Court Opinion

ID: 2826967
Source: CourtListenerOpinion
Date Created: 2015-08-13 15:03:52.345874+00
Date Added: 2024-06-11T12:23:16.921719
License: Public Domain

Slip Op. 15-86

            UNITED STATES COURT OF INTERNATIONAL TRADE
________________________________
FENGCHI IMP. & EXP. CO., LTD.    :
OF HAICHENG CITY, FENGCHI        :
REFRACTORIES CO. OF HAICHENG     :
CITY, and FEDMET RESOURCES       :
CORPORATION,                     :
                                 :
          Plaintiffs,            : Before: Nicholas Tsoucalas,
                                 :          Senior Judge
     v.                          :
                                 : Court No.: 13-00186
UNITED STATES,                   :
                                 :
          Defendant,             :
                                 :
          and                    :
                                 :
RESCO PRODUCTS, INC., and        :
ANH REFRACTORIES COMPANY,        :
                                 :
          Defendant-Intervenors.:

                             OPINION

[Commerce’s Remand Results are sustained.]

                                        Dated:August 13, 2015

Donald B. Cameron, Brady W. Mills, Julie C. Mendoza, Mary S.
Hodgins, R. Will Planert, and Sarah S. Sprinkle, Morris Manning &
Martin LLP, of Washington, DC, for plaintiffs.

Melissa M. Devine, Trial Attorney, Commercial Litigation Branch,
Civil Division, U.S. Department of Justice, of Washington, DC, for
defendant. With her on the brief were Benjamin C. Mizer, Principal
Deputy Assistant Attorney General, Jeanne E. Davidson, Director,
and Patricia M. McCarthy, Assistant Director. Of counsel on the
brief was Whitney M. Rolig, Attorney, Office of the Chief Counsel
for Trade Enforcement & Compliance, U.S. Department of Commerce,
of Washington, DC.
Court No. 13-00186                                                          Page 2

Joseph W. Dorn, J. Michael Taylor, and Brian E. McGill, King &
Spalding LLP, of Washington, DC, for defendant-intervenor Resco
Products, Inc. and Harbison Walker International (formerly ANH
Refractories Company.

            Tsoucalas,    Senior   Judge:      before     the    court    are    the

Department     of     Commerce’s     (“Commerce”)         Final    Results       of

Redetermination pursuant to Court Remand in Fengchi Imp. & Exp.

Co., Ltd. of Haicheng City v. United States, 39 CIT __, __, Slip

Op. 15-23 (Mar. 25, 2015) (“Fengchi I”).                See Final Results of

Redetermination      Pursuant   to Fengchi     Imp.   &   Exp.    Co.,    Ltd.    of

Haicheng City v. United States, ECF No. 111 (May 26, 2015) (“Remand

Results”). The relevant facts and procedural history are set forth

in Fengchi I.       Familiarity with the court’s decision in Fengchi I

is presumed.

            Plaintiffs,    Fengchi    Import    and     Export    Co.,    Ltd.    of

Haicheng City, Fengchi Refractories Co. of Haicheng City and Fedmet

Resources    Corporation     (collectively,      “Plaintiffs”),          challenge

Commerce’s redetermination.          See Pls.’ Cmts. on Remand Results,

ECF No. 114 (June 25, 2015) (“Pls.’ Br.”).                 Both Commerce and

Defendant-Intervenors Resco Products, Inc. ("Resco") and Harbison

Walker International, formerly ANH Refractories Company ("ANH")

insist that the court sustain the Remand Results. See Def.'s Resp.

to Cmts. on Remand Results, ECF No. 118 (July 10, 2015) (“Def.’s

Br.”); Def.- Intervenors’s Cmts. Response to Pls.’ Cmts. on Remand

Results, ECF No. 120 (July 10, 2015) (“Def.-Int.’s Br.”).
Court No. 13-00186                                                     Page 3

                  JURISDICTION and STANDARD OF REVIEW

            The Court has jurisdiction pursuant to 28 U.S.C. §

1581(c) (2012) and section 516A(a)(2)(B)(iii) of the Tariff Act of

1930, 1 as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2012).              The

court will uphold Commerce’s final determination in an antidumping

duty    administrative    review    unless     it   is    “unsupported    by

substantial evidence on the record, or otherwise not in accordance

with law.”    19 U.S.C. § 1516a(b)(1)(B)(i).        Substantial evidence

“means such relevant evidence as a reasonable mind might accept as

adequate to support a conclusion.” Universal Camera Corp. v. NLRB,

340 U.S. 474, 477 (1951).

            Additionally, when reviewing an agency’s interpretation

of its regulations, the court must give substantial deference to

the    agency’s   interpretation,   Michaels    Stores,    Inc.   v.   United

States, 766 F.3d 1388, 1391 (Fed. Cir. 2014) (citing Torrington

Co. v. United States, 156 F.3d 1361, 1363-64 (Fed. Cir. 1998)),

according it “‘controlling weight unless it is plainly erroneous

or inconsistent with the regulation.’” Thomas Jefferson Univ. v.

Shalala, 512 U.S. 504, 512, (1994) (citations omitted); accord

Viraj Group v. United States, 476 F.3d 1349, 1355 (Fed. Cir. 2007).

In this context, “[d]eference to an agency’s interpretation of its

1Further citations to the Tariff Act of 1930 are to the relevant
portions of Title 19 of the U.S. Code, 2006 edition, and all
applicable amendments thereto.
Court No. 13-00186                                                               Page 4

own   regulations         is    broader      than   deference     to    the    agency’s

construction of a statute, because in the latter case the agency

is addressing Congress’s intentions, while in the former it is

addressing its own.”              Viraj, 476 F.3d at 1355 (quoting Gose v.

U.S. Postal Serv., 451 F.3d 831, 837 (Fed. Cir. 2006).

                                        Discussion

           In       the        underlying      administrative      review      of     the

antidumping order on certain magnesia carbon bricks (“MCBs”) from

China, Commerce applied a total adverse facts available (“AFA”) to

Fengchi   as    a   consequence         of   Fengchi’s    refusal      to   respond    to

Commerce’s request for certain sales information.                           See Certain

Magnesia Carbon Bricks From the People’s Republic of China: Final

Results   and       Final       Partial      Rescission    of    Antidumping        Duty

Administrative Review; 2010–2011, 78 Fed. Reg. 22,230 (Apr. 15,

2013) (“Final Results”); see also Certain MCBs from the PRC: Issues

and Decision Memorandum for the Final Results of the 2010–2011

Administrative Review, (Apr. 9, 2013) PR 148 at 1–2 (“IDM”).

Commerce assigned Fengchi a weighted-average dumping margin of

236% based on the petition rate from the investigation.                       See First

Administrative       Review        of   MCBs     from    the    PRC:    Corroboration

Memorandum (Oct. 1, 2012), CR 68 at 2–3 (unchanged in final).

Commerce found that the petition rate was reliable because it

calculated the 236% figure as the AFA rate for the PRC-wide entity

during the investigation, which it then corroborated using model-
Court No. 13-00186                                                     Page 5

specific margins of a cooperating respondent.         See id.      Commerce

determined that the rate was relevant to Fengchi by comparing the

United States price from the petition to the average unit prices

for five Fengchi sales of magnesia alumina carbon bricks (“MACBs”)

that were identified by United States Customs and Border Protection

(“CBP”).   Id. at 3.    Specifically, Commerce found that the U.S.

sales price from the petition rate was within the range of the

average unit values for Fengchi’s entries.           Id.     Additionally,

Commerce found that the usage rates for the factors of production

in the petition were within the range of values of Fengchi’s

reported usage rates.    Id.    Because the rate was both reliable and

relevant   to    Fengchi,      Commerce   found   that      it   adequately

corroborated the petition rate of 236%.       Id.

           In Fengchi I, the Court remanded the Final Results to

Commerce for further explanation regarding the corroboration of

the AFA rate.    Fengchi I, 39 CIT at __, Slip Op. 15-23 at 18–22.

Although the Court determined that Commerce properly relied on AFA

in   assigning   Fengchi’s   weighted-average     dumping    margin,    as   a

consequence of the Federal Circuit’s holding in Fedmet Resources

Corp. v. United States, 755 F.3d 912, (Fed. Cir. 2014), the court

became “concerned with Commerce’s potentially unreasonable use of

out of scope MACB sales to corroborate the AFA rate.”            Id. at __,

Slip Op. 15-23 at 21–22.        Therefore, the court remanded so that
Court No. 13-00186                                                               Page 6

Commerce could have the opportunity to address this concern at the

administrative level.            Id.

              Commerce resolved these concerns in its Remand Results.

There, Commerce reasonably explained that the Federal Circuit’s

ruling in Fedmet “only affects [Commerce’s] corroboration of the

AFA    rate   assigned     to    Fengchi    to    the    extent    that    the   record

demonstrates        that         the   entries          underlying        [Commerce’s]

corroboration analysis were actually non-subject MACBs.”                         Remand

Results at 5.       Commerce found that Fengchi’s refusal to cooperate

with the review precluded it from identifying the exact nature of

those entries.      Id.    Specifically, Commerce examined the CBP entry

documentation for the five sales at issue and found that the

documentation described the merchandise as MACBs, but did not

contain any additional details regarding the merchandise’s alumina

content, which is necessary to distinguish MACBs from MCBs.                           Id.

at 5-6; see also Fedmet Res. Corp. v. United States, 755 F.3d 912,

924 (Fed. Cir. 2014).           According to Commerce, nothing in this data

indicated whether Fengchi’s merchandise was actually out-of-scope

as outlined in Fedmet.            Since Fengchi refused to provide Commerce

with    any    narrative     clarifying       the      merchandise    in    question,

Commerce      reasonably     found     that      the    entry     documentation       was

ambiguous      as   to     the    product     actually      sold.         Id.    at    6.

Consequently, Commerce reasonably concluded that the five entries

used to corroborate the AFA rate were subject merchandise. Id.
Court No. 13-00186                                                      Page 7

          Commerce      also    examined     additional    record     evidence

regarding other sales that CBP identified as subject merchandise

that Fengchi did not report for the period of review.                 Id. at 7

(citing First Antidumping Administrative Review of Certain MCBs

from the PRC: Sections C and D Supplemental Questionnaire, (Aug.

3, 2012) CR 46 at Attach. II).          Once again, Fengchi chose not to

comment on these sales, limiting the record to only the prices and

quantities of imports that were classified as subject merchandise

by CBP.   Id. at 7.     Therefore, Commerce reasonably inferred that

the sales were subject merchandise and found that, as with the

other five CBP entries in question, the United States price from

the petition was “within the range of the average unit prices for

the remaining unreported sales and [was] therefore relevant to

Fengchi for this period of review.” Id. at 7.

          When    selecting     an    AFA   rate,   Commerce   may    rely   on

information      from     the        petition,      investigations,      prior

administrative reviews, or “any other information placed on the

record.” 19 U.S.C. § 1677e(b).           However, Commerce cannot select

any rate as the AFA rate, but rather, must select an AFA rate that

is “a reasonably accurate estimate of the respondent's actual rate,

albeit with some built-in increase intended as a deterrent to non-

compliance.”   F.lli De Cecco Di Filippo Fara S. Martino S.p.A. v.

United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000). “Commerce

must select secondary information that has some grounding in
Court No. 13-00186                                                         Page 8

commercial    reality.”   Gallant   Ocean    (Thailand)       Co.    v.    United

States, 602 F.3d 1319, 1324 (Fed. Cir. 2010).            Although a higher

AFA rate creates a stronger incentive to cooperate, “Commerce may

not select unreasonably high rates having no relationship to the

respondent’s actual dumping margin.” Id. at 1323 (citing De Cecco,
216 F.3d at 1032).

           The   requirements     articulated      by   the    CAFC       are     an

extension of the statute’s corroboration requirement.                     See De

Cecco, 216 F.3d at 1032.     Under 19 U.S.C. § 1677e(c), when Commerce

relies   on   secondary    information,     it    “shall,     to    the    extent

practicable, corroborate that information from independent sources

that are reasonably at [its] disposal.”          19 U.S.C. § 1677e(c).           To

corroborate secondary information, Commerce must find that it has

“probative value.” See KYD, Inc. v. United States, 607 F.3d 760,

765 (Fed. Cir. 2010).     Secondary information has “probative value”

if it is “reliable” and “relevant” to the respondent. Mittal Steel

Galati S.A. v. United States, 31 CIT 730, 734, 491 F. Supp. 2d
1273, 1278 (2007); see KYD, 607 F.3d at 765–67.

           Plaintiffs     argue   that   Fedmet    renders     the    AFA       rate

unreasonable because Commerce corroborated it using sales of non-

subject MACBs.    Pls.’ Br. at 2–3.      Plaintiffs insist that Commerce

is required to identify evidence on the record that the entries it

relies upon for the corroboration of an AFA rate are subject

merchandise.     Id. at 3 (citing Foshan Shunde Yongjian Housewares
Court No. 13-00186                                                                    Page 9

& Hardware Co. v. United States, 37 CIT __, __, Slip Op. 13-47

(Apr. 8, 2013)).         Additionally, Plaintiffs contend that although

Commerce had previously requested that Fengchi respond to its

antidumping duty questionnaire with respect to Fengchi’s exports

of    MACBs,    “Commerce       never    asked       Fengchi      for   any    additional

information specifically regarding the CBP entry data, including

the entries underlying the corroboration analysis.”                            Id. at 4.

Finally, Plaintiffs contend that Commerce erroneously continues to

rely on the same “post hoc rationalizations” it offered prior to

the    court’s      remand   in    Fengchi       I    as    justification           for   its

corroboration of the AFA rate, instead of reviewing the evidence

on the record.        Id. at 7–8.

               Plaintiffs’ arguments are unpersuasive.                        Commerce is

required       to    corroborate        information         only    “to       the     extent

practicable” on a given record.              19 U.S.C. § 1677e(c).                  On this

record, Fengchi identifies no evidence indicating whether the

alumina content of its merchandise falls within the range of out-

of-scope MACBs described in Fedmet.                     See Fedmet Res. Corp. v.

United States, 755 F.3d 912, 924 (Fed. Cir. 2014).                            As Commerce

reasonably          observed,     Fedmet         “only        affects       [Commerce’s]

corroboration of the AFA rate assigned to Fengchi to the extent

that    the     record    demonstrates       that          the    entries      underlying

[Commerce’s]        corroboration       analysis       were      actually     non-subject

MACBs.” Remand Results at 5 (emphasis added). Therefore, at best,
Court No. 13-00186                                                             Page 10

the record is ambiguous, and allows for more than one reasonable

answer to that predicate question.

             Moreover, it appears that Plaintiffs would prefer that

Commerce do all the work in establishing whether the entries in

question were or were not MACBs, that is not Commerce’s role.

Commerce’s inability to mandate participation in its proceedings

means that interested parties bear the primary burden of developing

the administrative record.          See QVD Food Co. v. United States, 658
F.3d 1318, 1325 (Fed. Cir. 2011).               Here, rather than provide any

information about its merchandise, Fengchi left it to Commerce to

assemble    a   record     which    it   now    complains    results      in   a   less

favorable    outcome.        The    fact   of    the    matter    is   that    Fengchi

identifies      no   evidence      on    this   record     that     undermines      the

reasonableness of Commerce’s corroboration.                 Once again, Commerce

is only required to corroborate the AFA rate “to the extent

practicable” on a given record.             19 U.S.C. § 1677e(c).

             Furthermore,          Plaintiffs          mistakenly       characterize

Commerce’s comments in its redetermination as being a “post hoc

rationalization.”          Pls.’ Br. at 7–8.             Commerce developed its

comments in the redetermination over the course of the remand

proceedings as the court directed in Fengchi I.                          The remand

proceeding      is    an    administrative        proceeding,          meaning     that

Commerce’s comments are not the post hoc rationalization of its
Court No. 13-00186                                         Page 11

counsel.   See Mitsubishi Heavy Indus. v. United States, 24 CIT
275, 287 n. 9, 97 F. Supp. 2d 1203, 1209 n.9 (2000).

           Accordingly, since Plaintiffs chose not to comply with

Commerce’s request for information, Commerce reasonably selected

from the list of secondary sources as the basis for Fengchi’s AFA

rate.   See 19 U.S.C. § 1677e(b).   The court finds that Commerce

acted reasonably when it chose to rely on the limited data on the

record to select an AFA rate that was “a reasonably accurate

estimate of the respondent's actual rate, albeit with some built-

in increase intended as a deterrent to non-compliance.”   De Cecco,
216 F.3d at 1032.

           For the foregoing reasons, Commerce’s Remand Results are

SUSTAINED. Judgment will be entered accordingly.

                                           /s/ Nicholas Tsoucalas
                                             Nicholas Tsoucalas
                                                 Senior Judge
Dated: __________________
        August 13, 2015
       New York, New York