Slip Op. 15-52

UNITED STATES COURT OF INTERNATIONAL TRADE 

US MAGNESIUM LLC, 

Plaintiff,

 v. 

UNITED STATES, 

 Defendant. 

 Before: Leo M. Gordon, Judge 

 Consol. Court No. 14-00038 

OPINION 

[Motion for judgment upon the agency record denied; final results of administrative review 

sustained.]

Dated: June 1, 2015 

 Stephen A. Jones and Jeffery B. Denning, King and Spalding of Washington, DC 

for Plaintiff US Magnesium LLC. 

David A. Riggle and David J. Craven, Riggle and Craven of Chicago, Illinois for 

Plaintiff and Defendant-Intervenor Tianjin Magnesium Metal Co., Ltd. 

 Eric E. Laufgraben, Trial Attorney, Commercial Litigation Branch, Civil Division, 

U.S. Department of Justice of Washington, DC for Defendant United States. With him on 

the brief were Joyce R. Branda, Acting Assistant Attorney General, Jeanne E. Davidson, 

Director, Claudia Burke, Assistant Director. Of counsel on the brief was Aman Kakar, 

Attorney, U.S. Department of Commerce, Office of the Chief Counsel for Trade 

Enforcement and Compliance of Washington, DC. 

Gordon, Judge: This action involves an administrative review conducted by the 

U.S. Department of Commerce (“Commerce”) of the antidumping duty order covering 

pure magnesium from the People’s Republic of China. See Pure Magnesium From the 

People’s Republic of China, 79 Fed. Reg. 94 (Dep’t of Commerce Jan. 2, 2014) (final 

results admin. review) (“Final Results”); see also Issues and Decision Memorandum for 
Consol. Court No. 14-00038 Page 2 

the Final Results of the Antidumping Duty Administrative Review on Pure Magnesium 

from the People’s Republic of China, A-570-832 (Dep’t of Commerce Dec. 26, 2013) 

(“Decision Memorandum”), available at http://enforcement.trade.gov/frn/summary/prc/ 

2013-31412-1.pdf (last visited this date). Before the court is US Magnesium LLC’s (“US 

Magnesium”) motion for judgment on the agency record. See US Magnesium’s R. 56.2 

Br. in Support of Mot. for J. on the Agency R. (July 29, 2014), ECF No. 40 (“US Mag. 

Br.”); see also Def.’s Opp. to Pl.’s and Def.-Intervenor’s R. 56.2 Mots. for J. upon the 

Agency R. (Oct. 24, 2014), ECF No. 43; Resp. of Pl. Tianjin Magnesium Metal Co., Ltd., 

to the Mot. Pursuant to R. 56 of the Rs. of the U.S. Ct. of Int’l Trade by US Magnesium 

LLC (Nov. 14, 2014), ECF No. 47; US Magnesium’s Reply to the Resps. of Def. and Def.-

Intervenor (Dec. 15, 2014), ECF No. 55 (“US Mag. Reply”).1 The court has jurisdiction 

pursuant to Section 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C. 

§ 1516a(a)(2)(B)(iii) (2012),2 and 28 U.S.C. § 1581(c) (2012). 

US Magnesium challenges (1) Commerce’s financial statement selection, 

(2) Commerce’s refusal to apply adverse facts available to Tianjin Magnesium Metal Co. 

Ltd. (“TMM”), and (3) Commerce’s surrogate valuation of magnesium scrap. US Mag. Br. 

 

1 Tianjin Magnesium Metal Co. Ltd. raises several conditional arguments in its motion for 

judgment on the agency record, requesting judicial review if the court remands any of the 

issues raised by US Magnesium. Mem. in Support of the Mot. for J. on the Agency R. 

Submitted by Pl. Tianjin Magnesium Metal Co., Ltd., Pursuant to R. 56.2 of the Rs. of the 

U.S. Ct. of Int’l Trade 3-12 (July 10, 2014), ECF No. 33. Having not remanded any of US 

Magnesium’s issues, the court does not address Tianjin Magnesium Metal Co. Ltd.’s 

motion.

2 Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of 

Title 19 of the U.S. Code, 2012 edition. 
Consol. Court No. 14-00038 Page 3 

at 5-39. For the reasons set forth below, the court sustains the Final Results on each of 

the issues challenged by US Magnesium. 

I. Standard of Review 

For administrative reviews of antidumping duty orders, the court sustains 

Commerce’s “determinations, findings, or conclusions” unless they are “unsupported by 

substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. 

§ 1516a(b)(1)(B)(i). More specifically, when reviewing agency determinations, findings, 

or conclusions for substantial evidence, the court assesses whether the agency action is 

reasonable given the record as a whole. Nippon Steel Corp. v. United States, 458 F.3d 

1345, 1350-51 (Fed. Cir. 2006). Substantial evidence has been described as “such 

relevant evidence as a reasonable mind might accept as adequate to support a 

conclusion.” DuPont Teijin Films USA v. United States, 407 F.3d 1211, 1215 (Fed. Cir. 

2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). Substantial 

evidence has also been described as “something less than the weight of the evidence, 

and the possibility of drawing two inconsistent conclusions from the evidence does not 

prevent an administrative agency’s finding from being supported by substantial evidence.” 

Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620 (1966). Fundamentally, though, 

“substantial evidence” is best understood as a word formula connoting reasonableness 

review. 3 Charles H. Koch, Jr., Administrative Law and Practice § 9.24[1] (3d ed. 2015). 

Therefore, when addressing a substantial evidence issue raised by a party, the court 

analyzes whether the challenged agency action “was reasonable given the circumstances 
Consol. Court No. 14-00038 Page 4 

presented by the whole record.” 8A West’s Fed. Forms, National Courts § 3:6 (5th ed. 

2015).

II. Discussion 

A. Financial Statement Selection 

Commerce calculates dumping margins by determining “the amount by which the 

normal value exceeds the export price or constructed export price of the subject 

merchandise.” 19 U.S.C. § 1677(35)(A). In the non-market economy context, Commerce 

calculates normal value using data from surrogate countries to value the factors of 

production. Id. § 1677b(c)(1)(B). Commerce must use the “best available information” in 

selecting surrogate data from “one or more” surrogate market economy countries. Id. 

§ 1677b(c)(1)(B), (4). The surrogate data must “to the extent possible” be from a market 

economy country or countries that are (1) “at a level of economic development 

comparable to that of the nonmarket economy country” and (2) “significant producers of 

comparable merchandise.” 19 U.S.C. § 1677b(c)(4). Commerce has a stated regulatory 

preference to “normally . . . value all factors in a single surrogate country.” 19 C.F.R. 

§ 351.408(c)(2) (2015). Commerce here chose the Philippines as the primary surrogate 

country. Decision Memorandum at 4-10. 

Pursuant to its regulations, Commerce relies upon financial statements from 

surrogate producers of “identical or comparable merchandise” to determine surrogate 

values for manufacturing overhead, general expenses, and profit. 19 C.F.R. 

§ 351.408(c)(4). Commerce’s choice of financial statements is guided by a regulatory 

preference for publicly available information. Id. Beyond that, Commerce generally 
Consol. Court No. 14-00038 Page 5 

considers the quality, specificity, and contemporaneity of the available financial 

statements. Issues and Decision Memorandum for the Final Results in the Antidumping 

Duty Administrative Review of Polyethylene Terephthalate Film, Sheet, and Strip from the 

People’s Republic of China, A-570-924, at 4 (Dep’t of Commerce Feb. 14, 2011), 

available at http://enforcement.trade.gov/frn/summary/prc/2011-3909-1.pdf (last visited 

this date). 

In its preliminary determination Commerce used financial statements from two 

Philippine companies to calculate TMM’s financial ratios: SOH Technologies Corp. and 

RU Foundry and Machine Shop Corporation (“RU Foundry”). Decision Memorandum for 

Preliminary Results of 2011-2012 Antidumping Administrative Review: Pure Magnesium 

from the People’s Republic of China, A-570-832, at 20-21 (Dep’t of Commerce May 31, 

2013), available at http://enforcement.trade.gov/frn/summary/prc/2013-13702-1.pdf (last 

visited this date) (“Prelim. Decision Memorandum”). Commerce selected RU Foundry 

because US Magnesium “placed on the record a description of RU Foundry’s line of work, 

which included production of aluminum, (considered to be a comparable production 

process to production of [the subject merchandise]).” Decision Memorandum at 22. 

TMM, however, argued in its administrative case brief that RU Foundry’s financial 

statements indicated that RU Foundry did not in fact produce comparable merchandise. 

Decision Memorandum at 20-21. For the final results Commerce agreed, explaining that 

the revenue sources, raw material purchases, and accounts receivables section of the 

financial statement all suggest that RU Foundry manufactures beverages, and not metal 

as the “Foundry” in its name implies. Id. (noting that RU Foundry “derives its revenue from 
Consol. Court No. 14-00038 Page 6 

‘a range of beverage products’” and “selling fruits, juices, and copra products,” that RU 

Foundry’s purchases do not include “raw materials for metal production,” and that RU 

Foundry’s accounts receivables include companies like “‘Eco Agri,’ ‘Puro Organic,’ and 

‘Fresh Start’”). Confronted with financial statements containing “irreconcilable 

contradictions as to what merchandise RU Foundry actually produces and sells,” 

Commerce chose not to use the RU Foundry financial statements for the Final Results. 

Decision Memorandum at 22. It is hard to fault that choice. 

US Magnesium, nevertheless, challenges this decision. US Mag. Br. at 33-37. The 

court is not persuaded by US Magnesium’s argument. Even if the issue of RU Foundry’s 

business were arguable, and the record unclear, US Magnesium could not prevail 

because the substantial evidence standard of review “contemplates [that] more than one 

reasonable outcome is possible on a given administrative record.” Globe Metallurgical, 

Inc. v. United States, 36 CIT ___, ___, 865 F. Supp. 2d 1269, 1276 (2012). US 

Magnesium fails to demonstrate that there is one and only one reasonable conclusion to 

be drawn from RU Foundry’s financial statement—that RU Foundry produces comparable 

merchandise. The court therefore agrees with TMM and Defendant that Commerce’s 

rejection of RU Foundry’s financial statement is reasonable on this administrative record. 

Accordingly, the court sustains this aspect of the Final Results. 

B. Facts Available

The statute mandates that Commerce use “facts otherwise available” when 

“necessary information is not available on the record” or when, among other things, an 

interested party “significantly impedes a proceeding.” 19 U.S.C. § 1677e(a). If Commerce 
Consol. Court No. 14-00038 Page 7 

“finds that an interested party has failed to cooperate by not acting to the best of its ability 

to comply with a request for information,” Commerce may “use an inference that is 

adverse” when selecting among facts available. Id. § 1677e(b). The use of “facts 

otherwise available” and the application of an adverse inference are separate 

determinations. Zheijang DunAn Hetian Metal Co. v. United States, 652 F.3d 1333, 1346 

(Fed. Cir. 2011) (citing Nippon Steel v. United States, 337 F.3d 1373, 1381 (Fed. Cir. 

2003)).

US Magnesium argues that Commerce did not consider whether TMM significantly 

impeded the proceeding by failing to include a complete and accurate translation of a 

Ukrainian financial statement. US Mag. Br. at 5-26. During the proceeding US Magnesium 

placed on the record an alternative English translation of the same Ukrainian financial 

statement. Commerce, in turn, concluded that US Magnesium’s alternative translation did 

not warrant a finding that TMM significantly impeded the proceeding: 

In this case, the information has been placed on the record, in the form of 

Petitioner’s translation of the omitted paragraphs and, in any case, we do 

not consider the information at issue to qualify as “necessary information” 

given that the Department has selected the Philippines as the appropriate 

surrogate country. Because the information at issue is not necessary for the 

determination, and there are no other allegations or information that raise 

question as to the reliability of any other information provided by TMM in 

this particular review, we do not find that the party significantly impeded the 

proceeding based upon the facts in this case. Accordingly, we find no basis 

to apply facts available, and thus no basis to apply adverse inferences in 

this case. 

Decision Memorandum at 26 (footnotes omitted) (emphasis added). 

When US Magnesium argues that Commerce did not consider whether TMM 

significantly impeded the proceeding, see, US Magnesium Br. at 10; US Magnesium 
Consol. Court No. 14-00038 Page 8 

Reply at 2, US Magnesium appears to have overlooked the underlined language above. 

And despite devoting almost its entire administrative case brief arguing TMM deserved a 

total AFA rate, US Magnesium could only identify three apparent discrepancies within a 

single exhibit among the many submitted by TMM. See Case Br. of US Magnesium, at 1-

17 (Dep’t of Commerce Aug. 8, 2013), PD 144.3 All US Magnesium submitted to support 

its argument was a competing translation of the same financial statement. Id.; see 

Decision Memorandum at 26 (“The record does not contain . . . information to contradict 

TMM’s assertion that it provided an acceptable translation of the words.). Here, 

Commerce reasonably declined US Magnesium’s invitation to find that TMM significantly 

impeded the proceedings. The court therefore sustains this aspect of the Final Results as 

well.

C. Surrogate Value for Magnesium Scrap 

For the preliminary results Commerce selected Philippine HTS 8104.20 

(“Magnesium Waste and Scrap”) to value TMM’s scrap input. Prelim. Decision 

Memorandum at 18-19 (“Philippine data for imports of magnesium scrap under HTS 

subcategory 8104.20 represent the best, and only, information available to value the 

scrap inputs used by TMM’s supplier in the production of subject merchandise during the 

POR.”). In the final results, however, Commerce acknowledged that the selection of 

Philippine data was no longer a reasonable choice on the administrative record. 

 

3 “PD” refers to a document contained in the public administrative record. 
Consol. Court No. 14-00038 Page 9 

Commerce explained that TMM submitted “benchmark” data showing that the 

Philippine scrap surrogate data point exceeded the values of Indonesian, South African, 

Thai, and Colombian imports under HTS 8104.19, which covered the finished subject 

merchandise as well as the magnesium TMM used to produce its scrap. The Philippine 

scrap surrogate data point also exceeded the values of Indonesian, South African, and 

Thai imports for pure (99.8% or greater) unwrought magnesium under HTS 8104.11. Id. 

at 12-16. These “benchmark” prices rendered the Philippine scrap value unreasonable. 

According to Commerce, scrap should not be more valuable than both the subject 

merchandise and the material used to produce the scrap. Id. at 15. Without a usable 

surrogate value from the primary surrogate country (Philippines), Commerce applied its 

standard selection criteria (specificity, contemporaneity, public availability, 

representativeness, and whether prices exclude taxes and duties) to the other available 

secondary surrogate country data on the administrative record. Id. at 12-20; see also 

Surrogate Value Memorandum, at 2-4 (Dep’t of Commerce Dec. 26, 2013), PD 165. 

The administrative record included data from various countries under three HTS 

subheadings: HTS 8104.20 (covering scrap magnesium); HTS 8104.19 (covering subject 

merchandise and input that created TMM’s scrap); HTS 8104.11 (covering pure 

magnesium). Commerce easily settled on HTS 8104.20 as best covering TMM’s “scrap.” 

Id. at 20. 

Among the available secondary surrogate country-specific HTS 8104.20 data, 

Commerce rejected Thai and South African data points as non-contemporaneous and 

unreliable. Decision Memorandum at 18-19. For the remaining Serbian, Ukrainian, and 
Consol. Court No. 14-00038 Page 10 

Bulgarian HTS 8104.20 data, Commerce explained that each were “publicly available, 

non-export, tax-exclusive, and obtained from the preferred GTA data-source,” but that 

“the Serbian HTS 8104.20 import data provide the most robust dataset and, therefore, 

represent the best available information to value scrap magnesium.” Id. at 20. 

Commerce’s choice of Serbian HTS 8104.20 as the “best available” surrogate value on 

this administrative record represents a reasonable application of Commerce’s surrogate 

value selection criteria. 

US Magnesium does not challenge Commerce’s rejection of the Philippine 

surrogate value as unreasonable when measured against the non-Philippine benchmark 

data. US Magnesium instead challenges Commerce’s use of the Serbian HTS 8104.20 

data point as an unreasonable departure from past practice. According to US Magnesium, 

once Commerce “established a benchmark” price, it should have also selected that 

benchmark price as the surrogate value, i.e., “cap” the scrap value at the benchmark 

price. US Mag. Br. at 27-31. Thus, US Magnesium argues that Commerce should have 

selected the Indonesian, South African, Thai, and Colombian HTS 8104.19 data points, 

either individually or in some combination. US Mag. Reply at 18-19.

Commerce acknowledged that its recent practice “is to continue to utilize the scrap 

value in question as the [surrogate value], but to cap this value at the price of the primary 

product.” Decision Memorandum at 15. Commerce has not always applied a cap. See 

Issues and Decision Memorandum for the Final Determination in the Less-Than-FairValue Investigation of Certain Steel Nails from the People’s Republic of China, A-570-

909, at 38 (Dep’t of Commerce June 6, 2008), available at 
Consol. Court No. 14-00038 Page 11 

http://enforcement.trade.gov/download/nme-sep-rates/prc-nails/prc-nails-final-memo.pdf 

(last visited this date). Where Commerce has applied a cap, it has not always selected 

the benchmark for use as a cap. See Issues and Decision Memorandum for the Final 

Results of the Antidumping Duty New Shipper Reviews on Certain Frozen Fish Fillets 

from the Socialist Republic of Vietnam, A-552-801, at 35-37 (Dep’t of Commerce June 

24, 2013), available at http://enforcement.trade.gov/frn/summary/vietnam/2013-15882-

1.pdf (last visited this date) (using a benchmark to reject a proposed scrap surrogate 

value, but constructing a cap value using different record data) (“Fish Filets”). 

If Commerce does “cap” a surrogate scrap value, Commerce uses the cap value 

in place of the unreasonable scrap surrogate value. See Issues and Decision 

Memorandum for the Final Determination in the Less-Than-Fair-Value Investigation of 

Multilayered Wood Flooring from the People’s Republic of China, A-570-970, at 89 (Dep’t 

of Commerce Oct. 11, 2011), available at 

http://enforcement.trade.gov/frn/summary/prc/2011-26932-1.pdf (last visited this date) 

(“valuing” respondent’s scrap using an average of the surrogate values for the inputs used 

to create the byproduct) (“Wood Flooring”); Decision Memorandum at 17 (describing the 

scrap value in Wood Flooring as “cap”). Most important, when Commerce has applied a 

cap, Commerce derived the cap value from the primary surrogate country price data for 

the input that created the scrap. See Decision Memorandum at 17 (explaining when 

Commerce has applied a cap). 

Here, there was no reasonable surrogate value from the primary surrogate country 

from which Commerce could establish a cap. Commerce looked to the Philippine HTS 
Consol. Court No. 14-00038 Page 12 

provision covering the input that created TMM’s scrap (HTS 8104.19). During the period 

of review, however, the Philippines had no imports under HTS 8104.19 (the category 

covering the input that created the scrap), and there were no Philippine alternatives on 

the record. Id. at 15. As Commerce explained, “because the instant record lacks a value 

for finished unwrought magnesium from the Philippines from which an appropriate cap 

may be determined (i.e., Philippine price data for imports of HTS 8104.19), we are unable 

to cap the SV in question and must instead look to the other available SV information on 

the record.” Id. This therefore is not a circumstance, as US Magnesium contends, in which 

Commerce unreasonably departed from past practice, but instead a circumstance in 

which Commerce attempted to identify the “best available information” for TMM’s scrap 

surrogate given a lack of available usable data from the primary surrogate country. 

19 U.S.C. § 1677b(c)(1). 

US Magnesium also argues that Commerce failed to explain why imports under 

Serbian HTS 8104.20 are specific to TMM’s scrap, which, according to US Magnesium, 

is a necessary finding because that provision is a basket category that may include 

imports of lower-quality and lower-priced scrap. US Mag. Br. at 31-33. Although everyone 

agrees that HTS 8104.20 covers TMM’s scrap, US Magnesium infers that perhaps the 

Serbian scrap provision, as a basket category, might also contain non-comparable scrap, 

rendering it a poor surrogate value choice. Id. Perhaps it does, but this remains just one 

of many possible inferences that could be drawn about this tariff heading. See Daewoo 

Elecs. Co. v. Int’l Union of Elec., Elec., Technical, Salaried & Mach. Workers, AFL-CIO, 

6 F.3d 1511, 1520 (Fed. Cir. 1993) (“The question is whether the record adequately 
Consol. Court No. 14-00038 Page 13 

supports the decision of [Commerce], not whether some other inference could reasonably 

have been drawn.”). If US Magnesium believed Serbian HTS 8104.20 was a poor choice, 

US Magnesium should have developed the administrative record with information 

substantiating its inference that the Serbian scrap provision contains lots of low-quality, 

non-comparable scrap. See QVD Food Co. v. United States, 658 F.3d 1318, 1324 (Fed. 

Cir. 2011) (“[T]he burden of creating an adequate record lies with [interested parties] and 

not with Commerce.”). 

As Commerce has provided a reasonable explanation for applying its standard 

selection criteria to the available secondary surrogate country data, as well as for 

declining to apply the benchmarks as a cap, the court sustains Commerce’s selection of 

Serbian HTS 8104.20 to value TMM’s scrap input. 

III. Conclusion

For the foregoing reasons, US Magnesium’s motion for judgment on the agency 

record is denied. Judgment will be entered accordingly. 

 /s/ Leo M. Gordon 

 Judge Leo M. Gordon 

Dated: June 1, 2015 

 New York, New York