1 SLIP-OP 03 - 23 UNITED STATES COURT OF I NTERNATIONAL

TRADE

_______ ___________________________________ : CITI C TRADING CO., L TD, ET AL., : : Plaintiff s, :

: v. : PU BLIC : UNI TED STATE S, : Before: WALLACH, J udge : Court No.: 01-00901 Defend ant, : and : : ABC COKE, CITI

ZENS GAS & COKE : UTIL ITY, ERIE

COKE CORP., SLOSS : INDUSTRI

ES CORP., and TONAWANDA : COKE CORPORATION, : : Defend ant-I nterven ors. : __________________________________________: [Remanded] Decided: March 4, 2003 Manatt, Ph elps & Phi llips, L LP ( Jeffrey S. Nee ley

), for Pla intiffs. Robert D. McCallum, Jr. , Assistan t Attorne y G eneral ; David M. Cohen , Direct or; Lucius B. L au , Assistant Director; John N. Maher , Trial At torney ; William J. Kovatch, Jr. , Office of Chief Counsel for Imp ort Admini stration, U.S. Depa rtment of Commerce , of coun sel, for Defend ant. Schagr in Associa

tes ( Roger B . Schag

rin ), for De fendant-Int

ervenor s.2 OPINION

WALLACH, Judge.

I Introduction

Plaintiffs CITIC Tr

ading Co., Ltd., Minmetals Townlord Technolog y Co., L td., and Sinochem International Co., L td. (collectively “Plaintiffs” or “ Respondents”) move for judgment upon the agency

record pursuant to USCIT Rule 56.2, cha llenging the decision of the United States Department of Commerce, I nternational Trade Administration (the “Department,” “Commerce” or “I TA”) in Final Determination of Sales at Le ss Than Fair Value: Foundry Coke Products From The People’s Republic of China , 66 Fed. Reg. 39487 (July 31, 2001) (“Final Determination”). Plaintiffs challenge five aspects of the F inal Determination: (1) the Department’s choice of surrogate values for coking coal; (2) the Department’s finding that fore ign producers reported coal usage amounts subsequent to washing; (3) the Department’s use of adverse infere nces based on non-cooperation by

producers; (4) the Department’s ref usal to use surrogate values from related coal mines; and (5) the Department’s use of adverse inferences ag ainst Sinochem. The Department’s determinat

ion is rema

nded on a ll five iss ues.1 Shanxi is not a party to this action. 3 II Background

On September 20, 2000, ABC Coke, Citizens Gas & Coke Utility, Er ie Coke Corpora tion, Sloss I

ndustrie s Corpora

tion, and T onawand

a Coke Cor

poration (collectively “Petitioners” or “Defendant-I ntervenors”) filed an antidumping petition alleging that imports of foundry coke

from China were being injuriously dumped in the United States. The Department initiated an antidumping duty investig ation on October 10, 2000. See Initiation of Antidumping Duty I nvestigation: Foundry

Coke From the People’s Republic of China , 65 Fed. Reg. 61303 (Oct. 17, 2000). Commerce determined the scope of the inve stigation to be “coke larger tha n 100 mm (4 inches) in maximum diameter and at least 50 percent of which is retained on a 100 mm (4 inch) sieve, of a kind used in foundries.” Id. at 61304. On November 7, 2000, Commerce issued Section A Questionnaires to the Embassy of the People’s Republic of China (“PRC”), as well as courtesy c opies to Sinochem, CITI C, Minmetals, and Shanxi Grand Coalchem Industrial Co. (“Shanxi”) 1 , each a foundry coke exporter. On November 14, 2000, the United States Inte rnationa l Trade C ommission ( “IT C”) prel iminary determined that “there is a reasona ble indication that an industry in the United States is threatene d with material injury by reason of imports from China of foundry c oke.” Foundry Coke f rom China , 65 Fed. Reg. 69573, 69573 (Nov. 17, 2000) (“ITC Preliminary Determination”). During the preliminary

proceedings, Commerce provided the par ties a list of countries operating at a similar level of economic deve lopment to the PRC for purposes of surrogate value2 These countries are: I ndia, Pakistan, Sri Lanka, Egy pt, Indonesia and the Philippines. See Notice of Preliminary D etermination of Sales at Less Than F air Value: Foundry Coke From the People’s Republic of China , 66 Fed. Reg. 13885, 13889 (Mar. 8, 2001) (“Pre liminary Determination”). 4 determination. 2 Accordingly , Respondents submitted information from an Indian produce r of coking coal, Bharat Coking Coal, for the relevant period of investigation running f rom January 1, 2000, thro

ugh June 3 0, 2000. Pe

titioners similarly determined on Janua

ry 23, 2001, t

hat I ndia was the most appropriate surrogate countr y and submitted publicly

-available information concerning factors of produc tion from India. On Februa ry 20, 2001, Commerce se lected India as the primary surr

ogate country , noting that India was a sig nificant producer of the subject mercha ndise, tha t Petitione

rs had sub mitted fa

ctors fr om Ind ian sourc es, and th

at In dia was a t a level of economic development similar to the PRC. In addition, Commerce requested tha t respondents provide information on their supply ing foundries within the PRC. On January 23, 2001, Sinochem, CI TIC, and Shanxi submitted Section DQuestionn

aires fr om some, bu

t not all, of

their sup pliers, explaining

that cer tain supplier s had fai led to re spond bec ause the y ha d been involuntaril

y c losed by

the PRC government. Commerce further issued Supplemental Que stionnaires on January 26, 2001 requesting documentation on the closures. I n response, Sinochem, CITI C, and Shanxi provided documents from the People’s Government of Qing-Xu County and the People’s Government of Shanxi Provin

ce repr esenting that cer tain unide ntified c ompanies

had bee n shut down

due to their use of outdated equipment. During the preliminary

proceedings, Commerce also issued a Supplemental Questionnaire to Sinochem requesting additional information on an unreporte d U.S. sale where a3 According to Commerce, the non-responsive suppliers f ailed to adequately

establish that they “we re in fact shut down by

the government since the gover nment document did not provide names of the foundry

coke producers subject to the governme ntal decree or any

other information that would suggest that any specific company

had been shut down.” Preliminary Determination, 66 Fed. Reg. at 13889. 5 portion of the merchandise was over 100mm in size. Sinochem responded on January 5, 2001, claiming that it had reported all sales of coke fa lling within the scope of the investigation. A second Supplemental Questionnaire was issued on January 26, 2001, in the response to which Sinochem c onfirmed

that it did s ell found

ry coke ove r 100mm in si ze during

the POI , but said that since the majority of the c oke was under 100mm, the sale was not subject to the investigation. Inthe Prelim

inary Determi nation, Co mmerce d

etermine d that fou

ndry coke fr om the PRC was being sold at less-than-fair value in the United States. See Preliminary Deter mination, 66 Fed. Reg. at 13885. I

n determining surrogate values f or coal, Commerce chose not to rely on Respondents’ Indian coking c oal prices but instead utilized Indian I mport Statistics for the period of April 1998 through March 1999. Id. at 13890. Pursuant to 19 U.S.C. §1677e(b), Commerce applied adverse facts available ag ainst Sinochem for failure to report its sale containing coke over 100 mm in size. 66

Fed. Reg . at 13889 . Finally , Commerc e deter

mined tha t respond ents did not act to the best of their ability to obtain section D responses from their suppliers and resorted to adver se fact s availa

ble for e xporters w

ho purch ased fr

om those c ompanies

. 3 Id. In order to addre ss Department’s use of alternative coking c oal prices, on May 1, 2001, respondents submitted additional coking coal prices from Coal Week I nternational. Arguing that import prices relied upon by Commerce in the Preliminary D etermination were imprecise and unreliable, respondents requested that Commerce use a basket of coking coal prices from4 Commerce ’s Final Determi nation wa s furthe

r amende d due to min

isterial errors in Notice of Amended Final Determination of Sales at Less Than Fair Value: Foundry Coke From the People’s Republic of China , 66 Fed. Reg. 45962 (Aug. 31, 2001), a nd Notice of Amended Final Determination of Sales at Le ss Than Fair Value and Antidumping Duty Order: Foundry Coke Products From The People’s Republic of China , 66 Fed. Reg. 48025 (Sept. 17, 2001). 6 comparable countries such as South Africa, I ndonesia, Colombia, Venezuela and Poland. In a ddition, Re spondents

also arr anged for Chine se gove

rnment of ficials t o meet wit

h Department’s inv estiga

tors to provide assu

rances of the cr edibility of the shu

tdowns an

d to counter Commerce ’s use of

adverse facts a vailable on the issue. Althou

gh Comme

rce met w ith the officials and they

offered various documents to support their statements, Commerce did not accept any

of the documents, claiming they would constitute new information on the record. Commerce published its Final Determination and accompany ing Issues and De cisions Memorandum (“Decision Memorandum”) 4 on Ju ly 31, 20 01. Fi nal De termi natio n, 66 F ed. Re g. 39487. In the Decision Memorandum, Commerce again rejected Respondents’ submission of surrogate values for coking coal, preferring instead to continue using Indian I mport Statistics for the period of April 1998 to March 1999. Id. As in the Preliminary Deter mination, Commerce continued using adverse facts available against those exporters that could not provide evidence substantiating that some of their suppliers had closed. Commerce explained that the continued applica tion of ad verse f acts ava ilable wa s appropr

iate sinc e respon

dents fa iled to sub mit information in a timely manner a nd in the requested form. As for Sinochem’s unreported sale , Commerce did not apply adve rse facts available but rather applied fa cts available by c onducting a “margin analy

sis” on the portion of the sale considered in-scope, “using the price of the original sale and the volume of the sale which exceeds 100mm in size.” Decision Memorandum at Comment 12.5 Respondents argued that the Department’s pra ctice is to calculate a surrogate value of the producer’s inputs using surrogate pr ices for the actual inputs for the mining of the coal. The y further argued that statutory provisions state that Commerce is to determine normal value using the factors of production of the merchandise. Conseque ntly, respondents arg

ue they ac

ted according to Department’s prac tice and statutory provisions in providing inputs of coking coal for both related and unrelated mines, including the f actors of production for coking coal supplied by r elated mi nes. 7 In addition, Commerce also determined that Responde nts reported coking coal inputs at stages subsequent to the washing. This conclusion was base d on Respondents’ questionnaires responses submitted earlier during the procee dings where respondents reported that they washed the coal themselves but recy cled the by-pr

oduct of the washing process, i.e. coal mud, into the production of coke. Commerce therefore de termined that “the reported usage r ates are for washed coal, and there is no need to adjust the coal fa ctors to account for washing.” Id. at Comment 2. F inally , Commerc e deter mined tha t, contra ry to respon dents’ c ontention s, 5 it would not d eterm ine a s urrogat e valu e for co al obt ained from r elate d coal mines by using a factors of production methodology . Commerce did not “consider that coal is a self-produced input for any of the r

espondents,” so it “did not value coal using the factors of produc tion for coal from the coal mines.” Id. at Comment 3. On Septem

ber 14, 2 001, the I

TC deter mined “that an indu stry

in the Unit

ed States is materially injured by

reason of imports from China of foundry coke.” Foundry Coke f

rom China , 66 Fed. Reg. 47926, 47926 (Sept. 14, 2001) (“I TC Final Determination”). On October 17 , 2001, Plaintiffs filed the present action to contest the Department’s Final De termination that foundry coke fr om the PRC wa s being s old at less -than-f air value in the Un

ited State s.8 III. Jurisdiction and Standard of Review

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (1994). In reviewing

the Final Determination, the court “shall hold unlawful any determination, finding, or conclusion found . . . to be unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 USC § 1516a (b) (1)(B) (1994). “Substantial evidence is somethin

g more t han a ‘me re scinti lla,’ and must be e nough r easonab ly to

support a conclusion.” Primary Steel, I nc. v. United States , 17 CIT 1080, 1085, 834 F.Supp. 1374, 1380 (1993); Ceramica Regiomontana, S.A. v. United States , 10 CIT 399, 405, 636 F. Supp. 961, 966 (1986), aff’d , 810 F.2d 1137 (Fed. Cir. 1987). “As long as the a gency ’s methodology a

nd procedures are reasona

ble means of effectuating the statutory purpose, and there is substantial evidence in the record supporting the a gency ’s conclusions, the court will not impose its own views as to the sufficiency of the agency ’s investigation or question the agency ’s methodology.” Ceramica Regiomontana, S.A. , 10 CIT at 404-5.9 IV. Discussion A. A Remand is Necessary Because The Departm ent’s Final Determination Is Not Supported by Substantial Evidence

Plaintiffs challenge five aspects of the F inal Determination: (1) the Department’s choice of surrogate values for coking coal; (2) the Department’s finding that fore ign producers reported coal usage amounts subsequent to washing; (3) the Department’s use of adverse infere nces based on non-cooperation by

producers; (4) the Department’s ref usal to use surrogate values from related coal mines; and (5) the Department’s use of adverse inferences ag ainst Sinochem. Because the court finds that the Final De termination is unsupported by substantial evidence , the Court concludes th at reman d is prope r on all fi ve issues . A detail ed revie w of the p arties’ contenti ons follow s.

1. The Department’s Choice of Surrogate Values Is Not Supported by Substantial Evidence

a. Commerce

Agrees That The Surrogate Value Date Upon Which It Relied Contains Errors

Plaintiffs dispute the Department’s choice of surroga te values for coking coal as6 See Analysis for the Final De terminat ion of Fo undry Coke fro m the Peopl e’s Repu blic of China: C ITI C Trading

Company, Ltd. , A.R. (Non-public ) Doc. No . 111 (“CI TIC A naly sis Memo”); Analysis for

the Final Determination of Foundry Coke from the People’s Republic of China: Sinochem International, A.R. (Non-Public) Doc. No. 110 ( “Sinochem Analysis Memo”) ; Analysis for the F inal Determination of Foundry Coke from the People’s Republic of China: Shanxi DaJin, A.R. (Non-public) Doc. No. 113 (“Shanxi Analysis Memo”); Analy sis for the Final De terminat ion of Fo undry Coke fro m the Peopl e’s Repu blic of Chi

na: Minmet

als Townlord , A.R. (Non-public ) Doc. No . 112 (“Mi nmetals A

naly sis Memo”)

(collectively “Analysis Memora

nda”); Plaintiffs’ Memo at 15-17. 10 unsupported by the re cord, falling outside of the period of investigation, and unr eflective of coal prices produced within PRC. More specifically , Plaintiffs argue that the Department’s relianc e on Indian I

mport Statistics for the period of April 1998 to March 1999 is unsupported by substantial evidence because: (1) the price s used by Commerce a re uncorroborated by

the record and inconsistent explanations were provided as to what source documentation might show; (2) Commerce

used coa l prices o utside of the peri od of inve stigation without ta king into consideration the commodity’s volatile na ture; (3) Commerce failed to use prices from an authoritative source on the record that is both contemporaneous to the pe riod of investigation and for coal produced and sold in economies of compara ble levels of development to the PRC; and (4) Commerce used prices that were re flective of coal produced in non-compara ble economies. To suppor

t their contention a s to the unr eliability and incon sistencie s in Commer ce’s use of surro gate pr

ices, Pla intiffs c ite to the D ecision M emorand um as well

as vario us docume

nts generated by

Commerce in reaching its Final Determination. 6 In comparing the Decision Memoran dum, the CI

TIC A naly sis Memo an

d its suppor

ting doc uments, Pla

intiffs po int to inconsistent listings of time periods for valuating coal input, and conflicting use s of value7 In the CI TIC Analysis memo, Commerce states that it based its determination on “coal

input base d on the I

ndian I mport Stati stics for

the peri od of Apr

il 1998 to Ma

y 19 99.” Plain

tiffs’ Memo at 15-16. Commerce further states that it inflated this value with I nternational Financial Statistics, resulting in a surrogate value for coa l of $59.82. Plaintiffs argue that this statement directly conflic ts with the

Issue s and Dec ision Memor andum, wh ere Comme

rce sta ted that it used data from a time contemporaneous to the period of investig ation, i.e. January 1, 2000, th rou gh J une 30, 200 0. P lai nt iff s al so a rgu e th at i t co nfl ict s wi th Att ach men t I to th e CIT IC Analysis Memo wh

ich is bas ed on the M onthly Statistics of the Foreign T

rade of India for Apri l 2000-September 2000, and has no inflated values as in the main memo.

8 As in the CI

TIC A naly sis Memo, th e Sinoche m Analy sis memo sta

tes that c oal input is based on Indian I

mport Statistics for the period of April 1998 to May 1999, a nd that the resulting values a re infla ted with I nternat ional Financial St

atistics. The supporting do cuments in Attachment I, however , list coking coal prices at the non-inflated value of $45.54.

9 The period of investigation ran from January 1, 2000, to June 30, 2000. 11 inflator s and surr

ogate p rices. 7 Plaintiff

s also cite to discre pancies in the Sinoc

hem Analy

sis Memo where the purportedly inflated values are not reflected in the supporting documents’ listed values. 8 Finally, Plaintiffs point to the Shanxi Analy sis memo, where coal inputs are for inconsistent periods, and the Minmetals Analysis Memo, whe re coal prices and input periods conflic t betwee

n the act ual memo a

nd its supporting do cuments. Plaintiff s argue that all th ese figures are unreliable bec ause no source documents were provided for the asserted values. Plaintiffs also argue that the Department has fa iled to follow its own preference for using surrogate data that is contemporaneous with the pe riod of investigation. 9 Accord ing to Pla intiffs, it is the accuracy

of the determination that is of paramount concern to the Antidumping statute, and where prices from one source are shown to be distorted, DOC practice is to turn to another

source. Rhodia, Inc. v. United States , 185 F. Su pp. 2d 1343 , 1352 (CI

T 2001). Pl aintiffs

claim that the data they submitted is more ac curate since it is contemporaneous with the period of investig ation and

contains prices f or merchandise f

rom compa

rable su rroga te countr ies. While10 Plai ntiff s cite to th e Issues and Dec isio n Memo randu m accom panying Manga nese Metal from the People’s Republic of China; Final Results of Antidumping Duty Administrative Review , 66 Fed. Reg. 15076 (Mar. 15, 2001), wher e Commerce stated that “where the fac ts on record indicate that the Department’s usual pra ctice would not permit the accurate valuation of a factor input, the Department has chosen surrog ates from countries not included among the Department’s list of potential surrogate countries.” Plaintiff’s Me mo at 19. 12 they admit that their price s are from numerous other developing countr ies, Plaintiffs argue they are still appropriate as “[i]t has been longstanding DOC prac tice to use prices from a basket of countries in appropriate circumstances.” 10 Plaintiffs’ Memo at 19. Accordingly , they conclude that in re fusing t

o use the d

ata they submitted a

nd providi

ng no sou rce doc umentation for its surrog ate pric es, Commer ce has “ failed to

follow its own pref

erence and the r equirem ent that it use the most accurate information available.” Id. at 18. Finally, Plaintiffs arg

ue that Commerce has failed to provide any specifications as to the nature of the coking coal upon which it based its surrog ate value determination. They note that Commerce had already

previously rejec

ted Plaintiffs’ submission of coal prices, which were from an I ndian Prod

ucer of coking coal and set conte mporane ously

to the per

iod of inve stigation. This decision was base d on the fa

ct that the specific ations of

that coki ng coa l were of a “sign ificantl y lower quality of c oking coal than that which is actually used by foundry

coke producers.” Preliminary Deter

mination, 66 Fed. Reg. at 13890. Plaintiffs therefore conc lude that Commerce has acted inconsistently in its own finding s since “[n]othing on the record allows DOC to know whether the coking coal import prices that it has used we re for coal similar to that used in China or for a far different produc t.” On this basis, Plaintiffs argue that the court should remand Commerce’s final determination on surrogate va lues because the use of I

ndian Import Statistics for the p eriod of

April 1998 - May

1999 is unsu

pported by th e recor

d and not su

fficien tly11 April 1998 - May 1999 and A pril 2000 - September 2000. 13 contemporaneous to the period of investigation. Defendant-Inte

rvenors, in turn, argue that Depar tment’s decision to use Indian I mport Statistics rather than Plaintiffs’ price quote from Coal Week I nternational is supported by substantia l evidenc e “beca

use the so urce wa s from [a] pr

imary surrog ate [coun

try], Indi a, that is publicly available, suff

iciently contemporane ous, specific to the input in question, and sufficiently re liable.” Defendant-I ntervenors’ Brief in Opposition to Plaintiffs’ Rule 56.2 Motion for Judgment Upon the Agency Record (“Defendant-I

ntervenors’ Brief”) at 9 (quoting Decision Memo at Comment 1). Accordingly , they say , Commerce “had no need to turn to another surrogate country

to obtain a value for coking coal.” De fendant-Interve nors’ Brief at 10. They further argue that Commerce pr operly deter

mined the price quotes from Coal Week Inte rnational to be improper since the data is not from a publicly available source and, contrary to the Indian Import Statistics, is only ba sed on “the average of two spot pric e quotes from unidentified companies.” Id. at 10 (quoting Decision Memorandum at Comment 1). Finally, Def

endant-Intervenor

s argue that the alleged inc onsistencies regarding the sourc e of surrogate values are me rely re flective of Commerce’s inadvertent mislabeling of suppor ting data. Although Department identified two differe nt dates throughout the analy sis memoranda, 11 an “[e]xamination of the coking coal val ue deriv ed from the Indian I mport Stati stics used

to calculate the final margins for ea ch of the four respondents demonstrates . . . that the Depar tment used a surrogate value derive d from the period of April 2000 - September 2000.” Id. at 10. Defendant-Inte

rvenors also argue that, contrar y to Plaintiffs’ assertions, the April 2000 - September 2000 statistics were made part of the rec ord in the underlying investigation.14

According to Defendant-I ntervenors, they

were reference d “on the record throughout the final analysis memoranda

for CITI C, Shanxi Dajin, and Minmetals,” and Commerce “stated in the Final De terminat ion that it h ad relie d on similar data in ot her inve stigations, includ ing Cer tain Hot-Rolled Carbon Steel Flat Products from the People’s Republic of China, I nv. No. A-570- 865.” Id. at 11-12; see also Decision Memorandum at Comment 1. On this basis, Defendant-Inter venors conclude that the court should uphold Department’s use of sur rogate value inf ormation on coking

coal fr om the I ndian I mport Stati stics fro m April 2000 - September 2000, as this data was sufficiently contemporaneous to the period of investig ation and

from a pu

blicly availab le sourc e often u

tilized in PRC in

vestiga tions. Defend ant admits

to numero

us inconsi stencie s in the ad ministrati ve record. None

theless, Defendant argues that an e xamination into the mislabeled surrogate values demonstrates that the source of the data is for the period of April 2000 throug h September 2000, rather than April 1998 through May

1999. According to Defendant, “the diff erences in the identification of the source data in the memoranda and calculation charts is most likely attributable to clerical error.” Defendant’s Memo at 15. Defendant ar gues that “the Court should remand this issue so that Commerce may r

eopen the administrative record, clarify clerical errors due to administrative oversight, make the I

ndian Import Statistics for the period April 2000 through Septe mber 2000 a matter of record, and allow for commentar y.” Id. at 16.12 This discr etion, how ever, is

constra ined by the under

lyin g objective of the

statute; t o obtain the most accurate dumping margins possible. See 19 U.S.C. §1 677b(c) ; see also Writing Instrument Mfrs. Ass’n. v. United States , 21 CI T 1185, 984 F. Supp. 6 29, 637 (1 997). “T his objectiv e is achi eved only when Comme

rce’s c hoice of what con stitutes th e best av ailable informat ion evide nces a r ational a nd reasonable re lationship to the fa ctor of productio n it represents.” See , e.g. , Allied Tube and Conduit Corp. v. United States , 132 F. Supp. 2d 1087, 1095 (CIT 2001); Usinas Siderurgicas De Minas Gerais, S.A. v. United States , __CIT__, Slip op. 98-108, 1 998 Cr. I

nt’l Tra de LE XIS 10 7 (July

24, 1998) ; AK Steel Corp. v. United States , 21 CIT 1265, 988 F. Supp. 594, 605 (1997). 15 b. The Record Evidence Does Not Provide a Reasonable Basis For Com merce’s Selection of Surrogat e Values

The antidumping law provides the standard by which Commerce is to establish normal value for merchandise exported from non-market e conomies. Section 773(c)(1) of the Tariff Act of 1930 directs Commerce to base normal value on the non-marke t economy produce

r’s factors of production. 19 U.S.C. §1677b(c)(4)(1999). These factors are to be valued, to the extent possible “in one or more market economy countries that are: (A) at a level of deve lopment comparable to that of the nonmarket economy country, and (

B) significant producers of the comparable merchandise.” 19 U.S.C. §1677b(c)(4)

. Commerce

must also va

lue the f actors o f produc tion “bas ed on the b est avai lable information regarding the value s of such factors in a market economy country or c ountries considered to be appropriate by the administering authority .” 19 U.S.C. §1677b(c)(1). While the statute do es not def

ine “bes t availab le information”, i t “gra nts to Comme

rce bro ad discr

etion to determine the ‘best available information’ in a rea sonable manner on a case-by -case basis.” Timken Co. v. United States , 2001 CIT 96, 166 F. Supp. 2d 608, 616 (2001). 1213 See Shandong Huarong Gen. Corp. v. United States , 15 9 F. Su pp. 2d 7 14, 728 (CIT

2001); Coalition for the Pres. of the Am. Brakedrum and Rotor Aftermar ket Mfrs. v. United States , 44 F. Sup

p. 2d 229, 2 59 (CI T 1999) ( “Commerc e’s pra ctice is t o use publi cly

availab le values which are ‘representa tive of a range of prices within the [period of inves tigat ion] ’”)(qu otin g Union Camp Corp. v. United States , 20 CIT 931, 941 F. Supp. 108, 116 (1996). “Under normal conditions and absent evidence to the contrary , the Court presumes that Commerce acts or seeks to act in a reg ular manner consistent with its established practices.” Shandong Huarong Gen. Corp. , 159 F. Su pp. 2d at 7 28; see also Hylsa, S.A. v. United States , 22 CIT 44 (1998)(“The c ase for judicial deference is less compe lling with respect to agency positions that are inconsistent with previously held views.”) (quoting Pauley v. B ethenergy Mine, Inc ., 501 U.S. 600, 610, 1 15 L. E d. 2d 604, 1 11 S. Ct. 2524 (1991)) ; United States v. Mead Corporation , 533 U.S. 218, 121 S. Ct. 2164, 150 L. Ed. 2d 292 (2001) (“the fair measur e of defere nce to an agenc y a dminister ing its ow n statute has been u

nderstoo d to vary

with ci rc um st an ce s, an d c ou rt s h av e l oo ke d t o t he de gr ee of th e a ge nc y’s ca re , i ts co ns is te nc y, formality, and re lative expertness, and to the persuasiveness of the age ncy’s position.”).

14 See e.g. A.R. (Non-Public) Doc. No. 110; A.R. (Non-Public) Doc. No. 111; A.R. (NonPublic) Doc. No. 113; A.R. (Non-Public) Doc. No. 112. 16 While acc

uracy is of utmost

importanc e, 19 U.S. C. §1677b( c) fails to indica te the time periods from which surrogate values a re supposed to be taken. This court, however, has repeatedly

recognized that Commerce’s practice is to use surrogate prices from a per iod contemporaneous with the period of investigation. 13 Accordingly , while the standard of review precludes the court from determining whe ther Department’s choice of surrog ate values was the best available on an absolute scale, the court may determine the reasonableness of Commerce’ s selection of surr

ogate p rices. The surrogate value data provide d within the administrative record reveals patent inconsiste ncies be tween the various d ocuments listing su rroga te price s. 14 These discrepancies are evident in Commerce’s listings of time periods for valuating coa l input, its sporadic use of value inflator s to reduc e inequa lities bet ween co mparabl e markets, and its f inal listing s of surr

ogate prices. The parties’ discussion of their source was pur ely speculative.17

The par ties seem to be in ag

reemen t that some

form of c lerical

error o ccurre d. While Plaintiffs and Defendant agree to a remand, Defendant-I

ntervenors recommend that the court speculate about what Commerce ultimately intended. That is beyond this court’s pe rview and remand is necessary

on the issue of surrogate values for coking coal produced in the PRC. Commerce must resolve its internal inconsistencies on this issue and select surrogate values that are sufficiently

contemporaneous to the period of investigation and consistent with the objectives of 19 U.S.C. §1677b(c).

2. The Department’s Finding that Foreign P roducers Reported Coal Usage Amounts

Subsequent to Washing is Unsupported by the Evid ence

a. Only Defendant-Intervenors Now Contends That Coal Inputs Were For Washed Coal

Plaintiffs challenge Commerce’s determination that the for eign producers reported coa l inputs at a

stage s ubseque nt to coal washing . In the Iss

ues and D ecisions

Memoran

dum, Commerce stated that “[i]t is evident from respondents’ questionnaire responses, and we fur ther confi rmed at verif

icati on, t hat res ponde nts re porte d coki ng coal inpu t quan titi es at t he sta ge subsequent to coal washing.” Decision Memorandum at Comment 2. Plaintiffs contend that these producers washed the coal themselves a nd reported all coal inputs prior to the washing stage. According to Plaintiffs, the washing process creates coal mud, which is a re- cycled input that is some

times used

in the pro duction of

coke. Pla

intiffs a rgue that Commer

ce impro perly18

determined that this re-cy cled product constitutes coal inputs at a stage subsequent to the washing since there is no evidence on the r ecord for this proposition. On this basis, Plaintiffs conclude that the court should remand the Final Deter mination with instructions for Commerce to make an adjustment for the difference be tween the washed coal used by the producers and the unwashed surrogate coal price s. Defend ant-I nterven ors, in tur n, arg ue that De

partmen t’s findin g on coa l usage amounts is supported by substantial evidenc e. They c laim that Plaintiff’s arguments “regar ding coal mud by-product doe s not undermine the Department’s decision” since other evide nce on record supports t he Depa rtment’s conclusi on. Defe

ndant-I nterven ors’ Br ief at 13 . Defen

dantInte rvenors point to the

questionnaires su

bmitted by

Plaintiff s and arg ue that be cause c oal inputs are “based on the number of beehive s that are filled with coal,” and “the coal in the bee hives has already undergone washing,” then “ the coal input that the producers reported must therefore be washed coal.” Id. at 15. In addition, Defendant-I

ntervenors maintain that a comparison “of the usag e amount reporte d by

a domestic

produce r of the s ubject me rchandi se in the p etition to t he Chines e producers’ usage amounts clea rly demonstrates that the Chinese producers reported coal input amounts of washed coal.” Id. Accord ing to De fendant-Int

ervenor s, the coa l washing process “results in losses as high as 40 to 50 percent as impurities in the coal are washed away .” Id. at 14. As dome stic prod

ucers us e washe d coal an d both dome stic and Ch

inese pr oducers reporte dly use similar amounts of coal per net ton of coke produced, De fendant-Interve nors argue that “[t]he simi larit y of these inpu t amou nts d emons trate s that the Ch inese produ cers re porte d the c oal us age amount subsequent to washing.” Id. at 15-16. On this basis, Defendant-I ntervenors conclude15 The court examined, inter alia , the producers’ Section D Questionnaire Responses. See

Section D Questionnaire Response of Wenshui Beizhang (Jan. 16, 2001) at D-2, A.R. (Nonpublic) Doc. No. 32; Section D Questionnaire Response of Wencheng International, PL C (Jan. 19 that there is substantial evidence on the record for the court to sustain Department’s determination on c oal usag e amounts

. Defendant itself maintains that “[u]pon further review of the rec ord, Commerce has determined that it cannot support its finding” on coal usage amounts. Defendant’s Memo at 17. Defendant consequently

argues that “a remand is appropr iate to allow Commerce to determine whether an adjustment is appropriate for Respondents’ use of unwashed coal.” Id.

b. There Is N o Cognizabl e Evidence Of Coal Inputs A

t Stages Su bsequent To C oal Washing

As previo usly discusse d, Commerc e must bas e normal value on t

he non-ma

rket ec onomy producer’s factors of production. 19 U.S.C. §1677b(c). I t values these factors of production “on the best available information regarding the values of such factors in a market economy country or countr ies consi dered to

be appro priate b y th e administ

ering a uthority .” 19 U.S. C. §1677b(c)(1). Purportedly applying tha

t standard, Commerce determined that there was no nee d to adjust th e coal f

actors to accoun t for washing be cause “ [i]t is eviden t from re spondents ’ questionnaire responses, and we further conf irmed at verification, that respondents reported coking coal input quantities at the stage subsequent to coa l washing.” Decision Memorandum at Comment 2. The court, however, finds no discernable rec ord evidence of coal inputs at stages subs equen t to t he wash ing. 15 The questionnaire responses that producers submitted during the16, 2001) at D-3, A.R. (Non-public) Doc. No. 31; Section D Questionnaire Response of Luliang Fu L i (Jan. 19, 2 001) at D -2, A.R. ( Non-publ ic) Doc. No. 39; Sec tion D Que stionnair

e Respons e of Shanxi Yaxin (Jan. 19, 2001) at D-3, A.R. (Non-public) Doc. No. 38; Section D Questionnaire Response of Shanxi Zhongy ang Shuangfe (Jan. 19, 2001) at D-2, A.R. (Non- public) Doc. No. 36; Section D Questionnaire Response of Shanxi Ju Fu (Jan. 19, 2001) at D-2, A.R. (Non-public) Doc. No. 35; Sectio n D Questi onnaire Response

of Shanxi Pan

long (Jan . 19, 2001)

at D-2, A .R. (Non-public) Doc. No. 28; Section D Questionnaire Response of Shanxi L ishi Liangy u (Jan. 16, 2001) at D-2, A.R. (Non-public) Doc. No. 29; Section D Questionnaire Response of Jiaocheng Youse (Jan . 16, 2001)

at D-2, A .R. (Non-

public) D oc. No. 33 ; Section D Questionn

aire Res ponse of Qingxu Huaxin (Jan. 16, 2001) at D-2-3, A.R. (Non-public) Doc. No. 34; Section D Questionnaire Response of Taiy uan Genya

ng (Jan. 16, 2001) at D-2, A.R. (Non-public) Doc. No. 30.

16 At oral a

rgumen t, counse l for Def

endant- Inte

rvenors further argue d that coa

l inputs were for washed coal bec ause such inputs were based on the number of filled bee hives, and such beehive s were o nly

filled wit h washed coal. As counsel f or Plaintif

fs corr ectly pointed ou

t, however, the calculation of coal inputs based on the number of beehives that are filled constitutes the normal methodology

of coal input calculation, which was not relied upon in the present investigation

. See Defend ant-I nterven ors’ App endix to the ir Brie f in Oppos ition to Plai ntiffs’ Rule 56.2 Motion for Judgment Upon the Agency Record, App. 1 at D-4. 20 in ve st ig at io n d em on st ra te th at th e p ro du ce rs wa sh ed th e c oa l t he ms el ve s a nd re cyc le d t he byproduct o f this proc ess as ad ditional c oal input. 16 This coal input is therefore neither for washed or unwashed coal, but rather for rec ycled inputs directly

resulting from washing already reported unwashe d coal. Defend ant-I nterven ors also a rgue that a comp arison be tween the practic es of dome stic and Chinese producers would demonstrate that the latter repor ted coal input amounts for washed coal. That argument was not the basis for Commerce ’s decision not to adjust coal input quantitie s. Commerc e refus ed to adju st the inpu ts becau se it was “ evident f rom resp ondents’ quest ionn aire re spons es . . . that r espon dents report ed cok ing coa l inp ut qu antit ies at the st age subseque nt to coal washing .” Deci sion Memor andum at Comment 2. Al though Co mmerce i s afforded considerable defe rence, this court will not accept Defendant-I ntervenors’ post hoc21

rationale as a basis for upholding a final deter mination. 19 U.S.C. §1516a(b)(1)(B)(i)(1999). Accordingly , since respondents’ questionnaire responses do not support Commerce’s f inal determination on coal inputs, a remand is necessary so that Commerce may e ither make an adjustment reflecting respondents’ use of unwa shed coal, or provide a reasonable explanation and substa

ntial evid ence for its findi

ng on wa shed coa

l inputs.

3. The Depar

tment ’s Use of A dverse In ference s Based on the Non-coope ration of P roducer s is Not Supported by Substantial Evidence

a. Defendant H as Applied Ad verse Infe rences D espite A C learly G ood Fait h Effort on The Par t of P laint

iff

Plaintiff s argue that Comme

rce impr operly applied a dverse i nferen ces for their fa ilure to obtain documentation on the coke producers’ shut-downs. Accor ding to Plaintiffs, “DOC cannot take adverse inferences whe re it has asked for information, been told that it does not exist, and there is nothing on the record to contradict that abse nce of data.” Plaintiff’s Memo at 23. Plaintiffs maintain there was “no list of closed companies . . . at the time of questionnaire and suppleme ntal resp onses.” P laintiff

s’ Reply Brief a t 7. While the

y “ made eve ry effort p ossible to provide i nformati on to DOC,”

they could not “ force t

hese inde pendent c ompanies

to cooper

ate with [Commerce]” as “the producers were independent a nd unrelated to the exporters.” Id.17 According to Plaintiffs, this list “had been compiled on March 8, 2001, only a few weeks before verification.” Plaintiff’s Reply Brief at 8. 22 Plaintiff s furthe r point out

that durin

g verif ication, Chinese g overnme nt offici als offe

red to pr ov id e C om me rc e w it h a li st of co mp an ie s t ha t h ad sh ut do wn du e t o e nv ir on me nt al lyobjectio nable eq

uipment, 17 but that the latter rejected this information as “new information.” Id. at 8. Plaintiffs claim Commerce improperly rejected this information because one of the purposes of verification is to “corroborate[], support[], or clarif[y ] information already on the record.” Id. at 9. On this basis, Plaintiffs argue that Commerce’s imposition of adverse facts available was unwarranted and that it should instead resort to non-adverse f acts available for determining the normal va

lues of Chi

nese pro ducers w

ho had inf

ormed Comm erce of

their shu tdowns. Defendant, in turn, argues that Commerce ’s decision to apply adve rse facts available was supporte d by

substantia

l evidenc e and in a

ccorda nce with l aw. Acc ording t o Defen dant, Commerce

needed “usag e rate information from the actual PRC

produce rs” in or der to “accurately

calculate normal value based upon the factors of production methdology .” Defend ant’s Me mo at 20. To

achieve this objective, Comme

rce re quested t

hat Plainti ffs “sub mit a Section D questionnaire response from each of their suppliers.” Id. While some of the suppliers “expressed a clear lack of interest in par ticipating in this investigation,” others had simply been shut down due to environmentally related hazards. Id. at 21. Defendant claims that adverse infere nces were warranted in the c ase of non-cooperating supplier s becaus e “Commer ce rea sonably

found tha

t Sinochem , CITI

C, and Shan

xi did not ac t to the best of their ability in urging their suppliers to comply w ith Commerce’s request for23

information.” Id. at 21. For the other non-responsive suppliers, Defe ndant similarly arg

ues that Plaintiffs did not act to the best of their ability in submitting information that would either list or identify the specific

companies that had been shut down. According to De fendants, Plaintiffs were never limited to compiling a list of shut down plants, but rather could submit any documentation that would substantiate the closures. Consequently , Defendant argues that Plaintiffs had no basis for claiming that a list could not be compiled within time constraints, as any other e

vidence would have sufficed. On this basis, Defenda nt concludes that Commerce’s determination on a

dverse f acts ava ilable wa s supporte d by

substantia

l evidenc e and in accordance with law. b. Plaintiffs Acted to the Best of Their Ability In Providing Commerce With Information on

the Non-r esponding P roducer s’ Shutdowns

In a rriving at its Fina

l Determ ination, Co mmerce i s requir ed to use f

acts othe rwise available if “necessary

information is not available on the record,” or: (2) an interested party

or any other

person - (A) withh olds infor mation tha

t has bee n reques ted by

[Commerce ] ... under

this subtitle, (B) fails to provide such information by the deadlines for submission of the information or in the form and manner requested, subject to subsections (c )(1) and (e) of section 1677m of this title, (C) significantly

impedes a proceeding under this subtitle, or (D) provides such information but the information cannot be verified a s provided in section 1677m(i) of this title . . . 19 USC § 1677e(a)(1999).24

The use of facts available, however , is limited by 19 U.S.C. §1677m(d), which was “desig ned to pre vent the u nrestra ined use o f facts a

vailable as to a fir m which ma

kes its be st effort to cooperate with [Commerce].” Borden, Inc. v. U nited States , 4 F. Supp. 2d 1221, 1245 (CIT 1998). Se ction 1677 m(d) pro vides tha t: If [Com merce] . . . determ

ines that a

response to a requ est for in formatio

n under th

is subtitle does not comply with the request, [Commerce] . . . shall promptly inform the person submitting the response of the nature of the def iciency a nd shall, to the extent practicable, provide that person with an opportunity to remedy or e

xplain the deficiency in light of the time limits established for the completion of the investigations or reviews under this title. If that person submits further information in response to such deficiency and either - (1) [Commerce] finds that such response is not satisfactory , or (2) such response is not submit

ted within

the appli cable time limits, then [Commerce] . . . may, subject to subsection (e) of this section, disregard all or part of the orig inal and s

ubseque nt respon ses. 19 USC § 1677m(d)(1999). Subsection (e) of

the same section f urther provides t

hat: In reaching

a determination . . . [Commerce] . . . shall not decline to consider information that is submitted by an interested party and is necessary

to the determination but does not meet all the applicable requirements established by [Commerce] . . . if - (1) the information is submitted by the dea dline established for its submission, (2) the information can be verified, (3) the information is not so incomplete that it cannot serve as a reliable basis for reaching the applicable deter mination, (4) the in tereste d party

has demon strated t

hat it act ed to the b est of its a

bility in providing the information and meeting the require ments established by [Commerce] . . . with respect to the information, and (5) the information can be used witho

ut undue d

ifficult ies. 19 USC § 1677m(e) (1999).25

19 USC § 1677m(d) requires that Commerce, prior to resorting to fac ts available, give a party an oppor

tunity to remedy

or explain deficiencies in its submission. Subject to the conditions in Subsection (e), the remedy or explanation provided by the par ty may be disregarded in favor of facts available if the information is found to be “not satisfa ctory” or untimely. See Borden , 4 F.Supp.2d at 1245 (“Subsection (e) may require use of the respondent’s information notwithstanding that a remedy or explanation is unsatisfactory.”)

. If Co mmerce makes an a

dditional f

inding th at “an in

tereste d party

has faile d to coope

rate by not acting

to the best of its ability to comply with a request for information,” Commerce may resort to adverse facts available under 19 USC § 1677e(b)(1999). However, a failure to re spond is only a basis f or fact s availa

ble, as Co mmerce m

ust make the additio nal findin g that th e party “failed to cooperate by

not acting to the best of its ability” in or der to draw adverse inferenc es. 19 USC § 1677 e(b); see also Mannesmannrohren-Werke AG v. United States , 23 CIT 826, 77 F. Supp. 2d 130 2, 1315 (1 999). A pa rty can ther efore “ fail to re spond bec ause it wa s not able to obtain the request ed infor mation, did

not prope

rly understa nd the que stion aske d, or simply overlooked a particular request,” without having adverse inferences draw

n against it. Mannesmannrohren-Werke AG , 77 F. Supp. 2d at 1316. Moreover, Commerce may not simply provide the conclusory statement that a party

“has failed to coopera te by not actin g to the b est of its a

bility ,” or re

peat its f indings w ith reg ards to facts available, in order to draw adver se inferences against it. Mannesmannrohren-Werke AG , 77 F. Supp. 2 d at 1313; see also Borden , 4 F. Supp. 2d at 1246 (“Here, the Department did not make th e re qui red add it io nal fin di ng t hat De C ecc o ha d fa il ed t o ac t t o t he b est of i ts abi li ty. In essence, it simply repe ated its 19 USC § 1677e(a)(2)(B) finding, using slightly differ

ent words. . .18 See “Notice of the Peo

ple’s Gov ernment

of Qing -Xu County

Regar ding June 5 shutDown Act

ion to the e

nterpris e and Equ

ipment whi ch are U

nable to F inish Har

ness Task within the Limited Time;” Prop. Doc. No. 55; “Notice About the Close Down of the Enterprise which do not Finish the Regulation within the Time Limitation,” Prop. Doc. No. 56. 26 ”) (cita tion omitte d); Ferro Union, Inc . v. United States , 23 CIT 178, 44 F. Supp. 2d 1310, 1329 (CIT 1999) (“ Once Comm erce ha s determi ned unde r 19 USC § 16 77e(a)that it may resort to facts available, it must make additional findings prior to apply ing 19 USC § 1677e(b) and drawing an adverse infer

ence.”). Commerce must “articulate why it concluded that a party

failed to act to the best of its ability, and explain why the absence of this information is of significance to the progress of its investigation.” Mannesmannrohren-Werke AG , 77 F. Supp. 2d at 1313, 1314; see also Ferro Union , 44 F. Sup p. 2d at 13 32 (“I f overa

ll the fai lure to ide

ntify these companies was of no significance to the prog ress of the investigation, then Commerce cannot apply total adverse

facts on the basis of the non-identification of these companies.”)

. Apply ing this s tandard

here, th e Court fi

nds that Pla

intiffs a cted to th e best of

their ab ility in providing Commerce with information on the non-responding produce rs’ shutdowns. During the investigation, Plaintiffs submitted notices from the Qingxu County g overnment and from the Shanxi Province demonstrating that the local governments had ordere d the shutdown of factories not in comp liance w

ith the en vironmen tal emission standar

ds. 18 Plaintiffs also notified Commerce that they w ere unable and could not force the produc ers to provide information substantiating their shutdowns because the producers we re unrelated and independent entities. Although Plaintiffs never submitted evidence specifically identifying the pr

oducers that were forced to shut down, they did submit information clearly demonstrating that massive shutdowns

had bee n ordere d by

the PRC go vernmen

t. These p

roducer s were c ompletely27

independent from Plaintiffs and neither Defendant nor De fendant-Interve nors point to evidence in the record that would demonstrate that Plaintiffs actually were in a position to obtain such evidence. As Plaintiffs correctly state, “[t]here . . . is no factual challenge to the rec ord evidence that the producers were independent and unr elated to the exporters and that the exporters in any way could for

ce these independent companies to cooperate with DOC.” Plaintiff’s Reply Br ief at 7. While Commerce does state in the Final Determination that “there is no evidence on the record to determine whether the specif ic suppliers at issue were among those shut down by the government,” Commerce fails to articulate a ny reason a s to why it concluded Plaintiffs have failed to act to the best of th eir abili

ty. Decision

Memoran

dum at Comme

nt 9. I n other w ords, Commerce did not explain the basis for its conclusion that Plaintiffs’ best abilities included obtaining the necessary

information from the producers. To conclude that Plaintiffs somehow could have obtained this information amounts to pure speculation. As Commerce provides no reasoning, this court finds Commerce’s decision to apply adverse inferences ag ainst Plaintiffs unsupported by the evide nce. In rega rd to Plaintiff’s list submission, Commerce determined it constituted “new informat ion” whic h was untimely

submitted. Untimeline ss alone, however , will not ne cessar ily bar the admission of new information during verification. Commerce has often accepted new information when “(1) the need for that information wa s not evident previously, (2) the information makes minor corrections to information already on the record, or (3) the information corroborates, supports, or clarifies information alre ady on the re cord.” See Notice of Final Determination of Sales at Less Than F air Value: Structural Steel Beams From L uxembourg , 6719 In a ny c ase the Co

urt quest ions whether, base d on the re cord her e, Commer

ce could conclude the information was new, as opposed to factua l verification of information already submitted, that is, that the plants had been shut down. 28 Fed. Reg . 35488, a

t Comment 1 (

May 20, 2002) ; Notice of

Final De terminat ion of Sale s at L ess Than Fair Value: Structural Steel Beams fr om Germany , 67 Fed. Reg. 354 97, at Comme nt 5 (May 20, 2002) ; Notice of

Final De terminat ion of Sale s at L ess Than Fair Va lue: Certain HotRolled Car

bon Steel F lat Products From I ndia , 66 Fed. Reg. 50406, at Comment 4 (Oct. 3, 2001). In fact, Commerce spe cifically told one of the respondents in the case that new information corroborating, supporting or clar ifying the r

ecord would be accepted during verification. The list offered by

Plaintiffs would fulfill that precise purpose for statements on the record re garding plant shut downs. 19 Conseque

ntly , this cour

t finds Comme

rce’s d ecision to reject P laintiff

s’ list submission unsupported by the evidence. Accord ingly , a rema

nd is nece ssary

so that Comm erce ma

y include Pla

intiffs’ list submission in the record and use non-adverse facts ava ilable for determining the normal values of non-r esponding

produce rs.29 4. The Depar

tment ’s Refusal t o Use Surr ogate Va lues Fr om Rel ated Coal Mines is Unsupported by the Evidence

a. Defendant-Intervenors and Plaintiffs Dispute Commerce’s Use of Surrogate Values from Unrelated Companies

Plaintiffs argue that Commerce improperly failed to include values from related coal mines in its surrogate value calculations. According to Plaintiffs, Commerce’s determination not to include these va lues bec ause “[n]o ne of the mines are

members o f any

of the re spondents ’ group,” is unsupported by the evidence. Plaintiffs’ Memo at 25. They argue that since the companies are related, their coal is self- produced and their costs should be calculated based on their actual inputs. To support this contention, Plaintiffs cite to 19 U.S.C. §1677(33)(E)(1999) which provi des th at an af fili ated p arty incl udes “ any person direct ly or indi rectl y owning, controlling or holding with power to vote, 5 percent or mor e of the outstanding voting stock or shares of any

organization and such organization.” As “DOC ver ified the related nature of the sampled coal mine and found that the producer owned [10] percent of the shares of the mine,” Plaintiffs maintain that Commerce should have used actual inputs rather than surrog ate values from a comparable market economy . Plaintiffs’ Memo at 25. On this bas is, Plaintif

fs concl ude that a remand i s necess ary

so that Comm erce ma

y us e the factors of production information from related coa l mines rather than surrogate values fr om unrelat ed compa nies.30

Defend ant-I nterven ors, in tur n, arg ue that Com

merce’ s use of th e same me thodolog y to determine the surrogate value for coal inputs purchased from both related and unrelate d coal mines is supported by substantial evidence . They ar gue that, “[i]n determining the normal value of subject merchandise in a nonmarket economy , the Department uses factors of production which are based on the best available information re garding the values of those fa ctors in a market e conomy

surrog ate coun

try .” Defe

ndant-I nterven ors’ Br ief at 20 ; 19 U.S.C. §1677b(c )(1). Ac cording to Defen dant-I nterven ors, “the valuatio n of fac tors in a su rroga te country should not be based upon c ircumstances peculiar to the state-controlled economy .” Defendant-Inte

rvenors’ Brief at 20. In a ddressin g Plainti ffs’ ar

guments , Defen

dant-I nterven ors arg ue that Pla

intiffs f ailed to “provide a sufficient factual basis to support valuing the c oal input any differ ently from the coa

l purchased from unaffiliated mines.” Id. at 21. Defendant-I ntervenors maintain that a 10 percent ownership interest or family interest in the coal mines is not sufficient to demonstrate that the coal is self-produced. Id. In a ddition, De fendant-Int

ervenor s claim tha

t Plaintiff s have al so “failed to provide any

legal support in their brief providing a basis for having the Department calculate separately

the actual inputs for the production of coal from the relate d coal mines in a nonmarket economy .” Id. Accordingly , they maintain that there is no De partment practice, nor any statutory

authority, supporting Plaintiffs’ c ontentions. Id. at 21-23. On this bas is, Defendant-Inte

rvenors conclude that the court “should affirm the De partment’s use of Indian Import Statistics for the surrogate value for coal used in producing the subject mer chandise.” Id. at 23. Defendant candidly states that, upon review of the record, Commerce c an no longer31

support its

finding and cons equently

, “a remand is appropriate to allow Co mmerce t

o fully consider the issue of whether apply ing a factors of production methodology to the coal produced by the purportedly

related coal mines is appropriate.” Defe ndant’s Memo at 17-18.

b. Commerce

Failed to Provide an Adequate Explanation for its Decision to Use Surrogate

Values from Unrelated Companies

As previo usly discusse d, sectio n 773(c) (1) of th e Tarif f Act of 1 930 direc

ts Commerc e to base nor mal value on the non -market economy produce r’s factors of pr

oduction. 19 U.S.C. §1677b(c)(4). Commerce must base these surrog ate values on the best available information and they must reflect the cost of producing goods “in one or more market economy

countries that are: (A) at a level of developm ent comparabl e to that of t he nonmarket economy country, and (B) significant producers of the compara ble merchandise.” 19 U.S.C. §1677b(c)(4). While the statute specifically provide s for factors of production, Commerce is not restricted to the exclusive use of surrogate values in c omparable market economies. As this court previous ly noted, “no thing in t he [statute ] or its leg islative h istory mandate s that Comme

rce must derive foreign market values e xclusively from either actua l prices paid by the nonma rket economy, or f

rom surrogate-based values.” Lasko Metal Products, I nc. v. United States , 16 CIT 1079, 1082 ( 1992) (quot ing Tianjin Mach. Import & Export Corp. v. United States , 16 CIT 931, 940 (1992)). Accordingly, “Commerce may use evidence of prices paid by the nonmarket economy country

to market-economy

suppliers in combination with surrogate country20 See Tapered Roller Bearing s and Parts Thereof, Finished and Unfinished, from the

Republic of Hungary , 56 Fed. Reg. 41,819, 41,820 (Dep’t Comm. 1991) (stating that “[i]t is the Department’s practice to value fac tor-of-production inputs at actual acquisition prices if it can be establish ed that th ose inputs are pur chased f rom a mar

ket econ omy country in free ly c onvertib le curren cy”); see also Sparklers from the People’s Republic of China , 56 Fed. Reg. 20,588, 20,588 (May 6, 1991).

21 While Plaintiffs argue that pursuant to 19 U.S.C. §1677(33)(E) the producers and the coal mine s are re lated, Pla intiffs f ail to prov

ide any explanation as to why

close af filiation is 32 information when valuing factors of production.” Id. at 1081 (quot ing Tianjin Ma ch. I mport & Export Corp. , 16 C IT at 941 ). The agency has o ften r esort ed to t his m ix an d matc h meth odol ogy in order to achie ve gre ater ac curacy

in the ca lculation of dumping

margin s. 20 In addition, Commerce

has simila

rly relied o n self-p roduced

inputs ra ther tha n surrog ate values wher

e it could value the materials, energy , and labor employe d to manufacture the input. See Silicomanganese From the People’s Republic of China , 65 Fed. Reg. 31514 (May 18, 2000); Certain Cu

t to Le ngth Car bon Steel Pl ates from PRC , 62 Fed. Reg. 61964 (Nov. 20, 1997). These methodologies are all reflec tive of the statute’s overriding requirement for accuracy . In reaching

its Final Determination on the issue of related coal mines, Commerce provi ded th e foll owing r eason ing:

Based on the re cord fa

cts, we d o not consi der that

coal is a selfproduced input for any of the r espondents, Shanxi Dajin International (Group) Company, Minmetals Townlord Techno lo gy C o., Ltd,, and Sinochem International Company, Ltd.. None of the mines are me mbers of any of the respondents’ group. Theref ore, we did not value c oal using the factor s of produ

ction for coal fr om the coa

l mines.

Decision Memorandum at Comment 3. Commerce

provides no explana

tion of wha

t constitut

es “res pondents’ group, ” nor doe s it explain why membership in such a g roup signifies that Plaintiffs’ merchandise is self-produced. 21proof tha

t the merc handise i s self-pr

oduced. Similarly

, while Com

merce r elies on me

mbership to a “gro up” as the basis for its decisi on, it fail s to explain w hether t his member

ship is equ

ivalent to an affiliation, and whether it would signify that the merchandise is self-produced.

22 This language is consistently used throughout the administrative proceedings. See , e.g., Petition, ITC Preliminary Determination, ITC Final Dete rmination, Preliminary Deter mination, Final De terminat ion, Dec ision Memor

andum. 33 Accordingly , a remand is necessary so that Commerce may pr operly deter

mine whether apply

ing a facto rs of pro duction me thodolog y to the coal produce d by

the rela ted coal mines is appropriate.

5. The Depar

tment ’s Use of A dverse In ference s Against Sin ochem is Unsupport ed by Substantial Evidence and Not in Accordance With Law

a. The Parties are in Dispute as to the Correct Interpretation of the Scope Language

Plaintiffs argue that Commerce incorrectly interpreted the sc ope of the investigation, and accordingly

that the agency ’s resort to adverse facts available is unsupported by the evidence and contrary to law. The petition limits the scope of the investigation to “coke large r than 100 mm (4 inches) in maximum diameter and at least 50 percent of which is retained on a 100 mm (4-inch) sieve, of a kind used in foundries.” 22 Plaintiffs’ Memo at 11. Plaintiffs maintain that the correct interpretation is that a shipment is subject to the order only if 50% or more of the sale contains coke tha t is larg er than 1 00 mm in diameter. As the Sinoch em shipmen

t under r eview ha d only 11.50 percent of coke over 100mm, Plaintiffs argue that it was not subject to the order.23 Plaintiff s similarly

argue that the sc ope of the

investig ation only

includes shipments where the majority

of the merchandise includes coke over 100mm in size, i.e. foundry coke. Although counsel for Plaintiffs conceded at oral a rgument that Sinochem’s 75-125 mm shipment was labeled as “foundry

coke”, counsel argued that Plaintiffs wer e relying on the ITC’s initial definition of industrial coke, i.e. coke under 100mm in size, for excluding the shipment from the scope of the investigation. 34 Plaintiffs further claim that “adverse inferenc es against Sinochem [are] unjustified because the product that Sinochem did not report was not subject mercha ndise.” Id. at 29. Plaintiffs point out that in its Preliminary Determination, the I TC determined that industrial coke fell outside of the scope of this case due to its smaller size. Accordingly , Plaintiffs conclude that Sinochem’s undersized coke is not within the order since it properly constitutes industrial coke rather than foundry

coke. 23 On this basis, Plaintiffs argue that this court should remand the Final Determination so that Commerce may recalculate the dumping marg ins of Sinochem after

re mo vi ng ad ve rs e i nf

er en ce s t ha t w er e d ra wn ag ai ns t t ha t c om pa ny. Defendant, in turn, argues that the cor rect interpretation of the scope of the investiga tion is whether 50% or more of the portion of the shipment sold as being over 100mm is retained on a 100 mm sieve. According to Defendants, “the H armonized Tariff Schedule of the United States (“HTSUS”) lends guidance” in interpre ting the language of this investig ation. Defendant’s Memo at 25 . Under t

he 2000 ve

rsion of the HTSUS subheading 2704.00.0 0.10, fou

ndry coke is defined as “larger than 100 mm (4 inche s) in maximum diameter and at least 50 percent of which is retained on a 100 mm (4-inch) sieve after drop sha tter testing pursuant to ASTM D 3038.” Id. at 25. Defendants argue that “so long as fifty per

cent of the coke, sold over 100 mm, passes the drop shatter testing (i.e. is retained on a 100mm sieve), it is within the scope of the or der.” Id. at 25-26. Accordingly , they conclude Commerce “properly

determined that the portion of35

[Sinochem’s] sale that was made up of coke over 100 mm was within the scope of the antidumping investigation.” Id. at 26. Defend ant points out that “ [a]lthough

Commerce

did apply adverse facts a vailable to this sale in the Preliminary De termination, . . . for the Final Determination, Commerce collected information on this sale at verification, and actually performed a ‘margin ana lysis’ on the portion of the sale that was sold as being over 100mm.” Id. at 24; Decision Memorandum at Comment 12. Conseq

uently , Defen

dant arg ues that the issue is n

ot whethe r Commerc e proper

ly r esorted to adverse facts available but whether Commerc e correctly interpreted the scope of the investigation and order. On this basis, they conclude that Commerce’s determination that the portion of Sinochem’s sale over 100 mm was within the scope of the investigation is supported by substantial evidence and in accordance w ith law. Finally, in addre ssing Plaintiffs’ argument that Sinochem’s merchandise is industrial coke rather than foun

dry coke, De fendant-Int

ervenor s add that “there is no basis

for Sinochem to assume that its labeling of subject merchandise as ‘industrial coke ’ necessarily avoids application of the order: the ITC dete rmination excluded ‘industrial coke’ from its like product finding because it defined ‘industrial coke’ as coke less than 100 mm in maximum diameter.” Defendant-Inte

rvenors’ Brief at 28. Defe ndant-Intervenors ther

efore conclude that “[t]he ITC’s like prod uct dete rmination did not in a

ny w ay limit the ap

plicabili ty o f the ord

er to mer chandise within the scope, i.e., coke of 100 mm or greater in maximum outside diameter and fifty perce nt of which is retained on a 100-mm sieve.” Id. at 28.24 Defendant argues that the lang uage of HTSUS 2704.00.00.10 supports its interpretation of the scope language . While the scope language is followed by a reference to severa

l HTSUS heading s, this ref

erence does not in

dicate a n intent to d

efine th e scope o f cover

ed merchandise solely based on the lang

uage of HTSUS 2704.00.00.10. See Wirth Limited v. United States , 22 CIT 285, 294 (1998). Petitioners were re quired by re gulation to include these headings. See 19 C.F.R. § 353.12(b)(4)(1996). 36 b. Commerce ’s Interpretation of the Scope Language Conflicts With its Application

The petition filed by the domestic industry limits the scope of the investigation to “coke larger than 100 mm (4 inches) in maximum diameter and at least 50 perc ent of which is retained on a 100-mm (4-inch) sieve, of a kind used in foundries.” A.R. (Public) Doc . No. 1, Petition at 3. This language is consistently used throughout the proceedings and f orms the basis for Commerce’s Final Determination. See Final Determination, 66 Fed. Reg. at 39489. I t is also further defined by

reference to several he adings within the HTSUS, namely subhe ading 2704.00.00.10 (as of Jan. 1, 2000) and subheading 2704.00.00.11 (as of July 1, 2001). Id. While these subheadings are cited as a r eference, the Final Dete

rmination specifically pr

ovides that “[a]lthough the HTSUS subheadings are provided for conve nience and Customs purposes, our written description of the scope of this investigation is dispositive.” 24 Id. In its Decision Memorandum, Commerce dete rmined that Sinochem had misread the scope language and tha

t its shipment of foundry coke straddling the scope size definition included merchandise that fell squarely within the proceedings. Commerce also provided an interpretation of the scope languag e:37 [T]he first condition of the scope is that the scope applies to coke “larger than 100mm,” the second being “and at least fifty

percent of which is retained on a 100-mm sieve.” By including the modifier “of which” immediately after the fifty

percent threshold, and with b oth statements following the initial co ndition of

100mm, the most reasonable understanding is that the test is to determine whether fifty

percent or more of the coke sold as being larger than 100mm is re

tained on the 100mm s ieve. Th e result o f this conclusion is that the respondents’ application of the fifty percent threshold to the entire volume of the portion of the sale straddling the scope is inapposite; the test should only be applied to coke above 10 0mm. Decision Memorandum at Comment 12. Based on this analysis, Commerce concluded that each sale “is best conceived as being in eff ect two sales, one for merchandise within the scope a nd one outside.” Id. Accordingly , Commerce performed a “margin analysis” on the portion of Sinochem’s straddling shipment that exceeded the 100mm scope limit. Id. This result, however, is wholly inconsistent with Commerce ’s treatment of Sinochem’s other shipments, as well as the shipments of other respondents involved in the proceeding s. Commerce’s articulation of the scope langua ge in the Final Determination essentially leads to the conclusion that where a shipment contains a percentag e of merchandise below 100mm, the shipment in its entirety could never be considered as falling within the scope. Similarly , where a shipment is

labeled as conta ining onl y me rchandi se over 1 00mm, but te sting re veals tha t less than 100% of the merchandise is over 100mm, Commerce would also be unable to include the entire sh ipment as w

ithin scop e. As pla

intiff correctly

argue s, howeve

r, Commer

ce repe atedly resorted to a “bright line test” where by an entire shipment is consider ed within scope if more than 50% of the sale is above 100mm, and outside of scope if less than 50% is below 100mm.25 Commerce similarly included the e ntire shipment of Shanxi Grand Coalchem, another responde nt, as with

in scope w

here 9.9 0 perce

nt of that s ale was b elow 100m m. Plaintif

f’s Reply Brief a t 11. With CITIC, C ommerce also inclu

ded one h undred p ercent

of the me

rchandi se where only 90.04 pe

rcent of the merchandise was above 100mm. Id.

26 Commerce’s interpretation of the scope lang uage also presents a tautology . According to Commer ce, only merchandise o ver 100mm s hould be su bjected to t he 100mm si eve. By definition, however, merchandise over 100mm will alway s be retained on a 100mm sieve. The sieve te st is there fore me aningle ss unless the sieve c an fulfil l its primar y pu rpose, i. e. to sift. 38 Plaintiff’s Reply Brief

at 10. For instance, Commerce included as within scope one hundr ed percent of Sinochem’s 100-300 mm shipment containing 88.13 percent of merchandise over 100

mm. 25 Under th e standa

rds artic ulated in the Dec ision Memor

andum, Com

merce c ould only include u p to 88.13 p ercent

of that sh ipment as w

ithin scop e since t

he test wo

uld alleg edly

only be applicable to merchandise over 100 mm. Under a “bright line” interpretation, however, Commerce

could pro

perly include one hundr

ed perc ent of the

mercha ndise bec ause ove

r fifty percent of it was over 100mm. I ts decision to perform a “margin analy sis” on the portion of Sinochem’ s straddli

ng shipme

nt contai ning 11. 50 perce

nt of coke over 100 mm is conse quently in direct contradiction with its prior application of the scope of the investiga tion, i.e. the “bright line test.” 26 Commerce provides no reasoning for its contradictory interpreta tion of the scope langua ge, so a remand i s necess ary

for it to e ither provide such a reasoning or r

esort to it s previous interpretation of the languag e consistent with its prior practice.39 V. Conclusion

For the foregoing r

easons, the Court remands this case to Commerce for considera tion of the issues discussed herein.

________________________ Evan J . Wal lach, Judge Dated: March 4, 2003

New York, New York