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

Slip Op. 15-86
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
[Commerce’s Remand Results are sustained.]
Dated:August 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 Benjamin C. Mizer, Principal
Deputy 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
Joseph W. Dorn, J. Michael Taylor, and Brian E. McGill, King &
Spalding LLP, of Washington, DC, for defendant-intervenor Resco
Products, Inc. and Harbison Walker International (formerly ANH
Refractories Company.
Tsoucalas, Senior Judge: before the court are the
Department of Commerce’s (“Commerce”) Final Results of
Redetermination pursuant to Court Remand in Fengchi Imp. & Exp.
Co., Ltd. of Haicheng City v. United States, 39 CIT __, __, Slip
Op. 15-23 (Mar. 25, 2015) (“Fengchi I”). See Final Results of
Redetermination Pursuant to Fengchi Imp. & Exp. Co., Ltd. of
Haicheng City v. United States, ECF No. 111 (May 26, 2015) (“Remand
Results”). The relevant facts and procedural history are set forth
in Fengchi I. Familiarity with the court’s decision in Fengchi I
is presumed.
Plaintiffs, Fengchi Import and Export Co., Ltd. of
Haicheng City, Fengchi Refractories Co. of Haicheng City and Fedmet
Resources Corporation (collectively, “Plaintiffs”), challenge
Commerce’s redetermination. See Pls.’ Cmts. on Remand Results,
ECF No. 114 (June 25, 2015) (“Pls.’ Br.”). Both Commerce and
Defendant-Intervenors Resco Products, Inc. ("Resco") and Harbison
Walker International, formerly ANH Refractories Company ("ANH")
insist that the court sustain the Remand Results. See Def.'s Resp.
to Cmts. on Remand Results, ECF No. 118 (July 10, 2015) (“Def.’s
Br.”); Def.- Intervenors’s Cmts. Response to Pls.’ Cmts. on Remand
Results, ECF No. 120 (July 10, 2015) (“Def.-Int.’s Br.”).
Court No. 13-00186 Page 3
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, 1 as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2012). The
court will uphold Commerce’s final determination in an antidumping
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
1Further 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 4
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
In the underlying administrative review of the
antidumping order on certain magnesia carbon bricks (“MCBs”) from
China, Commerce applied a total adverse facts available (“AFA”) to
Fengchi as a consequence of Fengchi’s refusal to respond to
Commerce’s request for certain sales information. See 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”); see also Certain MCBs from the PRC: Issues
and Decision Memorandum for the Final Results of the 2010–2011
Administrative Review, (Apr. 9, 2013) PR 148 at 1–2 (“IDM”).
Commerce assigned Fengchi a weighted-average dumping margin of
236% based on the petition rate from the investigation. See First
Administrative Review of MCBs from the PRC: Corroboration
Memorandum (Oct. 1, 2012), CR 68 at 2–3 (unchanged in final).
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-
Court No. 13-00186 Page 5
specific margins of a cooperating respondent. See id. Commerce
determined that the rate was relevant to Fengchi by comparing the
United States price from the petition to the average unit prices
for five Fengchi sales of magnesia alumina carbon bricks (“MACBs”)
that were identified by United States Customs and Border Protection
(“CBP”). 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.
In Fengchi I, the Court remanded the Final Results to
Commerce for further explanation regarding the corroboration of
the AFA rate. Fengchi I, 39 CIT at __, Slip Op. 15-23 at 18–22.
Although the Court determined that Commerce properly relied on AFA
in assigning Fengchi’s weighted-average dumping margin, as a
consequence of the Federal Circuit’s holding in Fedmet Resources
Corp. v. United States, 755 F.3d 912, (Fed. Cir. 2014), the court
became “concerned with Commerce’s potentially unreasonable use of
out of scope MACB sales to corroborate the AFA rate.” Id. at __,
Slip Op. 15-23 at 21–22. Therefore, the court remanded so that
Court No. 13-00186 Page 6
Commerce could have the opportunity to address this concern at the
administrative level. Id.
Commerce resolved these concerns in its Remand Results.
There, Commerce reasonably explained that the Federal Circuit’s
ruling in Fedmet “only affects [Commerce’s] corroboration of the
AFA rate assigned to Fengchi to the extent that the record
demonstrates that the entries underlying [Commerce’s]
corroboration analysis were actually non-subject MACBs.” Remand
Results at 5. Commerce found that Fengchi’s refusal to cooperate
with the review precluded it from identifying the exact nature of
those entries. Id. Specifically, Commerce examined the CBP entry
documentation for the five sales at issue and found that the
documentation described the merchandise as MACBs, but did not
contain any additional details regarding the merchandise’s alumina
content, which is necessary to distinguish MACBs from MCBs. Id.
at 5-6; see also Fedmet Res. Corp. v. United States, 755 F.3d 912,
924 (Fed. Cir. 2014). According to Commerce, nothing in this data
indicated whether Fengchi’s merchandise was actually out-of-scope
as outlined in Fedmet. Since Fengchi refused to provide Commerce
with any narrative clarifying the merchandise in question,
Commerce reasonably found that the entry documentation was
ambiguous as to the product actually sold. Id. at 6.
Consequently, Commerce reasonably concluded that the five entries
used to corroborate the AFA rate were subject merchandise. Id.
Court No. 13-00186 Page 7
Commerce also examined additional record evidence
regarding other sales that CBP identified as subject merchandise
that Fengchi did not report for the period of review. Id. at 7
(citing First Antidumping Administrative Review of Certain MCBs
from the PRC: Sections C and D Supplemental Questionnaire, (Aug.
3, 2012) CR 46 at Attach. II). Once again, Fengchi chose not to
comment on these sales, limiting the record to only the prices and
quantities of imports that were classified as subject merchandise
by CBP. Id. at 7. Therefore, Commerce reasonably inferred that
the sales were subject merchandise and found that, as with the
other five CBP entries in question, the United States price from
the petition was “within the range of the average unit prices for
the remaining unreported sales and [was] therefore relevant to
Fengchi for this period of review.” Id. at 7.
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
Court No. 13-00186 Page 8
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
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 Fedmet renders the AFA rate
unreasonable because Commerce corroborated it using sales of non-
subject MACBs. Pls.’ Br. at 2–3. Plaintiffs insist that Commerce
is required to identify evidence on the record that the entries it
relies upon for the corroboration of an AFA rate are subject
merchandise. Id. at 3 (citing Foshan Shunde Yongjian Housewares
Court No. 13-00186 Page 9
& Hardware Co. v. United States, 37 CIT __, __, Slip Op. 13-47
(Apr. 8, 2013)). Additionally, Plaintiffs contend that although
Commerce had previously requested that Fengchi respond to its
antidumping duty questionnaire with respect to Fengchi’s exports
of MACBs, “Commerce never asked Fengchi for any additional
information specifically regarding the CBP entry data, including
the entries underlying the corroboration analysis.” Id. at 4.
Finally, Plaintiffs contend that Commerce erroneously continues to
rely on the same “post hoc rationalizations” it offered prior to
the court’s remand in Fengchi I as justification for its
corroboration of the AFA rate, instead of reviewing the evidence
on the record. Id. at 7–8.
Plaintiffs’ arguments are unpersuasive. Commerce is
required to corroborate information only “to the extent
practicable” on a given record. 19 U.S.C. § 1677e(c). On this
record, Fengchi identifies no evidence indicating whether the
alumina content of its merchandise falls within the range of out-
of-scope MACBs described in Fedmet. See Fedmet Res. Corp. v.
United States, 755 F.3d 912, 924 (Fed. Cir. 2014). As Commerce
reasonably observed, Fedmet “only affects [Commerce’s]
corroboration of the AFA rate assigned to Fengchi to the extent
that the record demonstrates that the entries underlying
[Commerce’s] corroboration analysis were actually non-subject
MACBs.” Remand Results at 5 (emphasis added). Therefore, at best,
Court No. 13-00186 Page 10
the record is ambiguous, and allows for more than one reasonable
answer to that predicate question.
Moreover, it appears that Plaintiffs would prefer that
Commerce do all the work in establishing whether the entries in
question were or were not MACBs, that is not Commerce’s role.
Commerce’s inability to mandate participation in its proceedings
means that interested parties bear the primary burden of developing
the administrative record. See QVD Food Co. v. United States, 658
F.3d 1318, 1325 (Fed. Cir. 2011). Here, rather than provide any
information about its merchandise, Fengchi left it to Commerce to
assemble a record which it now complains results in a less
favorable outcome. The fact of the matter is that Fengchi
identifies no evidence on this record that undermines the
reasonableness of Commerce’s corroboration. Once again, Commerce
is only required to corroborate the AFA rate “to the extent
practicable” on a given record. 19 U.S.C. § 1677e(c).
Furthermore, Plaintiffs mistakenly characterize
Commerce’s comments in its redetermination as being a “post hoc
rationalization.” Pls.’ Br. at 7–8. Commerce developed its
comments in the redetermination over the course of the remand
proceedings as the court directed in Fengchi I. The remand
proceeding is an administrative proceeding, meaning that
Commerce’s comments are not the post hoc rationalization of its
Court No. 13-00186 Page 11
counsel. See Mitsubishi Heavy Indus. v. United States, 24 CIT
275, 287 n. 9, 97 F. Supp. 2d 1203, 1209 n.9 (2000).
Accordingly, since Plaintiffs chose not to comply with
Commerce’s request for information, Commerce reasonably selected
from the list of secondary sources as the basis for Fengchi’s AFA
rate. See 19 U.S.C. § 1677e(b). The court finds that Commerce
acted reasonably when it chose to rely on the limited data on the
record to select an AFA rate that was “a reasonably accurate
estimate of the respondent's actual rate, albeit with some built-
in increase intended as a deterrent to non-compliance.” De Cecco,
216 F.3d at 1032.
For the foregoing reasons, Commerce’s Remand Results are
SUSTAINED. Judgment will be entered accordingly.
/s/ Nicholas Tsoucalas
Nicholas Tsoucalas
Senior Judge
Dated: __________________
August 13, 2015
New York, New York