Fischer S.A. Comercio, Industria and Agricultura v. United States

Slip. Op. 12-149
UNITED STATES COURT OF INTERNATIONAL TRADE
Before: Nicholas Tsoucalas, Senior Judge
___________________________________
FISCHER S.A. COMERCIO, INDUSTRIA :
AND AGRICULTURA AND CITROSUCO :
NORTH AMERICA, INC., :
:
Plaintiffs, :
:
v. : Court No.: 11-00321
:
UNITED STATES, :
: PUBLIC VERSION
Defendant, :
:
and :
:
FLORIDA CITRUS MUTUAL, and :
CITRUS WORLD, INC., :
:
Defendant-Intervenors. :
:
OPINION and ORDER
Held: Plaintiffs’ Motion for Judgment on the Agency Record is
denied because the final results of the Antidumping Duty
Administrative Review issued by the Department of Commerce were
supported by substantial evidence and were otherwise in accordance
with the law.
Dated: December 6, 2012
Kalik Lewin, (Robert G. Kalik and Chelsea S. Severson) for
Fischer S.A. Comercio, Industria and Agricultura and Citrosuco
North America, Inc., Plaintiffs.
Stuart F. Delery, Acting Assistant Attorney General; Jeanne E.
Davidson, Director, Patricia M. McCarthy, Assistant Director,
Commercial Litigation Branch, Civil Division, United States
Department of Justice (Joshua E. Kurland); Office of Chief Counsel
for Import Administration, United States Department of Commerce,
Mykhaylo Gryzklov, Of Counsel, for the United States, Defendant.
Barnes, Richardson & Colburn, (Matthew T. McGrath and Stephen
W. Brophy) for Florida Citrus Mutual and Citrus World, Inc.,
Court No. 11-00321 Page 2
Defendant-Intervenors.
TSOUCALAS, Senior Judge: This matter comes before the court
upon the Motion for Judgment on the Agency Record filed by Fischer
S.A. Comercio, Industria and Agricultura and Citrosuco North
America, Inc. (“Fischer” and “Citrosuco,” respectively, and
“Plaintiffs” collectively). Plaintiffs contest certain
determinations made by the United States Department of Commerce,
International Trade Administration (“Commerce”) in Certain Orange
Juice from Brazil: Final Results of Antidumping Duty Administrative
Review, Determination Not To Revoke Antidumping Duty Order in Part,
and Final No Shipment Determination, 76 Fed. Reg. 50,176 (August
12, 2011) (“Final Results”). Commerce and defendant-intervenors,
Florida Citrus Mutual and Citrus World, Inc., oppose this motion.
For the reasons set forth below, the court finds that Commerce’s
determinations are supported by substantial evidence and are
otherwise in accord with the law.
BACKGROUND
On March 9, 2006, Commerce issued an antidumping order on
certain orange juice from Brazil. See Antidumping Duty Order:
Certain Orange Juice from Brazil, 71 Fed. Reg. 12,183 (Mar. 9,
2006). At Fischer’s request, Commerce initiated an administrative
review of the order for the period beginning March 1, 2009 and
ending February 28, 2010. See Initiation of Antidumping and
Countervailing Duty Administrative Reviews and Request for
Revocation in Part, 75 Fed. Reg. 22,107 (Apr. 27, 2010).
Court No. 11-00321 Page 3
During the preliminary review, Commerce requested certain
information from Fischer in order to calculate the normal value
(“NV”)1 and export price (“EP”)2 of the subject merchandise.
Commerce requested that Fischer report information on “all sales of
the foreign like product during the three months preceding the
earliest month of U.S sales, all months from the earliest to the
latest month of U.S. sales, and the two months after the latest
month of U.S. sales.” Memo from Analyst/IA to File (Apr. 28,
2010), Public Rec. 14 at § B.II.A.3 This request included
information on sales occurring during the period of review (“POR”)
as well as sales from the so called “90/60-Day Window Period”
1
“Normal Value” refers to “the price at which the foreign
like product is first sold (or, in the absence of a sale, offered
for sale) for consumption in the exporting country, in the usual
commercial quantities and in the ordinary course of trade and, to
the extent practicable, at the same level of trade as the export
price or constructed export price.” 19 U.S.C. § 1677b(a)(1)(B)(i)
(2006).
2
“Export Price” refers to the “price at which the subject
merchandise is first sold (or agreed to be sold) before the date of
importation by the producer or exporter of the subject merchandise
outside of the United States to an unaffiliated purchaser in the
United States or to an unaffiliated purchaser for exportation to
the United States.” 19 U.S.C. § 1677a(a).
3
Hereinafter all documents in the public record will be
designated “P.R.” and all documents in the confidential record
designated “C.R.” without further specification except where
relevant. Additionally, the abbreviation “I.A.” will refer to
portions of the confidential and public records filed in Commerce’s
electronic filing system, I.A. Access.
Court No. 11-00321 Page 4
(“Window Period”), as defined in 19 C.F.R. § 351.414(f) (2012).4
P.R. 14 at § B.II.A. The Window Period stretches up to three
months prior to and two months after a month without comparable
home market sales. 19 C.F.R. § 351.414(f)(2), (3). Accordingly,
Fischer provided information on home market sales that occurred
during the POR as well as sales outside the POR during the Window
Period. See P.R. 63 Ex. 4.
Additionally, Commerce requested information on Fischer’s
international freight expenses. Fischer reported that its
affiliate, Citrosuco, paid $[[ ]]/MT for shipments to the U.S.
during the POR, comprised of a base freight rate of $[[ ]]/MT
and a bunker fuel surcharge of $[[ ]]/MT. See P.R. 71 Ex. 3.
Fischer also reported that its affiliate [[
]] operated most of the vessels that transported subject
merchandise to the U.S. See P.R. 104 at 1. Per Commerce’s
request, Fischer provided a Sea Transport Service Agreement (“STS
Agreement”) between Fischer’s affiliated shipper and a third party,
[[ ]]. See P.R. 55 Ex.
9. Fischer also provided an invoice from that agreement dated
within the POR indicating that [[ ]] charged [[ ]]
$[[ ]]/MT, comprised of a base freight rate of $[[ ]]/MT
4
At the time Plaintiffs submitted their brief, this provision
was located at 19 C.F.R. § 351.414(e)(2). As part of the
amendments to the regulation effective April 16, 2012, the
regulation was moved but the provisions remain unaltered.
Court No. 11-00321 Page 5
and a bunker fuel surcharge of $[[ ]]/MT. Id. Ex. 8.
Commerce released the preliminary results of the
administrative review on April 7, 2011. See Certain Orange Juice
from Brazil: Preliminary Results of Antidumping Duty Administrative
Review and Notice of Intent Not To Revoke Antidumping Duty Order in
Part, 76 Fed. Reg. 19,315 (Apr. 7, 2011) (“Preliminary Results”).
Commerce determined that Fischer’s shipping arrangement was “not at
arm’s length,” and selected the $[[ ]]/MT rate from the STS
Agreement as a surrogate rate from which to calculate Fischer’s
international freight expenses. Id. at 19,318. Commerce used the
resulting value to reduce EP of the subject merchandise pursuant to
19 U.S.C § 1677a(c)(2)(A). See Preliminary Results, 76 Fed. Reg.
at 19,318. Additionally, for months of the POR with no comparable
home-market sales, Commerce calculated a constructed value (“CV”)
as a substitute for NV pursuant to 19 U.S.C. § 1677b(a)(4). Id. at
19,317. Commerce determined the profit component of the CV
calculation using information from the Window Period sales that
occurred outside the POR. Id. 19,317; P.R. 103 at 17. Commerce
determined Fischer’s weighted-average dumping margin (“WADM”) to be
3.96%. Preliminary Results, 76 Fed. Reg. at 19,321.
Following the Preliminary Results, Fischer submitted a case
brief raising three issues: (1) the inclusion of the bunker fuel
surcharge in the surrogate freight rate when calculating
international freight expenses, (2) the use of zeroing to calculate
Court No. 11-00321 Page 6
WADM, and (3) the use of sample sales to calculate profit ratio for
not-from-concentrate orange juice. See P.R. 116 at iii.
On August 12, 2011 Commerce issued the final results of the
review. See Final Results, 76 Fed. Reg. 50,176. Commerce lowered
Fischer’s WADM to 3.97%, id. at 50,178, but specifically rejected
Fischer’s arguments concerning zeroing and the bunker fuel
surcharge. See Issues and Decision Memorandum for the Antidumping
Duty Administrative Review on Certain Orange Juice from Brazil,
Inv. No. A-351-840 (Aug. 5, 2011) at 4–8, 23–24 (“I&D Memo”).
After Commerce released the Final Results, Fischer filed
ministerial error comments with Commerce. See I.A.P.R. 17.
Fischer contended that Commerce “committed a ministerial error when
it neglected to include specific programming language in its
[Analysis of Comparison Market Sales] to exclude home market sales
occurring outside the [POR].” Id. at 3. Concluding that Fischer’s
comments did not actually concern a ministerial error, Commerce did
not amend its calculation. See I.A.P.R. 19 at 2.
Plaintiffs raise three issues on appeal: (1) whether
Commerce’s decision to include the bunker fuel surcharge in the
surrogate freight rate was proper, (2) whether Commerce’s use of
Window Period sales outside the POR to calculate CV profit ratio
was proper, and (3) whether Commerce’s use of zeroing to calculate
WADM was proper. See Pls.’ Br. at 1–2.
JURISDICTION and STANDARD OF REVIEW
Court No. 11-00321 Page 7
This Court has jurisdiction over this matter pursuant to 19
U.S.C. § 1516a(a)(2)(B)(iii) and 28 U.S.C. § 1581(c).
This Court will uphold Commerce’s determination 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 is ‘such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion.’” Huaiyin
Foreign Trade Corp. (30) v. United States, 322 F.3d 1369, 1374
(Fed. Cir. 2003) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197,
229 (1938).
DISCUSSION
I. Bunker Fuel Surcharge
Commerce calculated Fischer’s international freight expenses
using a surrogate rate from the STS Agreement, see Preliminary
Results, 76 Fed. Reg. at 19,318; I&D Memo at 24, which included a
bunker fuel surcharge of $[[ ]]/MT. P.R. 55 Ex. 8. Pursuant
to 19 U.S.C. § 1677a(c)(2)(A), Commerce calculated a constructed EP
for the subject merchandise using Fischer’s international freight
expenses as a deduction. See Preliminary Results, 76 Fed. Reg. at
19,318. The bunker fuel surcharge increased the international
freight expenses, lowering the constructed EP even further and,
therefore, its inclusion made a finding of dumping more likely.
See 19 U.S.C. § 1677(35)(A); Florida Citrus Mutual v. United
States, 550 F.3d 1105, 1110 (Fed. Cir. 2008). Plaintiffs argue
Court No. 11-00321 Page 8
that Commerce overstated Fischer’s international freight expenses,
and thus its dumping margin, by including the bunker fuel surcharge
in the surrogate rate. See Pls.’ Br. at 8. Plaintiffs insist the
surrogate rate should be limited to $[[ ]]/MT, reflecting the
surrogate value for the base freight rate. Id. at 11. Plaintiffs
offer two arguments in support of this claim: either (1) Fischer
did not incur a bunker fuel surcharge during the POR, or, (2) if
Fischer did incur a bunker fuel surcharge, it would have been
reimbursed by its U.S. customers. See id. at 8–14.
When calculating EP, Commerce is permitted to reduce the value
by “the amount, if any, included in such price, attributable to
any additional costs, charges, or expenses, and United States
import duties, which are incident to bringing the subject
merchandise” to the U.S. 19 U.S.C. § 1677a(c)(2)(A). Commerce
adjusts EP to create a “‘fair, ‘apples-to-apples’ comparison’
between U.S. price and foreign market value ‘at a similar point in
the chain of commerce.’” Florida Citrus, 550 F.3d at 1110 (quoting
Torrington Co. v. United States, 68 F.3d 1347, 1352 (Fed. Cir.
1995)). The goal of the adjustments is to satisfy Commerce’s
mandate to calculate EP as accurately as possible. See Florida
Citrus 550 F.3d at 1111.
Plaintiffs argue that Commerce unlawfully overstated Fischer’s
international freight expenses because Fischer did not incur a
bunker fuel surcharge during the POR. Pls.’ Br. at 9–12.
Court No. 11-00321 Page 9
According to Plaintiffs, Fischer does not incur a bunker fuel
surcharge unless bunker fuel rates exceed a certain price. Id. at
10. Plaintiffs indicate that under Fischer’s sales contracts a
“bunker fuel surcharge is passed along to its U.S. customer via a
bunker fuel adjustment.” Id. at 10. Fischer reported that its
U.S. customers did not pay a bunker fuel adjustment during the POR.
Id. at 11. Because Fischer never assessed a bunker fuel adjustment
on its customers, Plaintiffs assert that Fischer never incurred a
bunker fuel surcharge. Id. Furthermore, Plaintiffs insist that
the bunker fuel surcharge from the STS Agreement should not have
been included in Fischer’s surrogate rate because “the conditions
triggering the additional bunker fuel surcharge specific to [[
]] differ from those specific to Fischer’s U.S. customers.”
Id. Accordingly, Plaintiffs conclude that the “inclusion of
[[ ]] bunker fuel surcharge . . . is arbitrary and
contrary to record evidence.” Id. at 12.
Plaintiffs’ argument is misleading and contrary to record
evidence. Plaintiffs essentially argue that Fischer never incurred
a bunker fuel surcharge because it never reported passing that
charge to its U.S. customers. However, bunker fuel surcharges
differ from bunker fuel adjustments – a shipper levies a bunker
fuel surcharge on its customer under their transport agreement,
whereas the shipping customer levies a bunker fuel adjustment upon
its own customers under a separate agreement. See Pls.’ Br. at
Court No. 11-00321 Page 10
10–11. Accordingly, the bunker fuel surcharge in Fischer’s
shipping arrangements are distinct from the bunker fuel adjustments
in Fischer’s U.S. sales contracts. The fact that Fischer did not
report the receipt of a bunker fuel adjustment during the POR does
not mean that Fischer or its affiliates did not pay a bunker fuel
surcharge. Just as Commerce concluded during the review, here
Plaintiffs “conflate[] the bunker fuel surcharge at issue here with
the bunker fuel adjustments.” I&D Memo at 24. Thus, Plaintiffs
fail to identify any evidence demonstrating that Fischer did not
incur a bunker fuel surcharge.
Moreover, record evidence clearly indicates that Fischer did
in fact incur a bunker fuel surcharge during the POR. See P.R. 71
Ex. 3. As noted above, Fischer submitted an invoice from the POR
indicating that [[ ]] charged Citrosuco, Fischer’s affiliate,
$[[ ]]/MT for shipments to the U.S., including a bunker fuel
surcharge of $[[ ]]/MT. Id. The invoice indicates that the
total cost of shipping was $[[ ]], including a bunker
fuel surcharge of $[[ ]] for shipments to the U.S. Id.
The record also contains a partial payment, id., and an
accompanying explanation indicating that Fischer still owed payment
on the full outstanding balance. See id. at 3. Fischer neither
challenged the $[[ ]] bunker fuel surcharge on the invoice
nor indicated any intention to refuse payment. See id. Because
record evidence indicates that Fischer incurred a bunker fuel
Court No. 11-00321 Page 11
surcharge, Commerce’s decision to include that charge in the
surrogate rate was supported by substantial evidence.
Alternatively, Plaintiffs argue that “Commerce could deduct
[the bunker fuel surcharge] only if Fischer’s U.S. customers did
not reimburse the expense.” Pls.’ Br. at 12. Plaintiffs contend
that the bunker fuel surcharge should not be included in the
international freight expenses because Fischer would have been
reimbursed by its U.S. customers, resulting in a net expense of
zero. Id. at 13. Accordingly, they insist that the international
freight expenses should only include the base freight rate from the
STS Agreement. Id. Essentially, Plaintiffs argue that Commerce
should have offset the bunker fuel surcharge with the bunker fuel
adjustment that would have been paid as a reimbursement. See id.
When adjusting EP under 19 U.S.C. § 1677a(c)(2)(A), Commerce
is permitted to offset expenses incurred with refunds or
reimbursements for those expenses. Florida Citrus, 550 F.3d at
1111. The rationale for granting offsets is the same rationale for
making any other adjustment to EP under the statute: “because the
resulting amount accurately represents the importer’s overall duty
liability.” Id.Plaintiffs ask the court to apply the holding in Florida
Citrus and remand the instant case so that Commerce may recalculate
Fischer’s international freight expenses with an offset for an
unreported bunker fuel adjustment. Pls.’ Br. at 13. However,
Court No. 11-00321 Page 12
Plaintiffs’ reliance on Florida Citrus is flawed. In Florida
Citrus, the plaintiffs, a domestic industry, challenged Commerce’s
decision to offset import duties with drawback duties5 when
adjusting EP under 19 U.S.C. § 1677a(c)(2)(A). Florida Citrus, 550
F.3d at 1108. The Court of Appeals for the Federal Circuit
(“Federal Circuit”) held that 19 U.S.C. § 1677a(c)(2)(A) is
ambiguous as to whether “import duties” meant “gross import duties”
or “net import duties.” Id. at 1110. In light of this ambiguity,
the Federal Circuit found that granting offsets for reimbursements
“enable[d] a fair ‘apples-to-apples’ comparison” between EP and NV,
resulting in a more accurate measurement of dumping margin. Id. at
1111. Accordingly, the Federal Circuit upheld Commerce’s decision,
concluding that the drawback duty refunds were “contingent upon and
related to importing merchandise because they cannot be claimed
without first importing the merchandise and paying the duties to
Customs.” Id.
Conversely, in the instant case, the interests of accuracy and
fairness would not be served by offsetting the bunker fuel
surcharges with the hypothetical reimbursement Plaintiffs claim.
Here, the record indicates Fischer incurred a bunker fuel surcharge
5
The drawback program “permits importers to claim
reimbursement of 99 percent of U.S. duties paid on imports when
‘commercially interchangeable’ merchandise is either (1) exported
from the United States, or (2) destroyed within three years of
the date of importation.” Florida Citrus, 550 F.3d at 1109
(citing 19 C.F.R § 191.32(a)).
Court No. 11-00321 Page 13
during the POR. See P.R. 71 Ex. 3. But, as Plaintiffs admit in
their brief, Fischer did not receive a bunker fuel adjustment
during the POR. Pls.’ Br. at 12. Put simply, Plaintiffs are
asking for a reduction in expenses for a reimbursement that did not
occur. Granting an offset in the instant case would be contrary to
the holding in Florida Citrus, as it would neither “enable a fair
‘apples-to-apples’ comparison” nor result in a more accurate
dumping margin. Cf. Florida Citrus, 550 F.3d at 1111. Commerce’s
decision not to offset the bunker fuel surcharge with an unrealized
reimbursement was reasonable. Thus, Commerce’s decision to adjust
the EP based upon the full rate from the STS Agreement, including
the bunker fuel surcharge, was supported by substantial evidence
and otherwise in accord with the law.
II. Window Period Sales
Commerce calculated Fischer’s CV profit ratio using
information from all of Fischer’s reported home-market sales,
including the Window Period sales that occurred outside the POR.
See Preliminary Results, 76 Fed. Reg. at 19,317. Plaintiffs allege
that Commerce’s use of sales outside the POR to calculate CV profit
ratio violated 19 C.F.R. § 351.414(f) and Commerce’s own internal
guidelines.6 Pls.’ Br. at 14. However, Fischer failed to raise
6
Commerce’s Antidumping Manual states:
Where no sales of the like product are made in the
exporting country in the month of the U.S. sale,
[Commerce] will attempt to find a weighted-average
Court No. 11-00321 Page 14
this issue before Commerce in the proper manner, and thus
Plaintiffs are precluded from raising it before the court. See 28
U.S.C. § 2637(d).
As a general rule, this Court “shall, where appropriate,
require the exhaustion of administrative remedies.” Id. The Court
of International Trade (“CIT”) “has ‘generally take[n] a strict
view of the need [for parties] to exhaust [their] remedies by
raising all arguments’ in a timely fashion so that they may be
appropriately addressed by the agency.” Corus Staal BV v. United
States, 30 CIT 1040, 1048 (2006) (not published in the Federal
Supplement), aff’d 502 F.3d 1370 (Fed. Cir. 2007), (quoting Pohang
Iron & Steel Co. v. United States, 23 CIT 778, 792 (1999) (not
reported in the Federal Supplement)) (alterations in Corus Staal).
“In the antidumping context, Congress has prescribed a clear, step-
by-step process for a claimant to follow, and the failure to do so
precludes it from obtaining review of that issue in the [CIT].”
JCM, Ltd. v. United States, 210 F.3d 1357, 1359 (Fed. Cir. 2000)
(citing Sandvik Steel Co. v. United States, 164 F.3d 596, 599–600
(Fed. Cir. 1998)).
The exhaustion requirement is subject to limited exceptions,
monthly price one month prior, then two months prior, and
then three months prior to the month of the U.S. sale. If
unsuccessful, we will then look one month after and
finally two months after the month of the U.S. sale.
Import Administration, Antidumping Manual, ch. 6, p. 7 (Oct. 13,
2009).
Court No. 11-00321 Page 15
which include:
(1) [P]laintiff raised a new argument that was purely
legal and required no further agency involvement; (2)
plaintiff did not have timely access to the confidential
record; (3) a judicial interpretation intervened since
the remand proceeding, changing the agency result; (4) it
would have been futile for plaintiff to have raised its
argument at the administrative level.
Corus Staal BV v. United States, 30 CIT at 1050 n.11 (citing Budd
Co., Wheel & Brake Div. v. United States, 15 CIT 446, 452 n.2, 773
F.Supp. 1549, 1555 n.2 (1991)). Additionally, where a party
properly challenges a ministerial error following the final results
of an administrative review, that party will be deemed to have
exhausted its administrative remedies with regards to that error.
See 19 U.S.C. § 1673d(e) (“The administering authority shall
establish procedures for the correction of ministerial errors in
final determinations within a reasonable time after the
determinations are issued under this section.”).
It is undisputed that Fischer did not challenge Commerce’s use
of Window Period sales outside the POR in its case brief before
Commerce. See Pls.’ Reply Supp. Mot. J. Agency R. at 4 (“Pls.’
Reply”) (“Fischer presented this to Commerce . . . in its
ministerial error comments.”); Def.’s Br. at 15. Further, none of
the recognized exceptions to the exhaustion requirement apply. The
timeliness of Plaintiffs’ access to confidential records is not at
issue. Commerce’s determination was not altered by an intervening
judicial opinion. The exception for purely legal questions does
not apply because Plaintiffs do not challenge the legality of 19
Court No. 11-00321 Page 16
C.F.R. § 351.414(f) or Commerce’s internal guidelines in and of
themselves. See Fuwei Films (Shandong) Co. v. United States, 35 CIT
__, __, 791 F. Supp. 2d 1381, 1384 (2011) (The purely legal issue
exception “only might apply for a clear statutory mandate that does
not implicate Commerce's interpretation of [a] statute”). Finally,
the futility exception does not apply because there is no
indication that Fischer would have been “‘required to go through
obviously useless motions in order to preserve [its] rights.’” See
Corus Staal BV v. United States, 502 F.3d at 1379 (quoting Bendure
v. United States, 554 F.2d 427, 431 (Ct. Cl. 1977)). Fischer
should have raised this issue in its case brief, even if Commerce
was unlikely to accept it. See id. (“The mere fact that an adverse
decision may have been likely does not excuse a party from a
statutory or regulatory requirement that it exhaust administrative
remedies.”).
Instead, Plaintiffs argue that Fischer properly raised the
Window Period sales issue as a ministerial error. See Pls.’ Reply
at 6–9. As noted above, Commerce rejected Fischer’s ministerial
error comments because they did not describe a ministerial error.
I.A.P.R. 19 at 2. Plaintiffs make the same claim here, alleging
that the inclusion of the Window Period sales, insofar as it
violates 19 C.F.R. § 351.414(f) and Commerce’s internal guidelines,
must be a ministerial error. See Pls.’ Reply at 8. Plaintiffs’
argument must fail for two reasons: First, Commerce’s decision to
Court No. 11-00321 Page 17
reject Fischer’s ministerial error comments was reasonable, and
second, allowing Plaintiffs to use the ministerial error procedure
in order to avoid claim preclusion on a substantive issue would
allow the ministerial error exception swallow the administrative
exhaustion requirement.
By definition, “ministerial errors” are “errors in addition,
subtraction, or other arithmetic function, clerical errors
resulting from inaccurate copying, duplication, or the like, and
any other type of unintentional error the administering authority
considers ministerial.” 19 U.S.C. § 1673d(e). “Ministerial errors
‘are by their nature not errors in judgment but merely
inadvertencies.’” SGL Carbon LLC v. United States, 36 CIT __, __,
819 F. Supp. 2d 1352, 1363 (2012) (quoting NTN Bearing Corp. v.
United States, 74 F.3d 1204, 1208 (Fed. Cir. 1995). This Court
affords substantial deference to Commerce’s determinations
regarding ministerial error. See Shangdong Huarong Gen. Corp. v.
United States, 25 CIT 834, 848, 159 F. Supp. 2d 714, 727–28 (2001)
aff’d 60 Fed. App’x 797 (Fed. Cir. 2003) (“Statute, regulations,
and case law largely leave the question of what constitutes a
‘ministerial error’ to Commerce's discretion.”).
Commerce properly determined that Fischer’s Window Period
sales claim did not concern ministerial error. In its ministerial
error comments, Fischer argued that Commerce “committed a
ministerial error when it neglected to include specific programming
Court No. 11-00321 Page 18
language . . . to exclude home market sales occurring outside the
[POR].” I.A.P.R. 17 at 3. Commerce concluded that “Fischer’s
allegation involve[d] a methodical issue,” I.A.P.R. 19 at 2, and
refused to alter the final results. Id. Indeed, Commerce’s use of
Window Period sales was not an inadvertent computer programming
error, but rather a method for calculating CV profit ratio. See
id.; Certain Steel Wire Rod from France, 63 Fed. Reg. 30,185,
30,187 (June 3, 1998) (using a respondent’s Window Period sales to
calculate CV profit ratio). Fischer mischaracterized the issue
before Commerce — and again in its reply brief — as an inadvertent
mistake so that it would fit within the definition of ministerial
error. By questioning Commerce’s intentional decision to measure
CV profit ratio using sales outside the POR, Fischer actually
challenged Commerce’s interpretation of 19 C.F.R. § 351.414(f) and
its own guidelines. See SGL Carbon, 36 CIT at __, 819 F. Supp. 2d
at 1363. Because Fischer’s argument did not concern clerical
error, miscalculation, or other ministerial error, Commerce’s
decision to reject it was proper. See 19 U.S.C. § 1673d(e).
Furthermore, the court will not allow Plaintiffs to make an
end run around the exhaustion requirement by entertaining an
unexhausted substantive issue disguised as a ministerial error.
Because ministerial errors concern clerical and mathematical
mistakes, the ministerial error procedure is not the appropriate
method for a party to raise a new, substantive legal argument. See
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19 U.S.C. § 1673d(e); Ta Chen Stainless Steel Pipe, Ltd. v. United
States, 28 CIT 627, 644, 342 F. Supp. 2d 1191, 1205 (2004) (“The
prescribed remedy for challenging Preliminary Results issued by
[Commerce] is to file a case brief with the agency setting forth
objections.”). Plaintiffs may have phrased their argument in terms
of inadvertent error, but they actually offer a substantive
interpretation of 19 C.F.R § 351.414(f) and Commerce’s Antidumping
Manual to support that argument. See Pls.’ Br. at 14–17. Allowing
Plaintiffs to make this argument before the court betrays the
purpose of the ministerial error procedure and undercuts the
exhaustion requirement. This would enable a party to preserve a
substantive legal challenge to Commerce’s determination using the
protection of the ministerial error process, thus depriving
Commerce of its opportunity to defend its decision at the proper
time. See United States v. L.A. Tucker Truck Lines, Inc., 344 U.S.
33, 37 (1952) (“[O]rderly procedure and good administration require
that objections to the proceedings of an administrative agency be
made while it has opportunity for correction in order to raise
issues reviewable by the courts.”). Plaintiffs can challenge
Commerce’s ministerial error decision, but they cannot abuse that
opportunity by introducing a new substantive legal claim before the
court. See 19 U.S.C. § 1673d(e); Ta Chen, 28 CIT at 644, 342 F.
Supp. 2d at 1205. Accordingly, Plaintiffs are precluded from
arguing their Window Period sales claim.
Court No. 11-00321 Page 20
III. Zeroing
Plaintiffs allege that Commerce’s use of zeroing was wrongful
because Commerce failed to provide an adequate explanation to
justify its practice of zeroing to calculate WADM during reviews
but not investigations. Pls.’ Br. at 20. In response, Commerce
argues that inherent differences between investigations and
reviews, as explained in the I&D Memo, provide sufficient
justification for its practice of zeroing during reviews while
offsetting during investigations. Def.’s Br. at 20–31.7
A. Background
“Zeroing” refers to a method of calculating WADM by
aggregating only the positive dumping margins from dumped
transactions and assigning all non-dumped transactions a dumping
margin of zero. See Timken Co. v. United States, 354 F.3d 1334,
1338 (Fed. Cir. 2004). Alternatively, Commerce also calculates
WADM by offsetting positive dumping margins from dumped
transactions with negative dumping margins from non-dumped
7
In its brief, Commerce also raises two additional arguments
which were already rejected by the Federal Circuit: (1) the Federal
Circuit previously upheld zeroing as a reasonable interpretation of
19 U.S.C. § 1677(35); and (2) it only changed its zeroing policy in
order to comply with an adverse WTO ruling. In Dongbu Steel Co. v.
United States, the Federal Circuit held that Commerce’s
inconsistent interpretation of the statute was a novel issue so it
was not bound by earlier decisions upholding zeroing as a
reasonable interpretation of 19 U.S.C. § 1677(35). See 635 F.3d
1363, 1371 (Fed. Cir. 2011). The Federal Circuit also held that
the adverse WTO determination, on its own, was insufficient to
justify an inconsistent interpretation of 19 U.S.C. § 1677(35).
See id. at 1372.
Court No. 11-00321 Page 21
transactions at the aggregation stage.
At one point, Commerce calculated WADM using zeroing during
both investigations, where it compares the average NV with the
average EP of subject merchandise (“average-to-average
comparisons”), as well as administrative reviews, where it compares
the average NV with the EP of individual transactions (“average-to-
transaction comparisons”). See Corus Staal BV v. Department of
Commerce, 395 F.3d 1343, 1347 (Fed. Cir. 2005) (holding that
zeroing is permissible during investigations); Timken Co., 354 F.3d
at 1342 (holding that 19 U.S.C. § 1675(35) neither requires nor
prohibits zeroing during administrative reviews). Recently,
however, Commerce decided to abandon its practice of zeroing during
investigations involving average-to-average comparisons following
a determination by the World Trade Organization (“WTO”) that this
practice violated the U.S.’s international obligations. See
Antidumping Proceedings: Calculation of the Weighted-Average
Dumping Margin During an Antidumping Investigation; Final
Modification, 71 Fed. Reg. 77,722 (Dec. 27, 2006). Commerce
continues to use zeroing to calculate WADM during administrative
reviews, Def.’s Br. at 29, resulting in an inconsistent application
of 19 U.S.C § 1677(35)(A) as between administrative reviews and
investigations.8
8
Although WADM is codified in 19 U.S.C § 1677(35)(B), the
definition of an individual “dumping margin” in 19 U.S.C §
1677(35)(A) will control what dumping margins are being aggregated
Court No. 11-00321 Page 22
Following this policy shift, the Federal Circuit held that
Commerce’s inconsistent interpretation of 19 U.S.C § 1677(35) was
arbitrary and required Commerce to either explain why its approach
was reasonable or adopt a consistent approach. See JTEKT Corp. v.
United States, 642 F.3d 1378, 1384–85 (Fed. Cir. 2011); Dongbu, 635
F.3d at 1373. In JTEKT Corp., Commerce explained that it zeroes
during reviews because they involve average-to-transaction
comparisons, whereas during investigations it offsets because it is
making average-to-average comparisons. See JTEKT Corp., 642 F.3d
at 1384. The Federal Circuit rejected Commerce’s explanation,
holding that “[i]t is not illuminating to the continued practice of
zeroing to know that one phase uses average-to-average comparisons
while the other uses average-to-transaction comparisons.” Id.Following Dongbu and JTEKT, this Court upheld Commerce’s
inconsistent interpretation of 19 U.S.C. § 1677(35) in Union Steel
v. United States, 36 CIT __, 823 F. Supp. 2d 1346 (2012) (appeal
pending).9 Accepting Commerce’s argument that there were inherent
in the WADM calculation under 19 U.S.C § 1677(35)(B).
9
This Court also upheld Commerce’s explanation for zeroing
in Grobest & I-Mei Indus. (Vietnam) Co., Ltd. v. United States, 36
CIT __, 853 F. Supp. 2d 1352 (2012), which was decided after the
defendant and defendant-intervenors’ filed their briefs.
Specifically, this Court found that during investigations
offsetting is reasonable because “Commerce adopts a methodology
intended to capture overall pricing behavior for the purpose of
determining who should and should not fall within the purview of an
antidumping order,” id. at __, 853 F. Supp. 2d at 1361 while during
reviews, Commerce zeroes because “a methodology that establishes
the antidumping duty with greater accuracy is warranted both
Court No. 11-00321 Page 23
differences in the way dumping margin is calculated as between
reviews and investigations, respectively, this Court concluded that
such differences were “sufficient to permit different approaches.”
Id. at __, 823 F. Supp. 2d at 1358. The issue before the court is
whether Commerce adequately explained why differences between
reviews and investigations justify calculating WADM differently in
each stage — as it did in Union Steel — so as to satisfy the
standard set out in Dongbu and JTEKT.
B. Analysis
Commerce argues that the use of zeroing to calculate dumping
margin during reviews but not investigations is reasonable because
inherent differences between the two processes permit it to treat
non-dumped transactions differently. See I&D Memo at 4–8. During
administrative reviews, Commerce interprets 19 U.S.C. § 1677(35)(A)
in the following manner: “[A] dumping margin exists only where NV
is greater than export price. . . . Because no dumping margins
exist with respect to sales where NV is equal to or less than EP or
[Constructed EP], [Commerce] will not permit these non-dumped sales
to offset the amount of dumping found with respect to other sales.”
I&D Memo at 4–5. Commerce disregards non-dumped transactions at the
aggregation stage so that it can detect and counteract the effects
of masked dumping – selling at high prices to disguise other sales
because the importer must actually pay the resulting antidumping
duty and because it serves to uncover masked dumping.” Id. at __,
853 F. Supp. 2d at 1361.
Court No. 11-00321 Page 24
at less than fair value – which would otherwise be obscured by high
priced sales. Id. at 5. Non-dumped sales still impact WADM as the
aggregated dumping margin is divided by the total value of U.S.
sales, which includes both dumped and non-dumped sales. Id.
During investigations, on the other hand, Commerce includes
the non-dumped sales because it calculates dumping margin “at an
‘on average’ level” for all U.S. sales. I&D Memo at 6. Commerce
explains that it “averages together high and low prices for
directly comparable merchandise prior to making the comparison.”
Id. Commerce calculates a dumping margin for each group by
comparing NV with an EP reflecting the average price of all sales
in that group, including non-dumped transactions. Id. Each
group’s dumping margin inherently includes non-dumped sales, id.,
and therefore Commerce offsets positive margins with negative
margins to determine the average extent of dumping activity. Id.
Because dumping margin is calculated differently during an
investigation than during a review, Commerce contends that its
approach to 19 U.S.C. § 1677(35) is justified. Id. at 5.
Plaintiffs contend that Commerce’s explanation was already
rejected by the Federal Circuit in JTEKT Corp. and thus fails to
justify the continued practice of zeroing during reviews but not
investigations. Pls.’ Br. at 20. When assessing Commerce’s
interpretation of 19 U.S.C. § 1677(35), this court undertakes the
two-prong analysis from Chevron U.S.A. v. NRDC, 467 U.S. 837,
Court No. 11-00321 Page 25
842–43 (1984). The first issue is “whether Congress has directly
spoken to the precise question at issue.” Id. at 842. If
Congressional intent is clear, “the court, as well as the agency,
must give effect to the unambiguously expressed intent of
Congress.” Id. at 842–43. However, “if the statute is silent or
ambiguous with respect to the specific issue, the question for the
court is whether the agency's answer is based on a permissible
construction of the statute.” Id. at 843. For the following
reasons, this court accepts Commerce’s explanation of its zeroing
practice.
Congress has not spoken directly on the issue of zeroing. See
Dongbu, 635 F.3d at 1366; Timken Co., 354 F.3d at 1342. Therefore,
the issue is whether Commerce’s inconsistent interpretation of 19
U.S.C. § 1677(35) is reasonable. See Nat’l Org. of Veterans’
Advocates, Inc. v. Sec’y of Veterans’ Affairs, 260 F.3d 1365,
1379–80 (Fed. Cir. 2001) (where an agency offers inconsistent
interpretations of the same term, it “must explain the rationale
for the different interpretations”). While a term should not be
given contradictory meanings throughout the statute, “terms may be
interpreted differently in different contexts.” Union Steel, 823
F. Supp. 2d at 1358 (citing FAG Kugelfischer Georg Schafer Ag v.
United States, 332 F.3d 1370, 1373 (Fed. Cir. 2003)).
Here, Commerce provides a sufficient explanation justifying
its policy of zeroing during reviews but not investigations. In
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JTEKT Corp., Commerce merely pointed out that reviews involve
average-to-transaction comparisons while investigations use
average-to-average comparisons, see JTEKT Corp., 642 F.3d at 1384,
but, in the I&D Memo, Commerce demonstrated how these differences
impact the WADM calculation. See I&D Memo at 4–6. During reviews,
where Commerce is considering the sales of a respondent subject to
an antidumping order, Commerce looks at the dumping activity at the
transactional level in order to uncover masked dumping. Id. at 5.
It is reasonable for Commerce to disregard non-dumped transactions
– that is, to zero – at this stage because it enables Commerce to
determine the actual extent of dumping activity, without the
obscuring effect of non-dumped transactions. This interpretation
of 19 U.S.C. 1677(35)(A) is consistent with the goal of the
antidumping statute, which seeks to remedy dumping and the
resulting injury to domestic industries. See Chaparral Steel Co.
v. United States, 901 F.2d 1097, 1103 (Fed. Cir. 1990) (citing
Imbert Imports, Inc. v. United States, 331 F. Supp. 1400, 1406
(Cust. Ct. 1971), aff’d 475 F.2d 1189 (C.C.P.A. 1973). This Court
accepted a similar justification for zeroing in Union Steel,
concluding that “when it comes to reviews, which are intended to
more accurately reflect commercial reality, Commerce is permitted
to unmask dumping behavior is a way that is not necessary at the
investigation stage.” Union Steel, 36 CIT at __, 823 F. Supp. 2d
at 1359. Zeroing during reviews is also justified because “it is
Court No. 11-00321 Page 27
not unreasonable for Commerce to counteract as much dumping
behavior as possible.” Id., 823 F. Supp. 2d at 1359.
In the context of an investigation, Commerce looks to
determine an average level of dumping activity rather than isolate
dumping activity. I&D Memo at 6. Zeroing is not necessary
because, unlike the individual dumping margins Commerce aggregates
during reviews, the margins Commerce aggregates during
investigations already include non-dumped transactions. Id.
Offsetting is reasonable because the resulting WADM reflects the
overall average level of dumping Commerce is looking for at this
stage. This Court accepted this rationale for offsetting in Union
Steel, recognizing that “[s]pecificity is less important in
investigations” because Commerce was comparing “broad averages.”
Union Steel, 36 CIT at __, 823 F. Supp. 2d at 1359.
Given similarities between Commerce’s explanations in Union
Steel and in the instant case, the court finds that Commerce
adequately explained its inconsistent interpretation of 19 U.S.C.
§ 1677(35)(A). Because it demonstrated that inherent differences
between reviews and investigations justify interpreting 19 U.S.C.
§ 1677(35)(A) differently in each context, Commerce provided a
reasonable explanation for the continued practice of calculating
WADM using zeroing during reviews while offsetting during
investigations. See Nat’l Org. of Veterans’ Advocates, 260 F.3d at1379–80.
Court No. 11-00321 Page 28
CONCLUSION
For the foregoing reasons, the court concludes that the Final
Results are supported by substantial evidence and are otherwise in
accord with the law.
ORDER
In accordance with the above, it is hereby
ORDERED that the determination of Commerce is SUSTAINED; and
it is further
ORDERED that this action is dismissed
/s/ NICHOLAS TSOUCALAS
Nicholas Tsoucalas
Senior Judge
Dated: December 6, 2012
New York, New York