Fengchi Imp. & Exp. Co., Ltd. of Haicheng City v. United States ( 2015 )

Slip Op. 15-23
UNITED STATES COURT OF INTERNATIONAL TRADE
________________________________
FENGCHI IMP. & EXP. CO., LTD. :
OF HAICHENG CITY, FENGCHI :
REFRACTORIES CO. OF HAICHENG :
CITY, and FEDMET RESOURCES :
CORPORATION, :
:
Plaintiffs, : Before: Nicholas Tsoucalas,
: Senior Judge
v. :
: Court No.: 13-00186
UNITED STATES, :
:
Defendant, :
:
and :
:
RESCO PRODUCTS, INC., and :
ANH REFRACTORIES COMPANY, :
:
Defendant-Intervenors.:
OPINION and ORDER
[Plaintiffs’ motion for judgment on the agency record is denied.]
Dated: March 25, 2015
Donald B. Cameron, Brady W. Mills, Julie C. Mendoza, Mary S.
Hodgins, R. Will Planert, and Sarah S. Sprinkle, Morris Manning &
Martin LLP, of Washington, DC, for plaintiffs.
Melissa M. Devine, Trial Attorney, Commercial Litigation Branch,
Civil Division, U.S. Department of Justice, of Washington, DC, for
defendant. With her on the brief were Stuart F. Delery, Assistant
Attorney General, Jeanne E. Davidson, Director, and Patricia M.
McCarthy, Assistant Director. Of counsel on the brief was Whitney
M. Rolig, Attorney, Office of the Chief Counsel for Trade
Enforcement & Compliance, U.S. Department of Commerce, of
Washington, DC.
Court No. 13-00186 Page 2
Camelia C. Mazard, Robert W. Doyle, Jr., and Andre P. Barlow, Doyle
Barlow & Mazard PLLC of Washington, DC, for defendant-intervenor
Resco Products, Inc.
Joseph W. Dorn and Brian E. McGill, King & Spalding LLP, of
Washington, DC, for defendant-intervenor ANH Refractories Company.
Tsoucalas, Senior Judge: Plaintiffs Fengchi Import and
Export Co., Ltd. of Haicheng City, Fengchi Refractories Co. of
Haicheng City, and Fedmet Resources Corporation (collectively
“Plaintiffs”), move for judgment on the agency record contesting
defendant United States Department of Commerce’s (“Commerce”)
determination in Certain Magnesia Carbon Bricks From the People’s
Republic of China: Final Results and Final Partial Rescission of
Antidumping Duty Administrative Review; 2010–2011, 78 Fed. Reg.
22,230 (Apr. 15, 2013) (“Final Results”). Commerce and defendant-
intervenors, Resco Products Inc. and ANH Refractories Company,
oppose Plaintiffs’ motion. For the following reasons, Plaintiffs’
motion is denied.
BACKGROUND
Magnesia carbon bricks (“MCBs”) from the People’s
Republic of China (“PRC”) are subject to an antidumping duty order.
See Certain MCBs From Mexico and the PRC: Antidumping Duty Orders,
75 Fed. Reg. 57,257 (Sept. 20, 2010) (“Orders”). On October 31,
2011, Commerce initiated an administrative review of the Orders,
covering sales of subject merchandise between March 12, 2010 and
August 31, 2011 (“2010-2011 Administrative Review”). See
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Initiation of Antidumping and Countervailing Duty Administrative
Reviews and Request for Revocation in Part, 76 Fed. Reg. 67,133,
67,135 (Oct. 31, 2011). Commerce named Fengchi Import and Export
Co., Ltd. of Haicheng City and Fengchi Refractories Co. of Haicheng
City, as mandatory respondents. 1 Id. Fedmet, a domestic importer
of Fengchi’s merchandise, joined the review as an interested party.
See Letter to Commerce re: Antidumping Duty Order on Certain MCBs
from the PRC, Administrative Review (3/12/10–8/31/11): Entry of
Appearance and APO Application (Oct. 31, 2012), Public Rec. 2 137
at 1. On March 14, 2012, Commerce issued its standard nonmarket
economy questionnaire to Fengchi, seeking information on Fengchi’s
factors of production and U.S. sales of subject merchandise. See
MCBs from the PRC: Antidumping Duty Questionnaire, (Mar. 14, 2012)
PR 62 at 1.
Concurrent with 2010-2011 Administrative Review,
Commerce conducted a scope inquiry to determine whether magnesia
alumina carbon bricks (“MACBs”) from the PRC were subject to the
Orders. See Certain MCBs from the PRC: Issues and Decision
1 Fengchi Import and Export Co., Ltd. of Haicheng City is a Chinese
exporter of MCBs, and Fengchi Refractories Co. of Haicheng City is
its affiliated producer. See Final Results, 78 Fed. Reg. at
22,230. Throughout the opinion, the court will refer to them
collectively as “Fengchi.”
2 Hereinafter, documents in the public record will be designated
“PR” and documents in the confidential record designated “CR”
without further specification except where relevant.
Court No. 13-00186 Page 4
Memorandum for the Final Results of the 2010–2011 Administrative
Review, (Apr. 9, 2013) PR 148 at 1–2 (“IDM”). On July 2, 2012,
Commerce issued the final results of its scope inquiry, determining
that MACBs were within the scope of the Orders. See Certain MCBs
from the PRC and Mexico: Final Scope Ruling — Fedmet Resources
Corporation at 1–2, Case Nos. A-201-837, A-570-954 and C-570-955
(July 2, 2012) (“MACB Scope Ruling”).
After issuing the MACB Scope Ruling, Commerce sent a
supplemental questionnaire to Fengchi indicating its intention to
consider sales of MACBs as part of the 2010-2011 Administrative
Review. See First Antidumping Administrative Review of Certain
MCBs from the PRC: Sections C and D Supplemental Questionnaire, 3
(Aug. 3, 2012) CR 46 at 3. Moreover, Commerce requested that
Fengchi confirm whether it had reported all sales of subject
merchandise, including MACBs, in its initial questionnaire
responses, and if not, it requested that Fengchi provide such
3 Petitioner ANH Refractories Company (“ANH”) requested that
Commerce include MACB sales in the 2010-2011 Administrative Review
after Commerce issued the preliminary results of the scope inquiry.
See Letter to Commerce re: MCBs from China: Scope of the
Administrative Review, (Apr. 18, 2012) CR 22 at 2. Fengchi
responded that Commerce’s preliminary scope ruling was not a final
determination and thus Commerce should not require Fengchi to
provide information on its MACB sales. See Letter to Commerce re:
Antidumping Order on Certain MCBs from the PRC; Antidumping Duty
Administrative Review, PR 67 at 1–3 (Apr. 23, 2012). However,
Commerce did not request information on Fengchi’s MACB sales during
the 2010-2011 Administrative Review until after it issued the MACB
Scope Ruling. See CR 46 at 3.
Court No. 13-00186 Page 5
information. See id. Additionally, Commerce provided Fengchi
with sales data it acquired from U.S. Customs and Border Protection
(“CBP”) indicating that Fengchi made entries of MACBs during the
period of review (“POR”). See id., att. 2 at 1.
Fengchi did not provide information on its MACB sales in
its response to the supplemental questionnaire, but instead,
submitted a series of letters to Commerce in which it insisted
that Commerce’s request was improper. See Letter to Commerce re:
Antidumping Order on Certain MCBs from the PRC; Antidumping Duty
Administrative Review (3/12/10-8/31/11), (Aug. 9, 2012) PR 104 at
1–5; Letter to Commerce re: Antidumping Order on Certain MCBs from
the PRC; Antidumping Duty Administrative Review (3/12/10-8/31/11),
(Aug. 14, 2012) PR 106 at 1–2; Letter to Commerce re: Antidumping
Order on Certain MCBs from the PRC; Antidumping Duty Administrative
Review (3/12/10–8/31/11), (Aug. 29, 2012) PR 114 at 2–4. Fengchi
argued that Commerce’s request was “extremely unreasonable” and
“well past the 90-day deadline” under 19 C.F.R. § 351.225(l)(4),
because Commerce initiated the 2010-2011 Administrative Review
eight months before it issued the MACB Scope Ruling. See PR 104
at 3, 4. Commerce offered to extend the deadline for Fengchi to
provide MACB sales information on multiple occasions, but Fengchi
continuously declined to comply with Commerce’s request for
information. See Letter to Fengchi re: First Antidumping
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Administrative Review of Certain MCBs from the PRC, (Sept. 7, 2012)
PR 125 at 1–2.
Commerce issued the Preliminary Results of the 2010-2011
Administrative Review in October 2012. See Certain MCBs From the
PRC: AD Administrative Review; 2010-2011, 77 Fed. Reg. 61,394 (Oct.
9, 2012) (“Preliminary Results”). See also Decision Memorandum
for Preliminary Results of Antidumping Duty Administrative Review:
Certain MCBs from the PRC, PR 132 (Oct. 1, 2012) (“PRM”). Commerce
determined that Fengchi’s refusal to provide information on its
MACBs sales constituted a failure to cooperate with the review to
the best of its ability and applied total adverse facts available
(“AFA”). PRM at 8–9. It selected an AFA rate of 236%, based on
the petition rate from the investigation. PRM at 10.
Commerce issued the Final Results in April 2013,
upholding the Preliminary Results in their entirety. Final
Results, 78 Fed. Reg. at 22,230; see IDM at 1.
JURISDICTION and STANDARD OF REVIEW
The Court has jurisdiction pursuant to 28 U.S.C. §
1581(c) (2012) and section 516A(a)(2)(B)(iii) of the Tariff Act of
1930, 4 as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2012). The
court will uphold Commerce’s final determination in an antidumping
4Further citations to the Tariff Act of 1930 are to the relevant
portions of Title 19 of the U.S. Code, 2006 edition, and all
applicable amendments thereto.
Court No. 13-00186 Page 7
duty administrative review unless it is “unsupported by
substantial evidence on the record, or otherwise not in accordance
with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). Substantial evidence
“means such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.” Universal Camera Corp. v. NLRB,
340 U.S. 474, 477 (1951).
Additionally, when reviewing an agency’s interpretation
of its regulations, the court must give substantial deference to
the agency’s interpretation, Michaels Stores, Inc. v. United
States, 766 F.3d 1388, 1391 (Fed. Cir. 2014) (citing Torrington
Co. v. United States, 156 F.3d 1361, 1363-64 (Fed. Cir. 1998)),
according it “‘controlling weight unless it is plainly erroneous
or inconsistent with the regulation.’” Thomas Jefferson Univ. v.
Shalala, 512 U.S. 504, 512, (1994) (citations omitted); accord
Viraj Group v. United States, 476 F.3d 1349, 1355 (Fed. Cir. 2007).
In this context, “[d]eference to an agency’s interpretation of its
own regulations 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.” Viraj, 476 F.3d at 1355 (quoting Gose v.
U.S. Postal Serv., 451 F.3d 831, 837 (Fed. Cir. 2006).
DISCUSSION
Plaintiffs contests the following aspects of the Final
Results: Commerce’s request for sales information on MACBs;
Court No. 13-00186 Page 8
Commerce’s application of AFA; Commerce’s selection of 236% as the
AFA rate. See Pls.’ Br. Supp. Mot. J. Agency R. at 8–23 (“Pls.’
Br.”).
As an initial matter, the Court of Appeals for the
Federal Circuit (“CAFC”) issued an opinion overturning the MACB
Scope Ruling on June 20, 2014, after the completion of briefing in
this case. See Fedmet Res. Corp. v. United States, 755 F.3d 912,
914 (Fed. Cir. 2014). Plaintiffs argue in their brief that a
reversal of the MACB Scope Ruling will resolve the issues in this
case because “there would be no lawful basis for Commerce to impose
antidumping duties on [MACBs] under the [Orders], and thus, no
lawful basis for Commerce to have directed Fengchi to report sales
of [MACBs] in the administrative review.” Id. The court must
reject this argument. The Fedmet litigation concerned the MACB
Scope Ruling. Fedmet, 755 F.3d at 914. In contrast, this case
concerns Commerce’s ability to request information on products
subject to a scope ruling during an administrative review and its
imposition of AFA after Fengchi declined to comply with that
request. Thus, the CAFC’s decision in Fedmet does not resolve the
legal issues raised in the instant case.
I. Commerce’s Request for Information on Fengchi’s MACB Sales
The first issue before the court is whether Commerce
properly requested that Fengchi provide information on its sales
of MACBs during the review. As noted above, Fengchi declined to
Court No. 13-00186 Page 9
provide such information on the theory that Commerce’s request
violated 19 C.F.R. § 351.225(l)(4). As a result of Fengchi’s
refusal to provide information, Commerce imposed AFA. Plaintiffs
claim that Commerce’s request was inconsistent with 19 C.F.R. §
351.225(l)(4) because Commerce issued the scope ruling on MACBs
245 days after the initiation of the review. Pls.’ Br. at 8.
Alternatively, Plaintiffs claim that even if Commerce’s
interpretation of the regulation was proper, it was nevertheless
impractical for Commerce to request that information so late in
the review. Id. at 14–16.
A. Commerce’s interpretation of 19 C.F.R. § 351.225(l)(4)
was reasonable.
Under 19 C.F.R § 351.225(l)(4), where Commerce issues a
scope ruling that a product is within the scope of an order within
ninety days of the initiation of an administrative review of that
same order, Commerce, “where practicable, will include sales of
that product for purposes of the review and will seek information
regarding such sales.” 19 C.F.R § 351.225(l)(4). However, where
Commerce issues the scope ruling more than ninety days after the
initiation of the administrative review, Commerce “may consider
sales of the product for purposes of the review on the basis of
non-adverse facts available.” Id. “However, notwithstanding the
pendency of a scope inquiry, if [Commerce] considers it
appropriate, [Commerce] may request information concerning the
Court No. 13-00186 Page 10
product that is the subject of the scope inquiry for purposes of
a review . . . .” Id.
Here, Commerce issued the scope ruling on MACBs 245 days
after initiating the administrative review at issue. See PRM at
8. As noted above, Commerce requested information on Fengchi’s
MACB sales shortly after issuing the scope ruling, see CR 46 at 3,
but Fengchi declined to provide the information, insisting that
Commerce’s request was improper. See PR 104 at 1. Commerce
insisted that its request was consistent with section
351.225(l)(4) because the regulation does not prohibit Commerce
from soliciting information on products that are subject to a scope
ruling issued over ninety days after the review begins. IDM at 4–
5. Rather, according to Commerce, the regulation permits Commerce
to decline to collect information in such situations and instead
consider sales of the product on the basis of non-adverse facts
available. Id.
Plaintiffs insist that Commerce’s reading of section
351.225(l)(4) is unreasonable. Instead, Plaintiffs suggest that
the regulation creates a “bright-line rule”: if the scope ruling
is issued within ninety days of the initiation of the
administrative review, then Commerce will request information on
the product subject to that scope ruling if practicable, but if
the scope ruling is issued more than ninety days after the
initiation of the review, then Commerce may not request information
Court No. 13-00186 Page 11
on the product and may only consider sales of the product based on
non-adverse facts available. See Pls.’ Br. at 8–11. According to
Plaintiffs, Commerce’s interpretation renders the ninety-day time
limit, and therefore much of the regulation itself, “mere
surplusage.” Id. at 13. Moreover, Plaintiffs insist that Commerce
indicated that their reading of the regulation was proper during
promulgation of the regulation, and in fact, acted in a manner
consistent with this interpretation in a prior administrative
review. See id. at 11–14.
The court must reject Plaintiffs’ interpretation because
it alters the plain meaning of the regulation. According to
Plaintiffs, where Commerce issues a scope ruling more than ninety
days after the initiation of an administrative review, Commerce
may consider sales of the product for purposes of the review, “but
only on the basis of non-adverse facts available.” Id. at 8
(emphasis added). This “bright-line rule” reads the word “only”
into the second sentence of the regulation. However, section
351.225(l)(4) provides that in such situations, Commerce “may
consider sales of the product for purposes of the review on the
basis of non-adverse facts available.” 19 C.F.R. § 351.225(l)(4)
(emphasis added). The language of the regulation is permissive
and does not proscribe Commerce’s power to request information in
the manner Plaintiffs suggest.
Court No. 13-00186 Page 12
Furthermore, Plaintiffs reliance on the regulatory
history of section 351.225(l)(4) is misplaced. According to
Plaintiffs, Commerce adopted their interpretation of section
351.225(l)(4) at the preliminary rule making stage. Pls.’ Br. at
10–12. In particular, Plaintiffs rely on Commerce’s comment that,
when a final scope ruling is issued more than ninety days after
initiation of a review, it is “not practicable” to collect sales
information and therefore Commerce “will rely on non-adverse facts
available.” Id. at 11 (citing Antidumping Duties; Countervailing
Duties: Proposed Rules, 61 Fed. Reg. 7308, 7322 (Feb. 27, 1996)).
However, Commerce clearly departed from this interpretation by the
final rule making stage. Commerce stated that section
351.225(l)(4) “provides, among other things, that if [Commerce]
determines after [ninety] days of the initiation of a review that
a product is included within the scope of an order or suspended
investigation, [Commerce] may decline to seek sales information
concerning the product for purposes of the review.” Antidumping
Duties; Countervailing Duties: Final Rule, 62 Fed. Reg. 27,296,
27,330 (May 19, 1997) (“Preamble”). Thus, at the final rulemaking
stage, Commerce did not limit itself to reliance on non-adverse
facts available, but instead provided itself with flexibility to
determine whether to collect information. See id.Plaintiffs also rely on two separate statements by
Commerce at the final rule making stage to support its
Court No. 13-00186 Page 13
interpretation. First, Plaintiffs note that Commerce rejected a
request to extend the ninety-day period when it extends the
deadline for the preliminary results of a review, indicating that
Commerce did not intend to collect information where the scope
ruling is issued after the ninety-day period. See Pls.’ Br. at
11. Plaintiffs misinterpret Commerce’s decision; Commerce
rejected the request because it generally makes the decision to
extend a deadline for the preliminary results of a review right
before that deadline expires and well after the ninety-day period
ends. Preamble, 62 Fed. Reg. at 27,330. Second, Plaintiffs note
that Commerce rejected a suggestion that it collect information
for a subsequent review when the scope ruling is issued after the
ninety-day period. See Pls.’ Br. at 11–12. This decision also
does not support Plaintiffs’ argument; Commerce rejected the
suggestion because it was unwilling to collect information for a
future review. Preamble, 62 Fed. Reg. at 27,330.
Moreover, the prior administrative decision that
Plaintiffs cite does not support their position. Plaintiffs rely
on Final Results of Antidumping Duty Administrative Review for Two
Manufacturers/Exporters: Certain Preserved Mushrooms From the PRC,
65 Fed. Reg. 50,183 (Aug. 17, 2000). See Pls.’ Br. at 12. However,
in that case, Commerce issued the scope ruling within ninety days
of initiating the review, and thus Commerce did not address the
situation before the court in the instant case. Issues and
Court No. 13-00186 Page 14
Decision Memorandum for the Administrative Review of Certain
Preserved Mushrooms from the PRC – May 7, 1998, through January
31, 2000; Final Results at comment 1 (Aug. 17, 2000).
Ultimately, Commerce’s interpretation of section
351.225(l)(4) was consistent with the plain language of the
regulation. Section 351.225(l)(4) does not proscribe Commerce’s
power to collect information on a respondent’s sales of a product
subject to a scope ruling issued over ninety-days after the
initiation of the review, so long as it is practicable to do so.
19 C.F.R. § 351.225. It does, however, permit Commerce to decline
to collect such information and instead rely on non-adverse facts
available. Id. Contrary to Plaintiffs’ argument, Commerce’s
interpretation does not render any language in the regulation
meaningless: if the scope ruling is issued within ninety-days of
the initiation of the review, Commerce, where practicable, will
collect information on the product subject to that scope ruling;
if the scope ruling is issued more than ninety-days after the
initiation of the review, Commerce may collect information on the
product, if practicable, but may decline to consider the
respondent’s information and rely instead on non-adverse facts
available. See id. As discussed above, this interpretation is
consistent with Commerce’s discussion of section 351.225(l)(4)
when promulgating the final rule. See Preamble, 62 Fed. Reg. at
27,330. Because Commerce’s interpretation of the regulation was
Court No. 13-00186 Page 15
not plainly erroneous or inconsistent with the regulation, the
court defers to Commerce’s reading of 19 C.F.R § 351.225(l)(4).
See Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512, (1994)
(citations omitted); accord Viraj Group v. United States, 476 F.3d
1349, 1355 (Fed. Cir. 2007).
B. Commerce reasonably determined that it was practicable to
request MACBs sales information.
Having determined that Commerce’s interpretation of
section 351.225(l)(4) was reasonable, the court now considers
whether it was practicable for Commerce to request information on
Fengchi’s MACBs sales. Plaintiffs insist that there was not
sufficient time remaining in the review for Commerce to consider
Fengchi’s sales of MACBs. Pls.’ Br. at 14–17. Specifically,
Plaintiffs argue that because consideration of its MACB sales data
would require Commerce to modify the CONNUM 5 product hierarchy,
surrogate country, and surrogate value data, there was not
sufficient time remaining in the review. Id. at 15–16.
The court must reject Plaintiffs’ assertion because it
was practicable for Commerce to request information on Fengchi’s
MACB sales in this proceeding. Here, Commerce requested that
Fengchi provide information on its MACB sales on August 3, 2012,
CR 46 at 3, well before the October 1, 2012 deadline for its
5 CONNUM stands for “control number,” which refers to a specific
product.
Court No. 13-00186 Page 16
preliminary determination. PRM at 3. Commerce repeatedly offered
to extend the deadline for Fengchi to provide the requested
information, See, e.g., Letter to Fengchi re: First Antidumping
Administrative Review of Certain MCBs from the PRC: Extension of
Time for Supplemental Questionnaire, PR 111 at 1 (Aug. 24, 2012),
but Fengchi declined to comply with Commerce’s request. See PR
104; PR 106; PR 114. On September 7, 2012, Commerce offered
Fengchi one final opportunity to comply, requesting that Fengchi
either provide MACB sales information or submit a request for an
extension by September 17, 2012. See PR 125 at 1–2. Once again,
Fengchi declined to provide its MACB sales information. See Letter
to Commerce re: Antidumping Order on Certain MCBs from the PRC:
Antidumping Administrative Review (3/12/10-8/31/11), PR 130 at 1–
2 (Sept. 17, 2012).
Furthermore, the court does not find merit to
Plaintiffs’ argument that Commerce would have to modify the CONNUM
product hierarchy, surrogate country, and surrogate value data in
order to consider information on Fengchi’s MACB sales. Commerce
determined that MACBs were MCBs within the scope of the Orders,
and therefore it was unnecessary to modify CONNUM product
hierarchy, surrogate country, and surrogate value data. See IDM
at 8. Because it was practicable to consider Fengchi’s MACBs sales
Court No. 13-00186 Page 17
at the time of the MACB Scope Ruling, Commerce reasonably requested
that data during the review. 6 See 19 C.F.R. § 351.225(l)(4).
II. Commerce’s Application of Adverse Facts Available
The next issue is whether Commerce properly relied on
AFA when determining Fengchi’s dumping margin. As noted above,
Commerce found that AFA was appropriate because Fengchi refused to
provide information on its MACB sales.
Commerce may apply AFA where “an interested party has
failed to cooperate by not acting to the best of its ability to
comply with a request for information.” 19 U.S.C. § 1677e(b).
“Compliance with the ‘best of its ability’ standard is determined
by assessing whether the respondent has put forth its maximum
effort to provide Commerce with full and complete answers” to a
request for information. Nippon Steel Corp. v. United States, 337
F.3d 1373, 1382 (Fed. Cir. 2003).
Although Fengchi concedes that it did not provide
information on its MACB sales, Plaintiffs argue that Commerce
erroneously applied AFA because the request itself was improper.
See Pls.’ Br. at 18–21. As noted above, Plaintiffs insist that
Commerce’s request for Fengchi’s MACB sales information violated
6Commerce also argues that it had the authority to request MACB
sales information at “any time during the proceeding” pursuant
to 19 C.F.R § 351.301(c)(2) (2012). Because Commerce properly
requested MACB sales information under 19 C.F.R § 351.225(l)(4),
the court declines to consider this alternative justification.
Court No. 13-00186 Page 18
19 C.F.R. § 351.225(l)(4). Plaintiffs conclude that Commerce could
not impose AFA based on Fengchi’s failure to comply with an
inappropriate request for information. See Pls.’ Br. at 18.
Plaintiffs rely on Laclede Steel Co. v. United States, 18 CIT 965(1994), where the Court overturned Commerce’s decision to impose
AFA because Commerce’s request for information was improper. See
Pls.’ Br. at 19 (citing Laclede Steel, 18 CIT at 973).
Plaintiffs’ argument is unconvincing. As this court has
already determined, Commerce’s request for Fengchi’s MACB sales
information was proper. Accordingly, Plaintiffs’ reliance on
Laclede Steel is misplaced. Ultimately, Fengchi’s refusal to
provide information on its MACB sales demonstrated a failure to
comply with Commerce’s request for information, and thus, Commerce
reasonably applied AFA. See 19 U.S.C. § 1677e(b); Nippon Steel,
337 F.3d at 1382.
III. The Adverse Facts Available Rate
Having determined that Commerce properly relied on AFA
to determine Fengchi’s dumping margin, the court now considers
whether Commerce properly selected the petition rate of 236% as
the AFA rate. Consistent with its practice, Commerce selected the
petition rate as the AFA rate. See PRM at 10. Commerce found
that the petition rate was reliable because it calculated the 236%
figure as the AFA rate for the PRC-wide entity during the
investigation, which it then corroborated using model-specific
Court No. 13-00186 Page 19
margins of a cooperating respondent. See First Administrative
Review of MCBs from the PRC: Corroboration Memorandum (Oct. 1,
2012), CR 68 at 2–3 (unchanged in final). Commerce determined
that the rate was relevant to Fengchi by comparing the CBP data
for Fengchi’s five MACB sales with the data Commerce used to
determine the petition rate. Id. at 3. Specifically, Commerce
found that the U.S. sales price from the petition rate was within
the range of the average unit values for Fengchi’s entries. Id.
Additionally, Commerce found that the usage rates for the factors
of production in the petition were within the range of values of
Fengchi’s reported usage rates. Id. Because the rate was both
reliable and relevant to Fengchi, Commerce found that it adequately
corroborated the petition rate of 236%. Id.
When selecting an AFA rate, Commerce may rely on
information from the petition, investigations, prior
administrative reviews, or “any other information placed on the
record.” 19 U.S.C. § 1677e(b). However, Commerce cannot select
any rate as the AFA rate, but rather, must select an AFA rate that
is “a reasonably accurate estimate of the respondent's actual rate,
albeit with some built-in increase intended as a deterrent to non-
compliance.” F.lli De Cecco Di Filippo Fara S. Martino S.p.A. v.
United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000). “Commerce
must select secondary information that has some grounding in
commercial reality.” Gallant Ocean (Thailand) Co. v. United
Court No. 13-00186 Page 20
States, 602 F.3d 1319, 1324 (Fed. Cir. 2010). Although a higher
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.” Id. at 1323 (citing De Cecco,
216 F.3d at 1032).
The requirements articulated by the CAFC are an
extension of the statute’s corroboration requirement. See De
Cecco, 216 F.3d at 1032. Under 19 U.S.C. § 1677e(c), when Commerce
relies on secondary information, it “shall, to the extent
practicable, corroborate that information from independent sources
that are reasonably at [its] disposal.” 19 U.S.C. § 1677e(c). To
corroborate secondary information, Commerce must find that it has
“probative value.” See KYD, Inc. v. United States, 607 F.3d 760,
765 (Fed. Cir. 2010). Secondary information has “probative value”
if it is “reliable” and “relevant” to the respondent. Mittal Steel
Galati S.A. v. United States, 31 CIT 730, 734, 491 F. Supp. 2d
1273, 1278 (2007); see KYD, 607 F.3d at 765–67.
Plaintiffs argue that the AFA rate was unreasonable,
overly punitive, and did not reflect commercial reality. Pls.’
Br. at 21–23. According to Plaintiffs, “Commerce never calculated
the actual dumping margin . . . on Fengchi’s reported MCBs sales,
electing instead to apply [AFA] to all of Fengchi’s sales of
subject merchandise. . . .” Id. at 22. Plaintiffs conclude that
“in selecting among possible AFA rates, Commerce blinded itself to
Court No. 13-00186 Page 21
Fengchi’s actual dumping margin on the MCB sales it had reported
even as it ostensibly considered whether the AFA rate from the
petition reflected commercial reality.” Id. at 22–23.
While the instant case was before the court, the Federal
Circuit issued a decision in Fedmet Resources Corp. v. United
States, 755 F.3d. 912, (Fed. Cir. 2014) (mandate issued on Feb. 4,
2015), holding that certain MACBs from the PRC were outside the
scope of the antidumping order. Fedmet, 755 F.3d at 922. As a
consequence of the Federal Circuit’s holding in Fedmet, the court
has become concerned with Commerce’s potentially unreasonable use
of out of scope MACB sales to corroborate the AFA rate. Although
the court requested that the parties provide it with supplemental
briefing to address this issue, Commerce’s responses present post
hoc rationalizations that do not bear on the reasonableness of the
explanations set forth in the IDM. See Burlington Truck Lines,
Inc. v. United States, 371 U.S. 156, 168-69 (1962) ("The courts
may not accept . . . counsel's post hoc rationalizations for agency
action; . . . an agency's discretionary order [must] be upheld, if
at all, on the same basis articulated in the order by the agency
itself."). Commerce does not appear to have considered the
possibility that the entries it used to corroborate the AFA rate
were of out-of-scope merchandise. Because the Federal Circuit’s
decision in Fedmet may potentially affect the reasonableness of
Commerce’s corroboration of the AFA rate, the court must remand so
Court No. 13-00186 Page 22
that Commerce has the opportunity to address this concern at the
administrative level with the benefit of comment from Plaintiffs
and Defendant-Intervenors. See SKF USA Inc. v. United States, 254
F.3d 1022, 1028-29 (Fed. Cir. 2001) (“A remand is generally
required if the intervening event may affect the validity of the
agency action.”) (citing Ethyl Corp. v. Browner, 989 F.2d 522, 524
(D.C. Cir. 1993)).
IV. Conclusion and Order
Upon consideration of Plaintiffs’ motion for judgment on
the agency record, Defendant’s and Defendant-Intervenors’
responses, Plaintiffs’ reply, and all papers and proceedings
herein, and in accordance with the court’s opinion issued on this
date, it is hereby
ORDERED that this case is remanded to Commerce for
further explanations regarding the corroboration of the AFA rate
in light of the Federal Circuit’s decision in Fedmet Resources
Corp. v. United States, 755 F.3d. 912 (Fed. Cir. 2014); and it is
further
ORDERED that the Final Results is sustained for all other
issues discussed above; and it is further
ORDERED that remand results are due within sixty (60)
days of the date this opinion is entered. Any responses or
comments are due within thirty (30) days thereafter. Any rebuttal
Court No. 13-00186 Page 23
comments are due within fifteen (15) days after the date responses
or comments are due.
SO ORDERED.
/s/ Nicholas Tsoucalas
Nicholas Tsoucalas
Senior Judge
Dated: March 25, 2015
New York, New York