Court Opinion

ID: 2807909
Source: CourtListenerOpinion
Date Created: 2015-06-12 19:02:04.693836+00
Date Added: 2024-06-11T11:30:06.343887
License: Public Domain

Slip Op. 15-58

               UNITED STATES COURT OF INTERNATIONAL TRADE

 SAMSUNG ELECTRONICS CO., LTD.,
 AND SAMSUNG ELECTRONICS
 AMERICA, INC.,

                      Plaintiffs,                      Before: Leo M. Gordon, Judge

               v.                                      Consol. Court No. 13-00098

 UNITED STATES,

                      Defendant.

                                        OPINION

[Motions for judgment on agency record denied; final determination of sales at less than
fair value sustained in part.]

                                                                    Dated: June 12, 2015

       Warren E. Connelly, J. David Park, Jarrod M. Goldfeder, and Phyllis L. Derrick,
Akin Gump Strauss Hauer & Feld LLP of Washington D.C. for Plaintiff Samsung
Electronics Co., Ltd and Samsung Electronics America, Inc.

      Daniel L. Porter, James P. Durling, Christopher A. Dunn, Ross E. Bidlingmaier,
and Claudia D. Hartleben, Curtis, Mallet-Prevost, Colt & Mosle of Washington, D.C. for
Consolidated Plaintiffs LG Electronics, Inc. and LG Electronics USA, Inc.

        Jack A. Levy, Myles S. Getlan, James R. Cannon, Jr. John D. Greenwald, Matthew
Frumin, and Thomas M. Beline, Cassidy Levy Kent (USA) LLP of Washington, D.C. for
Plaintiff and Defendant-Intervenor Whirlpool Corporation.

       Douglas G. Edelschick, 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 Stuart F. Delery, Assistant Attorney General, Jeanne E.
Davidson, Director, Franklin E. White, Jr., Assistant Director. Of counsel on the brief was
Joanna V. Theiss, Attorney, Office of the Chief Counsel for Trade Enforcement and
Compliance for the United States Department of Commerce.
Consol. Court No. 13-00098                                                      Page 2

       Gordon, Judge: This consolidated action involves a U.S. Department of Commerce

(“Defendant” or “Commerce”) final determination in the less than fair value investigation

of large residential washers from the Republic of Korea. Large Residential Washers from

the Republic of Korea, 77 Fed. Reg. 75,988 (Dep’t of Commerce Dec. 26, 2012) (final

determ. LTFV investigation) (“Final Results”); see also Issues and Decision Memorandum

for the Antidumping Duty Investigation of Large Residential Washers from the Republic

of   Korea,   A-580-868   (Dep’t   of   Commerce     Dec.   26,   2012),   available   at

http://enforcement.trade.gov/frn/summary/korea-south/2012-31104-1.pdf (last visited thi

date) (“Decision Memorandum”). Before the court are the motions for judgment on the

agency record of Plaintiffs Samsung Electronics Co., Ltd. and Samsung Electronics

America, Inc. (collectively, “Samsung”), Consolidated Plaintiffs LG Electronics Inc. and

LG Electronics USA, Inc. (collectively, “LG”), and Consolidated Plaintiff Whirlpool

Corporation (“Whirlpool”). This opinion addresses Samsung and LG’s challenges to the

Final Results. See Br. of Respondent Pls. LG Elecs. & LG Elecs. USA in Supp. of their

Mot. for J. on the Agency R. (Sept. 27, 2013), ECF No. 43 (“LG Br.”); Mem. of Pls.

Samsung Elecs. Co., Ltd. & Samsung Elecs. Am., Inc. in Supp. of their Rule 56.2 Mot. for

J. upon the Agency R. (Sept. 27, 2013), ECF No. 45 (“Samsung Br.”); Def.’s Consol.

Resp. to Pls.’ Mots. for J. on the Agency R. 1-50 (Feb. 14, 2014), ECF No. 62 (“Def.

Resp.”); Resp. Br. of Whirlpool Corp. 1-24 (Mar. 7, 2014), ECF No. 68; Reply Br. of Pls.

Samsung Elecs. Co., Ltd., & Samsung Elecs. Am., Inc. (Apr. 21, 2014), ECF No. 81

(“Samsung Reply”); Consol. Pls. LG Elecs., Inc.’s & LG Elecs. USA, Inc.’s Reply Br. (Apr.

21, 2014), ECF No. 82. The court has jurisdiction pursuant to Section 516A(a)(2)(B)(i) of
Consol. Court No. 13-00098                                                        Page 3

the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2012),1 and 28 U.S.C.

§ 1581(c) (2012).

       Specifically, Samsung argues that Commerce’s targeted dumping analysis

violates the statute because (1) Commerce’s established targeted dumping test uses

weighted average prices instead of individual transaction prices and (2) Commerce

thereafter applied the average-to-transaction price comparison to all of Samsung’s sales

rather than a subset of those sales. LG raises similar arguments, albeit with emphasis on

different points, and adds that Commerce unlawfully excluded certain home market sales

from its model-matching analysis.

       For the reasons set forth below, the court denies both motions and sustains the

Final Results for each of the issues raised.

                                 I. Standard of Review

       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,

1
 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. 13-00098                                                      Page 4

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 presented by the whole record.” 8A West’s Fed.

Forms, National Courts § 3:6 (5th ed. 2015).

      Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural

Res. Def. Council, Inc., 467 U.S. 837, 842-45 (1984), governs judicial review of

Commerce's interpretation of the antidumping statute. See United States v. Eurodif S.A.,

555 U.S. 305, 316 (2009) (Commerce’s “interpretation governs in the absence of

unambiguous statutory language to the contrary or unreasonable resolution of language

that is ambiguous.”).

                                     II. Discussion

                                A. Targeted Dumping

      Commerce calculates a respondent’s dumping margin 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). The statute provides three methods for
Consol. Court No. 13-00098                                                         Page 5

comparing normal value to export price or constructed export price to make this

calculation: (1) average-to-average (“A-to-A”), (2) transaction-to-transaction (“T-to-T”),2

and (3) average-to-transaction (“A-to-T”). Id. § 1677f-1(d)(1). Under the A-to-A

methodology, Commerce compares weighted-average normal values to weighted-

average export prices or constructed export prices, whereas under the A-to-T

methodology, Commerce compares weighted average normal values to export prices or

constructed export prices of individual transactions. 19 C.F.R. § 351.414(b)(1)-(2).

       The statute allows for the A-to-T methodology as an exception to the other

methodologies. 19 U.S.C. § 1677f-1(d)(1)(A). Specifically, Commerce may apply the A-

to-T methodology “if (i) there is a pattern of export prices (or constructed export prices)

for comparable merchandise that differ significantly among purchasers, regions, or period

of time, and (ii) the administering authority explains why such differences cannot be taken

into account using” the A-to-A or T-to-T methodologies. Id. § 1677f-1(d)(1)(B). Pricing that

meets both conditions is known as “targeted dumping.”

       Commerce in Certain Steel Nails from the United Arab Emirates, 73 Fed. Reg.

33,985 (Dep’t of Commerce June 16, 2008) and Certain Steel Nails from the People’s

Republic of China, 73 Fed. Reg. 33,977 (Dep’t of Commerce June 16, 2008) (collectively,

“Nails”) adopted a practice for evaluating whether a respondent has engaged in targeted

dumping. This so-called “Nails test” begins with two statistical analyses: the “standard

2
  Commerce “will use the [T-to-T] method only in unusual situations, such as when there
are very few sales of subject merchandise and the merchandise sold in each market is
identical or very similar or is custom-made.” 19 C.F.R. § 351.414(c)(2).
Consol. Court No. 13-00098                                                           Page 6

deviation test” and the “price gap test.” If these two tests reveal a pattern of export prices

or constructed export prices that differ significantly among purchasers, regions, or period

of time, Commerce next considers whether the A-to-A methodology could take into

account the observed price differences. Commerce does so by determining whether there

is a “meaningful difference” between the results of the A-to-A methodology and the A-to-

T methodology. Commerce explained its application of these procedures below:

       In the first stage of the test, the “standard-deviation test,” we determined the
       volume of the allegedly targeted group’s sales of subject merchandise that
       are at prices more than one standard deviation below the weighted-average
       price of all sales during the POI, targeted and non-targeted. We calculated
       the standard deviation on a product-specific basis (i.e., by CONNUM) using
       the POI-wide weighted-average sales prices for the allegedly targeted
       groups and the groups not alleged to have been targeted. If that volume did
       not exceed 33 percent of the total volume of a respondent’s sales of subject
       merchandise for the allegedly targeted group, then we did not conduct the
       second stage of the Nails test. If that volume exceeded 33 percent of the
       total volume of a respondent’s sales of subject merchandise for the
       allegedly targeted group, on the other hand, then we proceeded to the
       second stage of the Nails test.

       In the second stage, we examined all sales of identical merchandise (i.e.,
       by CONNUM) sold to the allegedly targeted group which passed the
       standard-deviat[i]on test. From those sales, we determined the total volume
       of sales for which the difference between the weighted-average price of
       sales to the allegedly targeted group and the next higher weighted-average
       price of sales for a non-targeted group exceeds the average price gap
       (weighted by sales volume) between the non-targeted groups. We weighted
       each of the price gaps between the non-targeted groups by the combined
       sales volume associated with the pair of non-targeted groups that defined
       the price gap. In doing this analysis, the allegedly targeted sales were not
       included in the non-targeted group; the allegedly targeted group’s weighted-
       average sales price was compared only to the weighted-average sales
       prices to the non-targeted groups. If the volume of the sales that met this
       test exceeded five percent of the total sales volume of subject merchandise
       to the allegedly targeted group, then we determined that targeting occurred.
Consol. Court No. 13-00098                                                         Page 7

       If we determined that a sufficient volume of U.S. sales were found to have
       passed the Nails test, then the Department considered whether the
       average-to-average method could take into account the observed price
       differences. To do this, the Department evaluated the difference between
       the weighted-average dumping margin calculated using the average-to-
       average method and the weighted-average dumping margin calculated
       using the average-to-transaction method. Where there was a meaningful
       difference between the results of the average-to-average method and the
       average-to-transaction method, the average-to-average method would not
       be able to take into account such price differences, and the average-to-
       transaction method would be used to calculate the weighted-average
       margin of dumping for the respondent in question. Where there was not a
       meaningful difference in the results, the average-to-average method would
       be able to take into account such price differences, and the average-to-
       average method would be used to calculate the weighted-average dumping
       margin for the respondent in question.

Decision Memorandum at 19-20 (footnote omitted). For a comprehensive explanation of

the Nails test see Judge Restani’s discussion in Mid Continent Nail Corp. v. United States,

34 CIT ___, ___, 712 F. Supp. 2d 1370, 1373-79 (2010).

       Applying this test, Commerce below concluded that LG and Samsung exhibited a

pattern of export prices or constructed export prices that differ significantly over certain

purchasers, regions, and time periods, and that those differences could not be taken into

account using the A-to-A methodology.3 Commerce then applied the A-to-T methodology

to all of LG and Samsung’s sales. Id. at 20.

3
  Commerce in a subsequent proceeding adopted a new targeted dumping methodology
that is not at issue in this action. See Issues and Decision Memorandum for the
Antidumping Duty Investigation of Xantham Gum from the People’s Republic of China, A-
570-985, at 23-29 (Dep’t of Commerce May 28, 2013), available at
http://enforcement.trade.gov/frn/summary/prc/2013-13220-1.pdf (describing the new
“differential pricing” analysis) (last visited this date).
Consol. Court No. 13-00098                                                        Page 8

                     1. Consistency of the Nails test with the law

      The U.S. Court of International Trade (“CIT”) has sustained the Nails test as

consistent with 19 U.S.C. § 1677f-1(d)(1)(B) on several prior occasions. See, e.g., JBF

RAK LLC v. United States, 38 CIT ___, ___, 991 F. Supp. 2d 1343, 1353-55 (2014);

Timken Co. v. United States, 38 CIT ___, ___, 968 F. Supp. 2d 1279, 1290-93 (2014);

Mid Continent Nail, 34 CIT at ___, 712 F. Supp. 2d at 1377-79. LG and Samsung

maintain, however, that the Nails test violated the statute, primarily because Commerce

failed to use individual transaction prices rather than average prices in analyzing export

prices. LG Br. at 16-33; Samsung Br. at 2-32.

      Section 1677f-1(d)(1)(B) conditions application of the A-to-T methodology on “a

pattern of export prices (or constructed export prices) for comparable merchandise that

differ significantly among purchasers, regions, or periods of time.” 19 U.S.C. § 1677f-

1(d)(1)(B)(i). Congress did not modify the phrase “pattern of export prices (or constructed

export prices)” with either “weighted average” or “individual transactions.” Id. Congress

could have used either modifier, but chose not to. This omission is critical because both

appear in the immediately preceding segment of the statute. Specifically, Congress

defined the A-to-T methodology as “comparing the weighted average of the normal values

to the export prices (or constructed export prices) of individual transactions for

comparable merchandise.” Id. § 1677f-1(d)(1)(B) (emphasis added); see also Statement

of Administrative Action, H.R. Doc. No. 103-316, vol. 1 at 843 (1994) (providing for

“comparison of average normal values to individual export prices or constructed export

prices in situations where an [A-to-A] or [T-to-T] methodology cannot account for a pattern
Consol. Court No. 13-00098                                                            Page 9

of prices that differ significantly” without specifying “pattern of prices”). This construction

shows that Congress remained silent on whether “a pattern of export prices” means more

specifically “a pattern of weighted average export prices” or “a pattern of export prices of

individual transactions.”

       Commerce’s decision to use weighted average prices therefore controls here so

long as it is reasonable. And Commerce below provided a reasonable justification for

using weighted averages instead of individual transaction prices:

       [I]n exercising our discretion, we interpret “export prices” (as well as
       “constructed export prices”) in [19 U.S.C. § 1677f-1(d)(1)(B)(i)] to mean a
       weighted average of the individual sales prices. In the context of testing to
       see whether purchasers, time periods, or regions have been targeted, the
       relevant price variance, in the Department’s view, is the variance in price
       across purchasers, time periods, and regions, not across transactions. For
       this reason, the Department approaches the problem by analyzing the
       variance of the weighted-average sales prices paid by each group.

Decision Memorandum at 20-21 (emphasis in original) (citations omitted). The court must

therefore sustain Commerce’s use of average prices instead of individual transaction

prices. See Gold E. Paper (Jiangsu) Co. v. United States, 37 CIT ___, ___, 918 F. Supp.

2d 1317, 1328 (2013) (sustaining as reasonable under Chevron Commerce’s use of

average prices instead of transaction prices).

       LG and Samsung nevertheless contend that the use of average prices violates the

plain language of the statute. LG Br. at 16-33; Samsung Br. at 17-20. The court does not

agree. As described above, Congress did not modify “export prices (or constructed export

prices)” in § 1677f-1(d)(1)(B)(i) with either “weighted averages” or “individual transactions”

when defining targeted dumping, even though Congress used both phrases in defining
Consol. Court No. 13-00098                                                          Page 10

the A-to-T methodology in § 1677f-1(d)(1)(B). Although LG and Samsung provide

numerous textual justifications to support their own interpretation, their view is not the one

and only one possible. Congress’ silence leaves Commerce with a measure of discretion

to craft a targeted dumping analysis that considers average prices instead of transaction

prices.

          LG and Samsung also argue that Commerce’s interpretation is unreasonable. LG

and Samsung insist that average prices are inherently distortive and both provide many

examples using hypothetical and record data to illustrate the problems they perceive with

using average prices instead of transaction prices. To LG and Samsung, averaging prices

masks the true nature of the underlying data because it hides variability from one

transaction to another. LG Br. at 16-29; Samsung Br. at 9-16, 21-27. LG adds that using

average prices could exaggerate the volume of targeted sales, since each averaged

group could include higher-priced sales. LG Br. at 25-29. The court again does not agree.

The question before the court is whether Commerce’s interpretation of 19 U.S.C. § 1677f-

1(d)(1)(B)(i) is reasonable, not whether some other approach might produce a different

(or even a better) result. Commerce below explained that “[t]he focus of the statute is not

. . . on the variation of transaction-specific sales per se, or even on a difference between

individual transactions to a particular group.” Decision Memorandum at 21. Instead, “the

statute is explicitly concerned with export prices that ‘differ significantly among

purchasers, regions, or periods of time,’” or in other words, differences among the groups

of purchasers, regions, or periods of time themselves. Id. 21 (quoting 19 U.S.C. § 1677f-

1(d)(1)(B)(i)) (emphasis in original). Id. Commerce applied the Nails test to groups of
Consol. Court No. 13-00098                                                      Page 11

sales averaged by individual purchasers, regions, and time periods to measure the

degree to which export prices differed among purchasers, among regions, and among

periods of time. This approach enabled Commerce “to disregard meaningless variations”

between individual transactions “and focus instead on uncovering a pattern of prices

among groups.” Id. (emphasis omitted).

      LG further challenges step two of the Nails test as inconsistent with the statute

because, in LG’s view, it “ignores” relevant data. LG Br. at 29-33. The court disagrees.

The statute requires Commerce to identify a pattern of prices that “differ significantly.”

The statute does so without describing the thing from which those prices must differ or

how great that difference must be. See 19 U.S.C. § 1677f-1(d)(1)(B)(i). Commerce

addresses the significant difference requirement in step two of the Nails test by “looking

up” from each targeted group’s average price to the next-highest non-targeted group and

measuring the gap. Commerce reasonably uses these gaps to quantify, in objective

mathematical terms, the significance of the price gap associated with the targeted group

as compared to the price gaps of non-targeted groups. Commerce in other words does

not consider the distance between targeted groups because step two of the Nails test

measures the relative significance of the distances between targeted groups and non-

targeted groups. See Decision Memorandum at 19-20; see also Issues and Decision

Memorandum for the Antidumping Duty Investigation of Certain Steel Nails from the

United Arab Emirates, A-520-804, at 12-13 (Dep’t of Commerce Mar. 19, 2012) (“Nails

Decision Memorandum”) (detailing mathematical rationale behind step two of the Nails

test). LG claims that Commerce’s gap test “ignores” prices below the targeted group’s
Consol. Court No. 13-00098                                                           Page 12

average price, but just as Commerce observed below, see Decision Memorandum at 21,

LG does not show why the significant-difference requirement can only be met by

measuring the distance between targeted groups as it prefers.

         Finally, LG and Samsung argue that Commerce failed to explain why the A-to-A

methodology could not account for the observed price differences in violation of 19 U.S.C.

§ 1677f-1(d)(1)(B)(ii). LG Br. at 37-39; Samsung Br. at 36-37. Defendant, though, agrees

with LG and Samsung that 19 U.S.C. § 1677f-1(d)(1)(B)(ii) requires an explanation, and

identifies where Commerce made that explanation in the Decision Memorandum. Def. Br.

at 22 (citing Decision Memorandum at 20). This argument is therefore not a Chevron

challenge on the question of whether the statute requires an explanation (it does), but

instead a challenge to the reasonableness of the explanation provided by Commerce.

Commerce below explained that “the A-to-A method does not take into account such price

differences because there is a meaningful difference in the weighted average dumping

margins when calculated using the A-to-A method and the A-to-T method for both

respondents.” Decision Memorandum at 20 (emphasis added). Specifically, Samsung’s

margin increased from de minimis to 9.29% using A-to-T, and LG’s margin increased from

a proprietary margin to 13.02% using A-to-T. See LG Electronics Final Determination

Margin Calculation Memorandum, Att. 2 at 127 (Dep’t of Commerce Dec. 18, 2012), CD

3204; Samsung Final Determination Margin Calculation Memorandum, Att. 2 at 125 (Dep’t

of Commerce Dec. 18, 2012), CD 319. Commerce’s explanation is reasonable. Cf. Apex

4
    “CD” refers to a document contained in the confidential administrative record.
Consol. Court No. 13-00098                                                       Page 13

Frozen Foods Private Ltd. v. United States, 38 CIT ___, ___, 37 F. Supp. 3d 1286, 1294-

300 (2014) (sustaining similar explanation as reasonable in the context of arbitrariness

review, and commenting in dicta that a similar explanation would survive substantial

evidence review).

       In sum, LG and Samsung’s arguments amount to a request that the court order

Commerce to redefine targeted dumping as something other than that defined by

Commerce. LG and Samsung would prefer that a finding of targeted dumping depend

upon the level of variance between low-priced individual export or constructed export

prices, and both offer good arguments for why their preferred definition may comport with

the statute’s language. LG and Samsung’s preferred definition is not the only possible

way to construe the statute, however. Commerce’s Nails test also represents a

reasonable interpretation of a silent statutory provision and must therefore be sustained.

                       2. Samsung’s subjective considerations

       Samsung argues that Commerce “refused to consider any of the numerous factual

considerations” behind its pricing strategies, such as rebates and holiday discounts, that

led Commerce to find targeted dumping. Samsung Br. at 7-9, 27-32. According to

Samsung, “on any given day and in any given locality, Samsung is likely to be charging

a wide variety of prices for the same [large residential washer] model. That is simply how

the entire consumer electronics industry works.” Id. at 9.

       Samsung effectively reads an “intent” requirement into the statute, urging the court

to remand because it had legitimate commercial justifications for differential pricing that

Commerce refused to consider. Section 1677f–1(d)(1)(B), however, only instructs
Consol. Court No. 13-00098                                                          Page 14

Commerce to consider export price (or constructed export price) patterns in its targeted

dumping analysis. It does not require Commerce to investigate the subjective reasons a

respondent may have for pricing its merchandise. Samsung’s argument therefore fails

under Chevron. See Borusan Mannesmann Boru Sanayi ve Ticaret A.S. v. United States,

38 CIT ___, ___, 990 F. Supp. 2d 1384, 1387-89 (2014); JBF RAK, 38 CIT at ___, 991

F. Supp. 2d at 1353-55.

        Similarly, Samsung argues that the Nails test makes it “[i]mpossible” for a

respondent to avoid a finding of targeted dumping because it is complex and

unpredictable. Samsung Br. at 21-24. Samsung’s argument is not persuasive. “The

absence of certainty regarding the dumping margins and final assessment of antidumping

duties is a characteristic of the retrospective system of administrative reviews designed

by Congress.” SKF USA, Inc. v. United States, 537 F.3d 1373, 1381 (Fed. Cir. 2008); see

19 C.F.R. § 351.212(a) (“Unlike the systems of some other countries, the United States

uses a ‘retrospective’ assessment system under which final liability for antidumping and

countervailing duties is determined after merchandise is imported.”). The statute does not

specify the methodology Commerce must employ to determine whether a respondent’s

sales exhibit a pattern of export or constructed export prices that differ significantly among

purchasers, regions, or periods of time. Commerce filled that silence with the Nails test,

which it had applied several times before commencing this investigation. Samsung’s

discomfort with a lack of certainty does not undermine the validity of Commerce’s Nails

test.
Consol. Court No. 13-00098                                                          Page 15

       The court therefore declines Samsung’s invitation for the court to order Commerce

to consider factual matter not required or suggested by the statute. See JBF RAK, 38 CIT

at ___, 991 F. Supp. 2d at 1355 (Explaining that an “intent” requirement here “would

create a tremendous burden on Commerce that is not required or suggested by the

statute” (quoting Viraj Group v. United States, 476 F.3d 1349, 1357-58 (Fed. Cir. 2007)).

    3. Application of the A-to-T methodology to all of LG and Samsung’s sales

       LG and Samsung both argue that Commerce violated an improperly-withdrawn

regulation and the statute when it applied the A-to-T methodology to all of LG and

Samsung’s sales rather than just those that passed the Nails test. LG Br. at 4-16;

Samsung Br. at 32-40.

                        a. Withdrawn regulation and exhaustion

       Samsung and LG introduce a new argument before the court that was not raised

during the investigation. Specifically, Samsung and LG argue that, in 2008, Commerce

improperly withdrew 19 C.F.R. § 351.414(f)(2) (2007), which stated that Commerce

“normally will limit the application of the [A-to-T] method to those sales that constitute the

targeted dumping.” Samsung Br. at 32-34; LG Br. at 4-5; see also Withdrawal of the

Regulatory Provisions Governing Targeted Dumping in Antidumping Duty Investigations,

73 Fed. Reg. 74,930, 74,930-31 (Dep’t of Commerce Dec. 10, 2008) (“Withdrawal

Notice”). When it withdrew the regulation, Commerce explained that it “had never

performed a targeted dumping analysis” and that it therefore promulgated the regulation

“without the benefit of any departmental experience on the issue of targeted dumping.”

Withdrawal Notice at 74,930. Commerce also explained that “[t]his situation has caused
Consol. Court No. 13-00098                                                      Page 16

the [agency] to question whether, in the absence of any practical experience, it

established an appropriate balance of interests in the provisions.” Id. By withdrawing the

regulation, Commerce sought “an opportunity to analyze extensively the concept of

targeted dumping and develop a meaningful practice in this area as it gains experience

in evaluating such allegations.” Id. at 73,930-31.

       Samsung and LG argue that Commerce violated the Administrative Procedure Act

(“APA”), 5 U.S.C. § 553 (2012), when it withdrew the regulation without notice and

comment. Samsung Br. at 32-34; LG Br. at 4-16. LG also argues that the good cause

exception to the notice and comment requirement, which Commerce relied upon in the

Withdrawal Notice, does not apply here. LG Br. at 5-12. Samsung and LG argue further

that Commerce erred in not applying the now-withdrawn regulation, which provided that

the agency “will normally limit the application of the [A-to-T] method to those sales that

constitute targeted dumping.” Samsung Br. at 32-34; LG Br. at 4-16. Finally, Samsung

and LG argue that Commerce was required “to limit its application of the” A-to-T method

to “only those transactions found to be targeted,” and to “determine the amount of

dumping, if any, in all other transactions using the” A-to-A method, “unless the [agency]

provides an adequate explanation why the situation is not a ‘normal’ one.” Samsung Br.

at 34; see also LG Br. at 36, 38. Samsung and LG, however, failed to exhaust any of

these arguments.

       Samsung and LG admit that they did not raise their arguments regarding the now-

withdrawn regulation in their case briefs before Commerce or at any other point during

the investigation below. Samsung Br. at 34 n.25; LG Br. at 12-16. Nonetheless, Samsung
Consol. Court No. 13-00098                                                           Page 17

and LG ask the court to excuse their failure to exhaust these arguments based upon

alleged futility and an assertion that the argument is a pure question of law. Samsung Br.

at 34 n.25; LG Br. at 12-16.

       The exhaustion requirement applicable to trade cases is rooted in two sources of

law that are implicated here: (1) a statute, 28 U.S.C. § 2637(d), which applies to all

antidumping and countervailing duty proceedings; and (2) a regulation, 19 C.F.R.

§ 351.309(c)(2), which applies to case briefs in antidumping and countervailing duty

investigations, certain types of reviews, and in other proceedings if Commerce requests

written argument. See 19 C.F.R. § 351.309(b).

       The statute provides that the court “shall, where appropriate, require the

exhaustion of administrative remedies” in civil actions arising from Commerce’s

antidumping and countervailing duty determinations. 28 U.S.C. § 2637(d). The U.S. Court

of Appeals for the Federal Circuit (“Federal Circuit”) has recognized limited exceptions

where exhaustion would have been “futile” or the matter is a “pure question of law,” Itochu

Bldg. Prods. v. United States, 733 F.3d 1140, 1146 (Fed. Cir. 2013), because, in the

parlance of the statute, “require[ing] the exhaustion of administrative remedies” in these

circumstances would not be “appropriate.” 28 U.S.C. § 2637(d). Notwithstanding these

limited exceptions, the CIT “generally takes a ‘strict view’ of the requirement that parties

exhaust their administrative remedies before . . . Commerce in trade cases.” Corus Staal

BV v. United States, 502 F.3d 1370, 1379 (Fed. Cir. 2007).

       The regulation requires that a “case brief must present all arguments that continue

in the submitter’s view to be relevant to the Secretary’s final determination or final results.”
Consol. Court No. 13-00098                                                          Page 18

19 C.F.R. § 351.309(c)(2). The Federal Circuit has held that “Commerce’s regulations

specifically address the exhaustion requirement, as applied to challenges to antidumping

determinations, and require a challenger to submit a case brief to Commerce that

contains all of the arguments that the submitter deems relevant, ‘including any arguments

presented before the date of publication of the preliminary determination or preliminary

results.’” Corus Staal, 502 F.3d at 1379 (quoting 19 C.F.R. § 351.309(c)(2)); accord

Dorbest Ltd. v. United States, 604 F.3d 1363, 1375 (Fed. Cir. 2010) (“Commerce

regulations require the presentation of all issues and arguments in a party’s administrative

case brief.”). In short, “parties are ‘procedurally required to raise the[ir] issue before

Commerce at the time Commerce [is] addressing the issue.’” Dorbest, 604 F.3d at 1375

(quoting Mittal Steel Point Lisas Ltd. v. United States, 548 F.3d 1375, 1383 (Fed. Cir.

2008)) (alteration in original). The Federal Circuit has explained further that the regulatory

exhaustion requirement is “not simply a creature of court decision, as is sometimes the

case, but is a requirement explicitly imposed by the agency as a prerequisite to judicial

review.” Corus Staal, 502 F.3d at 1379; see also Fuwei Films (Shandong) Co. v. United

States, 35 CIT ___, ___, 791 F. Supp. 2d 1381, 1385 (2011) (Commerce’s regulation

“carries the force of law and the court cannot simply ignore it.”). A violation of Commerce’s

regulation, therefore, supplies an independent ground for determining that an argument

has not been exhausted. See Dorbest, 604 F.3d at 1375 (holding “that Dorbest’s failure

to raise its issue in its administrative case brief constituted a failure to exhaust

administrative remedies” in violation of regulatory exhaustion requirement).
Consol. Court No. 13-00098                                                         Page 19

       Samsung and LG concede that they filed case briefs before Commerce that failed

to raise any arguments regarding Commerce’s now-withdrawn regulation. Samsung Br.

at 34 n.25; LG Br. at 12-16. Interested parties in other cases, however, raised these

arguments at the administrative level. See, e.g., Nails Decision Memorandum at 15-18;

Issues and Decision Memorandum for the Antidumping Duty Investigation of Certain

Coated Paper Suitable for High Quality Print Graphics Using Sheet-Fed Process from the

People’s Republic of China, A-570-958, at 21-25 (Dep’t of Commerce Sept. 20, 2010),

available at http://enforcement.trade.gov/frn/summary/prc/2010-24159-1.pdf (last visited

this date). Samsung and LG could have done the same thing, but apparently chose not

to do so. Requiring exhaustion here is “appropriate.”

       LG and Samsung argue that the “pure question of law” and “futility” exceptions

should apply here. Neither do. “In order to qualify for the [pure question of law] exception,

plaintiff must (a) raise a new argument; (b) this argument must be of purely legal nature;

(c) the inquiry shall require neither further agency involvement nor additional fact finding

or opening up the record; and (d) the inquiry shall neither create undue delay nor cause

expenditure of scarce party time and resources.” Corus Stall BV v. United States, 30 CIT

1040, 1050 n.11 (2006) (citing Consol. Bearings Co. v. United States, 25 CIT 546, 553-

54, 166 F. Supp. 2d 580, 587 (2001), rev’d on other grounds, 348 F.3d 997, 1003-04

(Fed. Cir. 2003), aff’d on other grounds, 502 F.3d at 1378 n.4. The withdrawn regulation

arguments advanced by LG and Samsung are not purely legal; they have two factual

components that would require further agency involvement, additional fact finding, and

potentially could necessitate a re-opening of the administrative record.
Consol. Court No. 13-00098                                                      Page 20

      First, the APA expressly provides for waivers of the notice and comment

requirement “when the agency for good cause finds (and incorporates the finding and a

brief statement of reasons therefor in the rules issued) that notice and public procedure

thereon are impracticable, unnecessary, or contrary to the public interest.” 5 U.S.C.

§ 553(b)(B). In the Withdrawal Notice, Commerce made a good cause finding that the

notice and comment “requirement is impracticable and contrary to the public interest.”

Withdrawal Notice at 74,931. Although Commerce included the required “brief statement

of reasons” for its good cause finding in the Withdrawal Notice, see 5 U.S.C. § 553(b)(B),

if LG and Samsung had raised their APA arguments in their administrative case briefs in

compliance with 19 C.F.R. § 351.309(c)(2), Commerce would have had an opportunity to

explain why, as a matter of fact, good cause existed. By failing to exhaust their

administrative remedies, LG and Samsung deprived Commerce of this opportunity.

      Second, even if LG and Samsung were to prevail in their APA arguments, the now-

withdrawn regulation would not mandate that LG and Samsung receive a different result

before Commerce. The now-withdrawn regulation provided that Commerce “will normally

limit the application of the [A-to-T] method to those sales that constitute targeted

dumping,” but the agency retained discretion to deviate from this normal practice in

appropriate circumstances. 19 C.F.R. § 351.414(f)(2) (2007) (emphasis added). Thus, in

applying the regulation, Commerce still would have to conduct a factual inquiry and

exercise its discretion as to whether, under the circumstances of this particular

investigation, limiting the application of the A-to-T method to targeted dumped sales

would be appropriate. By failing to exhaust their administrative remedies, LG and
Consol. Court No. 13-00098                                                        Page 21

Samsung deprived Commerce of the opportunity to: (1) conduct this factual inquiry

(which, on remand, could require a re-opening of the administrative record); and

(2) exercise agency discretion prior to judicial review. For these reasons, the pure

question of law exception to the exhaustion requirement is not applicable here.

       The futility exception does not apply either. LG and Samsung argue that

Commerce was not likely to agree with their arguments regarding the now-withdrawn

regulation because the agency rejected the same arguments in four other proceedings.

LG Br. at 13-15; Samsung Br. at 34 n.25. But even “if it is likely that Commerce would

have rejected” the arguments regarding the now-withdrawn regulation, “it still would have

been preferable, for purposes of administrative regularity and judicial efficiency, for” LG

and Samsung “to make [their] arguments in [their] case brief[s] and for Commerce to give

its full and final administrative response in the final” determination. See Corus Staal, 502

F.3d at 1380. Compare Fuwei Films, 35 CIT at ___, 791 F. Supp. 2d at 1385 (rejecting

plaintiff’s assertion of futility defense to exhaustion because plaintiff “could have raised

its arguments about potential unreasonable inconsistencies in Commerce’s zeroing

practice in its administrative case brief”), with Dongbu Steel Co. v. United States, 635

F.3d 1363, 1368-74 (Fed. Cir. 2011) (reaching merits of plaintiff’s challenge to zeroing

and noting that plaintiff raised the issue at the administrative level).

       Finally, LG and Samsung’s reliance on Itochu is unavailing. LG Br. at 12, 15. Itochu

involved a changed circumstances review, where the respondent “was under no specific

requirement to file a case brief” and the provisions of 19 C.F.R. § 351.309(c)(2) did “not

apply.” Itochu, 733 F.3d at 1145 n.1. In Itochu, the respondent provided comments to the
Consol. Court No. 13-00098                                                      Page 22

agency once prior to the preliminary results, and, in the absence of a regulatory

exhaustion requirement, the Federal Circuit held that it would have been futile for the

respondent to “resubmit” those comments for a second time after the preliminary results

when “Commerce was defending [its position] in court at the time” on the grounds that “it

had no discretion in the matter because it was constrained by statute to reject [the

respondent’s] position.” Itochu, 733 F.3d at 1146-48. Unlike Itochu, in this case, LG and

Samsung had a regulatory obligation to file case briefs containing all of their arguments,

they filed case briefs without making any arguments regarding the now-withdrawn

regulation, and there is no statute that would have required Commerce to reject the

position advanced by LG and Samsung. See Aluminum Extrusions Fair Trade Comm. v.

United States, 37 CIT ___, ___, 938 F. Supp. 2d 1337, 1341-42 (2013) (distinguishing

Itochu as case that applied futility exception where the statute required Commerce to

reject the respondent’s argument); Mid Continent Nail Corp. v. United States, 37 CIT ___,

___, 949 F. Supp. 2d 1247, 1260-61 n.10 (2013) (holding that, notwithstanding the “rare

circumstances” in Itochu, “[i]ssues that are not addressed in an administrative case brief

filed with the agency are generally deemed abandoned”).

      For these reasons, LG and Samsung failed to exhaust their arguments regarding

Commerce’s now-withdrawn regulation.

                            b. Consistency with the statute

      Commerce did not violate the statute when it applied the A-to-T methodology to all

of LG and Samsung’s sales. Section 1677f-1(d)(1)(B) permits Commerce to apply the A-

to-T methodology when “(i) there is a pattern of export prices (or constructed export
Consol. Court No. 13-00098                                                           Page 23

prices) for comparable merchandise that differ significantly among purchasers, regions,

or periods of time, and (ii) the administering authority explains why such differences

cannot be taken into account using” the A-to-A or T-to-T methodologies. 19 U.S.C.

§ 1677f-1(d)(1)(B). In Commerce’s view, this statutory language permitted application of

the A-to-T methodology to all of LG and Samsung’s sales:

      With respect to the application of the [A-to-T] method to the non-targeted
      sales, the Department has previously determined that the language of
      section 777A(d)(1)(B) of the Act does not preclude adopting a uniform
      application of [A-to-T] comparisons for all transactions when satisfaction of
      the statutory criteria suggests that application of the [A-to-T] method is
      appropriate. The only limitations the statute places on the application of the
      [A-to-T] method are the satisfaction of the two criteria set forth in the statute.
      When the criteria for application of the [A-to-T] method are satisfied, section
      777A(d)(1)(B) of the Act does not limit application of the [A-to-T] method to
      certain transactions. Instead, the provision expressly permits the
      Department to determine dumping margins by comparing weighted-
      average NVs to the EPs (or CEPs) of individual transactions. While the
      Department does not find that the language of section 777A(d)(1)(B) of the
      Act mandates application of the [A-to-T] method to all sales, it does find that
      this interpretation is a reasonable one and is more consistent with the
      Department’s approach to the selection of the appropriate comparison
      method under section 777A(d)(1) of the Act more generally.

      The respondents’ argument that the [A-to-T] method should only be applied
      to the U.S. sales which are found to be targeted would undermine the
      determination that a pattern of significant price differences exists under
      section 777A(d)(1)(B)(i) of the Act. This pattern is initially identified by the
      petitioner in its targeted dumping allegation when it identifies purchasers,
      regions or time periods which may be the basis of such a pattern. The
      Department then employs the Nails test to confirm whether the alleged
      purchasers, regions or time periods have been targeted based on the
      weighted-average sales prices to purchasers, regions, or time periods,
      allegedly targeted or not. Then, under section 777A(d)(1)(B)(ii) of the Act,
      the Department must explain whether the significant price differences can
      be taken into account by the [A-to-A] or [T-to-T] methods, and if not, then
      the Department may apply the [A-to-T] method. If the Department were to
      apply the [A-to-T] method only to those U.S. sales which pass the Nails test,
      as argued by the respondents, then this approach would include only part
Consol. Court No. 13-00098                                                         Page 24

      of the U.S. sales which constitute the identified pattern. In other words, the
      U.S. sales which pass the Nails test represent only part of the pricing
      behavior of the respondent, which, in and of themselves, do not constitute
      the identified pattern which is based on significant price differences between
      all groups, whether allegedly targeted or not. The identified pattern is
      defined by all of the respondent’s U.S. sales. To consider whether the [A-
      to-A] or [T-to-T] method can account for only part of the identified significant
      price differences, and if so, then to apply the [A-to-T] method to only part of
      the identified significant price differences, would be an incomplete
      application of the statute.

      If Congress had intended for the Department to apply the [A-to-T] method
      only to a subset of transactions and use a different comparison method for
      the remaining sales of the same respondent, Congress could have explicitly
      said so, but it did not. Instead, Congress expressed its intent with the
      language of section 777A(d)(1)(B), which imposes a general preclusion
      from using [A-to-T] comparisons and withdraws that preclusion entirely if
      the two criteria are satisfied. In the absence of a preclusion, the Department
      is free to apply the [A-to-T] method to all transactions. The Department may
      choose any method that is appropriate.

Decision Memorandum at 33-34 (citation omitted).

      The court agrees. See Apex Frozen Foods, 38 CIT at ___, 37 F. Supp. 3d at 1301-

03 (sustaining Commerce’s application of the A-to-T methodology to all sales under

Chevron.). The statute permits Commerce to “determine whether the subject

merchandise is being sold in the United States at less than fair value by comparing the

weighted average of the normal values of the normal values to the export prices (or

constructed export) prices of individual transactions” when the conditions in § 1677f-

1(d)(1)(B)(i) and (ii) are met, without specifying which individual export prices (or

constructed export prices). Rather, the statute outlines preconditions that, when met,

allow Commerce to apply the A-to-T methodology. The statute’s clear language does not

prohibit application of the A-to-T methodology to all sales, meaning Commerce’s
Consol. Court No. 13-00098                                                        Page 25

interpretation governs so long as it is reasonable. Commerce expressed concern that it

would not be able to account for a “pattern” if it isolated the A-to-T methodology to only

targeted sales. As Commerce explains, a “pattern” of targeted sales may only emerge

when observed against a backdrop of non-targeted sales. Commerce also observed that

applying the A-to-T methodology to all sales is just like applying the A-to-A and T-to-T

methodologies to all sales, its usual practice under the statute. Because Commerce has

supplied a reasonable interpretation of a silent statutory provision, the court must sustain

under Chevron.

       LG and Samsung nevertheless challenge Commerce’s refusal to limit application

of the A-to-T methodology to targeted sales. LG and Samsung contend that the required

explanation of “such differences” in § 1677f-1(d)(1)(B)(ii) refers only to the differences

“among purchasers, regions, or periods of time” in § 1677f-1(d)(1)(B)(i). LG Br. at 35-39;

Samsung Br. at 36, 38. As a consequence, LG and Samsung argue, “[t]he phrase ‘such

differences’ does not apply to those other transactions that do not have such differences,”

meaning Commerce may not apply the A-to-T methodology to all sales. LG Br. at 35-37

(emphasis omitted); see Samsung Br. at 36-38. The court disagrees. The preconditions

set forth in 19 U.S.C. § 1677f-1(d)(1)(B)(i) and (ii) are just that—preconditions that must

exist before Commerce may apply the A-to-T methodology. One of those preconditions

requires Commerce to supply an explanation with specified content, as LG and Samsung

point out. 19 U.S.C. § 1677f-1(d)(1)(B)(i) and (ii) do not, however, instruct Commerce on

how to apply the A-to-T methodology after making its explanation. That language is

instead in 19 U.S.C. § 1677f-1(d)(1)(B), which permits Commerce to compare “the
Consol. Court No. 13-00098                                                        Page 26

weighted average of the normal values to the export prices (or constructed export) prices

of individual transactions” without specifying whether those export prices or constructed

export prices must be drawn only from targeted sales. Id. § 1677f-1(d)(1)(B).

       LG and Samsung also argue that the statute “creates a strong presumption” for

using the A-to-A or T-to-T methodologies because the A-to-T methodology is a “limited

exception.” See LG Br. at 35; Samsung Br. at 37. As Defendant correctly argues,

however, the statute does not specify how often Commerce may use the alternative A-to-

T methodology. The statute merely sets forth preconditions that, when satisfied, permit

Commerce to use the A-to-T methodology. 19 U.S.C. § 1677f-1(d)(1)(B). The court does

not agree with LG and Samsung that the statute’s description of the A-to-T methodology

as an “exception” limits Commerce’s application of the A-to-T methodology once those

two conditions are satisfied.

       LG quotes statements Commerce made when promulgating the limiting rule

regulation in support of its Chevron argument. LG Br. at 36-37; see also Samsung Br. at

27-32. The court must defer to an agency’s reasonable interpretation of an unclear

statute, however, even if that interpretation reflects a change in policy. Eurodif, 555 U.S.

at 316 (Commerce’s “interpretation governs in the absence of unambiguous statutory

language to the contrary or unreasonable resolution of language that is ambiguous . . .

even after a change in regulatory treatment, which ‘is not a basis for declining to analyze

the agency’s interpretation under the Chevron framework.’” (quoting Nat’l Cable &

Telecomm. Ass’n v. Brand X Internet Servs., 545 U.S. 967, 981 (2005))). An agency “need

not demonstrate . . . that the reasons for the new policy are better than the reasons for
Consol. Court No. 13-00098                                                         Page 27

the old one; it suffices that the new policy is permissible under the statute, that there are

good reasons for it, and that the agency believes it to be better, which the conscious

change of course adequately indicates.” FCC v. Fox Television Stations, Inc., 566 U.S.

502, 515 (2009) (emphasis in original). Here, Commerce changed its position on the

limiting rule in 2008, explaining that it “promulgated [the limiting rule regulation] without

the benefit of any departmental experience on the issue of targeted dumping” because it

“had never [before] performed a targeted dumping analysis.” Withdrawal Notice, 73 Fed.

Reg. at 74,930-31. Commerce returned “to a case-by-case adjudication” to allow it “to

gain a greater understanding of the issue,” id. at 74,931, an effort that led to the Nails

test. Commerce in this investigation drew from actual experience with targeted dumping

and reasonably explained why applying the A-to-T methodology to all sales served to

remedy masked dumping. Decision Memorandum at 33-35 (explaining that applying the

A-to-T methodology to all sales “eliminates . . . masked dumping by exposing (1) any

implicit masking within the weighted-average U.S. sales price by basing the comparison

on the transaction-specific U.S. sales price, and (2) any explicit masking between

averaging groups by not providing offsets for negative comparison results”). Commerce’s

prior interpretation of the statute does not, in the court’s view, render its current

interpretation unreasonable.

       The court understands LG and Samsung’s arguments for why it might make sense

to limit application of the A-to-T methodology to only those sales constituting the targeted

dumping. Where Commerce finds that the conditions in § 1677f-1(d)(1)(B)(i) and (ii) are

satisfied, though, Commerce may apply the A-to-T methodology. 19 U.S.C. § 1677f-
Consol. Court No. 13-00098                                                        Page 28

1(d)(1)(B). In the end, LG and Samsung identify neither clear statutory language

prohibiting Commerce from applying the A-to-T methodology to all sales nor any

unreasonableness in Commerce’s decision. The court therefore must sustain

Commerce’s application of the targeted dumping remedy below.

          B. Commerce’s exclusion of small top-loading washers from its
                    model-matching analysis of LG’s sales

       The statute directs Commerce to set normal value at “the price at which the foreign

like product is first sold . . . for consumption in the exporting country.” 19 U.S.C.

§ 1677b(a)(1)(B)(i). The statute defines “foreign like product” as “merchandise in the first

of the following categories in respect of which a determination . . . can be satisfactorily

made”:

       (A) The subject merchandise and other merchandise which is identical in
       physical characteristics with, and was produced in the same country by the
       same person as, that merchandise.

       (B) Merchandise –

              (i) produced in the same country and by the same person as the
              subject merchandise,

              (ii) like that merchandise in component material or materials and in
              the purposes for which used, and

              (iii) approximately equal in commercial value to that merchandise

       (C) Merchandise –

              (i) produced in the same country and by the same person and of the
              same general class or kind as the subject merchandise,

              (ii) like that merchandise in the purposes for which used, and
Consol. Court No. 13-00098                                                    Page 29

               (iii) which [Commerce] determines may reasonably be compared
               with that merchandise

Id. § 1677(16). Merchandise falling within these three categories is known as identical

merchandise,     similar   merchandise,   and   reasonably   comparable   merchandise,

respectively. This statutory hierarchy requires Commerce first to consider identical

merchandise. Where a given export sale lacks a corresponding identical home-market

sale, however, Commerce must look next to similar merchandise. Where an export sale

lacks a corresponding identical or similar home market sale, Commerce then turns to

reasonably comparable merchandise. See id. Commerce has developed a “model-

matching” methodology for identifying similar and reasonably comparable merchandise.

SKF, 537 F.3d at 1375.

      Typically, the home market sales data available for model-matching is limited to

in-scope merchandise because Commerce only requests that data. This, as LG and

Defendant agree, is not the typical case. After LG and Samsung submitted their complete

questionnaire responses but before Commerce issued its preliminary determination,

Whirlpool asked Commerce to narrow the scope of the investigation. Commerce obliged

and amended the scope to exclude washers with vertical rotational axis and a capacity of

less than 3.70 cubic feet (“small top-load washers”). This sequence of events left

Commerce in the unusual position of having record data of home market sales for both

in-scope and non-scope merchandise, since LG had already reported its small top-load

washer sales. Commerce ultimately declined to consider LG’s small top-load washer data

as similar merchandise in its model-matching analysis. Decision Memorandum at 8.
Consol. Court No. 13-00098                                                       Page 30

       LG argues that Commerce’s exclusion of non-scope small top-load washer sales

from its model-matching analysis violates clear statutory language under Chevron step

one. LG frames the issue as a matter of whether Commerce erroneously added a

requirement to the statute that similar merchandise must also meet the scope’s physical

description. LG Br. at 41-43. Commerce below, though, agreed that the statute is not so

limited. Decision Memorandum at 8 (“LG maintains that [§ 1677(16)(B)] provides the

Department with the discretion to use sales which have been excluded from the scope of

the investigations as foreign like product for model-matching purposes. We do not

disagree with this assertion.”). The critical legal question is instead whether the statute

requires Commerce to examine all merchandise “like” the subject merchandise in

materials and use. LG believes it does. According to LG, the statute “explicitly

distinguishes” in-scope merchandise from similar merchandise by using the phrase

“subject merchandise” in § 1677(16)(B)(i) and the phrase “like that merchandise” in

§ 1677(16)(B)(ii). To LG, this distinction “can only mean” that similar merchandise “is

something other than subject merchandise.” LG Br. at 42 (emphasis omitted). LG also

points out that Congress explicitly committed the definition of reasonably comparable

merchandise to Commerce’s discretion. See 19 U.S.C. § 1677(16)(C) (defining

reasonably comparable merchandise as that “which [Commerce] determines may

reasonably be compared with [the subject] merchandise”). To LG, the lack of any similar

phrasing in § 1677(16)(B) means that Congress did not intend to give Commerce the

discretion to restrict the universe of sales under consideration for similar merchandise.

LG Br. at 43.
Consol. Court No. 13-00098                                                       Page 31

       LG’s reading of the statute may make sense, but it is not the only interpretation

possible. “[T]his statute ‘is silent with respect to the methodology that Commerce must

use to match a U.S. product with a suitable home-market product.’” SKF, 537 F.3d at

1379 (quoting Koyo Seiko Co. v. United States, 66 F.3d 1204, 1209 (Fed. Cir. 1995))

(emphasis added); see also Pesquera Mares Australes Ltda. v. United States, 266 F.3d

1372, 1382-84 (Fed. Cir. 2001). Here, the statute defines similar merchandise simply as

“[m]erchandise” that meets the requirements contained in § 1677(16)(B)(i)-(iii). Congress

did not clarify whether “[m]erchandise” must include in-scope merchandise, or both in-

scope and non-scope merchandise. See 19 U.S.C. § 1677(16)(B). Likewise, none of the

requirements outlined in § 1677(16)(B)(i)-(iii) say or imply that similar merchandise must

include non-scope merchandise. One easy inference to draw from this omission is that

“[m]erchandise” includes home market sales of in-scope and non-scope merchandise as

LG argues. Unfortunately for LG, however, because Congress in its silence did not

foreclose Commerce from interpreting the term “merchandise” differently, the court

proceeds with its analysis under Chevron step two.

       Commerce explained that including non-scope merchandise in its model-matching

analysis would “deviate from its standard practice” and “would have a significant effect on

all future investigations and administrative reviews.” Decision Memorandum at 8-9.

Commerce explained that doing so would also encourage respondents “to strategically

select sales of products, even those outside of the scope, that they believe [Commerce]

should use for model-matching purposes, in an effort to increase or decrease [dumping]

margins.” Id. at 9. In any event, Commerce found “no overarching reason to use smaller
Consol. Court No. 13-00098                                                          Page 32

top-load washers which do not meet the physical descriptions of the merchandise covered

by the scope for model-matching purposes” because “LG has reported home market

sales of merchandise covered under the scope of the investigations, which can be

accurately compared with sales of subject merchandise, and adjusted for any physical

differences affecting price.” Id.

       LG’s straightforward alternative interpretation of the statute has merit, as

Commerce itself acknowledged below. Under Chevron step two, however, “an agency’s

construction need not be the only interpretation or the reading the court would have

reached if the question initially had arisen in a judicial proceeding.” Koyo, 66 F.3d at 1210.

Commerce chose one possible interpretation over LG’s preferred interpretation after

considering the impact both interpretations would have on future administrative

proceedings. LG has not provided a reason for the court to second guess that judgment

call. The court must therefore defer to Commerce’s reasonable interpretation of the

statute.

       As a final note, LG insists that Commerce’s decision to restrict its model-matching

analysis to in-scope merchandise is not a long-standing practice that requires special

deference. LG Br. at 25-27. LG, though, asked the court to assess whether Commerce’s

approach constitutes a permissible construction of the statute, not whether Commerce’s

approach is consistent with past practice. See id. at 39. Under Chevron, the court must

defer to Commerce’s reasonable interpretation of a silent statutory provision.

Commerce’s discussion of its past practice informs the court’s assessment of whether

Commerce reasonably interpreted the statute, but no more than called for under the
Consol. Court No. 13-00098                                                     Page 33

Chevron standard. The court in sustaining Commerce’s interpretation of a silent statutory

provision here does so with the deference due under the second step of Chevron.

                                    III. Conclusion

      For the foregoing reasons, the court sustains the Final Results for each of the

issues LG and Samsung have challenged in their motions for judgment on the agency

record. Judgment will be entered accordingly.

                                                            /s/ Leo M. Gordon
                                                          Judge Leo M. Gordon

Dated: June 12, 2015
       New York, New York