Fengchi Imp. and Exp. Co., Ltd. of Haicheng City v. United States

Slip Op. 15-32
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.: 13-00166
UNITED STATES, :
:
Defendant, :
:
and :
:
RESCO PRODUCTS, INC., and :
ANH REFRACTORIES COMPANY, :
:
Defendant-Intervenors.:
OPINION
[Plaintiffs’ motion for judgment on the agency record is denied.]
Dated:April 13, 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, Patricia M.
McCarthy, Assistant Director, and Loren M. Preheim Trial Attorney,
Commercial Litigation Branch, Civil Division, U.S. Department of
Justice, of Washington, DC. Of counsel on the brief was Devin S.
Sikes, Attorney, Office of the Chief Counsel for Trade Enforcement
& Compliance, U.S. Department of Commerce, of Washington, DC.
Court No. 13-00166 Page 2
Camelia C. Mazard, Robert R. 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
Countervailing Duty Administrative Review; 2010, 78 Fed. Reg.
22,235 (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 a countervailing duty
(“CVD”) order. See Certain MCBs From the PRC: CVD Order, 75 Fed.
Reg. 57,442 (Sept. 21, 2010) (the “Order”). On October 31, 2011,
Commerce initiated an administrative review of the Order, covering
sales of subject merchandise between August 2, 2010 and December
31, 2010 (“2010 Administrative Review”). See Initiation of
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Antidumping and CVD Administrative Reviews and Request for
Revocation in Part, 76 Fed. Reg. 67,133, 67,139–40 (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: CVD Order on Certain MCBs from the PRC,
Administrative Review (8/2/10–12/31/11): Entry of Appearance and
APO Application (Oct. 31, 2012), Public Rec. 102 at 1. 2
On November 22, 2011, Commerce released U.S. Customs and
Border Patrol (“CPB”) data, covering Fengchi’s imports of MCBs
from the PRC made during the period of review (“POR”), and invited
Fengchi to comment on the data. See Certain MCBs from the PRC:
Customs Data of U.S. Imports of Certain MCBs, (Nov. 22, 2011), PR
20 at 1.
On February 21, 2012, Commerce issued a questionnaire to
the Government of China (“GOC”), with instructions to forward it
to Fengchi. Letter to GOC re: First Administrative Review of CVD
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
22,235. 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. 13-00166 Page 4
Order on Certain MCBs from the PRC, PR 65 at 1-2 (Feb. 21, 2012)
(“Initial Questionnaire”). Commerce insisted that both the GOC
and Fengchi respond. Id. Commerce requested that Fengchi report
all domestic and foreign sales of both subject and non-subject
merchandise, as well as total exports of subject and non-subject
merchandise to the United States and other markets during the POR.
See id. at section III. Specifically, Commerce requested
information on Fengchi’s sales and exports of magnesia alumina
carbon bricks (“MACBs”) during the POR. See id.
On March 29, 2012, Fengchi informed Commerce that,
because it had no entries, exports, or sales of subject merchandise
to the United States during the POR, there was no basis to conduct
a review of Fengchi and, thus, Commerce should rescind the
administrative review of the company. See Letter to Commerce re:
CVD Order on Certain MCBs from the PRC; Administrative Review
(8/2/10-12/31/10) (Mar. 29, 2012), PR 59 at 1-2. Fengchi insisted
that because it did not have entries or sales during the POR, its
letter to Commerce should be considered a complete response. Id.
at 2. Fengchi asserted that even though the entry data from the
U.S. Customs and Border Patrol (“CBP”) appears to show entries of
subject merchandise by Fengchi, the company was not in a position
to account for the entry data. Id. at 3–4.
Concurrent with 2010 Administrative Review, Commerce
conducted a scope inquiry to determine whether MACBs from the PRC
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were subject to the Order. See Certain MCBs from the PRC: Issues
and Decision Memorandum for the Final Results of the 2010–2011
Administrative Review, (Apr. 9, 2013) PR 117 at 1–2 (“IDM”). On
July 2, 2012, Commerce issued the final results of its scope
inquiry, finding that MACBs were within the scope of the Order.
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”).
Prior to issuing the MACB Scope Ruling, Commerce placed
the CBP information on the record regarding Fengchi’s apparent
entries during the POR and requested comments from Fengchi on the
data. Mem. re: MCBs from the PRC ( C-570-955): Requests for Entry
Summaries from CBP, CR 14 at 1 (June 20, 2012). Subsequently, on
July 2, 2012, in its comments to Commerce’s June 20, 2012
memorandum, Fengchi explained that its entries were incorrectly
categorized as subject merchandise by CBP. Letter to Commerce re:
CVD Order on Certain MCBs from the PRC; Administrative Review
(8/2/10-12/31/10), CR 15 at 1–6 (July 2, 2012). Fengchi argued
that the description of the merchandise in these documents supports
its claim that the company did not have entries of subject
merchandise during the POR. Id.
On August 15, 2012, Commerce informed Fengchi that it
should have responded to its Initial Questionnaire issued on
February 21, 2012, because the CBP information had been placed on
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the record and the MACB Scope Ruling had been issued, demonstrating
that Fengchi had made subject entries during the POR. Letter to
GOC re: First Administrative Review of CVD Order on Certain MCBs
from the PRC: Deficiency Letter Regarding Inadequate Questionnaire
Response, CR 17 at 1–3 (Aug. 15, 2012). Additionally, Commerce
requested that Fengchi submit information with regards to its sales
of MACBs during the POR. Id. at 2.
On August 16, 2012, Fengchi submitted a letter to
Commerce objecting to its request, arguing that: (1) Fengchi
correctly reported that it had no entries of MCBs at the time
Commerce issued the questionnaire; (2) Commerce’s request
contradicts the time limits provided in 19 C.F.R. § 351.225(l)(4),
because the request came a month after the final scope
determination and 289 days after the initiation of this review;
and (3) the request was unfair and burdensome. PR 72 at 1-12.
Fengchi also filed for an extension of ninety days to respond to
the questionnaire. PR 73 at 1-5.
In response to Fengchi requesting an extension of time
to respond to Commerce’s initial questionnaire, Commerce extended
the deadline for filing a responses to the Initial Questionnaire
for both Fengchi and the GOC until October 1, 2012. See Letter to
Fengchi re: First Administrative Review of the CVD Order on Certain
MCBs from the PRC: Fengchi's Extension Request, PR 78 at 1 (Aug.
28, 2012). Subsequently on August 29, 2012, Fengchi informed
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Commerce that it would not respond to its Initial Questionnaire
arguing that Commerce’s request was contrary to the express terms
of 19 C.F.R. § 351.225(l)(4) and that Commerce’s untimely request
to report such sales was unreasonably burdensome and prejudicial.
See Letter to Fengchi re: CVD Order on Certain MCBs from the PRC;
Administrative Review, PR 81 at 2-3 (Aug. 29, 2012).
On September 11, 2012, Commerce granted Fengchi a final
opportunity to respond its questionnaire by October 1, 2012, and
once again Fengchi declined to comply. See Letter to Fengchi re:
First CVD Administrative Review of Certain MCBs from the PRC, PR
86 at 1–3 (September 11, 2012); see also Letter to Commerce re:
CVD Order on Certain MCBs from the PRC; CVD Administrative Review
(8/02/10-12/31/10), PR 95 at 1–2 (Oct. 1, 2012).
Commerce issued the preliminary results of the 2010
Administrative Review in October 2012. See Certain MCBs From the
PRC: 2010 CVD Administrative Review, 77 Fed. Reg. 61,397 (Oct. 9,
2012) (“Preliminary Results”). See also Decision Memorandum for
Preliminary Results of CVD Administrative Review: Certain MCBs
from the PRC, PR 98 (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”).
Court No. 13-00166 Page 8
PRM at 6–9. Commerce assigned a 262.80% dumping margin to
Fengchi’s sales. PRM at 8.
Commerce issued the Final Results in April 2013,
upholding the Preliminary Results in their entirety. Final
Results, 78 Fed. Reg. at 22,236.
JURISDICTION and STANDARD OF REVIEW
The Court has jurisdiction pursuant to 28 U.S.C. §
1581(c) (2012) and section 516A(a)(2)(B)(i) of the Tariff Act of
1930, 3 as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2012). The court
will uphold Commerce’s final determination in a countervailing
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)),
3Further citations to the Tariff Act of 1930 are to the relevant
portions of Title 19 of the U.S. Code, 2012 edition, and all
applicable amendments thereto.
Court No. 13-00166 Page 9
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
Fengchi contests the following aspects of the Final
Results: Commerce’s request for sales information on MACBs;
Commerce’s application of AFA; Commerce’s selection of 262.80% as
the AFA rate. See Pls.’ Br. Supp. Mot. J. Agency R. at 7–23
(“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 argues 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
countervailing duties on [MACBs] under the [Order], and thus, no
Court No. 13-00166 Page 10
lawful basis for Commerce to have directed Fengchi to answer the
CVD questionnaire in the administrative review with respect to
[MACBs].” Pl.’s Br. 7–8. The court must reject this argument.
The Fedmet litigation concerned the MACB Scope Ruling. This case
concerns Commerce’s ability to request information on products
subject to a scope ruling during an administrative review and its
imposition of adverse facts available 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
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 based on
Fengchi’s refusal to provide the information. 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 9.
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 15–17.
Court No. 13-00166 Page 11
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
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
6. As noted above, Commerce requested information on Fengchi’s
MACB sales shortly after issuing the scope ruling, see CR 17 at 2,
but Fengchi declined to provide the information, insisting that
Commerce’s request was improper. See PR 81 at 2. Commerce
insisted that its request was consistent with section
351.225(l)(4) because the regulation does not prohibit Commerce
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from soliciting information on products that are subject to a scope
ruling issued over ninety days after the review begins. See IDM
at 11–12. 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
on the product and may only consider sales of the product based on
non-adverse facts available. See Pls.’ Br. at 9–12. 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. Id. at 11–15.
Court No. 13-00166 Page 13
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 8–9
(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 simply does not proscribe Commerce’s power to request
information in the manner Plaintiffs suggest.
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
11–13. 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; CVD: Proposed
Rules, 61 Fed. Reg. 7308, 7322 (Feb. 27, 1996)). However, Commerce
Court No. 13-00166 Page 14
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; CVD: 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
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
11–12. 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
Court No. 13-00166 Page 15
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 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.
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
Court No. 13-00166 Page 16
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
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 15–17.
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 sent Fengchi the
Initial Questionnaire on February 21, 2012, PR 65 at 1–2, well
before the October 1, 2012 deadline for its preliminary
determination. PRM at 3. Commerce repeatedly offered to extend
the deadline for Fengchi to provide the requested information.
See, e.g., CR 17 at 1, PR 71 at 1. As discussed above, Commerce
Court No. 13-00166 Page 17
also offered Fengchi one final opportunity to comply on September
11, 2012, but once again, Fengchi declined to provide its MACB
sales information. See PR 86 at 1–3.
Accordingly, because it was practicable to consider
Fengchi’s MACBs sales at the time of the MACB Scope Ruling,
Commerce reasonably requested that data during the review. 4 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).
4Commerce 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. 13-00166 Page 18
Although it 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 17–21. As noted above, Plaintiffs insist that Commerce’s
request for Fengchi’s MACB sales information violated 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 19. 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
18–19 (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 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 262.80% as the AFA rate.
Court No. 13-00166 Page 19
When selecting a total AFA rate, Commerce typically
cannot calculate a rate for an uncooperative respondent because
the information required for such a calculation has not been
provided. As a substitute, Commerce relies on various “secondary”
sources of information (the petition, the final determination from
the investigation, prior administrative reviews, or any other
information placed on the record), 19 U.S.C. § 1677e(b), (c), in
order to select a proxy 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)(“De Cecco”). When selecting an appropriate
total AFA proxy, “Commerce must balance the statutory objectives
of finding an accurate dumping margin and inducing compliance.”
Timken Co. v. United States, 354 F.3d 1334, 1345 (Fed. Cir. 2004).
The proxy’s purpose “is to provide respondents with an incentive
to cooperate, not to impose punitive, aberrational, or
uncorroborated margins.” De Cecco, 216 F.3d at 1032. “Commerce
must select secondary information that has some grounding in
commercial reality.” Gallant Ocean (Thailand) Co. v. United
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
Court No. 13-00166 Page 20
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.
In the CVD context, Commerce follows a hierarchy when
selecting a proxy subsidy rate for an uncooperative respondent
because “unlike other types of information, such as publicly
available data on the national inflation rate of a given country
or national average interest rates, there typically are no
independent sources for data on company-specific benefits
resulting from countervailable subsidy programs.” Certain Kitchen
Appliance Shelving and Racks From the People's Republic of China:
Final Results of the CVD Administrative Review, 77 Fed. Reg. 21,744(April 11, 2012) and accompanying Issues and Decision Memorandum
Court No. 13-00166 Page 21
for the Final Results of the CVD Administrative Review of Certain
Kitchen Appliance Shelving and Racks from the People's Republic of
China at 4 (Apr. 4, 2012). To select an AFA subsidy rate, Commerce
first attempts to apply the highest, above de minimis subsidy rate
calculated for the identical program from any segment of the
proceeding. See PRM at 8. Absent a calculated above de
minimis subsidy rate from an identical program, the Department
then seeks a subsidy rate calculated for a similar
program. Id. Absent such a rate, the Commerce then resorts to
the third step in its hierarchy, an above de minimis calculated
subsidy rate for any program from any CVD proceeding involving the
country in which the subject merchandise is produced, so long as
the producer of the subject merchandise or the industry to which
it belongs could have used the program for which the rates were
calculated. Id.In this case, Commerce assigned Fengchi a rate of 262.80%
which reflected the sum of rates assigned for 22 programs that
Commerce found countervailable in the investigation. See Final
Results to CVD Administrative Review of Certain MCBs from the PRC:
Application of AFA for Non-Cooperative Companies, PR 118 at 2, 7
(Apr. 9, 2013); IDM at 18. Since both Fengchi and the PRC failed
to respond to Commerce’s questionnaire, Commerce made the adverse
inference that Fengchi had facilities and/or cross-owned
affiliates that received subsidies under all of the sub-national
Court No. 13-00166 Page 22
programs which Commerce determined countervailable in the
investigation. Id. at 2. The rates for these programs ranged
0.51% to 25%, covering direct tax, other income tax, indirect tax,
loan, export restraints, less than adequate remuneration, and
grant programs. See id. at 7. For half of these programs, Commerce
applied a rate based upon partial AFA, 21.24%, which it had
calculated for a mandatory respondent in the original
investigation. IDM at 19; PR 118 at 4–5. Commerce reasoned that
the rates for these programs “were calculated in recent CVD final
investigations or final results of review for fully cooperating
respondents” and that, consequently, the rates “reflect the actual
subsidy practices of PRC’s national, provincial, and local
governments.” IDM at 18. Commerce also found the rates
appropriate because they were “based upon information about the
same or similar programs for periods close in time to the POR in
the instant case.” Id. Finally, Commerce determined that nothing
on the record called into question the reliability of these
calculated rates. Id.Plaintiffs argue that the 262.80% rate applied to
Fengchi “is unreasonable, overly punitive, and not reflective of
Fengchi’s commercial reality,” because it “is more than 10 times
higher than the only actual subsidy rate calculated for a
cooperating respondent in the proceeding.” Pl. Br. at 22.
Plaintiffs also contend that Commerce’s use of the 21.24% rate in
Court No. 13-00166 Page 23
its calculation was unreasonable because it was “derived from
partial AFA and thus was not calculated entirely based on actual
data.” Id. at 23.
On the issue of corroboration, the court finds that
Commerce corroborated Fengchi’s AFA rate to the extent practicable
under 19 U.S.C. § 1677e(c). Both Fengchi and the GOC refused to
provide any information during the administrative review regarding
their use of countervailable subsidies, thus Commerce’s ability to
corroborate its secondary information was limited by Fengchi’s
lack of cooperation. The rates Commerce used to corroborate
Fengchi’s AFA rate were reliable because they were calculated in
recent CVD final investigations or final results of review. PRM
at 6. Furthermore, the rates were relevant because they were based
upon information about the same or similar programs. Id. With
regard to the programs for which there was no program-type match,
Commerce selected the highest calculated subsidy rate for any PRC
program from which the non-cooperative companies could receive a
benefit to use as AFA. Id. These rates were calculated for
periods close in time to the POR in the instant case. Id.
Additionally, Commerce observed that it assigned a total AFA rate
to Fengchi that is comparable to the AFA rate assigned to a
mandatory respondent in the investigation that ceased to cooperate
and withheld information. Id.
Court No. 13-00166 Page 24
The court is not persuaded by Plaintiffs’ argument that
Commerce chose a rate that was unreasonable, overly punitive, and
not reflective of Fengchi’s commercial reality. Nor is the court
convinced that Commerce unreasonably relied on the 21.24% rate
based upon partial AFA. Due to Fengchi’s lack of cooperation
during the review, there is no company specific data on the record
regarding Fengchi’s participation in countervailable programs.
Because there were no other independent sources of data on company-
specific benefits, Commerce was limited in its ability to
corroborate the information used to calculate the AFA rate. Thus,
Plaintiffs’ arguments do not undermine the reasonableness of
Commerce’s corroboration given the limited information available
to Commerce. See Essar Steel, Ltd. v. United States, 753 F.3d
1368, 1374 (Fed. Cir. 2014).
Ultimately, section 1677e(c) requires that Commerce
“shall, to the extent practicable, corroborate that information
from independent sources that are reasonably at their disposal.”
19 U.S.C. § 1677e(c). As discussed above, both Fengchi and the
GOC failed to cooperate with Commerce and provide company-specific
information regarding countervailable benefits Fengchi received
during the POR. Since there were no other independent sources of
data on company-specific benefits, Commerce was limited in its
ability to corroborate the information used to calculate the AFA
rate. Accordingly, in light of the failure of Fengchi to cooperate
Court No. 13-00166 Page 25
and the reasonably accurate nature of the secondary information
that Commerce used under § 1677e(b), Commerce satisfied the
requirement of corroborating the 262.80% AFA rate “to the extent
practicable.” Id.
IV. Conclusion
For the foregoing reasons, the Final Results were
supported by substantial evidence and otherwise in accordance with
law. Plaintiffs’ motion for judgment on the agency record is
denied. Judgment will be entered accordingly.
/s/ Nicholas Tsoucalas
Nicholas Tsoucalas
Senior Judge
Dated: April 13, 2015
New York, New York