Slip Op. 10-85 UNITED STAT ES COURT OF INTERNATIONAL TRADE

--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- x CHANGZ HOU WUJ I

N FI NE CHEMI CAL : FACTORY CO., L TD. and JI ANGSU : J I ANGHA ICHEMI CAL GROUP, L TD., :

: Plaintiffs, : : v. : : Before: Judith M. Barzilay, Jud ge UNI TED STATES, : Consol. Court No. 09-00216 : P ubl ic Ver sion Def endant, : : and : : COMPASS CHEMI CAL : I NTERNATI ONAL , L L C, : : Def endant- I nterve nor. :

--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- x OP INION [The court sustains the U.S. Depa rtment of Commerce ’s Remand Results.] Dated: August 5, 2010 Riggle &Craven (

David J. Crave n ), for

Plaintiffs. Tony W est , Assistant Attorney

Gene ral; Jeanne

E. Davidson , Direc tor, Patricia M. McCa rthy , Assistant Director , Commercial L itigation B ranc h, Civil Division, United St ates De partment of J ustice ( Antonia R. Soares ); Ahran Kang McCloskey , Attorney-I nternational, Of Counsel, Off ice of the Chief Counsel for

Import Administration, United St ates De partment of Commerc e, for Def endant. Mondial Trade Compliance Servic es &Solutions Inc . ( Jeffrey S. Levin ), for Def endant- I nterve nor. Ba rzilay , J udg e: This case returns to the c ourt following a par tial remand of 1- Hydrox yethy lidene-1, 1-

Diphosphonic Acid from the Pe ople’s Re public of China: FinalConsol. Court No. 09-00216 P age 2

Determ ination of Sal es at Less Than Fair Value , 74 Fe d. Reg . 10,545 (De p’t Commerce Mar. 11, 2009) (“ Final Determination ”). O n rema nd, the cour

t instructed the U.S. Depa rtment of Commerce ( “Commerce ” or “ the Depa rtment”) to r econside r two aspe cts of its antidumping duty calc ulation: (1) “whe ther Commerc e cor roborated the adve rse f

acts available r ate upon whic h it relied in c alculatingthe sepa rate rate ” in its determination and ( 2) “whether Commerce use d the proper financ ial ratios and the pr oper sur rog ate va lue for Phosphorous Tr ichloride a nd steam in calc ulating the adver se fa cts ava ilable rate Commerce used as a basis for the se parate rate.” Changzhou W

ujin Fine Chem. Factory Co. v . United States , No. 09-00216 (CI T Fe b. 8, 2010) (orde ringpartial re mand of Final Determination ) (“ Remand O rder ”). On May 3, 2010, Commerce f

iled its remand re sults with t he Court. The D epar tment found that it could not corr oborate the orig inal adver se fa cts ava ilable (“ AFA ”) r ate use d to calc ulate the se parate rate, beca use the we ighte d-ave rag e United States pric e (“ U.S. price” ) of 1 the mandator

y responde nt had [[ not fallen ]] betwee n the investig ation’s preliminary

deter mination, 1-Hy droxye thylidene- 1, 1-Diphosphonic Ac id From the People ’s Republic of China: Preliminary De termination of Sales at L ess Than Fair Value and Postponement of Final Dete rmination , 73 Fe d. Reg . 62,470 (De p’t Commerce Oct. 21, 2008), and the Final Determination , while the mandatory responde nt’s weig hted-avera g e norma l value

Commerce pr esumes that all compa nies in a non-mar

ket ec onomy

opera te under 1 state-c ontrol. Howeve r, a c ompany that demonstrates de jure a nd de fa cto independe nce f rom g overnme nt control may

qualify for a “sepa rate rate ” fr om that of the country -wide r ate a ssessed ag ainst other firms ope ratingwithin the non-marke t economy

. Royal United Corp. v. United States , Slip Op. 10-71, 2010 Ct. I nt’l Trade L EXI S 73, at *3-4 n.3 (June 25, 2010).Consol. Court No. 09-00216 P age 3

[[ chang ed ]]

. Final Results of Redetermination Pursuant to Cour t Order , A-570-934 2 (De p’t Commerce Apr. 30, 2010) ( “Remand Re sults ”) at 2, 5. Consequently , Commerce calc ulated a r evised AF A rate base d upon the ave rag e unit value f rom a que stionnaire re sponse of BWA Water Additives U.S., L L C (“B WA”), a non- cooper ative, non-se lected r espondent fr om the investig ation. Id. at 6. Commerce adjusted this aver ag e unit value to ac count for a n industry

standard se ven per cent sa les commission deduction to produce the U.S. price. Id. I t subsequently

compar ed this price to the w eig hted-avera g e norma l value ca lculated f or the mandatory

responde nt, resulting in a new AF A rate of 30.94%. Id. Be cause the re vised AF A rate relied on infor

mation obtained duringthe investig ation, the Depa rtment deter

mined that it did not require c orrobor ation. Id. Commerce the n calc ulated a r evised sepa rate rate by

aver ag ing the re vised AF A rate and the zer o rate calc ulated for the mandator

y responde nt in the Final Determ ination , producinga rate of 15.47%. Id. at 7. 3 Plaintiffs Changzhou Wujin Fine Chemical F actor y Co., L td., and J iang su J iang hai Chemical Group Co., Ltd., (tog ether , “Plaintiffs”) c ontest the Remand Re sults on sever al g rounds. Fir st, they

claim that Commerce inappropriately rec alculate d the U.S. price , beca use no party challeng ed its acc urac y

duringthe administrative proc ess and be cause the Remand O rder

In the antidumping c ontext , the normal va lue of the subjec t mercha ndise is the price of 2 that merc handise a s sold for consumption in the exporting country at a time re asonably corr espondingto that of the sale of the merc handise in the United States. 19 U.S.C. § 1677b(a) (1)( A)-( B) (i). The antidumping duty marg in is the amount by

which the nor

mal value of the subjec t mercha

ndise exceeds its export price, i.e., U .S. price. Id. § 1673. Be cause the Depa

rtment ca lculated the r evised AF A rate using financ ial ratios and 3 surrog ate va lues for phosphor ous trichloride a nd steam diffe rent fr om those used to deter mine the orig inal rate , the Depa

rtment corr ectly

deter mined that it need not addr ess the sec ond issue in the Remand O rder

. Remand Re sults at 7-9.Consol. Court No. 09-00216 P age 4

“did not provide the D epar tment the leewa

y to rec onsider” the fig ure. Pls. Comments 4. Plaintiffs nex t assert that Commerc e improper ly adjusted B WA’s aver ag e unit value to ac count for a n industry -standar d seven pe rce nt commission, an adjustment that affe cted the va lue of the new U.S. pric e. Pls. Comm ents 6-7. F inally , Plaintiffs contend that the De partment a cted contra ry to law when it used only the ave rag e unit value of BWA to rec alculate the U.S. price

. Pls. C omments 7-13. For the re asons stated be low, Plaintiffs’ arguments fail.

I. S T A N D A R D O F RE V I E W The c ourt g rants “tr emendous de fer ence ” to Commerce ’s final a ntidumping deter minations due to the “tec hnical” a nd “complex” ec onomic and ac counting decisions involved, for whic h the Depa rtment “possess[es] far g reater e x pertise than [the Court].” Fujitsu Gen. Ltd. v. United States , 88 F.3d 1034, 1039 ( Fe d. Cir. 1996) (quotation marks & citation omitted); accord Thai Pineapple Pub. Co. v. U nited States , 187 F.3d 1362, 1367 ( Fe d. Cir. 1999). The c ourt only

will dist urb a de termination “unsupporte d by substantial evidence on the

rec ord, or other

wise not in acc ordanc e with law.” 19 U.S.C. § 1516a(b)(1) (B )(i). Substantial evidence on the re cord c onstitut es “le ss than a pre pondera nce, but more than a scintilla.” Novosteel SA v . United States , 25 CI T 2, 6, 128 F. Supp. 2d 720, 725 (2001) (quotation marks & citation omitted), aff’d , 284 F.3d 1261 ( Fe d. Cir. 2002). The r equisite proof amounts to “such re levant evide nce a s a re asonable mind might acc ept as a dequate to support a conclusion” in lig ht of the entire rec ord, including“whatever fairly detra cts from the substantiality

of the e vidence .” Atl. Sugar, Lt d. v. United States , 744 F.2d 1556, 1562 ( Fe d. Cir. 1984) (quotation mar

ks & f ootnote omitted). This standard ne cessitates that the Depa rtment thoroug hly

examine the rec ord and “ articulate a satisfactory explanation for its action including aConsol. Court No. 09-00216 P age 5

rational c onnection betwe en the f acts found a

nd the choice made.” Motor VehicleMfrs. Ass’n of the U.S., Inc . v. State Farm M ut. Ins. Co. , 463 U.S. 29, 43 (1983) (quotation marks & c itation omitted); accord Bando Chem. Indus., Ltd. v. United States , 16 CI T 133, 136-37, 787 F . Supp. 224, 227 (1992). That the court may drawtwo inconsistent conclusions from the e vidence does not prec lude Commerce from supportingits determination with substantial evidence

. Thai Pineapple Pub. Co. , 187 F.3d at 1365. To eva luate whe ther a

Commerce de termination ac cords with law, the court a pplies the two-step test ar

ticulated by

the Supreme Court in Chevron U.S.A., I nc. v. Natural Resource

s DefenseCouncil . 467 U.S. 837 (1984). F irst, the court de termines whe ther Cong ress ha s spoken direc tly to the issue at hand; if Cong ress’s intent is clea r, the c ourt and the D epar tment must “g ive ef fec t to the unambiguously expressed intent of Cong ress.” Id. at 843 (footnote omitted). I f the c ourt finds the re levant statute a mbiguous or silent with re spect to the spec ific issue, it must defer

to the Depa

rtment’s interpr etation as longas it is reasona ble. See id. This defe renc e extends to t echnic al methodolog ies that Commerce may apply to fulfill its statutory

mandate. Thai Pineapple Pub. Co. , 187 F.3d at 1365 (“The methodologie s relied upon by Commerce in making its determinations are presumptively corr ect.” ). II. D I S C U S S I O N A. WhetherCom m erc e Lawf ully Recalculated the U.S. P rice Plaintiffs contend that Commerce exceede d the bounds of the Remand O rder when it

rec alculate d the U.S. price duringits review of the conteste d AFArate . Pls. C omments 3-6. Acc ordingto Plainti ffs, the Remand O rder permitted Commerce to consider onlywhether Commerce c orrobor ated the A FA r ate upon whic h it relied in ca lculating the sepa rate rate . Pls.Consol. Court No. 09-00216 Page 6

Comments 5. Consequently, Plaintiffs assert that the Department “should have continued to use the U.S. price provided by petitioner in the petition.” Pls. Comments 5-6. Plaintiffs mischaracterize the scope of the Remand Order . In the antidumping context, an antidumping duty margin, including one calculated on the basis of AFA, is the difference between the normal value of the subject merchandise and the U.S. price. 19 U.S.C. § 1673. After the Department determined that it could not corroborate its initial AFA rate on remand, it acted in accordance with law when it used other sources in this case data collected from BWA during the investigation to calculate a new U.S. price in order to produce a revised AFA rate. See id. § 1677e(b); Gallant Ocean (Thailand) Co. v. United States , 602 F.3d 1319, 1321 (Fed. Cir. 2010); PAM S.p.A. v. United States , 582 F.3d 1336, 1339-40 & n.2 (Fed. Cir. 2009) (holding that “Commerce is permitted to use the information available to it in choosing and supporting an AFA value” (citation omitted)); Ta Chen Stainless Steel Pipe, Inc. v. United States , 298 F.3d 1330, 1338-39 (Fed. Cir. 2002) (same); F.Lli de Cecco di Filippo Fara S. Martino S.p.A. v. United States , 216 F.3d 1027, 1032 (Fed. Cir. 2000) (same); 19 C.F.R. § 351.308(c). To interpret the Remand Order as circumscribing Commerce’s ability to choose the proper methodology for its AFA calculation would place an impermissible restraint on the agency’s authority. Shakeproof Assembly Components Div. of Ill. Tool Works, Inc. v. United States , 29 CIT 1516, 1526, 412 F. Supp. 2d 1330, 1339 (2005) (“[T]he Federal Circuit has disfavored limited remands which restrict Commerce’s ability to collect and fully analyze data on a contested issue.”) (citing Am. Silicon Techs. v. United States , 334 F.3d 1033, 1038-39 (Fed. Cir. 2003)). The court therefore sustains Commerce’s decision to recalculate the U.S. price.Consol. Court No. 09-00216 P age 7

B. Whether Com m erc e Err ed by Adjustin g the U.S. P rice for a Sal es Com m ission Plaintiffs also claim that Commerce ina ppropriate ly

adjusted the U.S. price in its revised AFArate calc ulation to reflec t a purporte d industry -standar d [[ ]] sales commission. Pls. C omments 6-7. Specifica lly , they point to two factors that they believe inva lidate the Depa rtment’s re cog nition of the commission: (1) that the only individually

investigated entity did not pay

this commiss ion and (2) that “[t] he only evidenc e of the exis tence of Commissi ons . . . was set f

orth in the Antidumping Investig ation Initiation C hecklist” a nd linked to two subject importers “c ontrolled by

petitioner.” Pls. Comments 6-7. Accor dingly , Plaintiffs insis t that no evidenc e on the r ecor d supports Commerce’ s finding that the commission ex ists as an industry prac tice. Pls. Comm ents 7. Substantial evidence on the re cord de monstrates that this contention lacks mer it. Although the Depa

rtment found that the only individually

investigated entity

did not pay

the commission during the pe riod of re view, see Re mand Results at 19, that findingneither spe aks to industry prac tice as a

whole, nor nullifies the r ecor d aff idavit provided by

the petitioner fr om an industry source stating that “a 7% commission rate is ty pical . . . for the industry .” Pls. Pub. App. Tab 3 at 2 (quotation marks omitted) (e llipses in original) ( emphasis adde d). More over, Plaintiffs point t o nothing on the r ecor d that undermines the a ffidavit’s ve rac ity . The c ourt there fore finds that Commerce suppor ted the commission adjustment to it s U.S. price c alculation with substantial evidence

. See A tl. Sugar, L td. , 744 F.2d a t 1562.Consol. Court No. 09-00216 Page 8

C. Commerce’s Use of BWA’s Average Unit Value to Calculate the Revised AFA and Separate Rates Finally, Plaintiffs offer a host of reasons to show that Commerce acted contrary to law when it used the average unit value from a single uncooperative respondent, BWA, to calculate the revised AFA and separate rates. First, they aver that the Department erroneously chose BWA’s data solely to obtain a positive separate rate and, instead, should have used data from another uncooperative respondent, which would have produced a separate rate of zero. Pls. Comments 7-9. Second, Plaintiffs insist that BWA’s “aberrational and unreliable” data “do[] not reflect commercial reality.” Pls. Comments 9. More specifically, they argue that the “whole” or “round” numbers in BWA’s responses appear inaccurate, especially because the Department could not verify the figures due to BWA’s failure to cooperate. Pls. Comments 10-11. Finally, Plaintiffs state that if the court finds that Commerce did not err in using BWA’s data, Commerce also must use data from another uncooperative respondent so that “the data will reflect commercial reality.” Pls. Comments 11-12. Plaintiffs’ arguments have no basis in law. When Commerce used BWA’s data, rather than that of another uncooperative respondent, it complied with the law and its longstanding accepted methodologies for determining AFA and separate rates. Commerce customarily selects “the highest rate on the record of [a] proceeding” in this case BWA to calculate the AFA rate so that a “party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully.” Remand Results at 15 (citing Certain Frozen Warmwater Shrimp from Brazil: Final Results and Partial Rescission of Antidumping Duty Administrative Review , 73 Fed. Reg. 39,940, 39,942-43 (Dep’t Commerce July 11, 2008); Brake Rotors From the People’s RepublicConsol. Court No. 09-00216 P age 9

of China: Final Results and Part ial Rescission of the Seve nth Administrat ive Re view; Final Results of the Eleve nth New Shipper Review , 70 Fe d. Reg . 69,937, 69,939-40 (De p’t Commerce Nov. 18, 2005)) ( quotation marks omitted); see PA M S.p.A. , 582 F.3d a t 1339-40 & n.2; F.Lli de Cecc o di Filippo Fara S. Marti no S.p.A. , 216 F.3d at 1032; Mannesmannrohre n-W erkeAG v. United States , 23 CI T 826, 851, 77 F. Supp. 2d 1302, 1323 (1999) . L ikewise, Commerc e followed its customary

prac tice whe n it calculate d the sepa rate rate by

aver ag ing the revised A FA rate with the zero rate of the mandatory responde nt. Remand Re

sults at 7; see19 U.S.C. § 1673d(c) (5)( B) (“I f the e stimated weighted ave rag e dumping marg ins established for a ll exporters and produc ers individually investigated ar e zero or de minimi s marg ins . . . , the [Department] may

use any rea sonable method to establish the e stimated all-others r ate . . . .” ); see also KY D, Inc . v. United States , 607 F.3d 760, 768 ( Fe d. Cir. 2010); Notice of Preliminary Determ ination of Sal es at Less Than Fair Value and Postponement of Final Determination: Light-W alled Rec tangular Pipe and Tube From the Republic of Korea , 73 Fe d. Reg . 5794, 5800 (De p’t Commerce J an. 31, 2008). Mor eover , Plaintiffs’ complaints about the re liability and

acc urac y of B WA’s data sug g est that Commerce had a duty to corrobor ate the f

irm’s submissi ons. The De partment ha s no such duty

. See§ 1677e(c ) (“ When [ Commerce] . . . relies

on secondary

information rather than on informati on obtained in the course of an inve stigati on

or re view, [Comm erc e] . . . shall, to the ex tent prac ticable, c orrobor ate that infor mation . . . .”); § 351.308(c) -(d) . Be cause the ag ency acquir ed the data containe d in BWA’s questionnaire and response duringthe investig ation, the Depa rtment proper ly

used the unc orrobor ated infor mation to calculate the AF A rate. See§ 1677e(c ).Consol. Court No. 09-00216 P age 10

Finally , Plaintiffs fail to demonstrate that the B WA data does not re flec t commerc ial

rea lity . BWA’s avera g e unit value r epre sents approximately [[ a lar g e portion]] of all subject

merc handise sale s in the United States during the per iod of investigation. Remand Re sults at 18. Be cause this value substantially ref lects the mar

ket of the subjec t mercha ndise, the cour

t cannot find BWA’s data to lie outside the rea lm of commerc ial rea lity , let alone instruct the D epar tment to use unverif

ied data f rom an a dditional uncoopera tive responde nt to make its calculations. See Ta Chen Stainl ess Steel Pipe , Inc. , 298 F.3d at 1339-40; see also KY D, Inc

. , 607 F.3d at 765-67. In sum, the court sustains the De partment’s use of B WA’s aver ag e unit value in its AFA and separ ate r ate c alculations. III. C O N C L U S I O N For the re asons stated a

bove, it is hereby ORDERED that the Depa rtment’s Remand Re

sults are SUST AINED ; it is further ORDERED that Plaintiffs shall submi t their reply brief f or the c ase- in-chief

no later tha

n Aug ust 20, 2010; and it is further ORDERED that in their reply brief, Plaintiffs shall conc isely explain what active c laims

rema in in their Motion for J udg ment on the Ag ency Record. Mor e spec ifically , Plaintiffs must note which issues have not bee n rende red moot by the Remand Re

sults and this opinion, citing to the re levant statutory

and jurisprude ntial authorities.

Dated: August 5, 2010 /s/ J udith M. Barzil ay New Y ork, Ne w York J udith M. Barzil ay , J udg e