)(3)(i).
Furthermore, Respondents were aware that Commerce uses
contemporaneity as one of the factors in considering which
surrogate value data to use, see supra note 7, and that the 2009
financial statements on the record prior to the Preliminary
Determination were not contemporaneous with the POI. Finally,
Commerce explicitly notified parties that it does not consider
new surrogate value data on rebuttal. See I & D Mem., cmt. 3 at
24. Thus, Respondents had all the notice and opportunity they
needed to put the rejected financial statements on the record in
the forty day window provided, pursuant to § 351.301(c)(3)(i),
and they chose not to do so. The right to “rebut, clarify, and
correct” is not a substitute for a party’s obligation to develop
Consol. Court No. 12-00007 Page 39
the record in a timely manner, nor were Respondents prejudiced
on the facts of this case.23
Finally, Respondents argue that Commerce abused its
discretion by not factoring the 2009 financial statements on the
record into its surrogate financial ratio determination.
Resp’ts’ Br. at 78–81. Commerce determined that the 2010
financial statements submitted by Petitioners were the best
available information because they were contemporaneous with the
POI and that the 2009 financial statements should be rejected as
non-contemporaneous. I & D Mem., cmt. 1 at 12. Commerce has
provided a reasoned explanation for its determination, and the
court will not substitute its judgment for that of the agency.
Zhejiang DunAn, 652 F.3d at 1341.
For these reasons, Commerce’s rejection of
Respondents’ late filed surrogate financial statements is
affirmed.
23
In their briefing, Respondents raise a scenario in which
a party submits new surrogate value data on the fortieth day of
the § 351.301(c)(3)(i) period relating to a surrogate country
that no party argued for prior to the preliminary determination
and which Commerce did not choose in the preliminary
determination. Resp’ts’ Reply Br. at 23–25. Certainly,
Commerce’s refusal to accept alternative surrogate values in
such a scenario would be reviewed for abuse of discretion. See
Wuhu Fenglian Co. v. United States, __ CIT __, 836 F. Supp. 2d
1398, 1403 (2012). The court also acknowledges, without
deciding, that on the stated facts an opposing party may be
prejudiced. But, those are not the facts of this case.
Consol. Court No. 12-00007 Page 40
CONCLUSION
In light of the foregoing: (1) the court grants
Commerce’s request for remand to reconsider the surrogate value
determinations for Layo’s plywood input and Samling’s HDF input;
(2) the court grants Commerce’s request for remand of the
targeted dumping determination for reconsideration in light of
any changes to the surrogate value determinations and in light
of Commerce’s current standards for applying the targeted
dumping method; (3) the court remands the surrogate value
determinations for Layo’s core veneer input, Layo’s HDF input,
and the brokerage and handling fees for further explanation or
reconsideration consistent with this opinion; and (4) the court
affirms Commerce’s rejection of Respondents’ late filed
surrogate financial statements.
Commerce shall have until September 30, 2013, to
complete and file its remand redetermination. Plaintiffs and
Defendant-Intervenors shall have until October 15, 2013, to file
comments. Plaintiffs, Defendant, and Defendant-Intervenors
shall have until October 29, 2013, to file any reply.
IT IS SO ORDERED.
______/s/ Donald C. Pogue___
Donald C. Pogue, Chief Judge
Dated: July 31, 2013
New York, NY