Slip Op. 11-25 UNITED STAT ES COURT OF INTERNATIONAL TRADE

___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ _ : PSC VSMPO-AVI SMA Corporation : and VSMPO-Tirus, U.S., Inc., : : Plaintiffs, : v. : Be fore : J ane A . Restani, J udg e : UNI TED STATES, : Court No. 09-00349 : Def endant : P ubl ic Ver sion : and : : US Mag nesium L L C : : Interve nor De fenda

nt :

_________________________________________ :
OP INION AND ORDER [R emand to De partment of Commerc e to re consider A FA r ate.] Dated: Ma rch 7, 2011 Are nt Fox L L P (J ohn M. Gurley , Mark P. Lunn, and Diana Dimitriuc-Quaia ) for the plaintiffs. Tony

West, Assist ant Attorney Gene ral; Jeanne E. Da

vidson, Director , Patricia M. McCarthy , Assistant Director , Commercial L itigation B ranc h, Civil Division, U.S. Department of Jus tice (D avid S. Sil verbr and); Of fice of Chief Counsel for

I mport Administration, U.S. Depa rtment of Commerce (Da niel J . Calhoun), of c ounsel, for the defe ndant. King & Spalding , L L P (Stephen A. Jones, J eff rey B. D enning , J eff

rey M. Telep, and Steven R. Ke ener) for the interve nor-de fenda

nt. Restani, J udg e: This court a ction challeng es the De partment of Commerc e’s (“Commerc e”) final re sults rendere d in an antidumping duty revie w of magnesium metal fromCourt No. 09-00349 Pag e 2

Russian Fede ration (“ Russia”). See Ma g nesium Metal Fr om the Russian Fede ration: Fina l Results and Partial Rescission of Antidumping Duty Administrative Review, 74 F ed. Reg
. 39,919 (De p’t Commerce Aug . 10, 2000). The pla intiffs, PS C VSMP O-AV I SMA Corporation and VSMPO-Tirus, U.S., Inc. (c ollectively “AVI SMA”), submitted a motion for judg ment on the ag ency rec ord pursua

nt to USC I T Rule 56. For the re asons stated be low, the cour t denies the plaintiffs’ motion in part and re mands to Commerce so that it may rec onsider the AF A rate. BACK GR OUND In Fe bruar

y 2004, multipl e U.S. companie s, repr esentingthe domestic produc ers of mag nesium metal (“the domestic industry”), filed a pe tition wit h Commerce c oncer ning 1 mag nesium metal from Russia and the People ’s Republic of China. Initiation, 69 Fed. Reg . at 15,293. In Marc h 2004, Commerce initiated a n antidumping investig ation of mag nesium metal from Russia for the period of January 1, 2003 throug h Dec ember 31, 2003, id. at 15,295, and selec ted AVI SMA and Solikamsk Magne sium W orks (“ SMW ”) a s the mandatory responde nts, Notice of Preliminary

Deter mination of Sales at L ess Than F air Va lue and Postponement of F inal Deter mination: Magne sium Metal From the Russian F eder ation, 69 Fe d. Reg . 59,197, 59,198 (De p’t Commerce Oct. 4, 2004). I n Marc h 2005, Commerce de termined that AV I SMA and SMW , duringthe per iod of investiga tion, sold t he subjec t mercha ndise in the United States with

The “ ad hoc c oalition” consisted of U.S. Mag nesium Corporation L L C (“U.S. 1 Mag nesium”), United Stee lworker s of Amer ica, L ocal 8319, a nd Glass, Molders, Pottery , Plastics & Allied Workers International, L ocal 374. Notice of Initiation of Antidumpi ng Duty Investig ations: Mag nesium Metal Fr om the People’s Republic of China a nd the Russian Fe deration, 69 Fed. Reg . 15,293, 15,293 (De p’t Commerce Mar. 25, 2004) (“I nitiation”).Court No. 09-00349 Pag e 3

antidumping duty

(AD) marg ins of 21.71% and 18.65% respe ctively
. Mag nesium Metal Fr om 2 the Russian Fe deration: Notice of Amende d Final De termination of Sales at L ess Than F air Value, 70 F ed. Reg . 15,837, 15,837 (De p’t Commerce Mar. 29, 2005)
.

In September 2007, Commerc e complete d an administrative r eview of this order for the pe riod of Oc tober 4, 2004, throug h Marc h 31, 2006, and ca lculated AD marg ins of .41% (de minimis) for AV I SMA and 3.77% for SMW . Mag nesium Metal from the Russian F eder al: Final Results of Antidumping D uty Administrative Review, 72 F ed. Reg . 51,791, 51,792 (De p’t Commerce Sept. 11, 2007) . In September 2008, Commerc e published the re sults of the administrative re view (“ 2006/07 review ”) f or the pe riod of Apr il 1, 2006, through Ma rch 31, 2007, and ca lculated a

n AD mar g in of 15.77% for AVI SMA. Mag nesium Metal from the Russian Fede ration: Fina l Results of Antidumpi ng Duty Administrative Review, 73 F ed. Reg
. 52,642, 52,643 (De p’t Commerce Sept. 10, 2008) (“F inal Results 2008”). Commerce , howeve r, selec ted an a dverse fac ts available ( “AF A”) rate of 21.71% f or SMW. I d.

3 In J une 2008, Commerce initiated the administrative re view (“ 2007/08 review ”) of the AD duty

order reg ardingmag nesium metal from Russia for the period of A pril 1, 2007,
An AD mar g in is the differe nce be tween the normal value (“N V”) of merc handise a nd 2 the price for sa le in the United States. See 19 U .S.C. § 1673e(a)( 1); 19 U.S.C. § 1677(35). Unless nonmarke t economy (“N ME”) me thodology

is used, an NV is e ither the pric e of the merc handise whe n sold for consumption in the exporting country or the pric e of the merc handise when sold for

consumption in a simil ar c ountry . 19 U.S.C. § 1677b(a)(1) . An export price or constructe d export price is the price that the merc handise is sold for in the United States. 19 U.S.C. § 1677a(a) –(b). Shortly afte r the initiation of the sec ond revie w, SMW notified Commerce that it would 3 not participate . Mag nesium Metal from the Russian F eder ation: Preliminary Results of Antidumping Duty

Administrative Review, 73 F ed. Reg . 24,541, 24,542 (De p’t Commerce May 5, 2008).Court No. 09-00349 Pag e 4

throug h Marc h 31, 2008. Initiation of Antidumpi ng and Counterva iling Duty Administrative Reviews and Re quests for Revoc ation in Part, 73 Fe d. Reg . 31,813, 31,813 (De p’t Commerce J une 4, 2008). In J anuar

y 2009, howeve r, AVI SMA informed Commerce that it would no longer participate in the administrative re view bec ause of “the a dminist rative bur dens re quired to pursue this review f

urther, inc luding multiple verific ations of AVI SMA and VSMPO-Tirus, a cha ng e in AVI SMA’s product foc us, as well as othe r matters a ffe cting the re spondents’ business.” Pls.’ Confidential App. Tab 2, 1. In April 2009, Commerce published the preliminary results of its revie w and a ssigne d AVI SMA an AF A rate of 43.58%, “ the hig hest transa ction-spec ific rate [it ] calc ulated in the 2006/07 administrative re view of the order with respec t to AVI SMA.” Mag nesium Metal Fr om the Russian Fede ration: Preliminary Results of Antidumping Duty Administrative Review a

nd Intent To Rescind in Part, 74 Fe d. Reg . 15,435, 15,437 (De p’t Commerce A

pr. 6, 2009). In response to this AFA rate, AVI SMA submit ted a c ase br ief urg ing Commerce to se lect the lowe r rate of 21.71%, the highe st weig hted-avera g e mar g in from the orig inal AD investig ation. Pls.’ Confidential App. Tab 11, 29–34. Ne verthe less, Commerce published its final results in August 2009, a nd selec ted an AF A rate of 43.58% f or AVI SMA. Mag nesium Metal Fr om the Russian Fede ration: Fina l Results and Partial Rescission of Antidumping Duty

Administrative Review, 74 F ed. Reg . 39,919, 39,920 (De p’t Commerce Aug
. 10, 2009) (“ Final Results”).

In August 2009, the plaintiffs commence d this action contesting the AF A rate of 43.58%. In Marc h 2010, the plaintiffs filed a motion for judgme nt on the ag ency rec ord pursua

nt to USCI T Rule 56.2.Court No. 09-00349 Pag e 5
STANDARD OF REVIEW The c ourt has jurisdiction pursuant to 28 U.S.C. § 1581(c). The court will uphold Commerce’ s final re sults in AD reviews unless they are “unsupported by

substantial evidence on the re cord, or

otherwise not in ac corda nce w ith law.” 19 U.S.C. § 1516a(b) (1)( B) (i). DISCUSSIO N I. 19 U.S.C. § 1677e

Duringan AD r eview, when “a n interested pa

rty has fa iled to cooper ate by not actingto the best of its ability to comply

with a re quest for infor

mation from the administering authority . . . the administeringauthority . . . may use an infe renc e that is adve rse to the inter ests of that par

ty in selectingfrom amongthe fa cts otherwise available .” 19 U.S.C. § 1677e(b) . The AD duty rate under suc h circ umstances is known a s an AF A rate and may be base d on information obtained f

rom: “(1) the petition, (2) a f inal deter mination in the investigation under this ti tle, (3) a

ny previous re view under

. . . [19 U.S .C. § 1675] or dete rmination under . . . [19 U.S.C. § 1675b] , or (4) any other infor

mation placed on the rec ord.” I d. For this reason, the United States Court of Appea ls for the F eder al Circuit has re peate dly acknow ledg ed that “Commerce ’s discre tion in apply ing a n AFAmarg in is particularly g reat.” PAM S.p.A. v. United States, 582 F.3d 1336, 1340 ( Fe d. Cir. 2009). A. AVISMA’s A F A Rate is Uncorroborat ed AVI SMA challeng es the F inal Results on the gr ounds that the selec ted AF A rate of 43.58% violates 19 U .S.C. § 1677e(c) be cause it is notcorr oborate d. Pls. P SC VS MPOAVI SMA Corporation and VSMPO-TI RUS, US I nc.’s Me m. L aw Supp. Mot. J . on the Ag encyCourt No. 09-00349 Pag e 6

R. Pursuant to Rul e 56.2 (“ Pls.’ Br.” ) 8, 17. This claim has mer it.

Although “ the possibilit y of a hig h AFAmarg in cre ates a power ful incentive to avoid dumping a

nd to cooper ate in investig ations, there is a limit to Comm erc e' s discretion.” PAM S.p.A., 582 F.3d at 1340. Pursuant to 19 U.S.C. § 1677e(c) , “[w]hen the administering authority . . . relies on se condar

y information rather than on infor mation obtained in the cour se of an investig ation or re view, the a dminist eringauthority . . . shall, to the ext ent pra cticable , corr oborate that information from indepe ndent source s that are rea sonably at their disposal.” 19 U.S.C. § 1677e(c) . “Seconda ry information includes [i] nformation der ived from the pe tition t hat g ave r ise to the investiga

tion or review , the final de termination conc erningthe subject
merc handise, or a

ny previous re view under

[19 U.S .C. § 1675] conce rningthe subject
merc handise.” KYD, Inc. v. United States, 607 F .3d 760, 765 (F ed. Cir. 2010) (inter nal quotation marks and c itation omit ted). He re, the AFArate of 43.58% wa s based on the hig hest transac tion-specific marg in calculated for A VI SMA during the previous administrative r eview, and thus, is seconda

ry information. Commerce must, therefor e, cor roborate this information “to the extent practica

ble.” 19 U.S.C. § 1677e(c ); see a lso Gallant Oce an (Tha i.) Co., L td. v. United States, 602 F.3d 1319, 1324 (F ed. Cir. 2010).

In order to corrobor ate a

n AFArate , Commerce must show that it used “r eliable fac ts” that had “ some g roundingin commerc ial rea lity .” Ga llant, 602 F.3d a 1324. H ere , Commerce r easone d that the AF A rate of 43.58% w as re levant and r eliable a nd there fore , “cor roborated to the extent practica ble,” a s a re sult of it being “ based on A VI SMA’s questionnaire r esponses a nd acc ompanying data from the immediate ly prec edingadministrativeCourt No. 09-00349 Pag e 7

revie w that ar e uncontr adicted by any rec ord evide nce.” I ssues and De cision Memorandum for the Antidumping Duty

Administrative Review of Ma g nesium Metal from the Russian F eder ation for the Per iod of Review Apr il 1, 2007, through Ma rch 31, 2008, A -821-819, at 14 (Aug . 10, 2009) (“ I ssues and De cision Memorandum” ), ava ilable at Pls.’ Confidential App. Tab 8. Commerce’ s appar ent under standing of re liability , howeve r, is misplaced. The mere fac t that specific -transa ction data is ac cura te and ve rified doe s not ipso facto re nder it re liable for the se purposes. See PAM, S.p.A., 582 F.3d at 1340 (providing that “one sa le by itself” will not 4 “alwa y s rise to the leve l of substantial evidenc e”) ; J TEKT Corp. v. United States, 675 F . Supp. 2d 1205, 1256 (CI T 2009); Fe rro Union, Inc. v. United States, 44 F . Supp. 2d 1310, 1334 (CI T 1999). Rather, r eliability in this contex t is determined by the information’s r elationship to the 5

commerc ial rea lity

of this respondent. See Gallant, 602 F .3d at 1323–24. Thus, otherw ise uncontra dicted information from prior re views ca n be prove n ung rounded in c ommercia l rea lity U.S. Mag nesium relies he avily on Ta Chen Stainless Steel Pipe, Inc. v. United States, 4 298 F.3d 1330 ( Fe d. Cir. 2002), for the proposition that a single sale fr om a prior r eview c an rende r an A FA r ate c orrobor ated. See US Mag nesium’s Resp. in Opp’n Pls.’ Rule 56.2 Mot. for J . on the Ag ency

R. 26–27. The Fe dera l Circuit rece ntly explained, however , that despite languag e in the opinion to the contra ry , “Ta Chen was not a c orrobor ation case as Commerce relied on pr imary

information.” Ga llant, 602 F.3d at 1324. Commerc e, ther efor e, did not need to establish specific ally

how the one a ctual sale in that case corr oborate d the selec ted rate. For this rea son, Ta Chen is distinguishable f rom this case be cause the sing le sale data used he re is fr om a prior re view and thus, must be cor roborated. See F inal Results, 74 Fed. Reg . at 39,920; Ta Chen, 298 F.3d at 1339. I n any

case , howeve r, substantial evidenc e has to support the c hoice of rate . Although both of

the last two ca ses involved marg ins that were far more out of date than 5 the one at hand, J TEKT Corp., 675 F . Supp. 2d at 1256 (marg in calculated seve nteen year s ear lier) F err o Union, Inc., 44 F . Supp. 2d at 1335 (marg in calculated eig ht y ear s ear lier), ther e is no rea son to assume their holding s are limit ed to those circ umstances, a s the Gover nment sug g ests, Def

.’s Resp. Pls.’ Rule 56.2 Mot. J . Upon Ag ency R. 17. Comm erc e ca

nnot “proc eed[] on the basis that prior c alculate d marg ins are ipso fa cto re liable,” a s it did i n this case. F err o Union, Inc., 44 F . Supp. 2d at 1334. Rather, it must do more to show releva ncy and re liability
.Court No. 09-00349 Pag e 8

if “much more reliable information,” suc h as a la rg e quantity

of more r ece nt data sug g esting differ ent marke t conditions, is present. I d. at 1323.

Commerce, the ref

ore, ha s failed to explain its reasoningadequately or has f ailed to corrobor ate a dequate ly AVI SMA’s AFArate beca use it has not related it to market re alities. 6 See Ga llant, 602 F.3d at 1325 ( holding that a n AFArate is uncorrobor ated whe n “Commerce
. . . did not show that a small perc entag e of the mandatory responde nts’ transac tions repre sented a
rea sonably

acc urate estimate of [the plaintiff’s] actual dumpingmarg in”). Acc ording ly , the 7 court re mands this matter to Commerce w ith inst ructions to either r easona bly explain such a relationship, t here by

corr oboratingthe 43.58% AF A ra te, or re place it with a rate that is
corr oborate d. See Ga llant, 602 F.3d at 1324; Ta ifa, 2010 Ct. Int’l Trade L EXI S 131, at *18–19.

8 B. AVISMA’s A F A Rate Has Not Been De m onstrate d to Be P uni tive

Whil e the f

act that this rate was c alculate d from sing le sale data from the pr evious 6 administrative re view may be some e vidence , Commerce must explain what rele vance this rate has to curr ent commer cial re ality . See Pls.’ Reply to Def.’ s and De f.-Interve nor’s Resps. in Opp’n to Pls.’ Mot. for J . on the Ag ency R. 11. The c ourt has noted that a rate based on spe cific tra nsactions is g ener ally

not as 7 acc eptable a s an over all rate calc ulated for a par ty . See Qing dao Ta ifa Gr p. Co., L td. v. United States, Sli p Op. 10-126, 2010 Ct. Int’l Trade L EXI S 131, *17–18 (CI T Nov. 12, 2010); see also infra Sec t. I I
. I t remains uncle ar whether or not Commerce can e x plain or cor roborate this perce ntag e 8 g iven the fa cts of this case . The AF A rate ca lculated wa s using the da ta of one sale fr om a prior investigation that is si g nificantly highe r than the ne x t three hig hest transa ction specific rate s from that revie w ([[ ]] %, [[ ]] %, and [[ ] ]%). See Pls.’ Br . 24. Even in PAM, S.p.A., Comm erc e cor

roborated the AF A rate by a per centa g e, albe it small, of prior sales. 582 F.3d at 1340. I f Commerce wer e to adopt a similar methodology in this case, AVI SMA’s AFA rate would be much lowe r than it is now. See Pls.’ Br . 24. Confidential Data Delete dCourt No. 09-00349 Pag e 9 Next, AVI SMA argues that the AF A rate was punitive be cause , inter alia, 9 Commerce a ssigne d SMW , another uncooper ative Russian responde nt, an AF A rate of 21.71% in the prior re view. See Pls.’ B r. 32–38. This argument lacks mer it.

“[T] he purpose of sec tion 1677e(b) is to provide r espondents with an ince ntive to cooper ate, not to impose punitive, aber rational, or unc orrobor ated mar g ins.” F.L ii De Cecc o Di Filippo Fa

ra S. Mar tino S.p.A. v. United St ates, 216 F .3d 1027, 1032 (F ed. Cir. 2000). An A FA rate is puniti ve if it is not “based on f acts” and “ha s been discr edited by the ag ency ’s own investigation.” I d., at 1033 (interna l quotation marks omitted). At this point there is lit tle evidenc e esta

blishing whe ther the r ate is punitive or not. I f the rate is sufficiently corr oborate d as
a re liable rate it will not be found to be punitive. C. AVISMA’s A F A Rate Has Not Been De m onstrate d to Be Aberr ational Additionally , AVI SMA argues that its AFA r ate is impermissibly aber rational beca use it is based on an outlier sa le. Pls.’ Br. 25–32. Spec ifically , AVI SMA argues that this single sale ha d an unusually low quantity , and unusually high f reig ht expenses. See id. This argument lacks mer it.

Duringits review, AV I SMA raised its conce rns about the r epre sentational value of this sale and Commerc e investig ated, but conc luded that these a lleg edly abnorma l fac tors wer e not corre lated to a hig her ma rg in. Administ rative Revie w of the Antidumping Duty Orde r on

AVI SMA’s contentions on sever al of these issues are repe titive at times. S ee Pl.’s B r. 9 17–38. This is because one of A VI SMA’s claims, that Commerce’ s decision was not supporte d by substantial evidence beca use this transac tion-specific marg in was so larg e compa red to a ll others if succ essful, would re nder this AF A rate uncor roborated, abe rrational, or punitive, or all three
.Court No. 09-00349 Pag e 10

Mag nesium Metal from the Russian F eder ation - F inal Results Analy sis Memorandum for PSC VSMPO-AVI SMA Corporation, 2, available at Pls.’ Confidential App. Tab 15. Thus, Commerce de monstrated that hig h fre ight e x penses or low quantities did not cause this sale’ s highe r transa ction-spec ific marg in. See id. Wit h the exception of the fa ct that this sale has the highe st transac tion-specific marg in by a wide ma

rg in from the pre vious review, there is no 1 0 evidenc e on the r ecor d that demonstrates howthis sale was irr egular. At this time there doe s not appea r to be substantial evide nce on this issue, either way . II. Com m erc e’s M ethodology

Finally , AVI SMA claims that Comm erc e’s de cision to base the AF A rate on a transac tion-specific marg in is unreasona ble in light of Commerc e’s g ener al pra ctice of adopting the hig hest weig hted-avera g e mar g in calculated for a ny responde nt in any

previous segment of the proc eeding . Pls.’ Br. 10–12. This cla im has merit.

Gene rally , statutory

silence ha s been inter

prete d as “a

n invitation” for an a g ency administering unfair tr ade la w to “per form its duties in the way it believes most suitable” and courts will uphold these dec isions “[ s]o l ong as the [ag ency]’s analy sis does not violate any statute and is not otherwise a rbitrar y and ca pricious.” U.S. Steel Gr oup v. United States, 96 F.3d 1352, 1362 (F ed. Cir. 1996). F or this rea son, “Commerce has broa d discretion in making antidumping de terminations.” Ga llant, 602 F.3d at 1323. As pr eviously discussed, this “discre tion is particularly g reat in the case of uncoope rative r espondents.” I d.

This fac t, in and of itself, does not automatica lly rende r the rate abe rrational. See 1 0 Br anco Per es Citrus, S.A. v. United States, 173 F. Supp. 2d 1363, 1376 (CI T 2001) (holdingthat an AF A rate base d on a tra nsaction-spe cific ma

rg in was supported by

substantial evidence ).Court No. 09-00349 Pag e 11 When selectingan AF A rate in an administrative r eview, Commerc e has utilized its discretion by

seeming ly

establishing a

prac tice of a dopting the hig hest weig hted-avera g e marg in calculated for a

ny responde nt during either the orig inal investigation or any subsequent revie w. See Ta

pere d Roller Be aring s and Parts Ther eof, F inished and Unfinished, F rom the People’s Republic of China: F inal Results of Antidumping Duty Administrative Review, 74 F ed. Reg . 3987, 3989 (De p’t Commerce J an. 22, 2009); F inal Results 2008, 73 Fed. Reg . at 52,643; Certain Small Diameter

Carbon and A lloy

Seamless Standard, L ine, and Pre ssure Pipe fr om Romania: Preliminary

Results of Antidumping Duty Administrative Review, 71 F ed. Reg . 1509, 1510 (De p’t Commerce J an. 10, 2006); Cer tain Corrosion-Resistant Carbon Steel F lat Products from the Republic of

Kore a: Notice of

Preliminary

Results of Antidumping Duty Review a nd Antidumping Duty

New Shipper

Review, 69 F ed. Reg . 54,101, 54,104–05 (De p’t Commerce Sept. 7, 2004); Notice of F inal Results and Partial Recision of Antidumping D uty Administrative Review; Oil Country

Tubular Goods, O ther Tha n Drill Pipe, from Arg entina, 68 F ed. Reg
. 39,516, 39,518 (Jul y

2, 2003). This prac tice has a lso been uphe ld in numerous decisions. See Peer B ear ing Co. - Cha

ng shan v. United States, 587 F . Supp. 2d. 1319, 1327 (CI T 2008); Shang hai Taoe n Int’l TradingCo. v. United States, 360 F. Supp. 2d 1339, 1346 (CI T 2005); Alleg heny

Ludlum Corp. v. United States, 276 F. Supp. 2d. 1344, 1359 (CI T 2003). Commerce’ s decision in this review, to assig n an AF A rate base d on a hig hest transa ctionspecific rate from its previous re view rather than a weig hted-avera g e mar g in, theref ore, is contra ry to its normal practice
. At times, however , Commerce ha s assig ned an A FA r ate to an unc ooperativeCourt No. 09-00349 Pag e 12

responde nt based on a

transac tion-specific marg in. See Certain F rozen Warmwater Shrimp from Ecua dor: Preliminary

Results and Partial Rescission of Antidumping Duty Administrative Review, 72 F ed. Reg . 10,698, 10,701 (De p’t Commerce Mar. 9, 2007) ; Notice of F inal Deter mination of Sales at L ess Than F air Va lue, and Ne g ative De termination of Critical Circumstance s: Certain L ined Paper Products from India, 71 Fe d. Reg . 45,012, 45,013 (De p’t Commerce Aug . 8, 2006) (“ L ined Paper ”); Cer tain Cut-to-L eng th Carbon-Qua lity Steel Plate Products Fr om I taly : Final Results and Partial Rescission of Antidumping Duty Administrative Review, 71 F ed. Reg . 39,299, 39,302 (De p’t Commerce J uly 12, 2006) (“ Plate Products”); Fr ozen Concentrate d Ora ng e Jui ce F rom Br azil; Final Results and Partial Rescission of Antidumping Duty

Administrative Review, 64 F ed. Reg . 43,650, 43,651–52 (De p’t Commerce Aug . 11, 1999). When depa rting from a pr evious prac tice, an a g ency “nee d not demonstrate to a court’s satisfaction that the re asons for the new policy are better tha

n the re asons for the old one; it suffices that the ne w policy is permissible under the statute, that there a re g ood rea sons for it, and that the a g ency

believes it to be be tter, which the conscious cha ng e of c ourse a dequate ly indicates.” FCC v. Fox Television Stations , Inc., 129 S. Ct. 1800, 1811 (2009). Indeed, in the afor ementioned pr ocee dings where Commerce de parte d from its normal pra ctice, its dec ision was uphe ld beca

use it either e x plained that no other “probative alternatives” we re a vailable duringan investig ation, see A ss’n of Am. Sch. Paper Suppliers v. United States, Sli p Op. 08-122, 2008 Ct. I nt’l Trade L EXI S 128, at *15–17 (CI T Nov. 17, 2008) ( internal quotation marks omitted), or explained why all previous we ighte d-ave rag e tra nsactions wer e too low to provide an ince ntive to cooper ate, se e B ranc o Peres Citrus, S.A. v. United States, 173 F. Supp. 2d 1363,Court No. 09-00349 Pag e 13

1376 (2001). Thus, whe n Commerce de parts fr om its normal practice and base s an AF A rate on a sing le-tra

nsaction marg in, it mus t expl ain its decision. In its Final Results, Com merc e dete rmined that 21.71%, the A FA r ate a ssigne d to SMW in the prior re view and the highe st weig hted-avera g e mar g in in the proce eding s, was not sufficie nt “[b] eca

use AVI SMA’s cash- deposit rate w as 21.71 per cent f or entrie s during a portion of the 2007/08 POR.” I ssues and De cision Memorandum at 12. Comm erc e see mingly rea soned that if the ca sh deposit rate of 21.71% wa s not sufficiently adver se to ca

use AVI SMA to cooper ate dur ing the period of r eview, the AFArate neede d to be hig her. I d. at 11–12. Althoug h such re asoningis likely

enoug h to support a rate hig her tha n 21.71%, the statutory

languag e require s Commerce to c orrobor ate the se lected r ate to the e x tent prac ticable, a nd as pre viously discussed, it has fa iled to do so here. See supra 5–8.

The fa ct that the rate of 21.71% w as too low to incite AVI SMA’s cooper ation does not rende r the much hig her r ate of 43.58% cor

robora ted. Rather, the issue is whether the selec ted rate of 43.58% “ repr esente d a re asonably acc urate estimate of [AVI SMA’s] actual dumping mar g in” and is there fore , corr oborate d. Gallant, 602 F .3d at 1325. To satisfy this statutory require ment, Commerce must either demonstrate how

43.58% is a re asonably

acc urate estimate of AV I SMA’s actua l dumping ra te (a lbeit with a deter

renc e fa ctor built in) beyond the
mere fac t that there is one tr ansac tion on the rec ord at this marg in, or selec t a new r ate that is better grounded in its commerc ial rea lity . See id. at 1323–25. III. Sup plem ental Inf orm ation On Novembe r 24, 2010, AVI SMA filed a notice of supplemental authority ,Court No. 09-00349 Pag e 14

aler ting the c ourt, for the first time, to the status of its li tigation challeng ing the finding s of the 2006/07 administrative revie w. Notice of Supplemental Authority , ECF No. 63. In that matter, AVI SMA challeng ed the leg ality of Commerce ’s method for c alculatingthe value of chlorine g as for the pur

poses of de termining NV. See PSV VSMPO-AVI SMA Corp. and VSMPA Tirus, U.S., I nc. v. United States, 724 F . Supp. 2d 1308, 1310 (CI T 2010). The court he ld that the valuation methodolog y

Commerce use d in that reviewwas unsupporte d by the re cord a

nd was contra ry to the statute and re manded f or fur ther c onsideration. I d. In acc ordanc e with that orde r, Commerce f

iled its Result s of Redete rmination Pursuant to Remand, in which it ree x amined its calc ulation methodology

for NVand re duced AVI SMA’s AD marg in for the 2006/07 re view from 15.77% to 8.51%. Re sults of Redetermination Pursuant to Remand 15, ava ilable at Notice of Supplemental Authority , at Attach. A VI SMA attache d these re mand re sults to i ts Notice of Supplemental Authority
.

On Novembe r 30, 2010, the c ourt held ora l argument at which AV I SMA contende d that Commerce now needs to c onsider its 2006/07 remand de termination, eff ectively reduc ing a ll of the transa ction-spec ific AD ma rg ins from that revie w, when c orrobor ating an AFArate in this review. Tr. of Ora l Arg . 3:12–24, Nov. 30, 2010. The Gove rnment, howe ver, claimed that AV I SMA had failed to e x haust this claim, as it had failed to c halleng e the calc ulation of the 43.58% r ate at the administrative level. I d. at 22:12–22. The c ourt order ed the parties to submit supplemental briefingon this iss ue. Or der, N ov. 30, 2010, ECF No. 64. I n its brief, A VI SMA maintained that exhaustion does not apply to this i nformation. Pls. PS C VSMPO-AVI SMA Corp. and VSMPO-Tirus, US I nc.’s Resp. to De f. and D ef.- Interve nor’sCourt No. 09-00349 Pag e 15

Comments on P ls.’ Notice of Supplemental Authority

(“Pls.’ Supplemental B r.”) 4. This claim lacks mer it. The c ourt “shall, whe re a ppropriate , require the exhaustion of administrative
reme dies.” 28 U.S.C. § 2637(d). “ Although the court ha s discretion to rema nd an issue to the ag ency despite non-e x haustion of re medies . . . the Supreme Court has ca utioned that a re mand require s a showingthat the fa ilure to raise an issue wa s not the result of a la ck of due diligenc e on the par t of the cla imant.” B ridg estone Ams., Inc. v. United States, 710 F . Supp. 2d 1359, 1366 (CI T 2010) (c itations and internal quotation marks omitted).

AVI SMA argues that it could not have que stioned the 43.58% mar g in’s vera city in the 2007/08 reviewbeca use the a lleg edly

flawe d methodologie s from the 2006/07 re view we re not on the 2007/08 rec ord. Pls.’ Supplemental Br . 5. Fur thermore , AVI SMA contends that such a cha lleng e wa s barr ed by res judicata. I d. at 6–7. This arg ument is unpersuasive, how ever , as 1 1 the AF A rate of 43.58% f rom the 2007/08 revie w is merely a proxy that Commerce se lected using f acts other wise ava ilable. See 19 U.S.C. § 1677e(b) . AVI SMA could have a rgued during the 2007/08 revie w that 43.58% wa s a flaw ed proxy per its own cha lleng e of the 2006/07 review , and soug ht to incorporate that rec ord, if nec essar y . Such comment would have aff orded Commerce the option of avoiding any potential problems with the ac cura cy of the 43.58%

AVI SMA also argues that this supplemental information does not ra ise a ne w issue, but 1 1 rathe r fur ther supports its orig inal claim that the 43.58% tra nsaction-spe cific r ate wa s unreliable and uncor roborated. Pls.’ Supplemental Br. 12. I f the c ourt wer e to re quire the r ece nt developments c oncer

ning the 2006/07 reviewto be consider ed, howe ver, a ll of the transa ctionspecific rate s could be invalidate d, including the smaller mar g ins that AVI SMA init ially advanc ed. See Pls.’ B r. 24–25. This issue, there fore , cannot be considere d a mer e extension of AVI SMA’s orig inal claim.Court No. 09-00349 Pag e 16

calc ulation by

ag ree ing w ith AVI SMA or choosinganother avenue , reg ardle ss of whethe r Commerce be lieved its calc ulation methodology from the 2006/07 re view wa s corr ect. See 1 2 Unemploy

ment Comp. Com m’n of Alaska v. Ara g on, 329 U.S. 143, 155 (1946) (e x haustion aff ords ag encie s the “opportunity to consider the matter, make its ruling, and state the re asons for its action”); Ae ctra

Refining and Mar

keting , Inc. v. United States, 565 F .3d 1364, 1373 (F ed. Cir. 2009) (a responde nt must raise its specific c laim on the ag ency level “e ven if the g overnme nt authority to whom the claim is prese nted is cer tain to dispute the validity of the c laim”). F or this
rea son, AVI SMA failed to exhaust the issue of whethe r the 2006/07 spec ific transa ction marg in
was a n adequate basis for a

n AFArate here based on the manner of ca lculation in that review
. 1 3 Nonethele ss, this m atter is re manded f or other r easons, a

nd Commerce should a

rrive at a rate “Exceptions to the exhausti on doctrine ma y include: (1) r aising a pure question of law 1 2 that neither c reates undue de lay nor ca uses expenditure of sc arc e par ty time and re source s, . . . (2) judicial interpre tations of exis ting law afte r dec ision below and pending appea l interpretations which if a pplied might have materia lly altere d the re sult, . . . and (3) ra ising the issue be fore the ag ency would have be en futile.” Br idge stone Ams., 710 F. Supp. 2d at 1364 n.4 (c itations and internal quotation marks omitted). None of these e x ceptions apply , howeve r, as this issue require s fac tual decisions, AVI SMA was awa re of its own challeng e of the 2006/07 review , and it is unclear if Commerc e would have used other a vailable f acts to re ach a

corr oborate d AFArate if this reason to do so had be en pre sented. AVI SMA claims that the use of incor rec t information is contrar y to law, as it violates 1 3 conce pts of fairne ss, acc urac y , and ca nnot, as a pra ctical matter , repr esent c ommercia l rea lity
. Pls.’ Suppl emental B r. 14–18. The c ourt notes that this is not a case where the selec ted rate is based on a

nother c ompany ’s data. Under suc h circ umstances, a responde nt may

be unaw are of flaws a nd thus, ex haustion of re medies on the a g ency level would be impra cticable . See Hor mel v. Helver ing, 312 U .S. 552, 558–59 (1941). In contra st, when a pla intiff is awar e of possible problems with information from pr ior revie ws, interests of “ fairne ss” and a ccur acy will not trump those of judicial ec onomy to excuse what is otherwise a failure to exhaust. S ee IPSC O, Inc. v. United States, 749 F . Supp. 1147, 1150 (CI T 1990), af f’d in re levant par

t, 965 F.2d 1056, 1061–62 (F ed. Cir. 1992) (pr oviding that inter ests of “[j] udicial ec onomy , fairne ss to the parties and the ne ed to fulfill Congr ess’s intent . . . re quires that er rors . . . be raised f

rom the outset”)
.Court No. 09-00349 Pag e 17

which is fair

and will not needlessly

multipl y or extend proce eding s. 1 4 CONCLUSION For all the fore g oing r easons, the c ourt rema nds the matter f

or Commerce to
rec onsider the r ate se lected a nd explain it or to selec t another A FA r ate ba sed on substantial evidenc e. Any

rate selec ted shall be c orrobor ated to the e x tent prac ticable. Commerce sha ll file its remand dete rmination with the court within 75 day s of this date. AVI SMA and US Mag nesium have 20 da y s therea fter to f

ile objections, and the Gover nment will have 11 day s therea fter to f ile its response.

/s/ J ane A . Restani J ane A . Restani J udg e Dated: This 7th day

of Mar ch, 2011. New Y ork, Ne w York.

Thus, if Commerce now ag ree s that the specif ic transa ction rate it selected is incor rec t, 1 4 the cour t expects it would subs titute a differ ent rate.