CH IN A P RO CE SSED F OOD IM P OR T &

EXP ORT COMP ANY ,

Plaintiff,
v. UN ITED STA TES , De fe nd ant,

and CO AL ITI ON F OR

F AI R P RE SER

VE D MUSHROOM TRADE ,

Def endant- Interve nor.

Slip Op. 08-16 UNITED STAT ES COURT OF INTERNATIONAL TRADE

Before: Tim othy C. Stanceu, Judge Court No. 04- 00503

OP IN ION [Denying pla intiff’s motion for judg ment upon the ag ency rec ord and dismissing a ction] Dated: January

31, 2008 Tra dePa c ifi c PLLC

( Robert G. Gosselink

) f or pla int if f C hin a Pr oc e sse d F oo d Impo rt

& E x p o rt C o mp an y. J e ffr e yS. Bu c ho ltz , ActingAssistant Attorney Gene ral, JeanneE. Davidson , Direc tor, Patricia M. McCarthy , Assistant Director , Commercial L itigation B ranc h, Civil Division, United States Depa

rtment of Just ice (

Richard P. Schroe der); Qu e nti n M . B air d , Ph ili p J . Cu rti n , and Jonathan M. Zielinski , Offic e of Chief Counsel for Import Administration, United St ates De pa rtme nt o f C omm e rc e , o f c ouns e l, f or de fe nd ant. Kelley Dry e Collier Shannon ( Michae l J. Courseyand Adam H. Gordon ) f or de fe nd antintervenor

Coalition for Fa ir Preser

ved Mushroom Tra de. Stanceu, Judge : China Processed F ood I mport & Export Company (“pla intiff” or “COF CO”) c halleng es the fina l administrative deter mination (“F inal Results”) that the International Trade Administration, United States Depar tment of Commerce (“Commerc e” or theCourt No. 04- 00503 P age 2

“De partment” ) issued in the four th administrative revie w of a n antidumping duty

order enter ed
on cer tain prese rved mushrooms (“ subject merc handise” ) fr om the People’s Republic of China (“China” or the “ PRC ”). See Certain Preserve d Mushrooms From the Pe ople’s Re public of China: Final Results of Si xth Antidumping Duty New Shipper Rev iew and Final Results and Partial Rescission of the Fourth Anti dumping Duty Admin. Re view , 69 Fe d. Reg . 54,635 (Sept. 9, 2004) (“ Fi na l R esu lts ”). Plaintiff moves pur suant to USCI T Rule 56.2 for judg ment upon the
a g e nc y re c or d, arguin g that th e F ina l Re su lts we re un lawf ul b e c a us e Comme rc e a

bu se d it s d i s cr et i o nan d

ac t edun fa i rl y

i nap p l yi n g t o C OF C O r et ro ac t i v el y a c h an ge i nth e m et h o d o l o gy for de termining the normal va lue of COF CO’s subject mer chandise . Plaintiff, however , does not
c ha lle ng e the ne w m e tho do logy on the me ri ts. Under the new me thodology , which Commerce applied in the four th administrative revie w but not in the antidumping duty investigation or in a previous a dminist rative r eview of the antidumping duty

order , Commerce tr eate d COFCO and its af filiated produc ers a

nd exporters as a sing le entity . When determiningthe normal va lue of COF CO’s exports of subject
merc handise, Commerc e used not only data on the f

actor s of produc tion associated with the
a c tua l pr od

uc e r o f t he me rc ha

nd ise that CO F CO e xpor

te d to the Un ite d St a te s, but a lso fa c tor sof-pr oduction data of

an af filiated produc er that did not produce that mer chandise . Coalition for F a ir Pr e se rv e d M us hr oo m T ra de , th e pe tit ion e r i n th e anti dumpi ngduty inv e sti g a tio n r e su lti ngin the antidumping duty

order (“pe titioner”) a

nd the par ty that advocated use of the new methodology

in the fourth administrative r eview, sought and was grante d defe ndant-interve nor status but did not further par ticipate in this lit iga

tion. See id. a t 54 ,6 35 n. 3. B e c a us e pla int if

f, in moving f or judg ment upon the ag ency rec ord, did not challeng e on the mer its the method byCourt No. 04- 00503 P age 3

wh ic h Co mme rc e c a lc ulate d th e no rm a l va lue of CO F CO ’s me rc ha

nd ise in t he fo ur th
a dmi nis tr a tiv e re vie w, and be c a us e Comme rc e did

no t e xce e d it s d isc re tio n in de c idi ngno t to
c on tin ue fo llo wi ngthe me tho d b y wh ic h it de te rm ine d s uc h n or

ma l va lue pr ior

to t he fo ur th administrative re view, the c ourt denies plaintiff’ s motion for judgme nt upon the ag ency rec ord and, pursua

nt to USC I T Rule 56.2(b), dismisses this action. I. B ACKG ROUND A. The Investig ation and the F irst, Second, and Third A dminist rative Revie ws Commerce issued a

n antidumping duty

order on the subject mer chandise in 1999. Notice of A me nd me nt o f F ina l D e te rm ina tio n o

f Sa le s a t Le ss T ha n F air Va luean d A nti du mp ing

Du ty Order: Certain Prese rved M ushrooms From the People ’s Republic of China , 64 Fe d. Reg . 8308 (F eb. 19, 1999) ( “ Order ”). COF CO, an exporter of the subject merc handise in China, purc hased the subject mer chandise that it ex ported to the United States dur ing the period of inve stigation from two mushroom produc ers with which it wa s aff iliated, Z ishan Canner

y Canned F ood F a c tor y (n owkn ow n a s F uji an Z ish an G ro up Co. , Ltd. (“ F uji an Z ish an” )) and CO F CO (L on g ha i) Food, Inc. (“ L ong hai”) . Mem. of P. & A . in Supp. of COFCO’s Mot. for J. upon the Ag ency R. 2 (“COF CO’s Mem. of P. & A.”) . Commerce de termined in the investig ation that the subject
me rc ha nd ise CO F CO e xpor

te d to the Un ite d St a te s w a s so ld at le ss t ha n f a ir va lue and

a pp lie d to that merc handise a

n antidumping duty

marg in of 121.47 perc ent. Order , 64 Fe d. Reg . at 8310. In the final less-tha

n-fa ir-value deter

mination that concluded the a ntidumping duty

investigation, Commerce ide ntified various a ffiliates of COF CO but did not, i n discussing its ca lculation of the normal value of COFCO’ s mercha ndise or its determination of a n antidumping duty

marg in for COFCO, discuss whe ther COF CO and any of its affiliates should be tr eate d as a sing le entity
.Court No. 04- 00503 P age 4

Commerce ide ntified China National Cere als, Oils, & F oodstuffs Import & Export Corp. 1 as COFCO’ s owner. It also identified Xiamen Jiahua Import & Export TradingCo., L td. (“X iamen Ji ahua” ) as COF CO’s aff iliated exporter and Xiamen Special Ec onomic Trade Group Cerea ls, Oils, & Foodstuff s I mport & Export Company as Xiame n J iahua’ s owner. Notice of Final Determination of Sales at Less T han Fair Value: Certain Preserv ed Mushrooms from the People’ s Republic of China , 63 Fe d. Reg . 72,255, 72,255-56 (De c. 31, 1998). See Notice of Final Determination of Sales at Less T han Fair Value: Certain Preserv ed Mushrooms from the People ’s Republic of China , 63 Fe d. Reg . 72,255, 72,255-56, 72,258 (D e c . 3 1, 19 98 ) ; Notice of Prelim. Dete rmination of Sal es at Less Than Fair Value and 1 Postponement of Final Dete rmination: Certain Preserved M ushrooms From the People ’s Republic of China , 63 Fe d. Reg . 41,794, 41,796, 41,799-800 (Aug . 5, 1998). After issuance of

the antidumping duty

order , COFCO stopped purc hasingsubject
merc handise fr om Fujian Z ishan and L ong hai, produc ers that pr ocesse d, but did not grow , mushrooms, and beg an to purc hase solely from anothe r mushroom produce r with which it was aff iliated, Fujian Yu X ing F ruit & V eg etable F oodstuff De velopment Co. (“Yu X ing” ), a pr od uc e r t hat di d g ro w m

us hr oo ms. CO F CO ’s Me m. o f P . & A. 3; Certain Preserve d Mushrooms From the Pe ople’s Re public of China: Prelim. Results of Sixth New Shi pper Rev iew and Prelim. Results and Partial Rescission of Fourth Anti dumping Duty Admin. Re view , 69 Fe d. Reg . 10,410, 10,413 (Mar . 5, 2004) (“ Pr e lim . R esu lts ”). “ COFCO believe d that the primary
rea son for its 127.47 [ sic ] pe rc e nt a nti dumpi ngmarg in w a s th a t F uji an Z ish an’ s a nd [L on g ha i’ s] pr od uc tio n p ro c e sse s d id n ot t ake a dv anta g e of ve rt ic a l in te g ra

tio n, and that th e pr od

uc tio n c os ts and norma l values ca lculated by Commerce w ere highe r than they otherwise mig ht have be en had F uji an Z ish an a

nd [L on g ha i] g ro wn

mus hr oo ms i ns te a d o f p ur c ha sin g the m.” CO F CO ’s Me m. of P. & A . 3.Court No. 04- 00503 P age 5

In the first administrative re view, Commerce calc ulated the nor mal value of

COFCO’s
merc handise ba sed on the fa ctors-of -produc tion data re ported by COFCO’s sole pr oducer , Yu Xing , for the pe riod August 5, 1998 through January 31, 2000. See Pr e lim . R esu lts of F irs t New Shipper Revie w and First Ant idumping Duty Admin. Rev iew: Certain Preserve d Mushrooms From the Pe ople’s Re

public of China , 65 Fe d. Reg . 66,703, 66,706-07 (Nov. 7, 2000) (identifying Yu Xing as COFCO’ s supplier). Commerce considere d and re jected pe titioner’s objection that Yu Xing ’s fa ctors-of -produc tion data wer e unre liable. See Issues and De cision Mem . for the Antidumping Duty Admin. and New Shipper Rev iews on Certain Preserved Mushrooms from the People ’s Republic of China – Aug. 5, 1998, through Jan. 31, 2000at 1-2, 18-19 (Ma

y 31, 2001). Commerce deter mined an antidumping duty marg in of 0.00 perc ent for
en tri es o f s u

b j ec tm er ch an d i s e e x p o rt edb y C OF C O duri n g th e p er i o d o f A u gu s t5 , 1 9 9 8 th ro u gh J anuar y 31, 2000. Se e Fi na l R esu lts of F irs t Ne w Sh ipp e r R e v ie w an d F irs t A nti du mp ing

Du ty Admin. Rev iew: Certain Preserve d Mushrooms From the Pe ople’s Re public of China , 66 Fe d. Re g . 3 1, 20 4, 31 ,2 05 (Jun e 11 , 2 00 1) . F ro m th e pu bli sh e d d e c isi on

c on c lud ingthe fi rs t administrative re view, it does not appe ar that either pe titioner or Commerce considere d the po ssi bil ity

of the De pa rtme nt’ s c oll e c tin g and

us ingdata

fr om C OF CO ’s oth e r a ff ili a te s in deter mining the nor

mal value of

COFCO’s mer chandise
. See id. at 31,204-06. Comme rc e c on du c te d tw o a dd iti on a l a dmi nis tr a tiv e re vie ws of the anti dumpi ngduty
or de r b e fo re the a dmi nis tr ativ e re vie w at is su e in t his c a se . H ow e ve r, up on pe tit ion e r’ s r e qu e st, the sec ond and third administrative re views we re r escinde d with respec t to COFCO. Ce rta in Preserv ed Mushrooms From thePeople’ s Republic of China: Prelim. Results of New Shipper Rev iew and Prelim. Results and Partial Rescission of Second Antidumping Duty Admin. Re view ,Court No. 04- 00503 P age 6

6 7 Fe d
. R eg. 1 0 , 1 2 8 , 1 0 , 1 2 9 (M ar . 6 , 2 0 0 2 ) ( co v er i n g th e p er i o d Fe b ru ary 1 , 2 0 0 0 th ro u gh Janu ary 31 , 2 00 1) ; Certain Preserve d Mushrooms from the People ’s Republic of China: Notice of Partial Rescission of Ant idumping Duty Admin. Rev iew , 67 Fe d. Reg . 53,914, 53,914 ( A u g . 2 0 , 2 0 0 2 ) ( c o v e r i n g th e p e r i o d F e b r u ar y 1 , 2 0 0 1 th r o u g hJ anu ar

y 3 1 , 2 0 0 2 )
. A c c o r d i n g l y, the assessment r ate f

or entrie s of COFCO’ s mercha ndise made dur ing those time periods
rema ined at 0.00 per cent, the r ate de termined in the fir st administrative review
. B. The Four

th Administ rative Revie w Commerce c onducted the a dminist rative r eview at issue here , i.e. , th e fo ur th administrative re view, for entries of subject merc handise made by COFCO, amongothers, during the per iod Febr

uary 1, 2002 throug h J anuar

y 31, 2003 (“pe riod of re view” or “POR”). Prelim. Re su lts , 69 Fe d. Reg . at 10,412. Duringthe fourth a dminist rative r eview, in r esponse to the Depa rtment’s re quests for infor mation, COFCO re ported that Yu X ing, its af filiated produc er, supplied all subject merc handise that COF CO exported to the United States during the per iod of revie w, and COF CO provided Yu Xing ’s fa ctors-of -produc tion data. See , e.g. , Le tte r from W hite &Case to Sec’

y of Commerc e A1 6- A1 7, D1 -D 15 , E xs. D 1- D6 (M ay 30 , 2 00 3) (r e sp on din g to the Depa rtment’s questionnaire ) (Admin. R. Doc. N o. 41). Petitioner commented that Commerce should re quire COF CO to submit a full re sponse to Section A of the D epar tment’s questionnaire f

or ea ch of its af

filiates, including companies othe r than Yu X ing, to de termine which compa

nies aff iliated with COFCO should submit factors-of -produc tion data. Letter from Colli er Shannon Scott to Sec ’y of Comme rce7-10 (July 17, 2003) (c ommenting on COF CO’s questionnaire r esponse) (Admin. R. Doc. No. 56) . Commerce se nt COFCO supplemental qu e sti onna ir e s.Court No. 04- 00503 P age 7

In r e sp on se to t

hr e e su pp le me nta l qu e sti onna ir e s, CO F CO pr ov ide d Co mme rc e wi th inf or matio n o n c omp anie s th at Co mme rc e po te nti a lly c ou ld f ind to b e a ff ili a te d w ithCO F CO and also provide d fac tors-of- production data for c erta in of those companie s. Letter from W hite & Case to Sec’

y of Commerc e (Sept. 10, 2003) (r espondingto the first supplemental questionnaire ) (A dmi n. R. D oc . N o. 96 ); Letter from W hite &Case to Sec’

y of Commerc e (Nov. 10, 2003) (re sponding to the se cond supplementa l questionnaire) (Admin. R. Doc. No. 127) (“ Second Supplemental Re

sp. ” ); Letter from W

hite &Case to Sec’

y of Commerc e (De c. 8, 2003) (re sponding to the third suppleme ntal questionnaire) (Admin. R. Doc. No. 132) . Petitioner urg ed Comme rc e to t

re at a s a sin g le e nti ty

CO F CO ’s a ff

ili a te d p ro du c e rs and

e xpor te rs and to c a lc ulate
no rm a l va lue ba se d o n a

we ig hte d ave ra g e of

the fa c tor s- of

-p ro du c tio n d a ta

pe rt a ini ngto produce rs of subjec t mercha ndise with which COFCO w as af filiated. Letter from Coll ier Shannon Scott to Sec’

y of Commerc e (S e pt. 30 , 2 00 3) (c omm e nti ngon CO F CO ’s fi rs t
su pp le me nta l r e sp on se ) ( Ad min . R. Do c . N o. 10 9) ; se e als o Le tte r from Col lie r S ha nn on Sc ott

to Sec’ y of Commerc e (F eb. 2, 2004) ( commentingon COFCO’s f ourth supplemental re sponse) (Admin. R. Doc. No. 157)
. Commerce me t with counsel for pe titioner and COFCO dur ing D ece mber 2003 a nd Janu ary 20 04 to d e te rm ine wh e the r t o r e qu ir e a dd iti on a l pr od uc e rs a ff ili a te d w ithCO F CO to repor t fac tors-of- production data
. See Me m. to t heFi le(De c. 22, 2003) ( Admin. R. Doc. No . 1 37 ); Me m. to t

heFi le(D e c . 2 2, 20 03 ) ( Ad min . R. Do c . N o. 13 8) ; Me m. to t heFi le(Jan. 7, 2004) (Admin. R. Doc. N o. 145). Commerce subsequently issued a four

th supplemental questionnaire to COF CO in which Commerce “addr essed [COFCO’s] affiliations with other companies that sold and/or produce d prese rved mushrooms duringthe POR and reque stedCourt No. 04- 00503 P age 8

COFCO to provide f

actor s of produc tion data for those companies.” Pr e lim . R esu lts , 69 Fe d. Re g . at 10 ,4 11 ; see Le tte r from Se c ’y of C om me rc e to W

hite &Cas e 1-12 (Jan. 7, 2004) (Admin. R. Doc. No. 146) (“ Fo ur th S up ple me nta l Q ue

sti on na ire ”). Spec ifically , Commerce asked that COFCO provide f actor s-of-pr oduction data f or two additional produc ers, F ujian Z ishan and COF CO (Z hang zhou) Food Industrial Co., L td. (“Z hang zhou”). Fo ur th Su pp le me nta l Q ue

sti on na ireat 1, 11-12. COF CO responde d in J anuar y and F ebrua

ry 2004, providing reque sted information for both Fujian Z ishan and Z hang zhou. Pr e lim . R esu lts , 69 Fe d. Re g . at 10 ,4 11 ; Letter from W hite &Case to Sec’

y of Commerc e (Jan. 26, 2004) (Admin. R. Doc. No. 156) (“

Fo ur th S up ple me nta l R esp . P ar t I

” ); Letter from W

hite &Case to Sec’

y of Commerc e (F eb. 9, 2004) ( Admin. R. Doc. No. 167) ( “Fourth Supplemental Resp. Part II ”). Commerce issued a

preliminary

deter mination in the fourth administrative re view (“Pre liminary

Results”) in which Commerce conclude d that COFCO wa s aff iliated with three produce rs – Yu Xing , Fujian Z ishan, and Z hang zhou – and two other exporters – China National Cerea ls, Oils, & Foodstuff s I mport & Export Corp. (“China National”) a nd Xiamen Jiahua I mport & Export TradingCo., L td. (“Xiamen J iahua” ) – throug h common owner ship and common control. Pr e lim . R esu lts , 69 Fe d. Reg . at 10,413. Commerce cited COF CO’s “sig nificant owne rship share in Yu Xing ” and ide ntified China National as COF CO’s pare nt company and the e ntity

throug h which COF CO is affiliated with produc ers F ujian Z ishan and Z hang zhou and exporter Xiamen Jiahua. Id. Commerce f urther c oncluded that the thr ee aff iliated produce rs should be trea ted as a single entity
. Id. at 10,413-14. B eca use Z hang zhou did not produce pr ocesse d mushrooms in the same containe r sizes as those sold by COFCO in the United States, Commerce did not use Z hang zhou’s factors- of-pr oduction data in dete rmining theCourt No. 04- 00503 P age 9

no rm a l va lue of

CO F CO ’s me rc ha

nd ise . H ow e ve r, fo r i de nti c a l si zes of c ann e d mu shro oms produce d by

Yu Xingand F ujian Z ishan, Commerce weig ht-ave rag ed the f actor s of produc tion repor ted by Fujian Z ishan with those of Yu Xing
. See 4th Adm in. Revie w of the Antidumping Duty Orde r on Certain Preserve d Mushrooms from the People ’s Republic of China: Calculation Me m. for thePr e lim . R esu lts for

Chi na Proc esse d F

oo d I mp or t &Ex

po rt C o. ( “CO FCO ”) at 2-3 (Mar . 1, 2004) (Admin. R. Doc. N o. 192) (“ COFCO Calculation Mem. ” ); se e als o Prelim. Re su lts , 69 Fe d. Reg . at 10,420. Commerce used this approa ch eve n though a ll of the
merc handise e x ported by COFCO duringthe per iod of revie w was pr oduced by Yu Xing , not Fujian Z ishan. Commerce preliminarily deter mined a mar g in of 87.47 perc ent for COF CO. Pr e lim . R esu lts , 69 Fe d. Reg . at 10,422. Upon issuing the Pre liminary Results, Com merc e sent COF CO another supple mental questionnaire. See Le tte r from Se c ’y of C om me rc e to W

hite &Cas e (M ar. 5, 20 04 ) ( se tti ngfo rt h the fifth supplementa l questionnaire) (Admin. R. Doc. No. 193) . COFCO re sponded, providing additional data c oncer

ning its af

filiates. Letter from W

hite &Case to Sec’

y of Commerc e (Mar . 31, 2004) (r espondingto the fifth supplemental que stionnaire) ( Admin. R. Doc. No. 209). In the Fina l Results, C ommerce aff irmed its determination to treat COFCO and the thr ee produce rs – Yu Xing , Fujian Z ishan, and Z hang zhou – as a single entity and also a dded two exporters to that entity

– China National and X iamen Ji ahua. Fi na l R esu lts , 6 9 Fe d
. R eg. at 54,639. Commerce deter mined a mar g in of 3.92 perc ent for COF CO. Id. at 54,641. As it had in the Preliminary

Results, Com merc e used f actor s-of-pr oduction data of both Yu Xing and Fujian Z ishan in determiningthe normal va lue of COF CO’s merc handise. How ever , Commerce chang ed its method for c alculatingCOFCO’s nor mal value f

rom that used in the PreliminaryCourt No. 04- 00503 P age 10

Results. Agr eeingwith a comment of COF CO, Commerce f irst calculated the norma l value for
eac h product ba sed on the fa ctors of pr oduction at ea ch sepa rate fac ility

and then avera g ed the normal value s by

applying a

weig hting f

actor based on the total production quantity of ea ch product. Issues and De cision Mem. for the Final Re sults of t he Antidumping Duty New Shipper and Admin. Rev iews on Certain Preserved M ushrooms from the People’ s Republic of China – Feb. 1, 2002, through Jan. 31, 2003 , Comment 2 (“ Dec ision Mem. ”). On Octobe r 8, 2004, COFCO f iled a summons and complaint contestingthe Fina l Results. SeeCompl. ¶¶ 12-15. Plaintiff moves pursuant to USCI T Rule 56.2 for judg ment upon the ag ency

rec ord. SeePl.’s Rul e 56.2 Mot. for J. upon the Ag ency R. 1-2; COFCO’s Mem. of P. & A. 1. II. D I S CUS S I ON Th e c ourt ha s juri sd ic tio n o ve r C OF CO ’s c a us e of a c tio n p ur su ant t o 2 8 U .S. C. § 1 58 1( c ). 28 U. S.C. § 1 58 1( c ) ( 20 00 ); se e als o Compl. 1. C OFCO timely broug ht suit pursuant to 19 U.S.C § 1516a(a)( 2)(A) (i) to contest the F inal Results. 19 U.S.C § 1516a(a )(2) (A) ( 2000). COFCO has standingto do so beca use it is an exporter of the subjec t mercha ndise that participated in the administrative re view proc eedingbefor e Commerce
. Id. ; seeCompl. 1-2. The court re views the F inal Results accor ding to 19 U.S.C. § 1516a(b) (1)( B) (i), which r equire s the court to “hold unlaw ful any deter mination, finding, or c onclusion found . . . in an ac tion broug ht under [19 U.S.C. § 1516a(a) (2)], to be unsupported by substantial evidence on the re cord, or otherwise not in ac corda

nce w ith law.” 19 U.S.C. § 1516a(b) (1)( B)
. Plaintiff’s challeng e to the F inal Results arose fr om the Depa rtment’s application in the fourth administrative r eview, but not in the investig ation or in a prior administrative re view, of aCourt No. 04- 00503 P age 11

proce dure to whic h Commerce ha s ref err ed as “ collapsing .” Althoug h plaintiff’s complaint set fo rt h tw o c la ims re late d to the a pp lic atio n o f t

he “ c oll a ps ing ” me tho do logy , p la int if f, in i ts motion for judgme nt upon the ag ency rec ord, limited its arg uments to the second c laim. See Compl. ¶¶ 12-15; COFCO’s Me m. of P. & A. 1 & n.1. Be low, the cour t first descr ibes the Depa rtment’s “c ollapsing” regulation, 19 C.F.R. § 351.401(f), to provide the nec essar y background for

the discussion of plaintiff’s c laims. See19 C.F.R. § 351.401(f) (2004). The
c ourt the n a dd re sse s th e c on se qu e nc e s o f p la int if f’ s a ba nd onme nt o f i ts f

ir st c la im, wh ic h c la im had cha lleng ed ce rtain fa ctual finding s and dete rminations supporting the a pplication of the De pa rtme nt’ s “ c oll a

ps ing ” me tho do logy . F ina lly , th e c ourt a dd re sse s p la int if

f’ s se c on d c la im, which cla im is t he basis for plaintiff’s motion for judg ment upon the ag ency rec ord. Un de r t he pr oc e dure se t f

or th i n th e De pa

rtme nt’ s r e g ulatio ns , Co mme rc e in s ome
c ir c ums tanc e s w ill “ c oll a ps e ” a pr od uc e r o f s ub

je c t me rc ha

nd ise and pr od uc e rs a ff ili a te d w ith that produce r, i.e. , treat the produce r and its af filiated produc ers a s a sing le entity , in an antidumping duty

investigation or review
. See id. § 3 51 .4 01 (f )( 1) . Sp e c if

ic a lly , und e r 1 9 C. F .R. § 351.401(f) (1), “ the Secr etar y will treat two or more aff iliated produce rs as a

single entity

wher e those produce rs have production fa cilities for similar or identica l products that would not require substantial retooling of either fac ility in order to r estructur e manuf actur ing pr iorities and the Secre tary conclude s that there is a

signific ant potential for the manipulation of price or production.” Id. Th e De pa rtme nt’ s r e g ulatio n o n c oll a ps ingfu rt he r p ro vid e s th a t: [i ]n i dentifying a

signific ant potential for the manipulation of price or produc tion, the fa ctors the Sec reta

ry may consider inc lude: (i) The level of c ommon ownership; (ii) The e x tent to which manag eria l employ ees or board me mbers of one firm sit on the board of dire ctors of a n aff iliated firm; andCourt No. 04- 00503 P age 12

In rele vant par

t, 19 U.S.C. § 1677(33) defines “ aff iliated persons,” stating that 2 [t ]he following pe rsons shall be conside red to be “af filiated” or

“af filiated persons” :

... (E ) Any

pe rs on dir e c tly or ind ir e c tly

ow nin g , c on tr oll ing , o r h old ingwi th power to vote, 5 perc ent or more of the outstandingvoting stock or share s of any org anization and such org anization. (F ) Two or

more pe rsons direc tly

or indirec tly

controlling , controlled by , or under c ommon control with, any person. (G) Any person who c ontrols any other pe rson and suc h other pe rson. 19 U. S.C. § 1 67 7( 33 )( E) -( G) (2 00 0) . T he se c tio n f ur the r p ro vid e s th a t “ [f]o r p ur po se s o f t his para g raph, a

person sha ll be considere d to control another person if the person is leg ally or operationally

in a position to ex erc ise restra int or direction over the other pe rson.” Id. § 1677(33).

(iii) Whether oper ations are intertwined, such a s throug h the sharingof sales information, involvement in production and pr icing decisions, the shar ing of fac iliti es or e mploy ees, or signific ant transa ctions betwee n the af filiated pr od uc e rs . Id. § 3 51 .4 01 (f

)( 2) . In th e fo ur

th a dmi nis tr a tiv e re vie w, Comme rc e “ c oll a ps e d” CO F CO wi th Chinese produc ers, a

nd also with Chinese exporters, of the subjec t mercha ndise. Fi na l R esu lts , 69 Fe d. Reg . at 54,639. Commerce deter mined COFCO to be a ffiliated with these other produce rs and e x porters, a deter mination that COFCO did not contest in the administrative revie w and doe s not challeng e bef ore the court. See id. In making the deter mination that COFCO and the various produc ers a nd other e x porters w ere aff iliated for pur

poses of the antidumping law s, Commerce a pplied criter ia set for

th in 19 U.S.C . § 1677(33) ( 2000). See id. ; 2 Pr e lim . R esu lts , 69 Fe d. Reg . at 10,413-14. The re g ulation on collapsing does not expressly limit the use of the collapsing
m e th o d o l o g y

t o an t i d u mp i n g c a s e s i n v o l v i n g m e r c h an d i s e f r o mm ar k e te c o n o m y

c o un tr i e s . In fa c t, C omm e rc e ha s a

pp lie d th e c oll a

ps ingre g ulatio n to me rc ha nd ise fr om n onmark e t e c on omyCourt No. 04- 00503 P age 13

As sp e c if

ie d b y the statut e , th e no n- e xha us tiv e lis t of

fa c tor s o f p ro du c tio n s ub je c t to 3 valuation includes the hour s of labor r equire d to produce the merc handise, the qua ntities of raw materia ls used, the amount of e nergy and other utilit ies consumed in the pr oduction proce ss, and any repr esentative capital c ost, including de prec iation. 19 U.S.C. § 1677b(c)(3) (2000). In the fourth a dminist rative r eview, Commerc e chose India as the “ surrog ate” marke t 4 economy country for pur poses of va luing the f

actor s of produc tion. Pr e lim . R esu lts , 6 9 Fe d
. R eg. at 10,420. countries e ven thoug h the method for de termining normal value in a nonmarke t economy country is s ub sta nti a lly dif fe re nt f ro m th e me tho d a

pp lie d to me rc ha

nd ise fr om a

mark e t e c on omy country . See , e.g. , Hontex E nters., Inc. v . United States , 27 CI T 272, 288-97, 248 F . Supp. 2d 1323, 1337-44 (2003) (compa ringthe application of the collapsingmethodology in market a

nd
no nma rk e t e c on omy

c a se s) . I f t

he su bje c t me rc ha

nd ise is p ro du c e d in

and e xpor te d f ro m a country that Commerce c onsiders to be a nonmarke t economy

country , such as China, Commerc e usually calc ulates the norma l value of the subject merc handise a ccor ding to a fac tors-ofproduction method spec ified by statute. See19 U.S.C. § 1677b(c)(1) (2000). Unde r this method, the Depa rtment identifies and qua

ntifies the fa ctors of pr oduction utiliz ed in produc ing the 3 subject merc handise. Id. § 1677b(c) (1), ( 3)-( 4). The D epar tment then deter

mines values for these fa ctors base d on the best ava ilable information per taining to a

marke t economy

country that is at a leve l of ec onomic development c ompara ble to that of the nonmar

ket ec onomy

country and that is a signif

icant produc er of

either the subject merc handise or c ompara ble merc handise. See 4 id. § 1 67 7b (c )( 4) . Sp e c if ic a lly , th e statut e pr ov ide s th a t w he re the su bje c t me rc ha

nd ise is exported from a nonma

rket e conomy

country and Commerce finds (as it did in this case) that available information does not per mit normal value to be de termined a ccor ding to the usua l method as provided in 19 U.S.C. § 1677b(a) , “the a dminist eringauthority shall determine theCourt No. 04- 00503 P age 14

normal value of the subjec t mercha ndise on the basis of the va lue of the f actor s of produc tion utiliz ed in produc ing the merc handise a nd to which shall be a dded an a mount for g ener al expenses and prof

it plus t he cost of c ontainers, c overing s, and other e x penses.” Id. § 1677b(c) (1). Unle ss Comm erc e finds that ava ilable information is inadequate for doingso (a finding Commerce did not make in this case), Commerc e is to value the f actor s of produc tion ba se d o n th e be st a

va ila ble inf or matio n r e g ard ingthe va lue s o f s uc h f a c tor s in the surr og a te
c ountr y or c ountr ie s th at Co mme rc e c ho os e s ( i.e. , in this case, India). See id. § 1677b(c) (1)- (2); Pr e lim . R esu lts , 69 Fe d. Reg . at 10,420. In the fourth a dminist rative r eview, Commerc e invoked its collapsingauthority under 19 C.F.R. § 351.401(f) in determiningthe normal va lue of COF CO’s exports of subject
merc handise a ccor ding to f actor -of- production data

perta ining to two Chinese mushroom produce rs, Yu Xingand F ujian Z ishan. See Pr e lim . R esu lts , 69 Fe d. Reg . at 10,413-14, 10,420; COFCO Calculation Mem. 2-3. Commerce did so even thoug h COFCO re ported (a nd Commerce f

ound) that all subject mer chandise that COFCO exported to the United States mar ket duringthe per iod of revie w was pr oduced by Yu Xing
. See Pr e lim . R esu lts , 6 9 Fe d
. R eg.
a t 10 ,4 13 ; Dec ision Mem . at 11 -1 2. Mo re br oa dly , Co mme rc e a pp lie d it s c oll a

ps ingme tho d in the Fina l Results i n decidingto treat COF CO and its two affiliated e x porters, China Na tional and X i am e nJ i ahu a , an d

p r o d u c e r s Y uX i n g , F u

j i anZ i s h an , an d

Z h an g z h o u , a s a

s i n g l e e n t i ty,
su bje c tin g CO F CO and

the c omp anie s a ff

ili a te d w ithCO F CO to C OF CO ’s anti dumpi ngduty rate . Fi na l R esu lts , 69 Fe d. Reg . at 54,639, 54,641. Up on a pp lyingthe c ri te ri a

of 19 C.F .R. § 3 51 .4 01 (f

), Comme rc e c on c lud e d th a t “ the fi rs t and sec ond collapsingcriter ia ar e met her e bec ause [Yu Xing , Fujian Z ishan, and Z hang zhou] areCourt No. 04- 00503 P age 15

aff iliated . . . and all have production fa cilities for produc ing similar or identical produc ts that would not require substantial retooling in order to r estructur e manuf actur ing pr iorities . . . .” Pr e lim . R esu lts , 6 9 Fe d
. R eg. at1 0 , 4 1 4 (c i t i n g Fourth Supplemental Resp. Part II ). Commerce conclude d that “the third c ollapsing c riterion is met in this case be cause a sig nificant potential for manipulation of price or produc tion ex ists among [Yu Xing , Fujian Z ishan, and Z hang zhou] ” due to common ownership, common contr ol throug h a common member of the boa

rd of dire ctors and
a g e ne ra l ma

na g e r s ha re d b y tw o o f t he c omp anie s, and

op e ra tio ns fo un d to be “ su ff

ic ie ntl y intertwined.” Id. at 10,413-14. On the issue of “suf ficiently intertwined” operations, Com merc e found that “COF CO has shifted its source of supply amongthese a ffiliates.” Id. at 10,414. Commerce e x plained that it used F ujian Z ishan’s fa ctors-of -produc tion data duringthe investigation to determine COFCO’ s dumping mar g in and “that dur ing the POR Fujian Z ishan
su pp lie d p re se rv e d mu shro oms to X iame n Jiahu a , a nd Yu Xi ngsu pp lie d p re se rv e d mu shro oms to COFCO . . . .” Id. (c i t i n g Fourth Supplemental Resp. Part II , Ex . 1 and Second Supple mental Resp. at 4). In the Fina l Results, C ommerce aff irmed its conclusions reg ardingcollapsingof the
a ff ili a te d p ro du c e rs and

inc lud e d th e tw o a ff

ili a te d e xpor

te rs in t he c oll a ps e d e nti ty . “ We n ote that our rationale for c ollapsing, i.e. , to preve nt manipulation of price a nd/or production, applies to both producer s and exporters, if the f acts indicate that produc ers of like merc handise a

re aff iliated as a r esult of their mutual re lationship with an ex porter.” Fi na l R esu lts , 6 9 Fe d
. R eg. at 54,639. In it s c omp la int , p la int if

f a lle g e s a s it s f

ir st c la im that “ [t]he De pa rtme nt’ s f ind ing s, deter minations, and conclusion that Yu Xing , Fujian Z ishan, and [Z hang zhou] had produc tion fac iliti es for

producingsimil ar or

identical produc ts that would not require substantial re toolingCourt No. 04- 00503 P age 16

in order to r estructur e manuf actur ing pr iorities, were not supported by substantial evidence
and /or oth e rw ise no t in

a c c or da nc e wi th l aw. ” Com

pl. ¶ 1 3. As state d p re vio us ly , CO F CO
e xpre ssl y de c lin e d to purs ue thi s c la im i n mo vin g fo r j ud g me nt u po n th e a g e nc y

re c or d, statin g in its me mor and

um i n s up po rt

of its mot ion

that it “ ha s d ro pp e d o ne of

the iss ue s p re vio us ly ide nti fi e d” and

that “ [t]he Rul e 56 .2 (c ) s tate me nt t he re fo re su

pe rs e de s th e State me nt o f C la ims fi le d e arl ie r. ” CO F CO ’s Me m. o f P . & A. 1 n .1 . B e c a us e pla int if

f d id n ot i nc lud e its fi rs t c la im in i ts m oti on

fo r j ud g me nt u

po n th e a g e nc y

re c or d, that c la im i s n ot b e fo re the c ourt . The Court of International Trade previously has addr essed the g ener al issue of whe ther Commerce ma

y deter mine normal value acc ordingto 19 U.S.C. § 1677b(c)(1) on the basis of the
va lue of fa c tor s o f p ro du c tio n th at pe rt a ine d to an a ff ili a te d p ro du c e r t

hat di d n ot a c tua lly pr od uc e the su bje c t me rc ha

nd ise e xpor

te d to the Un ite d St a te s b ut t hat Co mme rc e c oll a

ps e d w ith the ac tual produce r. See A nshan Iron &Steel Co. v. United States , 27 CI T 1234, 1254 (2003) (conc luding that no languag e in the statute supports the pr oposition t hat Commerce must ex clude from the c alculation of nor mal value the f

actor s of produc tion of non-exporting subsidiaries that manufa cture d the subject mer chandise duringthe per iod of investigation). The De partment’s method of dete rmining the normal value of COFCO’ s mercha ndise in the fourth a dminist rative revie w appe ars to be similar to the method that wa s at issue in Anshan Iron &Steel Co. See id. at 1254-55. How ever , the cour t will not address the issue of whe ther the D epar tment’s
me tho d o f d e te rm ini ngno rm a l va lue on the re c or d o f t

his c a se wa s c on sis te nt w ith19 U. S.C. § 1677b(c) and re lated provisions bec ause COF CO has not raised this issue in moving f or jud g me nt u

po n th e a g e nc y

re c or d. CO F CO ’s me mor and um i n s up po rt

of its mot ion

make s p la inCourt No. 04- 00503 P age 17

that COFCO is not challeng ing on the merits the method by which Commerce calc ulated the normal value of its mercha ndise. SeeCOFCO’s Me m. of P. & A. 1 & n.1. Un de r U SCI T Ru le 56 .2 (c ), a pa rt y mov ingfo r j ud g me nt u

po n th e a g e nc y

re c or d mu st state in its brief the issues of la w pre sented tog ether

with the rea sons for conte sting or suppor ting the a dmi nis tr ativ e de te rm inatio n. USC I T R. 56 .2 (c ). No wh e re in p la int if f’ s me mor and

um i n support of its motion for judgment upon the a g ency rec ord does the c ourt find any argument by plaintiff that the De partment’s me thod of deter mining norma l value in the four th administrative revie w was imper

missibl e ac cordingto 19 U.S.C. § 1677b(c) and r elated pr ovisions of the antidumping law s. In abandoningthe first cla im set forth in its complaint, C OFCO sig nifies that it is no l ong er c halleng ing the Depa rtment’s finding , pursuant to 19 C.F.R. § 351.401(f) , that Yu Xi ngand F uji an Z ish an h a d p ro du c tio n f a c ili tie s f or pr od uc ingsim ila

r o r i de nti c a l pr od

uc ts that would not require substantial retooling in order to r estructur e manuf actur ing pr iorities, a finding that was a

basis for the D epar

tment’s decision to deter

mine normal value based on fac tors-of- production data of both Yu Xingand F ujian Z ishan. COFCO conf

ined its Rule 56.2 moti on to the second c laim in its complaint, which is that “[t] he De partment’s de cision to impl ement a ne w normal va lue ca lculation methodology that
cre ated dumpingmarg ins for merc handise that a lrea dy had ente red the United States when Pla int if f C hin a Pr oc e sse d h a d r e lie d o n th e De pa rtme nt’ s p re vio us me tho do logy in o rd e r t o avo id just such an outcome is unre asonable , inequitable, an a buse of discr etion, and not in acc ordanc e with law.” Compl. ¶ 15. COFCO pur sues this claim in seekingrelief under Rule 56.2, a

rguing that Commerce, in a

pplying r etroa ctively

a new methodology

for c alculatingnormal value , un fa ir ly pe na lize d CO F CO , w hic h h a d d e tr ime nta lly re lie d o n th e old

me tho do logy

to a vo idCourt No. 04- 00503 P age 18

selling subjec t mercha

ndise in the United States at less than f air va lue. COFCO’ s Mem. of P. & A. 10. Relying on Shikoku Chem icals Corp. v. United States , 16 CI T 382, 795 F. Supp. 417 (1992), a nd IPSCO, Inc . v. United States , 12 CI T 359, 687 F. Supp. 614 (1988) , COFCO ar g ues that it was unfair

of Commerce to chang e its methodology for c alculatingnormal value when the fac ts had not chang ed and when COF CO had re lied on the old methodology , i.e. , a m et h o d o l o gy that did not employ

collapsing , in exporti ng subject merc handise to the United States. COF CO’s Mem. of P. & A . 10-11, 15. As re lie f, CO F CO se e ks a c ourt or de r r e mand ingthe F ina l Re su lts to C omm e rc e “ wi th instructions (1) to ca lculate the nor mal value of

COFCO’s sa les of subjec t mercha ndise during the fo ur th a dmi nis tr ativ e re vie w p e ri od us ingon ly

the fa c tor

data of Yu Xi ng , a nd (2 ) t o implement only

prospec tively

its new methodolog y .” Id. at 15. B y seekingrelief

under which the c ourt wo uld dir e c t Co mme rc e to i mpl e me nt t he c oll a ps ingme tho do logy

“ on ly prospec tively ,” COF CO sugg ests that it views as lawf ul the method by

which Commerce deter mined normal value , i.e. , by using f actor s-of-pr oduction data of both Yu Xing and F ujian Z ishan eve n though only

Yu Xingproduce d the subject mer chandise that COFCO exported to the United States marke t during the per iod of revie w. See id. ; se e als o Reply Br . in Furthe r Supp. of COFCO’s Mot. for

J . upon the Ag ency

R. 1 (“re iteratingat the outset that COFCO is not
c ha lle ng ingComme rc e ’s a ff ili atio n d e te rm inatio n in

the un de rl yingpr oc e e din g . N or is C OF CO challeng ing Commerc e’s a uthority to collapse COF CO and its affiliated pr oducer s in future administrative re views for purposes of c alculatingthe appr opriate a ntidumping duty

marg in.”) (“COF CO’s Reply ”). COFCO objec ts only to what it char acte rizes as a re troac tive application of
a ne w m e tho do logy

that, i f a pp lie d p ro sp e c tiv e ly , w ou ld h ave be e n a c c e pta ble . CO F CO ’s Me m.Court No. 04- 00503 P age 19

of P. & A. 15 . A c c or din g to p la int if f, “ in t he fa c e of y e ars of a c c e pta nc e of [the De pa

rtme nt’ s] prior appr oach, Commerc e may not implement a new methodolog ical cha ng e re troac tively .” Id
. at 14. When applied in the four th administrative revie w, the collapsingproce dure w as, ac cording to COFCO, unfa ir bec ause COF CO, desiringto avoid selling me rcha ndise in the United States at less than fa ir value, ha d relied on the Depa rtment’s pre vious methodology , which did not use the collapsingproce dure. Id. at 11-15. Rather than ra ise a substantive objec tion to the new
me tho do logy , CO F CO ’s re ma ini ngc la im t ake s is su e on ly wi th t he De pa rtme nt’ s d e c isi on

to d i s c o n t i nu e u s i n g th e o l d , n o n - c o l l a p s i n g m e th o d o l o g y. COFCO’s c hara cter ization of the chang e in the De partment’s me thod as “re troac tive” does not, by

itself, convince the cour

t that Comm erc e abuse d its discretion or otherw ise ac ted contra ry to law in decidingto discontinue using its previous method. Antidumping duties are administered a ccor ding to a retrospe ctive, re medial duty assessment sy stem. The Court of International Trade has obser ved pre viously

that “[t] he abse nce of

cer tainty reg ardingthe dumping mar g ins and final asse ssment of antidumping duties is a c hara cter istic of the retrospe ctive sy stem of administrative re views desig ned by Congr ess.” Abitibi-Consol . Inc. v

. United States , 3 0 CI T _

_, __ , 4 37 F . Su

pp . 2 d 1 35 2, 13 61 (2 00 6) . Re tr oa c tiv ity is i nh e re nt i n this sy stem in that the Depa rtment’s dete rminations made duringthe administrative re view
nece ssarily

apply to mercha

ndise previously

exported from the produc ing c ountry and ente red into the United States. Even if COF CO relied to its detriment on the continuation of the method
a pp lie d in the inv e sti g atio n a

nd the fi rs t a dmi nis tr a tiv e re vie w ( a s it c la ims ), that r e lia

nc e is n ot, by its e lf , s uf fi c ie nt t o e nti tle CO F CO to r e lie f t hat w ou ld r e ve rs e the De pa rtme nt’ s d e c isi on

in the fourth a dminist rative r eview to de part fr om that method, under the r etrospec tive statutoryCourt No. 04- 00503 P age 20

In administrative re views conduc ted under 19 U.S.C. § 1675(a), “ the Secr etar y will treat 5 a s demi nim is any

we ig hte d- ave ra g e dumpi ngmarg in o r c ounte rv a ila ble su bs idy ra te that is le ss tha n 0 .5 pe rc e nt ad valorem , or the e quivalent spec ific rate.” 19 C.F .R. § 351.106(c)( 1) (2004)
. scheme . Commerce invoke d its collapsing pr ocedur e in the four th administrative revie w af ter making cer

tain finding s of fa ct that it did not make on the re cord of the investig ation or the
rec ord of the f

irst administrative revie w and did not have occa sion to make in the second a nd third administrative revie ws, which did not include a revie w of COF CO’s sales. Commerc e proce eded w ith its collapsinganaly sis, invoking a pr ocedur e that it had esta blished previously

by regulation, on the basis of those finding s of fa ct and on the ba sis of conclusions of law, which finding s and conc lusions C OFCO ha s declined to c halleng e in moving f or judg ment upon the ag ency rec ord. The c ourt disag ree s with plaintiff’s argument that the cour t, based on guidance drawn from the holdingof the Court of International Trade in Shikoku , should conclude that Comm erc e
a bu se d it s d isc re tio n a

nd a c te d unr e a so na

bly by de c idi ngto d e pa

rt fr om a me tho do logy

that it had employ ed pre viously and on which COF CO had re lied. SeeCOFCO’s Me m. of P. & A. 13 -1 5; Shikoku , 16 CI T 382, 795 F. Supp. 417. The c ourt conc ludes that the fa cts and circ umstances of Shikoku differ in material re spects fr om those g iving r ise to this case. In Shikoku , Co mme rc e e sta bli sh e d a dumpi ngmarg in o f 9 .6 6 p e rc e nt f or the pla int if

fs ’ sales of dic hloro isocy anurates (“D CA”) in the f irst administrative revie w of a n antidumping duty order on cy anuric acid a

nd its chlorinated der ivatives, DCA and tric hloro isocy anuric acid, from Japan. 16 CI T at 383, 795 F . Supp. at 418. For pla intiffs’ sales of DCA, Commerce deter mined a demi nim is marg in in the second a dminist rative r eview a nd assig ned mar g ins of 5 zero for the third and four th administrative revie ws. Id. As discussed in Shikoku , theCourt No. 04- 00503 P age 21

Depa rtment’s re g ulations, 19 C.F.R. § 353.25(b)(1) (1991), a llowed Commerce to revoke the “a n t i d u mp i n g d u ty o rd er i f t h e s u b j ec tm er ch an d i s e h a[ d ] n o tb ee ns o l d atl es s th an fo re i gn marke t value for

three y ear s subsequent to the publication of the or der.” Id. at 3 84 n. 4, 79 5 F. Supp. at 418 n.4. I n the fifth and sixth admini strative re views, howe ver, Commerc e cha ng ed the
me tho do logy

that it ha d u se d in

the inv e sti g a tio n a

nd in t he fi rs t f our a dmi nis tr a tiv e re vie ws in calc ulating a

deduction fr om home marke t value for cer tain expenses that plaintiff Shikoku incurre d when r epac kag ing D CA from a granula r for m suitable for e x port to a for m suitable for home marke t sale. Id. at 38 3- 84 , 7 95 F . Su pp . at 41 8. Comme rc e de te rm ine d a nti dumpi ngduty marg ins of 0.81 and 0.91 per cent f or plaintiffs’ sa les of DCA in the fif th and six th administrative
re vie ws , r e sp e c tiv e ly , a

nd re fu se d p la int if

fs ’ r e qu e st t o r e vo ke the anti dumpi ngduty or de r a s to DCA. Id. By

chang ing its methodolog y , Commerce attempted to eliminate from the c alculation of the re packa g ing de duction cer tain labor e x penses that we re dire ctly attributable to making tablets and to tablet re packa g ing, r ecognizi ng that plaintiffs exported chlorinate d derivative products to the United States only in gr anular , not tablet, form. Id. at 384-86, 795 F . Supp. at 418-20. The plaintiffs in Shikoku argue d th a t th e ne w m e tho do logy wa s r if e wi th inconsistencies a

nd err ors and did not re sult in a more ac curate ca lculation of the re packa g ing deduction than the pr evious method. Id. Th e y argue d, fu

rt he r, that th e y

ha d b e e n unf

a ir ly penalized bec ause Commerc e applied the new methodolog y retroa ctively

in spite of their re liance on the old methodology
. Id. at 386-88, 795 F . Supp. at 420-22. The Court of International Trade in Shikoku explained that the g overnme nt had not
c le arl y de mon str ate d th at th e ne w m e tho do logy wa s a n im pr ov e me nt o ve r t

he old but th a t “ it appea rs that expenses of makingtablets wer e sig nificant so it is likely that there was a

marg inalCourt No. 04- 00503 P age 22

incre ase in a ccur acy .” Id. at 386, 795 F. Supp. at 420. The Court also found that plaintiffs had demonstrated the ir relianc e on the old methodolog y by adjusting the ir pricingacc ording ly
. Id. The Court re asoned that “[i] t [ wa]s simpl y too late to mandate a

nother thre e y ear s of
a dm i n i s tr a t i v e r e v i e w s b e c a u s e o f a l a s tm i nu t e ‘ i mp r o v e m e n t ’ i nC o m m e r c e ’ s m e th o d o l o g y” and that “[p]lainti ffs’ r eliance , the uncha ng ed fa ct patter

n, and the lac k of discover y of sig nificant
e rr or le a d th e c ourt

to c on c lud e that Co mme rc e did no t ha ve a de qu a te re a so ns fo r i ts l a st m inute chang e in methodolog y .” Id. at 388, 795 F. Supp. at 422. The Court concluded that “Commerce
a bu se d it s d isc re tio n a

nd a c te d unr e a so na

bly in c ha ng ingits
. . . me tho do logy . . . in the late st revie ws, there by

preve nting [Shikoku] from qualify ing f or consider ation for r evocation.” Id. at 388-89, 795 F . Supp. at 422. COFCO, unlike the plaintiffs in Shikoku , declined to c halleng e on the mer its a new methodology

employ ed by

the Depa rtment. This is significa

nt beca use the re asoningin Shikoku depende d in part on the Court’s c onclusions, rea ched ba sed on plaintiffs’ ha ving c halleng ed the new methodolog y

on the merits, that the g overnme nt had not clea rly demonstrated that the new methodology

was a n improvement and that the new methodolog y yielded what appea

red to be only a mar g inal incre ase in a ccur acy over the old methodology , conce rningwhich no sig nificant
err or had be en discove red. In this case, the c ourt dec lines to reac h a conc lusion on the issue of the re lativ e me ri ts o f t

he old and ne w m e tho do log ie s b e c a us e pla int if

f d e c ide d n ot t o ma

ke thi s issue the basis of its motion for judgme nt upon the ag ency rec ord. Mo re ov e r, CO F CO did

no t ha ve a ba sis fo r r e lia

nc e e qu iva le nt t o th a t f

ound to e xist in Shikoku , in which the pre vious methodology had bee n used, without chang e, in the investig ation and in ea ch of the first four a dminist rative r eviews. I n Shikoku , afte r assig ning pla intiffs zeroCourt No. 04- 00503 P age 23

marg ins in the third and fourth administrative r eviews, Commerc e assig ned plaintiffs mar g ins above the demi nim is l ev el i nth e f i ft han d s i x thad m i n i s tra t i v e r ev i ew s af t er m ak i n g th e c h an ge in methodology . In contra st, prior to the fourth a dminist rative r eview at issue in this case , Comme rc e c a lc ulate d ma rg ins fo r C OF CO on ly

in t he inv e sti g a tio n a

nd in t he fi rs t administrative re view. As discussed pr eviously , Commerce r escinde d the sec ond and third
a dmi nis tr a tiv e re vie ws a s to CO F CO up on the wi thd

ra wa l of pe tit ion e r’ s r e qu e sts . CO F CO could have , but did not, request re view of its sales in the se cond and third a dminist rative r eviews. In Shikoku , Commerce e mploy ed a la st-minute chang e af ter a n investigation and four administrative re views, which c hang e likely (althoug h not definitely

) produc ed a ma

rg inal incre ase in a ccur acy

and had the result of pre cluding the opportunity for r evoca

tion of the antidumping duty

order . A similar basis for r eliance does not exist in this case. CO F CO a lso c ite s IP

SCO in support of its argument that retroa ctive application of the Depa rtment’s newmethodology was not fa ir in this case, whe re the fac ts had not chang ed and wher e COF CO had re lied on the old methodology
. See12 CI T at 378 n.27, 687 F . Supp. at 631 n.27. The pla intiffs in IP SCO claimed that the D epar

tment’s use of c erta in new methodologie s in a counter vailing duty

investigation unfairly

altere d plaintiffs’ counte rvailing duty liabiliti es re troac tively
. Id. The ne w methodolog ies at issue postdated the grants that resulted in the c ounterva iling duty investigation and wer e set for th in an appendix (“Subsidies Appendix”) that was not the subjec t of notice-a nd-comment rule making
. Id. at 378 & n.27, 687 F. Supp. at 630-31, 631 n.27. The IP SCO pla int if fs c la ime d p re

jud ic ia l r e lia

nc e on the old
me tho do log ie s, un de r whic h, the y a lle g e d, the y

wo uld no t ha ve inc ur re d c ounte rv a ili ngduty liability
. Id. at 378 n.27, 687 F. Supp. at 631 n.27. The y argued that re troac tive application ofCourt No. 04- 00503 P age 24

the new me thodologies, g iven their re liance, w as impermissible unless such application produced benef its outweighingthe re sulting pre judice. Id. The holdingin IP

SCO does not convince the cour t that COFCO is entitled to relief on the
rec ord of this ca se. The Court of International Trade held in IP SCO that one aspe ct of the ne w methodologie s established by the Subsidies Appendix , the use of a fiftee n-y ear

period for

the allocation of be nefits from g rants, wa s a leg islative rule that wa s not adopted followingthe notice-a nd-comment proc edure s that were require d by the Administrative Proce dure A ct (“A PA”), but that other a spects of the Subsidi es Appe ndix wer e exempt from the APA noticeand-c omment require ments beca use they wer e interpr etive rule s. Id. at 373-78, 687 F . Supp. at 626-31. The Court rejec ted the plaintiffs’ r etroa ctivity argument in a footnote, c oncluding that the plaintiffs fa iled to demonstrate a ctual pre judicial relianc e on the old methodolog ies that wer e in use prior to the De partment’s issuanc e of the Subsidi es Appe ndix
. Id. at 3 78 n. 27 , 6 87 F. Supp. at 631 n.27. The Court of International Trade in IP SCO did not further c onsider the plaintiffs’ re troac tivity

claim and thus did not, in formulating its holdi ng s in the case , decide the qu e sti on of wh e the r t he c ha ng e in m e tho do logy

wo uld have be e n im

pe rm iss ibl e on

re tr oa c tiv ity g rounds had pr ejudicial re liance be en demonstrated. In s up po rt

of its mot ion

fo r j ud g me nt u

po n th e a g e nc y

re c or d, pla int if

f a lso c ite s Fujian Machine ry and Equipment I mport &Export Corp. v. United States , 25 CI T 1150, 1169-70, 178 F. Supp. 2d 1305, 1327 (2001), a nd Slater Steels Corporation v. United States , 28 CI T 340, 345, 3 1 6 F. S u p p . 2 d 1 3 6 8 , 1 3 7 4 (2 0 0 4 ), fo r t h e p ri n ci p l e t h atan age n cy d i s ca rd i n g o n e m et h o d o l o gy in favor of

another must state clear ly

the g rounds for its depa

rture f rom prior norms. COF CO’s Mem. of P. & A . 11. Howeve r, plaintiff, in its memorandum in support of its Rule 56.2 motion,Court No. 04- 00503 P age 25

does not set forth a

n argument that Commerce, in the F inal Results, failed to state its rea sons for
a pp lyingin t

he fo ur th a dmi nis tr ativ e re vie w a c oll a ps ingana ly sis that it

did no t a pp ly pr e vio us ly to COFCO and its aff

iliates. Only

in its reply

brief, when attemptingto refute defe ndant’s
argume nt t

hat Shikoku is i na

pp os ite to t

his c a se , d id p la int if

f a rgue that Co mme rc e fa ile d to explain “its i mplied conclusion that the methodolog ical cha ng e in the under lying pr ocee ding w as either ne cessa

ry or better ” and that Comm erc e, in citing a potential for manipulation of price or production, “ha s cited no spec ific fa cts or re cord e vidence that actua l manipulation of price or production occ urre d.” COF CO’s Reply 3-4 (e ntitli ng the sec tion in it s reply brief c ontaining the above- quoted statement a s “The Court’ s Holding in Shikoku Chem . Corp. v. United States is Ap pli c a ble to t he Pr e se nt C a se ” ). Th e c ourt do e s n ot c on str

ue the qu ote d la

ngua g e a s a

n atte mpt , imp e rm iss ibl e or

oth e rw ise , to ra ise in a

re ply br ie f a ne w s ub sta

nti ve argume nt. In th e same reply brief, pla intiff stated explicitl y that it was dec lining to ra ise the substantive ar g ument discussed pre viously , “re iteratingat the outset that COFCO is not cha lleng ing Commerc e’s aff iliation determination in the underlying pr ocee ding. N or is COFCO cha lleng ing Commerc e’s authority to collapse COF CO and its affiliated pr oducer s in future a dminist rative r eviews f or purposes of c alculatingthe appr opriate a ntidumping duty

marg in.” Id. a t 1. Mo re ov e r, a s a lso discussed pre viously , plaintiff aba ndoned its claim in the complaint cha lleng ing the Depa rtment’s findingthat Yu Xing , Fujian Z ishan, and Z hang zhou had production fac iliti es for pr od uc ingsim ila

r o r i de nti c a l pr od

uc ts that w ou ld n ot r e qu ir e su bs tanti a l r e too lin g in o rd e r t o restruc ture manuf

actur ing pr iorities. SeeCOFCO’s Me m. of P. & A. 1 & n.1. L ater , in a supplemental brie f re sponding to a question of the cour

t conce rningthe issue of notice f

or a c hang e in methodolog y , plaintiff cha rac terized as “hollow” the Depa rtment’sCourt No. 04- 00503 P age 26

explanation that collapsing w as applied in the f ourth administrative re view to pre vent
manip ulatio n o f p ri c e or

pr od uc tio n, wh e n “ the c oll a

ps ingre g ulatio n a

nd the c a se -s pe c if

ic fa c ts rele vant to a findingof af filiation among COFCO’s r elated pr oducer s had not cha ng ed since the underlying inve stigation[ .]” China Processed F ood I mport and Export Com pany ’s Resp. to the Ct.’s May 11, 2006 Questions 7 (“COF CO’s Resp. to the Ct.’s Questions”). He re a g ain, plaintiff confine d its terse ar g ument to the issues of its reliance on the old methodology and the timing of the cha ng e rather than to the que stion of whether the new me thodology , reg ardle ss of when implemented, was in a ccor dance with the statute. “Without any expli cit rec og nition or warning that the standar d for c ollapsing ha d been c hang ed, or a ny attempt to disti ng uish or reje ct appar ently

inconsistent prec edent, Commerc e applied its collapsingregulation to COFCO’s aff iliated produce rs in the under lying pr ocee ding when it had neve r done so be fore .” Id. In its brief re sponding to the c ourt’s questions, plaintiff also cited United States v. Midwest Oil Company , 236 U.S. 459 (1915), for the principles that pa

rties ar e justified in relying on the law in conduc ting their business and that re peate d actions of the g overnme nt can de fine the meaningand applica

bility of a pa rticular statute or powe r. COFCO’ s Resp. to the Ct.’s Questions 4, 10. The Supreme Court in Midwest Oil Companyaff irmed the powe r of the Pr e sid e nt, a c tin g wi tho ut e xpre ss s tatut or y a uth or ity , to wi thd

ra w p ub lic land

that ot he rw ise would have be en open to pr ivate ac quisiti on, based on a long- standing prac tice under which numerous executive or ders ha d eff ecte d simil ar w ithdrawa ls. 236 U.S. at 469-74, 483. The analy sis of the prac tice addr essed in Midwest Oil Company– o ne that “ date [d] f ro m an e arl y period in the history

of the g overnme nt,” occ urre d over “ eig hty y ear s,” and involved hundr eds of order s – does not support, even r emotely , a conc lusion that COFCO, in the particular context ofCourt No. 04- 00503 P age 27

this case, may

obtain relief

on an expectation that Commerce would not make a c hang e in the
me tho do logy

it e mpl oye d in

the inv e sti g a tio n a

nd the fi rs t a dmi nis tr a tiv e re vie w. 23 6 U .S. at 469 (interna l quotation marks and citations omitted). In the same br ief, plaintiff a rgues that the De partment’s de parture from its ear lier methodology

was unfa ir, contra

ry to the principle, a ddresse d in MelamineChemicals, Inc . v. United States , 732 F.2d 924, 933 ( Fe d. Cir. 1984), and c ited in Budd Company v. U nited States , 14 CI T 595, 602, 746 F. Supp. 1093, 1099 (1990) , that Commerce ha s a duty to enforc e the antidumping law s fairly . COFCO’s Resp. to the Ct.’s Que stions 13-14. I n the portion of the opinion in Me lam ineChe mi c als to which plaintiff dire cts the cour t’s attention, the Court of Ap pe a ls f or the F e de ra l Cir c uit

he ld t hat Co mme rc e a c te d w ith in i ts s tatut or y a uth or ity in promulg ating and apply

ing a regulation under whic h Commerce disre g arde d antidumping marg ins caused sole ly

by volatile and tempora

ry exchang e rate fluctuations and allowed a 90-day la g pe ri od fo r c ur re nc y c onve rs ion

that a ff or de d a n e xpor te r a re a so na ble tim e pe ri od

to a dju st i ts price s to such fluctuations. 732 F.2d at 930-34. The holdingin Me lam ineChe mi c als , which turned on the br eadth of

Commerce’ s discretion in implementing the antidumping duty laws rathe r than limitations on C ommerce ’s authority to make cha

ng es in its methodologies, re sted on fac tual circ umstances a

nd issues of law dissimilar to those of this case
. Me lam ineChe mi c als do e s n ot s up po rt

a c on c lus ion

that pr inc ipl e s o f f

a ir ne ss r e qu ir e d Co mme rc e to c on tin ue to u se its
ear lier methodolog y

duringthe fourth a dminist rative r eview. No r i s Budd Companyinstructive on the re solution of the question presente d by COFCO’s sole c laim in this case . See14 CI T 595, 746 F. Supp. 1093. In Budd Company , the Court of International Trade considere d a cir cumstance -of- sale a djustment that Com merc e madeCourt No. 04- 00503 P age 28

in a n ame nd e d le ss- tha

n- fa ir -v a lue de te rm inatio n to a c c ount f or e xtre me e xch ang e rate fluctuations. See id. at 60 0- 07 , 7 46 F . Su pp . at 10 97 -1 10 3. Statin g the pr inc ipl e that “ fa ir ne ss i s the touchstone of Commerc e’s duty in enforc ing the antidumping law s[,] ” the Court explained that “ c ourt s w ill no t sa

nc tio n Co mme rc e ’s us e of c ir c ums tanc e of

sa le a dju stm e nts if

to d o s o would bringabout re sults which appea r to be e ntirely

absurd a nd unfair.” See id. at 6 02 , 7 46 F. Supp. at 1099 (internal quotation mar ks and citations omitted). The Court nonethe less held that the De pa rtme nt’ s u se of

the c ir c ums tanc e -o f- sa le a dju stm e nt i n th e de te rm inatio n w a s r e a so na ble and not a violation of the A PA’s require d proce dures f or notice a

nd public comment. See id. at 600-07, 746 F . Supp. at 1097-1103. Althoug h stating the g ener al principle of fairne ss in the administration of the antidumping laws that plaintiff ha s cited, Budd Companydoes not lend support to plaintiff’s spec ific ar g ument in this case. III . C ONCL US I ON For the re asons discussed a

bove, the c ourt reje cts plaintiff’s c laim that Comm erc e ac ted unfairly and abuse d its discretion in decidingto depar t from a method of

deter mining norma l value on whic h plaintiff asser ts that it relied. The c ourt there fore will deny plaintiff’s motion for judgme nt upon the ag ency rec ord. Unde r the a

uthority of USCI T R. 56.2(b), the c ourt will enter judgme nt dismi ssing this ac tion. SeeUSCI T R. 56.2(b) (a llowing the c ourt, in ruling on a motion for judgme nt upon the ag ency rec ord, to enter

judgme nt in favor of

an opposingparty

).
/s/ Timot hy

C. St ance u Timothy C. St ance u J u d ge Dated: J anuar

y 31, 2008 New Y ork, Ne w York